Republic of the PhilippinesSUPREME COURT

ManilaTHIRD DIVISION

G.R. NO. 156041             February 21, 2007PEST MANAGEMENT ASSOCIATION OF THE PHILIPPINES (PMAP), represented by its President, MANUEL J. CHAVEZ, Petitioner, vs.FERTILIZER AND PESTICIDE AUTHORITY (FPA), SECRETARY OF THE DEPARTMENT OF AGRICULTURE, FPA OFFICER- IN-CHARGE CESAR M. DRILON, AND FPA DEPUTY DIRECTOR DARIO C. SALUBARSE,Respondents.

D E C I S I O NAUSTRIA-MARTINEZ, J.:This resolves the Petition for Review on Certiorari seeking to set aside the Decision1 of the Regional Trial Court of Quezon City, Branch 90 (RTC) dated November 5, 2002.The case commenced upon petitioner’s filing of a Petition For Declaratory Relief With Prayer For Issuance Of A Writ Of Preliminary Injunction And/Or Temporary Restraining Order with the RTC on January 4, 2002. Petitioner, a non-stock corporation duly organized and existing under the laws of the Philippines, is an association of pesticide handlers duly licensed by respondent Fertilizer and Pesticide Authority (FPA). It questioned the validity of Section 3.12 of the 1987 Pesticide Regulatory Policies and Implementing Guidelines, which provides thus:3.12 Protection of Proprietary DataData submitted to support the first full or conditional registration of a pesticide active ingredient in the Philippines will be granted proprietary protection for a period of seven years from the date of such registration. During this period subsequent registrants may rely on these data only with third party authorization or otherwise must submit their own data. After this period, all data may be freely cited in support of registration by any applicant, provided convincing proof is submitted that the product being registered is identical or substantially similar to any current registered pesticide, or differs only in ways that would not significantly increase the risk of unreasonable adverse effects.Pesticides granted provisional registration under P.D. 1144 will be considered first registered in 1977, the date of the Decree.Pesticide products in which data is still under protection shall be referred to as proprietary pesticides, and all others as commodity pesticides. (Emphasis supplied)Petitioner argued that the specific provision on the protection of the proprietary data in FPA’s Pesticide Regulatory Policies and Implementing Guidelines is unlawful for going counter to the objectives of Presidential Decree No. 1144 (P.D. No. 1144); for exceeding the limits of delegated authority; and for encroaching on the exclusive jurisdiction of the Intellectual Property Office.On November 5, 2002, the RTC dismissed the petition for declaratory relief for lack of merit. The RTC held that "the FPA did not exceed the limits of its delegated authority in issuing the aforecited Section 3.12 of the Guidelines granting protection to proprietary data x x x because the issuance of the aforecited Section was a valid exercise of its power to regulate, control and develop the pesticide industry under P.D. 1144"2 and the assailed provision does "not encroach on one of the functions of the Intellectual Properly Office (IPO)."3

Dissatisfied with the RTC Decision, petitioner resorted to filing this petition for review on certiorari where the following issues are raised:

IWHETHER OR NOT RESPONDENT FPA HAS ACTED BEYOND THE SCOPE OF ITS DELEGATED POWER WHEN IT GRANTED A SEVEN-YEAR PROPRIETARY PROTECTION TO DATA SUBMITTED TO SUPPORT THE FIRST FULL OR CONDITIONAL REGISTRATION OF A PESTICIDE INGREDIENT IN THE PHILIPPINES;

IIWHETHER OR NOT RESPONDENT FPA IS ENCROACHING ON THE EXCLUSIVE JURISDICTION OF THE INTELLECTUAL PROPERTY OFFICE (IPO) WHEN IT INCLUDED IN ITS PESTICIDE REGULATORY POLICIES AND IMPLEMENTING GUIDELINES THE SUBJECT SEVEN-YEAR PROPRIETARY DATA PROTECTION;

IIIWHETHER OR NOT SAID PROPRIETARY DATA PROTECTION IS AN UNLAWFUL RESTRAINT OF FREE TRADE;

IVWHETHER OR NOT SAID PROPRIETARY DATA PROTECTION RUNS COUNTER TO THE OBJECTIVES OF P.D. NO. 1144;

VWHETHER OR NOT THE REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 90, COMMITTED A REVERSIBLE ERROR WHEN IT UPHELD THE VALIDITY OF SECTION 3.12 OF THE PESTICIDE REGULATORY POLICIES AND IMPLEMENTING GUIDELINES ISSUED BY RESPONDENT FPA.Respondents, on the other hand, maintain that the provision on the protection of proprietary data in the FPA's Pesticide Regulatory Policies and Implementing Guidelines is valid and legal as it does not violate the objectives of P.D. No. 1144; the proprietary data are a substantial asset which must be protected; the protection for a limited number of years does not constitute unlawful restraint of free trade; and such provision does not encroach upon the jurisdiction of the Intellectual Property Office.Respondents expound that since under P.D. No. 1144, the FPA is mandated to regulate, control and develop the pesticide industry, it was necessary to provide for such protection of proprietary data, otherwise, pesticide handlers will proliferate to the the detriment of the industry and the public since the inherent toxicity of pesticides are hazardous and are potential environmental contaminants.They also pointed out that the protection under the assailed Pesticide Regulatory Policies and Implementing Guidelines is warranted, considering that the development of proprietary data involves an investment of many years and large sums of money, thus, the data generated by an applicant in support of his application for registration are owned and proprietary to him. Moreover, since the protection accorded to the proprietary data is limited in time, then such protection is reasonable and does not constitute unlawful restraint of trade.Lastly, respondents emphasize that the provision on protection of proprietary data does not usurp the functions of the Intellectual Property Office (IPO) since a patent and data protection are two different matters. A patent prohibits all unlicensed making, using and selling of a particular product, while data protection accorded by the FPA merely prevents copying or unauthorized use of an applicant's data, but any other party may independently generate and use his own data. It is further argued that under Republic Act No. 8293 (R.A. No. 8293), the grant of power to the IPO to administer and implement State policies on intellectual property is not exclusionary as the IPO is even allowed to coordinate with other government agencies to formulate and implement plans and policies to strengthen the protection of intellectual property rights.The petition is devoid of merit.The law being implemented by the assailed Pesticide Regulatory Policies and Implementing Guidelines is P.D. No. 1144, entitled Creating the Fertilizer and Pesticide Authority and Abolishing the Fertilizer Industry Authority. As stated in the Preamble of said decree, "there is an urgent need to create a technically-oriented government authority equipped with the required expertise to regulate, control and develop both the fertilizer and the pesticide industries." (Underscoring supplied) The decree further provided as follows:Section 6. Powers and Functions. The FPA shall have jurisdiction, over all existing handlers of pesticides, fertilizers and other agricultural chemical inputs. The FPA shall have the following powers and functions:I. Common to Fertilizers, Pesticides and other Agricultural Chemicals

x x x

4. To promulgate rules and regulations for the registration and licensing of handlers of these products, collect fees pertaining thereto, as well as the renewal, suspension, revocation, or cancellation of such registration or licenses and such other rules and regulations as may be necessary to implement this Decree;

x x xSection 7. Power to Issue Rules and Regulations to Implement Decree. The FPA is hereby authorized to issue or promulgate rules and regulations to implement, and carry out the purposes and provisions of this Decree.Did the FPA go beyond its delegated power and undermine the objectives of P.D. No. 1144 by issuing regulations that provide for protection of proprietary data? The answer is in the negative.Under P.D. No. 1144, the FPA is given the broad power to issue rules and regulations to implement and carry out the purposes and provisions of said decree, i.e., to regulate, control and develop the pesticide industry. In furtherance of such ends, the FPA sees the protection of proprietary data as one way of fulfilling its mandate. InRepublic v. Sandiganbayan,4 the Court emphasized that:x x x [t]he interpretation of an administrative government agency, which is tasked to implement a statute is generally accorded great respect and ordinarily controls the construction of the courts. The reason behind this rule was explained in Nestle Philippines, Inc. vs. Court of Appeals in this wise:The rationale for this rule relates not only to the emergence of the multifarious needs of a modern or modernizing society and the establishment of diverse administrative agencies for addressing and satisfying those needs; it also relates to the accumulation of experience and growth of specialized capabilities by the administrative agency charged with implementing a particular statute. In Asturias Sugar Central, Inc. vs. Commissioner of Customs, the Court stressed that executive officials are presumed to have familiarized themselves with all the considerations pertinent to the meaning and purpose of the law, and to have formed an independent, conscientious and competent expert opinion thereon. The courts give much weight to the government agency officials charged with the implementation of the law, their competence, expertness, experience and informed judgment, and the fact that they frequently are the drafters of the law they interpret."x x x.5 [Emphasis supplied]Verily, in this case, the Court acknowledges the experience and expertise of FPA officials who are best qualified to formulate ways and means of ensuring the quality and quantity of pesticides and handlers thereof that should enter the Philippine market, such as giving limited protection to proprietary data submitted by applicants for registration. The Court ascribes great value and will not disturb the FPA's determination that one way of attaining the purposes of its charter is by granting such protection, specially where there is nothing on record which shows that said administrative agency went beyond its delegated powers.Moreover, petitioner has not succeeded in convincing the Court that the provision in question has legal infirmities.1awphi1.netThere is no encroachment upon the powers of the IPO granted under R.A. No. 8293, otherwise known as theIntellectual Property Code of the Philippines. Section 5 thereof enumerates the functions of the IPO. Nowhere in said provision does it state nor can it be inferred that the law intended the IPO to have the exclusive authority to protect or promote intellectual property rights in the Philippines. On the contrary, paragraph (g) of said Section even provides that the IPO shall "[c]oordinate with other government agencies and the private sector efforts to formulate and implement plans and policies to strengthen the protection of intellectual property rights in the country." Clearly, R.A. No. 8293 recognizes that efforts to fully protect intellectual property rights cannot be undertaken by the IPO alone. Other agencies dealing with intellectual property rights are, therefore, not precluded from issuing policies, guidelines and regulations to give protection to such rights.There is also no evidence whatsoever to support petitioner's allegation that the grant of protection to proprietary data would result in restraining free trade. Petitioner did not adduce any reliable data to prove its bare allegation that the protection of proprietary data would unduly restrict trade on pesticides.

Furthermore, as held inAssociation of Philippine Coconut Desiccators v. Philippine Coconut Authority,6 despite the fact that "our present Constitution enshrines free enterprise as a policy, it nonetheless reserves to the government the power to intervene whenever necessary to promote the general welfare." There can be no question that the unregulated use or proliferation of pesticides would be hazardous to our environment. Thus, in the aforecited case, the Court declared that "free enterprise does not call for removal of ‘protective regulations’."7 More recently, in Coconut Oil Refiners Association, Inc. v. Torres,8 the Court held that "[t]he mere fact that incentives and privileges are granted to certain enterprises to the exclusion of others does not render the issuance unconstitutional for espousing unfair competition." It must be clearly explained and proven by competent evidence just exactly how such protective regulation would result in the restraint of trade.In sum, the assailed provision in the 1987 Pesticide Regulatory Policies and Implementing Guidelines granting protection to proprietary data is well within the authority of the FPA to issue so as to carry out its purpose of controlling, regulating and developing the pesticide industry.WHEREFORE, the petition is DENIED. The Decision of the Regional Trial Court of Quezon City, Branch 90, in SP. Civil Case No. Q-01-42790 is AFFIRMED.SO ORDERED.

SECOND DIVISION[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, and ANG TIAM CHAY, respondents.

D E C I S I O NDE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision[1] 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 Sufor 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 Cream with the Philippine Patent Office and other appropriate governmental agencies; that KEC Cosmetics Laboratory of the petitioner obtained the copyrights through misrepresentation and falsification; and, that the authority of Quintin Cheng, assignee of the patent registration certificate, to distribute and market Chin Chun Su products in the Philippines had already been terminated by the said Taiwanese Manufacturing Company.

After due hearing on the application for preliminary injunction, the trial court granted the same in an Order dated February 10, 1992, the dispositive portion of which reads:ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under the style of KEC Cosmetic Laboratory, for preliminary injunction, is hereby granted. Consequentially, plaintiff is required to file with the Court a bond executed to defendants in the amount of five hundred thousand pesos (P500,000.00) to the effect that plaintiff will pay to defendants all damages which defendants may sustain by reason of the injunction if the Court should finally decide that plaintiff is not entitled thereto.SO ORDERED.[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       xxxAs 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.

IIRESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN REFUSING TO PROMPTLY RESOLVE PETITIONER’S MOTION FOR RECONSIDERATION.

IIIIN 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.

IVRESPONDENT 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.

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.SECOND DIVISION

[G.R. No. 161295.  June 29, 2005]JESSIE G. CHING, petitioner, vs. WILLIAM M. SALINAS, SR., WILLIAM M. SALINAS, JR.,

JOSEPHINE L. SALINAS, JENNIFER Y. SALINAS, ALONTO SOLAIMAN SALLE, JOHN ERIC I. SALINAS, NOEL M. YABUT (Board of Directors and Officers of WILAWARE PRODUCT CORPORATION), respondents.

D E C I S I O NCALLEJO, SR., J.:

This petition for review on certiorari assails the Decision[1] and Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 70411 affirming the January 3, 2002 and February 14, 2002 Orders[3] of the Regional Trial Court (RTC) of Manila, Branch 1, which quashed and set aside Search Warrant Nos. 01-2401 and 01-2402 granted in favor of petitioner Jessie G. Ching.

Jessie G. Ching is the owner and general manager of Jeshicris Manufacturing Co., the maker and manufacturer of a Utility Model, described as “Leaf Spring Eye Bushing for Automobile” made up of plastic.

On September 4, 2001, Ching and Joseph Yu were issued by the National Library Certificates of Copyright Registration and Deposit of the said work described therein as “Leaf Spring Eye Bushing for Automobile.”[4]

On September 20, 2001, Ching requested the National Bureau of Investigation (NBI) for police/investigative assistance for the apprehension and prosecution of illegal manufacturers, producers and/or distributors of the works.[5]

After due investigation, the NBI filed applications for search warrants in the RTC of Manila against William Salinas, Sr. and the officers and members of the Board of Directors of Wilaware Product Corporation.  It was alleged that the respondents therein reproduced and distributed the said models penalized under Sections 177.1 and 177.3 of Republic Act (R.A.) No. 8293.  The applications sought the seizure of the following:

a.)     Undetermined quantity of Leaf spring eye bushing for automobile that are made up of plastic polypropylene;

b.)     Undetermined quantity of Leaf spring eye bushing for automobile that are made up of polyvinyl chloride plastic;

c.)     Undetermined quantity of Vehicle bearing cushion that is made up of polyvinyl chloride plastic;

d.)     Undetermined quantity of Dies and jigs, patterns and flasks used in the manufacture/fabrication of items a to d;

e.)     Evidences of sale which include delivery receipts, invoices and official receipts.[6]

The RTC granted the application and issued Search Warrant Nos. 01-2401 and 01-2402 for the seizure of the aforecited articles.[7] In the inventory submitted by the NBI agent, it appears that the following articles/items were seized based on the search warrants:Leaf Spring eye bushing

a)  Plastic Polypropylene-     C190                                             27   }-     C240 rear                                      40   }-     C240 front                                     41   }    BAG 1

b)  Polyvinyl Chloride Plastic-   C190                                               13   }

c)  Vehicle bearing cushion-     center bearing cushion                 11   }

Budder for C190 mold                                  8   }Diesel Mold

a)  Mold for spring eye bushing rear                    1 setb)  Mold for spring eye bushing front                    1 setc)  Mold for spring eye bushing for C190 1 setd)  Mold for C240 rear                                          1 piece of the

sete)  Mold for spring eye bushing for L300              2 setsf)   Mold for leaf spring eye bushing C190

with metal                                                        1 setg)  Mold for vehicle bearing cushion                    1 set[8]

The respondents filed a motion to quash the search warrants on the following grounds:2.        The copyright registrations were issued in violation of the Intellectual Property Code on the ground that:

a)     the subject matter of the registrations are not artistic or literary;b)     the subject matter of the registrations are spare parts of automobiles meaning – there (sic)

are original parts that they are designed to replace.  Hence, they are not original.[9]

The respondents averred that the works covered by the certificates issued by the National Library are not artistic in nature; they are considered automotive spare parts and pertain to technology.   They aver that the models are not original, and as such are the proper subject of a patent, not copyright. [10]

In opposing the motion, the petitioner averred that the court which issued the search warrants was not the proper forum in which to articulate the issue of the validity of the copyrights issued to him.   Citing the ruling of the Court in Malaloan v. Court of Appeals,[11] the petitioner stated that a search warrant is merely a judicial process designed by the Rules of Court in anticipation of a criminal case.   Until his copyright was nullified in a proper proceeding, he enjoys rights of a registered owner/holder thereof.

On January 3, 2002, the trial court issued an Order [12] granting the motion, and quashed the search warrant on its finding that there was no probable cause for its issuance.  The court ruled that the work covered by the certificates issued to the petitioner pertained to solutions to technical problems, not literary and artistic as provided in Article 172 of the Intellectual Property Code.

His motion for reconsideration of the order having been denied by the trial court’s Order of February 14, 2002, the petitioner filed a petition for certiorari in the CA, contending that the RTC had no jurisdiction to delve into and resolve the validity of the copyright certificates issued to him by the

National Library.  He insisted that his works are covered by Sections 172.1 and 172.2 of the Intellectual Property Code.  The petitioner averred that the copyright certificates are prima facie evidence of its validity, citing the ruling of the United States Court of Appeals in Wildlife Express Corporation v. Carol Wright Sales, Inc.[13] The petitioner asserted that the respondents failed to adduce evidence to support their motion to quash the search warrants.  The petitioner noted that respondent William Salinas, Jr. was not being honest, as he was able to secure a similar copyright registration of a similar product from the National Library on January 14, 2002.

On September 26, 2003, the CA rendered judgment dismissing the petition on its finding that the RTC did not commit any grave abuse of its discretion in issuing the assailed order, to wit:It is settled that preliminarily, there must be a finding that a specific offense must have been committed to justify the issuance of a search warrant.  In a number of cases decided by the Supreme Court, the same is explicitly provided, thus:“The probable cause must be in connection with one specific offense, and the judge must, before issuing the warrant, personally examine in the form of searching questions and answers, in writing and under oath, the complainant and any witness he may produce, on facts personally known to them and attach to the record their sworn statements together with any affidavit submitted.“In the determination of probable cause, the court must necessarily resolve whether or not an offense exists to justify the issuance or quashal of the search warrant.”In the instant case, the petitioner is praying for the reinstatement of the search warrants issued, but subsequently quashed, for the offense of Violation of Class Designation of Copyrightable Works under Section 177.1 in relation to Section 177.3 of Republic Act 8293, when the objects subject of the same, are patently not copyrightable.It is worthy to state that the works protected under the Law on Copyright are: literary or artistic works (Sec. 172) and derivative works (Sec. 173).  The Leaf Spring Eye Bushing and Vehicle Bearing Cushion fall on neither classification.  Accordingly, if, in the first place, the item subject of the petition is not entitled to be protected by the law on copyright, how can there be any violation?[14]

The petitioner’s motion for reconsideration of the said decision suffered the same fate.   The petitioner forthwith filed the present petition for review on certiorari, contending that the revocation of his copyright certificates should be raised in a direct action and not in a search warrant proceeding.

The petitioner posits that even assuming ex argumenti that the trial court may resolve the validity of his copyright in a proceeding to quash a search warrant for allegedly infringing items, the RTC committed a grave abuse of its discretion when it declared that his works are not copyrightable in the first place.  He claims that R.A. No. 8293, otherwise known as the Intellectual Property Code of the Philippines, which took effect on January 1, 1998, provides in no uncertain terms that copyright protection automatically attaches to a work by the sole fact of its creation, irrespective of its mode or form of expression, as well as of its content, quality or purpose. [15] The law gives a non-inclusive definition of “work” as referring to original intellectual creations in the literary and artistic domain protected from the moment of their creation; and includes original ornamental designs or models for articles of manufacture, whether or not registrable as an industrial design and other works of applied art under Section 172.1(h) of R.A. No. 8293.

As such, the petitioner insists, notwithstanding the classification of the works as either literary and/or artistic, the said law, likewise, encompasses works which may have a bearing on the utility aspect to which the petitioner’s utility designs were classified.  Moreover, according to the petitioner, what the Copyright Law protects is the author’s intellectual creation, regardless of whether it is one with utilitarian functions or incorporated in a useful article produced on an industrial scale.

The petitioner also maintains that the law does not provide that the intended use or use in industry of an article eligible for patent bars or invalidates its registration under the Law on Copyright.   The test of protection for the aesthetic is not beauty and utility, but art for the copyright and invention of original and ornamental design for design patents. [16] In like manner, the fact that his utility designs or models for articles of manufacture have been expressed in the field of automotive parts, or based on

something already in the public domain does not automatically remove them from the protection of the Law on Copyright.[17]

The petitioner faults the CA for ignoring Section 218 of R.A. No. 8293 which gives the same presumption to an affidavit executed by an author who claims copyright ownership of his work.

The petitioner adds that a finding of probable cause to justify the issuance of a search warrant means merely a reasonable suspicion of the commission of the offense.  It is not equivalent to absolute certainty or a finding of actual and positive cause.[18] He assists that the determination of probable cause does not concern the issue of whether or not the alleged work is copyrightable.  He maintains that to justify a finding of probable cause in the issuance of a search warrant, it is enough that there exists a reasonable suspicion of the commission of the offense.

The petitioner contends that he has in his favor the benefit of the presumption that his copyright is valid; hence, the burden of overturning this presumption is on the alleged infringers, the respondents herein.  But this burden cannot be carried in a hearing on a proceeding to quash the search warrants, as the issue therein is whether there was probable cause for the issuance of the search warrant.   The petitioner concludes that the issue of probable cause should be resolved without invalidating his copyright.

In their comment on the petition, the respondents aver that the work of the petitioner is essentially a technical solution to the problem of wear and tear in automobiles, the substitution of materials,  i.e., from rubber to plastic matter of polyvinyl chloride, an oil resistant soft texture plastic material strong enough to endure pressure brought about by the vibration of the counter bearing and thus brings bushings.  Such work, the respondents assert, is the subject of copyright under Section 172.1 of R.A. No. 8293.  The respondents posit that a technical solution in any field of human activity which is novel may be the subject of a patent, and not of a copyright.   They insist that the certificates issued by the National Library are only certifications that, at a point in time, a certain work was deposited in the said office.  Furthermore, the registration of copyrights does not provide for automatic protection.  Citing Section 218.2(b) of R.A. No. 8293, the respondents aver that no copyright is said to exist if a party categorically questions its existence and legality.  Moreover, under Section 2, Rule 7 of the Implementing Rules of R.A. No. 8293, the registration and deposit of work is not conclusive as to copyright outlay or the time of copyright or the right of the copyright owner.  The respondents maintain that a copyright exists only when the work is covered by the protection of R.A. No. 8293.

The petition has no merit.The RTC had jurisdiction to delve into and resolve the issue whether the petitioner’s utility models

are copyrightable and, if so, whether he is the owner of a copyright over the said models.   It bears stressing that upon the filing of the application for search warrant, the RTC was duty-bound to determine whether probable cause existed, in accordance with Section 4, Rule 126 of the Rules of Criminal Procedure:SEC. 4.  Requisite for issuing search warrant. – A search warrant shall not issue but upon probable cause in connection with one specific offense to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and, particularly, describing the place to be searched and the things to be seized.

In Solid Triangle Sales Corporation v. The Sheriff of RTC QC , Br. 93 ,[19] the Court held that in the determination of probable cause, the court must necessarily resolve whether or not an offense exists to justify the issuance of a search warrant or the quashal of one already issued by the court. Indeed, probable cause is deemed to exist only where facts and circumstances exist which could lead a reasonably cautious and prudent man to believe that an offense has been committed or is being committed. Besides, in Section 3, Rule 126 of the Rules of Criminal Procedure, a search warrant may be issued for the search and seizure of personal property (a) subject of the offense; (b) stolen or embezzled and other proceeds or fruits of the offense; or (c) used or intended to be used as the means of committing an offense.

The RTC is mandated under the Constitution and Rules of Criminal Procedure to determine probable cause.  The court cannot abdicate its constitutional obligation by refusing to determine

whether an offense has been committed.[20] The absence of probable cause will cause the outright nullification of the search warrant.[21]

For the RTC to determine whether the crime for infringement under R.A. No. 8293 as alleged in an application is committed, the petitioner-applicant was burdened to prove that (a) respondents Jessie Ching and Joseph Yu were the owners of copyrighted material; and (b) the copyrighted material was being copied and distributed by the respondents.  Thus, the ownership of a valid copyright is essential.[22]

Ownership of copyrighted material is shown by proof of originality and copyrightability.  By originality is meant that the material was not copied, and evidences at least minimal creativity; that it was independently created by the author and that it possesses at least same minimal degree of creativity.[23] Copying is shown by proof of access to copyrighted material and substantial similarity between the two works.[24] The applicant must thus demonstrate the existence and the validity of his copyright because in the absence of copyright protection, even original creation may be freely copied.[25]

By requesting the NBI to investigate and, if feasible, file an application for a search warrant for infringement under R.A. No. 8293 against the respondents, the petitioner thereby authorized the RTC (in resolving the application), to delve into and determine the validity of the copyright which he claimed he had over the utility models.  The petitioner cannot seek relief from the RTC based on his claim that he was the copyright owner over the utility models and, at the same time, repudiate the court’s jurisdiction to ascertain the validity of his claim without running afoul to the doctrine of estoppel.

To discharge his burden, the applicant may present the certificate of registration covering the work or, in its absence, other evidence. [26] A copyright certificate providesprima facie evidence of originality which is one element of copyright validity.  It constitutes prima facie evidence of both validity and ownership[27] and the validity of the facts stated in the certificate.[28] The presumption of validity to a certificate of copyright registration merely orders the burden of proof.  The applicant should not ordinarily be forced, in the first instance, to prove all the multiple facts that underline the validity of the copyright unless the respondent, effectively challenging them, shifts the burden of doing so to the applicant.[29] Indeed, Section 218.2 of R.A. No. 8293 provides:218.2.  In an action under this Chapter:(a)       Copyright shall be presumed to subsist in the work or other subject matter to which the action relates if the defendant does not put in issue the question whether copyright subsists in the work or other subject matter; and(b)       Where the subsistence of the copyright is established, the plaintiff shall be presumed to be the owner of the copyright if he claims to be the owner of the copyright and the defendant does not put in issue the question of his ownership.

A certificate of registration creates no rebuttable presumption of copyright validity where other evidence in the record casts doubt on the question.  In such a case, validity will not be presumed.[30]

To discharge his burden of probable cause for the issuance of a search warrant for violation of R.A. No. 8293, the petitioner-applicant submitted to the RTC Certificate of Copyright Registration Nos. 2001-197 and 2001-204 dated September 3, 2001 and September 4, 2001, respectively, issued by the National Library covering work identified as Leaf Spring Eye Bushing for Automobile and Vehicle Bearing Cushion both classified under Section 172.1(h) of R.A. No. 8293, to wit:SEC. 172.  Literary and Artistic Works. – 172.1.  Literary and artistic works, hereinafter referred to as “works,” are original intellectual creations in the literary and artistic domain protected from the moment of their creation and shall include in particular:

...(h)       Original ornamental designs or models for articles of manufacture, whether or not registrable as an industrial design, and other works of applied art.

Related to the provision is Section 171.10, which provides that a “work of applied art” is an artistic creation with utilitarian functions or incorporated in a useful article, whether made by hand or produced on an industrial scale.

But, as gleaned from the specifications appended to the application for a copyright certificate filed by the petitioner, the said Leaf Spring Eye Bushing for Automobile is merely a utility model described as comprising a generally cylindrical body having a co-axial bore that is centrally located and provided with a perpendicular flange on one of its ends and a cylindrical metal jacket surrounding the peripheral walls of said body, with the bushing made of plastic that is either polyvinyl chloride or polypropylene.[31]Likewise, the Vehicle Bearing Cushion is illustrated as a bearing cushion comprising a generally semi-circular body having a central hole to secure a conventional bearing and a plurality of ridges provided therefore, with said cushion bearing being made of the same plastic materials. [32] Plainly, these are not literary or artistic works.  They are not intellectual creations in the literary and artistic domain, or works of applied art.  They are certainly not ornamental designs or one having decorative quality or value.

It bears stressing that the focus of copyright is the usefulness of the artistic design, and not its marketability.  The central inquiry is whether the article is a work of art.[33]Works for applied art include all original pictorials, graphics, and sculptural works that are intended to be or have been embodied in useful article regardless of factors such as mass production, commercial exploitation, and the potential availability of design patent protection.[34]

As gleaned from the description of the models and their objectives, these articles are useful articles which are defined as one having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information.  Indeed, while works of applied art, original intellectual, literary and artistic works are copyrightable, useful articles and works of industrial design are not.[35] A useful article may be copyrightable only if and only to the extent that such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of the utilitarian aspects of the article.

We agree with the contention of the petitioner (citing Section 171.10 of R.A. No. 8293), that the author’s intellectual creation, regardless of whether it is a creation with utilitarian functions or incorporated in a useful article produced on an industrial scale, is protected by copyright law.  However, the law refers to a “work of applied art which is an artistic creation.”  It bears stressing that there is no copyright protection for works of applied art or industrial design which have aesthetic or artistic features that cannot be identified separately from the utilitarian aspects of the article. [36] Functional components of useful articles, no matter how artistically designed, have generally been denied copyright protection unless they are separable from the useful article.[37]

In this case, the petitioner’s models are not works of applied art, nor artistic works.  They are utility models, useful articles, albeit with no artistic design or value.  Thus, the petitioner described the utility model as follows:

LEAF SPRING EYE BUSHING FOR AUTOMOBILEKnown bushings inserted to leaf-spring eye to hold leaf-springs of automobile are made of hard rubber.  These rubber bushings after a time, upon subjecting them to so much or intermittent pressure would eventually wore (sic) out that would cause the wobbling of the leaf spring.The primary object of this utility model, therefore, is to provide a leaf-spring eye bushing for automobile that is made up of plastic.Another object of this utility model is to provide a leaf-spring eye bushing for automobiles made of polyvinyl chloride, an oil resistant soft texture plastic or polypropylene, a hard plastic, yet both causes cushion to the leaf spring, yet strong enough to endure pressure brought about by the up and down movement of said leaf spring.Yet, an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a much longer life span than the rubber bushings.Still an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a very simple construction and can be made using simple and ordinary molding equipment.A further object of this utility model is to provide a leaf-spring eye bushing for automobile that is supplied with a metal jacket to reinforce the plastic eye bushing when in engaged with the steel material of the leaf spring.These and other objects and advantages will come to view and be understood upon a reading of the detailed description when taken in conjunction with the accompanying drawings.

Figure 1 is an exploded perspective of a leaf-spring eye bushing according to the present utility model;Figure 2 is a sectional view taken along line 2-2 of Fig. 1;Figure 3 is a longitudinal sectional view of another embodiment of this utility model;Figure 4 is a perspective view of a third embodiment; andFigure 5 is a sectional view thereof.Referring now to the several views of the drawings wherein like reference numerals designated same parts throughout, there is shown a utility model for a leaf-spring eye bushing for automobile generally designated as reference numeral 10.Said leaf-spring eye bushing 10 comprises a generally cylindrical body 11 having a co-axial bore 12 centrally provided thereof.As shown in Figs. 1 and 2, said leaf-spring eye bushing 10 is provided with a perpendicular flange 13 on one of its ends and a cylindrical metal jacket 14 surrounding the peripheral walls 15 of said body 11.  When said leaf-spring bushing 10 is installed, the metal jacket 14 acts with the leaf-spring eye (not shown), which is also made of steel or cast steel.  In effect, the bushing 10 will not be directly in contact with steel, but rather the metal jacket, making the life of the bushing 10 longer than those without the metal jacket.In Figure 2, the bushing 10 as shown is made of plastic, preferably polyvinyl chloride, an oil resistant soft texture plastic or a hard polypropylene plastic, both are capable to endure the pressure applied thereto, and, in effect, would lengthen the life and replacement therefor.Figure 3, on the other hand, shows the walls 16 of the co-axial bore 12 of said bushing 10 is insertably provided with a steel tube 17 to reinforce the inner portion thereof.  This steel tube 17 accommodates or engages with the leaf-spring bolt (not shown) connecting the leaf spring and the automobile’s chassis.Figures 4 and 5 show another embodiment wherein the leaf eye bushing 10 is elongated and cylindrical as to its construction.  Said another embodiment is also made of polypropylene or polyvinyl chloride plastic material.  The steel tube 17 and metal jacket 14 may also be applied to this embodiment as an option thereof.[38]

VEHICLE BEARING CUSHIONKnown bearing cushions inserted to bearing housings for vehicle propeller shafts are made of hard rubber.  These rubber bushings after a time, upon subjecting them to so much or intermittent pressure would eventually be worn out that would cause the wobbling of the center bearing.The primary object of this utility model therefore is to provide a vehicle-bearing cushion that is made up of plastic.Another object of this utility model is to provide a vehicle bearing cushion made of polyvinyl chloride, an oil resistant soft texture plastic material which causes cushion to the propeller’s center bearing, yet strong enough to endure pressure brought about by the vibration of the center bearing.Yet, an object of this utility model is to provide a vehicle-bearing cushion that has a much longer life span than rubber bushings.Still an object of this utility model is to provide a vehicle bearing cushion that has a very simple construction and can be made using simple and ordinary molding equipment.These and other objects and advantages will come to view and be understood upon a reading of the detailed description when taken in conjunction with the accompanying drawings.Figure 1 is a perspective view of the present utility model for a vehicle-bearing cushion; andFigure 2 is a sectional view thereof.Referring now to the several views of the drawing, wherein like reference numeral designate same parts throughout, there is shown a utility model for a vehicle-bearing cushion generally designated as reference numeral 10.Said bearing cushion 10 comprises of a generally semi-circular body 11, having central hole 12 to house a conventional bearing (not shown).  As shown in Figure 1, said body 11 is provided with a plurality of ridges 13 which serves reinforcing means thereof.The subject bearing cushion 10 is made of polyvinyl chloride, a soft texture oil and chemical resistant plastic material which is strong, durable and capable of enduring severe pressure from the center bearing brought about by the rotating movement of the propeller shaft of the vehicle.[39]

A utility model is a technical solution to a problem in any field of human activity which is new and industrially applicable.  It may be, or may relate to, a product, or process, or an improvement of any of the aforesaid.[40] Essentially, a utility model refers to an invention in the mechanical field.  This is the reason why its object is sometimes described as a device or useful object. [41] A utility model varies from an invention, for which a patent for invention is, likewise, available, on at least three aspects:   first, the requisite of “inventive step”[42] in a patent for invention is not required; second, the maximum term of protection is only seven years[43] compared to a patent which is twenty years,[44] both reckoned from the date of the application; and third, the provisions on utility model dispense with its substantive examination[45] and prefer for a less complicated system.

Being plain automotive spare parts that must conform to the original structural design of the components they seek to replace, the Leaf Spring Eye Bushing and Vehicle Bearing Cushion are not ornamental.  They lack the decorative quality or value that must characterize authentic works of applied art.  They are not even artistic creations with incidental utilitarian functions or works incorporated in a useful article.  In actuality, the personal properties described in the search warrants are mechanical works, the principal function of which is utility sans any aesthetic embellishment.

Neither are we to regard the Leaf Spring Eye Bushing and Vehicle Bearing Cushion as included in the catch-all phrase “other literary, scholarly, scientific and artistic works” in Section 172.1(a) of R.A. No. 8293.  Applying the principle of ejusdem generis which states that “where a statute describes things of a particular class or kind accompanied by words of a generic character, the generic word will usually be limited to things of a similar nature with those particularly enumerated, unless there be something in the context of the state which would repel such inference,” [46] the Leaf Spring Eye Bushing and Vehicle Bearing Cushion are not copyrightable, being not of the same kind and nature as the works enumerated in Section 172 of R.A. No. 8293.

No copyright granted by law can be said to arise in favor of the petitioner despite the issuance of the certificates of copyright registration and the deposit of the Leaf Spring Eye Bushing and Vehicle Bearing Cushion.  Indeed, in Joaquin, Jr. v. Drilon [47]  and Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated,[48] the Court ruled that:Copyright, in the strict sense of the term, is purely a statutory right.  It is a new or independent right granted by the statute, and not simply a pre-existing right regulated by it.  Being a statutory grant, the rights are only such as the statute confers, and may be obtained and enjoyed only with respect to the subjects and by the persons, and on terms and conditions specified in the statute.  Accordingly, it can cover only the works falling within the statutory enumeration or description.

That the works of the petitioner may be the proper subject of a patent does not entitle him to the issuance of a search warrant for violation of copyright laws.  In Kho v. Court of Appeals [49]  and Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated,[50] the Court ruled that “these copyright and patent 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.”  The Court expounded further, thus: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.

The petitioner cannot find solace in the ruling of the United States Supreme Court in Mazer v. Stein[51] to buttress his petition.  In that case, the artifacts involved in that case were statuettes of dancing male and female figures made of semi-vitreous china.  The controversy therein centered on the fact that although copyrighted as “works of art,” the statuettes were intended for use and used as bases for table lamps, with electric wiring, sockets and lampshades attached.  The issue raised was

whether the statuettes were copyright protected in the United States, considering that the copyright applicant intended primarily to use them as lamp bases to be made and sold in quantity, and carried such intentions into effect.  At that time, the Copyright Office interpreted the 1909 Copyright Act to cover works of artistic craftsmanship insofar as their form, but not the utilitarian aspects, were concerned.  After reviewing the history and intent of the US Congress on its copyright legislation and the interpretation of the copyright office, the US Supreme Court declared that the statuettes were held copyrightable works of art or models or designs for works of art.  The High Court ruled that:“Works of art (Class G) – (a) – In General.  This class includes works of artistic craftsmanship, in so far as their form but not their mechanical or utilitarian aspects are concerned, such as artistic jewelry, enamels, glassware, and tapestries, as well as all works belonging to the fine arts, such as paintings, drawings and sculpture. …”So we have a contemporaneous and long-continued construction of the statutes by the agency charged to administer them that would allow the registration of such a statuette as is in question here.[52]

The High Court went on to state that “[t]he dichotomy of protection for the aesthetic is not beauty and utility but art for the copyright and the invention of original and ornamental design for design patents.”  Significantly, the copyright office promulgated a rule to implement Mazer to wit:… [I]f “the sole intrinsic function of an article is its utility, the fact that the work is unique and attractively shaped will not qualify it as a work of art.”

In this case, the bushing and cushion are not works of art.  They are, as the petitioner himself admitted, utility models which may be the subject of a patent.

IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby DENIED for lack of merit.  The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 70411 are AFFIRMED.  Search Warrant Nos. 01-2401 and 01-2402 issued on October 15, 2001 are ANNULLED AND SET ASIDE.  Costs against the petitioner.

SO ORDERED.

AIR PHILIPPINES CORPORATION, vs. PENNSWELL, INC G.R. No. 172835

 CHICO-NAZARIO, J.:              Petitioner Air Philippines Corporation seeks, via the instant Petition for Review under Rule 45 of the Rules of Court, the nullification of the 16 February 2006 Decision [1] and the 25 May 2006 Resolution[2] of the Court of Appeals in CA-G.R. SP No. 86329, which affirmed the Order[3] dated 30 June 2004 of the Regional Trial Court (RTC), Makati City, Branch 64, in Civil Case No. 00-561.           Petitioner Air Philippines Corporation is a domestic corporation engaged in the business of air transportation services.  On the other hand, respondent Pennswell, Inc. was organized to engage in the business of manufacturing and selling industrial chemicals, solvents, and special lubricants.           On various dates, respondent delivered and sold to petitioner sundry goods in trade, covered by Sales Invoices No. 8846,[4] 9105,[5] 8962,[6] and 8963,[7] which correspond to Purchase Orders No. 6433, 6684, 6634 and 6633, respectively.  Under the contracts, petitioner’s total outstanding obligation amounted to P449,864.98 with interest at 14% per annum until the amount would be fully paid.  For failure of the petitioner to comply with its obligation under said contracts, respondent filed a Complaint[8] for a Sum of Money on 28 April 2000 with the RTC.            In its Answer,[9] petitioner contended that its refusal to pay was not without valid and justifiable reasons.  In particular, petitioner alleged that it was defrauded in the amount of P592,000.00 by respondent for its previous sale of four items, covered by Purchase Order No. 6626.  Said items were misrepresented by respondent as belonging to a new line, but were in truth and in fact, identical with products petitioner had previously purchased

from respondent.  Petitioner asserted that it was deceived by respondent which merely altered the names and labels of such goods.  Petitioner specifically identified the items in question, as follows:  

Label/Description Item No. Amount P.O. Date1. a. Anti-Friction Fluid     b. Excellent Rust Corrosion (fake)

MPL-800MPL-008

153,941.40155,496.00

57145888

05/20/9906/20/99

 

2. a. Contact Grease    b. Connector Grease (fake)

COG #2 CG

115,236.00230,519.52

55406327

04/26/9908/05/99

3. a. Trixohtropic Grease    b. Di-Electric Strength          Protective Coating (fake)

EPCEPC#2

 81,876.9681,876.96

45825446

01/29/9904/21/99

4. a. Dry Lubricant    b. Anti-Seize Compound (fake)

ASC-EPASC-EP 2000

87,346.52124,108.10

57124763 &

5890

05/20/9902/16/99 &06/24/99

            According to petitioner, respondent’s products, namely Excellent Rust Corrosion, Connector Grease, Electric Strength Protective Coating, and Anti-Seize Compound, are identical with its Anti-Friction Fluid, Contact Grease, Thixohtropic Grease, and Dry Lubricant, respectively.  Petitioner asseverated that had respondent been forthright about the identical character of the products, it would not have purchased the items complained of.  Moreover, petitioner alleged that when the purported fraud was discovered, a conference was held between petitioner and respondent on 13 January 2000, whereby the parties agreed that respondent would return to petitioner the amount it previously paid.  However, petitioner was surprised when it received a letter from the respondent, demanding payment of the amount of P449,864.94, which later became the subject of respondent’s Complaint for Collection of a Sum of Money against petitioner.           During the pendency of the trial, petitioner filed a Motion to Compel [10] respondent to give a detailed list of the ingredients and chemical components of the following products, to wit: (a) Contact Grease and Connector Grease; (b) Thixohtropic Grease and Di-Electric Strength Protective Coating; and (c) Dry Lubricant and Anti-Seize Compound.[11]  It appears that petitioner had earlier requested the Philippine Institute of Pure and Applied Chemistry (PIPAC) for the latter to conduct a comparison of respondent’s goods.            On 15 March 2004, the RTC rendered an Order granting the petitioner’s motion.  It disposed, thus: 

The Court directs [herein respondent] Pennswell, Inc. to give [herein petitioner] Air Philippines Corporation[,] a detailed list of the ingredients or chemical components of the following chemical products:

 a.                   Contact Grease to be compared with Connector Grease;

 b.                  Thixohtropic Grease to be compared with Di-Electric

Strength    Protective Coating; and

 c.                   Dry Lubricant to be compared with Anti-Seize Compound[.]

 [Respondent] Pennswell, Inc. is given fifteen (15) days from receipt of this Order to

submit to [petitioner] Air Philippines Corporation the chemical components of all the above-mentioned products for chemical comparison/analysis.[12]

  

          Respondent sought reconsideration of the foregoing Order, contending that it cannot be compelled to disclose the chemical components sought because the matter is confidential.  It argued that what petitioner endeavored to inquire upon constituted a trade secret which respondent cannot be forced to divulge. Respondent maintained that its products are specialized lubricants, and if their components were revealed, its business competitors may easily imitate and market the same types of products, in violation of its proprietary rights and to its serious damage and prejudice.           The RTC gave credence to respondent’s reasoning, and reversed itself.  It issued an Order dated 30 June 2004, finding that the chemical components are respondent’s trade secrets and are privileged in character.   A priori, it rationalized: 

          The Supreme Court held in the case of Chavez vs. Presidential Commission on Good Government, 299 SCRA 744, p. 764, that “the drafters of the Constitution also unequivocally affirmed that aside from national security matters and intelligence information, trade or industrial secrets (pursuant to the Intellectual Property Code and other related laws) as well as banking transactions (pursuant to the Secrecy of Bank Deposit Act) are also exempted from compulsory disclosure.”

             Trade secrets may not be the subject of compulsory disclosure.  By reason of [their] confidential and privileged character, ingredients or chemical components of the products ordered by this Court to be disclosed constitute trade secrets lest [herein respondent] would eventually be exposed to unwarranted business competition with others who may imitate and market the same kinds of products in violation of [respondent’s] proprietary rights.  Being privileged, the detailed list of ingredients or chemical components may not be the subject of mode of discovery under Rule 27, Section 1 of the Rules of Court, which expressly makes privileged information an exception from its coverage.[13]

  Alleging grave abuse of discretion on the part of the RTC, petitioner filed a Petition

for Certiorari under Rule 65 of the Rules of Court with the Court of Appeals, which denied the Petition and affirmed the Order dated 30 June 2004 of the RTC. 

 The Court of Appeals ruled that to compel respondent to reveal in detail the list of ingredients of its

lubricants is to disregard respondent’s rights over its trade secrets.  It was categorical in declaring that the chemical formulation of respondent’s products and their ingredients are embraced within the meaning of “trade secrets.” In disallowing the disclosure, the Court of Appeals expounded, thus:

 The Supreme Court in Garcia v. Board of Investments (177 SCRA 374 [1989]) held

that trade secrets and confidential, commercial and financial information are exempt from public scrutiny.  This is reiterated in Chavez v. Presidential Commission on Good Government (299 SCRA 744 [1998]) where the Supreme Court enumerated the kinds of information and transactions that are recognized as restrictions on or privileges against compulsory disclosure.  There, the Supreme Court explicitly stated that:

 “The drafters of the Constitution also unequivocally affirmed that, aside from

national security matters and intelligence information, trade or industrial secrets (pursuant to the Intellectual Property Code and other related laws) as well as banking transactions (pursuant to the Secrecy of Bank Deposits Act) re also exempt from compulsory disclosure.” 

It is thus clear from the foregoing that a party cannot be compelled to produce, release or disclose documents, papers, or any object which are considered trade secrets. 

In the instant case, petitioner [Air Philippines Corporation] would have [respondent] Pennswell produce a detailed list of ingredients or composition of the latter’s lubricant products so that a chemical comparison and analysis thereof can be obtained.  On this note, We believe and so hold that the ingredients or composition of [respondent] Pennswell’s lubricants are trade secrets which it cannot be compelled to disclose. 

[Respondent] Pennswell has a proprietary or economic right over the ingredients or components of its lubricant products.  The formulation thereof is not known to the general public and is peculiar only to [respondent] Pennswell.  The legitimate and economic interests of business enterprises in protecting their manufacturing and business secrets are well-recognized in our system. 

[Respondent] Pennswell has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information against the public.  Otherwise, such information can be illegally and unfairly utilized by business competitors who, through their access to [respondent] Pennswell’s business secrets, may use the same for their own private gain and to the irreparable prejudice of the latter.             x x x x 

In the case before Us, the alleged trade secrets have a factual basis, i.e., it comprises of the ingredients and formulation of [respondent] Pennswell’s lubricant products which are unknown to the public and peculiar only to Pennswell. 

All told, We find no grave abuse of discretion amounting to lack or excess of jurisdiction on the part of public respondent Judge in finding that the detailed list of ingredients or composition of the subject lubricant products which petitioner [Air Philippines Corporation] seeks to be disclosed are trade secrets of [respondent] Pennswell; hence, privileged against compulsory disclosure.[14]

  Petitioner’s Motion for Reconsideration was denied. Unyielding, petitioner brought the instant Petition before us, on the sole issue of:       WHETHER THE COURT OF APPEALS RULED IN ACCORDANCE WITH PREVAILING LAWS AND JURISPRUDENCE WHEN IT UPHELD THE RULING OF THE TRIAL COURT THAT THE CHEMICAL COMPONENTS OR INGREDIENTS OF RESPONDENT’S PRODUCTS ARE TRADE SECRETS OR INDUSTRIAL SECRETS THAT ARE NOT SUBJECT TO COMPULSORY DISCLOSURE.[15]

  

          Petitioner seeks to convince this Court that it has a right to obtain the chemical composition and ingredients of respondent’s products to conduct a comparative analysis of its products.   Petitioner assails the conclusion reached by the Court of Appeals that the matters are trade secrets which are protected by law and beyond public scrutiny.  Relying on Section 1, Rule 27 of the Rules of Court, petitioner argues that the use of modes of discovery operates with desirable flexibility under the discretionary control of the trial court.   Furthermore, petitioner posits that its request is not done in bad faith or in any manner as to annoy, embarrass, or oppress respondent.           A trade secret is defined as a plan or process, tool, mechanism or compound known only to its owner and those of his employees to whom it is necessary to confide it. [16]  The definition also extends to a secret formula or process not patented, but known only to certain individuals using it in compounding some article of trade having a commercial value.[17]  A trade secret may consist of any formula, pattern, device, or compilation of information that: (1) is used in one's business; and (2) gives the employer an opportunity to obtain an advantage over competitors who do not possess the information.[18] Generally, a trade secret is a process or device intended for continuous use in the operation of the business, for example, a machine or formula, but can be a price list or catalogue or specialized customer list.[19]  It is indubitable that trade secrets constitute proprietary rights.  The inventor, discoverer, or possessor of a trade secret or similar innovation has rights therein which may be treated as property, and ordinarily an injunction will be granted to prevent the disclosure of the trade secret by one who obtained the information "in confidence" or through a "confidential relationship." [20]  American jurisprudence has utilized the following factors[21] to determine if an information is a trade secret, to wit:         

(1)               the extent to which the information is known outside of the employer's business; 

(2)               the extent to which the information is known by employees and others involved in the business;

 (3)               the extent of measures taken by the employer to guard the secrecy of the

information; 

(4)               the value of the information to the employer and to competitors; 

(5)               the amount of effort or money expended by the company indeveloping the information; and

 (6)      the extent to which the information could be easily or readily            obtained

through an independent source.[22]

  In Cocoland Development Corporation v. National Labor Relations Commission,[23] the issue was the

legality of an employee’s termination on the ground of unauthorized disclosure of trade secrets.  The Court laid down the rule that any determination by management as to the confidential nature of technologies, processes, formulae or other so-called trade secrets must have a substantial factual basis which can pass judicial scrutiny.  The Court rejected the employer’s naked contention that its own determination as to what constitutes a trade secret should be binding and conclusive upon the NLRC.  As a caveat, the Court said that to rule otherwise would be to permit an employer to label almost anything a trade secret, and thereby create a weapon with which he/it may arbitrarily dismiss an employee on the pretext that the latter somehow disclosed a trade secret, even if in fact there be none at all to speak of.[24]  Hence, inCocoland, the parameters in the determination of trade secrets were set to be such substantial factual basis that can withstand judicial scrutiny. 

 The chemical composition, formulation, and ingredients of respondent’s special lubricants are trade

secrets within the contemplation of the law. Respondent was established to engage in the business of general

manufacturing and selling of, and to deal in, distribute, sell or otherwise dispose of goods, wares, merchandise, products, including but not limited to industrial chemicals, solvents, lubricants, acids, alkalies, salts, paints, oils, varnishes, colors, pigments and similar preparations, among others.  It is unmistakable to our minds that the manufacture and production of respondent’s products proceed from a formulation of a secret list of ingredients.  In the creation of its lubricants, respondent expended efforts, skills, research, and resources.  What it had achieved by virtue of its investments may not be wrested from respondent on the mere pretext that it is necessary for petitioner’s defense against a collection for a sum of money.  By and large, the value of the information to respondent is crystal clear.  The ingredients constitute the very fabric of respondent’s production and business.  No doubt, the information is also valuable to respondent’s competitors.  To compel its disclosure is to cripple respondent’s business, and to place it at an undue disadvantage.  If the chemical composition of respondent’s lubricants are opened to public scrutiny, it will stand to lose the backbone on which its business is founded.  This would result in nothing less than the probable demise of respondent’s business.  Respondent’s proprietary interest over the ingredients which it had developed and expended money and effort on is incontrovertible. Our conclusion is that the detailed ingredients sought to be revealed have a commercial value to respondent.  Not only do we acknowledge the fact that the information grants it a competitive advantage; we also find that there is clearly a glaring intent on the part of respondent to keep the information confidential and not available to the prying public. 

           We now take a look at Section 1, Rule 27 of the Rules of Court, which permits parties to inspect documents or things upon a showing of good cause before the court in which an action is pending.  Its entire provision reads:                     SECTION 1. Motion for production or inspection order. – Upon motion of any party

showing good cause therefore, the court in which an action is pending may (a) order any party to produce and permit the inspection and copying or photographing, by or on behalf of the moving party, of any designated documents, papers, books, accounts, letters, photographs, objects or tangible things, not privileged, which constitute or contain evidence material to any matter involved in the action and which are in his possession, custody or control; or (b) order any party to permit entry upon designated land or other property in his possession or control for the purpose of inspecting, measuring, surveying, or photographing the property or any designated relevant object or operation thereon.  The order shall specify the time, place and manner of making the inspection and taking copies and photographs, and may prescribe such terms and conditions as are just.

  

A more than cursory glance at the above text would show that the production or inspection of documents or things as a mode of discovery sanctioned by the Rules of Court may be availed of by any party upon a showing of good cause therefor before the court in which an action is pending.  The court may order any party: a) to produce and permit the inspection and copying or photographing of any designated documents, papers, books, accounts, letters, photographs, objects or tangible things, which are not privileged;[25] which constitute or contain evidence material to any matter involved in the action; and which are in his possession, custody or control; or b) to permit entry upon designated land or other property in his possession or control for the purpose of inspecting, measuring, surveying, or photographing the property or any designated relevant object or operation thereon. 

 Rule 27 sets an unequivocal proviso that the documents, papers, books, accounts, letters, photographs,

objects or tangible things that may be produced and inspected should not be privileged.[26]  The documents must not be privileged against disclosure.[27]  On the ground of public policy, the rules providing for production and inspection of books and papers do not authorize the production or inspection of privileged matter; that is, books and papers which, because of their confidential and privileged character, could not be received in evidence.[28] Such a condition is in addition to the requisite that the items be specifically described, and must constitute or

contain evidence material to any matter involved in the action and which are in the party’s possession, custody or control. 

 Section 24[29] of Rule 130 draws the types of disqualification by reason of privileged communication, to

wit: (a) communication between husband and wife; (b) communication between attorney and client; (c) communication between physician and patient; (d) communication between priest and penitent; and (e) public officers and public interest.  There are, however, other privileged matters that are not mentioned by Rule 130.  Among them are the following: (a) editors may not be compelled to disclose the source of published news; (b) voters may not be compelled to disclose for whom they voted; (c)trade secrets; (d) information contained in tax census returns; and (d) bank deposits. [30]  

We, thus, rule against the petitioner.  We affirm the ruling of the Court of Appeals which upheld the finding of the RTC that there is substantial basis for respondent to seek protection of the law for its proprietary rights over the detailed chemical composition of its products.  

That trade secrets are of a privileged nature is beyond quibble.  The protection that this jurisdiction affords to trade secrets is evident in our laws.  The Interim Rules of Procedure on Government Rehabilitation, effective 15 December 2000, which applies to: (1) petitions for rehabilitation filed by corporations, partnerships, and associations pursuant to Presidential Decree No. 902-A,[31] as amended; and (2) cases for rehabilitation transferred from the Securities and Exchange Commission to the RTCs pursuant to Republic Act No. 8799, otherwise known as The Securities Regulation Code, expressly provides that the court may issue an order to protect trade secrets or other confidential research, development, or commercial information belonging to the debtor.[32] Moreover, the Securities Regulation Code is explicit that the Securities and Exchange Commission is not required or authorized to require the revelation of trade secrets or processes in any application, report or document filed with the Commission.[33]  This confidentiality is made paramount as a limitation to the right of any member of the general public, upon request, to have access to all information filed with the Commission.[34] 

 Furthermore, the Revised Penal Code endows a cloak of protection to trade secrets under the following

articles: 

            Art. 291. Revealing secrets with abuse of office. — The penalty of arresto mayor and a fine not exceeding 500 pesos shall be imposed upon any manager, employee or servant who, in such capacity, shall learn the secrets of his principal or master and shall reveal such secrets.             Art. 292. Revelation of industrial secrets. — The penalty of prision correccional in its minimum and medium periods and a fine not exceeding 500 pesos shall be imposedupon the person in charge, employee or workman of any manufacturing or industrial establishment who, to the prejudice of the owner thereof, shall reveal the secrets of the industry of   the latter.  Similarly, Republic Act No. 8424, otherwise known as the National Internal Revenue Code of 1997,

has a restrictive provision on trade secrets, penalizing the revelation thereof by internal revenue officers or employees, to wit:

             SECTION 278. Procuring Unlawful Divulgence of Trade Secrets. - Any person who causes or procures an officer or employee of the Bureau of Internal Revenue to divulge any confidential information regarding the business, income or inheritance of any taxpayer, knowledge of which was acquired by him in the discharge of his official duties, and which it

is unlawful for him to reveal, and any person who publishes or prints in any manner whatever, not provided by law, any income, profit, loss or expenditure appearing in any income tax return, shall be punished by a fine of not more than two thousand pesos (P2,000), or suffer imprisonment of not less than six (6) months nor more than five (5) years, or both.  Republic Act No. 6969, or the Toxic Substances and Hazardous and Nuclear Wastes Control Act of

1990, enacted to implement the policy of the state to regulate, restrict or prohibit the importation, manufacture, processing, sale, distribution, use and disposal of chemical substances and mixtures that present unreasonable risk and/or injury to health or the environment, also contains a provision that limits the right of the public to have access to records, reports or information concerning chemical substances and mixtures including safety data submitted and data on emission or discharge into the environment, if the matter is confidential such that it would divulge trade secrets, production or sales figures; or methods, production or processes unique to such manufacturer, processor or distributor; or would otherwise tend to affect adversely the competitive position of such manufacturer, processor or distributor.[35]

 Clearly, in accordance with our statutory laws, this Court has declared that intellectual and industrial

property rights cases are not simple property cases.[36]  Without limiting such industrial property rights to trademarks and trade names, this Court has ruled that all agreements concerning intellectual property are intimately connected with economic development.[37]  The protection of industrial property encourages investments in new ideas and inventions and stimulates creative efforts for the satisfaction of human needs.  It speeds up transfer of technology and industrialization, and thereby bring about social and economic progress.[38]  Verily, the protection of industrial secrets is inextricably linked to the advancement of our economy and fosters healthy competition in trade. 

           Jurisprudence has consistently acknowledged the private character of trade secrets.  There is a privilege not to disclose one’s trade secrets.[39] Foremost, this Court has declared that trade secrets and banking transactions are among the recognized restrictions to the right of the people to information as embodied in the Constitution.[40]  We said that the drafters of the Constitution also unequivocally affirmed that, aside from national security matters and intelligence information, trade or industrial secrets (pursuant to the Intellectual Property Code and other related laws) as well as banking transactions (pursuant to the Secrecy of Bank Deposits Act), are also exempted from compulsory disclosure.[41]  

Significantly, our cases on labor are replete with examples of a protectionist stance towards the trade secrets of employers.  For instance, this Court upheld the validity of the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company, on the rationalization that the company has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors.[42]  Notably, it was in a labor-related case that this Court made a stark ruling on the proper determination of trade secrets.          

In the case at bar, petitioner cannot rely on Section 77 [43] of Republic Act 7394, or the Consumer Act of the Philippines, in order to compel respondent to reveal the chemical components of its products.   While it is true that all consumer products domestically sold, whether manufactured locally or imported, shall indicate their general make or active ingredients in their respective labels of packaging, the law does not apply to respondent.  Respondent’s specialized lubricants -- namely, Contact Grease, Connector Grease, Thixohtropic Grease, Di-Electric Strength Protective Coating, Dry Lubricant and Anti-Seize Compound -- are not consumer products.  “Consumer products,” as it is defined in Article 4(q),[44] refers to goods, services and credits, debts or obligations which are primarily for personal, family, household or agricultural purposes, which shall include, but not be limited to, food, drugs, cosmetics, and devices. This is not the nature of respondent’s products.  Its

products are not intended for personal, family, household or agricultural purposes.  Rather, they are for industrial use, specifically for the use of aircraft propellers and engines. 

 Petitioner’s argument that Republic Act No. 8203, or the Special Law on Counterfeit Drugs, requires

the disclosure of the active ingredients of a drug is also on faulty ground. [45]  Respondent’s products are outside the scope of the cited law.  They do not come within the purview of a drug [46] which, as defined therein, refers to any chemical compound or biological substance, other than food, that is intended for use in the treatment, prevention or diagnosis of disease in man or animals. Again, such are not the characteristics of respondent’s products.

 What is clear from the factual findings of the RTC and the Court of Appeals is that the chemical

formulation of respondent’s products is not known to the general public and is unique only to it.  Both courts uniformly ruled that these ingredients are not within the knowledge of the public.   Since such factual findings are generally not reviewable by this Court, it is not duty-bound to analyze and weigh all over again the evidence already considered in the proceedings below.[47]  We need not delve into the factual bases of such findings as questions of fact are beyond the pale of Rule 45 of the Rules of Court.   Factual findings of the trial court when affirmed by the Court of Appeals, are binding and conclusive on the Supreme Court.[48]  

We do not find merit or applicability in petitioner’s invocation of Section 12 [49] of the Toxic Substances and Hazardous and Nuclear Wastes Control Act of 1990, which grants the public access to records, reports or information concerning chemical substances and mixtures, including safety data submitted, and data on emission or discharge into the environment.  To reiterate, Section 12[50] of said Act deems as confidential matters, which may not be made public, those that would divulge trade secrets, including production or sales figures or methods; production or processes unique to such manufacturer, processor or distributor, or would otherwise tend to affect adversely the competitive position of such manufacturer, processor or distributor.  It is true that under the same Act, the Department of Environment and Natural Resources may release information; however, the clear import of the law is that said authority is limited by the right to confidentiality of the manufacturer, processor or distributor, which information may be released only to a medical research or scientific institution where the information is needed for the purpose of medical diagnosis or treatment of a person exposed to the chemical substance or mixture.  The right to confidentiality is recognized by said Act as primordial.  Petitioner has not made the slightest attempt to show that these circumstances are availing in the case at bar. 

 Indeed, the privilege is not absolute; the trial court may compel disclosure where it is indispensable for

doing justice.[51] We do not, however, find reason to except respondent’s trade secrets from the application of the rule on privilege.  The revelation of respondent’s trade secrets serves no better purpose to the disposition of the main case pending with the RTC, which is on the collection of a sum of money.  As can be gleaned from the facts, petitioner received respondent’s goods in trade in the normal course of business.  To be sure, there are defenses under the laws of contracts and sales available to petitioner.  On the other hand, the greater interest of justice ought to favor respondent as the holder of trade secrets.  If we were to weigh the conflicting interests between the parties, we rule in favor of the greater interest of respondent.  Trade secrets should receive greater protection from discovery, because they derive economic value from being generally unknown and not readily ascertainable by the public.[52]  To the mind of this Court, petitioner was not able to show a compelling reason for us to lift the veil of confidentiality which shields respondent’s trade secrets. 

 WHEREFORE, the Petition is DENIED.  The Decision dated 16 February 2006, and the Resolution

dated 25 May 2006, of the Court of Appeals in CA-G.R. SP No. 86329 are AFFIRMED.  No costs. SO ORDERED.

FIRST DIVISION[G.R. Nos. 160054-55.  July 21, 2004]

MANOLO P. SAMSON, petitioner, vs. HON. REYNALDO B. DAWAY, in his capacity as Presiding Judge, Regional Trial Court of Quezon City, Branch 90, PEOPLE OF THE PHILIPPINES and CATERPILLAR, INC., respondents.

D E C I S I O NYNARES-SANTIAGO, J.:

Assailed in this petition for certiorari is the March 26, 2003 Order[1] of the Regional Trial Court of Quezon City, Branch 90, which denied petitioner’s – (1) motion to quash the information; and (2) motion for reconsideration of the August 9, 2002 Order denying his motion to suspend the arraignment and other proceedings in Criminal Case Nos. Q-02-108043-44.  Petitioner also questioned its August 5, 2003 Order[2] which denied his motion for reconsideration.

The undisputed facts show that on March 7, 2002, two informations for unfair competition under Section 168.3 (a), in relation to Section 170, of the Intellectual Property Code (Republic Act No. 8293), similarly worded save for the dates and places of commission, were filed against petitioner Manolo P. Samson, the registered owner of ITTI Shoes.  The accusatory portion of said informations read:That on or about the first week of November 1999 and sometime prior or subsequent thereto, in Quezon City, Philippines, and within the jurisdiction of this Honorable Court, above-named accused, owner/proprietor of ITTI Shoes/Mano Shoes Manufactuirng Corporation located at Robinson’s Galleria, EDSA corner Ortigas Avenue, Quezon City, did then and there willfully, unlawfully and feloniously distribute, sell and/or offer for sale CATERPILLAR products such as footwear, garments, clothing, bags, accessories and paraphernalia which are closely identical to and/or colorable imitations of the authentic Caterpillar products and likewise using trademarks, symbols and/or designs as would cause confusion, mistake or deception on the part of the buying public to the damage and prejudice of CATERPILLAR, INC., the prior adopter, user and owner of the following internationally: “CATERPILLAR”, “CAT”, “CATERPILLAR & DESIGN”, “CAT AND DESIGN”, “WALKING MACHINES” and “TRACK-TYPE TRACTOR & DESIGN.”CONTRARY TO LAW.[3]

On April 19, 2002, petitioner filed a motion to suspend arraignment and other proceedings in view of the existence of an alleged prejudicial question involved in Civil Case No. Q-00-41446 for unfair competition pending with the same branch; and also in view of the pendency of a petition for review filed with the Secretary of Justice assailing the Chief State Prosecutor’s resolution finding probable cause to charge petitioner with unfair competition.   In an Order dated August 9, 2002, the trial court denied the motion to suspend arraignment and other proceedings.

On August 20, 2002, petitioner filed a twin motion to quash the informations and motion for reconsideration of the order denying motion to suspend, this time challenging the jurisdiction of the trial court over the offense charged.  He contended that since under Section 170 of R.A. No. 8293, the penalty5 of imprisonment for unfair competition does not exceed six years, the offense is cognizable by the Municipal Trial Courts and not by the Regional Trial Court, per R.A. No. 7691.

In its assailed March 26, 2003 Order, the trial court denied petitioner’s twin motions.6 A motion for reconsideration thereof was likewise denied on August 5, 2003.

Hence, the instant petition alleging that respondent Judge gravely abused its discretion in issuing the assailed orders.

The issues posed for resolution are – (1) Which court has jurisdiction over criminal and civil cases for violation of intellectual property rights? (2) Did the respondent Judge gravely abuse his discretion in refusing to suspend the arraignment and other proceedings in Criminal Case Nos. Q-02-108043-44 on the ground of – (a) the existence of a prejudicial question; and (b) the pendency of a petition for review with the Secretary of Justice on the finding of probable cause for unfair competition?

Under Section 170 of R.A. No. 8293, which took effect on January 1, 1998, the criminal penalty for infringement of registered marks, unfair competition, false designation of origin and false description or representation, is imprisonment from 2 to 5 years and a fine ranging from Fifty Thousand Pesos to Two Hundred Thousand Pesos, to wit:

SEC. 170. Penalties. – Independent of the civil and administrative sanctions imposed by law, a criminal penalty of imprisonment from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (P50,000.00) to Two hundred thousand pesos (P200,000.00), shall be imposed on any person who is found guilty of committing any of the acts mentioned in Section 155 [Infringement], Section 168 [Unfair Competition] and Section 169.1 [False Designation of Origin and False Description or Representation].

Corollarily, Section 163 of the same Code states that actions (including criminal and civil) under Sections 150, 155, 164, 166, 167, 168 and 169 shall be brought before the proper courts with appropriate jurisdiction under existing laws, thus –SEC. 163. Jurisdiction of Court. – All actions under Sections 150, 155, 164 and 166 to 169 shall be brought before the proper courts with appropriate jurisdiction under existing laws. (Emphasis supplied)

The existing law referred to in the foregoing provision is Section 27 of R.A. No. 166 (The Trademark Law) which provides that jurisdiction over cases for infringement of registered marks, unfair competition, false designation of origin and false description or representation, is lodged with the Court of First Instance (now Regional Trial Court) –SEC. 27. Jurisdiction of Court of First Instance. – All actions under this Chapter [V – Infringement] and Chapters VI [Unfair Competition] and VII [False Designation of Origin and False Description or Representation], hereof shall be brought before the Court of First Instance.

We find no merit in the claim of petitioner that R.A. No. 166 was expressly repealed by R.A. No. 8293.  The repealing clause of R.A. No. 8293, reads –SEC. 239. Repeals. – 239.1. All Acts and parts of Acts inconsistent herewith, more particularly Republic Act No. 165, as amended; Republic Act No. 166, as amended; and Articles 188 and 189 of the Revised Penal Code; Presidential Decree No. 49, including Presidential Decree No. 285, as amended, are hereby repealed. (Emphasis added)

Notably, the aforequoted clause did not expressly repeal R.A. No. 166 in its entirety, otherwise, it would not have used the phrases “parts of Acts” and “inconsistent herewith;” and it would have simply stated “Republic Act No. 165, as amended; Republic Act No. 166, as amended; and Articles 188 and 189 of the Revised Penal Code; Presidential Decree No. 49, including Presidential Decree No. 285, as amended are hereby repealed.”  It would have removed all doubts that said specific laws had been rendered without force and effect.  The use of the phrases “parts of Acts” and “inconsistent herewith” only means that the repeal pertains only to provisions which are repugnant or not susceptible of harmonization with R.A. No. 8293.7 Section 27 of R.A. No. 166, however, is consistent and in harmony with Section 163 of R.A. No. 8293.  Had R.A. No. 8293 intended to vest jurisdiction over violations of intellectual property rights with the Metropolitan Trial Courts, it would have expressly stated so under Section 163 thereof.

Moreover, the settled rule in statutory construction is that in case of conflict between a general law and a special law, the latter must prevail.  Jurisdiction conferred by a special law to Regional Trial Courts must prevail over that granted by a general law to Municipal Trial Courts.8

In the case at bar, R.A. No. 8293 and R.A. No. 166 are special laws 9 conferring jurisdiction over violations of intellectual property rights to the Regional Trial Court.  They should therefore prevail over R.A. No. 7691, which is a general law.10 Hence, jurisdiction over the instant criminal case for unfair competition is properly lodged with the Regional Trial Court even if the penalty therefor is imprisonment of less than 6 years, or from 2 to 5 years and a fine ranging from P50,000.00 to P200,000.00.

In fact, to implement and ensure the speedy disposition of cases involving violations of intellectual property rights under R.A. No. 8293, the Court issued A.M. No. 02-1-11-SC dated February 19, 2002 designating certain Regional Trial Courts as Intellectual Property Courts.  On June 17, 2003, the Court further issued a Resolution consolidating jurisdiction to hear and decide Intellectual Property Code and Securities and Exchange Commission cases in specific Regional Trial Courts designated as Special Commercial Courts.

The case of Mirpuri v. Court of Appeals,11 invoked by petitioner finds no application in the present case.  Nowhere in Mirpuri did we state that Section 27 of R.A. No. 166 was repealed by R.A. No. 8293.  Neither did we make a categorical ruling therein that jurisdiction over cases for violation of

intellectual property rights is lodged with the Municipal Trial Courts.  The passing remark in Mirpuri on the repeal of R.A. No. 166 by R.A. No. 8293 was merely a backgrounder to the enactment of the present Intellectual Property Code and cannot thus be construed as a jurisdictional pronouncement in cases for violation of intellectual property rights.

Anent the second issue, petitioner failed to substantiate his claim that there was a prejudicial question.  In his petition, he prayed for the reversal of the March 26, 2003 order which sustained the denial of his motion to suspend arraignment and other proceedings in Criminal Case Nos. Q-02-108043-44.  For unknown reasons, however, he made no discussion in support of said prayer in his petition and reply to comment.  Neither did he attach a copy of the complaint in Civil Case No. Q-00-41446 nor quote the pertinent portion thereof to prove the existence of a prejudicial question.

At any rate, there is no prejudicial question if the civil and the criminal action can, according to law, proceed independently of each other.12 Under Rule 111, Section 3 of the Revised Rules on Criminal Procedure, in the cases provided in Articles 32, 33, 34 and 2176 of the Civil Code, the independent civil action may be brought by the offended party.  It shall proceed independently of the criminal action and shall require only a preponderance of evidence.

In the case at bar, the common element in the acts constituting unfair competition under Section 168 of R.A. No. 8293 is fraud.13 Pursuant to Article 33 of the Civil Code, in cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the criminal action, may be brought by the injured party.  Hence, Civil Case No. Q-00-41446, which as admitted14 by private respondent also relate to unfair competition, is an independent civil action under Article 33 of the Civil Code.  As such, it will not operate as a prejudicial question that will justify the suspension of the criminal cases at bar.Section 11 (c), Rule 116 of the Revised Rules on Criminal Procedure provides –SEC. 11. Suspension of arraignment. – Upon motion by the proper party, the arraignment shall be suspended in the following cases –

x x x                          x x x                             x x x(c)     A petition for review of the resolution of the prosecutor is pending at either the Department of Justice, or the Office of the President; Provided, that the period of suspension shall not exceed sixty (60) days counted from the filing of the petition with the reviewing office.

While the pendency of a petition for review is a ground for suspension of the arraignment, the aforecited provision limits the deferment of the arraignment to a period of 60 days reckoned from the filing of the petition with the reviewing office.  It follows, therefore, that after the expiration of said period, the trial court is bound to arraign the accused or to deny the motion to defer arraignment.

In the instant case, petitioner failed to establish that respondent Judge abused his discretion in denying his motion to suspend.  His pleadings and annexes submitted before the Court do not show the date of filing of the petition for review with the Secretary of Justice.15 Moreover, the Order dated August 9, 2002 denying his motion to suspend was not appended to the petition.  He thus failed to discharge the burden of proving that he was entitled to a suspension of his arraignment and that the questioned orders are contrary to Section 11 (c), Rule 116 of the Revised Rules on Criminal Procedure.  Indeed, the age-old but familiar rule is that he who alleges must prove his allegations.

In sum, the dismissal of the petition is proper considering that petitioner has not established that the trial court committed grave abuse of discretion.  So also, his failure to attach documents relevant to his allegations warrants the dismissal of the petition, pursuant to Section 3, Rule 46 of the Rules of Civil Procedure, which states:SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. — The petition shall contain the full names and actual addresses of all the petitioners and respondents, a concise statement of the matters involved, the factual background of the case, and the grounds relied upon for the relief prayed for.It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the respondent with the original copy intended for the court indicated as such by the petitioner, and shall be accompanied by a clearly legible duplicate original or certified true copy of the judgment, order, resolution, or ruling subject

thereof, such material portions of the record as are referred to therein, and other documents relevant or pertinent thereto.

x x x                          x x x                             x x xThe failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the dismissal of the petition. (Emphasis added)

WHEREFORE, in view of all the foregoing, the petition is DISMISSED.SO ORDERED.

 

 ANDREA TAN, CLARITA                G.R. No.148420LLAMAS,         VICTOR ESPINA    and LUISA ESPINA,                                          Petitioners,

Present:                               

- v e r s u s -                     BAUSCH & LOMB, INC.                      Respondent.          Promulgated:

 December 15, 2005

                               x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

 D E C I S I O N

  CORONA, J.:                Assailed in this petition for review[1] are the decision[2] and resolution[3] of the Court of Appeals which set aside the December 22, 1998 order[4] of Judge Genis Balbuena of Branch 21, Regional Trial Court (RTC), Cebu City and ordered the transfer of Criminal Case No. CBU-45890 to Branch 9, RTC, Cebu City.       

The antecedents follow. On April 8, 1997, an information[5] for violation of paragraph 1, Article 189 [6] of the

Revised Penal Code (RPC) was filed before Branch 21, RTC, Cebu City against petitioners Andrea Tan, Clarita Llamas, Victor Espina and Luisa Espina of Best Buy Mart, Inc.  The information read:

 That on or about June 27, 1996 and sometime prior or subsequent thereto, in

the City of Cebu, Philippines, and within the jurisdiction of this Honorable Court, abovementioned accused, conspiring and mutually helping each other, did then and there willfully, unlawfully and feloniously distribute and sell counterfeit RAY BAN sunglasses bearing the appearance and trademark of RAY BAN in the aforesaid store wherein they have direct control, supervision and management thereby inducing the public to believe that these goods offered by them are those of RAY BAN to the

damage and prejudice of BAUSCH AND LOMB, INC., the exclusive owner and user of trademark RAY BAN on sunglasses.[7]

   

        On January 21, 1998, respondent filed a motion to transfer the case to Branch 9, RTC, Cebu City.  Administrative Order No. 113-95[8] (A.O. No. 113-95) designated the said branch as the special court in Region VII to handle violations of intellectual property rights.

 On March 2, 1998, petitioners filed a motion to quash[9] the information on the

ground that the RTC had no jurisdiction over the offense charged against them. The penalty[10] provided by the RPC for the crime was within the jurisdiction of the Municipal Trial Court in Cities (MTCC).        

On March 6, 1998, respondent filed an opposition to the motion to quash,[11] explaining that BP 129 had already transferred the exclusive jurisdiction to try and decide violations of intellectual property rights from the MTC and MTCC to the RTC and that the Supreme Court had also issued Administrative Order No. 104-96 (A.O. No. 104-96)[12] deleting and withdrawing the designation of several branches of the MTC and MTCC as special intellectual property courts.        

On December 22, 1998, the court a quo denied respondent’s motion to transfer the case and granted petitioners’ motion to quash.  It ruled:  

            Accused [wa]s charged for violation of Art. 189 of Revised Penal Code the penalty for which is prision correccional in its minimum period or a fine ranging from P500.00 to P2,000.00, or both.  Hence, within the jurisdiction of the metropolitan and municipal trial courts (Sec. 32(2), B.P. Blg. 129, as amended).             Administrative Orders Nos. 113-95 and 104-96, cited by plaintiff, cannot prevail over the express provisions of Batas Pambansa Blg. 129, as amended, jurisdiction of courts being a matter of substantive law.             If this Court has no jurisdiction over the case, the same is true with Branch 9 of the same court, Therefore, the motion to transfer the case to the latter should fail.             WHEREFORE, premises considered, the motion to transfer is denied, while the motion to quash is granted.   The case is thus dismissed.             SO ORDERED.[13]

        

Respondent received the order on January 21, 1999 but filed neither an appeal nor a motion for reconsideration.  Rather, it filed a petition for certiorari[14] in the Court of Appeals on March 23, 1999 or one (1) day beyond the period allowed in Section 4, Rule 65[15] of the Rules of Court.       

Respondent’s procedural lapses notwithstanding, the appellate court gave due course to the petition and set aside the trial court order:

 

WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. The assailed Order of December 22, 1998 is VACATED and another is entered ordering the transfer of Crim. Case No. CBU-45890 to Branch 9 of the Regional Trial Court of Cebu City, and directing the public respondent to accordingly transmit the records thereof.             SO ORDERED.[16]

  Hence, the present petition for review, centered on the following issues: 

I.                     THE COURT OF APPEALS SERIOUSLY ERRED IN NOT DISMISSING THE PETITION OF RESPONDENT THAT IS FRAUGHT WITH FATAL INFIRMITIES.

 II.                   THE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE

CORRECT RULING OF THE TRIAL COURT THAT THE REGIONAL TRIAL COURT HAS NO JURISDICTION OVER THE OFFENSE OF UNFAIR COMPETITION UNDER ARTICLE 189 OF THE REVISED PENAL CODE.[17]

           There is no merit in the petition.

         As to the first assigned error, petitioners contend that the Court of Appeals erred in giving due course to the petition for certiorari because respondent failed to appeal or file a motion for reconsideration of the trial court’s order granting the motion to quash.  Worse, respondent filed the petition in the appellate court one day after the reglementary period expired.           Needless to state, the acceptance of a petition for certiorari  as  well  as  the  grant  of  due  course  thereto  is, in  general, addressed to the sound discretion of the court.[18]

  

Besides, the provisions of the Rules of Court, which are technical rules, may be relaxed in certain exceptional situations.[19] Where a rigid application of the rule that certiorari cannot be a substitute for appeal will result in a manifest failure or miscarriage of justice, it is within our power to suspend the rules or exempt a particular case from its operation.[20]   

 Under certain special circumstances,[21] a petition for certiorari may be given due

course notwithstanding that no motion for reconsideration was filed in the lower court.  The exception applies in this case since the order of the trial court was, as will be discussed later, a patent nullity.

 Likewise, the one-day delay in the filing of the petition may be excused on the

basis of equity to afford respondent the chance to prove the merits of the complaint.In Yao v. Court of Appeals,[22] we held:

 

In the interest of substantial justice, procedural rules of the most mandatory character in terms of compliance may be relaxed.  In other words, if strict adherence to the letter of the law would result in absurdity and manifest injustice or where the merit of a party’s cause is apparent and outweighs consideration of non-compliance with certain formal requirements, procedural rules should definitely be liberally construed.  A party-litigant is to be given the fullest opportunity to establish the merits of his complaint or defense rather than for him to lose life, liberty, honor or property on mere technicalities.

        

Hence, the only relevant issue left for our resolution is whether or not the jurisdiction over the crime allegedly committed by petitioners is vested on the RTC.

         Section 5 (5) of the 1987 Constitution empowers the Supreme Court to promulgate rules concerning pleading, practice and procedure in all courts.  The limitations to this rule-making   power   are   the   following:   the   rules   must (a) provide a simplified and inexpensive procedure for the speedy disposition of cases; (b) be uniform for all courts of the same grade and (c) not diminish, increase or modify substantive rights. [23]  As long as these limits are met, the argument used by petitioners that the Supreme Court, through A.O. Nos. 113-95 and 104-96, transgressed on Congress’ sole power to legislate, cannot be sustained.

A.O. No. 113-95 designated special intellectual property courts to promote the efficient administration of justice and to ensure the speedy disposition of intellectual property cases.  

 A.O. No. 104-96,[24] on the other hand, was issued pursuant to Section 23 of BP

129[25] which transferred the jurisdiction over such crimes from the MTC and MTCC to the RTC and which furthermore gave the Supreme Court the authority to designate certain branches of the RTC to exclusively handle special cases in the interest of the speedy and efficient administration of justice.  Accordingly, the RTC was vested with the exclusive and original jurisdiction to try and decide intellectual property cases.

 The transfer of jurisdiction from the MTC and MTCC to the RTC did not in any way

affect the substantive rights of petitioners. The administrative orders did not change the definition or scope of the crime of unfair competition with which petitioners were charged.

 Both administrative orders therefore have the force and effect of law, having been

validly issued by the Supreme Court in the exercise of its constitutional rule-making power.  The trial court, being a subordinate court, should have followed the mandate of the later A.O. 104-96 which vested jurisdiction over the instant case on the RTC.  Thus, the appellate court correctly found that the court a quo committed grave abuse of discretion.

 Furthermore, the order of the trial court was a patent nullity.  In resolving the

pending incidents of the motion to transfer and motion to quash, the trial court should not have allowed petitioners to collaterally attack the validity of A.O. Nos. 113-95 and 104-96.  We have ruled time and again that the constitutionality or validity of laws, orders, or such other rules with the force of law cannot be attacked collaterally. There is a legal presumption of validity of these laws and rules. Unless a law or rule is annulled in a direct

proceeding, the legal presumption of its validity stands.[26] The trial court’s order was consequently null and void.         

The transfer of this case to Branch 9, RTC, Cebu City, however, is no longer possible.  A.M. No. 03-03-03-SC[27]consolidated the intellectual property courts and commercial SEC courts in one RTC branch in a particular locality to streamline the court structure and to promote expediency.  The RTC branch so designated will try and decide cases involving violations of intellectual property rights, and cases formerly cognizable by the Securities and Exchange Commission. It is now called a special commercial court.  In Region VII, the designated special commercial court is Branch 11, RTC, Cebu City.  The transfer of this case to that court is therefore warranted.

 WHEREFORE, the Court of Appeals decision dated October 20, 2000 is

hereby AFFIRMED with the MODIFICATIONthat Criminal Case No. CBU-45890 shall be transferred to Branch 11, RTC, Cebu City.  Let the records of the case be transmitted thereto and the case tried and decided with dispatch.         Costs against petitioners. 

 SO ORDERED.