SECOND DIVISION

SOCIETE DES PRODUITS G.R. No. 172276

NESTLE, S.A.,
Petitioner,
Present:

CARPIO, J., Chairperson,

NACHURA,
- versus - PERALTA,
ABAD, and
MENDOZA, JJ.

MARTIN T. DY, JR., Promulgated:

Respondent. August 8, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

CARPIO, J.:

The Case

This is a petition for review on certiorari under Rule 45 of the Rules of Court.The
petition challenges the 1 September 2005 Decision and 4 April 2006 Resolution of
the Court of Appeals in CA-G.R. CV No. 62730, finding respondent Martin T. Dy,
Jr. (Dy, Jr.) not liable for trademark infringement. The Court of Appeals reversed
the 18 September 1998 Decision of the Regional Trial Court (RTC), Judicial
Region 7, Branch 9, Cebu City, in Civil Case No. CEB-19345.
The Facts

Petitioner Societe Des Produits Nestle, S.A. (Nestle) is a foreign corporation

organized under the laws of Switzerland. It manufactures food products and
beverages. As evidenced by Certificate of Registration No. R-14621 issued on 7
April 1969 by the then Bureau of Patents, Trademarks and Technology Transfer,
Nestle owns the NAN trademark for its line of infant powdered milk products,
consisting of PRE-NAN, NAN-H.A., NAN-1, and NAN-2. NAN is classified
under Class 6 diatetic preparations for infant feeding.
Nestle distributes and sells its NAN milk products all over the Philippines. It has
been investing tremendous amounts of resources to train its sales force and to
promote the NAN milk products through advertisements and press releases.

Dy, Jr. owns 5M Enterprises. He imports Sunny Boy powdered milk from Australia
and repacks the powdered milk into three sizes of plastic packs bearing the name
NANNY. The packs weigh 80, 180 and 450 grams and are sold for P8.90, P17.50
and P39.90, respectively. NANNY is is also classified under Class 6 full cream
milk for adults in [sic] all ages. Dy, Jr. distributes and sells the powdered milk
in Dumaguete, Negros Oriental, Cagayan de Oro, and parts of Mindanao.

In a letter dated 1 August 1985, Nestle requested Dy, Jr. to refrain from using
NANNY and to undertake that he would stop infringing the NAN trademark.Dy, Jr.
did not act on Nestles request. On 1 March 1990, Nestle filed before the RTC,
Judicial Region 7, Branch 31, Dumaguete City, a complaint against Dy, Jr. for
infringement. Dy, Jr. filed a motion to dismiss alleging that the complaint did not
state a cause of action. In its 4 June 1990 order, the trial court dismissed the
complaint. Nestle appealed the 4 June 1990 order to the Court of Appeals. In its 16
February 1993 Resolution, the Court of Appeals set aside the 4 June 1990 order
and remanded the case to the trial court for further proceedings.

Pursuant to Supreme Court Administrative Order No. 113-95, Nestle filed with the
trial court a motion to transfer the case to the RTC, Judicial Region 7, Branch
9, Cebu City, which was designated as a special court for intellectual property
rights.

The RTCs Ruling

In its 18 September 1998 Decision, the trial court found Dy, Jr. liable for
infringement. The trial court held:

If determination of infringement shall only be limited on whether or not the mark

used would likely cause confusion or mistake in the minds of the buying public or
deceive customers, such in [sic] the most considered view of this forum would
be highly unlikely to happen in the instant case. This is because upon comparison
of the plaintiffs NAN and defendants NANNY, the following features would
reveal the absence of any deceptive tendency in defendants NANNY: (1) all NAN
products are contained tin cans [sic], while NANNY are contained in plastic
packs; (2) the predominant colors used in the labels of NAN products
are blue and white, while the predominant colors in the plastic packings of
NANNY are blue and green; (3) the labels of NAN products have at the bottom
portion an elliptical shaped figure containing inside it a drawing of nestling birds,
which is overlapped by the trade-name Nestle, while the plastic packs of NANNY
have a drawing of milking cows lazing on a vast green field, back-dropped with
snow covered mountains; (4) the word NAN are [sic] all in large, formal and
conservative-like block letters, while the word NANNY are [sic] all in small and
irregular style of letters with curved ends; and (5) all NAN products are milk
formulas intended for use of [sic] infants, while NANNY is an instant full cream
powdered milk intended for use of [sic] adults.

The foregoing has clearly shown that infringement in the instant case cannot be
proven with the use of the test of dominancy because the deceptive tendency of
the unregistered trademark NANNY is not apparent from the essential features of
the registered trademark NAN.

However, in Esso Standard Eastern, Inc. vs. Court of Appeals, et al. L-29971,
Aug. 31, 1982, the Supreme Court took the occasion of discussing what is implied
in the definition of infringement when it stated: Implicit in this definition is the
concept that the goods must be so related that there is likelihood either of
confusion of goods or business. x x x But as to whether trademark infringement
exists depends for the most part upon whether or not the goods are so related that
the public may be, or is actually, deceived and misled that they came from the
same maker or manufacturer. For non-competing goods may be those which,
though they are not in actual competition, are so related to each other that it might
reasonably be assumed that they originate from one manufacturer. Non-competing
goods may also be those which, being entirely unrelated, could not reasonably be
assumed to have a common source. In the former case of related goods, confusion
of business could arise out of the use of similar marks; in the latter case of non-
related goods, it could not.

Furthermore, in said case the Supreme Court as well discussed on when goods
may become so related for purposes of infringement when it stated: Goods are
related when they belong to the same class or have same descriptive properties;
when they possess the same physical attributes or essential characteristics with
reference to their form, composition, texture or quality. They may also be related
because they serve the same purpose or are sold in grocery stores. x x x

Considering that defendants NANNY belongs to the same class as that of

plaintiffs NAN because both are food products, the defendants unregistered trade
mark NANNY should be held an infringement to plaintiffs registered trademark
NAN because defendants use of NANNY would imply that it came from the
manufacturer of NAN. Furthermore, since the word nanny means a childs nurse,
there might result the not so remote probability that defendants NANNY may be
confused with infant formula NAN despite the aparent [sic] disparity between the
features of the two products.
Dy, Jr. appealed the 18 September 1998 Decision to the Court of Appeals.

The Court of Appeals Ruling

In its 1 September 2005 Decision, the Court of Appeals reversed the trial courts 18
September 1998 Decision and found Dy, Jr. not liable for infringement. The Court
of Appeals held:

[T]he trial court appeared to have made a finding that there is no colorable
imitation of the registered mark NAN in Dys use of NANNY for his own milk
packs. Yet it did not stop there. It continued on applying the concept of related
goods.

The Supreme Court utlilized the concept of related goods in the said case
of Esso Standard Easter, Inc. versus Court of Appeals, et al. wherein two
contending parties used the same trademark ESSO for two different goods, i.e.
petroleum products and cigarettes. It rules that there is infringement of trademark
involving two goods bearing the same mark or label, even if the said goods are
non-competing, if and only if they are so related that the public may be, or is
actually, deceived that they originate from the one maker or manufacturer. Since
petroleum products and cigarettes, in kind and nature, flow through different trade
channels, and since the possibility of confusion is unlikely in the general
appearances of each mark as a whole, the Court held in this case that they cannot
be so related in the context of infringement.

In applying the concept of related goods in the present case, the trial court
haphazardly concluded that since plaintiff-appellees NAN and defendant-
appellants NANNY belong to the same class being food products, the
unregistered NANNY should be held an infringement of Nestles NAN because
the use of NANNY would imply that it came from the manufacturer of NAN.Said
court went on to elaborate further: since the word NANNY means a childs nurse,
there might result the not so remote probability that defendants NANNY may be
confused with infant formula NAN despite the aparent (sic) disparity between the
features of the two products as discussed above.

The trial courts application of the doctrine laid down by the Supreme Court in
the Esso Standard case aforementioned and the cases cited therein is quite
misplaced. The goods of the two contending parties in those cases bear similar
marks or labels: Esso for petroleum products and cigarettes, Selecta for biscuits
and milk, X-7 for soap and perfume, lipstick and nail polish. In the instant case,
two dissimilar marks are involved plaintiff-appellees NAN and defendant-
appellants NANNY. Obviously, the concept of related goods cannot be utilized in
the instant case in the same way that it was used in the Esso Standard case.
In the Esso Standard case, the Supreme Court even cautioned judges that in
resolving infringement or trademark cases in the Philippines, particularly in
ascertaining whether one trademark is confusingly similar to or is a colorable
imitation of another, precedent must be studied in the light of the facts of the
particular case. Each case must be decided on its own merits. In the more recent
case of Societe Des Produits Nestle S.A. Versus Court of Appeals, the High Court
further stressed that due to the peculiarity of the facts of each infringement case, a
judicial forum should not readily apply a certain test or standard just because of
seeming similarities. The entire panoply of elements constituting the relevant
factual landscape should be comprehensively examined.

While it is true that both NAN and NANNY are milk products and that the word
NAN is contained in the word NANNY, there are more glaring dissimilarities in
the entirety of their trademarks as they appear in their respective labels and also in
relation to the goods to which they are attached.The discerning eye of the
observer must focus not only on the predominant words but also on the other
features appearing in both labels in order that he may draw his conclusion
whether one is confusingly similar to the other. Even the trial court found these
glaring dissimilarities as above-quoted. We need not add more of these factual
dissimilarities.

NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1 and NAN-2, are
all infant preparations, while NANNY is a full cream milk for adults in [sic] all
ages. NAN milk products are sold in tin cans and hence, far expensive than the
full cream milk NANNY sold in three (3) plastic packs containing 80, 180 and
450 grams and worth P8.90, P17.50 and P39.90 per milk pack. The labels of NAN
products are of the colors blue and white and have at the bottom portion an
elliptical shaped figure containing inside it a drawing of nestling birds, which is
overlapped by the trade-name Nestle. On the other hand, the plastic packs
NANNY have a drawing of milking cows lazing on a vast green field, back-
dropped with snow-capped mountains and using the predominant colors of blue
and green. The word NAN are [sic] all in large, formal and conservative-like
block letters, while the word NANNY are [sic] all in small and irregular style of
letters with curved ends. With these material differences apparent in the
packaging of both milk products, NANNY full cream milk cannot possibly be an
infringement of NAN infant milk.

Moreover, NAN infant milk preparation is more expensive than NANNY instant
full cream milk. The cheaper price of NANNY would give, at the very first
instance, a considerable warning to the ordinary purchaser on whether he is
buying an infant milk or a full cream milk for adults. A cursory examination of
the packaging would confirm the striking differences between the products in
question.

In view of the foregoing, we find that the mark NANNY is not confusingly
similar to NAN. Dy therefore cannot be held liable for infringement.
Nestle filed a motion for reconsideration. In its 4 April 2006 Resolution, the Court
of Appeals denied the motion for lack of merit. Hence, the present petition.

Issue

The issue is whether Dy, Jr. is liable for infringement.

The Courts Ruling

The petition is meritorious.

Section 22 of Republic Act (R.A.) No. 166, as amended, states:

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.

Section 155 of R.A. No. 8293 states:

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

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 the 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.

In Prosource International, Inc. v. Horphag Research Management SA, the Court

laid down the elements of infringement under R.A. Nos. 166 and 8293:

In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A,
and 20 thereof, the following constitute the elements of trademark infringement:

(a) A trademark actually used in commerce in the Philippines and

registered in the principal register of the Philippine Patent Office[;]

(b) [It] is used by another person in connection with the sale,

offering for sale, or advertising of any goods, business or services
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
such trademark is reproduced, counterfeited, copied
or colorably imitated by another person and such reproduction,
counterfeit, copy or colorable imitation 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 as to likely cause confusion or mistake or to deceive
purchasers[;]

(c) [T]he trademark is used for identical or similar goods[;] and

(d) [S]uch act is done without the consent of the trademark

registrant or assignee.

On the other hand, the elements of infringement under R.A. No. 8293 are as
follows:

The trademark being infringed is registered in the

Intellectual Property Office; however, in infringement of trade
name, the same need not be registered;
 The trademark or trade name is reproduced, counterfeited,
copied, or colorably imitated by the infringer;

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;

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 idenity of such business;
and

It is without the consent of the trademark or trade name

owner or the assignee thereof.

Among the elements, the element of likelihood of confusion is the gravamen of

trademark infringement. There are two types of confusion in trademark
infringement: confusion of goods and confusion of business. In Sterling Products
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, the Court
distinguished the two types of confusion:

Callman notes two types of confusion. The first is the confusion of goods in which
event the ordinarily prudent purchaser would be induced to purchase one product
in the belief that he was purchasing the other. In which case, defendants goods are
then bought as the plaintiffs, and the poorer quality of the former reflects
adversely on the plaintiffs reputation. The other is the confusion of business: Here
though the goods of the parties are different, the defendants product is such as
might reasonably be assumed to originate with the plaintiff, and the public would
then be deceived either into that belief or into the belief that there is some
connection between the plaintiff and defendant which, in fact, does not exist.

There are two tests to determine likelihood of confusion: the dominancy test and
holistic test. The dominancy test focuses on the similarity of the main, prevalent or
essential features of the competing trademarks that might cause
confusion.Infringement takes place when the competing trademark contains the
essential features of another. Imitation or an effort to imitate is unnecessary. The
question is whether the use of the marks is likely to cause confusion or deceive
purchasers.

The holistic test considers the entirety of the marks, including labels and
packaging, in determining confusing similarity. The focus is not only on the
predominant words but also on the other features appearing on the labels.

In cases involving trademark infringement, no set of rules can be deduced. Each

case must be decided on its own merits. Jurisprudential precedents must be studied
in the light of the facts of each particular case. In McDonalds Corporation
v. MacJoy Fastfood Corporation, the Court held:

In trademark cases, particularly in ascertaining whether one trademark is

confusingly similar to another, no set rules can be deduced because each case
must be decided on its merits. In such cases, even more than in any other
litigation, precedent must be studied in the light of the facts of the particular
case. That is the reason why in trademark cases, jurisprudential precedents should
be applied only to a case if they are specifically in point.

In the light of the facts of the present case, the Court holds that the dominancy test
is applicable. In recent cases with similar factual milieus, the Court has
consistently applied the dominancy test. In Prosource International, Inc., the Court
applied the dominancy test in holding that PCO-GENOLS is confusingly similar to
PYCNOGENOL. The Court held:

The trial and appellate courts applied the Dominancy Test in determining whether
there was a confusing similarity between the marks PYCNOGENOL and PCO-
GENOL. Applying the test, the trial court found, and the CA affirmed, that:

Both the word[s] PYCNOGENOL and PCO-GENOLS have the

same suffix GENOL which on evidence, appears to be merely
descriptive and furnish no indication of the origin of the article and
hence, open for trademark registration by the plaintiff through
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 is 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.

We find no cogent reason to depart from such conclusion.

This is not the first time 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., cited
in McDonalds Corporation v. L.C. Big Mak Burger, Inc., 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 [sic], as
coming within the purview of the idem sonans rule, Yusea and U-
C-A, 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 Conduraare 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.

In McDonalds Corporation v. MacJoy Fastfood Corporation, the Court applied the

dominancy test in holding that MACJOY is confusingly similar
toMCDONALDS. The Court held:
 While we agree with the CAs detailed enumeration of differences between the two
(2) competing trademarks herein involved, we believe that the holistic test is not
the one applicable in this case, the dominancy test being the one more suitable. In
recent cases with a similar factual milieu as here, the Court has consistently used
and applied the dominancy test in determining confusing similarity or likelihood
of confusion between competing trademarks.

xxxx

Applying the dominancy test to the instant case, the Court finds that herein
petitioners MCDONALDS and respondents MACJOY marks are areconfusingly
similar with each other that an ordinary purchaser can conclude an association or
relation between the marks.

To begin with, both marks use the corporate M design logo and the prefixes Mc
and/or Mac as dominant features. x x x

For sure, it is the prefix Mc, and abbreviation of Mac, which visually and aurally
catches the attention of the consuming public. Verily, the word MACJOY attracts
attention the same way as did McDonalds, MacFries, McSpaghetti, McDo, Big
Mac and the rest of the MCDONALDS marks which all use the prefixes Mc
and/or Mac.

Besides and most importantly, both trademarks are used in the sale
of fastfood products. Indisputably, the respondents trademark application for the
MACJOY & DEVICE trademark covers goods under Classes 29 and 30 of the
International Classification of Goods, namely, fried chicken, chicken barbeque,
burgers, fries, spaghetti, etc. Likewise, the petitioners trademark registration for
the MCDONALDS marks in the Philippines covers goods which are similar if not
identical to those covered by the respondents application.

In McDonalds Corporation v. L.C. Big Mak Burger, Inc., the Court applied the
dominancy test in holding that BIG MAK is confusingly similar to BIG MAC.The
Court held:

This Court x x x has relied on the dominancy test rather than the holistic test.The
dominancy test considers the dominant features in the competing marks in
determining whether they are confusingly similar. Under the dominancy test,
courts give greater weight to the similarity of the appearance of the product
arising from the adoption of the dominant features of the registered mark,
disregarding minor differences. Courts will consider more the aural and visual
 impressions created by the marks in the public mind, giving little weight to factors
like prices, quality, sales outlets and market segments.

Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the Court ruled:

x x x 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 is it necessary that the infringing
label should suggest an effort to imitate. (G. Heilman 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; x x x)
xxxx

The test of dominancy is now explicitly incorporated into law in Section 155.1 of
the Intellectual Property Code which defines infringement as the colorable
imitation of a registered mark x x x or a dominant feature thereof.

Applying the dominancy test, the Court finds that respondents use of the
Big Mak mark results in likelihood of confusion. First, Big Mak sounds exactly
the same as Big Mac. Second, the first word in Big Mak is exactly the same as the
first word in Big Mac. Third, the first two letters in Mak are the same as the first
two letters in Mac. Fourth, the last letter Mak while a k sounds the same as c
when the word Mak is pronounced. Fifth, in Filipino, the letter k replaces c in
spelling, thus Caloocan is spelled Kalookan.

In Societe Des Produits Nestle, S.A v. Court of Appeals, the Court applied the
dominancy test in holding that FLAVOR MASTER is confusingly similar to
MASTER ROAST and MASTER BLEND. The Court held:

While this Court agrees with the Court of Appeals detailed enumeration of
differences between the respective trademarks of the two coffee products, this
Court cannot agree that totality test is the one applicable in this case. Rather, this
 Court believes that the dominancy test is more suitable to this case in light of its
peculiar factual milieu.

Moreover, the totality or holistic test is contrary to the elementary postulate of the
law on trademarks and unfair competition that confusing similarity is to be
determined on the basis of visual, aural, connotative comparisons and overall
impressions engendered by the marks in controversy as they are encountered in
the realities of the marketplace. The totality or holistic test only relies on visual
comparison between two trademarks whereas the dominancy test relies not only
on the visual but also on the aural and connotative comparisons and overall
impressions between the two trademarks.

For this reason, this Court agrees with the BPTTT when it applied the test of
dominancy and held that:

From the evidence at hand, it is sufficiently established that the

word MASTER is the dominant feature of opposers mark. The
word MASTER is printed across the middle portion of the label in
bold letters almost twice the size of the printed word
ROAST.Further, the word MASTER has always been given
emphasis in the TV and radio commercials and other
advertisements made in promoting the product. x x x In due time,
because of these advertising schemes the mind of the buying public
had come to learn to associate the word MASTER with
the opposers goods.

x x x. It is the observation of this Office that much of the

dominance which the word MASTER has acquired
through Opposers advertising schemes is carried over when the
same is incorporated into respondent-applicants trademark
FLAVOR MASTER. Thus, when one looks at the label bearing the
trademark FLAVOR MASTER (exh. 4) ones attention is easily
attracted to the word MASTER, rather than to the dissimilarities
that exist. Therefore, the possibility of confusion as to the goods
which bear the competing marks or as to the origins thereof is not
farfetched.

Applying the dominancy test in the present case, the Court finds that NANNY is
confusingly similar to NAN. NAN is the prevalent feature of Nestles line of infant
powdered milk products. It is written in bold letters and used in all products. The
line consists of PRE-NAN, NAN-H.A., NAN-1, and NAN-2.Clearly, NANNY
contains the prevalent feature NAN. The first three letters of NANNY are exactly
the same as the letters of NAN. When NAN and NANNY are pronounced, the
aural effect is confusingly similar.

In determining the issue of confusing similarity, the Court takes into account the
aural effect of the letters contained in the marks. In Marvex Commercial Company,
Inc. v. Petra Hawpia & Company, the Court held:

It is our considered view that the trademarks SALONPAS and LIONPAS are
confusingly similar in sound.

Both these words have the same suffix, PAS, which is used to denote a plaster that
adheres to the body with curative powers. PAS, being merely descriptive,
furnishes no indication of the origin of the article and therefore is open for
appropriation by anyone (Ethepa vs. Director of Patents, L-20635, March 31,
1966) and may properly become the subject of a trademark by combination with
another word or phrase.

xxxx

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; Zusoand Hoo Hoo. Leon Amdur, in his book Trade-Mark Law and
Practice, pp. 419-421, cities [sic], as coming within the purview of
the idem sonans rule, Yusea and U-C-A, 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 Condura 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.

The scope of protection afforded to registered trademark owners is not limited to

protection from infringers with identical goods. The scope of protection extends to
protection from infringers with related goods, and to market areas that are the
normal expansion of business of the registered trademark owners. Section 138 of
R.A. No. 8293 states:

Certificates of Registration. A certificate of registration of a mark shall be prima

facie evidence of validity of the registration, the registrants ownership of the
mark, and of the registrants exclusive right to use the same in connection with the
goods or services and those that are related thereto specified in the
certificate. (Emphasis supplied)

In Mighty Corporation v. E. & J. Gallo Winery, the Court held that, Non-competing
goods may be those which, though they are not in actual competition, are so related
to each other that it can reasonably be assumed that they originate from one
manufacturer, in which case, confusion of business can arise out of the use of
similar marks. In that case, the Court enumerated factors in determining whether
goods are related: (1) classification of the goods; (2) nature of the goods; (3)
descriptive properties, physical attributes or essential characteristics of the goods,
with reference to their form, composition, texture or quality; and (4) style of
distribution and marketing of the goods, including how the goods are displayed and
sold.

NANNY and NAN have the same classification, descriptive properties and
physical attributes. Both are classified under Class 6, both are milk products, and
both are in powder form. Also, NANNY and NAN are displayed in the same
section of stores the milk section.

The Court agrees with the lower courts that there are differences between NAN and
NANNY: (1) NAN is intended for infants while NANNY is intended for children
past their infancy and for adults; and (2) NAN is more expensive than
NANNY. However, as the registered owner of the NAN mark, Nestle should be
free to use its mark on similar products, in different segments of the market, and at
different price levels. In McDonalds Corporation v. L.C. Big Mak Burger, Inc., the
Court held that the scope of protection afforded to registered trademark owners
extends to market areas that are the normal expansion of business:

xxx

Even respondents use of the Big Mak mark on non-hamburger food products
cannot excuse their infringement of petitioners registered mark, otherwise
registered marks will lose their protection under the law.
 The registered trademark owner may use his mark on the same or similar
products, in different segments of the market, and at different price levels
depending on variations of the products for specific segments of the
market. The Court has recognized that the registered trademark owner
enjoys protection in product and market areas that are the normal potential
expansion of his business. Thus, the Court has declared:

Modern law recognizes that the protection to which the owner of a

trademark is entitled is not limited to guarding his goods or
business from actual market competition with identical or similar
products of the parties, but extends to all cases in which the use by
a junior appropriator of a trade-mark or trade-name is likely to lead
to a confusion of source, as where prospective purchasers would be
misled into thinking that the complaining party has extended his
business into the field (see 148 ALR 56 et sq; 53 Am. Jur. 576) or
is in any way connected with the activities of the infringer; or when
it forestalls the normal potential expansion of his business (v. 148
ALR, 77, 84; 52 Am. Jur. 576, 577). (Emphasis supplied)

WHEREFORE, we GRANT the petition. We SET ASIDE the 1 September 2005

Decision and 4 April 2006 Resolution of the Court of Appeals in CA-G.R. CV No.
62730 and REINSTATE the 18 September 1998 Decision of the Regional Trial
Court, Judicial Region 7, Branch 9, Cebu City, in Civil Case No. CEB-19345.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice

WE CONCUR:

ANTONIO EDUARDO B. NACHURA

Associate Justice
DIOSDADO M. PERALTA ROBERTO A. ABAD
Associate Justice Associate Justice

JOSE C. MENDOZA
Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and
the DivisionChairpersons Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

FIRST DIVISION
MCDONALDS CORPORATION and G.R. No. 143993
MCGEORGE FOOD INDUSTRIES, INC.,
Petitioners,
Present:
Davide, Jr., C.J.,
Chairman,
- versus - Quisumbing,
Ynares-Santiago,
Carpio, and
Azcuna, JJ.

L.C. BIG MAK BURGER, INC.,

FRANCIS B. DY, EDNA A. DY,
RENE B. DY, WILLIAM B. DY,
JESUS AYCARDO, ARACELI Promulgated:
AYCARDO, and GRACE HUERTO,
Respondents. August 18, 2004

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

DECISION

CARPIO, J.:

The Case

This is a petition for review[1] of the Decision dated 26 November 1999 of the

Court of Appeals[2] finding respondent L.C. Big Mak Burger, Inc. not liable for

trademark infringement and unfair competition and ordering petitioners to pay

respondents P1,900,000 in damages, and of its Resolution dated 11 July 2000

denying reconsideration. The Court of Appeals Decision reversed the 5 September

1994 Decision[3] of the Regional Trial Court of Makati, Branch 137, finding

respondent L.C. Big Mak Burger, Inc. liable for trademark infringement and unfair

competition.

The Facts

Petitioner McDonalds Corporation (McDonalds) is a corporation organized

under the laws of Delaware, United States. McDonalds operates, by itself or

through its franchisees, a global chain of fast-food restaurants. McDonalds [4] owns

a family of marks[5] including the Big Mac mark for its double-decker hamburger

sandwich.[6] McDonalds registered this trademark with the United States

Trademark Registry on 16 October 1979.[7] Based on this Home Registration,

McDonalds applied for the registration of the same mark in the Principal Register

of the then Philippine Bureau of Patents, Trademarks and Technology

(PBPTT), now the Intellectual Property Office (IPO). Pendingapproval of its

application, McDonalds introduced its Big Mac hamburger sandwiches in the

Philippine market in September 1981. On 18 July 1985, the PBPTT allowed

registration of the Big Mac mark in the Principal Register based on its Home

Registration in the United States.

Like its other marks, McDonalds displays the Big Mac mark in items [8]and
paraphernalia[9] in its restaurants, and in its outdoor and indoor signages. From
1982 to 1990, McDonalds spent P10.5 million in advertisement for Big Mac
hamburger sandwiches alone.[10]

Petitioner McGeorge Food Industries (petitioner McGeorge), a domestic

corporation, is McDonalds Philippine franchisee.[11]

Respondent L.C. Big Mak Burger, Inc. (respondent corporation) is a

domestic corporation which operates fast-food outlets and snack vans in Metro
Manila and nearby provinces.[12] Respondent corporations menu includes
hamburger sandwiches and other food items.[13] Respondents Francis B. Dy, Edna
A. Dy, Rene B. Dy, William B. Dy, Jesus Aycardo, Araceli Aycardo, and Grace
Huerto (private respondents) are the incorporators, stockholders and directors of
respondent corporation.[14]

On 21 October 1988, respondent corporation applied with the PBPTT

for the registration of the Big Mak mark for its hamburger sandwiches. McDonalds

opposed respondent corporations application on the ground that Big Mak was a

colorable imitation of its registered Big Mac mark for the same food products.
McDonalds also informed respondent Francis Dy (respondent Dy), the chairman of

the Board of Directors of respondent corporation, of its exclusive right to the Big

Mac mark and requested him to desist from using the Big Mac mark or any similar

mark.

Having received no reply from respondent Dy, petitioners on 6 June 1990

sued respondents in the Regional Trial Court of Makati, Branch 137 (RTC), for

trademark infringement and unfair competition. In its Order of 11 July 1990, the
RTC issued a temporary restraining order (TRO) against respondents enjoining

them from using the Big Mak mark in the operation of their business in the

National Capital Region.[15] On 16 August 1990, the RTC issued a writ of

preliminary injunction replacing the TRO.[16]

In their Answer, respondents admitted that they have been using the name Big Mak

Burger for their fast-food business. Respondents claimed, however, that

McDonalds does not have an exclusive right to the Big Mac mark or to any other

similar mark. Respondents point out that the Isaiyas Group of Corporations

(Isaiyas Group) registered the same mark for hamburger sandwiches with the

PBPTT on 31 March 1979. One Rodolfo Topacio (Topacio) similarly registered the

same mark on 24 June 1983, prior to McDonalds registration on 18 July

1985. Alternatively, respondents claimed that they are not liable for trademark

infringement or for unfair competition, as the Big Mak mark they sought to register

does not constitute a colorable imitation of the Big Mac mark. Respondents

asserted that they did not fraudulently pass off their hamburger sandwiches as

those of petitioners Big Mac hamburgers.[17] Respondents sought damages in their

counterclaim.

In their Reply, petitioners denied respondents claim that McDonalds is not the

exclusive owner of the Big Mac mark. Petitioners asserted that while the Isaiyas

Group and Topacio did register the Big Mac mark ahead of McDonalds, the Isaiyas

Group did so only in the Supplemental Register of the PBPTT and such
registration does not provide any protection. McDonalds disclosed that it

had acquired Topacios rights to his registration in a Deed of Assignment dated 18

May 1981.[18]

The Trial Courts Ruling

On 5 September 1994, the RTC rendered judgment (RTC Decision) finding

respondent corporation liable for trademark infringement and unfair

competition. However, the RTC dismissed the complaint against private

respondents and the counterclaim against petitioners for lack of merit and

insufficiency of evidence. The RTC held:

Undeniably, the mark B[ig] M[ac] is a registered trademark for
plaintiff McDonalds, and as such, it is entitled [to] protection against
infringement.

xxxx
There exist some distinctions between the names B[ig] M[ac] and B[ig]
M[ak]as appearing in the respective signages, wrappers and containers of
the food products of the parties. But infringement goes beyond the
physical features of the questioned name and the original name. There
are still other factors to be considered.

xxxx

Significantly, the contending parties are both in the business of fast-food

chains and restaurants. An average person who is hungry and wants to
eat a hamburger sandwich may not be discriminating enough to look for
a McDonalds restaurant and buy a B[ig] M[ac] hamburger. Once he sees
a stall selling hamburger sandwich, in all likelihood, he will dip into his
pocket and order a B[ig] M[ak] hamburger sandwich. Plaintiff
McDonalds fast-food chain has attained wide popularity and acceptance
by the consuming public so much so that its air-conditioned food outlets
and restaurants will perhaps not be mistaken by many to be the same as
defendant corporations mobile snack vans located along busy streets or
highways. But the thing is that what is being sold by both contending
parties is a food item a hamburger sandwich which is for immediate
consumption, so that a buyer may easily be confused or deceived into
thinking that the B[ig] M[ak] hamburger sandwich he bought is a food-
product of plaintiff McDonalds, or a subsidiary or allied
outlet thereof. Surely, defendant corporation has its own
secret ingredients to make its hamburger sandwiches as palatable and as
tasty as the other brands in the market, considering the keen competition
among mushrooming hamburger stands and multinational fast-food
chains and restaurants. Hence, the trademark B[ig] M[ac] has been
infringed by defendant corporation when it used the name B[ig] M[ak] in
its signages, wrappers, and containers in connection with its food
business. xxxx

Did the same acts of defendants in using the name B[ig] M[ak] as a
trademark or tradename in their signages, or in causing the name B[ig]
M[ak] to be printed on the wrappers and containers of their food
products also constitute an act of unfair competition under Section 29 of
the Trademark Law?

The answer is in the affirmative. xxxx

The xxx provision of the law concerning unfair competition is broader

and more inclusive than the law concerning the infringement of
trademark, which is of more limited range, but within its narrower range
recognizes a more exclusive right derived by the adoption and
registration of the trademark by the person whose goods or services are
first associated therewith. xxxNotwithstanding the distinction between an
action for trademark infringement and an action for unfair competition,
however, the law extends substantially thesame relief to the injured party
for both cases. (See Sections 23 and 29 of Republic Act No. 166)

Any conduct may be said to constitute unfair competition if the effect is to pass off
on the public the goods of one man as the goods of another. The choice of B[ig]
M[ak] as tradename by defendant corporation is not merely for sentimental
reasons but was clearly made to take advantage of the reputation, popularity and
the established goodwill of plaintiff McDonalds. For, as stated in Section 29, a
person is guilty of unfair competition 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 likely influence purchasers to believe that the goods
offered are those of a manufacturer or dealer other than the actual manufacturer
or dealer. Thus, plaintiffs have established their valid cause of action against the
defendants for trademark infringement and unfair competition and for damages.[19]

The dispositive portion of the RTC Decision provides:

WHEREFORE, judgment is rendered in favor of plaintiffs
McDonalds Corporation and McGeorge Food Industries, Inc. and
against defendant L.C. Big Mak Burger, Inc., as follows:

1. The writ of preliminary injunction issued in this case on [16

August 1990] is made permanent;

2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay

plaintiffs actual damages in the amount of P400,000.00, exemplary
damages in the amount of P100,000.00, and attorneys fees and expenses
of litigation in the amount of P100,000.00;

3. The complaint against defendants Francis B. Dy, Edna A. Dy, Rene B.

Dy, Wiliam B. Dy, Jesus Aycardo, Araceli Aycardo and Grace Huerto, as well
as all counter-claims, are dismissed for lack of merit as well as for insufficiency
of evidence.[20]

Respondents appealed to the Court of Appeals.

The Ruling of the Court of Appeals

On 26 November 1999, the Court of Appeals rendered judgment (Court of Appeals

Decision) reversing the RTC Decision and ordering McDonalds to pay

respondents P1,600,000 as actual and compensatory damages and P300,000 as

moral damages. The Court of Appeals held:

Plaintiffs-appellees in the instant case would like to impress on
this Court that the use of defendants-appellants of its corporate name the
whole L.C. B[ig] M[ak] B[urger], I[nc]. which appears on their food
packages, signages and advertisements is an infringement of their
trademark B[ig] M[ac] which they use to identify [their] double decker
sandwich, sold in a Styrofoam box packaging material with the
McDonalds logo of umbrella M stamped thereon, together with the
printed mark in red bl[o]ck capital letters, the words being separated
by a single space. Specifically, plaintiffs-appellees argue that defendants-
appellants use of their corporate name is a colorable imitation of their
trademark Big Mac.

xxxx

To Our mind, however, this Court is fully convinced that no colorable

imitation exists. As the definition dictates, it is not sufficient that a
similarity exists in both names, but that more importantly, the over-all
presentation, or in their essential, substantive and distinctive parts is such
as would likely MISLEAD or CONFUSE persons in the ordinary course
of purchasing the genuine article. A careful comparison of the way the
trademark B[ig] M[ac] is being used by plaintiffs-appellees and
corporate name L.C. Big Mak Burger, Inc. by defendants-appellants,
would readily reveal that no confusion could take place, or that the
ordinary purchasers would be misled by it. As pointed out by
defendants-appellants, the plaintiffs-appellees trademark is used to
designate only one product, a double decker sandwich sold in a
Styrofoam box with the McDonalds logo. On the other hand, what the
defendants-appellants corporation is using is not a trademark for its food
product but a business or corporate name. They use the business name
L.C. Big Mak Burger, Inc. in their restaurant business which serves
diversified food items such as siopao, noodles, pizza, and sandwiches
such as hotdog, ham, fish burger and hamburger. Secondly, defendants-
appellants corporate or business name appearing in the food packages
and signages are written in silhouette red-orange letters with the b and m
in upper case letters. Above the words Big Mak are the upper case letter
L.C.. Below the words Big Mak are the words Burger, Inc. spelled out in
upper case letters. Furthermore, said corporate or business name
appearing in such food packages and signages is always accompanied by
the company mascot, a young chubby boy named Maky who wears a red
T-shirt with the upper case m appearing therein and a blue lower
garment. Finally, the defendants-appellants food packages are made of
plastic material.

xxxx

xxx [I]t is readily apparent to the naked eye that there appears a vast difference in
the appearance of the product and the manner that the tradename Big Mak is
being used and presented to the public. As earlier noted, there are glaring
dissimilarities between plaintiffs-appellees trademark and defendants-appellants
corporate name. Plaintiffs-appellees product carrying the trademark B[ig] M[ac]
is a double decker sandwich (depicted in the tray mat containing photographs of
the various food products xxx sold in a Styrofoam box with the McDonalds logo
and trademark in red, bl[o]ck capital letters printed thereon xxx at a price which is
more expensive than the defendants-appellants comparable food products. In
order to buy a Big Mac, a customer needs to visit an air-conditioned McDonalds
restaurant usually located in a nearby commercial center, advertised and identified
by its logo - the umbrella M, and its mascot Ronald McDonald. A typical
McDonalds restaurant boasts of a playground for kids, a second floor to
accommodate additional customers, a drive-thru to allow customers with cars to
make orders without alighting from their vehicles, the interiors of the building are
well-lighted, distinctly decorated and painted with pastel colors xxx. In buying a
B[ig] M[ac], it is necessary to specify it by its trademark. Thus, a customer needs
to look for a McDonalds and enter it first before he can find a hamburger
sandwich which carry the mark Big Mac. On the other hand, defendants-
appellants sell their goods through snack vans xxxx

Anent the allegation that defendants-appellants are guilty of unfair competition,

We likewise find the same untenable.

Unfair competition is defined as the employment of deception or any other means

contrary to good faith by which a person shall pass off the goods manufactured by
him or in which he deals, or his business, or service, for those of another who has
already established good will for his similar good, business or services,
or any acts calculated to produce the same result (Sec. 29, Rep. Act No. 166, as
amended).

To constitute unfair competition therefore it must necessarily follow that there

was malice and that the entity concerned was in bad faith.
 In the case at bar, We find no sufficient evidence adduced by plaintiffs-
appellees that defendants-appellants deliberately tried to pass off the goods
manufactured by them for those of plaintiffs-appellees. The mere suspected
similarity in the sound of the defendants-appellants corporate name with the
plaintiffs-appellees trademark is not sufficient evidence to conclude unfair
competition. Defendants-appellants explained that the name M[ak] in their
corporate name was derived from both the first names of the mother and father of
defendant Francis Dy, whose names are Maxima and Kimsoy. With this
explanation, it is up to the plaintiffs-appellees to prove bad faith on the part
ofdefendants-appellants. It is a settled rule that the law always presumes good
faith such that any person who seeks to be awarded damages due to acts of
another has the burden of proving that the latter acted in bad faith or with ill
motive. [21]

Petitioners sought reconsideration of the Court of Appeals Decision but

the appellate court denied their motion in its Resolution of 11 July 2000.

Hence, this petition for review.

Petitioners raise the following grounds for their petition:

I. THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENTS
CORPORATE NAME L.C. BIG MAK BURGER, INC. IS NOT A
COLORABLE IMITATION OF THE MCDONALDS TRADEMARK BIG
MAC, SUCH COLORABLE IMITATION BEING AN ELEMENT
OF TRADEMARK INFRINGEMENT.

A. Respondents use the words Big Mak as trademark for their

products and not merely as their business or corporate name.

B. As a trademark, respondents Big Mak is undeniably and

unquestionably similar to petitioners Big Mac trademark based
on the dominancy test and the idem sonans test resulting
inexorably in confusion on the part of the consuming public.

II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER THE

INHERENT SIMILARITY BETWEEN THE MARK BIG MAK AND THE
WORD MARK BIG MAC AS AN INDICATION OF RESPONDENTS
 INTENT TO DECEIVE OR DEFRAUD FOR PURPOSES
OF ESTABLISHING UNFAIR COMPETITION.[22]

Petitioners pray that we set aside the Court of Appeals Decision and reinstate the

RTC Decision.

In their Comment to the petition, respondents question the propriety of this

petition as it allegedly raises only questions of fact. On the merits, respondents

contend that the Court of Appeals committed no reversible error in finding them

not liable for trademark infringement and unfair competition and in ordering

petitioners to pay damages.

The Issues

The issues are:

1. Procedurally, whether the questions raised in this petition are proper for a

petition for review under Rule 45.

2. On the merits, (a) whether respondents used the words Big Mak not only

as part of the corporate name L.C. Big Mak Burger, Inc. but also as a trademark for

their hamburger products, and (b) whether respondent corporation is liable for

trademark infringement and unfair competition.[23]

The Courts Ruling

The petition has merit.

On Whether the Questions Raised in the Petition are

Proper for a Petition for Review

A party intending to appeal from a judgment of the Court of Appeals may file with
this Court a petition for review under Section 1 of Rule 45 (Section 1) [24]raising
only questions of law. A question of law exists when the doubt or difference arises
on what the law is on a certain state of facts. There is a question of fact when the
doubt or difference arises on the truth or falsity of the alleged facts. [25]

Here, petitioners raise questions of fact and law in assailing the Court of Appeals
findings on respondent corporations non-liability for trademark infringement and
unfair competition. Ordinarily, the Court can deny due course to such a petition. In
view, however, of the contradictory findings of fact of the RTC and Court of
Appeals, the Court opts to accept the petition, this being one of the recognized
exceptions to Section 1.[26] We took a similar course of action in Asia Brewery,
Inc. v. Court of Appeals[27] which also involved a suit for trademark infringement
and unfair competition in which the trial court and the Court of Appeals arrived at
conflicting findings.

On the Manner Respondents Used

Big Mak in their Business
Petitioners contend that the Court of Appeals erred in ruling that the corporate
name L.C. Big Mak Burger, Inc. appears in the packaging for respondents
hamburger products and not the words Big Mak only.

The contention has merit.

The evidence presented during the hearings on petitioners motion for the issuance
of a writ of preliminary injunction shows that the plastic wrappings and plastic
bags used by respondents for their hamburger sandwiches bore the words Big
Mak. The other descriptive words burger and 100% pure beef were set in smaller
type, along with the locations of branches.[28] Respondents cash invoices simply
refer to their hamburger sandwiches as Big Mak.[29] It isrespondents snack vans that
carry the words L.C. Big Mak Burger, Inc.[30]
It was only during the trial that respondents presented in evidence the plastic
wrappers and bags for their hamburger sandwiches relied on by the Court of
Appeals.[31] Respondents plastic wrappers and bags were identical with those
petitioners presented during the hearings for the injunctive writ except that the
letters L.C. and the words Burger, Inc. in respondents evidence were added above
and below the words Big Mak, respectively. Since petitioners complaint was based
on facts existing before and during the hearings on the injunctive writ, the facts
established during those hearings are the proper factual bases for the disposition of
the issues raised in this petition.

On the Issue of Trademark Infringement

Section 22 (Section 22) of Republic Act No. 166, as amended (RA 166), the law
applicable to this case,[32] defines trademark infringement as follows:
Infringement, what constitutes. Any person who [1] 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 [2] 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.[33]

Petitioners base their cause of action under the first part of Section
22, i.e.respondents allegedly used, without petitioners consent, a colorable
imitation of the Big Mac mark in advertising and selling respondents hamburger
sandwiches. This likely caused confusion in the mind of the purchasing public on
the source of the hamburgers or the identity of the business.

To establish trademark infringement, the following elements must be shown:

(1) the validity of plaintiffs mark; (2) the plaintiffs ownership of the mark; and
(3) the use of the mark or its colorable imitation by the allegedinfringer results in
likelihood of confusion.[34] Of these, it is the element oflikelihood of confusion that
is the gravamen of trademark infringement.[35]

On the Validity of the Big MacMark

and McDonalds Ownership of such Mark
A mark is valid if it is distinctive and thus not barred from
registration under Section 4[36] of RA 166 (Section 4). However, once registered,
not only the marks validity but also the registrants ownership of the mark is prima
facie presumed.[37]

Respondents contend that of the two words in the Big Mac mark, it is only
the word Mac that is valid because the word Big is generic and descriptive
(proscribed under Section 4[e]), and thus incapable of exclusive appropriation.[38]

The contention has no merit. The Big Mac mark, which should be treated in its
entirety and not dissected word for word, [39] is neither generic nor descriptive.
Generic marks are commonly used as the name or description of a kind of goods,
[40]
such as Lite for beer[41] or Chocolate Fudge for chocolate soda drink.
[42]
Descriptive marks, on the other hand, convey the characteristics, functions,
qualities or ingredients of a product to one who has never seen it or does not know
it exists,[43] such as Arthriticare for arthritis medication. [44] On the contrary, Big
Mac falls under the class of fanciful or arbitrary marks as it bears no logical
relation to the actual characteristics of the product it represents. [45]As such, it is
highly distinctive and thus valid. Significantly, the trademark Little Debbie for
snack cakes was found arbitrary or fanciful.[46]
The Court also finds that petitioners have duly established McDonalds
exclusive ownership of the Big Mac mark. Although Topacio and the Isaiyas
Group registered the Big Mac mark ahead of McDonalds, Topacio, as petitioners
disclosed, had already assigned his rights to McDonalds. The Isaiyas Group, on the
other hand, registered its trademark only in the Supplemental Register. A mark
which is not registered in the Principal Register, and thus not distinctive, has no
real protection.[47] Indeed, we have held that registration in the Supplemental
Register is not even a prima facie evidence of the validity of the registrants
exclusive right to use the mark on the goods specified in the certificate.[48]

On Types of Confusion

Section 22 covers two types of confusion arising from the use of similar or

colorable imitation marks, namely, confusion of goods (product confusion) and

confusion of business (source or origin confusion). In Sterling Products

International, Incorporated v. Farbenfabriken Bayer Aktiengesellschaft, et al.,

[49]
the Court distinguished these two types of confusion, thus:
[Rudolf] Callman notes two types of confusion. The first is the confusion of
goods in which event the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the other. xxx The other
is the confusion of business: Here though the goods of the parties are different, the
defendants product is such as might reasonably be assumed to originate with the
plaintiff, and the public would then be deceived either into that belief or into the
belief that there is some connection between the plaintiff and defendant which, in
fact, does not exist.

Under Act No. 666,[50] the first trademark law, infringement was limited to

confusion of goods only, when the infringing mark is used on goods of a similar

kind.[51] Thus, no relief was afforded to the party whose registered mark or its

colorable imitation is used on different although related goods. To remedy this

situation, Congress enacted RA 166 on 20 June 1947. In defining trademark

infringement, Section 22 of RA 166 deleted the requirement in question and

expanded its scope to include such use of the mark or its colorable imitation that is

likely to result in confusion on the

source or origin of such goods or services, or identity of such business. [52] Thus,

while there is confusion of goods when the products are competing, confusion of

business exists when the products are non-competing but related enough to

produce confusion of affiliation.[53]

On Whether Confusion of Goods and

Confusion of Business are Applicable

Petitioners claim that respondents use of the Big Mak mark on respondents

hamburgers results in confusion of goods, particularly with respect to petitioners

hamburgers labeled Big Mac. Thus, petitioners alleged in their complaint:

1.15. Defendants have unduly prejudiced and clearly
infringed uponthe property rights of plaintiffs in the McDonalds Marks,
particularly the mark B[ig] M[ac]. Defendants unauthorized acts are
likely, and calculated, to confuse, mislead or deceive the public into
believing that the products and services offered by defendant Big
Mak Burger, and the business it is engaged in, are approved and
sponsored by, or affiliated with, plaintiffs.[54] (Emphasis supplied)

Since respondents used the Big Mak mark on the same goods, i.e. hamburger

sandwiches, that petitioners Big Mac mark is used, trademark infringement

through confusion of goods is a proper issue in this case.

Petitioners also claim that respondents use of the Big Mak mark in the sale of

hamburgers, the same business that petitioners are engaged in, results in confusion

of business. Petitioners alleged in their complaint:

1.10. For some period of time, and without the consent of plaintiff
McDonalds nor its licensee/franchisee, plaintiff McGeorge, and in clear
violation of plaintiffs exclusive right to use and/or appropriate the
McDonalds marks, defendant Big Mak Burger acting through individual
defendants, has been operating Big Mak Burger, a fast food restaurant
business dealing in the sale of hamburger and cheeseburger sandwiches,
french fries and other food products, and has caused to be printed on the
wrapper of defendants food products and incorporated in its signages the
name Big Mak Burger, which is confusingly similar to and/or is a
colorable imitation of the plaintiff McDonalds mark B[ig] M[ac],
xxx. Defendant Big Mak Burger has thus unjustly created the
impression that its business is approved and sponsored by, or
affiliated with, plaintiffs. xxxx

2.2 As a consequence of the acts committed by defendants, which unduly

prejudice and infringe upon the property rights of plaintiffs McDonalds and
McGeorge as the real owner and rightful proprietor, and the
licensee/franchisee, respectively, of the McDonalds marks, and which are likely to
have caused confusion or deceived the public as to the true source,
sponsorship or affiliation of defendants food products and restaurant
business, plaintiffs have suffered and continue to suffer actual damages in the
form of injury to their business reputation and goodwill, and of the dilution ofthe
distinctive quality of the McDonalds marks, in particular, the mark B[ig] M[ac].
[55]
(Emphasis supplied)

Respondents admit that their business includes selling hamburger sandwiches, the

same food product that petitioners sell using the Big Mac mark. Thus, trademark

infringement through confusion of business is also a proper issue in this case.

Respondents assert that their Big Mak hamburgers cater mainly to the low-

income group while petitioners Big Mac hamburgers cater to the middle and upper
income groups. Even if this is true, the likelihood of confusion of business

remains, since the low-income group might be led to believe that the Big Mak

hamburgers are the low-end hamburgers marketed by petitioners. After all,

petitioners have the exclusive right to use the Big Mac mark. On the other

hand,respondents would benefit by associating their low-end hamburgers,

through the use of the Big Mak mark, with petitioners high-end Big Mac

hamburgers, leading to likelihood of confusion in the identity of business.

Respondents further claim that petitioners use the Big Mac mark only on

petitioners double-decker hamburgers, while respondents use the Big Mak mark on

hamburgers and other products like siopao, noodles and pizza. Respondents also

point out that petitioners sell their Big Mac double-deckers in a styrofoam box with

the McDonalds logo and trademark in red, block letters at a price more expensive

than the hamburgers of respondents. In contrast, respondents sell their Big Mak

hamburgers in plastic wrappers and plastic bags. Respondents further point out that

petitioners restaurants are air-conditioned buildings with drive-thru service,

compared to respondents mobile vans.

These and other factors respondents cite cannot negate the undisputed fact

that respondents use their Big Mak mark on hamburgers, the same food product

that petitioners sell with the use of their registered mark Big Mac. Whether a

hamburger is single, double or triple-decker, and whether wrapped in plastic or

styrofoam, it remains the same hamburger food product. Even respondents use of

the Big Mak mark on non-hamburger food products cannot excuse their
infringement of petitioners registered mark, otherwise registered marks will lose

their protection under the law.

The registered trademark owner may use his mark on the same or similar

products, in different segments of the market, and at different price levels

depending on variations of the products for specific segments of the market. The

Court has recognized that the registered trademark owner enjoys protection in

product and market areas that are the normal potential expansion of his

business. Thus, the Court has declared:

Modern law recognizes that the protection to which the owner of a
trademark is entitled is not limited to guarding his goods or business
from actual market competition with identical or similar products of the parties,
but extends to all cases in which the use by a junior appropriator of a trade-mark
or trade-name is likely to lead to a confusion of source, as where prospective
purchasers would be misled into thinking that the complaining party has
extended his business into the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or
is in any way connected with the activities of the infringer; or when it forestalls
the normal potential expansion of his business (v. 148 ALR, 77, 84; 52 Am. Jur.
576, 577).[56] (Emphasis supplied)

On Whether Respondents Use of the Big Mak

Mark Results in Likelihood of Confusion

In determining likelihood of confusion, jurisprudence has developed two tests, the

dominancy test and the holistic test.[57] The dominancy test focuses on the

similarity of the prevalent features of the competing trademarks that might cause

confusion. In contrast, the holistic test requires the court to consider the entirety of
the marks as applied to the products, including the labels and packaging,

in determining confusing similarity.

The Court of Appeals, in finding that there is no likelihood of confusion that

could arise in the use of respondents Big Mak mark on hamburgers, relied on the

holistic test. Thus, the Court of Appeals ruled that it is not sufficient that a

similarity exists in both name(s), but that more importantly,

the overall presentation, or in their essential, substantive and distinctive parts is

such as would likely MISLEAD or CONFUSE persons in the ordinary course of

purchasing the genuine article. The holistic test considers the two marks in their

entirety, as they appear on the goods with their labels and packaging. It is not

enough to consider their words and compare the spelling and pronunciation ofthe

words.[58]

Respondents now vigorously argue that the Court of Appeals application of

the holistic test to this case is correct and in accord with prevailing jurisprudence.

This Court, however, has relied on the dominancy test rather than the holistic test.

The dominancy test considers the dominant features in the competing marks

in determining whether they are confusingly similar. Under the dominancy test,

courts give greater weight to the similarity of the appearance of the product arising

from the adoption of the dominant features of the registered mark,

disregarding minor differences.[59] Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving little weight to factors

like prices, quality, sales outlets and market segments.

Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,[60] the Court

ruled:
xxx 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 is it necessary that the infringing label should
suggest an effort to imitate. (G. Heilman 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; xxx) (Emphasis supplied.)

The Court reiterated the dominancy test in Lim Hoa v. Director of Patents,
[61]
Phil. Nut Industry, Inc. v. Standard Brands Inc.,[62] Converse Rubber

Corporation v. Universal Rubber Products, Inc.,[63] and Asia Brewery, Inc. v.

Court of Appeals.[64] In the 2001 case of Societe Des Produits Nestl, S.A. v. Court

of Appeals,[65] the Court explicitly rejected the holistic test in this wise:
[T]he totality or holistic test is contrary to the elementary postulate of the law
on trademarks and unfair competition that confusing similarity is to
be determined on the basis of visual, aural, connotative comparisons
and overall impressions engendered by the marks in controversy as they
are encounteredin the realities of the marketplace. (Emphasis supplied)
 The test of dominancy is now explicitly incorporated into law in Section
155.1 of the Intellectual Property Code which defines infringement as thecolorable
imitation of a registered mark xxx or a dominant feature thereof.
Applying the dominancy test, the Court finds that respondents use of the Big
Mak mark results in likelihood of confusion. First, Big Mak sounds exactlythe
same as Big Mac. Second, the first word in Big Mak is exactly the same as the first
word in Big Mac. Third, the first two letters in Mak are the same as the first two
letters in Mac. Fourth, the last letter in Mak while a k sounds the same as c when
the word Mak is pronounced. Fifth, in Filipino, the letter k replaces c in spelling,
thus Caloocan is spelled Kalookan.

In short, aurally the two marks are the same, with the first word
of bothmarks phonetically the same, and the second word of both marks also
phonetically the same. Visually, the two marks have both two words and six letters,
with the first word of both marks having the same letters and the second word
having the same first two letters. In spelling, considering the Filipino language,
even the last letters of both marks are the same.

Clearly, respondents have adopted in Big Mak not only the dominant but
also almost all the features of Big Mac. Applied to the same food product of
hamburgers, the two marks will likely result in confusion in the public mind.

The Court has taken into account the aural effects of the words and
letters contained in the marks in determining the issue of confusing
similarity. Thus, in Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al.,
[66]
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-C-A, 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. (Emphasis supplied)

Certainly, Big Mac and Big Mak for hamburgers create even greater confusion, not
only aurally but also visually.
Indeed, a person cannot distinguish Big Mac from Big Mak by their
sound. When one hears a Big Mac or Big Mak hamburger advertisement over the
radio, one would not know whether the Mac or Mak ends with a c or a k.

Petitioners aggressive promotion of the Big Mac mark, as borne by their

advertisement expenses, has built goodwill and reputation for such mark making it
one of the easily recognizable marks in the market today. This increases the
likelihood that consumers will mistakenly associate petitioners hamburgers and
business with those of respondents.

Respondents inability to explain sufficiently how and why they came to choose Big
Mak for their hamburger sandwiches indicates their intent to imitate petitioners
Big Mac mark. Contrary to the Court of Appeals finding, respondents claim that
their Big Mak mark was inspired by the first names of respondent Dys mother
(Maxima) and father (Kimsoy) is not credible. As petitioners well noted:
 [R]espondents, particularly Respondent Mr. Francis Dy, could have
arrived at a more creative choice for a corporate name by using the
names of his parents, especially since he was allegedly driven by
sentimental reasons. For one, he could have put his fathers name ahead
of his mothers, as is usually done in this patriarchal society, and derived
letters from said names in that order. Or, he could have taken an
equal number of letters (i.e., two) from each name, as is the more usual
thing done. Surely, the more plausible reason behind Respondents choice
of the word M[ak], especially when taken in conjunction with the word
B[ig], was their intent to take advantage of Petitioners xxx B[ig] M[ac]
trademark, with their alleged sentiment-focused explanation merely
thought of as a convenient, albeit unavailing, excuse or defense for such
an unfair choice of name.[67]

Absent proof that respondents adoption of the Big Mak mark was due
tohonest mistake or was fortuitous,[68] the inescapable conclusion is that
respondents adopted the Big Mak mark to ride on the coattails of the more
established Big Mac mark.[69] This saves respondents much of the expense in
advertising to create market recognition of their mark and hamburgers.[70]

Thus, we hold that confusion is likely to result in the public mind. We

sustain petitioners claim of trademark infringement.

On the Lack of Proof of

Actual Confusion

Petitioners failure to present proof of actual confusion does not negate their claim

of trademark infringement. As noted in American Wire & Cable Co. v. Director of

Patents,[71] Section 22 requires the less stringent standard of likelihood of

confusion only. While proof of actual confusion is the best evidence of

infringement, its absence is inconsequential.[72]

On the Issue of Unfair Competition

Section 29 (Section 29)[73] of RA 166 defines unfair competition, thus:

xxxx

Any person who will employ deception or any other means contrary to
good faith by which he shall pass off the goods manufactured by him or
in which he deals, or his business, or services for those of the one having
established such goodwill, or who shall commit any acts calculated to
produce said result, shall be guilty of unfair competition, and shall be
subject to an action therefor.
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 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 actualmanufacturer 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;
(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
(c) Any person who shall make any false statement in the course of trade
or who shall commit any other act contrary to good faith of a nature
calculated to discredit the goods, business or services of another.
(Emphasis supplied)
 The essential elements of an action for unfair competition are (1) confusing
similarity in the general appearance of the goods, and (2) intent to deceive the
public and defraud a competitor.[74] The confusing similarity may or may not result
from similarity in the marks, but may result from other external factors
in the packaging or presentation of the goods. The intent to deceive and defraud
may be inferred from the similarity of the appearance of the goods as offered for
sale to the public.[75] Actual fraudulent intent need not be shown.[76]
Unfair competition is broader than trademark infringement and includes
passing off goods with or without trademark infringement. Trademark
infringement is a form of unfair competition.[77] Trademark infringement
constitutes unfair competition when there is not merely likelihood of confusion,
but also actual or probable deception on the public because of the general
appearance of the goods. There can be trademark infringement without unfair
competition as when the infringer discloses on the labels containing the mark that
he manufactures the goods, thus preventing the public from being deceived that the
goods originate from the trademark owner.[78]

To support their claim of unfair competition, petitioners allege that

respondents fraudulently passed off their hamburgers as Big Mac hamburgers.
Petitioners add that respondents fraudulent intent can be inferred from the
similarity of the marks in question.[79]

Passing off (or palming off) takes place where the defendant, by imitative
devices on the general appearance of the goods, misleads prospective purchasers
into buying his merchandise under the impression that they are buying that of his
competitors.[80] Thus, the defendant gives his goods the general appearance of the
goods of his competitor with the intention of deceiving the public that the goods
are those of his competitor.

The RTC described the respective marks and the goods of petitioners and
respondents in this wise:
The mark B[ig] M[ac] is used by plaintiff McDonalds to identify
its double decker hamburger sandwich. The packaging material is
a styrofoam boxwith the McDonalds logo and trademark in red with
block capital letters printed on it. All letters of the B[ig] M[ac] mark are
also in red and block capital letters. On the other hand, defendants B[ig]
M[ak] script print is in orange with only the letter B and M being
capitalized and the packaging material is plastic wrapper. xxxx Further,
plaintiffs logo and mascot are the umbrella M and Ronald
McDonalds, respectively, compared to the mascot of defendant
Corporation which is a chubby boy called Macky displayed or printed
between the words Big and Mak.[81] (Emphasis supplied)

Respondents point to these dissimilarities as proof that they did not give their
hamburgers the general appearance of petitioners Big Mac hamburgers.

The dissimilarities in the packaging are minor compared to the stark

similarities in the words that give respondents Big Mak hamburgers the general
appearance of petitioners Big Mac hamburgers. Section 29(a) expressly provides
that the similarity in the general appearance of the goods may be in the devices
or words used on the wrappings. Respondents have applied on their plastic
wrappers and bags almost the same words that petitioners use on their styrofoam
box. What attracts the attention of the buying public are the words Big Mak which
are almost the same, aurally and visually, as the words Big Mac. The dissimilarities
in the material and other devices are insignificant compared to the glaring
similarity in the words used in the wrappings.
 Section 29(a) also provides that the defendant gives his goods the general
appearance of goods of another manufacturer. Respondents goods are hamburgers
which are also the goods of petitioners. If respondents sold egg sandwiches
only instead of hamburger sandwiches, their use of the Big Mak mark would not
give their goods the general appearance of petitioners Big Mac hamburgers. In
such case, there is only trademark infringement but no unfair
competition. However, since respondents chose to apply the Big Mak mark on
hamburgers, just like petitioners use of the Big Mac mark on hamburgers,
respondents have obviously clothed their goods with the general appearance of
petitioners goods.

Moreover, there is no notice to the public that the Big Mak hamburgers are
products of L.C. Big Mak Burger, Inc. Respondents introduced during the trial
plastic wrappers and bags with the words L.C. Big Mak Burger, Inc. to inform the
public of the name of the seller of the hamburgers. However, petitioners introduced
during the injunctive hearings plastic wrappers and bags with the Big Mak
mark without the name L.C. Big Mak Burger, Inc.Respondents belated
presentation of plastic wrappers and bags bearing the name of L.C. Big Mak
Burger, Inc. as the seller of the hamburgers is an after-thought designed to
exculpate them from their unfair business conduct. As earlier stated, we cannot
consider respondents evidence since petitioners complaint was based on facts
existing before and during the injunctive hearings.

Thus, there is actually no notice to the public that the Big Mak hamburgers
are products of L.C. Big Mak Burger, Inc. and not those of petitioners who have
the exclusive right to the Big Mac mark. This clearly shows respondents intent to
deceive the public. Had respondents placed a notice on their plastic wrappers and
bags that the hamburgers are sold by L.C. Big Mak Burger, Inc., then they could
validly claim that they did not intend to deceive the public. In such case, there is
only trademark infringement but no unfair competition.[82] Respondents, however,
did not give such notice. We hold that as found by the RTC, respondent corporation
is liable for unfair competition.

The Remedies Available to Petitioners

Under Section 23[83] (Section 23) in relation to Section 29 of RA 166, a plaintiff

who successfully maintains trademark infringement and unfair competition claims
is entitled to injunctive and monetary reliefs. Here, the RTC did not err in issuing
the injunctive writ of 16 August 1990 (made permanent in its Decision of 5
September 1994) and in ordering the payment of P400,000 actual damages in favor
of petitioners. The injunctive writ is indispensable to prevent further acts of
infringement by respondent corporation. Also, the amount of actual damages is a
reasonable percentage (11.9%) of respondent corporations gross sales for three
(1988-1989 and 1991) of the six years (1984-1990) respondents have used the Big
Mak mark.[84]

The RTC also did not err in awarding exemplary damages by way of
correction for the public good[85] in view of the finding of unfair competition where
intent to deceive the public is essential. The award of attorneys fees and expenses
of litigation is also in order.[86]

WHEREFORE, we GRANT the instant petition. We SET ASIDE the

Decision dated 26 November 1999 of the Court of Appeals and its Resolution
dated 11 July 2000 and REINSTATE the Decision dated 5 September 1994 of the
Regional Trial Court of Makati, Branch 137, finding respondent L.C. Big Mak
Burger, Inc. liable for trademark infringement and unfair competition.

SO ORDERED.

ANTONIO T. CARPIO
Associate Justice
WE CONCUR:

HILARIO G. DAVIDE, JR.

Chief Justice
Chairman

LEONARDO A. QUISUMBING CONSUELO YNARES-SANTIAGO

Associate Justice Associate Justice

ADOLFO S. AZCUNA
Associate Justice

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that

the conclusions in the above Decision were reached in consultation before the case

was assigned to the writer of the opinion of the Courts Division.

HILARIO G. DAVIDE, JR.

Chief Justice

SECOND DIVISION

FREDCO MANUFACTURING G.R. No. 185917

CORPORATION,

Petitioner, Present:
CARPIO, J.,
Chairperson,
NACHURA,

- versus - PERALTA,
ABAD, and
MENDOZA, JJ.

PRESIDENT AND FELLOWS

OF HARVARD COLLEGE Promulgated:

(HARVARD UNIVERSITY),
Respondents. June 1, 2011

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

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review assailing the 24 October 2008 Decision and 8
1 2

January 2009 Resolution of the Court of Appeals in CA-G.R. SP No. 103394.

3

The Antecedent Facts

On 10 August 2005, petitioner Fredco Manufacturing Corporation (Fredco), a

corporation organized and existing under the laws of the Philippines, filed a Petition
for Cancellation of Registration No. 56561 before the Bureau of Legal Affairs of the
Intellectual Property Office (IPO) against respondents President and Fellows of
Harvard College (Harvard University), a corporation organized and existing under the
laws of Massachusetts, United States of America. The case was docketed as Inter
Partes Case No. 14-2005-00094.
Fredco alleged that Registration No. 56561 was issued to Harvard University on 25
November 1993 for the mark Harvard Veritas Shield Symbol for decals, tote bags,
serving trays, sweatshirts, t-shirts, hats and flying discs under Classes 16, 18, 21, 25
and 28 of the Nice International Classification of Goods and Services. Fredco alleged
that the mark Harvard for t-shirts, polo shirts, sandos, briefs, jackets and slacks was
first used in the Philippines on 2 January 1982 by New York Garments Manufacturing
& Export Co., Inc. (New York Garments), a domestic corporation and Fredcos
predecessor-in-interest. On 24 January 1985, New York Garments filed for trademark
registration of the mark Harvard for goods under Class 25. The application matured
into a registration and a Certificate of Registration was issued on 12 December 1988,
with a 20-year term subject to renewal at the end of the term. The registration was
later assigned to Romeo Chuateco, a member of the family that owned New York
Garments.

Fredco alleged that it was formed and registered with the Securities and Exchange
Commission on 9 November 1995 and had since then handled the manufacture,
promotion and marketing of Harvard clothing articles. Fredco alleged that at the time
of issuance of Registration No. 56561 to Harvard University, New York Garments had
already registered the mark Harvard for goods under Class 25. Fredco alleged that the
registration was cancelled on 30 July 1998 when New York Garments inadvertently
failed to file an affidavit of use/non-use on the fifth anniversary of the registration but
the right to the mark Harvard remained with its predecessor New York Garments and
now with Fredco.

Harvard University, on the other hand, alleged that it is the lawful owner of the name
and mark Harvard in numerous countries worldwide, including the Philippines.
Among the countries where Harvard University has registered its name and mark
Harvard are:

1. Argentina 26. South Korea

2. Benelux 27. Malaysia
4
 3. Brazil 28. Mexico
4. Canada 29. New Zealand
5. Chile 30. Norway
6. China P.R. 31. Peru
7. Colombia 32. Philippines
8. Costa Rica 33. Poland
9. Cyprus 34. Portugal
10. Czech Republic 35. Russia
11. Denmark 36. South Africa
12. Ecuador 37. Switzerland
13. Egypt 38. Singapore
14. Finland 39. Slovak Republic
15. France 40. Spain
16. Great Britain 41. Sweden
17. Germany 42. Taiwan
18. Greece 43. Thailand
19. Hong Kong 44. Turkey
20. India 45. United Arab Emirates
21. Indonesia 46. Uruguay
22. Ireland 47. United States of America
23. Israel 48. Venezuela
24. Italy 49. Zimbabwe
25. Japan 50. European Community 5

The name and mark Harvard was adopted in 1639 as the name of Harvard College of 6

Cambridge, Massachusetts, U.S.A. The name and mark Harvard was allegedly used in
commerce as early as 1872. Harvard University is over 350 years old and is a highly
regarded institution of higher learning in the United States and throughout the world.
Harvard University promotes, uses, and advertises its name Harvard through various
publications, services, and products in foreign countries, including the Philippines.
Harvard University further alleged that the name and the mark have been rated as one
of the most famous brands in the world, valued between US $750,000,000 and US
$1,000,000,000.

Harvard University alleged that in March 2002, it discovered, through its international
trademark watch program, Fredcos website www.harvard-usa.com. The website
advertises and promotes the brand name Harvard Jeans USA without Harvard
Universitys consent. The websites main page shows an oblong logo bearing the mark
Harvard Jeans USA, Established 1936, and Cambridge, Massachusetts. On 20 April
2004, Harvard University filed an administrative complaint against Fredco before the
IPO for trademark infringement and/or unfair competition with damages.

Harvard University alleged that its valid and existing certificates of trademark
registration in the Philippines are:

1. Trademark Registration No. 56561 issued on 25 November 1993 for Harvard

Veritas Shield Design for goods and services in Classes 16, 18, 21, 25 and 28
(decals, tote bags, serving trays, sweatshirts, t-shirts, hats and flying discs) of
the Nice International Classification of Goods and Services;
2. Trademark Registration No. 57526 issued on 24 March 1994 for Harvard
Veritas Shield Symbol for services in Class 41; Trademark Registration No.
56539 issued on 25 November 1998 for Harvard for services in Class 41; and
3. Trademark Registration No. 66677 issued on 8 December 1998 for Harvard
Graphics for goods in Class 9. Harvard University further alleged that it filed
the requisite affidavits of use for the mark Harvard Veritas Shield Symbol with
the IPO.
Further, on 7 May 2003 Harvard
University filed Trademark
Application No. 4-2003-04090
for Harvard Medical
International & Shield Design
for services in Classes 41 and
 44. In 1989, Harvard University
established the Harvard
Trademark Licensing Program,
operated by the Office for
Technology and Trademark
Licensing, to oversee and
manage the worldwide licensing
of the Harvard name and
trademarks for various goods
and services. Harvard University
stated that it never authorized or
licensed any person to use its
name and mark Harvard in
connection with any goods or
services in the Philippines.

In a Decision dated 22 December 2006, Director Estrellita Beltran-Abelardo of the

7

Bureau of Legal Affairs, IPO cancelled Harvard Universitys registration of the mark
Harvard under Class 25, as follows:

WHEREFORE, premises considered, the Petition for Cancellation is

hereby GRANTED. Consequently, Trademark Registration Number
56561 for the trademark HARVARD VE RI TAS SHIELD SYMBOL
issued on November 25, 1993 to PRESIDENT AND FELLOWS OF
HARVARD COLLEGE (HARVARD UNIVERSITY) should be
CANCELLED only with respect to goods falling under Class 25. On the
other hand, considering that the goods of Respondent-Registrant falling
under Classes 16, 18, 21 and 28 are not confusingly similar with the
Petitioners goods, the Respondent-Registrant has acquired vested right
over the same and therefore, should not be cancelled.

Let the filewrapper of the Trademark Registration No. 56561 issued on

November 25, 1993 for the trademark HARVARD VE RI TAS SHIELD
 SYMBOL, subject matter of this case together with a copy of this
Decision be forwarded to the Bureau of Trademarks (BOT) for
appropriate action.

SO ORDERED. 8

Harvard University filed an appeal before the Office of the Director General of the
IPO. In a Decision dated 21 April 2008, the Office of the Director General, IPO
9

reversed the decision of the Bureau of Legal Affairs, IPO.

The Director General ruled that more than the use of the trademark in the Philippines,
the applicant must be the owner of the mark sought to be registered. The Director
General ruled that the right to register a trademark is based on ownership and when
the applicant is not the owner, he has no right to register the mark. The Director
General noted that the mark covered by Harvard Universitys Registration No. 56561
is not only the word Harvard but also the logo, emblem or symbol of Harvard
University. The Director General ruled that Fredco failed to explain how its
predecessor New York Garments came up with the mark Harvard. In addition, there
was no evidence that Fredco or New York Garments was licensed or authorized by
Harvard University to use its name in commerce or for any other use.

The dispositive portion of the decision of the Office of the Director General, IPO
reads:

WHEREFORE, premises considered, the instant appeal is GRANTED.

The appealed decision is hereby REVERSED and SET ASIDE. Let a
copy of this Decision as well as the trademark application and records 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 and the Administrative, Financial and Human Resources
Development Services Bureau, and the library of the Documentation,
 Information and Technology Transfer Bureau be furnished a copy of this
Decision for information, guidance, and records purposes.

SO ORDERED. 10

Fredco filed a petition for review before the Court of Appeals assailing the decision of
the Director General.

The Decision of the Court of Appeals

In its assailed decision, the Court of Appeals affirmed the decision of the Office of the
Director General of the IPO.

The Court of Appeals adopted the findings of the Office of the Director General and
ruled that the latter correctly set aside the cancellation by the Director of the Bureau
of Legal Affairs of Harvard Universitys trademark registration under Class 25. The
Court of Appeals ruled that Harvard University was able to substantiate that it
appropriated and used the marks Harvard and Harvard Veritas Shield Symbol in Class
25 way ahead of Fredco and its predecessor New York Garments. The Court of
Appeals also ruled that the records failed to disclose any explanation for Fredcos use
of the name and mark Harvard and the words USA, Established 1936, and Cambridge,
Massachusetts within an oblong device, US Legend and Europes No. 1 Brand.
Citing Shangri-La International Hotel Management, Ltd. v. Developers Group of
Companies, Inc., the Court of Appeals ruled:
11

One who has imitated the trademark of another cannot bring an action
for infringement, particularly against the true owner of the mark, because
he would be coming to court with unclean hands. Priority is of no avail
to the bad faith plaintiff. Good faith is required in order to ensure that a
second user may not merely take advantage of the goodwill established
by the true owner. 12

The dispositive portion of the decision of the Court of Appeals reads:

 WHEREFORE, premises considered, the petition for review is DENIED.
The Decision dated April 21, 2008 of the Director General of the IPO in
Appeal No. 14-07-09 Inter Partes Case No. 14-2005-00094 is hereby
AFFIRMED.

SO ORDERED. 13

Fredco filed a motion for reconsideration.

In its Resolution promulgated on 8 January 2009, the Court of Appeals denied the
motion for lack of merit.

Hence, this petition before the Court.

The Issue

The issue in this case is whether the Court of Appeals committed a reversible error in
affirming the decision of the Office of the Director General of the IPO.

The Ruling of this Court

The petition has no merit.

There is no dispute that the mark Harvard used by Fredco is the same as the mark
Harvard in the Harvard Veritas Shield Symbol of Harvard University. It is also not
disputed that Harvard University was named Harvard College in 1639 and that then,
as now, Harvard University is located in Cambridge, Massachusetts, U.S.A. It is also
unrefuted that Harvard University has been using the mark Harvard in commerce
since 1872. It is also established that Harvard University has been using the marks
Harvard and Harvard Veritas Shield Symbol for Class 25 goods in the United States
since 1953. Further, there is no dispute that Harvard University has registered the
name and mark Harvard in at least 50 countries.

On the other hand, Fredcos predecessor-in-interest, New York Garments, started using
the mark Harvard in the Philippines only in 1982. New York Garments filed an
application with the Philippine Patent Office in 1985 to register the mark Harvard,
which application was approved in 1988. Fredco insists that the date of actual use in
the Philippines should prevail on the issue of who has the better right to register the
marks.

Under Section 2 of Republic Act No. 166, as amended (R.A. No. 166), before a
14

trademark can be registered, it must have been actually used in commerce for not less
than two months in the Philippines prior to the filing of an application for its
registration. While Harvard University had actual prior use of its marks abroad for a
long time, it did not have actual prior use in the Philippines of the mark Harvard
Veritas Shield Symbol before its application for registration of the mark Harvard with
the then Philippine Patents Office. However, Harvard Universitys registration of the
name Harvard is based on home registration which is allowed under Section 37 of
R.A. No. 166. As pointed out by Harvard University in its Comment:
15

Although Section 2 of the Trademark law (R.A. 166) requires for the
registration of trademark that the applicant thereof must prove that the
same has been actually in use in commerce or services for not less than
two (2) months in the Philippines before the application for registration
is filed, where the trademark sought to be registered has already been
registered in a foreign country that is a member of the Paris Convention,
the requirement of proof of use in the commerce in the Philippines for
the said period is not necessary. An applicant for registration based on
home certificate of registration need not even have used the mark or
trade name in this country.16
Indeed, in its Petition for Cancellation of Registration No. 56561, Fredco alleged that
Harvard Universitys registration is based on home registration for the mark Harvard
Veritas Shield for Class 25.
17

In any event, under Section 239.2 of Republic Act No. 8293 (R.A. No. 8293), [m]arks
18

registered under Republic Act No. 166 shall remain in force but shall be deemed to
have been granted under this Act x x x, which does not require actual prior use of
the mark in the Philippines. Since the mark Harvard Veritas Shield Symbol is now
deemed granted under R.A. No. 8293, any alleged defect arising from the absence of
actual prior use in the Philippines has been cured by Section 239.2. In addition,
19

Fredcos registration was already cancelled on 30 July 1998 when it failed to file the
required affidavit of use/non-use for the fifth anniversary of the marks registration.
Hence, at the time of Fredcos filing of the Petition for Cancellation before the Bureau
of Legal Affairs of the IPO, Fredco was no longer the registrant or presumptive owner
of the mark Harvard.

There are two compelling reasons why Fredcos petition must fail.

First, Fredcos registration of the mark Harvard and its identification of origin as
Cambridge, Massachusetts falsely suggest that Fredco or its goods are connected with
Harvard University, which uses the same mark Harvard and is also located in
Cambridge, Massachusetts. This can easily be gleaned from the following oblong logo
of Fredco that it attaches to its clothing line:

Fredcos registration of the

mark Harvard should not
have been allowed because
Section 4(a) of R.A. No. 166
prohibits the registration of a
mark which may disparage
or falsely suggest a connection with persons, living or dead, institutions, beliefs x x
x. Section 4(a) of R.A. No. 166 provides:

Section 4. Registration of trade-marks, trade-names and service- marks

on the principal register. There is hereby established a register of
trade-mark, trade-names and service-marks which shall be known as the
principal register. The owner of a trade-mark, a 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:

(a) Consists of or comprises immoral, deceptive or scandalous manner,

or matter which may disparage or falsely suggest a connection
with persons, living or dead, institutions, beliefs, or national symbols,
or bring them into contempt or disrepute;

(b) x x x (emphasis supplied)

Fredcos use of the mark Harvard, coupled with its claimed origin in Cambridge,
Massachusetts, obviously suggests a false connection with Harvard University. On
this ground alone, Fredcos registration of the mark Harvard should have been
disallowed.
Indisputably, Fredco does not have any affiliation or connection with Harvard
University, or even with Cambridge, Massachusetts. Fredco or its predecessor New
York Garments was not established in 1936, or in the U.S.A. as indicated by Fredco in
its oblong logo. Fredco offered no explanation to the Court of Appeals or to the IPO
why it used the mark Harvard on its oblong logo with the words Cambridge,
Massachusetts, Established in 1936, and USA. Fredco now claims before this Court
that it used these words to evoke a lifestyle or suggest a desirable aura of petitioners
clothing lines. Fredcos belated justification merely confirms that it sought to connect
or associate its products with Harvard University, riding on the prestige and popularity
of Harvard University, and thus appropriating part of Harvard Universitys goodwill
without the latters consent.
Section 4(a) of R.A. No. 166 is identical to Section 2(a) of the Lanham Act, the
20

trademark law of the United States. These provisions are intended to protect the right
of publicity of famous individuals and institutions from commercial exploitation of
their goodwill by others. What Fredco has done in using the mark Harvard and the
21

words Cambridge, Massachusetts, USA to evoke a desirable aura to its products is

precisely to exploit commercially the goodwill of Harvard University without the
latters consent. This is a clear violation of Section 4(a) of R.A. No. 166. Under
Section 17(c) of R.A. No. 166, such violation is a ground for cancellation of Fredcos
22

registration of the mark Harvard because the registration was obtained in violation of
Section 4 of R.A. No. 166.
Second, the Philippines and the United States of America are both signatories to the
Paris Convention for the Protection of Industrial Property (Paris Convention). The
Philippines became a signatory to the Paris Convention on 27 September 1965.
Articles 6bis and 8 of the Paris Convention state:

ARTICLE 6bis

(i) The countries of the Union undertake either administratively 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, imitation or translation, liable to create
confusion or a mark considered by the competent authority of the
country as being already the mark of a person entitled to the benefits
of the present 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.

ARTICLE 8

A trade name shall be protected in all the countries of the Union without
the obligation of filing or registration, whether or not it forms part of a
trademark. (Emphasis supplied)

Thus, this Court has ruled that the Philippines is obligated to assure nationals of
countries of the Paris Convention that they are afforded an effective protection against
violation of their intellectual property rights in the Philippines in the same way that
their own countries are obligated to accord similar protection to Philippine nationals. 23

Article 8 of the Paris Convention has been incorporated in Section 37 of R.A. No.
166, as follows:

Section 37. Rights of foreign registrants. Persons who are nationals of,
domiciled in, or have a bona fide or effective business or commercial
establishment in any foreign country, which is a party to any
international convention or treaty relating to marks or trade-names, or
the repression of unfair competition to which the Philippines may be a
party, shall be entitled to the benefits and subject to the provisions of this
Act to the extent and under the conditions essential to give effect to any
such convention and treaties so long as the Philippines shall continue to
be a party thereto, except as provided in the following paragraphs of this
section.
xxxx

Trade-names of persons described in the first paragraph of this

section shall be protected without the obligation of filing or
registration whether or not they form parts of marks. 24

x x x x (Emphasis supplied)

Thus, under Philippine law, a trade name of a national of a State that is a party to the
Paris Convention, whether or not the trade name forms part of a trademark, is
protected without the obligation of filing or registration.
Harvard is the trade name of the world famous Harvard University, and it is also a
trademark of Harvard University. Under Article 8 of the Paris Convention, as well as
Section 37 of R.A. No. 166, Harvard University is entitled to protection in the
Philippines of its trade name Harvard even without registration of such trade name in
the Philippines. This means that no educational entity in the Philippines can use the
trade name Harvard without the consent of Harvard University. Likewise, no entity in
the Philippines can claim, expressly or impliedly through the use of the name and
mark Harvard, that its products or services are authorized, approved, or licensed by, or
sourced from, Harvard University without the latters consent.

Article 6bis of the Paris Convention has been administratively implemented in the
Philippines through two directives of the then Ministry (now Department) of Trade,
which directives were upheld by this Court in several cases. On 20 November 1980,
25

then Minister of Trade Secretary Luis Villafuerte issued a Memorandum directing the
Director of Patents to reject, pursuant to the Paris Convention, all pending
applications for Philippine registration of signature and other world-famous
trademarks by applicants other than their original owners. The Memorandum states:
26

Pursuant to the Paris Convention for the Protection of Industrial Property

to which the Philippines is a signatory, you are hereby directed to reject
all pending applications for Philippine registration of signature and other
world-famous trademarks by applicants other than its original owners or
users.

The conflicting claims over internationally known trademarks involve

such name brands as Lacoste, Jordache, Vanderbilt, Sasson, Fila, Pierre
Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein,
Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.

It is further directed that, in cases where warranted, Philippine registrants

of such trademarks should be asked to surrender their certificates of
registration, if any, to avoid suits for damages and other legal action by
the trademarks foreign or local owners or original users.

You are also required to submit to the undersigned a progress report on

the matter.

For immediate compliance. 27

In a Memorandum dated 25 October 1983, then Minister of Trade and Industry

Roberto Ongpin affirmed the earlier Memorandum of Minister Villafuerte. Minister
Ongpin directed the Director of Patents to implement measures necessary to comply
with the Philippines obligations under the Paris Convention, thus:

1. Whether the trademark under consideration is well-known

in the Philippines or is a mark already belonging to a
person entitled to the benefits of the CONVENTION, this
should be established, pursuant to Philippine Patent Office
procedures in inter partes and ex parte cases, according
to any of the following criteria or any combination
thereof:

(a) a declaration by the Minister of Trade and Industry that the trademark
being considered is already well-known in the Philippines such that
permission for its use by other than its original owner will constitute a
reproduction, imitation, translation or other infringement;

(b) that the trademark is used in commerce internationally, supported by

proof that goods bearing the trademark are sold on an international scale,
advertisements, the establishment of factories, sales offices,
distributorships, and the like, in different countries, including volume or
other measure of international trade and commerce;

(c) that the trademark is duly registered in the industrial property

office(s) of another country or countries, taking into consideration
the dates of such registration;

(d) that the trademark has been long established and obtained goodwill
and general international consumer recognition as belonging to one
owner or source;

(e) that the trademark actually belongs to a party claiming ownership and
has the right to registration under the provisions of the aforestated
PARIS CONVENTION.

2. The word trademark, as used in this MEMORANDUM, shall

include tradenames, service marks, logos, signs, emblems, insignia
 or other similar devices used for identification and recognition by
consumers.
3. The Philippine Patent Office shall refuse all applications for, or cancel
the registration of, trademarks which constitute a reproduction,
translation or imitation of a trademark owned by a person, natural or
corporate, who is a citizen of a country signatory to the PARIS
CONVENTION FOR THE PROTECTION OF INDUSTRIAL
PROPERTY.

x x x x (Emphasis supplied)
28

In Mirpuri, the Court ruled that the essential requirement under Article 6bis of the
Paris Convention is that the trademark to be protected must be well-known in the
country where protection is sought. The Court declared that the power to determine
29

whether a trademark is well-known lies in the competent authority of the country of

registration or use. The Court then stated that the competent authority would either
30

be the registering authority if it has the power to decide this, or the courts of the
country in question if the issue comes before the courts.31

To be protected under the two directives of the Ministry of Trade, an internationally

well-known mark need not be registered or used in the Philippines. All that is
32

required is that the mark is well-known internationally and in the Philippines for
identical or similar goods, whether or not the mark is registered or used in the
Philippines. The Court ruled in Sehwani, Incorporated v. In-N-Out Burger, Inc.: 33

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 well-known 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

(iii) that the mark is well known by the public at large in the Member
State. (Italics in the original decision; boldface supplied)
34

Indeed, Section 123.1(e) of R.A. No. 8293 now categorically states that a mark which
is considered by the competent authority of the Philippines to be well-known
internationally and in the Philippines, whether or not it is registered here, cannot
be registered by another in the Philippines. Section 123.1(e) does not require that the
well-known mark be used in commerce in the Philippines but only that it be well-
known in the Philippines. Moreover, Rule 102 of the Rules and Regulations on
Trademarks, Service Marks, Trade Names and Marked or Stamped Containers, which
implement R.A. No. 8293, provides:

Rule 102. Criteria for determining whether a mark is well-known. In

determining whether a mark is well-known, the following criteria or any
combination thereof may be taken into account:

(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 advertising or publicity and the presentation, at fairs
or exhibitions, of the goods and/or services to which the mark applies;

(b) the market share, in the Philippines and in other countries, of the
goods and/or services to which the mark applies;
 (c) the degree of the inherent or acquired distinction of the mark;
(d) the quality-image or reputation acquired by the mark;

(e) the extent to which the mark has been registered in the world;

(f) the exclusivity of registration attained by the mark in the world;

(g) the extent to which the mark has been used in the world;

(h) the exclusivity of use attained by the mark in the world;

(i) the commercial value attributed to the mark in the world;

(j) the record of successful protection of the rights in the mark;

(k) the outcome of litigations dealing with the issue of whether the mark
is a well-known mark; and

(l) the presence or absence of identical or similar marks validly

registered for or used on identical or similar goods or services and owned
by persons other than the person claiming that his mark is a well-known
mark. (Emphasis supplied)

Since any combination of the foregoing criteria is sufficient to determine that a mark
is well-known, it is clearly not necessary that the mark be used in commerce in the
Philippines. Thus, while under the territoriality principle a mark must be used in
commerce in the Philippines to be entitled to protection, internationally well-known
marks are the exceptions to this rule.
In the assailed Decision of the Office of the Director General dated 21 April 2008, the
Director General found that:

Traced to its roots or origin, HARVARD is not an ordinary word. It

refers to no other than Harvard University, a recognized and respected
institution of higher learning located in Cambridge, Massachusetts,
U.S.A. Initially referred to simply as the new college, the institution was
named Harvard College on 13 March 1639, after its first principal
donor, a young clergyman named John Harvard. A graduate of
Emmanuel College, Cambridge in England, John Harvard bequeathed
about four hundred books in his will to form the basis of the college
library collection, along with half his personal wealth worth several
hundred pounds. The earliest known official reference to Harvard as a
university rather than college occurred in the new Massachusetts
Constitution of 1780.

Records also show that the first use of the name HARVARD was in 1638
for educational services, policy courses of instructions and training at
the university level. It has a Charter. Its first commercial use of the name
or mark HARVARD for Class 25 was on 31 December 1953 covered by
UPTON Reg. No. 2,119,339 and 2,101,295. Assuming in arguendo, that
the Appellate may have used the mark HARVARD in the Philippines
ahead of the Appellant, it still cannot be denied that the Appellants use
thereof was decades, even centuries, ahead of the Appellees. More
importantly, the name HARVARD was the name of a person whose
deeds were considered to be a cornerstone of the university. The
Appellants logos, emblems or symbols are owned by Harvard
University. The name HARVARD and the logos, emblems or symbols
are endemic and cannot be separated from the institution. 35

Finally, in its assailed Decision, the Court of Appeals ruled:

Records show that Harvard University is the oldest and one of the
foremost educational institutions in the United States, it being
established in 1636. It is located primarily in Cambridge, Massachusetts
 and was named after John Harvard, a puritan minister who left to the
college his books and half of his estate.

The mark Harvard College was first used in commerce in the United
States in 1638 for educational services, specifically, providing courses of
instruction and training at the university level (Class 41). Its application
for registration with the United States Patent and Trademark Office was
filed on September 20, 2000 and it was registered on October 16, 2001.
The marks Harvard and Harvard Ve ri tas Shield Symbol were first used
in commerce in the the United States on December 31, 1953 for athletic
uniforms, boxer shorts, briefs, caps, coats, leather coats, sports coats,
gym shorts, infant jackets, leather jackets, night shirts, shirts, socks,
sweat pants, sweatshirts, sweaters and underwear (Class 25). The
applications for registration with the USPTO were filed on September 9,
1996, the mark Harvard was registered on December 9, 1997 and the
mark Harvard Ve ri tas Shield Symbol was registered on September 30,
1997. 36

We also note that in a Decision dated 18 December 2008 involving a separate case
37

between Harvard University and Streetward International, Inc., the Bureau of Legal
38

Affairs of the IPO ruled that the mark Harvard is a well-known mark. This Decision,
which cites among others the numerous trademark registrations of Harvard University
in various countries, has become final and executory.

There is no question then, and this Court so declares, that Harvard is a well-known
name and mark not only in the United States but also internationally, including the
Philippines. The mark Harvard is rated as one of the most famous marks in the world.
It has been registered in at least 50 countries. It has been used and promoted
extensively in numerous publications worldwide. It has established a considerable
goodwill worldwide since the founding of Harvard University more than 350 years
ago. It is easily recognizable as the trade name and mark of Harvard University of
Cambridge, Massachusetts, U.S.A., internationally known as one of the leading
educational institutions in the world. As such, even before Harvard University applied
for registration of the mark Harvard in the Philippines, the mark was already protected
under Article 6bis and Article 8 of the Paris Convention. Again, even without
applying the Paris Convention, Harvard University can invoke Section 4(a) of R.A.
No. 166 which prohibits the registration of a mark which may disparage or falsely
suggest a connection with persons, living or dead, institutions, beliefs x x x.

WHEREFORE, we DENY the petition. We AFFIRM the 24 October 2008 Decision

and 8 January 2009 Resolution of the Court of Appeals in CA-G.R. SP No. 103394.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

ANTONIO EDUARDO B. NACHURA

Associate Justice
DIOSDADO M. PERALTA ROBERTO A. ABAD

Associate Justice Associate Justice

JOSE C. MENDOZA

Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.
 ANTONIO T. CARPIO

Associate Justice

Chairperson

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons
Attestation, I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.

RENATO C. CORONA

Chief Justice

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 100098 December 29, 1995

EMERALD GARMENT MANUFACTURING CORPORATION, petitioner,

vs.
HON. COURT OF APPEALS, BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY
TRANSFER and H.D. LEE COMPANY, INC., respondents.

KAPUNAN, J.:

In this petition for review on certiorari under Rule 45 of the Revised Rules of Court, Emerald
Garment Manufacturing Corporation seeks to annul the decision of the Court of Appeals dated 29
November 1990 in CA-G.R. SP No. 15266 declaring petitioner's trademark to be confusingly similar
to that of private respondent and the resolution dated 17 May 1991 denying petitioner's motion for
reconsideration.

The record reveals the following antecedent facts:

On 18 September 1981, private respondent H.D. Lee Co., Inc., a foreign corporation organized
under the laws of Delaware, U.S.A., filed with the Bureau of Patents, Trademarks & Technology
Transfer (BPTTT) a Petition for Cancellation of Registration No. SR 5054 (Supplemental Register)
for the trademark "STYLISTIC MR. LEE" used on skirts, jeans, blouses, socks, briefs, jackets,
jogging suits, dresses, shorts, shirts and lingerie under Class 25, issued on 27 October 1980 in the
name of petitioner Emerald Garment Manufacturing Corporation, a domestic corporation organized
and existing under Philippine laws. The petition was docketed as Inter Partes Case No. 1558. 1

Private respondent, invoking Sec. 37 of R.A. No. 166 (Trademark Law) and Art. VIII of the Paris
Convention for the Protection of Industrial Property, averred that petitioner's trademark "so closely
resembled its own trademark, 'LEE' as previously registered and used in the Philippines, and not
abandoned, as to be likely, when applied to or used in connection with petitioner's goods, to cause
confusion, mistake and deception on the part of the purchasing public as to the origin of the goods." 2

In its answer dated 23 March 1982, petitioner contended that its trademark was entirely and
unmistakably different from that of private respondent and that its certificate of registration was
legally and validly granted. 3

On 20 February 1984, petitioner caused the publication of its application for registration of the
trademark "STYLISTIC MR. LEE" in the Principal Register." 4

On 27 July 1984, private respondent filed a notice of opposition to petitioner's application for
registration also on grounds that petitioner's trademark was confusingly similar to its "LEE"
trademark. 5 The case was docketed as Inter Partes Case No. 1860.

On 21 June 1985, the Director of Patents, on motion filed by private respondent dated 15 May 1985,
issued an order consolidating Inter Partes Cases Nos. 1558 and 1860 on grounds that a common
question of law was involved. 6

On 19 July 1988, the Director of Patents rendered a decision granting private respondent's petition
for cancellation and opposition to registration.

The Director of Patents found private respondent to be the prior registrant of the trademark "LEE" in
the Philippines and that it had been using said mark in the Philippines. 7
Moreover, the Director of Patents, using the test of dominancy, declared that petitioner's trademark
was confusingly similar to private respondent's mark because "it is the word 'Lee' which draws the
attention of the buyer and leads him to conclude that the goods originated from the same
manufacturer. It is undeniably the dominant feature of the mark." 8

On 3 August 1988, petitioner appealed to the Court of Appeals and on 8 August 1988, it filed with the
BPTTT a Motion to Stay Execution of the 19 July 1988 decision of the Director of Patents on
grounds that the same would cause it great and irreparable damage and injury. Private respondent
submitted its opposition on 22 August 1988. 9

On 23 September 1988, the BPTTT issued Resolution No. 88-33 granting petitioner's motion to stay
execution subject to the following terms and conditions:

1. That under this resolution, Respondent-Registrant is authorized only to dispose of

its current stock using the mark "STYLISTIC MR. LEE";

2. That Respondent-Registrant is strictly prohibited from further production,

regardless of mode and source, of the mark in question (STYLISTIC MR. LEE) in
addition to its current stock;

3. That this relief Order shall automatically cease upon resolution of the Appeal by
the Court of Appeals and, if the Respondent's appeal loses, all goods bearing the
mark "STYLISTIC MR. LEE" shall be removed from the market, otherwise such
goods shall be seized in accordance with the law.

SO ORDERED. 10

On 29 November 1990, the Court of Appeals promulgated its decision affirming the decision of the
Director of Patents dated 19 July 1988 in all respects. 11

In said decision the Court of Appeals expounded, thus:

xxx xxx xxx

Whether or not a trademark causes confusion and is likely to deceive the public is a
question of fact which is to be resolved by applying the "test of dominancy", meaning,
if the competing trademark contains the main or essential or dominant features of
another by reason of which confusion and deception are likely to result, then
infringement takes place; that duplication or imitation is not necessary, a similarity in
the dominant features of the trademark would be sufficient.

The word "LEE" is the most prominent and distinctive feature of the appellant's
trademark and all of the appellee's "LEE" trademarks. It is the mark which draws the
attention of the buyer and leads him to conclude that the goods originated from the
same manufacturer. While it is true that there are other words such as "STYLISTIC",
printed in the appellant's label, such word is printed in such small letters over the
word "LEE" that it is not conspicuous enough to draw the attention of ordinary buyers
whereas the word "LEE" is printed across the label in big, bold letters and of the
same color, style, type and size of lettering as that of the trademark of the appellee.
 The alleged difference is too insubstantial to be noticeable. Even
granting arguendo that the word "STYLISTIC" is conspicuous enough to draw
attention, the goods may easily be mistaken for just another variation or line of
garments under the ap appelle's "LEE" trademarks in view of the fact that the
appellee has registered trademarks which use other words in addition to the principal
mark "LEE" such as "LEE RIDERS", "LEESURES" and "LEE LEENS". The likelihood
of confusion is further made more probable by the fact that both parties are engaged
in the same line of business. It is well to reiterate that the determinative factor in
ascertaining whether or not the marks are confusingly similar to each other is not
whether the challenged mark would actually cause confusion or deception of the
purchasers but whether the use of such mark would likely cause confusion or
mistake on the part of the buying public.

xxx xxx xxx

The appellee has sufficiently established its right to prior use and registration of the
trademark "LEE" in the Philippines and is thus entitled to protection from any
infringement upon the same. It is thus axiomatic that one who has identified a
peculiar symbol or mark with his goods thereby acquires a property right in such
symbol or mark, and if another infringes the trademark, he thereby invokes this
property right.

The merchandise or goods being sold by the parties are not that expensive as
alleged to be by the appellant and are quite ordinary commodities purchased by the
average person and at times, by the ignorant and the unlettered. Ordinary
purchasers will not as a rule examine the small letterings printed on the label but will
simply be guided by the presence of the striking mark "LEE". Whatever difference
there may be will pale in insignificance in the face of an evident similarity in the
dominant features and overall appearance of the labels of the parties. 12

xxx xxx xxx

On 19 December 1990, petitioner filed a motion for reconsideration of the above-mentioned decision
of the Court of Appeals.

Private respondent opposed said motion on 8 January 1991 on grounds that it involved an
impermissible change of theory on appeal. Petitioner allegedly raised entirely new and unrelated
arguments and defenses not previously raised in the proceedings below such as laches and a claim
that private respondent appropriated the style and appearance of petitioner's trademark when it
registered its "LEE" mark under Registration No. 44220. 13

On 17 May 1991, the Court of Appeals issued a resolution rejecting petitioner's motion for
reconsideration and ruled thus:

xxx xxx xxx

A defense not raised in the trial court cannot be raised on appeal for the first time. An
issue raised for the first time on appeal and not raised timely in the proceedings in
the lower court is barred by estoppel.
 The object of requiring the parties to present all questions and issues to the lower
court before they can be presented to this Court is to have the lower court rule upon
them, so that this Court on appeal may determine whether or not such ruling was
erroneous. The purpose is also in furtherance of justice to require the party to first
present the question he contends for in the lower court so that the other party may
not be taken by surprise and may present evidence to properly meet the issues
raised.

Moreover, for a question to be raised on appeal, the same must also be within the
issues raised by the parties in their pleadings. Consequently, when a party
deliberately adopts a certain theory, and the case is tried and decided based upon
such theory presented in the court below, he will not be permitted to change his
theory on appeal. To permit him to do so would be unfair to the adverse party. A
question raised for the first time on appeal, there having opportunity to raise them in
the court of origin constitutes a change of theory which is not permissible on appeal.

In the instant case, appellant's main defense pleaded in its answer dated March 23,
1982 was that there was "no confusing similarity between the competing trademark
involved. On appeal, the appellant raised a single issue, to wit:

The only issue involved in this case is whether or not respondent-

registrant's trademark "STYLISTIC MR. LEE" is confusingly similar
with the petitioner's trademarks "LEE or LEERIDERS, LEE-LEENS
and LEE-SURES."

Appellant's main argument in this motion for reconsideration on the other hand is that
the appellee is estopped by laches from asserting its right to its trademark. Appellant
claims although belatedly that appellee went to court with "unclean hands" by
changing the appearance of its trademark to make it identical to the appellant's
trademark.

Neither defenses were raised by the appellant in the proceedings before the Bureau
of Patents. Appellant cannot raise them now for the first time on appeal, let alone on
a mere motion for reconsideration of the decision of this Court dismissing the
appellant's appeal.

While there may be instances and situations justifying relaxation of this rule, the
circumstance of the instant case, equity would be better served by applying the
settled rule it appearing that appellant has not given any reason at all as to why the
defenses raised in its motion for reconsideration was not invoked earlier. 14

xxx xxx xxx

Twice rebuffed, petitioner presents its case before this Court on the following assignment of errors:

I. THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE

RESPONDENT CAUSED THE ISSUANCE OF A FOURTH "LEE" TRADEMARK
IMITATING THAT OF THE PETITIONER'S ON MAY 5, 1989 OR MORE THAN
 EIGHT MONTHS AFTER THE BUREAU OF PATENT'S DECISION DATED JULY 19,
1988.

II. THE COURT OF APPEALS ERRED IN RULING THAT THE DEFENSE OF

ESTOPPEL BY LACHES MUST BE RAISED IN THE PROCEEDINGS BEFORE THE
BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY TRANSFER.

III. THE COURT OF APPEALS ERRED WHEN IT CONSIDERED PRIVATE

RESPONDENT'S PRIOR REGISTRATION OF ITS TRADEMARK AND
DISREGARDED THE FACT THAT PRIVATE RESPONDENT HAD FAILED TO
PROVE COMMERCIAL
USE THEREOF BEFORE FILING OF APPLICATION FOR REGISTRATION. 15

In addition, petitioner reiterates the issues it raised in the Court of Appeals:

I. THE ISSUE INVOLVED IN THIS CASE IS WHETHER OR NOT PETITIONER'S

TRADEMARK SYTLISTIC MR. LEE, IS CONFUSINGLY SIMILAR WITH THE
PRIVATE RESPONDENT'S TRADEMARK LEE OR LEE-RIDER, LEE-LEENS AND
LEE-SURES.

II. PETITIONER'S EVIDENCES ARE CLEAR AND SUFFICIENT TO SHOW THAT IT

IS THE PRIOR USER AND ITS TRADEMARK IS DIFFERENT FROM THAT OF THE
PRIVATE RESPONDENT.

III. PETITIONER'S TRADEMARK IS ENTIRELY DIFFERENT FROM THE PRIVATE

RESPONDENT'S AND THE REGISTRATION OF ITS TRADEMARK IS PRIMA
FACIE EVIDENCE OF GOOD FAITH.

IV. PETITIONER'S "STYLISTIC MR. LEE" TRADEMARK CANNOT BE CONFUSED

WITH PRIVATE RESPONDENT'S LEE TRADEMARK. 16

Petitioner contends that private respondent is estopped from instituting an action for infringement
before the BPTTT under the equitable principle of laches pursuant to Sec. 9-A of R.A. No. 166,
otherwise known as the Law on Trade-marks, Trade-names and Unfair Competition:

Sec. 9-A. Equitable principles to govern proceedings. In opposition proceedings

and in all other inter partes proceedings in the patent office under this act, equitable
principles of laches, estoppel, and acquiescence, where applicable, may be
considered and applied.

Petitioner alleges that it has been using its trademark "STYLISTIC MR. LEE" since 1 May 1975, yet,
it was only on 18 September 1981 that private respondent filed a petition for cancellation of
petitioner's certificate of registration for the said trademark. Similarly, private respondent's notice of
opposition to petitioner's application for registration in the principal register was belatedly filed on 27
July 1984. 17

Private respondent counters by maintaining that petitioner was barred from raising new issues on
appeal, the only contention in the proceedings below being the presence or absence of confusing
similarity between the two trademarks in question. 18
We reject petitioner's contention.

Petitioner's trademark is registered in the supplemental register. The Trademark Law (R.A. No. 166)
provides that "marks and tradenames for the supplemental register shall not be published for or be
subject to opposition, but shall be published on registration in the Official Gazette." 19 The reckoning
point, therefore, should not be 1 May 1975, the date of alleged use by petitioner of its assailed trademark
but 27 October 1980, 20 the date the certificate of registration SR No. 5054 was published in the Official
Gazette and issued to petitioner.

It was only on the date of publication and issuance of the registration certificate that private
respondent may be considered "officially" put on notice that petitioner has appropriated or is using
said mark, which, after all, is the function and purpose of registration in the supplemental
register. 21 The record is bereft of evidence that private respondent was aware of petitioner's trademark
before the date of said publication and issuance. Hence, when private respondent instituted cancellation
proceedings on 18 September 1981, less than a year had passed.

Corollarily, private respondent could hardly be accused of inexcusable delay in filing its notice of
opposition to petitioner's application for registration in the principal register since said application
was published only on 20 February 1984. 22 From the time of publication to the time of filing the
opposition on 27 July 1984 barely five (5) months had elapsed. To be barred from bringing suit on
grounds of estoppel and laches, the delay must be
lengthy. 23

More crucial is the issue of confusing similarity between the two trademarks. Petitioner vehemently
contends that its trademark "STYLISTIC MR. LEE" is entirely different from and not confusingly
similar to private respondent's "LEE" trademark.

Private respondent maintains otherwise. It asserts that petitioner's trademark tends to mislead and
confuse the public and thus constitutes an infringement of its own mark, since the dominant feature
therein is the word "LEE."

The pertinent provision of R.A. No. 166 (Trademark Law) states thus:

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 imitable 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.

Practical application, however, of the aforesaid provision is easier said than done. In the history of
trademark cases in the Philippines, particularly in ascertaining whether one trademark is confusingly
similar to or is a colorable imitation of another, no set rules can be deduced. Each case must be
decided on its own merits.
In Esso Standard Eastern, Inc. v. Court of Appeals, 24 we held:

. . . But likelihood of confusion is a relative concept; to be determined only according

to the particular, and sometimes peculiar, circumstances of each case. It is
unquestionably true that, as stated in Coburn vs. Puritan Mills, Inc.: "In trademark
cases, even more than in other litigation, precedent must be studied in the light of the
facts of the particular case."

xxx xxx xxx

Likewise, it has been observed that:

In determining whether a particular name or mark is a "colorable imitation" of

another, no all-embracing rule seems possible in view of the great number of factors
which must necessarily be considered in resolving this question of fact, such as the
class of product or business to which the article belongs; the product's quality,
quantity, or size, including its wrapper or container; the dominant color, style, size,
form, meaning of letters, words, designs and emblems used; the nature of the
package, wrapper or container; the character of the product's purchasers; location of
the business; the likelihood of deception or the mark or name's tendency to confuse;
etc. 25

Proceeding to the task at hand, the essential element of infringement is colorable imitation. This term
has been defined as "such a close or ingenious imitation as to be calculated to deceive ordinary
purchasers, or such resemblance of the infringing mark to the original as to deceive an ordinary
purchaser giving such attention as a purchaser usually gives, and to cause him to purchase the one
supposing it to be the other." 26

Colorable imitation does not mean such similitude as amounts to identity. Nor does it
require that all the details be literally copied. Colorable imitation refers to such
similarity in form, content, words, sound, meaning, special arrangement, or general
appearance of the trademark or tradename with that of the other mark or tradename
in their over-all presentation or in their essential, substantive and distinctive parts as
would likely mislead or confuse persons in the ordinary course of purchasing the
genuine article. 27

In determining whether colorable imitation exists, jurisprudence has developed two kinds of tests
the Dominancy Test applied in Asia Brewery, Inc. v. Court of Appeals 28 and other cases 29 and the
Holistic Test developed in Del Monte Corporation v. Court of Appeals 30 and its proponent cases. 31

As its title implies, the test of dominancy focuses on the similarity of the prevalent features of the
competing trademarks which might cause confusion or deception and thus constitutes infringement.

xxx xxx xxx

. . . 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. v. 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; . . .) 32

xxx xxx xxx

On the other side of the spectrum, the holistic test mandates that the entirety of the marks in
question must be considered in determining confusing similarity.

xxx xxx xxx

In determining whether the trademarks are confusingly similar, a comparison of the

words is not the only determinant factor. The trademarks in their entirety as they
appear in their respective labels or hang tags must also be considered in relation to
the goods to which they are attached. The discerning eye of the observer must focus
not only on the predominant words but also on the other features appearing in both
labels in order that he may draw his conclusion whether one is confusingly similar to
the other. 33

xxx xxx xxx

Applying the foregoing tenets to the present controversy and taking into account the factual
circumstances of this case, we considered the trademarks involved as a whole and rule that
petitioner's "STYLISTIC MR. LEE" is not confusingly similar to private respondent's "LEE" trademark.

Petitioner's trademark is the whole "STYLISTIC MR. LEE." Although on its label the word "LEE" is
prominent, the trademark should be considered as a whole and not piecemeal. The dissimilarities
between the two marks become conspicuous, noticeable and substantial enough to matter
especially in the light of the following variables that must be factored in.

First, the products involved in the case at bar are, in the main, various kinds of jeans. These are not
your ordinary household items like catsup, soysauce or soap which are of minimal cost. Maong
pants or jeans are not inexpensive. Accordingly, the casual buyer is predisposed to be more cautious
and discriminating in and would prefer to mull over his purchase. Confusion and deception, then, is
less likely. In Del Monte Corporation v. Court of Appeals, 34 we noted that:

. . . Among these, what essentially determines the attitudes of the purchaser,

specifically his inclination to be cautious, is the cost of the goods. To be sure, a
person who buys a box of candies will not exercise as much care as one who buys
an expensive watch. As a general rule, an ordinary buyer does not exercise as much
prudence in buying an article for which he pays a few centavos as he does in
purchasing a more valuable thing. Expensive and valuable items are normally bought
only after deliberate, comparative and analytical investigation. But mass products,
low priced articles in wide use, and matters of everyday purchase requiring frequent
replacement are bought by the casual consumer without great
care. . . .
Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does not
ask the sales clerk for generic jeans but for, say, a Levis, Guess, Wrangler or even an Armani. He is,
therefore, more or less knowledgeable and familiar with his preference and will not easily be
distracted.

Finally, in line with the foregoing discussions, more credit should be given to the "ordinary
purchaser." Cast in this particular controversy, the ordinary purchaser is not the "completely unwary
consumer" but is the "ordinarily intelligent buyer" considering the type of product involved.

The definition laid down in Dy Buncio v. Tan Tiao Bok 35 is better suited to the present case. There, the
"ordinary purchaser" was defined as one "accustomed to buy, and therefore to some extent familiar with,
the goods in question. The test of fraudulent simulation is to be found in the likelihood of the deception of
some persons in some measure acquainted with an established design and desirous of purchasing the
commodity with which that design has been associated. The test is not found in the deception, or the
possibility of deception, of the person who knows nothing about the design which has been counterfeited,
and who must be indifferent between that and the other. The simulation, in order to be objectionable, must
be such as appears likely to mislead the ordinary intelligent buyer who has a need to supply and is
familiar with the article that he seeks to purchase."

There is no cause for the Court of Appeal's apprehension that petitioner's products might be
mistaken as "another variation or line of garments under private respondent's 'LEE' trademark". 36 As
one would readily observe, private respondent's variation follows a standard format "LEERIDERS,"
"LEESURES" and "LEELEENS." It is, therefore, improbable that the public would immediately and
naturally conclude that petitioner's "STYLISTIC MR. LEE" is but another variation under private
respondent's "LEE" mark.

As we have previously intimated the issue of confusing similarity between trademarks is resolved by
considering the distinct characteristics of each case. In the present controversy, taking into account
these unique factors, we conclude that the similarities in the trademarks in question are not sufficient
as to likely cause deception and confusion tantamount to infringement.

Another way of resolving the conflict is to consider the marks involved from the point of view of what
marks are registrable pursuant to Sec. 4 of R.A. No. 166, particularly paragraph 4 (e):

CHAPTER II-A. The Principal Register

(Inserted by Sec. 2, Rep. Act No. 638.)

Sec. 4. Registration of trade-marks, trade-names and service-marks on the principal

register. There is hereby established a register of trade-marks, trade-names and
service-marks which shall be known as the principal register. The owner of a 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 is primarily geographically descriptive or
 deceptively misdescriptive of them, or is primarily merely a surname; (Emphasis
ours.)

xxx xxx xxx

"LEE" is primarily a surname. Private respondent cannot, therefore, acquire exclusive ownership
over and singular use of said term.

. . . It has been held that a personal name or surname may not be monopolized as a
trademark or tradename as against others of the same name or surname. For in the
absence of contract, fraud, or estoppel, any man may use his name or surname in all
legitimate ways. Thus, "Wellington" is a surname, and its first user has no cause of
action against the junior user of "Wellington" as it is incapable of exclusive
appropriation. 37

In addition to the foregoing, we are constrained to agree with petitioner's contention that private
respondent failed to prove prior actual commercial use of its "LEE" trademark in the Philippines
before filing its application for registration with the BPTTT and hence, has not acquired ownership
over said mark.

Actual use in commerce in the Philippines is an essential prerequisite for the acquisition of
ownership over a trademark pursuant to Sec. 2 and 2-A of the Philippine Trademark Law (R.A. No.
166) which explicitly provides that:

CHAPTER II. Registration of Marks and Trade-names.

Sec. 2. What are registrable. Trade-marks, trade-names, and service marks

owned by persons, corporations, partnerships or associations domiciled in the
Philippines and by persons, corporations, partnerships, or associations domiciled in
any foreign country may be registered in accordance with the provisions of this
act: Provided, That said trade-marks, trade-names, or service marks are actually in
use in commerce and services not less than two months in the Philippines before the
time the applications for registration are filed: And Provided, further, That the country
of which the applicant for registration is a citizen grants by law substantially similar
privileges to citizens of the Philippines, and such fact is officially certified, with a
certified true copy of the foreign law translated into the English language, by the
government of the foreign country to the Government of the Republic of the
Philippines. (As amended.) (Emphasis ours.)

Sec. 2-A. Ownership of trade-marks, trade-names and service-marks; how acquired.

Anyone who lawfully produces or deals in merchandise of any kind or who
engages in lawful business, or who renders any lawful service in commerce, by
actual use hereof in manufacture or trade, in business, and in the service rendered;
may appropriate to his exclusive use a trade-mark, a trade-name, or a service-mark
not so appropriated by another, to distinguish his merchandise, business or services
from others. The ownership or possession of trade-mark, trade-name, service-mark,
heretofore or hereafter appropriated, as in this section provided, shall be recognized
and protected in the same manner and to the same extent as are other property
rights to the law. (As amended.) (Emphasis ours.)
The provisions of the 1965 Paris Convention for the Protection of Industrial Property 38 relied upon by
private respondent and Sec. 21-A of the Trademark Law (R.A. No. 166) 39 were sufficiently expounded
upon and qualified in the recent case of Philip Morris, Inc. v. Court of Appeals: 40

xxx xxx xxx

Following universal acquiescence and comity, our municipal law on trademarks

regarding the requirement of actual use in the Philippines must subordinate an
international agreement inasmuch as the apparent clash is being decided by a
municipal tribunal (Mortisen vs. Peters, Great Britain, High Court of Judiciary of
Scotland, 1906, 8 Sessions, 93; Paras, International Law and World Organization,
1971 Ed., p. 20). Withal, the fact that international law has been made part of the law
of the land does not by any means imply the primacy of international law over
national law in the municipal sphere. Under the doctrine of incorporation as applied in
most countries, rules of international law are given a standing equal, not superior, to
national legislative enactments.

xxx xxx xxx

In other words, (a foreign corporation) may have the capacity to sue for infringement
irrespective of lack of business activity in the Philippines on account of Section 21-A
of the Trademark Law but the question of whether they have an exclusive right over
their symbol as to justify issuance of the controversial writ will depend on actual use
of their trademarks in the Philippines in line with Sections 2 and 2-A of the same law.
It is thus incongruous for petitioners to claim that when a foreign corporation not
licensed to do business in the Philippines files a complaint for infringement, the entity
need not be actually using its trademark in commerce in the Philippines. Such a
foreign corporation may have the personality to file a suit for infringement but it may
not necessarily be entitled to protection due to absence of actual use of the emblem
in the local market.

xxx xxx xxx

Undisputably, private respondent is the senior registrant, having obtained several registration
certificates for its various trademarks "LEE," "LEERIDERS," and "LEESURES" in both the
supplemental and principal registers, as early as 1969 to 1973. 41 However, registration alone will not
suffice. In Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft, 42 we declared:

xxx xxx xxx

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 prerequisite in the acquisition
of the right of ownership over a trademark.

xxx xxx xxx

It would seem quite clear that adoption alone of a trademark would not give exclusive
right thereto. Such right "grows out of their actual use." Adoption is not use. One may
make advertisements, issue circulars, give out price lists on certain goods; but these
 alone would not give exclusive right of use. For trademark is a creation of use. The
underlying reason for all these is that purchasers have come to understand the mark
as indicating the origin of the wares. Flowing from this is the trader's right to
protection in the trade he has built up and the goodwill he has accumulated from use
of the trademark. Registration of a trademark, of course, has value: it is an
administrative act declaratory of a pre-existing right. Registration does not, however,
perfect a trademark right. (Emphasis ours.)

xxx xxx xxx

To augment its arguments that it was, not only the prior registrant, but also the prior user, private
respondent invokes Sec. 20 of the Trademark Law, thus:

Sec. 20. Certificate of registration prima facie evidence of validity. A certificate of

registration of a mark or tradename shall be a prima facie evidence of the validity of
the registration, the registrant's ownership of the mark or trade-name, and of the
registrant's exclusive right to use the same in connection with the goods, business or
services specified in the certificate, subject to any conditions and limitations stated
therein.

The credibility placed on a certificate of registration of one's trademark, or its weight as evidence of
validity, ownership and exclusive use, is qualified. A registration certificate serves merely as prima
facie evidence. It is not conclusive but can and may be rebutted by controverting evidence.

Moreover, the aforequoted provision applies only to registrations in the principal

register. 43 Registrations in the supplemental register do not enjoy a similar privilege. A supplemental
register was created precisely for the registration of marks which are not registrable on the principal
register due to some defects. 44

The determination as to who is the prior user of the trademark is a question of fact and it is this
Court's working principle not to disturb the findings of the Director of Patents on this issue in the
absence of any showing of grave abuse of discretion. The findings of facts of the Director of Patents
are conclusive upon the Supreme Court provided they are supported by substantial evidence. 45

In the case at bench, however, we reverse the findings of the Director of Patents and the Court of
Appeals. After a meticulous study of the records, we observe that the Director of Patents and the
Court of Appeals relied mainly on the registration certificates as proof of use by private respondent of
the trademark "LEE" which, as we have previously discussed are not sufficient. We cannot give
credence to private respondent's claim that its "LEE" mark first reached the Philippines in the 1960's
through local sales by the Post Exchanges of the U.S. Military Bases in the Philippines 46 based as it
was solely on the self-serving statements of Mr. Edward Poste, General Manager of Lee (Phils.), Inc., a
wholly owned subsidiary of the H.D. Lee, Co., Inc., U.S.A., herein private respondent. 47 Similarly, we give
little weight to the numerous
vouchers representing various advertising expenses in the Philippines for "LEE" products. 48 It is well to
note that these expenses were incurred only in 1981 and 1982 by LEE (Phils.), Inc. after it entered into a
licensing agreement with private respondent on 11 May 1981. 49
On the other hand, petitioner has sufficiently shown that it has been in the business of selling jeans
and other garments adopting its "STYLISTIC MR. LEE" trademark since 1975 as evidenced by
appropriate sales invoices to various stores and retailers. 50

Our rulings in Pagasa Industrial Corp. v. Court of Appeals 51 and Converse Rubber Corp. v. Universal Rubber
Products, Inc., 52respectively, are instructive:

The Trademark Law is very clear. It requires actual commercial use of the mark prior
to its registration. There is no dispute that respondent corporation was the first
registrant, yet it failed to fully substantiate its claim that it used in trade or business in
the Philippines the subject mark; it did not present proof to invest it with exclusive,
continuous adoption of the trademark which should consist among others, of
considerable sales since its first use. The invoices submitted by respondent which
were dated way back in 1957 show that the zippers sent to the Philippines were to be
used as "samples" and "of no commercial value." The evidence for respondent must
be clear, definite and free from inconsistencies. "Samples" are not for sale and
therefore, the fact of exporting them to the Philippines cannot be considered to be
equivalent to the "use" contemplated by law. Respondent did not expect income from
such "samples." There were no receipts to establish sale, and no proof were
presented to show that they were subsequently sold in the Philippines.

xxx xxx xxx

The sales invoices provide the best proof that there were actual sales of petitioner's
product in the country and that there was actual use for a protracted period of
petitioner's trademark or part thereof through these sales.

For lack of adequate proof of actual use of its trademark in the Philippines prior to petitioner's use of
its own mark and for failure to establish confusing similarity between said trademarks, private
respondent's action for infringement must necessarily fail.

WHEREFORE, premises considered, the questioned decision and resolution are hereby
REVERSED and SET ASIDE.

SO ORDERED.

Bellosillo and Hermosisima, Jr., JJ., concur.

Separate Opinions

PADILLA, J., dissenting:

I dissent. I vote deny the petition; I agree with BPTTT and the CA that petitioner's trademark
"STYLISTIC MR. LEE" is confusingly similar to private respondent's earlier registered trademarks
"LEE" or "LEE RIDER, LEE-LEENS and LEE-SURES" such that the trademark "STYLISTIC MR.
LEE" is an infringement of the earlier registered trademarks.

Separate Opinions

PADILLA, J., dissenting:

I dissent. I vote deny the petition; I agree with BPTTT and the CA that petitioner's trademark
"STYLISTIC MR. LEE" is confusingly similar to private respondent's earlier registered trademarks
"LEE" or "LEE RIDER, LEE-LEENS and LEE-SURES" such that the trademark "STYLISTIC MR.
LEE" is an infringement of the earlier registered trademarks.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-32747 November 29, 1984

FRUIT OF THE LOOM, INC., petitioner,

vs.
COURT OF APPEALS and GENERAL GARMENTS CORPORATION, respondents.

Lichauco, Picazo & Agcaoli Law Office for petitioner.

MAKASIAR, J.:

This is a petition for review on certiorari of the decision dated October 8, 1970 of the former Court of
Appeals reversing the decision of the defunct Court of First Instance of Manila, Branch XIV, ordering
the cancellation of private respondent's registration of the trademark FRUIT FOR EVE, enjoining it
permanently from using trademark and ordering it to pay herein petitioner P10,000.00 as attorney's
fees.

Petitioner, a corporation duly organized and existing under the laws of the State of Rhode Island,
United States of America, is the registrant of a trademark, FRUIT OF THE LOOM, in the Philippines
Patent Office and was issued two Certificates of Registration Nos. 6227 and 6680, on November 29,
1957 and July 26, 1958, respectively. The classes of merchandise covered by Registration
Certificate No. 6227 are, among others, men's, women's and children's underwear, which includes
women's panties and which fall under class 40 in the Philippine Patent Office's classification of
goods. Registration Certificate No. 6680 covers knitted, netted and textile fabrics.

Private respondent, a domestic corporation, is the registrant of a trademark FRUIT FOR EVE in the
Philippine Patent Office and was issued a Certificate of Registration No. 10160, on January 10, 1963
covering garments similar to petitioner's products like women's panties and pajamas.
On March 31, 1965 petitioner filed before the lower court, a complaint for infringement of trademark
and unfair competition against the herein private respondent. Petitioner principally alleged in the
complaint that private respondent's trademark FRUIT FOR EVE is confusingly similar to its
trademark FRUIT OF THE LOOM used also on women's panties and other textile products.
Furthermore, it was also alleged therein that the color get-up and general appearance of private
respondent's hang tag consisting of a big red apple is a colorable imitation to the hang tag of
petitioner.

On April 19, 1965, private respondent filed an answer invoking the special defense that its registered
trademark is not confusingly similar to that of petitioner as the latter alleged. Likewise, private
respondent stated that the trademark FRUIT FOR EVE is being used on ladies' panties and pajamas
only whereas petitioner's trademark is used even on men's underwear and pajamas.

At the pre-trial on May 5, 1965, the following admissions were made: (1) That the trademark FRUIT
OF THE LOOM has been registered with the Bureau of Patents and it does not bear the notice 'Reg.
Phil. Patent Off.', and (2) That the trademark FRUIT FOR EVE has been registered with the Bureau
of Patents and it bears the notice "Reg. Phil. Patent Off." and (3) That at the time of its registration,
plaintiff filed no opposition thereto.

After trial, judgment was rendered by the lower court in favor of herein petitioner, the dispositive
portion of which reads as follows:

Judgment is, therefore, rendered ordering the Bureau of Patents to cancel the
registration of the Trademark "Fruit for Eve", permanently enjoining Defendant from
using the trademark "Fruit for Eve", ordering Defendant to pay plaintiff the sum of
P10,000.00 as attorney's fees and to pay the costs.

Both parties appealed to the former Court of Appeals, herein petitioner's appeal being centered on
the failure of the trial court to award damages in its favor. Private respondent, on the other hand,
sought the reversal of the lower court's decision.

On October 8, 1970, the former Court of Appeals, as already stated, rendered its questioned
decision reversing the judgment of the lower court and dismissing herein petitioner's complaint.

Petitioner's motion for reconsideration having been denied, the present petition was filed before this
Court.

The first and second arguments advanced by petitioner are that the respondent court committed an
error in holding that the word FRUIT, being a generic word, is not capable of exclusive appropriation
by petitioner and that the registrant of a trademark is not entitled to the exclusive use of every word
of his mark. Otherwise stated, petitioner argues that the respondent court committed an error in
ruling that petitioner cannot appropriate exclusively the word FRUIT in its trademark FRUIT OF THE
LOOM.

The third and fourth arguments submitted by petitioner which We believe is the core of the present
controversy, are that the respondent court erred in holding that there is no confusing similarity in
sound and appearance between the two trademarks in question. According to petitioner, the
prominent and dominant features in both of petitioner's and private respondent's trademark are the
word FRUIT and the big red apple design; that ordinary or average purchasers upon seeing the word
FRUIT and the big red apple in private respondent's label or hang tag would be led to believe that
the latter's products are those of the petitioner, The resolution of these two assigned errors in the
negative will lay to rest the matter in litigation and there is no need to touch on the other issues
raised by petitioner. Should the said questions be resolved in favor of petitioner, then the other
matters may be considered.

Petitioner, on its fifth assigned error, blames the former Court of Appeals for not touching the
question of the fraudulent registration of private respondent's trademark FRUIT FOR EVE. As may
be gleaned from the questioned decision, respondent court did not pass upon the argument of
petitioner that private respondent obtained the registration of its trademark thru fraud or
misrepresentation because of the said court's findings that there is no confusing similarity between
the two trademarks in question. Hence, said court has allegedly nothing to determine as to who has
the right to registration because both parties have the right to have their respective trademarks
registered.

Lastly, petitioner asserts that respondent court should have awarded damages in its favor because
private respondent had clearly profited from the infringement of the former's trademark.

The main issue involved in this case is whether or not private respondent's trademark FRUIT FOR
EVE and its hang tag are confusingly similar to petitioner's trademark FRUIT OF THE LOOM and its
hang tag so as to constitute an infringement of the latter's trademark rights and justify the
cancellation of the former.

In cases involving infringement of trademark brought before this Court it has been consistently held
that there is infringement of trademark when the use of the mark involved would be likely to cause
confusion or mistake in the mind of the public or to deceive purchasers as to the origin or source of
the commodity (Co Tiong Sa vs. Director of Patents, 95 Phil. 1; Alhambra Cigar & Cigarette Co. vs.
Mojica, 27 Phil. 266; Sapolin Co. vs. Balmaceda, 67 Phil. 705; La Insular vs. Jao Oge, 47 Phil. 75).

In cases of this nature, there can be no better evidence as to whether there is a confusing similarity
in the contesting trademarks than the labels or hang tags themselves. A visual presentation of the
labels or hang tags is the best argument for one or the other, hence, We are reproducing hereunder
pictures of the hang tags of the products of the parties to the case. The pictures below are part of the
documentary evidence appearing on page 124 of the original records.

Petitioner asseverates in the third and fourth assignment of errors, which, as We have said,
constitute the main argument, that the dominant features of both trademarks is the word FRUIT. In
determining whether the trademarks are confusingly similar, a comparison of the words is not the
only determinant factor. The trademarks in their entirety as they appear in their respective labels or
hang tags must also be considered in relation to the goods to which they are attached. The
discerning eye of the observer must focus not only on the predominant words but also on the other
features appearing in both labels in order that he may draw his conclusion whether one is
confusingly similar to the other (Bristol Myers Co. vs. Director of Patents, 17 SCRA 131).

In the trademarks FRUIT OF THE LOOM and FRUIT FOR EVE, the lone similar word is FRUIT. WE
agree with the respondent court that by mere pronouncing the two marks, it could hardly be said that
it will provoke a confusion, as to mistake one for the other. Standing by itself, FRUIT OF THE LOOM
is wholly different from FRUIT FOR EVE. WE do not agree with petitioner that the dominant feature
of both trademarks is the word FRUIT for even in the printing of the trademark in both hang tags, the
word FRUIT is not at all made dominant over the other words.

As to the design and coloring scheme of the hang tags, We believe that while there are similarities in
the two marks like the red apple at the center of each mark, We also find differences or
dissimilarities which are glaring and striking to the eye such as:

1. The shape of petitioner's hang tag is round with a base that looks like a paper
rolled a few inches in both ends; while that of private respondent is plain rectangle
without any base.

2. The designs differ. Petitioner's trademark is written in almost semi-circle while that
of private respondent is written in straight line in bigger letters than petitioner's.
Private respondent's tag has only an apple in its center but that of petitioner has also
clusters of grapes that surround the apple in the center.

3. The colors of the hang tag are also very distinct from each other. Petitioner's hang
tag is fight brown while that of respondent is pink with a white colored center piece.
The apples which are the only similarities in the hang tag are differently colored.
Petitioner's apple is colored dark red, while that of private respondent is light red.

The similarities of the competing trademarks in this case are completely lost in the substantial
differences in the design and general appearance of their respective hang tags. WE have examined
the two trademarks as they appear in the hang tags submitted by the parties and We are impressed
more by the dissimilarities than by the similarities appearing therein. WE hold that the trademarks
FRUIT OF THE LOOM and FRUIT FOR EVE do not resemble each other as to confuse or deceive
an ordinary purchaser. The ordinary purchaser must be thought of as having, and credited with, at
least a modicum of intelligence (Carnation Co. vs. California Growers Wineries, 97 F. 2d 80; Hyram
Walke and Sons vs. Penn-Maryland Corp., 79 F. 2d 836) to be able to see the obvious differences
between the two trademarks in question. Furthermore, We believe that a person who buys
petitioner's products and starts to have a liking for it, will not get confused and reach out for private
respondent's products when she goes to a garment store.

These findings in effect render immaterial the other errors assigned by petitioner which are premised
on the assumption that private respondent's trademark FRUIT FOR EVE had infringed petitioner's
trademark FRUIT OF THE LOOM.

WHEREFORE, THE DECISION APPEALED FROM IS AFFIRMED. COSTS AGAINST PETITIONER.

SO ORDERED.

Aquino, Concepcion, Jr., Abad Santos, Escolin and Cuevas, JJ., concur.

THIRD DIVISION

G.R. No. 209843, March 25, 2015

TAIWAN KOLIN CORPORATION, LTD., Petitioner, v. KOLIN ELECTRONICS CO., INC., Respondent.
 DECISION

VELASCO JR., J.:

Nature of the Case

Before the Court is a petition for review under Rule 45 of the Rules of Court interposed by petitioner Taiwan
Kolin Corporation, Ltd. (Taiwan Kolin), assailing the April 30, 2013 Decision 1 of the Court of Appeals (CA) in
CA-G.R. SP No. 122565 and its subsequent November 6, 2013 Resolution. 2 The assailed issuances effectively
denied petitioners trademark application for the use of KOLIN on its television and DVD players. chanroblesvirtuallawlibrary

The Facts

On February 29, 1996, Taiwan Kolin filed with the Intellectual Property Office (IPO), then Bureau of Patents,
Trademarks, and Technology Transfer, a trademark application, docketed as Application No. 4-1996-106310,
for the use of KOLIN on a combination of goods, including colored televisions, refrigerators, window-type
and split-type air conditioners, electric fans and water dispensers. Said goods allegedly fall under Classes 9,
11, and 21 of the Nice Classification (NCL).

Application No. 4-1996-106310 would eventually be considered abandoned for Taiwan Kolins failure to
respond to IPOs Paper No. 5 requiring it to elect one class of good for its coverage. However, the same
application was subsequently revived through Application Serial No. 4-2002-011002, 3 with petitioner electing
Class 9 as the subject of its application, particularly: television sets, cassette recorder, VCD Amplifiers,
camcorders and other audio/video electronic equipment, flat iron, vacuum cleaners, cordless handsets,
videophones, facsimile machines, teleprinters, cellular phones and automatic goods vending machine. The
application would in time be duly published.4 cralawred

On July 13, 2006, respondent Kolin Electronics Co., Inc. (Kolin Electronics) opposed petitioners revived
application, docketed as Inter Partes Case No. 14-2006-00096. As argued, the mark Taiwan Kolin seeks to
register is identical, if not confusingly similar, with its KOLIN mark registered on November 23, 2003,
covering the following products under Class 9 of the NCL: automatic voltage regulator, converter, recharger,
stereo booster, AC-DC regulated power supply, step-down transformer, and PA amplified AC-DC. 5 cralawred

To digress a bit, Kolin Electronics KOLIN registration was, as it turns out, the subject of a prior legal
dispute between the parties in Inter Partes Case No. 14-1998-00050 before the IPO. In the said case, Kolin
Electronics own application was opposed by Taiwan Kolin, being, as Taiwan Kolin claimed, the prior
registrant and user of the KOLIN trademark, having registered the same in Taipei, Taiwan on December 1,
1988. The Bureau of Legal Affairs of the IPO (BLA-IPO), however, did not accord priority right to Taiwan
Kolins Taipei registration absent evidence to prove that it has already used the said mark in the Philippines
as early as 1988. On appeal, the IPO Director General affirmed the BLA-IPOs Decision. Taiwan Kolin
elevated the case to the CA, but without injunctive relief, Kolin Electronics was able to register the KOLIN
trademark on November 23, 2003 for its products.6 Subsequently, the CA, on July 31, 2006, affirmed7 the
Decision of the Director General.

In answer to respondents opposition in Inter Partes Case No. 14-2006-00096, petitioner argued that it
should be accorded the benefits of a foreign-registered mark under Secs. 3 and 131.1 of Republic Act No.
8293, otherwise known as the Intellectual Property Code of the Philippines (IP Code); 8 that it has already
registered the KOLIN mark in the Peoples Republic of China, Malaysia and Vietnam, all of which are parties
to the Paris Convention for the Protection of Industrial Property (Paris Convention) and the Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS);and that benefits accorded to a well-known
mark should be accorded to petitioner.9 cralawre d

Ruling of the BLA-IPO

By Decision10 dated August 16, 2007, the BLA-IPO denied petitioners application disposing as follows: chanRoble svirtualLawlibrary

In view of all the foregoing, the instant Opposition is as, it is hereby SUSTAINED. Accordingly, application
bearing Serial No. 4-1996-106310 for the mark KOLIN filed in the name of TAIWAN KOLIN., LTD. on
February 29, 1996 for goods falling under Class 09 of the International Classification of Goods such as
cassette recorder, VCD, woofer, amplifiers, camcorders and other audio/video electronic equipment, flat iron,
vacuum cleaners, cordless handsets, videophones, facsimile machines, teleprinters, cellular phones,
automatic goods vending machines and other electronic equipment is hereby REJECTED.

Let the file wrapper of KOLIN, subject of this case be forwarded to the Bureau of Trademarks (BOT) for
appropriate action in accordance with this Decision.

SO ORDERED. cralawlawlibrary

Citing Sec. 123(d) of the IP Code,11 the BLA-IPO held that a mark cannot be registered if it is identical with a
registered mark belonging to a different proprietor in respect of the same or closely-related goods.
Accordingly, respondent, as the registered owner of the mark KOLIN for goods falling under Class 9 of the
NCL, should then be protected against anyone who impinges on its right, including petitioner who seeks to
register an identical mark to be used on goods also belonging to Class 9 of the NCL. 12 The BLA-IPO also
noted that there was proof of actual confusion in the form of consumers writing numerous e-mails to
respondent asking for information, service, and complaints about petitioners products. 13 cralawre d

Petitioner moved for reconsideration but the same was denied on January 26, 2009 for lack of merit. 14Thus,
petitioner appealed the above Decision to the Office of the Director General of the IPO. chanroble svirtuallawlibrary

Ruling of the IPO Director General

On November 23, 2011, the IPO Director General rendered a Decision 15 reversing that of the BLA-IPO in the
following wise: chanRoble svirtualLawlibrary

Wherefore, premises considered, the appeal is hereby GRANTED. The Appellants Trademark Application No.
4-1996-106310 is hereby GIVEN DUE COURSE subject to the use limitation or restriction for the goods
television and DVD player. Let a copy of this Decision as well as the trademark application and records be
furnished and returned to the Director of the Bureau of Legal Affairs for appropriate action. Further, let the
Director of the Bureau of Trademarks and the library of the Documentation, Information and Technology
Transfer Bureau be furnished a copy of this Decision for information, guidance, and records purposes.

SO ORDERED. cralawlawlibrary

In so ruling, the IPO Director General ratiocinated that product classification alone cannot serve as the
decisive factor in the resolution of whether or not the goods are related and that emphasis should be on the
similarity of the products involved and not on the arbitrary classification or general description of their
properties or characteristics. As held, the mere fact that one person has adopted and used a particular
trademark for his goods does not prevent the adoption and use of the same trademark by others on articles
of a different description.16 cralawred

Aggrieved, respondent elevated the case to the CA. chanroblesvirtuallawlibrary

Ruling of the Court of Appeals

In its assailed Decision, the CA found for Kolin Electronics, on the strength of the following premises: (a) the
mark sought to be registered by Taiwan Kolin is confusingly similar to the one already registered in favor of
Kolin Electronics; (b) there are no other designs, special shape or easily identifiable earmarks that would
differentiate the products of both competing companies; 17 and (c) the intertwined use of television sets with
amplifier, booster and voltage regulator bolstered the fact that televisions can be considered as within the
normal expansion of Kolin Electronics, 18 and is thereby deemed covered by its trademark as explicitly
protected under Sec. 13819 of the IP Code.20 Resultantly, the CA granted respondents appeal thusly: chanRoblesvirtualLa wlibrary

WHEREFORE, the appeal is GRANTED. The November 23, 2011 Decision of the Director General of the
Intellectual Property Office in Inter Partes Case No. 14-2006-0096 is REVERSED and SET ASIDE. The
September 17, 2007 Decision of the Bureau of Legal Affairs of the same office is REINSTATED.

SO ORDERED. cralawlawlibrary

Petitioner moved for reconsideration only to be denied by the CA through its equally assailed November 6,
2013 Resolution. Hence, the instant recourse. chanroble svirtuallawlibrary
 The Issue

The primordial issue to be resolved boils down to whether or not petitioner is entitled to its trademark
registration of KOLIN over its specific goods of television sets and DVD players. Petitioner postulates, in
the main, that its goods are not closely related to those of Kolin Electronics. On the other hand, respondent
hinges its case on the CAs findings that its and petitioners products are closely-related. Thus, granting
petitioners application for trademark registration, according to respondent, would cause confusion as to the
public.

The Courts Ruling

The petition is impressed with merit.

Identical marks may be registered for

products from the same classification

To bolster its opposition against petitioners application to register trademark KOLIN, respondent maintains
that the element of mark identity argues against approval of such application,quoting the BLA IPOs ruling in
this regard:21 cralawred

Indubitably, Respondent-Applicants [herein petitioner] mark is identical to the registered mark of herein
Opposer [herein respondent] and the identical mark is used on goods belonging to Class 9 to which
Opposers goods are also classified. On this point alone, Respondent-Applicants application should already
be denied.cralawla wlibrary

The argument is specious.

The parties admit that their respective sets of goods belong to Class 9 of the NCL, which includes the
following:22 cralawred

Class 9

Scientific, nautical, surveying, photographic, cinematographic, optical, weighing, measuring, signalling,

checking (supervision), life-saving and teaching apparatus and instruments; apparatus and instruments for
conducting, switching, transforming, accumulating, regulating or controlling electricity; apparatus for
recording, transmission or reproduction of sound or images; magnetic data carriers, recording discs;
compact discs, DVDs and other digital recording media; mechanisms for coin-operated apparatus; cash
registers, calculating machines, data processing equipment, computers; computer software; fire-
extinguishing apparatus. cralawlawlibrary

But mere uniformity in categorization, by itself, does not automatically preclude the registration of what
appears to be an identical mark, if that be the case. In fact, this Court, in a long line of cases,has held that
such circumstance does not necessarily result in any trademark infringement. The survey of jurisprudence
cited in Mighty Corporation v. E. & J Gallo Winery 23 is enlightening on this point:
chanRoble svirtualLawlibrary

(a) in Acoje Mining Co., Inc. vs. Director of Patents,24 we ordered the
approval of Acoje Minings application for registration of the trademark
LOTUS for its soy sauce even though Philippine Refining Company had
prior registration and use of such identical mark for its edible oil which,
like soy sauce, also belonged to Class 47;
(b)
in Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents, 25 we
upheld the Patent Directors registration of the same trademark CAMIA
for Ng Sams ham under Class 47, despite Philippine Refining Companys
prior trademark registration and actual use of such mark on its lard,
butter, cooking oil (all of which belonged to Class 47), abrasive
 detergents, polishing materials and soaps;

(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos Lim
Bun Liong,26we dismissed Hickoks petition to cancel private respondents
HICKOK trademark registration for its Marikina shoes as against
petitioners earlier registration of the same trademark for handkerchiefs,
briefs, belts and wallets.
cralawla wlibrary

Verily, whether or not the products covered by the trademark sought to be registered by Taiwan Kolin, on
the one hand, and those covered by the prior issued certificate of registration in favor of Kolin Electronics,
on the other, fall under the same categories in the NCL is not the sole and decisive factor in determining a
possible violation of Kolin Electronics intellectual property right should petitioners application be granted. It
is hornbook doctrine, as held in the above-cited cases, that emphasis should be on the similarity of the
products involved and not on the arbitrary classification or general description of their properties or
characteristics. The mere fact that one person has adopted and used a trademark on his goods would not,
without more, prevent the adoption and use of the same trademark by others on unrelated articles of a
different kind.27 cralawre d

The CA erred in denying petitioners

registration application

Respondent next parlays the idea of relation between products as a factor militating against petitioners
application. Citing Esso Standard Eastern, Inc. v. Court of Appeals,28 respondent argues that the goods
covered by petitioners application and those covered by its registration are actually related belonging as
they do to the same class or have the same physical characteristics with reference to their form,
composition, texture, or quality, or if they serve the same purpose. Respondent likewise draws parallelisms
between the present controversy and the following cases: 29 cralawred

(a) In Arce & Sons, Inc. vs. Selecta Biscuit Company,30 biscuits were held
related to milk because they were both food products;
(b)
In Chua Che vs. Phil. Patents Office,31 soap and perfume, lipstick and nail
polish are held to be similarly related because they are common
household items;

(c) In Ang vs. Teodoro,32 the trademark Ang Tibay for shoes and slippers
was disallowed to be used for shirts and pants because they belong to
the same general class of goods; and
(d) In Khe vs. Lever Bros. Co.,33 soap and pomade, although non-
competitive, were held to be similar or belong to the same class, since
both are toilet articles.
cralawla wlibrary

Respondent avers that Kolin Electronics and Taiwan Kolins products are closely-related not only because
both fall under Class 9 of the NCL, but mainly because they both relate to electronic products, instruments,
apparatus, or appliances.34 Pushing the point, respondent would argue that Taiwan Kolin and Kolin
Electronics goods are inherently similar in that they are all plugged into electric sockets and perform a
useful function.35 Furthermore, respondent echoes the appellate courts ratiocination in denying petitioners
application, viz:36 cralawred

Significantly, Kolin Electronics goods (automatic voltage regulator; converter; recharger; stereo booster;
AC-DC regulated power supply; step-down transformer; and PA amplified AC-DC) and Taiwan Kolins
television sets and DVD players are both classified under class 9 of the NICE agreement. At first glance, it is
also evident that all these goods are generally described as electrical devices.x x x [T]he goods of both Kolin
Electronics and Taiwan Kolin will inevitably be introduced to the public as KOLIN products and will be
offered for sale in the same channels of trade. Contrary to Taiwan Kolins claim, power supply as well as
audio and stereo equipment like booster and amplifier are not only sold in hardware and electrical shops.
These products are commonly found in appliance stores alongside television sets and DVD players. With the
present trend in todays entertainment of having a home theater system, it is not unlikely to see a stereo
booster, amplifier and automatic voltage regulator displayed together with the television sets and DVD
players. With the intertwined use of these products bearing the identical KOLIN mark, the ordinary
intelligent consumer would likely assume that they are produced by the same manufacturer.

In sum, the intertwined use, the same classification of the products as class 9 under the NICE
Agreement, and the fact that they generally flow through the same channel of trade clearly
establish that Taiwan Kolins television sets and DVD players are closely related to Kolin
Electronics goods. As correctly pointed out by the BLA-IPO, allowing Taiwan Kolins registration would
only confuse consumers as to the origin of the products they intend to purchase. Accordingly, protection
should be afforded to Kolin Electronics, as the registered owner of the KOLIN trademark. 37(emphasis
added) cralawlawlibrary

The CAs approach and reasoning to arrive at the assailed holding that the approval of petitioners
application is likely to cause confusion or deceive fail to persuade.

The products covered by petitioners

application and respondents
registration are unrelated
A certificate of trademark registration confers upon the trademark owner the exclusive right to sue those
who have adopted a similar mark not only in connection with the goods or services specified in the
certificate, but also with those that are related thereto.38 cralawre d

In resolving one of the pivotal issues in this casewhether or not the products of the parties involved are
relatedthe doctrine in Mighty Corporation is authoritative. There, the Court held that the goods should be
tested against several factors before arriving at a sound conclusion on the question of relatedness. Among
these are: chanRoblesvirtualLa wlibrary

(a) the business (and its location) to which the goods belong;
(b) the class of product to which the goods belong;
(c) the products quality, quantity, or size, including the nature of the package, wrapper or container;
(d) the nature and cost of the articles;
(e) the descriptive properties, physical attributes or essential characteristics with reference to their form,
composition, texture or quality;
(f) the purpose of the goods;
(g) whether the article is bought for immediate consumption, that is, day-to-day household items;
(h) the fields of manufacture;
(i) the conditions under which the article is usually purchased; and
(j) the channels of trade through which the goods flow, how they are distributed, marketed, displayed and
sold.39 cralawlawlibrary

As mentioned, the classification of the products under the NCL is merely part and parcel of the factors to be
considered in ascertaining whether the goods are related. It is not sufficient to state that the goods involved
herein are electronic products under Class 9 in order to establish relatedness between the goods, for this
only accounts for one of many considerations enumerated in Mighty Corporation. In this case, credence is
accorded to petitioners assertions that:40 cralawred

a. Taiwan Kolins goods are classified as home appliances as opposed to Kolin Electronics goods which
are power supply and audio equipment accessories; ChanRoblesVirtualawlibrary

b. Taiwan Kolins television sets and DVD players perform distinct function and purpose from Kolin
Electronics power supply and audio equipment; and
 c. Taiwan Kolin sells and distributes its various home appliance products on wholesale and to
accredited dealers, whereas Kolin Electronics goods are sold and flow through electrical and
hardware stores.

Clearly then, it was erroneous for respondent to assume over the CA to conclude that all electronic products
are related and that the coverage of one electronic product necessarily precludes the registration of a similar
mark over another. In this digital age wherein electronic products have not only diversified by leaps and
bounds, and are geared towards interoperability, it is difficult to assert readily, as respondent simplistically
did, that all devices that require plugging into sockets are necessarily related goods.

It bears to stress at this point that the list of products included in Class 9 41 can be sub-categorized into five
(5) classifications, namely: (1) apparatus and instruments for scientific or research purposes, (2)
information technology and audiovisual equipment, (3) apparatus and devices for controlling the distribution
and use of electricity, (4) optical apparatus and instruments, and (5) safety equipment. 42From this sub-
classification, it becomes apparent that petitioners products, i.e., televisions and DVD players, belong to
audiovisiual equipment, while that of respondent, consisting of automatic voltage regulator, converter,
recharger, stereo booster, AC-DC regulated power supply, step-down transformer, and PA amplified AC-DC,
generally fall under devices for controlling the distribution and use of electricity.

The ordinarily intelligent buyer

is not likely to be confused
In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to another, no
rigid set rules can plausible be formulated. Each case must be decided on its merits, with due regard to the
goods or services involved, the usual purchasers character and attitude, among others. In such cases, even
more than in any other litigation, precedent must be studied in the light of the facts of a particular case.
That is the reason why in trademark cases, jurisprudential precedents should be applied only to a case if
they are specifically in point.43
cralawre d

For a clearer perspective and as matter of record, the following image on the left 44 is the trademark applied
for by petitioner, while the image juxtaposed to its right 45 is the trademark registered by respondent:

(please see image in G.R. No. 209843 page 10)

While both competing marks refer to the word KOLIN written in upper case letters and in bold font, the
Court at once notes the distinct visual and aural differences between them: Kolin Electronics mark is
italicized and colored black while that of Taiwan Kolin is white in pantone red color background. The differing
features between the two, though they may appear minimal, are sufficient to distinguish one brand from the
other.

It cannot be stressed enough that the products involved in the case at bar are, generally speaking, various
kinds of electronic products. These are not ordinary consumable household items, like catsup, soy sauce or
soap which are of minimal cost.46 The products of the contending parties are relatively luxury items not
easily considered affordable. Accordingly, the casual buyer is predisposed to be more cautious and
discriminating in and would prefer to mull over his purchase. Confusion and deception, then, is less
likely.47 As further elucidated in Del Monte Corporation v. Court of Appeals:48 cralawre d

x x x Among these, what essentially determines the attitudes of the purchaser, specifically his inclination to
be cautious, is the cost of the goods. To be sure, a person who buys a box of candies will not exercise as
much care as one who buys an expensive watch. As a general rule, an ordinary buyer does not exercise as
much prudence in buying an article for which he pays a few centavos as he does in purchasing a more
valuable thing. Expensive and valuable items are normally bought only after deliberate,
comparative and analytical investigation. But mass products, low priced articles in wide use, and
matters of everyday purchase requiring frequent replacement are bought by the casual consumer
without great care x x x.(emphasis added) cralawla wlibrary

Respondent has made much reliance on Arce & Sons, Chua Che, Ang, and Khe, oblivious that they involved
common household itemsi.e., biscuits and milk, cosmetics, clothes, and toilet articles, respectively
whereas the extant case involves luxury items not regularly and inexpensively purchased by the consuming
public. In accord with common empirical experience, the useful lives of televisions and DVD players last for
about five (5) years, minimum, making replacement purchases very infrequent. The same goes true with
converters and regulators that are seldom replaced despite the acquisition of new equipment to be plugged
onto it. In addition, the amount the buyer would be parting with cannot be deemed minimal considering that
the price of televisions or DVD players can exceed todays monthly minimum wage.In light of these
circumstances, it is then expected that the ordinary intelligent buyer would be more discerning when it
comes to deciding which electronic product they are going to purchase, and it is this standard which this
Court applies here in in determining the likelihood of confusion should petitioners application be granted.

To be sure, the extant case is reminiscent of Emerald Garment Manufacturing Corporation v. Court of
Appeals,49 wherein the opposing trademarks are that of Emerald Garment Manufacturing Corporations
Stylistic Mr. Lee and H.D. Lees LEE. In the said case, the appellate court affirmed the decision of the
Director of Patents denying Emerald Garments application for registration due to confusing similarity with
H.D. Lees trademark. This Court, however, was of a different beat and ruled that there is no confusing
similarity between the marks, given that the products covered by the trademark, i.e., jeans, were,at that
time, considered pricey, typically purchased by intelligent buyers familiar with the products and are more
circumspect, and, therefore, would not easily be deceived. As held: chanRoblesvirtualLa wlibrary

Finally, in line with the foregoing discussions, more credit should be given to the ordinary purchaser. Cast
in this particular controversy, the ordinary purchaser is not the completely unwary consumer but is the
ordinarily intelligent buyer considering the type of product involved.

The definition laid down in Dy Buncio v. Tan Tiao Bok50is better suited to the present case. There, the
ordinary purchaser was defined as one accustomed to buy, and therefore to some extent familiar
with, the goods in question. The test of fraudulent simulation is to be found in the likelihood of the
deception of some persons in some measure acquainted with an established design and desirous of
purchasing the commodity with which that design has been associated. The test is not found in the
deception, or the possibility of deception, of the person who knows nothing about the design which has been
counterfeited, and who must be indifferent between that and the other. The simulation, in order to be
objectionable, must be such as appears likely to mislead the ordinary intelligent buyer who has a
need to supply and is familiar with the article that he seeks to purchase.51 (emphasis added) cralawla wlibrary

Consistent with the above ruling, this Court finds that the differences between the two marks, subtle as they
may be, are sufficient to prevent any confusion that may ensue should petitioners trademark application be
granted.As held in Esso Standard Eastern, Inc.:52 cralawre d

Respondent court correctly ruled that considering the general appearances of each mark as a whole, the
possibility of any confusion is unlikely. A comparison of the labels of the samples of the goods submitted by
the parties shows a great many differences on the trademarks used. As pointed out by respondent court in
its appealed decision, (A) witness for the plaintiff, Mr. Buhay, admitted that the color of the ESSO used by
the plaintiff for the oval design where the blue word ESSO is contained is the distinct and unique kind of
blue. In his answer to the trial courts question, Mr. Buhay informed the court that the plaintiff never used its
trademark on any product where the combination of colors is similar to the label of the Esso cigarettes, and
Another witness for the plaintiff, Mr. Tengco, testified that generally, the plaintiffs trademark comes all in
either red, white, blue or any combination of the three colors. It is to be pointed out that not even a shade
of these colors appears on the trademark of the appellants cigarette. The only color that the appellant uses
in its trademark is green.

Even the lower court, which ruled initially for petitioner, found that a noticeable difference between the
brand ESSO being used by the defendants and the trademark ESSO of the plaintiff is that the former has a
rectangular background, while in that of the plaintiff the word ESSO is enclosed in an oval background. cralawla wlibrary

All told, We are convinced that petitioners trademark registration not only covers unrelated good, but is also
incapable of deceiving the ordinary intelligent buyer. The ordinary purchaser must be thought of as having,
and credited with, at least a modicum of intelligence to be able to see the differences between the two
trademarks in question.53 cralawre d

Questions of fact may still be entertained

On a final note, the policy according factual findings of courts a quo great respect, if not finality, is not
binding where they have overlooked, misapprehended, or misapplied any fact or circumstance of weight and
substance.54 So it must be here; the nature of the products involved materially affects the outcome of the
instant case. A reversal of the appellate courts Decision is then in order.
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The Decision and the Resolution
of the Court of Appeals in CA-G.R. SP No. 122565, dated April 30, 2013 and November 6, 2013,
respectively, are hereby REVERSED and SET ASIDE. Accordingly, the Decision of the Intellectual Property
Office Director General in Inter Partes Case No. 14-2006-00096, dated November 23, 2011, is
hereby REINSTATED.

SO ORDERED. cralawla wlibrary

Peralta, Villarama, Jr., Reyes, and Jardeleza, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 159938 March 31, 2006

SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., SHANGRI-LA PROPERTIES,

INC., MAKATI SHANGRI-LA HOTEL & RESORT, INC., AND KUOK PHILIPPINES PROPERTIES,
INC., Petitioners,
vs.
DEVELOPERS GROUP OF COMPANIES, INC., Respondent.

DECISION

GARCIA, J.:

In this petition for review under Rule 45 of the Rules of Court, petitioners Shangri-La International
Hotel Management, Ltd. (SLIHM), et al. assail and seek to set aside the Decision dated May 15,
20031 of the Court of Appeals (CA) in CA-G.R. CV No. 53351 and its Resolution 2 of September 15,
2003 which effectively affirmed with modification an earlier decision of the Regional Trial Court
(RTC) of Quezon City in Civil Case No. Q-91-8476, an action for infringement and damages, thereat
commenced by respondent Developers Group of Companies, Inc. (DGCI) against the herein
petitioners.

The facts:

At the core of the controversy are the "Shangri-La" mark and "S" logo. Respondent DGCI claims
ownership of said mark and logo in the Philippines on the strength of its prior use thereof within the
country. As DGCI stresses at every turn, it filed on October 18, 1982 with the Bureau of Patents,
Trademarks and Technology Transfer (BPTTT) pursuant to Sections 2 and 4 of Republic Act (RA)
No. 166,3 as amended, an application for registration covering the subject mark and logo. On May
31, 1983, the BPTTT issued in favor of DGCI the corresponding certificate of registration
therefor, i.e., Registration No. 31904. Since then, DGCI started using the "Shangri-La" mark and "S"
logo in its restaurant business.

On the other hand, the Kuok family owns and operates a chain of hotels with interest in hotels and
hotel-related transactions since 1969. As far back as 1962, it adopted the name "Shangri-La" as part
of the corporate names of all companies organized under the aegis of the Kuok Group of Companies
(the Kuok Group). The Kuok Group has used the name "Shangri-La" in all Shangri-La hotels and
hotel-related establishments around the world which the Kuok Family owned.

To centralize the operations of all Shangri-la hotels and the ownership of the "Shangri-La" mark and
"S" logo, the Kuok Group had incorporated in Hong Kong and Singapore, among other places,
several companies that form part of the Shangri-La International Hotel Management Ltd. Group of
Companies. EDSA Shangri-La Hotel and Resort, Inc., and Makati Shangri-La Hotel and Resort, Inc.
were incorporated in the Philippines beginning 1987 to own and operate the two (2) hotels put up by
the Kuok Group in Mandaluyong and Makati, Metro Manila.

All hotels owned, operated and managed by the aforesaid SLIHM Group of Companies adopted and
used the distinctive lettering of the name "Shangri-La" as part of their trade names.

From the records, it appears that Shangri-La Hotel Singapore commissioned a Singaporean design
artist, a certain Mr. William Lee, to conceptualize and design the logo of the Shangri-La hotels.

During the launching of the stylized "S" Logo in February 1975, Mr. Lee gave the following
explanation for the logo, to wit:

The logo which is shaped like a "S" represents the uniquely Asean architectural structures as well as
keep to the legendary Shangri-la theme with the mountains on top being reflected on waters below
and the connecting centre [sic] line serving as the horizon. This logo, which is a bold, striking
definitive design, embodies both modernity and sophistication in balance and thought.

Since 1975 and up to the present, the "Shangri-La" mark and "S" logo have been used consistently
and continuously by all Shangri-La hotels and companies in their paraphernalia, such as
stationeries, envelopes, business forms, menus, displays and receipts.

The Kuok Group and/or petitioner SLIHM caused the registration of, and in fact registered, the
"Shangri-La" mark and "S" logo in the patent offices in different countries around the world.

On June 21, 1988, the petitioners filed with the BPTTT a petition, docketed as Inter Partes Case No.
3145, praying for the cancellation of the registration of the "Shangri-La" mark and "S" logo issued to
respondent DGCI on the ground that the same were illegally and fraudulently obtained and
appropriated for the latter's restaurant business. They also filed in the same office Inter Partes Case
No. 3529, praying for the registration of the same mark and logo in their own names.

Until 1987 or 1988, the petitioners did not operate any establishment in the Philippines, albeit they
advertised their hotels abroad since 1972 in numerous business, news, and/or travel magazines
widely circulated around the world, all readily available in Philippine magazines and newsstands.
They, too, maintained reservations and booking agents in airline companies, hotel organizations,
tour operators, tour promotion organizations, and in other allied fields in the Philippines.

It is principally upon the foregoing factual backdrop that respondent DGCI filed a complaint for
Infringement and Damages with the RTC of Quezon City against the herein petitioners SLIHM,
Shangri-La Properties, Inc., Makati Shangri-La Hotel & Resort, Inc., and Kuok Philippine Properties,
Inc., docketed as Civil Case No. Q-91-8476 and eventually raffled to Branch 99 of said court. The
complaint with prayer for injunctive relief and damages alleged that DGCI has, for the last eight (8)
years, been the prior exclusive user in the Philippines of the mark and logo in question and the
registered owner thereof for its restaurant and allied services. As DGCI alleged in its complaint,
SLIHM, et al., in promoting and advertising their hotel and other allied projects then under
construction in the country, had been using a mark and logo confusingly similar, if not identical, with
its mark and "S" logo. Accordingly, DGCI sought to prohibit the petitioners, as defendants a quo,
from using the "Shangri-La" mark and "S" logo in their hotels in the Philippines.

In their Answer with Counterclaim, the petitioners accused DGCI of appropriating and illegally using
the "Shangri-La" mark and "S" logo, adding that the legal and beneficial ownership thereof pertained
to SLIHM and that the Kuok Group and its related companies had been using this mark and logo
since March 1962 for all their corporate names and affairs. In this regard, they point to the Paris
Convention for the Protection of Industrial Property as affording security and protection to SLIHM's
exclusive right to said mark and logo. They further claimed having used, since late 1975, the
internationally-known and specially-designed "Shangri-La" mark and "S" logo for all the hotels in
their hotel chain.

Pending trial on the merits of Civil Case No. Q-91-8476, the trial court issued a Writ of Preliminary
Injunction enjoining the petitioners from using the subject mark and logo. The preliminary injunction
issue ultimately reached the Court in G.R. No. 104583 entitled Developers Group of Companies, Inc.
vs. Court of Appeals, et al. In a decision4 dated March 8, 1993, the Court nullified the writ of
preliminary injunction issued by the trial court and directed it to proceed with the main case and
decide it with deliberate dispatch.

While trial was in progress, the petitioners filed with the court a motion to suspend proceedings on
account of the pendency before the BPTTT of Inter Partes Case No. 3145 for the cancellation of
DGCI's certificate of registration. For its part, respondent DGCI filed a similar motion in that case,
invoking in this respect the pendency of its infringement case before the trial court. The parties'
respective motions to suspend proceedings also reached the Court via their respective petitions in
G.R. No. 114802, entitled Developers Group of Companies, Inc. vs. Court of Appeals, et al. and G.R.
No. 111580, entitled Shangri-La International Hotel Management LTD., et al. vs. Court of Appeals, et
al., which were accordingly consolidated.

In a consolidated decision5 dated June 21, 2001, the Court, limiting itself to the core issue of
whether, despite the petitioners' institution of Inter Partes Case No. 3145 before the BPTTT, herein
respondent DGCI "can file a subsequent action for infringement with the regular courts of justice in
connection with the same registered mark," ruled in the affirmative, but nonetheless ordered the
BPTTT to suspend further proceedings in said inter partes case and to await the final outcome of the
main case.

Meanwhile, trial on the merits of the infringement case proceeded. Presented as DGCI's lone
witness was Ramon Syhunliong, President and Chairman of DGCI's Board of Directors. Among
other things, this witness testified that:

1. He is a businessman, with interest in lumber, hotel, hospital, trading and restaurant

businesses but only the restaurant business bears the name "Shangri-La" and uses the
same and the "S-logo" as service marks. The restaurant now known as "Shangri-La Finest
Chinese Cuisine" was formerly known as the "Carvajal Restaurant" until December 1982,
when respondent took over said restaurant business.

2. He had traveled widely around Asia prior to 1982, and admitted knowing the Shangri-La
Hotel in Hong Kong as early as August 1982.

3. The "S-logo" was one of two (2) designs given to him in December 1982, scribbled on a
piece of paper by a jeepney signboard artist with an office somewhere in Balintawak. The
 unnamed artist supposedly produced the two designs after about two or three days from the
time he (Syhunliong) gave the idea of the design he had in mind.

4. On October 15, 1982, or before the unknown signboard artist supposedly created the
"Shangri-La" and "S" designs, DGCI was incorporated with the primary purpose of "owning
or operating, or both, of hotels and restaurants".

5. On October 18, 1982, again prior to the alleged creation date of the mark and logo, DGCI
filed an application for trademark registration of the mark "SHANGRI-LA FINEST CHINESE
CUISINE & S. Logo" with the BPTTT. On said date, respondent DGCI amended its Articles of
Incorporation to reflect the name of its restaurant, known and operating under the style and
name of "SHANGRI-LA FINEST CHINESE CUISINE." Respondent DGCI obtained
Certificate of Registration No. 31904 for the "Shangri-La" mark and "S" logo.

Eventually, the trial court, on the postulate that petitioners', more particularly petitioner SLIHM's, use
of the mark and logo in dispute constitutes an infringement of DGCI's right thereto, came out with its
decision6 on March 8, 1996 rendering judgment for DGCI, as follows:

WHEREFORE, judgment is hereby rendered in favor of [respondent DGCI] and against [SLIHM, et
al.] -

a) Upholding the validity of the registration of the service mark "Shangri-la" and "S-Logo" in
the name of [respondent];

b) Declaring [petitioners'] use of said mark and logo as infringement of [respondent's] right
thereto;

c) Ordering [petitioners], their representatives, agents, licensees, assignees and other

persons acting under their authority and with their permission, to permanently cease and
desist from using and/or continuing to use said mark and logo, or any copy, reproduction or
colorable imitation

thereof, in the promotion, advertisement, rendition of their hotel and allied projects and
services or in any other manner whatsoever;

d) Ordering [petitioners] to remove said mark and logo from any premises, objects, materials
and paraphernalia used by them and/or destroy any and all prints, signs, advertisements or
other materials bearing said mark and logo in their possession and/or under their control;
and

e) Ordering [petitioners], jointly and severally, to indemnify [respondent] in the amounts of

P2,000,000.00 as actual and compensatory damages, P500,000.00 as attorney's fee and
expenses of litigation.

Let a copy of this Decision be certified to the Director, Bureau of Patents, Trademarks and
Technology Transfer for his information and appropriate action in accordance with the provisions of
Section 25, Republic Act No. 166

Costs against [petitioners].

SO ORDERED. [Words in brackets added.]

Therefrom, the petitioners went on appeal to the CA whereat their recourse was docketed as CA
G.R. SP No. 53351.

As stated at the threshold hereof, the CA, in its assailed Decision of May 15, 2003, 7 affirmed that of
the lower court with the modification of deleting the award of attorney's fees. The appellate court
predicated its affirmatory action on the strength or interplay of the following premises:

1. Albeit the Kuok Group used the mark and logo since 1962, the evidence presented shows
that the bulk use of the tradename was abroad and not in the Philippines (until 1987). Since
the Kuok Group does not have proof of actual use in commerce in the Philippines (in
accordance with Section 2 of R.A. No. 166), it cannot claim ownership of the mark and logo
in accordance with the holding in Kabushi Kaisha Isetan v. IAC8, as reiterated in Philip
Morris, Inc. v. Court of Appeals.9

2. On the other hand, respondent has a right to the mark and logo by virtue of its prior use in
the Philippines and the issuance of Certificate of Registration No. 31904.

3. The use of the mark or logo in commerce through the bookings made by travel agencies is
unavailing since the Kuok Group did not establish any branch or regional office in the
Philippines. As it were, the Kuok Group was not engaged in commerce in the Philippines
inasmuch as the bookings were made through travel agents not owned, controlled or
managed by the Kuok Group.

4. While the Paris Convention protects internationally known marks, R.A. No. 166 still
requires use in commerce in the Philippines. Accordingly, and on the premise that
international agreements, such as Paris Convention, must yield to a municipal law, the
question on the exclusive right over the mark and logo would still depend on actual use in
commerce in the Philippines.

Petitioners then moved for a reconsideration, which motion was denied by the CA in its equally
assailed Resolution of September 15, 2003.10

As formulated by the petitioners, the issues upon which this case hinges are:

1. Whether the CA erred in finding that respondent had the right to file an application for
registration of the "Shangri-La" mark and "S" logo although respondent never had any prior
actual commercial use thereof;

2. Whether the CA erred in finding that respondent's supposed use of the identical "Shangri-
La" mark and "S" logo of the petitioners was not evident bad faith and can actually ripen into
ownership, much less registration;

3. Whether the CA erred in overlooking petitioners' widespread prior use of the "Shangri-La"
mark and "S" logo in their operations;

4. Whether the CA erred in refusing to consider that petitioners are entitled to protection
under both R.A. No. 166, the old trademark law, and the Paris Convention for the Protection
of Industrial Property;

5. Whether the CA erred in holding that SLIHM did not have the right to legally own the
"Shangri-La" mark and "S" logo by virtue of and despite their ownership by the Kuok Group;
 6. Whether the CA erred in ruling that petitioners' use of the mark and logo constitutes
actionable infringement;

7. Whether the CA erred in awarding damages in favor of respondent despite the absence of
any evidence to support the same, and in failing to award relief in favor of the petitioners;
and

8. Whether petitioners should be prohibited from continuing their use of the mark and logo in
question.

There are two preliminary issues, however, that respondent DGCI calls our attention to, namely:

1. Whether the certification against forum-shopping submitted on behalf of the petitioners is

sufficient;

2. Whether the issues posed by petitioners are purely factual in nature hence improper for
resolution in the instant petition for review on certiorari.

DGCI claims that the present petition for review should be dismissed outright for certain procedural
defects, to wit: an insufficient certification against forum shopping and raising pure questions of fact.
On both counts, we find the instant petition formally and substantially sound.

In its Comment, respondent alleged that the certification against forum shopping signed by Atty. Lee
Benjamin Z. Lerma on behalf and as counsel of the petitioners was insufficient, and that he was not
duly authorized to execute such document. Respondent further alleged that since petitioner SLIHM
is a foreign entity based in Hong Kong, the Director's Certificate executed by Mr. Madhu Rama
Chandra Rao, embodying the board resolution which authorizes Atty. Lerma to act for SLIHM and
execute the certification against forum shopping, should contain the authentication by a consular
officer of the Philippines in Hong Kong.

In National Steel Corporation v. CA,11 the Court has ruled that the certification on non-forum
shopping may be signed, for and in behalf of a corporation, by a specifically authorized lawyer who
has personal knowledge of the facts required to be disclosed in such document. The reason for this
is that a corporation can only exercise its powers through its board of directors and/or its duly
authorized officers and agents. Physical acts, like the signing of documents, can be performed only
by natural persons duly authorized for the purpose. 12

Moreover, Rule 7, Section 5 of the Rules of Court concerning the certification against forum
shopping does not require any consular certification if the petitioner is a foreign entity. Nonetheless,
to banish any lingering doubt, petitioner SLIHM furnished this Court with a consular certification
dated October 29, 2003 authenticating the Director's Certificate authorizing Atty. Lerma to execute
the certification against forum shopping, together with petitioners' manifestation of February 9, 2004.

Respondent also attacks the present petition as one that raises pure questions of fact. It points out
that in a petition for review under Rule 45 of the Rules of Court, the questions that may properly be
inquired into are strictly circumscribed by the express limitation that "the petition shall raise only
questions of law which must be distinctly set forth." 13 We do not, however, find that the issues
involved in this petition consist purely of questions of fact. These issues will be dealt with as we go
through the questions raised by the petitioners one by one.
Petitioners' first argument is that the respondent had no right to file an application for registration of
the "Shangri-La" mark and "S" logo because it did not have prior actual commercial use thereof. To
respondent, such an argument raises a question of fact that was already resolved by the RTC and
concurred in by the CA.

First off, all that the RTC found was that respondent was the prior user and registrant of the subject
mark and logo in the Philippines. Taken in proper context, the trial court's finding on "prior use" can
only be interpreted to mean that respondent used the subject mark and logo in the country before
the petitioners did. It cannot be construed as being a factual finding that there was prior use of the
mark and logo before registration.

Secondly, the question raised is not purely factual in nature. In the context of this case, it involves
resolving whether a certificate of registration of a mark, and the presumption of regularity in the
performance of official functions in the issuance thereof, are sufficient to establish prior actual use by
the registrant. It further entails answering the question of whether prior actual use is required before
there may be a valid registration of a mark.

Under the provisions of the former trademark law, R.A. No. 166, as amended, which was in effect up
to December 31, 1997, hence, the law in force at the time of respondent's application for registration
of trademark, the root of ownership of a trademark is actual use in commerce. Section 2 of said law
requires that before a trademark can be registered, it must have been actually used in commerce
and service for not less than two months in the Philippines prior to the filing of an application for its
registration.

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. 14

Among the effects of registration of a mark, as catalogued by the Court in Lorenzana v.

Macagba,15 are:

1. Registration in the Principal Register gives rise to a presumption of the validity of the
registration, the registrant's ownership of the mark, and his right to the exclusive use thereof.
xxx

2. Registration in the Principal Register is limited to the actual owner of the trademark and
proceedings therein pass on the issue of ownership, which may be contested through
opposition or interference proceedings, or, after registration, in a petition for
cancellation. xxx

[Emphasis supplied] 1avvphil.et

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. 16
While the present law on trademarks17 has dispensed with the requirement of prior actual use at the
time of registration, the law in force at the time of registration must be applied, and thereunder it was
held that as a condition precedent to registration of trademark, trade name or service mark, the
same must have been in actual use in the Philippines before the filing of the application for
registration.18 Trademark is a creation of use and therefore actual use is a pre-requisite to exclusive
ownership and its registration with the Philippine Patent Office is a mere administrative confirmation
of the existence of such right.19

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 registrant's
ownership of the trademark and of the exclusive right to the use thereof. 20 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, respondent's own witness, Ramon Syhunliong, testified that a jeepney signboard artist
allegedly commissioned to create the mark and logo submitted his designs only in December
1982.21 This was two-and-a-half months after the filing of the respondent's trademark application on
October 18, 1982 with the BPTTT. It was also only in December 1982 when the respondent's
restaurant was opened for business.22 Respondent cannot now claim before the Court that the
certificate of registration itself is proof that the two-month prior use requirement was complied with,
what with the fact that its very own witness testified otherwise in the trial court. And because at the
time (October 18, 1982) the respondent filed its application for trademark registration of the
"Shangri-La" mark and "S" logo, respondent was not using these in the Philippines commercially, the
registration is void.

Petitioners also argue that the respondent's use of the "Shangri-La" mark and "S" logo was in
evident bad faith and cannot therefore ripen into ownership, much less registration. While the
respondent is correct in saying that a finding of bad faith is factual, not legal, 23 hence beyond the
scope of a petition for review, there are, however, noted exceptions thereto. Among these exceptions
are:

1. When the inference made is manifestly mistaken, absurd or impossible; 24

2. When there is grave abuse of discretion;25

3. When the judgment is based on a misapprehension of facts;26

4. When the findings of fact are conflicting;27 and

5. When the facts set forth in the petition as well as in the petitioner's main and reply briefs
are not disputed by the respondent.28

And these are naming but a few of the recognized exceptions to the rule.

The CA itself, in its Decision of May 15, 2003, found that the respondent's president and chairman of
the board, Ramon Syhunliong, had been a guest at the petitioners' hotel before he caused the
registration of the mark and logo, and surmised that he must have copied the idea there:

Did Mr. Ramon Syhunliong, [respondent's] President copy the mark and devise from one of
[petitioners'] hotel (Kowloon Shangri-la) abroad? The mere fact that he was a visitor of [petitioners']
hotel abroad at one time (September 27, 1982) establishes [petitioners'] allegation that he got the
idea there.29

Yet, in the very next paragraph, despite the preceding admission that the mark and logo must have
been copied, the CA tries to make it appear that the adoption of the same mark and logo could have
been coincidental:

The word or name "Shangri-la" and the S-logo, are not uncommon. The word "Shangri-la" refers to a
(a) remote beautiful imaginary place where life approaches perfection or (b) imaginary mountain land
depicted as a utopia in the novel Lost Horizon by James Hilton. The Lost Horizon was a well-read
and popular novel written in 1976. It is not impossible that the parties, inspired by the novel, both
adopted the mark for their business to conjure [a] place of beauty and pleasure.

The S-logo is, likewise, not unusual. The devise looks like a modified Old English print. 30

To jump from a recognition of the fact that the mark and logo must have been copied to a
rationalization for the possibility that both the petitioners and the respondent coincidentally chose the
same name and logo is not only contradictory, but also manifestly mistaken or absurd. Furthermore,
the "S" logo appears nothing like the "Old English" print that the CA makes it out to be, but is
obviously a symbol with oriental or Asian overtones. At any rate, it is ludicrous to believe that the
parties would come up with the exact same lettering for the word "Shangri-La" and the exact same
logo to boot. As correctly observed by the petitioners, to which we are in full accord:

x x x When a trademark copycat adopts the word portion of another's trademark as his own, there
may still be some doubt that the adoption is intentional. But if he copies not only the word but also
the word's exact font and lettering style and in addition, he copies also the logo portion of the
trademark, the slightest doubt vanishes. It is then replaced by the certainty that the adoption was
deliberate, malicious and in bad faith.31

It is truly difficult to understand why, of the millions of terms and combination of letters and designs
available, the respondent had to choose exactly the same mark and logo as that of the petitioners, if
there was no intent to take advantage of the goodwill of petitioners' mark and logo. 32

One who has imitated the trademark of another cannot bring an action for infringement, particularly
against the true owner of the mark, because he would be coming to court with unclean
hands.33 Priority is of no avail to the bad faith plaintiff. Good faith is required in order to ensure that a
second user may not merely take advantage of the goodwill established by the true owner.

This point is further bolstered by the fact that under either Section 17 of R.A. No. 166, or Section 151
of R.A. No. 8293, or Article 6bis(3) of the Paris Convention, no time limit is fixed for the cancellation
of marks registered or used in bad faith.34 This is precisely why petitioners had filed an inter partes
case before the BPTTT for the cancellation of respondent's registration, the proceedings on which
were suspended pending resolution of the instant case.

Respondent DGCI also rebukes the next issue raised by the petitioners as being purely factual in
nature, namely, whether the CA erred in overlooking petitioners' widespread prior use of the
"Shangri-La" mark and "S" logo in their operations. The question, however, is not whether there had
been widespread prior use, which would have been factual, but whether that prior use entitles the
petitioners to use the mark and logo in the Philippines. This is clearly a question which is legal in
nature.
It has already been established in the two courts below, and admitted by the respondent's president
himself, that petitioners had prior widespread use of the mark and logo abroad:

There is, to be sure, an impressive mass of proof that petitioner SLIHM and its related companies
abroad used the name and logo for one purpose or another x x x.35 [Emphasis supplied]

In respondent's own words, "[T]he Court of Appeals did note petitioners' use of the mark and logo
but held that such use did not confer to them ownership or exclusive right to use them in the
Philippines."36 To petitioners' mind, it was error for the CA to rule that their worldwide use of the mark
and logo in dispute could not have conferred upon them any right thereto. Again, this is a legal
question which is well worth delving into.

R.A. No. 166, as amended, under which this case was heard and decided provides:

Section 2. What are registrable. - Trademarks, trade names and service marks owned by persons,
corporations, partnerships or associations domiciled in the Philippines and by persons, corporations,
partnerships or associations domiciled in any foreign country may be registered in accordance with
the provisions of this Act: Provided, That said trademarks trade names, or service marks
are actually in use in commerce and services not less than two months in the
Philippines before the time the applications for registration are filed: And provided, further, That the
country of which the applicant for registration is a citizen grants by law substantially similar privileges
to citizens of the Philippines, and such fact is officially certified, with a certified true copy of the
foreign law translated into the English language, by the government of the foreign country to the
Government of the Republic of the Philippines.

Section 2-A. Ownership of trademarks, trade names and service marks; how acquired. - Anyone
who lawfully produces or deals in merchandise of any kind or who engages in any lawful business,
or who renders any lawful service in commerce, by actual use thereof in manufacture or trade, in
business, and in the service rendered, may appropriate to his exclusive use a trademark, a trade
name, or a servicemark not so appropriated by another, to distinguish his merchandise, business
or service from the merchandise, business or services of others. The ownership or possession of a
trademark, trade name, service mark, heretofore or hereafter appropriated, as in this section
provided, shall be recognized and protected in the same manner and to the same extent as are
other property rights known to this law. [Emphasis supplied]

Admittedly, the CA was not amiss in saying that the law requires the actual use in commerce of the
said trade name and "S" logo in the Philippines. Hence, consistent with its finding that the bulk of the
petitioners' evidence shows that the alleged use of the Shangri-La trade name was done abroad and
not in the Philippines, it is understandable for that court to rule in respondent's favor. Unfortunately,
however, what the CA failed to perceive is that there is a crucial difference between the aforequoted
Section 2 and Section 2-A of R.A. No. 166. For, while Section 2 provides for what
is registrable, Section 2-A, on the other hand, sets out how ownership is acquired. These are two
distinct concepts.

Under Section 2, in order to register a trademark, one must be the owner thereof and must have
actually used the mark in commerce in the Philippines for 2 months prior to the application for
registration. Since "ownership" of the trademark is required for registration, Section 2-A of the same
law sets out to define how one goes about acquiring ownership thereof. Under Section 2-A, it is clear
that actual use in commerce is also the test of ownership but the provision went further by saying
that the mark must not have been so appropriated by another. Additionally, it is significant to note
that Section 2-A does not require that the actual use of a trademark must be within the Philippines.
Hence, under R.A. No. 166, as amended, one may be an owner of a mark due to actual use thereof
but not yet have the right to register such ownership here due to failure to use it within the
Philippines for two months.

While the petitioners may not have qualified under Section 2 of R.A. No. 166 as a registrant, neither
did respondent DGCI, since the latter also failed to fulfill the 2-month actual use requirement. What
is worse, DGCI was not even the owner of the mark. For it to have been the owner, the mark must
not have been already appropriated (i.e., used) by someone else. At the time of respondent DGCI's
registration of the mark, the same was already being used by the petitioners, albeit abroad, of which
DGCI's president was fully aware.

It is respondent's contention that since the petitioners adopted the "Shangri-La" mark and "S" logo
as a mere corporate name or as the name of their hotels, instead of using them as a trademark or
service mark, then such name and logo are not trademarks. The two concepts of corporate name or
business name and trademark or service mark, are not mutually exclusive. It is common, indeed
likely, that the name of a corporation or business is also a trade name, trademark or service mark.
Section 38 of R.A. No. 166 defines the terms as follows:

Sec. 38. Words and terms defined and construed - In the construction of this Act, unless the contrary
is plainly apparent from the context - The term "trade name" includes individual names and
surnames, firm names, trade names, devices or words used by manufacturers, industrialists,
merchants, agriculturists, and others to identify their business, vocations or occupations; the names
or titles lawfully adopted and used by natural or juridical persons, unions, and any
manufacturing, industrial, commercial, agricultural or other organizations engaged in trade or
commerce.

The term "trade mark" includes any word, name, symbol, emblem, sign or device or any combination
thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them
from those manufactured, sold or dealt in by others.

The term "service mark" means a mark used in the sale or advertising of services to identify the
services of one person and distinguish them from the services of others and includes without
limitation the marks, names, symbols, titles, designations, slogans, character names, and
distinctive features of radio or other advertising. [Emphasis supplied]

Clearly, from the broad definitions quoted above, the petitioners can be considered as having used
the "Shangri-La" name and "S" logo as a tradename and service mark.

The new Intellectual Property Code (IPC), Republic Act No. 8293, undoubtedly shows the firm
resolve of the Philippines to observe and follow the Paris Convention by incorporating the relevant
portions of the Convention such that persons who may question a mark (that is, oppose registration,
petition for the cancellation thereof, sue for unfair competition) include persons whose internationally
well-known mark, whether or not registered, is

identical with or confusingly similar to or constitutes a translation of a mark that is sought to be

registered or is actually registered.37

However, while the Philippines was already a signatory to the Paris Convention, the IPC only took
effect on January 1, 1988, and in the absence of a retroactivity clause, R.A. No. 166 still
applies.38 Under the prevailing law and jurisprudence at the time, the CA had not erred in ruling that:
The Paris Convention mandates that protection should be afforded to internationally known marks as
signatory to the Paris Convention, without regard as to whether the foreign corporation is registered,
licensed or doing business in the Philippines. It goes without saying that the same runs afoul to
Republic Act No. 166, which requires the actual use in commerce in the Philippines of the subject
mark or devise. The apparent conflict between the two (2) was settled by the Supreme Court in this
wise -

"Following universal acquiescence and comity, our municipal law on trademarks regarding the
requirement of actual use in the Philippines must subordinate an international
agreement inasmuch as the apparent clash is being decided by a municipal tribunal (Mortensen vs.
Peters, Great Britain, High Court of Judiciary of Scotland, 1906, 8 Sessions 93; Paras, International
Law and World Organization, 1971 Ed., p. 20). Withal, the fact that international law has been made
part of the law of the land does not by any means imply the primacy of international law over national
law in the municipal sphere. Under the doctrine of incorporation as applied in most countries, rules of
international law are given a standing equal, not superior, to national legislative enactments
(Salonga and Yap, Public International Law, Fourth ed., 1974, p. 16)."39 [Emphasis supplied]

Consequently, the petitioners cannot claim protection under the Paris Convention. Nevertheless,
with the double infirmity of lack of two-month prior use, as well as bad faith in the respondent's
registration of the mark, it is evident that the petitioners cannot be guilty of infringement. It would be
a great injustice to adjudge the petitioners guilty of infringing a mark when they are actually the
originator and creator thereof.

Nor can the petitioners' separate personalities from their mother corporation be an obstacle in the
enforcement of their rights as part of the Kuok Group of Companies and as official repository,
manager and operator of the subject mark and logo. Besides, R.A. No. 166 did not require the party
seeking relief to be the owner of the mark but "any person who believes that he is or will be
damaged by the registration of a mark or trade name."40

WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the Court
of Appeals dated May 15, 2003 and September 15, 2003, respectively, and the Decision of the
Regional Trial Court of Quezon City dated March 8, 1996 are hereby SET ASIDE. Accordingly, the
complaint for infringement in Civil Case No. Q-91-8476 is ordered DISMISSED.

SO ORDERED.

CANCIO C. GARCIA
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Associate Justice
Chairperson

ANGELINA SANDOVAL-GUTIERREZ RENATO C. CORONA

Associate Justice Asscociate Justice

ADOLFO S. AZCUNA
Associate Justice
 ATT E S TATI O N

I attest that the conclusions in the above decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.

REYNATO S. PUNO
Associate Justice
Chairperson, Second Division

C E R TI F I C ATI O N

Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, it
is hereby certified that the conclusions in the above decision were reached in consultation before the
case was assigned to the writer of the opinion of the Court.

ARTEMIO V. PANGANIBAN
Chief Justice

THIRD DIVISION

G.R. No. 175278, September 23, 2015

GSIS FAMILY BANK - THRIFT BANK [FORMERLY COMSAVINGS BANK, INC.], Petitioner, v. BPI
FAMILY BANK, Respondent.

DECISION

JARDELEZA, J.:

This is a Petition for Review on Certiorari filed by GSIS Family Bank Thrift Bank 1 assailing the Court of
Appeals Decision2 dated March 29, 2006 (Decision) and Resolution3 dated October 23, 2006 which denied
petitioner's petition for review of the Securities and Exchange Commission Decision dated February 22, 2005
(SEC En Banc Decision). The SEC En Banc Decision4 prohibited petitioner from using the word "Family" as
part of its corporate name and ordered petitioner to delete the word from its name. 5

Facts

Petitioner was originally organized as Royal Savings Bank and started operations in 1971. Beginning 1983
and 1984, petitioner encountered liquidity problems. On July 9, 1984, it was placed under receivership and
later temporarily closed by the Central Bank of the Philippines. Two (2) months after its closure, petitioner
reopened and was renamed Comsavings Bank, Inc. under the management of the Commercial Bank of
Manila.6

In 1987, the Government Service Insurance System (GSIS) acquired petitioner from the Commercial Bank
of Manila. Petitioner's management and control was thus transferred to GSIS. 7 To improve its marketability
to the public, especially to the members of the GSIS, petitioner sought Securities and Exchange Commission
(SEC) approval to change its corporate name to "GSIS Family Bank, a Thrift Bank." 8 Petitioner likewise
applied with the Department of Trade and Industry (DTI) and Bangko Sentral ng Pilpinas (BSP) for authority
to use "GSIS Family Bank, a Thrift Bank" as its business name. The DTI and the BSP approved the
applications.9 Thus, petitioner operates under the corporate name "GSIS Family Bank - a Thrift Bank,"
pursuant to the DTI Certificate of Registration No. 741375 and the Monetary Board Circular approval. 10

Respondent BPI Family Bank was a product of the merger between the Family Bank and Trust Company
(FBTC) and the Bank of the Philippine Islands (BPI).11 On June 27, 1969, the Gotianum family registered
with the SEC the corporate name "Family First Savings Bank," which was amended to "Family Savings
Bank," and then later to "Family Bank and Trust Company." 12 Since its incorporation, the bank has been
commonly known as "Family Bank." In 1985, Family Bank merged with BPI, and the latter acquired all the
rights, privileges, properties, and interests of Family Bank, including the right to use names, such as "Family
First Savings Bank," "Family Bank," and "Family Bank and Trust Company." BPI Family Savings Bank was
registered with the SEC as a wholly-owned subsidiary of BPI. BPI Family Savings Bank then registered with
the Bureau of Domestic Trade the trade or business name "BPI Family Bank," and acquired a reputation and
goodwill under the name.13 chanroblesvirtuallawlibrary

Proceedings before the SEC

Eventually, it reached respondent's attention that petitioner is using or attempting to use the name "Family
Bank." Thus, on March 8, 2002, respondent petitioned the SEC Company Registration and Monitoring
Department (SEC CRMD) to disallow or prevent the registration of the name "GSIS Family Bank" or any
other corporate name with the words "Family Bank" in it. Respondent claimed exclusive ownership to the
name "Family Bank," having acquired the name since its purchase and merger with Family Bank and Tmst
Company way back 1985.14 Respondent also alleged that through the years, it has been known as "BPI
Family Bank" or simply "Family Bank" both locally and internationally. As such, it has acquired a reputation
and goodwill under the name, not only with clients here and abroad, but also with correspondent and
competitor banks, and the public in general.15

Respondent prayed the SEC CRMD to disallow or prevent the registration of the name "GSIS Family Bank" or
any other corporate name with the words "Family Bank" should the same be presented for registration.
Respondent likewise prayed the SEC CRMD to issue an order directing petitioner or any other corporation to
change its corporate name if the names have already been registered with the SEC. 16

The SEC CRMD was thus confronted with the issue of whether the names BPI Family Bank and GSIS Family
Bank are confusingly similar as to require the amendment of the name of the latter corporation.

The SEC CRMD declared that upon the merger of FBTC with the BPI in 1985, the latter acquired the right to
the use of the name of the absorbed corporation. Thus, BPI Family Bank has a prior right to the use of the
name Family Bank in the banking industry, arising from its long and extensive nationwide use, coupled with
its registration with the Intellectual Property Office (IPO) of the name "Family Bank" as its trade name.
Applying the rule of "priority in registration" based on the legal maxim first in time, first in right, the SEC
CRMD concluded that BPI has the preferential right to the use of the name "Family Bank." More, GSIS and
Comsavings Bank were then fully aware of the existence and use of the name "Family Bank" by FBTC prior
to the latter's merger with BPI.17

The SEC CRMD also held that there exists a confusing similarity between the corporate names BPI Family
Bank and GSIS Family Bank. It explained that although not identical, the corporate names are indisputably
similar, as to cause confusion in the public mind, even with the exercise of reasonable care and observation,
especially so since both corporations are engaged in the banking business. 18

In a decision19 dated May 19, 2003, the SEC CRMD said, cralawla wlibrary

PREMISES CONSIDERED respondent GSIS FAMILY BANK is hereby directed to refrain from using the word
"Family" as part of its name and make good its commitment to change its name by deleting or dropping the
subject word from its corporate name within [thirty (30) days] from the date of actual receipt hereof.20 chanrobleslaw

Petitioner appealed21 the decision to the SEC En Banc, which denied the appeal, and upheld the SEC CRMD
in the SEC En Banc Decision.22 Petitioner elevated the SEC En Banc Decision to the Court of Appeals, raising
the following issues:chanRoblesvirtualLa wlibrary

1. Whether the use by GSIS Family Bank of the words "Family Bank" is deceptively and confusingly
similar to the name BPI Family Bank;

2. Whether the use by Comsavings Bank of "GSIS Family Bank" as its business constitutes unfair
competition;

3. Whether BPI Family Bank is guilty of forum shopping;

 4. Whether the approval of the DTI and the BSP of petitioner's application to use the name GSIS
Family Bank constitutes its authority to the lawful and valid use of such trade name or trade mark;

5. Whether the application of respondent BPI Family Bank for the exclusive use of the name "Family
Bank," a generic name, though not yet approved by IPO of the Bureau of Patents, has barred the
GSIS Family Bank from using such trade mark or name. 23

Court of Appeals Ruling

The Court of Appeals ruled that the approvals by the BSP and by the DTI of petitioner's application to use
the name "GSIS Family Bank" do not constitute authority for its lawful and valid use. It said that the SEC
has absolute jurisdiction, supervision and control over all corporations. 24 The Court of Appeals held that
respondent was entitled to the exclusive use of the corporate name because of its prior adoption of the
name "Family Bank" since 1969.25 There is confusing similarity in the corporate names because "[c]onfusion
as to the possible association with GSIS might arise if we were to allow Comsavings Bank to add its parent
company's acronym, 'GSIS' to 'Family Bank.' This is true especially considering both companies belong to
the banking industry. Proof of actual confusion need not be shown. It suffices that confusion is probably or
likely to occur."26 The Court of Appeals also ruled out forum shopping because not all the requirements
of litis pendentia are present.27

The dispositive portion of the decision read, cralawlawlibrary

WHEREFORE, the instant petition for review is hereby DISMISSED for lack of merit.28 chanroble slaw

After its Motion for Reconsideration was denied,29 petitioner brought the decision to this Court via a Petition
for Review on Certiorari.30

Issues in the Petition

Petitioner raised the following issues in its petition: chanRoblesvirtualLa wlibrary

I. The Court of Appeals gravely erred in affirming the SEC Resolution finding the word "Family" not
generic despite its unregistered status with the IPO of the Bureau of Patents and the use by GSIS-
Family Bank in its corporate name of the words "[F]amily [B]ank" as deceptive and [confusingly
similar] to the name BPI Family Bank;31

II. The Court of Appeals gravely erred when it ruled that the respondent is not guilty of forum shopping
despite the filing of three (3) similar complaints before the DTI and BSP and with the SEC without
the requisite certification of non-forum shopping attached thereto;32

III. The Court of Appeals gravely erred when it completely disregarded the opinion of the Banko Sentral
ng Pilipinas that the use by the herein petitioner of the trade name GSIS Family Bank - Thrift Bank
is not similar or does not deceive or likely cause any deception to the public. 33

Court's Ruling

We uphold the decision of the Court of Appeals.

Section 18 of the Corporation Code provides,

Section 18. Corporate name. - No corporate name may be allowed by the Securities and Exchange
Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing
corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to
existing laws. When a change in the corporate name is approved, the Commission shall issue an amended
certificate of incorporation under the amended name. chanrobleslaw
In Philips Export B.V. v. Court of Appeals,34 this Court ruled that to fall within the prohibition of the law on
the right to the exclusive use of a corporate name, two requisites must be proven, namely: chanRoble svirtualLawlibrary

(1) that the complainant corporation acquired a prior right over the use
of such corporate name; and
(2) the proposed name is either
(a) identical or
(b) deceptive or confusingly similar to that of any existing
corporation or to any other name already protected by law; or
(c) patently deceptive, confusing or contrary to existing law.35
These two requisites are present in this case. On the first requisite of a prior right, Industrial Refractories
Corporation of the Philippines v. Court of Appeals (IRCP case)36 is instructive. In that case, Refractories
Corporation of the Philippines (RCP) filed before the SEC a petition to compel Industrial Refractories
Corporation of the Philippines (IRCP) to change its corporate name on the ground that its corporate name is
confusingly similar with that of RCP's such that the public may be confused into believing that they are one
and the same corporation. The SEC and the Court of Appeals found for petitioner, and ordered IRCP to
delete or drop from its corporate name the word "Refractories." Upon appeal of IRCP, this Court upheld the
decision of the CA.

Applying the priority of adoption rule to determine prior right, this Court said that RCP has acquired the right
to use the word "Refractories" as part of its corporate name, being its prior registrant. In arriving at this
conclusion, the Court considered that RCP was incorporated on October 13, 1976 and since then
continuously used the corporate name "Refractories Corp. of the Philippines." Meanwhile, IRCP only started
using its corporate name "Industrial Refractories Corp. of the Philippines" when it amended its Articles of
Incorporation on August 23, 1985.37

In this case, respondent was incorporated in 1969 as Family Savings Bank and in 1985 as BPI Family Bank.
Petitioner, on the other hand, was incorporated as GSIS Family - Thrift Bank only in 2002, 38 or at least
seventeen (17) years after respondent started using its name. Following the precedent in the IRCP case, we
rule that respondent has the prior right over use of the corporate name.

The second requisite in the Philips Export case likewise obtains on two points: the proposed name is (a)
identical or (b) deceptive or confusingly similar to that of any existing corporation or to any other name
already protected by law.

On the first point (a), the words "Family Bank" present in both petitioner and respondent's corporate name
satisfy the requirement that there be identical names in the existing corporate name and the proposed one.
Respondent cannot justify its claim under Section 3 of the Revised Guidelines in the Approval of Corporate
and Partnership Names,39 to wit: cralawla wlibrary

3. The name shall not be identical, misleading or confusingly similar to one already registered by another
corporation or partnership with the Commission or a sole proprietorship registered with the Department of
Trade and Industry.

If the proposed name is similar to the name of a registered firm, the proposed name must contain at least
one distinctive word different from the name of the company already registered. chanrobleslaw

Section 3 states that if there be identical, misleading or confusingly similar name to one already registered
by another corporation or partnership with the SEC, the proposed name must contain at least one distinctive
word different from the name of the company already registered. To show contrast with respondent's
corporate name, petitioner used the words "GSIS" and "thrift." But these are not sufficiently distinct words
that differentiate petitioner's corporate name from respondent's. While "GSIS" is merely an acronym of the
proper name by which petitioner is identified, the word "thrift" is simply a classification of the type of bank
that petitioner is. Even if the classification of the bank as "thrift" is appended to petitioner's proposed
corporate name, it will not make the said corporate name distinct from respondent's because the latter is
likewise engaged in the banking business.
This Court used the same analysis in Ang mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus, H.S.K. sa Bans
ang Pilipinas, Inc. v. Iglesia ng Dios Kay Cristo Jesus, Haligi at Suhay ng Katotohanan 40 In that case, Iglesia
ng Dios Kay Cristo Jesus filed a case before the SEC to compel Ang mga Kaanib sa Iglesia ng Dios Kay Kristo
Hesus to change its corporate name, and to prevent it from using the same or similar name on the ground
that the same causes confusion among their members as well as the public. Ang mga Kaanib sa Iglesia ng
Dios Kay Kristo Hesus claimed that it complied with SEC Memorandum Circular No. 14-2000 by adding not
only two, but eight words to their registered name, to wit: "Ang Mga Kaanib" and "Sa Bansang Pilipinas,
Inc.," which effectively distinguished it from Iglesia ng Dios Kay Cristo Jesus. This Court rejected the
argument, thus: cralawlawlibrary

The additional words "Ang Mga Kaanib" and "Sa Bansang Pilipinas, Inc." in petitioner's name are, as
correctly observed by the SEC, merely descriptive of and also referring to the members, or kaanib, of
respondent who are likewise residing in the Philippines. These words can hardly serve as an effective
differentiating medium necessary to avoid confusion or difficulty in distinguishing petitioner from
respondent. This is especially so, since both petitioner and respondent corporations are using the same
acronym - H.S.K.; not to mention the fact that both are espousing religious beliefs and operating in the
same place. xxx41 chanrobleslaw

On the second point (b), there is a deceptive and confusing similarity between petitioner's proposed name
and respondent's corporate name, as found by the SEC.42 In determining the existence of confusing
similarity in corporate names, the test is whether the similarity is such as to mislead a person using ordinary
care and discrimination.43 And even without such proof of actual confusion between the two corporate
names, it suffices that confusion is probable or likely to occur.44

Petitioner's corporate name is "GSIS Family BankA Thrift Bank" and respondent's corporate name is "BPI
Family Bank." The only words that distinguish the two are "BPI," "GSIS," and "Thrift." The first two words
are merely the acronyms of the proper names by which the two corporations identify themselves; and the
third word simply describes the classification of the bank. The overriding consideration in determining
whether a person, using ordinary care and discrimination, might be misled is the circumstance that both
petitioner and respondent are engaged in the same business of banking. "The likelihood of confusion is
accentuated in cases where the goods or business of one corporation are the same or substantially the same
to that of another corporation."45

Respondent alleged that upon seeing a Comsavings Bank branch with the signage "GSIS Family Bank"
displayed at its premises, some of the respondent's officers and their clients began asking questions. These
include whether GSIS has acquired Family Bank; whether there is a joint arrangement between GSIS and
Family Bank; whether there is a joint arrangement between BPI and GSIS regarding Family Bank; whether
Comsavings Bank has acquired Family Bank; and whether there is there an arrangement among Comsavings
Bank, GSIS, BPI, and Family Bank regarding BPI Family Bank and GSIS Family Bank. 46 The SEC made a
finding that "[i]t is not a remote possibility that the public may entertain the idea that a relationship or
arrangement indeed exists between BPI and GSIS due to the use of the term 'Family Bank' in their corporate
names."47

Findings of fact of quasi-judicial agencies, like the SEC, are generally accorded respect and even finality by
this Court, if supported by substantial evidence, in recognition of their expertise on the specific matters
under their consideration, more so if the same has been upheld by the appellate court, as in this case. 48

Petitioner cannot argue that the word "family" is a generic or descriptive name, which cannot be
appropriated exclusively by respondent. "Family," as used in respondent's corporate name, is not generic.
Generic marks are commonly used as the name or description of a kind of goods, such as "Lite" for beer or
"Chocolate Fudge" for chocolate soda drink. Descriptive marks, on the other hand, convey the
characteristics, function, qualities or ingredients of a product to one who has never seen it or does not know
it exists, such as "Arthriticare" for arthritis medication. 49

Under the facts of this case, the word "family" cannot be separated from the word "bank." 50 In asserting
their claims before the SEC up to the Court of Appeals, both petitioner and respondent refer to the phrase
"Family Bank" in their submissions. This coined phrase, neither being generic nor descriptive, is merely
suggestive and may properly be regarded as arbitrary. Arbitrary marks are "words or phrases used as a
mark that appear to be random in the context of its use. They are generally considered to be easily
remembered because of their arbitrariness. They are original and unexpected in relation to the products
they endorse, thus, becoming themselves distinctive." 51 Suggestive marks, on the other hand, "are marks
which merely suggest some quality or ingredient of goods, xxx The strength of the suggestive marks lies on
how the public perceives the word in relation to the product or service." 52

In Ang v. Teodoro,53 this Court ruled that the words "Ang Tibay" is not al descriptive term within the
meaning of the Trademark Law but rather a fanciful or coined phrase. 54 In so ruling, this Court considered
the etymology and meaning of the Tagalog words, "Ang Tibay" to determine whether they relate to the
quality or description of the merchandise to which respondent therein applied them as trademark, thus: cralawlawlibrary

We find it necessary to go into the etymology and meaning of the Tagalog words "Ang Tibay" to determine
whether they are a descriptive term, i.e., whether they relate to the quality or description of the
merchandise to which respondent has applied them as a trade-mark. The word "ang" is a definite article
meaning "the" in English. It is also used as an adverb, a contraction of the word "anong" (what or how). For
instance, instead of saying, "Anong ganda!" ("How beautiful!"), we ordinarily say, "Ang ganda!" Tibay is a
root word from which are derived the verb magpatibay (to strengthen); the nouns pagkamatibay (strength,
durability), katibayan (proof, support, strength), katibaytibayan (superior strength); and the
adjectives matibay (strong, durable, lasting), napakatibay (very strong), kasintibay or magkasintibay (as
strong as, or of equal strength). The phrase "Ang Tibay" is an exclamation denoting admiration of strength
or durability. For instance, one who tries hard but fails to break an object exclaims, "Ang tibay!" ("How
strong!") It may also be used in a sentence thus, "Ang tibay ng sapatos mo!" ("How durable your shoes
are!") The phrase "ana tibay" is never used adjectively to define or describe an object. One does not say,
"ang tibay sapatos" or "sapatos ang tibay" to mean "durable shoes," but "matibay na sapatos" or "sapatos
na matibay."

From all of this we deduce that "Ang Tibay" is not a descriptive term within the meaning of the Trade-Mark
Law but rather a fanciful or coined phrase which may properly and legally be appropriated as a trade-mark
or trade-name, xxx55 (Underscoring supplied). chanrobleslaw

The word "family" is defined as "a group consisting of parents and children living together in a household" or
"a group of people related to one another by blood or marriage." 56Bank, on the other hand, is defined as "a
financial establishment that invests money deposited by customers, pays it out when requested, makes
loans at interest, and exchanges currency."57 By definition, there can be no expected relation between the
word "family" and the banking business of respondent. Rather, the words suggest that respondent's bank is
where family savings should be deposited. More, as in the Ang case, the phrase "family bank" cannot be
used to define an object.

Petitioner's argument that the opinion of the BSP and the certificate of registration granted to it by the DTI
constitute authority for it to use "GSIS Family Bank" as corporate name is also untenable.

The enforcement of the protection accorded by Section 18 of the Corporation Code to corporate names is
lodged exclusively in the SEC. The jurisdiction of the SEC is not merely confined to the adjudicative functions
provided in Section 5 of the SEC Reorganization Act, 58 as amended.59 By express mandate, the SEC has
absolute jurisdiction, supervision and control over all corporations. 60 It is the SEC's duty to prevent confusion
in the use of corporate names not only for the protection of the corporations involved, but more so for the
protection of the public. It has authority to de-register at all times, and under all circumstances corporate
names which in its estimation are likely to generate confusion. 61

The SEC62 correctly applied Section 18 of the Corporation Code, and Section 15 of SEC Memorandum
Circular No. 14-2000, pertinent portions of which provide: cralawlawlibrary

In implementing Section 18 of the Corporation Code of the Philippines (BP 69), the following revised
guidelines in the approval of corporate and partnership names are hereby adopted for the information and
guidance of all concerned: chanRoble svirtualLawlibrary

xxx

15. Registrant corporations or partnership shall submit a letter undertaking to change their corporate or
partnership name in case another person or firm has acquired a prior right to the use of the said firm name
or the same is deceptively or confusingly similar to one already registered unless this undertaking is already
included as one of the provisions of the articles of incorporation or partnership of the registrant.
chanrobleslaw
The SEC, after finding merit in respondent's claims, can compel petitioner to abide by its commitment "to
change its corporate name in the event that another person, firm or entity has acquired a prior right to use
of said name or one similar to it."63

Clearly, the only determination relevant to this case is that one made by the SEC in the exercise of its
express mandate under the law. The BSP opinion invoked by petitioner even acknowledges that "the issue
on whether a proposed name is identical or deceptively similar to that of any of existing corporation is
matter within the official jurisdiction and competence of the SEC." 64

Judicial notice65 may also be taken of the action of the IPO in approving respondent's registration of the
trademark "BPI Family Bank" and its logo on October 17, 2008. The certificate of registration of a mark shall
be prima facie evidence of the validity of the registration, the registrant's ownership of the mark, and of the
registrant's exclusive right to use the same in connection with the goods or services and those that are
related thereto specified in the certificate.66

Finally, we uphold the Court of Appeals' finding that the issue of forum shopping was belatedly raised by
petitioner and, thus, cannot anymore be considered at the appellate stage of the proceedings. Petitioner
raised the issue of forum shopping for the first time only on appeal. 67 Petitioner argued that the complaints
filed by respondent did not contain certifications against non-forum shopping, in violation of Section 5, Rule
7 of the Rules of Court.68

In S.C. Megaworld Construction and Development Corporation vs. Parada, 69 this Court said that objections
relating to non-compliance with the verification and certification of non-forum shopping should be raised in
the proceedings below, and not for the first time on appeal. In that case, S.C. Megaworld argued that the
complaint for collection of sum of money should have been dismissed outright by the trial court on account
of an invalid non-forum shopping certification. It alleged that the Special Power of Attorney granted to
Parada did not specifically include an authority for the latter to sign the verification and certification of non-
forum shopping, thus rendering the complaint defective for violation of Sections 4 and 5 of Rule 7 of the
Rules of Court. On motion for reconsideration of the decision of the Court of Appeals, petitioner raised for
the first time, the issue of forum shopping. The Court ruled against S.C. Megaworld, thus: cralawlawlibrary

It is well-settled that no question will be entertained on appeal unless it has been raised in the proceedings
below. Points of law, theories, issues and arguments not brought to the attention of the lower
court, administrative agency or quasi-judicial body, need not be considered by a reviewing court, as
they cannot be raised for the first time at that late stage. Basic considerations of fairness and due process
impel this rule. Any issue raised for the first time on appeal is barred by estoppel. 70chanroble slaw

In this case, the fact that respondent filed a case before the DTI was made known to petitioner 71 long before
the SEC rendered its decision. Yet, despite its knowledge, petitioner failed to question the alleged forum
shopping before the SEC. The exceptions to the general rule that forum shopping should be raised in the
earliest opportunity, as explained in the cited case of Young v. Keng Seng,72 do not obtain in this case.

WHEREFORE, the petition is DENIED. The decision of the Court of Appeals dated March 29, 2006 is
hereby AFFIRMED.

SO ORDERED. chanroblesvirtuallawlibrary

Velasco, Jr. (Chairperson) Peralta, Villarama, Jr., and Perez,*JJ., concur.