138SUPREME COURT REPORTS ANNOTATEDSasot vs. PeopleG.R. No. 143193. June 29, 2005.*MELBAROSE R. SASOT and ALLANDALE R. SASOT, petitioners, vs. PEOPLE OF THE PHILIPPINES, THE HONORABLE COURT OF APPEALS, and REBECCA G. SALVADOR, Presiding Judge, RTC, Branch 1, Manila, respondents.Remedial Law; Criminal Procedure; Certiorari; A special civil action for certiorari is not the proper remedy to assail the denial of a motion to quash an information.—The Court has consistently held that a special civil action for certiorari is not the proper remedy to assail the denial of a motion to quash an information. The proper procedure in such a case is for the accused to enter a plea, go to trial without prejudice on his part to present the special defenses he had invoked in his motion to quash and, if after trial on the merits, an adverse decision is rendered, to appeal therefrom in the manner authorized by law. Thus, petitioners should not have forthwith filed a special civil action for certiorari with the CA and instead, they_______________

* SECOND DIVISION.139

VOL. 462, JUNE 29, 2005139Sasot vs. Peopleshould have gone to trial and reiterate the special defenses contained in their motion to quash.Same; Same; Same; Grounds for quashing an information enumerated in Section 3, Rule 117 of the 1985 Rules of Criminal Procedure.—Section 3, Rule 117 of the 1985 Rules of Criminal Procedure, which was then in force at the time the alleged criminal acts were committed, enumerates the grounds for quashing an information, to wit: a) That the facts charged do not constitute an offense; b) That the court trying the case has no jurisdiction over the offense charged or the person of the accused; c) That the officer who filed the information had no authority to do so; d) That it does not conform substantially to the prescribed form; e) That more than one offense is charged except in those cases in which existing laws prescribe a single punishment for various offenses; f) That the criminal action or liability has been extinguished; g) That it contains averments which, if true, would constitute a legal excuse or justification; and h) That the accused has

been previously convicted or in jeopardy of being convicted, or acquitted of the offense charged.Same; Pleadings and Practice; Complaints; Even the absence of an oath in the complaint does not necessarily render it invalid; Want of oath is a mere defect of form which does not affect the substantial rights of the defendant on the merits.—Under Section 3, Rule 112 of the 1985 Rules of Criminal Procedure, a complaint is substantially sufficient if it states the known address of the respondent, it is accompanied by complainant’s affidavit and his witnesses and supporting documents, and the affidavits are sworn to before any fiscal, state prosecutor or government official authorized to administer oath, or in their absence or unavailability, a notary public who must certify that he personally examined the affiants and that he is satisfied that they voluntarily executed and understood their affidavits. All these have been duly satisfied in the complaint filed before Prosecution Attorney Aileen Marie S. Gutierrez. It must be noted that even the absence of an oath in the complaint does not necessarily render it invalid. Want of oath is a mere defect of form, which does not affect the substantial rights of the defendant on the merits.140

140SUPREME COURT REPORTS ANNOTATEDSasot vs. PeopleSPECIAL CIVIL ACTION in the Supreme Court. Certiorari.

The facts are stated in the opinion of the Court. Michael P. Moralde for petitioners. The Solicitor General for the People.AUSTRIA-MARTINEZ, J.:

The case subject of the present special civil action for certiorari is a criminal prosecution against petitioners for unfair competition under Article 189 of the Revised Penal Code, filed before the Regional Trial Court (RTC) of Manila (Branch 1), and docketed as Criminal Case No. 98-166147.1Some time in May 1997, the National Bureau of Investigation (NBI) conducted an investigation pursuant to a complaint by the NBA Properties, Inc., against petitioners for possible violation of Article 189 of the Revised Penal Code on unfair competition. In its Report dated June 4, 1997, the NBI stated that NBA Properties, Inc., is a foreign corporation organized under the laws of the United States of America, and is the registered owner of NBA

trademarks and names of NBA basketball teams such as “USA BASKETBALL,” “CHICAGO BULLS,” “ORLANDO MAGIC,” “LOS ANGELES LAKERS,” “ROCKETS,” “PHOENIX SUNS,” “BULLETS,” “PACERS,” “CHARLOTTE HORNETS,” “BLAZERS,” “DENVER NUGGETS,” “SACRAMENTO KINGS,” “MIAMI HEAT,” UTAH JAZZ,” “DETROIT PISTONS,” “MILWAUKEE BUCKS,” “SEATTLE SONICS,” “TORONTO RAPTORS,” “ATLANTA HAWKS,” “CAVS,” “DALLAS MAVERICKS,” “MINNESOTA TIMBERWOLVES,” and “LOS ANGELES CLIPPERS.” These names are used on hosiery, footwear, t-shirts, sweatshirts,_______________

1 Per letter dated May 4, 2005 sent by Clerk of Court Rosalinda S. Medinaceli-Gepigon of the Regional Trial Court of Manila (Branch 1), this case is already assigned to Branch 24, which was designated under A.M. No. 02-1-11-SC (February 19, 2002) as the Intellectual Property Court of Manila.141

VOL. 462, JUNE 29, 2005141Sasot vs. Peopletank tops, pajamas, sport shirts, and other garment products, which are allegedly registered with the Bureau of Patents, Trademarks and Technology Transfer. The Report further stated that during the investigation, it was discovered that petitioners are engaged in the manufacture, printing, sale, and distribution of counterfeit “NBA” garment products. Hence, it recommended petitioners’ prosecution for unfair competition under Article 189 of the Revised Penal Code.2In a Special Power of Attorney dated October 7, 1997, Rick Welts, as President of NBA Properties, Inc., constituted the law firm of Ortega, Del Castillo, Bacorro, Odulio, Calma & Carbonell, as the company’s attorney-in-fact, and to act for and on behalf of the company, in the filing of criminal, civil and administrative complaints, among others.3 The Special Power of Attorney was notarized by Nicole Brown of New York County and certified by Norman Goodman, County Clerk and Clerk of the Supreme Court of the State of New York. Consul Cecilia B. Rebong of the Consulate General of the Philippines, New York, authenticated the certification.4 Welts also executed a Complaint-Affidavit on February 12, 1998, before Notary Public Nicole J. Brown of the State of New York.5Thereafter, in a Resolution dated July 15, 1998, Prosecution Attorney Aileen Marie S. Gutierrez recommended the filing of an Information against

petitioners for violation of Article 189 of the Revised Penal Code.6 The accusatory portion of the Information reads:“That on or about May 9, 1997 and on dates prior thereto, in the City of Manila, Philippines, and within the jurisdiction of this Honorable Court, above named accused ALLANDALE SASOT and_______________

2 Records, pp. 6-8.3 Id., pp. 99-100.4 Id., p. 98.5 Id., pp. 108-110.6 Id., pp. 31-33.142

142SUPREME COURT REPORTS ANNOTATEDSasot vs. PeopleMELBAROSE SASOT of Allandale Sportslines, Inc., did then and there willfully, unlawfully and feloniously manufacture and sell various garment products bearing the appearance of “NBA” names, symbols and trademarks, inducing the public to believe that the goods offered by them are those of “NBA” to the damage and prejudice of the NBA Properties, Inc., the trademark owner of the “NBA”.CONTRARY TO LAW.”7Before arraignment, petitioners filed a Motion to Quash the Information on the following grounds:I. THAT THE FACTS CHARGED DO NOT CONSTITUTE AN OFFENSEII. AND THIS HONORABLE COURT HAD NO JURISDICTION OVER THE OFFENSE CHARGED OR THE PERSON OF THE ACCUSED8In support of the foregoing, petitioners argue that the fiscal should have dismissed Welts’s complaint because under the rules, the complaint must be sworn to before the prosecutor and the copy on record appears to be only a fax transmittal.9 They also contend that complainant is a foreign corporation not doing business in the Philippines, and cannot be protected by Philippine patent laws since it is not a registered patentee. Petitioners aver that they have been using the business name “ALLANDALE SPORTSLINE, INC.” since 1972, and their designs are original and do not appear to be similar to complainant’s, and they do not use complainant’s logo or design.10

The trial prosecutor of the RTC-Manila (Branch 1), Jaime M. Guray, filed his Comment/Opposition to the motion to quash, stating that he has the original copy of the complaint, and that complainant has an attorney-in-fact to represent_______________

7 Id., p. 1.8 Id., p. 79.9 Id., p. 80.10 Id., pp. 81-82.143

VOL. 462, JUNE 29, 2005143Sasot vs. Peopleit. Prosecutor Guray also contended that the State is entitled to prosecute the offense even without the participation of the private offended party, as the crime charged is a public crime.11The trial court sustained the prosecution’s arguments and denied petitioners’ motion to quash in its Order dated March 5, 1999.12Petitioners filed a special civil action for certiorari with the Court of Appeals (CA) docketed as CA-G.R. SP No. 52151 which was dismissed per its Decision dated January 26, 2000.13 According to the CA, the petition is not the proper remedy in assailing a denial of a motion to quash, and that the grounds raised therein should be raised during the trial of the case on the merits.14 The dispositive portion of the assailed Decision reads:“WHEREFORE, premises considered, the petition for certiorari is hereby DISMISSED. Respondent court is hereby ordered to conduct further proceedings with dispatch in Criminal Case No. 98-166147.SO ORDERED.”15Petitioners sought reconsideration of the Decision but this was denied by the CA.16Hence, the present petition for review on certiorari under Rule 45 of the Rules of Court, with issues raised as follows:1. WHETHER A FOREIGN CORPORATION NOT ENGAGED AND LICENSE (sic) TO DO BUSINESS IN THE PHILIP_______________

11 Id., pp. 95-97.12 Id., p. 103.

13 Penned by Associate Justice Rodrigo V. Cosico, Associate Justices Eugenio S. Labitoria and Elvi John S. Asuncion, concurring.14 CA Rollo, pp. 77-82.15 Id., p. 82.16 Id., p. 107.144

144SUPREME COURT REPORTS ANNOTATEDSasot vs. PeoplePINES MAY MAINTAIN A CAUSE OF ACTION FOR UNFAIR COMPETITION.2. WHETHER AN OFFICER OF A FOREIGN CORPORATION MAY ACT IN BEHALF OF A CORPORATION WITHOUT AUTHORITY FROM ITS BOARD OF DIRECTORS.3. WHETHER A FOREIGN CORPORATION NOT ENGAGED IN BUSINESS AND WHOSE EMBLEM IT SOUGHT TO PROTECT IS NOT IN ACTUAL USE IS ENTITLED TO THE PROTECTION OF THE PHILIPPINE LAW.4. WHETHER THE RESPONDENT REGIONAL TRIAL COURT CORRECTLY ASSUMED JURISDICTION OVER THE CASE AND THE PERSONS OF THE ACCUSED.5. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT DISMISSED THE PETITION.17Petitioners reiterate the argument that the complaint filed by Rick Welts of the NBA Properties, Inc., is defective and should have been dismissed by the fiscal because it should have been personally sworn to by the complainant before the investigating prosecutor. They also reiterate the claim that Welts failed to show any board resolution showing his authority to institute any action in behalf of the company, and that the NBA’s trademarks are not being actually used in the Philippines, hence, they are of public dominion and cannot be protected by Philippine patent laws. Petitioners further contend that they have not committed acts amounting to unfair competition.18The Office of the Solicitor General appeared in behalf of the People, and filed its Amended Comment to the petition, praying for its dismissal, arguing that the CA did not commit any grave abuse of discretion in dismissing the petition for reasons stated in its Decision dated January 26, 2000.19_______________

17 Rollo, p. 13.

18 Id., pp. 13-27.19 Id., pp. 213-218.145

VOL. 462, JUNE 29, 2005145Sasot vs. PeopleThe petition must be denied.The Court has consistently held that a special civil action for certiorari is not the proper remedy to assail the denial of a motion to quash an information.20 The proper procedure in such a case is for the accused to enter a plea, go to trial without prejudice on his part to present the special defenses he had invoked in his motion to quash and, if after trial on the merits, an adverse decision is rendered, to appeal therefrom in the manner authorized by law.21 Thus, petitioners should not have forthwith filed a special civil action for certiorari with the CA and instead, they should have gone to trial and reiterate the special defenses contained in their motion to quash. There are no special or exceptional circumstances22 in the present case such that immediate resort to a filing of a petition for certiorari should be permitted. Clearly, the CA did not commit any grave abuse of discretion in dismissing the petition.Moreover, the Court does not find any justification for the quashal of the Information filed against petitioners.For one, while petitioners raise in their motion to quash the grounds that the facts charged do not constitute an offense and that the trial court has no jurisdiction over the offense charged or the person of the accused,23 their arguments focused on an alleged defect in the complaint filed before the fiscal, complainant’s capacity to sue and petitioners’ exculpatory defenses against the crime of unfair competition._______________

20 Raro vs. Sandiganbayan, G.R. No. 108431, July 14, 2000, 335 SCRA 581.21 Basa vs. People, G.R. No. 152444, February 16, 2005, 451 SCRA 510.22 Lavides vs. Court of Appeals, G.R. No. 129670, February 1, 2000, 324 SCRA 321.23 Records, p. 79.146

146SUPREME COURT REPORTS ANNOTATED

Sasot vs. PeopleSection 3, Rule 117 of the 1985 Rules of Criminal Procedure, which was then in force at the time the alleged criminal acts were committed, enumerates the grounds for quashing an information, to wit:a) That the facts charged do not constitute an offense;b) That the court trying the case has no jurisdiction over the offense charged or the person of the accused;c) That the officer who filed the information had no authority to do so;d) That it does not conform substantially to the prescribed form;e) That more than one offense is charged except in those cases in which existing laws prescribe a single punishment for various offenses;f) That the criminal action or liability has been extinguished;g) That it contains averments which, if true, would constitute a legal excuse or justification; andh) That the accused has been previously convicted or in jeopardy of being convicted, or acquitted of the offense charged.Nowhere in the foregoing provision is there any mention of the defect in the complaint filed before the fiscal and the complainant’s capacity to sue as grounds for a motion to quash.For another, under Section 3, Rule 112 of the 1985 Rules of Criminal Procedure, a complaint is substantially sufficient if it states the known address of the respondent, it is accompanied by complainant’s affidavit and his witnesses and supporting documents, and the affidavits are sworn to before any fiscal, state prosecutor or government official authorized to administer oath, or in their absence or unavailability, a notary public who must certify that he personally examined the affiants and that he is satisfied that they voluntarily executed and understood their affidavits. All these have been duly satisfied in the complaint filed before Prosecution Attorney Aileen Marie S. Gutierrez. It must be noted that even the absence of147

VOL. 462, JUNE 29, 2005147Sasot vs. Peoplean oath in the complaint does not necessarily render it invalid.24 Want of oath is a mere defect of form, which does not affect the substantial rights of the defendant on the merits.25In this case, Welts’s Complaint-Affidavit contains an acknowledgement by Notary Public Nicole Brown of the State of New York that the same has been subscribed and sworn to before her on February 12, 1998,26 duly

authenticated by the Philippine Consulate. While the copy on record of the complaint-affidavit appears to be merely a photocopy thereof, Prosecution Attorney Gutierrez stated that complainant’s representative will present the authenticated notarized original in court,27 and Prosecutor Guray manifested that the original copy is already on hand.28 It is apt to state at this point that the prosecutor enjoys the legal presumption of regularity in the performance of his duties and functions, which in turn gives his report the presumption of accuracy.29Moreover, records show that there are other supporting documents from which the prosecutor based his recommendation, to wit:(1) The NBI Report dated June 4, 1997, containing an account of the investigation conducted from April 30, 1997 to May 9, 1997, and the subsequent search and seizure of several items from petitioners’ establishment;30(2) The letter dated May 8, 1997 from the law firm of Ortega, Del Castillo, Bacorro, Odulio, Calma & Carbonell to the NBI, seeking assistance in stopping the illegal manufacture, distribution and sale_______________

24 People vs. Cayosa, G.R. No. L-24689, December 26, 1969, 30 SCRA 806.25 People vs. Historillo, G.R. No. 130408, June 16, 2000, 33 SCRA 615.26 Records, p. 85.27 Id., p. 33.28 Id., p. 96.29 People vs. Court of Appeals, G.R. No. 126005, January 21, 1999, 301 SCRA 475.30 Records, pp. 6-9.148

148SUPREME COURT REPORTS ANNOTATEDSasot vs. Peopleof “fake products bearing the ‘NBA’ trademark, and in prosecuting the proprietors of aforesaid factory;”31 and(3) The Joint Affidavit executed by Rechie D. Malicse and Dalisay P. Bal-ot of the Pinkerton Consulting Services (Phils.) Inc., which was certified to by Prosecution Attorney Gutierrez, attesting to their findings that petitioners were found to be manufacturing, printing, selling, and distributing counterfeit “NBA” garment products.32

Consequently, if the information is valid on its face, and there is no showing of manifest error, grave abuse of discretion and prejudice on the part of public prosecutor, as in the present case, the trial court should respect such determination.33More importantly, the crime of Unfair Competition punishable under Article 189 of the Revised Penal Code34 is a public crime. It is essentially an act against the State and it is the latter which principally stands as the injured party. The complainant’s capacity to sue in such case becomes immaterial.In La Chemise Lacoste, S.A. vs. Fernandez,35 a case akin to the present dispute, as it involved the crime of Unfair Competition under Article 189 of the Revised Penal Code, and the quashal of search warrants issued against manufacturers of garments bearing the same trademark as that of the petitioner, the Court succinctly ruled that:More important is the nature of the case which led to this petition. What preceded this petition for certiorari was a letter-complaint filed before the NBI charging Hemandas with a criminal_______________

31 Id., pp. 12-13.32 Id., pp. 18-19.33 People vs. Court of Appeals, supra.34 Article 189 of the Revised Penal Code has already been repealed by the express provisions of Republic Act No. 8293 or The Intellectual Property Code, which took effect on January 1, 1998.35 G.R. Nos. L-63796-97, G.R. No. 65659, May 21, 1984, 129 SCRA 373.149

VOL. 462, JUNE 29, 2005149Sasot vs. Peopleoffense, i.e., violation of Article 189 of the Revised Penal Code. If prosecution follows after the completion of the preliminary investigation being conducted by the Special Prosecutor the information shall be in the name of the People of the Philippines and no longer the petitioner which is only an aggrieved party since a criminal offense is essentially an act against the State. It is the latter which is principally the injured party although there is a private right violated. Petitioner’s capacity to sue would become, therefore, of not much significance in the main case. We cannot allow a possible violator of our criminal statutes to escape prosecution upon a far-

fetched contention that the aggrieved party or victim of a crime has no standing to sue.In upholding the right of the petitioner to maintain the present suit before our courts for unfair competition or infringement of trademarks of a foreign corporation, we are moreover recognizing our duties and the rights of foreign states under the Paris Convention for the Protection of Industrial Property to which the Philippines and France are parties. We are simply interpreting and enforcing a solemn international commitment of the Philippines embodied in a multilateral treaty to which we are a party and which we entered into because it is in our national interest to do so.36 (Emphasis supplied)Lastly, with regard to petitioners’ arguments that the NBA Properties, Inc., is not entitled to protection under Philippine patent laws since it is not a registered patentee, that they have not committed acts amounting to unfair competition for the reason that their designs are original and do not appear to be similar to complainant’s, and they do not use complainant’s logo or design, the Court finds that these are matters of defense that are better ventilated and resolved during trial on the merits of the case.WHEREFORE, the petition is DENIED for lack of merit. Let the records of this case be REMANDED to the Regional Trial Court of Manila (Branch 24) where Criminal Case No. 98-166147 is presently assigned, for further proceedings with reasonable dispatch._______________

36 Id., p. 386.150

150SUPREME COURT REPORTS ANNOTATEDSia vs. Heirs of Jose P. MarianoSO ORDERED. Puno (Chairman), Callejo, Sr., Tinga and Chico-Nazario, JJ., concur.Petition denied.Note.—A complaint or information can only be filed if it is approved or authorized by the provincial or city fiscal or chief state prosecutor. (Abdula vs. Guiani, 326 SCRA 1 [2000])——o0o—— [Sasot vs. People, 462 SCRA 138(2005)]

G.R. No. 118295. May 2, 1997.*WIGBERTO E. TAÑADA and ANNA DOMINIQUE COSETENG, as members of the Philippine Senate and as taxpayers; GREGORIO ANDOLANA and JOKER ARROYO as members of the House of Representatives and as taxpayers; NICANOR P. PERLAS and HORACIO R. MORALES, both as taxpayers; CIVIL LIBERTIES UNION, NATIONAL ECONOMIC PROTECTIONISM ASSOCIATION, CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, LIKAS-KAYANG KAUNLARAN FOUNDATION, INC., PHILIPPINE RURAL RECONSTRUCTION MOVEMENT, DEMOKRATIKONG KILUSAN NG MAGBUBUKID NG PILIPINAS, INC., and PHILIPPINE PEASANT INSTITUTE, in representation of various taxpayers and as non-governmental organizations, petitioners, vs. EDGARDO ANGARA, ALBERTO ROMULO, LETICIA RAMOS-SHAHANI, HEHERSON ALVAREZ, AGAPITO AQUINO, RODOLFO BIAZON, NEPTALI______________

* EN BANC.19

VOL. 272, MAY 2, 199719Tañada vs. AngaraGONZALES, ERNESTO HERRERA, JOSE LINA, GLORIA MACAPAGAL-ARROYO, ORLANDO MERCADO, BLAS OPLE, JOHN OSMEÑA, SANTANINA RASUL, RAMON REVILLA, RAUL ROCO, FRANCISCO TATAD and FREDDIE WEBB, in their respective capacities as members of the Philippine Senate who concurred in the ratification by the President of the Philippines of the Agreement Establishing the World Trade Organization; SALVADOR ENRIQUEZ, in his capacity as Secretary of Budget and Management; CARIDAD VALDEHUESA, in her capacity as National Treasurer; RIZALINO NAVARRO, in his capacity as Secretary of Trade and Industry; ROBERTO SEBASTIAN, in his capacity as Secretary of Agriculture; ROBERTO DE OCAMPO, in his capacity as Secretary of Finance; ROBERTO ROMULO, in his capacity as Secretary of Foreign Affairs; and TEOFISTO T. GUINGONA, in his capacity as Executive Secretary, respondents.Constitutional Law; Judicial Review; Separation of Powers; Where an action of the legislative branch is seriously alleged to have infringed the Constitution, it becom es not only the right but in fact the duty of the judiciary to settle the dispute.—In seeking to nullify an act of the Philippine

Senate on the ground that it contravenes the Constitution, the petition no doubt rais es a justiciable controversy. Where an action of the legislative branch is seriously alleged to have infringed the Cons titution, it becomes not only the right but in fact the duty of the judiciary to settle the dispute. “The question thus posed is judicial rather than political. The duty (to adjudicate) remains to assure that the supremacy of the Constitution is upheld.” Once a “controvers y as to the application or interpretation of a constitutional provision is raised before this Court (as in the instant case), it becomes a legal issue which the Court is bound by constitutional mandate to decide.”Same; Same; Actions; Special Civil Actions; Certiorari, prohibition and mandamus are appropriate remedies to raise constitutional issues and to review and/or prohibit/nullify, when proper, acts of legislative and executive officials.—As the petition alleges grave abuse of discretion and as there is no other pl ain, speedy or adequate remedy in the ordinary course of law, we have no hesitation at all in holding that this petition should be given due course and the20

20SUPREME COURT REPORTS ANNOTATEDTañada vs. Angaravital questions raised therein ruled upon under Rule 65 of the Rules of Court. Indeed, certiorari, prohibition and mandamus are appropriate remedies to raise constitutional issues and to review and/or prohibit/nullify, when proper, acts of legislative and executive officials. On this, we have no equivocation.Same; Same; Same; Same; In deciding to take jurisdiction over this petition, the Supreme Court does not review the wisdom of the decision of the President and the Senate in enlisting the country in the WTO, or pass upon the merits of trade liberalization as a policy espoused by said international body, rather, it only exercises its constitutional duty “to determine whether or not there had been a grave abuse of discretion amounting to lack or excess of jurisdiction” on the part of the Senate in ratifying the WTO Agreement and its three annexes.—We should stres s that, in deciding to take jurisdiction over this petition, this Court will not review the wisdom of the decision of the President and the Senate in enlisting the country into the WTO, or pass upon the m erits of trade liberalization as a policy espoused by said international body. Neither will it rule on the propriety of the government’s economic policy of reducing/removing tariffs, taxes,

subsidies, quantitative restrictions, and other import/trade barriers. Rather, it will only exercise its constitutional duty “to determine whether or not there had been a grave abuse of discretion amounting to lack or excess of jurisdiction” on the part of the Senate in ratifying the WTO Agreement and its three annexes.Same; Constitutional Principles and State Policies; The principles and state policies enumerated in Article II and some sections of Article XII are not self-executing provisions, the disregard of which can give rise to a cause of action in the courts.—By its very title, Article II of the Constitution is a “declaration of principles and state policies.” The counterpart of this article in the 1935 Constitution is called the “bas ic political creed of the nation” by Dean Vicente Sinco. These principles in Article II are not intended to be self-executing principles ready for enforcement through the courts. They are used by the judiciary as aids or as guides in the exercise of its power of judicial review, and by the legislature in its enactment of laws. As held in the leading case of Kilosbayan, Incorporated vs. Morato, the principles and state policies enumerated in Article II and some sections of Article XII are not “self-executing provis ions, the disregard of which can give rise to a cause of action in the courts. They do not embody judicially enforceable constitutional rights but guidelines for legislation.”21

VOL. 272, MAY 2, 199721Tañada vs. AngaraSame; Same; Separation of Powers; Due Process.—The reasons for denying a cause of action to an alleged infringement of broad constitutional principles are sourced from basic considerations of due process and the lack of judicial authority to wade “into the uncharted ocean of social and economic policy making.”Same; Same; Trade Liberalization; “Filipino First” Policy; While the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and enterprises, at the same time, it recognizes the need for business exchange with the rest of the world on the bases of equality and reciprocity and limits protection of Filipino enterprises only against foreign competition and trade practices that are unfair—the Constitution did not intend to pursue an isolationist policy.—All told, while the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and enterprises, at the same time, it recognizes the need for business exchange with the rest of the world on the bases of equality and reciprocity and limits protection of

Filipino enterprises only against foreign competition and trade practices that are unfair. In other words, the Constitution did not intend to pursue an isolationist policy. It did not shut out foreign investments, goods and services in the development of the Philippine economy. While the Constitution does not encourage the unlimited entry of foreign goods, services and investments into the country, it does not prohibit them either. In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on foreign competition that is unfair.Same; Same; Same; Same; World Trade Organization (WTO); General Agreement on Tariffs and Trade (GATT); There is hardly any basis for the statement that under the WTO, local industries and enterprises will all be wiped out and that Filipinos will be deprived of control of the economy, for, quite to the contrary, the weaker situations of developing nations like the Philippines have been taken into account.—Moreover, GATT itself has provided built-in protection from unfair foreign competition and trade practices including anti-dumping measures, countervailing measures and safeguards against import surges. Where local business are jeopardized by unfair foreign competition, the Philippines can avail of these measures. There is hardly therefore any basis for the statement that under the WTO, local industries and enterprises will all be wiped out and that Filipinos will be deprived of control of the economy. Quite the contrary, the weaker situations of developin g na ti on s like the Philippines have been taken into account; thus, there would be no basis to say22

22SUPREME COURT REPORTS ANNOTATEDTañada vs. Angarathat in joining the WTO, the respondents have gravely abused their discretion. True, they have made a bold decision to steer the ship of state into the yet uncharted sea of economic liberalization. But such decision cannot be set aside on the ground of grave abuse of discretion, simply because we disagree with it or simply because we believe only in other economic policies. As earlier stated, the Court in taking jurisdiction of this case will not pass upon the advantages and disadvantages of trade liberalization as an economic policy. It will only perform its constitutional duty of determining whether the Senate committed grave abuse of discretion.Same; Same; Same; Same; Same; Same; The fundamental law encourages industries that are “competitive in both domestic and foreign markets,”

thereby demonstrating a clear policy against a sheltered domestic trade environment, but one in favor of the gradual developm ent of robust industries that can compete with the best in the foreign markets.—The WTO reliance on “most favored nation,” “national treatment,” and “trade without discrimination” cannot be struck down as unconstitutional as in fact they are rules of equality and reciprocity that apply to all WTO members. Aside from envisioning a trade policy based on “equality and reciprocity,” the fundamental law encourages industries that are “competitive in both domestic and foreign markets,” thereby demonstrating a clear policy against a sheltered domestic trade environment, but one in favor of the gradual development of robust industries that can compete with the best in the foreign markets. Indeed, Filipino managers and Filipino enterprises have shown capability and tenacity to compete internationally. And given a free trade environment, Filipino entrepreneurs and managers in Hongkong have demonstrated the Filipino capacity to grow and to prosper against the best offered under a policy of laissez faire.Same; Same; Same; Same; Same; Same; Political Questions; The responses to questions on whether WTO/GATT will favor the general welfare of the public at large involve “judgment calls” by our policy makers, for which they are answerable to our people during appropriate electoral exercises—such questions and the answers thereto are not subject to judicial pronouncements based on grave abuse of discretion.—Consequently, the question boils down to whether WTO/GATT will favor the general welfare of the public at large. Will adherence to the W TO treaty bring this ideal (of favoring the general welfare) to reality? Will WTO/GATT succeed in promoting the Filipinos’ general welfare because it will—as promised by its23

VOL. 272, MAY 2, 199723Tañada vs. Angarapromoters—expand the country’s exports and generate more employment? Will it bring more prosperity, employment, purchasing power and quality products at the most reasonable rates to the Filipino public? The responses to these questions involve “judgment calls” by our policy makers, for which they are answerable to our people during appropriate electoral exercises. Such questions and the answers thereto are not subject to judicial pronouncements based on grave abuse of discretion.Same; It is to the credit of its drafters that the Constitution can withstand the assaults of bigots and infidels but at the same time bend with the

refreshing winds of change necessitated by unfolding events.—It is not difficult to answer this question. Constitutions are designed to meet not only the vagaries of contemporary events. They should be interpreted to cover even future and unknown circumstances. It is to the credit of its drafters that a Constitution can withstand the assaults of bigots and infidels but at the same time bend with the refreshing winds of change necessitated by unfolding events. As one eminent political law writer and respected jurist explains: “The Constitution must be quintessential rather than superficial, the root and not the blossom, the base and framework only of the edifice that is yet to rise. It is but the core of the dream that must take shape, not in a twinkling by mandate of our delegates, but slowly ‘in the crucible of Filipino minds and hearts,’ where it will in time develop its sinews and gradually gather its strength and finally achieve its substance. In fine, the Constitution cannot, like the goddess Athena, rise full-grown from the brow of the Constitutional Convention, nor can it conjure by mere fiat an instant Utopia. It must grow with the society it seeks to re-structure and march apace with the progress of the race, drawing from the vicissitudes of history the dynamism and vitality that will keep it, far from becoming a petrified rule, a pulsing, living law attuned to the heartbeat of the nation.”Same; International Law; While sovereignty has traditionally been deemed absolute and all—encompassing on the domestic level, it is however subject to restrictions and limi tation s vol un tari ly agreed to by the Philippines, expressly or impliedly, as a mem ber of the family of nations.—This Court notes and appreciates the ferocity and passion by which petitioners stressed their arguments on this issue. However, while sovereignty has traditionally been deemed absolute and all-encompassing on the domestic level, it is however subject to restrictions and limitations voluntarily agreed to by the24

24SUPREME COURT REPORTS ANNOTATEDTañada vs. AngaraPhilippines, expressly or impliedly, as a member of the family of nations. Unquestionably, the Constitution did not envision a hermit-type isolation of the country from the rest of the world.Same; Same; Doctrine of I ncorporation; Words and Phrases; By the doctrine of incorporation, the country is bound by generally accepted principles of international law, which are considered automatically part of our own laws.—In its Declaration of Principles and State Policies, the Constitution “adopts the generally accepted principles of international law as part of the law of

the land, and adheres to the policy of peace, equality, justice, freedom, cooperation and amity, with all nations.” By the doctrine of incorporation, the country is bound by generally accepted principles of international law, which are considered to be autom atically part of our own laws. One of the oldest and most fundamental rules in international law is pacta sunt servanda—international agreements must be performed in good faith. “A treaty engagement is not a mere moral obligation but creates a legally binding obligation on the parties x x x. A state which has contracted valid international obligations is bound to make in its legislations such modifications as may be necessary to ensure the fulfillment of the obligations undertaken.”Same; Same; Treaties; By their voluntary act, nations may surrender some aspects of their state power in exchange for greater benefits granted by or derived from a convention or pact.—By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their voluntary act, nations may surrender some aspects of their state power in exchange for greater benefits granted by or derived from a convention or pact. After all, states, like individuals, live with coequals, and in pursuit of mutually covenanted objectives and benefits, they also commonly agree to limit the exercise of their otherwise absolute rights.Same; Same; Same; World Trade Organization; Pleadings and Practice; Article 34 of the General Provisions and Basic Principles of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) does not contain an unreasonable burden, consistent as it is with due process and the concept of adversarial dispute settlement inherent in Philippine judicial system.—Petitioners aver that paragraph 1, Article 34 of the General Provisions and Basic Principles of the Agreement on T ra de-Rel a ted A s pects of Intellectual Property Rights (TRIPS) intrudes on the power of the Supreme Court to prom ulgate rules concerning pleading, practice and proce-25

VOL. 272, MAY 2, 199725Tañada vs. Angaradures. x x x By and large, the arguments adduced in connection with our dis position of the third issue—derogation of legislative power—will apply to this fourth issue also. Suffice it to say that the reciprocity clause more than justifies such intrusion, if any actually exists. Besides, Article 34 does not contain an unreasonable burden, consistent as it is with due process and the

concept of adversarial dispute settlement inherent in our judicial system. So too, since the Philippines is a signatory to most international conventions on patents, trademarks and copyrights, the adjus tment in legislation and rules of procedure will not be substantial.Same; Same; Same; Same; Same; Patents; Evidence; Words and Phrases; Burden of Proof; Burden of Evidence; The “burden of proof” contemplated by Article 34 should actually and properly be understood as referring to the “burden of evidence” (burden of going forward) placed on the producer of identical (or fake) product to show that his product was produced without the use of the patented process—the patent owner still has the “burden of proof” since he still has to introduce evidence of the existence of the alleged identical product, the fact that it is “identical” to the genuine one produced by the patented process and the fact of “newness” of the genuine product or the fact of “substantial likelihood” that the identical product was made by the patented process.—From the above, a WTO Member is required to provide a rule of dis putable (note the words “in the absence of proof to the contrary”) presumption that a product shown to be identical to one produced with the use of a patented process shall be deemed to have been obtained by the (illegal) use of the said patented process, (1) where such product obtained by the patented product is new, or (2) where there is “substantial likelihood” that the identical product was made with the use of the said patented process but the owner of the patent could not determine the exact process used in obtaining such identical product. Hence, the “burden of proof” contemplated by Article 34 should actually be understood as the duty of the alleged patent infringer to overthrow such presumption. Such burden, properly understood, actually refers to the “burden of evidence” (burden of going forward) placed on the producer of the identical (or fake) product to show that his product was produced without the use of the patented process. The foregoing notwithstanding, the patent owner still has the “burden of proof” since, regardles s of the presumption provided under paragraph 1 of Article 34, such owner still has to introduce evidence of the existence of the alleged identical product, the fact that it is “identical” to the genuine one produced by the patented process and the fact of26

26SUPREME COURT REPORTS ANNOTATEDTañada vs. Angara“newness ” of the genuine product or the fact of “substantial likelihood” that the identical product was made by the patented process.

Same; Same; Same; Same; Words and Phrases; “Final Act,” Explained.—“A final act, sometimes called protocol de clÔture, is an instrument which records the winding up of the proceedings of a diplomatic conference and usually includes a reproduction of the texts of treaties, conventions, recommendations and other acts agreed upon and s igned by the plenipotentiaries attending the conference.” It is not the treaty itself. It is rather a summary of the proceedings of a protracted conference which may have taken place over several years .Same; Judicial Review; Words and Phrases; Certiorari; By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, and mere abuse of discretion is not enough—it must be grave.—By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not enough. It mus t be grave abuse of discretion as when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. Failure on the part of the petitioner to show grave abus e of discretion will result in the dismissal of the petition.Same; Same; Separation of Powers; In rendering this Decision, the Supreme Court never forgets that the Senate, whose act is under review, is one of two sovereign houses of Congress and is thus entitled to great respect in its actions.—In rendering this Decision, this Court never forgets that the Senate, whose act is under review, is one of two sovereign houses of Congress and is thus entitled to great respect in its actions. It is itself a constitutional body independent and coordinate, and thus its actions are presumed regular and done in good faith. Unless convincing proof and persuasive arguments are presented to overthrow such presumptions, this Court will resolve every doubt in its favor. Using the foregoing well-accepted definition of grave abuse of discretion and the presumption of regularity in the Senate’s processes, this Court cannot find any cogent reason to impute grave abuse of discretion to the Senate’s exercise of its power of concurrence in the WTO Agreement granted it by Sec. 21 of Article VII of the Constitution.27

VOL. 272, MAY 2, 199727Tañada vs. Angara

Same; Same; Same; Treaties; World Trade Organization; The Senate Act, after deliberation and voting, of voluntarily and overwhelmingly giving its consent to the WTO Agreement thereby making it “a part of the law of the land,” is a legitimate exercise of its sovereign duty and power.—That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its consent to the WTO Agreement thereby making it “a part of the law of the land” is a legitimate exercise of its sovereign duty and power. W e find no “patent and gross” arbitrariness or des potism “by reas on of passion or personal hostility” in such exercise. It is not impossible to surmise that this Court, or at least some of its members, may even agree with petitioners that it is more advantageous to the national interest to strike down Senate Resolution No. 97. But that is not a legal reason to attribute grave abuse of dis cretion to the Senate and to nullify its decision. To do so would constitute grave abuse in the exercise of our own judicial power and duty. Ineludably, what the Senate did was a valid exercise of its authority. As to whether such exercise was wise, beneficial or viable is outside the realm of judicial inquiry and review. That is a matter between the elected policy makers and the people. As to whether the nation should join the worldwide march toward trade liberalization and economic globalization is a matter that our people should determine in electing their policy makers. After all, the WTO Agreement allows withdrawal of membership, should this be the political desire of a member.World Trade Organization; Trade Liberalization; I nternational Law; Notwithstanding objections against possible limitations on national sovereignty, the WTO remains as the only viable structure for multilateral trading and the veritable forum for the development of international trade law.—The eminent futurist John Naisbitt, author of the best seller Megatrends, predicts an Asian Renaissance where “the East will become the dominant region of the world economically, politically and culturally in the next century.” He refers to the “free market” espoused by WTO as the “catalyst” in this coming Asian ascendancy. There are at present about 31 countries including China, Russia and Saudi Arabia negotiating for membership in the WTO. Notwithstanding objections against possible limitations on national sovereignty, the WTO remains as the only viable structure for multilateral trading and the veritable forum for the development of international trade law. The alternative to WTO is isolation, stagnation, if not economic self-destruction. Duly enriched with original membership, keenly aware of the advantages and disadvantages of globalization with its on-line experience, and endowed with28

28SUPREME COURT REPORTS ANNOTATEDTañada vs. Angaraa vision of the future, the Philippines now straddles the crossroads of an international strategy for economic prosperity and stability in the new millennium. Let the people, through their duly authorized elected officers , make their free choice.SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.

The facts are stated in the Opinion of the Court. Abelardo F. Domondon for petitioners. The Solicitor General for respondents.PANGANIBAN, J.:

The emergence on January 1, 1995 of the World Trade Organization, abetted by the membership thereto of the vast majority of countries, has revolutionized international business and economic relations amongst states. It has irreversibly propelled the world towards trade liberalization and economic globalization. Liberalization, globalization, deregulation and privatization, the third-millennium buzz words, are ushering in a new borderless world of business by sweeping away as mere historical relics the heretofore traditional modes of promoting and protecting national economies like tariffs, export subsidies, import quotas, quantitative restrictions, tax exemptions and currency controls. Finding market niches and becoming the best in specific industries in a market-driven and export-oriented global scenario are replacing age-old “beggar-thy-neighbor” policies that unilaterally protect weak and inefficient domestic producers of goods and services. In the words of Peter Drucker, the well-known management guru, “Increased participation in the world economy has become the key to domestic economic growth and prosperity.”Brief Historical BackgroundTo hasten worldwide recovery from the devastation wrought by the Second World War, plans for the establishment of three multilateral institutions—inspired by that grand political body, the United Nations—were discussed at29

VOL. 272, MAY 2, 199729Tañada vs. Angara

Dumbarton Oaks and Bretton Woods. The first was the World Bank (WB) which was to address the rehabilitation and reconstruction of war-ravaged and later developing countries; the second, the International Monetary Fund (IMF) which was to deal with currency problems; and the third, the International Trade Organization (ITO), which was to foster order and predictability in world trade and to minimize unilateral protectionist policies that invite challenge, even retaliation, from other states. However, for a variety of reasons, including its non-ratification by the United States, the ITO, unlike the IMF and WB, never took off. What remained was only GATT—the General Agreement on Tariffs and Trade. GATT was a collection of treaties governing access to the economies of treaty adherents with no institutionalized body administering the agreements or dependable system of dispute settlement.After half a century and several dizzying rounds of negotiations, principally the Kennedy Round, the Tokyo Round and the Uruguay Round, the world finally gave birth to that administering body—the World Trade Organization—with the signing of the “Final Act” in Marrakesh, Morocco and the ratification of the WTO Agreement by its members.1______________

1 In Annex “A” of her Memorandum, dated August 8, 1996, received by this Court on August 12, 1996, Philippine Ambassador to the United Nations , World Trade Organization and other international organizations Lilia R. Bautista (hereafter referred to as “Bautista Paper”) submitted a “46-year Chronology” of GATT as follows:“1947 The birth of GATT. On 30 October 1947, the General Agreement on Tariffs and Trade (GATT) was signed by 23 nations at the Palais des Nations in Geneva. The Agreement contained tariff concessions agreed to in the first multilateral trade negotiations and a set of rules designed to prevent these concessions from being frustrated by restrictive trade measures.The 23 founding contracting parties were members of the Preparatory Committee established by the United Nations Economic and Social Council in 1946 to draft the charter of the International Trade Organization (ITO). The ITO was envis-30

30SUPREME COURT REPORTS ANNOTATEDTañada vs. Angara

Like many other developing countries, the Philippines joined WTO as a founding member with the goal, as articu-_______________

aged as the final leg of a triad of post-War economic agencies (the other two were the International Monetary Fund and the International Bank for Reconstruction—later the World Bank).In parallel with this task, the Committee members decided to negotiate tariff conces sions among themselves. From April to October 1947, the participants completed some 123 negotiations and established 20 schedules containing the tariff reductions and bindings which became an integral part of GATT. These schedules resulting from the first Round covered some 45,000 tariff concessions and about $10 billion in trade.GATT was conceived as an interim measure that put into effect the commercial-policy provisions of the ITO. In November, delegations from 56 countries met in Havana, Cuba, to consider the ITO draft as a whole. After long and difficult negotiations, s ome 53 countries signed the Final Act authenticating the text of the Havana Charter in March 1948. There was no commitment, however, from governments to ratification and, in the end, the ITO was stillborn, leaving GATT as the only international instrument governing the conduct of world trade.1948 Entry into force. On 1 January 1948, GATT entered into force. The 23 founding mem bers were: Australia, Belgium, Brazil, Burma, Canada, Ceylon, Chile, China, Cuba, Czechoslovakia, France, India, Lebanon, Luxembourg, Netherlands, New Zealand, Norway, Pakistan, Southern Rhodesia, Syria, South Africa, United Kingdom and the United States. The firs t Session of the Contracting Parties was held from February to March in Havana, Cuba. The secretariat of the Interim Commiss ion for the ITO, which served as the ad hoc secretariat of GATT, moved from Lake Placid, New York, to Geneva. The Contracting Parties held their second session in Geneva from August to September.1949 Second Round at Annecy. During the second Round of trade negotiations, held from April to August at Annecy, France, the contracting parties exchanged some 5,000 tariff concess ions. At their third Session, they also dealt with the access ion of ten more countries.31

VOL. 272, MAY 2, 199731Tañada vs. Angara

lated by President Fidel V. Ramos in two letters to the Senate (infra), of improving “Philippine access to foreign markets, especially its major trading partners, through the reduction of tariffs on its exports, particularly agricultural and industrial products.” The President also saw in the WTO the opening of_______________

1950 Third Round at Torquay. From September 1950 to April 1951, the contracting parties exchanged some 8,700 tariff concessions in the English town, yielding tariff reduction of about 25 per cent in relation to the 1948 level. Four more countries acceded to GATT. During the fifth Session of the Contracting Parties, the United States indicated that the ITO Charter would not be re-submitted to the US Congress; this, in effect, meant that ITO would not come into operation.1956 Fourth Round at Geneva. The fourth Round was completed in May and produced some $2.5 billion worth of tariff reductions . At the beginning of the year, the GATT commercial policy course for officials of developing countries was inaugurated.1958 The Haberler Report. GATT published Trends in International Trade in October. Known as the “Haberler Report” in honour of Professor Gottfried Haberler, the chairman of the panel of eminent economists, it provided initial guidelines for the work of GATT. The Contracting Parties at their 13th Session, attended by Ministers, subsequently established three committees in GATT: Committee I to convene a further tariff negotiating conference; Committee II to review the agricultural policies of member governments; and Committee III to tackle the problems facing developing countries in their trade. The establishment of the European Economic Community during the previous year also demanded large-scale tariff negotiations under Article XXIV:6 of the General Agreement.1960 The Dillon Round. The fifth Round opened in September and was divided into two phases: the first was concerned with negotiations with EEC member s tates for the creation of a single schedule of concessions for the Community based on its Common External Tariff; and the second was a further general round of tariff negotiations. Named in honour of US UnderSecretary of State Douglas Dillon who proposed the negotiations, the Round was concluded in July 1962 and resulted in about 4,400 tariff concessions covering $4.9 billion of trade.32

32

SUPREME COURT REPORTS ANNOTATEDTañada vs. Angara“new opportunities for the services sector x x x, (the reduction of) costs and uncertainty associated with exporting x x x, and_______________

1961 The Short-Term Arrangement covering cotton textiles was agreed as an exception to the GATT rules. The arrangement permitted the negotiation of quota restrictions affecting the exports of cotton-producing countries. In 1962 the “Short Term” Arrangement became the “Long term” Arrangement, lasting until 1974 when the Multifibre Arrangement entered into force.1964 The Kennedy Round. Meeting at Ministerial level, a Trade Negotiations Committee formally opened the Kennedy Round in May. In June 1967, the Round’s Final Act was signed by some 50 participating countries which together accounted for 75 per cent of world trade. For the first time, negotiations departed from the product-by-product approach used in the previous Rounds to an across-the-board or linear method of cutting tariffs for industrial goods. The working hypothesis of a 50 per cent target cut in tariff levels was achieved in many areas. Concessions covered an estimated total value of trade of about $40 billion. Separate agreements were reached on grains, chemical products and a Code on Anti-Dumping.1965 A New Chapter. The early 1960s marked the accession to the General Agreement of many newly-independent developing countries. I n February, the Contracting Parties, meeting in a special session, adopted the text of Part IV on Trade and Development. The additional chapter to the GATT required developed countries to accord high priority to the reduction of trade barriers to products of developing countries. A Committee on Trade and Development was established to oversee the functioning of the new GATT provisions. In the preceding year, GATT had established the International Trade Centre (ITC) to help developing countries in trade promotion and identification of potential markets. Since 1968, the ITC had been jointly operated by GATT and the UN Conference on Trade and Development (UNCTAD). 1973 The Tokyo Round. The seventh Round was launched by Ministers in September at the Japanese capital. Some 99 countries participated in negotiating a comprehensive body of agreements covering both tariff and non-tariff matters.33

VOL. 272, MAY 2, 199733

Tañada vs. Angara(the attraction of) more investments into the country.” Although the Chief Executive did not expressly mention it in his_______________

At the end of the Round in November 1979, participants exchanged tariff reductions and bindings which covered more than $300 billion of trade. As a result of these cuts, the weighted average tariff on manufactured goods in the world’s nine major industrial markets declined from 7.0 to 4.7 per cent. Agreements were reached in the following areas: subsidies and countervailing measures, technical barriers to trade, import licensing procedures, government procurement, customs valuation, a revised anti-dumping code, trade in bovine meat, trade in dairy products and trade in civil aircraft. The first concrete result of the Round was the reduction of import duties and other trade barriers by industrial countries on tropical products exported by developing countries.1974 On 1 January 1974, the Arrangement Regarding International Trade in Textiles, otherwise known as the Multi-fibre Arrangement (MFA), entered into force. I t superseded the arrangements that had been governing trade in cotton textiles since 1961. The MFA seeks to promote the expansion and progressive liberalization of trade in textile products while at the same time avoiding disruptive effects in individual markets and lines of production. The MFA was extended in 1978, 1982, 1986, 1991 and 1992. MFA members account for most of the world exports of textiles and clothing which in 1986 amounted to US$128 billion.1982 Ministerial Meeting. Meeting for the first time in nearly ten years, the GATT Ministers in November at Geneva reaffirmed the validity of GATT rules for the conduct of international trade and committed themselves to combating protectionist pressures. They also established a wide-ranging work programme for the GATT which was to lay down the groundwork for a new Round.1986 The Uruguay Round. The GATT Trade Mi ni sters meeting at Punta del Este, Uruguay, launched the eighth Round of trade negotiations on 20 September. The Punta del Este Declaration, while representing a single political undertaking, was divided into two sections. The first covered negotiations on trade in goods and the second initiated negotiation on trade in s ervices. In the area of trade in goods, the Minis34

34

SUPREME COURT REPORTS ANNOTATEDTañada vs. Angaraletter, the Philippines—and this is of special interest to the legal profession—will benefit from the WTO system of dispute settlement by judicial adjudication through the independent WTO settlement bodies called (1) Dispute Settlement Panels and (2) Appellate Tribunal. Heretofore, trade disputes were settled mainly through negotiations where solutions were arrived at frequently on the basis of relative bargaining strengths, and where naturally, weak and underdeveloped countries were at a disadvantage.The Petition in BriefArguing mainly (1) that the WTO requires the Philippines “to place nationals and products of member-countries on the same footing as Filipinos and local products” and (2) that the WTO “intrudes, limits and/or impairs” the constitutional powers of both Congress an d th e Su preme Court, the instant petition before this Court assails the WTO Agreement for________________

ters committed themselves to a “standstill” on new trade measures inconsis tent with their GATT obligations and to a “rollback” programme aimed at phasing out existing inconsistent measures. Envisaged to last four years, negotiations started in early February 1987 in the following areas: tariffs, non-tariff measures, tropical products, natural resource-based products, textiles and clothing, agriculture, subsidies, safeguards, trade-related aspects of intellectual property rights including trade in counterfeit goods, and trade-related investment meas ures . The work of other groups included a review of GATT articles, the GATT dispute-settlement procedure, the Tokyo Round agreements, as well as the functioning of the GATT system as a whole.1994 “GATT 1994” is the updated version of GATT 1947 and takes into account the substantive and institutional changes negotiated in the Uruguay Round. GATT 1994 is an integral part of the World Trade Organization established on 1 January 1995. It is agreed that there be a one year transition period during which certain GATT 1947 bodies and commitments would co-exist with those of the World Trade Organization.”35

VOL. 272, MAY 2, 199735Tañada vs. Angara

violating the mandate of the 1987 Constitution to “develop a self-reliant and independent national economy effectively controlled by Filipinos x x x (to) give preference to qualified Filipinos (and to) promote the preferential use of Filipino labor, domestic materials and locally produced goods.”Simply stated, does the Philippine Constitution prohibit Philippine participation in worldwide trade liberalization and economic globalization? Does it proscribe Philippine integration into a global economy that is liberalized, deregulated and privatized? These are the main questions raised in this petition for certiorari, prohibition and mandamus under Rule 65 of the Rules of Court praying (1) for the nullification, on constitutional grounds, of the concurrence of the Philippine Senate in the ratification by the President of the Philippines of the Agreement Establishing the World Trade Organization (WTO Agreement, for brevity) and (2) for the prohibition of its implementation and enforcement through the release and utilization of public funds, the assignment of public officials and employees, as well as the use of government properties and resources by respondent-heads of various executive offices concerned therewith. This concurrence is embodied in Senate Resolution No. 97, dated December 14, 1994.The FactsOn April 15, 1994, Respondent Rizalino Navarro, then Secretary of the Department of Trade and Industry (Secretary Navarro, for brevity), representing the Government of the Republic of the Philippines, signed in Marrakesh, Morocco, the Final Act Embodying the Results of the Uruguay Round of Multilateral Negotiations (Final Act, for brevity).By signing the Final Act,2 Secretary Navarro on behalf of the Republic of the Philippines, agreed:_______________

2 The Final Act was signed by repres entatives of 125 entities, namely Algeria, Angola, Antigua and Barbuda, Argentine Republic, Australia, Republic of Austria, State of Bahrain, People’s Republic of Bangladesh, Barbados, The Kingdom of Belgium, Belize, Republic of36

36SUPREME COURT REPORTS ANNOTATEDTañada vs. Angara“(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective competent authorities, with a view to seeking approval of the Agreement in accordance with their procedures; and

(b) to adopt the Ministerial Declarations and Decisions.”On August 12, 1994, the members of the Philippine Senate received a letter dated August 11, 1994 from the President of_______________

Benin, Bolivia, Botswana, Brazil, Brunei Darussalam, Burkina Faso, Burundi, Cameroon, Canada, Central African Republic, Chad, Chile, People’s Republic of China, Colombia, Congo, Costa Rica, Republic of Cote d’Ivoire, Cuba, Cyprus, Czech Republic, Kingdom of Denmark, Commonwealth of Dominica, Dominican Republic, Arab Republic of Egypt, El Salvador, European Communities, Republic of Fiji, Finland, French Republic, Gabonese Republic, Gambia, Federal Republic of Germany, Ghana, Hellenic Republic, Grenada, Guatemala, Republic of Guinea-Bissau, Republic of Guyana, Haiti, Honduras, Hongkong, Hungary, Iceland, India, Indonesia, Ireland, State of Israel, Italian Republic, Jamaica, Japan, Kenya, Korea, State of Kuwait, Kingdom of Lesotho, Principality of Liechtenstein, Grand Duchy of Luxembourg, Macau, Republic of Madagascar, Republic of Malawi, Malaysia, Republic of Maldives, Republic of Mali, Republic of Malta, Islamic Republic of Mauritania, Republic of Mauritius, United Mexican States, Kingdom of Morocco, Republic of Mozambique, Union of Myanmar, Republic of Namibia, Kingdom of the Netherlands, New Zealand, Nicaragua, Republic of Niger, Federal Republic of Nigeria, Kingdom of Norway, Islamic Republic of Pakistan, Paraguay, Peru, Philippines, Poland, Portuguese Republic, State of Qatar, Romania, Rwandese Republic, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Senegal, Sierra Leone, Singapore, Slovak Republic, South Africa, Kingdom of Spain, Democratic Socialist Republic of Sri Lanka, Republic of Surinam, Kingdom of Swaziland, Kingdom of Sweden, Swiss Confederation, United Republic of Tanzania, Kingdom of Thailand, Togolese Republic, Republic of Trinidad and Tobago, Tunisia, Turkey, Uganda, United Arab Emirates, United Kingdom of Great Britain and Northern I reland, United States of America, Eastern Republic of Uruguay, Venezuela, Republic of Zaire, Republic of Zambia, Republic of Zimbabwe; see pp. 6-25, Vol. 1, Uruguay Round of Multilateral Trade Negotiations.37

VOL. 272, MAY 2, 199737Tañada vs. Angarathe Philippines,3 stating among others that “the Uruguay Round Final Act is hereby submitted to the Senate for its

________________

311 August 1994The Honorable Members

SenateThrough Senate President Edgardo AngaraManilaLadies and Gentlemen:I have the honor to forward herewith an authenticated copy of the Uruguay Round Final Act signed by Department of Trade and Industry Secretary Rizalino S. Navarro for the Philippines on 15 April 1994 in Marrakesh, Morocco.The Uruguay Round Final Act aims to liberalize and expand world trade and strengthen the interrelationship between trade and economic policies affecting growth and development.The Final Act will improve Philippine access to foreign markets, especially its major trading partners through the reduction of tariffs on its exports particularly agricultural and industrial products. These concessions may be availed of by the Philippines, only if it is a member of the World Trade Organization. By GATT estimates, the Philippines can acquire additional export revenues from $2.2 to $2.7 Billion annually under Uruguay Round. This will be on top of the normal increase in exports that the Philippines may experience.The Final Act will also open up new opportunities for the services sector in such areas as the movement of personnel, (e.g., professional services and construction services), cross-border supply (e.g., computer-related services), consumption abroad (e.g., tourism, convention services, etc.) and commercial presence.The clarified and improved rules and disciplines on anti-dumping and countervailing measures will also benefit Philippine exporters by reducing the costs and uncertainty associated with exporting while at the same time providing a means for domestic industries to safeguard themselves against unfair imports.Likewise, the provision of adequate protection for intellectual property rights is expected to attract more inves tments into the country and to make it less vulnerable to unilateral actions by its trading partners (e.g., Sec. 301 of the United States’ Omnibus Trade Law).38

38SUPREME COURT REPORTS ANNOTATEDTañada vs. Angaraconcurrence pursuant to Section 21, Article VII of the Constitution.”On August 13, 1994, the members of the Philippine Senate received another letter from the President of the Philippines4_______________

In view of the foregoing, the Uruguay Round Final Act is hereby submitted to the Senate for its concurrence pursuant to Section 21, Article VI I of the Constitution.A draft of a proposed Resolution giving its concurrence to the afores aid Agreement is enclosed.Very truly yours, (SGD.) FIDEL V. RAMOS411 August 1994The Honorable Members

SenateThrough Senate President Edgardo AngaraManilaLadies and Gentlemen:I have the honor to forward herewith an authenticated copy of the Uruguay Round Final Act signed by Department of Trade and Industry Secretary Rizalino S. Navarro for the Philippines on 13 April 1994 in Marrakech (sic), Morocco.Members of the trade negotiations committee, which included the Philippines, agreed that the Agreement Establishing the World Trade Organization, the Ministerial Declarations and Decisions, and the Understanding on Commitments in Financial Services embody the results of their negotiations and form an integral part of the Uruguay Round Final Act.By signing the Uruguay Round Final Act, the Philippines, through Secretary Navarro, agreed:(a) To submit the Agreement Establishing the World Trade Organization to the Senate for its concurrence pursuant to Section 21, Article VII of the Constitution; and(b) To adopt the Ministerial Declarations and Decisions. The Uruguay Round Final Act aims to liberalize and expand world trade and strengthen the

interrelationship between trade and economic policies affecting growth and development.39

VOL. 272, MAY 2, 199739Tañada vs. Angaralikewise dated August 11, 1994, which stated among others that “the Uruguay Round Final Act, the Agreement Establishing the World Trade Organization, the Ministerial Declarations and Decisions, and the Understanding on Commitments in Financial Services are hereby submitted to the Sen-______________

The Final Act will improve Philippine access to foreign markets, especially its major trading 0partners through the reduction of tariffs on its exports particularly agricultural and industrial products. These concessions may be availed of by the Philippines, only if it is a member of the World Trade Organization. By GATT estimates, the Philippines can acquire additional export revenues from $2.2. to $2.7 Billion annually under Uruguay Round. This will be on top of the normal increase in the exports that the Philippines may experience.The Final Act will also open up new opportunities for the services sector in such areas as the movement of personnel, (e.g., professional services and construction services), cross-border supply (e.g., computer-related services), consumption abroad (e.g., tourism, convention services, etc.) and commercial presence.The clarified and improved rules and disciplines on anti-dumping and countervailing measures will also benefit Philippine exporters by reducing the costs and uncertainty associated with exporting while at the same time providing a means for domestic industries to safeguard themselves against unfair imports.Likewise, the provision of adequate protection for intellectual property rights is expected to attract more inves tments into the country and to make it less vulnerable to unilateral actions by its trading partners (e.g., Sec. 301 of the United States Omnibus Trade Law).In view of the foregoing, the Uruguay Round Final Act, the Agreement Establishing the World Trade Organization, the Ministerial Declarations and Decisions, and the Understanding on Commitments in Financial Services, as embodied in the Uruguay Round Final Act and forming an integral part

thereof are hereby submitted to the Senate for its concurrence pursuant to Section 21, Article VII of the Constitution.A draft of a proposed Resolution giving its concurrence to the aforesaid Agreement is enclosed.Very truly yours, (SGD.) FIDEL V. RAMOS40

40SUPREME COURT REPORTS ANNOTATEDTañada vs. Angaraate for its concurrence pursuant to Section 21, Article VII of the Constitution.”On December 9, 1994, the President of the Philippines certified the necessity of the immediate adoption of P.S. 1083, a resolution entitled “Concurring in the Ratification of the Agreement Establishing the World Trade O rganization.”5On December 14, 1994, the Philippine Senate adopted Resolution No. 97 which “Resolved, as it is hereby resolved, that the Senate concur, as it hereby concurs, in the ratification by the President of the Philippines of the Agreement Establishing the World Trade Organization.”6 The text of the WTO Agreement is written on pages 137 et seq. of Volume I of the 36-volume Uruguay Round of Multilateral Trade Negotiations and includes various agreements and associated legal_______________

5December 9, 1994HON. EDGARDO J. ANGARA Senate President Senate, ManilaDear Senate President Angara:Pursuant to the provis ions of Sec. 26(2), Article VI of the Constitution, I hereby certify to the necessity of the immediate adoption of P.S. 1083, entitled:“CONCURRING IN THE RATIFICATION OF THE AGREEMENT ESTABLISHING THE WORLD TRADE ORGANIZATION”to meet a public emergency consisting of the need for immediate membership in the WTO in order to assure the benefits to the Philippine economy arising from such membership.

Very truly yours, (SGD.) FIDEL V. RAMOS6 Attached as Annex A; Petition; rollo, p. 52. P.S. 1083 is the forerunner of assailed Senate Resolution No. 97. It was prepared by the Committee of the Whole on the General Agreement on Tariffs and Trade chaired by Sen. Blas F. Ople and co-chaired by Sen. Gloria Macapagal-Arroyo; see Annex C, Compliance of petitioners dated January 28, 1997.41

VOL. 272, MAY 2, 199741Tañada vs. Angarainstruments (identified in the said Agreement as Annexes 1, 2 and 3 thereto and collectively referred to as Multilateral Trade Agreements, for brevity) as follows:“ANNEX 1

Annex 1A: Multilateral Agreement on Trade in Goods General Agreement on Tariffs and Trade 1994 Agreement on Agriculture Agreement on the Application of Sanitary and Phytosanitary Meas ures Agreement on Textiles and Clothing Agreement on Technical Barriers to Trade Agreement on Trade-Related Investment Measures Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 Agreement on Pre-Shipment Inspection Agreement on Rules of Origin Agreement on Imports Licensing Procedures Agreement on Subsidies and Coordinating Measures Agreement on SafeguardsAnnex 1B: General Agreement on Trade in Services and AnnexesAnnex 1C: Agreement on Trade-Related As pects of Intellectual Property RightsANNEX 2

Understanding on Rules and Procedures Governing the Settlement of Disputes

ANNEX 3

Trade Policy Review Mechanism”

On December 16, 1994, the President of the Philippines signed7 the Instrument of Ratification, declaring:_______________

7 The Philippines is thus considered an original or founding member of WTO, which as of July 26, 1996 had 123 members as follows: Antigua and Barbuda, Argentina, Australia, Austria, Bahrain, Bangladesh, Barbados, Belguim, Belize, Benin, Bolivia, Botswana, Brazil, Brunei Darussalam, Burkina Faso, Burundi, Camer42

42SUPREME COURT REPORTS ANNOTATEDTañada vs. Angara“NOW THEREFORE, be it known that I, FIDEL V. RAMOS, President of the Republic of the Philippines, after having seen and considered the aforementioned Agreem ent Establishing the World Trade Organization and the agreements and associated legal instruments included in Annexes one (1), two (2) and three (3) of that Agreement which are integral parts thereof, signed at Marrakesh, Morocco on 15 April 1994, do hereby ratify and confirm the same and every Article and Clause thereof.”To emphasize, the WTO Agreement ratified by the President of the Philippines is composed of the Agreement Proper and “the associated legal instruments included in Annexes one (1), two (2) and three (3) of that Agreement which are integral parts thereof.”On the other hand, the Final Act signed by Secretary Navarro embodies not only the WTO Agreement (and its integral annexes aforementioned) but also (1) the Ministerial Declarations and Decisions and (2) the Understanding on Commitments in Financial Services. In his Memorandum______________

oon, Canada, Central African Republic, Chili, Colombia, Costa Rica, Cote d’Ivoire, Cuba, Cyprus, Czech Republic, Denmark, Djibouti, Dominica,

Dominican Republic, Ecuador, Egypt, El Salvador, European Community, Fiji, Finland, France, Gabon, Germany, Ghana, Greece, Grenada, Guatemala, Guinea, Guinea Bissau, Guyana, Haiti, Honduras, Hongkong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kenya, Korea, Kuwait, Lesotho, Liechtenstein, Luxembourg, Macau, Madagascar, Malawi, Malaysia, Maldives, Mali, Malta, Mauritania, Mauritius, Mexico, Morocco, Mozambique, Myanmar, Namibia, Netherlands—for the Kingdom in Europe and for the Netherlands Antilles, New Zealand, Nicaragua, Nigeria, Norway, Pakistan, Papua New Guinea, Paraguay, Peru, Philippines, Poland, Portugal, Qatar, Romania, Rwanda, Saint Kitts and Nevis , Saint Lucia, Saint Vincent & the Grenadines, Senegal, Si erra Leone, Si ngapore, Sl ovak Republ ic, Sl oveni a, Solomon Islands, South Africa, Spain, Sri Lanka, Surinam, Swaziland, Sweden, Switzerland, Tanzania, Thailand, Togo, Trinidad and Tobago, Tunisia, Turkey, Uganda, United Arab Emirates, United Kingdom, United States, Uruguay, Venezuela, Zambia and Zimbabwe. See Annex A, Bautista Paper, infra.43

VOL. 272, MAY 2, 199743Tañada vs. Angaradated May 13, 1996,8 the Solicitor General describes these two latter documents as follows:“The Ministerial Decisions and Declarations are twenty-five declarations and decisions on a wide range of matters, such as measures in favor of least developed countries, notification procedures, relationship of WTO with the International Monetary Fund (I MF), and agreements on technical barriers to trade and on dispute settlement.The Understanding on Commitments in Financial Services dwell on, among other things, standstill or limitations and qualifications of commitments to existing non-conforming measures, market access, national treatment, and definitions of non-resident supplier of financial services, commercial presence and new financial service.”On December 29, 1994, the present petition was filed. After careful deliberation on respondents’ comment and petitioners’ reply thereto, the Court resolved on December 12, 1995, to give due course to the petition, and the parties thereafter filed their respective memoranda. The Court also requested the Honorable Lilia R. Bautista, the Philippine Ambassador to the United Nations stationed in Geneva, Switzerland, to submit a paper,

hereafter referred to as “Bautista Paper,”9 for brevity, (1) providing a historical background of and (2) summarizing the said agreements.During the Oral Argument held on August 27, 1996, the Court directed:“(a) the petitioners to submit the (1) Senate Committee Report on the matter in controversy and (2) the transcript of proceedings/hearings in the Senate; and(b) the Solicitor General, as cou n s el for res ponden ts , to file (1) a list of Philippine treaties signed prior to the Philippine adher______________

8 Page 6; rollo p. 261.9 I n compliance, Ambassador Bautista submitted to the Court on August 12, 1996, a Memorandum (the “Bautista Paper”) consisting of 56 pages excluding annexes. This is the same document mentioned in footnote No. 1.44

44SUPREME COURT REPORTS ANNOTATEDTañada vs. Angaraence to the WTO Agreement, which derogate from Philippine sovereignty and (2) copies of the multi-volume WTO Agreement and other documents mentioned in the Final Act, as soon as possible.”After receipt of the foregoing documents, the Court said it would consider the case subm itted for resolution. In a Compliance dated September 16, 1996, the Solicitor General submitted a printed copy of the 36-volume Uruguay Round of Multilateral Trade Negotiations, and in another Compliance dated October 24, 1996, he listed the various “bilateral or multilateral treaties or international instruments involving derogation of Philippine sovereignty.” Petitioners, on the other hand, submitted their Compliance dated January 28, 1997, on January 30, 1997.The IssuesIn their Memorandum dated March 11, 1996, petitioners summarized the issues as follows:“A. Whether the petition presents a political question or is otherwise not justiciable.B. Whether the petitioner members of the Senate who participated in the deliberations and voting leading to the concurrence are estopped from impugning the validity of the Agreement Establishing the World Trade Organization or of the validity of the concurrence.

C. Whether the provisions of the Agreement Establishing the World Trade Organization contravene the provisions of Sec. 19, Article II, and Secs. 10 and 12, Article XII, all of the 1987 Philippine Constitution.D. Whether provisions of the Agreement Establis hing the World Trade Organization unduly limit, res trict and impair Philippine sovereignty specifically the legislative power which, under Sec. 2, Article VI, 1987 Philippine Constitution is ‘vested in the Congress of the Philippines.’E. Whether provisions of the Agreement Establishing the World Trade Organization interfere with the exercise of judicial power.F. Whether the respondent members of the Senate acted in grave abuse of discretion amounting to lack or excess of jurisdiction45

VOL. 272, MAY 2, 199745Tañada vs. Angarawhen they voted for concurrence in the ratification of the constitutionally-infirm Agreement Establishing the World Trade Organization.G. Whether the respondent members of the Senate acted in grave abuse of discretion amounting to lack or excess of jurisdiction when they concurred only in the ratification of the Agreement Establishing the World Trade Organization, and not with the Presidential submission which included the Final Act, Ministerial Declaration and Decisions, and the Understanding on Commitments in Financial Services.”On the other hand, the Solicitor General as counsel for respondents “synthesized the several issues raised by petitioners into the following:”10“1. Whether or not the provisions of the ‘Agreement Establishing the World Trade Organization and the Agreements and Associated Legal Instruments included in Annexes one (1), two (2) and three (3) of that agreement’ cited by petitioners directly contravene or undermine the letter, spirit and intent of Section 19, Article II and Sections 10 and 12, Article XII of the 1987 Constitution.2. Whether or not certain provisions of the Agreement unduly limit, restrict or impair the exercise of legislative power by Congress.3. Whether or not certain provis ions of the Agreement impair the exercise of judicial power by this Honorable Court in promulgating the rules of evidence.4. Whether or not the concurrence of the Senate ‘in the ratification by the President of the Philippines of the Agreement establishing the W orld Trade Organization’ implied rejection of the treaty embodied in the Final Act.”

By raising and arguing only four issues against the seven presented by petitioners, the Solicitor General has effectively ignored three, namely: (1) whether the petition presents a political question or is otherwise not justiciable; (2) whether petitioner-members of the Senate (Wigberto E. Tañada and Anna Dominique Coseteng) are estopped from joining this_______________

10 Memorandum for Respondents, p. 13; rollo, p. 268.46

46SUPREME COURT REPORTS ANNOTATEDTañada vs. Angarasuit; and (3) whether the respondent-members of the Senate acted in grave abuse of discretion when they voted for concurrence in the ratification of the WTO Agreement. The foregoing notwithstanding, this Court resolved to deal with these three issues thus:(1) The “political question” issue—being very fundamental and vital, and being a matter that probes into the very jurisdiction of this Court to hear and decide this case—was deliberated upon by the Court and will thus be ruled upon as the first issue;(2) The matter of estoppel will not be taken up because this defense is waivable and the respondents have effectively waived it by not pursuing it in any of their pleadings; in any event, this issue, even if ruled in respondents’ favor, will not cause the petition’s dismissal as there are petitioners other than the two senators, who are not vulnerable to the defense of estoppel; and(3) The issue of alleged grave abuse of discretion on the part of the respondent senators will be taken up as an integral part of the disposition of the four issues raised by the Solicitor General.During its deliberations on the case, the Court noted that the respondents did not question the locus standi of petitioners. Hence, they are also deemed to have waived the benefit of such issue. They probably realized that grave constitutional issues, expenditures of public funds and serious international commitments of the nation are involved here, and that transcendental public interest requires that the substantive issues be met head on and decided on the merits, rather than skirted or deflected by procedural matters.11To recapitulate, the issues that will be ruled upon shortly are:______________

11 Cf. Kilosbayan, Incorporated vs. Morato, 246 SCRA 540, July 17, 1995 for a discussion on locus standi. See also the Concurring Opinion of Mr. Justice Vicente V. Mendoza in Tatad vs. Garcia, Jr., 243 SCRA 473, April 6, 1995, as well as Kilusang Mayo Uno Labor Center vs. Garcia, Jr., 239 SCRA 386, 414, December 23, 1994.47

VOL. 272, MAY 2, 199747Tañada vs. Angara(1) DOES THE PETITION PRESENT A JUSTICIABLE CONTROVERSY? OTHERWISE STATED, DOES THE PETITION INVOLVE A POLITI CAL QUESTION OVER WHICH THIS COURT HAS NO JURISDICTION?(2) DO THE PROVI SI ONS OF THE WTO AGREEM ENT AND ITS THREE ANNEXES CONTRAVENE SEC. 19, ARTICLE II, AND SECS. 10 AND 12, ARTICLE XII, OF THE PHILIPPINE CONSTITUTION?(3) DO THE PROVISIONS OF SAID AGREEMENT AND ITS ANNEXES LIMIT, RESTRICT, OR IMPAIR THE EXERCISE OF LEGISLATIVE POWER BY CONGRESS?(4) DO SAID PROVISIONS UNDULY IMPAIR OR INTERFERE WITH THE EXERCISE OF JUDICIAL POWER BY THIS COURT IN PROMULGATING RULES ON EVIDENCE?(5) WAS THE CONCURRENCE OF THE SENATE IN THE WTO AGREEMENT AND ITS ANNEXES SUFFICIENT AND/OR VALID, CONSIDERING THAT I T DID NOT INCLUDE THE FI NAL ACT, MINISTERIAL DECLARATIONS AND DECISIONS, AND THE UNDERSTANDING ON COMMITMENTS IN FINANCIAL SERVICES?The First Issue: Does the Court Have Jurisdiction Over the Controversy?In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the Constitution, the petition no doubt raises a justiciable controversy. Where an action of the legislative branch is seriously alleged to have infringed the Constitution, it becomes not only the right but in fact the duty of the judiciary to settle the dispute. “The question thus posed is judicial rather than political. The duty (to adjudicate) remains to assure that the supremacy of the Constitution is upheld.”12 Once a “controversy as to the application or interpretation of a constitutional provision is raised before this_______________

12 Aquino, Jr. vs. Ponce Enrile, 59 SCRA 183, 196, September 17, 1974, cited in Bondoc vs. Pineda, 201 SCRA 792, 795, September 26, 1991.48

48SUPREME COURT REPORTS ANNOTATEDTañada vs. AngaraCourt (as in the instant case), it becomes a legal issue which the Court is bound by constitutional mandate to decide.”13The jurisdiction of this Court to adjudicate the matters14 raised in the petition is clearly set out in the 1987 Constitution,15 as follow s:“Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government.”The foregoing text emphasizes the judicial department’s duty and power to strike down grave abuse of discretion on the part of any branch or instrumentality of government including Congress. It is an innovation in our political law.16 As explained by former Chief Justice Roberto Concepcion,17 “the judiciary is the final arbiter on the question of whether or not a branch of government or any of its officials has acted without jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction. This is not only a judicial pow er but a duty to pass judgment on matters of this nature.”As this Court has repeatedly and firmly emphasized in many cases,18 it w ill not shirk, digress from or abandon its sacred duty and authority to uphold the Constitution in matters that involve grave abuse of discretion brought before it in________________

13 Guingona, Jr. vs. Gonzales, 219 SCRA 326, 337, March 1, 1993.14 See Tanada and Macapagal vs. Cuenco, et al., 103 Phil. 1051 for a discussion on the scope of “political question.”15 Section 1, Article VIII, (par. 2).16 In a privilege speech on May 17, 1993, entitled “Supreme Court—Potential Tyrant?” Senator Arturo Tolentino concedes that this new provision gives the Supreme Court a duty “to intrude into the jurisdiction of the Congress or the President.”17 I Record of the Constitutional Commission 436.

18 Cf. Daza vs. Singson, 180 SCRA 496, December 21, 1989.49

VOL. 272, MAY 2, 199749Tañada vs. Angaraappropriate cases, committed by any officer, agency, instrumentality or department of the government.As the petition alleges grave abuse of discretion and as there is no other plain, speedy or adequate remedy in the ordinary course of law, we have no hesitation at all in holding that this petition should be given due course and the vital questions raised therein ruled upon under Rule 65 of the Rules of Court. Indeed, certiorari, prohibition and mandamus are appropriate remedies to raise constitutional issues and to review and/or prohibit/nullify, w hen proper, acts of legislative and executive officials. On this, we have no equivocation.We should stress that, in deciding to take jurisdiction over this petition, this Court w ill not review the wisdom of the decision of the President and the Senate in enlisting the country into the WTO, or pass upon the merits of trade liberalization as a policy espoused by said international body. Neither will it rule on the propriety of the government’s economic policy of reducing/removing tariffs, taxes, subsidies, quantitative restrictions, and other import/trade barriers. Rather, it will only exercise its constitutional duty “to determine whether or not there had been a grave abuse of discretion amounting to lack or excess of jurisdiction” on the part of the Senate in ratifying the WTO Agreement and its three annexes.Second Issue: The WTO Agreement and Economic NationalismThis is the lis mota, the main issue, raised by the petition.Petitioners vigorously argue that the “letter, spirit and intent” of the Constitution mandating “economic nationalism” are violated by the so-called “parity provisions” and “national treatment” clauses scattered in various parts not only of the WTO Agreement and its annexes but also in the Ministerial Decisions and Declarations and in the Understanding on Commitments in Financial Services.Specifically, the “flagship” constitutional provisions referred to are Sec. 19, Article II, and Secs. 10 and 12, Article XII, of the Constitution, which are worded as follows:50

50SUPREME COURT REPORTS ANNOTATEDTañada vs. Angara“Article II

DECLARATION OF PRINCIPLES AND STATE POLICI ES

xx xx xx xxSec. 19. The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos.xx xx xx xxArticle XII

NATIONAL ECONOM Y AND PATRIMONY

xx xx xx xxSec. 10. x x x. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos.In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.xx xx xx xxSec. 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive.”Petitioners aver that these sacred constitutional principles are desecrated by the following WTO provisions quoted in their memorandum:19“a) In the area of investment measures related to trade in goods (TRIMS, for brevity):“Article 2

National Treatment and Quantitative Restrictions.1. Without prejudice to other rights and obligations under GATT 1994, no Member shall apply any TRIM that is inconsistent with the provisions of Article III or Article XI of GATT 1994.2. An Illustrative list of TRIMS that are inconsistent with the obligations of general elimination of quantitative re_______________

19 Memorandum for Petitioners, pp. 14-16; rollo, pp. 204-206.51

VOL. 272, MAY 2, 199751Tañada vs. Angarastrictions provided for in paragraph I of Article XI of GATT 1994 is contained in the Annex to this Agreement.” (Agreement on Trade-Related Investment Measures, Vol. 27, Uru-guay Round, Legal Instruments, p. 22121, emphasis supplied). The Annex referred to reads as follows:“ANNEX

Illustrative List

1. TRIMS that are inconsistent with the obligation of national treatment provided for in paragraph 4 of Article III of GATT 1994 include those which are mandatory or enforceable under domestic law or under administrative rulings, or compliance with which is necessary to obtain an advantage, and which require:(a) the purchase or use by an enterprise of products of domestic origin or from any domestic source, whether specified in terms of particular products, in terms of volume or value of products, or in terms of proportion of volume or value of its local production; or(b) that an enterprise’s purchases or use of im-ported products be limited to an amount related to the volume or value of local products that it exports.2. TRIMS that are inconsistent with the obligations of general elimination of quantitative restrictions provided for in paragraph 1 of Article XI of GATT 1994 include those which are mandatory or enforceable under domestic laws or under administrative rulings, or compliance with which is necessary to obtain an advantage, and which restrict:(a) the importation by an enterprise of products used in or related to the local production that it exports;(b) the importation by an enterprise of products used in or related to its local production by restricting its access to foreign exchange inflows attributable to the enterprise; or(c) the exportation or sale for export specified in terms of particular products, in terms of volume or value of products, or in terms of a preparation of volume or value of its local production.” (Annex to the Agreement on Trade-Related Investment Measures, Vol. 27, Uru-

52

52SUPREME COURT REPORTS ANNOTATEDTañada vs. Angaraguay Round Legal Documents, p. 22125, emphasis supplied).The paragraph 4 of Article III of GATT 1994 referred to is quoted as follows:The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. The provisions of this paragraph shall not prevent the application of differential internal transportation charges which are based exclusively on the economic operation of the means of transport and not on the nationality of the product.” (Article III , GATT 1947, as amended by the Protocol Modifying Part II, and Article XXVI of GATT, 14 September 1948, 62 UMTS 82-84 in relation to paragraph 1(a) of the General Agreement on Tariffs and Trade 1994, Vol. 1, Uruguay Round, Legal Instruments, p. 177, emphasis supplied).“b) In the area of trade related aspects of intellectual property rights (TRIPS, for brevity):Each Mem ber shall accord to the nationals of other Members treatment no less favourable than what it accords to its own nationals with regard to the protection of intellectual property . . . (par. 1, Article 3, Agreement on Trade-Related Aspect of Intellectual Property Rights, Vol. 31, Uruguay Round, Legal Instruments, p. 25432, emphasis supplied).“(c) In the area of the General Agreement on Trade in Services:National Treatment

1. In the sectors inscribed in its schedule, and subject to any conditions and qualifications set out therein, each Member shall accord to services and service suppliers of any other Member, in res pect of all measures affecting the supply of services, treatment no less favourable than it accords to its own like services and service suppliers.53

VOL. 272, MAY 2, 199753Tañada vs. Angara

2. A Member may meet the requirement of paragraph I by according to services and service suppliers of any other Member, either formally identical treatment or formally different treatment to that it accords to its own like services and service suppliers.3. Formally identical or formally different treatment shall be considered to be less favourable if it modifies the conditions of completion in favour of services or service suppliers of the Member compared to like s ervices or service suppliers of any other Member. (Article XVII, General Agreement on Trade in Services, Vol. 28, Uruguay Round, Legal Instruments, p. 22610 emphasis supplied).”It is petitioners’ position that the foregoing “national treatment” and “parity provisions” of the WTO Agreement “place nationals and products of member countries on the same footing as Filipinos and local products,” in contravention of the “Filipino First” policy of the Constitution. They allegedly render meaningless the phrase “effectively controlled by Filipinos.” The constitutional conflict becomes more manifest when viewed in the context of the clear duty imposed on the Philippines as a WTO member to ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed agreements.20 Petitioners further argue that these provisions contravene constitutional limitations on the role exports play in national development and negate the preferential treatment accorded to Filipino labor, domestic materials and locally produced goods.On the other hand, respondents through the Solicitor General counter (1) that such Charter provisions are not self-executing and m erely set out general policies; (2) that these nationalistic portions of the Constitution invoked by petitioners should not be read in isolation but should be related to other relevant provisions of Art. XII, particularly Secs. 1 and 13 thereof; (3) that read properly, the cited WTO clauses do not conflict with the Constitution; and (4) that the WTO_______________

20 Par. 4, Article XVI, WTO Agreement, Uruguay Round of Multilateral Trade Negotiations, Vol. 1, p. 146.54

54SUPREME COURT REPORTS ANNOTATEDTañada vs. Angara

Agreement contains sufficient provisions to protect developing countries like the Philippines from the harshness of sudden trade liberalization.We shall now discuss and rule on these arguments.Declaration of Principles Not Self-ExecutingBy its very title, Article II of the Constitution is a “declaration of principles and state policies.” The counterpart of this article in the 1935 Constitution21 is called the “basic political creed of the nation” by Dean Vicente Sinco.22 These principles in Article II are not intended to be self-executing principles ready for enforcement through the courts.23 They are used by the judiciary as aids or as guides in the exercise of its pow er of judicial review, and by the legislature in its enactment of laws. As held in the leading case of Kilosbayan, Incorporated vs. Morato,24 the principles and state policies enumerated in Article II and some sections of Article XII are not “self-executing provisions, the disregard of which can give rise to a cause of action in the courts. They do not embody judicially enforceable constitutional rights but guidelines for legislation.”In the same light, we held in Basco vs. Pagcor 25 that broad constitutional principles need legislative enactments to implement them, thus:_______________

21 Also entitled “Declaration of Principles .” The nomenclature in the 1973 Charter is identical with that in the 1987’s.22 Philippine Political Law, 1962 Ed., p. 116.23 Bernas, The Constitution of the Philippines: A Comm entary, Vol. II, 1988 Ed., p. 2. In the very recent case of Manila Prince Hotel vs. GSIS, G.R. No. 122156, February 3, 1997, p. 8, it was held that “A provision which lays down a general principle, such as those found in Art. II of the 1987 Constitution, is usually not self-executing.”24 246 SCRA 540, 564, July 17, 1995. See also Tolentino vs. Secretary of Finance, G.R. No. 115455 and consolidated cases, August 25, 1995.25 197 SCRA 52, 68, May 14, 1991.55

VOL. 272, MAY 2, 199755Tañada vs. Angara“On petitioners’ allegation that P.D. 1869 violates Sections 11 (Personal Dignity) 12 (Family) and 13 (Role of Youth) of Article II; Section 13 (Social Justice) of Article XIII and Section 2 (Educational Values) of Article XIV of the 1987 Constitution, suffice it to state also that these are merely statements

of principles and policies. As such, they are basically not self-executing, meaning a law should be passed by Congress to clearly define and effectuate such principles.‘In general, therefore, the 1935 provisions were not intended to be self-executing principles ready for enforcement through the courts. They were rather directives addressed to the executive and to the legislature. If the executive and the legislature failed to heed the directives of the article, the available rem edy was not judicial but political. The electorate could express their displeasure with the failure of the executive and the legislature through the language of the ballot. (Bernas, Vol. II, p. 2).’ ”The reasons for denying a cause of action to an alleged infringement of broad constitutional principles are sourced from basic considerations of due process and the lack of judicial authority to wade “into the uncharted ocean of social and economic policy making.” Mr. Justice Florentino P. Feliciano in his concurring opinion in Oposa vs. Factoran, Jr.,26 explained these reasons as follow s:“My s uggestion is simply that petitioners must, before the trial court, show a more specific legal right—a right cast in language of a significantly lower order of generality than Article II (15) of the Constitution—that is or may be violated by the actions, or failures to act, imputed to the public res pondent by petitioners so that the trial court can validly render judgment granting all or part of the relief prayed for. To my mind, the court should be understood as simply saying that such a more specific legal right or rights may well exist in our corpus of law, considering the general policy principles found in the Constitution and the existence of the Philippine Environment Code, and that the trial court should have given petitioners an effective opportunity so to demonstrate, instead of aborting the proceedings on a motion to dismiss._______________

26 224 SCRA 792, 817, July 30, 1993.56

56SUPREME COURT REPORTS ANNOTATEDTañada vs. AngaraIt seems to me important that the legal right which is an essential component of a cause of action be a specific, operable legal right, rather than a constitutional or statutory policy, for at least two (2) reasons. One is that unless the legal right claimed to have been violated or disregarded is given specification in operational terms, defendants may well be unable to

defend themselves intelligently and effectively; in other words, there are due process dimensions to this matter.The second is a broader-gauge consideration—where a specific violation of law or applicable regulation is not alleged or proved, petitioners can be expected to fall back on the expanded conception of judicial power in the second paragraph of Section 1 of Article VIII of the Constitution which reads:‘Section 1. x x xJudicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of juris diction on the part of any branch or instrumentality of the Government.’ (Emphases supplied)When substantive standards as general as ‘the right to a balanced and healthy ecology’ and ‘the right to health’ are combined with remedial standards as broad ranging as ‘a grave abuse of discretion amounting to lack or excess of jurisdiction,’ the result will be, it is respectfully submitted, to propel courts into the uncharted ocean of social and economic policy making. At leas t in respect of the vast area of environmental protection and management, our courts have no claim to special technical competence and experience and professional qualification. Where no specific, operable norms and standards are shown to exis t, then the policy making departments—the legislative and executive departments—must be given a real and effective opportunity to fashion and promulgate those norms and standards, and to implement them before the courts should intervene.”Economic Nationalism Should Be Read with Other Constitutional Mandates to Attain Balanced Development of EconomyOn the other hand, Secs. 10 and 12 of Article XII, apart from merely laying down general principles relating to the57

VOL. 272, MAY 2, 199757Tañada vs. Angaranational economy and patrimony, should be read and understood in relation to the other sections in said article, especially Secs. 1 and 13 thereof which read:“Section 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of

the people; and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged.The State shall promote indus trialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices.In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. x x xx x x x x x x x xSec. 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity.”As pointed out by the Solicitor General, Sec. 1 lays down the basic goals of national economic development, as follows:1. A more equitable distribution of opportunities, income and wealth;2. A sustained increase in the amount of goods and services provided by the nation for the benefit of the people; and3. An expanding productivity as the key to raising the quality of life for all especially the underprivileged.With these goals in context, the Constitution then ordains the ideals of economic nationalism (1) by expressing preference in favor of qualified Filipinos “in the grant of rights, privileges and concessions covering the national economy and patrimony”27 and in the use of ”Filipino labor, domestic mate-_______________

27 Sec. 10, Article XI I.58

58SUPREME COURT REPORTS ANNOTATEDTañada vs. Angararials and locally-produced goods”; (2) by mandating the State to “adopt measures that help make them competitive”28; and (3) by requiring the State to “develop a self-reliant and independent national economy effectively controlled by Filipinos.”29 In similar language, the Constitution takes into account the realities of the outside world as it requires the pursuit of “a trade policy that serves the general welfare and utilizes all

forms and arrangements of exchange on the basis of equality and reciprocity”30; and speaks of industries “which are competitive in both dom estic and foreign markets” as w ell as of the protection of “Filipino enterprises against unfair foreign competition and trade practices.”It is true that in the recent case of Manila Prince Hotel vs. Government Service Insurance System, et al.,31 this Court held that “Sec. 10, second par., Art. XII of the 1987 Constitution is a mandatory, positive command which is complete in itself and which needs no further guidelines or implementing laws or rules for its enforcement. From its very words the provision does not require any legislation to put it in operation. It is per se judicially enforceable.” However, as the constitutional provision itself states, it is enforceable only in regard to “the grants of rights, privileges and concessions covering national economy and patrimony” and not to every aspect of trade and commerce. It refers to exceptions rather than the rule. The issue here is not whether this paragraph of Sec. 10 of Art. XII is self-executing or not. Rather, the issue is whether, as a rule, there are enough balancing provisions in the Constitution to allow the Senate to ratify the Philippine concurrence in the WTO Agreement. And we hold that there are.All told, while the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and enterprises, at the same tim e, it recognizes the need for business exchange with the rest of the world on the bases of equality and reciprocity_______________

28 Sec. 12, Article XI I.29 Sec. 19, Art. I I.30 Sec. 13, Art. XII.31 G.R. No. 122156, February 3, 1997, pp.13-14.59

VOL. 272, MAY 2, 199759Tañada vs. Angaraand limits protection of Filipino enterprises only against foreign competition and trade practices that are unfair.32 In other words, the Constitution did not intend to pursue an isolationist policy. It did not shut out foreign investments, goods and services in the development of the Philippine economy. While the Constitution does not encourage the unlimited entry of foreign goods, services and investments into the country, it does not

prohibit them either. In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on foreign competition that is unfair.WTO Recognizes Need to Protect Weak EconomiesUpon the other hand, respondents maintain that the WTO itself has some built-in advantages to protect weak and developing economies, which comprise the vast majority of its members. Unlike in the UN where major states have permanent seats and veto pow ers in the Security Council, in the WTO, decisions are made on the basis of sovereign equality, with each member’s vote equal in weight to that of any other. There is no WTO equivalent of the UN Security Council.“WTO decides by consensus whenever possible, otherwise, decisions of the Ministerial Conference and the General Council shall be taken by the majority of the votes cast, except in cases of interpretation of the Agreement or waiver of the obligation of a member which would require three fourths vote. Amendments would require two thirds vote in general. Amendments to MFN provisions and the Amendments provision will require assent of all members. Any member may withdraw from the Agreement upon the expiration of six months from the date of notice of withdrawals.”33Hence, poor countries can protect their common interests more effectively through the WTO than through one-on-one negotiations with developed countries. Within the WTO, developing countries can form powerful blocs to push their eco-______________

32 Sec. 1, Art. XII.33 Bautista Paper, p. 19.60

60SUPREME COURT REPORTS ANNOTATEDTañada vs. Angaranomic agenda more decisively than outside the Organization. This is not merely a matter of practical alliances but a negotiating strategy rooted in law. Thus, the basic principles underlying the WTO Agreement recognize the need of developing countries like the Philippines to “share in the growth in international trade commensurate with the needs of their economic development.” These basic principles are found in the preamble34 of the WTO Agreements as follows:

“The Parties to this Agreement,Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development,Recognizing further that there is need for positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic developm ent,Being des irous of contributing to these objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations,Resolved, therefore, to develop an integrated, more viable and durable multilateral trading system encompassing the General Agreement on Tariffs and Trade, the results of pas t trade liberalization efforts, and all of the results of the Uruguay Round of Multilateral Trade Negotiations,Determined to preserve the basic principles and to further the objectives underlying this multilateral trading system, x x x.” (italics supplied.)_______________

34 Preamble, WTO Agreement p. 137, Vol. 1, Uruguay Round of Multilateral Trade Negotiations. Italics supplied.61

VOL. 272, MAY 2, 199761Tañada vs. AngaraSpecific WTO Provisos Protect Developing CountriesSo too, the Solicitor General points out that pursuant to and consistent with the foregoing basic principles, the WTO Agreement grants developing countries a more lenient treatment, giving their domestic industries some protection from the rush of foreign competition. Thus, with respect to tariffs in general, preferential treatment is given to developing countries in terms

of the amount of tariff reduction and the period within which the reduction is to be spread out. Specifically, GATT requires an average tariff reduction rate of 36% for developed countries to be effected within a period of six (6) years while developing countries—including the Philippines—are required to effect an average tariff reduction of only 24% within ten (10) years.In respect to domestic subsidy, GATT requires developed countries to reduce domestic support to agricultural products by 20% over six (6) years, as compared to only 13% for developing countries to be effected within ten (10) years.In regard to export subsidy for agricultural products, GATT requires developed countries to reduce their budgetary outlays for export subsidy by 36% and export volumes receiving export subsidy by 21% within a period of six (6) years. For developing countries, however, the reduction rate is only two-thirds of that prescribed for developed countries and a longer period of ten (10) years within which to effect such reduction.Moreover, GATT itself has p rov id ed bu il t-in protection from unfair foreign competition and trade practices including anti-dumping measures, countervailing measures and safeguards against import surges. Where local businesses are jeopardized by unfair foreign competition, the Philippines can avail of these measures. There is hardly therefore any basis for the statement that under the WTO , local industries and enterprises will all be w iped out and that Filipinos w ill be deprived of control of the economy. Quite the contrary, the weaker situations of developing nations like the Philippines have been taken into account; thus, there would be no basis to62

62SUPREME COURT REPORTS ANNOTATEDTañada vs. Angarasay that in joining the WTO, the respondents have gravely abused their discretion. True, they have made a bold decision to steer the ship of state into the yet uncharted sea of economic liberalization. But such decision cannot be set aside on the ground of grave abuse of discretion, simply because we disagree with it or simply because we believe only in other economic policies. As earlier stated, the Court in taking jurisdiction of this case will not pass upon the advantages and disadvantages of trade liberalization as an economic policy. It will only perform its constitutional duty of determining whether the Senate committed grave abuse of discretion.Constitution Does Not

Rule Out Foreign CompetitionFurthermore, the constitutional policy of a “self-reliant and independent national economy”35 does not necessarily rule out the entry of foreign investments, goods and services. It contemplates neither “economic seclusion” nor “mendicancy in the international community.” As explained by Constitutional Comm issioner Bernardo Villegas, sponsor of this constitutional policy:“Economic self-reliance is a primary objective of a developing country that is keenly aware of overdependence on external assistance for even its most basic needs. It does not mean autarky or economic seclusion; rather, it means avoiding mendicancy in the international community. Independence refers to the freedom from undue foreign control of the national economy, especially in such strategic industries as in the development of natural resources and public utilities.”36The WTO reliance on “most favored nation,” “national treatment,” and “trade without discrimination” cannot be struck down as unconstitutional as in fact they are rules of equality and reciprocity that apply to all WTO members. Aside from envisioning a trade policy based on “equality and_______________

35 Sec. 19, Article II, Constitution.36 II I Records of the Constitutional Commission 252.63

VOL. 272, MAY 2, 199763Tañada vs. Angarareciprocity,”37 the fundamental law encourages industries that are “competitive in both domestic and foreign markets,” thereby demonstrating a clear policy against a sheltered domestic trade environment, but one in favor of the gradual development of robust industries that can compete with the best in the foreign markets. Indeed, Filipino managers and Filipino enterprises have shown capability and tenacity to compete internationally. And given a free trade environment, Filipino entrepreneurs and managers in Hongkong have demonstrated the Filipino capacity to grow and to prosper against the best offered under a policy of laissez faire.Constitution Favors Consumers, Not Industries or EnterprisesThe Constitution has not really shown any unbalanced bias in favor of any business or enterprise, nor does it contain any specific pronouncement that

Filipino companies should be pampered with a total proscription of foreign competition. On the other hand, respondents claim that WTO/GATT aims to make available to the Filipino consumer the best goods and services obtainable anywhere in the world at the most reasonable prices. Consequently, the question boils down to whether WTO/GATT will favor the general welfare of the public at large.Will adherence to the WTO treaty bring this ideal (of favoring the general welfare) to reality?Will WTO/GATT succeed in promoting the Filipinos’ general welfare because it will—as promised by its promoters—expand the country’s exports and generate more employment?Will it bring more prosperity, employment, purchasing power and quality products at the most reasonable rates to the Filipino public?The responses to these questions involve “judgment calls” by our policy makers, for which they are answerable to our people during appropriate electoral exercises. Such questions______________

37 Sec. 13, Article XI I, Constitution.64

64SUPREME COURT REPORTS ANNOTATEDTañada vs. Angaraand the answers thereto are not subject to judicial pronouncements based on grave abuse of discretion.Constitution Designed to Meet Future Events and ContingenciesNo doubt, the WTO Agreement was not yet in existence when the Constitution w as drafted and ratified in 1987. That does not mean however that the Charter is necessarily flawed in the sense that its framers might not have anticipated the advent of a borderless world of business. By the same token, the United Nations was not yet in existence when the 1935 Constitution became effective. Did that necessarily mean that the then Constitution might not have contemplated a diminution of the absoluteness of sovereignty when the Philippines signed the UN Charter, thereby effectively surrendering part of its control over its foreign relations to the decisions of various UN organs like the Security Council?It is not difficult to answer this question. Constitutions are designed to meet not only the vagaries of contemporary events. They should be interpreted

to cover even future and unknown circumstances. It is to the credit of its drafters that a Constitution can withstand the assaults of bigots and infidels but at the same time bend with the refreshing winds of change necessitated by unfolding events. As one eminent political law writer and respected jurist38 explains:“The Constitution must be quintessential rather than superficial, the root and not the blossom, the base and framework only of the edifice that is yet to rise. It is but the core of the dream that must take shape, not in a twinkling by mandate of our delegates, but s lowly ‘in the crucible of Filipino minds and hearts,’ where it will in time develop its sinews and gradually gather its strength and finally achieve its substance. In fine, the Constitution cannot, like the goddess Athena, rise full-grown from the brow of the Constitu-______________

38 Justice Isagani A. Cruz, Philippine Political Law, 1995 Ed., p. 13, quoting his own article entitled, “A Quintessential Constitution” earlier published in the San Beda Law Journal, April 1972; Italics supplied.65

VOL. 272, MAY 2, 199765Tañada vs. Angarational Convention, nor can it conjure by mere fiat an ins tant Utopia. It must grow with the society it seeks to re-structure and march apace with the progress of the race, drawing from the vicissitudes of history the dynamism and vitality that will keep it, far from becoming a petrified rule, a pulsing, living law attuned to the heartbeat of the nation.”Third Issue: The WTO Agreement and Legislative PowerThe WTO Agreement provides that “(e)ach Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements.”39 Petitioner s maintain that this undertaking “unduly limits, restricts and impairs Philippine sovereignty, specifically the legislative power which under Sec. 2, Article VI of the 1987 Philippine Constitution is vested in the Congress of the Philippines. It is an assault on the sovereign powers of the Philippines because this means that Congress could not pass legislation that will be good for our national interest and general welfare if such legislation will not conform with the WTO Agreement, which not only relates to the trade in

goods x x x but also to the flow of investments and money x x x as well as to a whole slew of agreements on socio-cultural matters x x x .”40More specifically, petitioners claim that said WTO proviso derogates from the power to tax, which is lodged in the Congress.41 And while the Constitution allows Congress to authorize the President to fix tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts, such authority is subject to “specified limits and x x x such limitations and restrictions” as Congress may provide,42 as in fact it did under Sec. 401 of the Tariff and Customs Code._______________

39 Par. 4, Article XVI (M iscellaneous Provisions), WTO Agreement, p. 146, Vol. 1, Uruguay Round of Multilateral Trade Negotiations.40 Memorandum for the Petitioners, p. 29; rollo, p. 219.41 Sec. 24, Article VI, Constitution.42 Subsection (2), Sec. 28, Article VI, Constitution.66

66SUPREME COURT REPORTS ANNOTATEDTañada vs. AngaraSovereignty Limited by International Law and TreatiesThis Court notes and appreciates the ferocity and passion by which petitioners stressed their arguments on this issue. However, while sovereignty has traditionally been deemed absolute and all-encompassing on the domestic level, it is however subject to restrictions and limitations voluntarily agreed to by the Philippines, expressly or impliedly, as a member of the family of nations. Unquestionably, the Constitution did not envision a hermit-type isolation of the country from the rest of the world. In its Declaration of Principles and State Policies, the Constitution “adopts the generally accepted principles of international law as part of the law of the land, and adheres to the policy of peace, equality, justice, freedom, cooperation and am ity, w ith all nations.”43 By the doctrine of incorporation, the country is bound by generally accepted principles of international law, which are considered to be automatically part of our own laws.44 One of the oldest and most fundamental rules in international law is pacta sunt servanda—international agreements must be performed in good faith. “A treaty engagement is not a mere moral obligation but creates a legally binding obligation on the parties x x x. A state which has contracted

valid international obligations is bound to make in its legislations such modifications as may be necessary to ensure the fulfillment of the obligations undertaken.”45By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By their voluntary act, nations may surrender some aspects of their state power in exchange for greater benefits granted by or derived from a convention or pact. After all, states, like individuals, live w ith coequals, and in pursuit of mutually covenanted objectives and benefits, they also commonly agree to limit the exercise of their other-______________

43 Sec. 2, Article II, Cons titution.44 Cruz, Philippine Political Law, 1995 Ed., p. 55.45 Salonga and Yap, op cit., 305.67

VOL. 272, MAY 2, 199767Tañada vs. Angarawise absolute rights. Thus, treaties have been used to record agreements between States concerning such widely diverse matters as, for example, the lease of naval bases, the sale or cession of territory, the termination of war, the regulation of conduct of hostilities, the formation of alliances, the regulation of commercial relations, the settling of claims, the laying down of rules governing conduct in peace and the establishment of international organizations.46 The sovereignty of a state therefore cannot in fact and in reality be considered absolute. Certain restrictions enter into the picture: (1) limitations imposed by the very nature of membership in the family of nations and (2) limitations imposed by treaty stipulations. As aptly put by John F. Kennedy, “Today, no nation can build its destiny alone. The age of self-sufficient nationalism is over. The age of interdependence is here.”47UN Charter and Other Treaties Limit SovereigntyThus, when the Philippines joined the United Nations as one of its 51 charter members, it consented to restrict its sovereign rights under the “concept of sovereignty as autolimitation.”47a Under Article 2 of the UN Charter, “(a)ll members shall give the United Nations every assistance in any action it takes in accordance w ith the present Charter, and shall refrain from giving assistance to any state against which the United Nations is taking preventive or enforcement action.” Such assistance includes payment

of its corresponding share not merely in administrative expenses but also in expenditures for the peace-keeping operations of the organization. In its advisory opinion of July 20, 1961, the International Court of Justice held that money used by the United Nations Emergency Force in the Middle East and in the Congo were______________

46 Salonga, op cit., p. 287.47 Quoted in Paras and Paras, Jr., International Law and World Politics, 1994 Ed., p. 178.47a Reagan vs. Commission of I nternal Revenue, 30 SCRA 968, 973, December 27, 1969.68

68SUPREME COURT REPORTS ANNOTATEDTañada vs. Angara“expenses of the United Nations” under Article 17, paragraph 2, of the UN Charter. Hence, all its m embers must bear their corresponding share in such expenses. In this sense, the Philippine Congress is restricted in its power to appropriate. It is compelled to appropriate funds whether it agrees with such peace-keeping expenses or not. So too, under Article 105 of the said Charter, the UN and its representatives enjoy diplomatic privileges and immunities, thereby limiting again the exercise of sovereignty of members within their own territory. Another example: although “sovereign equality” and “domestic jurisdiction” of all members are set forth as underlying principles in the UN Charter, such provisos are however subject to enforcement measures decided by the Security Council for the maintenance of international peace and security under Chapter VII of the Charter. A final example: under Article 103, “(i)n the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligation under the present charter shall prevail,” thus unquestionably denying the Philippines—as a member—the sovereign power to make a choice as to which of conflicting obligations, if any, to honor. Apart from the UN Treaty, the Philippines has entered into many other international pacts—both bilateral and multilateral—that involve limitations on Philippine sovereignty. These are enumerated by the Solicitor General in his Compliance dated October 24, 1996, as follows:

“(a) Bilateral convention with the United States regarding taxes on income, where the Philippines agreed, among others , to exempt from tax, income received in the Philippines by, among others, the Federal Reserve Bank of the United States, the Export/Import Bank of the United States, the Overseas Private Investment Corporation of the United States. Likewise, in said convention, wages , salaries and similar remunerations paid by the United States to its citizens for labor and personal services performed by them as employees or officials of the United States are exempt from income tax by the Philippines.69

VOL. 272, MAY 2, 199769Tañada vs. Angara(b) Bilateral agreement with Belgium, providing, among others, for the avoidance of double taxation with respect to taxes on income.(c) Bilateral convention with the Kingdom of Sweden for the avoidance of double taxation.(d) Bilateral convention with the French Republic for the avoidance of double taxation.(e) Bilateral air transport agreement with Korea where the Philippines agreed to exempt from all customs duties, inspection fees and other duties or taxes aircrafts of South Korea and the regular equipment, spare parts and supplies arriving with said aircrafts.(f) Bilateral air service agreement with Japan, where the Philippines agreed to exempt from customs duties, excise taxes, inspection fees and other similar duties, taxes or charges fuel, lubricating oils, spare parts, regular equipment, stores on board Japanese aircrafts while on Philippine soil.(g) Bilateral air service agreement with Belgium where the Philippines granted Belgian air carriers the same privileges as those granted to Japanese and Korean air carriers under separate air service agreements.(h) Bilateral notes with Israel for the abolition of transit and vis itor visas where the Philippines exempted Israeli nationals from the requirement of obtaining transit or visitor visas for a sojourn in the Philippines not exceeding 59 days.(i) Bilateral agreement with France exempting French nationals from the requirement of obtaining transit and visitor visa for a sojourn not exceeding 59 days.(j) Multilateral Convention on Special Missions , where the Philippines agreed that premises of Special Missions in the Philippines are inviolable

and its agents can not enter said premis es without consent of the Head of Mission concerned. Special Missions are also exempted from cus toms duties, taxes and related charges.(k) Multilateral Convention on the Law of Treaties. In this convention, the Philippines agreed to be governed by the Vienna Convention on the Law of Treaties.(l) Declaration of the President of the Philippines accepting com puls ory jurisdiction of the International Court of Jus tice. The International Court of Justice has jurisdiction in all legal disputes concerning the interpretation of a treaty, any question of interna70

70SUPREME COURT REPORTS ANNOTATEDTañada vs. Angarational law, the existence of any fact which, if established, would constitute a breach of international obligation.”In the foregoing treaties, the Philippines has effectively agreed to limit the exercise of its sovereign powers of taxation, eminent domain and police power. The underlying consideration in this partial surrender of sovereignty is the reciprocal commitment of the other contracting states in granting the same privilege and immunities to the Philippines, its officials and its citizens. The same reciprocity characterizes the Philippine commitments under WTO-GATT.“International treaties , whether relating to nuclear disarmament, human rights, the environment, the law of the sea, or trade, constrain domestic political sovereignty through the assumption of external obligations. But unless anarchy in international relations is preferred as an alternative, in most cases we accept that the benefits of the reciprocal obligations involved outweigh the costs associated with any loss of political s overeignty. (T)rade treaties that structure relations by reference to durable, well-defined substantive norms and objective dispute resolution procedures reduce the risks of larger countries exploiting raw economic power to bully smaller countries, by subjecting power relations to some form of legal ordering. In addition, smaller countries typically stand to gain disproportionately from trade liberalization. This is due to the simple fact that liberalization will provide access to a larger set of potential new trading relationship than in case of the larger country gaining enhanced success to the smaller country’s market.”48

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

48 Trebilcock and Howse. The Regulation of International Trade, p. 14, London, 1995, cited on pp. 55-56, Bautista Paper.71

VOL. 272, MAY 2, 199771Tañada vs. AngaraFourth Issue: The WTO Agreement and Judicial PowerPetitioners aver that paragraph 1, Article 34 of the General Provisions and Basic Principles of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)49 intrudes on the power of the Supreme Court to promulgate rules concerning pleading, practice and procedures.50To understand the scope and meaning of Article 34, TRIPS,51 it will be fruitful to restate its full text as follows:“Article 34 Process Patents: Burden of Proof

1. For the purposes of civil proceedings in respect of the infringement of the rights of the owner referred to in paragraph 1(b) of Article 28, if the subject matter of a patent is a process for obtaining a product, the judicial authorities shall have the authority to order the defendant to prove that the process to obtain an identical product is different from the patented process. Therefore, Members shall provide, in at least one of the following circumstances, that any identical product when produced without the consent of the patent owner shall, in the absence of proof to the contrary, be deemed to have been obtained by the patented process:(a) if the product obtained by the patented process is new;(b) if there is a substantial likelihood that the identical product was made by the process and the owner of the patent has been unable through reasonable efforts to determine the process actually used.2. Any Member shall be free to provide that the burden of proof indicated in paragraph 1 shall be on the alleged infringer only if the condition referred to

in subparagraph (a) is fulfilled or only if the condition referred to in subparagraph (b) is fulfilled.3. In the adduction of proof to the contrary, the legitimate interests of defendants in protecting their manufacturing and business_______________

49 Uruguay Round of Multilateral Trade Negotiations, Vol. 31, p. 25445.50 Item 5, Sec. 5, Article VII I, Constitution.51 Uruguay Round of Multilateral Trade Negotiations, Vol. 31, p. 25445.72

72SUPREME COURT REPORTS ANNOTATEDTañada vs. Angarasecrets shall be taken into account.”From the above, a WTO Member is required to provide a rule of disputable (note the words “in the absence of proof to the contrary”) presumption that a product shown to be identical to one produced with the use of a patented process shall be deemed to have been obtained by the (illegal) use of the said patented process, (1) where such product obtained by the patented product is new, or (2) where there is “substantial likelihood” that the identical product was made with the use of the said patented process but the owner of the patent could not determine the exact process used in obtaining such identical product. Hence, the “burden of proof” contemplated by Article 34 should actually be understood as the duty of the alleged patent infringer to overthrow such presumption. Such burden, properly understood, actually refers to the “burden of evidence” (burden of going forward) placed on the producer of the identical (or fake) product to show that his product was produced without the use of the patented process.The foregoing notwithstanding, the patent owner still has the “burden of proof” since, regardless of the presumption provided under paragraph 1 of Article 34, such owner still has to introduce evidence of the existence of the alleged identical product, the fact that it is “identical” to the genuine one produced by the patented process and the fact of “newness” of the genuine product or the fact of “substantial likelihood” that the identical product was made by the patented process.The foregoing should really present no problem in changing the rules of evidence as the present law on the subject, Republic Act No. 165, as amended, otherwise known as the Patent Law, provides a similar

presumption in cases of infringement of patented design or utility model, thus:“Sec. 60. Infringement.—Infringement of a design patent or of a patent for utility model shall consist in unauthorized copying of the patented design or utility model for the purpose of trade or industry in the article or product and in the making, using or selling of the article or product copying the patented design or utility model. Identity or substantial identity with the patented design or utility model shall constitute evidence of copying.” (italics supplied)73

VOL. 272, MAY 2, 199773Tañada vs. AngaraMoreover, it should be noted that the requirement of Article 34 to provide a disputable presumption applies only if (1) the product obtained by the patented process is NEW or (2) there is a substantial likelihood that the identical product w as made by the process and the process owner has not been able through reasonable effort to determine the process used. Where either of these two provisos does not obtain, members shall be free to determine the appropriate method of implementing the provisions of TRIPS within their own internal systems and processes.By and large, the arguments adduced in connection with our disposition of the third issue—derogation of legislative power—will apply to this fourth issue also. Suffice it to say that the reciprocity clause more than justifies such intrusion, if any actually exists. Besides, Article 34 does not contain an unreasonable burden, consistent as it is with due process and the concept of adversarial dispute settlement inherent in our judicial system.So too, since the Philippines is a signatory to most international conventions on patents, trademarks and copyrights, the adjustment in legislation and rules of procedure will not be substantial.52Fifth Issue: Concurrence Only in the WTO Agreement and Not in Other Documents Contained in the Final ActPetitioners allege that the Senate concurrence in the WTO Agreement and its annexes—but not in the other documents referred to in the Final Act, namely the Ministerial Declaration and Decisions and the Understanding on Commitments in Financial Services—is defective and insufficient and thus constitutes abuse of discretion. They submit that such concurrence in the WTO Agreement alone is flawed because it is in effect a rejection of the Final Act, which in turn was the document signed by Secretary Navarro, in

representation of the Republic upon authority of the President. They contend that the second letter of the President to the Senate53 which________________

52 Bautista Paper, p. 13.53 See footnote 3 of the text of this letter.74

74SUPREME COURT REPORTS ANNOTATEDTañada vs. Angaraenumerated what constitutes the Final Act should have been the subject of concurrence of the Senate.“A final act, sometimes called protocol de clÔture, is an instrument which records the winding up of the proceedings of a diplomatic conference and usually includes a reproduction of the texts of treaties, conventions, recommendations and other acts agreed upon and signed by the plenipotentiaries attending the conference.”54 It is not the treaty itself. It is rather a summary of the proceedings of a protracted conference which may have taken place over several years. The text of the “Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations” is contained in just one page55 in Vol. I of the 36-volum e Uruguay Round of Multilat-______________

54 Salonga and Yap, op cit., pp. 289-290.55 The full text, without the signatures, of the Final Act is as follows:“Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations

1. Having met in order to conclude the Uruguay Round of Multilateral Trade Negotiations, representatives of the governments and of the European Comm unities, members of the Trade Negotiations Committee, agree that the Agreement Establis hing the World Trade Organization (referred to in the Final Act as the “WTO Agreement”), the Ministerial Declarations and Decisions, and the Understanding on Commitments in Financial Services, as annexed hereto, embody the results of their negotiations and form an integral part of this Final Act.2. By signing to the present Final Act, the representatives agree.

“(a) to subm it, as appropriate, the WTO Agreement for the consideration of their respective competent authorities with a view to seeking approval of the Agreement in accordance with their procedures; and(b) to adopt the Ministerial Declarations and Decisions.”3. The representative agree on the desirability of acceptance of the WTO Agreement by all participants in the Uruguay Round of Multilateral Trade Negotiations (hereinafter referred to as “partici75

VOL. 272, MAY 2, 199775Tañada vs. Angaraeral Trade Negotiations. By signing said Final Act, Secretary Navarro as representative of the Republic of the Philippines undertook:“(a) to submit, as appropriate, the WTO Agreement for the consideration of their respective competent authorities with a view to seeking approval of the Agreement in accordance with their procedures; and(b) to adopt the Ministerial Declarations and Decisions.”The assailed Senate Resolution No. 97 expressed concurrence in exactly what the Final Act required from its signatories, namely, concurrence of the Senate in the WTO Agreement._______________

pants”) with a view to its entry into force by 1 January 1995, or as early as possible thereafter. Not later than late 1994, Ministers will meet, in accordance with the final paragraph of the Punta del Este Ministerial Declarations, to decide on the international implementation of the results, including the timing of their entry into force.4. The representatives agree that the WTO Agreem ent shall be open for acceptance as a whole, by signature or otherwise, by all participants pursuant to Article XIV thereof. The acceptance and entry into force of a Plurilateral Trade Agreement included in Annex 4 of the WTO Agreement shall be governed by the provisions of that Plurilateral Trade Agreement.5. Before accepting the WTO Agreement, participants which are not contracting parties to the General Agreement on Tariffs and Trade must first have concluded negotiations for their acces sion to the General Agreement and become contracting parties thereto. For participants which are not contracting parties to the General Agreement as of the date of the Final Act, the Schedules are not definitive and shall be subsequently completed for

the purpose of their accession to the General Agreement and acceptance of the WTO Agreement.6. This Final Act and the texts annexed hereto shall be deposited with the Director-General to the CONTRACTING PARTIES to the General Agreem ent on Tariffs and Trade who shall promptly furnish to each participant a certified copy thereof. DONE at Marrakesh this fifteenth day of April one thousand nine hundred and ninety-four, in a single copy, in the English, French and Spanish languages, each text being authentic.”76

76SUPREME COURT REPORTS ANNOTATEDTañada vs. AngaraThe Ministerial Declarations and Decisions were deemed adopted without need for ratification. They were approved by the ministers by virtue of Article XXV: 1 of GATT which provides that representatives of the members can meet “to give effect to those provisions of this Agreement which invoke joint action, and generally with a view to facilitating the operation and furthering the objectives of this Agreement.”56The Understanding on Com mitments in Financial Services also approved in Marrakesh does not apply to the Philippines. It applies only to those 27 Members which “have indicated in their respective schedules of commitments on standstill, elimination of monopoly, expansion of operation of existing financial service suppliers, temporary entry of personnel, free transfer and processing of information, and national treatment with respect to access to payment, clearing systems and refinancing available in the normal course of business.”57On the other hand, the WTO Agreement itself expresses what multilateral agreements are deemed included as its integral parts,58 as follow s:“Article II

Scope of the WTO

1. The WTO shall provide the common institutional framework for the conduct of trade relations among its Members in matters to the agreements and associated legal instruments included in the Annexes to this Agreement.2. The Agreements and associated legal instruments included in Annexes 1, 2, and 3 (hereinafter referred to as “Multilateral Agreements”) are integral parts of this Agreement, binding on all Members.

3. The Agreements and associated legal instruments included in Annex 4 (hereinafter referred to as “Plurilateral Trade Agreements”) are also part of this Agreement for those Members that have accepted them, and are binding on those Members. The Plurilateral_______________

56 Bautista Paper, p. 16.57 Bautista Paper, p. 16.58 Uruguay Round of Multilateral Trade Negotiations, Vol. I, pp. 137-138.77

VOL. 272, MAY 2, 199777Tañada vs. AngaraTrade Agreements do not create either obligation or rights for Members that have not accepted them.4. The General Agreement on Tariffs and Trade 1994 as specified in Annex 1A (hereinafter referred to as “GATT 1994’) is legally distinct from the General Agreement on Tariffs and Trade, dated 30 October 1947, annexed to the Final Act adopted at the conclusion of the Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment, as subsequently rectified, amended or modified (hereinafter referred to as “GATT 1947”).It should be added that the Senate was well-aware of w hat it was concurring in as shown by the members’ deliberation on August 25, 1994. After reading the letter of President Ramos dated August 11, 1994,59 the senators of the Republic minutely dissected w hat the Senate was concurring in, as follow s:60“THE CHAIRMAN: Yes. Now, the question of the validity of the submission came up in the first day hearing of this Committee yesterday. Was the observation made by Senator Tañada that what was submitted to the Senate was not the agreement on es tablishing the World Trade Organization by the final act of the Uruguay Round which is not the same as the agreement establishing the World Trade Organization? And on that basis, Senator Tolentino raised a point of order which, however, he agreed to withdraw upon understanding that his suggestion for an alternative solution at that time was acceptable. That suggestion was to treat the proceedings of the Committee as being in the nature of briefings for Senators until the question of the submission could be clarified. And so, Secretary Romulo, in effect, is the President submitting a new. . . is he

making a new submission which improves on the clarity of the first submission?MR. ROMULO: Mr. Chairman, to make sure that it is clear cut and there should be no misunderstanding, it was his intention to clarify all matters by giving this letter.THE CHAIRMAN: Thank you._______________

59 See footnote 3 for complete text.60 Taken from pp. 63-85, “Respondent” Memorandum.78

78SUPREME COURT REPORTS ANNOTATEDTañada vs. AngaraCan this Comm ittee hear from Senator Tañada and later on Senator Tolentino since they were the ones that raised this question yesterday?Senator Tañada, please.SEN. TAÑADA: Thank you, Mr. Chairman.Based on what Secretary Romulo has read, it would now clearly appear that what is being submitted to the Senate for ratification is not the Final Act of the Uruguay Round, but rather the Agreement on the World Trade Organization as well as the Ministerial Declarations and Decisions, and the Understanding and Comm itm ents in Financial Services.I am now satisfied with the wording of the new submission of President Ramos.SEN. TAÑADA. . . . of President Ramos, Mr. Chairman.THE CHAIRMAN. Thank you, Senator Tañada. Can we hear from Senator Tolentino? And after him Senator Neptali Gonzales and Senator Lina.SEN. TOLENTI NO. MR. Chairman, I have not seen the new submission actually transmitted to us but I saw the draft of his earlier, and I think it now complies with the provisions of the Constitution, and with the Final Act itself. The Constitution does not require us to ratify the Final Act. It requires us to ratify the Agreement which is now being submitted. The Final Act itself specifies what is going to be submitted to with the governments of the participants.In paragraph 2 of the Final Act, we read and I quote:‘By signing the present Final Act, the representatives agree: (a) to submit as appropriate the WTO Agreement for the consideration of the respective

competent authorities with a view to seeking approval of the Agreement in accordance with their procedures.’In other words, it is not the Final Act that was agreed to be submitted to the governments for ratification or acceptance as whatever their constitutional procedures may provide but it is the World Trade Organization Agreement. And if that is the one that is being submitted now, I think it satisfies both the Constitution and the Final Act itself.Thank you, Mr. Chairman.THE CHAIRMAN. Thank you, Senator Tolentino, May I call on Senator Gonzales.79

VOL. 272, MAY 2, 199779Tañada vs. AngaraSEN. GONZALES. Mr. Chairman, my views on this matter are already a matter of record. And they had been adequately reflected in the journal of yesterday’s session and I don’t see any need for repeating the same.Now, I would consider the new submission as an act ex abudante cautela.THE CHAIRMAN. Thank you, Senator Gonzales. Senator Lina, do you want to make any comment on this?SEN. LINA. Mr. President, I agree with the observation just made by Senator Gonzales out of the abundance of question. Then the new submission is, I believe, stating the obvious and therefore I have no further comment to make.”EpilogueIn praying for the nullification of the Philippine ratification of the WTO Agreement, petitioners are invoking this Court’s constitutionally imposed duty “to determine whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction” on the part of the Senate in giving its concurrence therein via Senate Resolution No. 97. Procedurally, a writ of certiorari grounded on grave abuse of discretion may be issued by the Court under Rule 65 of the Rules of Court when it is amply shown that petitioners have no other plain, speedy and adequate remedy in the ordinary course of law.By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.61 Mere abuse of discretion is not enough. It must be grave abuse of discretion as when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and so gross as to amount to an

evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.62 Failure on the part of the petitioner to show grave_______________

61 Zarate vs. Olegario, G.R. No. 90655, October 7, 1996.62 San Sebastian College vs. Court of Appeals, 197 SCRA 138, 144, May 15, 1991; Comm issioner of Internal Revenue vs. Court of Tax Appeals, 195 SCRA 444, 458 March 20, 1991; Simon vs. Civil80

80SUPREME COURT REPORTS ANNOTATEDTañada vs. Angaraabuse of discretion will result in the dismissal of the petition.63In rendering this D ecision, this Court never forgets that the Senate, whose act is under review, is one of two sovereign houses of Congress and is thus entitled to great respect in its actions. It is itself a constitutional body independent and coordinate, and thus its actions are presumed regular and done in good faith. Unless convincing proof and persuasive arguments are presented to overthrow such presumptions, this Court will resolve every doubt in its favor. Using the foregoing well-accepted definition of grave abuse of discretion and the presumption of regularity in the Senate’s processes, this Court cannot find any cogent reason to impute grave abuse of discretion to the Senate’s exercise of its power of concurrence in the WTO Agreement granted it by Sec. 21 of Article VII of the Constitution.64It is true, as alleged by petitioners, that broad constitutional principles require the State to develop an independent national economy effectively controlled by Filipinos; and to protect and/or prefer Filipino labor, products, dom estic materials and locally produced goods. But it is equally true that such principles—while serving as judicial and legislative guides—are not in themselves sources of causes of action. Moreover, there are other equally fundamental constitutional principles relied upon by the Senate which mandate the pursuit of a “trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity” and the promotion of industries “w hich are competitive in both domestic and foreign markets,” thereby justifying its acceptance of said treaty. So too, the alleged impairment of sovereignty in the exercise of legisla-_______________

Service Commission, 215 SCRA 410, November 5, 1992; Bustamante vs. Commissioner on Audit, 216 SCRA 134, 136, November 27, 1992.63 Paredes vs. Civil Service Commission, 192 SCRA 84, 94, December 4, 1990.64 “Sec. 21. No treaty or international agreement shall be valid and effective unless concurred in by at least two-thirds of all the Members of the Senate.”81

VOL. 272, MAY 2, 199781Tañada vs. Angarative and judicial powers is balanced by the adoption of the generally accepted principles of international law as part of the law of the land and the adherence of the Constitution to the policy of cooperation and amity with all nations.That the Senate, after deliberation and voting, voluntarily and overwhelmingly gave its consent to the WTO Agreement thereby making it “a part of the law of the land” is a legitimate exercise of its sovereign duty and power. We find no “patent and gross” arbitrariness or despotism “by reason of passion or personal hostility” in such exercise. It is not impossible to surmise that this Court, or at least some of its members, may even agree with petitioners that it is more advantageous to the national interest to strike down Senate Resolution No. 97. But that is not a legal reason to attribute grave abuse of discretion to the Senate and to nullify its decision. To do so would constitute grave abuse in the exercise of our own judicial power and duty. Ineludably, what the Senate did was a valid exercise of its authority. As to whether such exercise was wise, beneficial or viable is outside the realm of judicial inquiry and review. That is a matter between the elected policy makers and the people. As to whether the nation should join the worldwide march toward trade liberalization and economic globalization is a m atter that our people should determine in electing their policy makers. After all, the WTO Agreement allows withdrawal of membership, should this be the political desire of a member.The eminent futurist John Naisbitt, author of the best seller Megatrends, predicts an Asian Renaissance65 where “the East will become the dominant region of the world economically, politically and culturally in the next century.” He refers to the “free market” espoused by WTO as the “catalyst” in this com in g A sian ascend ancy . There are at present about 31 countries including China, Russia and Saudi Arabia negotiating for membership in the

WTO. Notwithstanding objections against possible l imitation s on n at ional sovereignty, the WTO remains as the only viable structure for multilateral_______________

65 Reader’s Digest, December 1996 issue, p. 28.82

82SUPREME COURT REPORTS ANNOTATEDTañada vs. Angaratrading and the veritable forum for the development of international trade law. The alternative to WTO is isolation, stagnation, if not economic self-destruction. Duly enriched with original membership, keenly aware of the advantages and disadvantages of globalization with its on-line experience, and endowed with a vision of the future, the Philippines now straddles the crossroads of an international strategy for economic prosperity and stability in the new millennium. Let the people, through their duly authorized elected officers, make their free choice.WHEREFORE, the petition is DISMISSED for lack of merit.SO ORDERED. Narvasa (C.J.), Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Kapunan, Mendoza, Francisco, Hermosisima, Jr. and Torres, Jr., JJ., concur. Padilla and Vitug, JJ., In the result.Petition dismissed.Notes.—The primary purpose of the commissioners in expanding the concept of judicial power is to eliminate the defense of political question which in the past deprived the Supreme Court of the jurisdiction to strike down abuses of power by government. (Arroyo vs. House of Representatives Electoral Tribunal, 246 SCRA 384 [1995])When the Constitution mandates that in the grant of rights, privileges, and concessions covering national economy and patrimony, the State shall give preference to qualified Filipinos, it means just that—qualified Filipinos shall be preferred. (Manila Prince Hotel vs. Government Service Insurance System, 267 SCRA [1997]) [Tañada vs. Angara, 272 SCRA 18(1997)]

410SUPREME COURT REPORTS ANNOTATEDKho vs. Court of AppealsG.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.Actions; Injunctions; 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.—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. 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.Intellectual Property Law; Trademarks and Trade Names; Copyrights; Patents; Words and Phrases; “Trademark,” “Copyright,” and “Patent,” Explained and Distinguished; Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another.—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.______________

* SECOND DIVISION.

411

VOL. 379, MARCH 19, 2002411Kho vs. Court of AppealsSame; Same; Same; Same; The name and container of a beauty cream product are proper subjects of a trademark, and a party’s copyright and patent registration of the name and container would not guarantee him or her the right to the exclusive use of the same for the reason that they are not appropriate subjects of the said intellectual rights.—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.Same; Injunctions; Judgments; Moot and Academic Issues; The decision on the merits of the trial court with respect to the issue of final injunction and damages renders the issuance of the writ of preliminary injunction moot and academic notwithstanding the fact that the same has been appealed to the Court of Appeals.—We cannot likewise overlook the decision of the trial court in the case for final injunction and damages. The disposi-tive 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.Same; Same; Forum Shopping; Technicalities and Procedural Rules; A party improperly raises the technical objection of non-compliance with Supreme Court Circular No. 28-91 by filing a motion to dismiss the petition for certiorari since the filing of a motion to dismiss is prohibited; Substantial justice and equity require the Supreme 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 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 the412

412SUPREME COURT REPORTS ANNOTATEDKho vs. Court of AppealsRevised 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.Judgments; It is well-settled that non-observance of the period for deciding cases or their incidents does not render such judgments ineffective or void.—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.

Contempt; There is nothing contemptuous about advertisements which merely announced in plain and straightforward language the promulgation of a Court of Appeals decision which was subsequently assailed before the Supreme Court.—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.413

VOL. 379, MARCH 19, 2002413Kho vs. Court of AppealsPETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court. Padilla, Jimenez, Kintanar & Asuncion Law Offices for petitioner. Roberto C. Bermejo for private respondents.DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision1 dated May 24, 1993 of the Court of Appeals setting aside and declaring as null and void the Orders2 dated February 10, 1992 and March 19, 1992 of the Regional Trial Court, Branch 90, of Quezon City granting the issuance of a writ of preliminary injunction.The facts of the case are as follows:On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction and damages with a prayer for the issuance of a writ of preliminary injunction, docketed as Civil Case No. Q-91-10926, against the respondents Summerville General Merchandising and Company (Summerville, for brevity) and Ang Tiam Chay.The petitioner’s complaint alleges that petitioner, doing business under the name and style of KEC Cosmetics Laboratory, is the registered owner of the copyrights Chin Chun Su and Oval Facial Cream Container/Case, as shown by Certificates of Copyright Registration No. 0-1358 and No. 0-3678; that she also has patent rights on Chin Chun Su & Device and Chin Chun Su for medicated cream after purchasing the same from Quintin Cheng, the

registered owner thereof in the Supplemental Register of the Philippine Patent Office on February 7, 1980 under Registration Certificate No. 4529; that respondent Summerville advertised and sold petitioner’s cream products under the brand name Chin Chun Su, in______________

1 Penned by Associate Justice Ricardo P. Galvez, and concurred in by Associate Justices Manuel M. Herrera and Asaali S. Isnani, Ninth Division; Rollo, pp. 36-40.2 Penned by Judge Abraham P. Vera; CA Rollo, pp. 12-18.414

414SUPREME COURT REPORTS ANNOTATEDKho vs. Court of Appealssimilar 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, repacker 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.3The respondents moved for reconsideration but their motion for reconsideration was denied by the trial court in an Order dated March 19, 1992.4On April 24, 1992, the respondents filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 27803,______________

3 CA Rollo, pp. 12-17.4 CA Rollo, p. 18.415

VOL. 379, MARCH 19, 2002415Kho vs. Court of Appealspraying 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.5In 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.

x x x x x x x x xAs ratiocinated in La Chemise Lacoste, S.A. 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______________

5 Rollo, p. 39.416

416SUPREME COURT REPORTS ANNOTATEDKho vs. Court of Appealsstill 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).”6The 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 Decision7 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 Thou-______________

6 Rollo, pp. 38-39.7 Rollo, pp. 19-241.417

VOL. 379, MARCH 19, 2002417Kho vs. Court of Appealssand 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 Resolution8 denying the petitioner’s motions for reconsideration and for contempt of court in CA-G.R. SP No. 27803.Hence, this petition anchored on the following assignment of errors:I

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE ON PETITIONER’S MOTION TO DISMISS.II

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

IN DELAYING THE RESOLUTION OF PETITIONER’S MOTION FOR RECONSIDERATION, THE HONORABLE COURT OF APPEALS DENIED PETITIONER’S RIGHT TO SEEK TIMELY APPELLATE RELIEF AND VIOLATED PETITIONER’S RIGHT TO DUE PROCESS.IV

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO CITE THE PRIVATE RESPONDENTS IN CONTEMPT.9The 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______________

8 Rollo, pp. 42-43.9 Rollo, p. 21.418

418SUPREME COURT REPORTS ANNOTATEDKho vs. Court of AppealsAppeals 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.11In 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______________

10 Section 4, Rule 58, Revised Rules of Civil Procedure.11 Sy v. Court of Appeals, 313 SCRA 328 (1999).419

VOL. 379, MARCH 19, 2002419Kho vs. Court of Appealsinclude 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.15Petitioner 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______________

12 Section 121.1, Republic Act No. 8293.13 Section 121.3, Republic Act No. 8293.14 Section 172, Republic Act No. 8293.15 Section 21, Republic Act No. 8293.420

420SUPREME COURT REPORTS ANNOTATEDKho vs. Court of AppealsAppeals. 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 x x x 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 x x x 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 x x x. 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______________

16 278 SCRA 498, 506 quoting Solid Homes, Inc. v. LA Vista, G.R. No. 71150 dated April 20, 1988 (unpublished).421

VOL. 379, MARCH 19, 2002421Kho vs. Court of Appealsand 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 x x x (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______________

17 De Roma v. Court of Appeals, 152 SCRA 205, 209 (1987).422

422SUPREME COURT REPORTS ANNOTATEDKho vs. Court of Appealsregards 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. Bellosillo (Chairman), Mendoza, Quisumbing and Buena, JJ., concur.Petition denied, judgment and resolution affirmed.Notes.—Infringement of trade mark is a form of unfair competition. (Asia Brewery, Inc. vs. Court of Appeals, 224 SCRA 437 [1994])Cancellation of registration of a trademark has the effect of depriving the registrant of protection from infringement from the moment judgment or order of cancellation has become final. (Heirs of Crisanta Y. Gabriel-Almoradie vs. Court of Appeals, 229 SCRA 15 [1994])Where there is clear and contumacious defiance of, or refusal to obey the Supreme Court’s Decision, the Court will not hesitate to exercise its inherent power if only to maintain respect to the Court, for without which the administration of justice may falter or fail. (Province of Camarines Norte vs. Province of Quezon, 367 SCRA 91 [2001])

——o0o—— [Kho vs. Court of Appeals, 379 SCRA 410(2002)]

VOL. 409, AUGUST 15, 2003231Pearl & Dean (Phil.), Incorporated vs. Shoemart, IncorporatedG.R. No. 148222. August 15, 2003.*PEARL & DEAN (PHIL.), INCORPORATED, petitioner, vs. SHOEMART, INCORPORATED and NORTH EDSA MARKETING, INCORPORATED, respondents.Intellectual Property; Copyrights; Patents; Being a mere statutory grant, the rights are limited to what the statute confers; It can cover only the works falling within the statutory enumeration or description.—Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant, the rights are limited to what the statute confers. It may be obtained and enjoyed only with respect to the subjects and by the persons, and on terms and conditions specified in the statute. Accordingly, it can cover only the works falling within the statutory enumeration or description._______________

* THIRD DIVISION.232

232SUPREME COURT REPORTS ANNOTATEDPearl & Dean (Phil.), Incorporated vs. Shoemart, IncorporatedSame; Same; Same; The three legal rights are completely distinct and separate from one another and the protection afforded by one cannot be used interchangeably to cover items or works that exclusively pertain to the others.—During the trial, the president of P & D himself admitted that the light box was neither a literary not an artistic work but an “engineering or marketing invention.” Obviously, there appeared to be some confusion regarding what ought or ought not to be the proper subjects of copyrights, patents and trademarks. In the leading case of Kho vs. Court of Appeals, we ruled that these three legal rights are completely distinct and separate from one another, and the protection afforded by one cannot be used interchangeably to cover items or works that exclusively pertain to the others.Same; Same; Same; There can be no infringement of a patent until a patent has been issued since whatever right one has to the invention covered by the patent arises alone from the grant of patent.—For some reason or another, petitioner never secured a patent for the light boxes. It therefore acquired no patent rights which could have protected its invention, if in fact

it really was. And because it had no patent, petitioner could not legally prevent anyone from manufacturing or commercially using the contraption. In Creser Precision Systems, Inc. vs. Court of Appeals, we held that “there can be no infringement of a patent until a patent has been issued, since whatever right one has to the invention covered by the patent arises alone from the grant of patent. x x x (A)n inventor has no common law right to a monopoly of his invention. He has the right to make use of and vend his invention, but if he voluntarily discloses it, such as by offering it for sale, the world is free to copy and use it with impunity. A patent, however, gives the inventor the right to exclude all others. As a patentee, he has the exclusive right of making, selling or using the invention.Same; Same; Same; To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a primordial requirement.—To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a primordial requirement. No patent, no protection. The ultimate goal of a patent system is to bring new designs and technologies into the public domain through disclosure. Ideas, once disclosed to the public without the protection of a valid patent, are subject to appropriation without significant restraint.Same; Same; Same; Patent law has a three-fold purpose.—The patent law has a three-fold purpose: “first, patent law seeks to foster and reward invention; second, it promotes disclosures of inventions to stimulate further innovation and to permit the public to practice the invention once the patent expires; third, the stringent requirements for patent protection seek to ensure that ideas in the public domain remain there for the free use of the public.”233

VOL. 409, AUGUST 15, 2003233Pearl & Dean (Phil.), Incorporated vs. Shoemart, IncorporatedSame; Same; Same; One who has adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others for products which are of a different description.—Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate Court, where we, invoking Section 20 of the old Trademark Law, ruled that “the certificate of registration issued by the Director of Patents can confer (upon petitioner) the exclusive right to use its own symbol only to those goods specified in the certificate, subject to any conditions and limitations specified in the certificate x x x. One who has

adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others for products which are of a different description.” Faberge, Inc. was correct and was in fact recently reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.Same; Same; Same; Unfair Competition; There can be no unfair competition under the law on copyrights although it is applicable to disputes over the use of trademarks.—By the nature of things, there can be no unfair competition under the law on copyrights although it is applicable to disputes over the use of trademarks. Even a name or phrase incapable of appropriation as a trademark or trade name may, by long and exclusive use by a business (such that the name or phrase becomes associated with the business or product in the mind of the purchasing public), be entitled to protection against unfair competition. In this case, there was no evidence that P & D’s use of “Poster Ads” was distinctive or well-known. As noted by the Court of Appeals, petitioner’s expert witnesses himself had testified that “Poster Ads” was too generic a name. So it was difficult to identify it with any company, honestly speaking.”PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court. Rilloraza, Africa, De Ocampo and Africa for petitioner. Poblador, Bautista & Reyes for private respondent SM. Gonzales, Batiller, Bilog and Associates for respondent North Edsa Mktg., Inc.CORONA, J.:

In the instant petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Pearl & Dean (Phil.) Inc. (P & D)234

234SUPREME COURT REPORTS ANNOTATEDPearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporatedassails the May 22, 2001 decision1 of the Court of Appeals reversing the October 31, 1996 decision2 of the Regional Trial Court of Makati, Branch 133, in Civil Case No. 92-516 which declared private respondents Shoemart, Inc. (SMI) and North Edsa Marketing, Inc. (NEMI) liable for infringement of trademark and copyright, and unfair competition.Factual Antecedents

The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:“Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units simply referred to as light boxes. These units utilize specially printed posters sandwiched between plastic sheets and illuminated with backlights. Pearl and Dean was able to secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated display units. The advertising light boxes were marketed under the trademark “Poster Ads”. The application for registration of the trademark was filed with the Bureau of Patents, Trademarks and Technology Transfer on June 20, 1983, but was approved only on September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro Industrial Services to manufacture its advertising displays.Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and installation of the light boxes in SM City North Edsa. Since SM City North Edsa was under construction at that time, SMI offered as an alternative, SM Makati and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985, Pearl and Dean’s General Manager, Rodolfo Vergara, submitted for signature the contracts covering SM Cubao and SM Makati to SMI’s Advertising Promotions and Publicity Division Manager, Ramonlito Abano. Only the contract for SM Makati, however, was returned signed. On October 4, 1985, Vergara wrote Abano inquiring about the other contract and reminding him that their agreement for installation of light boxes was not only for its SM Makati branch, but also for SM Cubao. SMI did not bother to reply.Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean that it was rescinding the contract for SM Makati_______________

1 Penned by Associate Justice Salvador J. Valdez, Jr. and concurred in by Associate Justices Wenceslao L. Agnir and Juan Q. Enriquez, Jr.2 Penned by Judge Napoleon E. Inoturan.3 Seventeenth Division; CAG.R. 55303.235

VOL. 409, AUGUST 15, 2003235Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

due to non-performance of the terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action of SMI, saying it was without basis. In the same letter, he pushed for the signing of the contract for SM Cubao.Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display units, offered to construct light boxes for Shoemart’s chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in 1991. These were delivered on a staggered basis and installed at SM Megamall and SM City.Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and in the fastfood section of SM Cubao. Upon investigation, Pearl and Dean found out that aside from the two (2) reported SM branches, light boxes similar to those it manufactures were also installed in two (2) other SM stores. It further discovered that defendant-appellant North Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising space in lighted display units located in SMI’s different branches. Pearl and Dean noted that NEMI is a sister company of SMI.In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and NEMI enjoining them to cease using the subject light boxes and to remove the same from SMI’s establishments. It also demanded the discontinued use of the trademark “Poster Ads,” and the payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos (P20,000,000.00).Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light boxes and NEMI took down its advertisements for “Poster Ads” from the lighted display units in SMI’s stores. Claiming that both SMI and NEMI failed to meet all its demands, Pearl and Dean filed this instant case for infringement of trademark and copyright, unfair competition and damages.In denying the charges hurled against it, SMI maintained that it independently developed its poster panels using commonly known techniques and available technology, without notice of or reference to Pearl and Dean’s copyright. SMI noted that the registration of the mark “Poster Ads” was only for stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word “Poster Ads” is a generic term which cannot be appropriated as a trademark, and, as such, registration of such

mark is invalid. It also stressed that Pearl and Dean is not entitled to the reliefs prayed for in its complaint since its advertising display units con-236

236SUPREME COURT REPORTS ANNOTATEDPearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporatedtained no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it and that the suit was purely intended to malign SMI’s good name. On this basis, SMI, aside from praying for the dismissal of the case, also counterclaimed for moral, actual and exemplary damages and for the cancellation of Pearl and Dean’s Certification of Copyright Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12, 1988.NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor having engaged in the business of advertising. It repleaded SMI’s averments, admissions and denials and prayed for similar reliefs and counterclaims as SMI.”The RTC of Makati City decided in favor of P & D:“Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright under Section 2 of PD 49, as amended, and infringement of trademark under Section 22 of RA No. 166, as amended, and are hereby penalized under Section 28 of PD 49, as amended, and Sections 23 and 24 of RA 166, as amended. Accordingly, defendants are hereby directed:(1) to pay plaintiff the following damages:(a)actual damages representing profits derived by defendants as a result of infringement of plaintiff’s copyright from 1991 to 1992- P16,600,000.00(b)moral damages- P1,000.000.00(c)exemplary damages- P1,000,000.00(d)attorney’s fees plus- P1,000,000.00

(e)costs of suit; (2) to deliver, under oath, for impounding in the National Library, all light boxes of SMI which were fabricated by Metro Industrial Services and EYD Rainbow Advertising Corporation;(3) to deliver, under oath, to the National Library, all filler- posters using the trademark “Poster Ads”, for destruction; and(4) to permanently refrain from infringing the copyright on plaintiff’s light boxes and its trademark “Poster Ads”.Defendants’ counterclaims are hereby ordered dismissed for lack of merit.237

VOL. 409, AUGUST 15, 2003237Pearl & Dean (Phil.), Incorporated vs. Shoemart, IncorporatedSO ORDERED.”4On appeal, however, the Court of Appeals reversed the trial court:Since the light boxes cannot, by any stretch of the imagination, be considered as either prints, pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly classified as a copyrightable class “O” work, we have to agree with SMI when it posited that what was copyrighted were the technical drawings only, and not the light boxes themselves, thus:42. When a drawing is technical and depicts a utilitarian object, a copyright over the drawings like plaintiff-appellant’s will not extend to the actual object. It has so been held under jurisprudence, of which the leading case is Baker vs. Selden (101 U.S. 841 (1879). In that case, Selden had obtained a copyright protection for a book entitled “Selden’s Condensed Ledger or Bookkeeping Simplified” which purported to explain a new system of bookkeeping. Included as part of the book were blank forms and illustrations consisting of ruled lines and headings, specially designed for use in connection with the system explained in the work. These forms showed the entire operation of a day or a week or a month on a single page, or on two pages following each other. The defendant Baker then produced forms which were similar to the forms illustrated in Selden’s copyrighted books. The Court held that exclusivity to the actual forms is not extended by a copyright. The reason was that “to grant a monopoly in the underlying art when no examination of its novelty has ever been made would be a surprise and a fraud upon the public; that is the province of letters patent, not of copyright.” And that is precisely the point. No doubt aware that its alleged

original design would never pass the rigorous examination of a patent application, plaintiff-appellant fought to foist a fraudulent monopoly on the public by conveniently resorting to a copyright registration which merely employs a recordal system without the benefit of an in-depth examination of novelty.The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had obtained a copyright over an unpublished drawing entitled “Bridge Approach—the drawing showed a novel bridge approach to unsnarl traffic congestion”. The defendant constructed a bridge approach which was alleged to be an infringement of the new design illustrated in plaintiff’s drawings. In this case it was held that protection of the drawing_______________

4 Records, pp. 620-621.238

238SUPREME COURT REPORTS ANNOTATEDPearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporateddoes not extend to the unauthorized duplication of the object drawn because copyright extends only to the description or expression of the object and not to the object itself. It does not prevent one from using the drawings to construct the object portrayed in the drawing.In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v. Maddox, 379 F. 2d 84, it was held that there is no copyright infringement when one who, without being authorized, uses a copyrighted architectural plan to construct a structure. This is because the copyright does not extend to the structures themselves.In fine, we cannot find SMI liable for infringing Pearl and Dean’s copyright over the technical drawings of the latter’s advertising display units.xxx xxx xxxThe Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate Court that the protective mantle of the Trademark Law extends only to the goods used by the first user as specified in the certificate of registration, following the clear mandate conveyed by Section 20 of Republic Act 166, as amended, otherwise known as the Trademark Law, which reads:SEC. 20. Certification of registration prima facie evidence of validity.—A certificate of registration of a mark or trade-name shall be prima facie

evidence of the validity of the registration, the registrant’s ownership of the mark or trade-name, and of the registrant’s exclusive right to use the same in connection with the goods, business or services specified in the certificate, subject to any conditions and limitations stated therein.” (italics supplied)The records show that on June 20, 1983, Pearl and Dean applied for the registration of the trademark “Poster Ads” with the Bureau of Patents, Trademarks, and Technology Transfer. Said trademark was recorded in the Principal Register on September 12, 1988 under Registration No. 41165 covering the following products: stationeries such as letterheads, envelopes and calling cards and newsletters.With this as factual backdrop, we see no legal basis to the finding of liability on the part of the defendants-appellants for their use of the words “Poster Ads”, in the advertising display units in suit. Jurisprudence has interpreted Section 20 of the Trademark Law as “an implicit permission to a manufacturer to venture into the production of goods and allow that producer to appropriate the brand name of the senior registrant on goods other than those stated in the certificate of registration.” The Supreme Court further emphasized the restrictive meaning of Section 20 when it stated, through Justice Conrado V. Sanchez, that:Really, if the certificate of registration were to be deemed as including goods not specified therein, then a situation may arise239

VOL. 409, AUGUST 15, 2003239Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporatedwhereby an applicant may be tempted to register a trademark on any and all goods which his mind may conceive even if he had never intended to use the trademark for the said goods. We believe that such omnibus registration is not contemplated by our Trademark Law.While we do not discount the striking similarity between Pearl and Dean’s registered trademark and defendants-appellants’ “Poster Ads” design, as well as the parallel use by which said words were used in the parties’ respective advertising copies, we cannot find defendants-appellants liable for infringement of trademark. “Poster Ads” was registered by Pearl and Dean for specific use in its stationeries, in contrast to defendants-appellants who used the same words in their advertising display units. Why Pearl and Dean limited the use of its trademark to stationeries is simply beyond us.

But, having already done so, it must stand by the consequence of the registration which it had caused.x x x x x x x x xWe are constrained to adopt the view of defendants-appellants that the words “Poster Ads” are a simple contraction of the generic term poster advertising. In the absence of any convincing proof that “Poster Ads” has acquired a secondary meaning in this jurisdiction, we find that Pearl and Dean’s exclusive right t o t he use of” Poster Ads” is limited to what is written in its certificate of registration, namely, stationeries.Defendants-appellants cannot thus be held liable for infringement of the trademark “Poster Ads”.There being no finding of either copyright or trademark infringement on the part of SMI and NEMI, the monetary award granted by the lower court to Pearl and Dean has no leg to stand on.x x x x x x x x xWHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE, and another is rendered DISMISSING the complaint and counterclaims in, the above-entitled case for lack of merit.5Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the following errors for the Court’s consideration:A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHT INFRINGEMENT WAS COMMITTED BY RESPONDENTS SM AND NEMI;_______________

5 Rollo, pp. 17-19, 21-22, 23-24, 26.240

240SUPREME COURT REPORTS ANNOTATEDPearl & Dean (Phil.), Incorporated vs. Shoemart, IncorporatedB. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO INFRINGEMENT OF PEARL & DEAN’S TRADEMARK “POSTER ADS” WAS COMMITTED BY RESPONDENTS SM AND NEMI;C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD OF THE TRIAL COURT, DESPITE THE LATTER’S FINDING, NOT DISPUTED BY THE HONORABLE COURT OF APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN ITS NEGOTIATION OF ADVERTISING CONTRACTS WITH PEARL & DEAN.

D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENTS SM AND NEMI LIABLE TO PEARL & DEAN FOR ACTUAL, MORAL & EXEMPLARY DAMAGES, ATTORNEY’S FEES AND COSTS OF SUIT.6IssuesIn resolving this very interesting case, we are challenged once again to put into proper perspective four main concerns of intellectual property law—patents, copyrights, trademarks and unfair competition arising from infringement of any of the first three. We shall focus then on the following issues:(1) if the engineering or technical drawings of an advertising display unit (light box) are granted copyright protection (copyright certificate of registration) by the National Library, is the light box depicted in such engineering drawings ipso facto also protected by such copyright?(2) or should the light box be registered separately and protected by a patent issued by the Bureau of Patents Trademarks and Technology Transfer (now Intellectual Property Office)—in addition to the copyright of the engineering drawings?(3) can the owner of a registered trademark legally prevent others from using such trademark if it is a mere abbreviation of a term descriptive of his goods, services or business?On the Issue of Copyright InfringementPetitioner P & D’s complaint was that SMI infringed on its copyright over the light boxes when SMI had the units manufactured_______________

6 Rollo, p. 34.241

VOL. 409, AUGUST 15, 2003241Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporatedby Metro and EYD Rainbow Advertising for its own account. Obviously, petitioner’s position was premised on its belief that its copyright over the engineering drawings extended ipso facto to the light boxes depicted or illustrated in said drawings. In ruling that there was no copyright infringement, the Court of Appeals held that the copyright was limited to the drawings alone and not to the light box itself. We agree with the appellate court.First, petitioner’s application for a copyright certificate—as well as Copyright Certificate No. PD-R2588 issued by the National Library on January 20, 1981

—clearly stated that it was for a class “O” work under Section 2 (O) of PD 49 (The Intellectual Property Decree) which was the statute then prevailing. Said Section 2 expressly enumerated the works subject to copyright:SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any of the following works:x x x x x x x x x(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;x x x x x x x x xAlthough petitioner’s copyright certificate was entitled “Advertising Display Units” (which depicted the box-type electrical devices), its claim of copyright infringement cannot be sustained.Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant, the rights are limited to what the statute confers. It may be obtained and enjoyed only with respect to the subjects and by the persons, and on terms and conditions specified in the statute.7 Accordingly, it can cover only the works falling within the statutory enumeration or description.8P & D secured its copyright under the classification class “O” work. This being so, petitioner’s copyright protection extended only to the technical drawings and not to the light box itself because the latter was not at all in the category of “prints, pictorial illustrations, advertising copies, labels, tags and box wraps.” Stated otherwise, even as we find that P & D indeed owned a valid copyright, the same could have referred only to the technical drawings within_______________

7 18 C.J.S. 161.8 Joaquin vs. Drilon, 302 SCRA 225 [1999].242

242SUPREME COURT REPORTS ANNOTATEDPearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporatedthe category of “pictorial illustrations.” It could not have possibly stretched out to include the underlying light box. The strict application9 of the law’s enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is, even if its copyright certificate was entitled “Advertising Display Units.” What the law does not include, it excludes, and for the good reason: the light box was not a literary or artistic piece which could be

copyrighted under the copyright law. And no less clearly, neither could the lack of statutory authority to make the light box copyrightable be remedied by the simplistic act of entitling the copyright certificate issued by the National Library as “Advertising Display Units.”In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to the public without license from P & D, then no doubt they would have been guilty of copyright infringement. But this was not the case. SMI’s and NEMI’s acts complained of by P & D were to have units similar or identical to the light box illustrated in the technical drawings manufactured by Metro and EYD Rainbow Advertising, for leasing out to different advertisers. Was this an infringement of petitioner’s copyright over the technical drawings? We do not think so.During the trial, the president of P & D himself admitted that the light box was neither a literary not an artistic work but an “engineering or marketing invention.”10 Obviously, there appeared to be some confusion regarding what ought or ought not to be the proper subjects of copyrights, patents and trademarks. In the leading case of Kho vs. Court of Appeals,11 we ruled that these three legal rights are completely distinct and separate from one another, and the protection afforded by one cannot be used interchangeably to cover items or works that exclusively pertain to the others:Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one another. A trademark is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked container of goods. In relation thereto, a trade name means the name or designation identifying or distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to literary and artistic works which are_______________

9 Ibid.10 TSN, February 3, 1993, pp. 11-13.11 G.R. No. 115758, March 19, 2002, 379 SCRA 410.243

VOL. 409, AUGUST 15, 2003243Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporatedoriginal intellectual creations in the literary and artistic domain protected from the moment of their creation. Patentable inventions, on the other

hand, refer to any technical solution of a problem in any field of human activity which is new, involves an inventive step and is industrially applicable.On the Issue of Patent InfringementThis brings us to the next point: if, despite its manufacture and commercial use of the light boxes without license from petitioner, private respondents cannot be held legally liable for infringement of P & D’s copyright over its technical drawings of the said light boxes, should they be liable instead for infringement of patent? We do not think so either.For some reason or another, petitioner never secured a patent for the light boxes. It therefore acquired no patent rights which could have protected its invention, if in fact it really was. And because it had no patent, petitioner could not legally prevent anyone from manufacturing or commercially using the contraption. In Creser Precision Systems, Inc. vs. Court of Appeals,12 we held that “there can be no infringement of a patent until a patent has been issued, since whatever right one has to the invention covered by the patent arises alone from the grant of patent. x x x (A)n inventor has no common law right to a monopoly of his invention. He has the right to make use of and vend his invention, but if he voluntarily discloses it, such as by offering it for sale, the world is free to copy and use it with impunity. A patent, however, gives the inventor the right to exclude all others. As a patentee, he has the exclusive right of making, selling or using the invention.13 On the assumption that petitioner’s advertising units were patentable inventions, petitioner revealed them fully to the public by submitting the engineering drawings thereof to the National Library.To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a primordial requirement. No patent, no protection. The ultimate goal of a patent system is to bring new designs and technologies into the public do-_______________

12 286 SCRA 13 [1998].13 Id., at p. 21, citing Anchor Hocking Glass Corp. vs. White Cap Co., 47 F. Supp. A 451, and Bauer & Cie vs. O’ Donnel, 229 US 1.244

244SUPREME COURT REPORTS ANNOTATEDPearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

main through disclosure.14 Ideas, once disclosed to the public without the protection of a valid patent, are subject to appropriation without significant restraint.15On one side of the coin is the public which will benefit from new ideas; on the other are the inventors who must be protected. As held in Bauer & Cie vs. O’Donnel,16 “The act secured to the inventor the exclusive right to make use, and vend the thing patented, and consequently to prevent others from exercising like privileges without the consent of the patentee. It was passed for the purpose of encouraging useful invention and promoting new and useful inventions by the protection and stimulation given to inventive genius, and was intended to secure to the public, after the lapse of the exclusive privileges granted the benefit of such inventions and improvements.”The law attempts to strike an ideal balance between the two interests:“(The p)atent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of new, useful and non-obvious advances in technology and design, in return for the exclusive right to practice the invention for a number of years. The inventor may keep his invention secret and reap its fruits indefinitely. In consideration of its disclosure and the consequent benefit to the community, the patent is granted. An exclusive enjoyment is guaranteed him for 17 years, but upon the expiration of that period, the knowledge of the invention inures to the people, who are thus enabled to practice it and profit by its use.”17The patent law has a three-fold purpose: “first, patent law seeks to foster and reward invention; second, it promotes disclosures of inventions to stimulate further innovation and to permit the public to practice the invention once the patent expires; third, the strin-_______________

14 Bonito Boats, Inc. vs. Thunder Craft Boats, Inc., 489 US 141 [1989].15 Id., at p. 156.16 Ibid., at p. 10.17 Bonito Boats, Inc. vs. Thunder Craft Boats, Inc., ibid., p. 150, citing U.S. vs. Dubilier Condenser Corp., 289 U.S. 178.245

VOL. 409, AUGUST 15, 2003245Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated

gent requirements for patent protection seek to ensure that ideas in the public domain remain there for the free use of the public.”18It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-depth investigation is required because “in rewarding a useful invention, the rights and welfare of the community must be fairly dealt with and effectively guarded. To that end, the prerequisites to obtaining a patent are strictly observed and when a patent is issued, the limitations on its exercise are equally strictly enforced. To begin with, a genuine invention or discovery must be demonstrated lest in the constant demand for new appliances, the heavy hand of tribute be laid on each slight technological advance in art.”19There is no such scrutiny in the case of copyrights nor any notice published before its grant to the effect that a person is claiming the creation of a work. The law confers the copyright from the moment of creation20 and the copyright certificate is issued upon registration with the National Library of a sworn ex parte claim of creation.Therefore, not having gone through the arduous examination for patents, the petitioner cannot exclude others from the manufacture, sale or commercial use of the light boxes on the sole basis of its copyright certificate over the technical drawings.Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent office (IPO) to scrutinize the light box’s eligibility as a patentable invention. The irony here is that, had petitioner secured a patent instead, its exclusivity would have been for 17 years only. But through the simplified procedure of copyright-registration with the National Library—without undergoing the rigor of defending the patentability of its invention before the IPO and the public—the petitioner would be protected for 50 years. This situation could not have been the intention of the law.In the oft-cited case of Baker vs. Selden,21 the United States Supreme Court held that only the expression of an idea is protected by_______________

18 Aronson vs. Quick Point Pencil Co., 440 U.S. 257, 262 [1979], citing Kewanee Oil Co. vs. Bicron Corp., 416 U.S. 470 [1994], cited Amador, patents, p, 496.19 Sears Roebuck vs. Stiffel, 376 US 225, 229 [1964].20 Section 2, PD 49 (The Intellectual Property Decree).21 101 US 102-105 [1879].246

246SUPREME COURT REPORTS ANNOTATEDPearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporatedcopyright, not the idea itself. In that case, the plaintiff held the copyright of a book which expounded on a new accounting system he had developed. The publication illustrated blank forms of ledgers utilized in such a system. The defendant reproduced forms similar to those illustrated in the plaintiff ’s copyrighted book. The US Supreme Court ruled that:“There is no doubt that a work on the subject of bookkeeping, though only explanatory of well known systems, may be the subject of a copyright; but, then, it is claimed only as a book, x x x. But there is a clear distinction between the books, as such, and the art, which it is, intended to illustrate. The mere statement of the proposition is so evident that it requires hardly any argument to support it. The same distinction may be predicated of every other art as well as that of bookkeeping. A treatise on the composition and use of medicines, be they old or new; on the construction and use of ploughs or watches or churns; or on the mixture and application of colors for painting or dyeing; or on the mode of drawing lines to produce the effect of perspective, would be the subject of copyright; but no one would contend that the copyright of the treatise would give the exclusive right to the art or manufacture described therein. The copyright of the book, if not pirated from other works, would be valid without regard to the novelty or want of novelty of its subject matter. The novelty of the art or thing described or explained has nothing to do with the validity of the copyright. To give to the author of the book an exclusive property in the art described therein, when no examination of its novelty has ever been officially made, would be a surprise and a fraud upon the public. That is the province of letters patent, not of copyright. The claim to an invention of discovery of an art or manufacture must be subjected to the examination of the Patent Office before an exclusive right therein can be obtained; and a patent from the government can only secure it.The difference between the two things, letters patent and copyright, may be illustrated by reference to the subjects just enumerated. Take the case of medicines. Certain mixtures are found to be of great value in the healing art. If the discoverer writes and publishes a book on the subject (as regular physicians generally do), he gains no exclusive right to the manufacture and sale of the medicine; he gives that to the public. If he desires to acquire such exclusive right, he must obtain a patent for the mixture as a new art, manufacture or composition of matter. He may copyright his book, if he

pleases; but that only secures to him the exclusive right of printing and publishing his book. So of all other inventions or discoveries.The copyright of a book on perspective, no matter how many drawings and illustrations it may contain, gives no exclusive right to the modes of drawing described, though they may never have been known or used before. By publishing the book without getting a patent for the art, the latter is given to the public.247

VOL. 409, AUGUST 15, 2003247Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporatedx x xNow, whilst no one has a right to print or publish his book, or any material part thereof, as a book intended to convey instruction in the art, any person may practice and use the art itself which he has described and illustrated therein. The use of the art is a totally different thing from a publication of the book explaining it. The copyright of a book on bookkeeping cannot secure the exclusive right to make, sell and use account books prepared upon the plan set forth in such book. Whether the art might or might not have been patented, is a question, which is not before us. It was not patented, and is open and free to the use of the public. And, of course, in using the art, the ruled lines and headings of accounts must necessarily be used as incident to it.The plausibility of the claim put forward by the complainant in this case arises from a confusion of ideas produced by the peculiar nature of the art described in the books, which have been made the subject of copyright. In describing the art, the illustrations and diagrams employed happened to correspond more closely than usual with the actual work performed by the operator who uses the art. x x x The description of the art in a book, though entitled to the benefit of copyright, lays no foundation for an exclusive claim to the art itself. The object of the one is explanation; the object of the other is use. The former may be secured by copyright. The latter can only be secured, if it can be secured at all, by letters patent.” (italics supplied)On the Issue of Trademark InfringementThis issue concerns the use by respondents of the mark “Poster Ads” which petitioner’s president said was a contraction of “poster advertising.” P & D was able to secure a trademark certificate for it, but one where the goods specified were “stationeries such as letterheads, envelopes, calling cards and newsletters.”22 Petitioner admitted it did not commercially engage in

or market these goods. On the contrary, it dealt in electrically operated backlit advertising units and the sale of advertising spaces thereon, which, however, were not at all specified in the trademark certificate.Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate Court,23 where we, invoking Section 20 of the old Trademark Law, ruled that “the certificate of registration issued by the Director of Patents can confer (upon petitioner) the exclusive right to use its own symbol only to those_______________

22 Exhibit “B,” Original Records, p. 63.23 215 SCRA 316 [1992].248

248SUPREME COURT REPORTS ANNOTATEDPearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporatedgoods specified in the certificate, subject to any conditions and limitations specified in the certificate x x x. One who has adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others for products which are of a different description.”24 Faberge, Inc. was correct and was in fact recently reiterated in Canon Kabushiki Kaisha vs. Court of Appeals.25Assuming arguendo that “Poster Ads” could validly qualify as a trademark, the failure of P & D to secure a trademark registration for specific use on the light boxes meant that there could not have been any trademark infringement since registration was an essential element thereof.On the Issue of Unfair CompetitionIf at all, the cause of action should have been for unfair competition, a situation which was possible even if P & D had no registration.26 However, while the petitioner’s complaint in the RTC also cited unfair competition, the trial court did not find private respondents liable therefor. Petitioner did not appeal this particular point; hence, it cannot now revive its claim of unfair competition.But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair competition.By the nature of things, there can be no unfair competition under the law on copyrights although it is applicable to disputes over the use of trademarks. Even a name or phrase incapable of appropriation as a trademark or trade name may, by long and exclusive use by a business (such

that the name or phrase becomes associated with the business or product in the mind of the purchasing public), be entitled to protection against unfair competition.27 In this case, there was no evidence that P & D’s use of “Poster Ads” was distinctive or well-known. As noted by the Court of Appeals, petitioner’s expert witnesses himself had testified that “Poster Ads” was too generic a name. So it was difficult to identify it with_______________

24 Id., at p. 326.25 336 SCRA 266 [2000].26 Ogura vs. Chua, 59 Phil. 471.27 Sapalo, The Law on Trademark Infringement and Unfair Competition, 2000 ed., p. 185.249

VOL. 409, AUGUST 15, 2003249Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporatedany company, honestly speaking.”28 This crucial admission by its own expert witness that “Poster Ads” could not be associated with P & D showed that, in the mind of the public, the goods and services carrying the trademark “Poster Ads” could not be distinguished from the goods and services of other entities.This fact also prevented the application of the doctrine of secondary meaning. “Poster Ads” was generic and incapable of being used as a trademark because it was used in the field of poster advertising, the very business engaged in by petitioner. “Secondary meaning” means that a word or phrase originally incapable of exclusive appropriation with reference to an article in the market (because it is geographically or otherwise descriptive) might nevertheless have been used for so long and so exclusively by one producer with reference to his article that, in the trade and to that branch of the purchasing public, the word or phrase has come to mean that the article was his property.29 The admission by petitioner’s own expert witness that he himself could not associate “Poster Ads” with petitioner P & D because it was “too generic” definitely precluded the application of this exception.Having discussed the most important and critical issues, we see no need to belabor the rest.All told, the Court finds no reversible error committed by the Court of Appeals when it reversed the Regional Trial Court of Makati City.

WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May 22, 2001 is AFFIRMED in toto.SO ORDERED. Puno (Chairman), Panganiban, Sandoval-Gutierrez and Carpio-Morales, JJ., concur.Petition denied, assailed decision affirmed in toto.Note.—Intellectual and industrial property rights cases are not simple property cases (Mirpuri vs. Court of Appeals, 318 SCRA 516 [1999])——o0o——

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28 Decision, p. 16, citing TSN, December 3, 1992, pp. 19-20.29 Sapalo, at p. 92. [Pearl & Dean (Phil.), Incorporated vs. Shoemart, Incorporated, 409 SCRA 231(2003)]