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THIRD DIVISION
[G.R. No. 115286. August 11, 1994.]
INTER-ORIENT MARITIME ENTERPRISES, INC., SEA HORSE SHIP MANAGEMENT, INC. and
TRENDA WORLD SHIPPING (MANILA), INC., petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION and RIZALINO D. TAYONG, respondents.
SYLLABUS
1. LABOR LAWS AND SOCIAL LEGISLATION; CONDITIONS OF EMPLOYMENT;
CAPTAIN OF VESSEL A CONFIDENTIAL AND MANAGERIAL EMPLOYEE. — It is w ellsettled in
this jurisdiction that confidentialand managerial employees cannot be arbitrarily dismissed at any
time, and w ithout cause as reasonably establishedin an appropriate investigation. Such
employees, too, are entitled to security of tenure, fair standardsof employment and the protection
of labor law s. The captain of a vesselis a confidentialand managerial employee w ithin the
meaning of the above doctrine. A master or captain, for purposes of maritime commerce, is one
w ho has command of a vessel. A captain commonly performs three (3) distinct roles: (1) he is a
general agent of the shipow ner; (2) he is also commander and technicaldirector of the vessel; and
(3) he is a representative of the country under w hose flag he navigates. Of these roles, by far the
most important is the role performed by the captain as commander of the vessel; for such role
(w hich, to our mind, is analogous to that of "Chief Executive Officer" [CEO] of a present-day
corporate enterprise) has to do w ith the operation and preservation of the vesselduring its voyage
and the protection of the passengers (if any) and crew and cargo. In his role as generalagent of
the shipow ner, the captain has authority to sign bills of lading, carry goods aboard and dealw ith
the freight earned, agree upon rates and decide w hether to take cargo. The ship captain, as agent
of the shipow ner, has legalauthority to enter into contracts with respect to the vesseland the
trading of the vessel, subject to applicable limitations established by statute, contract or
instructions and regulations of the shipow ner. To the captain is committed the governance, care
and management of the vessel. Clearly, the captain is vested w ith both management and fiduciary
functions.
2. ID.; TERMINATION OF EMPLOYMENT; ILLEGAL DISMISSAL ESTABLISHED IN
CASE AT BAR. — It is plain from the records of the present petition that Captain Tayong w as
denied any opportunity to defend himself. Petitioners curtly dismissed him fromhis command and
summarily ordered his repatriation to the Philippines w ithout informing him of the charge or
charges levelled against him, and much less giving him a change to refute any such charge. In
fact, it w as only on 26 October 1989 that Captain Tayong received a telegram dated 24 October
1989 fromInter-Orient requiring him to explain w hy he delayed sailing to South Africa. We also
find that the principal contention of petitioners against the decision of the NLRC pertains to facts,
that is, w hether or not there w as actualand sufficient basis forthe alleged loss of trust or
confidence. We have consistently held that a question of "fact" is, as a generalrule, the concern
solely of an administrative body, so long as there is substantialevidence of record to sustain its
action. The record requires us to reject petitioners' claim that the NLRC's conclusion of fact were
not supported by substantialevidence. Petitioner's rely on self-serving affidavits of their own
officersand employees predictably tending to support petitioners' allegation that Captain Tayong
had performed acts inimical to petitioners' interests for which, supposedly, he w asdischarged. The
officialreport of Mr. Clark, petitioners' representative, in fact supports the NLRC's conclusion that
private respondent Captain did not arbitrarily and maliciously delay the voyage to South Africa.
There had been, Mr. Clark stated, a disruption in the normal functioning of the vessel's turbo
charger and economizer and that had prevented the fullor regular operation of the vessel. Thus,
Mr. Clark relayed to Captain Tayong instructions to "maintain reduced RPM" during the voyage to
South Africa, instead of waiting in Singapore for the supplies that w ould permit shipboard repair of
the malfunctioning machinery and equipment. Under all the circumstances of this case, we, along
w ith the NLRC, are unable to hold that Captain Tayong's decision (arrived at after consultation
w ith the vessel's Chief Engineer) to w ait seven (7) hours in Singapore for the delivery on board the
Oceanic Mindoro of the requisitioned supplies needed for the w elding-repair, on board the ship, of
the turbo-charger and the economizer equipment of the vessel, constituted merely arbitrary,
capricious or grossly insubordinate behavior on his part. In the view of the NLRC, that decision of
Captain Tayong did not constitute a legal basis for the summary dismissal of Captain Tayong and
for termination of his contract with petitioners prior to the expiration of the term thereof. We cannot
hold this conclusion of the NLRC to be a grave abuse of discretion amounting to an excess or loss
of jurisdiction; indeed, w e share that conclusion and make it our ow n. Clearly, petitioners w ere
angered at Captain Tayong's decision to w ait for delivery of the needed supplied before sailing
fromSingapore, and may have changed their estimate of their ability to w orkwith himand of his
capabilities as a ship captain. Assuming that to be petitioners' management prerogative, that
prerogative is nevertheless not to be exercised, in the case at bar, at the cost of loss of Captain
Tayong's rights under his contract with petitioner's and under Philippine law .
3. COMMERCIAL LAW; CODE OF COMMERCE; CAPTAIN'S CONTROL OF VESSEL
AND REASONABLE DISCRETION AS TO ITS NAVIGATION. — A ship's captain must be
accorded a reasonable measure of discretionary authority to decide w hat the safetyof the ship
and of its crew and cargo specifically requireson a stipulated ocean voyage. The captain is held
responsible, and properly so, for such safety. He is right there on the vessel, in command of its

2. 2
and (it must be presumed) know ledgeable as to the specific requirements of seaworthinessand
the particular risks and perils of the voyage he is to embark upon. The applicable principle is that
the captain has controlof all departments of service in the vessel, and reasonable discretion as to
its navigation. It is the right and duty of the captain, in the exercise of sound discretion and in good
faith, to do all things w ith respect to the vesseland its equipment and conduct of the voyage w hich
are reasonably necessaryfor the protection and preservation of the interests under his charge,
w hether those be of the shipow ner, charterers, cargo ownersor of underwriters. It is a basic
principle of admiralty law that in navigating a merchantman, the master must be left free to
exercise his ow n best judgment. The requirements of safe navigation compel us to reject any
suggestion that the judgment and discretion of the captain of a vesselmay be confined w ithin a
straitjacket, even in this age of electronic communications. Indeed, if the ship captain is convinced,
as a reasonably prudent and competent mariner acting in good faith that the shipow ner'sor ship
agent's instructions (insisted upon by radio or telefax fromtheir officers thousandof miles aw ay)
w illresult, in the very specific circumstances facing him, in imposing unacceptable risks of loss or
serious danger to ship or crew , he cannot casually seekabsolution fromhis responsibility, if a
marine casualty occurs, in such instructions. Compagnie de Commerce v. Hamburg is instructive
in this connection. There, this Court recognized the discretionary authority of the master of a
vesseland his right to exercise his best judgment, w ith respect to navigating the vesselhe
commands. In Compagnie de Commerce, a charger party w asexecutedbetween Compagnie de
Commerce and the ow nersof the vesselSambia, under w hich the former as charterer loaded on
board the Sambia, at the port of Saigon, certain cargo destined for the Ports of Dunkirk and
Hamburg in Europe. The Sambia flying the German flag, could not, in the judgment of its master,
reach its ports of destination because w ar (World War I) had been declared betw een Germany and
France. The master of the Sambia decided to deviate from the stipulated voyage and sailed
instead for the Port of Manila. Compagnie de Commerce sued in the Philippines for damages
arising from breach of the charter party and unauthorized sale of the cargo. In affirming the
decision of the trial court dismissing the complaint, our Supreme Court held that the master of the
Sambia had reasonable grounds to apprehend that the vesselw asin danger of seizure or capture
by the French authorities in Saigon w as justified by necessity to elect the course w hich the took —
i.e., to flee Saigon for the Port of Manila — w ith the result that the shipow ner wasrelieved from
liability for the deviation fromthe stipulated route and fromliability for damage to the cargo.
4. ID.; ID.; COMMERCIAL LAW; CODE OF COMMERCE; CAPTAIN'S CONTROL OF
VESSEL AND REASONABLE DISCRETION AS TO ITS NAVIGATION. — "The danger from
w hich the master of the Sambia fled a real and not merely an imaginary one as counselfor shipper
contends. Seizure at the hands of an 'enemy of the King', though not inevitable, w as a possible
outcome of a failure to leave the port of Saigon; and w e cannot say that under the conditions
existing at the time w hen the master elected to flee from that port, there w ere no grounds for a
'reasonable apprehension of danger' fromseizure by the French authorities, and therefore no
necessity for flight. The w ord 'necessity' when applied to mercantile affairs, where the judgment
must in the nature of things be exercised, cannot, of course, mean an irresistible compelling
pow er. what is meant by it in such cases is the force of circumstanceswhichdetermine the course
of a man ought to take. Thus, w here by the force of circumstances, a man has the duty cast upon
him of taking some action for another, and under that obligation adopts a course w hich, to the
judgment of a w ise and prudent man, is apparently the best for the interest of the persons for
w homhe acts in a given emergency, it may properly be said of the course so taken that it w as in a
mercantile sense necessaryto take it." Compagnie de Commerce contended that the shipow ner
should, at all events, be held responsible for the deterioration in the value of the cargo incident to
its long stay on board the vesselfromthe date of its arrivalin Manila until the cargo w assold. The
Supreme Court, in rejecting this contention also, declared that: "But it is clear that the master could
not be required to act on the very day of his arrival; or before he had a reasonable opportunity to
ascertain w hetherhe could hope to carry out his contract and earn his freight; and that he should
not be held responsible for a reasonable delay incident to an effort to ascertain the w ishesof the
freighter, and upon failure to secure prompt advice, to decide for himself as to the course which he
should adopt to secure the interests of the absent ow ner of the property aboard the vessel. The
master is entitled to delay for such a period as may be reasonable under the circumstances,
before deciding on the course he w illadopt. he may claim a fair opportunity of carrying out a
contract, and earning the freight, w hether by repairing or transshipping. should the repair of the
ship be undertaken, it must be proceeded w ith diligently; and if so done, the freighter willhave no
ground of complaint, although the consequent delay be a long one, unless, indeed, the cargo is
perishable, and likely to be injured by the delay. Where that is the case, it ought to be forwarded,
or sold, or given up, as the case may be, w ithout w aiting for repairs. A shipowner or shipmaster (if
communication w ith the shipow neris impossible), w illbe allow ed a reasonable time in w hich to
decide w hat course he willadopt in such cases as those under discussion; time must be allow ed
to him to ascertain the facts, and to balance the conflicting interests involved, of shipowner,cargo
ow ner, underwriteron ship and freight. But once the time has elapsed, he is bound to act promptly
according as he has elected either to repair, or abandon the voyage, or tranship. If he delays, and
ow ing to that delay a perishable cargo suffers damage; he cannot escape that obligation by
pleading the absence of definite instructions fromthe ow nersof the cargo or their underw riters,
since he has controlof the cargo and is entitled to elect."
D E C I S I O N
FELICIANO, J p:
Private respondent Rizalino Tayong, a licensed Master Mariner w ith experience in commanding
ocean-going vessels, wasemployed on 6 July 1989 by petitioners Trenda World Shipping
(Manila), Inc. and Sea Horse Ship Management, Inc. through petitioner Inter-Orient Maritime
Enterprises, Inc. as Master of the vesselM/V Oceanic Mindoro, for a period of one (1) year, as
evidenced by an employment contract. On 15 July 1989, Captain Tayong assumed command of
petitioners' vesselat the port of Hongkong. His instructions w ere to replenish bunker and diesel
fuel, to said forthwith to Richard Bay, South Africa, and there to load 120,000 metric tons of coal.
On 16 July 1989, w hile at the Pork of Hongkong and in the process of unloading cargo, Captain
Tayong received a w eather report that a stormcode-named "Gordon" w ould shortly hit Hongkong.
Precautionary measures w ere taken to secure the safety of the vessel, as w ellas its crew,
considering that the vessel's turbo-charger was leaking and the vesselw asfourteen (14) years
old.
On 21 July 1989, Captain Tayong follow ed-up the requisition by the former captain of the Oceanic
Mindoro for supplies of oxygen and acetylene, necessaryfor the welding-repair of the turbo-
charger and the economizer. 1 This requisition had been made upon request of the Chief Engineer
of the vesseland had been approved by the shipow ner. 2
On 25 July 1989, the vesselsailed fromHong Kong for Singapore. In the Master's sailing
message, Captain Tayong reported a w ater leakfromM.E. Turbo Charger No. 2 Exhaust gas
casing. He w as subsequentlyinstructedto blockoff the cooling w ater and maintain reduced RPM
unless authorized by the ow ners. 3
On 29 July 1989, w hile the vesselw asen route to Singapore, Captain Tayong reported that the
vesselhad stopped in mid-ocean for six (6) hours and forty-five (45) minutes due to a leaking
economizer. He w as instructed to shut down the economizer and use the auxiliary boiler instead.
4
On 31 July 1989 at 0607 hrs., the vesselarrived at the port of Singapore. 5 The Chief Engineer
reminded Captain Tayong that the oxygen and acetylene supplies had not been delivered. 6
Captain Tayong inquired from the ship's agent in Singapore about the supplies. The ship agent

3. 3
stated that these could only be delivered at 0800 hours on August 1, 1989 as the stores had
closed. 7
Captain Tayong called the shipow ner, Sea Horse Ship Management, Ltc., in London and informed
them that the departure of the vesselfor South Africa may be affected because of the delay in the
delivery of the supplies. 8
Sea Horse advised Captain Tayong to contact its Technical Director, Mr. Clark, w ho w asin Tokyo
and w ho could provide a solution for the supply of said oxygen and acetylene. 9
On the night of 31 July 1989, Mr. Clark received a call fromCaptain Tayong informing him that the
vesselcannot said w ithout the oxygen and acetylene for safetyreasonsdue to the problems w ith
the turbo charger and economizer. Mr. Clark responded that by shutting off the w ater to the turbo
charger and using the auxiliary boiler, there should be no further problem. According to Mr. Clark,
Captain Tayong agreed w ith him that the vesselcould sail as scheduled on 0100 hours on 1
August 1989 for South Africa. 10
According to Captain Tayong, how ever, he communicated to Sea Horse his reservations regarding
proceeding to South Africa without the requested supplied, 11 and w as advised by Sea Horse to
w ait for the supplies at 0800 hrs. of 1 August 1989, w hich Sea Horse had arranged to be delivered
on board the Oceanic Mindoro. 12 At 0800 hours on 1 August 1989, the requisitioned supplies
w ere delivered and Captain Tayong immediately sailed for Richard Bay.
When the vesselarrived at the port of Richard Bay, South Africa on 16 August 1989, Captain
Tayong w as instructed to turn-overhis post to the new captain. He w as thereafter repatriated to
the Philippines, after serving petitioners for a little more than tw o weeks. 13 He w as not informed
of the charges against him. 14
On 5 October 1989, Captain Tayong instituted a complaint for illegal dismissal before the
Philippine Overseas Employment Administration ("POEA"), claiming his unpaid salary for the
unexpired portion of the w ritten employment contract, plus attorney's fees.
Petitioners, in their answ er to the complaint, denied that they had illegally dismissed Captain
Tayong. Petitioners alleged that he had refused to said immediately to South Africa to the
prejudice and damage of petitioners. According to petitioners, as a direct result of Captain
Tayong's delay, petitioners' vesselw as placed "off-hire" by the charterersrefused to pay the
charter hire or compensation corresponding to tw elve (12)hours, amounting to US $15,500.00,
due to time lost in the voyage. They stated that they had dismissed private respondent for loss of
trust and confidence.
The POEA dismissed Captain Tayong's complaint and held that there w as valid cause forhis
untimely repatriation. The decision of the POEA placed considerable w eight on petitioners'
assertion that all the time lost as a result of the delay w ascaused by Captain Tayong and that his
concern for the oxygen and acetylene w asnot legitimate as these supplies w ere not necessaryor
indispensable for running the vessel. The POEA believed that the Captain had unreasonably
refused to follow the instructionsof petitioners and their representative, despite petitioner's firm
assurances that the vesselwasseaworthyforthe voyage to South Africa.
On appeal, the National Labor Relations Commission ("NLRC") reversed and set aside the
decision of the POEA. The NLRC found that Captain Tayong had not been afforded an opportunity
to be heard and that no substantialevidence w as adduced to establish the basis for petitioners'
loss of trust or confidence in the Captain. The NLRC declared that he had only acted in
accordance with his duties to maintain the seaw orthinessof the vesseland to insure the safety of
the ship and the crew. The NLRC directed petitioners to pay the Captain (a) his salary for the
unexpired portion of the contract at US$1,900.00 a month, plus one (1) month leave benefit; and
(b) attorney's fees equivalent to ten percent (10%) of the total aw ard due.
Petitioners, before this Court, claim that the NLRC had acted w ith grave abuse of discretion.
Petitioners allege that they had adduced sufficient evidence to establish the basis for private
respondent's discharge, contraryto the conclusion reached by the NLRC. Petitioners insist that
Captain Tayong, w ho must protect the interest of petitioners, had caused them unnecessary
damage, and that they, as ow ners of the vessel, cannot be compelled to keep in their employ a
captain of a vesselin w homthey have lost their trust and confidence. Petitioners finally contend
that the aw ard to the Captain of his salary corresponding to the unexpired portion of the contract
and one (1) month leave pay, including attorney's fees, also constituted grave abuse of discretion.
The petition must fail.
We note preliminary that petitioners failed to attach a clearly legible, properly certified, true copy of
the decision of the NLRC dated 23 April1994, in violation of requirement no. 3 of Revised Circular
No. 1-88. On this ground alone, the petition could have been dismissed. But the Court chose not to
do so, in view of the nature of question here raised and instead required private respondent to file
a comment on the petition. Captain Tayong submitted his comment. The Office of the Solicitor
General asked for an extension of thirty (30) days to file its comment on behalf of the NLRC. We
consider that the Solicitor General's comment may be dispensed w ith in this case.
It is w ellsettled in this jurisdiction that confidentialand managerial employees cannot be arbitrarily
dismissed at any time, and w ithout cause as reasonably established in an appropriate
investigation. 15 Such employees, too, are entitled to security of tenure, fair standards of
employment and the protection of labor law s.
The captain of a vesselis a confidentialand managerial employee w ithin the meaning of the above
doctrine. A master or captain, for purposes of maritime commerce, is one w ho has command of a
vessel. A captain commonly performs three (3) distinct roles: (1) he is a general agent of the
shipow ner; (2) he is also commander and technicaldirector of the vessel; and (3) he is a
representative of the country under whose flag he navigates. 16 Of these roles, by far the most
important is the role performed by the captain as commander of the vessel; for such role (which, to
our mind, is analogous to that of "Chief Executive Officer" [CEO] of a present-day corporate
enterprise) has to do w ith the operation and preservation of the vesselduring its voyage and the
protection of the passengers (if any) and crew and cargo. In his role as general agent of the
shipow ner, the captain has authority to sign bills of lading, carry goods aboard and deal w ith the
freight earned, agree upon rates and decide w hether to take cargo. The ship captain, as agent of
the shipow ner, has legalauthority to enter into contracts with respectto the vesseland the trading
of the vessel, subject to applicable limitations established by statute, contract or instructions and
regulations of the shipow ner. 17 To the captain is committed the governance, care and
management of the vessel. 18 Clearly, the captain is vested w ith both management and fiduciary
functions.
It is plain fromthe records of the present petition that Captain Tayong w as denied any opportunity
to defend himself. Petitioners curtly dismissed him fromhis command and summarily ordered his
repatriation to the Philippines w ithout informing him of the charge or charges levelled against him,
and much less giving him a change to refute any such charge. In fact, it w as only on 26 October
1989 that Captain Tayong received a telegram dated 24 October 1989 fromInter-Orient requiring
him to explain w hy he delayed sailing to South Africa.
We also find that the principal contention of petitioners against the decision of the NLRC pertains
to facts, that is, w hether or not there w asactualand sufficient basis for the alleged loss of trust or

4. 4
confidence. We have consistently held that a question of "fact" is, as a generalrule, the concern
solely of an administrative body, so long as there is substantialevidence of record to sustain its
action.
The record requires us to reject petitioners' claim that the NLRC's conclusion of fact were not
supported by substantialevidence. Petitioner's rely on self-serving affidavitsof their ow nofficers
and employees predictably tending to support petitioners' allegation that Captain Tayong had
performed acts inimical to petitioners' interests for which, supposedly, he wasdischarged. The
officialreport of Mr. Clark, petitioners' representative, in fact supports the NLRC's conclusion that
private respondent Captain did not arbitrarily and maliciously delay the voyage to South Africa.
There had been, Mr. Clark stated, a disruption in the normal functioning of the vessel's turbo
charger 19 and economizer and that had prevented the full or regular operation of the vessel.
Thus, Mr. Clark relayed to Captain Tayong instructions to "maintain reduced RPM" during the
voyage to South Africa, instead of waiting in Singapore for the supplies that w ould permit
shipboard repair of the malfunctioning machinery and equipment.
More importantly, a ship's captain must be accorded a reasonable measure of discretionary
authority to decide w hat the safety of the ship and of its crew and cargo specifically requireson a
stipulated ocean voyage. The captain is held responsible, and properly so, for such safety. He is
right there on the vessel, in command of it and (it must be presumed) know ledgeable as to the
specific requirements of seaworthinessand the particular risks and perils of the voyage he is to
embark upon. The applicable principle is that the captain has controlof all departments of service
in the vessel, and reasonable discretion as to its navigation. 20 It is the right and duty of the
captain, in the exercise of sound discretion and in good faith, to do all things w ith respect to the
vesseland its equipment and conduct of the voyage w hich are reasonablynecessaryforthe
protection and preservation of the interests under his charge, whether those be of the shipowners,
charterers, cargo owners or of underwriters. 21 It is a basic principle of admiralty law that in
navigating a merchantman, the master must be left free to exercise his ow n best judgment. The
requirements of safe navigation compel us to reject any suggestion that the judgment and
discretion of the captain of a vesselmay be confined w ithin a straitjacket, even in this age of
electronic communications. 22 Indeed, if the ship captain is convinced, as a reasonably prudent
and competent mariner acting in good faith that the shipow ner's or ship agent's instructions
(insisted upon by radio or telefax fromtheir officers thousand of miles aw ay) willresult, in the very
specific circumstances facing him, in imposing unacceptable risks of loss or serious danger to ship
or crew , he cannot casually seekabsolution fromhis responsibility, if a marine casualty occurs, in
such instructions. 23
Compagnie de Commerce v. Hamburg 24 is instructive in this connection. There, this Court
recognized the discretionary authority of the master of a vessel and his right to exercise his best
judgment, w ith respect to navigating the vesselhe commands. In Compagnie de Commerce, a
charter party w asexecuted betweenCompagnie de Commerce and the ow ners of the vessel
Sambia, under w hich the former as charterer loaded on board the Sambia, at the port of Saigon,
certain cargo destined for the Ports of Dunkirk and Hamburg in Europe. The Sambia flying the
German flag, could not, in the judgment of its master, reach its ports of destination because w ar
(World War I) had been declared betw een Germany and France. The master of the Sambia
decided to deviate fromthe stipulated voyage and sailed instead for the Port of Manila.
Compagnie de Commerce sued in the Philippines for damages arising frombreach of the charter
party and unauthorized sale of the cargo. In affirming the decision of the trial court dismissing the
complaint, our Supreme Court held that the master of the Sambia had reasonable grounds to
apprehend that the vesselwas in danger of seizure or capture by the French authorities in Saigon
w as justified by necessity to elect the course w hich the took — i.e., to flee Saigon for the Port of
Manila — w ith the result that the shipow ner wasrelieved fromliability for the deviation fromthe
stipulated route and fromliability for damage to the cargo. The Court said:
"The danger from w hich the master of the Sambia fled a real and not merely an imaginary one as
counselfor shipper contends. Seizure at the hands of an 'enemy of the King', though not
inevitable, w as a possible outcome of a failure to leave the port of Saigon; and w e cannot say that
under the conditions existing at the time w hen the master elected to flee from that port, there w ere
no grounds for a 'reasonable apprehension of danger' fromseizure by the French authorities, and
therefore no necessity forflight.
The w ord 'necessity' whenapplied to mercantile affairs, where the judgment must in the nature of
things be exercised, cannot, of course, mean an irresistible compelling pow er. What is meant by it
in such cases is the force of circumstanceswhich determine the course of a man ought to take.
Thus, w here by the forceof circumstances, a man has the duty cast upon him of taking some
action for another, and under that obligation adopts a course w hich, to the judgment of a w ise and
prudent man, is apparently the best for the interest of the persons for whomhe acts in a given
emergency, it may properly be said of the course so taken that it w as in a mercantile sense
necessary to take it." 25 (Emphasis supplied)
Compagnie de Commerce contended that the shipow ner should, at allevents, be held responsible
for the deterioration in the value of the cargo incident to its long stay on board the vesselfromthe
date of its arrivalin Manila until the cargo w as sold. The Supreme Court, in rejecting this
contention also, declared that:
"But it is clear that the master could not be required to act on the very day of his arrival; or before
he had a reasonable opportunity to ascertain w hetherhe could hope to carry out his contract and
earn his freight; and that he should not be held responsible for a reasonable delay incident to an
effort to ascertain the w ishesof the freighter, and upon failure to secure prompt advice, to decide
for himself as to the course w hich he should adopt to secure the interests of the absent ow ner of
the property aboard the vessel.
The master is entitled to delay for such a period as may be reasonable under the circumstances,
before deciding on the course he w illadopt. He may claim a fair opportunity of carrying out a
contract, and earning the freight, w hether by repairing or transshipping. Should the repair of the
ship be undertaken, it must be proceeded w ith diligently; and if so done, the freighter willhave no
ground of complaint, although the consequent delay be a long one, unless, indeed, the cargo is
perishable, and likely to be injured by the delay. Where that is the case, it ought to be forwarded,
or sold, or given up, as the case may be, w ithout w aiting for repairs.
A shipow ner or shipmaster (if communication w ith the shipow neris impossible), w illbe allow ed a
reasonable time in w hich to decide w hat course he w illadopt in such cases as those under
discussion; time must be allow ed to him to ascertain the facts, and to balance the conflicting
interests involved, of shipowner, cargo owner, underwriter on ship and freight. But once the time
has elapsed, he is bound to act promptly according as he has elected either to repair, or abandon
the voyage, or tranship. If he delays, and ow ing to that delay a perishable cargo suffers damage,
the shipow nerwillbe liable for that damage; he cannot escape that obligation by pleading the
absence of definite instructions fromthe ow nersof the cargo or their underwriters, since he has
controlof the cargo and is entitled to elect." 26 (Emphasis supplied)
The critical question, therefore, is w hetheror not Captain Tayong had reasonable grounds to
believe that the safety of the vesseland the crew under his command or the possibility of
substantialdelay at sea required him to w ait for the delivery of the supplies needed for the repair
of the turbo-charger and the economizer before embarking on the long voyage fromSingapore to
South Africa.
In this connection, it is especially relevant to recallthat, according to the report of Mr. Robert Clark,
Technical Director of petitioner Sea Horse Ship Management, Inc., the Oceanic Mindoro had

5. 5
stopped in mid-ocean for six (6) hours and forty-five (45) minutes on its w ay to Singapore because
of its leaking economizer. 27 Equally relevant is the telex dated 2 August 1989 sent by Captain
Tayong to Sea Horse after Oceanic Mindoro had left Singapore and w as en route to South Africa.
In this telex, Captain Tayong explained his decision to Sea Horse in the follow ing terms:
"I CAPT R.D. TAYONG RE: UR PROBLEM IN SPORE (SINGAPORE) I EXPLAIN AGN TO YOU
THAT WE ARE INSECURITY/DANGER TO SAIL IN SPORE W/OUT HAVING SUPPLY OF
OXY/ACET. PLS UNDERSTAND HV PLENTY TO BE DONE REPAIR FM MAIN ENGINE LIKE
TURBO CHARGER PIPELINE, ECONOMIZER LEAKAGE N ETC WE COULD NOT FIX IT
W/OUT OXY/ACET ONBOARD. I AND MR. CLARK WE CONTACTED EACH OTHER BY PHONE
IN PAPAN N HE ADVSED US TO SAIL TO RBAY N WILL SUPPLY OXY/ACET UPON ARRIVAL
RBAY HE ALSOEXPLAINED TO MY C/E HOW TO FIND THE REMEDY W/OUT OXY/ACET
BUT C/E HE DISAGREED MR. CLARK IDEA, THAT IS WHY WE URG REQUEST[ED] YR KIND
OFFICE TO ARRANGE SUPPLY OXY/ACET BEFORE SAILING TO AVOID RISK/DANGER OR
DELAY AT SEA N WE TOOK PRECAUTION UR TRIP FOR 16 DAYS FM SPORE TO RBAY.
PLS. UNDERSTAND UR SITUATION." 28 (Emphasis partly in source and partly supplied)
Under all the circumstances of this case, we, along w ith the NLRC, are unable to hold that Captain
Tayong's decision (arrived at after consultation w ith the vessel's Chief Engineer) to w ait seven (7)
hours in Singapore for the delivery on board the Oceanic Mindoro of the requisitioned supplies
needed for the w elding-repair, on board the ship, of the turbo-charger and the economizer
equipment of the vessel, constituted merely arbitrary, capricious or grossly insubordinate behavior
on his part. In the view of the NLRC, that decision of Captain Tayong did not constitute a legal
basis for the summary dismissal of Captain Tayong and for termination of his contract w ith
petitioners prior to the expiration of the term thereof. We cannot hold this conclusion of the NLRC
to be a grave abuse of discretion amounting to an excess or loss of jurisdiction; indeed, w e share
that conclusion and make it our ow n.
Clearly, petitioners w ere angered at Captain Tayong's decision to w ait for delivery of the needed
supplies before sailing fromSingapore, and may have changed their estimate of their ability to
w orkwith him and of his capabilities as a ship captain. Assuming that to be petitioners'
management prerogative, that prerogative is nevertheless not to be exercised, in the case at bar,
at the cost of loss of Captain Tayong's rights under his contract w ith petitioner's and under
Philippine law .
ACCORDINGLY, petitioners having failed to show grave abuse of discretion amounting to loss or
excess of jurisdiction on the part of the NLRC in rendering its assailed decision, the Petition for
Certiorari is hereby DISMISSED, for lackof merit. Costs against petitioners.
SO ORDERED.
Bidin, Romero, Melo and Vitug, JJ., concur.
EN BANC
[G.R. No. L-23791. November 23, 1966.]
CHUNG TE, petitioner, vs. NG KIAN GIAB and THE HONORABLE DIRECTOR OF PATENTS,
respondents.
Generoso V. Jacinto for petitioner.
Federico Diaz for respondent.
SYLLABUS
1. PATENT OFFICE; FACTUAL FINDING CONCLUSIVE ON SUPREME COURT. — The
rule is that the findings of fact by the Director of Patents are conclusive on the Supreme Court,
provided they are supported by substantialevidence (Anchor Trading Co, vs. Director of Patents,
G.R. No. L-8004, May 30, 1956).
2. ID.; APPLICATION FOR TRADEMARK; FILLING DATES OF APPLICATION AS
PROOF OF THE DATE OF FIRST USE. — Where the testimonial evidence for both parties has
been entirely disregarded, and reliance is placed solely on the filing dates of the applications as
proof of the respective dates of first use, then the abandoned application filed by the junior party
applicant becomes cogent evidence to show that he first used the trademark as of the date of its
filing (Smith vs. Hall, 81 L. ed. 1049).
3. ID.; ID.; BURDEN OF PRESENTING CLEAR AND CONVINCING EVIDENCE OF
ADOPTION AND USE AT EARLIER DATE OF TRADEMARK. — Where an applicant for
registration of a trademark states under oath the date of his earliest use, and later on he w ishesto
carry backhis first date of use to an earlier date, he then takes on the greater burden of presenting
"clear and convincing evidence" of adoption and use as of that earlier date, (B. R.. Baker Co. vs.
Lebow Bros., 150 F. 2d. 580).
4. TRADEMARKS AND TRADENAMES; ESTABLISHMENT OF FIRST USE; DECISION
OF DIRECTOR OF PATENTS, EFFECT ON. — Where it appears that petitioner has established
prior use and adoption of questioned trademark for w hich reason he and not respondent Ng Giab
is entitled to registration thereof, the decision of the Director of Patents is reversed. Petitioner is
adjudged prior user of the trademark MARCA PIÑA and representation thereof, and its registration
in his name is hereby ordered.
D E C I S I O N
MAKALINTAL, J p:
Petitioner Chung Te interposed this appeal from the decision of the Director of Patents giving due
course to the application of respondent Ng Kian Giab for registration of the trademark "Marca
Piña" and representation thereof, and rejecting his ow n application for registration of the same
trademark and a similar representation.
Petitioner filed his application on November 25, 1958, alleging therein that since January 8, 1951
he had been using the trademark on undershirts (de hilo), T-shirts, and baby dresses. Because of
the confusing similarity betw een said trademarkand that applied for on July 16, 1957 by Ng Kian
Giab, an interference was declared as existing between the tw o applications. 1 Ng Kian Giab
stated in his application that he had been using the trademark on undershirts since December 6,
1955. At the hearing both parties presented testimonial as w ellas documentary evidence to prove
their respective claims of priority of adoption and use. Respondent Director of Patents, how ever,
declared that neither of them "satisfactorily adduced definite and conclusive proof of their asserted
dates of first use of the trademark "Marca Piña"; and relying on the rule that "in inter plates cases,
w hen neither of the parties have (has) satisfactorily proven the date of first use alleged in their
applications, such date shallbe confined to the filing date of the said application," 2 granted the
application of senior party applicant Ng Kian Giab. Junior party applicant Chung Te moved for
reconsideration of the decision, but the Director declined to reconsider, hence this appeal.
Chung Te avers that respondent Director erred (1) in not giving due w eight to his documentary
evidence w hich tends to prove that he has been using the trademark since 1951; (2) in not finding
that respondent Ng Kian Giab had admitted he first used the trademark only in 1955; (3) in

6. 6
disregarding petitioner's prior application No. 5544 and thus finding that respondent had filed his
application earlier then petitioner; and (4) in declaring respondent as the prior user w hen there is
no substantialevidence in support thereof.
The rule is that the findings of fact by the Director of Patents are conclusive on the Supreme Court
provided they are supported by substantialevidence. 3
Respondent Director disregarded all the evidence submitted by both parties and relied exclusively
on the filing dates of the applications in reaching his conclusion as to the dates of first use by the
senior party applicant and the junior party applicant, respectively. Even if the evidence for both
parties w ere entirely unreliable — and w e do not find it so — w e cannot completely disregard the
fact that on March 13, 1957 an application for the registration of the same trademark "MARCA
PIÑA. and Representation" w as filed by Chung Te (Application No. 5544), although it w as
subsequently considered abandoned by reason of his failure to answ er 4 the communication of
the Principal Trademark Examiner dated September 25, 1957. 5 To be sure, for the purpose of
determining w ho wasthe junior party applicant in the interference 6 the filing date of said
abandoned application may not properly be considered. But in the peculiar situation obtaining in
this case, w here the testimonial evidence for both parties has been entirely disregarded, and
reliance is placed solely on the filing of the applications as proof of the respective dates of first
use, then the abandoned application filed by the junior party applicant becomes cogent evidence
to show that he first used the trademarkas of the date of its filing. 7 Chung Te's petition in said
abandoned case w as duly submitted in evidence and forms part of the record. (Exhibits X, X-1, to
X-3).
The fact, how ever, is that there is other substantialevidence adduced by petitioner tending to
show that he first used the trademark in question as early as February 1952. For a long time
petitioner w as the purchasing agent for his father-in-law, who owned the Liong Bee Shirt Factory.
Afterwardshe decided to go into the same business for himself. His father-in-law, who theretofore
had been using the trademark "Marca Piña," transferred it to him. In January 1951 he started
laying the groundw orkfor his own factory. Jose Lim, 8 w homhe had engaged the previous year,
helped him w ith the preliminary paper w ork, registered the factory'sfirst books of accounts with the
Bureau of Internal Revenue, and w hen the business was officially launched in 1952, continued
therein as bookkeeper. In January 1951 petitioner started producing undershirts labeled "Marca
Piña". How ever, he sold them under the firm name of his father-in-law because he had yet no
license in his ow n name.
Julieta Francisco testified that she started w orking with petitioner in 1951. Her job w as to sew
skippers and "sandos" and to affix the trademark"Marca Piña" (Exhibit B-1) and "Pineapple" on
the nape of the neck of each finished undershirt. The trademark, (Exhibit B-2), she added, as w ell
as the legend indicating the size of the undershirt (Exhibit B-3) w ere pressed on the low er portion
of the garment (Exhibits E and E-1). The undershirts were then placed inside cellophane w rappers
(Exhibit C), put together in half dozens by means of paper labels (Exhibits F and F-1), and then
placed on box containers (Exhibit D). All these exhibits (Exhibits C, F, F-1 and D) bear the
trademark in question.
On November 20, 1951 the factory became a member of the Philippine Chinese Underw ear
Manufacturers Association (certificate of membership, Exhibit N). According to Juanito Vitug,
secretary of the association, before a firmw as admitted as member it w as required to informthe
association of the trademark it w as using to identify its products; and he found that among the files
of the association the sample labels "Marca Piña" (Exhibit O) submitted by petitioner w hen he
applied for membership w ere included.
On January 31, 1952 the City of Manila granted petitioner a permit to operate a shirt factory
(Exhibit T). On February 1, 1952 he paid the corresponding businesstaxes (Exhibits U, U-1 to U-
3). On February 5, 1952 the Bureau of Commerce issued to him a certificate of registration as
private merchant (Exhibit V) and tw o days later a certificate of registration of the business name
"Liong Sun Shirt Factory" (Exhibit W). It appears fromhis application that he had commenced
business on February 1, 1952.
He obtained the labels he w as using fromthe Asiatic Press. On February 7, 1952 he bought 5000
pieces of "Marca Piña" box labels (Exhibit Q). On December 29, 1952 he purchased 100,000
"Marca Piña" shirt labels and 10,000 "Marca Piña" cover labels (Exhibit Q-1). And on July 21, 1954
he bought 100,000 sheets of "Pineapple Brand" shirt labels (Exhibit Q-2). The box labels w ere
delivered by him to the Avenue Paper Box Factory, w hich used themin covering the cardboard
boxes (a sample is Exhibit D) w hich petitioner had ordered fromit (Exhibit S, dated March 17,
1952; Exhibits S-1 to S-7). Petitioner also ordered boxes fromthe De Luxe Cardboard Box from
Factory (Exhibits AA and AA-1). Co In, manager of the Asiatic Printing Press, affirmed that
petitioner had purchased "Marca Piña" labels fromhim, w hile Tan Dy, manager of the Avenue
Paper Box Factory, attested that he used the "Marca Pina" box covers in covering the boxes w hich
petitioner had ordered fromhim. 9
On November 19, 1952 petitioner ordered fromthe Victory Printing Company 500 calendars
(Exhibit Z), one of w hich (Exhibit Z-1) w assubmitted in evidence. Written thereon are the w ords:
"LIONG SUN Shirt Factory, Manufacturer of the w ellknow n brand 'Pineapple and Piña' the best
cotton and De Hilo Skippers."
Petitioner first sold skippers under his firm name "Liong Sun Shirt Factory" on February 1, 1952 to
Tay Liong Kian (Receipt No. 1, Exhibit Z) and Yap Suy Yu (Receipt No. 2, Exhibit R). Both of these
customers regularly bought skippers and undershirts by the dozens as shown by receipt dated
fromthat time up to July 14, 1952 (Exhibits L-1 to L-9, R-1 to R-10). Although the receipts do not
state that the merchandise purchased bore the trademark "Marca Piña", both customers testified
that w hat they bought had that label. At the time of the hearing Tay Liong Kian 10 had a store in
Yangco Market. On the other hand, at the time he bought undershirts, Yap Suy Yu had a store at
Tabora Market.
According to the statement (Exhibit G-1) attached to the application (Exhibit G) of respondent Ng
Kian Giab he first used the trademark on December 6, 1955. At the hearing he sought to prove
that his family had been using it since 1946. Where an applicant for registration of a trademark
states under oath the date of his earliest use, and later on he w ishes to carrybackhis first date of
use to an earlier date he then takes on the greater burden of presenting "clear and convincing
evidence" of adoption and use as of that earlier date. 11
To prove such earlier date respondent relies purely on testimonial evidence consisting of the
declarations of his father Ng Kian Soy, his brother Ng Kian Kee, their supposed seamstress
Genoveva Santos, and tw o customersDiego Magpantay and Cleto Sarmiento. The substance of
their testimony is as follow s: since 1946 Ng Kian Soy operated a generalmerchandise store, the
Sin Kian Ning Store, 12 in Batangas, Batangas, w here he sold polo shirts bearing the trademark.
After the fire in 1953 the family rebuilt their store and expanded the business by including
undershirt w ith the same trademark. The name of the store w as changedto Hongkong Bazar.
From 1946 to 1955 they merely bought ready made polo shirts and undershirts to each of w hich
they then sew ed the label"Marca Piña" before resale to the public. In 1955 the father transferred
the business to Ng Kian Kee, w ho put up a factory — the Hongkong T-Shirt Manufacturer — and
started producing undershirts bearing the trademark. When he decided to continue his studies in
1957, he, in turn, transferred the business to respondent.
Such testimonial evidence falls short of the kind of proof required of respondent. It is doubtfulthat
respondent's father would pay Genoveva Santos as high as P0.02 per label (w hich did not even
bear his name) on polo shirts w hich he had purchased ready-made, and w hich he could very well

7. 7
have sold w ithout any label. Santos testified that the stamped label used w as only "Marca Piña"
w ithout any representation or name of the ow ner (Exhibit 1-D), w hile Magpantay said there w as
the representation of a pineapple on the labels used by respondent's family. To explain the
discrepancy, Sarmiento, w ho testified later, declared that there w ere ,three kinds of labels used
(Exhibits 1-A, 1-B and 1-C), tw o of w hich bore the representation of a pineapple, and these w ere
attached to goods of better quality.
While Ng Kian Kee declared that they rebuilt their store severalmonths after the fire in 1953,
Sarmiento, w ho wassupposed to be a regular customer, said they had no store in 1954, and they
resumed selling garments only in 1955. Santos declared that from 1954 up to the time the
business moved to Manila (in 1958) her job w as to sew labels on ready made polo shirts. In
answ erto a leading question, she added "undershirts". But in 1955 the factory was already in
operation and producing undershirts to w hich labels were attached in the process of production,
thus rendering her services unnecessary.
The documentary evidence show clearlythat respondent's use began only in 1955. The business
tax receipt in the name of Ng Kian Kee is dated October 18, 1955 (Exhibit 6). In his application for
original registration of the business name "Hongkong T-Shirt Manufacturer," Ng Kian Kee stated
that his business w asthat of Manufacturing T-shirts, and that as of that date, October 25, 1955,
the same w as not yet in operation. It seems that it actually started operations on December 3,
1955, the date of its Receipt No. 1 (Exhibit 4-A). It sold its first half dozen undershirts bearing the
trademark on December 5, 1955 (Receipt No. 7, Exhibit 4-G). Notew orthy is the fact that in his
statement attached to the application respondent alleged that he first used the trademark "on or
about December 6, 1955," w hich statement appears to be the truth.
From all the foregoing w e are convinced that petitioner has established prior use and adoption of
the questioned trademark, for w hich reason he and not respondent Ng Giab is the one entitled to
registration thereof.
WHEREFORE, the decision of the Director of Patents is reversed. Petitioner is adjudged prior user
of the trademark MARCA PIÑA and representation thereof, and its registration in his name is
hereby ordered; and the resolution of this Court dated December 24, 1965, enjoining petitioner to
comply w ith the decision appealed fromis set aside. Costs against respondent Ng Kian Giab.
Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Bengzon, J.P., Zaldivar, Sanchez and
Castro, JJ., concur.
Footnotes
1. An interference is a proceeding instituted for the purpose of determining the question of
priority of adoption and use of a trademark, tradename, or service markbetw een two or more
parties claiming ow nership of the same or substantially similar trademark, tradename, or service
mark.
Whenever application is made for the registration of a trademark, tradename
or service mark w hich so resembles a mark or tradename previously registered by another, or for
the registration of w hich another had previously made application, as to be likely w hen applied to
the goods or w hen used in connection w ith the business or servicesof the applicant to cause
confusion or mistake or to deceive purchasers, the director may declare that an interference
exists. Section 10-A, Republic Act No. 166, as amended.
An interference willnot be declared betw een two applications or between an
application and a registration, unless the junior party alleges in his application a date of use prior
to the filing date of the senior party. Rule 180, Revised Rules of Practice before the Philippines
Patent Office in Trademark Cases.
2. In all inter partes proceedings, the allegations of date of use in the application for
registration of the applicant or of the registrant cannot be used as evidence in behalf of the party
making the same. In case no testimony is taken as to the date of use, the party w illbe limited to
the filing date of the application as the date of his first use. Rule 73, id.
3. A finding of the Director of Patents, in connection w ith an application to cancela
registered trademark, that the registrant w asnot the first user and is therefore not the ow ner of the
trademark, and that the petitioner for cancellation w as the first user and is the rightfulow ner of the
trademark is a finding of fact w hich cannot be overturned upon review unlessit is show n that the
Director overlooked some matter of substance in evaluating the evidence. Anchor Trading Co. vs.
Director of Patents, May 30, 1956, L-8004.
4. The applicant has three months, from the date of the mailing of any action of the
Principal Examiner, to respond thereto. (Rule 93, id.)
If an applicant fails to respond or to respond completely w ithin three months
after the date an action of the Principal Examiner w as mailed, the application shall be deemed to
have been abandoned. (Rule 97, id.)
5. In his communication, the Principal Trademark Examiner stated that examination ex
parte of the application disclosed the follow ing defects: (1) the w ord "Marca" being commonly used
in the trade to indicate mark, must be duly disclaimed in the "Statement"; (2) the application w ould
be declared in interference with the application of Ng Kian Giab (Serial No. 4765) filed on July 16,
1957; and (3) for verification purposes of trademarkuse, the applicant or his duly authorized
representatives wasrequired to submit a sample of the goods bearing "Marca Piña and
Representation," w ithin ten days fromreceipt of the communication.
6. The party w hose application or registration involved in the interference has the latest
filing date is the junior party and w illbe regarded as having the burden of proof. (Rule 184, id.)
7. While the Patent Office file on the abandoned claim is not relied on as a prior
publication, it is competent and cogent evidence to determine the nature and date of the invention
w hich the inventor claims to have embodied in w orking form. Smith vs. Hall, 81 L. ed. 1049.
8. Actually petitioner engaged the services of Limand his nephew Jose Tantioco, although
he paid the salary of only one employee. The tw o alternated in keeping the books of the factory.
9. The Director found that the mere purchase of labels and boxes. w ithout more, cannot be
regarded as trademark use. Such purchase of labels together w ith proof of sale of garments
produced by petitioner, reasonably gives rise to the presumption of the use of the labels on the
products sold.
10. Respondent Director did not believe this w itness on the ground that since he w as only
23 years old at the time he testified on August 7, 1962, then he w as only 10 years old in 1949
w hen he first became a merchant, and he w as only 13 years old in 1952 w hen he started
purchasing undershirts frompetitioner, w hich factsnaturally render his testimony suspect. It is
apparent, how ever, that the stenographer who tookdow n his testimony had misheard his age
w hen he stated it. He w as 33 years old w hen he testified. He could not have been less than 18
years old w hen he made the purchases in 1952, because some of the receipts show that he
already had a residence certificate then. The same thing happened w ith respect to Julieta
Francisco, w ho, according to the stenographic notes was only 24 years old w hen she testified on

8. 8
June 16, 1961, thus leading respondent Ng Kian Giab to brand her testimony as unw orthy of
credence because she wasonly 14 years old w hen she first started working for petitioner in 1951.
During the course of her testimony she, how ever, clearlystated that she w asthen almost 34 years
old.
11. Where one has under oath stated his earliest use and then amends his oath and by
proof attempts to show an earlier date, he is then under a heavy burden, and his proof must be
"clear and convincing." B.R. Baker Co. v. Lebow Bros. 150 F. 2d 580.
Mr. McKay, w ho had been a member of the firmfor many years, verified the
application for registration No. 168, 074, w hich wasfiled in the Patent Office on January 24, 1922,
by Hall, Hartw ell& Co., and in the application stated that the mark had been used since about
October 1, 1921. It w illbe seen that this application w as made w ithin a few months of the date set
out in the application as the first date of use, and w as made by a member of the firm w ho certainly
should have know ledge produced of the date of first use far greater than any of the w itnesses
produced. When such as affidavit has been made at about the time of the event, a greater burden
of proof should be, and is required in order to carry the date of use back to a prior date. Elder Mfg.
Co. vs. International Shoe Co. 194 F. 2d 114.
12. Respondent presented a certificate to the effect that on April15, 1948 Ng Kian Soy w as
granted a municipal license for his general merchandise store (Exhibit 16), w hich certificatedoes
not in any w ay prove use of the trademarkas of the time. Note also that at the hearing Ng Kian
Soy emphasized that he sold only polo shirts in his store.
FIRST DIVISION
[G.R. No. 115106. March 15, 1996.]
ROBERTO L. DEL ROSARIO, petitioner, vs. COURT OF APPEALS AND JANITO
CORPORATION, respondents.
Quisumbing Torres & Evangelista for petitioner.
J.P. Villanueva & Associatesfor private respondent.
SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; INJUNCTION; ITS NATURE. —
Injunction is a preservative remedy for the protection of substantive rights or interests. It is not a
cause of action in itself but merely a provisionalremedy, an adjunct to a main suit. The controlling
reason for the existence of the judicial pow er to issue the w rit is that the court may thereby prevent
a threatened or continuous irremediable injury to some of the parties before their claims can be
thoroughly investigated and advisedly adjudicated. It is to be resorted to only w hen there is a
pressing necessity to avoid injurious consequences which cannot be remedied under any standard
of compensation. The application of the w rit rests upon an alleged existence for an emergency or
of a specialreason for such an order before the case can be regularly heard, and the essential
conditions for granting such temporary injunctive relief are that the complaint alleges facts w hich
appear to be sufficient to constitute a cause of action for injunction and that on the entire show ing
fromboth sides, it appears, in view of allthe circumstances, that the injunction is reasonably
necessary to protect the legalrights of plaintiff pending the litigation.
2. ID.; ID.; ID.; WHEN INJUNCTION MAY BE GRANTED; REQUISITES FOR ITS
ISSUANCE. — A preliminary injunction may be granted at any time after the commencement of
the action and before judgment w hen it is established that the defendant is doing, threatens, or is
about to do, or is procuring or suffering to be done, some act probably in violation of the plaintiff's
rights. Thus, there are only tw o requisites to be satisfied if an injunction is to issue, namely, the
existence of the right to be protected, and that the facts against which the injunction is to be
directed are violative of said right. For the w rit to issue the interest of petitioner in the controversy
or the right he seeks to be protected must be a present right, a legal right w hich must be show n to
be clear and positive.
3. COMMERCIAL LAW; THE PATENT LAW; WHEN A UTILITY MODEL IS NOT
CONSIDERED "NEW" UNDER SECTION 55 OF THE PATENT LAW. — Under Sec. 55 of The
Patent Law a utility model shallnot be considered "new "if before the application for a patent it has
been publicly know n or publicly used in this country or has been described in a printed publication
or publications circulated w ithin the country, or if it is substantially similar to any other utility model
so know n, used or described w ithin the country.
4. ID.; ID.; WHEN ANY NEW MODEL OF IMPLEMENTS OR TOOLS IS ENTITLED TO A
PATENT FOR UTILITY MODEL. — The Patent Law expressly acknowledgesthat any new model
of implements or tools of any industrial product even if not possessed of the quality of invention but
w hich is of practicalutility is entitled to a patent for utility model.
5. ID.; ID.; RIGHTS OF A PATENTEE UNDER SECTION 37 OF THE PATENT LAW. —
The rights of petitioner as a patentee have been sufficientlyestablished, contraryto the findings
and conclusions of respondent Court of Appeals. Consequently, under Sec. 37 of The Patent Law ,
petitioner as a patentee shallhave the exclusive right to make, use and sell the patented machine,
article or product for the purpose of industry or commerce, throughout the territory of the
Philippines for the term of the patent, and such making, using or selling by any person w ithout
authorization of the patentee constitutes infringement of his patent.
6. ID.; ID.; WHAT CONSTITUTES AN INFRINGEMENT OF A PATENT. — It is elementary
that a patent may be infringed w here the essentialor substantialfeatures of the patented invention
are taken or appropriated, or the device, machine or other subject matter alleged to infringe is
substantially identical w ith the patent invention. In order to infringe a patent, a machine or device
must performthe same function, or accomplish the same result by identical or substantially
identical means and the principle or mode of operation must be substantially the same.
7. ID.; PETITIONER HAD SUFFICIENTLY ESTABLISHED A PRIMA FACIE PROOF OF
VIOLATION OF HIS RIGHTS AS PATENTEE. — It may be noted that respondent corporation
failed to present before the trial court a clear, competent and reliable comparison betw een its own
model and that of petitioner, and disregarded completely petitioner's Utility Model No. 6237 w hich
improved on his first patented model. Notw ithstanding the differencescited by respondent
corporation, it did not refute and disprove the allegations of petitioner before the trial court that: (a)
both are used by a singer to sing and amplify his voice; (b) both are used to sing w ith a minus-one
or multiplex tapes, or that both are used to play minus-one or standard cassette tapes forsinging
or for listening to; (c) both are used to sing w ith a minus-one tape and multiplex tape and to record
the singing and the accompaniment; (d) both are used to sing w ith live accompaniment and to
record the same; (e) both are used to enhance the voice of the singer using echo effect, treble,

9. 9
bass and other controls; (f) both are equipped w ith cassette tape decks which are installed w ith
one being used for playbackand the other, for recording the singer and the accompaniment, and
both may also be used to record a speaker's voice or instrumental playing, like the guitar and other
instruments, (g) both are encased in box-like cabinets; and (h) both can be used w ith one or more
microphones. Clearly, therefore, both petitioner's and respondent's models involve substantially
the same modes of operation and produce substantially the same if not identical results w hen
used. In view thereof, we find that petitioner had established before the trial court prima facie proof
of violation of his rights as patentee to justify the issuance of a w rit of preliminary injunction in his
favor during the pendency of the main suit for damages resulting from the alleged infringement.
D E C I S I O N
BELLOSILLO, J p:
Roberto del Rosario petitions this Court to review the decision of the Court of Appeals 1 w hich set
aside the order of the Regional Trial Court of Makati granting a w rit of preliminary injunction in his
favor.
The antecedents: On 18 January 1993 petitioner filed a complaint for patent infringement against
private respondent Janito Corporation. 2 Roberto L. del Rosario alleged that he w as a patentee of
an audio equipment and improved audio equipment commonly know n as the sing-along systemor
karaoke under Letters Patent No. UM-5269 dated 2 June 1983 as w ellas Letters Patent No. UM-
6237 dated 14 November 1986 issued by the Director of Patents. The effectivity of both Letters
Patents w as for five (5) yearsand w asextended foranother five (5) yearsstarting 2 June 1988
and 14 November 1991, respectively. He described his sing-along systemas a handy multi-
purpose compact machine w hich incorporatesan amplifier speaker, one or tw o tape mechanisms,
optional tuner or radio and microphone mixer w ith features to enhance one's voice, such as the
echo or reverb to stimulate an opera hall or a studio sound, w ith the w hole systemenclosed in one
cabinet casing.
In the early part of 1990 petitioner learned that private respondent w asmanufacturing a sing-along
systembearing the trademark miyata or miyata karaoke substantially similar if not identical to the
sing-along systemcovered by the patents issued in his favor. Thus he sought fromthe trial court
the issuance of a w rit of preliminary injunction to enjoin private respondent, its officersand
everybody elsewhere acting on its behalf, fromusing, selling and advertising the miyata or miyata
karaoke brand, the injunction to be made permanent after trial, and praying for damages,
attorney's fees and costs of suit.
On 5 February 1993 the trial court temporarily restrained private respondent frommanufacturing,
using and/or selling and advertising the miyata sing-along systemor any sing-along system
substantially identical to the sing-along systempatented by petitioner until further orders.
On 24 February 1993 the trial court issued a w rit of preliminary injunction upon a bond on the
basis of its finding that petitioner w as a holder of a utility model patent for a sing-along systemand
that w ithout his approvaland consent private respondent was admittedly manufacturing and selling
its ow n sing-along systemunder the brand name miyata w hich was substantially similar to the
patented utility model 3 of petitioner.
Private respondent assailed the order of 24 February 1993 directing the issuance of the w rit by
w ay of a petition for certiorariw ith prayerfor the issuanceof a w rit of preliminary injunction and a
temporary restraining order before respondent Court of Appeals.
On 15 November 1993 respondent appellate court granted the w rit and set aside the questioned
order of the trial court. It expressed the view that there was no infringement of the patents of
petitioner by the fact alone that private respondent had manufactured the miyata karaoke or audio
system, and that the karaoke systemw as a universalproduct manufactured, advertised and
marketed in most countries of the w orld long before the patents w ereissued to petitioner. The
motion to reconsider the grant of the w rit w asdenied; 4 hence, the instant petition for review .
This petition alleges that: (a) it w as improper for the Court of Appeals to consider questions of fact
in a certiorariproceeding; (b) the Court of Appeals erred in taking judicial notice of private
respondent's self-serving presentation of facts; (c) the Court of Appeals erred in disregarding the
findings of fact of the trial court; and, (d) there w as no basis for the Court of Appeals to grant a w rit
of preliminary injunction in favor of private respondent. 5
Petitioner argues that in a certiorariproceeding, questions of fact are not generally permitted the
inquiry being limited essentially to w hether the tribunalhas acted w ithout or in excess of
jurisdiction or w ith grave abuse of discretion; that respondent court should not have disturbed but
respected instead the factualfindings of the trial court; that the movant has a clear legal right to be
protected and that there is a violation of such right by private respondent. Thus, petitioner herein
claims, he has satisfied the legal requisites to justify the order of the trial court directing the
issuance of the w rit of injunction. On the other hand, in the absence of a patent to justify the
manufacture and sale by private respondent of sing-along systems, it is not entitled to the
injunctive relief granted by respondent appellate court.
The crux of the controversybefore us hinges on w hether respondent Court of Appeals erred in
finding the trial court to have committed grave abuse of discretion in enjoining private respondent
frommanufacturing, selling and advertising the miyata karaoke brand sing-along systemfor being
substantially similar if not identical to the audio equipment covered by letters patent issued to
petitioner.
Injunction is a preservative remedy for the protection of substantive rights or interests. It is not a
cause of action in itself but merely a provisionalremedy, an adjunct to a main suit. The controlling
reason for the existence of the judicial pow er to issue the w rit is that the court may thereby prevent
a threatened or continuous irremediable injury to some of the parties before their claims can be
thoroughly investigated and advisedly adjudicated. It is to be resorted to only w hen there is a
pressing necessity to avoid injurious consequences which cannot be remedied under any standard
of compensation. The application of the w rit rests upon an alleged existence of an emergency or of
a specialreason for such an order before the case can be regularly heard, and the essential
conditions for granting such temporary injunctive relief are that the complaint alleges facts w hich
appear to be sufficient to constitute a cause of action for injunction and that on the entire show ing
fromboth sides, it appears, in view of allthe circumstances, that the injunction is reasonably
necessary to protect the legalrights of plaintiff pending the litigation. 6
A preliminary injunction may be granted at any time after the commencement of the action and
before judgment w hen it is established that the defendant is doing, threatens, or is about to do, or
is procuring or suffering to be done, some act probably in violation of the plaintiff's rights. Thus,
there are only tw o requisites to be satisfied if an injunction is to issue, namely, the existence of the
right to be protected, and that the facts against w hich the injunction is to be directed are violative
of said right. 7
For the w rit to issue the interest of petitioner in the controversy or the right he seeks to be
protected must be a present right, a legal right w hich must be show n to be clear and positive.
In this regard Sec. 55 of R.A. 165 as amended, know n as The Patent Law , provides —
Sec. 55. Design patents and patents for utility models. — (a) Any new ,original, and ornamental
design for an article of manufacture and (b) new model of implements or tools or of any industrial

10. 10
product or of part of the same, w hich does not possessthe quality of invention but w hich is of
practicalutility by reason of its form, configuration, construction or composition, may be protected
by the author thereof, the former by a patent for a design and the latter by a patent for a utility
model, in the same manner and subject to the same provisions and requirements as relate to
patents for inventions insofar as they are applicable, except as otherw iseherein provide . . .
Admittedly, petitioner is a holder of Letters Patent No. UM-5629 dated 2 June 1985 issued for a
term of five (5) years fromthe grant of a Utility Model herein described —
The construction of an audio equipment comprising a substantially cubicalcasing having a w indow
at its rear and upper corner fitted w ith a slightly inclined controlpanel, said cubical(casing) having
a verticalpartition w alltherein defining a rear compartment and a front compartment, and said
front compartment serving as a speaker baffle; a transistorized amplifier circuit having an echo
section and w rithed in at least the printed circuit boards placed inside said rear compartment of
said casing and attached to said verticalpartition w all, said transistorized amplifier circuit capable
of being operated fromoutside, through various controls mounted on said controlpanel of such
casing; a loud speaker fitted inside said front compartment of said casing and connected to the
output of the main audio amplifier section of said transistorized amplifier circuit and a tape player
mounted on the top w allof said casing and said tape player being connected in conventional
manner to said transistorized amplifier circuit. 8
Again, on 14 November 1986 petitioner w as granted LettersPatent No. UM-6237 for a term of five
(5) years fromthe grant of a Utility Model described as —
In an audio equipment consisting of a first cubicalcasing having an opening at its rear and upper
rear portion and a partition therein forming a rear compartment and a front compartment serving
as a loud speaker baffle, a controlpanel formed by verticaland horizontalsections, a
transistorized amplifier circuit w ired in at least tw o printed circuit boards attached at the backof
said controlpanel, a first loud speaker fitted inside said first compartment of such first casing and
connected to the output of said transistorized amplifier circuit; the improvement w herein said
controlpanel being removably fitted to said first cubicalcasing and further comprises a set of tape
recorder and tape player mounted on the verticalsection of said controlpanel and said recorder
and player are likew ise connected to said transistorized amplifier circuit; a second cubicalcasing
having an opening at its rear, said second cubicalcasing having (being ?) provided w ith a vertical
partition therein defining a rear compartment and a front compartment, said rear compartment
being provided w ith a door and enclosing therein a set of tape racks and said front compartment
serving as loud speaker baffle, said second cubicalcasing being adapted to said first cubical
casing so that said first and second casings are secured together in compact and portable form;
and a second loud speaker fitted inside said front compartment of said casing and connected to
the output of said amplifier circuit. 9
The terms of both Letters Patents w ere extended for another five (5) years each, the first
beginning 2 June 1988 and the second, 14 November 1991.
The Patent Law expressly acknowledgesthat any new modelof implements or tools of any
industrial product even if not possessed of the quality of invention but w hich is of practicalutility is
entitled to a patent for utility model. 10 Here, there is no dispute that the letters patent issued to
petitioner are for utility models of audio equipment.
In issuing, reissuing or w ithholding patents and extensions thereof, the Director of Patents
determines w hether the patent is new and w hetherthe machine or device is the proper subject of
patent. In passing on an application, the Director decides not only questions of law but also
questions of fact, i.e. w hether there has been a prior public use or sale of the article sought to be
patented. 11 Where petitioner introduces the patent in evidence, if it is in due form, it affords a
prima facie presumption of its correctness and validity. The decision of the Director of Patents in
granting the patent is alw ayspresumed to be correct, and the burden then shifts to respondent to
overcome this presumption by competent evidence. 12
Under Sec. 55 of The Patent Law a utility model shall not be considered "new" if before the
application for a patent it has been publicly know n or publicly used in this country or has been
described in a printed publication or publications circulated w ithin the country, or if it is
substantially similar to any other utility model so know n, used or described w ithin the country.
Respondent corporation failed to present before the trial court competent evidence that the utility
models covered by the Letters Patents issued to petitioner w ere not new. This is evident from the
testimony of Janito Cua, President of respondent Janito Corporation, during the hearing on the
issuance of the injunction, to w it —
Q. Mr. Cua, you testified that there are (sic) so many other companies w hich already have
(sic) the sing-along systemeven before the patent application of Mr. del Rosario and as a matter
of fact you mentioned Sanyo, Sony and Sharp, is that right?
A. Musicmate and Asahi.
Q. Now do you recall that your law yerfiled with this Honorable Court an Urgent Motion to
Lift Temporary Restraining Order of this Honorable Court. I am sure you w ere the one w ho
provided him w ith the information about the many other companies selling the sing-along system,
is that right? These 18 w hich you enumerated here.
A. More than that because . . .
Q. Now you w illagree w ith me that in your statement Sharp you put the date as 1985
agreed?
A. No.
Q. You mean your law yerwaswrong when he put the w ord Sharp 1985?
A. Maybe I informed him already.
xxx xxx xxx
Q. You mean your law yerwaswrong in alleging to this Court that Sharp manufactured and
sold (in) 1985 as found in the Urgent Motion?
A. Since it is urgent it is more or less.
Q. The same also w ith Sanyo 1985 w hich you put, more or less?
A. Sanyo is w rong.
Q. It is not 1985?
A. Sanyo is 1979 I think.
Q. So this is also w rong. Panasonic 1986 is also w rong?
A. Panasonic I think.

11. 11
Q. So you don't think this is also correct.
A. The date?
Q. So you don't think also that this allegation here that they manufacture in 1986 is correct?
A. Wrong. Earlier.
Q. National by Precision Electronic 1986 this is also w rong?
A. I think earlier.
Q. So that means all your allegations here from 2 to 5 are w rong? OK. By Philipps
Philippines 1986, this is also correct or w rong?
A. More or less. We said more or less.
Q. Nakabutshi by AsahiElectronics that is also w rong?
A. No, that is 1979.
Q. Electone by DICO 1989 is this correct or w rong?
A. Correct. More or less.
Q. Skylers 1985 is that correct or w rong?
A. It is more or less because it is urgent. We don't have time to exact the date.
Q. Musicmate of G.A. Yupangco 1981 this is more or less? You are not also sure?
A. 95% sure.
Q. Now you are sure 1981.
A. This one because . . .
Q. Mr. Witness so you are now trying to tell this Honorable Court that all your allegations
here of the dates in this Urgent Motion except for Musicmate w hich you are only 95% sure they
are all w rong or they are also more or less or not sure, is that right?
A. More or less.
Q. Now do you have any proof, any advertisement, anything in w riting that w ould show that
all these instruments are in the market, do you have it?
A. No, I don't have it because . . .
Q. No. I am satisfied w ith your answer. Now Mr. Witness, you don't also have a proof that
Akai instrument that you said w as also in the market before 1982? You don't have any w ritten
proof, any advertisement?
A. I have the product.
Q. But you have not brought the product in (sic) this Honorable Court, right?
A. No. 13
As may be gleaned herein, the rights of petitioner as a patentee have been sufficiently established,
contrary to the findings and conclusions of respondent Court of Appeals. Consequently, under
Sec. 37 of The Patent Law , petitioner as a patentee shall have the exclusive right to make, use
and sell the patented machine, article or product for the purpose of industry or commerce,
throughout the territory of the Philippines for the term of the patent, and such making, using or
selling by any person w ithout authorization of the patentee constitutes infringement of his patent.
Petitioner established before the trial court that respondent Janito Corporation w as manufacturing
a similar sing-along systembearing the trademark miyata w hich infringed his patented models. He
also alleged that both his ow n patented audio equipment and respondent's sing-along system
w ere constructed in a casing w ith a controlpanel, the casing having a verticalpartition w all
defining the rear compartment from the front compartment, w ith the front compartment consisting
of a loud speaker baffle, both containing a transistorized amplifier circuit capable of being operated
fromoutside through various controls mounted on the controlpanel, and that both had loud
speakers fitted inside the front compartment of the casing and connected to the output of the main
audio amplifier section both having a tape recorder and a tape player mounted on the control
panel w ith the tape recorder and tape player being both connected to the transistorized amplifier
circuit. 14
Respondent Janito Corporation denied that there w as any violation of petitioner's patent rights,
and cited the differencesbetween its miyata equipment and petitioner's audio equipment. But, it
must be emphasized, respondent only confined its comparison to the first model, Utility Model No.
5269, and completely disregarded Utility Model No. 6237 w hich improved on the first. As described
by respondent corporation, 15 these differencesare —
First. Under Utility Model 5269, the unit is a substantially cubicalcasing w ith a w indow at its rear
and upper corner fitted w ith slightly inclined controlpanel, w hile the miyata equipment is a
substantially rectangular casing w ith panelvertically positioned.
Second. Under Utility Model 5269, the cubicalcasing has a verticalpartition w alldefining a rear
compartment and a front compartment serving as a speaker baffle, w hile the miyata equipment
has no rear compartment and front compartment in its rectangular casing; it has only a front
compartment horizontally divided into 3 compartments like a 3-storey building, the 1st
compartment being a kit, the 2nd also the speaker, and the 3rd are kits.
Third. Under Utility Model No. 5269, a transistorized amplifier circuit w ith an echo section wired in
at least 2 printed circuit boards is placed inside the rear compartment of the casing and attached
to the verticalpartition w all, the printed circuit board having 1 amplifier and 1 echo, w hile in the
miyata equipment the amplifier is mainly IC (Integrated Circuit) — pow ered with 8 printed circuit
boards almost all of w hich are IC controlled, w ith 1 amplifier w ith pow ersupply, 1 main tuner, 1
equalizer (3-band), 1 IC controlled volume control, 1 echo IC, 1 tape pream, 1 instrument and 1
w ireless microphone.
Fourth. Under Utility Model 5269, 4 printed circuits are placed inside the compartment of its casing
attached to the verticalpartition w all, w hile in the miyata, the 7 printed circuit boards (PCB) are
attached to the front paneland 1 attached to the horizontaldivider.

12. 12
Fifth. Under Utility Model 5269, there are various controls mounted on the controlpanel of the
casing, w hile in miyata, the various controls are all separated fromthe printed circuit boards and
the various controls are all attached thereto.
Sixth. Under Utility Model 5269, a loud speaker fitted inside the front compartment of the casing is
connected to the output of the main audio amplifier section of the transistorized amplifier circuit,
w hile in miyata, there is no other w ay but to use 2 loud speakers connected to the amplifier.
Seventh. Under Utility Model 5269, a tape player is mounted on the top w allof the casing, w hile in
miyata, 2 tape players are used mounted side by side at the front.
It is elementary that a patent may be infringed w here the essentialor substantialfeaturesof the
patented invention are taken or appropriated, or the device, machine or other subject matter
alleged to infringe is substantially identical w ith the patented invention. In order to infringe a patent,
a machine or device must performthe same function, or accomplish the same result by identical or
substantially identical means and the principle or mode of operation must be substantially the
same. 16
It may be noted that respondent corporation failed to present before the trial court a clear,
competent and reliable comparison betw een its ow n modeland that of petitioner, and disregarded
completely petitioner's Utility Model No. 6237 w hich improved on his first patented model.
Notw ithstanding the differencescited by respondent corporation, it did not refute and disprove the
allegations of petitioner before the trial court that: (a) both are used by a singer to sing and amplify
his voice; (b) both are used to sing w ith a minus-one or multiplex tapes, or that both are used to
play minus-one or standard cassette tapes for singing or for listening to; (c) both are used to sing
w ith a minus-one tape and multiplex tape and to record the singing and the accompaniment; (d)
both are used to sing w ith live accompaniment and to record the same; (e) both are used to
enhance the voice of the singer using echo effect, treble, bass and other controls; (g) both are
equipped w ith cassette tape decks which are installed w ith one being used for playbackand the
other, for recording the singer and the accompaniment, and both may also be used to record a
speaker's voice or instrumental playing, like the guitar and other instruments; (h) both are encased
in a box-like cabinets; and (i) both can be used w ith one or more microphones. 17
Clearly, therefore, both petitioner's and respondent's models involve substantially the same modes
of operation and produce substantially the same if not identical results w hen used.
In view thereof, we find that petitioner had established before the trial court prima facie proof of
violation of his rights as patentee to justify the issuance of a w rit of preliminary injunction in his
favor during the pendency of the main suit for damages resulting from the alleged infringement.
WHEREFORE, the Decision of the Court of Appeals dated 15 November 1993 is REVERSED and
SET ASIDE and the Order of the trial court dated 24 February 1993 granting petitioner the w rit of
injunction is REINSTATED.
The trial court is directed to continue w ith the proceedings on the main action pending before it in
order to resolve w ith dispatch the issues therein presented.
SO ORDERED.
Padilla, Vitug, Kapunan, and Hermosisima, Jr., JJ., concur.
EN BANC
G.R. No. 175769-70 January 19, 2009
ABS-CBN BROADCASTING CORPORATION, Petitioners,
vs.
PHILIPPINE MULTI-MEDIA SYSTEM, INC., CESAR G. REYES, FRANCIS CHUA (ANG BIAO),
MANUEL F. ABELLADA, RAUL B. DE MESA, AND ALOYSIUS M. COLAYCO, Respondents.
D E C I S I O N
YNARES-SANTIAGO, J.:
This petition for review on certiorari1
assails the July 12, 2006 Decision2
of the Court of Appeals in
CA-G.R. SP Nos. 88092 and 90762, w hich affirmed the December 20, 2004 Decision of the
Director-Generalof the Intellectual Property Office (IPO) in Appeal No. 10-2004-0002. Also
assailed is the December 11, 2006 Resolution3
denying the motion for reconsideration.
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is licensed under the law s of the
Republic of the Philippines to engage in television and radio broadcasting.4
It broadcasts television
programs by w ireless means to Metro Manila and nearby provinces, and by satellite to provincial
stations through Channel 2 on Very High Frequency (VHF) and Channel 23 on Ultra High
Frequency (UHF). The programs aired over Channels 2 and 23 are either produced by ABS-CBN
or purchased fromor licensed by other producers.
ABS-CBN also ow ns regionaltelevision stations w hich pattern their programming in accordance
w ith perceived demands of the region. Thus, television programs show n in Metro Manila and
nearby provinces are not necessarily shown in other provinces.
Respondent Philippine Multi-Media System, Inc. (PMSI) is the operator of Dream Broadcasting
System. It delivers digital direct-to-home (DTH) television via satellite to its subscribers allover the
Philippines. Herein individual respondents, Cesar G. Reyes, Francis Chua, Manuel F. Abellada,
Raul B. De Mesa, and Aloysius M. Colayco, are members of PMSI’s Board of Directors.
PMSI w as granted a legislative franchise under Republic Act No. 86305
on May 7, 1998 and w as
given a Provisional Authority by the National Telecommunications Commission (NTC) on February
1, 2000 to install, operate and maintain a nationw ide DTH satellite service. When it commenced
operations, it offered as part of its programline-up ABS-CBN Channels 2 and 23, NBN, Channel 4,
ABC Channel 5, GMA Channel 7, RPN Channel 9, and IBC Channel 13, together w ith other paid
premium program channels.
How ever, on April25, 2001,6
ABS-CBN demanded for PMSI to cease and desist from
rebroadcasting Channels 2 and 23. On April 27, 2001,7
PMSI replied that the rebroadcasting w as
in accordance with the authority granted it by NTC and its obligation under NTC Memorandum
Circular No. 4-08-88,8
Section 6.2 of w hich requires allcable television systemoperators operating
in a community w ithin Grade “A” or “B” contours to carry the television signals of the authorized
television broadcast stations.9
Thereafter, negotiations ensued betw een the parties in an effort to reach a settlement; how ever,
the negotiations w ere terminated on April4, 2002 by ABS-CBN allegedly due to PMSI’s inability to

13. 13
ensure the prevention of illegal retransmission and further rebroadcast of its signals, as w ellas the
adverse effect of the rebroadcastson the business operations of its regionaltelevision stations.10
On May 13, 2002, ABS-CBN filed w ith the IPO a complaint for “Violation of Law s Involving
Property Rights, w ith Prayer for the Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction,” w hich was docketed as IPV No. 10-2002-0004. It alleged that PMSI’s
unauthorized rebroadcasting of Channels 2 and 23 infringed on its broadcasting rights and
copyright.
On July 2, 2002, the Bureau of Legal Affairs(BLA)of the IPO granted ABS-CBN’s application for a
temporary restraining order. On July 12, 2002, PMSI suspended its retransmission of Channels 2
and 23 and likew ise filed a petition for certiorariwith the Court of Appeals, w hich was docketed as
CA-G.R. SP No. 71597.
Subsequently, PMSI filed w ith the BLA a Manifestation reiterating that it is subject to the must-
carry rule under Memorandum Circular No. 04-08-88. It also submitted a letter dated December
20, 2002 of then NTC Commissioner Armi Jane R. Borje to PMSI stating as follow s:
This refers to your letter dated December 16, 2002 requesting for regulatory guidance fromthis
Commission in connection w ith the application and coverage of NTC Memorandum Circular No. 4-
08-88, particularly Section 6 thereof, on mandatory carriage of television broadcast signals, to the
direct-to-home (DTH) pay television services of Philippine Multi-Media System, Inc. (PMSI).
Preliminarily, both DTH pay television and cable television services are broadcast services, the
only difference being the medium of delivering such services(i.e. the former by satellite and the
latter by cable). Both can carry broadcast signals to the remote areas, thus enriching the lives of
the residents thereof through the dissemination of social, economic, educational information and
culturalprograms.
The DTH pay television services of PMSI is equipped to provide nationw ide DTH satellite services.
Concededly, PMSI’s DTH pay television services coversverymuch w ider areasin terms of
carriage of broadcast signals, including areas not reachable by cable television services thereby
providing a better medium of dissemination of information to the public.
In view of the foregoing and the spirit and intent of NTC memorandum Circular No. 4-08-88,
particularly section 6 thereof, on mandatory carriage of televisionbroadcastsignals, DTH
pay television services shouldbe deemed covered by suchNTC Memorandum Circular.
For your guidance. (Emphasis added)11
On August 26, 2003, PMSI filed another Manifestation w ith the BLA that it received a letter dated
July 24, 2003 from the NTC enjoining strict and immediate compliance w ith the must-carry rule
under Memorandum Circular No. 04-08-88, to w it:
Dear Mr. Abellada:
Last July 22, 2003, the National Telecommunications Commission (NTC) received a letter dated
July 17, 2003 from President/COO Rene Q. Bello of the International Broadcasting Corporation
(IBC-Channel 13) complaining that your company, Dream Broadcasting System, Inc., has cut-off,
w ithout any notice or explanation w hatsoever, to air the programs of IBC-13, a free-to-air
television, to the detriment of the public.
We w ere told that, until now , this has been going on.
Please be advised thatas a directbroadcastsatellite operator, operating a direct-to-home
(DTH) broadcasting system, witha provisional authority(PA) from the NTC, your company,
along with cable televisionoperators, are mandated to strictly comply withthe existing
policy of NTC on mandatory carriage of televisionbroadcast signals as provided under
Memorandum Circular No. 04-08-88, also knownas the Revised Rules and Regulations
GoverningCable Television Systemin the Philippines.
This mandatorycoverage provisionunder Section6.2 of said Memorandum Circular,
requires all cable televisionsystemoperators, operating in a community within the Grade
“A” or “B” contours to “must-carry” the television signals of the authorized television
broadcast stations, one of whichis IBC-13. Said directive equally appliesto your company
as the circular was issuedto give consumers andthe public a wider access to more
sources of news, information, entertainment and other programs/contents.
This Commission, as the governing agency vested by law swith the jurisdiction, supervision and
controlover all public services, which includes direct broadcast satellite operators, and taking into
consideration the paramount interest of the public in general, hereby directs you to immediately
restore the signal of IBC-13 in your netw orkprograms, pursuant to existing circularsand
regulations of the Commission.
For strict compliance. (Emphasis added)12
Meanw hile, on October 10, 2003, the NTC issued Memorandum Circular No. 10-10-2003, entitled
“Implementing Rules and Regulations Governing Community Antenna/Cable Television (CATV)
and Direct Broadcast Satellite (DBS) Services to Promote Competition in the Sector.” Article 6,
Section 8 thereof states:
As a general rule, the reception, distribution and/or transmission by any CATV/DBS operator of
any television signals w ithout any agreement w ith or authorization fromprogram/content providers
are prohibited.
On w hether Memorandum Circular No. 10-10-2003 amended Memorandum Circular No. 04-08-88,
the NTC explained to PMSI in a letter dated November 3, 2003 that:
To address your query on w hether or not the provisions of MC 10-10-2003 w ould have the effect
of amending the provisions of MC 4-08-88 on mandatory carriage of television signals, the answ er
is in the negative.
x x x x
The Commission maintains that, MC 4-08-88 remains valid, subsisting and enforceable.

14. 14
Please be advised, therefore, that as duly licenseddirect-to-home satellite television service
provider authorized by this Commission, your company continues to be boundby the
guidelines provided for under MC 04-08-88, specifically your obligationunder its mandatory
carriage provisions, in additionto your obligations under MC 10-10-2003. (Emphasis added)
Please be guided accordingly.13
On December 22, 2003, the BLA rendered a decision14
finding that PMSI infringed the
broadcasting rights and copyright of ABS-CBNand ordering it to permanently cease and desist
fromrebroadcasting Channels 2 and 23.
On February 6, 2004, PMSI filed an appeal w ith the Office of the Director-Generalof the IPO
w hich wasdocketed as AppealNo. 10-2004-0002. On December 23, 2004, it also filed w ith the
Court of Appeals a “Motion to Withdraw Petition; Alternatively, Memorandum of the Petition for
Certiorari” in CA-G.R. SP No. 71597, w hich was granted in a resolution dated February 17, 2005.
On December 20, 2004, the Director-Generalof the IPO rendered a decision15
in favor of PMSI,
the dispositive portion of w hich states:
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. Accordingly,
Decision No. 2003-01 dated 22 December 2003 of the Director of Bureau of Legal Affairsis hereby
REVERSED and SET ASIDE.
Let a copy of this Decision be furnished the Director of the Bureau of Legal Affairs for appropriate
action, and the records be returned to her for proper disposition. The Documentation, Information
and Technology Transfer Bureau is also given a copy for library and reference purposes.
SO ORDERED.16
Thus, ABS-CBN filed a petition for review with prayerfor issuance of a temporary restraining order
and w rit of preliminary injunction w ith the Court of Appeals, w hich was docketed as CA-G.R. SP
No. 88092.
On July 18, 2005, the Court of Appeals issued a temporary restraining order. Thereafter, ABS-
CBN filed a petition for contempt against PMSI for continuing to rebroadcast Channels 2 and 23
despite the restraining order. The case w as docketed as CA- G.R. SP No. 90762.
On November 14, 2005, the Court of Appeals ordered the consolidation of CA-G.R. SP Nos.
88092 and 90762.
In the assailed Decision dated July 12, 2006, the Court of Appeals sustained the findings of the
Director-Generalof the IPO and dismissed both petitions filed by ABS-CBN.17
ABS-CBN’s motion for reconsideration wasdenied, hence, this petition.
ABS-CBN contends that PMSI’s unauthorized rebroadcasting of Channels 2 and 23 is an
infringement of its broadcasting rights and copyright under the Intellectual Property Code (IP
Code);18
that Memorandum Circular No. 04-08-88 excludes DTH satellite television operators; that
the Court of Appeals’interpretation of the must-carry rule violates Section 9 of Article III19
of the
Constitution because it allow s the taking of property for public use w ithout payment of just
compensation; that the Court of Appeals erred in dismissing the petition for contempt docketed as
CA-G.R. SP No. 90762 w ithout requiring respondents to file comment.
Respondents, on the other hand, argue that PMSI’s rebroadcasting of Channels 2 and 23 is
sanctioned by Memorandum Circular No. 04-08-88; that the must-carry rule under the
Memorandum Circular is a valid exercise of police pow er; and that the Court of Appeals correctly
dismissed CA-G.R. SP No. 90762 since it found no need to exercise its pow er of contempt.
After a carefulreview of the factsand records of this case, we affirmthe findings of the Director-
General of the IPO and the Court of Appeals.
There is no merit in ABS-CBN’s contention that PMSI violated its broadcaster’s rights under
Section 211 of the IP Code w hich providesin part:
Chapter XIV
BROADCASTING ORGANIZATIONS
Sec. 211. Scope of Right. - Subject to the provisions of Section 212, broadcasting organizations
shall enjoy the exclusive right to carry out, authorize or prevent any of the follow ing acts:
211.1. The rebroadcasting of their broadcasts;
x x x x
Neither is PMSI guilty of infringement of ABS-CBN’s copyright under Section 177 of the IP Code
w hich states that copyright or economic rights shallconsist of the exclusive right to carry out,
authorize or prevent the public performance of the w ork(Section 177.6), and other communication
to the public of the w ork (Section 177.7).20
Section 202.7 of the IP Code defines broadcasting as “the transmission by wirelessmeans for
the public reception of sounds or of images or of representations thereof;such transmission by
satellite is also ‘broadcasting’w here the means for decrypting are provided to the public by the
broadcasting organization or w ith its consent.”
On the other hand, rebroadcastingas defined in Article 3(g) of the International Convention for
the Protection of Performers, Producers of Phonograms and Broadcasting Organizations,
otherw ise knownas the 1961 Rome Convention, of w hich the Republic of the Philippines is a
signatory, 21
is “the simultaneous broadcasting by one broadcasting organization of the broadcast
of another broadcasting organization.”
The Director-Generalof the IPO correctly found that PMSI is not engaged in rebroadcasting and
thus cannot be considered to have infringed ABS-CBN’s broadcasting rights and copyright, thus:
That the Appellant’s [herein respondent PMSI] subscribers are able to view Appellee’s [herein
petitioner ABS-CBN] programs (Channels 2 and 23) at the same time that the latter is