G.R. No.

148222 August 15, 2003

PEARL & DEAN (PHIL.), INCORPORATED, Petitioner, vs. SHOEMART, INCORPORATED, and
NORTH EDSA MARKETING, INCORPORATED, Respondents.
DECISION
CORONA, J.:
In the instant petition for review on certiorari under Rule 45 of the Rules of Court, petitioner
Pearl & Dean (Phil.) Inc. (P & D) assails the May 22, 2001 decision 1 of the Court of Appeals
reversing the October 31, 1996 decision 2 of the Regional Trial Court of Makati, Branch 133, in
Civil Case No. 92-516 which declared private respondents Shoemart Inc. (SMI) and North Edsa
Marketing Inc. (NEMI) liable for infringement of trademark and copyright, and unfair
competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of
advertising display units simply referred to as light boxes. These units utilize specially printed
posters sandwiched between plastic sheets and illuminated with back lights. Pearl and Dean
was able to secure a Certificate of Copyright Registration dated January 20, 1981 over these
illuminated display units. The advertising light boxes were marketed under the trademark
"Poster Ads". The application for registration of the trademark was filed with the Bureau of
Patents, Trademarks and Technology Transfer on June 20, 1983, but was approved only on
September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean
employed the services of Metro Industrial Services to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI)
for the lease and installation of the light boxes in SM City North Edsa. Since SM City North Edsa
was under construction at that time, SMI offered as an alternative, SM Makati and SM Cubao, to
which Pearl and Dean agreed. On September 11, 1985, Pearl and Dean’s General Manager,
Rodolfo Vergara, submitted for signature the contracts covering SM Cubao and SM Makati to
SMI’s Advertising Promotions and Publicity Division Manager, Ramonlito Abano. Only the
contract for SM Makati, however, was returned signed. On October 4, 1985, Vergara wrote
Abano inquiring about the other contract and reminding him that their agreement for
installation of light boxes was not only for its SM Makati branch, but also for SM Cubao. SMI did
not bother to reply.
Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean that it
was rescinding the contract for SM Makati due to non-performance of the terms thereof. In his
reply dated February 17, 1986, Vergara protested the unilateral action of SMI, saying it was
without basis. In the same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean
to fabricate its display units, offered to construct light boxes for Shoemart’s chain of stores. SMI
approved the proposal and ten (10) light boxes were subsequently fabricated by Metro
Industrial for SMI. After its contract with Metro Industrial was terminated, SMI engaged the
services of EYD Rainbow Advertising Corporation to make the light boxes. Some 300 units were
fabricated in 1991. These were delivered on a staggered basis and installed at SM Megamall
and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were
installed at SM City and in the fastfood section of SM Cubao. Upon investigation, Pearl and Dean
found out that aside from the two (2) reported SM branches, light boxes similar to those it
manufactures were also installed in two (2) other SM stores. It further discovered that
defendant-appellant North Edsa Marketing Inc. (NEMI), through its marketing arm, Prime
Sports Marketing Services, was set up primarily to sell advertising space in lighted display units
located in SMI’s different branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI
and NEMI enjoining them to cease using the subject light boxes and to remove the same from
SMI’s establishments. It also demanded the discontinued use of the trademark "Poster Ads,"
and the payment to Pearl and Dean of compensatory damages in the amount of Twenty Million
Pesos (P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four
(224) light boxes and NEMI took down its advertisements for "Poster Ads" from the lighted
display units in SMI’s stores. Claiming that both SMI and NEMI failed to meet all its demands,
Pearl and Dean filed this instant case for infringement of trademark and copyright, unfair
competition and damages.
In denying the charges hurled against it, SMI maintained that it independently developed its
poster panels using commonly known techniques and available technology, without notice of
or reference to Pearl and Dean’s copyright. SMI noted that the registration of the mark "Poster
Ads" was only for stationeries such as letterheads, envelopes, and the like. Besides, according
to SMI, the word "Poster Ads" is a generic term which cannot be appropriated as a trademark,
and, as such, registration of such mark is invalid. It also stressed that Pearl and Dean is not
entitled to the reliefs prayed for in its complaint since its advertising display units contained no
copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no
cause of action against it and that the suit was purely intended to malign SMI’s good name. On
this basis, SMI, aside from praying for the dismissal of the case, also counterclaimed for moral,
actual and exemplary damages and for the cancellation of Pearl and Dean’s Certification of
Copyright Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark
Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display units,
nor having engaged in the business of advertising. It repleaded SMI’s averments, admissions
and denials and prayed for similar reliefs and counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of
copyright under Section 2 of PD 49, as amended, and infringement of trademark under Section
22 of RA No. 166, as amended, and are hereby penalized under Section 28 of PD 49, as
amended, and Sections 23 and 24 of RA 166, as amended. Accordingly, defendants are hereby
directed:
(1) to pay plaintiff the following damages:
(a) actual damages - P16,600,000.00, representing profits derived by defendants as a result of
infringe- ment of plaintiff’s copyright from 1991 to 1992
(b) moral damages - P1,000.000.00
(c) exemplary damages - P1,000,000.00
(d) attorney’s fees - P1,000,000.00
plus
(e) costs of suit;
(2) to deliver, under oath, for impounding in the National Library, all light boxes of SMI which
were fabricated by Metro Industrial Services and EYD Rainbow Advertising Corporation;
(3) to deliver, under oath, to the National Library, all filler-posters using the trademark "Poster
Ads", for destruction; and
(4) to permanently refrain from infringing the copyright on plaintiff’s light boxes and its
trademark "Poster Ads".
Defendants’ counterclaims are hereby ordered dismissed for lack of merit.
SO ORDERED.4
On appeal, however, the Court of Appeals reversed the trial court:
Since the light boxes cannot, by any stretch of the imagination, be considered as either prints,
pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly classified as a
copyrightable class "O" work, we have to agree with SMI when it posited that what was
copyrighted were the technical drawings only, and not the light boxes themselves, thus:
42. When a drawing is technical and depicts a utilitarian object, a copyright over the drawings
like plaintiff-appellant’s will not extend to the actual object. It has so been held under
jurisprudence, of which the leading case is Baker vs. Selden (101 U.S. 841 (1879). In that case,
Selden had obtained a copyright protection for a book entitled "Selden’s Condensed Ledger or
Bookkeeping Simplified" which purported to explain a new system of bookkeeping. Included as
part of the book were blank forms and illustrations consisting of ruled lines and headings,
specially designed for use in connection with the system explained in the work. These forms
showed the entire operation of a day or a week or a month on a single page, or on two pages
following each other. The defendant Baker then produced forms which were similar to the
forms illustrated in Selden’s copyrighted books. The Court held that exclusivity to the actual
forms is not extended by a copyright. The reason was that "to grant a monopoly in the
underlying art when no examination of its novelty has ever been made would be a surprise and
a fraud upon the public; that is the province of letters patent, not of copyright." And that is
precisely the point. No doubt aware that its alleged original design would never pass the
rigorous examination of a patent application, plaintiff-appellant fought to foist a fraudulent
monopoly on the public by conveniently resorting to a copyright registration which merely
employs a recordal system without the benefit of an in-depth examination of novelty.
The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge Authority
[43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had obtained a copyright over an
unpublished drawing entitled "Bridge Approach – the drawing showed a novel bridge approach
to unsnarl traffic congestion". The defendant constructed a bridge approach which was alleged
to be an infringement of the new design illustrated in plaintiff’s drawings. In this case it was
held that protection of the drawing does not extend to the unauthorized duplication of the
object drawn because copyright extends only to the description or expression of the object and
not to the object itself. It does not prevent one from using the drawings to construct the object
portrayed in the drawing.
In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v.
Maddox, 379 F. 2d 84, it was held that there is no copyright infringement when one who,
without being authorized, uses a copyrighted architectural plan to construct a structure. This is
because the copyright does not extend to the structures themselves.
In fine, we cannot find SMI liable for infringing Pearl and Dean’s copyright over the technical
drawings of the latter’s advertising display units.
xxx xxx xxx
The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate Court
that the protective mantle of the Trademark Law extends only to the goods used by the first
user as specified in the certificate of registration, following the clear mandate conveyed by
Section 20 of Republic Act 166, as amended, otherwise known as the Trademark Law, which
reads:
SEC. 20. Certification of registration prima facie evidence of validity.- A certificate of registration
of a mark or trade-name shall be prima facie evidence of the validity of the registration, the
registrant’s ownership of the mark or trade-name, and of the registrant’s exclusive right to use
the same in connection with the goods, business or servicesspecified in the certificate, subject
to any conditions and limitations stated therein." (underscoring supplied)
The records show that on June 20, 1983, Pearl and Dean applied for the registration of the
trademark "Poster Ads" with the Bureau of Patents, Trademarks, and Technology Transfer.
Said trademark was recorded in the Principal Register on September 12, 1988 under
Registration No. 41165 covering the following products: stationeries such as letterheads,
envelopes and calling cards and newsletters.
With this as factual backdrop, we see no legal basis to the finding of liability on the part of the
defendants-appellants for their use of the words "Poster Ads", in the advertising display units
in suit. Jurisprudence has interpreted Section 20 of the Trademark Law as "an implicit
permission to a manufacturer to venture into the production of goods and allow that producer
to appropriate the brand name of the senior registrant on goods other than those stated in the
certificate of registration." The Supreme Court further emphasized the restrictive meaning of
Section 20 when it stated, through Justice Conrado V. Sanchez, that:
Really, if the certificate of registration were to be deemed as including goods not specified
therein, then a situation may arise whereby an applicant may be tempted to register a
trademark on any and all goods which his mind may conceive even if he had never intended to
use the trademark for the said goods. We believe that such omnibus registration is not
contemplated by our Trademark Law.
While we do not discount the striking similarity between Pearl and Dean’s registered
trademark and defendants-appellants’ "Poster Ads" design, as well as the parallel use by which
said words were used in the parties’ respective advertising copies, we cannot find defendants-
appellants liable for infringement of trademark. "Poster Ads" was registered by Pearl and Dean
for specific use in its stationeries, in contrast to defendants-appellants who used the same
words in their advertising display units. Why Pearl and Dean limited the use of its trademark to
stationeries is simply beyond us. But, having already done so, it must stand by the consequence
of the registration which it had caused.
xxx xxx xxx
We are constrained to adopt the view of defendants-appellants that the words "Poster Ads" are
a simple contraction of the generic term poster advertising. In the absence of any convincing
proof that "Poster Ads" has acquired a secondary meaning in this jurisdiction, we find that
Pearl and Dean’s exclusive right to the use of "Poster Ads" is limited to what is written in its
certificate of registration, namely, stationeries.
Defendants-appellants cannot thus be held liable for infringement of the trademark "Poster
Ads".
There being no finding of either copyright or trademark infringement on the part of SMI and
NEMI, the monetary award granted by the lower court to Pearl and Dean has no leg to stand on.
xxx xxx xxx
WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE, and
another is rendered DISMISSING the complaint and counterclaims in the above-entitled case
for lack of merit.5
Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the
following errors for the Court’s consideration:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHT
INFRINGEMENT WAS COMMITTED BY RESPONDENTS SM AND NEMI;
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO INFRINGEMENT OF
PEARL & DEAN’S TRADEMARK "POSTER ADS" WAS COMMITTED BY RESPONDENTS SM AND
NEMI;
C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD OF THE TRIAL
COURT, DESPITE THE LATTER’S FINDING, NOT DISPUTED BY THE HONORABLE COURT OF
APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN ITS NEGOTIATION OF ADVERTISING
CONTRACTS WITH PEARL & DEAN.
D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENTS SM AND
NEMI LIABLE TO PEARL & DEAN FOR ACTUAL, MORAL & EXEMPLARY DAMAGES,
ATTORNEY’S FEES AND COSTS OF SUIT.6
ISSUES
In resolving this very interesting case, we are challenged once again to put into proper
perspective four main concerns of intellectual property law — patents, copyrights, trademarks
and unfair competition arising from infringement of any of the first three. We shall focus then
on the following issues:
(1) if the engineering or technical drawings of an advertising display unit (light box) are
granted copyright protection (copyright certificate of registration) by the National Library, is
the light box depicted in such engineering drawings ipso facto also protected by such
copyright?
(2) or should the light box be registered separately and protected by a patent issued by the
Bureau of Patents Trademarks and Technology Transfer (now Intellectual Property Office) —
in addition to the copyright of the engineering drawings?
(3) can the owner of a registered trademark legally prevent others from using such trademark
if it is a mere abbreviation of a term descriptive of his goods, services or business?
ON THE ISSUE OF COPYRIGHT INFRINGEMENT
Petitioner P & D’s complaint was that SMI infringed on its copyright over the light boxes when
SMI had the units manufactured by Metro and EYD Rainbow Advertising for its own account.
Obviously, petitioner’s position was premised on its belief that its copyright over the
engineering drawings extended ipso facto to the light boxes depicted or illustrated in said
drawings. In ruling that there was no copyright infringement, the Court of Appeals held that the
copyright was limited to the drawings alone and not to the light box itself. We agree with the
appellate court.
First, petitioner’s application for a copyright certificate — as well as Copyright Certificate No.
PD-R2588 issued by the National Library on January 20, 1981 — clearly stated that it was for a
class "O" work under Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the
statute then prevailing. Said Section 2 expressly enumerated the works subject to copyright:
SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with
respect to any of the following works:
xxxxxxxxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
xxxxxxxxx
Although petitioner’s copyright certificate was entitled "Advertising Display Units" (which
depicted the box-type electrical devices), its claim of copyright infringement cannot be
sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory
grant, the rights are limited to what the statute confers. It may be obtained and enjoyed only
with respect to the subjects and by the persons, and on terms and conditions specified in the
statute.7 Accordingly, it can cover only the works falling within the statutory enumeration or
description.8
P & D secured its copyright under the classification class "O" work. This being so, petitioner’s
copyright protection extended only to the technical drawings and not to the light box itself
because the latter was not at all in the category of "prints, pictorial illustrations, advertising
copies, labels, tags and box wraps." Stated otherwise, even as we find that P & D indeed owned
a valid copyright, the same could have referred only to the technical drawings within the
category of "pictorial illustrations." It could not have possibly stretched out to include the
underlying light box. The strict application 9of the law’s enumeration in Section 2 prevents us
from giving petitioner even a little leeway, that is, even if its copyright certificate was entitled
"Advertising Display Units." What the law does not include, it excludes, and for the good
reason: the light box was not a literary or artistic piece which could be copyrighted under the
copyright law. And no less clearly, neither could the lack of statutory authority to make the
light box copyrightable be remedied by the simplistic act of entitling the copyright certificate
issued by the National Library as "Advertising Display Units."
In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to the public without
license from P & D, then no doubt they would have been guilty of copyright infringement. But
this was not the case. SMI’s and NEMI’s acts complained of by P & D were to have units similar
or identical to the light box illustrated in the technical drawings manufactured by Metro and
EYD Rainbow Advertising, for leasing out to different advertisers. Was this an infringement of
petitioner’s copyright over the technical drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was neither a literary
not an artistic work but an "engineering or marketing invention." 10 Obviously, there appeared
to be some confusion regarding what ought or ought not to be the proper subjects of
copyrights, patents and trademarks. In the leading case of Kho vs. Court of Appeals, 11 we ruled
that these three legal rights are completely distinct and separate from one another, and the
protection afforded by one cannot be used interchangeably to cover items or works that
exclusively pertain to the others:
Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another.A trademark is any visible sign capable of distinguishing the
goods (trademark) or services (service mark) of an enterprise and shall include a stamped or
marked container of goods. In relation thereto, a trade name means the name or designation
identifying or distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to
literary and artistic works which are original intellectual creations in the literary and artistic
domain protected from the moment of their creation. Patentable inventions, on the other hand,
refer to any technical solution of a problem in any field of human activity which is new, involves
an inventive step and is industrially applicable.
ON THE ISSUE OF PATENT INFRINGEMENT
This brings us to the next point: if, despite its manufacture and commercial use of the light
boxes without license from petitioner, private respondents cannot be held legally liable for
infringement of P & D’s copyright over its technical drawings of the said light boxes, should they
be liable instead for infringement of patent? We do not think so either.
For some reason or another, petitioner never secured a patent for the light boxes. It therefore
acquired no patent rights which could have protected its invention, if in fact it really was. And
because it had no patent, petitioner could not legally prevent anyone from manufacturing or
commercially using the contraption. In Creser Precision Systems, Inc. vs. Court of Appeals, 12 we
held that "there can be no infringement of a patent until a patent has been issued, since
whatever right one has to the invention covered by the patent arises alone from the grant of
patent. x x x (A)n inventor has no common law right to a monopoly of his invention. He has the
right to make use of and vend his invention, but if he voluntarily discloses it, such as by offering
it for sale, the world is free to copy and use it with impunity. A patent, however, gives the
inventor the right to exclude all others. As a patentee, he has the exclusive right of making,
selling or using the invention.13 On the assumption that petitioner’s advertising units were
patentable inventions, petitioner revealed them fully to the public by submitting the
engineering drawings thereof to the National Library.
To be able to effectively and legally preclude others from copying and profiting from the
invention, a patent is a primordial requirement. No patent, no protection. The ultimate goal of a
patent system is to bring new designs and technologies into the public domain through
disclosure.14 Ideas, once disclosed to the public without the protection of a valid patent, are
subject to appropriation without significant restraint. 15
On one side of the coin is the public which will benefit from new ideas; on the other are the
inventors who must be protected. As held in Bauer & Cie vs. O’Donnel,16 "The act secured to the
inventor the exclusive right to make use, and vend the thing patented, and consequently to
prevent others from exercising like privileges without the consent of the patentee. It was
passed for the purpose of encouraging useful invention and promoting new and useful
inventions by the protection and stimulation given to inventive genius, and was intended to
secure to the public, after the lapse of the exclusive privileges granted the benefit of such
inventions and improvements."
The law attempts to strike an ideal balance between the two interests:
"(The p)atent system thus embodies a carefully crafted bargain for encouraging the creation
and disclosure of new useful and non-obvious advances in technology and design, in return for
the exclusive right to practice the invention for a number of years. The inventor may keep his
invention secret and reap its fruits indefinitely. In consideration of its disclosure and the
consequent benefit to the community, the patent is granted. An exclusive enjoyment is
guaranteed him for 17 years, but upon the expiration of that period, the knowledge of the
invention inures to the people, who are thus enabled to practice it and profit by its use." 17
The patent law has a three-fold purpose: "first, patent law seeks to foster and reward
invention; second, it promotes disclosures of inventions to stimulate further innovation and to
permit the public to practice the invention once the patent expires; third, the stringent
requirements for patent protection seek to ensure that ideas in the public domain remain there
for the free use of the public."18
It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-
depth investigation is required because "in rewarding a useful invention, the rights and welfare
of the community must be fairly dealt with and effectively guarded. To that end, the
prerequisites to obtaining a patent are strictly observed and when a patent is issued, the
limitations on its exercise are equally strictly enforced. To begin with, a genuine invention or
discovery must be demonstrated lest in the constant demand for new appliances, the heavy
hand of tribute be laid on each slight technological advance in art." 19 There is no such scrutiny
in the case of copyrights nor any notice published before its grant to the effect that a person is
claiming the creation of a work. The law confers the copyright from the moment of creation 20
and the copyright certificate is issued upon registration with the National Library of a sworn
ex-parte claim of creation.
Therefore, not having gone through the arduous examination for patents, the petitioner cannot
exclude others from the manufacture, sale or commercial use of the light boxes on the sole
basis of its copyright certificate over the technical drawings.
Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent
office (IPO) to scrutinize the light box’s eligibility as a patentable invention. The irony here is
that, had petitioner secured a patent instead, its exclusivity would have been for 17 years only.
But through the simplified procedure of copyright-registration with the National Library —
without undergoing the rigor of defending the patentability of its invention before the IPO and
the public — the petitioner would be protected for 50 years. This situation could not have been
the intention of the law.
In the oft-cited case of Baker vs. Selden 21, the United States Supreme Court held that only the
expression of an idea is protected by copyright, not the idea itself. In that case, the plaintiff held
the copyright of a book which expounded on a new accounting system he had developed. The
publication illustrated blank forms of ledgers utilized in such a system. The defendant
reproduced forms similar to those illustrated in the plaintiff’s copyrighted book. The US
Supreme Court ruled that:
"There is no doubt that a work on the subject of book-keeping, though only explanatory of well-
known systems, may be the subject of a copyright; but, then, it is claimed only as a book. x x x.
But there is a clear distinction between the books, as such, and the art, which it is, intended to
illustrate. The mere statement of the proposition is so evident that it requires hardly any
argument to support it. The same distinction may be predicated of every other art as well as
that of bookkeeping. A treatise on the composition and use of medicines, be they old or new; on
the construction and use of ploughs or watches or churns; or on the mixture and application of
colors for painting or dyeing; or on the mode of drawing lines to produce the effect of
perspective, would be the subject of copyright; but no one would contend that the copyright of
the treatise would give the exclusive right to the art or manufacture described therein. The
copyright of the book, if not pirated from other works, would be valid without regard to the
novelty or want of novelty of its subject matter. The novelty of the art or thing described or
explained has nothing to do with the validity of the copyright. To give to the author of the
book an exclusive property in the art described therein, when no examination of its
novelty has ever been officially made, would be a surprise and a fraud upon the public.
That is the province of letters patent, not of copyright. The claim to an invention of
discovery of an art or manufacture must be subjected to the examination of the Patent
Office before an exclusive right therein can be obtained; and a patent from the
government can only secure it.
The difference between the two things, letters patent and copyright, may be illustrated by
reference to the subjects just enumerated. Take the case of medicines. Certain mixtures are
found to be of great value in the healing art. If the discoverer writes and publishes a book
on the subject (as regular physicians generally do), he gains no exclusive right to the
manufacture and sale of the medicine; he gives that to the public. If he desires to acquire
such exclusive right, he must obtain a patent for the mixture as a new art, manufacture
or composition of matter. He may copyright his book, if he pleases; but that only secures
to him the exclusive right of printing and publishing his book. So of all other inventions
or discoveries.
The copyright of a book on perspective, no matter how many drawings and illustrations it may
contain, gives no exclusive right to the modes of drawing described, though they may never
have been known or used before. By publishing the book without getting a patent for the art,
the latter is given to the public.
xxx
Now, whilst no one has a right to print or publish his book, or any material part thereof, as a
book intended to convey instruction in the art, any person may practice and use the art itself
which he has described and illustrated therein. The use of the art is a totally different thing
from a publication of the book explaining it. The copyright of a book on bookkeeping cannot
secure the exclusive right to make, sell and use account books prepared upon the plan set forth
in such book. Whether the art might or might not have been patented, is a question, which is
not before us. It was not patented, and is open and free to the use of the public. And, of course,
in using the art, the ruled lines and headings of accounts must necessarily be used as incident
to it.
The plausibility of the claim put forward by the complainant in this case arises from a
confusion of ideas produced by the peculiar nature of the art described in the books, which
have been made the subject of copyright. In describing the art, the illustrations and diagrams
employed happened to correspond more closely than usual with the actual work performed by
the operator who uses the art. x x x The description of the art in a book, though entitled to
the benefit of copyright, lays no foundation for an exclusive claim to the art itself. The
object of the one is explanation; the object of the other is use. The former may be
secured by copyright. The latter can only be secured, if it can be secured at all, by letters
patent." (underscoring supplied)
ON THE ISSUE OF TRADEMARK INFRINGEMENT
This issue concerns the use by respondents of the mark "Poster Ads" which petitioner’s
president said was a contraction of "poster advertising." P & D was able to secure a trademark
certificate for it, but one where the goods specified were "stationeries such as letterheads,
envelopes, calling cards and newsletters." 22 Petitioner admitted it did not commercially engage
in or market these goods. On the contrary, it dealt in electrically operated backlit advertising
units and the sale of advertising spaces thereon, which, however, were not at all specified in the
trademark certificate.
Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate
Appellate Court,23where we, invoking Section 20 of the old Trademark Law, ruled that "the
certificate of registration issued by the Director of Patents can confer (upon petitioner) the
exclusive right to use its own symbol only to those goods specified in the certificate, subject to
any conditions and limitations specified in the certificate x x x. One who has adopted and used a
trademark on his goods does not prevent the adoption and use of the same trademark by others
for products which are of a different description."24 Faberge, Inc. was correct and was in fact
recently reiterated inCanon Kabushiki Kaisha vs. Court of Appeals.25
Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P & D
to secure a trademark registration for specific use on the light boxes meant that there could not
have been any trademark infringement since registration was an essential element
thereof.1âwphi1
ON THE ISSUE OF UNFAIR COMPETITION
If at all, the cause of action should have been for unfair competition, a situation which was
possible even if P & D had no registration.26 However, while the petitioner’s complaint in the
RTC also cited unfair competition, the trial court did not find private respondents liable
therefor. Petitioner did not appeal this particular point; hence, it cannot now revive its claim of
unfair competition.
But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of
unfair competition.
By the nature of things, there can be no unfair competition under the law on copyrights
although it is applicable to disputes over the use of trademarks. Even a name or phrase
incapable of appropriation as a trademark or tradename may, by long and exclusive use by a
business (such that the name or phrase becomes associated with the business or product in the
mind of the purchasing public), be entitled to protection against unfair competition. 27 In this
case, there was no evidence that P & D’s use of "Poster Ads" was distinctive or well-known. As
noted by the Court of Appeals, petitioner’s expert witnesses himself had testified that " ‘Poster
Ads’ was too generic a name. So it was difficult to identify it with any company, honestly
speaking."28 This crucial admission by its own expert witness that "Poster Ads" could not be
associated with P & D showed that, in the mind of the public, the goods and services carrying
the trademark "Poster Ads" could not be distinguished from the goods and services of other
entities.
This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was
generic and incapable of being used as a trademark because it was used in the field of poster
advertising, the very business engaged in by petitioner. "Secondary meaning" means that a
word or phrase originally incapable of exclusive appropriation with reference to an article in
the market (because it is geographically or otherwise descriptive) might nevertheless have
been used for so long and so exclusively by one producer with reference to his article that, in
the trade and to that branch of the purchasing public, the word or phrase has come to mean
that the article was his property. 29 The admission by petitioner’s own expert witness that he
himself could not associate "Poster Ads" with petitioner P & D because it was "too generic"
definitely precluded the application of this exception.
Having discussed the most important and critical issues, we see no need to belabor the rest. All
told, the Court finds no reversible error committed by the Court of Appeals when it reversed
the Regional Trial Court of Makati City.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated
May 22, 2001 is AFFIRMED in toto.
SO ORDERED.

Footnotes
1 Penned by Associate Justice Salvador J. Valdez, Jr. and concurred in by Associate Justices Wenceslao L. Agnir and Juan Q.
Enriquez Jr.
2 Penned by Judge Napoleon E. Inoturan.
3 Seventeenth Division; CA G.R. 55303.
4 Records, pp. 620-621.
5 Rollo, pp. 17-19, 21-22, 23-24, 26.
6 Rollo, p. 34.
7 18 C.J.S. 161.
8 Joaquin vs. Drilon, 302 SCRA 225 [1999].
9 Ibid.
10 Pp. 11-13, TSN, February 3, 1993.
11 G.R. No. 115758, March 19, 2002.
12 286 SCRA 13 [1998].
13 Id., at p. 21, citing Anchor Hocking Glass Corp. vs. White Cap Co., 47 F. Supp. A 451, and Bauer & Cie vs. O’Donnel, 229
US 1.
14 Bonito Boats, Inc. vs. Thunder Craft Boats, Inc., 489 US 141 [1989].
15 Id., at p. 156.
16 Ibid., at p. 10.
17 Bonito Boats, Inc. vs. Thunder Craft Boats, Inc., ibid., p. 150, citing U.S. vs. Dubilier Condenser Corp., 289 U.S. 178.
18 Aronson vs. Quick Point Pencil Co., 440 U.S. 257, 262 [1979], citing Kewanee Oil Co. vs. Bicron Corp., 416 U.S. 470
[1994], cited Amador, patents, p. 496.
19 Sears Roebuck vs. Stiffel, 376 US 225, 229 [1964].
20 Section 2, PD 49 (The Intellectual Property Decree).
21 101 US 102-105 [1879].
22 Exhibit "B," Original Records, p. 63.
23 215 SCRA 316 [1992].
24 Id., at p. 326.
25 336 SCRA 266 [2000].
26 Ogura vs. Chua, 59 Phil. 471.
27 Sapalo, The Law on Trademark Infringement and Unfair Competition, 2000 ed., p. 185.
28 Decision, p. 16, citing TSN, December 3, 1992, pp. 19-20.
29 Sapalo, at p. 92.

G.R. No. 115758 March 19, 2002

ELIDAD C. KHO, doing business under the name and style of KEC COSMETICS LABORATORY,
petitioner, vs. HON. COURT OF APPEALS, SUMMERVILLE GENERAL MERCHANDISING and
COMPANY, andANG TIAM CHAY, respondents.
DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision1 dated May 24, 1993 of the Court
of Appeals setting aside and declaring as null and void the Orders 2 dated February 10, 1992
and March 19, 1992 of the Regional Trial Court, Branch 90, of Quezon City granting the
issuance of a writ of preliminary injunction.

The facts of the case are as follows:

On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction and damages
with a prayer for the issuance of a writ of preliminary injunction, docketed as Civil Case No. Q-
91-10926, against the respondents Summerville General Merchandising and Company
(Summerville, for brevity) and Ang Tiam Chay.
The petitioner's complaint alleges that petitioner, doing business under the name and style of
KEC Cosmetics Laboratory, is the registered owner of the copyrights Chin Chun Su and Oval
Facial Cream Container/Case, as shown by Certificates of Copyright Registration No. 0-1358
and No. 0-3678; that she also has patent rights on Chin Chun Su & Device and Chin Chun Su for
medicated cream after purchasing the same from Quintin Cheng, the registered owner thereof
in the Supplemental Register of the Philippine Patent Office on February 7, 1980 under
Registration Certificate No. 4529; that respondent Summerville advertised and sold petitioner's
cream products under the brand name Chin Chun Su, in similar containers that petitioner uses,
thereby misleading the public, and resulting in the decline in the petitioner's business sales and
income; and, that the respondents should be enjoined from allegedly infringing on the
copyrights and patents of the petitioner.
The respondents, on the other hand, alleged as their defense that Summerville is the exclusive
and authorized importer, re-packer and distributor of Chin Chun Su products manufactured by
Shun Yi Factory of Taiwan; that the said Taiwanese manufacturing company authorized
Summerville to register its trade name Chin Chun Su Medicated Creamwith the Philippine
Patent Office and other appropriate governmental agencies; that KEC Cosmetics Laboratory of
the petitioner obtained the copyrights through misrepresentation and falsification; and, that
the authority of Quintin Cheng, assignee of the patent registration certificate, to distribute and
market Chin Chun Su products in the Philippines had already been terminated by the said
Taiwanese Manufacturing Company.
After due hearing on the application for preliminary injunction, the trial court granted the same
in an Order dated February 10, 1992, the dispositive portion of which reads:
ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under the style of KEC
Cosmetic Laboratory, for preliminary injunction, is hereby granted. Consequentially, plaintiff is
required to file with the Court a bond executed to defendants in the amount of five hundred
thousand pesos (P500,000.00) to the effect that plaintiff will pay to defendants all damages
which defendants may sustain by reason of the injunction if the Court should finally decide that
plaintiff is not entitled thereto.
SO ORDERED.3
The respondents moved for reconsideration but their motion for reconsideration was denied
by the trial court in an Order dated March 19, 1992. 4
On April 24, 1992, the respondents filed a petition for certiorari with the Court of Appeals,
docketed as CA-G.R. SP No. 27803, praying for the nullification of the said writ of preliminary
injunction issued by the trial court. After the respondents filed their reply and almost a month
after petitioner submitted her comment, or on August 14 1992, the latter moved to dismiss the
petition for violation of Supreme Court Circular No. 28-91, a circular prohibiting forum
shopping. According to the petitioner, the respondents did not state the docket number of the
civil case in the caption of their petition and, more significantly, they did not include therein a
certificate of non-forum shopping. The respondents opposed the petition and submitted to the
appellate court a certificate of non-forum shopping for their petition.
On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No. 27803 ruling in
favor of the respondents, the dispositive portion of which reads:
WHEREFORE, the petition is hereby given due course and the orders of respondent court dated
February 10, 1992 and March 19, 1992 granting the writ of preliminary injunction and denying
petitioners' motion for reconsideration are hereby set aside and declared null and void.
Respondent court is directed to forthwith proceed with the trial of Civil Case No. Q-91-10926
and resolve the issue raised by the parties on the merits.
SO ORDERED.5
In granting the petition, the appellate court ruled that:
The registration of the trademark or brandname "Chin Chun Su" by KEC with the supplemental
register of the Bureau of Patents, Trademarks and Technology Transfer cannot be equated with
registration in the principal register, which is duly protected by the Trademark Law.

xxx xxx xxx

As ratiocinated in La Chemise Lacoste, S.S. vs. Fernandez, 129 SCRA 373, 393:
"Registration in the Supplemental Register, therefore, serves as notice that the registrant is
using or has appropriated the trademark. By the very fact that the trademark cannot as yet be
on guard and there are certain defects, some obstacles which the use must still overcome
before he can claim legal ownership of the mark or ask the courts to vindicate his claims of an
exclusive right to the use of the same. It would be deceptive for a party with nothing more than
a registration in the Supplemental Register to posture before courts of justice as if the
registration is in the Principal Register.
The reliance of the private respondent on the last sentence of the Patent office action on
application Serial No. 30954 that 'registrants is presumed to be the owner of the mark until
after the registration is declared cancelled' is, therefore, misplaced and grounded on shaky
foundation. The supposed presumption not only runs counter to the precept embodied in Rule
124 of the Revised Rules of Practice before the Philippine Patent Office in Trademark Cases but
considering all the facts ventilated before us in the four interrelated petitions involving the
petitioner and the respondent, it is devoid of factual basis. As even in cases where presumption
and precept may factually be reconciled, we have held that the presumption is rebuttable, not
conclusive, (People v. Lim Hoa, G.R. No. L-10612, May 30, 1958, Unreported). One may be
declared an unfair competitor even if his competing trademark is registered (Parke, Davis & Co.
v. Kiu Foo & Co., et al., 60 Phil 928; La Yebana Co. v. chua Seco & Co., 14 Phil 534)." 6
The petitioner filed a motion for reconsideration. This she followed with several motions to
declare respondents in contempt of court for publishing advertisements notifying the public of
the promulgation of the assailed decision of the appellate court and stating that genuine Chin
Chun Su products could be obtained only from Summerville General Merchandising and Co.
In the meantime, the trial court went on to hear petitioner's complaint for final injunction and
damages. On October 22, 1993, the trial court rendered a Decision 7 barring the petitioner from
using the trademark Chin Chun Su and upholding the right of the respondents to use the same,
but recognizing the copyright of the petitioner over the oval shaped container of her beauty
cream. The trial court did not award damages and costs to any of the parties but to their
respective counsels were awarded Seventy-Five Thousand Pesos (P75,000.00) each as
attorney's fees. The petitioner duly appealed the said decision to the Court of Appeals.
On June 3, 1994, the Court of Appeals promulgated a Resolution 8 denying the petitioner's
motions for reconsideration and for contempt of court in CA-G.R. SP No. 27803.
Hence, this petition anchored on the following assignment of errors:
I
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE ON PETITIONER'S MOTION TO
DISMISS.
II
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN REFUSING TO PROMPTLY RESOLVE
PETITIONER'S MOTION FOR RECONSIDERATION.
III
IN DELAYING THE RESOLUTION OF PETITIONER'S MOTION FOR RECONSIDERATION, THE
HONORABLE COURT OF APPEALS DENIED PETITIONER'S RIGHT TO SEEK TIMELY
APPELLATE RELIEF AND VIOLATED PETITIONER'S RIGHT TO DUE PROCESS.
IV
RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN FAILING TO CITE THE PRIVATE RESPONDENTS IN
CONTEMPT.9
The petitioner faults the appellate court for not dismissing the petition on the ground of
violation of Supreme Court Circular No. 28-91. Also, the petitioner contends that the appellate
court violated Section 6, Rule 9 of the Revised Internal Rules of the Court of Appeals when it
failed to rule on her motion for reconsideration within ninety (90) days from the time it is
submitted for resolution. The appellate court ruled only after the lapse of three hundred fifty-
four (354) days, or on June 3, 1994. In delaying the resolution thereof, the appellate court
denied the petitioner's right to seek the timely appellate relief. Finally, petitioner describes as
arbitrary the denial of her motions for contempt of court against the respondents.
We rule in favor of the respondents.
Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, one of the grounds for
the issuance of a writ of preliminary injunction is a proof that the applicant is entitled to the
relief demanded, and the whole or part of such relief consists in restraining the commission or
continuance of the act or acts complained of, either for a limited period or perpetually. Thus, a
preliminary injunction order may be granted only when the application for the issuance of the
same shows facts entitling the applicant to the relief demanded. 10 This is the reason why we
have ruled that it must be shown that the invasion of the right sought to be protected is
material and substantial, that the right of complainant is clear and unmistakable, and, that
there is an urgent and paramount necessity for the writ to prevent serious damage. 11
In the case at bar, the petitioner applied for the issuance of a preliminary injunctive order on
the ground that she is entitled to the use of the trademark on Chin Chun Su and its container
based on her copyright and patent over the same. We first find it appropriate to rule on
whether the copyright and patent over the name and container of a beauty cream product
would entitle the registrant to the use and ownership over the same to the exclusion of others.
Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is any visible sign capable of distinguishing the
goods (trademark) or services (service mark) of an enterprise and shall include a stamped or
marked container of goods.12 In relation thereto, a trade name means the name or designation
identifying or distinguishing an enterprise. 13 Meanwhile, the scope of a copyright is confined to
literary and artistic works which are original intellectual creations in the literary and artistic
domain protected from the moment of their creation. 14 Patentable inventions, on the other
hand, refer to any technical solution of a problem in any field of human activity which is new,
involves an inventive step and is industrially applicable. 15
Petitioner has no right to support her claim for the exclusive use of the subject trade name and
its container. The name and container of a beauty cream product are proper subjects of a
trademark inasmuch as the same falls squarely within its definition. In order to be entitled to
exclusively use the same in the sale of the beauty cream product, the user must sufficiently
prove that she registered or used it before anybody else did. The petitioner's copyright and
patent registration of the name and container would not guarantee her the right to the
exclusive use of the same for the reason that they are not appropriate subjects of the said
intellectual rights. Consequently, a preliminary injunction order cannot be issued for the
reason that the petitioner has not proven that she has a clear right over the said name and
container to the exclusion of others, not having proven that she has registered a trademark
thereto or used the same before anyone did.
We cannot likewise overlook the decision of the trial court in the case for final injunction and
damages. The dispositive portion of said decision held that the petitioner does not have
trademark rights on the name and container of the beauty cream product. The said decision on
the merits of the trial court rendered the issuance of the writ of a preliminary injunction moot
and academic notwithstanding the fact that the same has been appealed in the Court of
Appeals. This is supported by our ruling in La Vista Association, Inc. v. Court of Appeals 16, to
wit:
Considering that preliminary injunction is a provisional remedy which may be granted at any
time after the commencement of the action and before judgment when it is established that the
plaintiff is entitled to the relief demanded and only when his complaint shows facts entitling such
reliefs xxx and it appearing that the trial court had already granted the issuance of a final
injunction in favor of petitioner in its decision rendered after trial on the merits xxx the Court
resolved to Dismiss the instant petition having been rendered moot and academic. An injunction
issued by the trial court after it has already made a clear pronouncement as to the plaintiff's right
thereto, that is, after the same issue has been decided on the merits, the trial court having
appreciated the evidence presented, is proper, notwithstanding the fact that the decision
rendered is not yet final xxx. Being an ancillary remedy, the proceedings for preliminary
injunction cannot stand separately or proceed independently of the decision rendered on the
merit of the main case for injunction. The merit of the main case having been already
determined in favor of the applicant, the preliminary determination of its non-existence ceases
to have any force and effect. (italics supplied)
La Vista categorically pronounced that the issuance of a final injunction renders any question
on the preliminary injunctive order moot and academic despite the fact that the decision
granting a final injunction is pending appeal. Conversely, a decision denying the applicant-
plaintiff's right to a final injunction, although appealed, renders moot and academic any
objection to the prior dissolution of a writ of preliminary injunction.
The petitioner argues that the appellate court erred in not dismissing the petition for certiorari
for non-compliance with the rule on forum shopping. We disagree. First, the petitioner
improperly raised the technical objection of non-compliance with Supreme Court Circular No.
28-91 by filing a motion to dismiss the petition for certiorari filed in the appellate court. This is
prohibited by Section 6, Rule 66 of the Revised Rules of Civil Procedure which provides that
"(I)n petitions for certiorari before the Supreme Court and the Court of Appeals, the provisions
of Section 2, Rule 56, shall be observed. Before giving due course thereto, the court may require
the respondents to file their comment to, and not a motion to dismiss, the petition xxx (italics
supplied)". Secondly, the issue was raised one month after petitioner had filed her
answer/comment and after private respondent had replied thereto. Under Section 1, Rule 16 of
the Revised Rules of Civil Procedure, a motion to dismiss shall be filed within the time for but
before filing the answer to the complaint or pleading asserting a claim. She therefore could no
longer submit a motion to dismiss nor raise defenses and objections not included in the
answer/comment she had earlier tendered. Thirdly, substantial justice and equity require this
Court not to revive a dissolved writ of injunction in favor of a party without any legal right
thereto merely on a technical infirmity. The granting of an injunctive writ based on a technical
ground rather than compliance with the requisites for the issuance of the same is contrary to
the primary objective of legal procedure which is to serve as a means to dispense justice to the
deserving party.
The petitioner likewise contends that the appellate court unduly delayed the resolution of her
motion for reconsideration. But we find that petitioner contributed to this delay when she filed
successive contentious motions in the same proceeding, the last of which was on October 27,
1993, necessitating counter-manifestations from private respondents with the last one being
filed on November 9, 1993. Nonetheless, it is well-settled that non-observance of the period for
deciding cases or their incidents does not render such judgments ineffective or void. 17 With
respect to the purported damages she suffered due to the alleged delay in resolving her motion
for reconsideration, we find that the said issue has likewise been rendered moot and academic
by our ruling that she has no right over the trademark and, consequently, to the issuance of a
writ of preliminary injunction.1âwphi1.nêt
Finally, we rule that the Court of Appeals correctly denied the petitioner's several motions for
contempt of court. There is nothing contemptuous about the advertisements complained of
which, as regards the proceedings in CA-G.R. SP No. 27803 merely announced in plain and
straightforward language the promulgation of the assailed Decision of the appellate court.
Moreover, pursuant to Section 4 of Rule 39 of the Revised Rules of Civil Procedure, the said
decision nullifying the injunctive writ was immediately executory.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals
dated May 24, 1993 and June 3, 1994, respectively, are hereby AFFIRMED. With costs against
the petitioner. SO ORDERED.

Footnote
1 Penned by Associate Justice Ricardo P. Galvez, and concurred in by Associate Justices Manuel M. Herrera
and Asaali S. Isnani, Ninth Division; Rollo, pp. 36-40.
2 Penned by Judge Abraham P. Vera; CA Rollo, pp. 12-18.
3 CA Rollo, pp. 12-17.
4 CA Rollo, p. 18.
5 Rollo, p. 39.
6 Rollo, pp. 38-39.
7 Rollo, pp. 19, 241.
8 Rollo, pp. 42-43.
9 Rollo, p. 21.
10 Section 4, Rule 58, Revised Rules of Civil Procedure.
11 Sy v. Court of Appeals, 313 SCRA 328 (1999).
12 Section 121.1, Republic Act No. 8293.
13 Section 121.3, Republic Act. No. 8293.
14 Section 172, Republic Act No. 8293.
15 Section 21, Republic Act No. 8293.
16 278 SCRA 498, 506 quoting Solid Homes, Inc. v. LA Vista, G.R. No. 71150 dated April 20, 1988
(unpublished).
17 De Roma v. Court of Appeals, 152 SCRA 205, 209 (1987).

VICTORIO P. DIAZ, Petitioner, 
vs.
 PEOPLE OF THE PHILIPPINES AND LEVI STRAUSS [PHILS.], INC., Respondents.
G.R. No. 180677, February 18, 2013
It is the tendency of the allegedly infringing mark to be confused with the registered trademark
that is the gravamen of the offense of infringement of a registered trademark. The acquittal of
the accused should follow if the allegedly infringing mark is not likely to cause confusion.
Thereby, the evidence of the State does not satisfy the quantum of proof beyond reasonable
doubt.

Accused Victorio P. Diaz (Diaz) appeals the resolutions promulgated on July 17, 2007 1 and
November 22, 2007,2 whereby the Court of Appeals (CA), respectively, dismissed his appeal in
C.A.-G.R. CR No. 30133 for the belated filing of the appellant’s brief, and denied his motion for
reconsideration. Thereby, the decision rendered on February 13, 2006  in Criminal Case No. 00-
0318 and Criminal Case No. 00-0319 by the Regional Trial Court, Branch 255, in Las Piñ as City
(RTC) convicting him for two counts of infringement of trademark were affirmed. 3

Antecedents

On February 10, 2000, the Department of Justice filed two informations in the RTC of Las Piñ as
City, charging Diaz with violation of Section 155, in relation to Section 170, of Republic Act No.
8293, also known as the Intellectual Property Code of the Philippines (Intellectual Property
Code), to wit:
Criminal Case No. 00-0318

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

CONTRARY TO LAW.4

Criminal Case No. 00-0319

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

CONTRARY TO LAW.5

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

1.
Evidence of the Prosecution

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

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

2.
Evidence of the Defense

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

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

Ruling of the RTC

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

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

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

1. P50,000.00 in exemplary damages; and

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

Costs de officio. SO ORDERED.10

Ruling of the CA

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

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

Issue

Diaz submits that:

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

Ruling

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

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

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

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

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

Yet, we have before us an appeal in two criminal cases in which the appellant lost his chance to
be heard by the CA on appeal because of the failure of his counsel to serve and file the
appellant’s brief on time despite the grant of several extensions the counsel requested. Diaz
was convicted and sentenced to suffer two indeterminate sentences that would require him to
spend time in detention for each conviction lasting two years, as minimum, to five years, as
maximum, and to pay fines totaling P100,000.00 (with subsidiary imprisonment in case of his
insolvency). His personal liberty is now no less at stake. This reality impels us to look beyond
the technicality and delve into the merits of the case to see for ourselves if the appeal, had it not
been dismissed, would have been worth the time of the CA to pass upon. After all, his
appellant’s brief had been meanwhile submitted to the CA. While delving into the merits of the
case, we have uncovered a weakness in the evidence of guilt that cannot be simply ignored and
glossed over if we were to be true to our oaths to do justice to everyone.
We feel that despite the CA being probably right in dismissing the excuses of oversight and
excusable negligence tendered by Diaz’s counsel to justify the belated filing of the appellant’s
brief as unworthy of serious consideration, Diaz should not be made to suffer the dire
consequence. Any accused in his shoes, with his personal liberty as well as his personal fortune
at stake, expectedly but innocently put his fullest trust in his counsel’s abilities and
professionalism in the handling of his appeal. He thereby delivered his fate to the hands of his
counsel. Whether or not those hands were efficient or trained enough for the job of handling
the appeal was a learning that he would get only in the end. Likelier than not, he was probably
even unaware of the three times that his counsel had requested the CA for extensions. If he
were now to be left to his unwanted fate, he would surely suffer despite his innocence. How
costly a learning it would be for him! That is where the Court comes in. It is most important for
us as dispensers of justice not to allow the inadvertence or incompetence of any counsel to
result in the outright deprivation of an appellant’s right to life, liberty or property. 13

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

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

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

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

155.1.  Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a

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

155.2.  Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant

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

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

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

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

infringer;

3. The infringing mark is used in connection with the sale, offering for sale, or advertising
of any goods, business or services; or the infringing mark is applied to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be used upon or
in connection with such goods, business or services;
 4. The use or application of the infringing mark is likely to cause confusion or mistake or
to deceive purchasers or others as to the goods or services themselves or as to the
source or origin of such goods or services or the identity of such business; and

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

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

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

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

As to what test should be applied in a trademark infringement case, we said in McDonald’s

Corporation v. Macjoy Fastfood Corporation 17 that:

In trademark cases, particularly in ascertaining whether one trademark is confusingly similar

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

The case of Emerald Garment Manufacturing Corporation v. Court of Appeals, 18 which involved
an alleged trademark infringement of jeans products, is worth referring to. There, H.D. Lee Co.,
Inc. (H.D. Lee), a corporation based in the United States of America, claimed that Emerald
Garment’s trademark of “STYLISTIC MR. LEE” that it used on its jeans products was confusingly
similar to the “LEE” trademark that H.D. Lee used on its own jeans products. Applying the
holistic test, the  Court ruled that there was no infringement.

The holistic test is applicable here considering that the herein criminal cases also involved
trademark infringement in relation to jeans products. Accordingly, the jeans trademarks of
Levi’s Philippines and Diaz must be considered as a whole in determining the likelihood of
confusion between them. The maong pants or jeans made and sold by Levi’s Philippines, which
included LEVI’S 501, were very popular in the Philippines. The consuming public knew that the
original LEVI’S 501 jeans were under a foreign brand and quite expensive. Such jeans could be
purchased only in malls or boutiques as ready-to-wear items, and were not available in
tailoring shops like those of Diaz’s as well as not acquired on a “made-to-order” basis. Under
the circumstances, the consuming public could easily discern if the jeans were original or fake
LEVI’S 501, or were manufactured by other brands of jeans. Confusion and deception were
remote, for, as the Court has observed in Emerald Garments:

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

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

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

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

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

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

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

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

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

In terms of classes of customers and channels of trade, the jeans products of the private
complainant and the accused cater to different classes of customers and flow through the
different channels of trade. The customers of the private complainant are mall goers belonging
to class A and B market group – while that of the accused are those who belong to class D and E
market who can only afford Php 300 for a pair of made-to-order pants. 20 
x x x.
Moreover, based on the certificate issued by the Intellectual Property Office, “LS JEANS
TAILORING” was a registered trademark of Diaz. He  had registered his trademark prior to the
filing of the present cases.21 The Intellectual Property Office would certainly not have allowed
the registration had Diaz’s trademark been confusingly similar with the registered trademark
for LEVI’S 501 jeans.

Given the foregoing, it should be plain that there was no likelihood of confusion between the
trademarks involved. Thereby, the evidence of guilt did not satisfy the quantum of proof
required for a criminal conviction, which is proof beyond reasonable doubt. According to
Section 2, Rule 133 of the Rules of Court, proof beyond a reasonable doubt does not mean such
a degree of proof as, excluding possibility of error, produces absolute certainty.  Moral certainty
only is required, or that degree of proof which produces conviction in an unprejudiced mind.
Consequently, Diaz should be acquitted of the charges.

WHEREFORE, the Court ACQUITS petitioner VICTORIO P. DIAZ of the crimes of infringement

of trademark charged in Criminal Case No. 00-0318 and Criminal Case No. 00-0319 for failure
of the State to establish his guilt by proof beyond reasonable doubt. No pronouncement on
costs of suit. SO ORDERED.

Sereno, C.J., Leonardo-De Castro, Villarama, Jr., and Reyes, JJ., concur.

Endnotes:

1
Rollo, pp. 29-32; penned by Associate Justice Ramon M. Bato, Jr., with Associate Justice Andres B. Reyes, Jr.
(now Presiding Justice) and Associate Justice Jose C. Mendoza (now a Member of the Court) concurring.
2
 Id. at 34-36.
3
 Id. at 37-56.
4
 Records, p. 3
5
 Id. at 9.
6
 Id. at 192.
7
 Id. at 26-101.
8
 Id. at 98-148.
9
 TSN, November 11, 2004, pp. 1-30.
10
Rollo, p. 56.
11
  Id. at 10-11.
12
 Section 1(e), Rule 50, Rules of Court, states:
Section 1.  Grounds for dismissal of appeal. – An appeal may be dismissed by the Court of Appeals, on its own
motion or on that of the appellee, on the following grounds:
xxxx
(e) Failure of the appellant to serve and file the required number of copies of his brief or memorandum within
the time provided by these Rules.
xxxx
13
 See, e.g., The Government of the Kingdom of Belgium v. Court of Appeals, G.R. No. 164150, April 14, 2008, 551
SCRA 223, 242.
14
  Societe Des Produits Nestle, S.A. v. Dy, Jr., G.R. No. 172276,  August 9, 2010, 627 SCRA 223, 233-234;
citing Prosource International, Inc. v. Horphag Research Management SA, G.R. No. 180073, November 25, 2009,
605 SCRA 523, 530.
15
 Societe Des Produits Nestle, S.A. v. Dy, Jr., id.
16
 Id. at 235.
17
 G.R. No. 166115, February 2, 2007, 514 SCRA 95, 107.
18
 G.R. No. 100098, December 29, 1995, 251 SCRA 600.
19
 Id. at 616-617.
20
Rollo, pp. 19-20.
21
 Records, p. 696