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PAGODA PHILIPPINES, INC., G.R. No. 160966


Petitioner,
Present:
Panganiban, J.,
Chairman,
Sandoval-Gutierrez,
- versus - Corona,
Carpio Morales, and
Garcia, JJ
Promulgated:
UNIVERSAL CANNING, INC.,*
Respondent. October 11, 2005
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --- -- -- -- -- x
DECISION
PANGANIBAN, J.:
T
he Rules on voluntary inhibition do not give judges the unfettered
discretion to desist from hearing a case. The motion for inhibition
must be grounded on just and valid causes. The mere imputation of
bias or partiality is not enough basis for them to inhibit, especially
when the charge is groundless.
The Case
Before us is a Petition for Review [1] under Rule 45 of the Rules of
Court, challenging the August 14, 2003 Decision [2] of the Court of
Appeals (CA) in CA-GR SP No. 77514 and the November 24, 2003
Resolution[3] denying petitioners Motion for Reconsideration. The
decretal portion or fallo of the assailed Decision reads as follows:
WHEREFORE, foregoing
considered, the instant petition for mandamus is
hereby GRANTED. Public respondents Order
dated May 22, 2003, voluntarily inhibiting
himself from the case is hereby SET ASIDE.
Public respondent is DIRECTED to continue
hearing the case and dispose of the same with
utmost dispatch.
The Facts
The facts are narrated by the CA as follows:
[Petitioner] filed a civil complaint against
[respondent] for Trademark Infringement, False
Representation and Unfair Competition with
Damages and Injunction. The case was docketed
as Civil Case [N]o. 02-102988.
[Petitioner] claimed that [respondents] Familys
Brand Sardines is confusingly similar with
[petitioners] Family Brand Sardines. [Petitioner]
insisted that it has superior right to use the
trademark Family than [respondent].
[Respondent] filed an Answer with Compulsory
Counter-claim and Motion to Dismiss and Prayer

for the Issuance of a Temporary Restraining


Order and/or Preliminary Injunction.
[Respondent] prayed that [petitioner] be
enjoined from using the trademark Family and to
pay damages. [Respondent] further asked [Judge
Antonio M. Eugenio, Jr.] to set the hearing for its
motion to dismiss the action on the grounds of
lack of authority of the affiant of the complaint to
institute the action, insufficient verification and
failure to exhaust administrative remedies.
After hearing, [Judge Eugenio] issued a
temporary
restraining
order
enjoining
[petitioner] to use the trademark Family.
On March 21, 2003, [Judge Eugenio] dismissed
without prejudice, [petitioners] complaint on the
ground of insufficient verification as invoked by
[respondent].
[Respondent] filed a motion for reconsideration
of the Order dismissing [petitioners] complaint,
claiming that the defect in the verification has
been rendered moot and academic by subsequent
rulings respective to the application for
preliminary injunction and that the attending
circumstances of the case warrant liberal
compliance [with] the rule.
[Petitioner] filed a Motion for Voluntary
Inhibition, requesting [Judge Eugenio] to inhibit
himself from proceeding to hear, try and decide
the pending incidents of the case to afford
[petitioner] an impartial trial.
[Respondent] opposed [petitioners] Motion for
Voluntary Inhibition.
On May 22, 2003, [Judge Eugenio] issued an
Order voluntarily inhibiting himself from further
hearing the case.
Hence, [the] petition [filed with the CA] by
[respondent] for mandamus to compel [Judge
Eugenio] to continue to hear the pending
incidents of the case.[4]
Ruling of the Court of Appeals
Finding no valid and just reason for the voluntary inhibition of Judge
Eugenio, the CA issued the writ of mandamus. It ruled that the
present case fell within the exception that mandamus would lie in
instances of gross abuse of discretion.
Hence, this Petition.[5]
Issue
The issue was worded by petitioner in this wise:

The principal issue raised by the petitioner for


this Honorable Court to resolve is whether or not
a petition for mandamus is the proper remedy to
assail a purely discretionary act of Judge Antonio
Eugenio, Jr. of voluntarily inhibiting himself
from hearing Civil Case No. 02-102988 and
corollary thereto, whether Judge Eugenio, Jr.
who inhibited himself in accordance with the law
and the Rules, can be compelled to perform an
act he had already decided not to do with the
intention of assuring the litigants of an impartial
trial.[6]
The Court believes that there are actually two issues to be settled in
this case: first, whether mandamus is the proper remedy to assail an
order of voluntary inhibition; and second, whether there was a valid
and just reason for the voluntary inhibition of the trial court judge.
The Courts Ruling
The Petition is unmeritorious.
First Issue:
Remedy Against the
Order of Voluntary Inhibition

At the outset, we note that petitioner, in an effort to cover its bases,


filed the present Petition as both a petition for review under Rule
45 and a petition for certiorari under Rule 65 of the Rules of Court.
The applicable rule is Rule 45, which clearly provides that decisions,
final orders or resolutions of the CA in any case -- regardless of the
nature of the action or proceeding involved -- may be appealed to this
Court through a petition for review. This remedy is a continuation of
the appellate process over the original case. [7] It is basic that where
Rule 45 is available, and in fact availed of as a remedy -- as in this
case -- recourse under Rule 65 cannot be allowed either as an add-on
or as a substitute for appeal.[8]
The procedural infirmity notwithstanding, this Court shall deal with
this Petition as one filed under Rule 45 only and shall treat the alleged
grave abuse of discretion on the part of the CA as an allegation of
reversible error.
Petitioner claims that respondent erred when the latter questioned
the trial judges Order of Voluntary Inhibition --supposedly a purely
discretionary act -- through a Petition for Mandamus filed with the
CA.
While, ordinarily, mandamus will not prosper to compel a
discretionary act, the writ shall issue in instances of gross abuse of
discretion, manifest injustice or palpable excess of authority,
equivalent to denial of a settled right to which petitioner is
entitled; and when there is no other plain, speedy and adequate
remedy.[9] This Court has recognized that [a] judges decision to refuse
to act on account of some disqualification is not conclusive, and his
competency may be determined on an application for mandamus to
compel him to act.[10]

2
Second Issue:
Inhibition
Section 1 of Rule 137 of the Rules of Court provides:
Section 1. Disqualification of judges. No judge or
judicial officer shall sit in any case in which he, or
his wife or child, is pecuniarily interested as heir,
legatee, creditor or otherwise, or in which he is
related to either party within the sixth degree of
consanguinity or affinity, or to counsel within the
fourth degree, computed according to the rules of
the civil law, or in which he has been executor,
administrator, guardian, trustee or counsel, or in
which he has presided in any inferior court when
his ruling or decision is the subject of review,
without the written consent of all parties in
interest, signed by them and entered upon the
record.
A judge may, in the exercise of his sound
discretion, disqualify himself from sitting in a
case, for just or valid reasons other than those
mentioned above.

A perusal of the records of the case fails to reveal that any bias or x
prejudice motivated Judge Eugenio in issuing the Writ of Preliminary ---------------------------------------------------------------------------------Injunction in favor of respondent or in dismissing petitioners ------ x
Complaint. Neither did this Court find any questionable or suspicious
circumstances leading to the issuance of those Orders, as suggested
by petitioner.
DECISION
This Court has repeatedly held that for bias and prejudice to be
considered valid reasons for the voluntary inhibition of judges, mere
suspicion is not enough. Bare allegations of their partiality will not YNARES-SANTIAGO, J.:
suffice in the absence of clear and convincing evidence to overcome
the presumption that a judge will undertake his noble role to dispense
justice according to law and evidence and without fear or favor. [16]
In his questioned Order of Inhibition, Judge Eugenio himself
satisfactorily clarified his actuations and the circumstances leading to
the issuance of the questioned injunction and Order of dismissal.
Obviously not believing that he had been motivated by bias or
prejudice, he nonetheless granted petitioners Motion to Inhibit.
Understandably, he did so with the intention to uphold the integrity
of the judiciary as an institution worthy of public trust and
confidence. Under the circumstances, however, to affirm his Order of
Inhibition would open the floodgates to a form of forum-shopping, in
which litigants would be allowed to shop for a judge more
sympathetic to their cause. [17] Such action would be antithetical to the
speedy and fair administration of justice.

This petition for review assails the Decision [1] of the Court of Appeals
in CA-G.R. SP No. 88004 dated October 21, 2005, which affirmed the
December 7, 2004 Order[2] of Director General Emma C. Francisco of
the Intellectual Property Office (IPO), in Appeal No. 14-2004-0004
finding that petitioners appeal was filed out of time, as well as the
Resolution[3] dated January 12, 2006 denying the motion for
reconsideration.

Respondent IN-N-OUT Burger, Inc., a foreign corporation organized


The Rules contemplate two kinds of inhibition: compulsory and
voluntary. Under the first paragraph of the cited Rule, it is
WHEREFORE, the Petition is hereby DENIED and the under the laws of California, U.S.A., and not doing business in the
Philippines, filed before the Bureau of Legal Affairs of the IPO (BLAconclusively presumed that judges cannot actively and impartially sit assailed Decision AFFIRMED. Costs against petitioner.
IPO), an administrative complaint against petitioners Sehwani, Inc.
in the instances mentioned. The second paragraph, which embodies
and Benitas Frites, Inc. for violation of intellectual property rights,
voluntary inhibition, leaves to the sound discretion of the judges
THIRD DIVISION
attorneys fees and damages with prayer for the issuance of a
concerned whether to sit in a case for other just and valid reasons,
restraining order or writ of preliminary injunction. [4]
with only their conscience as guide.[11]
In Umale v. Villaluz,[12] the Court traced the history of the second
paragraph of the above-quoted provision, which had been added only
as an amendment to the Rules of Court in 1964. Prior to that year, the
question on whether to take cognizance of the case did not depend
upon the discretion of the judges not legally disqualified to sit in a
given case. If those concerned were not disqualified, it was their
official duty to proceed with the case or else risk being called upon to
account for their dereliction. They could not voluntarily inhibit
themselves on grounds of prejudice or bias, extreme delicacy, or even
if they themselves took great interest and an active part in the filing of
the case. Gutierrez v. Santos[13] and Del Castillo v. Javelona[14] paved
the way for the recognition of other circumstances for disqualification
--those that depended upon the exercise of discretion of the judges
concerned.

SEHWANI, INCORPORATED G.R. No. 171053


and/or BENITAS FRITES, INC.,
Petitioner, Present:
Ynares-Santiago, J. (Chairperson),
- versus - Austria-Martinez,

Respondent alleged that it is the owner of the tradename


IN-N-OUT and trademarks IN-N-OUT, IN-N-OUT Burger & Arrow
Design and IN-N-OUT Burger Logo, which are used in its business
since 1948 up to the present. These tradename and trademarks were
registered in the United States as well as in other parts of the world.[5]
C
hicoNazario,

The judges right, however, must be weighed against their duty to


decide cases without fear of repression. Verily, the second paragraph
of Section 1 of Rule 137 does not give judges the unfettered discretion
to decide whether to desist from hearing a case. The inhibition must
be for just and valid causes. The mere imputation of bias or partiality IN-N-OUT BURGER, INC.,
is not enough ground for them to inhibit, especially when the charge
is without basis. This Court has to be shown acts or conduct clearly Respondent. Promulgated:
indicative of arbitrariness or prejudice before it can brand them with
the stigma of bias or partiality. [15]
October 15, 2007

On June 2, 1997, respondent applied with the IPO for the


registration
of its trademark IN-N-OUT Burger & Arrow Design and
N
achura, servicemark IN-N-OUT. In the course of its application, respondent
discovered that petitioner Sehwani, Inc. had obtained Trademark
and
Registration No. 56666 for the mark IN N OUT (THE INSIDE OF
THE LETTER O FORMED LIKE A STAR) on December 17,
R
1993 without its authority.[6] Respondent thus demanded that
eyes, JJ.
petitioner Sehwani, Inc. desist from claiming ownership of the mark
IN-N-OUT and to voluntarily cancel its Trademark Registration No.
56666. Petitioner Sehwani, Inc. however refused to accede to the
demand and even entered into a Licensing Agreement granting its copetitioner Benitas Frites, Inc. license to use for a period of five years
the trademark IN-N-OUT BURGER in its restaurant in Pasig City.
[7]
Hence, respondent filed a complaint for violation of intellectual
property rights.

3
In their answer with counterclaim, petitioners alleged that
respondent lack the legal capacity to sue because it was not doing
business in the Philippines and that it has no cause of action because
WHEREFORE, premises considered,
its mark is not registered or used in the Philippines. Petitioner
the MOTION TO ADMIT COPY OF DECISION
Sehwani, Inc. also claimed that as the registered owner of the IN-NNO. 2003-02 is hereby granted. The instant
OUT mark, it enjoys the presumption that the same was validly
appeal, however, is hereby DISMISSED for
acquired and that it has the exclusive right to use the mark. Moreover,
having been filed out of time.[15]
petitioners argued that other than the bare allegation of fraud in the
registration of the mark, respondent failed to show the existence of
any of the grounds for cancellation thereof under Section 151 of
Republic Act (R.A.) No. 8293, otherwise known as The Intellectual Aggrieved, petitioners filed a petition before the Court of Appeals
Property Code of the Philippines.[8]
which was dismissed for lack of merit. It held that the right to appeal
is not a natural right or a part of due process, but a procedural
remedy of statutory origin, hence, its requirements must be strictly
complied with. The appeal being filed out of time, the December 22,
On December 22, 2003, Bureau Director Estrellita Beltran-Abelardo 2003 Decision and the October 28, 2004 Orders of Bureau Director
rendered Decision No. 2003-02 finding that respondent has the legal Beltran-Abelardo are now final and executory.[16]
capacity to sue and that it is the owner of the internationally wellknown trademarks; however, she held that petitioners are not guilty
of unfair competition, thus:
Meanwhile, respondent filed a Manifestation with the Court of
Appeals that on December 23, 2005, Director General Adrian S.
Cristobal, Jr. had rendered a Decision in Appeal 10-05-01 finding
With the foregoing disquisition,
petitioners guilty of unfair competition.[17]
Certificate of Registration No. 56666 dated 17
December 1993 for the mark IN-N-OUT (the
inside of the letter O formed like a star) issued in
favor of Sehwani, Incorporated is hereby
Petitioners motion for reconsideration was denied; hence,
CANCELLED. Consequently,
Respondents
the instant petition raising the following issues:
Sehwani, Inc. and Benitas Frites are hereby
ordered to permanently cease and desist from
using the mark IN-N-OUT and IN-N-OUT
BURGER LOGO on its goods and in its
THE
COURT
OF
APPEALS
business. With regard to mark Double-Double,
COMMITTED GRAVE ERROR IN UPHOLDING
considering that as earlier discussed, the mark
THE IPO DIRECTOR GENERALS DISMISSAL
has been approved by this Office for publication
OF APPEAL NO. 14-2004-0004 ON A MERE
and that as shown by the evidence, Complainant
TECHNICALITY.
is the owner of the said mark, Respondents are
also ordered to permanently cease and desist
from using the mark Double-Double. NO COSTS.

SO ORDERED.

[9]

Petitioners filed a motion for reconsideration [10] insisting that


respondent has no legal capacity to sue, that no ground for
cancellation was duly proven, and that the action is barred
by laches; while
respondent
moved
for
partial
reconsideration[11] assailing the finding that petitioners are not guilty
of unfair competition. Both, however, were denied in Resolution No.
2004-18 dated October 28, 2004[12] and Resolution No. 2005-05
dated April 25, 2005,[13] respectively.

SUBSTANTIAL JUSTICE WOULD BE


BETTER SERVED IF THE COURT OF APPEALS
AND THE IPO DIRECTOR GENERAL
ENTERTAINED PETITIONERS APPEAL AS
THE BUREAU OF LEGAL AFFAIRS DECISION
AND
RESOLUTION
(1)
CANCELING
PETITIONER SEHWANIS CERTIFICATE OF
REGISTRATION FOR THE MARK IN-N-OUT,
AND (2) ORDERING PETITIONERS TO
PERMANENTLY CEASE AND DESIST FROM
USING THE SUBJECT MARK ON ITS GOODS
AND BUSINESS ARE CONTRARY TO LAW
AND/OR NOT SUPPORTED BY EVIDENCE.[18]

On separate dates, the parties appealed to the Office of the


Director General which rendered an Order dated December 7, 2004,
[14]
in Appeal No. 14-2004-0004, dismissing petitioners appeal for
Petitioners contend that the Court of Appeals erred when it dismissed
being filed out of time, thus:
the petition on mere technicality which resulted in a miscarriage of
justice and deprivation of intellectual property rights. They claim that

their counsel believed in good faith that Resolution No. 2004-18


dated October 28, 2004, denying the motion for reconsideration, was
received only on November 3, 2004, thus, they have until November
18, 2004 within which to file an appeal memorandum with the Office
of the Director General. They claim that they should not be prejudiced
by their counsels mistake in computing the period to appeal; besides,
the same is understandable and excusable as their counsel is a solo
practitioner with only a handful of non-legal staff assisting him. They
also reiterate their position that respondent has no legal capacity to
sue, that no ground for cancellation was duly proven, and that the
complaint is barred by laches, if not, by prescription.[19]

The petition has no merit.

The Court has invariably ruled that perfection of an appeal


within the statutory or reglementary period is not only mandatory but
also jurisdictional; failure to do so renders the questioned
decision/final order final and executory, and deprives the appellate
court of jurisdiction to alter the judgment or final order, much less to
entertain the appeal.[20] True, this rule had been relaxed but only in
highly meritorious cases to prevent a grave injustice from being done.
[21]
Such does not obtain in this case.

Director General Francisco, as affirmed by the Court of


Appeals, correctly held:

[T]hat the appeal must be dismissed


outright. Section 2 of the Uniform Rules on
Appeal (Office Order no. 12, s. 2002) states
that:

Section 2. Appeal
to the Director General. The
decisions or final orders of
the Bureau Director shall
become final and executory
thirty (30) days after receipt
of a copy thereof by the
appellant
or
appellants
unless, within the same
period,
a
motion
for
reconsideration is filed with
the Bureau Director or an
appeal to the Director
General has been perfected;
Provided, that only one (1)
motion for reconsideration
of the decision or order of
the Bureau Director shall be

4
allowed, and, in case the
motion for reconsideration is
denied, the appellant or
appellants has/have the
balance of the period
prescribed above within
which to file the appeal.

Considering that the RespondentAppellants received a copy of the appealed


Decision on 15 January 2004 and filed their
MOTION FOR RECONSIDERATION on 30
January 2004, said parties had a balance of 15
days from their receipt of the Resolution denying
said motion within which to file the APPEAL
MEMORANDUM. Per records of the Bureau of
Legal Affairs, the Respondents-Appellants
received a copy of the Resolution on 29 October
2004. Hence the deadline for the filing of the
APPEAL MEMORANDUM was on 13 November
2004.Since said date fell on a Saturday, the
appeal should have been filed on the ensuing
working day, that is, 15 November 2004.

On this score, Section 5(c) of the


Uniform Rules on Appeal provides:

Section 5. Action on the


Appeal Memorandum The
Director General shall:

(Underscoring
supplied)
[22]

Section 3 thereof provides:


Petitioners allegation that they honestly believed that they
received
Resolution
No.
2004-18
dated October
28,
2004 on November 3, 2004 and not on October 29, 2004, as what
appears on the records of the BLA-IPO, is self-serving and
unbelievable. The inadvertent computation of the period for one to
file a pleading is inexcusable, and has become an all too familiar and
ready excuse on the part of lawyers remiss in their bounden duty to
comply with the mandatory periods.[23]

This Court has always reminded the members of the legal


profession that every case they handle deserves full and undivided
attention, diligence, skill and competence, regardless of its
importance.[24] A lawyer has the responsibility of monitoring and
keeping track of the period of time left to file pleadings and to see to it
that said pleadings are filed before the lapse of the period. If he fails
to do so, his client is bound by his conduct, negligence and mistakes.
[25]
This responsibility is imposed on all lawyers notwithstanding the Respondent anchors its causes of action under Articles 6 bis and 8
presence or absence of staff assisting them in the discharge thereof.
of The Convention of Paris for the Protection of Industrial Property,
otherwise known as the Paris Convention, wherein both the United
States and the Philippines are signatories.[26] The Articles read:
Thus, as correctly held by the Court of Appeals, petitioners
belated filing of an appeal memorandum rendered the December 22,
2003 Decision and the October 28, 2004 Order of Bureau Director
Beltran-Abelardo final and executory.

At this point, the Court could very well write finis to this
petition. However, in disposing of the instant case, we shall resolve
the principal issues raised by petitioners.

xxxx

c) Dismiss the appeal for


being
patently
without
merit, provided
that the dismissal
shall be outright if
the appeal is not
filed within the
prescribed
period or
for
failure
of
the
appellant to pay
the required fee
within the period
of
appeal.

SECTION
3. International
Conventions and Reciprocity. Any person who is
a national or who is domiciled or has a real and
effective industrial establishment in a country
which is a party to any convention, treaty or
agreement relating to intellectual property rights
or the repression of unfair competition, to which
the Philippines is also a party, or extends
reciprocal rights to nationals of the Philippines
by law, shall be entitled to benefits to the extent
necessary to give effect to any provision of such
convention, treaty or reciprocal law, in addition
to the rights to which any owner of an intellectual
property right is otherwise entitled by this Act.

Contrary to petitioners argument, respondent has the legal


capacity to sue for the protection of its trademarks, albeit it is not
doing business in the Philippines.Section 160 in relation to Section 3
of R.A. No. 8293, provides:

SECTION 160. Right of Foreign


Corporation to Sue in Trademark or Service
Mark Enforcement Action. Any foreign national
or juridical person who meets the requirements
of Section 3 of this Act and does not engage in
business in the Philippines may bring a civil or
administrative action hereunder for opposition,
cancellation, infringement, unfair competition, or
false designation of origin and false description,
whether or not it is licensed to do business in the
Philippines under existing laws.

Article 6bis

(1) The countries of the Union undertake, ex


officio if their legislation so permits, or at the
request of an interested party, to refuse or to
cancel the registration, and to prohibit the use, of
a trademark which constitutes a reproduction, an
imitation, or a translation, liable to create
confusion, of a mark considered by the
competent authority of the country of
registration or use to be well known in that
country as being already the mark of a person
entitled to the benefits of this Convention and
used for identical or similar goods. These
provisions shall also apply when the essential
part of the mark constitutes a reproduction of
any such well-known mark or an imitation liable
to create confusion therewith.

x x x x.

Article 8

5
A tradename shall be protected in all countries of
the Union without the obligation of filing or
registration whether or not it forms part of a
trademark.

Article 6bis which governs the protection of well-known


trademarks, is a self-executing provision and does not require
legislative enactment to give it effect in the member country. It may
be applied directly by the tribunals and officials of each member
country by the mere publication or proclamation of the Convention,
after its ratification according to the public law of each state and the
order for its execution. The essential requirement under this Article is
that the trademark to be protected must be "well-known" in the
country where protection is sought. The power to determine whether
a trademark is well-known lies in the competent authority of the
country of registration or use. This competent authority would be
either the registering authority if it has the power to decide this, or
the courts of the country in question if the issue comes before a court.
[27]

The question of whether or not respondents trademarks are


considered well-known is factual in nature, involving as it does the
appreciation of evidence adduced before the BLA-IPO. The settled
rule is that the factual findings of quasi-judicial agencies, like the IPO,
which have acquired expertise because their jurisdiction is confined
to specific matters, are generally accorded not only respect, but, at
times, even finality if such findings are supported by substantial
evidence.[28]
Director Beltran-Abelardo found that:

for cheeseburgers, hamburgers, hot coffee and


milkshake for consumption on or off premises
(Exhibit N); US Trademark Registration No.
1,085,163 IN-N-OUT under Class 42 dated
February 7, 1978 for Restaurant Services and
carry-out restaurant services (Exhibit Q). For its
mark Double-Double it submitted Certificates of
Registration of said mark in several countries
(Exhibits MM and submarkings).

decision in the previous inter partes case and


which set the criteria for determining whether a
mark is well known, takes into consideration the
extent of registration of a mark. Similarly, the
implementing rules of Republic Act 8293,
specifically Section (e) Rule 102 Criteria for
determining whether a mark is well known, also
takes into account the extent to which the mark
has been registered in the world in determining
whether a mark is well known.

xxxx

Moreover, complainant also cites our


decision in Inter Pares Case No. 14-1998-00045
dated 12 September 2000, an opposition case
involving the mark IN-N-OUT between IN-NOUT Burger (herein complainant) and Nestor SJ
Bonjales where we ruled:

Likewise, as shown by the records of


the instant case, Complainant submitted
evidence consisting of articles about IN-N-OUT
Burger appearing in magazines, newspapers and
print-out of what appears to be printed
representations
of
its
internet
website
(www.innout.com) (Exhibits CCC to QQQ), as
well as object evidence consisting of videotapes of
famous celebrities mentioning IN-N-OUT
burgers in the course of their interviews (Exhibits
EEEE and FFFF) showing a tremendous
following among celebrities.

And last but not


the lease, the herein Opposer
was
able
to
prove
substantially
that
its
mark IN-N-OUT Burger and
Arrow
Design
is
an
internationally well known
mark as evidenced by its
trademark
registrations
around the world and its
comprehensive
advertisements therein.

The quality image and reputation


acquired by the complainants IN-N-OUT mark is
unmistakable. With this, complainants mark
have met other criteria set in the Implementing
Rules of Republic Act 8293, namely, a and d of
Rule 102, to wit:

Rule 102:
Arguing mainly that it is the owner of
an
internationally
well-known
mark,
complainant presented its United States
trademark registrations, namely: United States
Trademark Registration No. 1,514,689 for the
mark IN-N-OUT Burger and Arrow Design under
class 25 dated November 29, 1988 for the shirts
(Exhibit
L);
United
States
Trademark
Registration No. 1,528,456 for the mark IN-NOUT Burger and Arrow Design under Class 29,
30, 32 and 42 dated March 7, 1989 for milk and
french-fried potatoes for consumption on or off
the premises, for hamburger sandwiches,
cheeseburger sandwiches, hot coffee and
milkshakes for consumption on or off the
premises, lemonade and softdrinks for
consumption on and off the premises, restaurant
services respectively (Exhibit M); US Trademark
Registration No. 1,101,638 for the mark IN-NOUT under Class No. 30 dated September 5, 1978

The nub of complainants reasoning is that the


Intellectual Property Office as a competent
authority had declared in previous inter partes
case that IN-N-OUT Burger and Arrow Design is
an internationally well known mark.

In the aforementioned case, we are


inclined to favor the declaration of the mark INN-OUT as an internationally well-known mark
on the basis of registrations in various countries
around the world and its comprehensive
advertisements therein.

The Ongpin Memorandum dated 25


October 1983 which was the basis for the

(a) the duration, extent and


geographical area of
any use of the mark, in
particular, the duration,
extent and geographical
area of any promotion
of the mark, including
publicity
and
the
presentation at fairs or
exhibitions,
of
the
goods and/or services
to which the mark
applies;

xxxx

6
(d) the quality image or
reputation acquired by the
mark

Hence, on the basis of evidence presented


consisting of worldwide registration of mark INN-OUT almost all of which were issued earlier
than the respondents date of filing of its
application and the subsequent registration of
the mark IN-N-OUT in this Office, as well as the
advertisements therein by the complainant, this
Office hereby affirms its earlier declaration that
indeed, the mark IN-N-OUT BURGER LOGO is
an internally well-known mark.[29]
We find the foregoing findings and conclusions of Director
Beltran-Abelardo fully substantiated by the evidence on record and in
accord with law.

The fact that respondents marks are neither registered nor


used in the Philippines is of no moment. The scope of protection
initially afforded by Article 6bis of the Paris Convention has been
expanded in the 1999 Joint Recommendation Concerning Provisions
on the Protection of Well-Known Marks, wherein the World
Intellectual Property Organization (WIPO) General Assembly and the
Paris Union agreed to a nonbinding recommendation that a wellknown mark should be protected in a country even if the mark is
neither registered nor used in that country. Part I, Article 2(3) thereof
provides:

(3) [Factors Which Shall Not Be Required] (a) A


Member State shall not require, as a condition for
determining whether a mark is a well-known
mark:

(i) that the mark has been used in, or that the
mark has been registered or that an application
for registration of the mark has been filed in or in
respect of, the Member State;

(ii) that the mark is well known in, or that the


mark has been registered or that an application
for registration of the mark has been filed in or in

respect of, any jurisdiction other than the


Member State; or

Finally, petitioners contention that respondent is precluded


from asserting its claim by laches, if not by prescription, lacks
basis. Section 151(b) of R.A. No. 8293 specifically provides that a
petition to cancel the registration of a mark which is registered
contrary to the provisions thereof, or which is used to misrepresent
the source of the goods or services, may be filed at any
(iii) that the mark is well known by the public at
time. Moreover, laches may not prevail against a specific provision of
large in the Member State. (Underscoring
law, since equity, which has been defined as justice outside legality is
supplied)
applied in the absence of and not against statutory law or rules of
procedure.[31] Aside from the specific provisions of R.A. No. 8293, the
Paris Convention and the WIPO Joint Recommendation have the
force and effect of law, for under Section 2, Article II of the
Moreover, petitioners claim that no ground exists for the Constitution, the Philippines adopts the generally accepted principles
cancellation of their registration lacks merit. Section 151(b) of RA of international law as part of the law of the land. To rule otherwise
would be to defeat the equitable consideration that no one other than
8293 provides:
the owner of the well-known mark shall reap the fruits of an honestly
established goodwill.

SECTION 151. Cancellation. 151.1. A


petition to cancel a registration of a mark under
this Act may be filed with the Bureau of Legal
Affairs by any person who believes that he is or
will be damaged by the registration of a mark
under this Act as follows:

WHEREFORE, the petition is DENIED. The Decision and


Resolution of the Court of Appeals in CA-G.R. SP No. 88004, dated
October 21, 2005 and January 16, 2006, affirming the December 7,
2004 Order of Director General Emma C. Francisco, in Appeal No.
14-2004-0004, and denying the motion for reconsideration,
respectively, are AFFIRMED.

xxxx
SO ORDERED.
(b) At any time, if the registered mark
becomes the generic name for the goods or
services, or a portion thereof, for which it is
registered, or has been abandoned, or its
registration
was
obtained
fraudulently
or contrary to the provisions of this Act, or if the
registered mark is being used by, or with the
permission of, the registrant so as to
misrepresent the source of the goods or services
on or in connection with which the mark is
used. x x x.

E.Y. INDUSTRIAL SALES, INC. G.R. No. 184850


and ENGRACIO YAP,
Petitioners, Present:
CORONA, C.J., Chairperson,
VELASCO, JR.,
- versus - LEONARDO - DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.
SHEN DAR ELECTRICITY AND Promulgated:
MACHINERY CO., LTD.,
Respondent. October 20, 2010
x----------------------------------------------------------------------------------------x

DECISION
The evidence on record shows that not only did the
petitioners use the IN-N-OUT Burger trademark for the name of their VELASCO, JR., J.:
restaurant, but they also used identical or confusingly similar mark
for their hamburger wrappers and french-fries receptacles, thereby
The Case
effectively misrepresenting the source of the goods and services. [30]
This Petition for Review on Certiorari under Rule 45 seeks to nullify
and reverse the February 21, 2008 Decision [1] and the October 6,
2008 Resolution[2] rendered by the Court of Appeals (CA) in CA-G.R.

7
SP No. 99356 entitled Shen Dar Electricity and Machinery Co., Ltd.
v. E.Y. Industrial Sales, Inc. and Engracio Yap.

In its Answer, EYIS and Yap denied the claim of Shen Dar
to be the true owners of the mark VESPA being the sole assembler
and fabricator of air compressors since the early 1990s. They further
alleged that the air compressors that Shen Dar allegedly supplied
them bore the mark SD for Shen Dar and not VESPA. Moreover, EYIS
argued that Shen Dar, not being the owner of the mark, could not
seek protection from the provisions of the Paris Convention or the IP
Code.[16]

The assailed decision reversed the Decision dated May 25,


2007[3] issued by the Director General of the Intellectual Property
Office (IPO) in Inter Partes Case No. 14-2004-00084. The IPO
Director General upheld Certificate of Registration (COR) No. 41999-005393 issued by the IPO for the trademark VESPA in favor of
petitioner E.Y. Industrial Sales, Inc. (EYIS), but ordered the
cancellation of COR No. 4-1997-121492, also for the trademark
VESPA, issued in favor of respondent Shen Dar Electricity and
Thereafter, the Director of the BLA issued its Decision
Machinery Co., Ltd. (Shen Dar). The Decision of the IPO Director dated May 29, 2006 in favor of EYIS and against Shen Dar, the
General, in effect, affirmed the Decision dated May 29, 2006 [4] issued dispositive portion of which reads:
by the Director of the Bureau of Legal Affairs (BLA) of the IPO.
WHEREFORE, premises considered,
The Facts
the Petition for Cancellation is, as it is hereby,
DENIED.
Consequently,
Certificate
of
EYIS is a domestic corporation engaged in the production,
Registration No. 4-1999-[005393] for the mark
distribution and sale of air compressors and other industrial tools and
VESPA granted in the name of E.Y. Industrial
equipment.[5] Petitioner Engracio Yap is the Chairman of the Board of
Sales, Inc. on 9 January 2007 is hereby upheld.
[6]
Directors of EYIS.
Let the filewrapper of VESPA subject
Respondent Shen Dar is a Taiwan-based foreign
matter of this case be forwarded to the
[7]
corporation engaged in the manufacture of air compressors.
Administrative, Financial and Human Resource
Development Services Bureau for issuance and
Both companies claimed to have the right to register the
appropriate action in accordance with this
trademark VESPA for air compressors.
DECISION and a copy thereof furnished to the
Bureau of Trademarks for information and
From 1997 to 2004, EYIS imported air compressors from
update of its records.
Shen Dar through sales contracts. In the Sales Contract dated April
20, 2002,[8] for example, Shen Dar would supply EYIS in one (1) year
SO ORDERED.[17]
with 24 to 30 units of 40-ft. containers worth of air compressors
identified in the Packing/Weight Lists simply as SD-23, SD-29, SD31, SD-32, SD-39, SD-67 and SD-68. In the corresponding Bill of
Shen Dar appealed the decision of the BLA Director to the
Ladings, the items were described merely as air compressors. [9] There Director General of the IPO. In the appeal, Shen Dar raised the
is no documentary evidence to show that such air compressors were following issues:
marked VESPA.
1. Whether the BLA Director erred in ruling that
On June 9, 1997, Shen Dar filed Trademark Application
Shen Dar failed to present evidence;
Serial No. 4-1997-121492 with the IPO for the mark VESPA, Chinese
Characters and Device for use on air compressors and welding
2. Whether the registration of EYIS application was
machines.[10]
proper considering that Shen Dar was the first to
file an application for the mark; and
On July 28, 1999, EYIS filed Trademark Application Serial
No. 4-1999-005393, also for the mark VESPA, for use on air
3. Whether the BLA Director correctly ruled that
compressors.[11] On January 18, 2004, the IPO issued COR No. 4EYIS is the true owner of the mark.[18]
1999-005393 in favor of EYIS. [12] Thereafter, on February 8, 2007,
Later, the IPO Director General issued a Decision dated
Shen Dar was also issued COR No. 4-1997-121492.[13]
May 25, 2007 upholding the COR issued in favor of EYIS while
cancelling the COR of Shen Dar, the dispositive portion of which
In the meantime, on June 21, 2004, Shen Dar filed a reads:
Petition for Cancellation of EYIS COR with the BLA. [14] In the Petition,
Shen Dar primarily argued that the issuance of the COR in favor of
WHEREFORE, premises considered,
EYIS violated Section 123.1 paragraphs (d), (e) and (f) of Republic Act
the appeal is DENIED. Certificate of Registration
No. (RA) 8293, otherwise known as the Intellectual Property
No. 4-1999-005393 for the mark VESPA for air
Code (IP Code), having first filed an application for the mark. Shen
compressor issued in favor of Appellee is hereby
Dar further alleged that EYIS was a mere distributor of air
upheld. Consequently, Certificate of Registration
compressors bearing the mark VESPA which it imported from Shen
No. 4-1997-121492 for the mark VESPA, Chinese
Dar. Shen Dar also argued that it had prior and exclusive right to the
Characters & Device for goods air compressor
use and registration of the mark VESPA in the Philippines under the
and spot welding machine issued in favor of
provisions of the Paris Convention.[15]
Appellant is hereby ordered cancelled.

Let a copy of this Decision as well as


the records of this case be furnished and returned
to the Director of Bureau of Legal Affairs for
appropriate action. Further, let also the Directors
of the Bureau of Trademarks, the Administrative,
Financial and Human Resources Development
Services Bureau, and the Documentation,
Information and Technology Transfer Bureau be
furnished a copy of this Decision for information,
guidance, and records purposes.[19]
Shen Dar appealed the above decision of the IPO Director
General to the CA where Shen Dar raised the following issues:
1.
2.
3.
4.
5.
6.

Whether Shen Dar is guilty of forum shopping;


Whether the first-to-file rule applies to the instant
case;
Whether Shen Dar presented evidence of actual use;
Whether EYIS is the true owner of the mark VESPA;
Whether the IPO Director General erred in cancelling
Shen Dars COR No. 4-1997-121492 without a petition
for cancellation; and
Whether Shen Dar sustained damages.[20]

In the assailed decision, the CA reversed the IPO Director


General and ruled in favor of Shen Dar. The dispositive portion states:
WHEREFORE, premises considered,
the petition is GRANTED. Consequently, the
assailed decision of the Director General of the
Intellectual Property Office dated May 25, 2007
is hereby REVERSED and SET ASIDE. In lieu
thereof, a new one is entered: a) ordering the
cancellation of Certificate of Registration No. 41999-005393 issued on January 19, 2004 for the
trademark VESPA in favor of E.Y. Industrial
Sales, Inc.; b) ordering the restoration of the
validity of Certificate of Registration No. 4-1997121492 for the trademark VESPA in favor of Shen
Dar Electricity and Machinery Co., Ltd. No
pronouncement as to costs.
SO ORDERED.[21]
In ruling for Shen Dar, the CA ruled that, despite the fact
that Shen Dar did not formally offer its evidence before the BLA, such
evidence was properly attached to the Petition for Cancellation. As
such, Shen Dars evidence may be properly considered. The CA also
enunciated that the IPO failed to properly apply the provisions of Sec.
123.1(d) of RA 8293, which prohibits the registration of a trademark
in favor of a party when there is an earlier filed application for the
same mark. The CA further ruled that Shen Dar should be considered
to have prior use of the mark based on the statements made by the
parties in their respective Declarations of Actual Use. The CA added
that EYIS is a mere importer of the air compressors with the mark
VESPA as may be gleaned from its receipts which indicated that EYIS

8
is an importer, wholesaler and retailer, and therefore, cannot be
considered an owner of the mark.[22]
EYIS filed a motion for reconsideration of the assailed
decision which the CA denied in the assailed resolution.
Hence, the instant appeal.
Issues
EYIS and Yap raise the following issues in their petition:
A.

Whether the Director General of the


IPO correctly upheld the rights of
Petitioners over the trademark VESPA.

B.

Whether the Director General of the


IPO can, under the circumstances,
order the cancellation of Respondents
certificate of registration for VESPA,
which has been fraudulently obtained
and erroneously issued.

C.

Whether the Honorable Court of


Appeals was justified in reversing the
findings of fact of the IPO, which
affirm the rights of Petitioner EYIS
over the trademark VESPA and when
such findings are supported by the
evidence on record.

D.

Whether this Honorable Court may


review questions of fact considering
that the findings of the Court of
Appeals and the IPO are in conflict and
the conclusions of the appellee court
are contradicted by the evidence on
record.[23]
The Ruling of the Court

[i]t is a settled rule that in the exercise


of the Supreme Courts power of
review, the Court is not a trier of facts
and does not normally undertake the
re-examination of the evidence
presented by the contending parties
during the trial of the case considering
that the findings of facts of the CA are
conclusive and binding on the
Court. However,
the
Court
had
recognized several exceptions to this
rule, to wit: (1) when the findings are
grounded entirely on speculation,
surmises or conjectures; (2) when the
inference made is manifestly mistaken,
absurd or impossible; (3) when there is
grave abuse of discretion; (4) when the
judgment
is
based
on
a
misapprehension of facts; (5) when the
findings of facts are conflicting; (6)
when in making its findings the Court
of Appeals went beyond the issues of
the case, or its findings are contrary to
the admissions of both the appellant
and the appellee; (7) when the
findings are contrary to the trial
court; (8) when the findings are
conclusions without citation of specific
evidence on which they are based; (9)
when the facts set forth in the petition
as well as in the petitioners main and
reply briefs are not disputed by the
respondent; (10) when the findings of
fact are premised on the supposed
absence of evidence and contradicted
by the evidence on record; and (11)
when the Court of Appeals manifestly
overlooked certain relevant facts not
disputed by the parties, which, if
properly considered, would justify a
different
conclusion.
(Emphasis
supplied.)

At the outset, we note petitioners


failure to adduce any evidence in support of its
allegations in the Petition for Cancellation.
Petitioner did not file nor submit its marked
evidence as required in this Bureaus Order No.
2006-157 dated 25 January 2006 in compliance
with Office Order No. 79, Series of 2005,
Amendments to the Regulations on Inter
Partes Proceedings.[25] x x x
In reversing such finding, the CA cited Sec. 2.4 of BLA
Memorandum Circular No. 03, Series of 2005, which states:
Section 2.4. In all cases, failure to file
the documentary evidences in accordance with
Sections 7 and 8 of the rules on summary
proceedings shall be construed as a waiver on the
part of the parties. In such a case, the original
petition, opposition, answer and the supporting
documents therein shall constitute the entire
evidence for the parties subject to applicable
rules.
The CA concluded that Shen Dar needed not formally offer
its evidence but merely needed to attach its evidence to its position
paper with the proper markings,[26] which it did in this case.
The IP Code provides under its Sec. 10.3 that the Director
General of the IPO shall establish the procedure for the application
for the registration of a trademark, as well as the opposition to it:
Section 10. The Bureau of Legal
Affairs.The Bureau of Legal Affairs shall have the
following functions:
xxxx
10.3. The Director General may by
Regulations establish the procedure to govern the
implementation of this Section.

The appeal is meritorious.


First Issue:
Whether this Court may review the questions of fact
presented
Petitioners raise the factual issue of who the true owner of
the mark is. As a general rule, this Court is not a trier of facts.
However, such rule is subject to exceptions.

Thus, the Director General issued Office Order No. 79,


In the instant case, the records will show that the IPO and Series of 2005 amending the regulations on Inter Partes Proceedings,
the CA made differing conclusions on the issue of ownership based on Sec. 12.1 of which provides:
the evidence presented by the parties. Hence, this issue may be the
subject of this Courts review.
Section 12. Evidence for the Parties
Second Issue:
Whether evidence presented before the BLA must be
formally offered

In New City Builders, Inc. v. National Labor Relations


Commission,[24] the Court ruled that:
We are very much aware that the rule
to the effect that this Court is not a trier of facts
admits of exceptions. As we have stated
in Insular Life Assurance Company, Ltd. vs. CA:

Preliminarily, it must be noted that the BLA ruled that


Shen Dar failed to adduce evidence in support of its allegations as
required under Office Order No. 79, Series of 2005, Amendments to
the Regulations on Inter Partes Proceedings, having failed to formally
offer its evidence during the proceedings before it. The BLA ruled:

12.1.
The verified petition or
opposition, reply if any, duly marked affidavits of
the witnesses, and the documents submitted,
shall constitute the entire evidence for the
petitioner or opposer. The verified answer,
rejoinder if any, and the duly marked affidavits
and documents submitted shall constitute the
evidence for the respondent. Affidavits,
documents and other evidence not submitted and
duly marked in accordance with the preceding
sections shall not be admitted as evidence.

9
the petition may, therefore, be properly considered in the resolution
The above rule reflects the oft-repeated legal principle that
of the case.
quasi-judicial and administrative bodies are not bound by technical
The preceding sections referred to in the above provision
rules of procedure. Such principle, however, is tempered by
refer to Secs. 7.1, 8.1 and 9 which, in turn, provide:
fundamental evidentiary rules, including due process. Thus, we ruled
Section 7. Filing of Petition or
in Aya-ay, Sr. v. Arpaphil Shipping Corp.:[28]
Opposition
Third Issue:
Whether the IPO Director General can
That administrative quasi-judicial
7.1. The petition or opposition,
validly cancel Shen Dars Certificate of Registration
bodies like the NLRC are not bound by technical
together with the affidavits of witnesses and
rules of procedure in the adjudication of cases
originals of the documents and other
does not mean that the basic rules on proving
requirements, shall be filed with the Bureau,
In his Decision, the IPO Director General stated that,
allegations should be entirely dispensed with. A
provided, that in case of public documents,
despite the fact that the instant case was for the cancellation of the
party alleging a critical fact must still support his
certified copies shall be allowed in lieu of the
COR issued in favor of EYIS, the interests of justice dictate, and in
allegation
with
substantial
evidence. Any
originals. The Bureau shall check if the petition
view of its findings, that the COR of Shen Dar must be cancelled. The
decision based on unsubstantiated allegation
or opposition is in due form as provided in the
Director General explained:
cannot stand as it will offend due process.
Regulations particularly Rule 3, Section 3; Rule
x x x The liberality of procedure in
4, Section 2; Rule 5, Section 3; Rule 6, Section 9;
Accordingly, while the instant case
administrative actions is subject to limitations
Rule 7, Sections 3 and 5; Rule 8, Sections 3 and
involves a petition to cancel the registration of
imposed by basic requirements of due
4. For petition for cancellation of layout design
the Appellees trademark VESPA, the interest of
process. As this Court said in Ang Tibay v. CIR,
(topography) of integrated circuits, Rule 3,
justice requires that Certificate of Registration
the provision for flexibility in administrative
Section 3 applies as to the form and
No. 4-1997-121492 be cancelled. While the
procedure does not go so far as to justify orders
requirements. The affidavits, documents and
normal course of proceedings should have been
without a basis in evidence having rational
other evidence shall be marked consecutively as
the filing of a petition for cancellation of
probative value. More specifically, as held in
Exhibits beginning with the letter A.
Certificate of Registration No. 4-1997-121492,
Uichico v. NLRC:
that would involve critical facts and issues that
It is true that administrative and
Section 8. Answer
have already been resolved in this case. To allow
quasi-judicial bodies like the NLRC are
the Applicant to still maintain in the Trademark
not bound by the technical rules of
8.1. Within three (3) working days
Registry Certificate of Registration No. 4-1997procedure in the adjudication of
from receipt of the petition or opposition, the
121492 would nullify the exclusive rights of
cases. However, this procedural rule
Bureau shall issue an order for the respondent to
Appellee as the true and registered owner of the
should not be construed as a license to
file an answer together with the affidavits of
mark VESPA and defeat the purpose of the
disregard
certain
fundamental
[27]
witnesses and originals of documents, and at the
trademark registration system.
evidentiary rules.
same time shall notify all parties required to be
notified in the IP Code and these Regulations,
provided, that in case of public documents,
Shen Dar challenges the propriety of such cancellation on
This was later reiterated in Lepanto Consolidated Mining
certified true copies may be submitted in lieu of
the ground that there was no petition for cancellation as required Company v. Dumapis:[29]
the originals. The affidavits and documents shall
under Sec. 151 of RA 8293.
be marked consecutively as Exhibits beginning
While it is true that administrative or
with the number 1.
Office Order No. 79, Series of 2005, provides under its Sec.
quasi-judicial bodies like the NLRC are not
5 that:
bound by the technical rules of procedure in the
Section 9. Petition or Opposition and
adjudication of cases, this procedural rule should
Answer must be verified Subject to Rules 7 and 8
not be construed as a license to disregard certain
of these regulations, the petition or opposition
Section 5. Rules of Procedure to be
fundamental evidentiary rules. The evidence
and the answer must be verified. Otherwise, the
followed in the conduct of hearing of Inter
presented must at least have a modicum of
same shall not be considered as having been
Partes cases.The rules of procedure herein
admissibility for it to have probative value. Not
filed.
contained primarily apply in the conduct of
only must there be some evidence to support a
hearing of Inter Partes cases. The Rules of Court
finding or conclusion, but the evidence must be
may be applied suppletorily. The Bureau shall
substantial. Substantial evidence is more than a
In other words, as long as the petition is verified and the
not be bound by strict technical rules of
mere scintilla. It means such relevant evidence as
pieces of evidence consisting of the affidavits of the witnesses and the
procedure and evidence but may adopt, in
a reasonable mind might accept as adequate to
original of other documentary evidence are attached to the petition
the absence of any applicable rule herein,
support a conclusion. Thus, even though
and properly marked in accordance with Secs. 7.1 and 8.1
such mode of proceedings which is
technical rules of evidence are not strictly
abovementioned, these shall be considered as the evidence of the
consistent with the requirements of fair
complied with before the LA and the NLRC, their
petitioner. There is no requirement under the abovementioned rules
play and conducive to the just, speedy and
decision must be based on evidence that must, at
that the evidence of the parties must be formally offered to the BLA.
inexpensive disposition of cases, and
the very least, be substantial.
which will give the Bureau the greatest
In any case, as a quasi-judicial agency and as stated in Rule
possibility to focus on the contentious
2, Sec. 5 of the Regulations on Inter Partes Proceedings, the BLA is
issues before it. (Emphasis supplied.)
The fact that no petition for cancellation was filed against
not bound by technical rules of procedure. The evidence attached to
the COR issued to Shen Dar does not preclude the cancellation of
Shen Dars COR. It must be emphasized that, during the hearing for

10
the cancellation of EYIS COR before the BLA, Shen Dar tried to
establish that it, not EYIS, was the true owner of the mark VESPA
and, thus, entitled to have it registered. Shen Dar had more than
sufficient opportunity to present its evidence and argue its case, and it
did. It was given its day in court and its right to due process was
respected. The IPO Director Generals disregard of the procedure for
the cancellation of a registered mark was a valid exercise of his
discretion.
Fourth Issue:
Whether the factual findings of the IPO are binding on the
CA
Next, petitioners challenge the CAs reversal of the factual
findings of the BLA that Shen Dar and not EYIS is the prior user and,
therefore, true owner of the mark. In arguing its position, petitioners
cite numerous rulings of this Court where it was enunciated that the
factual findings of administrative bodies are given great weight if not
conclusive upon the courts when supported by substantial evidence.

(6) when the judgment of the Court of


Appeals is premised on a misapprehension of
facts;
(7) when the Court of Appeals
fails to notice certain relevant facts which,
if properly considered, will justify a
different conclusion;
(8) when the findings of fact are
themselves conflicting;
(9) when the findings of fact are
conclusions without citation of the specific
evidence on which they are based; and
(10) when the findings of fact of the
Court of Appeals are premised on the absence of
evidence but such findings are contradicted by
the evidence on record. (Emphasis supplied.)

We agree with petitioners that the general rule in this


jurisdiction is that the factual findings of administrative bodies
deserve utmost respect when supported by evidence. However, such
Thereafter, in Villaflor v. Court of Appeals,[31] this Court
general rule is subject to exceptions.
applied the above principle to factual findings of quasi-judicial
bodies, to wit:
In Fuentes v. Court of Appeals,[30] the Court established the
rule of conclusiveness of factual findings of the CA as follows:
Proceeding by analogy, the exceptions
to the rule on conclusiveness of factual findings
Jurisprudence teaches us that (a)s a
of the Court of Appeals, enumerated
rule, the jurisdiction of this Court in cases
in Fuentes vs. Court of Appeals, can also be
brought to it from the Court of Appeals x x x is
applied to those of quasi-judicial bodies x x
limited to the review and revision of errors of law
x. (Emphasis supplied.)
allegedly committed by the appellate court, as its
findings of fact are deemed conclusive. As such
this Court is not duty-bound to analyze and
Here, the CA identified certain material facts that were
weigh all over again the evidence already
allegedly overlooked by the BLA and the IPO Director General which
considered in the proceedings below. This rule,
it opined, when correctly appreciated, would alter the result of the
however, is not without exceptions. The findings
case. An examination of the IPO Decisions, however, would show that
of fact of the Court of Appeals, which are as a
no such evidence was overlooked.
general rule deemed conclusive, may admit of
First, as to the date of first use of the mark by the parties,
review by this Court:
the CA stated:
(1) when the factual findings of the
Court of Appeals and the trial court are
To begin with, when respondentscontradictory;
appellees filed its application for registration of
the VESPA trademark on July 28, 1999, they
(2) when the findings are grounded
stated under oath, as found in their
entirely on speculation, surmises, or conjectures;
DECLARATION OF ACTUAL USE, that their first
use of the mark was on December 22, 1998. On
(3) when the inference made by the
the other hand, [Shen Dar] in its application
Court of Appeals from its findings of fact is
dated June 09, 1997 stated, likewise under oath
manifestly mistaken, absurd, or impossible;
in their DECLARATION OF ACTUAL USE, that
its first use of the mark was in June 1996. This
(4) when there is grave abuse of
cannot be made any clearer. [Shen Dar] was not
discretion in the appreciation of facts;
only the first to file an application for registration
but likewise first to use said registrable mark.[32]
(5) when the appellate court, in making
its findings, goes beyond the issues of the case,
and such findings are contrary to the admissions
Evidently, the CA anchors its finding that Shen Dar was the
of both appellant and appellee;
first to use the mark on the statements of the parties in their

respective Declarations of Actual Use.Such conclusion is premature at


best. While a Declaration of Actual Use is a notarized document,
hence, a public document, it is not conclusive as to the fact of first use
of a mark. The declaration must be accompanied by proof of actual
use as of the date claimed. In a declaration of actual use, the applicant
must, therefore, present evidence of such actual use.
The BLA ruled on the same issue, as follows:
More
importantly,
the
private
respondents prior adoption and continuous use
of the mark VESPA on air compressors is
bolstered by numerous documentary evidence
consisting of sales invoices issued in the name of
E.Y. Industrial and Bill of Lading (Exhibits 4 to
375). Sales Invoice No. 12075 dated March 27,
1995 antedates petitioners date of first use on
January 1, 1997 indicated in its trademark
application filed on June 9, 1997 as well as the
date of first use in June of 1996 as indicated in
the Declaration of Actual Use submitted on
December 3, 2001 (Exhibit 385). The use by
respondent registrant in the concept of owner is
shown by commercial documents, sales invoices
unambiguously describing the goods as VESPA
air compressors. Private respondents have sold
the air compressors bearing the VESPA to
various locations in the Philippines, as far
as Mindanao and the Visayas since the early
1990s. We carefully inspected the evidence
consisting of three hundred seventy-one (371)
invoices and shipment documents which show
that VESPA air compressors were sold not only in
Manila, but to locations such as Iloilo City, Cebu
City, Dumaguete City, Zamboanga City, Cagayan
de Oro City, Davao City, to name a few. There is
no doubt that it is through private respondents
efforts that the mark VESPA used on air
compressors has gained business goodwill and
reputation in the Philippines for which it has
validly acquired trademark rights. Respondent
E.Y. Industrials right has been preserved until
the passage of RA 8293 which entitles it to
register the same.[33]
Comparatively, the BLAs findings were founded upon the
evidence presented by the parties. An example of such evidence is
Invoice No. 12075 dated March 29, 1995 [34] where EYIS sold four units
of VESPA air compressors to Veteran Paint Trade Center. Shen Dar
failed to rebut such evidence. The truth, as supported by the evidence
on record, is that EYIS was first to use the mark.
Moreover, the discrepancy in the date provided in the
Declaration of Actual Use filed by EYIS and the proof submitted was
appropriately considered by the BLA, ruling as follows:
On the contrary, respondent EY
Industrial was able to prove the use of the mark

11
VESPA on the concept of an owner as early as
1991. Although Respondent E.Y. indicated in its
trademark application that its first use was in
December 22, 1998, it was able to prove by clear
and positive evidence of use prior to such date.
In Chuang Te v. Ng Kian-Guiab and
Director of Patents, L-23791, 23 November 1966,
the High Court clarified: Where an applicant for
registration of a trademark states under oath the
date of his earliest use, and later on he wishes to
carry back his first date of use to an earlier date,
he then takes on the greater burden of presenting
clear and convincing evidence of adoption and
use as of that earlier date. (B.R. Baker Co. vs.
Lebrow Bros., 150 F. 2d 580.)[35]
The CA further found that EYIS is not a manufacturer of air
compressors but merely imports and sells them as a wholesaler and
retailer. The CA reasoned:
Conversely, a careful perusal of
appellees own submitted receipts shows
that it is not manufacturer but an
importer, wholesaler and retailer. This
fact is corroborated by the testimony of a
former employee of appellees. Admittedly
too, appellees are importing air compressors
from [Shen Dar] from 1997 to 2004. These
matters, lend credence to [Shen Dars] claim that
the letters SD followed by a number inscribed in
the air compressor is only to describe its type,
manufacturer business name and capacity. The
VESPA mark is in the sticker which is attached to
the air compressors. The ruling of the Supreme
Court, in the case of UNNO Commercial
Enterprises, Inc. vs. General Milling Corporation
et al., is quite enlightening, thus We quote:
The term owner does not
include the importer of the goods
bearing the trademark, trade name,
service mark, or other mark of
ownership, unless such importer is
actually the owner thereof in the
country from which the goods are
imported. Thus, this Court, has on
several occasions ruled that where the
applicants alleged ownership is not
shown in any notarial document and
the applicant appears to be merely an
importer or distributor of the
merchandise
covered
by
said
trademark, its application cannot be
[36]
granted.

This is a non sequitur. It does not follow. The fact that EYIS
described itself in its sales invoice as an importer, wholesaler and
retailer does not preclude its being a manufacturer. Sec. 237 of the
National Internal Revenue Code states:
Section 237. Issuance of Receipts or
Sales or Commercial Invoices.All persons subject
to an internal revenue tax shall, for each sale and
transfer of merchandise or for services rendered
valued at Twenty-five pesos (P25.00) or more,
issue duly registered receipts or sale or
commercial invoices, prepared at least in
duplicate, showing the date of transaction,
quantity, unit cost and description of
merchandise or nature of service: Provided,
however, That where the receipt is issued to
cover payment made as rentals, commissions,
compensation or fees, receipts or invoices shall
be issued which shall show the name, business
style, if any, and address of the purchaser,
customer or client.
The original of each receipt or invoice
shall be issued to the purchaser, customer or
client at the time the transaction is effected, who,
if engaged in business or in the exercise of
profession, shall keep and preserve the same in
his place of business for a period of three (3)
years from the close of the taxable year in which
such invoice or receipt was issued, while the
duplicate shall be kept and preserved by the
issuer, also in his place of business, for a like
period.
The Commissioner may, in meritorious
cases, exempt any person subject to an internal
revenue tax from compliance with the provisions
of this Section. (Emphasis supplied.)
Correlatively, in Revenue Memorandum No. 16-2003 dated
May 20, 2003, the Bureau of Internal Revenue defined a Sales Invoice
and identified its required information as follows:
Sales Invoices (SI)/Cash Invoice (CI)
is written account of goods sold or services
rendered and the prices charged therefor used in
the ordinary course of business evidencing sale
and transfer or agreement to sell or transfer of
goods and services. It contains the same
information found in the Official Receipt.
Official Receipt (OR) is a receipt issued
for the payment of services rendered or goods
sold. It contains the following information:
a.
b.
c.

Business name and address;


Taxpayer Identification Number;
Name of printer (BIR Permit No.)
with inclusive serial number of

booklets and date of issuance of


receipts.
There is no requirement that a sales invoice should
accurately state the nature of all the businesses of the seller. There is
no legal ground to state that EYIS declaration in its sales invoices that
it is an importer, wholesaler and retailer is restrictive and would
preclude its being a manufacturer.
From the above findings, there was no justifiable reason for
the CA to disregard the factual findings of the IPO. The rulings of the
IPO Director General and the BLA Director were supported by clear
and convincing evidence. The facts cited by the CA and Shen Dar do
not justify a different conclusion from that of the IPO.Hence, the
findings of the BLA Director and the IPO Director General must be
deemed as conclusive on the CA.
Fifth Issue:
Whether EYIS is the true owner of the mark VESPA
In any event, given the length of time already invested by
the parties in the instant case, this Court must write finis to the
instant controversy by determining, once and for all, the true owner
of the mark VESPA based on the evidence presented.
RA 8293 espouses the first-to-file rule as stated under Sec.
123.1(d) which states:
Section 123. Registrability. - 123.1. A
mark cannot be registered if it:
xxxx
(d) Is identical with a registered mark
belonging to a different proprietor or a mark with
an earlier filing or priority date, in respect
of:
(i) The same goods or
services, or
(ii)
Closely
related
goods or services, or
(iii)
If
it
nearly
resembles such a mark
as to be likely to deceive
or
cause
confusion. (Emphasis
supplied.)
Under this provision, the registration of a mark is
prevented with the filing of an earlier application for
registration. This must not, however, be interpreted to mean that
ownership should be based upon an earlier filing date. While RA 8293
removed the previous requirement of proof of actual use prior to the
filing of an application for registration of a mark, proof of prior and
continuous use is necessary to establish ownership of a mark. Such
ownership constitutes sufficient evidence to oppose the registration of
a mark.

12
Sec. 134 of the IP Code provides that any person who
believes that he would be damaged by the registration of a mark x x x
may file an opposition to the application. The term any person
encompasses the true owner of the markthe prior and continuous
user.
Notably, the Court has ruled that the prior and continuous
use of a mark may even overcome the presumptive ownership of the
registrant and be held as the owner of the mark. As aptly stated by the
Court in Shangri-la International Hotel Management, Ltd. v.
Developers Group of Companies, Inc.:[37]
Registration, without more, does not
confer upon the registrant an absolute right to
the registered mark. The certificate of
registration is merely a prima facie proof that the
registrant is the owner of the registered mark or
trade
name. Evidence
of
prior
and
continuous use of the mark or trade name
by another can overcome the presumptive
ownership of the registrant and may very
well entitle the former to be declared
owner in an appropriate case.
xxxx
Ownership of a mark or trade name
may be acquired not necessarily by registration
but by adoption and use in trade or commerce.
As between actual use of a mark without
registration, and registration of the mark without
actual use thereof, the former prevails over the
latter. For a rule widely accepted and firmly
entrenched, because it has come down through
the years, is that actual use in commerce or
business is a pre-requisite to the
acquisition of the right of ownership.
xxxx
By itself, registration is not a mode of
acquiring ownership. When the applicant is
not the owner of the trademark being
applied for, he has no right to apply for
registration of the same. Registration merely
creates a prima facie presumption of the validity
of the registration, of the registrants ownership
of the trademark and of the exclusive right to the
use thereof. Such presumption, just like the
presumptive regularity in the performance of
official functions, is rebuttable and must give way
to evidence to the contrary.
Here, the incontrovertible truth, as established by the
evidence submitted by the parties, is that EYIS is the prior user of the
mark. The exhaustive discussion on the matter made by the BLA
sufficiently addresses the issue:

Based on the evidence, Respondent


E.Y. Industrial is a legitimate corporation
engaged in buying, importing, selling, industrial
machineries and tools, manufacturing, among
others since its incorporation in 1988. (Exhibit
1). Indeed private respondents have submitted
photographs (Exhibit 376, 377, 378, 379)
showing an assembly line of its manufacturing or
assembly process.
More
importantly,
the
private
respondents prior adoption and continuous use
of the mark VESPA on air compressors is
bolstered by numerous documentary evidence
consisting of sales invoices issued in the name of
respondent EY Industrial and Bills of Lading.
(Exhibits 4 to 375). Sales Invoice No. 12075 dated
March 27, 1995 antedates petitioners date of first
use in January 1, 1997 indicated in its trademark
application filed in June 9, 1997 as well as the
date of first use in June of 1996 as indicated in
the Declaration of Actual Use submitted on
December 3, 2001 (Exhibit 385). The use by
respondent-registrant in the concept of owner is
shown by commercial documents, sales invoices
unambiguously describing the goods as VESPA
air compressors. Private respondents have sold
the air compressors bearing the VESPA to
various locations in the Philippines, as far
as Mindanao and the Visayas since the early
1990s. We carefully inspected the evidence
consisting of three hundred seventy one (371)
invoices and shipment documents which show
that VESPA air compressors were sold not only in
Manila, but to locations such as Iloilo City, Cebu
City, Dumaguete City, Zamboanga City, Cagayan
de Oro City, Davao City to name a few. There is
no doubt that it is through private respondents
efforts that the mark VESPA used on air
compressors has gained business goodwill and
reputation in the Philippines for which it has
validly acquired trademark rights. Respondent
EY Industrials right has been preserved until the
passage of RA 8293 which entitles it to register
the same. x x x[38]
On the other hand, Shen Dar failed to refute the evidence
cited by the BLA in its decision. More importantly, Shen Dar failed to
present sufficient evidence to prove its own prior use of the mark
VESPA. We cite with approval the ruling of the BLA:
[Shen Dar] avers that it is the true and
rightful owner of the trademark VESPA used on
air compressors. The thrust of [Shen Dars]
argument is that respondent E.Y. Industrial
Sales, Inc. is a mere distributor of the VESPA air
compressors. We disagree.

This conclusion is belied by the


evidence. We have gone over each and every
document attached as Annexes A, A 1-48 which
consist of Bill of Lading and Packing Weight List.
Not one of these documents referred to a VESPA
air compressor. Instead, it simply describes the
goods plainly as air compressors which is type SD
and not VESPA. More importantly, the earliest
date reflected on the Bill of Lading was on May 5,
1997. (Annex A-1). [Shen Dar] also attached as
Annex B a purported Sales Contract with
respondent EY Industrial Sales dated April 20,
2002. Surprisingly, nowhere in the document
does it state that respondent EY Industrial agreed
to sell VESPA air compressors. The document
only mentions air compressors which if genuine
merely bolsters respondent Engracio Yaps
contention that [Shen Dar] approached them if it
could sell the Shen Dar or SD air compressor.
(Exhibit 386) In its position paper, [Shen Dar]
merely mentions of Bill of Lading constituting
respondent as consignee in 1993 but never
submitted the same for consideration of this
Bureau. The document is also not signed by
[Shen Dar]. The agreement was not even drafted
in the letterhead of either [Shen Dar] nor [sic]
respondent registrant. Our only conclusion is
that [Shen Dar] was not able to prove to be the
owner of the VESPA mark by appropriation.
Neither was it able to prove actual commercial
use in the Philippines of the mark VESPA prior to
its filing of a trademark application in 9 June
1997.[39]
As such, EYIS must be considered as the prior and
continuous user of the mark VESPA and its true owner. Hence, EYIS
is entitled to the registration of the mark in its name.
WHEREFORE,
the
petition
is
hereby GRANTED. The
CAs February 21, 2008 Decision and October 6, 2008 Resolution in
CA-G.R. SP No. 99356 are herebyREVERSED and SET ASIDE. The
Decision dated May 25, 2007 issued by the IPO Director General
in Inter Partes Case No. 14-2004-00084 and the Decision dated May
29, 2006 of the BLA Director of the IPO are hereby REINSTATED.
No costs.
SO ORDERED.
PROSOURCE INTERNATIONAL, INC.,
Petitioner,

- versus -

HORPHAG RESEARCH MANAGEMENT SA,


Respondent.

13
The petition is without merit.
x------------------------------------------------------------------------------------x

2. The trademark PYCNOGENOL of the plaintiff


is duly registered with the Intellectual Property
Office but not with the Bureau of Food and Drug
(BFAD).

DECISION
NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules


of Court seeking to reverse and set aside the Court of Appeals (CA)
Decision[1] dated July 27, 2007 and Resolution[2] dated October 15,
2007 in CA-G.R. CV No. 87556. The assailed decision affirmed the
Regional Trial Court (RTC)[3] Decision[4] dated January 16, 2006 and
Order[5] dated May 3, 2006 in Civil Case No. 68048; while the
assailed resolution denied petitioners motion for reconsideration.
The facts are as follows:
Respondent Horphag Research Management SA is a corporation duly
organized and existing under the laws of Switzerland and the
owner[6] of trademark PYCNOGENOL, a food supplement sold and
distributed by Zuellig Pharma Corporation. Respondent later
discovered that petitioner Prosource International, Inc. was also
distributing a similar food supplement using the mark PCO-GENOLS
since 1996.[7] This prompted respondent to demand that petitioner
cease and desist from using the aforesaid mark.[8]
Without notifying respondent, petitioner discontinued the use of, and
withdrew from the market, the products under the name PCOGENOLS as of June 19, 2000. It, likewise, changed its mark from
PCO-GENOLS to PCO-PLUS.[9]
On August 22, 2000, respondent filed a Complaint [10] for
Infringement of Trademark with Prayer for Preliminary Injunction
against petitioner, praying that the latter cease and desist from using
the brand PCO-GENOLS for being confusingly similar with
respondents trademark PYCNOGENOL. It, likewise, prayed for actual
and nominal damages, as well as attorneys fees.[11]

3. The defendants product PCO-GENOLS is duly


registered with the BFAD but not with the
Intellectual Property Office (IPO).
4. The defendant corporation discontinued the
use of and had withdrawn from the market the
products under the name of PCO-GENOLS as
of June 19, 2000, with its trademark changed
from PCO-GENOLS to PCO-PLUS.
5. Plaintiff corporation sent a demand letter to
the defendant dated 02 June 2000.[14]

It must be recalled that respondent filed a complaint for


trademark infringement against petitioner for the latters use of the
mark PCO-GENOLS which the former claimed to be confusingly
similar to its trademark PYCNOGENOL. Petitioners use of the
questioned mark started in 1996 and ended in June 2000. The instant
case should thus be decided in light of the provisions of Republic Act
(R.A.) No. 166[18] for the acts committed until December 31, 1997, and
R.A. No. 8293[19] for those committed from January 1, 1998 until June
19, 2000.
A trademark is any distinctive word, name, symbol,
emblem, sign, or device, or any combination thereof, adopted and
used by a manufacturer or merchant on his goods to identify and
distinguish them from those manufactured, sold, or dealt by others.
Inarguably, a trademark deserves protection.[20]

On January 16, 2006, the RTC decided in favor of respondent. It R.A. No.
observed that PYCNOGENOL and PCO-GENOLS have the same suffix follows:
GENOL which appears to be merely descriptive and thus open for
trademark registration by combining it with other words. The trial
court, likewise, concluded that the marks, when read, sound similar,
and thus confusingly similar especially since they both refer to food
supplements. The court added that petitioners liability was not
negated by its act of pulling out of the market the products bearing
the questioned mark since the fact remains that from 1996 until June
2000, petitioner had infringed respondents product by using the
trademark PCO-GENOLS. As respondent manifested that it was no
longer interested in recovering actual damages, petitioner was made
to answer only for attorneys fees amounting to P50,000.00.[15] For
lack of sufficient factual and legal basis, the court dismissed
petitioners counterclaim. Petitioners motion for reconsideration was
likewise denied.
On appeal to the CA, petitioner failed to obtain a favorable
decision. The appellate court explained that under the Dominancy or
the Holistic Test, PCO-GENOLS is deceptively similar to
PYCNOGENOL. It also found just and equitable the award of
attorneys fees especially since respondent was compelled to litigate. [16]

Section 22 of R.A. No. 166, as amended, and Section 155 of


8293 define what constitutes trademark infringement, as
Sec.
22. Infringement,
what
constitutes. Any person who shall use, without
the consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation of any
registered mark or tradename in connection with
the sale, offering for sale, or advertising of any
goods, business or services on or in connection
with which such use is likely to cause confusion
or mistake or to deceive purchasers or others as
to the source or origin of such goods or services,
or identity of such business; or reproduce,
counterfeit, copy of colorably imitate any such
mark or tradename and apply such reproduction,
counterfeit, copy or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such goods, business, or
services, shall be liable to a civil action by the
registrant for any or all of the remedies herein
provided.

Hence, this petition, assigning the following errors:


In its Answer,[12] petitioner contended that respondent could not file
the infringement case considering that the latter is not the registered
owner of the trademark PYCNOGENOL, but one Horphag Research
Limited. It, likewise, claimed that the two marks were not confusingly
similar. Finally, it denied liability, since it discontinued the use of the
mark prior to the institution of the infringement case. Petitioner thus
prayed for the dismissal of the complaint. By way of counterclaim,
petitioner prayed that respondent be directed to pay exemplary
damages and attorneys fees.[13]

I.

II.
During the pre-trial, the parties admitted the following:
1. Defendant [petitioner] is a corporation duly
organized and existing under the laws of the
Republic of the Philippines with business address
at No. 7 Annapolis Street, Greenhills, San Juan,
Metro Manila;

THAT THE COURT OF APPEALS


ERRED IN AFFRIMING THE RULING
OF THE LOWER [COURT] THAT
RESPONDENTS
TRADEMARK
P[YC]NOGENOLS
(SIC)
WAS
INFRINGED BY PETITIONERS PCOGENOLS.
THAT THE COURT OF APPEALS
ERRED IN AFFIRMING THE AWARD
OF ATTORNEYS FEES IN FAVOR OF
RESPONDENT
HORPHAG
RESEARCH MANAGEMENT S.A. IN
THE AMOUNT OF Php50,000.00.[17]

Sec. 155. Remedies; Infringement. Any


person who shall, without the consent of the
owner of the registered mark:
155.1.
Use
in
commerce
any
reproduction, counterfeit, copy, or colorable
imitation of a registered mark or the same
container or a dominant feature thereof in
connection with the sale, offering for sale,
distribution, advertising of any goods or services
including other preparatory steps necessary to
carry out the sale of any goods or services on or
in connection with which such use is likely to
cause confusion, or to cause mistake, or to
deceive; or

14
155.2. Reproduce, counterfeit, copy or
colorably imitate a registered mark or a
dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable
imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended
to be used in commerce upon or in connection
with the sale, offering for sale, distribution, or
advertising of goods or services on or in
connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive,
shall be liable in a civil action for infringement by
the registrant for the remedies hereinafter set
forth: Provided, That infringement takes place at
the moment any of the acts stated in Subsection
155.1 or this subsection are committed regardless
of whether there is actual sale of goods or
services using the infringing material.

(3) The infringing mark or trade name is used in


connection with the sale, offering for sale, or
advertising of any goods, business or services; or the
infringing mark or trade name is applied to labels,
signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such goods, business or services;
(4) The use or application of the infringing mark or trade
name is likely to cause confusion or mistake or to
deceive purchasers or others as to the goods or
services themselves or as to the source or origin of
such goods or services or the identity of such business;
and
(5) It is without the consent of the trademark or trade
name owner or the assignee thereof.[22]

In accordance with Section 22 of R.A. No. 166, as well as Sections 2,


In the foregoing enumeration, it is the element of likelihood
2-A, 9-A, and 20 thereof, the following constitute the elements of of confusion that is the gravamen of trademark infringement. But
trademark infringement:
likelihood of confusion is a relative concept. The particular, and
sometimes peculiar, circumstances of each case are determinative of
(a) A trademark actually used in commerce in
its existence. Thus, in trademark infringement cases, precedents must
the Philippines and registered in the principal
be evaluated in the light of each particular case.[23]
register of the Philippine Patent Office[;]
In determining similarity and likelihood of confusion,
(b) [It] is used by another person in connection
jurisprudence has developed two tests: the Dominancy Test and the
with the sale, offering for sale, or advertising of
Holistic or Totality Test. The Dominancy Test focuses on the
any goods, business or services or in connection
similarity of the prevalent features of the competing trademarks that
with which such use is likely to cause confusion
might cause confusion and deception, thus constituting infringement.
[24]
or mistake or to deceive purchasers or others as
If the competing trademark contains the main, essential and
to the source or origin of such goods or services,
dominant features of another, and confusion or deception is likely to
or identity of such business; or such trademark is
result, infringement takes place. Duplication or imitation is not
reproduced, counterfeited, copied or colorably
necessary; nor is it necessary that the infringing label should suggest
imitated by another person and such
an effort to imitate. The question is whether the use of the marks
reproduction, counterfeit, copy or colorable
involved is likely to cause confusion or mistake in the mind of the
imitation is applied to labels, signs, prints,
public or to deceive purchasers. [25] Courts will consider more the aural
packages,
wrappers,
receptacles
or
and visual impressions created by the marks in the public mind,
advertisements intended to be used upon or in
giving little weight to factors like prices, quality, sales outlets, and
connection with such goods, business or services
market segments.[26]
as to likely cause confusion or mistake or to
deceive purchasers[;]
In contrast, the Holistic Test entails a consideration of the
entirety of the marks as applied to the products, including the labels
(c) [T]he trademark is used for identical or
and packaging, in determining confusing similarity. [27] The discerning
similar goods[;] and
eye of the observer must focus not only on the predominant words but
also on the other features appearing on both labels in order that the
(d) [S]uch act is done without the consent of the
observer may draw his conclusion whether one is confusingly similar
[21]
trademark registrant or assignee.
to the other.[28]
On the other hand, the elements of infringement under R.A. No. 8293
are as follows:
The trial and appellate courts applied the Dominancy Test
in determining whether there was a confusing similarity between the
(1) The trademark being infringed is registered in the marks PYCNOGENOL and PCO-GENOL. Applying the test, the trial
Intellectual Property Office; however, in infringement court found, and the CA affirmed, that:
of trade name, the same need not be registered;
Both the word[s] PYCNOGENOL and PCO(2) The trademark or trade name is reproduced,
GENOLS have the same suffix GENOL which on
counterfeited, copied, or colorably imitated by the
evidence, appears to be merely descriptive and
infringer;
furnish no indication of the origin of the article

and hence, open for trademark registration by


the plaintiff thru combination with another word
or phrase such as PYCNOGENOL, Exhibits A to
A-3. Furthermore, although the letters Y between
P and C, N between O and C and S after L are
missing in the [petitioners] mark PCO-GENOLS,
nevertheless, when the two words are
pronounced, the sound effects are confusingly
similar not to mention that they are both
described by their manufacturers as a food
supplement and thus, identified as such by their
public consumers. And although there were
dissimilarities in the trademark due to the type of
letters used as well as the size, color and design
employed on their individual packages/bottles,
still the close relationship of the competing
products name in sounds as they were
pronounced, clearly indicates that purchasers
could be misled into believing that they are the
same and/or originates from a common source
and manufacturer.[29]
We find no cogent reason to depart from such conclusion.
This is not the first time that the Court takes into account
the aural effects of the words and letters contained in the marks in
determining the issue of confusing similarity. In Marvex Commercial
Co., Inc. v. Petra Hawpia & Co., et al.,[30] cited in McDonalds
Corporation v. L.C. Big Mak Burger, Inc.,[31] the Court held:
The following random list of
confusingly similar sounds in the matter of
trademarks,
culled
from
Nims,
Unfair
Competition and Trade Marks, 1947, Vol. 1, will
reinforce our view that SALONPAS and
LIONPAS are confusingly similar in sound: Gold
Dust and Gold Drop; Jantzen and Jass-Sea;
Silver Flash and Supper Flash; Cascarete and
Celborite; Celluloid and Cellonite; Chartreuse
and Charseurs; Cutex and Cuticlean; Hebe and
Meje; Kotex and Femetex; Zuso and Hoo Hoo.
Leon Amdur, in his book Trade-Mark Law and
Practice, pp. 419-421, cities, as coming within the
purview of the idem sonans rule, Yusea and U-CA, Steinway Pianos and Steinberg Pianos, and
Seven-Up and Lemon-Up. In Co Tiong vs.
Director of Patents, this Court unequivocally said
that Celdura and Cordura are confusingly similar
in sound; this Court held in Sapolin Co. vs.
Balmaceda, 67 Phil. 795 that the name Lusolin is
an infringement of the trademark Sapolin, as the
sound of the two names is almost the same.[32]
Finally, we reiterate that the issue of trademark
infringement is factual, with both the trial and appellate courts
finding the allegations of infringement to be meritorious. As we have
consistently held, factual determinations of the trial court, concurred
in by the CA, are final and binding on this Court. [33] Hence, petitioner
is liable for trademark infringement.

15
We, likewise, sustain the award of attorneys fees in favor unavailing.[35] In the instant case, we find no reversible error in the
of respondent. Article 2208 of the Civil Code enumerates the grant of attorneys fees by the CA.
instances when attorneys fees are awarded, viz.:
WHEREFORE, premises considered, the petition
Art. 2208. In the absence of
is DENIED for lack of merit. The Court of Appeals Decision dated
stipulation, attorneys fees and expenses of
July 27, 2007 and its Resolution dated October 15, 2007 in CA-G.R.
litigation, other than judicial costs, cannot be
CV No. 87556 are AFFIRMED.
recovered, except:
SO ORDERED.
G.R. No. L-6235
March 28, 1955
1. When exemplary damages are
awarded;
ONG AI GUI alias TAN AI GUI, applicant-petitioner,
2. When the defendants act or
vs.
omission has compelled the
the Director of the Philippines Patent Office, respondent.
plaintiff to litigate with third
E. I. DU PONT DE NEMOURS AND COMPANY, intervenor.
persons or to incur expenses to
protect his interest;
Jose P. Laurel for petitioner.
3. In criminal cases of malicious
Solicitor General Juan R. Liwag and Solicitor Pacifico P. de Castro
prosecution against the plaintiff;
for respondent.
J. A. Wolfson for intervenor.
4. In case of a clearly unfounded
civil action or proceeding against
the plaintiff;
LABRADOR, J.:
5.

Where the defendant acted in


gross and evident bad faith in
refusing to satisfy the plaintiffs
plainly
valid,
just
and
demandable claim;

have, nor did he submit, authority to file it (opposition) in the


corporate name, and that the subsequent authorization from the
corporation to that effect did not cure the general defect in the
opposition.
But while he dismissed the opposition, the Director ruled that the
application must be disapproved unless the word "nylon" is also
disclaimed. The grounds for the disapproval of the application were
as follows:
"Nylon" is merely descriptive of the business of shirtmaking if the shirts are made of nylon. It is deceptively
misdescriptive of said business, if the shirts are not made of
nylon. In either case, its registration in the Principal
Register as a trade-name, or as a part of a trade-name, is
expressly forbidden by subsection (e) of Section 4 of
Republic Act No. 166, as amended by Section 2 of Republic
Act No. 638.
xxx

xxx

xxx

But even if the trade-name here in question were applied


On November 8, 1948, Ong Ai Gui alias Tan Ai Gui filed an
for under the said subsection (f), "Nylon" would still have to
application (No. 803) with the Director of Patents for the registration
be disclaimed. Used in connection with shirt-making,
of the following trade-name: "20th Century Nylon Shirts Factory." It
"Nylon" can never become distinctive, can never acquire
is stated in connection with the application that the trade-name was
secondary meaning, because it is a generic term, like
used for the first time by the applicant on September 12, 1941 for his
6. In actions for legal support;
cotton, silk, linen, or ramie. Just as no length of use and no
business described as follows: "General merchandise dealing
amount of advertising will make "cotton," "silk," "linen," or
principally
in
textiles,
haberdasheries;
also
operating
as
manufacturer
7. In actions for the recovery of
"ramie," distinctive of shirts or of the business of making
of shirts, pants and other men's and woman's wears." Upon the filing
wages of household helpers,
them, so no length of use and no amount of advertising will
laborers and skilled workers;
of the application, the same was referred by the Director to an
make "nylon" distinctive of shirts or of the business of
examiner. The latter in a report dated August 18, 1950 held that the
8. In actions for indemnity under
manufacturing them."
words "shirts factory" are not registrable; so the applicant made a
workmens compensation and
disclaimer of said words (shirts factory) inserting a statement to that
employers liability laws;
effect in his original application. On August 13, 1951 the Director
Again the above decision applicant has filed an appeal to this Court.
ordered the publication of the trade-name in the official Gazette.
During the pendency of this appeal, E. I. Du Pont de Nemours and Co.
9. In a separate civil action to
recover civil liability arising from
filed a petition to intervene, which petition was granted. It has also,
a crime;
Publication was made but before the expiration of the period for filing through counsel, filed a brief answering the arguments of the
opposition, Atty. J. A. Wolfson, on behalf of E. I. De Pont de Nemours applicant-appellant and supporting the decision appealed from.
10. When at least double judicial costs
and Company, presented on February 27, 1952, an opposition on the
are awarded;
ground that the word "nylon" was a name coined by E. I. Du Pont de There are two main questions raised in the appeal, one legal and the
11. In any other case where the court
Nemours and Company as the generic name of a synthetic fabric
other procedural. The legal question is put up by the claim of the
deems it just and equitable that
material, invented, patented, manufactured and sold by it and that
applicant-appellant that while he admits that the term "nylon" is by
attorneys fees and expenses of
this word is a generic term; that the use of the name "nylon" is
itself alone descriptive and generic, what he desires to register is not
litigation should be recovered.
descriptive or deceptively misdescriptive of the goods, business of
the said word alone but the whole combination of "20th Century
manufactures of the applicant; that the use of the name would
Nylon Shirts Factory." It is to be noted in answer to this contention
In all cases, the attorneys fees and
produce confusion in trade and would deceive the public; and that
expenses of litigation must be reasonable.
that the Director of Patents has not completely denied the registration
"nylon" is not distinctive of applicant's goods; business and
of the whole trade-name. He has made a conditional denial only,
As a rule, an award of attorneys fees should be deleted manufactures and applicant does not claim that it has so become.
permitting the registration of the name but with the disclaimer of the
where the award of moral and exemplary damages is not granted. This opposition, however, was dismissed by the Director on the
terms "shirt factory" and "nylon." The import of the decision is that
[34]
Nonetheless, attorneys fees may be awarded where the court ground that at the time it was submitted Atty. J. A. Wolfson did not
the trade-name may be registered, but applicant-appellant may not be
deems it just and equitable even if moral and exemplary damages are

16
entitled to the exclusive use of the terms "shirts factory" and "nylon"
as against any other who may subsequently use the said terms, juris
publici, incapable of appropriation by any single individual to the
exclusion of others. This is supported by reason and authority.

The claim that a combination of words may be registered as a trade- confined to this issuance alone. The answer to this argument is the
name is no justification for not applying the rules or principles
fact that the law allows oppositions to be filed after publication, thus:
hereinabove mentioned. The use of a generic term in a trade-name is
always conditional, i. e., subject to the limitation that the registrant
Sec. 8. Opposition. Any person who believes that he
does not acquire the exclusive right to the descriptive or generic term
would be damaged by the registration of a mark or tradeor word.
A word or a combination of words which is merely
name may, upon payment of the required fee and within
descriptive of an article of trade, or of its composition,
thirty days after the publication under the first paragraph
characteristics, or qualities, cannot be appropriated and
. . . A combination of marks or words may constitute a valid
of section seven hereof, file with the Director an opposition
protected as a trademark to the exclusion of its use by
trademark or (in the case of words) a tradename even
to the application. Such opposition shall be in writing and
others. The reason for this is that inasmuch as all persons
though some of the constituent portions thereof would not
verified by the oppositor, or by any person on his behalf
have an equal right to produce and vend similar articles,
be subject, separately, to exclusive appropriation as such.
who knows the facts, and shall specify the grounds on
they also have the right to describe them properly and to
Thus, although a word may be descriptive and not subject
which it is based and include a statement of the facts relied
use any appropriate to himself exclusively any word or
to exclusive use as a trademark, it may properly become the
upon. Copies of certificates of registration of marks or
expression, properly descriptive of the article, its qualities,
subject of a trademark by combination with another word
trade-names registered in other countries or other
ingredients, or characteristics, and thus limit other persons
or term which is nondescriptive, although no exclusive
supporting documents mentioned in the opposition shall be
in the use of language appropriate to the description of
right to then descriptive word or term id created . . . (52
filed therewith, together with the translation thereof into
their manufactures, the right to the use of such language
Am. Jur. 553.)
English, if not in the English language. For good cause
being common to all. This rule excluding descriptive terms
shown and upon payment of the required surcharge, the
has also been held to apply to trade-names. As to whether The citation of appellant himself supports the decision thus: ". . .
time for filing an opposition may be extended for an
words employed fall within this prohibition, it is said that
additional thirty days by the Director, who shall notify the
although perhaps not entitled to protection against infringement by
the true test is not whether they are exhaustively
applicant of such extension. (Republic Act No. 166.)
the use of the descriptive matter by another." (Frost vs. Rindskopt, 42
descriptive of the article designated, but whether in
Fed. 408.)
themselves, and as they are commonly used by those who
Of what use is the period given to oppositors to register their
understand their meaning, they are reasonably indicative
oppositions if such oppositions are not to be given consideration at
It
must
also
be
noted
that
no
claim
is
made
in
the
application
that
the
and descriptive of the thing intended. If they are thus
all, because the Director has only the ministerial duty after
trade-name
sought
to
be
registered
has
acquired
what
is
known
as
a
descriptive, and not arbitrary, they cannot be appropriated
secondary meaning within the provisions of paragraph (f) of section 4 publication to issue the certificate of registration; the first is that
from general use and become the exclusive property of
conducted in the Office of the Director and taking place prior to
of Republic Act No. 166. All that the applicant declares in his
anyone. (52 Am. Jur. 542-543.) .
publication, and the second, that conducted after publication, in
statement accompanying his application is that the said trade-name
which the public is given the opportunity to contest the application.
has been continuously used by it in business in the Philippines for
. . . If the trade-name consists of a descriptive word, no
In the first, the application is referred to an examiner, who, after
about seven years, without allegation or proof that the trade-name
monopoly of the right to use the same can be acquired. This has become distinctive of the applicant's business or services.
study and investigation makes a report and recommendation to the
is but a corollary of the proposition that a descriptive word Furthermore, the use of the term "nylon" in the trade-name is both
Director who, upon finding that applicant is entitled to registration,
cannot be the subject of a trade mark. G. & C. Merriam Co. "descriptive" and "deceptively and misdescriptive" of the applicantorders publication of the publication. (Sec. 7, Rep. Act No. 166.) If he
vs. Salfield (C. C. A.) 198, 369. Other may use the same or
finds that applicant is not entitled to registration, he may then and
appellant's business, for apparently he does not use nylon in the
similar descriptive word in connection with their own
manufacture of the shirts, pants and wears that he produces and sells. there dismiss the application. In the second, opportunity is offered
wares, provided they take proper steps to prevent the public How can a secondary meaning be acquired if appellant's products are the public or any interested party to come in and object to the petition
being deceived. . . . (Richmond Remedies Co. vs. Dr. Miles not made of nylon? Certainly no exclusive right can be acquired by
(Sec. 8, Id.), giving proofs and reasons for the objection, applicant
Medical Co., 16 E. (sd) 598.)
being given opportunity also to submit proofs or arguments in
deception of fraud.
support of the application. (Sec. 9, Id.) It is the decision of the
Director, given after this hearing, or opportunity to every interested
. . . The so-called descriptive terms, which may be used to
The procedural question arises from the fact that after the Director
party to be heard, that finally terminates the proceedings and in
described the product adequately, can not be monopolized had ordered publication and notwithstanding dismissal of an
which the registration is finally approved or disapproved. Thereafter,
by a single user and are available to all. It is only natural
opposition, the Director nevertheless conditionally denied the
notice of the issuance of the certificate of registration is published.
that the trade will prefer those marks which bear some
application after its publication and failed to give applicant
(Sec. 10, Id.)
reference to the article itself. Therefore, even those
opportunity for a hearing, as specifically required by section 7 of
descriptive marks which are distinctive by themselves can Republic Act No. 166.
be appropriated by others with impunity. A descriptive
It is evident that the decision of the Director after the first step,
word may be admittedly distinctive, especially if the user is
ordering publication, can not have any finality. Of what use is the
It is argued that after approval of the findings of the commissioner to second step in the proceedings, if the Director is bound by his first
the first creator of the article. It will, however, be denied
whom the application id referred and giving of the order of
protection, not because it lacks distinctiveness, but rather
decision, giving course to the publication? His first decision is merely
because others are equally entitled to its use. . . (2 Callman. publication, it becomes the ministerial duty of the Director to issue
provisional, in the sense that the application appears to be
the corresponding certificate of registration and that his power is
Unfair Competition and Trade Marks, pp. 869-870.)
meritorious and is entitled to be given course leading to the more

17
formal and important second step of hearing and trial, where the
public and interested parties are allowed to take part.
The argument that the Director failed to comply with paragraph 2 of
section 7, Republic Act No. 166 cannot be raised in the case at bar,
because the Director did not find that the applicant is not entitled to
registration. He actually found that he is entitled to registration and
that is why an order for the publication of the application was issued.
How can the Director comply with the provisions of said paragraph 2
if he did not disapprove the applicant's petition for registration?
We, therefore, find that the errors assigned in the appeal have not
been committed id hereby respondent Director of Patents. His
decision is hereby affirmed, with costs against the applicantappellant.

CARPIO, J.:

Libis, Quezon City. According to respondent, petitioners shop caused


confusion in the minds of the public as it bore a similar name and it
also engaged in the business of selling coffee. Respondent sent a letter
to petitioner demanding that the latter stop using the name SAN
FRANCISCO COFFEE. Respondent also filed a complaint with the
Bureau of Legal Affairs-Intellectual Property Office (BLA-IPO) for
infringement and/or unfair competition with claims for damages.

The Case

This is a petition for review [1] of the 15 June 2005 Decision [2] and the 1
September 2005 Resolution[3] of the Court of Appeals in CA-G.R.
SP No. 80396. In its 15 June 2005 Decision, the Court of Appeals set
aside the 22 October 2003 Decision [4] of the Office of the Director
General-Intellectual Property Office and reinstated the 14 August
2002 Decision[5] of the Bureau of Legal Affairs-Intellectual Property
Office. In its 1 September 2005 Resolution, the Court of Appeals
denied petitioners motion for reconsideration and respondents
motion for partial reconsideration.

COFFEE PARTNERS, INC., G.R. No. 169504


Petitioner,

In its answer, petitioner denied the allegations in the complaint.


Petitioner alleged it filed with the Intellectual Property Office (IPO)
applications for registration of the mark SAN FRANCISCO COFFEE
& DEVICE for class 42 in 1999 and for class 35 in 2000. Petitioner
maintained its mark could not be confused with respondents trade
name because of the notable distinctions in their appearances.
Petitioner argued respondent stopped operating under the trade
name SAN FRANCISCO COFFEE when it formed a joint venture with
Boyd Coffee USA. Petitioner contended respondent did not cite any
specific acts that would lead one to believe petitioner had, through
fraudulent means, passed off its mark as that of respondent, or that it
had diverted business away from respondent.

The Facts

Present:
CARPIO, J., Chairperson,
VELASCO, JR.,*
DEL CASTILLO,
- versus - ABAD, and
PEREZ, JJ.

SAN FRANCISCO COFFEE & Promulgated:


ROASTERY, INC.,
Respondent. March 3, 2010

Mr. David Puyat, president of petitioner corporation, testified that the


coffee shop in Libis, Quezon City opened sometime in June 2001 and
that another coffee shop would be opened in Glorietta Mall, Makati
City. He stated that the coffee shop was set up pursuant to a franchise
agreement executed in January 2001 with CPL, a British Virgin Island
Company owned by Robert Boxwell. Mr. Puyat said he became
involved in the business when one Arthur Gindang invited him to
invest in a coffee shop and introduced him to Mr. Boxwell. For his
part, Mr. Boxwell attested that the coffee shop SAN FRANCISCO
COFFEE has branches in Malaysia and Singapore. He added that he
formed CPL in 1997 along with two other colleagues, Shirley Miller
John and Leah Warren, who were former managers of Starbucks
Coffee Shop in the United States. He said they decided to invest in a
Respondent is a local corporation engaged in the wholesale and retail similar venture and adopted the name SAN FRANCISCO COFFEE
sale of coffee. It registered with the SEC in May 1995. It registered the from the famous city in California where he and his former colleagues
business name SAN FRANCISCO COFFEE & ROASTERY, INC. with once lived and where special coffee roasts came from.
the Department of Trade and Industry (DTI) in June 1995.
Respondent had since built a customer base that included Figaro
Company, Tagaytay Highlands, Fat Willys, and other coffee
companies.
The Ruling of the Bureau of Legal Affairs-Intellectual
Property Office
Petitioner Coffee Partners, Inc. is a local corporation engaged in the
business of establishing and maintaining coffee shops in the country.
It registered with the Securities and Exchange Commission (SEC) in
January 2001. It has a franchise agreement [6] with Coffee Partners
Ltd. (CPL), a business entity organized and existing under the laws of
British Virgin Islands, for a non-exclusive right to operate coffee
shops in the Philippines using trademarks designed by CPL such as
SAN FRANCISCO COFFEE.

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ---x
In 1998, respondent formed a joint venture company with Boyd
Coffee USA under the company name Boyd Coffee Company
Philippines, Inc. (BCCPI). BCCPI engaged in the processing, roasting,
and wholesale selling of coffee. Respondent later embarked on a
project study of setting up coffee carts in malls and other commercial
establishments in Metro Manila.
DECISION
In June 2001, respondent discovered that petitioner was about to
open a coffee shop under the name SAN FRANCISCO COFFEE in

In its 14 August 2002 Decision, the BLA-IPO held that petitioners


trademark infringed on respondents trade name. It ruled that the
right to the exclusive use of a trade name with freedom from
infringement by similarity is determined from priority of adoption.
Since respondent registered its business name with the DTI in 1995
and petitioner registered its trademark with the IPO in 2001 in the
Philippines and in 1997 in other countries, then respondent must be
protected from infringement of its trade name.

18
The BLA-IPO also held that respondent did not abandon the use of its
trade name as substantial evidence indicated respondent
continuously used its trade name in connection with the purpose for
which it was organized. It found that although respondent was no
longer involved in blending, roasting, and distribution of coffee
because of the creation of BCCPI, it continued making plans and
doing research on the retailing of coffee and the setting up of coffee
carts. The BLA-IPO ruled that for abandonment to exist, the disuse
must be permanent, intentional, and voluntary.

Respondent maintains the law protects trade names from


infringement even if they are not registered with the IPO. Respondent
claims Republic Act No. 8293 (RA 8293)[7] dispensed with
registration of a trade name with the IPO as a requirement for the
filing of an action for infringement. All that is required is that the
trade name is previously used in trade or commerce in the
Philippines. Respondent insists it never abandoned the use of its
trade name as evidenced by its letter to petitioner demanding
immediate discontinuation of the use of its trademark and by the
The Ruling of the Court of Appeals
filing of the infringement case. Respondent alleges petitioners
trademark is confusingly similar to respondents trade name.
Respondent stresses ordinarily prudent consumers are likely to be
The BLA-IPO held that petitioners use of the trademark SAN
In its 15 June 2005 Decision, the Court of Appeals set aside the 22 misled about the source, affiliation, or sponsorship of petitioners
FRANCISCO COFFEE will likely cause confusion because of the exact October 2003 decision of the ODG-IPO in so far as it ruled that there coffee.
similarity in sound, spelling, pronunciation, and commercial
was no infringement. It reinstated the 14 August 2002 decision of the
impression of the words SAN FRANCISCO which is the dominant
BLA-IPO finding infringement. The appellate court denied
portion of respondents trade name and petitioners trademark. It held respondents claim for actual damages and retained the award of
that no significant difference resulted even with a diamond-shaped
attorneys fees. In its 1 September 2005 Resolution, the Court of As to the issue of alleged abandonment of trade name by respondent,
figure with a cup in the center in petitioner's trademark because
Appeals denied petitioners motion for reconsideration and the BLA-IPO found that respondent continued to make plans and do
greater weight is given to words the medium consumers use in
research on the retailing of coffee and the establishment of coffee
respondents motion for partial reconsideration.
ordering coffee products.
carts, which negates abandonment. This finding was upheld by the
Court of Appeals, which further found that while respondent stopped
using its trade name in its business of selling coffee, it continued to
import and sell coffee machines, one of the services for which the use
The Issue
of the business name has been registered. The binding effect of the
On the issue of unfair competition, the BLA-IPO absolved petitioner
factual findings of the Court of Appeals on this Court applies with
from liability. It found that petitioner adopted the trademark SAN
The sole issue is whether petitioners use of the trademark SAN
greater force when both the quasi-judicial body or tribunal like the
FRANCISCO COFFEE because of the authority granted to it by its
FRANCISCO COFFEE constitutes infringement of respondents
BLA-IPO and the Court of Appeals are in complete agreement on
franchisor. The BLA-IPO held there was no evidence of intent to
trade name SAN FRANCISCO COFFEE & ROASTERY, INC.,
their factual findings. It is also settled that absent any circumstance
defraud on the part of petitioner.
even if the trade name is not registered with the Intellectual
requiring the overturning of the factual conclusions made by the
Property Office (IPO).
quasi-judicial body or tribunal, particularly if affirmed by the Court of
Appeals, the Court necessarily upholds such findings of fact. [8]
The BLA-IPO also dismissed respondents claim of actual damages
because its claims of profit loss were based on mere assumptions as
respondent had not even started the operation of its coffee carts. The
BLA-IPO likewise dismissed respondents claim of moral damages,
but granted its claim of attorneys fees.

petitioner continuously used the trademark since June 2001 when it


opened its first coffee shop in Libis, Quezon City. It ruled that
between a subsequent user of a trade name in good faith and a prior
user who had stopped using such trade name, it would be inequitable
to rule in favor of the latter.

The Courts Ruling

The petition has no merit.


Both parties moved for partial reconsideration. Petitioner protested
the finding of infringement, while respondent questioned the denial
Petitioner contends that when a trade name is not registered, a suit
of actual damages. The BLA-IPO denied the parties partial motion for
for infringement is not available. Petitioner alleges respondent has
reconsideration. The parties appealed to the Office of the Director
abandoned its trade name. Petitioner points out that respondents
General-Intellectual Property Office (ODG-IPO).
registration of its business name with the DTI expired on 16 June
2000 and it was only in 2001 when petitioner opened a coffee shop in
Libis, Quezon City that respondent made a belated effort to seek the
renewal of its business name registration. Petitioner stresses
The Ruling of the Office of the Director Generalrespondents failure to continue the use of its trade name to designate
its goods negates any allegation of infringement. Petitioner claims no
Intellectual Property Office
confusion is likely to occur between its trademark and respondents
trade name because of a wide divergence in the channels of trade,
petitioner serving ready-made coffee while respondent is in wholesale
blending, roasting, and distribution of coffee. Lastly, petitioner avers
In its 22 October 2003 Decision, the ODG-IPO reversed the BLA-IPO. the proper noun San Francisco and the generic word coffee are not
It ruled that petitioners use of the trademark SAN FRANCISCO capable of exclusive appropriation.
COFFEE did not infringe on respondent's trade name. The ODG-IPO
found that respondent had stopped using its trade name after it
entered into a joint venture with Boyd Coffee USA in 1998 while

Coming now to the main issue, in Prosource International, Inc. v.


Horphag Research Management SA,[9] this Court laid down what
constitutes infringement of an unregistered trade name, thus:

(1) The trademark being infringed is registered


in
the
Intellectual Property
Office;
however, in infringement of trade
name, the same need not be
registered;
(2) The trademark or trade name is reproduced,
counterfeited, copied, or colorably imitated by
the infringer;
(3) The infringing mark or trade name is used
in connection with the sale, offering for sale, or
advertising of any goods, business or services; or
the infringing mark or trade name is applied to
labels, signs, prints, packages, wrappers,
receptacles, or advertisements intended to be
used upon or in connection with such goods,
business, or services;

19
(4) The use or application of the infringing mark or trade name is
likely to cause confusion or mistake or to deceive purchasers or others
as to the goods or services themselves or as to the source or origin of
such goods or services or the identity of such business; and
(5) It is without the consent of the trademark or trade name owner
or the assignee thereof.[10] (Emphasis supplied)

Clearly, a trade name need not be registered with the IPO before an
infringement suit may be filed by its owner against the owner of an
infringing trademark. All that is required is that the trade name is
previously used in trade or commerce in the Philippines. [11]

SEC. 165.2 (A) NOTWITHSTANDING ANY


LAWS OR REGULATIONS PROVIDING
FOR ANY OBLIGATION TO REGISTER
TRADE NAMES, SUCH NAMES SHALL BE
PROTECTED, EVEN
PRIOR
TO
OR
WITHOUT REGISTRATION, AGAINST ANY
UNLAWFUL ACT COMMITTED BY THIRD
PARTIES.
(B) IN PARTICULAR, ANY SUBSEQUENT USE OF A TRADE NAME
BY A THIRD PARTY, WHETHER AS A TRADE NAME OR A MARK
OR COLLECTIVE MARK, OR ANY SUCH USE OF A SIMILAR
TRADE NAME OR MARK, LIKELY TO MISLEAD THE PUBLIC,
SHALL BE DEEMED UNLAWFUL. (EMPHASIS SUPPLIED)

Section 22 of Republic Act No. 166, [12] as amended, required


registration of a trade name as a condition for the institution of an IT IS THE LIKELIHOOD OF CONFUSION THAT IS THE
GRAVAMEN OF INFRINGEMENT. BUT THERE IS NO ABSOLUTE
infringement suit, to wit:
STANDARD FOR LIKELIHOOD OF CONFUSION. ONLY THE
PARTICULAR, AND SOMETIMES PECULIAR, CIRCUMSTANCES
OF EACH CASE CAN DETERMINE ITS EXISTENCE. THUS, IN
INFRINGEMENT CASES, PRECEDENTS MUST BE EVALUATED IN
Sec. 22. Infringement, what constitutes. Any
THE LIGHT OF EACH PARTICULAR CASE.[13]
person who shall use, without the consent of
the registrant, any reproduction, counterfeit,
copy, or colorable imitation of any registered
mark or trade name in connection with the sale,
IN DETERMINING SIMILARITY AND LIKELIHOOD OF
offering for sale, or advertising of any goods,
CONFUSION, OUR JURISPRUDENCE HAS DEVELOPED TWO
business or services on or in connection with
TESTS: THE DOMINANCY TEST AND THE HOLISTIC TEST. THE
which such use is likely to cause confusion or
DOMINANCY TEST FOCUSES ON THE SIMILARITY OF THE
mistake or to deceive purchasers or others as to
PREVALENT FEATURES OF THE COMPETING TRADEMARKS
the source or origin of such goods or services, or
THAT MIGHT CAUSE CONFUSION AND DECEPTION, THUS
identity of such business; or reproduce,
CONSTITUTING INFRINGEMENT. IF THE COMPETING
counterfeit, copy, or colorably imitate any such
TRADEMARK CONTAINS THE MAIN, ESSENTIAL, AND
mark or trade name and apply such
DOMINANT FEATURES OF ANOTHER, AND CONFUSION OR
reproduction, counterfeit, copy, or colorable
DECEPTION IS LIKELY TO RESULT, INFRINGEMENT OCCURS.
imitation to labels, signs, prints, packages,
EXACT DUPLICATION OR IMITATION IS NOT REQUIRED. THE
wrappers,
receptacles,
or
advertisements
QUESTION IS WHETHER THE USE OF THE MARKS INVOLVED IS
intended to be used upon or in connection with
LIKELY TO CAUSE CONFUSION OR MISTAKE IN THE MIND OF
such goods, business, or services, shall be
THE PUBLIC OR TO DECEIVE CONSUMERS.[14]
liable to a civil action by the registrant for
any or all of the remedies herein provided.
(Emphasis supplied)

HOWEVER, RA 8293, WHICH TOOK EFFECT ON 1 JANUARY 1998,


HAS DISPENSED WITH THE REGISTRATION REQUIREMENT.
SECTION 165.2 OF RA 8293 CATEGORICALLY STATES THAT
TRADE NAMES SHALL BE PROTECTED, EVEN PRIOR TO OR
WITHOUT REGISTRATION WITH THE IPO, AGAINST ANY
UNLAWFUL ACT INCLUDING ANY SUBSEQUENT USE OF THE
TRADE NAME BY A THIRD PARTY, WHETHER AS A TRADE
NAME OR A TRADEMARK LIKELY TO MISLEAD THE PUBLIC.
THUS:

IN
CONTRAST,
THE
HOLISTIC
TEST
ENTAILS
A
CONSIDERATION OF THE ENTIRETY OF THE MARKS AS
APPLIED TO THE PRODUCTS, INCLUDING THE LABELS AND
PACKAGING, IN DETERMINING CONFUSING SIMILARITY.
[15]
THE DISCERNING EYE OF THE OBSERVER MUST FOCUS NOT
ONLY ON THE PREDOMINANT WORDS BUT ALSO ON THE
OTHER FEATURES APPEARING ON BOTH MARKS IN ORDER
THAT THE OBSERVER MAY DRAW HIS CONCLUSION WHETHER
ONE IS CONFUSINGLY SIMILAR TO THE OTHER.[16]

COFFEE & ROASTERY, INC. TRADE NAME. THE DESCRIPTIVE


WORDS SAN FRANCISCO COFFEE ARE PRECISELY THE
DOMINANT FEATURES OF RESPONDENTS TRADE NAME.
PETITIONER AND RESPONDENT ARE ENGAGED IN THE SAME
BUSINESS OF SELLING COFFEE, WHETHER WHOLESALE OR
RETAIL. THE LIKELIHOOD OF CONFUSION IS HIGHER IN
CASES WHERE THE BUSINESS OF ONE CORPORATION IS THE
SAME OR SUBSTANTIALLY THE SAME AS THAT OF ANOTHER
CORPORATION. IN THIS CASE, THE CONSUMING PUBLIC WILL
LIKELY BE CONFUSED AS TO THE SOURCE OF THE COFFEE
BEING SOLD AT PETITIONERS COFFEE SHOPS. PETITIONERS
ARGUMENT THAT SAN FRANCISCO IS JUST A PROPER NAME
REFERRING TO THE FAMOUS CITY IN CALIFORNIA AND THAT
COFFEE IS SIMPLY A GENERIC TERM, IS UNTENABLE.
RESPONDENT HAS ACQUIRED AN EXCLUSIVE RIGHT TO THE
USE OF THE TRADE NAME SAN FRANCISCO COFFEE &
ROASTERY, INC. SINCE THE REGISTRATION OF THE BUSINESS
NAME WITH THE DTI IN 1995. THUS, RESPONDENTS USE OF ITS
TRADE NAME FROM THEN ON MUST BE FREE FROM ANY
INFRINGEMENT BY SIMILARITY. OF COURSE, THIS DOES NOT
MEAN THAT RESPONDENT HAS EXCLUSIVE USE OF THE
GEOGRAPHIC WORD SAN FRANCISCO OR THE GENERIC WORD
COFFEE. GEOGRAPHIC OR GENERIC WORDS ARE NOT, PER SE,
SUBJECT TO EXCLUSIVE APPROPRIATION. IT IS ONLY THE
COMBINATION OF THE WORDS SAN FRANCISCO COFFEE,
WHICH IS RESPONDENTS TRADE NAME IN ITS COFFEE
BUSINESS, THAT IS PROTECTED AGAINST INFRINGEMENT ON
MATTERS RELATED TO THE COFFEE BUSINESS TO AVOID
CONFUSING OR DECEIVING THE PUBLIC.

IN PHILIPS EXPORT B.V. V. COURT OF APPEALS,[17] THIS COURT


HELD THAT A CORPORATION HAS AN EXCLUSIVE RIGHT TO
THE USE OF ITS NAME. THE RIGHT PROCEEDS FROM THE
THEORY THAT IT IS A FRAUD ON THE CORPORATION WHICH
HAS ACQUIRED A RIGHT TO THAT NAME AND PERHAPS
CARRIED ON ITS BUSINESS THEREUNDER, THAT ANOTHER
SHOULD ATTEMPT TO USE THE SAME NAME, OR THE SAME
NAME WITH A SLIGHT VARIATION IN SUCH A WAY AS TO
INDUCE PERSONS TO DEAL WITH IT IN THE BELIEF THAT
THEY ARE DEALING WITH THE CORPORATION WHICH HAS
GIVEN A REPUTATION TO THE NAME.[18]

THIS COURT IS NOT JUST A COURT OF LAW, BUT ALSO OF


EQUITY. WE CANNOT ALLOW PETITIONER TO PROFIT BY THE
NAME AND REPUTATION SO FAR BUILT BY RESPONDENT
WITHOUT RUNNING AFOUL OF THE BASIC DEMANDS OF FAIR
PLAY. NOT ONLY THE LAW BUT EQUITY CONSIDERATIONS
HOLD PETITIONER LIABLE FOR INFRINGEMENT OF
RESPONDENTS TRADE NAME.

THE COURT OF APPEALS WAS CORRECT IN SETTING ASIDE


APPLYING EITHER THE DOMINANCY TEST OR THE HOLISTIC
TEST, PETITIONERS SAN FRANCISCO COFFEE TRADEMARK IS A THE 22 OCTOBER 2003 DECISION OF THE OFFICE OF THE
DIRECTOR GENERAL-INTELLECTUAL PROPERTY OFFICE AND
CLEAR INFRINGEMENT OF RESPONDENTS SAN FRANCISCO

20
IN REINSTATING THE 14 AUGUST 2002 DECISION OF THE
BUREAU OF LEGAL AFFAIRS-INTELLECTUAL PROPERTY
OFFICE.

CARPIO, J.:

GINEBRA KAPITAN IN NORTHERN AND SOUTHERN LUZON


AREAS IN MAY 2003. IN JUNE 2003, GINEBRA KAPITAN WAS
ALSO LAUNCHED IN METRO MANILA.[7]
The Case

TANDUAY DISTILLERS, INC. (TANDUAY) FILED THIS PETITION


FOR REVIEW ON CERTIORARI[1] ASSAILING THE COURT OF
APPEALS DECISION DATED 9 JANUARY 2004[2] AS WELL AS THE
RESOLUTION DATED 2 JULY 2004[3] IN CA-G.R. SP NO. 79655
DENYING THE MOTION FOR RECONSIDERATION. IN THE
ASSAILED DECISION, THE COURT OF APPEALS (CA) AFFIRMED
THE REGIONAL TRIAL COURTS ORDERS[4]DATED 23
SEPTEMBER 2003 AND 17 OCTOBER 2003 WHICH
RESPECTIVELY GRANTED GINEBRA SAN MIGUEL, INC.S (SAN
MIGUEL) PRAYER FOR THE ISSUANCE OF A TEMPORARY
RESTRAINING ORDER (TRO) AND WRIT OF PRELIMINARY
INJUNCTION. THE REGIONAL TRIAL COURT OF
MANDALUYONG CITY, BRANCH 214 (TRIAL COURT), ENJOINED
TANDUAY FROM COMMITTING THE ACTS COMPLAINED OF,
AND, SPECIFICALLY, TO CEASE AND DESIST FROM
G.R. NO. 164324
MANUFACTURING, DISTRIBUTING, SELLING, OFFERING FOR
SALE, ADVERTISING, OR OTHERWISE USING IN COMMERCE
THE MARK GINEBRA, AND MANUFACTURING, PRODUCING,
DISTRIBUTING, OR OTHERWISE DEALING IN GIN PRODUCTS
PRESENT:WHICH HAVE THE GENERAL APPEARANCE OF, AND WHICH
ARE CONFUSINGLY SIMILAR WITH, SAN MIGUELS MARKS,
BOTTLE DESIGN, AND LABEL FOR ITS GIN PRODUCTS.[5]

WHEREFORE, WE DENY THE PETITION FOR REVIEW.


WE AFFIRM THE 15 JUNE 2005 DECISION AND 1 SEPTEMBER
2005 RESOLUTION OF THE COURT OF APPEALS IN CA-G.R. SP
NO. 80396.

COSTS AGAINST PETITIONER.

SO ORDERED.
TANDUAY DISTILLERS, INC.,
Petitioner,

- versus -

PUNO, C.J.,
CARPIO,
CORONA,

ON 15 AUGUST 2003, SAN MIGUEL FILED A COMPLAINT FOR


TRADEMARK INFRINGEMENT, UNFAIR COMPETITION AND
DAMAGES, WITH APPLICATIONS FOR ISSUANCE OF TRO AND
WRIT OF PRELIMINARY INJUNCTION AGAINST TANDUAY
BEFORE THE REGIONAL TRIAL COURT OF
MANDALUYONG. THE CASE WAS RAFFLED TO BRANCH 214
AND DOCKETED AS IP CASE NO. MC-03-01 AND CIVIL CASE NO.
MC-03-073.[9]

ON 25 AND 29 AUGUST AND 4 SEPTEMBER 2003, THE TRIAL


COURT CONDUCTED HEARINGS ON THE TRO. SAN MIGUEL
SUBMITTED FIVE AFFIDAVITS, BUT ONLY ONE AFFIANT,
MERCEDES ABAD, WAS PRESENTED FOR CROSS-EXAMINATION
BECAUSE THE TRIAL COURT RULED THAT SUCH
EXAMINATION WOULD BE INCONSISTENT WITH THE
SUMMARY NATURE OF A TRO HEARING.[10] SAN MIGUEL
SUBMITTED THE FOLLOWING PIECES OF EVIDENCE:[11]

THE FACTS

LEONARDO-DE CASTRO, AND


Tanduay, a corporation organized and existing under Philippine laws,
GINEBRA SAN MIGUEL, INC.,
BERSAMIN,
has been engaged in the liquor business since 1854. In 2002, Tanduay
developed a new gin product distinguished by its sweet smell, smooth
RESPONDENT.
taste, and affordable price. Tanduay claims that it engaged the
services of an advertising firm to develop a brand name and a label
for its new gin product. The brand name eventually chosen was
Ginebra
Kapitan
with
the
representation
of
a
revolutionary Kapitan on horseback as the dominant feature of its
PROMULGATED:
label. Tanduay points out that the label design of Ginebra Kapitan in
terms
of color scheme, size and arrangement of text, and other label
AUGUST 14,
2009
features were precisely selected to distinguish it from the leading gin
brand in the Philippine market, Ginebra San Miguel. Tanduay also
X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -states
X
that the Ginebra Kapitan bottle uses a resealable twist cap to
distinguish it from Ginebra San Miguel and other local gin products
with bottles which use the crown cap or tansan.[6]

DECISION

ON 13 AUGUST 2003, TANDUAY RECEIVED A LETTER FROM SAN


MIGUELS COUNSEL. THE LETTER INFORMED TANDUAY TO
IMMEDIATELY CEASE AND DESIST FROM USING THE MARK
GINEBRA AND FROM COMMITTING ACTS THAT VIOLATE SAN
MIGUELS INTELLECTUAL PROPERTY RIGHTS.[8]

AFTER FILING THE TRADEMARK APPLICATION FOR GINEBRA


KAPITAN WITH THE INTELLECTUAL PROPERTY OFFICE (IPO)
AND AFTER SECURING THE APPROVAL OF THE PERMIT TO
MANUFACTURE AND SELL GINEBRA KAPITAN FROM THE
BUREAU OF INTERNAL REVENUE, TANDUAY BEGAN SELLING

1. Affidavit of Mercedes Abad, President and


Managing Director of the research firm NFO
Trends, Inc. (NFO Trends), to present, among
others, market survey results which prove that
gin drinkers associate the term Ginebra with San
Miguel, and that the consuming public is being
misled that Ginebra Kapitan is a product of San
Miguel;
2. MARKET SURVEY RESULTS CONDUCTED BY NFO TRENDS TO
DETERMINE THE BRAND ASSOCIATIONS OF THE MARK
GINEBRA AND TO PROVE THAT THE CONSUMING PUBLIC IS
CONFUSED AS TO THE MANUFACTURER OF GINEBRA
KAPITAN;
3. AFFIDAVIT OF RAMON CRUZ, SAN MIGUELS GROUP
PRODUCT MANAGER, TO PROVE, AMONG OTHERS, THE PRIOR
RIGHT OF SAN MIGUEL TO THE MARK GINEBRA AS SHOWN IN
VARIOUS APPLICATIONS FOR, AND REGISTRATIONS OF,
TRADEMARKS THAT CONTAIN THE MARK GINEBRA. HIS
AFFIDAVIT INCLUDED DOCUMENTS SHOWING THAT THE
MARK GINEBRA HAS BEEN USED ON SAN MIGUELS GIN
PRODUCTS SINCE 1834;

21
4. AFFIDAVITS OF LEOPOLDO GUANZON, JR., SAN MIGUELS
TRADE AND PROMO MERCHANDISING HEAD FOR NORTH
LUZON AREA, AND JUDERICK CRESCINI, SAN MIGUELS
DISTRICT SALES SUPERVISOR FOR SOUTH LUZON-EAST AREA,
TO PROVE, AMONG OTHERS, THAT TANDUAYS SALESMEN OR
DISTRIBUTORS MISREPRESENT GINEBRA KAPITAN AS SAN
MIGUELS PRODUCT AND THAT NUMEROUS RETAILERS OF SAN
MIGUELS GIN PRODUCTS ARE CONFUSED AS TO THE
MANUFACTURER OF GINEBRA KAPITAN; AND
5. AFFIDAVIT OF JOSE REGINALD PASCUAL, SAN MIGUELS
DISTRICT SALES SUPERVISOR FOR THE NORTH-GREATER
MANILA AREA, TO PROVE, AMONG OTHERS, THAT GIN
DRINKERS CONFUSE SAN MIGUEL TO BE THE
MANUFACTURER OF GINEBRA KAPITAN DUE TO THE USE OF
THE DOMINANT FEATURE GINEBRA.

Tanduay filed a Motion to Strike Out Hearsay Affidavits and


Evidence, which motion was denied by the trial court. Tanduay
presented witnesses who affirmed their affidavits in open court, as
follows:[12]
1. RAMONCITO BUGIA, GENERAL SERVICES
MANAGER OF TANDUAY. ATTACHED TO HIS
AFFIDAVIT WERE VARIOUS CERTIFICATES
OF
REGISTRATION
OF
TRADEMARKS
CONTAINING
THE
WORD
GINEBRA
OBTAINED BY TANDUAY AND OTHER
LIQUOR COMPANIES, TO PROVE THAT THE
WORD GINEBRA IS REQUIRED TO BE
DISCLAIMED BY THE IPO. THE AFFIDAVIT
ALSO ATTESTED THAT THERE ARE OTHER
LIQUOR COMPANIES USING THE WORD
GINEBRA AS PART OF THEIR TRADEMARKS
FOR GIN PRODUCTS ASIDE FROM SAN
MIGUEL AND TANDUAY.
2. HERBERT ROSALES, VICE PRESIDENT OF J. SALCEDO AND
ASSOCIATES, INC., THE ADVERTISING AND PROMOTIONS
COMPANY HIRED BY TANDUAY TO DESIGN THE LABEL OF
GINEBRA KAPITAN. HIS AFFIDAVIT ATTESTED THAT THE
LABEL WAS DESIGNED TO MAKE IT LOOK ABSOLUTELY
DIFFERENT FROM THE GINEBRA SAN MIGUEL LABEL.

ON 23 SEPTEMBER 2003, THE TRIAL COURT ISSUED A TRO


PROHIBITING TANDUAY FROM MANUFACTURING, SELLING
AND ADVERTISING GINEBRA KAPITAN.[13] THE DISPOSITIVE
PORTION READS IN PART:

1,000,000.00) within five (5) days from issuance


hereof, otherwise, this restraining order shall lose
its efficacy. Accordingly, defendant Tanduay
Distillers, Inc., and all persons and agents acting
for and in behalf are enjoined to cease and desist
from manufacturing, distributing, selling,
offering for sale and/or advertising or otherwise
using in commerce the mark GINEBRA
KAPITAN which employs, thereon, or in the
wrappings, sundry items, cartons and packages
thereof, the mark GINEBRA as well as from using
the bottle design and labels for its gin products
during the effectivity of this temporary
restraining order unless a contrary order is issued
by this Court.[14]

ON 9 JANUARY 2004, THE CA RENDERED A DECISION


DISMISSING TANDUAYS PETITION AND SUPPLEMENTAL
PETITION. ON 28 JANUARY 2004, TANDUAY MOVED FOR
RECONSIDERATION WHICH WAS DENIED IN A RESOLUTION
DATED 2 JULY 2004.[21]

AGGRIEVED BY THE DECISION DISMISSING THE PETITION


AND SUPPLEMENTAL PETITION AND BY THE RESOLUTION
DENYING THE MOTION FOR RECONSIDERATION, TANDUAY
On 3 October 2003, Tanduay filed a petition for certiorari with the ELEVATED THE CASE BEFORE THIS COURT.
[15]
CA. Despite Tanduays Urgent Motion to Defer Injunction Hearing,
the trial court continued to conduct hearings on 8, 9, 13 and 14
October 2003 for Tanduay to show cause why no writ of preliminary
injunction should be issued. [16] On 17 October 2003, the trial court
granted San Miguels application for the issuance of a writ of
preliminary injunction.[17] The dispositive portion of the Order reads:
THE TRIAL COURTS ORDERS

WHEREFORE, the plaintiffs application for a


writ of preliminary injunction is GRANTED.
Upon plaintiffs filing of an injunctive bond
executed to the defendant in the amount
of P20,000,000.00
(TWENTY
MILLION)
PESOS, let a Writ of Preliminary Injunction issue
enjoining the defendant, its employees, agents,
representatives, dealers, retailers or assigns, and
any all persons acting on its behalf, from
committing the acts complained of, and,
specifically, to cease and desist from
manufacturing, distributing, selling, offering for
sale, advertising, or otherwise using in commerce
the mark GINEBRA, and manufacturing,
producing, distributing or otherwise dealing in
gin products which have the general appearance
of, and which are confusingly similar with,
plaintiffs marks, bottle design and label for its gin
products.

SO ORDERED.[18]

WHEREFORE, the application for temporary


restraining order is hereby GRANTED and made
effective immediately. Plaintiff is directed to post
a bond of ONE MILLION PESOS (Php

and from further proceeding with the case. [19] On 23 December 2003,
the CA issued a resolution directing the parties to appear for a hearing
on 6 January 2004 to determine the need for the issuance of a writ of
preliminary injunction.[20]

In the Order dated 23 September 2003, the trial court stated that
during the hearings conducted on 25 and 29 August and on 4 and 11
September 2003, the following facts have been established:

1.
San Miguel has registered the
trademark Ginebra San Miguel;
2. THERE IS A CLOSE RESEMBLANCE
BETWEEN GINEBRA SAN MIGUEL AND
GINEBRA KAPITAN;
3. THE CLOSE SIMILARITY BETWEEN
GINEBRA SAN MIGUEL AND GINEBRA
KAPITAN
MAY
GIVE
RISE
TO
CONFUSION OF GOODS SINCE SAN
MIGUEL
AND
TANDUAY
ARE
COMPETITORS IN THE BUSINESS OF
MANUFACTURING
AND
SELLING
LIQUORS; AND

GINEBRA, WHICH IS A WELL-KNOWN TRADEMARK, WAS


ADOPTED BY TANDUAY TO BENEFIT FROM THE REPUTATION
AND ADVERTISEMENT OF THE ORIGINATOR OF THE MARK
On 22 October 2003, Tanduay filed a supplemental petition in the CA GINEBRA SAN MIGUEL, AND TO CONVEY TO THE PUBLIC THE
assailing the injunction order. On 10 November 2003, the CA issued a IMPRESSION OF SOME SUPPOSED CONNECTION BETWEEN
TRO enjoining the trial court from implementing its injunction order THE MANUFACTURER OF THE GIN PRODUCT SOLD UNDER

22
THE NAME GINEBRA SAN MIGUEL AND THE NEW GIN
PRODUCT GINEBRA KAPITAN.[22]

POPULARITY AND ESTABLISHED GOODWILL OF GINEBRA SAN


MIGUEL.[26]

Based on these facts, the trial court concluded that San Miguel had
demonstrated a clear, positive, and existing right to be protected by a
TRO. Otherwise, San Miguel would suffer irreparable injury if
infringement would not be enjoined. Hence, the trial court granted
the application for a TRO and set the hearing for preliminary
injunction.[23]

THE TRIAL COURT HELD THAT TO CONSTITUTE TRADEMARK


INFRINGEMENT, IT WAS NOT NECESSARY THAT EVERY WORD
SHOULD BE APPROPRIATED; IT WAS SUFFICIENT THAT
ENOUGH BE TAKEN TO DECEIVE THE PUBLIC IN THE
PURCHASE OF A PROTECTED ARTICLE. [27]

THE TRIAL COURT CONCEDED TO TANDUAYS ASSERTION


THAT THE TERM GINEBRA IS A GENERIC WORD; HENCE, IT IS
NON-REGISTRABLE BECAUSE GENERIC WORDS ARE BY LAW
FREE FOR ALL TO USE. HOWEVER, THE TRIAL COURT RELIED
ON THE PRINCIPLE THAT EVEN IF A WORD IS INCAPABLE OF
APPROPRIATION AS A TRADEMARK, THE WORD MAY STILL
ACQUIRE A PROPRIETARY CONNOTATION THROUGH LONG
AND EXCLUSIVE USE BY A BUSINESS ENTITY WITH
REFERENCE TO ITS PRODUCTS. THE PURCHASING PUBLIC
WOULD ASSOCIATE THE WORD TO THE PRODUCTS OF A
THE TRIAL COURT POINTED OUT THAT SAN MIGUEL AND ITS BUSINESS ENTITY. THE WORD THUS ASSOCIATED WOULD BE
PREDECESSORS HAVE CONTINUOUSLY USED GINEBRA AS THE ENTITLED TO PROTECTION AGAINST INFRINGEMENT AND
UNFAIR COMPETITION. THE TRIAL COURT HELD THAT THIS
DOMINANT FEATURE OF ITS GIN PRODUCTS SINCE 1834. ON
PRINCIPLE COULD BE MADE TO APPLY TO THIS CASE BECAUSE
THE OTHER HAND, TANDUAY FILED ITS TRADEMARK
SAN MIGUEL HAS SHOWN THAT IT HAS ESTABLISHED
APPLICATION FOR GINEBRA KAPITAN ONLY ON 7 JANUARY
2003. THE TRIAL COURT DECLARED THAT SAN MIGUEL IS THE GOODWILL OF CONSIDERABLE VALUE, SUCH THAT ITS GIN
PRODUCTS HAVE ACQUIRED A WELL-KNOWN REPUTATION AS
PRIOR USER AND REGISTRANT OF GINEBRA WHICH HAS
BECOME CLOSELY ASSOCIATED TO ALL OF SAN MIGUELS GIN JUST GINEBRA. IN ESSENCE, THE WORD GINEBRA HAS
PRODUCTS, THEREBY GAINING POPULARITY AND GOODWILL BECOME A POPULAR BY-WORD AMONG THE CONSUMERS AND
THEY HAD CLOSELY ASSOCIATED IT WITH SAN MIGUEL. [28]
FROM SUCH NAME.[25]
IN THE ORDER DATED 17 OCTOBER 2003, THE TRIAL COURT
GRANTED THE APPLICATION FOR A WRIT OF PRELIMINARY
INJUNCTION. THE TRIAL COURT RULED THAT WHILE A
CORPORATION ACQUIRES A TRADE NAME FOR ITS PRODUCT
BY CHOICE, IT SHOULD NOT SELECT A NAME THAT IS
CONFUSINGLY SIMILAR TO ANY OTHER NAME ALREADY
PROTECTED BY LAW OR IS PATENTLY DECEPTIVE, CONFUSING,
OR CONTRARY TO EXISTING LAW.[24]

THE CA ENUMERATED THE REQUISITES FOR AN INJUNCTION:


(1) THERE MUST BE A RIGHT IN ESSE OR THE EXISTENCE OF A
RIGHT TO BE PROTECTED AND (2) THE ACT AGAINST WHICH
THE INJUNCTION IS TO BE DIRECTED IS A VIOLATION OF
SUCH RIGHT. THE CA STATED THAT THE TRADEMARKS
GINEBRA SAN MIGUEL AND GINEBRA KAPITAN ARE NOT
IDENTICAL, BUT IT IS CLEAR THAT THE WORD GINEBRA IS
THE DOMINANT FEATURE IN BOTH TRADEMARKS. THERE
WAS A STRONG INDICATION THAT CONFUSION WAS LIKELY TO
OCCUR. ONE WOULD BE LED TO CONCLUDE THAT BOTH
PRODUCTS ARE AFFILIATED WITH SAN MIGUEL BECAUSE THE
DISTINCTIVE MARK GINEBRA IS IDENTIFIED WITH SAN
MIGUEL. IT IS THE MARK WHICH DRAWS THE ATTENTION OF
THE BUYER AND LEADS HIM TO CONCLUDE THAT THE GOODS
ORIGINATED FROM THE SAME MANUFACTURER.[32]

THE CA OBSERVED THAT THE GIN PRODUCTS OF GINEBRA


SAN MIGUEL AND GINEBRA KAPITAN POSSESS THE SAME
PHYSICAL ATTRIBUTES WITH REFERENCE TO THEIR FORM,
COMPOSITION, TEXTURE, OR QUALITY. THE CA UPHELD THE
TRIAL COURTS RULING THAT SAN MIGUEL HAS SUFFICIENTLY
ESTABLISHED ITS RIGHT TO PRIOR USE AND REGISTRATION
OF THE MARK GINEBRA AS A DOMINANT FEATURE OF ITS
TRADEMARK. GINEBRA HAS BEEN IDENTIFIED WITH SAN
MIGUELS GOODS, THEREBY, IT ACQUIRED A RIGHT IN SUCH
MARK, AND IF ANOTHER INFRINGED THE TRADEMARK, SAN
MIGUEL COULD INVOKE ITS PROPERTY RIGHT.[33]

The Issue

ON THE OTHER HAND, THE TRIAL COURT HELD THAT


TANDUAY FAILED TO SUBSTANTIATE ITS CLAIM AGAINST THE
ISSUANCE OF THE INJUNCTIVE RELIEF.[29]
The central question for resolution is whether San Miguel is entitled
THE TRIAL COURT NOTED THAT WHILE THE SUBJECT
to the writ of preliminary injunction granted by the trial court as
TRADEMARKS ARE NOT IDENTICAL, IT IS OBVIOUSLY CLEAR
THE RULING OF THE COURT OF APPEALS
affirmed by the CA. For this reason, we shall deal only with the
THAT THE WORD GINEBRA IS THE DOMINANT FEATURE IN
questioned writ and not with the merits of the case pending before the
THE TRADEMARKS. THE TRIAL COURT STATED THAT THERE IS
trial court.
A STRONG INDICATION THAT CONFUSION IS LIKELY TO OCCUR
SINCE ONE WOULD INEVITABLY BE LED TO CONCLUDE THAT
BOTH PRODUCTS ARE AFFILIATED WITH SAN MIGUEL DUE TO In resolving the petition and supplemental petition, the CA stated that
THE DISTINCTIVE MARK GINEBRA WHICH IS READILY
it is constrained to limit itself to the determination of whether the
IDENTIFIED WITH SAN MIGUEL. THE TRIAL COURT
TRO and the writ of preliminary injunction were issued by the trial
CONCLUDED THAT ORDINARY PURCHASERS WOULD NOT
court with grave abuse of discretion amounting to lack of jurisdiction.
[30]
EXAMINE THE LETTERINGS OR FEATURES PRINTED ON THE
The Ruling of the Court
LABEL BUT WOULD SIMPLY BE GUIDED BY THE PRESENCE OF
THE DOMINANT MARK GINEBRA. ANY DIFFERENCE WOULD
PALE IN SIGNIFICANCE IN THE FACE OF EVIDENT
SIMILARITIES IN THE DOMINANT FEATURES AND OVERALL
TO WARRANT THE ISSUANCE OF A TRO, THE CA RULED THAT
Clear and Unmistakable Right
APPEARANCE OF THE PRODUCTS. THE TRIAL COURT
THE AFFIDAVITS OF SAN MIGUELS WITNESSES AND THE FACT
EMPHASIZED THAT THE DETERMINATIVE FACTOR WAS
THAT THE REGISTERED TRADEMARK GINEBRA SAN MIGUEL
WHETHER THE USE OF SUCH MARK WOULD LIKELY CAUSE
EXISTS ARE ENOUGH TO MAKE A FINDING THAT SAN MIGUEL
CONFUSION ON THE PART OF THE BUYING PUBLIC, AND NOT HAS A CLEAR AND UNMISTAKABLE RIGHT TO PREVENT
SECTION 1, RULE 58 OF THE RULES OF COURT DEFINES A
WHETHER IT WOULD ACTUALLY CAUSE CONFUSION ON THE
IRREPARABLE INJURY BECAUSE GIN DRINKERS CONFUSE SAN PRELIMINARY INJUNCTION AS AN ORDER GRANTED AT ANY
PART OF THE PURCHASERS. THUS, TANDUAYS CHOICE OF
MIGUEL TO BE THE MANUFACTURER OF GINEBRA KAPITAN.[31] STAGE OF A PROCEEDING PRIOR TO THE JUDGMENT OR FINAL
GINEBRA AS PART OF THE TRADEMARK OF GINEBRA KAPITAN
ORDER, REQUIRING A PARTY OR A COURT, AGENCY, OR A
TENDED TO SHOW TANDUAYS INTENTION TO RIDE ON THE
PERSON TO REFRAIN FROM A PARTICULAR ACT OR ACTS.

23
A PRELIMINARY INJUNCTION IS A PROVISIONAL REMEDY FOR
THE PROTECTION OF SUBSTANTIVE RIGHTS AND INTERESTS.
IT IS NOT A CAUSE OF ACTION IN ITSELF BUT MERELY AN
ADJUNCT TO THE MAIN CASE. ITS OBJECTIVE IS TO PREVENT A
THREATENED OR CONTINUOUS IRREPARABLE INJURY TO
SOME OF THE PARTIES BEFORE THEIR CLAIMS CAN BE
THOROUGHLY INVESTIGATED AND ADVISEDLY ADJUDICATED.
IT IS RESORTED TO ONLY WHEN THERE IS A PRESSING NEED
TO AVOID INJURIOUS CONSEQUENCES WHICH CANNOT BE
REMEDIED UNDER ANY STANDARD COMPENSATION.[34]
Section 3, Rule 58 of the Rules of Court provides:

SECTION 3. GROUNDS FOR ISSUANCE OF A


WRIT OF PRELIMINARY INJUNCTION.A
PRELIMINARY
INJUNCTION
MAY
BE
GRANTED WHEN IT IS ESTABLISHED:
(a) That the applicant is
entitled
to
the
relief
demanded, and the whole or
part of such relief consists in
restraining the commission
or continuance of the act or
acts complained of, or in
requiring the performance of
an act or acts, either for a
limited
period
or
perpetually;
(b) That the commission, continuance or non-performance of the act
or acts complained of during the litigation would probably work
injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is
attempting to do, or is procuring or suffering to be done, some act or
acts probably in violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to render the
judgment ineffectual.
Before an injunctive writ is issued, it is essential that the following
requisites are present: (1) the existence of a right to be protected and
(2) the acts against which the injunction is directed are violative of
the right. The onus probandi is on the movant to show that the
invasion of the right sought to be protected is material and
substantial, that the right of the movant is clear and unmistakable,
and that there is an urgent and paramount necessity for the writ to
prevent serious damage.[35]

ruling based on the evidence on record. Assuming that Ginebra is a


generic word which is proscribed to be registered as a trademark
under Section 123.1(h)[37] of Republic Act No. 8293 or the Intellectual
Property Code (IP Code),[38] it can still be appropriated and registered
as a trademark under Section 123.1(j)[39] in relation to Section
123.2[40] of the IP Code, considering that Ginebra is also a mark which
designates the kind of goods produced by San Miguel. [41] San Miguel
alleges that although Ginebra, the Spanish word for gin, may be a
term originally incapable of exclusive appropriation, jurisprudence
dictates that the mark has become distinctive of San Miguels products
due to its substantially exclusive and continuous use as the dominant
feature of San Miguels trademarks since 1834. Hence, San Miguel is
entitled to a finding that the mark is deemed to have acquired a
secondary meaning.[42] San Miguel states that Tanduay failed to
present any evidence to disprove its claims; thus, there is no basis to
set aside the grant of the TRO and writ of preliminary injunction. [43]

trademarks belie San Miguels claim that it has been the exclusive user
of the trademark containing the word Ginebra since 1834.

San Miguel states that its disclaimer of the word Ginebra in some of
its registered marks is without prejudice to, and did not affect, its
existing or future rights over Ginebra, especially since Ginebra has
demonstrably become distinctive of San Miguels products. [44] San
Miguel adds that it did not disclaim Ginebra in all of its trademark
registrations and applications like its registration for Ginebra Cruz de
Oro, Ginebra Ka Miguel, Ginebra San Miguel bottle, Ginebra San
Miguel, and Barangay Ginebra.[45]

While the matter of the issuance of a writ of


preliminary injunction is addressed to the sound
discretion of the trial court, this discretion must
be exercised based upon the grounds and in the
manner provided by law. The exercise of
discretion by the trial court in injunctive matters
is generally not interfered with save in cases of
manifest abuse. And to determine whether there
was grave abuse of discretion, a scrutiny must be
made of the bases, if any, considered by the trial
court in granting injunctive relief. Be it stressed
that injunction is the strong arm of equity which
must be issued with great caution and
deliberation, and only in cases of great injury
where there is no commensurate remedy in
damages.[52]

Tanduay asserts that not one of the requisites for the valid issuance
of a preliminary injunction is present in this case. Tanduay argues
that San Miguel cannot claim the exclusive right to use the generic
word Ginebra for its gin products based on its registration of the
composite marks Ginebra San Miguel, Ginebra S. Miguel 65, and La
Tondea Cliq! Ginebra Mix, because in all of these registrations, San
Miguel disclaimed any exclusive right to use the non-registrable word
Ginebra for gin products.[46]Tanduay explains that the word Ginebra,
which is disclaimed by San Miguel in all of its registered trademarks,
is an unregistrable component of the composite mark Ginebra San
Miguel. Tanduay argues that this disclaimer further means that San
Miguel does not have an exclusive right to the generic word Ginebra.
[47]
Tanduay states that the word Ginebra does not indicate the source
of the product, but it is merely descriptive of the name of the product
itself and not the manufacturer thereof.[48]

Tanduay submits that it has been producing gin products under the
brand names Ginebra 65, Ginebra Matador, and Ginebra Toro
without any complaint from San Miguel. Tanduay alleges that San
Miguel has not filed any complaint against other liquor companies
which use Ginebra as part of their brand names such as Ginebra
Pinoy, a registered trademark of Webengton Distillery; Ginebra
Presidente and Ginebra Luzon as registered trademarks of
Washington Distillery, Inc.; and Ginebra Lucky Nine and Ginebra
Santiago as registered trademarks of Distileria Limtuaco & Co., Inc.
[49]
Tanduay claims that the existence of these products, the use and
San Miguel contends that Ginebra can be appropriated as a registration of the word Ginebra by other companies as part of their
trademark, and there was no error in the trial courts provisional
San Miguel claims that the requisites for the valid issuance of a writ of
preliminary injunction were clearly established. The clear and
unmistakable right to the exclusive use of the mark Ginebra was
proven through the continuous use of Ginebra in the manufacture,
distribution, marketing and sale of gin products throughout the
Philippines since 1834. To the gin-drinking public, the word Ginebra
does not simply indicate a kind of beverage; it is now synonymous
with San Miguels gin products.[36]

Tanduay argues that before a court can issue a writ of preliminary


injunction, it is imperative that San Miguel must establish a clear and
unmistakable right that is entitled to protection. San Miguels alleged
exclusive right to use the generic word Ginebra is far from clear and
unmistakable. Tanduay claims that the injunction issued by the trial
court was based on its premature conclusion that Ginebra Kapitan
infringes Ginebra San Miguel.[50]

In Levi Strauss & Co. v. Clinton Apparelle, Inc.,[51] we held:

The CA upheld the trial courts ruling that San Miguel has sufficiently
established its right to prior use and registration of the word Ginebra
as a dominant feature of its trademark. The CA ruled that based on
San Miguels extensive, continuous, and substantially exclusive use of
the word Ginebra, it has become distinctive of San Miguels gin
products; thus, a clear and unmistakable right was shown.
We hold that the CA committed a reversible error. The issue in the
main case is San Miguels right to the exclusive use of the mark
Ginebra. The two trademarks Ginebra San Miguel and Ginebra
Kapitan apparently differ when taken as a whole, but according to San
Miguel, Tanduay appropriates the word Ginebra which is a dominant
feature of San Miguels mark.

It is not evident whether San Miguel has the right to prevent other
business entities from using the word Ginebra. It is not settled (1)
whether Ginebra is indeed the dominant feature of the trademarks,
(2) whether it is a generic word that as a matter of law cannot be
appropriated, or (3) whether it is merely a descriptive word that may
be appropriated based on the fact that it has acquired a secondary
meaning.

24
sufficient evidence on record, as well as legal authorities, to warrant OF THE WRIT OF PRELIMINARY INJUNCTION HAD THE EFFECT
the trial courts preliminary findings of fact.[58]
OF GRANTING THE MAIN PRAYER OF THE COMPLAINT SUCH
The issue that must be resolved by the trial court is whether a word
THAT THERE IS PRACTICALLY NOTHING LEFT FOR THE TRIAL
like Ginebra can acquire a secondary meaning for gin products so as The instructive ruling in Manila International Airport Authority v. COURT TO TRY EXCEPT THE PLAINTIFFS CLAIM FOR
to prohibit the use of the word Ginebra by other gin manufacturers or Court of Appeals[59] states:
DAMAGES.
sellers. This boils down to whether the word Ginebra is a generic
mark that is incapable of appropriation by gin manufacturers.
Irreparable Injury
Considering the far-reaching effects of a writ of
In Asia Brewery, Inc. v. Court of Appeals, the Court ruled that pale
pilsen are generic words, pale being the actual name of the color and
pilsen being the type of beer, a light bohemian beer with a strong
hops flavor that originated in Pilsen City in Czechoslovakia and
became famous in the Middle Ages, and hence incapable of
appropriation by any beer manufacturer.[54] Moreover, Section
123.1(h) of the IP Code states that a mark cannot be registered if it
consists exclusively of signs that are generic for the goods or services
that they seek to identify.
[53]

In this case, a cloud of doubt exists over San Miguels exclusive right
relating to the word Ginebra. San Miguels claim to the exclusive use
of the word Ginebra is clearly still in dispute because of Tanduays
claim that it has, as others have, also registered the word Ginebra for
its gin products. This issue can be resolved only after a full-blown
trial.

In Ong Ching Kian Chuan v. Court of Appeals,[55] we held that in the


absence of proof of a legal right and the injury sustained by the
movant, the trial courts order granting the issuance of an injunctive
writ will be set aside, for having been issued with grave abuse of
discretion.
We find that San Miguels right to injunctive relief has not been clearly
and unmistakably demonstrated. The right to the exclusive use of the
word Ginebra has yet to be determined in the main case. The trial
courts grant of the writ of preliminary injunction in favor of San
Miguel, despite the lack of a clear and unmistakable right on its part,
constitutes grave abuse of discretion amounting to lack of
jurisdiction.
Prejudging the Merits of the Case

Tanduay alleges that the CA, in upholding the issuance of the writ of
preliminary injunction, has prejudged the merits of the case since
nothing is left to be decided by the trial court except the amount of
damages to be awarded to San Miguel.[56]
San Miguel claims that neither the CA nor the trial court prejudged
the merits of the case. San Miguel states that the CA did not rule on
the ultimate correctness of the trial courts evaluation and
appreciation of the evidence before it, but merely found that the
assailed Orders of the trial court are supported by the evidence on
record and that Tanduay was not denied due process. [57] San Miguel
argues that the CA only upheld the trial courts issuance of the TRO
and writ of preliminary injunction upon a finding that there was

preliminary injunction, the trial court should


have exercised more prudence and judiciousness
in its issuance of the injunction order. We remind
trial courts that while generally the grant of a writ
of preliminary injunction rests on the sound
discretion of the court taking cognizance of the
case, extreme caution must be observed in the
exercise of such discretion. The discretion of the
court a quo to grant an injunctive writ must be
exercised based on the grounds and in the
manner provided by law. Thus, the Court
declared in Garcia v. Burgos:
It has been consistently held
that there is no power the
exercise of which is more
delicate, which requires
greater caution, deliberation
and sound discretion, or
more
dangerous
in
a
doubtful case, than the
issuance of an injunction. It
is the strong arm of equity
that
should
never
be
extended unless to cases of
great injury, where courts of
law
cannot
afford
an
adequate or commensurate
remedy in damages.
Every
court
should
remember that an injunction
is a limitation upon the
freedom of action of the
defendant and should not be
granted
lightly
or
precipitately. It should be
granted only when the court
is fully satisfied that the law
permits
it
and
the
emergency
demands
it.
(Emphasis in the original)

TANDUAY POINTS OUT THAT THE SUPPOSED DAMAGES THAT


SAN MIGUEL WILL SUFFER AS A RESULT OF TANDUAYS
INFRINGEMENT OR UNFAIR COMPETITION CANNOT BE
CONSIDERED IRREPARABLE BECAUSE THE DAMAGES ARE
SUSCEPTIBLE OF MATHEMATICAL COMPUTATION. TANDUAY
INVOKES SECTION 156.1 OF THE IP CODE [61] AS THE BASIS FOR
THE COMPUTATION OF DAMAGES.[62]

SAN MIGUEL AVERS THAT IT STANDS TO SUFFER


IRREPARABLE INJURY IF THE MANUFACTURE AND SALE OF
TANDUAYS GINEBRA KAPITAN ARE NOT ENJOINED. SAN
MIGUEL CLAIMS THAT THE ROUGH ESTIMATE OF THE
DAMAGES[63] IT WOULD INCUR IS SIMPLY A GUIDE FOR THE
TRIAL COURT IN COMPUTING THE APPROPRIATE DOCKET
FEES. SAN MIGUEL ASSERTS THAT THE FULL EXTENT OF THE
DAMAGE IT WOULD SUFFER IS DIFFICULT TO MEASURE WITH
ANY REASONABLE ACCURACY BECAUSE IT HAS INVESTED
HUNDREDS OF MILLIONS OVER A PERIOD OF 170 YEARS TO
ESTABLISH GOODWILL AND REPUTATION NOW BEING
ENJOYED BY THE GINEBRA SAN MIGUEL MARK.[64] SAN
MIGUEL REFUTES TANDUAYS CLAIM THAT THE INJURY
WHICH SAN MIGUEL STANDS TO SUFFER CAN BE MEASURED
WITH REASONABLE ACCURACY AS THE LEGAL FORMULA TO
DETERMINE SUCH INJURY IS PROVIDED IN SECTION 156.1 OF
THE IP CODE. SAN MIGUEL REASONS THAT IF TANDUAYS
CLAIM IS UPHELD, THEN THERE WOULD NEVER BE A PROPER
OCCASION TO ISSUE A WRIT OF PRELIMINARY INJUNCTION IN
RELATION TO COMPLAINTS FOR INFRINGEMENT AND UNFAIR
COMPETITION, AS THE INJURY WHICH THE OWNER OF THE
MARK SUFFERS, OR STANDS TO SUFFER, WILL ALWAYS BE
SUSCEPTIBLE OF MATHEMATICAL COMPUTATION.[65]

IN LEVI STRAUSS & CO. V. CLINTON APPARELLE, INC.,[66] THIS


COURT UPHELD THE APPELLATE COURTS RULING THAT THE
DAMAGES LEVI STRAUSS & CO. HAD SUFFERED OR CONTINUES
TO SUFFER MAY BE COMPENSATED IN TERMS OF MONETARY
CONSIDERATION. THIS COURT, QUOTING GOVERNMENT
[67]
WE BELIEVE THAT THE ISSUED WRIT OF PRELIMINARY SERVICE INSURANCE SYSTEM V. FLORENDO, HELD:
INJUNCTION, IF ALLOWED, DISPOSES OF THE CASE ON THE
MERITS AS IT EFFECTIVELY ENJOINS THE USE OF THE WORD
GINEBRA WITHOUT THE BENEFIT OF A FULL-BLOWN TRIAL.
IN RIVAS V. SECURITIES AND EXCHANGE COMMISSION,[60] WE x x x a writ of injunction should never issue when an action for
RULED THAT COURTS SHOULD AVOID ISSUING A WRIT OF damages would adequately compensate the injuries caused. The very
PRELIMINARY INJUNCTION WHICH WOULD IN EFFECT foundation of the jurisdiction to issue the writ of injunction rests in
DISPOSE OF THE MAIN CASE WITHOUT TRIAL. THE ISSUANCE the probability of irreparable injury, inadequacy of pecuniary

25
compensation and the prevention of the multiplicity of suits, and
where facts are not shown to bring the case within these conditions,
the relief of injunction should be refused.

ASIA BREWERY, INC., petitioner,


vs.
THE HON. COURT OF APPEALS and SAN MIGUEL
CORPORATION, respondents.
Abad Santos & Associates and Sycip, Salazar, Hernandez &
Gatmaitan for petitioner.

Based on the affidavits and market survey report submitted during


the injunction hearings, San Miguel has failed to prove the probability
of irreparable injury which it will stand to suffer if the sale of Ginebra
Kapitan is not enjoined. San Miguel has not presented proof of
damages incapable of pecuniary estimation. At most, San Miguel only
claims that it has invested hundreds of millions over a period of 170
years to establish goodwill and reputation now being enjoyed by the
Ginebra San Miguel mark such that the full extent of the damage
cannot be measured with reasonable accuracy. Without the
submission of proof that the damage is irreparable and incapable of
pecuniary estimation, San Miguels claim cannot be the basis for a
valid writ of preliminary injunction.

Roco, Bunag, Kapunan Law Office for private respondent.

GRIO-AQUINO, J.:

On September 15, 1988, San Miguel Corporation (SMC) filed a


complaint against Asia Brewery Inc. (ABI) for infringement of
trademark and unfair competition on account of the latter's BEER
PALE PILSEN or BEER NA BEER product which has been competing
with SMC's SAN MIGUEL PALE PILSEN for a share of the local beer
WHEREFORE,
WE GRANT THE
PETITION.
WE SET market. (San Miguel Corporation vs. Asia Brewery Inc., Civ. Case. No.
ASIDE THE DECISION OF THE COURT OF APPEALS DATED 9 56390, RTC Branch 166, Pasig, Metro Manila.).
JANUARY 2004 AND THE RESOLUTION DATED 2 JULY 2004 IN
CA-G.R. SP NO. 79655. WE DECLARE VOID THE ORDER DATED
17 OCTOBER 2003 AND THE CORRESPONDING WRIT OF On August 27, 1990, a decision was rendered by the trial Court,
PRELIMINARY INJUNCTION ISSUED BY BRANCH 214 OF THE presided over by Judge Jesus O. Bersamira, dismissing SMC's
REGIONAL TRIAL COURT OF MANDALUYONG CITY IN IP CASE complaint because ABI "has not committed trademark infringement
NO. MC-03-01 AND CIVIL CASE NO. MC-03-073.
or unfair competition against" SMC (p. 189, Rollo).
SMC appealed to the Court of Appeals (C.A.-G.R. CV No. 28104). On
September 30, 1991, the Court of Appeals (Sixth Division composed of
Justice Jose C. Campos, Jr., chairman and ponente, and Justices
Venancio D. Aldecoa Jr. and Filemon H. Mendoza, as members)
reversed the trial court. The dispositive part of the decision reads as
follows:

THE REGIONAL TRIAL COURT OF MANDALUYONG CITY,


BRANCH 214, IS DIRECTED TO CONTINUE EXPEDITIOUSLY
WITH THE TRIAL TO RESOLVE THE MERITS OF THE CASE.

SO ORDERED.
G.R. No. 103543 July 5, 1993

Beer Pale Pilsen, or any similar preparation,


manufacture or beer in bottles and under labels
substantially identical with or like the said bottles
and labels of plaintiff San Miguel Corporation
employed for that purpose, or substantially
identical with or like the bottles and labels now
employed by the defendant for that purpose, or
in bottles or under labels which are calculated to
deceive purchasers and consumers into the belief
that the beer is the product of the plaintiff or
which will enable others to substitute, sell or
palm off the said beer of the defendant as and for
the beer of the plaintiff-complainant.
(2) The defendant Asia Brewery Inc. is hereby
ordered to render an accounting and pay the San
Miguel Corporation double any and all the
payments derived by defendant from operations
of its business and the sale of goods bearing the
mark "Beer Pale Pilsen" estimated at
approximately Five Million Pesos
(P5,000,000.00); to recall all its products
bearing the mark "Beer Pale Pilsen" from its
retailers and deliver these as well as all labels,
signs, prints, packages, wrappers, receptacles and
advertisements bearing the infringing mark and
all plates, molds, materials and other means of
making the same to the Court authorized to
execute this judgment for destruction.
(3) The defendant is hereby ordered to pay
plaintiff the sum of Two Million Pesos
(P2,000,000.00) as moral damages and Half a
Million Pesos (P5,000,000.00) by way of
exemplary damages.

In the light of the foregoing analysis and under


(4) The defendant is further ordered to pay the
the plain language of the applicable rule and
plaintiff attorney's fees in the amount of
principle on the matter, We find the defendant
P250,000.00 plus costs to this suit. (p.
Asia Brewery Incorporated GUILTY of
90, Rollo.)
infringement of trademark and unfair
competition. The decision of the trial court is
hereby REVERSED, and a new judgment entered Upon a motion for reconsideration filed by ABI, the above dispositive
modified by the separate opinions of the
in favor of the plaintiff and against the defendant part of the decision, was
1
Special
Sixth
Division
so
that it should read thus:
as follows:
(1) The defendant Asia Brewery Inc. its officers,
agents, servants and employees are hereby
permanently enjoined and restrained from
manufacturing, putting up, selling, advertising,
offering or announcing for sale, or supplying

In the light of the foregoing analysis and under


the plain language of the applicable rule and
principle on the matter, We find the defendant
Asia Brewery Incorporated GUILTY of
infringement of trademark and unfair

26
competition. The decision of the trial court is
a general rule, the findings of the Court of Appeals upon factual
hereby REVERSED, and a new judgment entered questions are conclusive and ought not to be disturbed by us.
in favor of the plaintiff and against the defendant However, there are exceptions to this general rule, and they are:
as follows:
(1) The defendant Asia Brewery Inc., its officers,
agents, servants and employees are hereby
permanently enjoined and restrained from
manufacturing, putting up, selling, advertising,
offering or announcing for sale, or supplying
Beer Pale Pilsen, or any similar preparation,
manufacture or beer in bottles and under labels
substantially identical with or like the said bottles
and labels of plaintiff San Miguel Corporation
employed for that purpose, or substantially
identical with or like the bottles and labels now
employed by the defendant for that purpose, or
in bottles or under labels which are calculated to
deceive purchasers and consumers into the belief
that the beer if the product of the plaintiff or
which will enable others to substitute, sell or
palm off the said beer of the defendant as and for
the beer of the plaintiff-complainant.
(2) The defendant Asia Brewery Inc. is hereby
ordered 2 to recall all its products bearing the
mark Beer Pale Pilsen from its retailers and
deliver these as well as all labels, signs, prints,
packages, wrappers, receptacles and
advertisements bearing the infringing mark and
all plates, molds, materials and other means of
making the same to the Court authorized to
execute this judgment for destruction.
(3) The defendant is hereby ordered to pay
plaintiff the sum of Two Million Pesos
(P2,000,000.00) as moral damages and Half a
Million Pesos (P500,000.00) by way of
exemplary damages.
(4) The defendant is further ordered to pay the
plaintiff attorney's fees in the amount of
P250,000.00 plus costs of this suit.
In due time, ABI appealed to this Court by a petition
for certiorari under Rule 45 of the Rules of Court. The lone issue in
this appeal is whether ABI infringes SMC's trademark: San Miguel
Pale Pilsen with Rectangular Hops and Malt Design, and thereby
commits unfair competition against the latter. It is a factual issue
(Phil. Nut Industry Inc. v. Standard Brands Inc., 65 SCRA 575) and as

(1) When the conclusion is grounded entirely on


speculation, surmises and conjectures;
(2) When the inference of the Court of Appeals
from its findings of fact is manifestly mistaken,
absurd and impossible;
(3) Where there is grave abuse of discretion;
(4) When the judgment is based on a
misapprehension of facts;
(5) When the appellate court, in making its
findings, went beyond the issues of the case, and
the same are contrary to the admissions of both
the appellant and the appellee;
(6) When the findings of said court are contrary
to those of the trial court;
(7) When the findings are without citation of
specific evidence on which they are based;
(8) When the facts set forth in the petition as well
as in the petitioner's main and reply briefs are
not disputed by the respondents; and
(9) When the findings of facts of the Court of
Appeals are premised on the absence of evidence
and are contradicted on record. (Reynolds
Philippine Corporation vs. Court of Appeals, 169
SCRA 220, 223 citing, Mendoza vs. Court of
Appeals, 156 SCRA 597; Manlapaz vs. Court of
Appeals, 147 SCRA 238; Sacay vs.
Sandiganbayan, 142 SCRA 593, 609; Guita vs.
CA, 139 SCRA 576; Casanayan vs. Court of
Appeals, 198 SCRA 333, 336; also Apex
Investment and Financing Corp. vs. IAC, 166
SCRA 458 [citing Tolentino vs. De Jesus, 56
SCRA 167; Carolina Industries, Inc. vs. CMS
Stock Brokerage, Inc., 97 SCRA 734; Manero vs.
CA, 102 SCRA 817; and Moran, Jr. vs. CA, 133
SCRA 88].)

Under any of these exceptions, the Court has to review the evidence in
order to arrive at the correct findings based on the record (Roman
Catholic Bishop of Malolos, Inc. vs. IAC, 191 SCRA 411, 420.) Where
findings of the Court of Appeals and trial court are contrary to each
other, the Supreme Court may scrutinize the evidence on record.
(Cruz vs. CA, 129 SCRA 222, 227.)
The present case is one of the exceptions because there is no
concurrence between the trial court and the Court of Appeals on the
lone factual issue of whether ABI, by manufacturing and selling its
BEER PALE PILSEN in amber colored steinie bottles of 320 ml.
capacity with a white painted rectangular label has committed
trademark infringement and unfair competition against SMC.
Infringement of trademark is a form of unfair competition (Clarke vs.
Manila Candy Co., 36 Phil. 100, 106). Sec. 22 of Republic Act No. 166,
otherwise known as the Trademark Law, defines what constitutes
infringement:
Sec. 22. Infringement, what constitutes. Any
person who shall use, without the consent of the
registrant, any reproduction, counterfeit, copy or
colorable imitation of any registered mark or
trade-name in connection with the sale, offering
for sale, or advertising of any goods, business or
services on or in connection with which such use
is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or
origin of such goods or services, or identity of
such business; or reproduce, counterfeit, copy or
colorably imitate any such mark or trade-name
and apply such reproduction, counterfeit, copy,
or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such goods, business or services,
shall be liable to a civil action by the registrant
for any or all of the remedies herein provided.
(Emphasis supplied.)
This definition implies that only registered trade marks, trade names
and service marks are protected against infringement or unauthorized
use by another or others. The use of someone else's registered
trademark, trade name or service mark is unauthorized, hence,
actionable, if it is done "without the consent of the registrant." (Ibid.)
The registered trademark of SMC for its pale pilsen beer is:
San Miguel Pale Pilsen With Rectangular Hops
and Malt Design. (Philippine Bureau of Patents,

27
Trademarks and Technology Transfer Trademark
Certificate of Registration No. 36103, dated 23
Oct. 1986,
(p. 174, Rollo.)

Infringement is determined by the "test of dominancy" rather than by


differences or variations in the details of one trademark and of
another. The rule was formulated in Co Tiong Sa vs. Director of
Patents, 95 Phil. 1, 4 (1954); reiterated in Lim Hoa vs. Director of
Patents, 100 Phil. 214, 216-217 (1956), thus:

As described by the trial court in its decision (Page 177, Rollo):


. . . . a rectangular design [is] bordered by what
appears to be minute grains arranged in rows of
three in which there appear in each corner hop
designs. At the top is a phrase written in small
print "Reg. Phil. Pat. Off." and at the bottom "Net
Contents: 320 Ml." The dominant feature is the
phrase "San Miguel" written horizontally at the
upper portion. Below are the words "Pale Pilsen"
written diagonally across the middle of the
rectangular design. In between is a coat of arms
and the phrase "Expertly Brewed." The "S" in
"San" and the "M" of "Miguel," "P" of "Pale" and
"Pilsen" are written in Gothic letters with fine
strokes of serifs, the kind that first appeared in
the 1780s in England and used for printing
German as distinguished from Roman and Italic.
Below "Pale Pilsen" is the statement "And Bottled
by" (first line, "San Miguel Brewery" (second
line), and "Philippines" (third line). (p.
177, Rollo; Emphasis supplied.)
On the other hand, ABI's trademark, as described by the trial court,
consists of:
. . . a rectangular design bordered by what appear
to be buds of flowers with leaves. The dominant
feature is "Beer" written across the upper portion
of the rectangular design. The phrase "Pale
Pilsen" appears immediately below in smaller
block letters. To the left is a hop design and to the
right, written in small prints, is the phrase "Net
Contents 320 ml." Immediately below "Pale
Pilsen" is the statement written in three lines
"Especially brewed and bottled by" (first line),
"Asia Brewery Incorporated" (second line), and
"Philippines" (third line), (p. 177, Rollo;
Emphasis supplied.)
Does ABI's BEER PALE PILSEN label or "design" infringe upon
SMC's SAN MIGUEL PALE PILSEN WITH RECTANGULAR MALT
AND HOPS DESIGN? The answer is "No."

It has been consistently held that the question of


infringement of a trademark is to be determined
by the test of dominancy. Similarity in size, form
and color, while relevant, is not conclusive. If the
competing trademark contains the main or
essential or dominant features of another, and
confusion and deception is likely to result,
infringement takes place. Duplication or
imitation is not necessary; nor it is necessary that
the infringing label should suggest an effort to
imitate. [C. Neilman Brewing Co. vs.
Independent Brewing Co., 191 F., 489, 495, citing
Eagle White Lead Co., vs. Pflugh (CC) 180 Fed.
579]. The question at issue in cases of
infringement of trademarks is whether the use of
the marks involved would be likely to cause
confusion or mistakes in the mind of the public
or deceive purchasers. (Auburn Rubber
Corporation vs. Honover Rubber Co., 107 F. 2d
588; . . . .) (Emphasis supplied.)
In Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272, 275, the
test was similarity or "resemblance between the two (trademarks)
such as would be likely to cause the one mark to be mistaken for the
other. . . . [But] this is not such similitude as amounts to identity."

The trial court perceptively observed that the word "BEER" does not
appear in SMC's trademark, just as the words "SAN MIGUEL" do not
appear in ABI's trademark. Hence, there is absolutely no similarity in
the dominant features of both trademarks.
Neither in sound, spelling or appearance can BEER PALE PILSEN be
said to be confusingly similar to SAN MIGUEL PALE PILSEN. No one
who purchases BEER PALE PILSEN can possibly be deceived that it
is SAN MIGUEL PALE PILSEN. No evidence whatsoever was
presented by SMC proving otherwise.
Besides the dissimilarity in their names, the following other
dissimilarities in the trade dress or appearance of the competing
products abound:
(1) The SAN MIGUEL PALE PILSEN bottle has a slender tapered
neck.
The BEER PALE PILSEN bottle has a fat, bulging neck.
(2) The words "pale pilsen" on SMC's label are printed in bold and
laced letters along a diagonal band, whereas the words "pale pilsen"
on ABI's bottle are half the size and printed in slender block letters on
a straight horizontalband. (See Exhibit "8-a".).
(3) The names of the manufacturers are prominently printed on their
respective bottles.
SAN MIGUEL PALE PILSEN is "Bottled by the San Miguel Brewery,
Philippines," whereas BEER PALE PILSEN is "Especially brewed and
bottled by Asia Brewery Incorporated, Philippines."

In Phil. Nut Industry Inc. vs. Standard Brands Inc., 65 SCRA 575, the
court was more specific: the test is "similarity in the dominant
(4) On the back of ABI's bottle is printed in big, bold letters, under a
features of the trademarks."
row of flower buds and leaves, its copyrighted slogan:
What are the dominant features of the competing trademarks before
us?

"BEER NA BEER!"

Whereas SMC's bottle carries no slogan.


There is hardly any dispute that the dominant feature of SMC's
trademark is the name of the product: SAN MIGUEL PALE PILSEN,
written in white Gothic letters with elaborate serifs at the beginning
(5) The back of the SAN MIGUEL PALE PILSEN bottle carries the
and end of the letters "S" and "M" on an amber background across the SMC logo, whereas the BEER PALE PILSEN bottle has no logo.
upper portion of the rectangular design.
On the other hand, the dominant feature of ABI's trademark is the
name: BEER PALE PILSEN, with the word "Beer" written in large
amber letters, larger than any of the letters found in the SMC label.

(6) The SAN MIGUEL PALE PILSEN bottle cap is stamped with a
coat of arms and the words "San Miguel Brewery Philippines"
encircling the same.

28
The BEER PALE PILSEN bottle cap is stamped with the name
"BEER" in the center, surrounded by the words "Asia Brewery
Incorporated Philippines."
(7) Finally, there is a substantial price difference between BEER
PALE PILSEN (currently at P4.25 per bottle) and SAN MIGUEL
PALE PILSEN (currently at P7.00 per bottle). One who pays only
P4.25 for a bottle of beer cannot expect to receive San Miguel Pale
Pilsen from the storekeeper or bartender.
The fact that the words pale pilsen are part of ABI's trademark does
not constitute an infringement of SMC's trademark: SAN MIGUEL
PALE PILSEN, for "pale pilsen" are generic words descriptive of the
color ("pale"), of a type of beer ("pilsen"), which is a light bohemian
beer with a strong hops flavor that originated in the City of Pilsen in
Czechoslovakia and became famous in the Middle Ages. (Webster's
Third New International Dictionary of the English Language,
Unabridged. Edited by Philip Babcock Gove. Springfield, Mass.: G & C
Merriam Co., [c] 1976, page 1716.) "Pilsen" is a "primarily
geographically descriptive word," (Sec. 4, subpar. [e] Republic Act No.
166, as inserted by Sec. 2 of R.A. No. 638) hence, non-registerable
and not appropriable by any beer manufacturer. The Trademark Law
provides:
Sec. 4. . . .. The owner of trade-mark, trade-name
or service-mark used to distinguish his goods,
business or services from the goods, business or
services of others shall have the right to register
the same [on the principal register], unless it:
xxx xxx xxx
(e) Consists of a mark or trade-name which,
when applied to or used in connection with the
goods, business or services of the applicant
is merely descriptive or deceptively
misdescriptive of them, or when applied to or
used in connection with the goods, business or
services of the applicant isprimarily
geographically descriptive or deceptively
misdescriptive of them, or is primarily merely a
surname." (Emphasis supplied.)
The words "pale pilsen" may not be appropriated by SMC for its
exclusive use even if they are part of its registered trademark: SAN
MIGUEL PALE PILSEN, any more than such descriptive words as
"evaporated milk," "tomato ketchup," "cheddar cheese," "corn flakes"
and "cooking oil" may be appropriated by any single manufacturer of
these food products, for no other reason than that he was the first to
use them in his registered trademark. InMasso Hermanos, S.A. vs.

Director of Patents, 94 Phil. 136, 139 (1953), it was held that a dealer
in shoes cannot register "Leather Shoes" as his trademark because
that would be merely descriptive and it would be unjust to deprive
other dealers in leather shoes of the right to use the same words with
reference to their merchandise. No one may appropriate generic or
descriptive words. They belong to the public domain (Ong Ai Gui vs.
Director of Patents, 96 Phil. 673, 676 [1955]):

Trademarks, pp. 869-870.)" (Emphasis


supplied.)

The circumstance that the manufacturer of BEER PALE PILSEN, Asia


Brewery Incorporated, has printed its name all over the bottle of its
beer product: on the label, on the back of the bottle, as well as on the
bottle cap, disproves SMC's charge that ABI dishonestly and
fraudulently intends to palm off its BEER PALE PILSEN as SMC's
A word or a combination of words which is
product. In view of the visible differences between the two products,
merely descriptive of an article of trade, or of its the Court believes it is quite unlikely that a customer of average
composition, characteristics, or qualities, cannot intelligence would mistake a bottle of BEER PALE PILSEN for SAN
be appropriated and protected as a trademark to MIGUEL PALE PILSEN.
the exclusion of its use by others. . . . inasmuch as
all persons have an equal right to produce and
The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN
vend similar articles, they also have the right to
is bottled in amber-colored steinie bottles of 320 ml. capacity and is
describe them properly and to use any
also advertised in print, broadcast, and television media, does not
appropriate language or words for that purpose, necessarily constitute unfair competition.
and no person can appropriate to himself
exclusively any word or expression, properly
Unfair competition is the employment of deception or any other
descriptive of the article, its qualities,
means contrary to good faith by which a person shall pass off the
ingredients or characteristics, and thus limit
other persons in the use of language appropriate goods manufactured by him or in which he deals, or his business, or
services, for those of another who has already established goodwill for
to the description of their manufactures, the
right to the use of such language being common his similar goods, business or services, or any acts calculated to
produce the same result. (Sec. 29, Republic Act No. 166, as amended.)
to all. This rule excluding descriptive terms has
The law further enumerates the more common ways of committing
also been held to apply to trade-names. As to
unfair competition, thus:
whether words employed fall within this
prohibition, it is said that the true test is not
whether they are exhaustively descriptive of the
article designated, but whether in themselves,
and as they are commonly used by those who
understand their meaning, they are reasonably
indicative and descriptive of the thing intended.
If they are thus descriptive, and not arbitrary,
they cannot be appropriated from general use
and become the exclusive property of anyone. (52
Am. Jur. 542-543.)
. . . . Others may use the same or similar
descriptive word in connection with their own
wares, provided they take proper steps to prevent
the public being deceived. (Richmond Remedies
Co. vs. Dr. Miles Medical Co., 16 E. [2d] 598.)
. . . . A descriptive word may be admittedly
distinctive, especially if the user is the first
creator of the article. It will, however, be denied
protection, not because it lacks distinctiveness,
but rather because others are equally entitled to
its use. (2 Callman. Unfair Competition and

Sec. 29. . . .
In particular, and without in any way limiting the
scope of unfair competition, the following shall
be deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give
them the general appearance of goods of another
manufacturer or dealer, either as to the goods
themselves or in the wrapping of the packages in
which they are contained, or the devices or words
thereon, or in any other feature of their
appearance, which would be likely to influence
purchasers to believe that the goods offered are
those of a manufacturer or dealer other than the
actual manufacturer or dealer, or who otherwise
clothes the goods with such appearance as shall
deceive the public and defraud another of his
legitimate trade, or any subsequent vendor of
such goods or any agent of any vendor engaged in
selling such goods with a like purpose.

29
(b) Any person who by any artifice, or device, or
who employs any other means calculated to
induce the false belief that such person is offering
the services of another who has identified such
services in the mind of the public; or

stamped on containers as required by Rep. Act


623. Thirdly, the neck of defendant's bottle is
much larger and has a distinct bulge in its
uppermost part. (p. 186, Rollo.)

With regard to the white label of both beer bottles, ABI explained that
it used the color white for its label because white presents the
strongest contrast to the amber color of ABI's bottle; it is also the
most economical to use on labels, and the easiest to "bake" in the
furnace (p. 16, TSN of September 20, 1988). No one can have a
The petitioner's contention that bottle size, shape and color may not monopoly of the color amber for bottles, nor of white for labels, nor of
(c) Any person who shall make any false
be the exclusive property of any one beer manufacturer is well taken. the rectangular shape which is the usual configuration of labels.
Needless to say, the shape of the bottle and of the label is
statement in the course of trade or who shall
SMC's being the first to use the steinie bottle does not give SMC a
unimportant. What is all important is the name of the product written
commit any other act contrary to good faith of a vested right to use it to the exclusion of everyone else. Being of
nature calculated to discredit the goods, business functional or common use, and not the exclusive invention of any one, on the label of the bottle for that is how one beer may be
distinguished form the others.
or services of another.
it is available to all who might need to use it within the industry.
Nobody can acquire any exclusive right to market articles supplying
In Dy Buncio v. Tan Tiao Bok, 42 Phil. 190, 196-197, where two
In this case, the question to be determined is whether ABI is using a simple human needs in containers or wrappers of the general form,
size and character commonly and immediately used in marketing
competing tea products were both labelled as Formosan tea, both sold
name or mark for its beer that has previously come to designate
in 5-ounce packages made of ordinary wrapping paper of
SMC's beer, or whether ABI is passing off its BEER PALE PILSEN as such articles (Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190, 194-195.)
conventional color, both with labels containing designs drawn in
SMC's SAN MIGUEL PALE PILSEN.
green ink and Chinese characters written in red ink, one label
. . . protection against imitation should be
showing a double-decked jar in the center, the other, a flower pot, this
properly confined to nonfunctional features.
. . ..The universal test question is whether the
court found that the resemblances between the designs were not
Even if purely functional elements are slavishly
public is likely to be deceived. Nothing less than
sufficient to mislead the ordinary intelligent buyer, hence, there was
copied,
the
resemblance
will
not
support
an
conduct tending to pass off one man's goods or
no unfair competition. The Court held:
action for unfair competition, and the first user
business as that of another will constitute unfair
cannot
claim
secondary
meaning
protection.
Nor
competition. Actual or probable deception and
can the first user predicate his claim to protection
. . . . In order that there may be deception of the
confusion on the part of the customers by reason
on the argument that his business was
buying public in the sense necessary to constitute
of defendant's practices must always appear.
established in reliance on any such unpatented
unfair competition, it is necessary to suppose a
(Shell Co., of the Philippines, Ltd. vs. Insular
nonfunctional
feature,
even
"at
large
expenditure
public accustomed to buy, and therefore to some
Petroleum Refining Co. Ltd. et al., 120 Phil. 434,
of money." (Callman Unfair Competition,
extent familiar with, the goods in question. The
439.)
Trademarks and Monopolies, Sec. 19.33 [4th
test of fraudulent simulation is to be found in the
Ed.].) (Petition for Review, p. 28.)
likelihood of the deception of persons in some
The use of ABI of the steinie bottle, similar but not identical to the
measure acquainted with an established design
SAN MIGUEL PALE PILSEN bottle, is not unlawful. As pointed out
and desirous of purchasing the commodity with
by ABI's counsel, SMC did not invent but merely borrowed the steinie ABI does not use SMC's steinie bottle. Neither did ABI copy it. ABI
which that design has been associated. The test is
makes
its
own
steinie
bottle
which
has
a
fat
bulging
neck
to
bottle from abroad and it claims neither patent nor trademark
not found in the deception, or possibility of the
protection for that bottle shape and design. (See rollo, page 55.) The differentiate it from SMC's bottle. The amber color is a functional
deception, of the person who knows nothing
Cerveza Especial and the Efes Pale Pilsen use the "steinie" bottle. (See feature of the beer bottle. As pointed out by ABI, all bottled beer
about the design which has been counterfeited,
produced
in
the
Philippines
is
contained
and
sold
in
amber-colored
Exhibits 57-D, 57-E.) The trial court found no infringement of SMC's
and who must be indifferent as between that and
bottles because amber is the most effective color in preventing
bottle
the other. The simulation, in order to be
transmission of light and provides the maximum protection to beer.
objectionable, must be such as appears likely to
As was ruled in California Crushed Fruit Corporation vs. Taylor B.
mislead the ordinarily intelligent buyer who has a
The court agrees with defendant that there is no and Candy Co., 38 F2d 885, a merchant cannot be enjoined from
need to supply and is familiar with the article
infringement of plaintiff's bottle, firstly, because using a type or color of bottle where the same has the useful purpose
that he seeks to purchase.
according to plaintiff's witness Deogracias
of protecting the contents from the deleterious effects of light rays.
Villadolid, it is a standard type of bottle called
Moreover, no one may have a monopoly of any color. Not only beer,
steinie, and to witness Jose Antonio Garcia, it is but most medicines, whether in liquid or tablet form, are sold in
The main thrust of SMC's complaint if not infringement of its
not a San Miguel Corporation design but a design amber-colored bottles.
trademark, but unfair competition arising form the allegedly
originally developed in the United States by the
"confusing similarity" in the general appearance or trade dress of
Glass Container Manufacturer's Institute and
ABI's BEER PALE PILSEN beside SMC's SAN MIGUEL PALE
That the ABI bottle has a 320 ml. capacity is not due to a desire to
therefore lacks exclusivity. Secondly, the shape
PILSEN (p. 209, Rollo)
imitate
SMC's
bottle
because
that
bottle
capacity
is
the
standard
was never registered as a trademark. Exhibit "C"
prescribed
under
Metrication
Circular
No.
778,
dated
4
December
is not a registration of a beer bottle design
SMC claims that the "trade dress" of BEER PALE PILSEN is
required under Rep. Act 165 but the registration 1979, of the Department of Trade, Metric System Board.
"confusingly similar" to its SAN MIGUEL PALE PILSEN because both
of the name and other marks of ownership

30
are bottled in 320 ml. steinie type, amber-colored bottles with white
rectangular labels.
However, when as in this case, the names of the competing products
are clearly different and their respective sources are prominently
printed on the label and on other parts of the bottle, mere similarity
in the shape and size of the container and label, does not constitute
unfair competition. The steinie bottle is a standard bottle for beer and
is universally used. SMC did not invent it nor patent it. The fact that
SMC's bottle is registered under R.A. No. 623 (as amended by RA
5700, An Act to Regulate the Use of Duly Stamped or Marked Bottles,
Boxes, Casks, Kegs, Barrels and Other Similar Containers) simply
prohibits manufacturers of other foodstuffs from the unauthorized
use of SMC's bottles by refilling these with their products. It was not
uncommon then for products such as patis (fish sauce) and toyo (soy
sauce) to be sold in recycled SAN MIGUEL PALE PILSEN bottles.
Registration of SMC's beer bottles did not give SMC a patent on the
steinie or on bottles of similar size, shape or color.
Most containers are standardized because they are usually made by
the same manufacturer. Milk, whether in powdered or liquid form, is
sold in uniform tin cans. The same can be said of the standard
ketchup or vinegar bottle with its familiar elongated neck. Many other
grocery items such as coffee, mayonnaise, pickles and peanut butter
are sold in standard glass jars. The manufacturers of these foodstuffs
have equal right to use these standards tins, bottles and jars for their
products. Only their respective labels distinguish them from each
other. Just as no milk producer may sue the others for unfair
competition because they sell their milk in the same size and shape of
milk can which he uses, neither may SMC claim unfair competition
arising from the fact that ABI's BEER PALE PILSEN is sold, like
SMC's SAN MIGUEL PALE PILSEN in amber steinie bottles.
The record does not bear out SMC's apprehension that BEER PALE
PILSEN is being passed off as SAN MIGUEL PALE PILSEN. This is
unlikely to happen for consumers or buyers of beer generally order
their beer by brand. As pointed out by ABI's counsel, in supermarkets
and tiendas, beer is ordered by brand, and the customer surrenders
his empty replacement bottles or pays a deposit to guarantee the

return of the empties. If his empties are SAN MIGUEL PALE PILSEN,
he will get SAN MIGUEL PALE PILSEN as replacement. In sari-sari
stores, beer is also ordered from the tindera by brand. The same is
true in restaurants, pubs and beer gardens beer is ordered from the
waiters by brand. (Op. cit. page 50.)

not only used recycled Del Monte bottles for its catsup (despite the
warning embossed on the bottles: "Del Monte Corporation. Not to be
refilled.") but also used labels which were "a colorable imitation" of
Del Monte's label, we held that there was infringement of Del Monte's
trademark and unfair competition by Sunshine.

Considering further that SAN MIGUEL PALE PILSEN has virtually


monopolized the domestic beer market for the past hundred years,
those who have been drinking no other beer but SAN MIGUEL PALE
PILSEN these many years certainly know their beer too well to be
deceived by a newcomer in the market. If they gravitate to ABI's
cheaper beer, it will not be because they are confused or deceived, but
because they find the competing product to their taste.

Our ruling in Del Monte would not apply to beer which is not usually
picked from a store shelf but ordered by brand by the beer drinker
himself from the storekeeper or waiter in a pub or restaurant.

Our decision in this case will not diminish our ruling in "Del Monte
Corporation vs. Court of Appeals and Sunshine Sauce Manufacturing
Industries," 181 SCRA 410, 419, 3 that:
. . . to determine whether a trademark has been
infringed, we must consider the mark as a whole
and not as dissected. If the buyer is deceived, it is
attributable to the marks as a totality, not usually
to any part of it.

Moreover, SMC's brand or trademark: "SAN MIGUEL PALE PILSEN"


is not infringed by ABI's mark: "BEER NA BEER" or "BEER PALE
PILSEN." ABI makes its own bottle with a bulging neck to
differentiate it from SMC's bottle, and prints ABI's name in three (3)
places on said bottle (front, back and bottle cap) to prove that it has
no intention to pass of its "BEER" as "SAN MIGUEL."
There is no confusing similarity between the competing beers for the
name of one is "SAN MIGUEL" while the competitor is plain "BEER"
and the points of dissimilarity between the two outnumber their
points of similarity.

Petitioner ABI has neither infringed SMC's trademark nor committed


unfair competition with the latter's SAN MIGUEL PALE PILSEN
That ruling may not apply to all kinds of products. The Court itself
product. While its BEER PALE PILSEN admittedly competes with the
cautioned that in resolving cases of infringement and unfair
latter in the open market, that competition is neither unfair nor
competition, the courts should "take into consideration several factors fraudulent. Hence, we must deny SMC's prayer to suppress it.
which would affect its conclusion, to wit: the age, training and
education of the usual purchaser, the nature and cost of the article,
WHEREFORE, finding the petition for review meritorious, the same
whether the article is bought for immediate consumption and also the is hereby granted. The decision and resolution of the Court of Appeals
conditions under which it is usually purchased" (181 SCRA 410, 418- in CA-G.R. CV No. 28104 are hereby set aside and that of the trial
419).
court is REINSTATED and AFFIRMED. Costs against the private
respondent.
The Del Monte case involved catsup, a common household item
which is bought off the store shelves by housewives and house help
who, if they are illiterate and cannot identify the product by name or
brand, would very likely identify it by mere recollection of its
appearance. Since the competitor, Sunshine Sauce Mfg. Industries,

SO ORDERED.