INTELLECTUAL

PROPERTY CODE
SECS. 137-154
CASES:
■ BIRKENSTOCK VS. PHILIPPINE SHOE EXPO MARKETING CORPORATION
■ DERMALINE VS. MYRA CAMILLE
■ ROMA DRUG and ROMEO RODRIGUEZ, as Proprietor of ROMA DRUG vs.
THE REGIONAL TRIAL COURT OF GUAGUA, PAMPANGA, THE PROVINCIAL
PROSECUTOR OF PAMPANGA, BUREAU OF FOOD & DRUGS (BFAD) and GLAXO
SMITHKLINE, April 16, 2009
■ SHANGRI-LA GROUP VS. CA, HON. FELIX DE GUZMAN, AND DEVELOPERS GROUP,
2001
■ CATERPILLAR, INC. VS. MANOLO SAMSON, NOVEMBER 9, 2016
 Birkenstock Orthopadie GmbH & Co. KG (formerly
Birkenstock Orthopadie Gmbh) v. Philippine Shoe Expo
Marketing Corporation
Application of Sec. 151. Cancellation. -
■ 151.1. A petition to cancel a registration of a mark under this Act may be filed
with the Bureau of Legal Affairs by any person who believes that he is or will be
damaged by the registration of a mark under this Act as follows:
■ (a) Within five (5) years from the date of the registration of the mark under this
Act.
■ (b) At any time, if the registered mark becomes the generic name for the goods or
services, or a portion thereof, for which it is registered, or has been abandoned,
or its registration was obtained fraudulently or contrary to the provisions of this
Act, or if the registered mark is being used by, or with the permission of, the
registrant so as to misrepresent the source of the goods or services on or in
connection with which the mark is used. If the registered mark becomes the
generic name for less than all of the goods or services for which it is registered, a
petition to cancel the registration for only those goods or services may be filed. A
registered mark shall not be deemed to be the generic name of goods or services
solely because such mark is also used as a name of or to identify a unique
product or service. The primary significance of the registered mark to the relevant
public rather than purchaser motivation shall be the test for determining whether
the registered mark has become the generic name of goods or services on or in
connection with which it has been used. (n)
■ (c) At any time, if the registered owner of the mark without legitimate reason fails
to use the mark within the Philippines, or to cause it to be used in the Philippines
by virtue of a license during an uninterrupted period of three (3) years or longer.
Facts of the case:
■ Petitioner, a corporation duly organized and existing under the laws of Germany, applied for
various trademark registrations before the IPO, namely: (a) “BIRKENSTOCK” under Trademark
Application Serial No. (TASN) 4–1994–091508 for goods falling under Class 25 of the
International Classification of Goods and Services (Nice Classification) with filing date of
March 11, 1994; (b) “BIRKENSTOCK BAD HONNEF–RHEIN & DEVICE COMPRISING OF ROUND
COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM” under TASN 4–
1994–091509 for goods falling under Class 25 of the Nice Classification with filing date of
March 11, 1994; and (c) “BIRKENSTOCK BAD HONNEF–RHEIN & DEVICE COMPRISING OF
ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM” under
TASN 4–1994–095043 for goods falling under Class 10 of the Nice Classification with filing
date of September 5, 1994 (subject applications).
■ However, registration proceedings of the subject applications were suspended in view of an
existing registration of the mark “BIRKENSTOCK AND DEVICE” under Registration No. 56334
dated October 21, 1993 (Registration No. 56334) in the name of Shoe Town International and
Industrial Corporation, the predecessor–in–interest of respondent Philippine Shoe Expo
Marketing Corporation.6 In this regard, on May 27, 1997 petitioner filed a petition for
cancellation of Registration No. 56334 on the ground that it is the lawful and rightful owner of
the Birkenstock marks (Cancellation Case).
■ The aforesaid cancellation of Registration No. 56334 paved the way for the publication of the
subject applications in the IPO e–Gazette on February 2, 2007.11 In response, respondent filed
three (3) separate verified notices of oppositions to the subject applications docketed as Inter
Partes Case Nos. 14–2007–00108, 14–2007–00115, and 14–2007–00116,12 claiming, inter
alia, that: (a) it, together with its predecessor–in–interest, has been using Birkenstock marks in the
Philippines for more than 16 years through the mark “BIRKENSTOCK AND DEVICE”; (b) the marks
covered by the subject applications are identical to the one covered by Registration No. 56334 and
thus, petitioner has no right to the registration of such marks;
■ (c) on November 15, 1991, respondent’s predecessor–in–interest likewise obtained a Certificate
of Copyright Registration No. 0–11193 for the word “BIRKENSTOCK”; (d) while respondent and its
predecessor–in–interest failed to file the 10th Year DAU, it continued the use of “BIRKENSTOCK
AND DEVICE” in lawful commerce; and (e) to record its continued ownership and exclusive right to
use the “BIRKENSTOCK” marks, it has filed TASN 4–2006–010273 as a “re–application” of its old
registration, Registration No. 56334.13 On November 13, 2007, the Bureau of Legal Affairs (BLA)
of the IPO issued Order No. 2007–2051 consolidating the aforesaid inter partes cases
(Consolidated Opposition Cases).
■ In its decision dated May 28, 2008 the BLA of the IPO sustained respondent’s oppotition, thus,
ordering the rejection of the subject applications. It ruled that competing marks of the parties are
confusingly similar since they contained the word “BIRKENSTOCK” and are used on the same and
related goods. It found respondent and its predecessor-in-interest as the prior user and adopter of
“BIRKENSTOCK” in the Philippines, while on the other hand, petitioner failed to present evidence
of actual use in the trade and business in this country.
■ It opined that while registration no 56334 was cancelled, it does not follow that prior right over
the mark was lost, as proof of continuous and uninterrupted use in trade and business in the
Philippines was presented. The BLA likewise opined that petitioner’s marks are not well known
in the Philippines and internationally and that the various certificates of registration submitted
by petitioners were all photocopies and therefore, not admissible as evidence.
■ In his decision dated December 22, 2009 the IPO director general reversed and set aside
theruling of the BLA, thus allowing the registration of the subject applications. He held that with
the cancellation of registration no 56334 for respondent’s failure to file the 10th year DAU there
is no more reason to reject the subject applications on the ground of prior registration by
another proprietor. More importantly, he found that the evidence presented proved that
petitioner is the true and lawful owner and prior user of “BIRKENSTOCK” marks thus entitled to
the registration of the marks covered by the subject applications. The IPO director general
further held that respondent’s copyright for the word “BIRKENSTOCK” is of no moment since
copyright and trademark are different forms of intellectual property.
■ In its Decision21 dated June 25, 2010, the CA reversed and set aside the ruling of the IPO
Director General and reinstated that of the BLA. It disallowed the registration of the subject
applications on the ground that the marks covered by such applications “are confusingly
similar, if not outright identical” with respondent’s mark.
■ Dissatisfied, petitioner filed a Motion for Reconsideration25 dated July 20, 2010, which was,
however, denied in a Resolution26 dated October 27, 2010. Hence, this petition.
Issue: Whether or not the subject marks
should be allowed registration in the name of
petitioner
Ruling:
■ YES. Respondent is deemed to have abandoned the mark. In the case, respondent admitted
that it failed to file the 10th year DAU for registration no 56334 within the requisite period, or on
before October 21, 2004. As a consequence, it was deemed to have abandoned or withdrawn
any right or interest over the mark “BIRKENSTOCK”. Neither can it invoke section 235 of the IP
Code which pertains to intellectual property rights obtained under previous intellectual property
laws, eg RA 166, precisely because it already lost any right or interest over the said mark.
■ Petitioner has duly established its true and lawful ownership of the mark. Besides, petitioner
has duly established its true and lawful ownership of the mark “BIRKENSTOCK”.
■ Under Section 238 of RA 166, which is also the law governing the subject applications, in order
to register a trademark, one must be the owner thereof and must have actually used the mark
in commerce in the Philippines for two (2) months prior to the application for registration.
Section 2–A39 of the same law sets out to define how one goes about acquiring ownership
thereof. Under the same section, it is clear that actual use in commerce is also the test of
ownership but the provision went further by saying that the mark must not have been so
appropriated by another. Significantly, to be an owner, Section 2–A does not require that the
actual use of a trademark must be within the Philippines. Thus, under RA 166, one may be an
owner of a mark due to its actual use but may not yet have the right to register such ownership
here due to the owner’s failure to use the same in the Philippines for two (2) months prior to
registration.
■ It must be emphasized that registration of a trademark, by itself, is not a mode of acquiring
ownership. If the applicant is not the owner of the trademark, he has no right to apply for its
registration. Registration merely creates a prima facie presumption of the validity of the registration,
of the registrant’s ownership of the trademark, and of the exclusive right to the use thereof. Such
presumption, just like the presumptive regularity in the performance of official functions, is
rebuttable and must give way to evidence to the contrary.
■ Clearly, it is not the application or registration of a trademark that vests ownership thereof, but it is
the ownership of a trademark that confers the right to register the same. A trademark is an industrial
property over which its owner is entitled to property rights which cannot be appropriated by
unscrupulous entities that, in one way or another, happen to register such trademark ahead of its
true and lawful owner. The presumption of ownership accorded to a registrant must then necessarily
yield to superior evidence of actual and real ownership of a trademark.
■ In the instant case, petitioner was able to establish that it is the owner of the mark “BIRKENSTOCK.”
It submitted evidence relating to the origin and history of “BIRKENSTOCK” and its use in commerce
long before respondent was able to register the same here in the Philippines. It has sufficiently
proven that “BIRKENSTOCK” was first adopted in Europe in 1774 by its inventor, Johann Birkenstock,
a shoemaker, on his line of quality footwear and thereafter, numerous generations of his kin
continuously engaged in the manufacture and sale of shoes and sandals bearing the mark
“BIRKENSTOCK” until it became the entity now known as the petitioner. Petitioner also submitted
various certificates of registration of the mark “BIRKENSTOCK” in various countries and that it has
used such mark in different countries worldwide, including the Philippines.
■ On the other hand, aside from Registration No. 56334 which had been cancelled, respondent only
presented copies of sales invoices and advertisements, which are not conclusive evidence of its
claim of ownership of the mark “BIRKENSTOCK” as these merely show the transactions made by
respondent involving the same.
 DERMALINE vs. MYRA
PHARMACEUTICALS

Application of Section 138 and Section 155.1 of R.A.

No. 8293 which provides—
138. a certification of registration of a mark is prima
facie evidence of the validity of the registration, the
registrant's ownership of the mark, and of the
registrant's exclusive right to use the same in
connection with the goods and those that are
related... thereto specified in the certificate.
155.1. Use in commerce any reproduction,
counterfeit, copy, or colorable imitation of a
registered mark or the same container or a dominant
feature thereof in connection with the sale, offering
for sale, distribution, advertising of any goods or...
services including other preparatory steps necessary
to carry out the sale of any goods or services on or in
connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive;
(emphasis supplied)
Facts of the case:
■ Petitioner Dermaline, Inc. (Dermaline) filed before the Intellectual Property Office (IPO) an
application for registration of the trademark "DERMALINE DERMALINE, INC."... respondent
Myra Pharmaceuticals, Inc. (Myra) filed a Verified Opposition alleging that the trademark
sought to be registered by Dermaline so resembles its trademark "DERMALIN" and will
likely cause confusion, mistake and deception to the... purchasing public.
■ It further alleged that Dermaline's use and registration of... its applied trademark will
diminish the distinctiveness and dilute the goodwill of Myra's "DERMALIN,"... espite
Dermaline's attempt to differentiate its applied mark, the dominant feature is the term
"DERMALINE," which is practically identical with its own "DERMALIN," more particularly that
the first eight (8) letters of the marks are identical,... Myra also pointed out that Dermaline
applied for the same mark "DERMALINE" on June 3, 2003 and was already refused
registration by the IPO. By filing this new application for registration, Dermaline appears to
have engaged in a fishing expedition for the approval of its... mark.
■ In its Verified Answer, Dermaline countered that a simple comparison of the trademark
"DERMALINE DERMALINE, INC." vis-à-vis Myra's "DERMALIN" trademark would show
that they have entirely different features and distinctive presentation, thus it cannot...
result in confusion, mistake or deception on the part of the purchasing public.
■ The IPO-Bureau of Legal Affairs rendered Decision... sustaining Myra's opposition
pursuant to Section 123.1(d) of R.A. No. 8293.
■ Dermaline appealed to the Office of the Director General of the IPO. However, in an
Order dated April 17, 2009, the appeal was dismissed for being filed out of time.
■ Undaunted, Dermaline appealed to the CA, but it affirmed and upheld the Order dated
April 17, 2009 and the rejection of Dermaline's application for registration of
trademark.
Issue: Whether the Court of Appeals erred in
upholding the IPO's rejection of Dermaline's
application for registration of trademark.
Ruling:
■ The petition is without merit. In rejecting the application of Dermaline for the registration of its mark
"DERMALINE DERMALINE, INC.," the IPO applied the Dominancy Test. It declared that both confusion
of goods and service and confusion of business or of origin were apparent in both trademarks.
■ The IPO also upheld Myra's right under Section 138 of R.A. No. 8293, which... provides that a
certification of registration of a mark is prima facie evidence of the validity of the registration, the
registrant's ownership of the mark, and of the registrant's exclusive right to use the same in
connection with the goods and those that are related... thereto specified in the certificate.
■ While it is true that the two marks are presented differently... the likelihood of confusion is still
apparent. This is because they are almost spelled in the same way, except for Dermaline's mark which
ends with the letter "E," and... they are pronounced practically in the same manner in three (3)
syllables, with the ending letter "E" in Dermaline's mark pronounced silently. Thus, when an ordinary
purchaser, for example, hears an advertisement of Dermaline's applied trademark over the radio,
chances are he... will associate it with Myra's registered mark.
■ Thus, the public may mistakenly think that Dermaline is connected to or associated with Myra, such
that, considering the current proliferation of health and beauty products in the market, the purchasers
would likely be misled that Myra has already expanded its business through
■ Dermaline from merely carrying pharmaceutical topical applications for the skin to health and beauty
services.
■ WHEREFORE, the petition is DENIED. The Decision dated August 7, 2009 and the Resolution dated
October 28, 2009 of the Court of Appeals in CA-G.R. SP No. 108627 are AFFIRMED. Costs against
petitioner.
 ROMA DRUG and ROMEO RODRIGUEZ, as Proprietor of ROMA DRUG vs.
THE REGIONAL TRIAL COURT OF GUAGUA, PAMPANGA, THE PROVINCIAL
PROSECUTOR OF PAMPANGA, BUREAU OF FOOD & DRUGS (BFAD) and
GLAXO SMITHKLINE, April 16, 2009

Application of Sec. 147

“There shall be no infringement of trademarks or trade
names of imported or sold patented drugs and medicines
allowed under Section 72.1 of this Act, as well as imported
or sold off-patent drugs and medicines: Provided, That, said
drugs and medicines bear the registered marks that have
not been tampered, unlawfully modified, or infringed upon,
under Section 155 of this Code.”
Facts of the case:
■ On 14 August 2000, a team composed of the NBI operatives and inspectors of the BFAD
conducted a raid on Roma Drug, a duly registered sole proprietorship of Rodriguez operating
a drug store located at San Matias, Guagua, Pampanga. The raiding team seized several
imported medicines, including Augmentin (375mg.) tablets, Orbenin (500mg.) capsules,
Amoxil (250mg.) capsules and Ampiclox (500mg.). It appears that Roma Drug is one of six
drug stores which were raided on or around the same time upon the request of SmithKline,
a duly registered corporation which is the local distributor of pharmaceutical products
manufactured by its parent London-based corporation.
■ The NBI subsequently filed a complaint against Rodriguez for violation of Section 4 (in
relation to Sections 3 and 5) of Republic Act No. 8203, also known as the Special Law on
Counterfeit Drugs (SLCD).
■ The section prohibits the sale of counterfeit drugs, which under Section 3(b)(3), includes "an
unregistered imported drug product." The term "unregistered" signifies the lack of
registration with the Bureau of Patent, Trademark and Technology Transfer of a trademark,
trade name or other identification mark of a drug in the name of a natural or juridical
person, the process of which is governed under Part III of the Intellectual Property Code.
■ In this case, there is no doubt that the subject seized drugs are identical in content with their
Philippine-registered counterparts. There is no claim that they were adulterated in any way or
mislabeled at least. Their classification as "counterfeit" is based solely on the fact that they
were imported from abroad and not purchased from the Philippine-registered owner of the
patent or trademark of the drugs.
■ Rodriguez challenged the constitutionality of the SLCD. However, Assistant Provincial
Prosecutor skirted the challenge and issued a Resolution dated 17 August 2001
recommending that Rodriguez be charged with violation of Section 4(a) of the SLCD which was
approved by the Provincial Prosecutor.
■ Hence, the present Petition for Prohibition questing the RTC-Guagua Pampanga and the
Provincial Prosecutor to desist from further prosecuting Rodriguez, and that Sections 3(b)(3), 4
and 5 of the SLCD be declared unconstitutional
■ Respondent have opposed the petition. Glaxo Smithkline adds that Section 11, Article XIII in
particular cannot be work "to the oppression and unlawful of the property rights of the
legitimate manufacturers, importers or distributors, who take pains in having imported drug
products registered before the BFAD." It further claims that the SLCD does not in fact conflict
with the aforementioned constitutional provisions and in fact are in accord with constitutional
precepts in favor of the people’s right to health.
Issue: Whether or not the contention
of Roma Drug is correct
 Ruling:
■ YES. The constitutional aspect of this petition have in fact been mooted with the passage in
2008 of Republic Act No. 9502, also known as the "Universally Accessible Cheaper and Quality
Medicines Act of 2008".
■ Section 7 of Rep. Act No. 9502 amends Section 72 of the Intellectual Property Code in that the
later law unequivocally grants third persons the right to import drugs or medicines whose
patent were registered in the Philippines by the owner of the product:
■ Section 7 of Rep. Act No. 9502 amends Section 72 of the Intellectual Property Code in that the
later law unequivocally grants third persons the right to import drugs or medicines whose
patent were registered in the Philippines by the owner of the product:
■ Sec. 7. Section 72 of Republic Act No. 8293, otherwise known as the Intellectual Property Code
of the Philippines, is hereby amended to read as follows:
■ "Sec. 72. Limitations of Patent Rights. – The owner of a patent has no right to prevent third
parties from performing, without his authorization, the acts referred to in Section 71 hereof in
the following circumstances:
■ "72.1. Using a patented product which has been put on the market in the Philippines by the
owner of the product, or with his express consent, insofar as such use is performed after that
product has been so put on the said market: Provided, That, with regard to drugs and
medicines, the limitation on patent rights shall apply after a drug or medicine has been
introduced in the Philippines or anywhere else in the world by the patent owner, or by any
party authorized to use the invention: Provided, further, That the right to import the drugs
and medicines contemplated in this section shall be available to any government agency or
any private third party;
■ The unqualified right of private third parties such as petitioner to import or possess
"unregistered imported drugs" in the Philippines is further confirmed by the "Implementing
Rules to Republic Act No. 9502" promulgated on 4 November 2008.8 The relevant provisions
thereof read:
■ Rule 9. Limitations on Patent Rights. The owner of a patent has no right to prevent third
parties from performing, without his authorization, the acts referred to in Section 71 of the IP
Code as enumerated hereunder:
■ (i) Introduction in the Philippines or Anywhere Else in the World.
■ Using a patented product which has been put on the market in the Philippines by the owner
of the product, or with his express consent, insofar as such use is performed after that
product has been so put on the said market: Provided, That, with regard to drugs and
medicines, the limitation on patent rights shall apply after a drug or medicine has been
introduced in the Philippines or anywhere else in the world by the patent owner, or by any
party authorized to use the invention: Provided, further, That the right to import the drugs
and medicines contemplated in this section shall be available to any government agency or
any private third party. (72.1)
■ The drugs and medicines are deemed introduced when they have been sold or offered for
sale anywhere else in the world. (n)
■ WHEREFORE, the petition is GRANTED in part. A writ of prohibition is hereby ISSUED
commanding respondents from prosecuting petitioner Romeo Rodriguez for violation of
Section 4 or Rep. Act No. 8203. The Temporary Restraining Order dated 15 October 2001 is
hereby made PERMANENT. No pronouncements as to costs.
■ SO ORDERED.
 Shangri-La Group vs. CA, Hon. Felix De
Guzman, and Developers Group (2001)
Application of Section 151.2 of Republic Act No. 8293,
otherwise known as the Intellectual Property Code,
provides, as follows –
Section 151.2. Notwithstanding the foregoing provisions,
the court or the administrative agency vested with
jurisdiction to hear and adjudicate any action to enforce
the rights to a registered mark shall likewise exercise
jurisdiction to determine whether the registration of said
mark may be cancelled in accordance with this Act. The
filing of a suit to enforce the registered mark with the
proper court or agency shall exclude any other court or
agency from assuming jurisdiction over a subsequently
filed petition to cancel the same mark. On the other
provided hand, the earlier filing of petition to cancel the
mark with the Bureau of Legal Affairs shall not constitute
a prejudicial question that must be resolved before an
action to enforce the rights to same registered mark may
be decided.
Facts of the case:
■ On June 1988, the Shangri-La Group (composed of the Shangri-La International Hotel
Management, Ltd., Shangri-La Properties, Inc., Makati Shangri-La Hotel and Resort, Inc. and
Kuok Philippine Properties, Inc.) – filed with the then Bureau of Patents, Trademarks and
Technology Transfer or BPTTT (now Bureau of Legal Affairs), a petition praying for the
cancellation of the registration of the "Shangri-La" mark and "S" device/logo issued to the
Developers Group of Companies, Inc., on the ground that the same was illegally and
fraudulently obtained and appropriated for the latter's restaurant business.
■ Likewise, the Shangri-La Group filed with the BPTTT its own application for registration of the
subject mark and logo. The Developers Group filed an opposition to the application. Almost
three (3) years later, the Developers Group instituted with the Regional Trial Court of Quezon
City, a complaint for infringement and damages against Shangri-La group.
■ On January 1992, the Shangri-La Group moved for the suspension of the proceedings in the
infringement case on account of the pendency of the administrative proceedings before the
BPTTT.
■ This was denied by the trial court and dismissed by the appellate court. Hence, this petition.
Issue: Whether or not despite the institution of an
Inter Partes case for cancellation of a mark with the
BPTTT (now the Bureau of Legal Affairs, Intellectual
Property Office) by one party, the adverse party can
file a subsequent action for infringement with the
regular courts of justice in connection with the same
registeredmark.
Ruling:
■ Yes. The Supreme Court ruled that an earlier filing of petition to cancel the mark with the
Bureau of Legal Affairs does not constitute a prejudicial question that must be resolved
before an action to enforce rights over the same mark may be decided by the court.
■ Section 151.2 of Republic Act No. 8293, otherwise known as the Intellectual Property Code,
provides, as follows –
■ Section 151.2. Notwithstanding the foregoing provisions, the court or the administrative
agency vested with jurisdiction to hear and adjudicate any action to enforce the rights to a
registered mark shall likewise exercise jurisdiction to determine whether the registration of
said mark may be cancelled in accordance with this Act. The filing of a suit to enforce the
registered mark with the proper court or agency shall exclude any other court or agency
from assuming jurisdiction over a subsequently filed petition to cancel the same mark. On
the other provided hand, the earlier filing of petition to cancel the mark with the Bureau of
Legal Affairs shall not constitute a prejudicial question that must be resolved before an
action to enforce the rights to same registered mark may be decided. (Emphasis)
■ As applied in the case at bar, the earlier institution of an Inter Partes case by the Shangri-La
Group for the cancellation of the "Shangri-La" mark and "S" device/logo with the BPTTT
cannot effectively bar the subsequent filing of an infringement case by registrant Developers
Group.
 Caterpillar, Inc. v. Manolo Samson
November 9, 2016
Application of Section 151.2 of Republic Act No. 8293,
otherwise known as the Intellectual Property Code, provides,
as follows –
Section 151.2. Notwithstanding the foregoing provisions, the
court or the administrative agency vested with jurisdiction to
hear and adjudicate any action to enforce the rights to a
registered mark shall likewise exercise jurisdiction to
determine whether the registration of said mark may be
cancelled in accordance with this Act. The filing of a suit to
enforce the registered mark with the proper court or agency
shall exclude any other court or agency from assuming
jurisdiction over a subsequently filed petition to cancel the
same mark. On the other provided hand, the earlier filing of
petition to cancel the mark with the Bureau of Legal Affairs
shall not constitute a prejudicial question that must be
resolved before an action to enforce the rights to same
registered mark may be decided.
 Facts of the case:
■ Caterpillar is a foreign corporation engaged in the manufacture and distribution of footwear,
clothing and related items, among others. Its products are known for six core trademarks, namely,
"CATERPILLAR", "CAT" "CATERPILLAR & DESIGN" "CAT AND DESIGN", "WALKING MACHINES" and
"TRACK-TYPE TRACTOR & DESIGN (Core Marks), all of which are alleged as internationally known.
■ On the other hand, Samson, doing business under the names and styles of Itti Shoes Corporation,
Kolm's Manufacturing Corporation and Caterpillar Boutique and General Merchandise, is the
proprietor of various retail outlets in the Philippines selling footwear, bags, clothing, and related
items under the trademark "CATERPILLAR", registered in 1997 under Trademark Registration No.
64705 issued by the Intellectual Property Office (IPO).
■ On July 26, 2000, upon application of the National Bureau of Investigation (NBI), the Regional Trial
Court (RTC), Branch 56, in Makati City issued Search Warrants Nos. 00-022 to 00-032, inclusive, all
for unfair competition, to search the establishments owned, controlled and operated by Samson.
The implementation of the search warrants on July 27, 2000 led to the seizure of various products
bearing Caterpillar's Core Marks.
■ Caterpillar filed against Samson several criminal complaints for unfair competition in the
Department of Justice (DOJ), docketed as LS. Nos. 2000-13 54 to 2000-13 64, inclusive.
■ Additionally, on July 31, 2000, Caterpillar commenced a civil action against Samson and his
business entities, with the IPO as a nominal party - for Unfair Competition, Damages and
Cancellation of Trademark with Application for Temporary Restraining Order (TRO) and/or Writ of
Preliminary Injunction - docketed as Civil Case No. Q-00-41446 of the RTC in Quezon City. In said
civil action, the RTC denied Caterpillar's application for the issuance of the TRO on August 17,
2000.
■ The DOJ, through Senior State Prosecutor Jude R. Romano, issued a joint resolution dated November 15, 2001
recommending that Samson be criminally charged with unfair competition under Section 168.3 (a), in relation
to Section 123.l(e), Section 131.1 and Section 170, all of Republic Act No. 8293, or the Intellectual Property
Code of the Philippines (IP Code).
■ However, because Samson and his affiliate companies allegedly continued to sell and distribute products
clothed with the general appearance of its own products, Caterpillar again applied for another set of search
warrants against Samson and his businesses. The RTC, Branch 172, in Valenzuela City issued Search Warrants
Nos. 12-V-00, 13-V-00, 20-V-00 and 29-V-00 upon application of the NBI, by virtue of the implementation of
which several goods were seized and confiscated by the NBI agents.
■ As a consequence, Caterpillar filed 26 criminal complaints for unfair competition on January 31, 2001,
docketed as LS. Nos. 2001-42 to 2001-67, against Samson and/or the occupants of his affiliate entities before
the DOJ. In due course, the DOJ, through State Prosecutor Zenaida M. Lim, issued a joint resolution dated
September 28, 2001 recommending the filing of criminal complaints for unfair competition under Section
168.3(a), in relation to Section 123 .1, Section 131.1 and Section 170 of the IP Code. Accordingly, six criminal
complaints were filed in the RTC, Branch 256, in Muntinlupa City, presided by Judge Alberto L. Lerma, docketed
as Criminal Cases Nos. 02-238 to 02-243.
■ On January 17 and 22, 2002, Samson filed a petitions for review with the Office of the Secretary of Justice to
appeal the joint resolutions in LS. Nos. 2000-1354 to 2000-1364 and LS. Nos. 2001-042 to 2001-067.
■ On May 30, 2002, Samson filed a Motion to Suspend Arraignment in Criminal Cases Nos. 02-238 to 243, citing
that there exists prejudicial questions pending litigation before the RTC of Quezon City.
■ On September 23, 2002, Presiding Judge Lerma of the RTC granted Samson's Motion to Suspend
Arraignment, and suspended the arraignment and all other proceedings in Criminal Cases Nos. 02-240 to 02-
243 until Civil Case No. Q-00-41446 was finally resolved, holding that there exists a prejudicial question since
the determination of who is really the lawful or registered user of the trademark “CATERPILLAR” will ultimately
determine whether or not the instant criminal action shall proceed.
Issue: Whether or not it is correct to
suspend the proceedings in the criminal
cases on the basis of prejudicial
questions
Ruling:
■ The court ruled in the negative. The civil cases are independent civil action that did not
operate as a prejudicial question to justify the suspension of the proceedings in Criminal
Cases. We note, to begin with, that Civil Case No. Q-00-41446, the civil case filed by
Caterpillar in the RTC in Quezon City, was for unfair competition, damages and cancellation of
trademark, while Criminal Cases Nos. Q-02-108043-44 were the criminal prosecution of
Samson for unfair competition. A common element of all such cases for unfair competition -
civil and criminal - was fraud. Under Article 33 of the Civil Code, a civil action entirely separate
and distinct from the criminal action may be brought by the injured party in cases of fraud,
and such civil action shall proceed independently of the criminal prosecution. In view of its
being an independent civil action, Civil Case No. Q-00-41446 did not operate as a prejudicial
question that justified the suspension of the proceedings in Criminal Cases Nos. Q-02-
108043-44.
■ A civil action for damages and cancellation of trademark cannot be considered a prejudicial
question by which to suspend the proceedings in the criminal cases for unfair competition. A
prejudicial question is that which arises in a civil case the resolution of which is a logical
antecedent of the issues to be determined in the criminal case. It must appear not only that
the civil case involves facts upon which the criminal action is based, but also that the
resolution of the issues raised in the civil action will necessarily be determinative of the
criminal case. As stated in Librodo v. Judge Coscolluela, Jr.:
■ A prejudicial question is one based on a fact distinct and separate from the crime but so intimately
connected with it that it determines the guilt or innocence of the accused, and for it to suspend the
criminal action, it must appear not only that said case involves facts intimately related to those upon
which the criminal prosecution would be based but also that in the resolution of the issue or issues
raised in the civil case, the guilt or innocence of the accused would necessarily be determined. It
comes into play generally in a situation where a civil action and a criminal action are both pending
and there exists in the former an issue which must be preemptively resolved before the criminal
action may proceed, because howsoever the issue raised in the civil action is resolved would be
determinative juris et de jure of the guilt or innocence of the accused in the criminal case.
■ An action for the cancellation of trademark like Civil Case No. Q-00-41446 is a remedy available to a
person who believes that he is or will be damaged by the registration of a mark. On the other hand,
the criminal actions for unfair competition (Criminal Cases Nos. Q-02-108043-44) involved the
determination of whether or not Samson had given his goods the general appearance of the goods
of Caterpillar, with the intent to deceive the public or defraud Caterpillar as his competitor.In the suit
for the cancellation of trademark, the issue of lawful registration should necessarily be determined,
but registration was not a consideration necessary in unfair competition. Indeed, unfair competition
is committed if the effect of the act is "to pass off to the public the goods of one man as the goods
of another;" it is independent of registration. As fittingly put in R.F. & Alexander & Co. v. Ang, "one
may be declared unfair competitor even if his competing trade-mark is registered."
■ Clearly, the determination of the lawful ownership of the trademark in the civil action was not
determinative of whether or not the criminal actions for unfair competition shall proceed against
Samson.
 GROUP 2:
■ Aborka, Rio Rina
■ Celiz, Camille Anne
■ Diaz, Norwin John
■ Firmeza, Mary Louraine
■ Olano, Lianne Joy
■ Raco, Jovy Anne
■ Santamaria, Toni Ann