 enterprise engaged in the production, processing
or manufacturing of products or commodities,
including agro-processing, trading and services,
whose total assets including those arising from
loans but exclusive of the land on which the
particular business entity's office, plant and
equipment are situated, shall not be more than
Three Million Pesos (P3,000,000.00) The Above
definition shall be subjected to review and
upward adjustment by the SMED Council, as
mandated under Republic Act No. 6977, as
amended by Republic Act No. 8289.
 For the purpose of this Act, "service" shall
exclude those rendered by any one, who is duly
licensed government after having passed a
government licensure examination, in
connection with the exercise of one's profession.
 (b) "Certificate of Authority" is the certificate
issued granting the authority to the registered
BMBE to operate and be entitled to the benefits
and privileges accorded thereto.
 (c) "Assets" refers to all kinds of properties, real
or personal, owned by the BMBE and used for
the conduct of its business as defined by the
SMED Council: Provided, That for the purpose of
exemption from taxes and fees under this Act,
this term shall mean all kinds of properties, real
or personal, owned and/or used by the BMBE for
the conduct of its business as defined by the
SMED Council.
 (d) "Registration" refers to the inclusion of BMBE
in the BMBE Registry of a city or municipality.
 (e) "Financing" refers to all borrowings of the
BMBE from all sources after registration.
 REGISTRATION AND OPERATION OF BMBE
Section 4. Registration and Fees - The
Of west bidder.
COA wrote PAL a letter stating:
It has come to our attention that PAL international fuel supply
contracts are expiring this August 31, 1989. In this connection, you are
advised to desist from bidding the company's fuel supply contracts,
considering that existing regulations require government-owned or
controlled corporations and other agencies of government to procure their
petroleum product requirements from PETRON Corporation.
PAL sought reconsideration but was denied by COA. A final
appeal for reconsideration was also denied in the now assailed COA
Decision No. 1127.
ISSUE: Did respondent commit grave abuse of discretion amounting to lack
or excess of jurisdiction in ordering PAL to desist from bidding the
company’s fuel supply contracts?
HELD:
No. The COA is clothed under Section 2(2), Article IX-D of the
1987 Constitution with the "exclusive authority, subject to the limitations in
this Article, to define the scope of its audit and examination, establish the
techniques and methods required therefor, and promulgate accounting and
auditing rules, and regulations including those for the prevention and
disallowance of irregular, unnecessary, excessive, extravagant or
unconscionable expenditures, or uses of government funds and properties."
The authority granted under this constitutional provision, being broad and
comprehensive enough, enables COA to adopt as its own, simply by
reiteration or by reference, without the necessity of repromulgation, already
existing rules and regulations. It may also expand the coverage thereof to
agencies or instrumentalities under its audit jurisdiction. It is in this light that
we view COA Memorandum No. 88-565 issued on August 1, 1988.
WHEREFORE, the petition is hereby DISMISSED for being
moot and academic.
ARTICLE IX - CONSTITUTIONAL COMMISSIONS D.
COMMISSION ON AUDIT BAGATSING VS. COMMITTEE ON
PRIVATIZATION (G.R. NO. 112399 JULY 14, 1995)
QUIASON, J.:
FACTS:
Petron is a government acquired company aimed to provide
for a buffer against the vagaries of oil prices in the international market by
serving as a counterfoil against price manipulation that may go uncheck if
all oil companies were foreign-owned. It owns the largest, most modern
complex refinery in the Philippines and is also the country's biggest
combined retail and wholesale market of refined petroleum products.
Following President Corazon Aquino’s desire to raise revenue for the
government and the ideal of leaving business to private sector, the
privatization of Petron was initiated. This privatization was subsequently
approved by President Fidel V. Ramos as recommended by PNOC and the
Committee on Privatization. 40 % was to be sold to a strategic partner, 40%
was to be retained by the government and the remaining 20% was to be
offered to the public. The floor bid price was finally set at us$440 million
The bidding for the 40% block share was participated by
PETRONAS, ARAMCO and WESTMONT. WESTMONT’s proposal was
rejected for not having met the pre-qualification criteria of financial capability
and lack of technical and management expertise. The bid of ARAMCO was
for US$502 million while the bid of PETRONAS was for US$421 million.
ARAMCO was declared the winning bidder.
Petitioner argues that there was a failed bidding as provided
for in COA circular No. 89-296. It provides that there is a failure of public
auction when: 1) there is only one offeror; or (2) when all the offers are non-
complying or unacceptable.
ISSUE: Whether or not the public bidding was tainted with haste and
arbitrariness because there was a failed bidding for having only one offeror?
HELD:
No. While two offerors were disqualified, PETRONAS for
submitting a bid below the floor price and WESTMONT for technical
reasons, not all the offerors were disqualified. To constitute a failed bidding
under the COA Circular, all the offerors must be disqualified.
Petitioners urge that in effect there was only one bidder and
that it can not be said that there was a competition on "an equal footing. But
the COA Circular does not speak of accepted bids but of offerors, without
distinction as to whether they were disqualified.
The COA itself, the agency that adopted the rules on bidding
procedure to be followed by government offices and corporations, had
upheld the validity and legality of the questioned bidding. The interpretation
of an agency of its own rules should be given more weight than the
interpretation by that agency of the law it is merely tasked to administer.
ARTICLE X - LOCAL GOVERNMENT
BORJA VS. COMMISSION ON ELECTIONS
(G.R. NO. 133495 SEPTEMBER 3, 1998)

MENDOZA, J.
FACTS:
Private respondent Jose T. Capco, Jr. was elected vice-mayor of Pateros
on January 18, 1988 for a term ending June 30, 1992. In 1989, he became mayor, by
operation of law, upon the death of the incumbent. In 1992, he ran and was elected mayor
for a 3-year term. On May 8, 1995, he was reelected mayor for another term.
San Beda College of Law
Based on ATTY. ADONIS V. GABRIEL lectures
Capco filed a certificate of candidacy for mayor of Pateros
relative to the May 11, 1998 elections. Petitioner Benjamin U. Borja Jr., also
a mayoralty candidate, sought Capco's disqualification, arguing that the
latter would have already served as mayor for three consecutive terms by
June 30, 1998 and would therefore be ineligible to serve for another term
after that.
The COMELEC ruled petitioner’s favor and declared Capco’s
disqualification. However, on motion of private respondent, the
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THE ADONIS CASES 2011

COMELEC reversed the decision and declared Capco eligible to run for
mayor.
ISSUE: Whether or not a vice-mayor who succeeds to the office of mayor
by operation of law and serves the remainder of the term is considered to
have served a term in that office for the purpose of the three-term limit?
HELD:
No. Article X, §8 of the Constitution provides, that the term of
office of elective local officials, except barangay officials, which shall be
determined by law, shall be three years and no such official shall serve for
more than three consecutive terms. Voluntary renunciation of the office for
any length of time shall not be considered as an interruption in the continuity
of his service for the full term for which he was elected.
To consider C as eligible for reelection would be
in accord with the understanding of the Constitutional
Commission that while the people should be protected from
the evils that a monopoly of political power may bring about,
care should be taken that their freedom of choice is not unduly
curtailed.
Further, resort to historical examination would
show adherence to the fundamental tenet of representative
democracy wherein the people should be allowed to choose
those whom they please to govern them. To bar the election
of a local official because he has already served three terms,
although the first as a result of succession by operation of law
rather than election, would therefore be to violate this
principle.
2006 CASES

The term limit for elective local officials must be taken to refer [G.R. NO. 167798. APRIL 19, 2006.]
to the right to be elected as well as the right to serve in the same elective
position. Consequently, it is not enough that an individual has served three
consecutive terms in an elective local office, he must also have been
elected to the same position for the same number of times before the KILUSANG MAYO UNO, NATIONAL FEDERATION OF
disqualification can apply. This point can be made clearer by considering LABOR UNIONS-KILUSANG MAYO UNO (NAFLU-KMU),
the following cases or situations: JOSELITO V. USTAREZ, EMILIA P. DAPULANG,
SALVADOR T. CARRANZA, MARTIN T. CUSTODIO, JR.
and ROQUE M. TAN, petitioners, vs. THE DIRECTOR-
GENERAL, NATIONAL ECONOMIC DEVELOPMENT
Case No. 1. Suppose A is a vice-mayor who becomes mayor AUTHORITY, and THE SECRETARY, DEPARTMENT OF
by reason of the death of the incumbent. Six months before the next BUDGET and MANAGEMENT, respondents.
election, he resigns and is twice elected thereafter. Can he run again for
mayor in the next election?

[G.R. NO. 167930. APRIL 19, 2006.]

Yes, because although he has already first served as mayor
by succession and subsequently resigned from office before the full term
expired, he has not actually served three full terms in all for the purpose of
applying the term limit. Under Art. X, §8, voluntary renunciation of the office
is not considered as an interruption in the continuity of his service for the
full term only if the term is one "for which he was elected." Since A is only
completing the service of the term for which the deceased and not he was
elected, A cannot be considered to have completed one term. His
resignation constitutes an interruption of the full term.

Case No. 2. Suppose B is elected mayor and, during his first

term, he is twice suspended for misconduct for a total of 1 year. If he is twice
reelected after that, can he run for one more term in the next election?

Yes, because he has served only two full terms

successively.

In both cases, the mayor is entitled to run for reelection

because the two conditions for the application of the disqualification
provisions have not concurred, namely, that the local official concerned has
been elected three consecutive times and that he has fully served three
consecutive terms. In the first case, even if the local official is considered to
have served three full terms notwithstanding his resignation before the end
of the first term, the fact remains that he has not been elected three times.
In the second case, the local official has been elected three consecutive
times, but he has not fully served three consecutive terms.

Case No. 3. The case of vice-mayor C who becomes mayor

by succession involves a total failure of the two conditions to concur for the
purpose of applying Art. X, §8. Suppose he is twice elected after that term,
is he qualified to run again in the next election?

Yes, because he was not elected to the office of mayor in the

first term but simply found himself thrust into it by operation of law. Neither
had he served the full term because he only continued the service,
interrupted by the death, of the deceased mayor.

To consider C in the third case to have served the first term in

full and therefore ineligible to run a third time for reelection would be not
only to falsify reality but also to unduly restrict the right of the people to
choose whom they wish to govern them. If the vice-mayor turns out to be a
bad mayor, the people can remedy the situation by simply not reelecting
him for another term. But if, on the other hand, he proves to be a good
mayor, there will be no way the people can return him to office (even if it is
just the third time he is standing for reelection) if his service of the first term
is counted as one for the purpose of applying the term limit.

BAYAN MUNA Representatives SATUR C. OCAMPO, TEODORO A. CASIÑO, and
JOEL G. VIRADOR, GABRIELA WOMEN'S PARTY Representative LIZA L. MAZA,
ANAKPAWIS Representatives RAFAEL V. MARIANO and CRISPIN B. BELTRAN,
Rep. FRANCIS G. ESCUDERO, Rep. EDUARDO C. ZIALCITA, Rep. LORENZO R.
TAÑADA III, DR. CAROL PAGADUAN-ARAULLO and RENATO M. REYES, JR. of
BAYAN, MARIE HILAO-ENRIQUEZ of KARAPATAN, ANTONIO L. TINIO of ACT,
FERDINAND GAITE of COURAGE, GIOVANNI A. TAPANG of AGHAM, WILFREDO
MARBELLA of KMP, LANA LINABAN of GABRIELA, AMADO GAT INCIONG,
RENATO CONSTANTINO, JR., DEAN PACIFICO H. AGABIN, SHARON R.
DUREMDES of the NATIONAL COUNCIL OF CHURCHES IN THE PHILIPPINES, and
BRO. EDMUNDO L. FERNANDEZ (FSC) of the
ASSOCIATION OF MAJOR RELIGIOUS SUPERIORS OF THE PHILIPPINES
(AMRSP), petitioners, vs. EDUARDO ERMITA, in his capacity as Executive
Secretary, ROMULO NERI, in his capacity as Director-General of the NATIONAL
ECONOMIC and DEVELOPMENT AUTHORITY (NEDA) and the Administrator of the
NATIONAL STATISTICS OFFICE (NSO), respondents.
FACTS:
This case involves two consolidated petitions for certiorari, prohibition, and
mandamus under Rule 65 of the Rules of Court, seeking the nullification of Executive
Order No. 420 (EO 420) on the ground that it is unconstitutional. EO 420, issued by
President Gloria Macapagal-Arroyo on 13 April 2005, reads:
REQUIRING ALL GOVERNMENT AGENCIES AND GOVERNMENT-
OWNED AND CONTROLLED CORPORATIONS TO STREAMLINE AND HARMONIZE
THEIR IDENTIFICATION (ID) SYSTEMS, AND AUTHORIZING FOR SUCH PURPOSE
THE DIRECTOR-GENERAL, NATIONAL ECONOMIC AND DEVELOPMENT
AUTHORITY TO IMPLEMENT THE SAME, AND FOR OTHER PURPOSES
Under EO 420, the President directs all government agencies and
government-owned and controlled corporations to adopt a uniform data collection and
format for their existing identification (ID) systems. The purposes of the uniform ID data
collection and ID format are to reduce costs, achieve efficiency and reliability, insure
compatibility, and provide convenience to the people served by government entities.
Section 3 of EO 420 limits the data to be collected and recorded under the uniform ID
system to only 14 specific items, namely: (1) Name; (2) Home Address; (3) Sex; (4)
Picture; (5) Signature; (6) Date of Birth; (7) Place of Birth; (8) Marital Status; (9) Name of
Parents; (10) Height; (11) Weight;
Two index fingers and two thumbmarks; (13) Any prominent distinguishing features
like moles or others; and (14) Tax Identification Number. Section 5 of EO 420 prescribes
the safeguards on the collection, recording, and disclosure of personal identification data
to protect the right to privacy. The following safeguards are instituted:
The data to be recorded and stored, which shall be used only for purposes of
establishing the identity of a person, shall be limited
San Beda College of Law
Based on ATTY. ADONIS V. GABRIEL lectures
to those specified in Section 3 of this executive order; aEAIDH
In no case shall the collection or compilation of other data in violation
of a person's right to privacy be allowed or tolerated under this order;
Stringent systems of access control to data in the identification
system shall be instituted;
Data collected and stored for this purpose shall be kept and treated
as strictly confidential and a personal or written authorization of the Owner
shall be required for access and disclosure of data;
The identification card to be issued shall be protected by advanced
security features and cryptographic technology;
A written request by the Owner of the identification card shall be
required for any correction or revision of relevant data, or under such
conditions as the participating agency issuing the identification card shall
prescribe.
ISSUES:
Whether or not EO 420 is a usurpation of legislative power by the
President.
Whether or not EO 420 infringes on the citizen's right to privacy.
HELD:
No, EO 420 is not a usurpation of legislative power by the President.
Section 2 of EO 420 provides, "Coverage. — All government agencies and
government-owned and controlled corporations issuing ID cards to their
members or constituents shall be covered by this executive order." EO 420
applies only to government entities that issue ID cards as part of their
functions under existing laws. These government entities have already
been issuing ID cards even prior to EO 420. Examples of these government
entities are the GSIS, SSS, Philhealth, Mayor's Office, LTO, PRC and
similar government entities. Section 1 of EO 420 directs these government
entities to "adopt a unified multi-purpose ID system." Thus, all government
entities that issue IDs as part of their functions under existing laws are
required to adopt a uniform data collection and format for their IDs.
Second, the President may by executive or administrative
order direct the government entities under the Executive department to
adopt a uniform ID data collection and format. Section 17, Article VII of the
1987 Constitution provides that the "President shall have control of all
executive departments, bureaus and offices." The same Section also
mandates the President to "ensure that the laws be faithfully executed."
Certainly, under this constitutional power of control the
President can direct all government entities, in the exercise of their
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THE ADONIS CASES 2011


functions under existing laws, to adopt a uniform ID data collection and ID
format to achieve savings, efficiency, reliability, compatibility, and
convenience to the public. The President's constitutional power of control is
self-executing and does not need any implementing legislation.
considering that existing regulations require government-
owned or controlled corporations and other agencies of
government to procure their petroleum product requirements
from PETRON Corporation.

PAL sought reconsideration but was denied by

Of course, the President's power of control is limited to the
Executive branch of government and does not extend to the Judiciary or to
the independent constitutional commissions. Thus, EO 420 does not apply
to the Judiciary, or to the COMELEC which under existing laws is also
authorized to issue voter's ID cards. This only shows that EO 420 does not
establish a national ID system because legislation is needed to establish a
single ID system that is compulsory for all branches of government.
COA. A final appeal for reconsideration was also denied in the
now assailed COA Decision No. 1127.
ISSUE: Did respondent commit grave abuse of discretion
amounting to lack or excess of jurisdiction in ordering PAL to
desist from bidding the company’s fuel supply contracts?

Constitution also mandates the President to ensure that the

laws are faithfully executed. There are several laws mandating government
entities to reduce costs, increase efficiency, and in general, improve public
services.

The adoption of a uniform ID data collection and format under

EO 420 is designed to reduce costs, increase efficiency, and in general,
improve public services. Thus, in issuing EO 420, the President is simply
performing the constitutional duty to ensure that the laws are faithfully
executed.

No, EO 420 does not infringe on the citizen’s right to privacy. Section 3
of EO 420 limits the data to be collected and recorded under the uniform ID
system to only 14 specific items, namely: (1) Name; (2) Home Address;

Sex; (4) Picture; (5) Signature; (6) Date of Birth; (7) Place of Birth; (8)
Marital Status; (9) Name of Parents; (10) Height; (11) Weight; (12) Two
index fingers and two thumbmarks; (13) Any prominent distinguishing
features like moles or others; and (14) Tax Identification Number.

These limited and specific data are the usual data required for
personal identification by government entities, and even by the private
sector. Any one who applies for or renews a driver's license provides to the
LTO all these 14 specific data.

The data collected and stored for the unified ID system under
EO 420 will be limited to only 14 specific data, and the ID card itself will
show only eight specific data. The data collection, recording and ID card
system under EO 420 will even require less data collected, stored and
revealed than under the disparate systems prior to EO 420.

Prior to EO 420, government entities had a free hand in

determining the kind, nature and extent of data to be collected and stored
for their ID systems. Under EO 420, government entities can collect and
record only the 14 specific data mentioned in Section 3 of EO 420. In
addition, government entities can show in their ID cards only eight of these
specific data, seven less data than what the Supreme Court's ID shows.

Also, prior to EO 420, there was no executive issuance to

government entities prescribing safeguards on the collection, recording,
and disclosure of personal identification data to protect the right to privacy.
Now, under Section 5 of EO 420, the following safeguards are instituted:

The data to be recorded and stored, which shall be used only

for purposes of establishing the identity of a person, shall be limited to those
specified in Section 3 of this executive order;

In no case shall the collection or compilation of other data in

violation of a person's right to privacy be allowed or tolerated under this
order;

Stringent systems of access control to data in the

identification system shall be instituted;

Data collected and stored for this purpose shall be kept and
treated as strictly confidential and a personal or written authorization of the
Owner shall be required for access and disclosure of data;

The identification card to be issued shall be protected by

advanced security features and cryptographic technology;

A written request by the Owner of the identification card shall

be required for any correction or revision of relevant data, or under such
conditions as the participating agency issuing the identification card shall
prescribe.

In the present case, EO 420 does not establish a national ID

system but makes the existing sectoral card systems of government entities
like GSIS, SSS, Philhealth and LTO less costly, more efficient, reliable and
user-friendly to the public. Hence, EO 420 is a proper subject west bidder.

COA wrote PAL a letter stating:

It has come to our attention that PAL international fuel supply

contracts are expiring this August 31, 1989. In this connection, you are
advised to desist from bidding the company's fuel supply contracts,
 ISSUE: Whether or not the public bidding was tainted with haste and
arbitrariness because there was a failed bidding for having only one offeror?
HELD:

No. The COA is clothed under Section 2(2), Article IX-D of the 1987 HELD:
Constitution with the "exclusive authority, subject to the limitations in this Article, to define
the scope of its audit and examination, establish the techniques and methods required
therefor, and promulgate accounting and auditing rules, and regulations including those No. While two offerors were disqualified, PETRONAS for
for the prevention and disallowance of irregular, unnecessary, excessive, extravagant or submitting a bid below the floor price and WESTMONT for technical
unconscionable expenditures, or uses of government funds and properties." The authority reasons, not all the offerors were disqualified. To constitute a failed bidding
granted under this constitutional provision, being broad and comprehensive enough, under the COA Circular, all the offerors must be disqualified.
enables COA to adopt as its own, simply by reiteration or by reference, without the
necessity of repromulgation, already existing rules and regulations. It may also expand
the coverage thereof to agencies or instrumentalities under its audit jurisdiction. It is in
Petitioners urge that in effect there was only one bidder and
this light that we view COA Memorandum No. 88-565 issued on August 1, 1988.
that it can not be said that there was a competition on "an equal footing. But
the COA Circular does not speak of accepted bids but of offerors, without
distinction as to whether they were disqualified.
WHEREFORE, the petition is hereby DISMISSED for being moot and
academic.
The COA itself, the agency that adopted the rules on bidding
procedure to be followed by government offices and corporations, had
upheld the validity and legality of the questioned bidding. The interpretation
of an agency of its own rules should be given more weight than the
ARTICLE IX - CONSTITUTIONAL COMMISSIONS D. COMMISSION ON interpretation by that agency of the law it is merely tasked to administer.
AUDIT BAGATSING VS. COMMITTEE ON PRIVATIZATION (G.R. NO.
112399 JULY 14, 1995)

ARTICLE X - LOCAL GOVERNMENT

QUIASON, J.:
BORJA VS. COMMISSION ON ELECTIONS
FACTS:
(G.R. NO. 133495 SEPTEMBER 3, 1998)

Petron is a government acquired company aimed to provide for a buffer

against the vagaries of oil prices in the international market by serving as a counterfoil
against price manipulation that may go uncheck if all oil companies were foreign-owned.
It owns the largest, most modern complex refinery in the Philippines and is also the
country's biggest combined retail and wholesale market of refined petroleum products.
Following President Corazon Aquino’s desire to raise revenue for the government and
the ideal of leaving business to private sector, the privatization of Petron was initiated.
This privatization was subsequently approved by President Fidel V. Ramos as
recommended by PNOC and the Committee on Privatization. 40 % was to be sold to a
strategic partner, 40% was to be retained by the government and the remaining 20% was
to be offered to the public. The floor bid price was finally set at us$440 million
The bidding for the 40% block share was participated by PETRONAS,
ARAMCO and WESTMONT. WESTMONT’s proposal was rejected for not having met the
pre-qualification criteria of financial capability and lack of technical and management
expertise. The bid of ARAMCO was for US$502 million while the bid of PETRONAS was
for US$421 million. ARAMCO was declared the winning bidder.
Petitioner argues that there was a failed bidding as provided for in COA
circular No. 89-296. It provides that there is a failure of public auction when: 1) there is
only one offeror; or (2) when all the offers are non-complying or unacceptable.
MENDOZA, J.
FACTS:
Private respondent Jose T. Capco, Jr. was elected vice-
mayor of Pateros on January 18, 1988 for a term ending June 30, 1992. In
1989, he became mayor, by operation of law, upon the death of the
incumbent. In 1992, he ran and was elected mayor for a 3-year term. On
May 8, 1995, he was reelected mayor for another term.
Capco filed a certificate of candidacy for mayor of Pateros
relative to the May 11, 1998 elections. Petitioner Benjamin U. Borja Jr., also
a mayoralty candidate, sought Capco's disqualification, arguing that the
latter would have already served as mayor for three consecutive terms by
June 30, 1998 and would therefore be ineligible to serve for another term
after that.
The COMELEC ruled petitioner’s favor and declared Capco’s
disqualification. However, on motion of private respondent, the

San Beda College of Law 167

Based on ATTY. ADONIS V. GABRIEL lectures

 Alliance for Alternative Action

THE ADONIS CASES 2011

COMELEC reversed the decision and declared Capco eligible to run for
mayor.
ISSUE: Whether or not a vice-mayor who succeeds to the office of mayor
by operation of law and serves the remainder of the term is considered to
have served a term in that office for the purpose of the three-term limit?
HELD:
No. Article X, §8 of the Constitution provides, that the term of
office of elective local officials, except barangay officials, which shall be
determined by law, shall be three years and no such official shall serve for
more than three consecutive terms. Voluntary renunciation of the office for
any length of time shall not be considered as an interruption in the continuity
of his service for the full term for which he was elected.
To consider C as eligible for reelection would be
in accord with the understanding of the Constitutional
Commission that while the people should be protected from
the evils that a monopoly of political power may bring about,
care should be taken that their freedom of choice is not unduly
curtailed.
Further, resort to historical examination would
show adherence to the fundamental tenet of representative
democracy wherein the people should be allowed to choose
those whom they please to govern them. To bar the election
of a local official because he has already served three terms,
although the first as a result of succession by operation of law
rather than election, would therefore be to violate this
principle.
2006 CASES

The term limit for elective local officials must be taken to refer [G.R. NO. 167798. APRIL 19, 2006.]
to the right to be elected as well as the right to serve in the same elective
position. Consequently, it is not enough that an individual has served three
consecutive terms in an elective local office, he must also have been
elected to the same position for the same number of times before the KILUSANG MAYO UNO, NATIONAL FEDERATION OF
disqualification can apply. This point can be made clearer by considering LABOR UNIONS-KILUSANG MAYO UNO (NAFLU-KMU),
the following cases or situations: JOSELITO V. USTAREZ, EMILIA P. DAPULANG,
SALVADOR T. CARRANZA, MARTIN T. CUSTODIO, JR.
and ROQUE M. TAN, petitioners, vs. THE DIRECTOR-
GENERAL, NATIONAL ECONOMIC DEVELOPMENT
Case No. 1. Suppose A is a vice-mayor who becomes mayor AUTHORITY, and THE SECRETARY, DEPARTMENT OF
by reason of the death of the incumbent. Six months before the next BUDGET and MANAGEMENT, respondents.
election, he resigns and is twice elected thereafter. Can he run again for
mayor in the next election?

[G.R. NO. 167930. APRIL 19, 2006.]

Yes, because although he has already first served as mayor
by succession and subsequently resigned from office before the full term
expired, he has not actually served three full terms in all for the purpose of
applying the term limit. Under Art. X, §8, voluntary renunciation of the office
is not considered as an interruption in the continuity of his service for the
full term only if the term is one "for which he was elected." Since A is only
completing the service of the term for which the deceased and not he was
elected, A cannot be considered to have completed one term. His
resignation constitutes an interruption of the full term.

Case No. 2. Suppose B is elected mayor and, during his first

term, he is twice suspended for misconduct for a total of 1 year. If he is twice
reelected after that, can he run for one more term in the next election?

Yes, because he has served only two full terms

successively.

In both cases, the mayor is entitled to run for reelection

because the two conditions for the application of the disqualification
provisions have not concurred, namely, that the local official concerned has
been elected three consecutive times and that he has fully served three
consecutive terms. In the first case, even if the local official is considered to
have served three full terms notwithstanding his resignation before the end
of the first term, the fact remains that he has not been elected three times.
In the second case, the local official has been elected three consecutive
times, but he has not fully served three consecutive terms.

Case No. 3. The case of vice-mayor C who becomes mayor

by succession involves a total failure of the two conditions to concur for the
purpose of applying Art. X, §8. Suppose he is twice elected after that term,
is he qualified to run again in the next election?

Yes, because he was not elected to the office of mayor in the

first term but simply found himself thrust into it by operation of law. Neither
had he served the full term because he only continued the service,
interrupted by the death, of the deceased mayor.

To consider C in the third case to have served the first term in

full and therefore ineligible to run a third time for reelection would be not
only to falsify reality but also to unduly restrict the right of the people to
choose whom they wish to govern them. If the vice-mayor turns out to be a
bad mayor, the people can remedy the situation by simply not reelecting
him for another term. But if, on the other hand, he proves to be a good
mayor, there will be no way the people can return him to office (even if it is
just the third time he is standing for reelection) if his service of the first term
is counted as one for the purpose of applying the term limit.

BAYAN MUNA Representatives SATUR C. OCAMPO, TEODORO A. CASIÑO, and
JOEL G. VIRADOR, GABRIELA WOMEN'S PARTY Representative LIZA L. MAZA,
ANAKPAWIS Representatives RAFAEL V. MARIANO and CRISPIN B. BELTRAN,
Rep. FRANCIS G. ESCUDERO, Rep. EDUARDO C. ZIALCITA, Rep. LORENZO R.
TAÑADA III, DR. CAROL PAGADUAN-ARAULLO and RENATO M. REYES, JR. of
BAYAN, MARIE HILAO-ENRIQUEZ of KARAPATAN, ANTONIO L. TINIO of ACT,
FERDINAND GAITE of COURAGE, GIOVANNI A. TAPANG of AGHAM, WILFREDO
MARBELLA of KMP, LANA LINABAN of GABRIELA, AMADO GAT INCIONG,
RENATO CONSTANTINO, JR., DEAN PACIFICO H. AGABIN, SHARON R.
DUREMDES of the NATIONAL COUNCIL OF CHURCHES IN THE PHILIPPINES, and
BRO. EDMUNDO L. FERNANDEZ (FSC) of the
ASSOCIATION OF MAJOR RELIGIOUS SUPERIORS OF THE PHILIPPINES
(AMRSP), petitioners, vs. EDUARDO ERMITA, in his capacity as Executive
Secretary, ROMULO NERI, in his capacity as Director-General of the NATIONAL
ECONOMIC and DEVELOPMENT AUTHORITY (NEDA) and the Administrator of the
NATIONAL STATISTICS OFFICE (NSO), respondents.
FACTS:
This case involves two consolidated petitions for certiorari, prohibition, and
mandamus under Rule 65 of the Rules of Court, seeking the nullification of Executive
Order No. 420 (EO 420) on the ground that it is unconstitutional. EO 420, issued by
President Gloria Macapagal-Arroyo on 13 April 2005, reads:
REQUIRING ALL GOVERNMENT AGENCIES AND GOVERNMENT-
OWNED AND CONTROLLED CORPORATIONS TO STREAMLINE AND HARMONIZE
THEIR IDENTIFICATION (ID) SYSTEMS, AND AUTHORIZING FOR SUCH PURPOSE
THE DIRECTOR-GENERAL, NATIONAL ECONOMIC AND DEVELOPMENT
AUTHORITY TO IMPLEMENT THE SAME, AND FOR OTHER PURPOSES
Under EO 420, the President directs all government agencies and
government-owned and controlled corporations to adopt a uniform data collection and
format for their existing identification (ID) systems. The purposes of the uniform ID data
collection and ID format are to reduce costs, achieve efficiency and reliability, insure
compatibility, and provide convenience to the people served by government entities.
Section 3 of EO 420 limits the data to be collected and recorded under the uniform ID
system to only 14 specific items, namely: (1) Name; (2) Home Address; (3) Sex; (4)
Picture; (5) Signature; (6) Date of Birth; (7) Place of Birth; (8) Marital Status; (9) Name of
Parents; (10) Height; (11) Weight;
Two index fingers and two thumbmarks; (13) Any prominent distinguishing features
like moles or others; and (14) Tax Identification Number. Section 5 of EO 420 prescribes
the safeguards on the collection, recording, and disclosure of personal identification data
to protect the right to privacy. The following safeguards are instituted:
The data to be recorded and stored, which shall be used only for purposes of
establishing the identity of a person, shall be limited
San Beda College of Law
Based on ATTY. ADONIS V. GABRIEL lectures
to those specified in Section 3 of this executive order; aEAIDH
In no case shall the collection or compilation of other data in violation
of a person's right to privacy be allowed or tolerated under this order;
Stringent systems of access control to data in the identification
system shall be instituted;
Data collected and stored for this purpose shall be kept and treated
as strictly confidential and a personal or written authorization of the Owner
shall be required for access and disclosure of data;
The identification card to be issued shall be protected by advanced
security features and cryptographic technology;
A written request by the Owner of the identification card shall be
required for any correction or revision of relevant data, or under such
conditions as the participating agency issuing the identification card shall
prescribe.
ISSUES:
Whether or not EO 420 is a usurpation of legislative power by the
President.
Whether or not EO 420 infringes on the citizen's right to privacy.
HELD:
No, EO 420 is not a usurpation of legislative power by the President.
Section 2 of EO 420 provides, "Coverage. — All government agencies and
government-owned and controlled corporations issuing ID cards to their
members or constituents shall be covered by this executive order." EO 420
applies only to government entities that issue ID cards as part of their
functions under existing laws. These government entities have already
been issuing ID cards even prior to EO 420. Examples of these government
entities are the GSIS, SSS, Philhealth, Mayor's Office, LTO, PRC and
similar government entities. Section 1 of EO 420 directs these government
entities to "adopt a unified multi-purpose ID system." Thus, all government
entities that issue IDs as part of their functions under existing laws are
required to adopt a uniform data collection and format for their IDs.
Second, the President may by executive or administrative
order direct the government entities under the Executive department to
adopt a uniform ID data collection and format. Section 17, Article VII of the
1987 Constitution provides that the "President shall have control of all
executive departments, bureaus and offices." The same Section also
mandates the President to "ensure that the laws be faithfully executed."
Certainly, under this constitutional power of control the
President can direct all government entities, in the exercise of their
168
Alliance for Alternative Action

THE ADONIS CASES 2011

 functions under existing laws, to adopt a uniform ID data collection and ID format to achieve savings, efficiency, reliability, compatibility, and convenience to the
public. The President's constitutional power of control is self-executing and does not need any implementing legislation.

Of course, the President's power of control is limited to the Executive branch of government and does not extend to the Judiciary or to the independent
constitutional commissions. Thus, EO 420 does not apply to the Judiciary, or to the COMELEC which under existing laws is also authorized to issue voter's ID cards.
This only shows that EO 420 does not establish a national ID system because legislation is needed to establish a single ID system that is compulsory for all branches
of government.

Constitution also mandates the President to ensure that the laws are faithfully executed. There are several laws mandating government entities to
reduce costs, increase efficiency, and in general, improve public services.

The adoption of a uniform ID data collection and format under EO 420 is designed to reduce costs, increase efficiency, and in general, improve public
services. Thus, in issuing EO 420, the President is simply performing the constitutional duty to ensure that the laws are faithfully executed.

No, EO 420 does not infringe on the citizen’s right to privacy. Section 3 of EO 420 limits the data to be collected and recorded under the uniform ID system to
only 14 specific items, namely: (1) Name; (2) Home Address;

Sex; (4) Picture; (5) Signature; (6) Date of Birth; (7) Place of Birth; (8) Marital Status; (9) Name of Parents; (10) Height; (11) Weight; (12) Two index fingers and
two thumbmarks; (13) Any prominent distinguishing features like moles or others; and (14) Tax Identification Number.

These limited and specific data are the usual data required for personal identification by government entities, and even by the private sector. Any one
who applies for or renews a driver's license provides to the LTO all these 14 specific data.

The data collected and stored for the unified ID system under EO 420 will be limited to only 14 specific data, and the ID card itself will show only eight
specific data. The data collection, recording and ID card system under EO 420 will even require less data collected, stored and revealed than under the disparate
systems prior to EO 420.

Prior to EO 420, government entities had a free hand in determining the kind, nature and extent of data to be collected and stored for their ID systems.
Under EO 420, government entities can collect and record only the 14 specific data mentioned in Section 3 of EO 420. In addition, government entities can show in
their ID cards only eight of these specific data, seven less data than what the Supreme Court's ID shows.

Also, prior to EO 420, there was no executive issuance to government entities prescribing safeguards on the collection, recording, and disclosure of
personal identification data to protect the right to privacy. Now, under Section 5 of EO 420, the following safeguards are instituted:

The data to be recorded and stored, which shall be used only for purposes of establishing the identity of a person, shall be limited to those specified in
Section 3 of this executive order;

In no case shall the collection or compilation of other data in violation of a person's right to privacy be allowed or tolerated under this order;

Stringent systems of access control to data in the identification system shall be instituted;

Data collected and stored for this purpose shall be kept and treated as strictly confidential and a personal or written authorization of the Owner shall
be required for access and disclosure of data;

The identification card to be issued shall be protected by advanced security features and cryptographic technology;

A written request by the Owner of the identification card shall be required for any correction or revision of relevant data, or under such conditions as
the participating agency issuing the identification card shall prescribe.

 In the present case, EO 420 does not establish a national ID system but makes the existing sectoral card systems of government entities like GSIS, SSS,
fice of the Treasurer of
Philhealth and LTO less costly, more efficient, reliable and user-friendly to the public. Hence, EO 420 is a proper subject
each city or municipality shall register the BMBE's and issue a Certificate of Authority to enable the BMBE
to avail of the benefits under this Act. Any such applications shall be processed within fifteen (15) working
days upon submission of complete documents. Otherwise, the BMBEs shall be deemed registered. The
Municipal or City Mayor may appoint a BMBE Registration Officer who shall be under the Office of the
Treasurer. Local government units (LGU's) are encouraged to establish a One-Stop-business Registration
Center to handle the efficient registration and processing of permits/licenses of BMBEs. Likewise, LGUs
shall make a periodic evaluation of the BMBE's financial status for monitoring and reporting purposes.
 The LGUs shall issue the Certificate of Authority promptly and free of charge. However, to defray the
administrative costs of registering and monitoring the BMBEs, the LGUs may charge a fee renewal.
 The Certificate of Authority shall be effective for a period of two (2) years, renewable for a period of two
(2) years for every renewal.
 As much as possible, BMBEs shall be subject to minimal bureaucratic requirements and reasonable fees
and charges.
 Section 5. Who are Eligible to Register – Any person, natural or juridical, or cooperative, or association,
having the qualifications as defined in Section 3(a) hereof may apply for registration as BMBE.
 Section 6. Transfer of Ownership - The BMBE shall report to the city or municipality of any changer in the
status of its ownership structure, and shall surrender the original copy of the BMBE Certificate of Authority
for notation of the transfer.
 INCENTIVES AND BENEFITS
 Section 7. Exemption from Taxes and Fees – All BMBEs shall be exempt from tax for income arising from
the operations of the enterprise.
 The LGUs are encouraged either to reduce the amount of local taxes, fees and charges imposed or to
exempt BMBEs from local taxes, fees and charges.
 Section 8. Exemption from the Coverage of the Minimum Wage Law – The BMBEs shall be exempt from
the coverage of the Minimum Wage Law: Provided, That all employees covered under this Act shall be
entitled to the same benefits given to any regular employee such as social security and healthcare
benefits.
 Section 9. Credit Delivery – upon the approval of this Act, the land Bank of the Philippines (LBP), the
Development Bank of the Philippines (DBP), the Small Business Guarantee and Finance Corporation
(SBGFC), and the People's Credit and Finance Corporation (PCFC) shall set up a special credit window that
will service the financing needs of BMBEs registered under this Act consistent with the Banko Sentral ng
Pilipinas (BSP) policies; rules and regulations. The Government Service Insurance System (GSIS) and
Social Security System (SSS) shall likewise set up a special credit window that will serve the financing
needs of their respective members who wish to establish a BMBE. The concerned financial institutions
(FIs) encouraged to wholesale the funds to accredited private financial institutions including community-
based organizations such as credit, cooperatives, non-government organizations (NGOs) and people's
organizations, which will in turn, directly provide credit support to BMBEs.
 All loans from whatever sources granted to BMBEs under this Act shall be considered as part of alternative
compliance to Presidential Decree no, 717,, otherwise known as the Agri-Agra Law, or to Republic Act. No.
6977, known as the Magna Carta for Small and Medium Enterprises, as amended. For purposes of
compliance with presidential Decree no. 717 and Republic Act No. 6977, as amended, loans granted to
BMBEs under this Act shall be computed at twice the amount of the face value of the loans.
 To minimize the risks in lending to the BMBEs, the SBGFC and the Quedan and Rural Credit Guarantee
Corporation (QUEDANCOR) under the Department of Agriculture, in case of agribusiness activities, shall
set up a special guarantee window to provide the necessary credit guarantee to BMBEs unde rtheir
respective guarantee programs.
 The LBP, DBP. PCFC, SBGFC, SSS, GSIS, and QUEDANCOR shall annually report to the appropriate
Committee of Both Houses of Congress on the status of the implementation of this provision.
 The BSP shall formulate the rules for the implementation of this provision and shall likewise establish
incentive programs to encourage and improve credit delivery to the BMBEs.
 Section 10. Technology Transfer, Production and Management Training, and marketing Assistance – A
BMBE Development Fund shall be set up with an endowment of Three Hundred Million pesos
(P300,000,000.00) from the Philippine Amusement and Gaming Corporation (PAGCOR) and shall be
administered by the SMED Council.
 The Department of Trade and Industry (DTI), the Department of Science and Technology (DOST), the
university of the Philippines Institute for Small Scale Industries (UP ISSI), Cooperative Development
Authority (CDA), Technical Education and Skills Development Authority (TESDA), and Technology and
Livelihood Resource Center (TLRC) may avail of the said Fund for technology transfer, production and
management training and marketing assistance to BMBEs.
 The DTI, in coordination with the private sector and non-government organization (NGOs), shall explore
the possibilities of linking or matching-up BMBEs with small, medium and large enterprises and likewise
establish incentives therefor.
 The DTI, in behalf of the DOST, UP ISSI, CDA. TESDA and TLRC shall be required to furnish the
appropriate Committees of both Houses of Congress a yearly report on the development and
accomplishments of their projects and programs in relation to technology transfer, production and
management training and marketing assistance extended to BMBEs.
 Section 11. Trade and Investment Promotions – The data gathered from business registration shall be
made accessible to and shall be utilized by private sector organizations and non-government organizations
for purposes of business matching, trade and investment promotion.
 INFORMATION DISSEMINATION
 Section 12. Information Dissemination - The Philippine Information Agency (PIA), in accordance with the
Department of Labor and Employment (DOLE), the DILG and the DTI, shall ensure the proper and
adequate information dissemination of the contents and benefits of this Act to the general public especially
to its intended beneficiaries specifically in the barangay level.
 PENALTY
 Section 13. Penalty - Any person who shall willfully violates any provision of this Act or who shall in any
manner commit any act to defeat any provisions of this Act shall, upon conviction, be punished by a fine
of not less than twenty-five Thousand Pesos (P25,000.00) but not more than Fifty Thousand Pesos
(P50,000.00) and suffer imprisonment of not less than six (6) months but not more than two (2) years.
 In case of non-compliance with the provisions of Section 9 of this Act, the BSP shall impose administrative
sanctions and other penalties on the concerned government financial institutions, including a fine of not
less than Five Hundred Thousand Pesos (P500,000.00)
 MISCELLANEOUS PROVISIONS
 Section 14. Annual Report – The DILG, DTI, and BSP shall submit an annual report to the Congress on
the status of the implementation of this Act.
 Section 15. Implementing Rules and Regulations – The Secretary of the Department of Trade and
Industry, in consultation with the Secretaries of the DILG, DOF, and the BSP Governor shall formulate the
necessary ruled and regulations to implement the provisions of this Act within ninety (90) days after its
approval. The rules and regulations issued pursuant to this section shall take effect fifteen (15) days after
its publication in a newspaper of general circulation.
 Section 16. Separably Clause - If any provision or part hereof, is held invalid or unconstitutional, the
remainder of the law or the provision not otherwise affected shall remain valid and subsisting.
 Section 17. Repealing Clause – Existing laws, presidential decrees, executive orders, proclamations or
administrative regulations that are inconsistent with the provisions of this Act are hereby amended,
modified, superseded or repealed accordingly.
 Section 18. Effectivity – This Act shall take effect fifteen (15) days after its publication in the Office
Gazette or in at least two (2) newspaper of general circulation.
 enterprise engaged in the production, processing or manufacturing of products or commodities, including
agro-processing, trading and services, whose total assets including those arising from loans but exclusive
of the land on which the particular business entity's office, plant and equipment are situated, shall not be
more than Three Million Pesos (P3,000,000.00) The Above definition shall be subjected to review and
upward adjustment by the SMED Council, as mandated under Republic Act No. 6977, as amended by
Republic Act No. 8289.
 For the purpose of this Act, "service" shall exclude those rendered by any one, who is duly licensed
government after having passed a government licensure examination, in connection with the exercise of
one's profession.
 (b) "Certificate of Authority" is the certificate issued granting the authority to the registered BMBE to
operate and be entitled to the benefits and privileges accorded thereto.
 (c) "Assets" refers to all kinds of properties, real or personal, owned by the BMBE and used for the
conduct of its business as defined by the SMED Council: Provided, That for the purpose of exemption from
taxes and fees under this Act, this term shall mean all kinds of properties, real or personal, owned and/or
used by the BMBE for the conduct of its business as defined by the SMED Council.
 (d) "Registration" refers to the inclusion of BMBE in the BMBE Registry of a city or municipality.
 (e) "Financing" refers to all borrowings of the BMBE from all sources after registration.
 REGISTRATION AND OPERATION OF BMBE
 Section 4. Registration and Fees - The Office of the Treasurer of each city or municipality shall register
the BMBE's and issue a Certificate of Authority to enable the BMBE to avail of the benefits under this Act.
Any such applications shall be processed within fifteen (15) working days upon submission of complete
documents. Otherwise, the BMBEs shall be deemed registered. The Municipal or City Mayor may appoint a
BMBE Registration Officer who shall be under the Office of the Treasurer. Local government units (LGU's)
are encouraged to establish a One-Stop-business Registration Center to handle the efficient registration
and processing of permits/licenses of BMBEs. Likewise, LGUs shall make a periodic evaluation of the
BMBE's financial status for monitoring and reporting purposes.
 The LGUs shall issue the Certificate of Authority promptly and free of charge. However, to defray the
administrative costs of registering and monitoring the BMBEs, the LGUs may charge a fee renewal.
 The Certificate of Authority shall be effective for a period of two (2) years, renewable for a period of two
(2) years for every renewal.
 As much as possible, BMBEs shall be subject to minimal bureaucratic requirements and reasonable fees
and charges.
 Section 5. Who are Eligible to Register – Any person, natural or juridical, or cooperative, or association,
having the qualifications as defined in Section 3(a) hereof may apply for registration as BMBE.
 Section 6. Transfer of Ownership - The BMBE shall report to the city or municipality of any changer in the
status of its ownership structure, and shall surrender the original copy of the BMBE Certificate of Authority
for notation of the transfer.
 INCENTIVES AND BENEFITS
 Section 7. Exemption from Taxes and Fees – All BMBEs shall be exempt from tax for income arising from
the operations of the enterprise.
 The LGUs are encouraged either to reduce the amount of local taxes, fees and charges imposed or to
exempt BMBEs from local taxes, fees and charges.
 Section 8. Exemption from the Coverage of the Minimum Wage Law – The BMBEs shall be exempt from
the coverage of the Minimum Wage Law: Provided, That all employees covered under this Act shall be
entitled to the same benefits given to any regular employee such as social security and healthcare
benefits.
 Section 9. Credit Delivery – upon the approval of this Act, the land Bank of the Philippines (LBP), the
Development Bank of the Philippines (DBP), the Small Business Guarantee and Finance Corporation
(SBGFC), and the People's Credit and Finance Corporation (PCFC) shall set up a special credit window that
will service the financing needs of BMBEs registered under this Act consistent with the Banko Sentral ng
Pilipinas (BSP) policies; rules and regulations. The Government Service Insurance System (GSIS) and
Social Security System (SSS) shall likewise set up a special credit window that will serve the financing
needs of their respective members who wish to establish a BMBE. The concerned financial institutions
(FIs) encouraged to wholesale the funds to accredited private financial institutions including community-
 based organizations such as credit, cooperatives, non-government organizations (NGOs) and people's
organizations, which will in turn, directly provide credit support to BMBEs.
 All loans from whatever sources granted to BMBEs under this Act shall be considered as part of alternative
compliance to Presidential Decree no, 717,, otherwise known as the Agri-Agra Law, or to Republic Act. No.
6977, known as the Magna Carta for Small and Medium Enterprises, as amended. For purposes of
compliance with presidential Decree no. 717 and Republic Act No. 6977, as amended, loans granted to
BMBEs under this Act shall be computed at twice the amount of the face value of the loans.
 To minimize the risks in lending to the BMBEs, the SBGFC and the Quedan and Rural Credit Guarantee
Corporation (QUEDANCOR) under the Department of Agriculture, in case of agribusiness activities, shall
set up a special guarantee window to provide the necessary credit guarantee to BMBEs unde rtheir
respective guarantee programs.
 The LBP, DBP. PCFC, SBGFC, SSS, GSIS, and QUEDANCOR shall annually report to the appropriate
Committee of Both Houses of Congress on the status of the implementation of this provision.
 The BSP shall formulate the rules for the implementation of this provision and shall likewise establish
incentive programs to encourage and improve credit delivery to the BMBEs.
 Section 10. Technology Transfer, Production and Management Training, and marketing Assistance – A
BMBE Development Fund shall be set up with an endowment of Three Hundred Million pesos
(P300,000,000.00) from the Philippine Amusement and Gaming Corporation (PAGCOR) and shall be
administered by the SMED Council.
 The Department of Trade and Industry (DTI), the Department of Science and Technology (DOST), the
university of the Philippines Institute for Small Scale Industries (UP ISSI), Cooperative Development
Authority (CDA), Technical Education and Skills Development Authority (TESDA), and Technology and
Livelihood Resource Center (TLRC) may avail of the said Fund for technology transfer, production and
management training and marketing assistance to BMBEs.
 The DTI, in coordination with the private sector and non-government organization (NGOs), shall explore
the possibilities of linking or matching-up BMBEs with small, medium and large enterprises and likewise
establish incentives therefor.
 The DTI, in behalf of the DOST, UP ISSI, CDA. TESDA and TLRC shall be required to furnish the
appropriate Committees of both Houses of Congress a yearly report on the development and
accomplishments of their projects and programs in relation to technology transfer, production and
management training and marketing assistance extended to BMBEs.
 Section 11. Trade and Investment Promotions – The data gathered from business registration shall be
made accessible to and shall be utilized by private sector organizations and non-government organizations
for purposes of business matching, trade and investment promotion.
 INFORMATION DISSEMINATION
 Section 12. Information Dissemination - The Philippine Information Agency (PIA), in accordance with the
Department of Labor and Employment (DOLE), the DILG and the DTI, shall ensure the proper and
adequate information dissemination of the contents and benefits of this Act to the general public especially
to its intended beneficiaries specifically in the barangay level.
 PENALTY
 Section 13. Penalty - Any person who shall willfully violates any provision of this Act or who shall in any
manner commit any act to defeat any provisions of this Act shall, upon conviction, be punished by a fine
of not less than twenty-five Thousand Pesos (P25,000.00) but not more than Fifty Thousand Pesos
(P50,000.00) and suffer imprisonment of not less than six (6) months but not more than two (2) years.
 In case of non-compliance with the provisions of Section 9 of this Act, the BSP shall impose administrative
sanctions and other penalties on the concerned government financial institutions, including a fine of not
less than Five Hundred Thousand Pesos (P500,000.00)
 MISCELLANEOUS PROVISIONS
 Section 14. Annual Report – The DILG, DTI, and BSP shall submit an annual report to the Congress on
the status of the implementation of this Act.
 Section 15. Implementing Rules and Regulations – The Secretary of the Department of Trade and
Industry, in consultation with the Secretaries of the DILG, DOF, and the BSP Governor shall formulate the
necessary ruled and regulations to implement the provisions of this Act within ninety (90) days after its
approval. The rules and regulations issued pursuant to this section shall take effect fifteen (15) days after
its publication in a newspaper of general circulation.
 Section 16. Separably Clause - If any provision or part hereof, is held invalid or unconstitutional, the
remainder of the law or the provision not otherwise affected shall remain valid and subsisting.
 Section 17. Repealing Clause – Existing laws, presidential decrees, executive orders, proclamations or
administrative regulations that are inconsistent with the provisions of this Act are hereby amended,
modified, superseded or repealed accordingly.
 Section 18. Effectivity – This Act shall take effect fifteen (15) days after its publication in the Office
Gazette or in at least two (2) newspaper of general circulation.
 De Guzman v. Comelec, GR 146319, October 26, 2001

31, 1996 decision2 of the Regional Trial Court of Makati, Branch 133, in Civil Case No. 92-516 which declared private respondents
Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and copyright, and unfair
competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units simply
referred to as light boxes. These units utilize specially printed posters sandwiched between plastic sheets and illuminated with back
lights. Pearl and Dean was able to secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated
display units. The advertising light boxes were marketed under the trademark "Poster Ads". The application for registration of the
trademark was filed with the Bureau of Patents, Trademarks and Technology Transfer on June 20, 1983, but was approved only on
September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro
Industrial Services to manufacture its advertising displays.
 Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and installation of the
light boxes in SM City North Edsa. Since SM City North Edsa was under construction at that time, SMI offered as an alternative, SM
Makati and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985, Pearl and Dean’s General Manager, Rodolfo Vergara,
submitted for signature the contracts covering SM Cubao and SM Makati to SMI’s Advertising Promotions and Publicity Division
Manager, Ramonlito Abano. Only the contract for SM Makati, however, was returned signed. On October 4, 1985, Vergara wrote
Abano inquiring about the other co De Guzman v. Comelec, GR 146319, October 26, 2001
 De Guzman v. Comelec, GR 146319, October 26, 2001
 De Guzman v. Comelec, GR 146319, October 26, 2001
 De Guzman v. Comelec, GR 146319, October 26, 2001
 De Guzman v. Comelec, GR 146319, October 26, 2001
 De Guzman v. Comelec, GR 146319, October 26, 2001
 De Guzman v. Comelec, GR 146319, October 26, 2001
 De Guzman v. Comelec, GR 146319, October 26, 2001
 De Guzman v. Comelec, GR 146319, October 26, 2001
 De Guzman v. Comelec, GR 146319, October 26, 2001
ntract and reminding him that their agreement for installation of light boxes was not only for its SM Makati branch, but also for SM
Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean that it was rescinding the contract for SM
Makati due to non-performance of the terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action
of SMI, saying it was without basis. In the same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display units, offered
to construct light boxes for Shoemart’s chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently
fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD
Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in 1991. These were delivered on a
staggered basis and installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and in the fastfood
section of SM Cubao. Upon investigation, Pearl and Dean found out that aside from the two (2) reported SM branches, light boxes
similar to those it manufactures were also installed in two (2) other SM stores. It further discovered that defendant-appellant North
Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising
space in lighted display units located in SMI’s different branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and NEMI enjoining them to cease
using the subject light boxes and to remove the same from SMI’s establishments. It also demanded the discontinued use of the
trademark "Poster Ads," and the payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos
(P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light boxes and NEMI took down
its advertisements for "Poster Ads" from the lighted display units in SMI’s stores. Claiming that both SMI and NEMI failed to meet
all its demands, Pearl and Dean filed this instant case for infringement of trademark and copyright, unfair competition and
damages.
In denying the charges hurled against it, SMI maintained that it independently developed its poster panels using commonly known
techniques and available technology, without notice of or reference to Pearl and Dean’s copyright. SMI noted that the registration of
the mark "Poster Ads" was only for stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word
"Poster Ads" is a generic term which cannot be appropriated as a trademark, and, as such, registration of such mark is invalid. It
also stressed that Pearl and Dean is not entitled to the reliefs prayed for in its complaint since its advertising display units contained
no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it and that
the suit was purely intended to malign SMI’s good name. On this basis, SMI, aside from praying for the dismissal of the case, also
counterclaimed for moral, actual and exemplary damages and for the cancellation of Pearl and Dean’s Certification of Copyright
Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor having engaged in the business
of advertising. It repleaded SMI’s averments, admissions and denials and prayed for similar reliefs and counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright under Section 2 of PD 49,
as amended, and infringement of trademark under Section 22 of RA No. 166, as amended, and are hereby penalized under
Section31, 1996 decision2 of the Regional Trial Court of Makati, Branch 133, in Civil Case No. 92-516 which declared private
respondents Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and copyright, and
unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units simply
referred to as light boxes. These units utilize specially printed posters sandwiched between plastic sheets and illuminated with back
lights. Pearl and Dean was able to secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated
display units. The advertising light boxes were marketed under the trademark "Poster Ads". The application for registration of the
trademark was filed with the Bureau of Patents, Trademarks and Technology Transfer on June 20, 1983, but was approved only on
September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro
Industrial Services to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and installation of the
light boxes in SM City North Edsa. Since SM City North Edsa was under construction at that time, SMI offered as an alternative, SM
Makati and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985, Pearl and Dean’s General Manager, Rodolfo
Vergara, submitted for signature the contracts covering SM Cubao and SM Makati to SMI’s Advertising Promotions and Publicity
Division Manager, Ramonlito Abano. Only the contract for SM Makati, however, was returned signed. On October 4, 1985, Vergara
wrote Abano inquiring about the other contract and reminding him that their agreement for installation of light boxes was not only
for its SM Makati branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean that it was rescinding the contract for SM
Makati due to non-performance of the terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action
of SMI, saying it was without basis. In the same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display units, offered
to construct light boxes for Shoemart’s chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently
fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD
Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in 1991. These were delivered on a
staggered basis and installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and in the fastfood
section of SM Cubao. Upon investigation, Pearl and Dean found out that aside from the two (2) reported SM branches, light boxes
similar to those it manufactures were also installed in two (2) other SM stores. It further discovered that defendant-appellant North
Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising
space in lighted display units located in SMI’s different branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and NEMI enjoining them to cease
using the subject light boxes and to remove the same from SMI’s establishments. It also demanded the discontinued use of the
trademark "Poster Ads," and the payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos
(P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light boxes and NEMI took down
its advertisements for "Poster Ads" from the lighted display units in SMI’s stores. Claiming that both SMI and NEMI failed to meet
all its demands, Pearl and Dean filed this instant case for infringement of trademark and copyright, unfair competition and
damages.
In denying the charges hurled against it, SMI maintained that it independently developed its poster panels using commonly known
techniques and available technology, without notice of or reference to Pearl and Dean’s copyright. SMI noted that the registration of
the mark "Poster Ads" was only for stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word
"Poster Ads" is a generic term which cannot be appropriated as a trademark, and, as such, registration of such mark is invalid. It
also stressed that Pearl and Dean is not entitled to the reliefs prayed for in its complaint since its advertising display units contained
no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it and that
the suit was purely intended to malign SMI’s good name. On this basis, SMI, aside from praying for the dismissal of the case, also
counterclaimed for moral, actual and exemplary damages and for the cancellation of Pearl and Dean’s Certification of Copyright
Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor having engaged in the business
of advertising. It repleaded SMI’s averments, admissions and denials and prayed for similar reliefs and counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright under Section 2 of PD 49,
as amended, and infringement of trademark under Section 22 of RA No. 166, as amended, and are hereby penalized under
Section31, 1996 decision2 of the Regional Trial Court of Makati, Branch 133, in Civil Case No. 92-516 which declared private
respondents Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and copyright, and
unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units simply
referred to as light boxes. These units utilize specially printed posters sandwiched between plastic sheets and illuminated with back
lights. Pearl and Dean was able to secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated
display units. The advertising light boxes were marketed under the trademark "Poster Ads". The application for registration of the
trademark was filed with the Bureau of Patents, Trademarks and Technology Transfer on June 20, 1983, but was approved only on
September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro
Industrial Services to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and installation of the
light boxes in SM City North Edsa. Since SM City North Edsa was under construction at that time, SMI offered as an alternative, SM
Makati and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985, Pearl and Dean’s General Manager, Rodolfo
Vergara, submitted for signature the contracts covering SM Cubao and SM Makati to SMI’s Advertising Promotions and Publicity
Division Manager, Ramonlito Abano. Only the contract for SM Makati, however, was returned signed. On October 4, 1985, Vergara
wrote Abano inquiring about the other contract and reminding him that their agreement for installation of light boxes was not only
for its SM Makati branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean that it was rescinding the contract for SM
Makati due to non-performance of the terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action
of SMI, saying it was without basis. In the same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display units, offered
to construct light boxes for Shoemart’s chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently
fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD
Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in 1991. These were delivered on a
staggered basis and installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and in the fastfood
section of SM Cubao. Upon investigation, Pearl and Dean found out that aside from the two (2) reported SM branches, light boxes
similar to those it manufactures were also installed in two (2) other SM stores. It further discovered that defendant-appellant North
Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising
space in lighted display units located in SMI’s different branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and NEMI enjoining them to cease
using the subject light boxes and to remove the same from SMI’s establishments. It also demanded the discontinued use of the
trademark "Poster Ads," and the payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos
(P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light boxes and NEMI took down
its advertisements for "Poster Ads" from the lighted display units in SMI’s stores. Claiming that both SMI and NEMI failed to meet
all its demands, Pearl and Dean filed this instant case for infringement of trademark and copyright, unfair competition and
damages.
In denying the charges hurled against it, SMI maintained that it independently developed its poster panels using commonly known
techniques and available technology, without notice of or reference to Pearl and Dean’s copyright. SMI noted that the registration of
the mark "Poster Ads" was only for stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word
"Poster Ads" is a generic term which cannot be appropriated as a trademark, and, as such, registration of such mark is invalid. It
also stressed that Pearl and Dean is not entitled to the reliefs prayed for in its complaint since its advertising display units contained
no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it and that
the suit was purely intended to malign SMI’s good name. On this basis, SMI, aside from praying for the dismissal of the case, also
counterclaimed for moral, actual and exemplary damages and for the cancellation of Pearl and Dean’s Certification of Copyright
Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor having engaged in the business
of advertising. It repleaded SMI’s averments, admissions and denials and prayed for similar reliefs and counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright under Section 2 of PD 49,
as amended, and infringement of trademark under Section 22 of RA No. 166, as amended, and are hereby penalized under
Section31, 1996 decision2 of the Regional Trial Court of Makati, Branch 133, in Civil Case No. 92-516 which declared private
respondents Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and copyright, and
unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units simply
referred to as light boxes. These units utilize specially printed posters sandwiched between plastic sheets and illuminated with back
lights. Pearl and Dean was able to secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated
display units. The advertising light boxes were marketed under the trademark "Poster Ads". The application for registration of the
trademark was filed with the Bureau of Patents, Trademarks and Technology Transfer on June 20, 1983, but was approved only on
September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro
Industrial Services to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and installation of the
light boxes in SM City North Edsa. Since SM City North Edsa was under construction at that time, SMI offered as an alternative, SM
Makati and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985, Pearl and Dean’s General Manager, Rodolfo
Vergara, submitted for signature the contracts covering SM Cubao and SM Makati to SMI’s Advertising Promotions and Publicity
Division Manager, Ramonlito Abano. Only the contract for SM Makati, however, was returned signed. On October 4, 1985, Vergara
wrote Abano inquiring about the other contract and reminding him that their agreement for installation of light boxes was not only
for its SM Makati branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean that it was rescinding the contract for SM
Makati due to non-performance of the terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action
of SMI, saying it was without basis. In the same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display units, offered
to construct light boxes for Shoemart’s chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently
fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD
Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in 1991. These were delivered on a
staggered basis and installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and in the fastfood
section of SM Cubao. Upon investigation, Pearl and Dean found out that aside from the two (2) reported SM branches, light boxes
similar to those it manufactures were also installed in two (2) other SM stores. It further discovered that defendant-appellant North
Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising
space in lighted display units located in SMI’s different branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and NEMI enjoining them to cease
using the subject light boxes and to remove the same from SMI’s establishments. It also demanded the discontinued use of the
trademark "Poster Ads," and the payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos
(P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light boxes and NEMI took down
its advertisements for "Poster Ads" from the lighted display units in SMI’s stores. Claiming that both SMI and NEMI failed to meet
all its demands, Pearl and Dean filed this instant case for infringement of trademark and copyright, unfair competition and
damages.
In denying the charges hurled against it, SMI maintained that it independently developed its poster panels using commonly known
techniques and available technology, without notice of or reference to Pearl and Dean’s copyright. SMI noted that the registration of
the mark "Poster Ads" was only for stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word
"Poster Ads" is a generic term which cannot be appropriated as a trademark, and, as such, registration of such mark is invalid. It
also stressed that Pearl and Dean is not entitled to the reliefs prayed for in its complaint since its advertising display units contained
no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it and that
the suit was purely intended to malign SMI’s good name. On this basis, SMI, aside from praying for the dismissal of the case, also
counterclaimed for moral, actual and exemplary damages and for the cancellation of Pearl and Dean’s Certification of Copyright
Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor having engaged in the business
of advertising. It repleaded SMI’s averments, admissions and denials and prayed for similar reliefs and counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright under Section 2 of PD 49,
as amended, and infringement of trademark under Section 22 of RA No. 166, as amended, and are hereby penalized under
Sectionv31, 1996 decision2 of the Regional Trial Court of Makati, Branch 133, in Civil Case No. 92-516 which declared private
respondents Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and copyright, and
unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units simply
referred to as light boxes. These units utilize specially printed posters sandwiched between plastic sheets and illuminated with back
lights. Pearl and Dean was able to secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated
display units. The advertising light boxes were marketed under the trademark "Poster Ads". The application for registration of the
trademark was filed with the Bureau of Patents, Trademarks and Technology Transfer on June 20, 1983, but was approved only on
September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro
Industrial Services to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and installation of the
light boxes in SM City North Edsa. Since SM City North Edsa was under construction at that time, SMI offered as an alternative, SM
Makati and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985, Pearl and Dean’s General Manager, Rodolfo
Vergara, submitted for signature the contracts covering SM Cubao and SM Makati to SMI’s Advertising Promotions and Publicity
Division Manager, Ramonlito Abano. Only the contract for SM Makati, however, was returned signed. On October 4, 1985, Vergara
wrote Abano inquiring about the other contract and reminding him that their agreement for installation of light boxes was not only
for its SM Makati branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean that it was rescinding the contract for SM
Makati due to non-performance of the terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action
of SMI, saying it was without basis. In the same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display units, offered
to construct light boxes for Shoemart’s chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently
fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD
Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in 1991. These were delivered on a
staggered basis and installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and in the fastfood
section of SM Cubao. Upon investigation, Pearl and Dean found out that aside from the two (2) reported SM branches, light boxes
similar to those it manufactures were also installed in two (2) other SM stores. It further discovered that defendant-appellant North
Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising
space in lighted display units located in SMI’s different branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and NEMI enjoining them to cease
using the subject light boxes and to remove the same from SMI’s establishments. It also demanded the discontinued use of the
trademark "Poster Ads," and the payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos
(P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light boxes and NEMI took down
its advertisements for "Poster Ads" from the lighted display units in SMI’s stores. Claiming that both SMI and NEMI failed to meet
all its demands, Pearl and Dean filed this instant case for infringement of trademark and copyright, unfair competition and
damages.
In denying the charges hurled against it, SMI maintained that it independently developed its poster panels using commonly known
techniques and available technology, without notice of or reference to Pearl and Dean’s copyright. SMI noted that the registration of
the mark "Poster Ads" was only for stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word
"Poster Ads" is a generic term which cannot be appropriated as a trademark, and, as such, registration of such mark is invalid. It
also stressed that Pearl and Dean is not entitled to the reliefs prayed for in its complaint since its advertising display units contained
no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it and that
the suit was purely intended to malign SMI’s good name. On this basis, SMI, aside from praying for the dismissal of the case, also
counterclaimed for moral, actual and exemplary damages and for the cancellation of Pearl and Dean’s Certification of Copyright
Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor having engaged in the business
of advertising. It repleaded SMI’s averments, admissions and denials and prayed for similar reliefs and counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright under Section 2 of PD 49,
as amended, and infringement of trademark under Section 22 of RA No. 166, as amended, and are hereby penalized under
Section31, 1996 decision2 of the Regional Trial Court of Makati, Branch 133, in Civil Case No. 92-516 which declared private
respondents Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and copyright, and
unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units simply
referred to as light boxes. These units utilize specially printed posters sandwiched between plastic sheets and illuminated with back
lights. Pearl and Dean was able to secure a Certificate of Copyright Registration dated January 20, 1981 over these illuminated
display units. The advertising light boxes were marketed under the trademark "Poster Ads". The application for registration of the
trademark was filed with the Bureau of Patents, Trademarks and Technology Transfer on June 20, 1983, but was approved only on
September 12, 1988, per Registration No. 41165. From 1981 to about 1988, Pearl and Dean employed the services of Metro
Industrial Services to manufacture its advertising displays.
Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and installation of the
light boxes in SM City North Edsa. Since SM City North Edsa was under construction at that time, SMI offered as an alternative, SM
Makati and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985, Pearl and Dean’s General Manager, Rodolfo
Vergara, submitted for signature the contracts covering SM Cubao and SM Makati to SMI’s Advertising Promotions and Publicity
Division Manager, Ramonlito Abano. Only the contract for SM Makati, however, was returned signed. On October 4, 1985, Vergara
wrote Abano inquiring about the other contract and reminding him that their agreement for installation of light boxes was not only
for its SM Makati branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean that it was rescinding the contract for SM
Makati due to non-performance of the terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action
of SMI, saying it was without basis. In the same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its display units, offered
to construct light boxes for Shoemart’s chain of stores. SMI approved the proposal and ten (10) light boxes were subsequently
fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD
Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in 1991. These were delivered on a
staggered basis and installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and in the fastfood
section of SM Cubao. Upon investigation, Pearl and Dean found out that aside from the two (2) reported SM branches, light boxes
similar to those it manufactures were also installed in two (2) other SM stores. It further discovered that defendant-appellant North
Edsa Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing Services, was set up primarily to sell advertising
space in lighted display units located in SMI’s different branches. Pearl and Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and NEMI enjoining them to cease
using the subject light boxes and to remove the same from SMI’s establishments. It also demanded the discontinued use of the
trademark "Poster Ads," and the payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos
(P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light boxes and NEMI took down
its advertisements for "Poster Ads" from the lighted display units in SMI’s stores. Claiming that both SMI and NEMI failed to meet
all its demands, Pearl and Dean filed this instant case for infringement of trademark and copyright, unfair competition and
damages.
In denying the charges hurled against it, SMI maintained that it independently developed its poster panels using commonly known
techniques and available technology, without notice of or reference to Pearl and Dean’s copyright. SMI noted that the registration of
the mark "Poster Ads" was only for stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word
"Poster Ads" is a generic term which cannot be appropriated as a trademark, and, as such, registration of such mark is invalid. It
also stressed that Pearl and Dean is not entitled to the reliefs prayed for in its complaint since its advertising display units contained
no copyright notice, in violation of Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it and that
the suit was purely intended to malign SMI’s good name. On this basis, SMI, aside from praying for the dismissal of the case, also
counterclaimed for moral, actual and exemplary damages and for the cancellation of Pearl and Dean’s Certification of Copyright
Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor having engaged in the business
of advertising. It repleaded SMI’s averments, admissions and denials and prayed for similar reliefs and counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright under Section 2 of PD 49,
as amended, and infringement of trademark under Section 22 of RA No. 166, as amended, and are hereby penalized under Section