G.R. No.
L-18337 January 30, 1965 presented a "Notice of Opposition," dated October 15, 1959,
CHUA CHE, petitioner,
vs.
PHILIPPINES PATENT OFFICE and SY TUO, respondents.
Chipeco & Alcaraz, Jr. for petitioner.
Perfecto E. de Vera for respondents.
PAREDES, J.:
This is a petition to review the decision of the Director of Patents,
in Inter Partes Case No. 161, denying the application of petitioner
Chua Che for the registration of "T.M. X-7" for use on soap Class 51,
being manufactured by said Chua Che, upon the opposition of
respondent Sy Tuo.
Under date of October 30, 1958, Chua Che presented with the
Philippines Patent Office a petition praying for the registration in
his favor the trade name "X-7". The petition, states:
The undersigned CHUA CHE, a citizen of China, a resident of 2804
Limay St., Tondo, Manila, and doing business at same address, has
adopted and used the trademark "X-7" shown in the accompanying
Drawing.
In accordance with the requirements of law, the undersigned
declares that this trademark —
1. Was first used by him on June 10, 1957.
2. Was first used by him in commerce in or with the Philippines on
June 10, 1957.
3. Has been continuously used by him in trade in or with the
Philippines for more than one year.
4. Is, on the date of this application, actually used by him on the
following goods, classified according to the Official Classification of
Goods (Rule 82):
Class 51 — Soap
5. Is applied to the goods or to the packages containing the same,
by placing thereon a printed label on which the trademark is shown,
or by directly impressing the mark to the goods.
The corresponding declaration, which was under oath, contained,
among others, the following:
3. That he believes himself to be the lawful owner of the trademark
sought to be registered.
4. That the said trademark is in actual use in commerce in or with
the Philippines not less than two months before this application is
filed.
5. That no other person, partnership, corporation, or association, to
the best of his knowledge and belief, has the right to use said
trademark in the Philippines, either in the identical form or in any
such near resemblance thereto as might be calculated to deceive.
Under date of July 6, 1959, an Examiner of the Department of
Commerce and Industry, submitted a report recommending the
allowance of the application, which report was approved by the
Supervising TM Examiner. After the Notice of allowance was
published in the Official Gazette, as required, respondent Sy Tuo
Page 1 of 69 IPL Day 5
anchoring said opposition on the following allegations:
1. The registration of the trademark "X-7" as applied for by
CHUA CHE will not only violate the rights and interests of the
Oppositor over his registered trademark "X-7" covered by
Certificate of Registration No. 5,000, issued April 21, 1951,
but will also tend to mislead the purchasing public and make
it convenient for unscrupulous dealers to pass off the goods
of the applicant CHUA CHE, for those of the oppositor SY
TUO, to the injury of both the oppositor and the public.
2. The registration of the said trademark "X-7" in the name of
CHUA CHE will be in violation of, and will run counter to,
Section 4 (d) of Republic Act No. 166, as amended, because it
is confusingly similar to the trademark "X-7" covered by
Registration No. 5,000 previously registered to, and being
used by the oppositor and is not abandoned.
The Oppositor SY TUO, doing business as the Western
Cosmetic Laboratory will rely on the following facts:
(a) Oppositor has prior use of the trademark "X-7" as he has
been using it extensively and continuously since July 31, 1952,
while the applicant, Chua Che, allegedly used his trademark
only since June 10, 1957.
(b) Oppositor's mark "X-7" is distinctive and his invented
mark and not merely an ordinary, common and weak mark.
(c) The oppositor and the applicant use the trademark "X-7"
for allied and closely related products.
(d) The oppositor has spent a huge amount by way of
advertising and advertising his "X-7" brand.
(e) The oppositor has spent a big amount in expanding his
business for the manufacture of toilet soap and crystal
laundry soap with his already popular "X-7" brand.
(f) The trademark applied for by the applicant Chua Che
consists of the trademark "X-7" and anyone is likely to be
misled as to the source or origin by the close resemblance or
identity with the trademark "X-7" of the oppositor.
Attached to the Opposition were labels (samples) being used
by oppositor on his products, which clearly show "X-7".
Petitioner herein presented an Answer to Notice of
Opposition, claiming among others that the grounds of
opposition are not correct, since although it is admitted that
"X-7" is registered in the name of oppositor, said trademark
is not being used on soap, but purely toilet articles. After the
presentation of the Answer the case was heard, wherein the
parties presented their respective evidence, both testimonial
and documentary. In the memoranda of the contenders,
they limited the principal issues, thus —
Oppositor SY TUO —
The registration of the trademark "X-7" in the name of
applicant CHUA CHE will likely mislead the public so as to
make them believe that said goods are manufactured or
sponsored by or in some way in trade associated with
opposer.
Applicant CHUA CHE —
In Inter Partes proceedings, the principal issue is "priority of
adoption and use." Since opposer has not yet used "X-7" mark on
soap, but will still use it, applicant should be entitled to the
registration of the same.
The Director of Patents rendered judgment on January 18, 1961,
the pertinent portions of which read:
Based on those facts there is no question that opposer's first use of
the trademark X-7 on July 31, 1953, is prior to applicant's first use
of the mark on June 10, 1957. The only question then in this case is
whether or not purchasers of X-7 perfume, lipstick and nail polish
would likely upon seeing X-7 laundry soap, attribute common origin
to the products or assume that there existed some kind of trade
connection between applicant and opposer.
Opposer's record shows that he has been using since July 31, 1953
the trademark X-7 on perfume, lipstick and nail polish; that he has
spent substantial amounts of money in building upon the goodwill
of this trademark through advertisements in all kinds of media —
through newspapers of general circulation, by means of billboards
in various places in the Philippines, and also over the radio and
television. In these advertisements opposer has spent about
P120,000.00. There is no question that opposer enjoys a valuable
goodwill in the trademark X-7.
The products of the parties, while specifically different, are
products intended for use in the home and usually have common
purchasers. Furthermore, the use of X-7 for laundry soap is but a
natural expansion of business of the opposer. In fact, herein
opposer in 1956, prior to the alleged date of first use by
respondent-applicant of the trademark X-7 for laundry soap on
June 10, 1957, had made steps in expanding the use of this
trademark to granulated soap. Under these circumstances, it is
concluded that the average purchasers are likely to associate X-7
laundry soap with X-7 perfume, lipstick and nail polish or to think
that the products have common origin or sponsorship.
to the effect that "the average purchasers are likely to
associate X-7 laundry soap with X-7 perfume, lipstick and nail
polish or to think that the products have common origin or
sponsorship," is indeed well taken. It has been pointed out by
appellant that the product upon which the trademark X-7 will
be used (laundry soap) is different from those of appellee's,
and therefore no infringement and/or confusion may result.
We find no merit in the above contention, for it has been
held that while it is no longer necessary to establish that the
goods of the parties possess the same descriptive properties,
as previously required under the Trade Mark Act of 1905,
registration of a trademark should be refused in cases where
there is a likelihood of confusion, mistake, or deception, even
though the goods fall into different categories. (Application
of Sylvan Sweets Co., 205 F. 2nd, 207.) The products of
appellee are common household items nowadays, in the
same manner as laundry soap. The likelihood of purchasers
to associate those products to a common origin is not
far-fetched. Both from the standpoint of priority of use and
for the protection of the buying public and, of course,
appellee's rights to the trademark "X-7", it becomes manifest
that the registration of said trademark in favor of
applicant-appellant should be denied.
PREMISES CONSIDERED, the decision sought to be reviewed
should be, as it is hereby affirmed in all respects, with costs
against appellant CHUA CHE in both instances.
Bengzon, C.J., Bautista Angelo, Reyes, J.B.L., Barrera, Dizon,
Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.
Concepcion, J., took no part.

IN VIEW OF THE ABOVE FINDINGS, the opposition in this case

should be as it is hereby sustained and consequently Application
Serial No. 6941, of Chua Che, is also hereby rejected.

OPPOSITION SUSTAINED

The above judgment is now before Us, applicant-appellant claiming

that it was error for the Director to conclude that opposer SY TUO
had priority to use the trademark in question, and that the use by
appellant of the trademark "X-7" on granulated soap to be
manufactured and sold by him, would likely mislead purchasers.

At the very outset, we would like to state that in cases of the

nature of the one at bar, only questions of law should be raised,
and the only exception to this rule, meaning that findings of facts
may be reviewed, is when such findings are not supported by
substantial evidence (Sec. 2, Rule 44, Revised Rules). The finding of
the Director of Patents Office to the effect that opposer-appellee
Sy Tuo had priority of use and adoption of the trademark "X-7", is
for all intents and purposes, one of fact. This being the case, such
finding becomes conclusive to this Court. Even on this sole issue
alone, the petition for review must fall.

However, there are other matters which must be clarified. For

instance, the fact that appellee has not yet used the trademark
"X-7" on granulated soap, the product on which appellant wants to
use the said trademark. The circumstance of non-actual use of the
mark on granulated soap by appellee, does not detract from the
fact that he has already a right to such a trademark and should,
therefore, be protected. The observation of the Director of Patents

Page 2 of 69 IPL Day 5

G.R. No. L-23023 August 31, 1968
JOSE P. STA. ANA, petitioner,
vs.
FLORENTINO MALIWAT and TIBURCIO S. EVALLE, in his capacity as
Director of Patents, respondents.
Rodolfo A. Francisco for petitioner.
Catalino S. Maravilla for respondent Florentino Maliwat.
Office of the Solicitor General for respondent Tiburcio S. Evalle.
REYES, J.B.L., J.:
Petition for review of the decision of the respondent Director of
Patents in an interference proceeding1 (Inter Partes Case No. 291),
finding for the senior party applicant, Florentino Maliwat, the
herein private respondent, and against the junior party
applicant2 Jose P. Sta. Ana, the herein petitioner.
On 21 June 1962, Florentino Maliwat filed with the Patent Office an
application for registration of the trademark FLORMANN, which is
used on shirts, pants, jackets and shoes for ladies, men, and
children, claiming first use in commerce of the said mark on 15
January 1962. The claim of first use was subsequently amended to
6 July 1955.
On 18 September 1962, Jose P. Sta. Ana filed an application for the
registration of the tradename FLORMEN SHOE MANUFACTURERS
(SHOE MANUFACTURERS disclaimed),3 which is used in the
business of manufacturing ladies' and children's shoes. His claim of
first use in commerce of the said tradename is 8 April 1959.
In view of the admittedly confusing similarity between the
trademark FLORMANN and the tradename FLORMEN, the Director
of Patents declared an interference. After trial, the respondent
Director gave due course to Maliwat's application and denied that
of Sta. Ana. The latter, not satisfied with the decision, appealed to
this Court.
The petitioner assigned the following errors:
I. The Director of Patents erred in not finding that respondent
(senior party-applicant) failed to establish by clear and convincing
evidence earlier date of use of his mark FLORMANN than that
alleged in his application for registration, hence, respondent is not
entitled to carry back the date of first use to a prior date.
II. The Director erred in holding that respondent is the prior
adopter and user of his mark and in concluding that this is
strengthened with documentary evidence that respondent has
been using his mark since 1953 as tailor and haberdasher.
III. The Director of Patents erred in not finding false and fabricated
respondent's testimonial and documentary evidence and Director
should have applied the rule "Falsus in uno, falsus in omnibus" and
should have disregarded them.
IV. The Director of Patents erred in declaring that Maliwat has the
prior right to the use of his trademark on shoes and such right may
be carried back to the year 1953 when respondent started his
tailoring and haberdashery business and in holding that the
manufacture of shoes is within the scope of natural expansion of
the business of a tailor and haberdasher.
V. The Director of Patents erred in failing to apply the stricture that
parties should confine use of their respective marks to their
corresponding fields of business, and should have allowed the
Page 3 of 69 IPL Day 5
concurrent use of tradename FLORMEN SHOE
MANUFACTURERS and the trademark FLORMANN provided it
is not used on shoes.
The findings of the Director that Maliwat was the prior
adopter and user of the mark can not be contradicted, since
his findings were based on facts stipulated in the course of
the trial in the interference proceedings. The recorded
stipulation is as follows:
ATTY. FRANCISCO: Your Honor please, with the mutual
understanding of the counsel for the Junior Party and the
counsel for the Senior Party in their desire to shorten the
proceedings of this case, especially on matters that are
admitted and not controverted by both parties, they have
agreed and admitted that Mr. Jose P. Sta. Ana, the Junior
Party Applicant in this case, is engaged solely in the
manufacture of shoes under the firm name FLORMEN SHOE
MANUFACTURERS since April 1959; that the name FLORMEN
SHOE MANUFACTURERS is registered with the Bureau of
Commerce on April 8, 1959, as shown by Exhibits "A" and
"A-2". That Mr. Florentino Maliwat has been engaged in the
manufacture and sale of menswear shirts, polo shirts, and
pants, since 1953, using FLORMANN as its trademark. That
Mr. Florentino Maliwat began using the trademark
FLORMANN on shoes on January 1962 and the firm name
FLORMANN SHOES under which these shoes with the
trademark FLORMANN were manufactured and sold was first
used on January 1962, having also been registered with the
Bureau of Commerce on January 1962 and with other
departments of the government, like the Bureau of Labor,
the Social Security System and the Workmen's Compensation
in 1962.
ATTY. MARAVILLA: On behalf of the Senior Party Applicant,
represented by this humble representation, I respectfully
concur and admit all those stipulations above mentioned.
HEARING OFFICER: The court reserves the resolution on
those stipulations. We can proceed now with the redirect
examination. (T.s.n., 9 August 1963, pp. 33-34).
And the Rules of Court provide:
Sec. 2. Judicial admissions. — Admission made by the parties
in the pleadings, or in the course of the trial or other
proceedings do not require proof and can not be
contradicted unless previously shown to have been made
through palpable mistake." (Rule 129, Revised Rules of
Court).
Since the aforequoted stipulation of facts has not been
shown to have been made through palpable mistake, it is
vain for the petitioner to allege that the evidence for
respondent Maliwat is false, fabricated, inconsistent,
indefinite, contradictory, unclear, unconvincing, and
unsubstantial.
The rule on judicial admissions was not found or provided for
in the old Rules but can be culled from rulings laid down by
this Court previous to its revision (Irlanda v. Pitargue, 22 Phil.
383; 5 Moran 57-59, 1963 Ed.). It was the law, then and now,
being an application of the law on estoppel.
To be true, petitioner Sta. Ana, through counsel, filed with
this Court, on 24 December 1964, a motion entitled
"MOTION TO ORDER STENOGRAPHER TO PRODUCE
STENOGRAPHIC NOTES AND TO CORRECT TRANSCRIPT OF
STENOGRAPHIC NOTES; TO ALLOW PETITIONER TO WITHDRAW
FROM STIPULATION OF FACTS AND BE ALLOWED TO PRESENT
ADDITIONAL EVIDENCE; AND TO SUSPEND PERIOD FOR FILING
PETITIONER'S BRIEF." The reason given was that "counsel for Mr.
Jose P. Sta. Ana does not recall making any stipulation or
agreement of facts with the counsel of Mr. Florentino Maliwat on 9
August 1963." Opposition thereto was filed by Maliwat, asserting
that the stenographer took down notes on those things which were
stated and uttered by the parties; that movant should have moved
for reconsideration in the Patent Office, instead of here in the
Supreme Court, which is both untimely and unhonorable.
Upon requirement by this Court, stenographer Cleofe Rosales
commented on petitioner's motion that what she had taken down
were actually uttered by counsel for Sta. Ana, no more, no less;
that it was practically and highly impossible for her to have
intercalated into the records the questioned stipulation of facts
because of the length of counsel's manifestations and the different
subject matters of his statements, aside from the concurrence of
Maliwat's counsel and the reservation on the resolution made by
the hearing officer; and that despite her length of service, since
1958, as stenographic reporter, there had been no complaint
against her, except this one.
Counsel for Sta. Ana replied to the foregoing comments, alleging,
among others, that after his receipt of the decision, after 5 May
1964, he bought the transcript and requested the stenographer to
verify the contents of pages 33 and 34 of her transcript but, despite
several requests, and for a period of seven (7) months, for her to
produce the stenographic notes, she has failed to produce said
notes.
On 2 April 1965, stenographer Rosales sent to the clerk of this
Court the transcript of stenographic notes.
This Court, on 2 February 1965, denied, for being late the motion
to present additional testimonial and documentary evidence, and,
on 8 April 1965, deferred action on the objection to a portion of
the transcript until after hearing.
We find no substantiation of the charge that the stipulation of facts
appearing on pages 33 to 34 of the transcript of stenographic notes
taken on 9 August 1963 had been intercalated; hence, the
presumption that the stenographer regularly performed her duty
stands. The integrity of the record being intact, the petitioner is
bound by it. We can not overlook that even if his charges were true,
it was plain and inexcusable negligence on his part not to discover
earlier the defect he now complains of, if any, and in not taking
steps to correct it before the records were elevated to this Court.
An application for registration is not bound by the date of first use
as stated by him in his application, but is entitled to carry back said
stated date of first use to a prior date by proper evidence; but in
order to show an earlier date of use, he is then under a heavy
burden, and his proof must be clear and convincing (Anchor
Trading Co., Inc. vs. The Director of Patents, et al., L-8004, 30 May
1956; Chung Te vs. Ng Kian Giab, et al.,
L-23791, 23 November 1966). In the case at bar, the proof of date
of first use (1953), earlier than that alleged in respondent Maliwat's
application (1962), can be no less than clear and convincing
because the fact was stipulated and no proof was needed.
Petitioner would confine the respondent to the use of the mark
FLORMANN to tailoring and haberdashery only, but not on shoes,
on the ground that petitioner had used the name FLORMEN on
shoes since 1959, while the respondent used his mark on shoes
only in 1962; but the Director ruled:
Page 4 of 69 IPL Day 5
. . . I believe that it is now the common practice among local
tailors and haberdashers to branch out into articles of
manufacture which have, one way or another, some direct
relationship with or appurtenance to garments or attire to
complete one's wardrobe such as belts, shoes, handkerchiefs,
and the like, . . . It goes without saying that shoes on one
hand and shirts, pants and jackets on the other, have the
same descriptive properties for purposes of our Trademark
Law.
Modern law recognizes that the protection to which the
owner of a trademark mark 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 trademark or tradename 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;
52 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). It is on this basis that the respondent
Director of Patents adverted to the practice "among local
tailors and haberdashers to branch out into articles of
manufacture which have some direct relationship" . . . "to
garments or attire to complete one's wardrobe". Mere
dissimilarity of goods should not preclude relief where the
junior user's goods are not too different or remote from any
that the owner would be likely to make or sell; and in the
present case, wearing apparel is not so far removed from
shoes as to preclude relief, any more than the pancake flour
is from syrup or sugar cream (Aunt Jemima Mills Co. vs.
Rigney & Co., LRA 1918 C 1039), or baking powder from
baking soda (Layton Pure Food Co. vs. Church & Co., 182 Fed.
35), or cosmetics and toilet goods from ladies' wearing
apparel and costume jewelry (Lady Esther Ltd. vs. Lady Esther
Corset Shoppe, 148 ALR 6). More specifically, manufacturers
of men's clothing were declared entitled to protection
against the use of their trademark in the sale of hats and
caps [Rosenberg Bros. vs. Elliott, 7 Fed. (2d) 962] and of
ladies shoes (Forsythe & Co. vs. Forsythe Shoe Corp., 254 NYS
584). In all these cases, the courts declared the owner of a
trademark from the first named goods entitled to exclude
use of its trademark on the related class of goods
above-referred to.
It may be that previously the respondent drew a closer
distinction among kinds of goods to which the use of similar
marks could be applied; but it can not be said that the
present ruling under appeal is so devoid of basis in law as to
amount to grave abuse of discretion warranting reversal.
Republic Act No. 166, as amended, provides:
Sec. 4. . . . The owner of a trademark, tradename 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
xxx xxx xxx
(d) Consists of or comprises a mark or tradename which
resembles a mark or tradename registered in the Philippines
or a mark or tradename previously used in the Philippines by
another and not abandoned, as to be likely, when applied to or
used in connection with the goods, business or services of the
applicant, to cause confusion or mistake or to deceive purchasers;

xxx xxx xxx

Note that the provision does not require that the articles of
manufacture of the previous user and the late user of the mark
should possess the same descriptive properties or should fall into
the same categories as to bar the latter from registering his mark in
the principal register (Chua Che vs. Phil. Patent Office, et al.,
L-18337, 30 Jan. 1965.4 citing Application of Sylvan Sweets Co., 205
F. 2nd, 207).5 Therefore, whether or not shirts and shoes have the
same descriptive properties, or whether or not it is the prevailing
practice or the tendency of tailors and haberdashers to expand
their business into shoes making, are not controlling. The meat of
the matter is the likelihood of confusion, mistake or deception
upon purchasers of the goods of the junior user of the mark and
the goods manufactured by the previous user. Here, the
resemblance or similarity of the mark FLORMANN and the name
FLORMEN and the likelihood of confusion, one to the other, is
admitted; therefore, the prior adopter, respondent Maliwat, has
the better right to the use of the mark.

FOR THE FOREGOING REASONS, the appealed decision is hereby

affirmed, with costs against the petitioner.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro,

Angeles and Fernando, JJ., concur.

Page 5 of 69 IPL Day 5

G.R. No. L-26676 July 30, 1982
PHILIPPINE REFINING CO., INC., petitioner,
vs.
NG SAM and THE DIRECTOR OF PATENTS, respondents.
Ponce Enrile, Siguion Reyna, Montecillo & Bello and Associates for
petitioner.
Primitivo C. Bucasas for respondents.
ESCOLIN, J.:
The sole issue raised in this petition for review of the decision of
the Director of patents is whether or not the product of respondent,
Ng Sam, which is ham, and those of petitioner consisting of lard,
butter, cooking oil and soap are so related that the use of the same
trademark "CAMIA" on said goods would likely result in confusion
as to their source or origin.
The trademark "CAMIA" was first used ill the Philippines by
petitioner on its products in 1922. In 1949, petitioner caused the
registration of said trademark with the Philippine Patent Office
under certificates of registration Nos. 1352-S and 1353-S, both
issued on May 3, 1949. Certificate of Registration No. 1352-S covers
vegetable and animal fats, particularly lard, butter and cooking oil,
all classified under Class 47 (Foods and Ingredients of Food) of the
Rules of Practice of the Patent Office, while certificate of
registration No. 1353-S applies to abrasive detergents, polishing
materials and soap of all kinds (Class 4).
On November 25, 1960, respondent Ng Sam, a citizen residing in
Iloilo City, filed an application with the Philippine Patent office for
registration of the Identical trademark "CAMIA" for his product,
ham, which likewise falls under Class 47. Alleged date of first use of
the trademark by respondent was on February 10, 1959.
After due publication of the application, petitioner filed an
opposition, in accordance with Section 8 of Republic Act No. 166,
otherwise known as the Trademark Law, as amended. Basis of
petitioner's opposition was Section 4(d) of said law, which provides
as unregistrable:
a mark which consists of or comprises a mark or tradename which
so resembles a mark or tradename registered in the Philippines or a
mark or tradename previously used in the Philippines by another
and not abandoned, as to be likely, when applied to or used in
connection with the goods, business services of the applicant, to
cause confusion or mistake or to deceive purchasers.
The parties submitted the case for decision without presenting any
evidence: thereafter the Director of patents rendered a decision
allowing registration of the trademark "CAMIA" in favor of Ng Sam.
Petitioner moved for a reconsideration, but the same was denied.
Hence, this petition.
A rudimentary precept in trademark protection is that "the right to
a trademark is a limited one, in the sense that others may used the
same mark on unrelated goods." 1 Thus, as pronounced by the
United States Supreme Court in the case of American Foundries vs.
Robertson 2, "the mere fact that one person has adopted and used
a trademark on his goods does not prevent the adoption and use of
the same trademark by others on articles of a different
description."
Page 6 of 69 IPL Day 5
Such restricted right over a trademark is likewise reflected in
our Trademark law. Under Section 4(d) of the law,
registration of a trademark which so resembles another
already registered or in use should be denied, where to allow
such registration could likely result in confusion, mistake or
deception to the consumers. Conversely, where no confusion
is likely to arise, as in this case, registration of a similar or
even Identical mark may be allowed.
The term "CAMIA" is descriptive of a whole genus of garden
plants with fragrant white flowers. Some people call the
"CAMIA" the "white ginger plant" because of its tuberous
roots, while children refer to it as the butterfly flower
because of its shape. Being a generic and common term, its
appropriation as a trademark, albeit in a fanciful manner in
that it bears no relation to the product it Identifies, is valid.
However, the degree of exclusiveness accorded to each user
is closely restricted. 3
The records of this case disclose that the term "CAMIA" has
been registered as a trademark not only by petitioner but by
two (2) other concerns, as follows:
1. CAMIA Application No. 280 Registration No. SR-320 Date
Registered — May 26, 1960 Owner — Everbright
Development Company Business Address — 310 M. H. del
Pilar Grace Park, Caloocan City Class 4 — Thread and Yarn
2. CAMIA and Representation Application No. 538 Date Filed
— August 10, 1945 Date Registered - April 20, 1946 Owner
— F.E. Zuellig, Inc. Business Address — 55 Rosario St., Manila
Class 43 — Particular Good on which mark is used: Textiles,
Embroideries laces, etc.
A trademark is designed to Identify the user. But it should be
so distinctive and sufficiently original as to enable those who
come into contact with it to recognize instantly the Identity
of the user. " It must be affirmative and definite, significant
and distinctive, capable to indicate origin." 4
It is evident that "CAMIA" as a trademark is far from being
distinctive. By itself, it does not Identify petitioner as the
manufacturer or producer of the goods upon which said
mark is used, as contra-distinguished to trademarks derived
from coined words such as "Rolex", "Kodak" or "Kotex". It has
been held that if a mark is so commonplace that it cannot be
readily distinguished from others, then it is apparent that it
cannot Identify a particular business; and he who first
adopted it cannot be injured by any subsequent
appropriation or imitation by others, and the public will not
be deceived." 5
The trademark "CAMIA" is used by petitioner on a wide range
of products: lard, butter, cooking oil, abrasive detergents,
polishing materials and soap of all kinds. Respondent desires
to use the same on his product, ham. While ham and some
of the products of petitioner are classified under Class 47
(Foods and Ingredients of Food), this alone cannot serve as
the decisive factor in the resolution of whether or not they
are related goods. Emphasis should be on the similarity of
the products involved and not on the arbitrary classification
or general description of their properties or characteristics.
In his decision, the Director of Patents enumerated the
factors that set respondent's product apart from the goods
of petitioner. He opined and We quote:
I have taken into account such factors as probable purchaser
attitude and habits, marketing activities, retail outlets, and
commercial impression likely to be conveyed by the trademarks if
used in conjunction with the respective goods of the parties. I
believe that ham on one hand, and lard, butter, oil, and soap on the
other are products that would not move in the same manner
through the same channels of trade. They pertain to unrelated
fields of manufacture, might be distributed and marketed under
dissimilar conditions, and are displayed separately even though
they frequently may be sold through the same retail food
establishments. Opposer's products are ordinary day-to-day
household items whereas ham is not necessarily so. Thus, the
goods of the parties are not of a character which purchasers would
be likely to attribute to a common origin. (p. 23, Rollo).

The observation and conclusion of the Director of Patents are

correct. The particular goods of the parties are so unrelated that
consumers would not in any probability mistake one as the source
or origin of the product of the other. "Ham" is not a daily food fare
for the average consumer. One purchasing ham would exercise a
more cautious inspection of what he buys on account of it price.
Seldom, if ever, is the purchase of said food product delegated to
household helps, except perhaps to those who, like the cooks, are
expected to know their business. Besides, there can be no
likelihood for the consumer of respondent's ham to confuse its
source as anyone but respondent. The facsimile of the label
attached by him on his product, his business name "SAM'S HAM
AND BACON FACTORY" written in bold white letters against a
reddish orange background 6, is certain to catch the eye of the
class of consumers to which he caters.

In addition, the goods of petitioners are basically derived from

vegetable oil and animal fats, while the product of respondent is
processed from pig's legs. A consumer would not reasonably
assume that, petitioner has so diversified its business as to include
the product of respondent.

Mr. Runolf Callman, in Section 80.3, VOL. I, p. 1121 of his book,

Unfair Competition and Trade Marks, declare:

While confusion of goods can only be evident, where the litigants

are actually in competition, confusion of business may arise
between non-competitive interests as well. This is true whether or
not the trademarks are registered. Sec. 16 of the Trademark Act, in
referring to 'merchandise of substantially the same descriptive
properties, embraces competitive and non-competitive trademark
infringement but it is not so extensive as to be applicable to cases
where the public would not reasonably expect the plaintiff to make
or sell the same class of goods as those made or sold by the
defendant. (Emphasis supplied).

In fine, We hold that the businesss of the parties are

non-competitive and their products so unrelated that the use of
Identical trademarks is not likely to give rise to confusion, much less
cause damage to petitioner.

WHEREFORE, the instant petition is hereby dismissed and the

decision of the Director of Patents in Inter Partes Case No. 231
affirmed in toto. Costs against petitioner.

SO ORDERED.

Barredo (Chairman), Aquino, Concepcion, Jr., Guerrero, Abad Santos

and De Castro, JJ., concur.

Page 7 of 69 IPL Day 5

G.R. No. L-29971 August 31, 1982
ESSO STANDARD EASTERN, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS ** and UNITED CIGARETTE
CORPORATION, respondents.
TEEHANKEE, J.:
The Court affirms on the basis of controlling doctrine the appealed
decision of the Court of Appeals reversing that of the Court of First
Instance of Manila and dismissing the complaint filed by herein
petitioner against private respondent for trade infringement for
using petitioner's trademark ESSO, since it clearly appears that the
goods on which the trademark ESSO is used by respondent is
non-competing and entirely unrelated to the products of petitioner
so that there is no likelihood of confusion or deception on the part
of the purchasing public as to the origin or source of the goods.
Petitioner Esso Standard Eastern, Inc., 1 then a foreign corporation
duly licensed to do business in the Philippines, is engaged in the
sale of petroleum products which are Identified with its trademark
ESSO (which as successor of the defunct Standard Vacuum Oil Co. it
registered as a business name with the Bureaus of Commerce and
Internal Revenue in April and May, 1962). Private respondent in
turn is a domestic corporation then engaged in the manufacture
and sale of cigarettes, after it acquired in November, 1963 the
business, factory and patent rights of its predecessor La Oriental
Tobacco Corporation, one of the rights thus acquired having been
the use of the trademark ESSO on its cigarettes, for which a permit
had been duly granted by the Bureau of Internal Revenue.
Barely had respondent as such successor started manufacturing
cigarettes with the trademark ESSO, when petitioner commenced a
case for trademark infringement in the Court of First Instance of
Manila. The complaint alleged that the petitioner had been for
many years engaged in the sale of petroleum products and its
trademark ESSO had acquired a considerable goodwill to such an
extent that the buying public had always taken the trademark ESSO
as equivalent to high quality petroleum products. Petitioner
asserted that the continued use by private respondent of the same
trademark ESSO on its cigarettes was being carried out for the
purpose of deceiving the public as to its quality and origin to the
detriment and disadvantage of its own products.
In its answer, respondent admitted that it used the trademark ESSO
on its own product of cigarettes, which was not Identical to those
produced and sold by petitioner and therefore did not in any way
infringe on or imitate petitioner's trademark. Respondent
contended that in order that there may be trademark infringement,
it is indispensable that the mark must be used by one person in
connection or competition with goods of the same kind as the
complainant's.
The trial court, relying on the old cases of Ang vs.
Teodoro 2 and Arce & Sons, Inc. vs. Selecta Biscuit
Company, 3 referring to related products, decided in favor of
petitioner and ruled that respondent was guilty of infringement of
trademark.
On appeal, respondent Court of Appeals found that there was no
trademark infringement and dismissed the complaint.
Reconsideration of the decision having been denied, petitioner
appealed to this Court by way of certiorari to reverse the decision
of the Court of Appeals and to reinstate the decision of the Court of
First Instance of Manila. The Court finds no ground for granting the
petition.
Page 8 of 69 IPL Day 5
The law defines infringement as the use without consent of
the trademark owner of any "reproduction, counterfeit, copy
or colorable limitation of any registered mark or tradename
in connection with the sale, offering for sale, or advertising of
any goods, business or services on or in connection with
which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of
such goods or services, or Identity of such business; or
reproduce, counterfeit, copy or colorably imitate any such
mark or tradename and apply such reproduction, counterfeit,
copy or colorable limitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used
upon or in connection with such goods, business or
services." 4 Implicit in this definition is the concept that the
goods must be so related that there is a likelihood either of
confusion of goods or business. 5 But likelihood of confusion
is a relative concept; to be determined only according to the
particular, and sometimes peculiar, circumstances of each
case. 6 It is unquestionably true that, as stated in Coburn vs.
Puritan Mills, Inc. 7 "In trademark cases, even more than in
other litigation, precedent must be studied in the light of the
facts of the particular case.
It is undisputed that the goods on which petitioner uses the
trademark ESSO, petroleum products, and the product of
respondent, cigarettes, are non-competing. But as to
whether trademark infringement exists depends for the most
part upon whether or not the goods are so relatedthat 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. 8 The vast majority of courts today follow the
modern theory or concept of "related goods" 9 which the
Court has likewise adopted and uniformly recognized and
applied. 10
Goods are related when they belong to the same class or
have the 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. 11 Thus, biscuits were held related
to milk because they are both food products. 12 Soap and
perfume, lipstick and nail polish are similarly related because
they are common household items now a days. 13 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. 14 Soap and pomade although
non- competitive, were held to be similar or to belong to the
same class, since both are toilet articles. 15 But no confusion
or deception can possibly result or arise when the name
"Wellington" which is the trademark for shirts, pants,
drawers and other articles of wear for men, women and
children is used as a name of a department store. 16
Thus, in Acoje Mining Co., Inc. vs. Director of Patents, 17 the
Court, through now Chief Justice Fernando, reversed the
patent director's decision on the question of "May petitioner
Acoje Mining Company register for the purpose of
advertising its product, soy sauce, the trademark LOTUS,
there being already in existence one such registered in favor
of the Philippine Refining Company for its product, edible oil,
it being further shown that the trademark applied for is in smaller
type, colored differently, set on a background which is dissimilar as
to yield a distinct appearance?" and ordered the granting of
petitioner's application for registration ruling that "there is quite a
difference between soy sauce and edible oil. If one is in the market
for the former, he is not likely to purchase the latter just because of
the trademark LOTUS" and "when regard is had for the principle
that the two trademarks in their entirety as they appear in their
respective labels should be considered in relation to the goods
advertised before registration could be denied, the conclusion is
inescapable that respondent Director ought to have reached a
different conclusion. "
By the same token, in the recent case of Philippine Refining Co., Inc.
vs. Ng Sam and Director of Patents, 18 the Court upheld the patent
director's registration of the same trademark CAMIA for therein
respondent's product of ham notwithstanding its already being
used by therein petitioner for a wide range of products: lard butter,
cooking oil, abrasive detergents, polishing materials and soap of all
kinds. The Court, after noting that the same CAMIA trademark had
been registered by two other companies, Everbright Development
Company and F. E. Zuellig, Inc. for their respective products of
thread and yarn (for the former) and textiles, embroideries and
laces (for the latter) ruled that "while ham and some of the
products of petitioner are classified under Class 47 (Foods and
Ingredients of Food), this alone cannot serve as the decisive factor
in the resolution of whether or not they are related goods.
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 Court, therefore, concluded that
"In fine, We hold that the businesses of the parties are
non-competitive and their products so unrelated that the use of
Identical trademarks is not likely to give rise to confusion, much less
cause damage to petitioner."
In the situation before us, the goods are obviously different from
each other with "absolutely no iota of similitude" 19 as stressed in
respondent court's judgment. They are so foreign to each other as
to make it unlikely that purchasers would think that petitioner is
the manufacturer of respondent's goods. The mere fact that one
person has adopted and used a trademark on his goods does not
prevent the adoption and use of the same trademark by others on
unrelated articles of a different kind. 20
Petitioner uses the trademark ESSO and holds certificate of
registration of the trademark for petroleum products, including
aviation gasoline, grease, cigarette lighter fluid and other various
products such as plastics, chemicals, synthetics, gasoline solvents,
kerosene, automotive and industrial fuel, bunker fuel, lubricating
oil, fertilizers, gas, alcohol, insecticides and the ESSO Gasul" burner,
while respondent's business is solely for the manufacture and sale
of the unrelated product of cigarettes. The public knows too well
that petitioner deals solely with petroleum products that there is
no possibility that cigarettes with ESSO brand will be associated
with whatever good name petitioner's ESSO trademark may have
generated. Although petitioner's products are numerous, they are
of the same class or line of merchandise which are non-competing
with respondent's product of cigarettes, which as pointed out in
the appealed judgment is beyond petitioner's "zone of potential or
natural and logical expansion" 21 When a trademark is used by a
party for a product in which the other party does not deal, the use
of the same trademark on the latter's product cannot be validly
objected to. 22
Another factor that shows that the goods involved are
non-competitive and non-related is the appellate court's finding
that they flow through different channels of trade, thus: "The
products of each party move along and are disposed through
different channels of distribution. The (petitioner's) products are
Page 9 of 69 IPL Day 5
distributed principally through gasoline service and
lubrication stations, automotive shops and hardware stores.
On the other hand, the (respondent's) cigarettes are sold in
sari-sari stores, grocery stores, and other small distributor
outlets. (Respondent's) cigarettes are even peddled in the
streets while (petitioner's) 'gasul' burners are not. Finally,
there is a marked distinction between oil and tobacco, as
well as between petroleum and cigarettes. Evidently, in kind
and nature the products of (respondent) and of (petitioner)
are poles apart." 23
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 court's 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
plaintiff's 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 appellant's cigarette. The only color that
the appellant uses in its trademark is green." 24
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."
In point of fact and time, the Court's dismissal of the petition
at bar was presaged by its Resolution of May 21, 1979
dismissing by minute resolution the petition for review for
lack of merit in the Identical case of Shell Company of the
Philippines, Ltd vs. Court of Appeals 25, wherein the Court
thereby affirmed the patent office's registration of the
trademark SHELL as used in the cigarettes manufactured by
therein respondent Fortune Tobacco Corporation
notwithstanding the therein petitioner Shell Company's
opposition thereto as the prior registrant of the same
trademark for its gasoline and other petroleum trademarks,
on the strength of the controlling authority of Acoje Mining
Co. vs. Director of Patents, Supra, and the same rationale that
"(I)n the Philippines, where buyers of appellee's (Fortune
Corp.'s) cigarettes, which are low cost articles, can be more
numerous compared to buyers of the higher priced
petroleum and chemical products of appellant (Shell Co.) and
where appellant (Shell) is known to be in the business of
selling petroleum and petroleum-based chemical products,
and no others, it is difficult to conceive of confusion in the
minds of the buying public in the sense it can be thought that
appellant (Shell) is the manufacturer of appellee's (Fortune's)
cigarettes, or that appellee (Fortune) is the manufacturer or
processor of appellant's (Shell's) petroleum and chemical
products." 26
ACCORDINGLY, the petition is dismissed and the decision of
respondent Court of Appeals is hereby affirmed.
G.R. No. L-44707 August 31, 1982 Can it be said then that petitioner's application would be
likely to cause confusion or mistake on the part of the buying
HICKOK MANUFACTURING CO., INC., petitioner, public? The answer should be in the negative. It does not
vs. defy common sense to assert that a purchaser would be
COURT OF APPEALS ** and SANTOS LIM BUN LIONG, respondents. cognizant of the product he is buying. There is quite a
difference between soy sauce and edible oil. If one is in the
Sycip, Salazar, Feliciano, Hernandez & Castillo Law Offices for market for the former, he is not likely to purchase the latter
petitioner. just because on the trademark LOTUS. Even on the rare
occasion that a mistake does occur, it can easily be rectified.
Tañada, Sanchez, Tafiada & Tanada Law Offices and George R. Moreover, there is no denying that the possibility of
Arbolario for respondents. confusion is remote considering petitioner's trademark being
in yellow and red while that of the Philippine Refining
& Company being in green and yellow, and the much smaller
size of petitioner's trademark. When regard is had for the
principle that the two trademarks in their entirety as they
TEEHANKEE, J.:
appear in their respective labels should be considered in
relation to the goods advertised before registration could be
The Court affirms on the strength of controlling doctrine as
denied, the conclusion is inescapable that respondent
reaffirmed in the companion case of Esso Standard Eastern Inc. vs.
Director ought to have reached a different conclusion.
Court of Appeals 1promulgated also on this date and the recent
Petitioner has successfully made out a case for registration.
case of Philippine Refining Co., Inc. vs. Ng Sam and Director of
Parents 2the appealed decision of the Court of Appeals reversing
From the statements of the Supreme Court in the two cases
the patent director's decision and instead dismissing petitioner's
aforementioned, we gather that there must be not only
petition to cancel private respondent's registration of the
resemblance between the trademark of the plaintiff and that
trademark of HICKOK for its Marikina shoes as against petitioner's
of the defendant, but also similarity of the goods to which
earlier registration of the same trademark for its other
the two trademarks are respectively attached.
non-competing products.
Since in this case the trademark of petitioner-appellee is
On the basis of the applicable reasons and considerations
used in the sale of leather wallets, key cases, money folds
extensively set forth in the above-cited controlling precedents and
made of leather, belts, men's briefs, neckties, handkerchiefs
the leading case of Acoje Mining Co., Inc. vs. Director of Patents 3on
and men's socks, and the trademark of registrant-appellant is
which the appellate court anchored its decision at bar, said decision
used in the sale of shoes, which have different channels of
must stand affirmed, as follows:
trade, the Director of Patents, as in the case of Acoje Mining
Co., Inc. vs. Director of Patents, supra, 'ought to have reached
An examination of the trademark of petitioner-appellee and that of
a different conclusion.
registrant-appellant convinces us that there is a difference in the
design and the coloring of, as well as in the words on the ribbons,
It is established doctrine, as held in the above-cited cases,
the two trademarks.
that "emphasis should be on the similarity of the products
involved and not on the arbitrary classification or general
In petitioner-appellee's trademark for handkerchiefs (Exhibit 'Q'),
description of their properties or characteristics" 4and that
the word 'HICKOK' is in red with white background in the middle of
"the mere fact that one person has adopted and used a
two branches of laurel in light gold. At the lower part thereof is a
trademark on his goods does not prevent the adoption and
ribbon on which are the words 'POSITIVELY FINER' in light gold. In
use of the same trademark by others on unrelated articles of
the trademark for underwear (Exhibit 'R'), the word 'HICKOK' is also
a different kind." 5Taking into account the facts of record
in red with white background in the middle of two branches of
that petitioner, a foreign corporation registered the
laurel in dark gold with similar ribbons and the words 'POSITIVELY
trademark for its diverse articles of men's wear such as
FINER' in dark gold. And in the trademark for briefs (Exhibit 'S'), the
wallets, belts and men's briefs which are all manufactured
word 'HICKOK' is in white but with red background in the middle of
here in the Philippines by a licensee Quality House, Inc.
two branches of laurel, the leaves being in dark gold with white
(which pays a royalty of 1-1/2 % of the annual net sales) but
edges, and with similar ribbon and words 'POSITIVELY FINER' in
are so labelled as to give the misimpression that the said
dark gold. In contrast, in respondent-appellant's trademark (Exhibit
goods are of foreign (stateside) manufacture and that
'J'), the word 'HICKOK' is in white with gold background between
respondent secured its trademark registration exclusively for
the two branches of laurel in red, with the word 'SHOES' also in red
shoes (which neither petitioner nor the licensee ever
below the word 'HICKOK'. The ribbon is in red with the words
manufactured or traded in) and which are clearly labelled in
'QUALITY AT YOUR FEET,' likewise in red.
block letters as "Made in Marikina, Rizal, Philippines," no
error can be attributed to the appellate court in upholding
While the law does not require that the competing trademarks be respondent's registration of the same trademark for his
Identical, the two marks must be considered in their entirety, as unrelated and non-competing product of Marikina shoes. 6
they appear in the respective labels, in relation to the goods to
which they are attached.
ACCORDINGLY, the petition is dismissed and the appealed
judgment of the Court of Appeals is hereby affirmed.
The case of H.E. Heacock Co. vs. American Trading Co., 56 Phil. 763,
cited by petitioner - appellee, is hardly applicable here, because the
defendant in that case imported and sold merchandise which are
very similar to, and precisely of the same designs as, that imported
and sold by the plaintiff. ...

In the recent case of Acoje Mining Co., Inc. vs. Director of Patents,
38 SCRA 480, 482-483, the Supreme Court stated -
Page 10 of 69 IPL Day 5
G.R. No. 71189 November 4, 1992
FABERGE, INCORPORATED, petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT and CO BENG
KAY,respondents.
MELO, J.:
The Director of Patents authorized herein private respondent Co
Beng Kay to register the trademark "BRUTE" for the briefs
manufactured and sold by his Corporation in the domestic
market vis-a-vis petitioner's opposition grounded on similarity of
said trademark with petitioner's own symbol "BRUT" which it
previously registered for after shave lotion, shaving cream,
deodorant, talcum powder, and toilet soap. Thereafter, respondent
court, through Justice Gopengco with Justices Patajo and Racela, Jr.
concurring, was initially persuaded by petitioner's plea for reversal
directed against the permission granted by the Director of Patents,
but the decision of the Second Special Cases Division handed down
on April 29, 1983 was later reconsidered in favor of herein private
respondent (pp. 46-54; pp. 34-36, Rollo).
Hence, the petition at bar assailing the action of respondent court
in affirming the ruling of the Director of Patents (Page 7, Petition;
Page 16, Rollo).
In essence, it appears that in the course of marketing petitioner's
"BRUT" products and during the pendency of its application for
registration of the trademark "BRUT 33 and DEVICE" for
antiperspirant, personal deodorant, cream shave, after
shave/shower lotion, hair spray, and hair shampoo (page
236, Rollo), respondent Co Beng Kay of Webengton Garments
Manufacturing applied for registration of the disputed emblem
"BRUTE" for briefs. Opposition raised by petitioner anchored on
similarity with its own symbol and irreparable injury to the business
reputation of the first user was to no avail. When the legal tussle
was elevated to respondent court, Justice Gopengco remarked
that:
Indeed, a look at the marks "BRUT," "BRUT 33" and "BRUTE" shows
that such marks are not only similar in appearance but they are
even similar in sound and in the style of presentation. It is
reasonable to believe that this similarity is sufficient to cause
confusion and even mistake and deception in the buying public as
to the origin for source of the goods bearing such trademarks. It
should be considered that, although the mark "BRUTE" was applied
for, only for briefs, yet such product has the same outlet — such as
department stores and haberdashery stores in the Philippines — as
the goods covered by the trademarks "BRUT" and "BRUTE 33" so
that such confusion, mistake or deception is not unlikely to occur.
The argument of appellee, that in modern marketing, goods of
similar use are grouped in one section of the supermarket and thus
it is unlikely that cosmetics be mixed with textile or wearing apparel,
is hardly convincing enough, for a look at the modern department
stores shows that merchandise intended for the use of men are
now placed in a section which is then labelled "Men's Accessories."
It is not unlikely, therefore, that in said section, appellant's
products, which are cosmetics for men's use, be placed beside
appellee's product, and cause such confusion or mistake as to the
source of the goods displayed in the section. To avoid this, the
Director of Patents held:
The marks KEYSTON (on shirts) and KEYSTONE (on shoes and
slippers), the latter having been previously registered are clearly
similar in sound and appearance that confusion or mistake, or
Page 11 of 69 IPL Day 5
deception among purchasers as to origin and source of
goods is likely to occur. Shirts and shoes are both wearing
apparel and there is no gainsaying the truth that these items
are ordinarily displayed in the same manner and sold
through the same retail outlets such as department and
haberdashery stores in the Philippines. (Ex-Parte Keystone
Garment Manufacturing Co., Decision No. 245 of the Director
of Patents, January 25, 1963.)
It is also not disputed that on account of the considerable
length of time that appellant has marketed its products
bearing the trademarks "BRUT" and "BRUT 33," and its
maintenance of high quality of its products through the years,
appellant has earned and established immense goodwill
among its customers. We agree with appellant that should
appellee be allowed to use the trademark "BRUTE" on the
briefs manufactured by him, appellee would be cashing in on
the goodwill already established by appellant, because, as
already stated above, appellant's cosmetics and appellee's
briefs are not entirely unrelated since both are directed to
the fashion trade and in the marketing process, they may
find themselves side by side in the "Men's Accessories
Section" of the market, thus easily leading the buying public
to believe that such briefs come from the same source as
appellant's cosmetics, and be induced to buy said briefs, to
the undue advantage of appellee. Again, if after purchasing
such briefs, the public finds them to be of non-competitive
quality, or not of the high quality expected of appellant's
products, then appellant's reputation and goodwill will be
ruined, to its damage and prejudice. Thus, for the protection
of the goodwill already established by a party, the Supreme
Court held:
When one applies for the registration of a trademark or label
which is almost the same or very closely resembles one
already used and registered by another, the application
should be rejected and dismissed outright, even without any
opposition on the part of the owner and user of a previously
registered label or trademark, this not only to avoid
confusion on the part of the public, but also to protect an
already used and registered trademark and an established
goodwill. (Chuanchow Soy & Canning Co. vs. Dir. of Patents
and Villapanta, 108 Phil. 833, 836.)
The test of confusing similarity which would preclude the
registration of a trademark 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.
In short, the law does not require that the competing marks
must be so identical as to produce actual error or mistakes. It
would be sufficient, for purposes of the law, that the
similarity between the two labels be such that there is a
possibility or likelihood of the purchaser of the older brand
mistaking the newer brand for it. (Gopengco, Mercantile Law
Compendium, 1983 ed., p. 684; Acoje Mining Co., Inc. vs.
Director of Patents, 38 SCRA 480). (pp. 3-6, Decision; pp.
48-51, Rollo).
On June 5, 1984, respondent's Motion for Reconsideration
merited the nod of approval of the appellate court brought
about by private respondent's suggestion that the controlling
ruling is that laid down in Philippine Refining Co., Inc. vs. Ng
Sam (115 SCRA 472 [1982]), ESSO Standard Eastern,
Inc. vs. Court of Appeals (116 SCRA 336 [1982]); Hickok
Manufacturing Co., Inc. vs. CA (116 SCRA 378 [1982]),
and Acoje Mining Co., Inc. vs. Director of Patents (38 SCRA
480 [1971], to the effect that the identical trademark can be
used by different manufacturers for products that are
non-competing and unrelated. (pp. 34-36, Rollo)
Petitioner is of the impression that respondent court could not
have relied on the rulings of this Court in the ESSO and
the PRC cases when the original decision was reconsidered since
respondent court already expressed the opinion in the text of the
previous discourse that the facts in said cases "are not found in the
case at bar" (Page 12, Brief for the Petitioner, Page 202, Rollo).
Petitioner likewise emphasis American jurisprudential doctrines to
the effect that sale of cosmetics and wearing apparel under similar
marks is likely to cause confusion. Instead of applying
the ESSO, PRC and Hickok cases, petitioner continues to asseverate,
the rule as announced in Ang vs. Teodoro (74 Phil. 50 [1942]) as
reiterated in Sta. Ana vs. Maliwat and Evalle (24 SCRA (1968) 101)
should be applied.
In additional, it seems that petitioner would want this Court to
appreciate petitioner's alleged application for registration of the
trademark "BRUT 33 DEVICE" for briefs as an explicit proof that
petitioner intended to expand its mark "BRUT" to other goods,
following the sentiment expressed by Justice J.B.L. Reyes in
the Sta. Ana case (supra, at page 1025) that relief is available where
the junior user's goods are not remote from any product that the
senior user would be likely to make or sell (Pages 26-27, Brief for
the Petitioner).
Besides, petitioner insists that in view of the repeal of Republic Act
No. 166 (which advocated the related goods theory) by Republic
Act No. 666 which deleted the phrase found in the old law that the
merchandise must be substantially the same descriptive properties,
respondent Court should have heeded the pronouncement in
the Ang case that there can be unfair competition even if the goods
are noncompeting (supra, at page 54).
On the other hand, private respondent echoes the glaring
difference in physical appearance of its products with petitioner's
own goods by stressing the observations of the Director of Patents
on May 3, 1978:
Considered in their entireties as depicted in the parties' sample box
and can containers, the involved trademarks are grossly different in
their overall appearance that even at a distance a would-be
purchaser could easily distinguish what is BRUTE brief and what is
BRUT after shave lotion, lotion and the like. Opposer's mark BRUT
or BRUT 33, as shown in Exhibit "6", is predominantly colored green
with a blue and white band at the middle portion of the container.
Also appearing therein in bold letters is opposer's name "FABERGE"
and a notation "Creme Shave". On the other hand, respondent's
mark as shown in Exh. "4-A" prominently displays the
representation of a muscular man, underneath of which appears
the trademark BRUTE with a notation "Bikini Brief" . . . Equally
visible at the other portions of respondent's labels are the pictorial
representation of "briefs" which unmistakably suggest that the
product contained in the box container is that of a man's brief. The
fact therefore is obvious that the goods upon which the conflicting
trademarks are used are clearly different and the intended purpose
of such goods are likewise not the same. Accordingly, a purchaser
who is out in the market for the purpose of buying respondent's
BRUTE brief would definitely be not mistaken or misled into buying
instead opposer's BRUT after shave lotion or deodorant.
Additional, the meaning or connotation of the bare word marks of
opposer, BRUT, and BRUTE of respondent, are clearly different and
not likely to be confused with each other. BRUT simply means "dry",
and also, "to browse"; while BRUTE means "ferocious, sensual", and
in Latin, it signifies "heavy". Gleaned from the respective meanings
of the two marks in question, they both suggest the
resultant effects of the application of the products, upon which the
Page 12 of 69 IPL Day 5
said trademarks are employed, which fact all the more
renders confusion or deception of purchasers a remote
possibility.
The products covered by petitioner's trademarks "BRUT" and
"BRUT 33 & Device" enjoying its so-called "goodwill" are
after-shave lotion, shaving cream, deodorant, talcum powder,
toilet soap, anti-perspirant, personal deodorant, cream shave,
after shave/shower lotion, hair spray and hair shampoo.
Petitioner has never applied for, registered nor used its
trademarks for briefs in commerce or trade in the Philippines.
Private respondent seeks to register his trademark "BRUTE"
only for briefs which is a product non-competitive to and
entirely unrelated with petitioner's aforementioned products.
(pp. 3-4, Brief for the Respondent)
in order to impress upon Us that the controlling norm is the
comparison of the trademarks in their entirely as they appear
in their labels to determine whether there is confusing
similarity.
Moreover, private respondent asserts that briefs and
cosmetics do not belong to the same class nor do they have
the same descriptive properties such that the use of a
trademark on one's goods does not prevent the adoption
and use of the same trademark by others on unrelated
articles of a different nature in line with the ruling of this
Court in Hickok Manufacturing Co., Inc. vs. Court of
Appeals (116 SCRA 387 [1982]). Furthermore, respondent
belies petitioner's claim that the latter had applied for
registration of the trademark "BRUT 33 DEVICE"
for briefssince the documents on file with the Director of
Patents attached to respondent's legal Brief does not include
the so-called application by petitioner of the alleged
trademark for briefs.
To the legal query of whether private respondent may
appropriate the trademark "BRUTE" for the briefs it
manufactures and sells to the public albeit petitioner had
previously registered the symbol "BRUT" and "BRUT 33" for
its own line of times, it is but apropos to shift Our attention
to the pertinent provisions of the new Civil
Code vis-a-vis Republic Act No. 166, as amended, the special
law patterned after the United States Trademark Act of 1946
(Director of Patents, Circular Release No. 36, 45 O.G.
3704; Martin, Commentaries and Jurisprudence on the
Philippine Commercial Laws, 1986 Revised Edition, Volume 2,
page 489), thus:
Art. 520. A trade-mark or trade-name duly registered in the
proper government bureau or office is owned by and
pertains to the person, corporation, or firm registering the
same, subject to the provisions of special laws.
Art. 521. The goodwill of a business is property, and may be
transferred together with the right to use the name under
which the business is conducted.
Art. 522. Trade-marks and trade-names are governed by
special laws.
xxx xxx xxx
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 Republic of the
Philippines. (As amended by Rep. Act No. 865).
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 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 trade-mark, a trade-name,
or a service-mark 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 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
known to the law. (As inserted by Sec. 1 of Rep. Act 638).
xxx xxx xxx
Sec. 4. Registration of trade-marks, trade-names and service-marks
on the principal register. —
. . . The owner of trademark, trade-name or service-mark used to
distinguish his goods, business or services from the goods, business
or services of others shall have right to register the same on the
principal register, unless it:
xxx xxx xxx
4(d) Consists of or comprises a mark or trade-name which so
resembles a mark or trade-name registered in the Philippines or a
mark or trade-name previously used in the Philippines by another
and not abandoned, as to be likely, when applied to or used in
connection with the goods, business or services of the applicant, to
cause confusion or mistake or to deceive purchasers.
xxx xxx xxx
Sec. 11. Issuance and contents of the certificate.— Certificates of
registration shall be issued in the name of the Republic of the
Philippines under the seal of the Patent Office, and shall be signed
by the Director, and a record thereof together with a copy of the
specimen or facsimile and the statement of the applicant, shall be
kept in books for that purpose. The certificate shall reproduce the
specimen or facsimile of the mark or trade-name, contain the
statement of the applicant and state that the mark or trade-name
is registered under this Act, the date of the first use in commerce
or business, the particular goods or services for which it is
registered, the number and date of the registration, the term
thereof, the date on which the application for registration was
received in the Patent Office, a statement of the requirement that
in order to maintain the registration, periodical affidavits of use
within the specified times hereinafter in section twelve provided,
shall be filed, and such other data as the rules and regulations may
from time to time prescribe.
xxx xxx xxx
Sec. 20. Certificate of registration prima facie evidence of validity.—
A certificate of registration of a mark or trade-name shall be prima
Page 13 of 69 IPL Day 5
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.
Having thus reviewed the laws applicable to the case before
Us, it is not difficult to discern from the foregoing statutory
enactments that private respondent may be permitted to
register the trademark "BRUTE" for briefs produced by it
notwithstanding petitioner's vehement protestations of
unfair dealings in marketing its own set of items which are
limited to: after-shave lotion, shaving cream, deodorant,
talcum powder and toilet soap. In as much as petitioner has
not ventured in the production of briefs, an item which is not
listed in its certificate of registration, petitioner can not and
should not be allowed to feign that private respondent had
invaded petitioner's exclusive domain. To be sure, it is
significant that petitioner failed to annex in its Brief the
so-called "eloquent proof that petitioner indeed intended to
expand its mark "BRUT" to other goods" (Page 27, Brief for
the Petitioner; Page 202, Rollo). Even then, a mere
application by petitioner in this aspect does not suffice and
may not vest an exclusive right in its favor that can ordinarily
be protected by the Trademark Law. In short, paraphrasing
Section 20 of the Trademark Law as applied to the
documentary evidence adduced by petitioner, the certificate
of registration issued by the Director of Patents can confer
upon petitioner the exclusive right to use its own symbol only
to those goods specified in the certificate, subject to any
conditions and limitations stated therein. This basic point is
perhaps the unwritten rationale of Justice Escolin
in Philippine Refining Co., Inc. vs. Ng Lam (115 SCRA 472
[1982]), when he stressed the principle enunciated by the
United States Supreme Court in American Foundries vs.
Robertson (269 U.S. 372, 381, 70 L ed 317, 46 Sct. 160) that
one who has adopted and used a trademark on his goods
does not prevent the adoption and use of the same
trademark by other for products which are of different
description. Verily, this Court had the occasion to observe in
the 1966 case of George W. Luft Co., Inc. vs. Ngo Guan (18
SCRA 944 [1966]) that no serious objection was posed by the
petitioner therein since the applicant utilized the emblem
"Tango" for no other product than hair pomade in which
petitioner does not deal.
This brings Us back to the incidental issue raised by
petitioner which private respondent sought to belie as
regards petitioner's alleged expansion of its business. It may
be recalled that petitioner claimed that it has a pending
application for registration of the emblem "BRUT 33" for
briefs (page 25, Brief for the Petitioner; page 202, Rollo) to
impress upon Us the Solomonic wisdom imparted by Justice
JBL Reyes in Sta. Ana vs.Maliwat (24 SCRA 1018 [1968]), to
the effect that dissimilarity of goods will not preclude relief if
the junior user's goods are not remote from any other
product which the first user would be likely to make or sell
(vide, at page 1025). Commenting on the former provision of
the Trademark Law now embodied substantially under
Section 4(d) of Republic Act No. 166, as amended, the
erudite jurist opined that the law in point "does not require
that the articles of manufacture of the previous user and late
user of the mark should possess the same descriptive
properties or should fall into the same categories as to bar
the latter from registering his mark in the principal register."
(supra at page 1026).
Yet, it is equally true that as aforesaid, the protective mantle of the
Trademark Law extends only to the goods used by the first user as
specified in the certificate of registration following the clear
message conveyed by section 20.
How do We now reconcile the apparent conflict between Section
4(d) which was relied upon by Justice JBL Reyes in the Sta. Ana case
and Section 20? It would seem that Section 4(d) does not require
that the goods manufactured by the second user be related to the
goods produced by the senior user while Section 20 limits the
exclusive right of the senior user only to those goods specified in
the certificate of registration. But the rule has been laid down that
the clause which comes later shall be given paramount significance
over an anterior proviso upon the presumption that it expresses
the latest and dominant purpose. (Graham Paper Co. vs. National
Newspaper Asso.(Mo. App.) 193 S.W. 1003; Barnett vs.Merchant's
L. Ins. Co., 87 Okl. 42; State ex nel Atty. Gen. vs. Toledo, 26 N.E., p.
1061; cited by Martin, Statutory Construction Sixth ed., 1980
Reprinted, p. 144). It ineluctably follows that Section 20 is
controlling and, therefore, private respondent can appropriate its
symbol for the briefs it manufactures because as aptly remarked by
Justice Sanchez in Sterling Products International
Inc. vs. Farbenfabriken Bayer (27 SCRA 1214 [1969]):
Really, if the certificate of registration were to be deemed as
including goods not specified therein, then a situation may arise
whereby an applicant may be tempted to register a trademark on
any and all goods which his mind may conceive even if he had
never intended to use the trademark for the said goods. We believe
that such omnibus registration is not contemplated by our
Trademark Law. (1226)
Withal, judging from the physical attributes of petitioner's and
private respondent's products, there can be no doubt that
confusion or the likelihood of deception to the average purchaser is
unlikely since the goods are non-competing and unrelated. In
upholding registration of the brand "ESSO for cigarettes inspite
previous appropriation of the same mark "ESSO" for petroleum
products, then Justice, later Chief Justices Teehankee in Esso
Standard Eastern, Inc. vs. Court of Appeals (116 SCRA 336 [1982]
said:
The Court affirms on the basis of controlling doctrine the appealed
decision of the Court of Appeals reversing that of the Court of First
Instance of Manila and dismissing the complaint filed by herein
petitioner against private respondent for trade infringement for
using petitioner's trademark ESSO, since it clearly appears that the
goods on which the trademark ESSO is used by respondent is
non-competing and entirely unrelated to the products of petitioner
so that there is no likelihood of confusion or deception on the part
of the purchasing public as to the origin or source of the goods.
xxx xxx xxx
The trial court, relying on the old cases of Ang vs. Teodoro and Arce
& Sons, Inc. vs. Selecta Biscuit Company, referring to related
products, decided in favor of petitioner and ruled that respondent
was guilty of infringement of trademark.
On appeal, respondent Court of Appeals found that there was no
trademark infringement and dismissed the complaint.
Reconsideration of the decision having been denied, petitioner
appealed to this court by way of certiorari to reverse the decision
of the Court of Appeals and to reinstate the decision of the Court of
First Instance of Manila. The Court finds no ground for granting the
petition.
Page 14 of 69 IPL Day 5
The law defines infringement as the use without consent of
the trademark owner of any "reproduction, counterfeit, copy
or colorable imitation of any registered mark or tradename in
connection with the sale, offering for sale, or advertising of
any goods, business or services on or in connection with
which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of
such goods or services, or identity of such business; or
reproduce, counterfeit, copy or colorable imitate any
director's decision on the question of "May petitioner Acoje
Mining Company register for the purpose of advertising its
product, soy sauce, the trademark LOTUS, there being
already in existence one such registered in favor of the
Philippine Refining Company for its product, edible oil, it
being further shown that the trademark applied for is in
smaller type, colored differently, set on a background which
is dissimilar as to yield a distinct appearance?" and ordered
the granting of petitioner's application for registration ruling
that "there is quite a difference between soy sauce and
edible oil. If one is in the market for the former, he is not
likely to purchase the latter just because of the trademarks
LOTUS" and "when regard is had for the principle that the
two trademark in their entirely as they appear in their
respective labels should be considered in relation to the
goods advertised before registration could be denied, the
conclusion is inescapable that respondent Director ought to
have reached a different conclusion."
By the same token, in the recent case of Philippine Refining
Co., Inc. v. Ng Sam and Director of Patents, the Court upheld
the patent director's registration of the same trademark
CAMIA for therein respondent's product of ham
notwithstanding its already being used by therein petitioner
for a wide range of products: lard; butter, cooking oil,
abrasive detergents, polishing material and soap of all kinds.
The Court, after noting that the same CAMIA trademark had
been registered by two other companies, Everbright
Development Company and F.E. Zuellig, Inc. for their
respective products of thread and yarn (for the former) and
textiles, embroideries and laces (for the latter) ruled that
"while ham and some of the products of petitioner are
classified under Class 47 (Foods and Ingredients of Food), this
alone cannot serve as the decisive factor in the resolution of
whether or not they are related goods. Emphasis should be
on the similarity of the arbitrary classification or general
description of their properties or characteristics. The Court,
therefore, concluded that "In fine, We hold that the
businesses of the parties are noncompetitive and their
products so unrelated that the use of identical trademarks is
not likely to give rise to confusion, much less cause damage
to petitioner.
In the situation before us, the goods are obviously different
from each other — with "absolutely no iota of similitude" as
stressed in respondent court's judgment. They are so foreign
to each other as to make it unlikely that purchasers would
think that petitioner is the manufacturer of respondent'
goods. The mere fact that one person has adopted and used
a trademark on his goods does not prevent the adoption and
use of the same trademark by others on unrelated articles of
a different kind.
Petitioner uses the trademark ESSO and holds certificate
registration of the trademark for petroleum products,
including aviation gasoline, grease, cigarette lighter fluid and
other various products such as plastics, chemicals, synthetics,
gasoline solvents, kerosene, automotive and industrial fuel,
bunker fuel, lubricating oil, fertilizers, gas alcohol,
insecticides and the "ESSO Gasul" burner, while respondent's
business is solely for the manufacture and sale of the unrelated
product of cigarettes. The public knows too well that petitioner
deals solely with petroleum products that there is no possibility
that cigarettes with ESSO brand will be associated with whatever
good name petitioner's ESSO trademark may have generated.
Although petitioner's products are numerous, they are of the same
class or line of merchandise which are non-competing with
respondent's product of cigarettes, which as pointed out in the
appealed judgment is beyond petitioner's "zone of potential or
natural and logical expansion." When a trademark is used by a
party for a product in which the other party does not deal, the use
of the same trademark on the latter's product cannot be validly
objected to.
production of goods and allow that producer to appropriate
the brand name of the senior registrant on goods other than
those stated in the certificate of registration.
But these nagging and disturbing points cannot win the day
for petitioner, although We must hasten to add that in the
final denouement, Our apprehensions in this regard are not
entirely irreversible since Section 4(d) and 20 of the law in
question may still be subjected to legislative modification in
order to protect the original user of the symbol.
WHEREFORE, the petition is hereby DISMISSED without
pronouncement as to costs.

xxx xxx xxx SO ORDERED.

Respondent court correctly ruled that considering the general Gutierrez, Jr., Bidin, Davide, Jr., and Romero, JJ., concur.
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 trademark 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 court's 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 plaintiff's
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 appellant's cigarette.
The only color that the appellant uses in its trademark is green.
(339; 341-346)

The glaring discrepancies between the two products had been

amply portrayed to such an extent that indeed, "a purchaser who is
out in the market for the purpose of buying respondent's BRUTE
brief would definitely be not mistaken or misled into buying BRUT
after shave lotion or deodorant" as categorically opined in the
decision of the Director of Patents relative to the inter-partes case.
(supra, at page 7).

Petitioner's bid to persuade Us into accepting the doctrines

announced in the aforementioned cases of Sta. Ana
vs. Maliwat and Ang vs. Teodorohardly inspire belief. In Sta Ana, it
was admitted that the marks were confusingly similar which is not
so in the case at bar. In the 1942 case of Ang vs. Teodoro, Justice
Ozaeta noted that pants and shirts are similar to shoes and slippers
within the meaning of Sections 3, 7, 11, 13 and 20 of Act No. 666
which was the old Trademark Law enacted on March 6, 1903 prior
to the present law. Obviously, the conclusion reached by
the ponentein the Ang case may not now be utilized by analogy to
the case at bar due to variance in the factual and legal milieu.
Neither can we agree with petitioner that the ruling in La Chemise
Lacoste, S.A. vs. Fernandez (129 SCRA 373 [1984]) is applicable to
the controversy at hand. The case adverted to by petitioner
involved the same mark for the same class of shirts manufactured
by the parties therein.

It would appear that as a consequence of this discourse, there still

remains hanging in mid-air the unanswered puzzle as to why an
aspiring commercial enterprise, given the infinite choices available
to it of names for the intend product, would select a trademark or
tradename which somewhat resembles an existing emblem that
had established goodwill. Our opinion hereinbefore expressed
could even open the floodgates to similar incursions in the future
when we interpreted Section 20 of the Trademark Law as an
implicit permission to a manufacturer to venture into the
Page 15 of 69 IPL Day 5
G.R. No. 120900 July 20, 2000
CANON KABUSHIKI KAISHA, petitioner,
vs.
COURT OF APPEALS and NSR RUBBER CORPORATION, respondents.
GONZAGA-REYES, J.:
Before us is a petition for review that seeks to set aside the
Decision1dated February 21, 1995 of the Court of Appeals in CA-GR
SP No. 30203, entitled "Canon Kabushiki Kaisha vs. NSR Rubber
Corporation" and its Resolution dated June 27, 1995 denying the
motion for reconsideration of herein petitioner Canon Kabushiki
Kaisha (petitioner).
On January 15, 1985, private respondent NSR Rubber Corporation
(private respondent) filed an application for registration of the
mark CANON for sandals in the Bureau of Patents, Trademarks, and
Technology Transfer (BPTTT). A Verified Notice of Opposition was
filed by petitioner, a foreign corporation duly organized and
existing under the laws of Japan, alleging that it will be damaged by
the registration of the trademark CANON in the name of private
respondent. The case was docketed as Inter Partes Case No. 3043.
Petitioner moved to declare private respondent in default for its
failure to file its answer within the prescribed period. The BPTTT
then declared private respondent in default and allowed petitioner
to present its evidence ex-parte.
Based on the records, the evidence presented by petitioner
consisted of its certificates of registration for the mark CANON in
various countries covering goods belonging to class 2 (paints,
chemical products, toner, and dye stuff). Petitioner also submitted
in evidence its Philippine Trademark Registration No. 39398,
showing its ownership over the trademark CANON also under class
2.
On November 10, 1992, the BPTTT issued its decision dismissing
the opposition of petitioner and giving due course to private
respondent's application for the registration of the trademark
CANON. On February 16, 1993, petitioner appealed the decision of
the BPTTT with public respondent Court of Appeals that eventually
affirmed the decision of BPTTT. Hence, this petition for review.
Petitioner anchors this instant petition on these grounds:
A) PETITIONER IS ENTITLED TO EXCLUSIVE USE OF THE MARK
CANON BECAUSE IT IS ITS TRADEMARK AND IS USED ALSO FOR
FOOTWEAR.
B) TO ALLOW PRIVATE RESPONDENT TO REGISTER CANON FOR
FOOTWEAR IS TO PREVENT PETITIONER FROM USING CANON FOR
VARIOUS KINDS OF FOOTWEAR, WHEN IN FACT, PETITIONER HAS
EARLIER USED SAID MARK FOR SAID GOODS.
C) PETITIONER IS ALSO ENTITLED TO THE RIGHT TO EXCLUSIVELY
USE CANON TO PREVENT CONFUSION OF BUSINESS.
D) PETITIONER IS ALSO ENTITLED TO THE EXCLUSIVE USE OF
CANON BECAUSE IT FORMS PART OF ITS CORPORATE NAME,
PROTECTED BY THE PARIS CONVENTION.2
The BPTTT and the Court of Appeals share the opinion that the
trademark "CANON" as used by petitioner for its paints, chemical
products, toner, and dyestuff, can be used by private respondent
for its sandals because the products of these two parties are
dissimilar. Petitioner protests the appropriation of the mark CANON
by private respondent on the ground that petitioner has used and
Page 16 of 69 IPL Day 5
continues to use the trademark CANON on its wide range of
goods worldwide. Allegedly, the corporate name or
tradename of petitioner is also used as its trademark on
diverse goods including footwear and other related products
like shoe polisher and polishing agents. To lend credence to
its claim, petitioner points out that it has branched out in its
business based on the various goods carrying its trademark
CANON3, including footwear which petitioner contends
covers sandals, the goods for which private respondent
sought to register the mark CANON. For petitioner, the fact
alone that its trademark CANON is carried by its other
products like footwear, shoe polisher and polishing agents
should have precluded the BPTTT from giving due course to
the application of private respondent.
We find the arguments of petitioner to be unmeritorious.
Ordinarily, the ownership of a trademark or tradename is a
property right that the owner is entitled to protect4 as
mandated by the Trademark Law.5 However, when a
trademark is used by a party for a product in which the other
party does not deal, the use of the same trademark on the
latter's product cannot be validly objected to.6
A review of the records shows that with the order of the
BPTTT declaring private respondent in default for failure to
file its answer, petitioner had every opportunity to
present ex-parte all of its evidence to prove that its
certificates of registration for the trademark CANON cover
footwear. The certificates of registration for the trademark
CANON in other countries and in the Philippines as presented
by petitioner, clearly showed that said certificates of
registration cover goods belonging to class 2 (paints,
chemical products, toner, dyestuff). On this basis, the BPTTT
correctly ruled that since the certificate of registration of
petitioner for the trademark CANON covers class 2 (paints,
chemical products, toner, dyestuff), private respondent can
use the trademark CANON for its goods classified as class 25
(sandals). Clearly, there is a world of difference between the
paints, chemical products, toner, and dyestuff of petitioner
and the sandals of private respondent.
Petitioner counters that notwithstanding the dissimilarity of
the products of the parties, the trademark owner is entitled
to protection when the use of by the junior user "forestalls
the normal expansion of his business".7 Petitioner's
opposition to the registration of its trademark CANON by
private respondent rests upon petitioner's insistence that it
would be precluded from using the mark CANON for various
kinds of footwear, when in fact it has earlier used said mark
for said goods. Stretching this argument, petitioner claims
that it is possible that the public could presume that
petitioner would also produce a wide variety of footwear
considering the diversity of its products marketed worldwide.
We do not agree. Even in this instant petition, except for its
bare assertions, petitioner failed to attach evidence that
would convince this Court that petitioner has also embarked
in the production of footwear products. We quote with
approval the observation of the Court of Appeals that:
"The herein petitioner has not made known that it intends to
venture into the business of producing sandals. This is clearly
shown in its Trademark Principal Register (Exhibit "U") where
the products of the said petitioner had been clearly and
specifically described as "Chemical products, dyestuffs,
pigments, toner developing preparation, shoe polisher,
polishing agent". It would be taxing one's credibility to aver
at this point that the production of sandals could be
considered as a possible "natural or normal expansion" of its
business operation".8
In Faberge, Incorporated vs. Intermediate Appellate Court,9 the
Director of patents allowed the junior user to use the trademark of
the senior user on the ground that the briefs manufactured by the
junior user, the product for which the trademark BRUTE was sought
to be registered, was unrelated and non-competing with the
products of the senior user consisting of after shave lotion, shaving
cream, deodorant, talcum powder, and toilet soap. The senior user
vehemently objected and claimed that it was expanding its
trademark to briefs and argued that permitting the junior user to
register the same trademark would allow the latter to invade the
senior user's exclusive domain. In sustaining the Director of Patents,
this Court said that since "(the senior user) has not ventured in the
production of briefs, an item which is not listed in its certificate of
registration, (the senior user), cannot and should not be allowed to
feign that (the junior user) had invaded (the senior user's) exclusive
domain."10 We reiterated the principle that the certificate of
registration confers upon the trademark owner the exclusive right
to use its own symbol only to those goods specified in the certificate,
subject to the conditions and limitations stated therein.11 Thus,
the exclusive right of petitioner in this case to use the trademark
CANON is limited to the products covered by its certificate of
registration.
Petitioner further argues that the alleged diversity of its products
all over the world makes it plausible that the public might be misled
into thinking that there is some supposed connection between
private respondent's goods and petitioner. Petitioner is
apprehensive that there could be confusion as to the origin of the
goods, as well as confusion of business, if private respondent is
allowed to register the mark CANON. In such a case, petitioner
would allegedly be immensely prejudiced if private respondent
would be permitted to take "a free ride on, and reap the
advantages of, the goodwill and reputation of petitioner
Canon".12 In support of the foregoing arguments, petitioner
invokes the rulings in Sta. Ana vs. Maliwat13 , Ang vs.
Teodoro14 and Converse Rubber Corporation vs. Universal Rubber
Products, Inc.15.
The likelihood of confusion of goods or business is a relative
concept, to be determined only according to the particular, and
sometimes peculiar, circumstances of each case.16 Indeed, in
trademark law cases, even more than in other litigation, precedent
must be studied in the light of the facts of the particular
case.17 Contrary to petitioner's supposition, the facts of this case
will show that the cases of Sta. Ana vs. Maliwat,, Ang vs. Teodoro
and Converse Rubber Corporation vs. Universal Rubber Products,
Inc. are hardly in point. The just cited cases involved goods that
were confusingly similar, if not identical, as in the case of Converse
Rubber Corporation vs. Universal Rubber Products, Inc. Here, the
products involved are so unrelated that the public will not be
misled that there is the slightest nexus between petitioner and the
goods of private respondent.
In cases of confusion of business or origin, the question that usually
arises is whether the respective goods or services of the senior user
and the junior user are so related as to likely cause confusion of
business or origin, and thereby render the trademark or
tradenames confusingly similar.18 Goods are related when they
belong to the same class or have the same descriptive properties;
when they possess the same physical attributes or essential
characteristics with reference to their form, composition, texture
or quality.19 They may also be related because they serve the same
purpose or are sold in grocery stores.20
Thus, in Esso Standard Eastern, Inc. vs. Court of Appeals, this Court
ruled that the petroleum products on which the petitioner therein
Page 17 of 69 IPL Day 5
used the trademark ESSO, and the product of respondent,
cigarettes are "so foreign to each other as to make it unlikely
that purchasers would think that petitioner is the
manufacturer of respondent's goods"21. Moreover, the fact
that the goods involved therein flow through different
channels of trade highlighted their dissimilarity, a factor
explained in this wise:
"The products of each party move along and are disposed
through different channels of distribution. The (petitioner's)
products are distributed principally through gasoline service
and lubrication stations, automotive shops and hardware
stores. On the other hand, the (respondent's) cigarettes are
sold in sari-sari stores, grocery store, and other small
distributor outlets. (Respondnet's) cigarettes are even
peddled in the streets while (petitioner's) 'gasul' burners are
not. Finally, there is a marked distinction between oil and
tobacco, as well as between petroleum and cigarettes.
Evidently, in kind and nature the products of (respondent)
and of (petitioner) are poles apart."22
Undoubtedly, the paints, chemical products, toner and
dyestuff of petitioner that carry the trademark CANON are
unrelated to sandals, the product of private respondent. We
agree with the BPTTT, following the Esso doctrine, when it
noted that the two classes of products in this case flow
through different trade channels. The products of petitioner
are sold through special chemical stores or distributors while
the products of private respondent are sold in grocery stores,
sari-sari stores and department stores.23 Thus, the evident
disparity of the products of the parties in the case at bar
renders unfounded the apprehension of petitioner that
confusion of business or origin might occur if private
respondent is allowed to use the mark CANON.
In its bid to bar the registration of private respondent of the
mark CANON, petitioner invokes the protective mantle of the
Paris Convention. Petitioner asserts that it has the exclusive
right to the mark CANON because it forms part of its
corporate name or tradename, protected by Article 8 of the
Paris Convention, to wit:
"A tradename 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."
Public respondents BPTTT and the Court of Appeals allegedly
committed an oversight when they required petitioner to
prove that its mark is a well-known mark at the time the
application of private respondent was filed. Petitioner
questions the applicability of the guidelines embodied in the
Memorandum of then Minister of Trade and Industry
Roberto Ongpin (Ongpin) dated October 25, 1983 which
according to petitioner implements Article 6bis of the Paris
Convention, the provision referring to the protection of
trademarks. The memorandum reads:
"a) the mark must be internationally known;
b) the subject of the right must be a trademark, not a patent
or copyright or anything else;
c) the mark must be for use in the same or similar class of
goods;
d) the person claiming must be the owner of the mark."
According to petitioner, it should not be required to prove that its
trademark is well-known and that the products are not similar as
required by the quoted memorandum. Petitioner emphasizes that
the guidelines in the memorandum of Ongpin implement Article
6bis of the Paris Convention, the provision for the protection of
trademarks, not tradenames. Article 6bis of the Paris Convention
states:
(1) 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, of a mark considered by the
competent authority of the country of registration or use to be
well-known in that country as being already the mark of a person
entitled to the benefits of 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.
(2) A period of at least five years from the date of registration shall
be allowed for seeking the cancellation of such a mark. The
countries of the Union may provide for a period within which the
prohibition of use must be sought.
(3) No time limit shall be fixed for seeking the cancellation or the
prohibition of the use of marks or used in bad faith."
Petitioner insists that what it seeks is the protection of Article 8 of
the Paris Convention, the provision that pertains to the protection
of tradenames. Petitioner believes that the appropriate
memorandum to consider is that issued by the then Minister of
Trade and Industry, Luis Villafuerte, directing the Director of
patents to:
"reject all pending applications for Philippine registration of
signature and other world famous trademarks by applicants other
than the original owners or users."
As far as petitioner is concerned, the fact that its tradename is at
risk would call for the protection granted by Article 8 of the Paris
Convention. Petitioner calls attention to the fact that Article 8, even
as embodied in par. 6, sec. 37 of RA 166, mentions no requirement
of similarity of goods. Petitioner claims that the reason there is no
mention of such a requirement, is "because there is a difference
between the referent of the name and that of the mark"24 and
that "since Art. 8 protects the tradename in the countries of the
Union, such as Japan and the Philippines, Petitioner's tradename
should be protected here."25
We cannot uphold petitioner's position.
The term "trademark" is defined by RA 166, the Trademark Law, as
including "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 for those
manufactured, sold or dealt in by others."26 Tradename is defined
by the same law as including "individual names and surnames, firm
names, tradenames, 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."27 Simply put, a
trade name refers to the business and its goodwill; a trademark
refers to the goods.28
Page 18 of 69 IPL Day 5
The Convention of Paris for the Protection of Industrial
Property, otherwise known as the Paris Convention, of which
both the Philippines and Japan, the country of petitioner, are
signatories29, is a multilateral treaty that seeks to protect
industrial property consisting of patents, utility models,
industrial designs, trademarks, service marks, trade names
and indications of source or appellations of origin, and at the
same time aims to repress unfair competition.30 We agree
with public respondents that the controlling doctrine with
respect to the applicability of Article 8 of the Paris
Convention is that established in Kabushi Kaisha Isetan vs.
Intermediate Appellate Court.31 As pointed out by the
BPTTT:
"Regarding the applicability of Article 8 of the Paris
Convention, this Office believes that there is no automatic
protection afforded an entity whose tradename is alleged to
have been infringed through the use of that name as a
trademark by a local entity.
In Kabushiki Kaisha Isetan vs. The Intermediate Appellate
Court, et. al., G.R. No. 75420, 15 November 1991, the
Honorable Supreme Court held that:
'The Paris Convention for the Protection of Industrial
Property does not automatically exclude all countries of the
world which have signed it from using a tradename which
happens to be used in one country. To illustrate - if a taxicab
or bus company in a town in the United Kingdom or India
happens to use the tradename "Rapid Transportation", it
does not necessarily follow that "Rapid" can no longer be
registered in Uganda, Fiji, or the Philippines.
This office is not unmindful that in the Treaty of Paris for the
Protection of Intellectual Property regarding well-known
marks and possible application thereof in this case. Petitioner,
as this office sees it, is trying to seek refuge under its
protective mantle, claiming that the subject mark is well
known in this country at the time the then application of NSR
Rubber was filed.
However, the then Minister of Trade and Industry, the Hon.
Roberto V. Ongpin, issued a memorandum dated 25 October
1983 to the Director of Patents, a set of guidelines in the
implementation of Article 6bis (sic) of the Treaty of Paris.
These conditions are:
a) the mark must be internationally known;
b) the subject of the right must be a trademark, not a patent
or copyright or anything else;
c) the mark must be for use in the same or similar kinds of
goods; and
d) the person claiming must be the owner of the mark (The
Parties Convention Commentary on the Paris Convention.
Article by Dr. Bogsch, Director General of the World
Intellectual Property Organization, Geneva, Switzerland,
1985)'
From the set of facts found in the records, it is ruled that the
Petitioner failed to comply with the third requirement of the
said memorandum that is the mark must be for use in the
same or similar kinds of goods. The Petitioner is using the
mark "CANON" for products belonging to class 2 (paints,
chemical products) while the Respondent is using the same
mark for sandals (class 25). Hence, Petitioner's contention
that its mark is well-known at the time the Respondent filed its
application for the same mark should fail. "32

Petitioner assails the application of the case of Kabushi Kaisha

Isetan vs. Intermediate Appellate Court to this case. Petitioner
points out that in the case of Kabushi Kaisha Isetan vs. Intermediate
Appellate Court, petitioner therein was found to have never at all
conducted its business in the Philippines unlike herein petitioner
who has extensively conducted its business here and also had its
trademark registered in this country. Hence, petitioner submits
that this factual difference renders inapplicable our ruling in the
case of Kabushi Kaisha Isetan vs. Intermediate Appellate Court that
Article 8 of the Paris Convention does not automatically extend
protection to a tradename that is in danger of being infringed in a
country that is also a signatory to said treaty. This contention
deserves scant consideration. Suffice it to say that the just quoted
pronouncement in the case of Kabushi Kaisha Isetan vs.
Intermediate Appellate Court, was made independent of the factual
finding that petitioner in said case had not conducted its business
in this country.

WHEREFORE, in view of the foregoing, the instant petition for

review on certiorari is DENIED for lack of merit.

SO ORDERED.

Melo, (Chairman), Vitug, Panganiban, and Pursima, JJ., concur.

Page 19 of 69 IPL Day 5

G.R. No. 157216 November 20, 2003
246 CORPORATION, doing business under the name and style of
ROLEX MUSIC LOUNGE, petitioner,
vs.
HON. REYNALDO B. DAWAY, in his capacity as Presiding Judge of
Branch 90 of the Regional Trial Court of Quezon City, MONTRES
ROLEX S.A. and ROLEX CENTRE PHIL. LIMITED, respondents.
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure assailing the November 28, 2002
Decision1 of the Court of Appeals in CA-G.R. SP No. 64660 which
dismissed the petition for certiorari filed by petitioner, as well as
the Resolution2 dated February 13, 2003 denying its motion for
reconsideration.
The undisputed facts show that on November 26, 1998,
respondents Montres Rolex S.A. and Rolex Centre Phil., Limited,
owners/proprietors of Rolex and Crown Device, filed against
petitioner 246 Corporation the instant suit for trademark
infringement and damages with prayer for the issuance of a
restraining order or writ of preliminary injunction3 before the
Regional Trial Court of Quezon City, Branch 90. Respondents
alleged that sometime in July 1996, petitioner adopted and, since
then, has been using without authority the mark "Rolex" in its
business name "Rolex Music Lounge" as well as in its newspaper
advertisements as - "Rolex Music Lounge, KTV, Disco & Party Club."
In its answer raising special affirmative defenses, petitioner argued
that respondents have no cause of action because no trademark
infringement exist; that no confusion would arise from the use by
petitioner of the mark "Rolex" considering that its entertainment
business is totally unrelated to the items catered by respondents
such as watches, clocks, bracelets and parts thereof. It also
contended that the complaint was not properly verified and
certified against forum shopping considering that Atty. Alonzo
Ancheta, the counsel of record of respondents who signed the
verification and certification, was not authorized to represent
respondents.4
On July 21, 2000, petitioner filed a motion for preliminary hearing
on its affirmative defenses.5 Subsequently, on motion of petitioner,
the trial court issued a subpoena ad testificandum requiring Atty.
Alonzo Ancheta to appear at the preliminary
hearing.6 Respondents, in the meantime, filed a Comment and
Opposition7 to the motion for preliminary hearing and a motion to
quash the subpoena ad testificandum.
In an Order dated October 27, 2000, the trial court quashed the
subpoena ad testificandum and denied petitioner’s motion for
preliminary hearing on affirmative defenses with motion to
dismiss.8
With the denial of the motion for reconsideration on March 16,
2001, petitioner filed a petition for certiorari with the Court of
Appeals contending that the trial court gravely abused its discretion
in issuing the October 27, 2000 and March 16, 2001 orders.
On November 28, 2002, the Court of Appeals dismissed the petition.
The motion for reconsideration filed by petitioner was denied.
Hence, the instant petition anchored on the following grounds:
I THE DOCTRINE OF SEPARATE CORPORATE PERSONALITY;
IN ISSUING THE ASSAILED DECISIONS, THE HONORABLE COURT OF
APPEALS PERFUNCTORILY BRUSHED ASIDE THE CONTROLLING
Page 20 of 69 IPL Day 5
PRECEDENTS LAID DOWN BY THIS HONORABLE COURT IN
ESSO STANDARD EASTERN, INC. VS. COURT OF APPEALS AND
UNITED CIGARETTE CORPORATION AND OTHER COMPANION
CASES HOLDING THAT NO TRADEMARK INFRINGEMENT CAN
POSSIBLY OCCUR WHERE THE CONTENDING PARTIES DEAL
WITH GOODS AND SERVICES THAT ARE TOTALLY UNRELATED
AND NON-COMPETING WITH EACH OTHER.
II
IN ARBITRARILY AND CAPRICIOUSLY RULING THAT THE
ISSUES RAISED IN PETITIONER’S CERTIORARI PETITION ARE
QUESTIONS OF FACT, THE HONORABLE COURT OF APPEALS
VIOLATED NOT ONLY PETITIONERS SUBSTANTIVE DUE
PROCESS RIGHTS BUT ALSO THE WELL-SETTLED RULE THAT
THE ALLEGATIONS OF THE COMPLAINT IS HYPOTHETICALLY
ADMITTED WHEN THE MOTION TO DISMISS IS GROUNDED
UPON LACK OF CAUSE OF ACTION. MOREOVER,
INDEPENDENT OF THE HYPOTHETICALLY ADMITTED FACTS
EMBODIED IN THE COMPLAINT A QUO, THERE ARE
SELF-EVIDENT FACTS AND IMPLIEDLY ADMITTED FACTS
CONTAINED IN PRIVATE RESPONDENTS’ PLEADINGS THAT
WOULD CLEARLY AND UNMISTAKABLY SHOW PRIVATE
RESPONDENTS’ LACK OF CAUSE OF ACTION AGAINST HEREIN
PETITIONER.
III
THE HONORABLE COURT OF APPEALS VIOLATED
PETITIONER’S RIGHT TO SUBSTANTIVE DUE PROCESS WHEN
IT ARBITRARILY AND CAPRICIOUSLY RULED THAT WHAT WAS
SPECIFICALLY DENIED IN THE ASSAILED OCTOBER 20, 2000
ORDER IS PETITIONER’S MOTION FOR PRELIMINARY HEARING
ON DEFENDANT’S AFFIRMATIVE DEFENSES AND NOT
PETITIONER’S MOTION TO DISMISS PER SE CONSIDERING
THAT:
A. THERE IS ABSOLUTELY NOTHING IN THE ORDER DATED
OCTOBER 20, 2000 OF RESPONDENT JUDGE WHICH
SUGGESTS THAT THE RESOLUTION OF PETITIONER’S MOTION
TO DISMISS PER SE WAS HELD IN ABEYANCE BY THE
RESPONDENT JUDGE. HENCE THE SAID ORDER DATED
OCTOBER 20, 2000 ALSO CONSTITUTES A DENIAL ON THE
MERITS OF PETITIONER’S MOTION TO DISMISS PER SE AND
NOT MERELY OF PETITIONER’S MOTION FOR PRELIMINARY
HEARING THEREON.
B. PRIVATE RESPONDENTS’ COMMENT AND OPPOSITION
DATED 11 AUGUST 2000, WHICH WAS CITED AND
SUSTAINED BY RESPONDENT JUDGE, CLEARLY TRAVERSED
THE MERITS OF THE GROUNDS FOR PETITIONER’S MOTION
TO DISMISS PER SE. HENCE, THE SAID 20 OCTOBER 2000
ORDER’S DENIAL OF PETITIONER’S MOTION IS NOT LIMITED
TO THE MOTION FOR PRELIMINARY HEARING BUT ALSO
CONSTITUTES A DENIAL OF PETITIONER’S MOTION TO
DISMISS PER SE.
IV
IN ARBITRARILY AND CAPRICIOUSLY RULING THAT ATTY.
ALONZO ANCHETA PROPERLY VERIFIED AND CERTIFIED
PRIVATE RESPONDENTS’ COMPLAINT A QUO, THE
HONORABLE COURT OF APPEALS VIOLATED NOT ONLY
PETITIONER’S SUBSTANTIVE DUE PROCESS RIGHTS, BUT ALSO
CONSIDERING THAT THE RECORDS OF THIS CASE IS (sic)
COMPLETELY BEREFT AND DEVOID OF ANY DULY EXECUTED
SPECIAL POWER OF ATTORNEY, EMANATING FROM PRIVATE
RESPONDENTS, WHICH EXPLICITLY AND SPECIFICALLY AUTHORIZES
ATTY. ALONZO ANCHETA TO REPRESENT PRIVATE RESPONDENTS
MONTRES ROLEX S.A. IN THE FILING OF THE COMPLAINT A QUO. BY
REASON THEREOF, PRIVATE RESPONDENTS COULD NOT BE
DEEMED TO HAVE VOLUNTARILY APPEARED BEFORE THE
RESPONDENT JUDGE; CONSEQUENTLY, THE TRIAL COURT COULD
NOT HAVE VALIDLY ACQUIRED JURISDICTION OVER THE PERSON OF
PRIVATE RESPONDENTS.
V Civil Procedure. Rule 16, Section 6, now provides that a grant
IN ARBITRARILY AND CAPRICIOUSLY AFFIRMING RESPONDENT
JUDGE’S QUASHAL OF THE SUBPOENA DATED 14 AUGUST 2000
DIRECTED AGAINST ATTY. ALONZO ANCHETA, THE HONORABLE
COURT OF APPEALS VIOLATED NOT ONLY PETITIONER’S
SUBSTANTIVE DUE PROCESS RIGHTS, BUT ALSO SECTION 9, RULE
132 AND SECTION 7 RULE 133 OF THE 1989 REVISED RULES ON
EVIDENCE, AND THE RULING OF THIS HONORABLE COURT IN THE
CASE OF PEOPLE VS. RIVERA.9
Simply put, the issues are as follows - (1) whether the trial court
denied not only petitioner’s motion for preliminary hearing on its
affirmative defenses but its motion to dismiss as well; (2) if the
answer is in the affirmative, whether or not the trial court gravely
abused its discretion in denying said motions; and (3) whether the
trial court gravely abused its discretion in quashing the
subpoena ad testificandum issued against Atty. Ancheta.
Anent the first issue, we find that what was denied in the order
dated October 27, 2000 was not only the motion for preliminary
hearing but the motion to dismiss as well. A reading of the
dispositive portion of said order shows that the trial court neither
qualified its denial nor held in abeyance the ruling on petitioner’s
motion to dismiss thus -
IN VIEW OF THE FOREGOING, the aforecited Motion To Quash
Subpoena Ad Testificandum is granted; and the aforecited Motion
For Preliminary Hearing On Defendant’s Affirmative Defenses With
Motion To dismiss The Instant Complaint Based On Said Affirmative
Defenses is denied.10(Emphasis supplied)
In issuing the assailed order, the trial court ruled on the merits of
petitioner’s Motion to Dismiss vis-à-vis respondents’ Comment and
Opposition which clearly traversed the affirmative defenses raised
by petitioner, to wit:
After carefully going over the pleadings, this Court finds, on the first
motion that the arguments raised in the said motion and the reply
filed in connection thereto appear to be meritorious; and on the
second motion, that the arguments raised in the comments and
opposition and the rejoinder filed by the plaintiffs likewise appear
to be meritorious.11
Moreover, it is presumed that all matters within an issue raised in a
case were passed upon by the court. In the absence of evidence to
the contrary, the presumption is that the court a quo discharged its
task properly.12
In Municipality of Biñan Laguna v. Court of Appeals,13 decided
under the old Rules of Civil Procedure, it was held that a
preliminary hearing permitted under Rule 16, Section 5, is not
mandatory even when the same is prayed for. It rests largely on the
sound discretion of the trial court, thus -
SEC. 5. Pleading grounds as affirmative defenses. — Any of the
grounds for dismissal provided for in this Rule, except improper
venue, may be pleaded as an affirmative defense, and a preliminary
Page 21 of 69 IPL Day 5
hearing may be had thereon as if a motion to dismiss had
been filed. (Emphasis supplied)
The use of the word "may" in the aforequoted provision
shows that such a hearing is not a matter of right
demandable from the trial court; it is not mandatory but
discretionary. "May" is an auxiliary verb indicating liberty,
opportunity, permission and possibility.14 Such
interpretation is specifically stated under the 1997 Rules of
of a preliminary hearing rests on the sound discretion of the
court, to wit -
SEC. 6. Pleading grounds as affirmative defenses.— If no
motion to dismiss has been filed, any of the grounds for
dismissal provided for in this Rule may be pleaded as an
affirmative defense in the answer and, in the discretion of the
court, a preliminary hearing may be had thereon as if a
motion to dismiss had been filed. (Emphasis supplied)
In the case at bar, the Court of Appeals did not err in finding
that no abuse of discretion could be ascribed to the trial
court’s denial of petitioner’s motion for preliminary hearing
on its affirmative defenses with motion to dismiss. The issue
of whether or not a trademark infringement exists, is a
question of fact that could best be determined by the trial
court.
Under the old Trademark Law15 where the goods for which
the identical marks are used are unrelated, there can be no
likelihood of confusion and there is therefore no
infringement in the use by the junior user of the registered
mark on the entirely different goods.16 This ruling, however,
has been to some extent, modified by Section 123.1(f) of the
Intellectual Property Code (Republic Act No. 8293), which
took effect on January 1, 1998. The said section reads:
Sec. 123. Registrability. - 123.1. A mark cannot be registered
if it:
xxx xxx xxx
(f) Is identical with, or confusingly similar to, or constitutes a
translation of a mark considered well-known in accordance
with the preceding paragraph, which is registered in the
Philippines with respect to goods or services which are not
similar to those with respect to which registration is applied
for: Provided, That use of the mark in relation to those goods
or services would indicate a connection between those
goods or services, and the owner of the registered
mark: Provided, further, That the interest of the owner of the
registered mark are likely to be damaged by such use;
(Emphasis supplied)
A junior user of a well-known mark on goods or services
which are not similar to the goods or services, and are
therefore unrelated, to those specified in the certificate of
registration of the well-known mark is precluded from using
the same on the entirely unrelated goods or services, subject
to the following requisites, to wit:
1. The mark is well-known internationally and in the
Philippines. Under Rule 102 of the Rules and Regulations on
Trademarks, Service Marks, Trade Names and Marked or
Stamped Containers,17 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
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 the 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;
Considering that the trial court correctly denied petitioner’s
motion for preliminary hearing on its affirmative defenses
with motion to dismiss, there exists no reason to compel Atty.
Ancheta to testify. Hence, no abuse of discretion was
committed by the trial court in quashing the subpoena ad
testificandum issued against Atty. Ancheta.
Grave abuse of discretion implies such capricious and
whimsical exercise of judgment as equivalent to lack of
jurisdiction, or, in other words, where the power is exercised
in an arbitrary or despotic manner by reason of passion or
personal hostility, and it must be so patent and gross as to
amount to an evasion of positive duty or to a virtual refusal
to perform the duty enjoined or to act at all in contemplation
of law. None of these was committed by the trial court;
hence, the Court of Appeals correctly dismissed the petition.
WHEREFORE, in view of all the foregoing, the petition for
review on certiorari filed by petitioner is DENIED. The
November 28, 2002 Decision and the February 13, 2003
Resolution of the Court of Appeals in CA-G.R. SP No. 64660
which dismissed the petition for certiorari filed by petitioner
are AFFIRMED.
SO ORDERED.

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

(l) the presence of 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.

2. The use of the well-known mark on the entirely unrelated goods

or services would indicate a connection between such unrelated
goods or services and those goods or services specified in the
certificate of registration in the well known mark. This requirement
refers to the likelihood of confusion of origin or business or some
business connection or relationship between the registrant and the
user of the mark.

3. The interests of the owner of the well-known mark are likely to

be damaged. For instance, if the registrant will be precluded from
expanding its business to those unrelated good or services, or if the
interests of the registrant of the well-known mark will be damaged
because of the inferior quality of the good or services of the
user.18

Section 123.1(f) is clearly in point because the Music Lounge of

petitioner is entirely unrelated to respondents’ business involving
watches, clocks, bracelets, etc. However, the Court cannot yet
resolve the merits of the present controversy considering that the
requisites for the application of Section 123.1(f), which constitute
the kernel issue at bar, clearly require determination facts of which
need to be resolved at the trial court. The existence or absence of
these requisites should be addressed in a full blown hearing and
not on a mere preliminary hearing. The respondent must be given
ample opportunity to prove its claim, and the petitioner to debunk
the same.

The same is true with respect to the issue of whether Atty. Alonzo
Ancheta was properly authorized to sign the verification and
certification against forum shopping in behalf of respondents. This
could be properly resolved during the trial together with the
substantive issues raised by petitioner.

Page 22 of 69 IPL Day 5

G.R. No. 112012 April 4, 2001 Were We to take even a lackadaisical glance at the overall
appearance of the contending marks, the physical
SOCIETE DES PRODUITS NESTLE, S.A. and NESTLE PHILIPPINES, discrepancies between appellant CFC’s and appellee’s
INC.,petitioners, respective logos are so ostensible that the casual purchaser
vs. cannot likely mistake one for the other. Appellant CFC’s label
COURT OF APPEALS and CFC CORPORATION., respondents. (Exhibit "4") is predominantly a blend of dark and lighter
shade of orange where the words "FLAVOR MASTER",
YNARES-SANTIAGO, J.: "FLAVOR" appearing on top of "MASTER", shaded in mocha
with thin white inner and outer sidings per letter and
This is a petition for review assailing the Decision of the Court of identically lettered except for the slightly protruding bottom
Appeals in CA-G.R. SP No. 24101,1 reversing and setting aside the curve of the letter "S" adjoining the bottom tip of the letter
decision of the Bureau of Patents, Trademarks and Technology "A" in the word "MASTER", are printed across the top of a
Transfer (BPTTT),2which denied private respondent’s application simmering red coffee cup. Underneath "FLAVOR MASTER"
for registration of the trade-mark, FLAVOR MASTER. appears "Premium Instant Coffee" printed in white, slim and
slanted letters. Appellees’ "MASTER ROAST" label (Exhibit
On January 18, 1984, private respondent CFC Corporation filed with "7"), however, is almost double the width of appellant CFC’s.
the BPTTT an application for the registration of the trademark At the top is printed in brown color the word "NESCAFE"
"FLAVOR MASTER" for instant coffee, under Serial No. 52994. The against a white backdrop. Occupying the center is a
application, as a matter of due course, was published in the July 18, square-shaped configuration shaded with dark brown and
1988 issue of the BPTTT’s Official Gazette. picturing a heap of coffee beans, where the word "MASTER"
is inscribed in the middle. "MASTER" in appellees’ label is
printed in taller capital letters, with the letter "M" further
Petitioner Societe Des Produits Nestle, S.A., a Swiss company
capitalized. The letters are shaded with red and bounded
registered under Swiss laws and domiciled in Switzerland, filed an
with thin gold-colored inner and outer sidings. Just above the
unverified Notice of Opposition,3 claiming that the trademark of
word "MASTER" is a red window like portrait of what appears
private respondent’s product is "confusingly similar to its
to be a coffee shrub clad in gold. Below the "MASTER"
trademarks for coffee and coffee extracts, to wit: MASTER ROAST
appears the word "ROAST" impressed in smaller, white print.
and MASTER BLEND."
And further below are the inscriptions in white: "A selection
of prime Arabica and Robusta coffee." With regard to
Likewise, a verified Notice of Opposition was filed by Nestle
appellees’ "MASTER BLEND" label (Exhibit "6") of which only
Philippines, Inc., a Philippine corporation and a licensee of Societe
a xeroxed copy is submitted, the letters are bolder and taller
Des Produits Nestle S.A., against CFC’s application for registration
as compared to appellant CFC’s and the word "MASTER"
of the trademark FLAVOR MASTER.4 Nestle claimed that the use, if
appears on top of the word "BLEND" and below it are the
any, by CFC of the trademark FLAVOR MASTER and its registration
words "100% pure instant coffee" printed in small letters.
would likely cause confusion in the trade; or deceive purchasers
and would falsely suggest to the purchasing public a connection in
From the foregoing description, while the contending marks
the business of Nestle, as the dominant word present in the three
depict the same product, the glaring dissimilarities in their
(3) trademarks is "MASTER"; or that the goods of CFC might be
presentation far outweigh and dispel any aspect of similitude.
mistaken as having originated from the latter.
To borrow the words of the Supreme Court in American
Cyanamid Co. v. Director of Patents (76 SCRA 568), appellant
In answer to the two oppositions, CFC argued that its trademark,
CFC’s and appellees’ labels are entirely different in size,
FLAVOR MASTER, is not confusingly similar with the former’s
background, colors, contents and pictorial arrangement; in
trademarks, MASTER ROAST and MASTER BLEND, alleging that,
short, the general appearances of the labels bearing the
"except for the word MASTER (which cannot be exclusively
respective trademarks are so distinct from each other that
appropriated by any person for being a descriptive or generic
appellees cannot assert that the dominant features, if any, of
name), the other words that are used respectively with said word in
its trademarks were used or appropriated in appellant CFC’s
the three trademarks are very different from each other - in
own. The distinctions are so well-defined so as to foreclose
meaning, spelling, pronunciation, and sound". CFC further argued
any probability or likelihood of confusion or deception on the
that its trademark, FLAVOR MASTER, "is clearly very different from
part of the normally intelligent buyer when he or she
any of Nestle’s alleged trademarks MASTER ROAST and MASTER
encounters both coffee products at the grocery shelf. The
BLEND, especially when the marks are viewed in their entirety, by
answer therefore to the query is a clear-cut NO.6
considering their pictorial representations, color schemes and the
letters of their respective labels."
Petitioners are now before this Court on the following
assignment of errors:
In its Decision No. 90-47 dated December 27, 1990, the BPTTT
denied CFC’s application for registration.5 CFC elevated the matter
1. RESPONDENT COURT GRAVELY ERRED IN REVERSING AND
to the Court of Appeals, where it was docketed as CA-G.R. SP No.
SETTING ASIDE THE DECISION (NO. 90-47) OF THE DIRECTOR
24101.
OF THE BUREAU OF PATENTS, TRADEMARKS AND
TECHNOLOGY TRANSFER (BPTTT) DATED DECEMBER 27,
The Court of Appeals defined the issue thus: "Does appellant CFC’s
1990.
trade dress bear a striking resemblance with appellee’s trademarks
as to create in the purchasing public’s mind the mistaken
2. RESPONDENT COURT ERRED IN FINDING THAT APPELLANT
impression that both coffee products come from one and the same
CFC’S TRADE DRESS IS BEYOND THE SCOPE OF THE
source?"
PROSCRIPTION LAID DOWN BY JURISPRUDENCE AND THE
TRADEMARK LAW.
As stated above, the Court of Appeals, in the assailed decision
dated September 23, 1993, reversed Decision No. 90-47 of the
3. RESPONDENT COURT ERRED IN HOLDING THAT THE
BPTTT and ordered the Director of Patents to approve CFC’s
TOTALITY RULE, RATHER THAN THE TEST OF DOMINANCY,
application. The Court of Appeals ruled:
APPLIES TO THE CASE.
Page 23 of 69 IPL Day 5
4. RESPONDENT COURT ERRED IN INVOKING THE TOTALITY RULE
APPLIED IN THE CASES OF BRISTOL MYERS V. DIRECTOR OF
PATENTS, ET AL. (17 SCRA 128), MEAD JOHNSON & CO. V. NVJ VAN
DORF LTD., (7 SCRA 768) AND AMERICAN CYANAMID CO. V.
DIRECTOR OF PATENTS (76 SCRA 568).
The petition is impressed with merit.
A trademark has been generally defined as "any word, name,
symbol or device adopted and used by a manufacturer or merchant
to identify his goods and distinguish them from those
manufactured and sold by others."7
A manufacturer’s trademark is entitled to protection. As Mr. Justice
Frankfurter observed in the case of Mishawaka Mfg. Co. v. Kresge
Co.:8
The protection of trade-marks is the law’s recognition of the
psychological function of symbols. If it is true that we live by
symbols, it is no less true that we purchase goods by them. A
trade-mark is a merchandising short-cut which induces a purchaser
to select what he wants, or what he has been led to believe he
wants. The owner of a mark exploits this human propensity by
making every effort to impregnate the atmosphere of the market
with the drawing power of a congenial symbol. Whatever the
means employed, the aim is the same --- to convey through the
mark, in the minds of potential customers, the desirability of the
commodity upon which it appears. Once this is attained, the
trade-mark owner has something of value. If another poaches upon
the commercial magnetism of the symbol he has created, the
owner can obtain legal redress.
Section 4 (d) of Republic Act No. 166 or the Trademark Law, as
amended, which was in force at the time, provides thus:
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
(d) Consists of or comprises a mark or trade-name which so
resembles a mark or trade-name registered in the Philippines or a
mark or trade-name previously used in the Philippines by another
and not abandoned, as to be likely, when applied to or used in
connection with the goods, business or services of the applicant, to
cause confusion or mistake or to deceive purchasers;
xxx xxx xxx
(Emphasis supplied)
The law prescribes a more stringent standard in that there should
not only be confusing similarity but that it should not likely cause
confusion or mistake or deceive purchasers.
Hence, the question in this case is whether there is a likelihood that
the trademark FLAVOR MASTER may cause confusion or mistake or
may deceive purchasers that said product is the same or is
manufactured by the same company. In other words, the issue is
whether the trademark FLAVOR MASTER is a colorable imitation of
the trademarks MASTER ROAST and MASTER BLEND.
Page 24 of 69 IPL Day 5
Colorable imitation denotes such a close or ingenious
imitation as to be calculated to deceive ordinary persons, or
such a resemblance to the original as to deceive an ordinary
purchaser giving such attention as a purchaser usually gives,
as to cause him to purchase the one supposing it to be the
other.9 In determining if colorable imitation exists,
jurisprudence has developed two kinds of tests - the
Dominancy Test and the Holistic Test.10 The test of
dominancy focuses on the similarity of the prevalent features
of the competing trademarks which might cause confusion or
deception and thus constitute infringement. 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.11
In the case at bar, the Court of Appeals held that:
The determination of whether two trademarks are indeed
confusingly similar must be taken from the viewpoint of the
ordinary purchasers who are, in general, undiscerningly rash
in buying the more common and less expensive household
products like coffee, and are therefore less inclined to closely
examine specific details of similarities and dissimilarities
between competing products. The Supreme Court in Del
Monte Corporation v. CA, 181 SCRA 410, held that:
"The question is not whether the two articles are
distinguishable by their labels when set side by side but
whether the general confusion made by the article upon the
eye of the casual purchaser who is unsuspicious and off his
guard, is such as to likely result in his confounding it with the
original. As observed in several cases, the general impression
of the ordinary purchaser, buying under the normally
prevalent conditions in trade and giving the attention such
purchasers usually give in buying that class of goods, is the
touchstone."
From this perspective, the test of similarity is to consider the
two marks in their entirety, as they appear in the respective
labels, in relation to the goods to which they are attached
(Bristol Myers Company v. Director of Patents, et al., 17 SCRA
128, citing Mead Johnson & Co. v. NVJ Van Dorp, Ltd., et al., 7
SCRA 768). The mark must be considered as a whole and not
as dissected. If the buyer is deceived, it is attributable to the
marks as a totality, not usually to any part of it (Del Monte
Corp. v. CA, supra), as what appellees would want it to be
when they essentially argue that much of the confusion
springs from appellant CFC’s use of the word "MASTER"
which appellees claim to be the dominant feature of their
own trademarks that captivates the prospective consumers.
Be it further emphasized that 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 (Mead Johnson & Co. v. NVJ Van Dorp,
Ltd., supra).12
The Court of Appeals applied some judicial precedents which
are not on all fours with this case. It must be emphasized
that in infringement or 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.13 In Esso Standard, Inc. v. Court of
Appeals,14 we ruled that the likelihood of confusion is a
relative concept; to be determined only according to the
particular, and sometimes peculiar, circumstances of each
case. In trademark cases, even more than in any other
litigation, precedent must be studied in light of the facts of
the particular case. The wisdom of the likelihood of confusion test
lies in its recognition that each trademark infringement case
presents its own unique set of facts. Indeed, the complexities
attendant to an accurate assessment of likelihood of confusion
require that the entire panoply of elements constituting the
relevant factual landscape be comprehensively examined.15
The Court of Appeals’ application of the case of Del Monte
Corporation v. Court of Appeals16 is, therefore, misplaced. In Del
Monte, the issue was about the alleged similarity of Del Monte’s
logo with that of Sunshine Sauce Manufacturing Industries. Both
corporations market the catsup product which is an inexpensive
and common household item.
Since Del Monte alleged that Sunshine’s logo was confusingly
similar to or was a colorable imitation of the former’s logo, there
was a need to go into the details of the two logos as well as the
shapes of the labels or marks, the brands printed on the labels, the
words or lettering on the labels or marks and the shapes and colors
of the labels or marks. The same criteria, however, cannot be
applied in the instant petition as the facts and circumstances herein
are peculiarly different from those in the Del Monte case.
In the same manner, the Court of Appeals erred in applying the
totality rule as defined in the cases of Bristol Myers v. Director of
Patents;17Mead Johnson & Co. v. NVJ Van Dorf
Ltd.;18 and American Cyanamid Co. v. Director of Patents.19 The
totality rule states that "the test is not simply to take their words
and compare the spelling and pronunciation of said words. In
determining whether two trademarks are confusingly similar, the
two marks in their entirety as they appear in the respective labels
must 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
on both labels."20
As this Court has often declared, each case must be studied
according to the peculiar circumstances of each 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 above cases cited by the Court of Appeals to justify the
application of the totality or holistic test to this instant case, the
factual circumstances are substantially different. In the Bristol
Myers case, this Court held that although both BIOFERIN and
BUFFERIN are primarily used for the relief of pains such as
headaches and colds, and their names are practically the same in
spelling and pronunciation, both labels have strikingly different
backgrounds and surroundings. In addition, one is dispensable only
upon doctor’s prescription, while the other may be purchased
over-the-counter.
In the Mead Johnson case, the differences between ALACTA and
ALASKA are glaring and striking to the eye. Also, ALACTA refers to
"Pharmaceutical Preparations which Supply Nutritional Needs,"
falling under Class 6 of the official classification of Medicines and
Pharmaceutical Preparations to be used as prescribed by physicians.
On the other hand, ALASKA refers to "Foods and Ingredients of
Foods" falling under Class 47, and does not require medical
prescription.
In the American Cyanamid case, the word SULMET is
distinguishable from the word SULMETINE, as the former is derived
from a combination of the syllables "SUL" which is derived from
sulfa and "MET" from methyl, both of which are chemical
compounds present in the article manufactured by the contending
parties. This Court held that the addition of the syllable "INE" in
respondent’s label is sufficient to distinguish respondent’s product
Page 25 of 69 IPL Day 5
or trademark from that of petitioner. Also, both products are
for medicinal veterinary use and the buyer will be more wary
of the nature of the product he is buying. In any case, both
products are not identical as SULMET’s label indicates that it
is used in a drinking water solution while that of SULMETINE
indicates that they are tablets.
It cannot also be said that the products in the above cases
can be bought off the shelf except, perhaps, for ALASKA. The
said products are not the usual "common and inexpensive"
household items which an "undiscerningly rash" buyer would
unthinkingly buy.In the case at bar, other than the fact that
both Nestle’s and CFC’s products are inexpensive and
common household items, the similarity ends there. What is
being questioned here is the use by CFC of the trademark
MASTER. In view of the difficulty of applying jurisprudential
precedents to trademark cases due to the peculiarity of each
case, judicial fora should not readily apply a certain test or
standard just because of seeming similarities. As this Court
has pointed above, there could be more telling differences
than similarities as to make a jurisprudential precedent
inapplicable.
Nestle points out that the dominancy test should have been
applied to determine whether there is a confusing similarity
between CFC’s FLAVOR MASTER and Nestle’s MASTER ROAST
and MASTER BLEND.
We agree.
As the Court of Appeals itself has stated, "[t]he
determination of whether two trademarks are indeed
confusingly similar must be taken from the viewpoint of the
ordinary purchasers who are, in general, undiscerningly rash
in buying the more common and less expensive household
products like coffee, and are therefore less inclined to closely
examine specific details of similarities and dissimilarities
between competing products."21
The basis for the Court of Appeals’ application of the totality
or holistic test is the "ordinary purchaser" buying the product
under "normally prevalent conditions in trade" and the
attention such products normally elicit from said ordinary
purchaser. An ordinary purchaser or buyer does not usually
make such scrutiny nor does he usually have the time to do
so. The average shopper is usually in a hurry and does not
inspect every product on the shelf as if he were browsing in a
library.22
The Court of Appeals held that the test to be applied should
be the totality or holistic test reasoning, since what is of
paramount consideration is the ordinary purchaser who is, in
general, undiscerningly rash in buying the more common and
less expensive household products like coffee, and is
therefore less inclined to closely examine specific details of
similarities and dissimilarities between competing products.
This Court cannot agree with the above reasoning. If the
ordinary purchaser is "undiscerningly rash" in buying such
common and inexpensive household products as instant
coffee, and would therefore be "less inclined to closely
examine specific details of similarities and dissimilarities"
between the two competing products, then it would be less
likely for the ordinary purchaser to notice that CFC’s
trademark FLAVOR MASTER carries the colors orange and
mocha while that of Nestle’s uses red and brown. The
application of the totality or holistic test is improper since
the ordinary purchaser would not be inclined to notice the
specific features, similarities or dissimilarities, considering that the
product is an inexpensive and common household item.
It must be emphasized that the products bearing the trademarks in
question are "inexpensive and common" household items bought
off the shelf by "undiscerningly rash" purchasers. As such, if the
ordinary purchaser is "undiscerningly rash", then he would not
have the time nor the inclination to make a keen and perceptive
examination of the physical discrepancies in the trademarks of the
products in order to exercise his choice.
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.23The 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 opposer’s 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. This can be gleaned from the fact that Robert Jaworski
and Atty. Ric Puno Jr.., the personalities engaged to promote the
product, are given the titles Master of the Game and Master of the
Talk Show, respectively. 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 opposer’s goods.
x x x. It is the observation of this Office that much of the dominance
which the word MASTER has acquired through Opposer’s
advertising schemes is carried over when the same is incorporated
into respondent-applicant’s trademark FLAVOR MASTER. Thus,
when one looks at the label bearing the trademark FLAVOR
MASTER (Exh. 4) one’s 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. x x x.24
In addition, the word "MASTER" is neither a generic nor a
descriptive term. As such, said term can not be invalidated as a
trademark and, therefore, may be legally protected. Generic
terms25 are those which constitute "the common descriptive name
of an article or substance," or comprise the "genus of which the
particular product is a species," or are "commonly used as the
name or description of a kind of goods," or "imply reference to
every member of a genus and the exclusion of individuating
characters," or "refer to the basic nature of the wares or services
provided rather than to the more idiosyncratic characteristics of a
particular product," and are not legally protectable. On the other
hand, a term is descriptive26 and therefore invalid as a trademark if,
as understood in its normal and natural sense, it "forthwith conveys
the characteristics, functions, qualities or ingredients of a product
Page 26 of 69 IPL Day 5
to one who has never seen it and does not know what it is,"
or "if it forthwith conveys an immediate idea of the
ingredients, qualities or characteristics of the goods," or if it
clearly denotes what goods or services are provided in such a
way that the consumer does not have to exercise powers of
perception or imagination.
Rather, the term "MASTER" is a suggestive term brought
about by the advertising scheme of Nestle. Suggestive
terms27 are those which, in the phraseology of one court,
require "imagination, thought and perception to reach a
conclusion as to the nature of the goods." Such terms,
"which subtly connote something about the product," are
eligible for protection in the absence of secondary meaning.
While suggestive marks are capable of shedding "some light"
upon certain characteristics of the goods or services in
dispute, they nevertheless involve "an element of
incongruity," "figurativeness," or " imaginative effort on the
part of the observer."
This is evident from the advertising scheme adopted by
Nestle in promoting its coffee products. In this case, Nestle
has, over time, promoted its products as "coffee perfection
worthy of masters like Robert Jaworski and Ric Puno Jr."
In associating its coffee products with the term "MASTER"
and thereby impressing them with the attributes of said term,
Nestle advertised its products thus:
Robert Jaworski. Living Legend. A true hard court hero. Fast
on his feet. Sure in every shot he makes. A master strategist.
In one word, unmatched.
MASTER ROAST. Equally unmatched. Rich and deeply
satisfying. Made from a unique combination of the best
coffee beans - Arabica for superior taste and aroma, Robusta
for strength and body. A masterpiece only NESCAFE, the
world’s coffee masters, can create.
MASTER ROAST. Coffee perfection worthy of masters like
Robert Jaworski.28
In the art of conversation, Ric Puno Jr. is master. Witty.
Well-informed. Confident.
In the art of coffee-making, nothing equals Master Roast, the
coffee masterpiece from Nescafe, the world’s coffee masters.
A unique combination of the best coffee beans - Arabica for
superior taste and aroma, Robusta for strength and body.
Truly distinctive and rich in flavor.
Master Roast. Coffee perfection worthy of masters like Ric
Puno Jr.29
The term "MASTER", therefore, has acquired a certain
connotation to mean the coffee products MASTER ROAST
and MASTER BLEND produced by Nestle. As such, the use by
CFC of the term "MASTER" in the trademark for its coffee
product FLAVOR MASTER is likely to cause confusion or
mistake or even to deceive the ordinary purchasers.
In closing, it may not be amiss to quote the case of American
Chicle Co. v. Topps Chewing Gum, Inc.,30 to wit:
Why it should have chosen a mark that had long been
employed by [plaintiff] and had become known to the trade
instead of adopting some other means of identifying its
goods is hard to see unless there was a deliberate purpose to
obtain some advantage from the trade that [plaintiff] had built up.
Indeed, it is generally true that, as soon as we see that a second
comer in a market has, for no reason that he can assign, plagiarized
the "make-up" of an earlier comer, we need no more; . . . [W]e feel
bound to compel him to exercise his ingenuity in quarters further
afield.

WHEREFORE, in view of the foregoing, the decision of the Court of

Appeals in CA-G.R. SP No. 24101 is REVERSED and SET ASIDE and
the decision of the Bureau of Patents, Trademarks and Technology
Transfer in Inter Partes Cases Nos. 3200 and 3202 is REINSTATED.

SO ORDERED.

Page 27 of 69 IPL Day 5

G.R. No. 138900 September 20, 2005
LEVI STRAUSS & CO., & LEVI STRAUSS (PHILS.), INC., Petitioners,
vs.
CLINTON APPARELLE, INC., Respondent.
DECISION
Tinga, J.:
Before us is a petition for review on certiorari1 under Rule 45 of the
1997 Rules of Civil Procedure filed by Levi Strauss & Co. (LS & Co.)
and Levi Strauss (Philippines), Inc. (LSPI) assailing the Court of
Appeals’ Decision2and Resolution3respectively dated 21 December
1998 and 10 May 1999. The questioned Decision granted
respondent’s prayer for a writ of preliminary injunction in
its Petition4 and set aside the trial court’s orders dated 15 May
19985 and 4 June 19986 which respectively granted petitioners’
prayer for the issuance of a temporary restraining order (TRO) and
application for the issuance of a writ of preliminary injunction.
This case stemmed from the Complaint7 for Trademark
Infringement, Injunction and Damages filed by petitioners LS & Co.
and LSPI against respondent Clinton Apparelle, Inc.* (Clinton
Aparelle) together with an alternative defendant, Olympian
Garments, Inc. (Olympian Garments), before the Regional Trial
Court of Quezon City, Branch 90.8 The Complaint was docketed as
Civil Case No. Q-98-34252, entitled "Levi Strauss & Co. and Levi
Strauss (Phils.), Inc. v. Clinton Aparelle, Inc. and/or Olympian
Garments, Inc."
The Complaint alleged that LS & Co., a foreign corporation duly
organized and existing under the laws of the State of Delaware,
U.S.A., and engaged in the apparel business, is the owner by prior
adoption and use since 1986 of the internationally famous "Dockers
and Design" trademark. This ownership is evidenced by its valid and
existing registrations in various member countries of the Paris
Convention. In the Philippines, it has a Certificate of Registration No.
46619 in the Principal Register for use of said trademark on pants,
shirts, blouses, skirts, shorts, sweatshirts and jackets under Class
25.9
The "Dockers and Design" trademark was first used in the
Philippines in or about May 1988, by LSPI, a domestic corporation
engaged in the manufacture, sale and distribution of various
products bearing trademarks owned by LS & Co. To date, LSPI
continues to manufacture and sell Dockers Pants with the "Dockers
and Design" trademark.10
LS & Co. and LSPI further alleged that they discovered the presence
in the local market of jeans under the brand name "Paddocks"
using a device which is substantially, if not exactly, similar to the
"Dockers and Design" trademark owned by and registered in the
name of LS & Co., without its consent. Based on their information
and belief, they added, Clinton Apparelle manufactured and
continues to manufacture such "Paddocks" jeans and other
apparel.
However, since LS & Co. and LSPI are unsure if both, or just one of
impleaded defendants are behind the manufacture and sale of the
"Paddocks" jeans complained of, they brought this suit under
Section 13, Rule 311 of the 1997 Rules of Civil Procedure.12
The Complaint contained a prayer that reads as follows:
1. That upon the filing of this complaint, a temporary restraining
order be immediately issued restraining defendants, their officers,
employees, agents, representatives, dealers, retailers or assigns
Page 28 of 69 IPL Day 5
from committing the acts herein complained of, and,
specifically, for the defendants, their officers, employees,
agents, representatives, dealers and retailers or assigns, to
cease and desist from manufacturing, distributing, selling,
offering for sale, advertising, or otherwise using denims,
jeans or pants with the design herein complained of as
substantially, if not exactly similar, to plaintiffs’ "Dockers and
Design" trademark.
2. That after notice and hearing, and pending trial on the
merits, a writ of preliminary injunction be issued enjoining
defendants, their officers, employees, agents, dealers,
retailers, or assigns from manufacturing, distributing, selling,
offering for sale, advertising, jeans the design herein
complained of as substantially, if not exactly similar, to
plaintiffs’ "Dockers and Design" trademark.
3. That after trial on the merits, judgment be rendered as
follows:
a. Affirming and making permanent the writ of preliminary
injunction;
b. Ordering that all infringing jeans in the possession of
either or both defendants as the evidence may warrant, their
officers, employees, agents, retailers, dealers or assigns, be
delivered to the Honorable Court of plaintiffs, and be
accordingly destroyed;13
Acting on the prayer for the issuance of a TRO, the trial court
issued an Order14setting it for hearing on 5 May 1998. On
said date, as respondent failed to appear despite notice and
the other defendant, Olympian Garments, had yet to be
notified, the hearing was re-scheduled on 14 May 1998.15
On 14 May 1998, neither Clinton Apparelle nor Olympian
Garments appeared. Clinton Apparelle claimed that it was
not notified of such hearing. Only Olympian Garments
allegedly had been issued with summons. Despite the
absence of the defendants, the hearing on the application for
the issuance of a TRO continued.16
The following day, the trial court issued an Order17granting
the TRO applied for, the pertinent portions of which state:
…Considering the absence of counsel/s for the defendant/s
during the summary hearing scheduled on May 5, 1998 and
also during the re-scheduled summary hearing held on May
14, 1998 set for the purpose of determining whether or not a
Temporary Restraining Order shall be issued, this Court
allowed the counsel for the plaintiffs to present on May 14,
1998 their arguments/evidences in support of their
application. After hearing the arguments presented by the
counsel for the plaintiffs during the summary hearing, this
Court is of the considered and humble view that grave
injustice and irreparable injury to the plaintiffs would arise
before the matter of whether or not the application for the
issuance of a Writ of Preliminary Injunction can be heard,
and that, in the interest of justice, and in the meantime, a
Temporary Restraining Order be issued.
WHEREFORE, let this Temporary Restraining Order be issued
restraining the defendants, their officers, employees, agents,
representatives, dealers, retailers or assigns from committing
the acts complained of in the verified Complaint, and
specifically, for the defendants, their officers, employees,
agents, representatives, dealers and retailers or assigns, to
cease and desist from manufacturing, distributing, selling,
offering for sale, advertising or otherwise using denims, jeans or
pants with the design complained of in the verified Complaint as
substantially, if not exactly similar, to plaintiffs’ "Dockers and
Design" trademark; until after the application/prayer for the
issuance of a Writ of Preliminary Injunction is heard/resolved, or
until further orders from this Court.
The hearing on the application for the issuance of a Writ of
Preliminary Injunction as embodied in the verified Complaint is set
on May 26, 1998 (Tuesday) at 2:00 P.M. which setting is
intransferable in character considering that the lifetime of this
Temporary Restraining Order is twenty (20) days from date
hereof.18
On 4 June 1998, the trial court issued another Order19 granting the
writ of preliminary injunction, to wit:
ORDER
This resolves the plaintiffs’ application or prayer for the issuance of
a writ of preliminary injunction as embodied in the verified
complaint in this case. Parenthetically, this Court earlier issued a
temporary restraining order. (see Order dated May 15,
1998; seealso Order dated May 26, 1998)
After a careful perusal of the contents of the pleadings and
documents on record insofar as they are pertinent to the issue
under consideration, this Court finds that at this point in time, the
plaintiffs appear to be entitled to the relief prayed for and this
Court is of the considered belief and humble view that, without
necessarily delving on the merits, the paramount interest of justice
will be better served if the statusquo shall be maintained and that
an injunction bond of P2,500,000.00 appears to be in order.
(see Sections 3 and 4, Rule 58, 1997 Rules of Civil Procedure)
IN VIEW OF THE FOREGOING, the plaintiffs’ prayer for the issuance
of a writ of preliminary injunction is GRANTED. Accordingly, upon
the plaintiffs’ filing, within ten (10) days from their receipt hereof,
an injunction bond of P2,500,000.00 executed to the defendants to
the effect that the plaintiffs will pay all damages the defendants
may sustain by reason of this injunction in case the Court should
finally decide that the plaintiffs are not entitled thereto, let a writ
of preliminary injunction issue enjoining or restraining the
commission of the acts complained of in the verified Complaint in
this case, and specifically, for the defendants, their officers,
employees, agents, representatives, dealers and retailers or assigns
or persons acting in their behalf to cease and desist from
manufacturing, distributing, selling, offering for sale, advertising, or
otherwise using, denims, jeans or pants with the design complained
of in the verified Complaint in this case, which is substantially, if not
exactly, similar to plaintiffs’ "DOCKERS and DESIGN" trademark or
logo as covered by the Bureau of Patents, Trademarks and
Technology Transfer Certificate of Registration No. 46619, until
after this case shall have been decided on the merits and/or until
further orders from this Court.20
The evidence considered by the trial court in granting injunctive
relief were as follows: (1) a certified true copy of the certificate of
trademark registration for "Dockers and Design"; (2) a pair of
DOCKERS pants bearing the "Dockers and Design" trademark; (3) a
pair of "Paddocks" pants bearing respondent’s assailed logo; (4) the
Trends MBL Survey Report purportedly proving that there was
confusing similarity between two marks; (5) the affidavit of one
Bernabe Alajar which recounted petitioners’ prior adoption, use
and registration of the "Dockers and Design" trademark; and (6) the
affidavit of one Mercedes Abad of Trends MBL, Inc. which detailed
the methodology and procedure used in their survey and the
results thereof.21
Page 29 of 69 IPL Day 5
Clinton Apparelle thereafter filed a Motion to Dismiss22 and
a Motion for Reconsideration23 of the Order granting the
writ of preliminary injunction. Meantime, the trial court
issued an Order24approving the bond filed by petitioners.
On 22 June 1998, the trial court required25the parties to file
their "respective citation of authorities/
jurisprudence/Supreme Court decisions" on whether or not
the trial court may issue the writ of preliminary injunction
pending the resolution of the Motion for Reconsideration and
the Motion to Dismiss filed by respondent.
On 2 October 1998, the trial court denied Clinton
Apparelle’s Motion to Dismiss and Motion for
Reconsideration in an Omnibus Order,26 the pertinent
portions of which provide:
After carefully going over the contents of the pleadings in
relation to pertinent portions of the records, this Court is of
the considered and humble view that:
On the first motion, the arguments raised in the plaintiffs’
aforecited Consolidated Opposition appears to be
meritorious. Be that as it may, this Court would like to
emphasize, among other things, that the complaint states a
cause of action as provided under paragraphs 1 to 18
thereof.
On the second motion, the arguments raised in the plaintiffs’
aforecited Consolidated Opposition likewise appear to be
impressed with merit. Besides, there appears to be no strong
and cogent reason to reconsider and set aside this Court’s
Order dated June 4, 1998 as it has been shown so far that
the trademark or logo of defendants is substantially, if not
exactly, similar to plaintiffs’ "DOCKERS and DESIGN"
trademark or logo as covered by BPTTT Certificate of
Registration No. 46619 even as the BPTTT Certificate of
Registration No. 49579 of Clinton Apparelle, Inc. is only for
the mark or word "PADDOCKS" (see Records, p. 377) In any
event, this Court had issued an Order dated June 18, 1998
for the issuance of the writ of preliminary injunction after the
plaintiffs filed the required bond of P2,500,000.00.
IN VIEW OF THE FOREGOING, the aforecited Motion To
Dismiss and Motion For Reconsideration are both DENIED for
lack of merit, and accordingly, this Court’s Order dated June
18, 1998 for the issuance of the writ of preliminary injunction
is REITERATED so the writ of preliminary injunction could be
implemented unless the implementation thereof is
restrained by the Honorable Court of Appeals or Supreme
Court.
The writ of preliminary injunction was thereafter issued on 8
October 1998.27
Thus, Clinton Apparelle filed with the Court of Appeals
a Petition28 for certiorari, prohibition and mandamus with
prayer for the issuance of a temporary restraining order
and/or writ of preliminary injunction, assailing the orders of
the trial court dated 15 May 1998, 4 June 1998 and 2
October 1998.
On 20 October 1998, the Court of Appeals issued
a Resolution29 requiring herein petitioners to file their
comment on the Petition and at the same time issued the
prayed-for temporary restraining order.
The appellate court rendered on 21 December 1998 its now
assailed Decision granting Clinton Apparelle’s petition. The Court of
Appeals held that the trial court did not follow the procedure
required by law for the issuance of a temporary restraining order as
Clinton Apparelle was not duly notified of the date of the summary
hearing for its issuance. Thus, the Court of Appeals ruled that the
TRO had been improperly issued.30
The Court of Appeals also held that the issuance of the writ of
preliminary injunction is questionable. In its opinion, herein
petitioners failed to sufficiently establish its material and
substantial right to have the writ issued. Secondly, the Court of
Appeals observed that the survey presented by petitioners to
support their contentions was commissioned by petitioners. The
Court of Appeals remarked that affidavits taken ex-parteare
generally considered to be inferior to testimony given in open court.
The appellate court also considered that the injury petitioners have
suffered or are currently suffering may be compensated in terms of
monetary consideration, if after trial, a final judgment shall be
rendered in their favor.31
In addition, the Court of Appeals strongly believed that the
implementation of the questioned writ would effectively shut down
respondent’s business, which in its opinion should not be
sanctioned. The Court of Appeals thus set aside the orders of the
trial court dated 15 May 1998 and 4 June 1998, respectively issuing
a temporary restraining order and granting the issuance of a writ of
preliminary injunction.
With the denial of their Motion for Reconsideration,32 petitioners
are now before this Court seeking a review of the appellate
court’s Decision and Resolution. LS & Co. and LSPI claim that the
Court of Appeals committed serious error in: (1) disregarding the
well-defined limits of the writ of certiorari that questions on the
sufficiency of evidence are not to be resolved in such a petition; (2)
in holding that there was no confusion between the two marks; (3)
in ruling that the erosion of petitioners’ trademark is not
protectable by injunction; (4) in ignoring the procedure previously
agreed on by the parties and which was adopted by the trial court;
and (5) in declaring that the preliminary injunction issued by the
trial court will lead to the closure of respondent’s business.
In its Comment,33 Clinton Apparelle maintains that only questions
of law may be raised in an appeal by certiorari under Rule 45 of the
Rules of Court. It asserts that the question of whether the Court of
Appeals erred in: (1) disregarding the survey evidence; (2) ruling
that there was no confusion between the two marks; and (c)
finding that the erosion of petitioners’ trademark may not be
protected by injunction, are issues not within the ambit of a
petition for review on certiorari under Rule 45. Clinton Apparelle
also contends that the Court of Appeals acted correctly when it
overturned the writ of preliminary injunction issued by the trial
court. It believes that the issued writ in effect disturbed the status
quo and disposed of the main case without trial.
There is no merit in the petition.
At issue is whether the issuance of the writ of preliminary
injunction by the trial court was proper and whether the Court of
Appeals erred in setting aside the orders of the trial court.
Section 1, Rule 58 of the Rules of Court defines a preliminary
injunction as an order granted at any stage of an action prior to the
judgment or final order requiring a party or a court, agency or a
person to refrain from a particular act or acts. Injunction is
accepted as the strong arm of equity or a transcendent remedy to
be used cautiously as it affects the respective rights of the parties,
and only upon full conviction on the part of the court of its extreme
Page 30 of 69 IPL Day 5
necessity. An extraordinary remedy, injunction is designed to
preserve or maintain the status quo of things and is generally
availed of to prevent actual or threatened acts until the
merits of the case can be heard.34 It may be resorted to only
by a litigant for the preservation or protection of his rights or
interests and for no other purpose during the pendency of
the principal action.35 It is resorted to only when there is a
pressing necessity to avoid injurious consequences, which
cannot be remedied under any standard compensation. The
resolution of an application for a writ of preliminary
injunction rests upon the existence of an emergency or of a
special recourse before the main case can be heard in due
course of proceedings.36
Section 3, Rule 58, of the Rules of Court enumerates the
grounds for the issuance of a preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. - A
preliminary injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and
the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained of,
or in requiring the performance of an act or acts, either for a
limited period or perpetually;
(b) That the commission, continuance, or non-performance
of the act or acts complained of during the litigation would
probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing,
threatening, or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in violation of
the rights of the applicant respecting the subject of the
action or proceeding, and tending to render the judgment
ineffectual.
Under the cited provision, a clear and positive right especially
calling for judicial protection must be shown. Injunction is
not a remedy to protect or enforce contingent, abstract, or
future rights; it will not issue to protect a right not in
esse and which may never arise, or to restrain an act which
does not give rise to a cause of action. There must exist an
actual right.37 There must be a patent showing by the
complaint that there exists a right to be protected and that
the acts against which the writ is to be directed are violative
of said right.38
There are generally two kinds of preliminary injunction: (1) a
prohibitory injunction which commands a party to refrain
from doing a particular act; and (2) a mandatory injunction
which commands the performance of some positive act to
correct a wrong in the past.39
The Court of Appeals did not err in reviewing proof adduced
by petitioners to support its application for the issuance of
the writ. While the matter of the issuance of a writ of
preliminary injunction is addressed to the sound discretion of
the trial court, this discretion must be exercised based upon
the grounds and in the manner provided by law. The exercise
of discretion by the trial court in injunctive matters is
generally not interfered with save in cases of manifest
abuse.40 And to determine whether there was abuse of
discretion, a scrutiny must be made of the bases, if any,
considered by the trial court in granting injunctive relief. Be it
stressed that injunction is the strong arm of equity which
must be issued with great caution and deliberation, and only
in cases of great injury where there is no commensurate remedy in
damages.41
In the present case, we find that there was scant justification for
the issuance of the writ of preliminary injunction.
Petitioners anchor their legal right to "Dockers and Design"
trademark on the Certificate of Registration issued in their favor by
the Bureau of Patents, Trademarks and Technology
Transfer.* According to Section 138 of Republic Act No.
8293,42 this Certificate of Registration is prima facieevidence of
the validity of the registration, the registrant’s ownership of the
mark and of the exclusive right to use the same in connection with
the goods or services and those that are related thereto specified
in the certificate. Section 147.1 of said law likewise grants the
owner of the registered mark the exclusive right to prevent all third
parties not having the owner’s consent from using in the course of
trade identical or similar signs for goods or services which are
identical or similar to those in respect of which the trademark is
registered if such use results in a likelihood of confusion.
However, attention should be given to the fact that petitioners’
registered trademark consists of two elements: (1) the word mark
"Dockers" and (2) the wing-shaped design or logo. Notably, there is
only one registration for both features of the trademark giving the
impression that the two should be considered as a single unit.
Clinton Apparelle’s trademark, on the other hand, uses the
"Paddocks" word mark on top of a logo which according to
petitioners is a slavish imitation of the "Dockers" design. The two
trademarks apparently differ in their word marks ("Dockers" and
"Paddocks"), but again according to petitioners, they employ similar
or identical logos. It could thus be said that respondent only
"appropriates" petitioners’ logo and not the word mark "Dockers";
it uses only a portion of the registered trademark and not the
whole.
Given the single registration of the trademark "Dockers and Design"
and considering that respondent only uses the assailed device but a
different word mark, the right to prevent the latter from using the
challenged "Paddocks" device is far from clear. Stated otherwise, it
is not evident whether the single registration of the trademark
"Dockers and Design" confers on the owner the right to prevent the
use of a fraction thereof in the course of trade. It is also unclear
whether the use without the owner’s consent of a portion of a
trademark registered in its entirety constitutes material or
substantial invasion of the owner’s right.
It is likewise not settled whether the wing-shaped logo, as opposed
to the word mark, is the dominant or central feature of petitioners’
trademark—the feature that prevails or is retained in the minds of
the public—an imitation of which creates the likelihood of
deceiving the public and constitutes trademark infringement.43 In
sum, there are vital matters which have yet and may only be
established through a full-blown trial.
From the above discussion, we find that petitioners’ right to
injunctive relief has not been clearly and unmistakably
demonstrated. The right has yet to be determined. Petitioners also
failed to show proof that there is material and substantial invasion
of their right to warrant the issuance of an injunctive writ. Neither
were petitioners able to show any urgent and permanent necessity
for the writ to prevent serious damage.
Petitioners wish to impress upon the Court the urgent necessity for
injunctive relief, urging that the erosion or dilution of their
trademark is protectable. They assert that a trademark owner does
not have to wait until the mark loses its distinctiveness to obtain
injunctive relief, and that the mere use by an infringer of a
Page 31 of 69 IPL Day 5
registered mark is already actionable even if he has not yet
profited thereby or has damaged the trademark owner.
Trademark dilution is the lessening of the capacity of a
famous mark to identify and distinguish goods or services,
regardless of the presence or absence of: (1) competition
between the owner of the famous mark and other parties; or
(2) likelihood of confusion, mistake or deception. Subject to
the principles of equity, the owner of a famous mark is
entitled to an injunction "against another person’s
commercial use in commerce of a mark or trade name, if
such use begins after the mark has become famous and
causes dilution of the distinctive quality of the mark." This is
intended to protect famous marks from subsequent uses
that blur distinctiveness of the mark or tarnish or disparage
it.44
Based on the foregoing, to be eligible for protection from
dilution, there has to be a finding that: (1) the trademark
sought to be protected is famous and distinctive; (2) the use
by respondent of "Paddocks and Design" began after the
petitioners’ mark became famous; and (3) such subsequent
use defames petitioners’ mark. In the case at bar, petitioners
have yet to establish whether "Dockers and Design" has
acquired a strong degree of distinctiveness and whether the
other two elements are present for their cause to fall within
the ambit of the invoked protection. The Trends MBL Survey
Report which petitioners presented in a bid to establish that
there was confusing similarity between two marks is not
sufficient proof of any dilution that the trial court must
enjoin.
The Court also finds that the trial court’s order granting the
writ did not adequately detail the reasons for the grant,
contrary to our ruling in University of the Philippines v. Hon.
Catungal Jr., 45 wherein we held that:
The trial court must state its own findings of fact and cite
particular law to justify grant of preliminary injunction.
Utmost care in this regard is demanded.46
The trial court in granting the injunctive relief tersely
ratiocinated that "the plaintiffs appear to be entitled to the
relief prayed for and this Court is of the considered belief
and humble view that, without necessarily delving on the
merits, the paramount interest of justice will be better
served if the statusquo shall be maintained." Clearly, this
statement falls short of the requirement laid down by the
above-quoted case. Similarly, in Developers Group of
Companies, Inc. v. Court of Appeals,47 we held that it was
"not enough" for the trial court, in its order granting the writ,
to simply say that it appeared "after hearing that plaintiff is
entitled to the relief prayed for."
In addition, we agree with the Court of Appeals in its holding
that the damages the petitioners had suffered or continue to
suffer may be compensated in terms of monetary
consideration. As held in Government Service Insurance
System v. Florendo:48
…a writ of injunction should never have been issued when an
action for damages would adequately compensate the
injuries caused. The very foundation of the jurisdiction to
issue the writ of injunction rests in the probability of
irreparable injury, inadequacy of pecuniary estimation and
the prevention of the multiplicity of suits, and where facts
are not shown to bring the case within these conditions, the
relief of injunction should be refused.49
We also believe that the issued injunctive writ, if allowed, would
dispose of the case on the merits as it would effectively enjoin the
use of the "Paddocks" device without proof that there is basis for
such action. The prevailing rule is that courts should avoid issuing a
writ of preliminary injunction that would in effect dispose of the
main case without trial.50There would be a prejudgment of the
main case and a reversal of the rule on the burden of proof since it
would assume the proposition which petitioners are inceptively
bound to prove.51

Parenthetically, we find no flaw in the Court of Appeals’ disquisition

on the consequences of the issued injunction. An exercise of
caution, we believe that such reflection is necessary to weigh the
alleged entitlement to the writ vis-à-vis its possible effects. The
injunction issued in the instant case is of a serious nature as it tends
to do more than to maintain the status quo. In fact, the assailed
injunction if sustained would bring about the result desired by
petitioners without a trial on the merits.

Then again, we believe the Court of Appeals overstepped its

authority when it declared that the "alleged similarity as to the two
logos is hardly confusing to the public." The only issue brought
before the Court of Appeals through respondent’s Petition under
Rule 65 of the Rules of Court involved the grave abuse of discretion
allegedly committed by the trial court in granting the TRO and the
writ of preliminary injunction. The appellate court in making such a
statement went beyond that issue and touched on the merits of
the infringement case, which remains to be decided by the trial
court. In our view, it was premature for the Court of Appeals to
declare that there is no confusion between the two devices or
logos. That matter remains to be decided on by the trial court.

Finally, we have no contention against the procedure adopted by

the trial court in resolving the application for an injunctive writ and
we believe that respondent was accorded due process. Due process,
in essence, is simply an opportunity to be heard. And in
applications for preliminary injunction, the requirement of hearing
and prior notice before injunction may issue has been relaxed to
the point that not all petitions for preliminary injunction must
undergo a trial-type hearing, it being a hornbook doctrine that a
formal or trial-type hearing is not at all times and in all instances
essential to due process. Due process simply means giving every
contending party the opportunity to be heard and the court to
consider every piece of evidence presented in their favor.
Accordingly, this Court has in the case of Co v. Calimag,
Jr.,52rejected a claim of denial of due process where such claimant
was given the opportunity to be heard, having submitted his
counter-affidavit and memorandum in support of his position.53

After a careful consideration of the facts and arguments of the

parties, the Court finds that petitioners did not adequately prove
their entitlement to the injunctive writ. In the absence of proof of a
legal right and the injury sustained by the applicant, an order of the
trial court granting the issuance of an injunctive writ will be set
aside for having been issued with grave abuse of
discretion.54 Conformably, the Court of Appeals was correct in
setting aside the assailed orders of the trial court.

WHEREFORE, the instant petition is DENIED. The Decision of the

Court of Appeals dated 21 December 1998 and its Resolution dated
10 May 1999 are AFFIRMED. Costs against petitioners.

SO ORDERED.

Page 32 of 69 IPL Day 5

G.R. No. 86683 January 21, 1993
PHILIP S. YU, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, THE HONORABLE PRESIDING
JUDGE, RTC OF MANILA, BRANCH XXXIV (34) and UNISIA
MERCHANDISING CO., INC., respondents.
Oscar M. Manahan for petitioner.
Ruben L. Pasamonte collaborating counsel for petitioner.
Alfredo G. De Guzman for private respondent.
MELO, J.:
Petitioner, the exclusive distributor of the House of Mayfair
wallcovering products in the Philippines, cried foul when his former
dealer of the same goods, herein private respondent, purchased
the merchandise from the House of Mayfair in England through
FNF Trading in West Germany and sold said merchandise in the
Philippines. Both the court of origin and the appellate court
rejected petitioner's thesis that private respondent was engaged in
a sinister form of unfair competition within the context of Article 28
of the New Civil Code (pp. 23 and 64, Rollo). Hence, the petition at
bar.
There is no dispute that petitioner has had an exclusive sales
agency agreement with the House of Mayfair since 1987 to
promote and procure orders for Mayfair wallcovering products
from customers in the Philippines (Annex "B", Petition; p. 30, Rollo).
Even as petitioner was such exclusive distributor, private
respondent, which was then petitioner's dealer, imported the some
goods via the FNF Trading which eventually sold the merchandise in
the domestic market (TSN, September 20, 1988, p. 9; p. 117, Rollo).
In the suit for injunction which petitioner filed before the Regional
Trial Court of the National Capital Judicial Region stationed at
Manila, petitioner pressed the idea that he was practically
by-passed and that private respondent acted in concert with the
FNF Trading in misleading Mayfair into believing that the goods
ordered by the trading firm were intended for shipment to Nigeria
although they were actually shipped to and sold in the Philippines
(Paragraph 5, Complaint: p. 34, Rollo). Private respondent
professed ignorance of the exclusive contract in favor of petitioner.
Even then, private respondent responded by asserting that
petitioner's understanding with Mayfair is binding only between
the parties thereto (Paragraph 5, Answer; p. 50, Rollo).
In the course of hearing the arguments for and against the issuance
of the requested writ of preliminary injunction, petitioner
impressed before the lower court that he is seeking to enjoin the
sale and distribution by private respondent of the same goods in
the market (TSN, September 20, 1988, p. 35; p. 142, Rollo) but the
Honorable Cesar V. Alejandria, Presiding Judge of Branch 34 was
unperturbed, thusly:
Resolving plaintiff's motion embodied in the complaint for the
issuance of a writ of preliminary injunction after hearing, but
without prejudging the merits of the case, and finding from the
evidences adduced by the plaintiff, that the terms and conditions of
the agency agreement, Exhibit "A-inj." between the plaintiff and
The House of Mayfair of England for the exclusive distributorship by
the plaintiff of the latter's goods, apertain to them; that there is no
privity of contract between the plaintiff and the defendant; that the
controversy in this case arose from a breach of contract by the FNF
Trading of Germany, for having shipped goods it had purchased
Page 33 of 69 IPL Day 5
from The House of Mayfair to the Philippines: that as shown
in Exh. "J-inj.", the House of Mayfair was demanding
payment of 4,500.00 from the FNF Trading for restitution of
plaintiff's alleged loss on account of the shipment of the
goods in question here in the Philippines and now in the
possession of the defendant; it appears to the Court that to
restrain the defendant from selling the goods it has ordered
from the FNF Trading of Germany, would be without legal
justification.
WHEREFORE, the motion for the issuance of a writ of
preliminary injunction to restrain the defendant from selling
the goods it has ordered from the FNF Trading of Germany is
hereby DENIED. (p. 64, Rollo.)
The indifference of the trial court towards petitioner's
supplication occasioned the filing of a petition for review
on certiorari with the Court of Appeals but Justice
Ordoñez-Benitez, with whom Justices Bellosillo and Kalalo
concurred, reacted in the same nonchalant fashion.
According to the appellate court, petitioner was not able to
demonstrate the unequivocal right which he sought to
protect and that private respondent is a complete
stranger vis-a-vis the covenant between petitioner and
Mayfair. Apart from these considerations, the reviewing
authority noted that petitioner could be fully compensated
for the prejudice he suffered judging from the tenor of
Mayfair's correspondence to FNF Trading wherein Mayfair
took the cudgels for petitioner in seeking compensation for
the latter's loss as a consequence of private respondent's
scheme (p. 79, Rollo; pp. 23-29, Rollo).
In the petition at hand, petitioner anchors his plea for
redress on his perception that private respondent has
distributed and continues to sell Mayfair covering products in
contravention of petitioner's exclusive right conferred by the
covenant with the House of Mayfair.
On March 13, 1989, a temporary restraining order was issued
to last until further notice from this Court directed against
private respondent (p. 188, Rollo). Notwithstanding such
proscription, private respondent persisted in the distribution
and sole (p. 208; 228-229, Rollo), triggering petitioner's
motion to cite private respondent's manager in contempt of
court (p. 223, Rollo). Considering that private respondent's
manager, Frank Sia, admitted the acts complained of, a fine
of P500.00 was imposed on him but he failed to pay the
same within the five-day period provided in Our Resolution
of June 21, 1989
(p. 236, Rollo).
Did respondent appellate court correctly agree with the
lower court in disallowing the writ solicited by herein
petitioner?
That the exclusive sales contract which links petitioner and
the House of Mayfair is solely the concern of the privies
thereto and cannot thus extend its chain as to bind private
respondent herein is, We believe, beside the point. Verily,
injunction is the appropriate remedy to prevent a wrongful
interference with contracts by strangers to such contracts
where the legal remedy is insufficient and the resulting injury
is irreparable (Gilchrist vs. Cuddy, 29 Phil. 542 [1915];
4-A Padilla, Civil Code Annotated, 1988 Ed., p. 90). The
liability of private respondent, if any, does not emanate from
the four corners of the contract for undoubtedly, Unisia
Merchandising Co., Inc. is not a party thereto but its
accountability is "an independent act generative of civil
liability" (Daywalt vs. Corporacion de PP. Agustinos Recoletos,
39 Phil. 587 [1919]; 4 Paras, Civil Code of the Philippines Annotated,
1981 10th Ed., p. 439; 4 Tolentino, Commentaries and
Jurisprudence on the Civil Code, 1986 Ed.,
p. 439). These observations, however, do not in the least convey
the message that We have placed the cart ahead of the horse, so to
speak, by pronouncing private respondent's liability at this stage in
view of the pendency of the main suit for injunction below. We are
simply rectifying certain misperceptions entertained by the
appellate court as regards the feasibility of requesting a preliminary
injunction to enjoin a stranger to an agreement.

To Our mind, the right to perform an exclusive distributorship

agreement and to reap the profits resulting from such performance
are proprietary rights which a party may protect (30 Am. Jur.
Section 19, pp. 71-72: Jurado, Comments and Jurisprudence
on Obligations and Contracts, 1983 8th Rev. Ed., p. 336) which may
otherwise not be diminished, nay, rendered illusory by the
expedient act of utilizing or interposing a person or firm to obtain
goods from the supplier to defeat the very purpose for which the
exclusive distributorship was conceptualized, at the expense of the
sole authorized distributor (43 C.J.S. 597).

Another circumstance which respondent court overlooked was

petitioner's suggestion, which was not disputed by herein private
respondent in its comment, that the House of Mayfair in England
was duped into believing that the goods ordered through the FNF
Trading were to be shipped to Nigeria only, but the goods were
actually sent to and sold in the Philippines. A ploy of this character
is akin to the scenario of a third person who induces a party to
renege on or violate his undertaking under a contract, thereby
entitling the other contracting party to relief therefrom (Article
1314, New Civil Code). The breach caused by private respondent
was even aggravated by the consequent diversion of trade from the
business of petitioner to that of private respondent caused by the
latter's species of unfair competition as demonstrated no less by
the sales effected inspite of this Court's restraining order. This
brings Us to the irreparable mischief which respondent court
misappreciated when it refused to grant the relief simply because
of the observation that petitioner can be fully compensated for the
damage. A contrario, the injury is irreparable where it is continuous
and repeated since from its constant and frequent recurrence, no
fair and reasonable redress can be had therefor by petitioner
insofar as his goodwill and business reputation as sole distributor
are concerned. Withal, to expect petitioner to file a complaint for
every sale effected by private respondent will certainly court
multiplicity of suits (3 Francisco, Revised Rules of Court, 1985
Edition, p. 261).

WHEREFORE, the petition is hereby GRANTED. The decision of the

Court of Appeals dated January 13, 1989 in CA-G.R. SP No. 16019
and the Order dated October 16, 1988 issued by the magistrate at
the court of origin are hereby REVERSED and SET ASIDE. Let this
case be remanded to the court of origin for issuance of a writ of
preliminary injunction upon petitioner's posting of a bond in the
sum of Fifty Thousand (P50,000.00) Pesos to be approved by said
court, to remain effective during the trial on the merits until final
determination of the case. The manager of private respondent.
Frank Sia, is hereby ordered to pay to the Clerk of Court within five
(5) days from notice hereof the fine of P500.00, as previously
imposed on him, with a warning that failure to do so will be dealt
with more severely.

Upon issuance of the writ of preliminary injunction, the restraining

order issued on March 13, 1989 by this Court shall be deemed
automatically lifted.

SO ORDERED.

Page 34 of 69 IPL Day 5

G.R. No. L-40163 June 19, 1982
LEVITON INDUSTRIES, NENA DE LA CRUZ LIM, DOMINGO GO, and
LIM KIAT, petitioners,
vs.
HON. SERAFIN SALVADOR, Judge, Court of First Instance of Rizal,
Caloocan City, Branch XIV and LEVITON MANUFACTURING CO.,
INC.,respondents.
ESCOLIN, J:
Challenged in this petition for certiorari and prohibition is the order
of the respondent Judge Serafin Salvador in Civil Case No. C-2891 of
the Court of First Instance of Rizal, sustaining the legal capacity of a
foreign corporation to maintain a suit for unfair competition under
Section 21-A of Republic Act No. 166, as amended, otherwise
known as the Trademark Law.
On April 17, 1973, private respondent Leviton Manufacturing Co.,
Inc. filed a complaint for unfair competition against petitioners
Leviton Industries, Nena de la Cruz Lim, Domingo Go and Lim Kiat
before the Court of First Instance of Rizal, Branch XXXIII, presided
by respondent Judge Serafin Salvador. The complaint substantially
alleges that plaintiff is a foreign corporation organized and existing
under the laws of the State of New York, United States of America,
with office located at 236 Greenpoint Avenue, Brooklyn City, State
of New York, U.S.A.; that defendant Leviton Industries is a
partnership organized and existing under the laws of the
Philippines with principal office at 382 10th Avenue, Grace Park,
Caloocan City; while defendants Nena de la Cruz Lim, Domingo Go
and Lim Kiat are the partners, with defendant Domingo Go acting
as General Manager of defendant Leviton Industries; that plaintiff,
founded in 1906 by Isidor Leviton, is the largest manufacturer of
electrical wiring devices in the United States under the trademark
Leviton, which various electrical wiring devices bearing the
trademark Leviton and trade name Leviton Manufacturing Co., Inc.
had been exported to the Philippines since 1954; that due to the
superior quality and widespread use of its products by the public,
the same are well known to Filipino consumers under the trade
name Leviton Manufacturing Co., Inc. and trademark Leviton; that
long subsequent to the use of plaintiff's trademark and trade name
in the Philippines, defendants began manufacturing and selling
electrical ballast, fuse and oval buzzer under the trademark Leviton
and trade name Leviton Industries Co.; that Domingo Go, partner
and general manager of defendant partnership, had registered with
the Philippine Patent Office the trademarks Leviton Label and
Leviton with respect to ballast and fuse under Certificate of
Registration Nos. SR-1132 and 15517, respectively, which
registration was contrary to paragraphs (d) and (e) of Section 4 of
RA 166, as amended, and violative of plaintiff's right over the
trademark Leviton; that defendants not only used the trademark
Leviton but likewise copied the design used by plaintiff in
distinguishing its trademark; and that the use thereof by
defendants of its products would cause confusion in the minds of
the consumers and likely to deceive them as to the source of origin,
thereby enabling defendants to pass off their products as those of
plaintiff's. Invoking the provisions of Section 21-A of Republic Act
No. 166, plaintiff prayed for damages. It also sought the issuance of
a writ of injunction to prohibit defendants from using the trade
name Leviton Industries, Co. and the trademark Leviton.
Defendants moved to dismiss the complaint for failure to state a
cause of action, drawing attention to the plaintiff's failure to allege
therein its capacity to sue under Section 21-A of Republic Act No.
166, as amended. After the filing of the plaintiff's opposition and
the defendant's reply, the respondent judge denied the motion on
the ground that the same did not appear to be indubitable. On
Page 35 of 69 IPL Day 5
September 21, 1973, defendants filed their answer,
reiterating the ground supporting their motion to dismiss.
Thereafter, defendants served upon plaintiff a request for
admission under Rule 26 of the Rules of Court, of the
following matters of fact, to wit:
(1) That the plaintiff is not actually manufacturing, selling
and/or distributing ballasts generally used in flourescent
lighting;
(2) That plaintiff has no registered trademark or trade name
in the Philippine Patent Office of any of its products; and
(3) That plaintiff has no license to do business in the
Philippines under and by virtue of the provision of Act No.
1459, better known as the Philippine Corporation Law, at the
time it filed the complaint. 1
Complying with the said request, plaintiff admitted:
That it does not manufacture ballasts; that it has not
registered its trademark in the Philippine Patent Office, but
has filed with the same office an application of its trade mark
on April 16, 1971; and that it has no license to do business in
the Philippines. 2
On the basis of these admissions, defendants filed an Urgent
Supplemental Motion to Dismiss. This was followed by the
plaintiff's opposition, and the defendant's rejoinder, after
which respondent judge issued the questioned
order 3 denying the motion, thus:
Acting on the Urgent Supplemental Motion to Dismiss, dated
July 2, 1974, filed by counsels for the defendants, as well as
the oppositions thereto, the Court after a careful
consideration of the reasons adduced for and against said
motion, is of the opinion that the same should be, as it is
hereby DENIED.
SO ORDERED.
The motion for reconsideration having likewise been denied,
defendants instituted the instant petition for certiorari and
prohibition, charging respondent judge with grave abuse of
discretion in denying their motion to dismiss.
We agree with petitioners that respondent Leviton
Marketing Co., Inc. had failed to allege the essential facts
bearing upon its capacity to sue before Philippine courts.
Private respondent's action is squarely founded on Section
21-A of Republic Act No. 166, as amended, which we quote:
Sec. 21-A. Any foreign corporation or juristic person to which
a mark or tradename has been registered or assigned under
this Act may bring an action hereunder for infringement, for
unfair competition, or false designation of origin and false
description, whether or not it has been licensed to do
business in the Philippines under Act numbered Fourteen
Hundred and Fifty-Nine, as amended, otherwise known as
the Corporation Law, at the time it brings the complaint;
Provided, That the country of which the said foreign
corporation or juristic person is a citizen, or in which it is
domiciled, by treaty, convention or law, grants a similar
privilege to corporate or juristic persons of the Philippines.
(As amended by R.A. No. 638)
Undoubtedly, the foregoing section grants to a foreign
corporation, whether or not licensed to do business in the
Philippines, the right to seek redress for unfair competition before
Philippine courts. But the said law is not without qualifications. Its
literal tenor indicates as a condition sine qua non the registration of
the trade mark of the suing foreign corporation with the Philippine
Patent Office or, in the least, that it be an asignee of such
registered trademark. The said section further requires that the
country, of which the plaintiff foreign corporation or juristic person
is a citizen or domicilliary, grants to Filipino corporations or juristic
entities the same reciprocal treatment, either thru treaty,
convention or law,

All that is alleged in private respondent's complaint is that it is a

foreign corporation. Such bare averment not only fails to comply
with the requirements imposed by the aforesaid Section 21-A but
violates as well the directive of Section 4, Rule 8 of the Rules of
Court that "facts showing the capacity of a party to sue or be sued
or the authority of a party to sue or be sued in a representative
capacity or the legal existence of an organized association of
persons that is made a party, must be averred "

In the case at bar, private respondent has chosen to anchor its

action under the Trademark Law of the Philippines, a law which, as
pointed out, explicitly sets down the conditions precedent for the
successful prosecution thereof. It is therefore incumbent upon
private respondent to comply with these requirements or aver its
exemption therefrom, if such be the case. It may be that private
respondent has the right to sue before Philippine courts, but our
rules on pleadings require that the necessary qualifying
circumstances which clothe it with such right be affirmatively
pleaded. And the reason therefor, as enunciated in "Atlantic
Mutual Insurance Co., et al. versus Cebu Stevedoring Co., Inc." 4 is
that —

these are matters peculiarly within the knowledge of appellants

alone, and it would be unfair to impose upon appellees the burden
of asserting and proving the contrary. It is enough that foreign
corporations are allowed by law to seek redress in our courts under
certain conditions: the interpretation of the law should not go so
far as to include, in effect, an inference that those conditions had
been met from the mere fact that the party sued is a foreign
corporation.

It was indeed in the light of this and other considerations that this
Court has seen fit to amend the former rule by requiring in the
revised rules (Section 4, Rule 8) that "facts showing the capacity of
a party to sue or be sued or the authority of a party to sue or be
sued in a representative capacity or the legal existence of an
organized association of persons that is made a party, must be
averred,

IN VIEW OF THE FOREGOING, the instant petition is hereby granted

and, accordingly, the order of the respondent judge dated
September 27, 1974 denying petitioner's motion to dismiss is
hereby set aside. The Court of First Instance of Rizal (Caloocan City),
the court of origin, is hereby restrained from conducting further
proceedings in Civil Case No. C-2891, except to dismiss the same.
No costs.

SO ORDERED.

Page 36 of 69 IPL Day 5

G.R. No. 75067 February 26, 1988
PUMA SPORTSCHUHFABRIKEN RUDOLF DASSLER, K.G., petitioner
vs.
THE INTERMEDIATE APPELLATE COURT and MIL-ORO
MANUFACTURING CORPORATION, respondents.
GUTIERREZ, JR., J.:
This is a petition for review by way of certiorari of the Court of
Appeals' decision which reversed the order of the Regional Trial
Court and dismissed the civil case filed by the petitioner on the
grounds of litis pendentia and lack of legal capacity to sue.
On July 25, 1985, the petitioner, a foreign corporation duly
organized and existing under the laws of the Federal Republic of
Germany and the manufacturer and producer of "PUMA
PRODUCTS," filed a complaint for infringement of patent or
trademark with a prayer for the issuance of a writ of preliminary
injunction against the private respondent before the Regional Trial
Court of Makati.
Prior to the filing of the said civil suit, three cases were pending
before the Philippine Patent Office, namely:
Inter Partes Case No. 1259 entitled 'PUMA SPORTSCHUHFABRIKEN
v. MIL-ORO MANUFACTURING CORPORATION,
respondent-applicant which is an opposition to the registration of
petitioner's trademark 'PUMA and DEVICE' in the PRINCIPAL
REGISTER;
Inter Partes Case No. 1675 similarly entitled, 'PUMA
SPORTSCHUHFABRIKEN RUDOLF DASSLER, K.G., petitioner, versus
MIL-ORO MANUFACTURING CORPORATION,
respondent-registrant,' which is a case for the cancellation of the
trademark registration of the petitioner; and
Inter Partes Case No. 1945 also between the same parties this time
the petitioner praying for the cancellation of private respondent's
Certificate of Registration No. 26875 (pp. 40-41, 255, Rollo) (pp. 51
-52, Rollo)
On July 31, 1985, the trial court issued a temporary restraining
order, restraining the private respondent and the Director of
Patents from using the trademark "PUMA' or any reproduction,
counterfeit copy or colorable imitation thereof, and to withdraw
from the market all products bearing the same trademark.
On August 9, 1985, the private respondent filed a motion to dismiss
on the grounds that the petitioners' complaint states no cause of
action, petitioner has no legal personality to sue, and litis
pendentia.
On August 19, 1985, the trial court denied the motion to dismiss
and at the same time granted the petitioner's application for a writ
of injunction. The private respondents appealed to the Court of
Appeals.
On June 23, 1986, the Court of Appeals reversed the order of the
trial court and ordered the respondent judge to dismiss the civil
case filed by the petitioner.
In reversing the order of the trial court, the Court of Appeals ruled
that the requisites of lis pendens as ground for the motion to
dismiss have been met. It said:
Page 37 of 69 IPL Day 5
Obviously, the parties are Identical. They are the same
protagonists. As to the second requisite, which is Identity of
rights and reliefs prayed for, both sides maintain that they
are the rightful owners of the trademark "PUMA" for socks
and belts such that both parties seek the cancellation of the
trademark of the other (see prayer in private respondent's
complaint, pp, 54-55, Rollo, Annex "A" to the Petition).
Inevitably, in either the lower court or in the Patent Office,
there is a need to resolve the issue as to who is the rightful
owner of the TRADEMARK 'PUMA' for socks and belts.After
all,the right to register a trademark must be based on
ownership thereof (Operators Inc. v. Director of Patents,
L-17910, Oct. 29,1965,15 SCRA 147). Ownership of the
trademark is an essential requisite to be proved by the
applicant either in a cancellation case or in a suit for
infringement of trademark. The relief prayed for by the
parties in Inter Partes Cases Nos. 1259, 1675 and 1945 and
Civil Case No. 11189 before respondent court seek for the
cancellation of usurper's trademark, and the right of the legal
owner to have exclusive use of said trademark. From the
totality of the obtaining circumstances, the rights of the
respective parties are dependent upon the resolution of a
single issue, that is, the rightful ownership of the trademark
in question. The second requisite needed to justify a motion
to dismiss based on lis pendens is present.
As to the third requisite, the decisions and orders of
administrative agencies rendered pursuant to their
quasi-judicial authority have upon their finality the character
of res judicata (Brilliantes v. Castro, 99 Phil. 497). The rule
which forbids the re-opening of a matter once judicially
determined by competent authority applies as well to judicial
acts of public executive and administrative officers and
boards acting within their jurisdiction as to the judgments of
Courts having general judicial powers (Brilliantes vs.
Castro, supra). It may be recalled that the resolution and
determination of the issue on ownership are both within the
jurisdiction of the Director of Patents and the Regional Trial
Court (Sec 25, RA 166). It would thus be confusing for two (2)
different forums to hear the same case and resolve a main
and determinative issue with both forums risking the
possibility of arriving at different conclusions. In the
construction of laws and statutes regarding jurisdiction, one
must interpret them in a complementary manner for it is
presumed that the legislature does not intend any absurdity
in the laws it makes (Statutory Construction, Martin, p. 133).
Ms is precisely the reason why both decisions of the Director
of Patents and Regional Trial Court are appealable to the
Intermediate Appellate Court (Sec. 9, BP 129), as both are
co-equal in rank regarding the cases that may fall within their
jurisdiction.
The record reveals that on March 31, 1986, the Philippine
Patent Office rendered a decision in Inter Partes Cases Nos.
1259 and 1675 whereby it concluded that petitioner is the
prior and actual adaptor of the trademark 'PUMA and DEVICE
used on sports socks and belts, and that MIL-ORO
CORPORATION is the rightful owner thereof. ... (pp. 6-7, CA
— decision, pp. 51-52, Rollo)
With regard to the petitioner's legal capacity to sue, the
Court of Appeals likewise held that it had no such capacity
because it failed to allege reciprocity in its complaint:
As to private respondent's having no legal personality to sue,
the record discloses that private respondent was suing under
Sec. 21-A of Republic Act No. 166, as amended (p. 50, Annex
"A", Petition). This is the exception to the general rule that a
foreign corporation doing business in the Philippines must
secure a license to do business before said foreign corporation
could maintain a court or administrative suit (Sec. 133, Corporation
Code, in relation to Sec. 21-A, RA 638, as amended). However,
there are some conditions which must be met before that
exception could be made to apply, namely: (a) the trademark of the
suing corporation must be registered in the Philippines, or that it be
the assignee thereof: and (b) that there exists a reciprocal
treatment to Philippine Corporations either by law or convention
by the country of origin of the foreign corporation (Sec. 21-A
Trademark Law). Petitioner recognizes that private respondent is
the holder of several certificates of registration, otherwise, the
former would not have instituted cancellation proceedings in the
Patent's Office. Petitioner actually zeroes on the second requisite
provided by Section 21-A of the Trademark Law which is the private
respondent's failure to allege reciprocity in the complaint. ...
Citing the case of Leviton Industries v. Salvador (114 SCRA 420), it
further ruled:
Failure to allege reciprocity, it being an essential fact under the
trademark law regarding its capacity to sue before the Philippine
courts, is fatal to the foreign corporations' cause. The Concurring
Opinion of Chief Justice Aquino on the same case is more emphatic
when he said:
Respondent Leviton Manufacturing Co. Inc., alleged in par. 2 of its
complaint for unfair competition that its action 'is being filed under
the provisions of Section 21-A of Republic Act No. 166, as
amended.' Respondent is bound by the allegation in its complaint.
It cannot sue under Section 21-A because it has not complied with
the requirements hereof that (1) its trademark Leviton has been
registered with the Patent Office and (2) that it should show that
the State of New York grants to Philippine Corporations the
privilege to bring an action for unfair competition in that state.
Respondent 'Leviton has to comply with those requirements before
it can be allowed to maintain an action for unfair competition. (p. 9,
CA — decision). (p. 55, Rollo).
The Court of Appeals further ruled that in issuing the writ of
preliminary injunction, the trial court committed grave abuse of
discretion because it deprived the private respondent of its day in
court as the latter was not given the chance to present its
counter-evidence.
In this petition for review, the petitioner contends that the Court of
appeals erred in holding that: (1) it had no legal capacity to sue; (2)
the doctrine of lis pendens is applicable as a ground for dismissing
the case and (3) the writ of injunction was improperly issued.
Petitioner maintains that it has substantially complied with the
requirements of Section 21-A of Republic Act R.A. No. 166, as
amended. According to the petitioner, its complaint specifically
alleged that it is not doing business in the Philippines and is suing
under the said Repulbic Act; that Section 21-A thereof provides that
"the country of which the said corporation or juristic person is a
citizen, or in which it is domiciled, by treaty, convention or law,
grants a similar privilege to corporate or juristic persons of the
Philippines" but does not mandatorily require that such reciprocity
between the Federal Republic of Germany and the Philippines be
pleaded; that such reciprocity arrangement is embodied in and
supplied by the Union Convention for the Protection of Industrial
Property Paris Convention) to which both the Philippines and
Federal Republic of Germany are signatories and that since the
Paris 'Convention is a treaty which, pursuant to our Constitution,
forms part of the law of the land, our courts are bound to take
judicial notice of such treaty, and, consequently, this fact need not
be averred in the complaint.
Page 38 of 69 IPL Day 5
We agree.
In the leading case of La Chemise Lacoste, S.A .v. Fernandez,
(129 SCRA 373), we ruled:
But even assuming the truth of the private respondents
allegation that the petitioner failed to allege material facto in
its petition relative to capacity to sue, the petitioner may still
maintain the present suit against respondent Hernandes. As
early as 1927, this Court was, and it still is, of the view that a
foreign corporation not doing business in the Philippines
needs no license to sue before Philippine courts for
infringement of trademark and unfair competition. Thus,
in Western Equipment and Supply Co. v. Reyes (51 Phil. 11 5),
this Court held that a foreign corporation which has never
done any business in the Philippines and which is unlicensed
and unregistered to do business here, but is widely and
favorably known in the Philippines through the use therein of
its products bearing its corporate and tradename, has a legal
right to maintain an action in the Philippines to restrain the
residents and inhabitants thereof from organizing a
corporation therein bearing the same name as the foreign
corporation, when it appears that they have personal
knowledge of the existence of such a foreign corporation,
and it is apparent that the purpose of the proposed domestic
corporation is to deal and trade in the same goods as those
of the foreign corporation.
Quoting the Paris Convention and the case of Vanity Fair
Mills, Inc. v. T. Eaton, Co. (234 F. 2d 633), this Court further
said:
By the same token, the petitioner should be given the same
treatment in the Philippines as we make available to our own
citizens. We are obligated to assure to nationals of 'countries
of the Union' an effective protection against unfair
competition in the same way that they are obligated to
similarly protect Filipino citizens and firms.
Pursuant to this obligation, the Ministry of Trade on
November 20,1980 issued a memorandum addressed to the
Director of the Patents Office directing the latter --
xxx xxx xxx
... [T]o 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, Gloria
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.
The memorandum is a clear manifestation of our avowed
adherence to a policy of cooperation and amity with an
nations. It is not, as wrongly alleged by the private
respondent, a personal policy of Minister Luis Villafuerte
which expires once he leaves the Ministry of trade. For a
treaty or convention is not a mere moral obligation to be
enforced or not at the whims of an incumbent head of a
Ministry. It creates a legally binding obligation on the parties
founded on the generally accepted principle of international law
of pacta sunt servanda which has been adopted as part of the law
of our land. (Constitution, Art. II, Sec. 3). The memorandum
reminds the Director of Patents of his legal duty to obey both law
and treaty. It must also be obeyed. (at pp. 389-390, La Chemise
Lacoste, S.A. v. Fernandez, supra).
In the case of of Cerverse Rubber Corporation V. Universal Rubber
Products, Inc. (174 SCRA 165), we likewise re-aafirmed our
adherence to the Paris Convention:
The ruling in the aforecited case is in consonance with the
Convention of Converse Rubber Corporation v. Universal Rubber
Products, Inc. (I 47 SCRA 165), we likewise re-affirmed our
adherence to the Paris Convention: the Union of Paris for the
Protection of Industrial Property to which the Philippines became a
party on September 27, 1965. Article 8 thereof provides that 'a
trade name [corporation 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 the trademark.'
The object of the Convention is to accord a national of a member
nation extensive protection 'against infringement and other types
of unfair competition [Vanity Fair Mills, Inc. v. T. Eaton Co., 234 F.
2d 633]." (at p. 165)
The mandate of the aforementioned Convention finds
implementation in Section 37 of RA No. 166, otherwise known as
the trademark Law:
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 an international convention or treaty relating to marks or
tradenames on the represssion of unfair competition to which the
Philippines may be party, shall be entitled to the benefits and
subject to the provisions of this Act ...
Tradenames 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 part of marks.
We, therefore, hold that the petitioner had the legal capacity to file
the action below.
Anent the issue of lis pendens as a ground for a motion to dismiss,
the petitioner submits that the relief prayed for in its civil action is
different from the relief sought in the Inter Partes cases. More
important, however, is the fact that for lis pendens to be a valid
ground for the dismissal of a case, the other case pending between
the same parties and having the same cause must be a court action.
As we have held in Solancho v. Ramos (19 SCRA 848):
As noted above, the defendants contend that the pendency of an
administrative between themselves and the plaintiff before the
Bureau of Lands is a sufficient ground to dismiss the action. On the
other hand, the plaintiff, believing that this ground as interposed by
the defendants is a sufficient ground for the dismissal of his
complaint, filed a motion to withdraw his free patent application
No. 16649.
This is not what is contemplated under the law because under
section 1(d), Rule 16 (formerly Rule 8) of the Rules of Court, one of
the grounds for the dismissal of an action is that "there is another
action pending between the same parties for the same cause."
Note that the Rule uses the phrase another action. This phrase
Page 39 of 69 IPL Day 5
should be construed in line with Section 1 of Rule 2, which
defines the word action, thus--
Action means an ordinary suit in a court of justice by which
one party prosecutes another for the enforcement or
protection of alright, or the prevention or redress of a wrong.
Every other remedy is a special proceeding.
It is,therefore,very clear that the Bureau of Land is not
covered under the aforementioned provisions of the Rules of
Court. (at p. 851)
Thus, the Court of Appeals likewise erred in holding that the
requisites of lis pendens were present so as to justify the
dismissal of the case below.
As regards the propriety of the issuance of the writ of
preliminary injunuction, the records show that herein private
respondent was given the opportunity to present its
counter-evidence against the issuance thereof but it
intentionally refused to do so to be consistent with its theory
that the civil case should be dismissed in the first place.
Considering the fact that "PUMA" is an internationally known
brand name, it is pertinent to reiterate the directive to lower
courts, which equally applies to administrative agencies,
found in La Chemise Lacoste, S.A. v. Fernandez, supra):
One final point. It is essential that we stress our concern at
the seeming inability of law enforcement officials to stem the
tide of fake and counterfeit consumer items flooding the
Philippine market or exported abroad from our country. The
greater victim is not so much the manufacturer whose
product is being faked but the Filipino consuming public and
in the case of exportations, our image abroad. No less than
the President, in issuing Executive Order No. 913 dated
October 7, 1983 to strengthen the powers of the Minister of
Trade and Industry for the protection of consumers, stated
that, among other acts, the dumping of substandard,
imitated, hazardous, and cheap goods, the infringement of
internationally known tradenames and trademarks, and the
unfair trade Practices of business firms have reached such
proportions as to constitute economic sabotage. We buy a
kitchen appliance, a household tool, perfume, face powder,
other toilet articles, watches, brandy or whisky, and items of
clothing like jeans, T-shirts, neckties, etc. — the list is quite
lengthy — pay good money relying on the brand name as
guarantee of its quality and genuine nature only to explode
in bitter frustration and helpless anger because the
purchased item turns out to be a shoddy imitation, albeit a
clever looking counterfeit, of the quality product. Judges all
over the country are well advised to remember that court
processes should not be used as instruments to, unwittingly
or otherwise, aid counterfeiters and intellectual pirates, tie
the hands of the law as it seeks to protect the Filipino
consuming public and frustrate executive and administrative
implementation of solemn commitments pursuant to
international conventions and treaties. (at p. 403)
WHEREFORE, the appealed decision of the Court of Appeals
dated June 23, 1986 is REVERSED and SET ASIDE and the
order of the Regional Trial Court of Makati is hereby
Reinstated.
SO ORDERED.
G.R. No. L-63796-97 May 2, 1984
LA CHEMISE LACOSTE, S. A., petitioner,
vs.
HON. OSCAR C. FERNANDEZ, Presiding Judge of Branch XLIX,
Regional Trial Court, National Capital Judicial Region, Manila and
GOBINDRAM HEMANDAS, respondents.
G.R. No. L-65659 May 2l, 1984
GOBINDRAM HEMANDAS SUJANANI, petitioner,
vs.
HON. ROBERTO V. ONGPIN, in his capacity as Minister of Trade and
Industry, and HON. CESAR SAN DIEGO, in his capacity as Director of
Patents, respondents.
Castillo, Laman, Tan & Pantaleon for petitioners in 63796-97.
Ramon C. Fernandez for private respondent in 63796-97 and
petitioner in 65659.
GUTIERREZ, JR., J.:
It is among this Court's concerns that the Philippines should not
acquire an unbecoming reputation among the manufacturing and
trading centers of the world as a haven for intellectual pirates
imitating and illegally profiting from trademarks and tradenames
which have established themselves in international or foreign
trade.
Before this Court is a petition for certiorari with preliminary
injunction filed by La Chemise Lacoste, S.A., a well known European
manufacturer of clothings and sporting apparels sold in the
international market and bearing the trademarks "LACOSTE"
"CHEMISE LACOSTE", "CROCODILE DEVICE" and a composite mark
consisting of the word "LACOSTE" and a representation of a
crocodile/alligator. The petitioner asks us to set aside as null and
void, the order of judge Oscar C. Fernandez, of Branch XLIX,
Regional Trial Court, National Capital Judicial Region, granting the
motion to quash the search warrants previously issued by him and
ordering the return of the seized items.
The facts are not seriously disputed. The petitioner is a foreign
corporation, organized and existing under the laws of France and
not doing business in the Philippines, It is undeniable from the
records that it is the actual owner of the abovementioned
trademarks used on clothings and other goods specifically sporting
apparels sold in many parts of the world and which have been
marketed in the Philippines since 1964, The main basis of the
private respondent's case is its claim of alleged prior registration.
In 1975, Hemandas & Co., a duly licensed domestic firm applied for
and was issued Reg. No. SR-2225 (SR stands for Supplemental
Register) for the trademark "CHEMISE LACOSTE & CROCODILE
DEVICE" by the Philippine Patent Office for use on T-shirts,
sportswear and other garment products of the company. Two years
later, it applied for the registration of the same trademark under
the Principal Register. The Patent Office eventually issued an order
dated March 3, 1977 which states that:
xxx xxx xxx
... Considering that the mark was already registered in the
Supplemental Register in favor of herein applicant, the Office has
no other recourse but to allow the application, however, Reg. No.
SR-2225 is now being contested in a Petition for Cancellation
Page 40 of 69 IPL Day 5
docketed as IPC No. 1046, still registrant is presumed to be
the owner of the mark until after the registration is declared
cancelled.
Thereafter, Hemandas & Co. assigned to respondent
Gobindram Hemandas all rights, title, and interest in the
trademark "CHEMISE LACOSTE & DEVICE".
On November 21, 1980, the petitioner filed its application for
registration of the trademark "Crocodile Device" (Application
Serial No. 43242) and "Lacoste" (Application Serial No.
43241).The former was approved for publication while the
latter was opposed by Games and Garments in Inter Partes
Case No. 1658. In 1982, the petitioner filed a Petition for the
Cancellation of Reg. No. SR-2225 docketed as Inter Partes
Case No. 1689. Both cases have now been considered by this
Court in Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659).
On March 21, 1983, the petitioner filed with the National
Bureau of Investigation (NBI) a letter-complaint alleging
therein the acts of unfair competition being committed by
Hemandas and requesting their assistance in his
apprehension and prosecution. The NBI conducted an
investigation and subsequently filed with the respondent
court two applications for the issuance of search warrants
which would authorize the search of the premises used and
occupied by the Lacoste Sports Center and Games and
Garments both owned and operated by Hemandas.
The respondent court issued Search Warrant Nos. 83-128
and 83-129 for violation of Article 189 of the Revised Penal
Code, "it appearing to the satisfaction of the judge after
examining under oath applicant and his witnesses that there
are good and sufficient reasons to believe that Gobindram
Hemandas ... has in his control and possession in his
premises the ... properties subject of the offense," (Rollo, pp.
67 and 69) The NBI agents executed the two search warrants
and as a result of the search found and seized various goods
and articles described in the warrants.
Hemandas filed a motion to quash the search warrants
alleging that the trademark used by him was different from
petitioner's trademark and that pending the resolution of IPC
No. 1658 before the Patent Office, any criminal or civil action
on the same subject matter and between the same parties
would be premature.
The petitioner filed its opposition to the motion arguing that
the motion to quash was fatally defective as it cited no valid
ground for the quashal of the search warrants and that the
grounds alleged in the motion were absolutely without merit.
The State Prosecutor likewise filed his opposition on the
grounds that the goods seized were instrument of a crime
and necessary for the resolution of the case on preliminary
investigation and that the release of the said goods would be
fatal to the case of the People should prosecution follow in
court.
The respondent court was, however, convinced that there
was no probable cause to justify the issuance of the search
warrants. Thus, in its order dated March 22, 1983, the search
warrants were recalled and set aside and the NBI agents or
officers in custody of the seized items were ordered to return
the same to Hemandas. (Rollo, p. 25)
The petitioner anchors the present petition on the following
issues:
Did respondent judge act with grave abuse of discretion amounting
to lack of jurisdiction,
(i) in reversing the finding of probable cause which he himself had
made in issuing the search warrants, upon allegations which are
matters of defense and as such can be raised and resolved only
upon trial on the merits; and
(ii) in finding that the issuance of the search warrants is premature
in the face of the fact that (a) Lacoste's registration of the subject
trademarks is still pending with the Patent Office with opposition
from Hemandas; and (b) the subject trademarks had been earlier
registered by Hemandas in his name in the Supplemental Register
of the Philippine Patent Office?
Respondent, on the other hand, centers his arguments on the
following issues:
I Mentholatum Co., Inc., in the latter's name or for the latter's
THE PETITIONER HAS NO CAPACITY TO SUE BEFORE PHILIPPINE
COURTS.
II
THE RESPONDENT JUDGE DID NOT COMMIT A GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OF JURISDICTION IN ISSUING
THE ORDER DATED APRIL 22, 1983.
Hemandas argues in his comment on the petition for certiorari that
the petitioner being a foreign corporation failed to allege essential
facts bearing upon its capacity to sue before Philippine courts. He
states that not only is the petitioner not doing business in the
Philippines but it also is not licensed to do business in the
Philippines. He also cites the case of Leviton Industries v.
Salvador (114 SCRA 420) to support his contention The Leviton case,
however, involved a complaint for unfair competition under Section
21-A of Republic Act No. 166 which provides:
Sec. 21 — A. Any foreign corporation or juristic person to which a
mark or tradename has been registered or assigned under this Act
may bring an action hereunder for infringement, for unfair
competition, or false designation of origin and false description,
whether or not it has been licensed to do business in the
Philippines under Act numbered Fourteen Hundred and Fifty-Nine,
as amended, otherwise known as the Corporation Law, at the time
it brings the complaint; Provided, That the country of which the
said foreign corporation or juristic person is a citizen, or in which it
is domiciled, by treaty, convention or law, grants a similar privilege
to corporate or juristic persons of the Philippines.
We held that it was not enough for Leviton, a foreign corporation
organized and existing under the laws of the State of New York,
United States of America, to merely allege that it is a foreign
corporation. It averred in Paragraph 2 of its complaint that its
action was being filed under the provisions of Section 21-A of
Republic Act No. 166, as amended. Compliance with the
requirements imposed by the abovecited provision was necessary
because Section 21-A of Republic Act No. 166 having explicitly laid
down certain conditions in a specific proviso, the same must be
expressly averred before a successful prosecution may ensue. It is
therefore, necessary for the foreign corporation to comply with
these requirements or aver why it should be exempted from them,
if such was the case. The foreign corporation may have the right to
sue before Philippine courts, but our rules on pleadings require that
the qualifying circumstances necessary for the assertion of such
right should first be affirmatively pleaded.
Page 41 of 69 IPL Day 5
In contradistinction, the present case involves a complaint
for violation of Article 189 of the Revised Penal Code.
The Leviton case is not applicable.
Asserting a distinctly different position from the Leviton
argument, Hemandas argued in his brief that the petitioner
was doing business in the Philippines but was not licensed to
do so. To support this argument, he states that the
applicable ruling is the case of Mentholatum Co., Inc. v.
Mangaliman: (72 Phil. 524) where Mentholatum Co. Inc., a
foreign corporation and Philippine-American Drug Co., the
former's exclusive distributing agent in the Philippines filed a
complaint for infringement of trademark and unfair
competition against the Mangalimans.
The argument has no merit. The Mentholatum case is distinct
from and inapplicable to the case at bar. Philippine American
Drug Co., Inc., was admittedly selling products of its principal
account. Thus, this Court held that "whatever transactions
the Philippine-American Drug Co., Inc. had executed in view
of the law, the Mentholatum Co., Inc., did it itself. And, the
Mentholatum Co., Inc., being a foreign doing business in the
Philippines without the license required by Section 68 of the
Corporation Law, it may not prosecute this action for
violation of trademark and unfair competition."
In the present case, however, the petitioner is a foreign
corporation not doing business in the Philippines. The
marketing of its products in the Philippines is done through
an exclusive distributor, Rustan Commercial Corporation The
latter is an independent entity which buys and then markets
not only products of the petitioner but also many other
products bearing equally well-known and established
trademarks and tradenames. in other words, Rustan is not a
mere agent or conduit of the petitioner.
The rules and regulations promulgated by the Board of
Investments pursuant to its rule-making power under
Presidential Decree No. 1789, otherwise known as the
Omnibus Investment Code, support a finding that the
petitioner is not doing business in the Philippines. Rule I, Sec.
1 (g) of said rules and regulations defines "doing business" as
one" which includes, inter alia:
(1) ... A foreign firm which does business through middlemen
acting on their own names, such as indentors, commercial
brokers or commission merchants, shall not be deemed
doing business in the Philippines. But such indentors,
commercial brokers or commission merchants shall be the
ones deemed to be doing business in the Philippines.
(2) Appointing a representative or distributor who is
domiciled in the Philippines, unless said representative or
distributor has an independent status, i.e., it transacts
business in its name and for its account, and not in the name
or for the account of a principal Thus, where a foreign firm is
represented by a person or local company which does not
act in its name but in the name of the foreign firm the latter
is doing business in the Philippines.
xxx xxx xxx
Applying the above provisions to the facts of this case, we
find and conclude that the petitioner is not doing business in
the Philippines. Rustan is actually a middleman acting and
transacting business in its own name and or its own account
and not in the name or for the account of the petitioner.
But even assuming the truth of the private respondent's allegation
that the petitioner failed to allege material facts in its petition
relative to capacity to sue, the petitioner may still maintain the
present suit against respondent Hemandas. As early as 1927, this
Court was, and it still is, of the view that a foreign corporation not
doing business in the Philippines needs no license to sue before
Philippine courts for infringement of trademark and unfair
competition. Thus, in Western Equipment and Supply Co. v.
Reyes (51 Phil. 115), this Court held that a foreign corporation
which has never done any business in the Philippines and which is
unlicensed and unregistered to do business here, but is widely and
favorably known in the Philippines through the use therein of its
products bearing its corporate and tradename, has a legal right to
maintain an action in the Philippines to restrain the residents and
inhabitants thereof from organizing a corporation therein bearing
the same name as the foreign corporation, when it appears that
they have personal knowledge of the existence of such a foreign
corporation, and it is apparent that the purpose of the proposed
domestic corporation is to deal and trade in the same goods as
those of the foreign corporation.
We further held:
xxx xxx xxx
... That company is not here seeking to enforce any legal or control
rights arising from, or growing out of, any business which it has
transacted in the Philippine Islands. The sole purpose of the action:
Is to protect its reputation, its corporate name, its goodwill,
whenever that reputation, corporate name or goodwill have,
through the natural development of its trade, established
themselves.' And it contends that its rights to the use of its
corporate and trade name:
Is a property right, a right in rem, which it may assert and protect
against all the world, in any of the courts of the world-even in
jurisdictions where it does not transact business-just the same as it
may protect its tangible property, real or personal, against trespass,
or conversion. Citing sec. 10, Nims on Unfair Competition and
TradeMarks and cases cited; secs. 21-22, Hopkins on TradeMarks,
Trade Names and Unfair Competition and cases cited.' That point is
sustained by the authorities, and is well stated in Hanover Star
Mining Co. v. Allen and Wheeler Co. (208 Fed., 513). in which the
syllabus says:
Since it is the trade and not the mark that is to be protected, a
trade-mark acknowledges no territorial boundaries of
municipalities or states or nations, but extends to every market
where the trader's goods have become known and Identified by the
use of the mark.
Our recognizing the capacity of the petitioner to sue is not by any
means novel or precedent setting. Our jurisprudence is replete with
cases illustrating instances when foreign corporations not doing
business in the Philippines may nonetheless sue in our courts.
In East Board Navigation Ltd, v. Ysmael and Co., Inc. (102 Phil. 1),
we recognized a right of foreign corporation to sue on isolated
transactions. In General Garments Corp. v. Director of Patents (41
SCRA 50), we sustained the right of Puritan Sportswear Corp., a
foreign corporation not licensed to do and not doing business in
the Philippines, to file a petition for cancellation of a trademark
before the Patent Office.
More important is the nature of the case which led to this petition.
What preceded this petition for certiorari was a letter complaint
filed before the NBI charging Hemandas with a criminal offense, i.e.,
violation of Article 189 of the Revised Penal Code. If prosecution
Page 42 of 69 IPL Day 5
follows after the completion of the preliminary investigation
being conducted by the Special Prosecutor the information
shall be in the name of the People of the Philippines and no
longer the petitioner which is only an aggrieved party since a
criminal offense is essentially an act against the State. It is
the latter which is principally the injured party although
there is a private right violated. Petitioner's capacity to sue
would become, therefore, of not much significance in the
main case. We cannot snow a possible violator of our
criminal statutes to escape prosecution upon a far-fetched
contention that the aggrieved party or victim of a crime has
no standing to sue.
In upholding the right of the petitioner to maintain the
present suit before our courts for unfair competition or
infringement of trademarks of a foreign corporation, we are
moreover recognizing our duties and the rights of foreign
states under the Paris Convention for the Protection of
Industrial Property to which the Philippines and France are
parties. We are simply interpreting and enforcing a solemn
international commitment of the Philippines embodied in a
multilateral treaty to which we are a party and which we
entered into because it is in our national interest to do so.
The Paris Convention provides in part that:
ARTICLE 1
(1) The countries to which the present Convention applies
constitute themselves into a Union for the protection of
industrial property.
(2) The protection of industrial property is concerned with
patents, utility models, industrial designs, trademarks service
marks, trade names, and indications of source or appellations
of origin, and the repression of unfair competition.
xxx xxx xxx
ARTICLE 2
(2) Nationals of each of the countries of the Union shall as
regards the protection of industrial property, enjoy in all the
other countries of the Union the advantages that their
respective laws now grant, or may hereafter grant, to
nationals, without prejudice to the rights specially provided
by the present Convention. Consequently, they shall have the
same protection as the latter, and the same legal remedy
against any infringement of their rights, provided they
observe the conditions and formalities imposed upon
nationals.
xxx xxx xxx
ARTICLE 6
(1) 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, of a mark considered by the competent
authority of the country of registration or use to be
well-known in that country as being already the mark of a
person entitled to the benefits of 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.
xxx xxx xxx
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.
xxx xxx xxx
ARTICLE 10bis
(1) The countries of the Union are bound to assure to persons
entitled to the benefits of the Union effective protection against
unfair competition.
xxx xxx xxx
ARTICLE 10ter
(1) The countries of the Union undertake to assure to nationals of
the other countries of the Union appropriate legal remedies to
repress effectively all the acts referred to in Articles 9, 10 and l0bis.
(2) They undertake, further, to provide measures to permit
syndicates and associations which represent the industrialists,
producers or traders concerned and the existence of which is not
contrary to the laws of their countries, to take action in the Courts
or before the administrative authorities, with a view to the
repression of the acts referred to in Articles 9, 10 and 10bis, in so
far as the law of the country in which protection is claimed allows
such action by the syndicates and associations of that country.
xxx xxx xxx
ARTICLE 17
Every country party to this Convention undertakes to adopt, in
accordance with its constitution, the measures necessary to ensure
the application of this Convention.
It is understood that at the time an instrument of ratification or
accession is deposited on behalf of a country; such country will be
in a position under its domestic law to give effect to the provisions
of this Convention. (61 O.G. 8010)
xxx xxx xxx
In Vanity Fair Mills, Inc. v. T Eaton Co. (234 F. 2d 633) the United
States Circuit Court of Appeals had occasion to comment on the
extraterritorial application of the Paris Convention It said that:
[11] The International Convention is essentially a compact between
the various member countries to accord in their own countries to
citizens of the other contracting parties trademark and other rights
comparable to those accorded their own citizens by their domestic
law. The underlying principle is that foreign nationals should be
given the same treatment in each of the member countries as that
country makes available to its own citizens. In addition, the
Convention sought to create uniformity in certain respects by
obligating each member nation 'to assure to nationals of countries
of the Union an effective protection against unfair competition.'
Page 43 of 69 IPL Day 5
[12] The Convention is not premised upon the Idea that the
trade-mark and related laws of each member nation shall be
given extra-territorial application, but on exactly the
converse principle that each nation's law shall have only
territorial application. Thus a foreign national of a member
nation using his trademark in commerce in the United States
is accorded extensive protection here against infringement
and other types of unfair competition by virtue of United
States membership in the Convention. But that protection
has its source in, and is subject to the limitations of,
American law, not the law of the foreign national's own
country. ...
By the same token, the petitioner should be given the same
treatment in the Philippines as we make available to our own
citizens. We are obligated to assure to nationals of "countries
of the Union" an effective protection against unfair
competition in the same way that they are obligated to
similarly protect Filipino citizens and firms.
Pursuant to this obligation, the Ministry of Trade on
November 20, 1980 issued a memorandum addressed to the
Director of the Patents Office directing the latter:
xxx xxx xxx
... 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, Gloria
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.
The memorandum is a clear manifestation of our avowed
adherence to a policy of cooperation and amity with all
nations. It is not, as wrongly alleged by the private
respondent, a personal policy of Minister Luis Villafuerte
which expires once he leaves the Ministry of Trade. For a
treaty or convention is not a mere moral obligation to be
enforced or not at the whims of an incumbent head of a
Ministry. It creates a legally binding obligation on the parties
founded on the generally accepted principle of international
law of pacta sunt servanda which has been adopted as part
of the law of our land. (Constitution, Art. II, Sec. 3). The
memorandum reminds the Director of Patents of his legal
duty to obey both law and treaty. It must also be obeyed.
Hemandas further contends that the respondent court did
not commit grave abuse of discretion in issuing the
questioned order of April 22, 1983.
A review of the grounds invoked by Hemandas in his motion
to quash the search warrants reveals the fact that they are
not appropriate for quashing a warrant. They are matters of
defense which should be ventilated during the trial on the
merits of the case. For instance, on the basis of the facts
before the Judge, we fail to understand how he could treat a
bare allegation that the respondent's trademark is different
from the petitioner's trademark as a sufficient basis to grant
the motion to quash. We will treat the issue of prejudicial question
later. Granting that respondent Hemandas was only trying to show
the absence of probable cause, we, nonetheless, hold the
arguments to be untenable.
As a mandatory requirement for the issuance of a valid search
warrant, the Constitution requires in no uncertain terms the
determination of probable cause by the judge after examination
under oath or affirmation of the complainant and the witnesses he
may produce (Constitution, Art. IV, Sec. 3). Probable cause has
traditionally meant such facts and circumstances antecedent to the
issuance of the warrant that are in themselves sufficient to induce a
cautious man to rely upon them and act in pursuance thereof
(People v. Sy Juco, 64 Phil. 667).
This concept of probable cause was amplified and modified by our
ruling in Stonehill v. Diokno, (20 SCRA 383) that probable cause
"presupposes the introduction of competent proof that the party
against whom it is sought has performed particular acts, or
committed specific omissions, violating a given provision of our
criminal laws."
The question of whether or not probable cause exists is one which
must be decided in the light of the conditions obtaining in given
situations (Central Bank v. Morfe, 20 SCRA 507). We agree that
there is no general formula or fixed rule for the determination of
the existence of probable cause since, as we have recognized
in Luna v. Plaza (26 SCRA 310), the existence depends to a large
degree upon the finding or opinion of the judge conducting the
examination. However, the findings of the judge should not
disregard the facts before him nor run counter to the clear dictates
of reason. More so it is plain that our country's ability to abide by
international commitments is at stake.
The records show that the NBI agents at the hearing of the
application for the warrants before respondent court presented
three witnesses under oath, sworn statements, and various exhibits
in the form of clothing apparels manufactured by Hemandas but
carrying the trademark Lacoste. The respondent court personally
interrogated Ramon Esguerra, Samuel Fiji, and Mamerto Espatero
by means of searching questions. After hearing the testimonies and
examining the documentary evidence, the respondent court was
convinced that there were good and sufficient reasons for the
issuance of the warrant. And it then issued the warrant.
The respondent court, therefore, complied with the constitutional
and statutory requirements for the issuance of a valid search
warrant. At that point in time, it was fully convinced that there
existed probable cause. But after hearing the motion to quash and
the oppositions thereto, the respondent court executed a complete
turnabout and declared that there was no probable cause to justify
its earlier issuance of the warrants.
True, the lower court should be given the opportunity to correct its
errors, if there be any, but the rectification must, as earlier stated
be based on sound and valid grounds. In this case, there was no
compelling justification for the about face. The allegation that vital
facts were deliberately suppressed or concealed by the petitioner
should have been assessed more carefully because the object of
the quashal was the return of items already seized and easily
examined by the court. The items were alleged to be fake and quite
obviously would be needed as evidence in the criminal prosecution.
Moreover, an application for a search warrant is heard ex parte. It
is neither a trial nor a part of the trial. Action on these applications
must be expedited for time is of the essence. Great reliance has to
be accorded by the judge to the testimonies under oath of the
complainant and the witnesses. The allegation of Hemandas that
the applicant withheld information from the respondent court was
clearly no basis to order the return of the seized items.
Page 44 of 69 IPL Day 5
Hemandas relied heavily below and before us on the
argument that it is the holder of a certificate of registration
of the trademark "CHEMISE LACOSTE & CROCODILE DEVICE".
Significantly, such registration is only in the Supplemental
Register.
A certificate of registration in the Supplemental Register is
not prima facie evidence of the validity of registration, of the
registrant's exclusive right to use the same in connection
with the goods, business, or services specified in the
certificate. Such a certificate of registration cannot be filed,
with effect, with the Bureau of Customs in order to exclude
from the Philippines, foreign goods bearing infringement
marks or trade names (Rule 124, Revised Rules of Practice
Before the Phil. Pat. Off. in Trademark Cases; Martin,
Philippine Commercial Laws, 1981, Vol. 2, pp.513-515).
Section 19-A of Republic Act 166 as amended not only
provides for the keeping of the supplemental register in
addition to the principal register but specifically directs that:
xxx xxx xxx
The certificates of registration for marks and trade names
registered on the supplemental register shall be
conspicuously different from certificates issued for marks
and trade names on the principal register.
xxx xxx xxx
The reason is explained by a leading commentator on
Philippine Commercial Laws:
The registration of a mark upon the supplemental register is
not, as in the case of the principal register, prima facie
evidence of (1) the validity of registration; (2) registrant's
ownership of the mark; and (3) registrant's exclusive right to
use the mark. It is not subject to opposition, although it may
be cancelled after its issuance. Neither may it be the subject
of interference proceedings. Registration on the
supplemental register is not constructive notice of
registrant's claim of ownership. A supplemental register is
provided for the registration of marks which are not
registrable on the principal register because of some defects
(conversely, defects which make a mark unregistrable on the
principal register, yet do not bar them from the
supplemental register.) (Agbayani, II Commercial Laws of the
Philippines, 1978, p. 514, citing Uy Hong Mo v. Titay & Co., et
al., Dec. No. 254 of Director of Patents, Apr. 30, 1963);
Registration in the Supplemental Register, therefore, serves
as notice that the registrant is using or has appropriated the
trademark. By the very fact that the trademark cannot as yet
be entered in the Principal Register, all who deal with it
should be on guard that there are certain defects, some
obstacles which the user must Still overcome before he can
claim legal ownership of the mark or ask the courts to
vindicate his claims of an exclusive right to the use of the
same. It would be deceptive for a party with nothing more
than a registration in the Supplemental Register to posture
before courts of justice as if the registration is in the Principal
Register.
The reliance of the private respondent on the last sentence
of the Patent office action on application Serial No. 30954
that "registrant is presumed to be the owner of the mark
until after the registration is declared cancelled" is, therefore,
misplaced and grounded on shaky foundation, The supposed
presumption not only runs counter to the precept embodied in
Rule 124 of the Revised Rules of Practice before the Philippine
Patent Office in Trademark Cases but considering all the facts
ventilated before us in the four interrelated petitions involving the
petitioner and the respondent, it is devoid of factual basis. And
even in cases where presumption and precept may factually be
reconciled, we have held that the presumption is rebuttable, not
conclusive, (People v. Lim Hoa, G.R. No. L10612, May 30, 1958,
Unreported). One may be declared an unfair competitor even if his
competing trademark is registered (Parke, Davis & Co. v. Kiu Foo &
Co., et al., 60 Phil. 928; La Yebana Co. v. Chua Seco & Co., 14 Phil.
534).
By the same token, the argument that the application was
premature in view of the pending case before the Patent Office is
likewise without legal basis.
The proceedings pending before the Patent Office involving IPC Co.
1658 do not partake of the nature of a prejudicial question which
must first be definitely resolved.
Section 5 of Rule 111 of the Rules of Court provides that:
A petition for the suspension of the criminal action based upon the
pendency of a pre-judicial question in a civil case, may only be
presented by any party before or during the trial of the criminal
action.
The case which suspends the criminal prosecution must be a civil
case which is determinative of the innocence or, subject to the
availability of other defenses, the guilt of the accused. The pending
case before the Patent Office is an administrative proceeding and
not a civil case. The decision of the Patent Office cannot be finally
determinative of the private respondent's innocence of the charges
against him.
In Flordelis v. Castillo (58 SCRA 301), we held that:
As clearly delineated in the aforecited provisions of the new Civil
Code and the Rules of Court, and as uniformly applied in numerous
decisions of this Court, (Berbari v. Concepcion, 40 Phil. 837 (1920);
Aleria v. Mendoza, 83 Phil. 427 (1949); People v. Aragon, 94 Phil.
357 (1954); Brito-Sy v. Malate Taxicab & Garage, Inc., 102 Phil 482
(1957); Mendiola v. Macadael, 1 SCRA 593; Benitez v. Concepcion,
2 SCRA 178; Zapante v. Montesa, 4 SCRA 510; Jimenez v. Averia, 22
SCRA 1380.) In Buenaventura v. Ocampo (55 SCRA 271) the
doctrine of prejudicial question was held inapplicable because no
criminal case but merely an administrative case and a civil suit were
involved. The Court, however, held that, in view of the peculiar
circumstances of that case, the respondents' suit for damages in
the lower court was premature as it was filed during the pendency
of an administrative case against the respondents before the
POLCOM. 'The possibility cannot be overlooked,' said the Court,
'that the POLCOM may hand down a decision adverse to the
respondents, in which case the damage suit will become
unfounded and baseless for wanting in cause of action.') the
doctrine of pre-judicial question comes into play generally in a
situation where a civil action and a criminal action both penned and
there exists in the former an issue which must be preemptively
resolved before the criminal action may proceed, because
howsoever the issue raised in the civil action is resolved would be
determinative juris et de jure of the guilt or innocence of the
accused in the criminal case.
In the present case, no civil action pends nor has any been
instituted. What was pending was an administrative case before
the Patent Office.
Page 45 of 69 IPL Day 5
Even assuming that there could be an administrative
proceeding with exceptional or special circumstances which
render a criminal prosecution premature pending the
promulgation of the administrative decision, no such peculiar
circumstances are present in this case.
Moreover, we take note of the action taken by the Patents
Office and the Minister of Trade and affirmed by the
Intermediate Appellate Court in the case of La Chemise
Lacoste S. A. v. Ram Sadhwani (AC-G.R. No. SP-13356, June
17, 1983).
The same November 20, 1980 memorandum of the Minister
of Trade discussed in this decision was involved in the
appellate court's decision. The Minister as the "implementing
authority" under Article 6bis of the Paris Convention for the
protection of Industrial Property instructed the Director of
Patents to reject applications for Philippine registration of
signature and other world famous trademarks by applicants
other than its original owners or users. The brand "Lacoste"
was specifically cited together with Jordache, Gloria
Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior,
Oscar dela Renta, Calvin Klein, Givenchy, Ralph Laurence,
Geoffrey Beene, Lanvin, and Ted Lapidus. The Director of
Patents was likewise ordered to require Philippine registrants
of such trademarks to surrender their certificates of
registration. Compliance by the Director of Patents was
challenged.
The Intermediate Appellate Court, in the La Chemise Lacoste
S.A. v. Sadhwani decision which we cite with approval
sustained the power of the Minister of Trade to issue the
implementing memorandum and, after going over the
evidence in the records, affirmed the decision of the Director
of Patents declaring La Chemise Lacoste &A. the owner of the
disputedtrademark and crocodile or alligator device. The
Intermediate Appellate Court speaking through Mr. Justice
Vicente V. Mendoza stated:
In the case at bar, the Minister of Trade, as 'the competent
authority of the country of registration,' has found that
among other well-known trademarks 'Lacoste' is the subject
of conflicting claims. For this reason, applications for its
registration must be rejected or refused, pursuant to the
treaty obligation of the Philippines.
Apart from this finding, the annexes to the opposition, which
La Chemise Lacoste S.A. filed in the Patent Office, show that
it is the owner of the trademark 'Lacoste' and the device
consisting of a representation of a crocodile or alligator by
the prior adoption and use of such mark and device on
clothing, sports apparel and the like. La Chemise Lacoste S.A,
obtained registration of these mark and device and was in
fact issued renewal certificates by the French National
Industry Property Office.
xxx xxx xxx
Indeed, due process is a rule of reason. In the case at bar the
order of the Patent Office is based not only on the
undisputed fact of ownership of the trademark by the
appellee but on a prior determination by the Minister of
Trade, as the competent authority under the Paris
Convention, that the trademark and device sought to be
registered by the appellant are well-known marks which the
Philippines, as party to the Convention, is bound to protect in
favor of its owners. it would be to exalt form over substance
to say that under the circumstances, due process requires
that a hearing should be held before the application is acted upon.
The appellant cites section 9 of Republic Act No. 166, which
requires notice and hearing whenever an opposition to the
registration of a trademark is made. This provision does not apply,
however, to situations covered by the Paris Convention, where the
appropriate authorities have determined that a well-known
trademark is already that of another person. In such cases, the
countries signatories to the Convention are obliged to refuse or to
cancel the registration of the mark by any other person or authority.
In this case, it is not disputed that the trademark Lacoste is such a
well-known mark that a hearing, such as that provided in Republic
Act No. 166, would be superfluous.
The issue of due process was raised and fully discussed in the
appellate court's decision. The court ruled that due process was not
violated.
In the light of the foregoing it is quite plain that the prejudicial
question argument is without merit.
We have carefully gone over the records of all the cases filed in this
Court and find more than enough evidence to sustain a finding that
the petitioner is the owner of the trademarks "LACOSTE",
"CHEMISE LACOSTE", the crocodile or alligator device, and the
composite mark of LACOSTE and the representation of the
crocodile or alligator. Any pretensions of the private respondent
that he is the owner are absolutely without basis. Any further
ventilation of the issue of ownership before the Patent Office will
be a superfluity and a dilatory tactic.
The issue of whether or not the trademark used by the private
respondent is different from the petitioner's trade mark is a matter
of defense and will be better resolved in the criminal proceedings
before a court of justice instead of raising it as a preliminary matter
in an administrative proceeding.
The purpose of the law protecting a trademark cannot be
overemphasized. They are to point out distinctly the origin or
ownership of the article to which it is affixed, to secure to him, who
has been instrumental in bringing into market a superior article of
merchandise, the fruit of his industry and skill, and to prevent fraud
and imposition (Etepha v. Director of Patents, 16 SCRA 495).
The legislature has enacted laws to regulate the use of trademarks
and provide for the protection thereof. Modern trade and
commerce demands that depredations on legitimate trade marks
of non-nationals including those who have not shown prior
registration thereof should not be countenanced. The law against
such depredations is not only for the protection of the owner of the
trademark but also, and more importantly, for the protection of
purchasers from confusion, mistake, or deception as to the goods
they are buying. (Asari Yoko Co., Ltd. v. Kee Boc, 1 SCRA 1; General
Garments Corporation v. Director of Patents, 41 SCRA 50).
The law on trademarks and tradenames is based on the principle of
business integrity and common justice' This law, both in letter and
spirit, is laid upon the premise that, while it encourages fair trade in
every way and aims to foster, and not to hamper, competition, no
one, especially a trader, is justified in damaging or jeopardizing
another's business by fraud, deceipt, trickery or unfair methods of
any sort. This necessarily precludes the trading by one dealer upon
the good name and reputation built up by another (Baltimore v.
Moses, 182 Md 229, 34 A (2d) 338).
The records show that the goodwill and reputation of the
petitioner's products bearing the trademark LACOSTE date back
even before 1964 when LACOSTE clothing apparels were first
Page 46 of 69 IPL Day 5
marketed in the Philippines. To allow Hemandas to continue
using the trademark Lacoste for the simple reason that he
was the first registrant in the Supplemental Register of a
trademark used in international commerce and not
belonging to him is to render nugatory the very essence of
the law on trademarks and tradenames.
We now proceed to the consideration of the petition
in Gobindram Hemandas Suianani u. Hon. Roberto V
Ongpin, et al. (G.R. No. 65659).
Actually, three other petitions involving the same trademark
and device have been filed with this Court.
In Hemandas & Co. v. Intermediate Appellate Court, et al.
(G.R. No. 63504) the petitioner asked for the following relief:
IN VIEW OF ALL THE FOREGOING, it is respectfully prayed (a)
that the Resolutions of the respondent Court of January 3,
1983 and February 24, 1983 be nullified; and that the
Decision of the same respondent Court of June 30, 1983 be
declared to be the law on the matter; (b) that the Director of
Patents be directed to issue the corresponding registration
certificate in the Principal Register; and (c) granting upon the
petitioner such other legal and equitable remedies as are
justified by the premises.
On December 5, 1983, we issued the following resolution:
Considering the allegations contained, issues raised and the
arguments adduced in the petition for review, the
respondent's comment thereon, and petitioner's reply to
said comment, the Court Resolved to DENY the petition for
lack of merit.
The Court further Resolved to CALL the attention of the
Philippine Patent Office to the pendency in this Court of G.R.
No. 563796-97 entitled 'La Chemise Lacoste, S.A. v. Hon.
Oscar C. Fernandez and Gobindram Hemandas' which was
given due course on June 14, 1983 and to the fact that G.R.
No. 63928-29 entitled 'Gobindram Hemandas v. La Chemise
Lacoste, S.A., et al.' filed on May 9, 1983 was dismissed for
lack of merit on September 12, 1983. Both petitions involve
the same dispute over the use of the trademark 'Chemise
Lacoste'.
The second case of Gobindram Hemandas vs. La Chemise
Lacoste, S.A., et al. (G.R. No. 63928-29) prayed for the
following:
I. On the petition for issuance of writ of preliminary
injunction, an order be issued after due hearing:
l. Enjoining and restraining respondents Company,
attorneys-in-fact, and Estanislao Granados from further
proceedings in the unfair competition charges pending with
the Ministry of Justice filed against petitioner;
2. Enjoining and restraining respondents Company and its
attorneys-in-fact from causing undue publication in
newspapers of general circulation on their unwarranted
claim that petitioner's products are FAKE pending
proceedings hereof; and
3. Enjoining and restraining respondents Company and its
attorneys-in-fact from sending further threatening letters to
petitioner's customers unjustly stating that petitioner's
products they are dealing in are FAKE and threatening them with
confiscation and seizure thereof.
II. On the main petition, judgment be rendered:
l. Awarding and granting the issuance of the Writ of Prohibition,
prohibiting, stopping, and restraining respondents from further
committing the acts complained of;
2. Awarding and granting the issuance of the Writ of Mandamus,
ordering and compelling respondents National Bureau of
Investigation, its aforenamed agents, and State Prosecutor
Estanislao Granados to immediately comply with the Order of the
Regional Trial Court, National Capital Judicial Region, Branch XLIX,
Manila, dated April 22, 1983, which directs the immediate return of
the seized items under Search Warrants Nos. 83-128 and 83-129;
3. Making permanent any writ of injunction that may have been
previously issued by this Honorable Court in the petition at bar: and
4. Awarding such other and further relief as may be just and
equitable in the premises.
As earlier stated, this petition was dismissed for lack of merit on
September 12, 1983. Acting on a motion for reconsideration, the
Court on November 23, 1983 resolved to deny the motion for lack
of merit and declared the denial to be final.
Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659) is the third
petition.
In this last petition, the petitioner prays for the setting aside as null
and void and for the prohibiting of the enforcement of the
following memorandum of respondent Minister Roberto Ongpin:
MEMORANDUM:
FOR: THE DIRECTOR OF PATENTS
Philippine Patent Office
xxx xxx xxx
Pursuant to Executive Order No. 913 dated 7 October 1983 which
strengthens the rule-making and adjudicatory powers of the
Minister of Trade and Industry and provides inter alia, that 'such
rule-making and adjudicatory powers should be revitalized in order
that the Minister of Trade and Industry can ...apply more swift and
effective solutions and remedies to old and new problems ... such
as the infringement of internationally-known tradenames and
trademarks ...'and in view of the decision of the Intermediate
Appellate Court in the case of LA CHEMISE LACOSTE, S.A., versus
RAM SADWHANI [AC-G.R. Sp. No. 13359 (17) June 1983] which
affirms the validity of the MEMORANDUM of then Minister Luis R.
Villafuerte dated 20 November 1980 confirming our obligations
under the PARIS CONVENTION FOR THE PROTECTION OF
INDUSTRIAL PROPERTY to which the Republic of the Philippines is a
signatory, you are hereby directed to implement measures
necessary to effect compliance with our obligations under said
convention in general, and, more specifically, to honor our
commitment under Section 6 bis thereof, as follows:
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:
Page 47 of 69 IPL Day 5
(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.
4. The Philippine Patent Office shall give due course to the
Opposition in cases already or hereafter filed against the
registration of trademarks entitled to protection of Section 6
bisof said PARIS CONVENTION as outlined above, by
remanding applications filed by one not entitled to such
protection for final disallowance by the Examination Division.
5. All pending applications for Philippine registration of
signature and other world famous trademarks filed by
applicants other than their original owners or users shall be
rejected forthwith. Where such applicants have already
obtained registration contrary to the abovementioned PARIS
CONVENTION and/or Philippine Law, they shall be directed to
surrender their Certificates of Registration to the Philippine
Patent Office for immediate cancellation proceedings.
6. Consistent with the foregoing, you are hereby directed to
expedite the hearing and to decide without delay the
following cases pending before your Office:
1. INTER PARTES CASE NO. 1689-Petition filed by La Chemise
Lacoste, S.A. for the cancellation of Certificate of Registration
No. SR-2225 issued to Gobindram Hemandas, assignee of
Hemandas and Company;
2. INTER PARTES CASE NO. 1658-Opposition filed by Games
and Garments Co. against the registration of the trademark
Lacoste sought by La Chemise Lacoste, S.A.;
3. INTER PARTES CASE NO. 1786-Opposition filed by La Chemise
Lacoste, S.A. against the registration of trademark Crocodile Device
and Skiva sought by one Wilson Chua.

Considering our discussions in G.R. Nos. 63796-97, we find the

petition in G.R. No. 65659 to be patently without merit and
accordingly deny it due course.

In complying with the order to decide without delay the cases

specified in the memorandum, the Director of Patents shall limit
himself to the ascertainment of facts in issues not resolved by this
decision and apply the law as expounded by this Court to those
facts.

One final point. It is essential that we stress our concern at the

seeming inability of law enforcement officials to stem the tide of
fake and counterfeit consumer items flooding the Philippine market
or exported abroad from our country. The greater victim is not so
much the manufacturer whose product is being faked but the
Filipino consuming public and in the case of exportations, our
image abroad. No less than the President, in issuing Executive
Order No. 913 dated October 7, 1983 to strengthen the powers of
the Minister of Trade and Industry for the protection of consumers,
stated that, among other acts, the dumping of substandard,
imitated, hazardous, and cheap goods, the infringement of
internationally known tradenames and trademarks, and the unfair
trade practices of business firms has reached such proportions as
to constitute economic sabotage. We buy a kitchen appliance, a
household tool, perfume, face powder, other toilet articles,
watches, brandy or whisky, and items of clothing like jeans, T-shirts,
neck, ties, etc. — the list is quite length — and pay good money
relying on the brand name as guarantee of its quality and genuine
nature only to explode in bitter frustration and genuine nature on
helpless anger because the purchased item turns out to be a
shoddy imitation, albeit a clever looking counterfeit, of the quality
product. Judges all over the country are well advised to remember
that court processes should not be used as instruments to,
unwittingly or otherwise, aid counterfeiters and intellectual pirates,
tie the hands of the law as it seeks to protect the Filipino
consuming public and frustrate executive and administrative
implementation of solemn commitments pursuant to international
conventions and treaties.

WHEREFORE, the petition in G.R. NOS. 63797-97 is hereby

GRANTED. The order dated April 22, 1983 of the respondent
regional trial court is REVERSED and SET ASIDE. Our Temporary
Restraining Order dated April 29, 1983 is ma(i.e. PERMANENT. The
petition in G.R. NO. 65659 is DENIED due course for lack of merit.
Our Temporary Restraining Order dated December 5, 1983 is
LIFTED and SET ASIDE, effective immediately.

SO ORDERED.

Page 48 of 69 IPL Day 5

G.R. No. L-18289 March 31, 1964
ANDRES ROMERO, petitioner,
vs.
MAIDEN FORM BRASSIERE CO., INC., and THE DIRECTOR OF
PATENTS,respondents.
Alafriz Law Office for petitioner.
Ross, Selph & Carrascoso for respondent Maiden Form Brassiere Co.,
Inc.
Office of the Solicitor General and Tiburcio S. Evalle for respondent
Director of Patents.
BARRERA, J.:
From the decision of the Director of Patents (of January 17, 1961)
dismissing his petition for cancellation of the registration of the
trademark "Adagio" for brassieres manufactured by respondent
Maiden Form Brassiere Co., Inc., petitioner Andres Romero,
interposed this appeal.
On February 12, 1957, respondent company, a foreign corporation,
filed with respondent Director of Patents an application for
registration (pursuant to Republic Act No. 166) of the trademark
"Adagio" for the brassieres manufactured by it. In its application,
respondent company alleged that said trademark was first used by
it in the United States on October 26, 1937, and in the Philippines
on August 31, 1946; that it had been continuously used by it in
trade in, or with the Philippines for over 10 years; that said
trademark "is on the date of this application, actually used by
respondent company on the following goods, classified according
to the official classification of goods (Rule 82) - Brassieres, Class 40";
and that said trademark is applied or affixed by respondent to the
goods by placing thereon a woven label on which the trademark is
shown.
Acting on said application, respondent Director, on August 13, 1957,
approved for publication in the Official Gazette said trademark of
respondent company, in accordance with Section 7 of Republic Act
No. 166 (Trademark Law), having found, inter alia, that said
trademark is "a fanciful and arbitrary use of a foreign word adopted
by applicant as a trademark for its product; that it is neither a
surname nor a geographical term, nor any that comes within the
purview of Section 4 of Republic Act No. 166; and that the mark as
used by respondent company convincingly shows that it identifies
and distinguishes respondent company's goods from others."
On October 17, 1957, respondent Director issued to respondent
company a certificate of registration of with, trademark "Adagio".
On February 26, 1958, petitioner filed with respondent Director a
petition for cancellation of said trademark, on the grounds that it is
a common descriptive name of an article or substance on which the
patent has expired; that its registration was obtained fraudulently
or contrary to the provisions of Section 4, Chapter II of Republic Act
No. 166; and that the application for its registration was not filed in
accordance with the provisions of Section 37, Chapter XI of the
same Act. Petitioner also alleged that said trademark has not
become distinctive of respondent company's goods or business;
that it has been used by respondent company to classify the goods
(the brassieres) manufactured by it, in the same manner as
petitioner uses the same; that said trademark has been used by
petitioner for almost 6 years; that it has become a common
descriptive name; and that it is not registered in accordance with
the requirements of Section 37(a), Chapter XI of Republic Act No.
166.
Page 49 of 69 IPL Day 5
Issues having been joined, the case was heard and, after
hearing, respondent Director (on January 17, 1961) rendered
the decision above adverted to.
Petitioner filed a motion for reconsideration of said decision,
on the grounds that (1) it is contrary to the evidence, and (2)
it is contrary to law. Said motion was denied by respondent
Director by resolution of March 7, 1961.
Hence, this appeal.
Appellant claims that the trademark "Adagio" has become a
common descriptive name of a particular style of brassiere
and is, therefore, unregistrable. It is urged that said
trademark had been used by local brassiere manufacturers
since 1948, without objection on the part of respondent
company.
This claim is without basis in fact. The evidence shows that
the trademark "Adagio" is a musical term, which means
slowly or in an easy manner, and was used as a trademark by
the owners thereof (the Rosenthals of Maiden Form Co.,
New York) because they are musically inclined. Being a
musical term, it is used in an arbitrary (fanciful) sense as a
trademark for brassieres manufactured by respondent
company. It also appears that respondent company has,
likewise, adopted other musical terms such as "Etude" (Exh.
W-2), "Chansonette" (Exh. W-3), "Prelude" (Exh. W-4),
"Over-ture" (Exh. W-6), and "Concerto" (Exh. V), to identify,
as a trademark, the different styles or types of its brassieres.
As respondent Director pointed out, "the fact that said mark
is used also to designate a particular style of brassiere, does
not affect its registrability as a trademark" (Kiekhaefer Corp.
v. Willys-Overland Motors, Inc., 111 USPQ 105).
It is not true that respondent company did not object to the
use of said trademark by petitioner and other local brassiere
manufacturers. The records show that respondent
company's agent, Mr. Schwartz, warned the Valleson
Department Store to desist from the sale of the "Adagio"
Royal Form brassieres manufactured by petitioner (t.s.n., pp.
27-28, Oct. 7, 1958), and even placed an advertisement (Exhs.
3 & 4) in the local newspapers (Manila Daily Bulletin, Manila
Times, Fookien Times, and others) warning the public against
unlawful use of said trademark (t.s.n., p. 15, Aug. 17, 1959).
The advertisement (Exh. U) in the Manila Times made by
respondent company on February 9, 1958, was brought to
petitioner's attention (t.s.n., p. 24, Oct. 7, 1958), which must
have prompted him to file this present petition for
cancellation, on February 26, 1958.
On the other hand, respondent company's long and
continuous use of the trademark "Adagio" has not rendered
it merely descriptive of the product. In Winthrop Chemical
Co. v. Blackman (268 NYS 653), it was held that widespread
dissemination does not justify the defendants in the use of
the trademark.
Veronal has been widely sold in this country by the plaintiff;
over 5,250,000 packages have been sold since 1919. This is a
consequence of the long and continued use by the plaintiff of
this trademark and is the result of its efforts to inform the
profession and the public of its product. This widespread
dissemination does not justify the defendants in the use of
this trademark. If this argument were sound, then every time
a plaintiff obtained the result of having the public purchase
its article, that fact of itself would destroy a trademark.
Arbitrary trademarks cannot become generic in this way.
Jacobs v. Beecham, 221 U.S. 263, 31 S. Ct. 555, 55 L. Ed. 729;
Coca-Cola Co. v. Koke Co. of American, 254 U.S. 143, 41 S. Ct. 113,
65 L. Ed. 189. (emphasis supplied.)
Appellant next contends that the trademark "Adagio at the time it
was registered (in the Philippines) on October 17, 1957, had long
been used by respondent company, only "to designate a particular
style or quality of brassiere and, therefore, is unregistrable as a
trademark. In support of the contention, he alleges that the
sentence "Maidenform bras are packaged for your quick shopping
convenience. For other popular Maidenform styles writ for free
style booklet to: Maiden Form Brassiere Co., Inc 200 Madison
Avenue, New York 16, N.Y." printed on the package (Exh. W), shows
that the trademark "Adagio" is used to designate a particular style
or quality of brassiere. He also cites portions of the testimonies of
his witnesses Bautista and Barro, to the effect that said trademark
refers to the style of brassieres sold in the stores of which they are
salesmen.
This contention is untenable. Said sentence appearing on the
package (Exh. W), standing alone, does not conclusively indicate
that the trademark "Adagio" is merely a style of brassiere. The
testimony of Mr. Schwartz, witness of respondent company, belies
petitioner's claim:
Q. There is a statement at the bottom of Exhibit W which reads,
'There is a Maidenform for every type of figure'. As you stated you
are very familiar with these bras manufacture by Maidenform
Brassiere Company, what are these types of figures this Exhibit W
refer to?
A. This is a product sold primarily in the United States they have
cold climate there, and a style to suit the climate and we have
different here. This kind of bra very seldom comes here. This type is
very expensive and sold primarily in the United States. We do not
sell it here; it is very expensive an import restrictions do not allow
our dollar allocations for such sort.
As to the testimonies of Bautista and Barro, they are me
conclusions of said witnesses. Note that when Bautista was asked
why he considered the trademark "Adagio" as a style, he replied
that the brand "Adagio" is attached distinguish the style. He stated
as follows:
Q. You said that those bras mentioned by you such as Adagio,
Prelude, Alloette, are styles, will you please tell us the reason why
you said that those are styles?
A. You know his brand like Adagio, Alloette are just attached to the
bras just to distinguish the style: It is not the main brand.
Barro, on the other hand, said that "Adagio" is a mark. She declared
as follows:
Q. You state that you used to sell brassieres in the store in which
you work; when customers come to your store and ask for
brassieres, what do they usually ask from you?
A. Well, I tell you there are so many types and certain types of
people ask for certain brassiere. There are people who ask for Royal
Form Adagio and there are others who ask for Duchess Ideal Form,
and so many kinds of marks.
Brassieres are usually of different types or styles, and appellee has
used different trademarks for every type as shown by its labels,
Exhibits W-2 (Etude), W-3 (Chansonette), W-4 (Prelude), W-5
(Maidenette), and W-6, (Overture). The mere fact that appellee
uses "Adagio" for one type or style, does not affect the validity of
Page 50 of 69 IPL Day 5
such word as a trademark. In. the case of Kiekhaefer Corp. v.
Willys-Overland Motors, 111 USPQ 105, it was held that the
fact that the word "Hurricane" was used to designate only
one model of automobile, did not affect the validity of that
word as a trademark. In Minnesota Mining Co. V. Motloid Co.,
74 USPQ 235, the applicant sought to register the letters
"MM" in diagonal relationship within a circle. Applicant
admitted that this mark was used only for its medium price
and medium quality denture-base materials. The Assistant
Commissioner of Patents held:
It clearly appears, however, that the mark serves to indicate
origin of applicant's goods; and the fact that it is used on only
one of several types or grades does not affect its
registrability as a trade mark.
Appellant also claims that respondent Director erred in
registering the trademark in question, despite appellee's
non-compliance with Section 37, paragraphs 1 and 4 (a) of
Republic Act No. 166.
This contention flows from a misconception of the
application for registration of trademark of respondent. As
we see it, respondent's application was filed under the
provisions of Section 2 of Republic Act No. 166 as amended
by Section 1 of Republic Act 865 which reads as follows:
"SEC. 2. What are registrable — Trademarks, ... own 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: ..."
Section 37 of Republic Act No. 166 can be availed of only
where the Philippines is a party to an international
convention or treaty relating to trademarks, in which the
trade-mark sought to be registered need not be use in the
Philippines. The applicability of Section 37 has been
commented on by the Director of Patents, in this wise:
Trademark rights in the Philippines, without actual use the
trademark in this country can, of course, be created
artificially by means of a treaty or convention with another
country or countries. Section 37 of the present Philippine
Trademark Law, Republic Act No. 166 (incorporated as Rule
82 in the Rules of Practice for Registration of Trademarks)
envisions the eventual entrance of the Philippines into such
convention treaty. It is provided in said section that
applications filed thereunder need not allege use in the
Philippines of the trade mark sought to be registered. The
Philippines has, however not yet entered into any such treaty
or convention and, until she does, actual use in the
Philippines of the trademark sought to be registered and
allegation in the application of such fact, will be required in
all applications for original or renewal registration submitted
to the Philippine Patent Office. (Circular Release No. 8.)
Appellant, likewise, contends that the registration the
trademark in question was fraudulent or contrary Section 4
of Republic Act No. 166. There is no evidence to show that
the registration of the trademark "Adagio" was obtained
fraudulently by appellee. The evidence record shows, on the
other hand, that the trademark "Adagio" was first exclusively
in the Philippines by a appellee in the year 1932. There being
no evidence of use of the mark by others before 1932, or
that appellee abandoned use thereof, the registration of the mark
was made in accordance with the Trademark Law. Granting that
appellant used the mark when appellee stopped using it during the
period of time that the Government imposed restrictions on
importation of respondent's brassiere bearing the trademark, such
temporary non-use did not affect the rights of appellee because it
was occasioned by government restrictions and was not permanent,
intentional, and voluntary.

To work an abandonment, the disuse must be permanent and not

ephemeral; it must be intentional and voluntary, and not
involuntary or even compulsory. There must be a thorough-going
discontinuance of any trade-mark use of the mark in question
(Callman, Unfair Competition and Trademark, 2nd Ed., p. 1341).

The use of the trademark by other manufacturers did not indicate

an intention on the part of appellee to abandon it.

"The instances of the use by others of the term 'Budweiser, cited by

the defendant, fail, even when liberally construed, to indicate an
intention upon the part of the complainant to abandon its rights to
that name. 'To establish the defense of abandonment, it is
necessary to show not only acts indicating a practical abandonment,
but an actual intention to abandon. Saxlehner v. Eisener &
Mendelson Co., 179 U.S. 19, 21 S. Ct. 7 (45 L. Ed. 60).
(Anheuser-Busch, Inc. v. Budweiser Malt Products Corp., 287 F.
245.)

Appellant next argues that respondent Director erred in declaring

illegal the appropriation in the Philippines of the trademark in
question by appellant and, therefore, said appropriation did not
affect appellee's right thereto and the subsequent registration
thereof. Appellant urges that its appropriation of the trademark in
question cannot be considered illegal under Philippine laws,
because of non-compliance by appellee of Section 37 of Republic
Act No. 166. But we have already shown that Section 37 is not the
provision invoked by respondent because the Philippines is not as
yet a party to any international convention or treaty relating to
trademarks. The case of United Drug Co. v. Rectanus, 248 U.S. 90,
39 S. Ct. 48, 63 L. Ed. 141, cited by appellant, is not applicable to
the present case, as the records show that appellee was the first
user of the trademark in the Philippines, whereas appellant was the
later user. Granting that appellant used the trade-mark at the time
appellee stopped using it due to government restrictions on certain
importations, such fact did not, as heretofore stated, constitute
abandonment of the trademark as to entitle anyone to its free use.

Non-use because of legal restrictions is not evidence of an intent to

abandon. Non-use of their ancient trade-mark and the adoption of
new marks by the Carthusian Monks after they had been compelled
to leave France was consistent with an intention to retain their
right to use their old mark. Abandonment will not be inferred from
a disuse over a period of years occasioned by statutory restrictions
on the name of liquor. (Nims Unfair Competition and Trade-Mark p.
1269.)

IN VIEW OF ALL THE FOREGOING, we are of the opinion and so hold,

that respondent Director of Patents did not err in dismissing the
present petition for cancellation of the registered trademark of
appellee company, and the decision appealed from is therefore
hereby affirmed, with costs against the appellant. So ordered.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Reyes, J.B.L.,

Paredes, Dizon, Regala and Makalintal, JJ., concur.
Concepcion, J., took no part.

Page 51 of 69 IPL Day 5

G.R. No. L-23035 July 31, 1975
PHILIPPINE NUT INDUSTRY, INC., petitioner,
vs.
STANDARD BRANDS INCORPORATED and TIBURCIO S. EVALLE as
Director of Patents, respondents.
Perfecta E. De Vera for petitioner.
Paredes, Poblador, Cruz and Nazareno for private respondent.
Office of the Solicitor General Arturo A. Alafriz, Acting Assistant
Solicitor General Isidro C. Borromeo and Solicitor Francisco J.
Bautista for respondent Director.
MUNOZ PALMA, J.:
Challenged in this petition for review is the decision of respondent
Director of Patents which orders the cancellation of Certificate of
Registration No. SR-416 issued in favor of herein petitioner
Philippine Nut Industry, Inc. (hereinafter called Philippine Nut) for
the trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS," upon
complaint of Standard Brands Inc. (hereinafter to be called
Standard Brands).
The records of the case show the following incidents:
Philippine Nut, a domestic corporation, obtained from the Patent
Office on August 10, 1961, Certificate of Registration No. SR-416
covering the trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS,"
the label used on its product of salted peanuts.
On May 14, 1962, Standard Brands a foreign corporation, 1filed
with the Director of Patents Inter Partes Case No. 268 asking for
the cancellation of Philippine Nut's certificate of registration on the
ground that "the registrant was not entitled to register the mark at
the time of its application for registration thereof" for the reason
that it (Standard Brands) is the owner of the trademark "PLANTERS
COCKTAIL PEANUTS" covered by Certificate of Registration No.
SR-172, issued by the Patent Office on July 28, 1958. Standard
Brands alleged in its petition that Philippine Nut's trademark
"PHILIPPINE PLANTERS CORDIAL PEANUTS" closely resembles and is
confusingly similar to its trademark "PLANTERS COCKTAIL
PEANUTS" used also on salted peanuts, and that the registration of
the former is likely to deceive the buying public and cause damage
to it.
On June 1, 1962, Philippine Nut filed its answer invoking the special
defense that its registered label is not confusingly similar to that of
Standard Brands as the latter alleges.
At the hearing of October 4, 1962, the parties submitted a partial
stipulation of facts. On December 12, 1962, an amended partial
stipulation of facts was submitted, the pertinent agreements
contained in which are: (1) that Standard Brands is the present
owner of the trademark "PLANTERS COCKTAIL PEANUTS" covered
by Certificate of Registration No. SR-172 issued on July 28, 1958; (2)
that Standard Brands trademark was first used in commerce in the
Philippines in December, 1938 and (3) that Philippine Nut's
trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS" was first
used in the Philippines on December 20, 1958 and registered with
the Patent Office on August 10, 1961.
On December 10, 1963, after the presentation of oral and
documentary evidence and the filing by the parties of their
memoranda, respondent Director of Patents rendered Decision No.
Page 52 of 69 IPL Day 5
281 giving due course to Standard Brand's petition and
ordering the cancellation of Philippine Nut's Certificate of
Registration No. SR-416. The Director of Patents found and
held that in the labels using the two trademarks in question,
the dominant part is the word "Planters", displayed "in a very
similar manner" so much so that "as to appearance and
general impression" there is "a very confusing similarity," and
he concluded that Philippine Nut "was not entitled to register
the mark at the time of its filing the application for
registration" as Standard Brands will be damaged by the
registration of the same. Its motion for reconsideration
having been denied, Philippine Nut came up to this Court for
a review of said decision.
In seeking a reversal of the decision of respondent Director
of Patents, petitioner brings forth eleven assigned errors all
of which revolve around one main issue: is the trademark
"PHILIPPINE PLANTERS CORDIAL PEANUTS" used by
Philippine Nut on its label for salted peanuts confusingly
similar to the trademark "PLANTERS COCKTAIL PEANUTS"
used by Standard Brands on its product so as to constitute an
infringement of the latter's trademark rights and justify its
cancellation?2
The applicable law to the case is found in Republic Act 166
otherwise known as the Trade-Mark Law from which We
quote the following pertinent provisions:
Chapter II-A. —
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:
(d) Consists of or comprises a mark or trade-name which so
resembles a mark or trade-name registered in the Philippines
or a mark or trade-name previously used in the Philippines by
another and not abandoned, as to be likely, when applied to
or used in connection with the goods, business or services of
the applicant, to cause confusion or mistake or to deceive
purchasers; ... (emphasis Ours)
Sec. 17. Grounds for cancellation — Any person, who
believes that he is or will be damaged by the registration of a
mark or trade-name, may, upon the payment of the
prescribed fee, apply to cancel said registration upon any of
the following grounds:
(c) That the registration was obtained fraudulently or
contrary to the provisions of section four, Chapter II
hereof; ....
Sec. 22. Infringement, what constitutes. — Any person who
shall use, without the consent of the registrant, any
reproduction, counterfeit, copy or colorable imitation of any
registered mark or trade-name in connection with the sale,
offering for sale, or advertising of any goods, business or
services on or in connection with which such use is likely to
cause confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or services, or
identity of such business; or reproduce, counterfeit, copy or
colorably imitate any such mark or trade-name and apply
such reproduction, counterfeit, copy, or colorable imitation
to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with
such goods, business or services, shall be liable to a civil action by
the registrant for any or all of the remedies herein provided.
(emphasis supplied).
In the cases involving infringement of trademark brought before
the 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; that
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 pIace; that duplication or imitation
is not necessary, a similarity in the dominant features of the
trademarks would be sufficient. 3
1. The first argument advanced by petitioner which We believe
goes to the core of the matter in litigation is that the Director of
Patents erred in holding that the dominant portion of the label of
Standard Brands in its cans of salted peanuts consists of the word
PLANTERS which has been used in the label of Philippine Nut for its
own product. According to petitioner, PLANTERS cannot be
considered as the dominant feature of the trademarks in question
because it is a mere descriptive term, an ordinary word which is
defined in Webster International Dictionary as "one who or that
which plants or sows, a farmer or an agriculturist." (pp. 10-11,
petitioner's brief)
We find the argument without merit. While it is true that PLANTERS
is an ordinary word, nevertheless it is used in the labels not to
describe the nature of the product, but to project the source or
origin of the salted peanuts contained in the cans. The word
PLANTERS printed across the upper portion of the label in bold
letters easily attracts and catches the eye of the ordinary consumer
and it is that word and none other that sticks in his mind when he
thinks of salted peanuts.
In cases of this nature there can be no better evidence as to what is
the dominant feature of a label and as to whether there is a
confusing similarity in the contesting trademarks than the labels
themselves. A visual and graphic presentation of the labels will
constitute the best argument for one or the other, hence, we are
reproducing hereunder a picture of the cans of salted peanuts of
the parties to the case.
The picture below is part of the documentary evidence appearing
in the original records, and it clearly demonstrates the correctness
of the finding of respondent Director that the word PLANTERS is
the dominant, striking mark of the labels in question.
It is true that there are other words used such as "Cordial" in
petitioner's can and "Cocktail" in Standard Brands', which are also
prominently displayed, but these words are mere adjectives
describing the type of peanuts in the labeled containers and are not
sufficient to warn the unwary customer that the two products
come form distinct sources. As a whole it is the word PLANTERS
which draws the attention of the buyer and leads him to conclude
that the salted peanuts contained in the two cans originate from
one and the same manufacturer. In fact, when a housewife sends
her housemaid to the market to buy canned salted peanuts, she
will describe the brand she wants by using the word PLANTERS and
not "Cordial" nor "Cocktail".
Page 53 of 69 IPL Day 5
2. The next argument of petitioner is that respondent
Director should not have based his decision simply on the
use of the term PLANTERS, and that what he should have
resolved is whether there is a confusing similarity in the
trademarks of the parties.
It is quite obvious from the record, that respondent
Director's decision is based not only on the fact that
petitioner herein adopted the same dominant mark of
Standard Brands, that is, the word PLANTERS, but that it also
used in its label the same coloring scheme of gold, blue, and
white, and basically the same lay-out of words such as
"salted peanuts" and "vacuum packed" with similar type and
size of lettering as appearing in Standard Brands' own
trademark, all of which result in a confusing similarity
between the two labels. 4Thus, the decision states:
"Furthermore, as to appearance and general impression of
the two trademarks, I find a very confusing similarity."
(Emphasis supplied) 5
Referring again to the picture We have reproduced, the
striking similarity between the two labels is quite evident not
only in the common use of PLANTERS but also in the other
words employed. As a matter of fact, the capital letter "C" of
petitioner's "Cordial" is alike to the capital "C" of Standard's
"Cocktail", with both words ending with an "1".
Admittedly, no producer or manufacturer may have a
monopoly of any color scheme or form of words in a label.
But when a competitor adopts a distinctive or dominant
mark or feature of another's trademark and with it makes
use of the same color ensemble, employs similar words
written in a style, type and size of lettering almost identical
with those found in the other trademark, the intent to pass
to the public his product as that of the other is quite obvious.
Hence, there is good reason for Standard Brands' to ask why
did petitioner herein use the word PLANTERS, the same
coloring scheme, even almost identical size and contour of
the cans, the same lay-out of words on its label when there is
a myriad of other words, colors, phrases, symbols, and
arrangements to choose from to distinguish its product from
Standard Brands, if petitioner was not motivated to simulate
the label of the latter for its own can of salted peanuts, and
thereby deceive the public?
A similar question was asked by this Court in Clarke vs.
Manila Candy Co., 36 Phil. 100, when it resolved in favor of
plaintiff a case of unfair competition based on an imitation of
Clarke's packages and wrappers of its candies the main
feature of which was one rooster. The Court queried thus: "...
why, with all the birds in the air, and all the fishes in the sea,
and all the animals on the face of the earth to choose from,
the defendant company (Manila Candy Co.) selected two
roosters as its trademark, although its directors and
managers must have been well aware of the long-continued
use of a rooster by the plaintiff with the sale and
advertisement of its goods? ... A cat, a dog, a carabao, a
shark or an eagle stamped upon the container in which
candies are sold would serve as well as a rooster for
purposes of identification as the product of defendant's
factory. Why did defendant select two roosters as its
trademark ?" (p.109, supra)
Petitioner contends, however, that there are differences
between the two trademarks, such as, the presence of the
word "Philippine" above PLANTERS on its label, and other
phrases, to wit: "For Quality and Price, Its Your Outstanding
Buy", the address of the manufacturer in Quezon City, etc.,
plus a pictorial representation of peanuts overflowing from a
tin can, while in the label of Standard Brands it is stated that the
product is manufactured in San Francisco, California, and on top of
the tin can is printed "Mr. Peanut" and the representation of a
"humanized peanut". (pp. 30-33, petitioner's brief)
We have taken note of those alleged differences but We find them
insignificant in the sense that they are not sufficient to call the
attention of the ordinary buyer that the labeled cans come from
distinct and separate sources. The word "Philippine" printed in
small type in petitioner's label may simply give to the purchaser the
impression that that particular can of PLANTERS salted peanuts is
locally produced or canned but that what he is buying is still
PLANTERS canned salted peanuts and nothing else. As regards "Mr.
Peanut" on Standard Brands' label, the same appears on the top
cover and is not visible when the cans are displayed on the shelves,
aside from the fact that the figure of "Mr. Peanut" is printed on the
tin cover which is thrown away after opening the can, leaving no
lasting impression on the consumer. It is also for this reason that
We do not agree with petitioner that it is "Mr. Peanut and the
Humanized Peanut" which is the trademark of Standard Brands
salted peanuts, it being a mere descriptive pictorial representation
of a peanut not prominently displayed on the very body of the label
covering the can, unlike the term PLANTERS which dominates the
label.
It is correctly observed by respondent Director that the
merchandize or goods being sold by the parties herein are very
ordinary commodities purchased by the average person and many
times by the ignorant and unlettered 6 and these are the persons
who will not as a rule examine the printed small letterings on the
container but will simply be guided by the presence of the striking
mark PLANTERS on the label. Differences there will always be, but
whatever differences exist, these pale into insignificance in the face
of an evident similarity in the dominant feature and overall
appearance of the labels of the parties.
It is not necessary, to constitute trademark "infringement", that
every word of a trade-mark should be appropriated, but it is
sufficient that enough be taken to deceive the public in the
purchase of a protected article. (Bunte Bros. v. Standard Chocolates,
D.C. Mass., 45 F. Supp. 478, 481)
A trade-name in order to be an `infringement' upon another need
not be exactly like it in form and sound, but it is enough if the one
so resembles another as to deceive or mislead persons of ordinary
caution into the belief that they are dealing with the one concern
when in fact they are dealing with the other. (Foss v. Culbertson,
136 P. 2d 711, 718, 17 Wash. 2d 610)
Where a trade-mark contains a dominating or distinguishing word,
and purchasing public has come to know and designate the article
by such dominating word, the use of such word by another in
marking similar goods may constitute Infringement though the
marks aside from such dominating word may be dissimilar. (Queen
Mfg. Co. v. lsaac Ginsberg & Bros., C.C.A. Mon., 25 F. 2d 284, 287)
(d) "Infringement" of trade-mark does not depend on the use of
identical words, nor on the question whether they are so similar
that a person looking at one would be deceived into the belief that
it was the other; it being sufficient if one mark is so like another in
form, spelling, or sound that one with not a very definite or clear
recollection as to the real mark is likely to be confused or misled.
(Northam Warren Corporation v. Universal Cosmetic Co., C. C. A; III.,
18 F. 2d 774, 775)
3. What is next submitted by petitioner is that it was error for
respondent Director to have enjoined it from using PLANTERS in
the absence of evidence showing that the term has acquired
Page 54 of 69 IPL Day 5
secondary meaning. Petitioner, invoking American
jurisprudence, asserts that the first user of a tradename
composed of common words is given no special preference
unless it is shown that such words have acquired secondary
meaning, and this, respondent Standard Brands failed to do
when no evidence was presented to establish that fact. (pp.
14-16, petitioner's brief)
The doctrine of secondary meaning is found in Sec. 4 (f),
Chapter II-A of the Trade-Mark Law, viz:
Except as expressly excluded in paragraphs (a), (b), (c) and (d)
of this section, nothing herein shall prevent the registration
of a mark or trade-name used by the applicant which has
become distinctive of the applicant's goods, business or
services. The Director may accept as prima facie evidence
that the mark or trade-name has become distinctive, as
applied to or used in connection with the applicant's goods,
business or services, proof of substantially exclusive and
continuous use thereof as a mark or trade-name by the
applicant in connection with the sale of goods, business or
services for the five years next preceding the date of the
filing of the application for its registration. (As amended by
Sec. 3, Rep. Act No. 638.)
This Court held that the doctrine is to the effect that a word
or phrase originally incapable of exclusive appropriation with
reference to an article on the market, because geographically
or otherwise descriptive, might nevertheless have been used
so long and so exclusively by one producer with reference to
his article that, in that trade and to that branch of the
purchasing public, the word or phrase has come to mean
that the article was his product. 7
By way of illustration, is the word "Selecta" which according
to this Court is a common ordinary term in the sense that it
may be used or employed by any one in promoting his
business or enterprise, but which once adopted or coined in
connection with one's business as an emblem, sign or device
to characterize its products, or as a badge of authenticity,
may acquire a secondary meaning as to be exclusively
associated with its products and business, so that its use by
another may lead to confusion in trade and cause damage to
its business. 8
The applicability of the doctrine of secondary meaning to the
situation now before Us is appropriate because there is oral
and documentary evidence showing that the word PLANTERS
has been used by and closely associated with Standard
Brands for its canned salted peanuts since 1938 in this
country. Not only is that fact admitted by petitioner in the
amended stipulation of facts (see p. 2 of this Decision), but
the matter has been established by testimonial (tsn October
4, 1962, pp. 2-8) and documentary evidence consisting of
invoices covering the sale of "PLANTERS cocktail peanuts".
(Exhibits C to C-4; D to D-10; E to E-10; F to F-2) In other
words, there is evidence to show that the term PLANTERS
has become a distinctive mark or symbol insofar as salted
peanuts are concerned, and by priority of use dating as far
back as 1938, respondent Standard Brands has acquired a
preferential right to its adoption as its trademark warranting
protection against its usurpation by another. Ubi jus ibi
remedium. Where there is a right there is a remedy. Standard
Brands has shown the existence of a property right(Arce Sons
& Co. vs. Selecta Biscuit Co., Inc., supra, pp. 262-263) and
respondent Director, has afforded the remedy.
Still on this point, petitioner contends that Standard Brands'
use of the trademark PLANTERS was interrupted during the
Japanese occupation and in fact was discontinued when the
importation of peanuts was prohibited by Central Bank regulations
effective July 1, 1953, hence it cannot be presumed that it has
acquired a secondary meaning. We hold otherwise. Respondent
Director correctly applied the rule that non-use of a trademark on
an article of merchandize due to legal restrictions or circumstances
beyond one's control is not to be considered as an abandonment.
In the case of Andres Romero vs. Maiden Form Brassiere Co., Inc.,
L-18289, March 31, 1964, 10 SCRA 556, the same question was
raised by petitioner Romero when he filed with the Bureau of
Patents a petition to cancel the registration of the trademark
"Adagio" for brassieres manufactured by Maiden Form Brassiere
Co., Inc. His petition having been dismissed by the Director of
Patents, Romero appealed to this Court and one of the issues
posed by him was that when the Government imposed restrictions
on importations of brassieres bearing that particular trademark,
there was abandonment of the same by respondent company
which entitled petitioner to adopt it for his own use and which in
fact he had been using for a number of years. That argument was
met by the Court in the words of Justice Jesus Barrera thus:
reputation and selling power of Standard Brands PLANTERS
salted peanuts, for a self-respecting person, or a reputable
business concern as is the case here, does not remain in the
shelter of another's popularity and goodwill but builds one of
his own.
4. Findings of fact by the Director of Patents are conclusive
and binding on this Court provided they are supported by
substantial evidence. 9 The testimonial and documentary
evidence in addition to the stipulation of facts submitted by
the parties fully support the findings of respondent Director
that(1) there is a confusing similarity between the labels or
trademarks of Philippine Nut and Standard Brands used in
their respective canned salted peanuts; (2) respondent
Standard Brands has priority of adoption and use of the label
with PLANTERS as the dominant feature and the same has
acquired secondary meaning in relation to salted peanuts;
and (3) there has been no abandonment or non-use of said
trademark by Standard Brands which would justify its
adoption by petitioner or any other competitor for the sale
of salted peanuts in the market.

... The evidence on record shows, on the other hand, that the PREMISES CONSIDERED, We AFFIRM the decision of
trademark "Adagio" was first used exlusively in the Philippines by respondent Director of Patents with costs against petitioner.
appellee in the year 1932. There being no evidence of use of the
mark by others before 1932, or that appellee abandoned use So Ordered.
thereof, the registration of the mark was made in accordance with
the Trademark Law. Granting that appellant used the mark when
appellee stopped using it during the period of time that the
Government imposed restrictions on importation of respondent's
brassiere being the trademark, such temporary non-use did not
affect the rights of appellee because it was occasioned by
government restrictions and was not permanent, intentional, and
voluntary.

To work an abandonment, the disuse must be permanent and not

ephemeral; it must, be intentional and voluntary, and not
involuntary or even compulsory. There must be a thoroughgoing
discontinuance of any trade-mark use of the mark in question
(Callman, Unfair Competition and Trademark, 2nd Ed., p. 1341).

The use of the trademark by other manufacturers did not indicate

an intention on the part of appellee to abandon it.

The instances of the use by others of the term Budweiser, cited by

the defendant, fail, even when liberally construed, to indicate an
intention upon the part of the complainant to abandon its rights to
that name. "To establish the defense of abandonment, it is
necessary to show not only acts indicating a practical abandonment,
but an actual intention to abandon." Sanlehner v. Eisener &
Mendelson Co., 179 U.S. 19, 21 S. Ct. 7 (45 L. Ed.
6.0).(Anheuser-Busch, Inc, v. Budweiser Malt Products Corp., 287 F.
245.)

xxx xxx xxx

Non-use because of legal restrictions is not evidence of an intent to

abandon. Non-use of their ancient trade-mark and the adoption of
new marks by the Carthusian Monks after they had been compelled
to leave France was consistent with an intention to retain their
right to use their old mark. Abandonment will not be inferred from
a disuse over a period of years occasioned by statutory restrictions
on the name of liquor. (Nims, Unfair Competition and Trade-Mark,
p. 1269.) (pp. 562-564, supra) (emphasis Ours)

Applying the words of Justice Roman Ozaeta in the "Ang Tibay" case
(Ang vs. Toribio Teodoro, p. 56, supra) to the case now before Us,
petitioner herein must not be allowed to get a free ride on the

Page 55 of 69 IPL Day 5

G.R. No. 169974 April 20, 2010
SUPERIOR COMMERCIAL ENTERPRISES, INC., Petitioner,
vs.
KUNNAN ENTERPRISES LTD. AND SPORTS CONCEPT & DISTRIBUTOR,
INC., Respondents.
DECISION
BRION, J.:
We review in this petition for review on certiorari1 the (1)
decision2 of the Court of Appeals (CA) in CA-G.R. CV No. 60777 that
reversed the ruling of the Regional Trial Court of Quezon City,
Branch 85 (RTC),3 and dismissed the petitioner Superior
Commercial Enterprises, Inc.’s (SUPERIOR) complaint for trademark
infringement and unfair competition (with prayer for preliminary
injunction) against the respondents Kunnan Enterprises Ltd.
(KUNNAN) and Sports Concept and Distributor, Inc. (SPORTS
CONCEPT); and (2) the CA resolution4 that denied SUPERIOR’s
subsequent motion for reconsideration. The RTC decision that the
CA reversed found the respondents liable for trademark
infringement and unfair competition, and ordered them to pay
SUPERIOR P2,000,000.00 in damages, P500,000.00 as attorney’s
fees, and costs of the suit.
THE FACTUAL ANTECEDENTS
On February 23, 1993, SUPERIOR5 filed a complaint for trademark
infringement and unfair competition with preliminary injunction
against KUNNAN6 and SPORTS CONCEPT7 with the RTC, docketed
as Civil Case No. Q-93014888.
In support of its complaint, SUPERIOR first claimed to be the owner
of the trademarks, trading styles, company names and business
names8"KENNEX",9 "KENNEX & DEVICE",10 "PRO KENNEX"11 and
"PRO-KENNEX" (disputed trademarks).12 Second, it also asserted
its prior use of these trademarks, presenting as evidence of
ownership the Principal and Supplemental Registrations of these
trademarks in its name. Third, SUPERIOR also alleged that it
extensively sold and advertised sporting goods and products
covered by its trademark registrations. Finally, SUPERIOR presented
as evidence of its ownership of the disputed trademarks the
preambular clause of the Distributorship Agreement dated October
1, 1982 (Distributorship Agreement) it executed with KUNNAN,
which states:
Whereas, KUNNAN intends to acquire the ownership of KENNEX
trademark registered by the [sic] Superior in the Philippines.
Whereas, the [sic] Superior is desirous of having been appointed
[sic] as the sole distributor by KUNNAN in the territory of the
Philippines." [Emphasis supplied.]13
In its defense, KUNNAN disputed SUPERIOR’s claim of ownership
and maintained that SUPERIOR - as mere distributor from October
6, 1982 until December 31, 1991 - fraudulently registered the
trademarks in its name. KUNNAN alleged that it was incorporated
in 1972, under the name KENNEX Sports Corporation for the
purpose of manufacturing and selling sportswear and sports
equipment; it commercially marketed its products in different
countries, including the Philippines since 1972.14 It created and
first used "PRO KENNEX," derived from its original corporate name,
as a distinctive trademark for its products in 1976. KUNNAN also
alleged that it registered the "PRO KENNEX" trademark not only in
the Philippines but also in 31 other countries, and widely promoted
the "KENNEX" and "PRO KENNEX" trademarks through worldwide
advertisements in print media and sponsorships of known tennis
players.
Page 56 of 69 IPL Day 5
On October 1, 1982, after the expiration of its initial
distributorship agreement with another
company,15 KUNNAN appointed SUPERIOR as its exclusive
distributor in the Philippines under a Distributorship
Agreement whose pertinent provisions state:16
Whereas, KUNNAN intends to acquire ownership of KENNEX
trademark registered by the Superior in the Philippines.
Whereas, the Superior is desirous of having been appointed
[sic] as the sole distributor by KUNNAN in the territory of the
Philippines.
Now, therefore, the parties hereto agree as follows:
1. KUNNAN in accordance with this Agreement, will appoint
the sole distributorship right to Superior in the Philippines,
and this Agreement could be renewed with the consent of
both parties upon the time of expiration.
2. The Superior, in accordance with this Agreement, shall
assign the ownership of KENNEX trademark, under the
registration of Patent Certificate No. 4730 dated 23 May
1980 to KUNNAN on the effects [sic] of its ten (10) years
contract of distributorship, and it is required that the
ownership of the said trademark shall be genuine, complete
as a whole and without any defects.
3. KUNNAN will guarantee to the Superior that no other third
parties will be permitted to supply the KENNEX PRODUCTS in
the Philippines except only to the Superior. If KUNNAN
violates this stipulation, the transfer of the KENNEX
trademark shall be null and void.
4. If there is a necessity, the Superior will be appointed, for
the protection of interest of both parties, as the agent in the
Philippines with full power to exercise and granted the power
of attorney, to pursue any case of Pirating, Infringement and
Counterfeiting the [sic] KENNEX trade mark in the Philippine
territory.
5. The Superior will be granted from [sic] KUNNAN’s approval
before making and selling any KENNEX products made in the
Philippines and the other countries, and if this is the situation,
KUNNAN is entitled to have a royalty of 5%-8% of FOB as the
right.
6. Without KUNNAN’s permission, the Superior cannot
procure other goods supply under KENNEX brand of which
are not available to supply [sic] by KUNNAN. However, in
connection with the sporting goods, it is permitted that the
Superior can procure them under KENNEX brand of which
are not available to be supplied by KUNNAN. [Emphasis
supplied.]
Even though this Agreement clearly stated that SUPERIOR
was obligated to assign the ownership of the KENNEX
trademark to KUNNAN, the latter claimed that the Certificate
of Registration for the KENNEX trademark remained with
SUPERIOR because Mariano Tan Bon Diong (Mr. Tan Bon
Diong), SUPERIOR’s President and General Manager, misled
KUNNAN’s officers into believing that KUNNAN was not
qualified to hold the same due to the "many requirements
set by the Philippine Patent Office" that KUNNAN could not
meet.17 KUNNAN further asserted that SUPERIOR deceived it
into assigning its applications for registration of the "PRO
KENNEX" trademark in favor of SUPERIOR, through an
Assignment Agreement dated June 14, 1983 whose pertinent
provisions state:18
1. In consideration of the distributorship relationship between
KUNNAN and Superior, KUNNAN, who is the seller in the
distributorship relationship, agrees to assign the following
trademark applications owned by itself in the Philippines to
Superior who is the buyer in the distributorship relationship.
Trademark Application Number
PROKENNEX 49999
PROKENNEX 49998
PROKENNEX 49997
2. Superior shall acknowledge that KUNNAN is still the real and
truthful owner of the abovementioned trademarks, and shall agree
that it will not use the right of the abovementioned trademarks to
do anything which is unfavourable or harmful to KUNNAN.
3. Superior agrees that it will return back the abovementioned
trademarks to KUNNAN without hesitation at the request of
KUNNAN at any time. KUNNAN agrees that the cost for the
concerned assignment of the abovementioned trademarks shall be
compensated by KUNNAN.
4. Superior agrees that the abovementioned trademarks when
requested by KUNNAN shall be clean and without any incumbency.
5. Superior agrees that after the assignment of the
abovementioned trademarks, it shall have no right to reassign or
license the said trademarks to any other parties except KUNNAN.
[Emphasis supplied]
Prior to and during the pendency of the infringement and unfair
competition case before the RTC, KUNNAN filed with the now
defunct Bureau of Patents, Trademarks and Technology
Transfer19 separate Petitions for the Cancellation of Registration
Trademark Nos. 41032, SR 6663, 40326, 39254, 4730 and 49998,
docketed as Inter Partes Cases Nos. 3709, 3710, 3811, 3812, 3813
and 3814, as well as Opposition to Application Serial Nos. 84565
and 84566, docketed as Inter Partes Cases Nos. 4101 and 4102
(Consolidated Petitions for Cancellation) involving the KENNEX and
PRO KENNEX trademarks.20 In essence, KUNNAN filed the Petition
for Cancellation and Opposition on the ground that SUPERIOR
fraudulently registered and appropriated the disputed trademarks;
as mere distributor and not as lawful owner, it obtained the
registrations and assignments of the disputed trademarks in
violation of the terms of the Distributorship Agreement and
Sections 2-A and 17 of Republic Act No. 166, as amended.21
On December 3, 1991, upon the termination of its distributorship
agreement with SUPERIOR, KUNNAN appointed SPORTS CONCEPT
as its new distributor. Subsequently, KUNNAN also caused the
publication of a Notice and Warning in the Manila Bulletin’s January
29, 1993 issue, stating that (1) it is the owner of the disputed
trademarks; (2) it terminated its Distributorship Agreement with
SUPERIOR; and (3) it appointed SPORTS CONCEPT as its exclusive
distributor. This notice prompted SUPERIOR to file its Complaint for
Infringement of Trademark and Unfair Competition with
Preliminary Injunction against KUNNAN.22
The RTC Ruling
Page 57 of 69 IPL Day 5
On March 31, 1998, the RTC issued its decision23 holding
KUNNAN liable for trademark infringement and unfair
competition. The RTC also issued a writ of preliminary
injunction enjoining KUNNAN and SPORTS CONCEPT from
using the disputed trademarks.
The RTC found that SUPERIOR sufficiently proved that it was
the first userClass
and owner of the disputed trademarks in the
Philippines, based on the findings of the Director of Patents
in Inter Partes Case No. 1709 and 1734 that SUPERIOR was
"rightfully entitled
28 to register the mark ‘KENNEX’ as user and
owner thereof." It also considered the "Whereas clause" of
the Distributorship Agreement, which categorically stated
that "KUNNAN intends to acquire ownership of [the] KENNEX
25
trademark registered by SUPERIOR in the Philippines."
According to the RTC, this clause amounts to KUNNAN’s
express recognition of SUPERIOR’s ownership of the KENNEX
trademarks.24 18
KUNNAN and SPORTS CONCEPT appealed the RTC’s decision
to the CA where the appeal was docketed as CA-G.R. CV No.
60777. KUNNAN maintained that SUPERIOR was merely its
distributor and could not be the owner of the disputed
trademarks. SUPERIOR, for its part, claimed ownership based
on its prior use and numerous valid registrations.
Intervening Developments:
The IPO and CA Rulings
In the course of its appeal to the CA, KUNNAN filed on
December 19, 2003 a Manifestation and Motion praying that
the decision of the Bureau of Legal Affairs (BLA) of the
Intellectual Property Office (IPO), dated October 30, 2003, in
the Consolidated Petitions for Cancellation be made of
record and be considered by the CA in resolving the
case.25 The BLA ruled in this decision -
In the case at bar, Petitioner-Opposer (Kunnan) has
overwhelmingly and convincingly established its rights to the
mark "PRO KENNEX". It was proven that actual use by
Respondent-Registrant is not in the concept of an owner but
as a mere distributor (Exhibits "I", "S" to "S-1", "P" and "P-1"
and "Q" and "Q-2") and as enunciated in the case of Crisanta
Y. Gabriel vs. Dr. Jose R. Perez, 50 SCRA 406, "a mere
distributor of a product bearing a trademark, even if
permitted to use said trademark has no right to and cannot
register the said trademark."
WHEREFORE, there being sufficient evidence to prove that
the Petitioner-Opposer (KUNNAN) is the prior user and
owner of the trademark "PRO-KENNEX", the consolidated
Petitions for Cancellation and the Notices of Opposition are
hereby GRANTED. Consequently, the trademark
"PRO-KENNEX" bearing Registration Nos. 41032, 40326,
39254, 4730, 49998 for the mark PRO-KENNEX issued in
favor of Superior Commercial Enterprises, Inc., herein
Respondent-Registrant under the Principal Register and SR
No. 6663 are hereby CANCELLED. Accordingly, trademark
application Nos. 84565 and 84566, likewise for the
registration of the mark PRO-KENNEX are hereby REJECTED.
Let the file wrappers of PRO-KENNEX subject matter of these
cases be forwarded to the Administrative Finance and
Human Resources Development Services Bureau (AFHRDSB)
for appropriate action in accordance with this Decision and a
copy thereof be furnished the Bureau of Trademarks (BOT)
for information and update of its record.26
On February 4, 2005, KUNNAN again filed another Manifestation
requesting that the IPO Director General’s decision on appeal dated
December 8, 2004, denying SUPERIOR’s appeal, be given weight in
the disposition of the case.27 The dispositive portion of the
decision reads:28
WHEREFORE, premises considered, there is no cogent reason to
disturb Decision No. 2003-35 dated 30 October 2003 rendered by
the Director of the Bureau of Legal Affairs. Accordingly, the instant
appeal is DENIED and the appealed decision is hereby AFFIRMED.
We take judicial notice that SUPERIOR questioned the IPO Director
General’s ruling before the Court of Appeals on a petition for
review under Rule 43 of the Rules of Court, docketed as CA-G.R. SP
No. 87928 (Registration Cancellation Case). On August 30, 2007,
the CA rendered its decision dismissing SUPERIOR’s petition.29 On
December 3, 2007, the CA decision was declared final and
executory and entry of judgment was accordingly made. Hence,
SUPERIOR’s registration of the disputed trademarks now stands
effectively cancelled.
The CA Ruling
On June 22, 2005, the CA issued its decision in CA-G.R. CV No.
60777, reversing and setting aside the RTC’s decision of March 31,
1998.30 It dismissed SUPERIOR’s Complaint for Infringement of
Trademark and Unfair Competition with Preliminary Injunction on
the ground that SUPERIOR failed to establish by preponderance of
evidence its claim of ownership over the KENNEX and PRO KENNEX
trademarks. The CA found the Certificates of Principal and
Supplemental Registrations and the "whereas clause" of the
Distributorship Agreement insufficient to support SUPERIOR’s claim
of ownership over the disputed trademarks.
The CA stressed that SUPERIOR’s possession of the aforementioned
Certificates of Principal Registration does not conclusively establish
its ownership of the disputed trademarks as dominion over
trademarks is not acquired by the fact of registration alone;31 at
best, registration merely raises a presumption of ownership that
can be rebutted by contrary evidence.32 The CA further
emphasized that the Certificates of Supplemental Registration
issued in SUPERIOR’s name do not even enjoy the presumption of
ownership accorded to registration in the principal register; it does
not amount to a prima facie evidence of the validity of registration
or of the registrant’s exclusive right to use the trademarks in
connection with the goods, business, or services specified in the
certificate.33
In contrast with the failure of SUPERIOR’s evidence, the CA found
that KUNNAN presented sufficient evidence to rebut SUPERIOR’s
presumption of ownership over the trademarks. KUNNAN
established that SUPERIOR, far from being the rightful owner of the
disputed trademarks, was merely KUNNAN’s exclusive distributor.
This conclusion was based on three pieces of evidence that, to the
CA, clearly established that SUPERIOR had no proprietary interest
over the disputed trademarks.
First, the CA found that the Distributorship Agreement, considered
in its entirety, positively confirmed that SUPERIOR sought to be the
KUNNAN’s exclusive distributor. The CA based this conclusion on
the following provisions of the Distributorship Agreement:
(1) that SUPERIOR was "desirous of [being] appointed as the sole
distributor by KUNNAN in the territory of the Philippines;"
(2) that "KUNNAN will appoint the sole distributorship right to
Superior in the Philippines;" and
Page 58 of 69 IPL Day 5
(3) that "no third parties will be permitted to supply KENNEX
PRODUCTS in the Philippines except only to Superior."
The CA thus emphasized that the RTC erred in unduly relying
on the first whereas clause, which states that "KUNNAN
intends to acquire ownership of [the] KENNEX trademark
registered by SUPERIOR in the Philippines" without
considering the entirety of the Distributorship Agreement
indicating that SUPERIOR had been merely appointed by
KUNNAN as its distributor.
Second, the CA also noted that SUPERIOR made the express
undertaking in the Assignment Agreement to "acknowledge
that KUNNAN is still the real and truthful owner of the [PRO
KENNEX] trademarks," and that it "shall agree that it will not
use the right of the abovementioned trademarks to do
anything which is unfavourable or harmful to KUNNAN." To
the CA, these provisions are clearly inconsistent with
SUPERIOR’s claim of ownership of the disputed trademarks.
The CA also observed that although the Assignment
Agreement was a private document, its authenticity and due
execution was proven by the similarity of Mr. Tan Bon
Diong’s signature in the Distributorship Agreement and the
Assignment Agreement.
Third, the CA also took note of SUPERIOR’s Letter dated
November 12, 1986 addressed to Brig. Gen. Jose Almonte,
identifying itself as the "sole and exclusive licensee and
distributor in the Philippines of all its KENNEX and
PRO-KENNEX products." Attached to the letter was an
agreement with KUNNAN, identifying the latter as the
"foreign manufacturer of all KENNEX products." The CA
concluded that in this letter, SUPERIOR acknowledged its
status as a distributor in its dealings with KUNNAN, and even
in its transactions with third persons.
Based on these reasons, the CA ruled that SUPERIOR was a
mere distributor and had no right to the registration of the
disputed trademarks since the right to register a trademark is
based on ownership. Citing Section 4 of Republic Act No.
16634 and established jurisprudence,35 the CA held that
SUPERIOR - as an exclusive distributor - did not acquire any
proprietary interest in the principal’s (KUNNAN’s) trademark.
The CA denied SUPERIOR’s motion for reconsideration for
lack of merit in its Resolution dated October 4, 2005.
THE PETITION
In the present petition, SUPERIOR raises the following issues:
I.
WHETHER OR NOT THE COURT OF
APPEALS ERRED IN HOLDING THAT
PETITIONER SUPERIOR IS NOT THE TRUE
AND RIGHTFUL OWNER OF THE
TRADEMARKS "KENNEX" AND
"PRO-KENNEX" IN THE PHILIPPINES
II.
WHETHER OR NOT THE HONORABLE
COURT OF APPEALS ERRED IN HOLDING
THAT PETITIONER SUPERIOR IS A MERE
DISTRIBUTOR OF RESPONDENT KUNNAN
IN THE PHILIPPINES
 III.
WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN REVERSING AND SETTING
ASIDE THE DECISION OF THE REGIONAL TRIAL
COURT OF QUEZON CITY IN CIVIL CASE NO.
Q-93-14888, LIFTING THE PRELIMINARY
INJUNCTION ISSUED AGAINST RESPONDENTS
KUNNAN AND SPORTS CONCEPT AND
DISMISSING THE COMPLAINT FOR
INFRINGEMENT OF TRADEMARK AND UNFAIR
COMPETITION WITH PRELIMINARY INJUNCTION
THE COURT’S RULING
We do not find the petition meritorious.
On the Issue of Trademark Infringement
We first consider the effect of the final and executory decision in
the Registration Cancellation Case on the present case. This
decision - rendered after the CA decision for trademark
infringement and unfair competition in CA-G.R. CV No. 60777 (root
of the present case) - states:
As to whether respondent Kunnan was able to overcome the
presumption of ownership in favor of Superior, the former
sufficiently established the fraudulent registration of the
questioned trademarks by Superior. The Certificates of Registration
No. SR-4730 (Supplemental Register) and 33487 (Principal Register)
for the KENNEX trademark were fraudulently obtained by
petitioner Superior. Even before PROKENNEX products were
imported by Superior into the Philippines, the same already
enjoyed popularity in various countries and had been distributed
worldwide, particularly among the sports and tennis enthusiasts
since 1976. Riding on the said popularity, Superior caused the
registration thereof in the Philippines under its name when it knew
fully well that it did not own nor did it manufacture the
PROKENNEX products. Superior claimed ownership of the subject
marks and failed to disclose in its application with the IPO that it
was merely a distributor of KENNEX and PROKENNEX products in
the Philippines.
While Superior accepted the obligation to assign Certificates of
Registration Nos. SR-4730 and 33487 to Kunnan in exchange for the
appointment by the latter as its exclusive distributor, Superior
however breached its obligation and failed to assign the same to
Kunnan. In a letter dated 13 February 1987, Superior, through Mr.
Tan Bon Diong, misrepresented to Kunnan that the latter cannot
own trademarks in the Philippines. Thus, Kunnan was misled into
assigning to Superior its (Kunnan’s) own application for the
disputed trademarks. In the same assignment document, however.
Superior was bound to ensure that the PROKENNEX trademarks
under Registration Nos. 40326, 39254, and 49998 shall be returned
to Kunnan clean and without any incumbency when requested by
the latter.
In fine, We see no error in the decision of the Director General of
the IPO which affirmed the decision of the Director of the Bureau
of Legal Affairs canceling the registration of the questioned marks
in the name of petitioner Superior and denying its new application
for registration, upon a finding that Superior is not the rightful
owner of the subject marks.
WHEREFORE, the foregoing considered, the petition is DISMISSED.
The CA decided that the registration of the "KENNEX" and "PRO
KENNEX" trademarks should be cancelled because SUPERIOR was
Page 59 of 69 IPL Day 5
not the owner of, and could not in the first place have validly
registered these trademarks. Thus, as of the finality of the CA
decision on December 3, 2007, these trademark registrations
were effectively cancelled and SUPERIOR was no longer the
registrant of the disputed trademarks.
Section 22 of Republic Act No. 166, as amended ("RA
166"),36 the law applicable to this case, defines trademark
infringement as follows:
Section 22. Infringement, what constitutes. — Any person
who [1] shalluse, 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. [Emphasis
supplied]
Essentially, Section 22 of RA 166 states that only a registrant
of a mark can file a case for infringement. Corollary to this,
Section 19 of RA 166 provides that any right conferred upon
the registrant under the provisions of RA 16637 terminates
when the judgment or order of cancellation has become final,
viz:
Section 19. Cancellation of registration. - If the Director finds
that a case for cancellation has been made out he shall order
the cancellation of the registration. The order shall not
become effective until the period for appeal has elapsed, or
if appeal is taken, until the judgment on appeal becomes
final. When the order or judgment becomes final, any right
conferred by such registration upon the registrant or any
person in interest of record shall terminate. Notice of
cancellation shall be published in the Official Gazette.
[Emphasis supplied.]
Thus, we have previously held that the cancellation of
registration of a trademark has the effect of depriving the
registrant of protection from infringement from the moment
judgment or order of cancellation has become final.38
In the present case, by operation of law, specifically Section
19 of RA 166, the trademark infringement aspect of
SUPERIOR’s case has been rendered moot and academic in
view of the finality of the decision in the Registration
Cancellation Case. In short, SUPERIOR is left without any
cause of action for trademark infringement since the
cancellation of registration of a trademark deprived it of
protection from infringement from the moment judgment or
order of cancellation became final. To be sure, in a
trademark infringement, title to the trademark is
indispensable to a valid cause of action and such title is
shown by its certificate of registration.39 With its certificates
of registration over the disputed trademarks effectively
cancelled with finality, SUPERIOR’s case for trademark
infringement lost its legal basis and no longer presented a
valid cause of action.
Even assuming that SUPERIOR’s case for trademark infringement
had not been rendered moot and academic, there can be no
infringement committed by KUNNAN who was adjudged with
finality to be the rightful owner of the disputed trademarks in the
Registration Cancellation Case. Even prior to the cancellation of the
registration of the disputed trademarks, SUPERIOR - as a mere
distributor and not the owner - cannot assert any protection from
trademark infringement as it had no right in the first place to the
registration of the disputed trademarks. In fact, jurisprudence holds
that in the absence of any inequitable conduct on the part of the
manufacturer, an exclusive distributor who employs the trademark
of the manufacturer does not acquire proprietary rights of the
manufacturer, and a registration of the trademark by the
distributor as such belongs to the manufacturer, provided the
fiduciary relationship does not terminate before application for
registration is filed.40 Thus, the CA in the Registration Cancellation
Case correctly held:
As a mere distributor, petitioner Superior undoubtedly had no right
to register the questioned mark in its name. Well-entrenched in our
jurisdiction is the rule that the right to register a trademark should
be based on ownership. When the applicant is not the owner of the
trademark being applied for, he has no right to apply for the
registration of the same. Under the Trademark Law, only the owner
of the trademark, trade name or service mark used to distinguish
his goods, business or service from the goods, business or service
of others is entitled to register the same. An exclusive distributor
does not acquire any proprietary interest in the principal’s
trademark and cannot register it in his own name unless it is has
been validly assigned to him.
In addition, we also note that the doctrine of res judicata bars
SUPERIOR’s present case for trademark infringement. The doctrine
of res judicata embraces two (2) concepts: the first is "bar by prior
judgment" under paragraph (b) of Rule 39, Section 47, and the
second is "conclusiveness of judgment" under paragraph (c)
thereof.
In the present case, the second concept - conclusiveness of
judgment - applies. Under the concept of res judicata by
conclusiveness of judgment, a final judgment or decree on the
merits by a court of competent jurisdiction is conclusive of the
rights of the parties or their privies in all later suits on points and
matters determined in the former suit.41 Stated differently, facts
and issues actually and directly resolved in a former suit cannot
again be raised in any future case between the same parties, even
if the latter suit may involve a different cause of action.42 This
second branch of the principle of res judicata bars the re-litigation
of particular facts or issues in another litigation between the same
parties on a different claim or cause of action.43
Because the Registration Cancellation Case and the present case
involve the same parties, litigating with respect to and disputing
the same trademarks, we are bound to examine how one case
would affect the other. In the present case, even if the causes of
action of the Registration Cancellation Case (the cancellation of
trademark registration) differs from that of the present case (the
improper or unauthorized use of trademarks), the final judgment in
the Registration Cancellation Case is nevertheless conclusive on the
particular facts and issues that are determinative of the present
case.
To establish trademark infringement, the following elements must
be proven: (1) the validity of plaintiff’s mark; (2) the plaintiff’s
ownership of the mark; and (3) the use of the mark or its colorable
imitation by the alleged infringer results in "likelihood of
confusion."44
Page 60 of 69 IPL Day 5
Based on these elements, we find it immediately obvious
that the second element - the plaintiff’s ownership of the
mark - was what the Registration Cancellation Case decided
with finality. On this element depended the validity of the
registrations that, on their own, only gave rise to the
presumption of, but was not conclusive on, the issue of
ownership.45
In no uncertain terms, the appellate court in the Registration
Cancellation Case ruled that SUPERIOR was a mere
distributor and could not have been the owner, and was thus
an invalid registrant of the disputed trademarks. Significantly,
these are the exact terms of the ruling the CA arrived at in
the present petition now under our review. Thus, whether
with one or the other, the ruling on the issue of ownership of
the trademarks is the same. Given, however, the final and
executory ruling in the Registration Cancellation Case on the
issue of ownership that binds us and the parties, any further
discussion and review of the issue of ownership - although
the current CA ruling is legally correct and can stand on its
own merits - becomes a pointless academic discussion.
On the Issue of Unfair Competition
Our review of the records shows that the neither the RTC nor
the CA made any factual findings with respect to the issue of
unfair competition. In its Complaint, SUPERIOR alleged
that:46
17. In January 1993, the plaintiff learned that the defendant
Kunnan Enterprises, Ltd., is intending to appoint the
defendant Sports Concept and Distributors, Inc. as its alleged
distributor for sportswear and sporting goods bearing the
trademark "PRO-KENNEX." For this reason, on January 20,
1993, the plaintiff, through counsel, wrote the defendant
Sports Concept and Distributor’s Inc. advising said defendant
that the trademark "PRO-KENNEX" was registered and
owned by the plaintiff herein.
18. The above information was affirmed by an
announcement made by the defendants in The Manila
Bulletin issue of January 29, 1993, informing the public that
defendant Kunnan Enterprises, Ltd. has appointed the
defendant Sports Concept and Distributors, Inc. as its alleged
distributor of sportswear and sporting goods and equipment
bearing the trademarks "KENNEX and "PRO-KENNEX" which
trademarks are owned by and registered in the name of
plaintiff herein as alleged hereinabove.
xxxx
27. The acts of defendants, as previously complained herein,
were designed to and are of the nature so as to create
confusion with the commercial activities of plaintiff in the
Philippines and is liable to mislead the public as to the nature
and suitability for their purposes of plaintiff’s business and
the defendant’s acts are likely to discredit the commercial
activities and future growth of plaintiff’s business.
From jurisprudence, unfair competition has been defined as
the passing off (or palming off) or attempting to pass off
upon the public of the goods or business of one person as
the goods or business of another with the end and probable
effect of deceiving the public. The essential elements of
unfair competition47 are (1) confusing similarity in the
general appearance of the goods; and (2) intent to deceive
the public and defraud a competitor.48
Jurisprudence also formulated the following "true test" of unfair cause of action. For this reason, the unfair competition
competition: whether the acts of the defendant have the intent of aspect of the SUPERIOR’s case likewise falls.
deceiving or are calculated to deceive the ordinary buyer making
his purchases under the ordinary conditions of the particular trade WHEREFORE, premises considered, we DENY Superior
to which the controversy relates. One of the essential requisites in Commercial Enterprises, Inc.’s petition for review on
an action to restrain unfair competition is proof of fraud; the intent certiorari for lack of merit. Cost against petitioner Superior
to deceive, actual or probable must be shown before the right to Commercial Enterprises, Inc.
recover can exist.49
SO ORDERED.
In the present case, no evidence exists showing that KUNNAN ever
attempted to pass off the goods it sold (i.e. sportswear, sporting
goods and equipment) as those of SUPERIOR. In addition, there is
no evidence of bad faith or fraud imputable to KUNNAN in using
the disputed trademarks. Specifically, SUPERIOR failed to adduce
any evidence to show that KUNNAN by the above-cited acts
intended to deceive the public as to the identity of the goods sold
or of the manufacturer of the goods sold. In McDonald’s
Corporation v. L.C. Big Mak Burger, Inc.,50 we held that there can
be trademark infringement without unfair competition such 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. In
this case, no issue of confusion arises because the same
manufactured products are sold; only the ownership of the
trademarks is at issue. Furthermore, KUNNAN’s January 29, 1993
notice by its terms prevents the public from being deceived that
the goods originated from SUPERIOR since the notice clearly
indicated that KUNNAN is the manufacturer of the goods bearing
the trademarks "KENNEX" and "PRO KENNEX." This notice states in
full:51

NOTICE AND WARNING

Kunnan Enterprises Ltd. is the owner and first user of the

internationally-renowned trademarks KENNEX and PRO KENNEX for
sportswear and sporting goods and equipment. Kunnan Enterprises
Ltd. has registered the trademarks KENNEX and PRO KENNEX in the
industrial property offices of at least 31 countries worldwide where
KUNNAN Enterprises Ltd. has been selling its sportswear and
sporting goods and equipment bearing the KENNEX and PRO
KENNEX trademarks.

Kunnan Enterprises Ltd. further informs the public that it had

terminated its Distributorship Agreement with Superior
Commercial Enterprises, Inc. on December 31, 1991. As a result,
Superior Commercial Enterprises, Inc. is no longer authorized to sell
sportswear and sporting goods and equipment manufactured by
Kunnan Enterprises Ltd. and bearing the trademarks KENNEX and
PRO KENNEX.

xxxx

In its place, KUNNAN has appointed SPORTS CONCEPT AND

DISTRIBUTORS, INC. as its exclusive Philippine distributor of
sportswear and sporting goods and equipment bearing the
trademarks KENNEX and PRO KENNEX. The public is advised to buy
sporting goods and equipment bearing these trademarks only from
SPORTS CONCEPT AND DISTRIBUTORS, INC. to ensure that the
products they are buying are manufactured by Kunnan Enterprises
Ltd. [Emphasis supplied.]

Finally, with the established ruling that KUNNAN is the rightful

owner of the trademarks of the goods that SUPERIOR asserts are
being unfairly sold by KUNNAN under trademarks registered in
SUPERIOR’s name, the latter is left with no effective right to make a
claim. In other words, with the CA’s final ruling in the Registration
Cancellation Case, SUPERIOR’s case no longer presents a valid

Page 61 of 69 IPL Day 5

G.R. No. 179127 December 24, 2008
IN-N-OUT BURGER, INC., petitioner,
vs.
SEHWANI, INCORPORATED AND/OR BENITA’S FRITES,
INC.,respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules
of Court, seeking to reverse the Decision1 dated 18 July 2006
rendered by the Court of Appeals in CA-G.R. SP No. 92785, which
reversed the Decision2dated 23 December 2005 of the Director
General of the Intellectual Property Office (IPO) in Appeal No.
10-05-01. The Court of Appeals, in its assailed Decision, decreed
that the IPO Director of Legal Affairs and the IPO Director General
do not have jurisdiction over cases involving unfair competition.
Petitioner IN-N-OUT BURGER, INC., a business entity incorporated
under the laws of California, United States (US) of America, which is
a signatory to the Convention of Paris on Protection of Industrial
Property and the Agreement on Trade Related Aspects of
Intellectual Property Rights (TRIPS). Petitioner is engaged mainly in
the restaurant business, but it has never engaged in business in the
Philippines. 3
Respondents Sehwani, Incorporated and Benita Frites, Inc. are
corporations organized in the Philippines.4
On 2 June 1997, petitioner filed trademark and service mark
applications with the Bureau of Trademarks (BOT) of the IPO for
"IN-N-OUT" and "IN-N-OUT Burger & Arrow Design." Petitioner
later found out, through the Official Action Papers issued by the
IPO on 31 May 2000, that respondent Sehwani, Incorporated had
already obtained Trademark Registration for the mark "IN N OUT
(the inside of the letter "O" formed like a star)."5 By virtue of a
licensing agreement, Benita Frites, Inc. was able to use the
registered mark of respondent Sehwani, Incorporated.
Petitioner eventually filed on 4 June 2001 before the Bureau of
Legal Affairs (BLA) of the IPO an administrative complaint against
respondents for unfair competition and cancellation of trademark
registration. Petitioner averred in its complaint that it is the owner
of the trade name IN-N-OUT and the following trademarks: (1)
"IN-N-OUT"; (2) "IN-N-OUT Burger & Arrow Design"; and (3)
"IN-N-OUT Burger Logo." These trademarks are registered with the
Trademark Office of the US and in various parts of the world, are
internationally well-known, and have become distinctive of its
business and goods through its long and exclusive commercial
use.6 Petitioner pointed out that its internationally well-known
trademarks and the mark of the respondents are all registered for
the restaurant business and are clearly identical and confusingly
similar. Petitioner claimed that respondents are making it appear
that their goods and services are those of the petitioner, thus,
misleading ordinary and unsuspecting consumers that they are
purchasing petitioner’s products.7
Following the filing of its complaint, petitioner sent on 18 October
2000 a demand letter directing respondent Sehwani, Incorporated
to cease and desist from claiming ownership of the mark
"IN-N-OUT" and to voluntarily cancel its trademark registration. In a
letter-reply dated 23 October 2000, respondents refused to accede
to petitioner’ demand, but expressed willingness to surrender the
registration of respondent Sehwani, Incorporated of the "IN N
OUT" trademark for a fair and reasonable consideration. 8
Page 62 of 69 IPL Day 5
Petitioner was able to register the mark "Double Double" on
4 July 2002, based on their application filed on 2 June
1997.9 It alleged that respondents also used this mark, as
well as the menu color scheme. Petitioners also averred that
respondent Benita’s receipts bore the phrase, "representing
IN-N-OUT Burger."10 It should be noted that that although
respondent Sehwahi, Incorporated registered a mark which
appeared as "IN N OUT (the inside of the letter "O" formed
like a star)," respondents used the mark "IN-N-OUT."11
To counter petitioner’s complaint, respondents filed before
the BLA-IPO an Answer with Counterclaim. Respondents
asserted therein that they had been using the mark "IN N
OUT" in the Philippines since 15 October 1982. On 15
November 1991, respondent Sehwani, Incorporated filed
with the then Bureau of Patents, Trademarks and Technology
Transfer (BPTTT) an application for the registration of the
mark "IN N OUT (the inside of the letter "O" formed like a
star)." Upon approval of its application, a certificate of
registration of the said mark was issued in the name of
respondent Sehwani, Incorporated on 17 December 1993.
On 30 August 2000, respondents Sehwani, Incorporated and
Benita Frites, Inc. entered into a Licensing Agreement,
wherein the former entitled the latter to use its registered
mark, "IN N OUT." Respondents asserted that respondent
Sehwani, Incorporated, being the registered owner of the
mark "IN N OUT," should be accorded the presumption of a
valid registration of its mark with the exclusive right to use
the same. Respondents argued that none of the grounds
provided under the Intellectual Property Code for the
cancellation of a certificate of registration are present in this
case. Additionally, respondents maintained that petitioner
had no legal capacity to sue as it had never operated in the
Philippines.12
Subsequently, the IPO Director of Legal Affairs, Estrellita
Beltran-Abelardo, rendered a Decision dated 22 December
2003,13 in favor of petitioner. According to said Decision,
petitioner had the legal capacity to sue in the Philippines,
since its country of origin or domicile was a member of and a
signatory to the Convention of Paris on Protection of
Industrial Property. And although petitioner had never done
business in the Philippines, it was widely known in this
country through the use herein of products bearing its
corporate and trade name. Petitioner’s marks are
internationally well-known, given the world-wide registration
of the mark "IN-N-OUT," and its numerous advertisements in
various publications and in the Internet. Moreover, the IPO
had already declared in a previous inter partes case that
"In-N-Out Burger and Arrow Design" was an internationally
well-known mark. Given these circumstances, the IPO
Director for Legal Affairs pronounced in her Decision that
petitioner had the right to use its tradename and mark
"IN-N-OUT" in the Philippines to the exclusion of others,
including the respondents. However, respondents used the
mark "IN N OUT" in good faith and were not guilty of unfair
competition, since respondent Sehwani, Incorporated did not
evince any intent to ride upon petitioner’s goodwill by
copying the mark "IN-N-OUT Burger" exactly. The inside of
the letter "O" in the mark used by respondents formed a star.
In addition, the simple act of respondent Sehwani,
Incorporated of inquiring into the existence of a pending
application for registration of the "IN-N-OUT" mark was not
deemed fraudulent. The dispositive part of the Decision of
the IPO Director for Legal Affairs reads:
With the foregoing disquisition, Certificate of Registration No.
56666 dated 17 December 1993 for the mark "IN-N-OUT"
(the inside of the letter "O" formed like a star) issued in favor
of Sehwani, Incorporated is hereby CANCELLED. Consequently,
respondents Sehwani, Inc. and Benita’s Frites are hereby ordered
to permanently cease and desist from using the mark "IN-N-OUT"
and "IN-N-OUT BURGER LOGO" on its goods and in its business.
With regards the mark "Double-Double," considering that as earlier
discussed, the mark has been approved by this Office for
publication and that as shown by evidence, Complainant is the
owner of the said mark, Respondents are so hereby ordered to
permanently cease and desist from using the mark Double-Double.
NO COSTS. 14
Both parties filed their respective Motions for Reconsideration of
the aforementioned Decision. Respondents’ Motion for
Reconsideration15and petitioner’s Motion for Partial
Reconsideration16 were denied by the IPO Director for Legal Affairs
in Resolution No. 2004-1817 dated 28 October 2004 and
Resolution No. 2005-05 dated 25 April 2005,18respectively.
Subsequent events would give rise to two cases before this Court,
G.R. No. 171053 and G.R. No. 179127, the case at bar.
G.R. No. 171053
On 29 October 2004, respondents received a copy of Resolution No.
2004-18 dated 28 October 2004 denying their Motion for
Reconsideration. Thus, on 18 November 2004, respondents filed an
Appeal Memorandum with IPO Director General Emma Francisco
(Director General Francisco). However, in an Order dated 7
December 2004, the appeal was dismissed by the IPO Director
General for being filed beyond the 15-day reglementary period to
appeal.
Respondents appealed to the Court of Appeals via a Petition for
Review under Rule 43 of the Rules of Court, filed on 20 December
2004 and docketed as CA-G.R. SP No. 88004, challenging the
dismissal of their appeal by the IPO Director General, which
effectively affirmed the Decision dated 22 December 2003 of the
IPO Director for Legal Affairs ordering the cancellation of the
registration of the disputed trademark in the name of respondent
Sehwani, Incorporated and enjoining respondents from using the
same. In particular, respondents based their Petition on the
following grounds:
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN
DISMISSING APPEAL NO. 14-2004-00004 ON A MERE TECHNICALITY
THE BUREAU OF LEGAL AFFAIR’S (SIC) DECISION AND RESOLUTION
(1) CANCELLING RESPONDENT’S CERTIFICATE OF REGISTRATION
FOR THE MARK "IN-N-OUT," AND (2) ORDERING PETITIONERS TO
PERMANENTLY CEASE AND DESIST FROM USING THE SUBJECT
MARK ON ITS GOODS AND BUSINESS ARE CONTRARY TO LAW
AND/OR IS NOT SUPPORTED BY EVIDENCE.
Respondents thus prayed:
WHEREFORE, petitioners respectfully pray that this Honorable
Court give due course to this petition, and thereafter order the
Office of the Director General of the Intellectual Property Office to
reinstate and give due course to [respondent]’s Appeal No.
14-2004-00004.
Other reliefs, just and equitable under the premises, are likewise
prayed for.
On 21 October 2005, the Court of Appeals rendered a Decision
denying respondents’ Petition in CA-G.R SP No. 88004 and affirming
the Order dated 7 December 2004 of the IPO Director General. The
appellate court confirmed that respondents’ appeal before the IPO
Page 63 of 69 IPL Day 5
Director General was filed out of time and that it was only
proper to cancel the registration of the disputed trademark
in the name of respondent Sehwani, Incorporated and to
permanently enjoin respondents from using the same.
Effectively, the 22 December 2003 Decision of IPO Director
of Legal Affairs was likewise affirmed. On 10 November 2005,
respondents moved for the reconsideration of the said
Decision. On 16 January 2006, the Court of Appeals denied
their motion for reconsideration.
Dismayed with the outcome of their petition before the
Court of Appeals, respondents raised the matter to the
Supreme Court in a Petition for Review under Rule 45 of the
Rules of Court, filed on 30 January 2006, bearing the
title Sehwani, Incorporated v. In-N-Out Burger and docketed
as G.R. No. 171053.19
This Court promulgated a Decision in G.R. No. 171053 on 15
October 2007,20 finding that herein respondents failed to
file their Appeal Memorandum before the IPO Director
General within the period prescribed by law and,
consequently, they lost their right to appeal. The Court
further affirmed the Decision dated 22 December 2003 of
the IPO Director of Legal Affairs holding that herein
petitioner had the legal capacity to sue for the protection of
its trademarks, even though it was not doing business in the
Philippines, and ordering the cancellation of the registration
obtained by herein respondent Sehwani, Incorporated of the
internationally well-known marks of petitioner, and directing
respondents to stop using the said marks. Respondents filed
a Motion for Reconsideration of the Decision of this Court in
G.R. No. 171053, but it was denied with finality in a
Resolution dated 21 January 2008.
G.R. No. 179127
Upon the denial of its Partial Motion for Reconsideration of
the Decision dated 22 December 2003 of the IPO Director for
Legal Affairs, petitioner was able to file a timely appeal
before the IPO Director General on 27 May 2005.
During the pendency of petitioner’s appeal before the IPO
Director General, the Court of Appeals already rendered on
21 October 2005 its Decision dismissing respondents’
Petition in CA-G.R. SP No. 88004.
In a Decision dated 23 December 2005, IPO Director General
Adrian Cristobal, Jr. found petitioner’s appeal meritorious
and modified the Decision dated 22 December 2003 of the
IPO Director of Legal Affairs. The IPO Director General
declared that respondents were guilty of unfair competition.
Despite respondents’ claims that they had been using the
mark since 1982, they only started constructing their
restaurant sometime in 2000, after petitioner had already
demanded that they desist from claiming ownership of the
mark "IN-N-OUT." Moreover, the sole distinction of the mark
registered in the name of respondent Sehwani, Incorporated,
from those of the petitioner was the star inside the letter
"O," a minor difference which still deceived purchasers.
Respondents were not even actually using the star in their
mark because it was allegedly difficult to print. The IPO
Director General expressed his disbelief over the
respondents’ reasoning for the non-use of the star symbol.
The IPO Director General also considered respondents’ use
of petitioner’s registered mark "Double-Double" as a sign of
bad faith and an intent to mislead the public. Thus, the IPO
Director General ruled that petitioner was entitled to an
award for the actual damages it suffered by reason of
respondents’ acts of unfair competition, exemplary damages, and
attorney’s fees.21 The fallo of the Decision reads:
WHEREFORE, premises considered, the [herein respondents] are
held guilty of unfair competition. Accordingly, Decision No. 2003-02
dated 22 December 2003 is hereby MODIFIED as follows:
[Herein Respondents] are hereby ordered to jointly and severally
pay [herein petitioner]:
1. Damages in the amount of TWO HUNDRED TWELVE THOUSAND
FIVE HUNDRED SEVENTY FOUR AND 28/100(P212,574.28);
2. Exemplary damages in the amount of FIVE HUNDRED THOUSAND
PESOS (P500,000.00);
3. Attorney’s fees and expenses of litigation in the amount of FIVE
HUNDRED THOUSAND PESOS (P500,000.00).
All products of [herein respondents] including the labels, signs,
prints, packages, wrappers, receptacles and materials used by them
in committing unfair competition should be without compensation
of any sort be seized and disposed of outside the channels of
commerce.
Let a copy of this Decision be furnished the Director of Bureau of
Legal Affairs for appropriate action, and the records be returned to
her for proper disposition. Further, let a copy of this Decision be
furnished the Documentation, Information and Technology
Transfer Bureau for their information and records purposes.22
Aggrieved, respondents were thus constrained to file on 11 January
2006 before the Court of Appeals another Petition for Review
under Rule 43 of the Rules of Court, docketed as CA-G.R. SP No.
92785. Respondents based their second Petition before the
appellate court on the following grounds:
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN
HOLDING PETITIONERS LIABLE FOR UNFAIR COMPETITION AND IN
ORDERING THEM TO PAY DAMAGES AND ATTORNEY’S FEES TO
RESPONDENTS
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN
AFFIRMING THE BUREAU OF LEGAL AFFAIR’S DECISION (1)
CANCELLING PETITIONER’S CERTIFICATE OF REGISTRATION FOR
THE MARK "IN-N-OUT," AND (2) ORDERING PETITIONERS TO
PERMANENTLY CEASE AND DESIST FROM USING THE SUBJECT
MARK ON ITS GOODS AND BUSINESS
Respondents assailed before the appellate court the foregoing 23
December 2005 Decision of the IPO Director General, alleging that
their use of the disputed mark was not tainted with fraudulent
intent; hence, they should not be held liable for damages. They
argued that petitioner had never entered into any transaction
involving its goods and services in the Philippines and, therefore,
could not claim that its goods and services had already been
identified in the mind of the public. Respondents added that the
disputed mark was not well-known. Finally, they maintained that
petitioner’s complaint was already barred by laches.23
At the end of their Petition in CA-G.R. SP No. 92785, respondents
presented the following prayer:
WHEREFORE, [respondents herein] respectfully pray that this
Honorable Court:
(a) upon the filing of this petition, issue a temporary restraining
order enjoining the IPO and [petitioner], their agents, successors
Page 64 of 69 IPL Day 5
and assigns, from executing, enforcing and implementing the
IPO Director General’s Decision dated 23 December 2005,
which modified the Decision No. 2003-02 dated 22
December 2003 of the BLA, until further orders from this
Honorable Court.
(b) after notice and hearing, enjoin the IPO and [petitioner],
their agents, successors and assigns, from executing,
enforcing and implementing the Decision dated 23
December 2005 of the Director General of the IPO in IPV No.
10-2001-00004 and to maintain the status quo ante pending
the resolution of the merits of this petition; and
(c) after giving due course to this petition:
(i) reverse and set aside the Decision dated 23 December
2005 of the Director General of the IPO in IPV No.
10-2001-00004 finding the [respondents] guilty of unfair
competition and awarding damages and attorney’s fees to
the respondent
(ii) in lieu thereof, affirm Decision No. 2003-02 of the BLA
dated 22 December 2003 and Resolution No. 2005-05 of the
BLA dated 25 April 2005, insofar as it finds [respondents] not
guilty of unfair competition and hence not liable to the
[petitioner] for damages and attorney’s fees;
(iii) reverse Decision No. 2003-02 of the BLA dated 22
December 2003, and Resolution No. 2005-05 of the BLA
dated 25 April 2005, insofar as it upheld [petitioner]’s legal
capacity to sue; that [petitioner]’s trademarks are
well-known; and that respondent has the exclusive right to
use the same; and
(iv) make the injunction permanent.
[Respondents] also pray for other reliefs, as may deemed just
or equitable.24
On 18 July 2006, the Court of Appeals promulgated a
Decision25 in CA-G.R. SP No. 92785 reversing the Decision
dated 23 December 2005 of the IPO Director General.
The Court of Appeals, in its Decision, initially addressed
petitioner’s assertion that respondents had committed
forum shopping by the institution of CA-G.R. SP No. 88004
and CA-G.R. SP No. 92785. It ruled that respondents were
not guilty of forum shopping, distinguishing between the
respondents’ two Petitions. The subject of Respondents’
Petition in CA-G.R SP No. 88004 was the 7 December 2004
Decision of the IPO Director General dismissing respondents’
appeal of the 22 December 2003 Decision of the IPO Director
of Legal Affairs. Respondents questioned therein the
cancellation of the trademark registration of respondent
Sehwani, Incorporated and the order permanently enjoining
respondents from using the disputed trademark.
Respondents’ Petition in CA-G.R. SP No. 92785 sought the
review of the 23 December 2005 Decision of the IPO Director
General partially modifying the 22 December 2003 Decision
of the IPO Director of Legal Affairs. Respondents raised
different issues in their second petition before the appellate
court, mainly concerning the finding of the IPO Director
General that respondents were guilty of unfair competition
and the awarding of actual and exemplary damages, as well
as attorney’s fees, to petitioner.
The Court of Appeals then proceeded to resolve CA-G.R. SP
No. 92785 on jurisdictional grounds not raised by the parties.
The appellate court declared that Section 163 of the Intellectual
Property Code specifically confers upon the regular courts, and not
the BLA-IPO, sole jurisdiction to hear and decide cases involving
provisions of the Intellectual Property Code, particularly
trademarks. Consequently, the IPO Director General had no
jurisdiction to rule in its Decision dated 23 December 2005 on
supposed violations of these provisions of the Intellectual Property
Code.
In the end, the Court of Appeals decreed:
WHEREFORE, the Petition is GRANTED. The Decision dated 23
December 2005 rendered by the Director General of the
Intellectual Property Office of the Philippines in Appeal No.
10-05-01 is REVERSED and SET ASIDE. Insofar as they pertain to acts
governed by Article 168 of R.A. 8293 and other sections
enumerated in Section 163 of the same Code, respondent’s claims
in its Complaint docketed as IPV No. 10-2001-00004 are
hereby DISMISSED.26
The Court of Appeals, in a Resolution dated 31 July 2007,27 denied
petitioner’s Motion for Reconsideration of its aforementioned
Decision.
Hence, the present Petition, where petitioner raises the following
issues:
I Verification/Certification attached to the instant Petition,
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE
QUESTIONED DECISION DATED 18 JULY 2006
AND RESOLUTIONDATED 31 JULY 2007 DECLARING THAT THE IPO
HAS NO JURISDICTION OVER ADMINISTRATIVE COMPLAINTS FOR
INTELLECTUAL PROPERTY RIGHTS VIOLATIONS;
II
WHETHER OR NOT THE INSTANT PETITION IS FORMALLY DEFECTIVE;
AND
III
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE
QUESTIONED DECISION DATED 18 JULY 2006
AND RESOLUTIONDATED 31 JULY 2007 DECLARING THAT SEHWANI
AND BENITA ARE NOT GUILTY OF: (A) SUBMITTING A PATENTLY
FALSE CERTIFICATION OF NON-FORUM SHOPPING; AND (B) FORUM
SHOPPING PROPER.28
As previously narrated herein, on 15 October 2007, during the
pendency of the present Petition, this Court already promulgated
its Decision29 in G.R. No. 171053 on 15 October 2007, which
affirmed the IPO Director General’s dismissal of respondents’
appeal for being filed beyond the reglementary period, and left the
22 December 2003 Decision of the IPO Director for Legal Affairs,
canceling the trademark registration of respondent Sehwani,
Incorporated and enjoining respondents from using the disputed
marks.
Before discussing the merits of this case, this Court must first rule
on the procedural flaws that each party has attributed to the other.
Formal Defects of the Petition
Respondents contend that the Verification/Certification executed
by Atty. Edmund Jason Barranda of Villaraza and Angangco, which
petitioner attached to the present Petition, is defective and should
result in the dismissal of the said Petition.
Page 65 of 69 IPL Day 5
Respondents point out that the Secretary’s Certificate
executed by Arnold M. Wensinger on 20 August 2007, stating
that petitioner had authorized the lawyers of Villaraza and
Angangco to represent it in the present Petition and to sign
the Verification and Certification against Forum Shopping,
among other acts, was not properly notarized. The jurat of
the aforementioned Secretary’s Certificate reads:
Subscribed and sworn to me this 20th day of August 2007 in
Irving California.
Rachel A. Blake (Sgd.)
Notary Public30
Respondents aver that the said Secretary’s Certificate cannot
properly authorize Atty. Barranda to sign the
Verification/Certification on behalf of petitioner because the
notary public Rachel A. Blake failed to state that: (1)
petitioner’s Corporate Secretary, Mr. Wensinger, was known
to her; (2) he was the same person who acknowledged the
instrument; and (3) he acknowledged the same to be his free
act and deed, as required under Section 2 of Act No. 2103
and Landingin v. Republic of the Philippines.31
Respondents likewise impugn the validity of the notarial
certificate of Atty. Aldrich Fitz B. Uy, on Atty. Baranda’s
noting the absence of (1) the serial number of the
commission of the notary public; (2) the office address of the
notary public; (3) the roll of attorneys’ number and the IBP
membership number; and (4) a statement that the
Verification/Certification was notarized within the notary
public’s territorial jurisdiction, as required under the 2004
Rules on Notarial Practice. 32
Section 2 of Act No. 2103 and Landingin v. Republic of the
Philippines are not applicable to the present case. The
requirements enumerated therein refer to documents which
require an acknowledgement, and not a mere jurat.
A jurat is that part of an affidavit in which the notary certifies
that before him/her, the document was subscribed and
sworn to by the executor. Ordinarily, the language of
the jurat should avow that the document was subscribed and
sworn to before the notary public. In contrast, an
acknowledgment is the act of one who has executed a deed
in going before some competent officer or court and
declaring it to be his act or deed. It involves an extra step
undertaken whereby the signor actually declares to the
notary that the executor of a document has attested to the
notary that the same is his/her own free act and deed.33 A
Secretary’s Certificate, as that executed by petitioner in favor
of the lawyers of the Angangco and Villaraza law office, only
requires a jurat.34
Even assuming that the Secretary’s Certificate was flawed,
Atty. Barranda may still sign the Verification attached to the
Petition at bar. A pleading is verified by an affidavit that the
affiant has read the pleading and that the allegations therein
are true and correct of his personal knowledge or based on
authentic records. 35 The party itself need not sign the
verification. A party’s representative, lawyer or any other
person who personally knows the truth of the facts alleged in
the pleading may sign the verification.36 Atty. Barranda, as
petitioner’s counsel, was in the position to verify the truth
and correctness of the allegations of the present Petition.
Hence, the Verification signed by Atty. Barranda substantially
complies with the formal requirements for such.
Moreover, the Court deems it proper not to focus on the supposed
technical infirmities of Atty. Baranda’s Verification. It must be
borne in mind that the purpose of requiring a verification is to
secure an assurance that the allegations of the petition has been
made in good faith; or are true and correct, not merely speculative.
This requirement is simply a condition affecting the form of
pleadings, and non-compliance therewith does not necessarily
render it fatally defective. Indeed, verification is only a formal, not a
jurisdictional requirement. In the interest of substantial justice,
strict observance of procedural rules may be dispensed with for
compelling reasons.37 The vital issues raised in the instant Petition
on the jurisdiction of the IPO Director for Legal Affairs and the IPO
Director General over trademark cases justify the liberal application
of the rules, so that the Court may give the said Petition due course
and resolve the same on the merits.
This Court agrees, nevertheless, that the notaries public, Rachel A.
Blake and Aldrich Fitz B. Uy, were less than careful with their jurats
or notarial certificates. Parties and their counsel should take care
not to abuse the Court’s zeal to resolve cases on their merits.
Notaries public in the Philippines are reminded to exert utmost
care and effort in complying with the 2004 Rules on Notarial
Practice. Parties and their counsel are further charged with the
responsibility of ensuring that documents notarized abroad be in
their proper form before presenting said documents before
Philippine courts.
Forum Shopping
Petitioner next avers that respondents are guilty of forum shopping
in filing the Petition in CA-G.R. SP No. 92785, following their earlier
filing of the Petition in CA-G.R SP No. 88004. Petitioner also asserts
that respondents were guilty of submitting to the Court of Appeals
a patently false Certification of Non-forum Shopping in CA-G.R. SP
No. 92785, when they failed to mention therein the pendency of
CA-G.R SP No. 88004.
Forum shopping is the institution of two or more actions or
proceedings grounded on the same cause on the supposition that
one or the other court would make a favorable disposition. It is an
act of malpractice and is prohibited and condemned as trifling with
courts and abusing their processes. In determining whether or not
there is forum shopping, what is important is the vexation caused
the courts and parties-litigants by a party who asks different courts
and/or administrative bodies to rule on the same or related causes
and/or grant the same or substantially the same reliefs and in the
process creates the possibility of conflicting decisions being
rendered by the different bodies upon the same issues.38
Forum shopping is present when, in two or more cases pending,
there is identity of (1) parties (2) rights or causes of action and
reliefs prayed for, and (3) the identity of the two preceding
particulars is such that any judgment rendered in the other action,
will, regardless of which party is successful, amount to res
judicata in the action under consideration.39
After a cursory look into the two Petitions in CA-G.R. SP No. 88004
and CA-G.R. SP No. 92785, it would at first seem that respondents
are guilty of forum shopping.
There is no question that both Petitions involved identical parties,
and raised at least one similar ground for which they sought the
same relief. Among the grounds stated by the respondents for their
Petition in CA-G.R SP No. 88004 was that "[T]he Bureau of Legal
Affair’s (sic) Decision and Resolution (1) canceling [herein
Page 66 of 69 IPL Day 5
respondent Sehwani, Incorporated]’s certificate of
registration for the mark ‘IN-N-OUT’ and (2) ordering [herein
respondents] to permanently cease and desist from using the
subject mark on its goods and business are contrary to law
and/or is (sic) not supported by evidence."40 The same
ground was again invoked by respondents in their Petition in
CA-G.R. SP No. 92785, rephrased as follows: "The IPO
Director General committed grave error in affirming the
Bureau of Legal Affair’s (sic) Decision (1) canceling [herein
respondent Sehwani, Incorporated]’s certificate of
registration for the mark "IN-N-OUT," and (2) ordering
[herein respondents] to permanently cease and desist from
using the subject mark on its goods and business."41 Both
Petitions, in effect, seek the reversal of the 22 December
2003 Decision of the IPO Director of Legal Affairs.
Undoubtedly, a judgment in either one of these Petitions
affirming or reversing the said Decision of the IPO Director of
Legal Affairs based on the merits thereof would bar the Court
of Appeals from making a contrary ruling in the other
Petition, under the principle of res judicata.
Upon a closer scrutiny of the two Petitions, however, the
Court takes notice of one issue which respondents did not
raise in CA-G.R. SP No. 88004, but can be found in CA-G.R. SP
No. 92785, i.e., whether respondents are liable for unfair
competition. Hence, respondents seek additional reliefs in
CA-G.R. SP No. 92785, seeking the reversal of the finding of
the IPO Director General that they are guilty of unfair
competition, and the nullification of the award of damages in
favor of petitioner resulting from said finding. Undoubtedly,
respondents could not have raised the issue of unfair
competition in CA-G.R. SP No. 88004 because at the time
they filed their Petition therein on 28 December 2004, the
IPO Director General had not yet rendered its Decision dated
23 December 2005 wherein it ruled that respondents were
guilty thereof and awarded damages to petitioner.
In arguing in their Petition in CA-G.R. SP No. 92785 that they
are not liable for unfair competition, it is only predictable,
although not necessarily legally tenable, for respondents to
reassert their right to register, own, and use the disputed
mark. Respondents again raise the issue of who has the
better right to the disputed mark, because their defense
from the award of damages for unfair competition depends
on the resolution of said issue in their favor. While this
reasoning may be legally unsound, this Court cannot readily
presume bad faith on the part of respondents in filing their
Petition in CA-G.R. SP No. 92785; or hold that respondents
breached the rule on forum shopping by the mere filing of
the second petition before the Court of Appeals.
True, respondents should have referred to CA-G.R. SP No.
88004 in the Certification of Non-Forum Shopping, which
they attached to their Petition in CA-G.R. SP No. 92785.
Nonetheless, the factual background of this case and the
importance of resolving the jurisdictional and substantive
issues raised herein, justify the relaxation of another
procedural rule. Although the submission of a certificate
against forum shopping is deemed obligatory, it is not
jurisdictional.42 Hence, in this case in which such a
certification was in fact submitted, only it was defective, the
Court may still refuse to dismiss and, instead, give due course
to the Petition in light of attendant exceptional
circumstances.
The parties and their counsel, however, are once again
warned against taking procedural rules lightly. It will do them
well to remember that the Courts have taken a stricter
stance against the disregard of procedural rules, especially in
connection with the submission of the certificate against forum
shopping, and it will not hesitate to dismiss a Petition for
non-compliance therewith in the absence of justifiable
circumstances.
The Jurisdiction of the IPO
The Court now proceeds to resolve an important issue which arose
from the Court of Appeals Decision dated 18 July 2006 in CA-G.R.
SP No. 92785. In the afore-stated Decision, the Court of Appeals
adjudged that the IPO Director for Legal Affairs and the IPO
Director General had no jurisdiction over the administrative
proceedings below to rule on issue of unfair competition, because
Section 163 of the Intellectual Property Code confers jurisdiction
over particular provisions in the law on trademarks on regular
courts exclusively. According to the said provision:
Section 163. Jurisdiction of Court.–All actions under Sections 150,
155, 164, and 166 to 169 shall be brought before the proper courts
with appropriate jurisdiction under existing laws.
The provisions referred to in Section 163 are: Section 150 on
License Contracts; Section 155 on Remedies on Infringement;
Section 164 on Notice of Filing Suit Given to the Director; Section
166 on Goods Bearing Infringing Marks or Trade Names; Section
167 on Collective Marks; Section 168 on Unfair Competition, Rights,
Regulation and Remedies; and Section 169 on False Designations of
Origin, False Description or Representation.
The Court disagrees with the Court of Appeals.
Section 10 of the Intellectual Property Code specifically identifies
the functions of the Bureau of Legal Affairs, thus:
Section 10. The Bureau of Legal Affairs.–The Bureau of Legal Affairs
shall have the following functions:
10.1 Hear and decide opposition to the application for registration
of marks; cancellation of trademarks; subject to the provisions of
Section 64, cancellation of patents and utility models, and industrial
designs; and petitions for compulsory licensing of patents;
10.2 (a) Exercise original jurisdiction in administrative complaints for
violations of laws involving intellectual property rights; Provided,
That its jurisdiction is limited to complaints where the total damages
claimed are not less than Two hundred thousand pesos
(P200,000): Provided, futher, That availment of the provisional
remedies may be granted in accordance with the Rules of Court. The
Director of Legal Affairs shall have the power to hold and punish for
contempt all those who disregard orders or writs issued in the
course of the proceedings.
(b) After formal investigation, the Director for Legal Affairs may
impose one (1) or more of the following administrative penalties:
(i) The issuance of a cease and desist order which shall specify the
acts that the respondent shall cease and desist from and shall
require him to submit a compliance report within a reasonable time
which shall be fixed in the order;
(ii) The acceptance of a voluntary assurance of compliance or
discontinuance as may be imposed. Such voluntary assurance may
include one or more of the following:
(1) An assurance to comply with the provisions of the intellectual
property law violated;
Page 67 of 69 IPL Day 5
(2) An assurance to refrain from engaging in unlawful and
unfair acts and practices subject of the formal investigation
(3) An assurance to recall, replace, repair, or refund the
money value of defective goods distributed in commerce;
and
(4) An assurance to reimburse the complainant the expenses
and costs incurred in prosecuting the case in the Bureau of
Legal Affairs.
The Director of Legal Affairs may also require the respondent
to submit periodic compliance reports and file a bond to
guarantee compliance of his undertaking.
(iii) The condemnation or seizure of products which are
subject of the offense. The goods seized hereunder shall be
disposed of in such manner as may be deemed appropriate
by the Director of Legal Affairs, such as by sale, donation to
distressed local governments or to charitable or relief
institutions, exportation, recycling into other goods, or any
combination thereof, under such guidelines as he may
provide;
(iv) The forfeiture of paraphernalia and all real and personal
properties which have been used in the commission of the
offense;
(v) The imposition of administrative fines in such amount as
deemed reasonable by the Director of Legal Affairs, which
shall in no case be less than Five thousand pesos (P5,000) nor
more than One hundred fifty thousand pesos (P150,000). In
addition, an additional fine of not more than One thousand
pesos (P1,000) shall be imposed for each day of continuing
violation;
(vi) The cancellation of any permit, license, authority, or
registration which may have been granted by the Office, or
the suspension of the validity thereof for such period of time
as the Director of Legal Affairs may deem reasonable which
shall not exceed one (1) year;
(vii) The withholding of any permit, license, authority, or
registration which is being secured by the respondent from
the Office;
(viii) The assessment of damages;
(ix) Censure; and
(x) Other analogous penalties or sanctions.
10.3 The Director General may by Regulations establish the
procedure to govern the implementation of this
Section.43(Emphasis provided.)
Unquestionably, petitioner’s complaint, which seeks the
cancellation of the disputed mark in the name of respondent
Sehwani, Incorporated, and damages for violation of
petitioner’s intellectual property rights, falls within the
jurisdiction of the IPO Director of Legal Affairs.
The Intellectual Property Code also expressly recognizes the
appellate jurisdiction of the IPO Director General over the
decisions of the IPO Director of Legal Affairs, to wit:
Section 7. The Director General and Deputies Director General.
7.1 Fuctions.–The Director General shall exercise the following
powers and functions:
xxxx
b) Exercise exclusive appellate jurisdiction over all decisions
rendered by the Director of Legal Affairs, the Director of Patents,
the Director of Trademarks, and the Director of Documentation,
Information and Technology Transfer Bureau. The decisions of the
Director General in the exercise of his appellate jurisdiction in
respect of the decisions of the Director of Patents, and the Director
of Trademarks shall be appealable to the Court of Appeals in
accordance with the Rules of Court; and those in respect of the
decisions of the Director of Documentation, Information and
Technology Transfer Bureau shall be appealable to the Secretary of
Trade and Industry;
The Court of Appeals erroneously reasoned that Section 10(a) of
the Intellectual Property Code, conferring upon the BLA-IPO
jurisdiction over administrative complaints for violations of
intellectual property rights, is a general provision, over which the
specific provision of Section 163 of the same Code, found under
Part III thereof particularly governing trademarks, service marks,
and tradenames, must prevail. Proceeding therefrom, the Court of
Appeals incorrectly concluded that all actions involving trademarks,
including charges of unfair competition, are under the exclusive
jurisdiction of civil courts.
Such interpretation is not supported by the provisions of the
Intellectual Property Code. While Section 163 thereof vests in civil
courts jurisdiction over cases of unfair competition, nothing in the
said section states that the regular courts have sole jurisdiction
over unfair competition cases, to the exclusion of administrative
bodies. On the contrary, Sections 160 and 170, which are also
found under Part III of the Intellectual Property Code, recognize the
concurrent jurisdiction of civil courts and the IPO over unfair
competition cases. These two provisions read:
Section 160. Right of Foreign Corporation to Sue in Trademark or
Service Mark Enforcement Action.–Any foreign national or juridical
person who meets the requirements of Section 3 of this Act and
does not engage in business in the Philippines may bring a civil
or administrative action hereunder for opposition, cancellation,
infringement, unfair competition, or false designation of origin and
false description, whether or not it is licensed to do business in the
Philippines under existing laws.
xxxx
Section 170. Penalties.–Independent of the civil and administrative
sanctions imposed by law, a criminal penalty of imprisonment from
two (2) years to five (5) years and a fine ranging from Fifty
thousand pesos (P50,000) to Two hundred thousand pesos
(P200,000), shall be imposed on any person who is found guilty of
committing any of the acts mentioned in Section 155, Section168,
and Subsection169.1.
Based on the foregoing discussion, the IPO Director of Legal Affairs
had jurisdiction to decide the petitioner’s administrative case
against respondents and the IPO Director General had exclusive
jurisdiction over the appeal of the judgment of the IPO Director of
Legal Affairs.
Unfair Competition
The Court will no longer touch on the issue of the validity or
propriety of the 22 December 2003 Decision of the IPO Director of
Page 68 of 69 IPL Day 5
Legal Affairs which: (1) directed the cancellation of the
certificate of registration of respondent Sehwani,
Incorporated for the mark "IN-N-OUT" and (2) ordered
respondents to permanently cease and desist from using the
disputed mark on its goods and business. Such an issue has
already been settled by this Court in its final and executory
Decision dated 15 October 2007 in G.R. No. 171053, Sehwani,
Incorporated v. In-N-Out Burger,44ultimately affirming the
foregoing judgment of the IPO Director of Legal Affairs. That
petitioner has the superior right to own and use the
"IN-N-OUT" trademarks vis-à-vis respondents is a finding
which this Court may no longer disturb under the doctrine of
conclusiveness of judgment. In conclusiveness of judgment,
any right, fact, or matter in issue directly adjudicated or
necessarily involved in the determination of an action before
a competent court in which judgment is rendered on the
merits is conclusively settled by the judgment therein and
cannot again be litigated between the parties and their
privies whether or not the claims, demands, purposes, or
subject matters of the two actions are the same.45
Thus, the only remaining issue for this Court to resolve is
whether the IPO Director General correctly found
respondents guilty of unfair competition for which he
awarded damages to petitioner.
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. 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. Actual fraudulent intent need not be
shown.46
In his Decision dated 23 December 2005, the IPO Director
General ably explains the basis for his finding of the existence
of unfair competition in this case, viz:
The evidence on record shows that the [herein respondents]
were not using their registered trademark but that of the
[petitioner]. [Respondent] SEHWANI, INC. was issued a
Certificate of Registration for IN N OUT (with the Inside of
the Letter "O" Formed like a Star) for restaurant business in
1993. The restaurant opened only in 2000 but under the
name IN-N-OUT BURGER. Apparently, the [respondents]
started constructing the restaurant only after the [petitioner]
demanded that the latter desist from claiming ownership of
the mark IN-N-OUT and voluntarily cancel their trademark
registration. Moreover, [respondents] are also using
[petitioner’s] registered mark Double-Double for use on
hamburger products. In fact, the burger wrappers and the
French fries receptacles the [respondents] are using do not
bear the mark registered by the [respondent], but the
[petitioner’s] IN-N-OUT Burger’s name and trademark
IN-N-OUT with Arrow design.
There is no evidence that the [respondents] were authorized
by the [petitioner] to use the latter’s marks in the business.
[Respondents’] explanation that they are not using their own
registered trademark due to the difficulty in printing the
"star" does not justify the unauthorized use of the
[petitioner’s] trademark instead.
Further, [respondents] are giving their products the general
appearance that would likely influence purchasers to believe
that these products are those of the [petitioner]. The
intention to deceive may be inferred from the similarity of the
goods as packed and offered for sale, and, thus, action will lie to
restrain such unfair competition. x x x.
xxxx
[Respondents’] use of IN-N-OUT BURGER in busineses signages
reveals fraudulent intent to deceive purchasers. Exhibit "GG,"
which shows the business establishment of [respondents]
illustrates the imitation of [petitioner’s] corporate name IN-N-OUT
and signage IN-N-OUT BURGER. Even the Director noticed it and
held:
"We also note that In-N-Out Burger is likewise, [petitioner’s]
corporate name. It has used the "IN-N-OUT" Burger name in its
restaurant business in Baldwin Park, California in the United States
of America since 1948. Thus it has the exclusive right to use the
tradenems "In-N-Out" Burger in the Philippines and the
respondents’ are unlawfully using and appropriating the same."
The Office cannot give credence to the [respondent’s] claim of
good faith and that they have openly and continuously used the
subject mark since 1982 and is (sic) in the process of expanding its
business. They contend that assuming that there is value in the
foreign registrations presented as evidence by the [petitioner], the
purported exclusive right to the use of the subject mark based on
such foreign registrations is not essential to a right of action for
unfair competition. [Respondents] also claim that actual or
probable deception and confusion on the part of customers by
reason of respondents’ practices must always appear, and in the
present case, the BLA has found none. This Office finds the
arguments untenable.
In contrast, the [respondents] have the burden of evidence to
prove that they do not have fraudulent intent in using the mark
IN-N-OUT. To prove their good faith, [respondents] could have
easily offered evidence of use of their registered trademark, which
they claimed to be using as early as 1982, but did not.
[Respondents] also failed to explain why they are using the marks
of [petitioner] particularly DOUBLE DOUBLE, and the mark
IN-N-OUT Burger and Arrow Design. Even in their listing of menus,
[respondents] used [Appellants’] marks of DOUBLE DOUBLE and
IN-N-OUT Burger and Arrow Design. In addition, in the wrappers
and receptacles being used by the [respondents] which also
contained the marks of the [petitioner], there is no notice in such
wrappers and receptacles that the hamburger and French fries are
products of the [respondents]. Furthermore, the receipts issued by
the [respondents] even indicate "representing IN-N-OUT." These
acts cannot be considered acts in good faith. 47
Administrative proceedings are governed by the "substantial
evidence rule." A finding of guilt in an administrative case would
have to be sustained for as long as it is supported by substantial
evidence that the respondent has committed acts stated in the
complaint or formal charge. As defined, substantial evidence is such
relevant evidence as a reasonable mind may accept as adequate to
support a conclusion.48 As recounted by the IPO Director General
in his decision, there is more than enough substantial evidence to
support his finding that respondents are guilty of unfair
competition.
With such finding, the award of damages in favor of petitioner is
but proper. This is in accordance with Section 168.4 of the
Intellectual Property Code, which provides that the remedies under
Sections 156, 157 and 161 for infringement shall apply mutatis
mutandis to unfair competition. The remedies provided under
Page 69 of 69 IPL Day 5
Section 156 include the right to damages, to be computed in
the following manner:
Section 156. Actions, and Damages and Injunction for
Infringement.–156.1 The owner of a registered mark may
recover damages from any person who infringes his rights,
and the measure of the damages suffered shall be either the
reasonable profit which the complaining party would have
made, had the defendant not infringed his rights, or the
profit which the defendant actually made out of the
infringement, or in the event such measure of damages
cannot be readily ascertained with reasonable certainty, then
the court may award as damages a reasonable percentage
based upon the amount of gross sales of the defendant or
the value of the services in connection with which the mark
or trade name was used in the infringement of the rights of
the complaining party.
In the present case, the Court deems it just and fair that the
IPO Director General computed the damages due to
petitioner by applying the reasonable percentage of 30% to
the respondents’ gross sales, and then doubling the amount
thereof on account of respondents’ actual intent to mislead
the public or defraud the petitioner,49 thus, arriving at the
amount of actual damages of P212,574.28.
Taking into account the deliberate intent of respondents to
engage in unfair competition, it is only proper that petitioner
be awarded exemplary damages. Article 2229 of the Civil
Code provides that such damages may be imposed by way of
example or correction for the public good, such as the
enhancement of the protection accorded to intellectual
property and the prevention of similar acts of unfair
competition. However, exemplary damages are not meant to
enrich one party or to impoverish another, but to serve as a
deterrent against or as a negative incentive to curb socially
deleterious action.50 While there is no hard and fast rule in
determining the fair amount of exemplary damages, the
award of exemplary damages should be commensurate with
the actual loss or injury suffered.51 Thus, exemplary
damages of P500,000.00 should be reduced to P250,000.00
which more closely approximates the actual damages
awarded.
In accordance with Article 2208(1) of the Civil Code,
attorney’s fees may likewise be awarded to petitioner since
exemplary damages are awarded to it. Petitioner was
compelled to protect its rights over the disputed mark. The
amount of P500,000.00 is more than reasonable, given the
fact that the case has dragged on for more than seven years,
despite the respondent’s failure to present countervailing
evidence. Considering moreover the reputation of
petitioner’s counsel, the actual attorney’s fees paid by
petitioner would far exceed the amount that was awarded to
it.52
IN VIEW OF THE FOREGOING, the instant Petition is GRANTED.
The assailed Decision of the Court of Appeals in CA-G.R. SP
No. 92785, promulgated on 18 July 2006, is REVERSED. The
Decision of the IPO Director General, dated 23 December
2005, is hereby REINSTATED IN PART, with the modification
that the amount of exemplary damages awarded be reduced
to P250,000.00.
SO ORDERED.