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G.R. No. L-18337 January 30, 1965 5.

1965 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
CHUA CHE, petitioner, be calculated to deceive.
vs.
PHILIPPINES PATENT OFFICE and SY TUO, respondents. 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
Chipeco & Alcaraz, Jr. for petitioner. published in the Official Gazette, as required, respondent Sy Tuo presented a "Notice of Opposition," dated October 15, 1959,
Perfecto E. de Vera for respondents. anchoring said opposition on the following allegations:

PAREDES, J.: 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
This is a petition to review the decision of the Director of Patents, in Inter Partes Case No. 161, denying the application of the goods of the applicant CHUA CHE, for those of the oppositor SY TUO, to the injury of both the oppositor and the
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 public.
opposition of respondent Sy Tuo.

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,
Under date of October 30, 1958, Chua Che presented with the Philippines Patent Office a petition praying for the registration in Section 4 (d) of Republic Act No. 166, as amended, because it is confusingly similar to the trademark "X-7" covered by
his favor the trade name "X-7". The petition, states: Registration No. 5,000 previously registered to, and being used by the oppositor and is not abandoned.

The undersigned CHUA CHE, a citizen of China, a resident of 2804 Limay St., Tondo, Manila, and doing business at same The Oppositor SY TUO, doing business as the Western Cosmetic Laboratory will rely on the following facts:
address, has adopted and used the trademark "X-7" shown in the accompanying Drawing.
(a) Oppositor has prior use of the trademark "X-7" as he has been using it extensively and continuously since
In accordance with the requirements of law, the undersigned declares that this trademark — July 31, 1952, while the applicant, Chua Che, allegedly used his trademark only since June 10,
1957.1äwphï1.ñët
1. Was first used by him on June 10, 1957.
(b) Oppositor's mark "X-7" is distinctive and his invented mark and not merely an ordinary, common and
2. Was first used by him in commerce in or with the Philippines on June 10, 1957. weak mark.

3. Has been continuously used by him in trade in or with the Philippines for more than one year. (c) The oppositor and the applicant use the trademark "X-7" for allied and closely related products.

4. Is, on the date of this application, actually used by him on the following goods, classified according to the Official (d) The oppositor has spent a huge amount by way of advertising and advertising his "X-7" brand.
Classification of Goods (Rule 82):
(e) The oppositor has spent a big amount in expanding his business for the manufacture of toilet soap and
Class 51 — Soap crystal laundry soap with his already popular "X-7" brand.

5. Is applied to the goods or to the packages containing the same, by placing thereon a printed label on which the (f) The trademark applied for by the applicant Chua Che consists of the trademark "X-7" and anyone is likely
trademark is shown, or by directly impressing the mark to the goods. to be misled as to the source or origin by the close resemblance or identity with the trademark "X-7" of the
oppositor.
The corresponding declaration, which was under oath, contained, among others, the following:
Attached to the Opposition were labels (samples) being used by oppositor on his products, which clearly show "X-7".
3. That he believes himself to be the lawful owner of the trademark sought to be registered.
Petitioner herein presented an Answer to Notice of Opposition, claiming among others that the grounds of opposition are not
4. That the said trademark is in actual use in commerce in or with the Philippines not less than two months before this correct, since although it is admitted that "X-7" is registered in the name of oppositor, said trademark is not being used on soap,
application is filed. 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 sponsorship," is indeed well taken. It has been pointed out by appellant that the product upon which the trademark X-7 will be
them believe that said goods are manufactured or sponsored by or in some way in trade associated with opposer. 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
Applicant CHUA CHE — 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
In Inter Partes proceedings, the principal issue is "priority of adoption and use." Since opposer has not yet used "X-7" nowadays, in the same manner as laundry soap. The likelihood of purchasers to associate those products to a common origin is
mark on soap, but will still use it, applicant should be entitled to the registration of the same. 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
The Director of Patents rendered judgment on January 18, 1961, the pertinent portions of which read: be denied.

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 PREMISES CONSIDERED, the decision sought to be reviewed should be, as it is hereby affirmed in all respects, with costs against
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- appellant CHUA CHE in both instances.
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. 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.
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.

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 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
G.R. No. L-23023 August 31, 1968 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 concurrent use of tradename FLORMEN SHOE
JOSE P. STA. ANA, petitioner, MANUFACTURERS and the trademark FLORMANN provided it is not used on shoes.
vs.
FLORENTINO MALIWAT and TIBURCIO S. EVALLE, in his capacity as Director of Patents, respondents. 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:
Rodolfo A. Francisco for petitioner.
Catalino S. Maravilla for respondent Florentino Maliwat. ATTY. FRANCISCO: Your Honor please, with the mutual understanding of the counsel for the Junior Party and the
Office of the Solicitor General for respondent Tiburcio S. Evalle. 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
REYES, J.B.L., J.: 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
Petition for review of the decision of the respondent Director of Patents in an interference proceeding1 (Inter Partes Case No. manufacture and sale of menswear shirts, polo shirts, and pants, since 1953, using FLORMANN as its trademark. That
291), finding for the senior party applicant, Florentino Maliwat, the herein private respondent, and against the junior party Mr. Florentino Maliwat began using the trademark FLORMANN on shoes on January 1962 and the firm name
applicant2 Jose P. Sta. Ana, the herein petitioner. 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
On 21 June 1962, Florentino Maliwat filed with the Patent Office an application for registration of the trademark FLORMANN, departments of the government, like the Bureau of Labor, the Social Security System and the Workmen's
which is used on shirts, pants, jackets and shoes for ladies, men, and children, claiming first use in commerce of the said mark on Compensation in 1962.
15 January 1962. The claim of first use was subsequently amended to 6 July 1955.
ATTY. MARAVILLA: On behalf of the Senior Party Applicant, represented by this humble representation, I respectfully
On 18 September 1962, Jose P. Sta. Ana filed an application for the registration of the tradename FLORMEN SHOE concur and admit all those stipulations above mentioned.
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. 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).
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 And the Rules of Court provide:1äwphï1.ñët
Sta. Ana. The latter, not satisfied with the decision, appealed to this Court.
Sec. 2. Judicial admissions. — Admission made by the parties in the pleadings, or in the course of the trial or other
The petitioner assigned the following errors: 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).
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, Since the aforequoted stipulation of facts has not been shown to have been made through palpable mistake, it is vain for the
hence, respondent is not entitled to carry back the date of first use to a prior date. petitioner to allege that the evidence for respondent Maliwat is false, fabricated, inconsistent, indefinite, contradictory, unclear,
unconvincing, and unsubstantial.
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 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
haberdasher. 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.
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. 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
IV. The Director of Patents erred in declaring that Maliwat has the prior right to the use of his trademark on shoes and ALLOW PETITIONER TO WITHDRAW FROM STIPULATION OF FACTS AND BE ALLOWED TO PRESENT ADDITIONAL EVIDENCE; AND
such right may be carried back to the year 1953 when respondent started his tailoring and haberdashery business and TO SUSPEND PERIOD FOR FILING PETITIONER'S BRIEF." The reason given was that "counsel for Mr. Jose P. Sta. Ana does not recall
in holding that the manufacture of shoes is within the scope of natural expansion of the business of a tailor and making any stipulation or agreement of facts with the counsel of Mr. Florentino Maliwat on 9 August 1963." Opposition thereto
haberdasher. 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 case, wearing apparel is not so far removed from shoes as to preclude relief, any more than the pancake flour is from syrup or
were actually uttered by counsel for Sta. Ana, no more, no less; that it was practically and highly impossible for her to have sugar cream (Aunt Jemima Mills Co. vs. Rigney & Co., LRA 1918 C 1039), or baking powder from baking soda (Layton Pure Food Co.
intercalated into the records the questioned stipulation of facts because of the length of counsel's manifestations and the vs. Church & Co., 182 Fed. 35), or cosmetics and toilet goods from ladies' wearing apparel and costume jewelry (Lady Esther Ltd.
different subject matters of his statements, aside from the concurrence of Maliwat's counsel and the reservation on the vs. Lady Esther Corset Shoppe, 148 ALR 6). More specifically, manufacturers of men's clothing were declared entitled to
resolution made by the hearing officer; and that despite her length of service, since 1958, as stenographic reporter, there had 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
been no complaint against her, except this one. 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.
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, It may be that previously the respondent drew a closer distinction among kinds of goods to which the use of similar marks could
despite several requests, and for a period of seven (7) months, for her to produce the stenographic notes, she has failed to 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
produce said notes. discretion warranting reversal.

On 2 April 1965, stenographer Rosales sent to the clerk of this Court the transcript of stenographic notes. Republic Act No. 166, as amended, provides:

This Court, on 2 February 1965, denied, for being late the motion to present additional testimonial and documentary evidence, Sec. 4. . . . The owner of a trademark, tradename or service-mark used to distinguish his goods, business or services
and, on 8 April 1965, deferred action on the objection to a portion of the transcript until after hearing. from the goods, business or services of others shall have the right to register the same on the principal register, unless
it:
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 xxx xxx xxx
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 xxx xxx xxx
taking steps to correct it before the records were elevated to this Court.

(d) Consists of or comprises a mark or tradename which resembles a mark or tradename registered in the Philippines or
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 a mark or tradename previously used in the Philippines by another and not abandoned, as to be likely, when applied to
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 or used in connection with the goods, business or services of the applicant, to cause confusion or mistake or to deceive
heavy burden, and his proof must be clear and convincing (Anchor Trading Co., Inc. vs. The Director of Patents, et al., L-8004, 30 purchasers;
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. xxx xxx xxx

Petitioner would confine the respondent to the use of the mark FLORMANN to tailoring and haberdashery only, but not on shoes, Note that the provision does not require that the articles of manufacture of the previous user and the late user of the mark
on the ground that petitioner had used the name FLORMEN on shoes since 1959, while the respondent used his mark on shoes should possess the same descriptive properties or should fall into the same categories as to bar the latter from registering his
only in 1962; but the Director ruled: 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.
. . . I believe that it is now the common practice among local tailors and haberdashers to branch out into articles of The meat of the matter is the likelihood of confusion, mistake or deception upon purchasers of the goods of the junior user of the
manufacture which have, one way or another, some direct relationship with or appurtenance to garments or attire to mark and the goods manufactured by the previous user. Here, the resemblance or similarity of the mark FLORMANN and the
complete one's wardrobe such as belts, shoes, handkerchiefs, and the like, . . . It goes without saying that shoes on one name FLORMEN and the likelihood of confusion, one to the other, is admitted; therefore, the prior adopter, respondent Maliwat,
hand and shirts, pants and jackets on the other, have the same descriptive properties for purposes of our Trademark has the better right to the use of the mark.
Law.

FOR THE FOREGOING REASONS, the appealed decision is hereby affirmed, with costs against the petitioner.
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 Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.1äwphï1.ñët
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
G.R. No. L-26676 July 30, 1982 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."
PHILIPPINE REFINING CO., INC., petitioner,
vs. Such restricted right over a trademark is likewise reflected in our Trademark law. Under Section 4(d) of the law, registration of a
NG SAM and THE DIRECTOR OF PATENTS, respondents. 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,
Ponce Enrile, Siguion Reyna, Montecillo & Bello and Associates for petitioner. registration of a similar or even Identical mark may be allowed.

Primitivo C. Bucasas for respondents. 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

ESCOLIN, J.: 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:
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 1. CAMIA Application No. 280 Registration No. SR-320 Date Registered — May 26, 1960 Owner — Everbright
use of the same trademark "CAMIA" on said goods would likely result in confusion as to their source or origin. Development Company Business Address — 310 M. H. del Pilar Grace Park, Caloocan City Class 4 — Thread
and Yarn
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 2. CAMIA and Representation Application No. 538 Date Filed — August 10, 1945 Date Registered - April 20,
issued on May 3, 1949. Certificate of Registration No. 1352-S covers vegetable and animal fats, particularly lard, butter and 1946 Owner — F.E. Zuellig, Inc. Business Address — 55 Rosario St., Manila Class 43 — Particular Good on
cooking oil, all classified under Class 47 (Foods and Ingredients of Food) of the Rules of Practice of the Patent Office, while which mark is used: Textiles, Embroideries laces, etc.
certificate of registration No. 1353-S applies to abrasive detergents, polishing materials and soap of all kinds (Class 4).
A trademark is designed to Identify the user. But it should be so distinctive and sufficiently original as to enable those who come
On November 25, 1960, respondent Ng Sam, a citizen residing in Iloilo City, filed an application with the Philippine Patent office into contact with it to recognize instantly the Identity of the user. " It must be affirmative and definite, significant and distinctive,
for registration of the Identical trademark "CAMIA" for his product, ham, which likewise falls under Class 47. Alleged date of first capable to indicate origin." 4
use of the trademark by respondent was on February 10, 1959.
It is evident that "CAMIA" as a trademark is far from being distinctive. By itself, it does not Identify petitioner as the manufacturer
After due publication of the application, petitioner filed an opposition, in accordance with Section 8 of Republic Act No. 166, or producer of the goods upon which said mark is used, as contra-distinguished to trademarks derived from coined words such as
otherwise known as the Trademark Law, as amended. Basis of petitioner's opposition was Section 4(d) of said law, which provides "Rolex", "Kodak" or "Kotex". It has been held that if a mark is so commonplace that it cannot be readily distinguished from others,
as unregistrable: 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
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 The trademark "CAMIA" is used by petitioner on a wide range of products: lard, butter, cooking oil, abrasive detergents, polishing
abandoned, as to be likely, when applied to or used in connection with the goods, business services of the materials and soap of all kinds. Respondent desires to use the same on his product, ham. While ham and some of the products of
applicant, to cause confusion or mistake or to deceive purchasers. 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
The parties submitted the case for decision without presenting any evidence: thereafter the Director of patents rendered a arbitrary classification or general description of their properties or characteristics.
decision allowing registration of the trademark "CAMIA" in favor of Ng Sam.
In his decision, the Director of Patents enumerated the factors that set respondent's product apart from the goods of petitioner.
Petitioner moved for a reconsideration, but the same was denied. He opined and We quote:

Hence, this petition. 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
A rudimentary precept in trademark protection is that "the right to a trademark is a limited one, in the sense that others may respective goods of the parties. I believe that ham on one hand, and lard, butter, oil, and soap on the other
used the same mark on unrelated goods." 1 Thus, as pronounced by the United States Supreme Court in the case of American 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. I vote to grant the petition of the Philippine Refining Co. Inc. As the registered owner and prior user of the trademark, "CAMIA" on
Opposer's products are ordinary day-to-day household items whereas ham is not necessarily so. Thus, the a wide variety of products such as lard, butter, cooking oil, abrasive detergents, polishing materials and soap of all kinds, the
goods of the parties are not of a character which purchasers would be likely to attribute to a common origin. respondent's ham which comes under the same classification of "Food and Ingredients of Foods" under which petitioner has
(p. 23, Rollo). registered its trademark, if given the same trademark, "CAMIA" is likely to confuse the public that the source of the ham is the
petitioner. if the respondent's ham is of poor quality, petitioner's business may thus be affected adversely as a result, while from
The observation and conclusion of the Director of Patents are correct. The particular goods of the parties are so unrelated that the standpoint of the purchasers, some measure of deception may take effect upon them. Thus, the use of the same trademark
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 on the ham would likely result in confusion as to the source or origin thereof, to the damage or detriment of the petitioner. The
fare for the average consumer. One purchasing ham would exercise a more cautious inspection of what he buys on account of it purpose of the law will be served better by not allowing the registration of the trademark "CAMIA" for respondent's ham, with
price. Seldom, if ever, is the purchase of said food product delegated to household helps, except perhaps to those who, like the such a limitless number of other words respondent may choose from, as trademark for his product.
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 Separate Opinions
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.
DE CASTRO, J., dissenting:
Mr. Runolf Callman, in Section 80.3, VOL. I, p. 1121 of his book, Unfair Competition and Trade Marks, declare:
I vote to grant the petition of the Philippine Refining Co. Inc. As the registered owner and prior user of the trademark, "CAMIA" on
a wide variety of products such as lard, butter, cooking oil, abrasive detergents, polishing materials and soap of all kinds, the
While confusion of goods can only be evident, where the litigants are actually in competition, confusion of respondent's ham which comes under the same classification of "Food and Ingredients of Foods" under which petitioner has
business may arise between non-competitive interests as well. This is true whether or not the trademarks are registered its trademark, if given the same trademark, "CAMIA" is likely to confuse the public that the source of the ham is the
registered. Sec. 16 of the Trademark Act, in referring to 'merchandise of substantially the same descriptive petitioner. if the respondent's ham is of poor quality, petitioner's business may thus be affected adversely as a result, while from
properties, embraces competitive and non-competitive trademark infringement but it is not so extensive as the standpoint of the purchasers, some measure of deception may take effect upon them. Thus, the use of the same trademark
to be applicable to cases where the public would not reasonably expect the plaintiff to make or sell the same on the ham would likely result in confusion as to the source or origin thereof, to the damage or detriment of the petitioner. The
class of goods as those made or sold by the defendant. (Emphasis supplied). purpose of the law will be served better by not allowing the registration of the trademark "CAMIA" for respondent's ham, with
such a limitless number of other words respondent may choose from, as trademark for his product.
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.

Separate Opinions

DE CASTRO, J., dissenting:


G.R. No. L-29971 August 31, 1982 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
ESSO STANDARD EASTERN, INC., petitioner, goods, business or services." 4 Implicit in this definition is the concept that the goods must be so related that there is a likelihood
vs. either of confusion of goods or business. 5But likelihood of confusion is a relative concept; to be determined only according to the
THE HONORABLE COURT OF APPEALS ** and UNITED CIGARETTE CORPORATION, respondents. 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,
TEEHANKEE, J.:1äwphï1.ñët cigarettes, are non-competing. But as to whether trademark infringement exists depends for the most part upon whether or not
the goods are so related that the public may be, or is actually, deceived and misled that they came from the same maker or
The Court affirms on the basis of controlling doctrine the appealed decision of the Court of Appeals reversing that of the Court of manufacturer. For non-competing goods may be those which, though they are not in actual competition, are so related to each
First Instance of Manila and dismissing the complaint filed by herein petitioner against private respondent for trade infringement other that it might reasonably be assumed that they originate from one manufacturer. Non-competing goods may also be those
for using petitioner's trademark ESSO, since it clearly appears that the goods on which the trademark ESSO is used by respondent which, being entirely unrelated, could not reasonably be assumed to have a common source. in the former case of related goods,
is non-competing and entirely unrelated to the products of petitioner so that there is no likelihood of confusion or deception on 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
the part of the purchasing public as to the origin or source of the goods. 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
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 Goods are related when they belong to the same class or have the same descriptive properties; when they possess the same
Oil Co. it registered as a business name with the Bureaus of Commerce and Internal Revenue in April and May, 1962). Private physical attributes or essential characteristics with reference to their form, composition, texture or quality. They may also be
respondent in turn is a domestic corporation then engaged in the manufacture and sale of cigarettes, after it acquired in related because they serve the same purpose or are sold in grocery stores. 11 Thus, biscuits were held related to milk because they
November, 1963 the business, factory and patent rights of its predecessor La Oriental Tobacco Corporation, one of the rights thus are both food products. 12 Soap and perfume, lipstick and nail polish are similarly related because they are common household
acquired having been the use of the trademark ESSO on its cigarettes, for which a permit had been duly granted by the Bureau of items now a days. 13 The trademark "Ang Tibay" for shoes and slippers was disallowed to be used for shirts and pants because
Internal Revenue. 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
Barely had respondent as such successor started manufacturing cigarettes with the trademark ESSO, when petitioner commenced name "Wellington" which is the trademark for shirts, pants, drawers and other articles of wear for men, women and children is
a case for trademark infringement in the Court of First Instance of Manila. The complaint alleged that the petitioner had been for used as a name of a department store. 16
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 Thus, in Acoje Mining Co., Inc. vs. Director of Patents, 17 the Court, through now Chief Justice Fernando, reversed the patent
asserted that the continued use by private respondent of the same trademark ESSO on its cigarettes was being carried out for the director's decision on the question of "May petitioner Acoje Mining Company register for the purpose of advertising its
purpose of deceiving the public as to its quality and origin to the detriment and disadvantage of its own products. 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
In its answer, respondent admitted that it used the trademark ESSO on its own product of cigarettes, which was not Identical to on a background which is dissimilar as to yield a distinct appearance?" and ordered the granting of petitioner's application for
those produced and sold by petitioner and therefore did not in any way infringe on or imitate petitioner's trademark. Respondent 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
contended that in order that there may be trademark infringement, it is indispensable that the mark must be used by one person not likely to purchase the latter just because of the trademark LOTUS" and "when regard is had for the principle that the two
in connection or competition with goods of the same kind as the complainant's. 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. "
The trial court, relying on the old cases of Ang vs. Teodoro 2 and Arce & Sons, Inc. vs. Selecta Biscuit Company, 3referring to related
products, decided in favor of petitioner and ruled that respondent was guilty of infringement of trademark.
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
On appeal, respondent Court of Appeals found that there was no trademark infringement and dismissed the complaint. being used by therein petitioner for a wide range of products: lard butter, cooking oil, abrasive detergents, polishing materials
Reconsideration of the decision having been denied, petitioner appealed to this Court by way of certiorari to reverse the decision and soap of all kinds. The Court, after noting that the same CAMIA trademark had been registered by two other companies,
of the Court of Appeals and to reinstate the decision of the Court of First Instance of Manila. The Court finds no ground for Everbright Development Company and F. E. Zuellig, Inc. for their respective products of thread and yarn (for the former) and
granting the petition. 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
The law defines infringement as the use without consent of the trademark owner of any "reproduction, counterfeit, copy or are related goods. Emphasis should be on the similarity of the products involved and not on the arbitrary classification or general
colorable limitation of any registered mark or tradename in connection with the sale, offering for sale, or advertising of any description of their properties or characteristics." The Court, therefore, concluded that "In fine, We hold that the businesses of
goods, business or services on or in connection with which such use is likely to cause confusion or mistake or to deceive the parties are non-competitive and their products so unrelated that the use of Identical trademarks is not likely to give rise to
purchasers or others as to the source or origin of such goods or services, or Identity of such business; or reproduce, counterfeit, 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" 19as stressed in ACCORDINGLY, the petition is dismissed and the decision of respondent Court of Appeals is hereby affirmed.
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.ït¢@lFº 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" 21When 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 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
G.R. No. L-44707 August 31, 1982 In the recent case of Acoje Mining Co., Inc. vs. Director of Patents, 38 SCRA 480, 482-483, the Supreme Court
stated - 1äwphï1.ñët
HICKOK MANUFACTURING CO., INC., petitioner,
vs. Can it be said then that petitioner's application would be likely to cause confusion or
COURT OF APPEALS ** and SANTOS LIM BUN LIONG, respondents. mistake on the part of the buying public? The answer should be in the negative. It does
not defy common sense to assert that a purchaser would be cognizant of the product he
Sycip, Salazar, Feliciano, Hernandez & Castillo Law Offices for petitioner. is buying. 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 on the
trademark LOTUS. Even on the rare occasion that a mistake does occur, it can easily be
Tañada, Sanchez, Tafiada & Tanada Law Offices and George R. Arbolario for respondents. rectified. Moreover, there is no denying that the possibility of 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
TEEHANKEE, J.:1äwphï1.ñët 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. Petitioner has
The Court affirms on the strength of controlling doctrine as reaffirmed in the companion case of Esso Standard Eastern Inc. vs. successfully made out a case for registration.
Court of Appeals 1 promulgated also on this date and the recent case of Philippine Refining Co., Inc. vs. Ng Sam and Director of
Parents 2 the appealed decision of the Court of Appeals reversing the patent director's decision and instead dismissing petitioner's
petition to cancel private respondent's registration of the trademark of HICKOK for its Marikina shoes as against petitioner's From the statements of the Supreme Court in the two cases aforementioned, we gather that there must be
earlier registration of the same trademark for its other non-competing products. not only resemblance between the trademark of the plaintiff and that of the defendant, but also similarity of
the goods to which the two trademarks are respectively attached.

On the basis of the applicable reasons and considerations extensively set forth in the above-cited controlling precedents and the
leading case of Acoje Mining Co., Inc. vs. Director of Patents 3 on which the appellate court anchored its decision at bar, said Since in this case the trademark of petitioner-appellee is used in the sale of leather wallets, key cases, money
decision must stand affirmed, as follows: 1äwphï1.ñët folds made of leather, belts, men's briefs, neckties, handkerchiefs and men's socks, and the trademark of
registrant-appellant is used in the sale of shoes, which have different channels of trade, the Director of
Patents, as in the case of Acoje Mining Co., Inc. vs. Director of Patents, supra, 'ought to have reached a
An examination of the trademark of petitioner-appellee and that of registrant-appellant convinces us that different conclusion.
there is a difference in the design and the coloring of, as well as in the words on the ribbons, the two
trademarks.
It is established doctrine, as held in the above-cited cases, that "emphasis should be on the similarity of the products involved and
not on the arbitrary classification or general description of their properties or characteristics" 4and that "the mere fact that one
In petitioner-appellee's trademark for handkerchiefs (Exhibit 'Q'), the word 'HICKOK' is in red with white person has adopted and used a trademark on his goods does not prevent the adoption and use of the same trademark by others
background in the middle of two branches of laurel in light gold. At the lower part thereof is a ribbon on on unrelated articles of a different kind." 5 Taking into account the facts of record that petitioner, a foreign corporation registered
which are the words 'POSITIVELY FINER' in light gold. In the trademark for underwear (Exhibit 'R'), the word the trademark for its diverse articles of men's wear such as wallets, belts and men's briefs which are all manufactured here in the
'HICKOK' is also in red with white background in the middle of two branches of laurel in dark gold with similar Philippines by a licensee Quality House, Inc. (which pays a royalty of 1-1/2 % of the annual net sales) but are so labelled as to give
ribbons and the words 'POSITIVELY FINER' in dark gold. And in the trademark for briefs (Exhibit 'S'), the word the misimpression that the said goods are of foreign (stateside) manufacture and that respondent secured its trademark
'HICKOK' is in white but with red background in the middle of two branches of laurel, the leaves being in dark registration exclusively for shoes (which neither petitioner nor the licensee ever manufactured or traded in) and which are clearly
gold with white edges, and with similar ribbon and words 'POSITIVELY FINER' in dark gold. In contrast, in labelled in block letters as "Made in Marikina, Rizal, Philippines," no error can be attributed to the appellate court in upholding
respondent-appellant's trademark (Exhibit 'J'), the word 'HICKOK' is in white with gold background between respondent's registration of the same trademark for his unrelated and non-competing product of Marikina shoes. 6
the two branches of laurel in red, with the word 'SHOES' also in red below the word 'HICKOK'.ït¢@lFº The
ribbon is in red with the words 'QUALITY AT YOUR FEET,' likewise in red.
ACCORDINGLY, the petition is dismissed and the appealed judgment of the Court of Appeals is hereby affirmed.

While the law does not require that the competing trademarks be Identical, the two marks must be
considered in their entirety, as they appear in the respective labels, in relation to the goods to which they are
attached.

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. ...
G.R. No. 71189 November 4, 1992 Parte Keystone Garment Manufacturing Co., Decision No. 245 of the Director of Patents,
January 25, 1963.)
FABERGE, INCORPORATED, petitioner,
vs. It is also not disputed that on account of the considerable length of time that appellant has marketed its
THE INTERMEDIATE APPELLATE COURT and CO BENG KAY, respondents. 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
MELO, J.: 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
The Director of Patents authorized herein private respondent Co Beng Kay to register the trademark "BRUTE" for the briefs from the same source as appellant's cosmetics, and be induced to buy said briefs, to the undue advantage of
manufactured and sold by his Corporation in the domestic market vis-a-vis petitioner's opposition grounded on similarity of said appellee. Again, if after purchasing such briefs, the public finds them to be of non-competitive quality, or not
trademark with petitioner's own symbol "BRUT" which it previously registered for after shave lotion, shaving cream, deodorant, of the high quality expected of appellant's products, then appellant's reputation and goodwill will be ruined,
talcum powder, and toilet soap. Thereafter, respondent court, through Justice Gopengco with Justices Patajo and Racela, Jr. to its damage and prejudice. Thus, for the protection of the goodwill already established by a party, the
concurring, was initially persuaded by petitioner's plea for reversal directed against the permission granted by the Director of Supreme Court held:
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). 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
Hence, the petition at bar assailing the action of respondent court in affirming the ruling of the Director of Patents (Page 7, should be rejected and dismissed outright, even without any opposition on the part of
Petition; Page 16, Rollo). 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
In essence, it appears that in the course of marketing petitioner's "BRUT" products and during the pendency of its application for trademark and an established goodwill. (Chuanchow Soy & Canning Co. vs. Dir. of
registration of the trademark "BRUT 33 and DEVICE" for antiperspirant, personal deodorant, cream shave, after shave/shower Patents and Villapanta, 108 Phil. 833, 836.)
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 The test of confusing similarity which would preclude the registration of a trademark is not whether the
symbol and irreparable injury to the business reputation of the first user was to no avail. When the legal tussle was elevated to challenged mark would actually cause confusion or deception of the purchasers but whether the use of such
respondent court, Justice Gopengco remarked that: 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
Indeed, a look at the marks "BRUT," "BRUT 33" and "BRUTE" shows that such marks are not only similar in sufficient, for purposes of the law, that the similarity between the two labels be such that there is a
appearance but they are even similar in sound and in the style of presentation. It is reasonable to believe possibility or likelihood of the purchaser of the older brand mistaking the newer brand for it. (Gopengco,
that this similarity is sufficient to cause confusion and even mistake and deception in the buying public as to Mercantile Law Compendium, 1983 ed., p. 684; Acoje Mining Co., Inc. vs. Director of Patents, 38 SCRA 480).
the origin for source of the goods bearing such trademarks. It should be considered that, although the mark (pp. 3-6, Decision; pp. 48-51, Rollo).
"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 On June 5, 1984, respondent's Motion for Reconsideration merited the nod of approval of the appellate court brought about by
33" so that such confusion, mistake or deception is not unlikely to occur. The argument of appellee, that in private respondent's suggestion that the controlling ruling is that laid down in Philippine Refining Co., Inc. vs. Ng Sam (115 SCRA
modern marketing, goods of similar use are grouped in one section of the supermarket and thus it is unlikely 472 [1982]), ESSO Standard Eastern, Inc. vs. Court of Appeals (116 SCRA 336 [1982]); Hickok Manufacturing Co., Inc. vs. CA (116
that cosmetics be mixed with textile or wearing apparel, is hardly convincing enough, for a look at the SCRA 378 [1982]), and Acoje Mining Co., Inc. vs. Director of Patents (38 SCRA 480 [1971], to the effect that the identical trademark
modern department stores shows that merchandise intended for the use of men are now placed in a section can be used by different manufacturers for products that are non-competing and unrelated. (pp. 34-36, Rollo)
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 Petitioner is of the impression that respondent court could not have relied on the rulings of this Court in the ESSOand
or mistake as to the source of the goods displayed in the section. To avoid this, the Director of Patents held: 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
The marks KEYSTON (on shirts) and KEYSTONE (on shoes and slippers), the latter having 202, Rollo). Petitioner likewise emphasis American jurisprudential doctrines to the effect that sale of cosmetics and wearing
been previously registered are clearly similar in sound and appearance that confusion or apparel under similar marks is likely to cause confusion. Instead of applying the ESSO, PRC and Hickok cases, petitioner continues
mistake, or deception among purchasers as to origin and source of goods is likely to to asseverate, the rule as announced in Ang vs.Teodoro (74 Phil. 50 [1942]) as reiterated in Sta. Ana vs. Maliwat and Evalle (24
occur. Shirts and shoes are both wearing apparel and there is no gainsaying the truth SCRA (1968) 101) should be applied.
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-
In additional, it seems that petitioner would want this Court to appreciate petitioner's alleged application for registration of the Inc. vs. Court of Appeals (116 SCRA 387 [1982]). Furthermore, respondent belies petitioner's claim that the latter had applied for
trademark "BRUT 33 DEVICE" for briefs as an explicit proof that petitioner intended to expand its mark "BRUT" to other goods, registration of the trademark "BRUT 33 DEVICE" for briefs since the documents on file with the Director of Patents attached to
following the sentiment expressed by Justice J.B.L. Reyes in the Sta. Ana case (supra, at page 1025) that relief is available where respondent's legal Brief does not include the so-called application by petitioner of the alleged trademark for briefs.
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). 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
Besides, petitioner insists that in view of the repeal of Republic Act No. 166 (which advocated the related goods theory) by but apropos to shift Our attention to the pertinent provisions of the new Civil Code vis-a-vis Republic Act No. 166, as amended,
Republic Act No. 666 which deleted the phrase found in the old law that the merchandise must be substantially the same the special law patterned after the United States Trademark Act of 1946 (Director of Patents, Circular Release No. 36, 45 O.G.
descriptive properties, respondent Court should have heeded the pronouncement in the Ang case that there can be unfair 3704; Martin, Commentaries and Jurisprudence on the Philippine Commercial Laws, 1986 Revised Edition, Volume 2, page 489),
competition even if the goods are noncompeting (supra, at page 54). thus:

On the other hand, private respondent echoes the glaring difference in physical appearance of its products with petitioner's own Art. 520. A trade-mark or trade-name duly registered in the proper government bureau or office is owned by
goods by stressing the observations of the Director of Patents on May 3, 1978: and pertains to the person, corporation, or firm registering the same, subject to the provisions of special
laws.
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 Art. 521. The goodwill of a business is property, and may be transferred together with the right to use the
could easily distinguish what is BRUTE brief and what is BRUT after shave lotion, lotion and the like. name under which the business is conducted.
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 Art. 522. Trade-marks and trade-names are governed by special laws.
"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 xxx xxx xxx
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 Sec. 2. What are registrable. — Trade-marks, trade-names, and service-marks owned by persons,
trademarks are used are clearly different and the intended purpose of such goods are likewise not the same. corporations, partnerships or associations domiciled in the Philippines and by persons, corporations,
Accordingly, a purchaser who is out in the market for the purpose of buying respondent's BRUTE brief would partnerships or associations domiciled in any foreign country may be registered in accordance with the
definitely be not mistaken or misled into buying instead opposer's BRUT after shave lotion or deodorant. 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
Additional, the meaning or connotation of the bare word marks of opposer, BRUT, and BRUTE of respondent, registration are filed: And provided, further, That the country of which the applicant for registration is a
are clearly different and not likely to be confused with each other. BRUT simply means "dry", and also, "to citizen grants by law substantially similar privileges to citizens of the Philippines, and such fact is officially
browse"; while BRUTE means "ferocious, sensual", and in Latin, it signifies "heavy". Gleaned from the certified, with a certified true copy of the foreign law translated into the English language, by the
respective meanings of the two marks in question, they both suggest the resultant effects of the application government of the Republic of the Philippines. (As amended by Rep. Act No. 865).
of the products, upon which the said trademarks are employed, which fact all the more renders confusion or
deception of purchasers a remote possibility. 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
The products covered by petitioner's trademarks "BRUT" and "BRUT 33 & Device" enjoying its so-called lawful service in commerce, by actual use thereof in manufacture or trade, in business, and in the service
"goodwill" are after-shave lotion, shaving cream, deodorant, talcum powder, toilet soap, anti-perspirant, rendered, may appropriate to his exclusive use a trade-mark, a trade-name, or a service-mark not so
personal deodorant, cream shave, after shave/shower lotion, hair spray and hair shampoo. Petitioner has appropriated by another, to distinguish his merchandise, business or service from the merchandise, business
never applied for, registered nor used its trademarks for briefs in commerce or trade in the Philippines. or services of others. The ownership or possession of a trade-mark, trade-name, service-mark, heretofore or
Private respondent seeks to register his trademark "BRUTE" only for briefs which is a product non- hereafter appropriated, as in this section provided, shall be recognized and protected in the same manner
competitive to and entirely unrelated with petitioner's aforementioned products. (pp. 3-4, Brief for the and to the same extent as are other property rights known to the law. (As inserted by Sec. 1 of Rep. Act 638).
Respondent)
xxx xxx xxx
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. Sec. 4. Registration of trade-marks, trade-names and service-marks on the principal register. —

Moreover, private respondent asserts that briefs and cosmetics do not belong to the same class nor do they have the same . . . The owner of trademark, trade-name or service-mark used to distinguish his goods, business or services
descriptive properties such that the use of a trademark on one's goods does not prevent the adoption and use of the same from the goods, business or services of others shall have right to register the same on the principal register,
trademark by others on unrelated articles of a different nature in line with the ruling of this Court in Hickok Manufacturing Co., unless it:
xxx xxx xxx 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
4(d) Consists of or comprises a mark or trade-name which so resembles a mark or trade-name registered in (vide, at page 1025). Commenting on the former provision of the Trademark Law now embodied substantially under Section 4(d)
the Philippines or a mark or trade-name previously used in the Philippines by another and not abandoned, as of Republic Act No. 166, as amended, the erudite jurist opined that the law in point "does not require that the articles of
to be likely, when applied to or used in connection with the goods, business or services of the applicant, to manufacture of the previous user and late user of the mark should possess the same descriptive properties or should fall into the
cause confusion or mistake or to deceive purchasers. same categories as to bar the latter from registering his mark in the principal register." (supra at page 1026).

xxx xxx xxx 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.

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 How do We now reconcile the apparent conflict between Section 4(d) which was relied upon by Justice JBL Reyes in
record thereof together with a copy of the specimen or facsimile and the statement of the applicant, shall be the Sta. Ana case and Section 20? It would seem that Section 4(d) does not require that the goods manufactured by the second
kept in books for that purpose. The certificate shall reproduce the specimen or facsimile of the mark or user be related to the goods produced by the senior user while Section 20 limits the exclusive right of the senior user only to
trade-name, contain the statement of the applicant and state that the mark or trade-name is registered those goods specified in the certificate of registration. But the rule has been laid down that the clause which comes later shall be
under this Act, the date of the first use in commerce or business, the particular goods or services for which it given paramount significance over an anterior proviso upon the presumption that it expresses the latest and dominant purpose.
is registered, the number and date of the registration, the term thereof, the date on which the application (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
for registration was received in the Patent Office, a statement of the requirement that in order to maintain nel Atty. Gen. vs. Toledo, 26 N.E., p. 1061; cited by Martin, Statutory Construction Sixth ed., 1980 Reprinted, p. 144). It ineluctably
the registration, periodical affidavits of use within the specified times hereinafter in section twelve provided, follows that Section 20 is controlling and, therefore, private respondent can appropriate its symbol for the briefs it manufactures
shall be filed, and such other data as the rules and regulations may from time to time prescribe. because as aptly remarked by Justice Sanchez in Sterling Products International Inc. vs. Farbenfabriken Bayer (27 SCRA 1214
[1969]):

xxx xxx xxx


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
Sec. 20. Certificate of registration prima facie evidence of validity. — A certificate of registration of a mark or which his mind may conceive even if he had never intended to use the trademark for the said goods. We
trade-name shall be prima facie evidence of the validity of the registration, the registrant's ownership of the believe that such omnibus registration is not contemplated by our Trademark Law. (1226)
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.
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
Having thus reviewed the laws applicable to the case before Us, it is not difficult to discern from the foregoing statutory upholding registration of the brand "ESSO for cigarettes inspite previous appropriation of the same mark "ESSO" for petroleum
enactments that private respondent may be permitted to register the trademark "BRUTE" for briefs produced by it products, then Justice, later Chief Justices Teehankee in Esso Standard Eastern, Inc.vs. Court of Appeals (116 SCRA 336 [1982] said:
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 The Court affirms on the basis of controlling doctrine the appealed decision of the Court of Appeals reversing
feign that private respondent had invaded petitioner's exclusive domain. To be sure, it is significant that petitioner failed to annex that of the Court of First Instance of Manila and dismissing the complaint filed by herein petitioner against
in its Brief the so-called "eloquent proof that petitioner indeed intended to expand its mark "BRUT" to other goods" (Page 27, private respondent for trade infringement for using petitioner's trademark ESSO, since it clearly appears that
Brief for the Petitioner; Page 202, Rollo). Even then, a mere application by petitioner in this aspect does not suffice and may not the goods on which the trademark ESSO is used by respondent is non-competing and entirely unrelated to
vest an exclusive right in its favor that can ordinarily be protected by the Trademark Law. In short, paraphrasing Section 20 of the the products of petitioner so that there is no likelihood of confusion or deception on the part of the
Trademark Law as applied to the documentary evidence adduced by petitioner, the certificate of registration issued by the purchasing public as to the origin or source of the goods.
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 xxx xxx xxx
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 The trial court, relying on the old cases of Ang vs. Teodoro and Arce & Sons, Inc. vs. Selecta Biscuit Company,
and used a trademark on his goods does not prevent the adoption and use of the same trademark by other for products which are referring to related products, decided in favor of petitioner and ruled that respondent was guilty of
of different description. Verily, this Court had the occasion to observe in the 1966 case of George W. Luft Co., Inc. vs. Ngo infringement of trademark.
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.
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
This brings Us back to the incidental issue raised by petitioner which private respondent sought to belie as regards petitioner's of certiorari to reverse the decision of the Court of Appeals and to reinstate the decision of the Court of First
alleged expansion of its business. It may be recalled that petitioner claimed that it has a pending application for registration of the Instance of Manila. The Court finds no ground for granting the petition.
emblem "BRUT 33" for briefs (page 25, Brief for the Petitioner; page 202, Rollo) to impress upon Us the Solomonic wisdom
The law defines infringement as the use without consent of the trademark owner of any "reproduction, Respondent court correctly ruled that considering the general appearances of each mark as a whole, the
counterfeit, copy or colorable imitation of any registered mark or tradename in connection with the sale, possibility of any confusion is unlikely. A comparison of the labels of the samples of the goods submitted by
offering for sale, or advertising of any goods, business or services on or in connection with which such use is the parties shows a great many differences on the trademark used. As pointed out by respondent court in its
likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such appealed decision, "(A) witness for the plaintiff, Mr. Buhay, admitted that the color of the "ESSO" used by the
goods or services, or identity of such business; or reproduce, counterfeit, copy or colorable imitate any plaintiff for the oval design where the blue word ESSO is contained is the distinct and unique kind of blue. In
director's decision on the question of "May petitioner Acoje Mining Company register for the purpose of his answer to the trial court's question, Mr. Buhay informed the court that the plaintiff never used its
advertising its product, soy sauce, the trademark LOTUS, there being already in existence one such registered trademark on any product where the combination of colors is similar to the label of the Esso cigarettes," and
in favor of the Philippine Refining Company for its product, edible oil, it being further shown that the "Another witness for the plaintiff, Mr. Tengco, testified that generally, the plaintiff's trademark comes all in
trademark applied for is in smaller type, colored differently, set on a background which is dissimilar as to either red, white, blue or any combination of the three colors. It is to be pointed out that not even a shade of
yield a distinct appearance?" and ordered the granting of petitioner's application for registration ruling that these colors appears on the trademark of the appellant's cigarette. The only color that the appellant uses in
"there is quite a difference between soy sauce and edible oil. If one is in the market for the former, he is not its trademark is green. (339; 341-346)
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 The glaring discrepancies between the two products had been amply portrayed to such an extent that indeed, "a purchaser who is
relation to the goods advertised before registration could be denied, the conclusion is inescapable that out in the market for the purpose of buying respondent's BRUTE brief would definitely be not mistaken or misled into buying
respondent Director ought to have reached a different conclusion." 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).
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 Petitioner's bid to persuade Us into accepting the doctrines announced in the aforementioned cases of Sta. Ana
product of ham notwithstanding its already being used by therein petitioner for a wide range of products: vs.Maliwat and Ang vs. Teodoro hardly inspire belief. In Sta Ana, it was admitted that the marks were confusingly similar which is
lard; butter, cooking oil, abrasive detergents, polishing material and soap of all kinds. The Court, after noting 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
that the same CAMIA trademark had been registered by two other companies, Everbright Development 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,
Company and F.E. Zuellig, Inc. for their respective products of thread and yarn (for the former) and textiles, 1903 prior to the present law. Obviously, the conclusion reached by theponente in the Ang case may not now be utilized by
embroideries and laces (for the latter) ruled that "while ham and some of the products of petitioner are 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
classified under Class 47 (Foods and Ingredients of Food), this alone cannot serve as the decisive factor in the Chemise Lacoste, S.A. vs. Fernandez (129 SCRA 373 [1984]) is applicable to the controversy at hand. The case adverted to by
resolution of whether or not they are related goods. Emphasis should be on the similarity of the arbitrary petitioner involved the same mark for the same class of shirts manufactured by the parties therein.
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 It would appear that as a consequence of this discourse, there still remains hanging in mid-air the unanswered puzzle as to why an
petitioner. 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
In the situation before us, the goods are obviously different from each other — with "absolutely no iota of Law as an implicit permission to a manufacturer to venture into the production of goods and allow that producer to appropriate
similitude" as stressed in respondent court's judgment. They are so foreign to each other as to make it the brand name of the senior registrant on goods other than those stated in the certificate of registration.
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. 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.
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, WHEREFORE, the petition is hereby DISMISSED without pronouncement as to costs.
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 SO ORDERED.
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.

xxx xxx xxx


CANON KABUSHIKI KAISHA, petitioner, vs. COURT OF APPEALS and NSR RUBBER CORPORATION, respondents. 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 CANON[3], including footwear which petitioner contends covers sandals, the goods for which private
DECISION 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.
GONZAGA-REYES, J.:
We find the arguments of petitioner to be unmeritorious. Ordinarily, the ownership of a trademark or tradename is a property
Before us is a petition for review that seeks to set aside the Decision[1] dated February 21, 1995 of the Court of Appeals in CA-GR right that the owner is entitled to protect[4] as mandated by the Trademark Law.[5] However, when a trademark is used by a party
SP No. 30203, entitled "Canon Kabushiki Kaisha vs. NSR Rubber Corporation" and its Resolution dated June 27, 1995 denying the for a product in which the other party does not deal, the use of the same trademark on the latters product cannot be validly
motion for reconsideration of herein petitioner Canon Kabushiki Kaisha (petitioner). objected to.[6]

On January 15, 1985, private respondent NSR Rubber Corporation (private respondent) filed an application for registration of the A review of the records shows that with the order of the BPTTT declaring private respondent in default for failure to file its
mark CANON for sandals in the Bureau of Patents, Trademarks, and Technology Transfer (BPTTT). A Verified Notice of Opposition answer, petitioner had every opportunity to present ex-parte all of its evidence to prove that its certificates of registration for the
was filed by petitioner, a foreign corporation duly organized and existing under the laws of Japan, alleging that it will be damaged trademark CANON cover footwear. The certificates of registration for the trademark CANON in other countries and in the
by the registration of the trademark CANON in the name of private respondent. The case was docketed as Inter Partes Case No. Philippines as presented by petitioner, clearly showed that said certificates of registration cover goods belonging to class 2
3043. (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
Petitioner moved to declare private respondent in default for its failure to file its answer within the prescribed period. The BPTTT trademark CANON for its goods classified as class 25 (sandals). Clearly, there is a world of difference between the paints, chemical
then declared private respondent in default and allowed petitioner to present its evidence ex-parte. products, toner, and dyestuff of petitioner and the sandals of private respondent.

Based on the records, the evidence presented by petitioner consisted of its certificates of registration for the mark CANON in Petitioner counters that notwithstanding the dissimilarity of the products of the parties, the trademark owner is entitled to
various countries covering goods belonging to class 2 (paints, chemical products, toner, and dye stuff). Petitioner also submitted protection when the use of by the junior user "forestalls the normal expansion of his business". [7] Petitioners opposition to the
in evidence its Philippine Trademark Registration No. 39398, showing its ownership over the trademark CANON also under class 2. registration of its trademark CANON by private respondent rests upon petitioners 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
On November 10, 1992, the BPTTT issued its decision dismissing the opposition of petitioner and giving due course to private argument, petitioner claims that it is possible that the public could presume that petitioner would also produce a wide variety of
respondents application for the registration of the trademark CANON. On February 16, 1993, petitioner appealed the decision of footwear considering the diversity of its products marketed worldwide.
the BPTTT with public respondent Court of Appeals that eventually affirmed the decision of BPTTT. Hence, this petition for review.
We do not agree. Even in this instant petition, except for its bare assertions, petitioner failed to attach evidence that would
Petitioner anchors this instant petition on these grounds: 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:

A) PETITIONER IS ENTITLED TO EXCLUSIVE USE OF THE MARK CANON BECAUSE IT IS ITS TRADEMARK AND IS
USED ALSO FOR FOOTWEAR. "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
B) TO ALLOW PRIVATE RESPONDENT TO REGISTER CANON FOR FOOTWEAR IS TO PREVENT PETITIONER developing preparation, shoe polisher, polishing agent". It would be taxing ones credibility to aver at this
FROM USING CANON FOR VARIOUS KINDS OF FOOTWEAR, WHEN IN FACT, PETITIONER HAS EARLIER USED point that the production of sandals could be considered as a possible "natural or normal expansion" of its
SAID MARK FOR SAID GOODS. business operation".[8]

C) PETITIONER IS ALSO ENTITLED TO THE RIGHT TO EXCLUSIVELY USE CANON TO PREVENT CONFUSION OF In Faberge, Incorporated vs. Intermediate Appellate Court,[9] the Director of patents allowed the junior user to use the trademark
BUSINESS. 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,
D) PETITIONER IS ALSO ENTITLED TO THE EXCLUSIVE USE OF CANON BECAUSE IT FORMS PART OF ITS shaving cream, deodorant, talcum powder, and toilet soap. The senior user vehemently objected and claimed that it was
CORPORATE NAME, PROTECTED BY THE PARIS CONVENTION.[2] 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 users 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),
The BPTTT and the Court of Appeals share the opinion that the trademark "CANON" as used by petitioner for its paints, chemical
cannot and should not be allowed to feign that (the junior user) had invaded (the senior users) exclusive domain."[10] We
products, toner, and dyestuff, can be used by private respondent for its sandals because the products of these two parties are
reiterated the principle that the certificate of registration confers upon the trademark owner the exclusive right to use its own
dissimilar. Petitioner protests the appropriation of the mark CANON by private respondent on the ground that petitioner has used
symbol only to those goods specified in the certificate, subject to the conditions and limitations stated therein.[11] Thus, the
and 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
exclusive right of petitioner in this case to use the trademark CANON is limited to the products covered by its certificate of "A tradename shall be protected in all the countries of the Union without the obligation of filing or
registration. registration, whether or not it forms part of a trademark."

Petitioner further argues that the alleged diversity of its products all over the world makes it plausible that the public might be Public respondents BPTTT and the Court of Appeals allegedly committed an oversight when they required petitioner to prove that
misled into thinking that there is some supposed connection between private respondents goods and petitioner. Petitioner is its mark is a well-known mark at the time the application of private respondent was filed. Petitioner questions the applicability of
apprehensive that there could be confusion as to the origin of the goods, as well as confusion of business, if private respondent is the guidelines embodied in the Memorandum of then Minister of Trade and Industry Roberto Ongpin (Ongpin) dated October 25,
allowed to register the mark CANON. In such a case, petitioner would allegedly be immensely prejudiced if private respondent 1983 which according to petitioner implements Article 6bis of the Paris Convention, the provision referring to the protection of
would be permitted to take "a free ride on, and reap the advantages of, the goodwill and reputation of petitioner Canon". [12] In trademarks. The memorandum reads:
support of the foregoing arguments, petitioner invokes the rulings in Sta. Ana vs. Maliwat[13], Ang vs. Teodoro[14] and Converse
Rubber Corporation vs. Universal Rubber Products, Inc.[15]. "a) the mark must be internationally known;

The likelihood of confusion of goods or business is a relative concept, to be determined only according to the particular, and b) the subject of the right must be a trademark, not a patent or copyright or anything else;
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 petitioners 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, c) the mark must be for use in the same or similar class of goods;
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 d) the person claiming must be the owner of the mark."
will not be misled that there is the slightest nexus between petitioner and the goods of private respondent.
According to petitioner, it should not be required to prove that its trademark is well-known and that the products are not similar
In cases of confusion of business or origin, the question that usually arises is whether the respective goods or services of the as required by the quoted memorandum. Petitioner emphasizes that the guidelines in the memorandum of Ongpin implement
senior user and the junior user are so related as to likely cause confusion of business or origin, and thereby render the trademark Article 6bis of the Paris Convention, the provision for the protection of trademarks, not tradenames. Article 6bis of the Paris
or tradenames confusingly similar.[18] Goods are related when they belong to the same class or have the same descriptive Convention states:
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] (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
Thus, in Esso Standard Eastern, Inc. vs. Court of Appeals, this Court ruled that the petroleum products on which the petitioner which constitutes a reproduction, imitation or translation, liable to create confusion, of a mark considered by
therein used the trademark ESSO, and the product of respondent, cigarettes are "so foreign to each other as to make it unlikely the competent authority of the country of registration or use to be well-known in that country as being
that purchasers would think that petitioner is the manufacturer of respondents goods"[21]. Moreover, the fact that the goods already the mark of a person entitled to the benefits of the present Convention and used for identical or
involved therein flow through different channels of trade highlighted their dissimilarity, a factor explained in this wise: 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.
"The products of each party move along and are disposed through different channels of distribution. The
(petitioners) products are distributed principally through gasoline service and lubrication stations, (2)....A period of at least five years from the date of registration shall be allowed for seeking the cancellation
automotive shops and hardware stores. On the other hand, the (respondents) cigarettes are sold in sari-sari of such a mark. The countries of the Union may provide for a period within which the prohibition of use must
stores, grocery store, and other small distributor outlets. (Respondents) cigarettes are even peddled in the be sought.
streets while (petitioners) 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 (3)....No time limit shall be fixed for seeking the cancellation or the prohibition of the use of marks or used in
(respondent) and of (petitioner) are poles apart."[22] bad faith."

Undoubtedly, the paints, chemical products, toner and dyestuff of petitioner that carry the trademark CANON are unrelated to Petitioner insists that what it seeks is the protection of Article 8 of the Paris Convention, the provision that pertains to the
sandals, the product of private respondent. We agree with the BPTTT, following the Esso doctrine, when it noted that the two protection of tradenames. Petitioner believes that the appropriate memorandum to consider is that issued by the then Minister
classes of products in this case flow through different trade channels. The products of petitioner are sold through special chemical of Trade and Industry, Luis Villafuerte, directing the Director of patents to:
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. "reject all pending applications for Philippine registration of signature and other world famous trademarks by
applicants other than the original owners or users."
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 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
tradename, protected by Article 8 of the Paris Convention, to wit: 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 d) the person claiming must be the owner of the mark (The Parties Convention Commentary on the Paris
countries of the Union, such as Japan and the Philippines, Petitioners tradename should be protected here." [25] Convention. Article by Dr. Bogsch, Director General of the World Intellectual Property Organization, Geneva,
Switzerland, 1985)
We cannot uphold petitioners position.
From the set of facts found in the records, it is ruled that the Petitioner failed to comply with the third
The term "trademark" is defined by RA 166, the Trademark Law, as including "any word, name, symbol, emblem, sign or device or requirement of the said memorandum that is the mark must be for use in the same or similar kinds of goods.
any combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them for those The Petitioner is using the mark "CANON" for products belonging to class 2 (paints, chemical products) while
manufactured, sold or dealt in by others."[26] Tradename is defined by the same law as including "individual names and surnames, the Respondent is using the same mark for sandals (class 25). Hence, Petitioners contention that its mark is
firm names, tradenames, devices or words used by manufacturers, industrialists, merchants, agriculturists, and others to identify well-known at the time the Respondent filed its application for the same mark should fail. "[32]
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, Petitioner assails the application of the case of Kabushi Kaisha Isetan vs. Intermediate Appellate Court to this case. Petitioner
a trade name refers to the business and its goodwill; a trademark refers to the goods. [28] 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
The Convention of Paris for the Protection of Industrial Property, otherwise known as the Paris Convention, of which both the had its trademark registered in this country. Hence, petitioner submits that this factual difference renders inapplicable our ruling
Philippines and Japan, the country of petitioner, are signatories[29], is a multilateral treaty that seeks to protect industrial property in the case of Kabushi Kaisha Isetan vs. Intermediate Appellate Court that Article 8 of the Paris Convention does not automatically
consisting of patents, utility models, industrial designs, trademarks, service marks, trade names and indications of source or extend protection to a tradename that is in danger of being infringed in a country that is also a signatory to said treaty. This
appellations of origin, and at the same time aims to repress unfair competition.[30] We agree with public respondents that the contention deserves scant consideration. Suffice it to say that the just quoted pronouncement in the case of Kabushi Kaisha
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, was made independent of the factual finding that petitioner in said case had not
Isetan vs. Intermediate Appellate Court.[31] As pointed out by the BPTTT: conducted its business in this country.

"Regarding the applicability of Article 8 of the Paris Convention, this Office believes that there is no WHEREFORE, in view of the foregoing, the instant petition for review on certiorari is DENIED for lack of merit.
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. SO ORDERED.

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
246 CORPORATION, doing business under the name and style of ROLEX MUSIC LOUNGE, petitioner, vs. HON. REYNALDO B. ACTION. MOREOVER, INDEPENDENT OF THE HYPOTHETICALLY ADMITTED FACTS EMBODIED IN THE COMPLAINT A
DAWAY, in his capacity as Presiding Judge of Branch 90 of the Regional Trial Court of Quezon City, MONTRES ROLEX QUO, THERE ARE SELF-EVIDENT FACTS AND IMPLIEDLY ADMITTED FACTS CONTAINED IN PRIVATE RESPONDENTS
S.A. and ROLEX CENTRE PHIL. LIMITED, respondents. PLEADINGS THAT WOULD CLEARLY AND UNMISTAKABLY SHOW PRIVATE RESPONDENTS LACK OF CAUSE OF ACTION
AGAINST HEREIN PETITIONER.
DECISION III
YNARES-SANTIAGO, J.: THE HONORABLE COURT OF APPEALS VIOLATED PETITIONERS RIGHT TO SUBSTANTIVE DUE PROCESS WHEN IT
ARBITRARILY AND CAPRICIOUSLY RULED THAT WHAT WAS SPECIFICALLY DENIED IN THE ASSAILED OCTOBER 20, 2000
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the November 28, 2002 ORDER IS PETITIONERS MOTION FOR PRELIMINARY HEARING ON DEFENDANTS AFFIRMATIVE DEFENSES AND NOT
Decision[1] of the Court of Appeals in CA-G.R. SP No. 64660 which dismissed the petition for certiorari filed by petitioner, as well as PETITIONERS MOTION TO DISMISS PER SE CONSIDERING THAT:
the Resolution[2] dated February 13, 2003 denying its motion for reconsideration.
A. THERE IS ABSOLUTELY NOTHING IN THE ORDER DATED OCTOBER 20, 2000 OF RESPONDENT JUDGE WHICH SUGGESTS THAT THE
The undisputed facts show that on November 26, 1998, respondents Montres Rolex S.A. and Rolex Centre Phil., Limited,
RESOLUTION OF PETITIONERS MOTION TO DISMISS PER SE WAS HELD IN ABEYANCE BY THE RESPONDENT JUDGE. HENCE THE
owners/proprietors of Rolex and Crown Device, filed against petitioner 246 Corporation the instant suit for trademark
SAID ORDER DATED OCTOBER 20, 2000 ALSO CONSTITUTES A DENIAL ON THE MERITS OF PETITIONERS MOTION TO DISMISS PER
infringement and damages with prayer for the issuance of a restraining order or writ of preliminary injunction[3] before the
SE AND NOT MERELY OF PETITIONERS MOTION FOR PRELIMINARY HEARING THEREON.
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. 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 PETITIONERS MOTION TO DISMISS PER SE. HENCE, THE SAID 20
In its answer raising special affirmative defenses, petitioner argued that respondents have no cause of action because no OCTOBER 2000 ORDERS DENIAL OF PETITIONERS MOTION IS NOT LIMITED TO THE MOTION FOR PRELIMINARY HEARING BUT
trademark infringement exist; that no confusion would arise from the use by petitioner of the mark Rolex considering that its ALSO CONSTITUTES A DENIAL OF PETITIONERS MOTION TO DISMISS PER SE.
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
IV
Atty. Alonzo Ancheta, the counsel of record of respondents who signed the verification and certification, was not authorized to
represent respondents.[4] IN ARBITRARILY AND CAPRICIOUSLY RULING THAT ATTY. ALONZO ANCHETA PROPERLY VERIFIED AND CERTIFIED
[5] PRIVATE RESPONDENTS COMPLAINT A QUO, THE HONORABLE COURT OF APPEALS VIOLATED NOT ONLY
On July 21, 2000, petitioner filed a motion for preliminary hearing on its affirmative defenses. Subsequently, on motion of
petitioner, the trial court issued a subpoena ad testificandumrequiring Atty. Alonzo Ancheta to appear at the preliminary PETITIONERS SUBSTANTIVE DUE PROCESS RIGHTS, BUT ALSO THE DOCTRINE OF SEPARATE CORPORATE
PERSONALITY; CONSIDERING THAT THE RECORDS OF THIS CASE IS (sic) COMPLETELY BEREFT AND DEVOID OF ANY
hearing.[6] Respondents, in the meantime, filed a Comment and Opposition[7] to the motion for preliminary hearing and a motion
DULY EXECUTED SPECIAL POWER OF ATTORNEY, EMANATING FROM PRIVATE RESPONDENTS, WHICH EXPLICITLY AND
to quash the subpoena ad testificandum.
SPECIFICALLY AUTHORIZES ATTY. ALONZO ANCHETA TO REPRESENT PRIVATE RESPONDENTS MONTRES ROLEX S.A. IN
In an Order dated October 27, 2000, the trial court quashed the subpoena ad testificandum and denied petitioners motion THE FILING OF THE COMPLAINT A QUO. BY REASON THEREOF, PRIVATE RESPONDENTS COULD NOT BE DEEMED TO
for preliminary hearing on affirmative defenses with motion to dismiss.[8] HAVE VOLUNTARILY APPEARED BEFORE THE RESPONDENT JUDGE; CONSEQUENTLY, THE TRIAL COURT COULD NOT
HAVE VALIDLY ACQUIRED JURISDICTION OVER THE PERSON OF PRIVATE RESPONDENTS.
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. V

On November 28, 2002, the Court of Appeals dismissed the petition. The motion for reconsideration filed by petitioner was IN ARBITRARILY AND CAPRICIOUSLY AFFIRMING RESPONDENT JUDGES QUASHAL OF THE SUBPOENA DATED 14
denied. Hence, the instant petition anchored on the following grounds: AUGUST 2000 DIRECTED AGAINST ATTY. ALONZO ANCHETA, THE HONORABLE COURT OF APPEALS VIOLATED NOT
ONLY PETITIONERS SUBSTANTIVE DUE PROCESS RIGHTS, BUT ALSO SECTION 9, RULE 132 AND SECTION 7 RULE 133
I OF THE 1989 REVISED RULES ON EVIDENCE, AND THE RULING OF THIS HONORABLE COURT IN THE CASE OF PEOPLE
VS. RIVERA.[9]
IN ISSUING THE ASSAILED DECISIONS, THE HONORABLE COURT OF APPEALS PERFUNCTORILY BRUSHED ASIDE THE
CONTROLLING PRECEDENTS LAID DOWN BY THIS HONORABLE COURT IN ESSO STANDARD EASTERN, INC. VS. COURT Simply put, the issues are as follows (1) whether the trial court denied not only petitioners motion for preliminary hearing
OF APPEALS AND UNITED CIGARETTE CORPORATION AND OTHER COMPANION CASES HOLDING THAT NO 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
TRADEMARK INFRINGEMENT CAN POSSIBLY OCCUR WHERE THE CONTENDING PARTIES DEAL WITH GOODS AND gravely abused its discretion in denying said motions; and (3) whether the trial court gravely abused its discretion in quashing the
SERVICES THAT ARE TOTALLY UNRELATED AND NON-COMPETING WITH EACH OTHER. subpoena ad testificandum issued against Atty. Ancheta.
II 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
IN ARBITRARILY AND CAPRICIOUSLY RULING THAT THE ISSUES RAISED IN PETITIONERS CERTIORARI PETITION ARE
neither qualified its denial nor held in abeyance the ruling on petitioners motion to dismiss thus
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
IN VIEW OF THE FOREGOING, the aforecited Motion To Quash Subpoena Ad Testificandum is granted; and the aforecited Motion A junior user of a well-known mark on goods or services which are not similar to the goods or services, and are therefore
For Preliminary Hearing On Defendants Affirmative Defenses With Motion To dismiss The Instant Complaint Based On Said unrelated, to those specified in the certificate of registration of the well-known mark is precluded from using the same on the
Affirmative Defenses is denied.[10] (Emphasis supplied) entirely unrelated goods or services, subject to the following requisites, to wit:

In issuing the assailed order, the trial court ruled on the merits of petitioners Motion to Dismiss vis--vis respondents 1. The mark is well-known internationally and in the Philippines. Under Rule 102 of the Rules and Regulations on Trademarks,
Comment and Opposition which clearly traversed the affirmative defenses raised by petitioner, to wit: 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:
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 (a) the duration, extent and geographical area of any use of the mark, in particular, the duration, extent and geographical area of
and opposition and the rejoinder filed by the plaintiffs likewise appear to be meritorious.[11] 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;
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] (b) the market share in the Philippines and in other countries, of the goods and/or services to which the mark applies;

In Municipality of Bian 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 (c) the degree of the inherent or acquired distinction of the mark;
sound discretion of the trial court, thus
(d) the quality-image or reputation acquired by the mark;
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 hearing maybe had thereon as if a motion to dismiss had (e) the extent to which the mark has been registered in the world;
been filed. (Emphasis supplied)
(f) the exclusivity of the registration attained by the mark in the world;
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 (g) the extent to which the mark has been used in the world;
possibility.[14] Such interpretation is specifically stated under the 1997 Rules of Civil Procedure. Rule 16, Section 6, now provides
that a grant of a preliminary hearing rests on the sound discretion of the court, to wit
(h) the exclusivity of use attained by the mark in the world;
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 (i) the commercial value attributed to the mark in the world;
may be had thereon as if a motion to dismiss had been filed. (Emphasis supplied)
(j) the record of successful protection of the rights in the mark;
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 courts
denial of petitioners motion for preliminary hearing on its affirmative defenses with motion to dismiss. The issue of whether or (k) the outcome of litigations dealing with the issue of whether the mark is a well-known mark; and
not a trademark infringement exists, is a question of fact that could best be determined by the trial court.

Under the old Trademark Law[15] where the goods for which the identical marks are used are unrelated, there can be no (l) the presence of absence of identical or similar marks validly registered for or used on identical or similar goods or services and
likelihood of confusion and there is therefore no infringement in the use by the junior user of the registered mark on the entirely owned by persons other than the person claiming that his mark is a well-known mark.
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: 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
Sec. 123. Registrability. 123.1. A mark cannot be registered if it: 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.
xxxxxxxxx
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
(f) Is identical with, or confusingly similar to, or constitutes a translation of a mark considered well-known in accordance with the be damaged because of the inferior quality of the good or services of the user.[18]
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 Section 123.1(f) is clearly in point because the Music Lounge of petitioner is entirely unrelated to respondents business
owner of the registered mark are likely to be damaged by such use; (Emphasis supplied) 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.

Considering that the trial court correctly denied petitioners 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.
SOCIETE DES PRODUITS NESTLE, S.A. and NESTLE PHILIPPINES, INC. petitioners, vs. COURT OF APPEALS and CFC in the middle. MASTER in appellees label is printed in taller capital letters, with the letter M further capitalized. The letters are
CORPORATION. respondents. shaded with red and bounded with thin gold-colored inner and outer sidings. Just above the word MASTER is a red window like
portrait of what appears to be a coffee shrub clad in gold. Below the MASTER appears the word ROAST impressed in smaller,
DECISION white print. And further below are the inscriptions in white: A selection of prime Arabica and Robusta coffee. With regard to
appellees MASTER BLEND label (Exhibit 6) of which only a xeroxed copy is submitted, the letters are bolder and taller as compared
YNARES-SANTIAGO, J.: to appellant CFCs and the word MASTER appears on top of the word BLEND and below it are the words 100% pure instant coffee
printed in small letters.
This is a petition for review assailing the Decision of the Court of Appeals in CA-G.R. SP No. 24101,[1] reversing and setting
aside the decision of the Bureau of Patents, Trademarks and Technology Transfer (BPTTT), [2] which denied private respondents From the foregoing description, while the contending marks depict the same product, the glaring dissimilarities in their
application for registration of the trade-mark, FLAVOR MASTER. presentation far outweigh and dispel any aspect of similitude. To borrow the words of the Supreme Court in American Cyanamid
Co. v. Director of Patents (76 SCRA 568), appellant CFCs and appellees labels are entirely different in size, background, colors,
On January 18, 1984, private respondent CFC Corporation filed with the BPTTT an application for the registration of the contents and pictorial arrangement; in short, the general appearances of the labels bearing the respective trademarks are so
trademark FLAVOR MASTER for instant coffee, under Serial No. 52994. The application, as a matter of due course, was published distinct from each other that appellees cannot assert that the dominant features, if any, of its trademarks were used or
in the July 18, 1988 issue of the BPTTTs Official Gazette. appropriated in appellant CFCs own. The distinctions are so well-defined so as to foreclose any probability or likelihood of
confusion or deception on the part of the normally intelligent buyer when he or she encounters both coffee products at the
Petitioner Societe Des Produits Nestle, S.A., a Swiss company registered under Swiss laws and domiciled in Switzerland,
grocery shelf. The answer therefore to the query is a clear-cut NO.[6]
filed an unverified Notice of Opposition,[3] claiming that the trademark of private respondents product is confusingly similar to its
trademarks for coffee and coffee extracts, to wit: MASTER ROAST and MASTER BLEND.
Petitioners are now before this Court on the following assignment of errors:
Likewise, a verified Notice of Opposition was filed by Nestle Philippines, Inc., a Philippine corporation and a licensee of
Societe Des Produits Nestle S.A., against CFCs application for registration of the trademark FLAVOR MASTER.[4] Nestle claimed that
1. RESPONDENT COURT GRAVELY ERRED IN REVERSING AND SETTING ASIDE THE DECISION (NO. 90-47) OF THE DIRECTOR OF THE
the use, if any, by CFC of the trademark FLAVOR MASTER and its registration would likely cause confusion in the trade; or deceive
BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY TRANSFER (BPTTT) DATED DECEMBER 27, 1990.
purchasers and would falsely suggest to the purchasing public a connection in the business of Nestle, as the dominant
word present in the three (3) trademarks is MASTER; or that the goods of CFC might be mistaken as having originated from the
latter. 2. RESPONDENT COURT ERRED IN FINDING THAT APPELLANT CFCS TRADE DRESS IS BEYOND THE SCOPE OF THE PROSCRIPTION
LAID DOWN BY JURISPRUDENCE AND THE TRADEMARK LAW.
In answer to the two oppositions, CFC argued that its trademark, FLAVOR MASTER, is not confusingly similar with the
formers trademarks, MASTER ROAST and MASTER BLEND, alleging that, except for the word MASTER (which cannot be exclusively
3. RESPONDENT COURT ERRED IN HOLDING THAT THE TOTALITY RULE, RATHER THAN THE TEST OF DOMINANCY, APPLIES TO THE
appropriated by any person for being a descriptive or generic name), the other words that are used respectively with said word in
CASE.
the three trademarks are very different from each other in meaning, spelling, pronunciation, and sound. CFC further argued that
its trademark, FLAVOR MASTER, is clearly very different from any of Nestles alleged trademarks MASTER ROAST and MASTER
BLEND, especially when the marks are viewed in their entirety, by considering their pictorial representations, color schemes and 4. RESPONDENT COURT ERRED IN INVOKING THE TOTALITY RULE APPLIED IN THE CASES OF BRISTOL MYERS V. DIRECTOR OF
the letters of their respective labels. 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).
In its Decision No. 90-47 dated December 27, 1990, the BPTTT denied CFCs application for registration. [5] CFC elevated the
matter to the Court of Appeals, where it was docketed as CA-G.R. SP No. 24101.
The petition is impressed with merit.
The Court of Appeals defined the issue thus: Does appellant CFCs trade dress bear a striking resemblance with appellees
A trademark has been generally defined as any word, name, symbol or device adopted and used by a manufacturer or
trademarks as to create in the purchasing publics mind the mistaken impression that both coffee products come from one and the
merchant to identify his goods and distinguish them from those manufactured and sold by others.[7]
same source?
A manufacturers trademark is entitled to protection. As Mr. Justice Frankfurter observed in the case of Mishawaka Mfg. Co.
As stated above, the Court of Appeals, in the assailed decision dated September 23, 1993, reversed Decision No. 90-47 of
v. Kresge Co.:[8]
the BPTTT and ordered the Director of Patents to approve CFCs application.The Court of Appeals ruled:

The protection of trade-marks is the laws recognition of the psychological function of symbols. If it is true that we live by symbols,
Were We to take even a lackadaisical glance at the overall appearance of the contending marks, the physical discrepancies
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
between appellant CFCs and appellees respective logos are so ostensible that the casual purchaser cannot likely mistake one for
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
the other. Appellant CFCs label (Exhibit 4) is predominantly a blend of dark and lighter shade of orange where the words FLAVOR
effort to impregnate the atmosphere of the market with the drawing power of a congenial symbol. Whatever the means
MASTER, FLAVOR appearing on top of MASTER, shaded in mocha with thin white inner and outer sidings per letter and identically
employed, the aim is the same --- to convey through the mark, in the minds of potential customers, the desirability of the
lettered except for the slightly protruding bottom curve of the letter S adjoining the bottom tip of the letter A in the word
commodity upon which it appears. Once this is attained, the trade-mark owner has something of value. If another poaches upon
MASTER, are printed across the top of a simmering red coffee cup. Underneath FLAVOR MASTER appears Premium Instant Coffee
the commercial magnetism of the symbol he has created, the owner can obtain legal redress.
printed in white, slim and slanted letters.Appellees MASTER ROAST label (Exhibit 7), however, is almost double the width of
appellant CFCs. At the top is printed in brown color the word NESCAFE against a white backdrop. Occupying the center is a
square-shaped configuration shaded with dark brown and picturing a heap of coffee beans, where the word MASTER is inscribed 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 also on the other features appearing in both labels in order that he may draw his conclusion whether one is confusingly similar to
trade-marks, trade-names and service marks which shall be known as the principal register. The owner of a trade-mark, trade- the other (Mead Johnson & Co. v. NVJ Van Dorp, Ltd., supra).[12]
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: 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
xxxxxxxxx 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
(d) Consists of or comprises a mark or trade-name which so resembles a mark or trade-name registered in the Philippines or a according to the particular, and sometimes peculiar, circumstances of each case. In trademark cases, even more than in any other
mark or trade-name previously used in the Philippines by another and not abandoned, as to be likely, when applied to or used in litigation, precedent must be studied in light of the facts of the particular case. The wisdom of the likelihood of confusion test lies
connection with the goods, business or services of the applicant, to cause confusion or mistake or to deceive purchasers; 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]
xxxxxxxxx
The Court of Appeals application of the case of Del Monte Corporation v. Court of Appeals[16] is, therefore, misplaced. In Del
(Emphasis supplied) Monte, the issue was about the alleged similarity of Del Montes logo with that of Sunshine Sauce Manufacturing Industries. Both
corporations market the catsup product which is an inexpensive and common household item.

The law prescribes a more stringent standard in that there should not only be confusing similarity but that it should Since Del Monte alleged that Sunshines logo was confusingly similar to or was a colorable imitation of the formers logo,
not likely cause confusion or mistake or deceive purchasers. 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,
Hence, the question in this case is whether there is a likelihood that the trademark FLAVOR MASTER may cause confusion cannot be applied in the instant petition as the facts and circumstances herein are peculiarly different from those in the Del
or mistake or may deceive purchasers that said product is the same or is manufactured by the same company. In other words, the Monte case.
issue is whether the trademark FLAVOR MASTER is a colorable imitation of the trademarks MASTER ROAST and MASTER BLEND.
In the same manner, the Court of Appeals erred in applying the totality rule as defined in the cases of Bristol Myers v.
Colorable imitation denotes such a close or ingenious imitation as to be calculated to deceive ordinary persons, or such a Director of Patents;[17] Mead Johnson & Co. v. NVJ Van Dorf Ltd.;[18] and American Cyanamid Co. v. Director of Patents.[19] The
resemblance to the original as to deceive an ordinary purchaser giving such attention as a purchaser usually gives, as to cause him totality rule states that the test is not simply to take their words and compare the spelling and pronunciation of said words. In
to purchase the one supposing it to be the other.[9] In determining if colorable imitation exists, jurisprudence has developed two determining whether two trademarks are confusingly similar, the two marks in their entirety as they appear in the respective
kinds of tests - the Dominancy Test and the Holistic Test.[10] The test of dominancy focuses on the similarity of the prevalent labels must be considered in relation to the goods to which they are attached; the discerning eye of the observer must focus not
features of the competing trademarks which might cause confusion or deception and thus constitute infringement. On the other only on the predominant words but also on the other features appearing on both labels.[20]
side of the spectrum, the holistic test mandates that the entirety of the marks in question must be considered in determining
confusing similarity.[11] 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 case at bar, the Court of Appeals held that:
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 determination of whether two trademarks are indeed confusingly similar must be taken from the viewpoint of the ordinary the factual circumstances are substantially different. In the Bristol Myers case, this Court held that although both BIOFERIN and
purchasers who are, in general, undiscerningly rash in buying the more common and less expensive household products like BUFFERIN are primarily used for the relief of pains such as headaches and colds, and their names are practically the same in
coffee, and are therefore less inclined to closely examine specific details of similarities and dissimilarities between competing spelling and pronunciation, both labels have strikingly different backgrounds and surroundings. In addition, one is dispensable
products. The Supreme Court in Del Monte Corporation v. CA, 181 SCRA 410, held that: only upon doctors 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
The question is not whether the two articles are distinguishable by their labels when set side by side but whether the general refers to Pharmaceutical Preparations which Supply Nutritional Needs, falling under Class 6 of the official classification of
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 Medicines and Pharmaceutical Preparations to be used as prescribed by physicians. On the other hand, ALASKA refers to Foods
in his confounding it with the original. As observed in several cases, the general impression of the ordinary purchaser, buying and Ingredients of Foods falling under Class 47, and does not require medical prescription.
under the normally prevalent conditions in trade and giving the attention such purchasers usually give in buying that class of
goods, is the touchstone. 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 respondents
From this perspective, the test of similarity is to consider the two marks in their entirety, as they appear in the respective labels, label is sufficient to distinguish respondents product or trademark from that of petitioner. Also, both products are for medicinal
in relation to the goods to which they are attached (Bristol Myers Company v. Director of Patents, et al., 17 SCRA 128, citing Mead 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
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 identical as SULMETs label indicates that it is used in a drinking water solution while that of SULMETINE indicates that they are
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 tablets.
appellees would want it to be when they essentially argue that much of the confusion springs from appellant CFCs use of the
word MASTER which appellees claim to be the dominant feature of their own trademarks that captivates the prospective It cannot also be said that the products in the above cases can be bought off the shelf except, perhaps, for ALASKA. The said
consumers. Be it further emphasized that the discerning eye of the observer must focus not only on the predominant words but 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 Nestles and CFCs products are inexpensive and common household items, engaged to promote the product, are given the titles Master of the Game and Master of the Talk Show, respectively.In due time,
the similarity ends there. What is being questioned here is the use by CFC of the trademark MASTER. In view of the difficulty of because of these advertising schemes the mind of the buying public had come to learn to associate the word MASTER with the
applying jurisprudential precedents to trademark cases due to the peculiarity of each case, judicial fora should not readily apply a opposers goods.
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. x x x. It is the observation of this Office that much of the dominance which the word MASTER has acquired through Opposers
Nestle points out that the dominancy test should have been applied to determine whether there is a confusing similarity advertising schemes is carried over when the same is incorporated into respondent-applicants trademark FLAVOR MASTER. Thus,
between CFCs FLAVOR MASTER and Nestles MASTER ROAST and MASTER BLEND. when one looks at the label bearing the trademark FLAVOR MASTER (Exh. 4) ones attention is easily attracted to the word
MASTER, rather than to the dissimilarities that exist. Therefore, the possibility of confusion as to the goods which bear the
We agree. competing marks or as to the origins thereof is not farfetched. x x x.[24]

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 In addition, the word MASTER is neither a generic nor a descriptive term. As such, said term can not be invalidated as a
common and less expensive household products like coffee, and are therefore less inclined to closely examine specific details of trademark and, therefore, may be legally protected. Generic terms[25] are those which constitute the common descriptive name of
similarities and dissimilarities between competing products. [21] 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
The basis for the Court of Appeals application of the totality or holistic test is the ordinary purchaser buying the product refer to the basic nature of the wares or services provided rather than to the more idiosyncratic characteristics of a particular
under normally prevalent conditions in trade and the attention such products normally elicit from said ordinary purchaser. An product, and are not legally protectable. On the other hand, a term is descriptive[26] and therefore invalid as a trademark if, as
ordinary purchaser or buyer does not usually make such scrutiny nor does he usually have the time to do so. The average shopper understood in its normal and natural sense, it forthwith conveys the characteristics, functions, qualities or ingredients of a
is usually in a hurry and does not inspect every product on the shelf as if he were browsing in a library.[22] product 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 Court of Appeals held that the test to be applied should be the totality or holistic test reasoning, since what is of the consumer does not have to exercise powers of perception or imagination.
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 Rather, the term MASTER is a suggestive term brought about by the advertising scheme of Nestle. Suggestive terms[27] are
dissimilarities between competing products. 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
This Court cannot agree with the above reasoning. If the ordinary purchaser is undiscerningly rash in buying such common secondary meaning. While suggestive marks are capable of shedding some light upon certain characteristics of the goods or
and inexpensive household products as instant coffee, and would therefore be less inclined to closely examine specific details of services in dispute, they nevertheless involve an element of incongruity, figurativeness, or imaginative effort on the part of the
similarities and dissimilarities between the two competing products, then it would be less likely for the ordinary purchaser to observer.
notice that CFCs trademark FLAVOR MASTER carries the colors orange and mocha while that of Nestles 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 This is evident from the advertising scheme adopted by Nestle in promoting its coffee products. In this case, Nestle has,
features, similarities or dissimilarities, considering that the product is an inexpensive and common household item. over time, promoted its products as coffee perfection worthy of masters like Robert Jaworski and Ric Puno Jr.

It must be emphasized that the products bearing the trademarks in question are inexpensive and common household items In associating its coffee products with the term MASTER and thereby impressing them with the attributes of said term,
bought off the shelf by undiscerningly rash purchasers. As such, if the ordinary purchaser is undiscerningly rash, then he would Nestle advertised its products thus:
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. Robert Jaworski. Living Legend. A true hard court hero. Fast on his feet. Sure in every shot he makes. A master strategist. In one
While this Court agrees with the Court of Appeals detailed enumeration of differences between the respective trademarks word, unmatched.
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. 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 worlds coffee masters, can
Moreover, the totality or holistic test is contrary to the elementary postulate of the law on trademarks and unfair create.
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.[23] The totality or
MASTER ROAST. Coffee perfection worthy of masters like Robert Jaworski.[28]
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.
In the art of conversation, Ric Puno Jr. is master. Witty. Well-informed. Confident.
For this reason, this Court agrees with the BPTTT when it applied the test of dominancy and held that:
In the art of coffee-making, nothing equals Master Roast, the coffee masterpiece from Nescafe, the worlds coffee masters. A
From the evidence at hand, it is sufficiently established that the word MASTER is the dominant feature of opposers mark. The unique combination of the best coffee beans - Arabica for superior taste and aroma, Robusta for strength and body. Truly
word MASTER is printed across the middle portion of the label in bold letters almost twice the size of the printed word distinctive and rich in flavor.
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
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.
LEVI STRAUSS & CO., G.R. No. 138900
its Petition[4] and set aside the trial courts orders dated 15 May 1998[5] and 4 June 1998[6] which respectively granted petitioners
& LEVI STRAUSS (PHILS.),
prayer for the issuance of a temporary restraining order (TRO) and application for the issuance of a writ of preliminary injunction.
INC., Present:

Petitioners,

PUNO,
This case stemmed from the Complaint[7] for Trademark Infringement, Injunction and Damages filed by petitioners LS & Co. and
Chairman,
LSPI against respondent Clinton Apparelle, Inc.* (Clinton Aparelle) together with an alternative defendant, Olympian Garments,
- versus - AUSTRIA-MARTINEZ, Inc. (Olympian Garments), before the Regional Trial Court of Quezon City, Branch 90. [8] The Complaint was docketed as Civil Case

CALLEJO, No. Q-98-34252, entitled Levi Strauss & Co. and Levi Strauss (Phils.), Inc. v. Clinton Aparelle, Inc. and/or Olympian Garments, Inc.

TINGA, and

CLINTON APPARELLE, INC., NAZARIO, JJ.

Respondent. The Complaint alleged that LS & Co., a foreign corporation duly organized and existing under the laws of the State of Delaware,

Promulgated: U.S.A., and engaged in the apparel business, is the owner by prior adoption and use since 1986 of the internationally famous

September 20, 2005 Dockers and Design trademark. This ownership is evidenced by its valid and existing registrations in various member countries of

x----------------------------------------------------------------------x 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]

DECISION
The Dockers and Design trademark was first used in the Philippines in or about May 1988, by LSPI, a domestic corporation

TINGA, J.: 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]

Before us is a petition for review on certiorari[1] 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 Decision[2] and Resolution[3] respectively dated 21 LS & Co. and LSPI further alleged that they discovered the presence in the local market of jeans under the brand name Paddocks

December 1998 and 10 May 1999. The questioned Decision granted respondents prayer for a writ of preliminary injunction in 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.


Acting on the prayer for the issuance of a TRO, the trial court issued an Order[14] setting 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]


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 3 [11] of the 1997 Rules of Civil

Procedure.[12]
On 14 May 1998, neither Clinton Apparelle nor Olympian Garments appeared. Clinton Apparelle claimed that it was not notified

The Complaint contained a prayer that reads as follows: 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]

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 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,
The following day, the trial court issued an Order[17] granting the TRO applied for, the pertinent portions of which state:
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.

Considering the absence of counsel/s for the defendant/s during the summary hearing scheduled on May 5,
2. That after notice and hearing, and pending trial on the merits, a writ of preliminary injunction be issued 1998 and also during the re-scheduled summary hearing held on May 14, 1998 set for the purpose of
enjoining defendants, their officers, employees, agents, dealers, retailers, or assigns from manufacturing, determining whether or not a Temporary Restraining Order shall be issued, this Court allowed the counsel
distributing, selling, offering for sale, advertising, jeans the design herein complained of as substantially, if for the plaintiffs to present on May 14, 1998 their arguments/evidences in support of their application. After
not exactly similar, to plaintiffs Dockers and Design trademark. 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.
3. That after trial on the merits, judgment be rendered as follows:

WHEREFORE, let this Temporary Restraining Order be issued restraining the defendants, their officers,
a. Affirming and making permanent the writ of preliminary injunction;
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,
b. Ordering that all infringing jeans in the possession of either or both defendants as the evidence may offering for sale, advertising or otherwise using denims, jeans or pants with the design complained of in the
warrant, their officers, employees, agents, retailers, dealers or assigns, be delivered to the Honorable Court verified Complaint as substantially, if not exactly similar, to plaintiffs Dockers and Design trademark; until
of plaintiffs, and be accordingly destroyed;[13] after the application/prayer for the issuance of a Writ of Preliminary Injunction is heard/resolved, or until
further orders from this Court.
The evidence considered by the trial court in granting injunctive relief were as follows: (1) a certified true copy of the
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 certificate of trademark registration for Dockers and Design; (2) a pair of DOCKERS pants bearing the Dockers and Design
considering that the lifetime of this Temporary Restraining Order is twenty (20) days from date hereof.[18]
trademark; (3) a pair of Paddocks pants bearing respondents 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,
On 4 June 1998, the trial court issued another Order[19] granting the writ of preliminary injunction, to wit:
Inc. which detailed the methodology and procedure used in their survey and the results thereof.[21]
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; see also 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 Clinton Apparelle thereafter filed a Motion to Dismiss[22] and a Motion for Reconsideration[23] of the Order granting the writ of
the status quo 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) preliminary injunction. Meantime, the trial court issued an Order[24] approving the bond filed by petitioners.

On 22 June 1998, the trial court required[25] the parties to file their respective citation of authorities/ jurisprudence/Supreme
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 Court decisions on whether or not the trial court may issue the writ of preliminary injunction pending the resolution of the Motion
bond of P2,500,000.00 executed to the defendants to the effect that the plaintiffs will pay all damages the
for Reconsideration and the Motion to Dismiss filed by respondent.
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,
On 2 October 1998, the trial court denied Clinton Apparelles Motion to Dismiss and Motion for Reconsideration in an Omnibus
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
Order,[26] the pertinent portions of which provide:
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]

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 20 October 1998, the Court of Appeals issued a Resolution[29] requiring herein petitioners to file their comment on

On the first motion, the arguments raised in the plaintiffs aforecited Consolidated Opposition appears to be the Petition and at the same time issued the prayed-for temporary restraining order.
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.

The appellate court rendered on 21 December 1998 its now assailed Decision granting Clinton Apparelles petition. The Court of
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 Appeals held that the trial court did not follow the procedure required by law for the issuance of a temporary restraining order as
and set aside this Courts 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 Clinton Apparelle was not duly notified of the date of the summary hearing for its issuance. Thus, the Court of Appeals ruled that
covered by BPTTT Certificate of Registration No. 46619 even as the BPTTT Certificate of Registration No.
the TRO had been improperly issued.[30]
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 Courts 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 Court of Appeals also held that the issuance of the writ of preliminary injunction is questionable. In its opinion, herein
The writ of preliminary injunction was thereafter issued on 8 October 1998. [27]
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-parte are 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]

Thus, Clinton Apparelle filed with the Court of Appeals a Petition[28] 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
In addition, the Court of Appeals strongly believed that the implementation of the questioned writ would effectively shut down
May 1998, 4 June 1998 and 2 October 1998.
respondents 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 At issue is whether the issuance of the writ of preliminary injunction by the trial court was proper and whether the Court of

of preliminary injunction. 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
With the denial of their Motion for Reconsideration,[32] petitioners are now before this Court seeking a review of the appellate
accepted as the strong arm of equity or a transcendent remedy to be used cautiously as it affects the respective rights of the
courts Decision and Resolution. LS & Co. and LSPI claim that the Court of Appeals committed serious error in: (1) disregarding the
parties, and only upon full conviction on the part of the court of its extreme necessity. An extraordinary remedy, injunction is
well-defined limits of the writ of certiorari that questions on the sufficiency of evidence are not to be resolved in such a petition;
designed to preserve or maintain the status quo of things and is generally availed of to prevent actual or threatened acts until the
(2) in holding that there was no confusion between the two marks; (3) in ruling that the erosion of petitioners trademark is not
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
protectable by injunction; (4) in ignoring the procedure previously agreed on by the parties and which was adopted by the trial
interests and for no other purpose during the pendency of the principal action.[35] It is resorted to only when there is a pressing
court; and (5) in declaring that the preliminary injunction issued by the trial court will lead to the closure of respondents business.
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]


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
Section 3, Rule 58, of the Rules of Court enumerates the grounds for the issuance of a preliminary injunction:
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. 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
There is no merit in the petition.
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 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.
(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.

Petitioners anchor their legal right to Dockers and Design trademark on the Certificate of Registration issued in their favor by the

Under the cited provision, a clear and positive right especially calling for judicial protection must be shown. Injunction is not a Bureau of Patents, Trademarks and Technology Transfer.* According to Section 138 of Republic Act No. 8293,[42] this Certificate of

remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a right not in esse and which may Registration is prima facie evidence of the validity of the registration, the registrants ownership of the mark and of the exclusive

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 right to use the same in connection with the goods or services and those that are related thereto specified in the certificate.

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 Section 147.1 of said law likewise grants the owner of the registered mark the exclusive right to prevent all third parties not

are violative of said right.[38] having the owners 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.

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 However, attention should be given to the fact that petitioners registered trademark consists of two elements: (1) the word mark

past.[39] 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 Apparelles 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

The Court of Appeals did not err in reviewing proof adduced by petitioners to support its application for the issuance of the writ. trademarks apparently differ in their word marks (Dockers and Paddocks), but again according to petitioners, they employ similar

While the matter of the issuance of a writ of preliminary injunction is addressed to the sound discretion of the trial court, this
or identical logos. It could thus be said that respondent only appropriates petitioners logo and not the word mark Dockers; it uses obtain injunctive relief, and that the mere use by an infringer of a registered mark is already actionable even if he has not yet

only a portion of the registered trademark and not the whole. profited thereby or has damaged the trademark owner.

Given the single registration of the trademark Dockers and Design and considering that respondent only uses the assailed device
Trademark dilution is the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of
but a different word mark, the right to prevent the latter from using the challenged Paddocks device is far from clear. Stated
the presence or absence of: (1) competition between the owner of the famous mark and other parties; or (2) likelihood of
otherwise, it is not evident whether the single registration of the trademark Dockers and Design confers on the owner the right to
confusion, mistake or deception. Subject to the principles of equity, the owner of a famous mark is entitled to an injunction
prevent the use of a fraction thereof in the course of trade. It is also unclear whether the use without the owners consent of a
against another persons commercial use in commerce of a mark or trade name, if such use begins after the mark has become
portion of a trademark registered in its entirety constitutes material or substantial invasion of the owners right.
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]

It is likewise not settled whether the wing-shaped logo, as opposed to the word mark, is the dominant or central feature of

petitioners trademarkthe feature that prevails or is retained in the minds of the publican imitation of which creates the likelihood
Based on the foregoing, to be eligible for protection from dilution, there has to be a finding that: (1) the trademark sought to be
of deceiving the public and constitutes trademark infringement. [43] In sum, there are vital matters which have yet and may only be
protected is famous and distinctive; (2) the use by respondent of Paddocks and Design began after the petitioners mark became
established through a full-blown trial.
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
From the above discussion, we find that petitioners right to injunctive relief has not been clearly and unmistakably demonstrated.
establish that there was confusing similarity between two marks is not sufficient proof of any dilution that the trial court must
The right has yet to be determined. Petitioners also failed to show proof that there is material and substantial invasion of their
enjoin.
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
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
The Court also finds that the trial courts order granting the writ did not adequately detail the reasons for the grant, contrary to
injunction should be refused.[49]
our ruling in University of the Philippines v. Hon. Catungal Jr., [45] wherein we held that:

We also believe that the issued injunctive writ, if allowed, would dispose of the case on the merits as it would effectively enjoin
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 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. [50] There 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]

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 Parenthetically, we find no flaw in the Court of Appeals disquisition on the consequences of the issued injunction. An exercise of

paramount interest of justice will be better served if the status quo shall be maintained. Clearly, this statement falls short of the caution, we believe that such reflection is necessary to weigh the alleged entitlement to the writ vis--vis its possible effects. The
[47]
requirement laid down by the above-quoted case. Similarly, in Developers Group of Companies, Inc. v. Court of Appeals, we 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

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 assailed injunction if sustained would bring about the result desired by petitioners without a trial on the merits.

plaintiff is entitled to the relief prayed for.

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 respondents 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
In addition, we agree with the Court of Appeals in its holding that the damages the petitioners had suffered or continue to suffer merits of the infringement case, which remains to be decided by the trial court. In our view, it was premature for the Court of
[48]
may be compensated in terms of monetary consideration. As held in Government Service Insurance System v. Florendo: 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.,[52] rejected 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.
G.R. No. L-40163 June 19, 1982 (2) That plaintiff has no registered trademark or trade name in the Philippine Patent Office of any of its
products; and
LEVITON INDUSTRIES, NENA DE LA CRUZ LIM, DOMINGO GO, and LIM KIAT, petitioners,
vs. (3) That plaintiff has no license to do business in the Philippines under and by virtue of the provision of Act
HON. SERAFIN SALVADOR, Judge, Court of First Instance of Rizal, Caloocan City, Branch XIV and LEVITON MANUFACTURING No. 1459, better known as the Philippine Corporation Law, at the time it filed the complaint. 1
CO., INC., respondents.
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
ESCOLIN, J: 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

Challenged in this petition for certiorari and prohibition is the order of the respondent Judge Serafin Salvador in Civil Case No. C- On the basis of these admissions, defendants filed an Urgent Supplemental Motion to Dismiss. This was followed by the plaintiff's
2891 of the Court of First Instance of Rizal, sustaining the legal capacity of a foreign corporation to maintain a suit for unfair opposition, and the defendant's rejoinder, after which respondent judge issued the questioned order 3denying the motion, thus:
competition under Section 21-A of Republic Act No. 166, as amended, otherwise known as the Trademark Law.
Acting on the Urgent Supplemental Motion to Dismiss, dated July 2, 1974, filed by counsels for the
On April 17, 1973, private respondent Leviton Manufacturing Co., Inc. filed a complaint for unfair competition against petitioners defendants, as well as the oppositions thereto, the Court after a careful consideration of the reasons
Leviton Industries, Nena de la Cruz Lim, Domingo Go and Lim Kiat before the Court of First Instance of Rizal, Branch XXXIII, adduced for and against said motion, is of the opinion that the same should be, as it is hereby DENIED.
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, SO ORDERED.
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 The motion for reconsideration having likewise been denied, defendants instituted the instant petition for certiorari and
Industries; that plaintiff, founded in 1906 by Isidor Leviton, is the largest manufacturer of electrical wiring devices in the United prohibition, charging respondent judge with grave abuse of discretion in denying their motion to dismiss.
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 We agree with petitioners that respondent Leviton Marketing Co., Inc. had failed to allege the essential facts bearing upon its
its products by the public, the same are well known to Filipino consumers under the trade name Leviton Manufacturing Co., Inc. capacity to sue before Philippine courts. Private respondent's action is squarely founded on Section 21-A of Republic Act No. 166,
and trademark Leviton; that long subsequent to the use of plaintiff's trademark and trade name in the Philippines, defendants as amended, which we quote:
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 Sec. 21-A. Any foreign corporation or juristic person to which a mark or tradename has been registered or
Patent Office the trademarks Leviton Label and Leviton with respect to ballast and fuse under Certificate of Registration Nos. SR- assigned under this Act may bring an action hereunder for infringement, for unfair competition, or false
1132 and 15517, respectively, which registration was contrary to paragraphs (d) and (e) of Section 4 of RA 166, as amended, and designation of origin and false description, whether or not it has been licensed to do business in the
violative of plaintiff's right over the trademark Leviton; that defendants not only used the trademark Leviton but likewise copied Philippines under Act numbered Fourteen Hundred and Fifty-Nine, as amended, otherwise known as the
the design used by plaintiff in distinguishing its trademark; and that the use thereof by defendants of its products would cause Corporation Law, at the time it brings the complaint; Provided, That the country of which the said foreign
confusion in the minds of the consumers and likely to deceive them as to the source of origin, thereby enabling defendants to corporation or juristic person is a citizen, or in which it is domiciled, by treaty, convention or law, grants a
pass off their products as those of plaintiff's. Invoking the provisions of Section 21-A of Republic Act No. 166, plaintiff prayed for similar privilege to corporate or juristic persons of the Philippines. (As amended by R.A. No. 638)
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.
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
Defendants moved to dismiss the complaint for failure to state a cause of action, drawing attention to the plaintiff's failure to indicates as a condition sine qua non the registration of the trade mark of the suing foreign corporation with the Philippine Patent
allege therein its capacity to sue under Section 21-A of Republic Act No. 166, as amended. After the filing of the plaintiff's Office or, in the least, that it be an asignee of such registered trademark. The said section further requires that the country, of
opposition and the defendant's reply, the respondent judge denied the motion on the ground that the same did not appear to be which the plaintiff foreign corporation or juristic person is a citizen or domicilliary, grants to Filipino corporations or juristic
indubitable. On September 21, 1973, defendants filed their answer, reiterating the ground supporting their motion to dismiss. entities the same reciprocal treatment, either thru treaty, convention or law,
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:
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
(1) That the plaintiff is not actually manufacturing, selling and/or distributing ballasts generally used in 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
flourescent lighting; 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 It cannot sue under section 21-A because it has not complied with the requirements thereof that (1) its trademark "Leviton" has
pointed out, explicitly sets down the conditions precedent for the successful prosecution thereof. It is therefore incumbent upon been registered with the Patent Office and (2) that it should show that the State of New York grants to Philippine corporations the
private respondent to comply with these requirements or aver its exemption therefrom, if such be the case. It may be that private privilege to bring an action for unfair competition in that state.
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 Respondent Leviton has to comply with those requirements before it can be allowed to maintain an action for unfair competition
Insurance Co., et al. versus Cebu Stevedoring Co., Inc." 4 is that — (Atlantic Mutual Ins. Co. vs. Cebu Stevedoring Co., Inc 124 Phil. 463).

these are matters peculiarly within the knowledge of appellants alone, and it would be unfair to impose upon On April 16, 1971 respondent Leviton Manufacturing Co., Inc. filed an application with the Patent Office for the registration of its
appellees the burden of asserting and proving the contrary. It is enough that foreign corporations are trademark. The record does not show whether that application has been granted.
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. The fact that it has filed with the Patent Office two petitions both dated June 14, 1974 for the cancellation of the trademark
"Leviton" issued to Domingo Go shows that the dismissal of its instant action for unfair competition does not leave it without any
remedy whatsoever.
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 That remedy — administrative cancellation of the trademark — was resorted to in General Garments Corporation vs. Director of
organized association of persons that is made a party, must be averred, Patents, L-24295, September 30, 1971, 41 SCRA 50, cited by respondent Leviton in its memorandum. It is provided for in section
17 of Republic Act No. 166. As held in the General Garments Corporation case, section 17 does not require that the trademark of
the foreign corporation alleged to have been infringed should have been registered.
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. In this connection, it may be noted that section 133 of the Corporation Code, Batas Blg. 68, which took effect on May 1, 1980,
No costs. provides that "no foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be
permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines ... ."
Section 133 is more stringent than section 69 of the Corporation Law, Act No. 1459.
SO ORDERED.

Guerrero, Abad Santos and De Castro, JJ., concur.

Separate Opinions
Concepcion Jr., J., is on leave.

BARREDO, J., concurring:

I concur in the above opinion and judgment as well as in the concurring opinion of Justice Aquino.
Separate Opinions

AQUINO, J., concurring:

I concur. Respondent Leviton Manufacturing Co., Inc. alleged in paragraph 2 of its complaint for unfair competition that its action
BARREDO, J., concurring: "is being filed under the provisions of section 21-A of Republic Act" No. 166, as amended. Respondent is bound by that allegation
in its complaint.
I concur in the above opinion and judgment as well as in the concurring opinion of Justice Aquino.
It cannot sue under section 21-A because it has not complied with the requirements thereof that (1) its trademark "Leviton" has
AQUINO, J., concurring: 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.
I concur. Respondent Leviton Manufacturing Co., Inc. alleged in paragraph 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 that allegation Respondent Leviton has to comply with those requirements before it can be allowed to maintain an action for unfair competition
in its complaint. (Atlantic Mutual Ins. Co. vs. Cebu Stevedoring Co., Inc 124 Phil. 463).

On April 16, 1971 respondent Leviton Manufacturing Co., Inc. filed an application with the Patent Office for the registration of its
trademark. The record does not show whether that application has been granted.
The fact that it has filed with the Patent Office two petitions both dated June 14, 1974 for the cancellation of the trademark
"Leviton" issued to Domingo Go shows that the dismissal of its instant action for unfair competition does not leave it without any
remedy whatsoever.

That remedy — administrative cancellation of the trademark — was resorted to in General Garments Corporation vs. Director of
Patents, L-24295, September 30, 1971, 41 SCRA 50, cited by respondent Leviton in its memorandum. It is provided for in section
17 of Republic Act No. 166. As held in the General Garments Corporation case, section 17 does not require that the trademark of
the foreign corporation alleged to have been infringed should have been registered.

In this connection, it may be noted that section 133 of the Corporation Code, Batas Blg. 68, which took effect on May 1, 1980,
provides that "no foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be
permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines ... ."
Section 133 is more stringent than section 69 of the Corporation Law, Act No. 1459.
G.R. No. 75067 February 26, 1988 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
PUMA SPORTSCHUHFABRIKEN RUDOLF DASSLER, K.G., petitioner trademark "PUMA" for socks and belts such that both parties seek the cancellation of the trademark of the
vs. other (see prayer in private respondent's complaint, pp, 54-55, Rollo, Annex "A" to the Petition). Inevitably,
THE INTERMEDIATE APPELLATE COURT and MIL-ORO MANUFACTURING CORPORATION, respondents. 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.
GUTIERREZ, JR., J.: 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
This is a petition for review by way of certiorari of the Court of Appeals' decision which reversed the order of the Regional Trial obtaining circumstances, the rights of the respective parties are dependent upon the resolution of a single
Court and dismissed the civil case filed by the petitioner on the grounds of litis pendentia and lack of legal capacity to sue. 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.

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 As to the third requisite, the decisions and orders of administrative agencies rendered pursuant to their
with a prayer for the issuance of a writ of preliminary injunction against the private respondent before the Regional Trial Court of quasi-judicial authority have upon their finality the character of res judicata (Brilliantes v. Castro, 99 Phil.
Makati. 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
Prior to the filing of the said civil suit, three cases were pending before the Philippine Patent Office, namely: 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)
Inter Partes Case No. 1259 entitled 'PUMA SPORTSCHUHFABRIKEN v. MIL-ORO MANUFACTURING different forums to hear the same case and resolve a main and determinative issue with both forums risking
CORPORATION, respondent-applicant which is an opposition to the registration of petitioner's trademark the possibility of arriving at different conclusions. In the construction of laws and statutes regarding
'PUMA and DEVICE' in the PRINCIPAL REGISTER; 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
Inter Partes Case No. 1675 similarly entitled, 'PUMA SPORTSCHUHFABRIKEN RUDOLF DASSLER, K.G.,
Intermediate Appellate Court (Sec. 9, BP 129), as both are co-equal in rank regarding the cases that may fall
petitioner, versus MIL-ORO MANUFACTURING CORPORATION, respondent-registrant,' which is a case for the
within their jurisdiction.
cancellation of the trademark registration of the petitioner; and

The record reveals that on March 31, 1986, the Philippine Patent Office rendered a decision in Inter Partes
Inter Partes Case No. 1945 also between the same parties this time the petitioner praying for the
Cases Nos. 1259 and 1675 whereby it concluded that petitioner is the prior and actual adaptor of the
cancellation of private respondent's Certificate of Registration No. 26875 (pp. 40-41, 255, Rollo) (pp. 51 -52,
trademark 'PUMA and DEVICE used on sports socks and belts, and that MIL-ORO CORPORATION is the
Rollo)
rightful owner thereof. ... (pp. 6-7, CA — decision, pp. 51-52, Rollo)

On July 31, 1985, the trial court issued a temporary restraining order, restraining the private respondent and the Director of
With regard to the petitioner's legal capacity to sue, the Court of Appeals likewise held that it had no such capacity because it
Patents from using the trademark "PUMA' or any reproduction, counterfeit copy or colorable imitation thereof, and to withdraw
failed to allege reciprocity in its complaint:
from the market all products bearing the same trademark.

As to private respondent's having no legal personality to sue, the record discloses that private respondent
On August 9, 1985, the private respondent filed a motion to dismiss on the grounds that the petitioners' complaint states no
was suing under Sec. 21-A of Republic Act No. 166, as amended (p. 50, Annex "A", Petition). This is the
cause of action, petitioner has no legal personality to sue, and litis pendentia.
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,
On August 19, 1985, the trial court denied the motion to dismiss and at the same time granted the petitioner's application for a Corporation Code, in relation to Sec. 21-A, RA 638, as amended). However, there are some conditions which
writ of injunction. The private respondents appealed to the Court of Appeals. 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
On June 23, 1986, the Court of Appeals reversed the order of the trial court and ordered the respondent judge to dismiss the civil a reciprocal treatment to Philippine Corporations either by law or convention by the country of origin of the
case filed by the petitioner. 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
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
Trademark Law which is the private respondent's failure to allege reciprocity in the complaint. ...
dismiss have been met. It said:
Citing the case of Leviton Industries v. Salvador (114 SCRA 420), it further ruled: 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.
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 Quoting the Paris Convention and the case of Vanity Fair Mills, Inc. v. T. Eaton, Co. (234 F. 2d 633), this Court further said:
Justice Aquino on the same case is more emphatic when he said:
By the same token, the petitioner should be given the same treatment in the Philippines as we make
Respondent Leviton Manufacturing Co. Inc., alleged in par. 2 of its complaint for unfair available to our own citizens. We are obligated to assure to nationals of 'countries of the Union' an effective
competition that its action 'is being filed under the provisions of Section 21-A of protection against unfair competition in the same way that they are obligated to similarly protect Filipino
Republic Act No. 166, as amended.' Respondent is bound by the allegation in its citizens and firms.
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 Pursuant to this obligation, the Ministry of Trade on November 20,1980 issued a memorandum addressed to
Office and (2) that it should show that the State of New York grants to Philippine the Director of the Patents Office directing the latter --
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). xxx xxx xxx

The Court of Appeals further ruled that in issuing the writ of preliminary injunction, the trial court committed grave abuse of ... [T]o reject all pending applications for Philippine registration of signature and other world famous
discretion because it deprived the private respondent of its day in court as the latter was not given the chance to present its trademarks by applicants other than its original owners or users.
counter-evidence.
The conflicting claims over internationally known trademarks involve such name brands as Lacoste, Jordache,
In this petition for review, the petitioner contends that the Court of appeals erred in holding that: (1) it had no legal capacity to Gloria Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy,
sue; (2) the doctrine of lis pendens is applicable as a ground for dismissing the case and (3) the writ of injunction was improperly Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.
issued.
It is further directed that, in cases where warranted, Philippine registrants of such trademarks should be
Petitioner maintains that it has substantially complied with the requirements of Section 21-A of Republic Act R.A. No. 166, as asked to surrender their certificates of registration, if any, to avoid suits for damages and other legal action
amended. According to the petitioner, its complaint specifically alleged that it is not doing business in the Philippines and is suing by the trademarks' foreign or local owners or original users.
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 The memorandum is a clear manifestation of our avowed adherence to a policy of cooperation and amity
Philippines" but does not mandatorily require that such reciprocity between the Federal Republic of Germany and the Philippines with an nations. It is not, as wrongly alleged by the private respondent, a personal policy of Minister Luis
be pleaded; that such reciprocity arrangement is embodied in and supplied by the Union Convention for the Protection of Villafuerte which expires once he leaves the Ministry of trade. For a treaty or convention is not a mere moral
Industrial Property Paris Convention) to which both the Philippines and Federal Republic of Germany are signatories and that obligation to be enforced or not at the whims of an incumbent head of a Ministry. It creates a legally binding
since the Paris 'Convention is a treaty which, pursuant to our Constitution, forms part of the law of the land, our courts are bound obligation on the parties founded on the generally accepted principle of international law of pacta sunt
to take judicial notice of such treaty, and, consequently, this fact need not be averred in the complaint. 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
We agree. obeyed. (at pp. 389-390, La Chemise Lacoste, S.A. v. Fernandez, supra).

In the leading case of La Chemise Lacoste, S.A .v. Fernandez, (129 SCRA 373), we ruled: 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:
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 The ruling in the aforecited case is in consonance with the Convention of Converse Rubber Corporation v.
respondent Hernandes. As early as 1927, this Court was, and it still is, of the view that a foreign corporation Universal Rubber Products, Inc. (I 47 SCRA 165), we likewise re-affirmed our adherence to the Paris
not doing business in the Philippines needs no license to sue before Philippine courts for infringement of Convention: the Union of Paris for the Protection of Industrial Property to which the Philippines became a
trademark and unfair competition. Thus, in Western Equipment and Supply Co. v. Reyes (51 Phil. 11 5), this party on September 27, 1965. Article 8 thereof provides that 'a trade name [corporation name] shall be
Court held that a foreign corporation which has never done any business in the Philippines and which is protected in all the countries of the Union without the obligation of filing or registration, whether or not it
unlicensed and unregistered to do business here, but is widely and favorably known in the Philippines forms part of the trademark.'
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 The object of the Convention is to accord a national of a member nation extensive protection 'against
therein bearing the same name as the foreign corporation, when it appears that they have personal 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, from our country. The greater victim is not so much the manufacturer whose product is being faked but the
otherwise known as the trademark Law: 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
Rights of Foreign Registrants. — Persons who are nationals of, domiciled in, or have a bona fide or effective and Industry for the protection of consumers, stated that, among other acts, the dumping of substandard,
business or commercial establishment in any foreign country, which is a party to an international convention imitated, hazardous, and cheap goods, the infringement of internationally known tradenames and
or treaty relating to marks or tradenames on the represssion of unfair competition to which the Philippines trademarks, and the unfair trade Practices of business firms have reached such proportions as to constitute
may be party, shall be entitled to the benefits and subject to the provisions of this Act ... 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
Tradenames of persons described in the first paragraph of this section shall be protected without the explode in bitter frustration and helpless anger because the purchased item turns out to be a shoddy
obligation of filing or registration whether or not they form part of marks. 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,
We, therefore, hold that the petitioner had the legal capacity to file the action below. 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
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 pursuant to international conventions and treaties. (at p. 403)
action is different from the relief sought in the Inter Partes cases. More important, however, is the fact that forlis 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 WHEREFORE, the appealed decision of the Court of Appeals dated June 23, 1986 is REVERSED and SET ASIDE and the order of the
court action. As we have held in Solancho v. Ramos (19 SCRA 848): Regional Trial Court of Makati is hereby Reinstated.

As noted above, the defendants contend that the pendency of an administrative between themselves and SO ORDERED.
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 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
G.R. No. L-63796-97 May 2, 1984 contested in a Petition for Cancellation docketed as IPC No. 1046, still registrant is presumed to be the owner
of the mark until after the registration is declared cancelled.
LA CHEMISE LACOSTE, S. A., petitioner,
vs. Thereafter, Hemandas & Co. assigned to respondent Gobindram Hemandas all rights, title, and interest in the trademark
HON. OSCAR C. FERNANDEZ, Presiding Judge of Branch XLIX, Regional Trial Court, National Capital Judicial Region, Manila and "CHEMISE LACOSTE & DEVICE".
GOBINDRAM HEMANDAS, respondents.
On November 21, 1980, the petitioner filed its application for registration of the trademark "Crocodile Device" (Application Serial
G.R. No. L-65659 May 2l, 1984 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-
GOBINDRAM HEMANDAS SUJANANI, petitioner, 2225 docketed as Inter Partes Case No. 1689. Both cases have now been considered by this Court in Hemandas v. Hon. Roberto
vs. Ongpin (G.R. No. 65659).
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. 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
Castillo, Laman, Tan & Pantaleon for petitioners in 63796-97. 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.
Ramon C. Fernandez for private respondent in 63796-97 and petitioner in 65659.
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
GUTIERREZ, JR., J.: 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.
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 Hemandas filed a motion to quash the search warrants alleging that the trademark used by him was different from petitioner's
which have established themselves in international or foreign trade. 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.
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" The petitioner filed its opposition to the motion arguing that the motion to quash was fatally defective as it cited no valid ground
"CHEMISE LACOSTE", "CROCODILE DEVICE" and a composite mark consisting of the word "LACOSTE" and a representation of a for the quashal of the search warrants and that the grounds alleged in the motion were absolutely without merit. The State
crocodile/alligator. The petitioner asks us to set aside as null and void, the order of judge Oscar C. Fernandez, of Branch XLIX, Prosecutor likewise filed his opposition on the grounds that the goods seized were instrument of a crime and necessary for the
Regional Trial Court, National Capital Judicial Region, granting the motion to quash the search warrants previously issued by him resolution of the case on preliminary investigation and that the release of the said goods would be fatal to the case of the People
and ordering the return of the seized items. should prosecution follow in court.

The facts are not seriously disputed. The petitioner is a foreign corporation, organized and existing under the laws of France and The respondent court was, however, convinced that there was no probable cause to justify the issuance of the search warrants.
not doing business in the Philippines, It is undeniable from the records that it is the actual owner of the abovementioned Thus, in its order dated March 22, 1983, the search warrants were recalled and set aside and the NBI agents or officers in custody
trademarks used on clothings and other goods specifically sporting apparels sold in many parts of the world and which have been of the seized items were ordered to return the same to Hemandas. (Rollo, p. 25)
marketed in the Philippines since 1964, The main basis of the private respondent's case is its claim of alleged prior registration.
The petitioner anchors the present petition on the following issues:
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, Did respondent judge act with grave abuse of discretion amounting to lack of jurisdiction,
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:
(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
xxx xxx xxx merits; and

... Considering that the mark was already registered in the Supplemental Register in favor of herein applicant, (ii) in finding that the issuance of the search warrants is premature in the face of the fact that (a) Lacoste's
the Office has no other recourse but to allow the application, however, Reg. No. SR-2225 is now being 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 Thus, this Court held that "whatever transactions the Philippine-American Drug Co., Inc. had executed in view of the law, the
Register of the Philippine Patent Office? 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
Respondent, on the other hand, centers his arguments on the following issues: competition."

I 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
THE PETITIONER HAS NO CAPACITY TO SUE BEFORE PHILIPPINE COURTS. and established trademarks and tradenames. in other words, Rustan is not a mere agent or conduit of the petitioner.

II 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
THE RESPONDENT JUDGE DID NOT COMMIT A GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OF JURISDICTION IN Philippines. Rule I, Sec. 1 (g) of said rules and regulations defines "doing business" as one" which includes, inter alia:
ISSUING THE ORDER DATED APRIL 22, 1983.
(1) ... A foreign firm which does business through middlemen acting on their own names, such as indentors,
Hemandas argues in his comment on the petition for certiorari that the petitioner being a foreign corporation failed to allege commercial brokers or commission merchants, shall not be deemed doing business in the Philippines. But
essential facts bearing upon its capacity to sue before Philippine courts. He states that not only is the petitioner not doing such indentors, commercial brokers or commission merchants shall be the ones deemed to be doing business
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. in the Philippines.
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: (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
Sec. 21 — A. Any foreign corporation or juristic person to which a mark or tradename has been registered or the name or for the account of a principal Thus, where a foreign firm is represented by a person or local
assigned under this Act may bring an action hereunder for infringement, for unfair competition, or false company which does not act in its name but in the name of the foreign firm the latter is doing business in the
designation of origin and false description, whether or not it has been licensed to do business in the Philippines.
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 xxx xxx xxx
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.
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
We held that it was not enough for Leviton, a foreign corporation organized and existing under the laws of the State of New York, name or for the account of the petitioner.
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 But even assuming the truth of the private respondent's allegation that the petitioner failed to allege material facts in its petition
certain conditions in a specific proviso, the same must be expressly averred before a successful prosecution may ensue. It is relative to capacity to sue, the petitioner may still maintain the present suit against respondent Hemandas. As early as 1927, this
therefore, necessary for the foreign corporation to comply with these requirements or aver why it should be exempted from 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
them, if such was the case. The foreign corporation may have the right to sue before Philippine courts, but our rules on pleadings Philippine courts for infringement of trademark and unfair competition. Thus, in Western Equipment and Supply Co. v. Reyes (51
require that the qualifying circumstances necessary for the assertion of such right should first be affirmatively pleaded. 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
In contradistinction, the present case involves a complaint for violation of Article 189 of the Revised Penal Code. The Leviton case inhabitants thereof from organizing a corporation therein bearing the same name as the foreign corporation, when it appears that
is not applicable. 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.
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 We further held:
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. xxx xxx xxx

The argument has no merit. The Mentholatum case is distinct from and inapplicable to the case at bar. Philippine American Drug ... That company is not here seeking to enforce any legal or control rights arising from, or growing out of, any
Co., Inc., was admittedly selling products of its principal Mentholatum Co., Inc., in the latter's name or for the latter's account. 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 xxx xxx xxx
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: ARTICLE 2

Is a property right, a right in rem, which it may assert and protect against all the world, in any of the courts of (2) Nationals of each of the countries of the Union shall as regards the protection of industrial property,
the world-even in jurisdictions where it does not transact business-just the same as it may protect its enjoy in all the other countries of the Union the advantages that their respective laws now grant, or may
tangible property, real or personal, against trespass, or conversion. Citing sec. 10, Nims on Unfair hereafter grant, to nationals, without prejudice to the rights specially provided by the present Convention.
Competition and TradeMarks and cases cited; secs. 21-22, Hopkins on TradeMarks, Trade Names and Unfair Consequently, they shall have the same protection as the latter, and the same legal remedy against any
Competition and cases cited.' That point is sustained by the authorities, and is well stated in Hanover Star infringement of their rights, provided they observe the conditions and formalities imposed upon nationals.
Mining Co. v. Allen and Wheeler Co. (208 Fed., 513). in which the syllabus says:

xxx xxx xxx


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. ARTICLE 6

Our recognizing the capacity of the petitioner to sue is not by any means novel or precedent setting. Our jurisprudence is replete (1) The countries of the Union undertake, either administratively if their legislation so permits, or at the
with cases illustrating instances when foreign corporations not doing business in the Philippines may nonetheless sue in our request of an interested party, to refuse or to cancel the registration and to prohibit the use of a trademark
courts. In East Board Navigation Ltd, v. Ysmael and Co., Inc. (102 Phil. 1), we recognized a right of foreign corporation to sue on which constitutes a reproduction, imitation or translation, liable to create confusion, of a mark considered by
isolated transactions. In General Garments Corp. v. Director of Patents (41 SCRA 50), we sustained the right of Puritan Sportswear the competent authority of the country of registration or use to be well-known in that country as being
Corp., a foreign corporation not licensed to do and not doing business in the Philippines, to file a petition for cancellation of a already the mark of a person entitled to the benefits of the present Convention and used for Identical or
trademark before the Patent Office. 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.

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. xxx xxx xxx
If prosecution 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 ARTICLE 8
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 A trade name shall be protected in all the countries of the Union without the obligation of filing or
cannot snow a possible violator of our criminal statutes to escape prosecution upon a far-fetched contention that the aggrieved registration, whether or not it forms part of a trademark.
party or victim of a crime has no standing to sue.

xxx xxx xxx


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 ARTICLE 10bis
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. (1) The countries of the Union are bound to assure to persons entitled to the benefits of the Union effective
protection against unfair competition.
The Paris Convention provides in part that:
xxx xxx xxx
ARTICLE 1
ARTICLE 10ter
(1) The countries to which the present Convention applies constitute themselves into a Union for the
protection of industrial property. (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) 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 (2) They undertake, further, to provide measures to permit syndicates and associations which represent the
repression of unfair competition. 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 The conflicting claims over internationally known trademarks involve such name brands as Lacoste, Jordache,
claimed allows such action by the syndicates and associations of that country. Gloria Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy,
Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.
xxx xxx xxx
It is further directed that, in cases where warranted, Philippine registrants of such trademarks should be
ARTICLE 17 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.

Every country party to this Convention undertakes to adopt, in accordance with its constitution, the
measures necessary to ensure the application of this Convention. 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
It is understood that at the time an instrument of ratification or accession is deposited on behalf of a head of a Ministry. It creates a legally binding obligation on the parties founded on the generally accepted principle of
country; such country will be in a position under its domestic law to give effect to the provisions of this international law of pacta sunt servanda which has been adopted as part of the law of our land. (Constitution, Art. II, Sec. 3). The
Convention. (61 O.G. 8010) memorandum reminds the Director of Patents of his legal duty to obey both law and treaty. It must also be obeyed.

xxx xxx xxx Hemandas further contends that the respondent court did not commit grave abuse of discretion in issuing the questioned order
of April 22, 1983.
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: 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
[11] The International Convention is essentially a compact between the various member countries to accord 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
in their own countries to citizens of the other contracting parties trademark and other rights comparable to respondent's trademark is different from the petitioner's trademark as a sufficient basis to grant the motion to quash. We will
those accorded their own citizens by their domestic law. The underlying principle is that foreign nationals treat the issue of prejudicial question later. Granting that respondent Hemandas was only trying to show the absence of probable
should be given the same treatment in each of the member countries as that country makes available to its cause, we, nonetheless, hold the arguments to be untenable.
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 As a mandatory requirement for the issuance of a valid search warrant, the Constitution requires in no uncertain terms the
competition.' 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
[12] The Convention is not premised upon the Idea that the trade-mark and related laws of each member the issuance of the warrant that are in themselves sufficient to induce a cautious man to rely upon them and act in pursuance
nation shall be given extra-territorial application, but on exactly the converse principle that each nation's law thereof (People v. Sy Juco, 64 Phil. 667).
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 This concept of probable cause was amplified and modified by our ruling in Stonehill v. Diokno, (20 SCRA 383) that probable cause
unfair competition by virtue of United States membership in the Convention. But that protection has its "presupposes the introduction of competent proof that the party against whom it is sought has performed particular acts, or
source in, and is subject to the limitations of, American law, not the law of the foreign national's own committed specific omissions, violating a given provision of our criminal laws."
country. ...
The question of whether or not probable cause exists is one which must be decided in the light of the conditions obtaining in
By the same token, the petitioner should be given the same treatment in the Philippines as we make available to our own citizens. given situations (Central Bank v. Morfe, 20 SCRA 507). We agree that there is no general formula or fixed rule for the
We are obligated to assure to nationals of "countries of the Union" an effective protection against unfair competition in the same determination of the existence of probable cause since, as we have recognized in Luna v. Plaza (26 SCRA 310), the existence
way that they are obligated to similarly protect Filipino citizens and firms. 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
Pursuant to this obligation, the Ministry of Trade on November 20, 1980 issued a memorandum addressed to the Director of the country's ability to abide by international commitments is at stake.
Patents Office directing the latter:
The records show that the NBI agents at the hearing of the application for the warrants before respondent court presented three
xxx xxx xxx 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
... to reject all pending applications for Philippine registration of signature and other world famous Espatero by means of searching questions. After hearing the testimonies and examining the documentary evidence, the
trademarks by applicants other than its original owners or users. 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 guard that there are certain defects, some obstacles which the user must Still overcome before he can claim legal ownership of
warrant. At that point in time, it was fully convinced that there existed probable cause. But after hearing the motion to quash and 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
the oppositions thereto, the respondent court executed a complete turnabout and declared that there was no probable cause to with nothing more than a registration in the Supplemental Register to posture before courts of justice as if the registration is in
justify its earlier issuance of the warrants. the Principal Register.

True, the lower court should be given the opportunity to correct its errors, if there be any, but the rectification must, as earlier The reliance of the private respondent on the last sentence of the Patent office action on application Serial No. 30954 that
stated be based on sound and valid grounds. In this case, there was no compelling justification for the about face. The allegation "registrant is presumed to be the owner of the mark until after the registration is declared cancelled" is, therefore, misplaced and
that vital facts were deliberately suppressed or concealed by the petitioner should have been assessed more carefully because grounded on shaky foundation, The supposed presumption not only runs counter to the precept embodied in Rule 124 of the
the object of the quashal was the return of items already seized and easily examined by the court. The items were alleged to be Revised Rules of Practice before the Philippine Patent Office in Trademark Cases but considering all the facts ventilated before us
fake and quite obviously would be needed as evidence in the criminal prosecution. Moreover, an application for a search warrant in the four interrelated petitions involving the petitioner and the respondent, it is devoid of factual basis. And even in cases where
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 presumption and precept may factually be reconciled, we have held that the presumption is rebuttable, not conclusive, (People v.
essence. Great reliance has to be accorded by the judge to the testimonies under oath of the complainant and the witnesses. The Lim Hoa, G.R. No. L10612, May 30, 1958, Unreported). One may be declared an unfair competitor even if his competing
allegation of Hemandas that the applicant withheld information from the respondent court was clearly no basis to order the 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).
return of the seized items.
By the same token, the argument that the application was premature in view of the pending case before the Patent Office is
Hemandas relied heavily below and before us on the argument that it is the holder of a certificate of registration of the trademark likewise without legal basis.
"CHEMISE LACOSTE & CROCODILE DEVICE". Significantly, such registration is only in the Supplemental Register.
The proceedings pending before the Patent Office involving IPC Co. 1658 do not partake of the nature of a prejudicial question
A certificate of registration in the Supplemental Register is not prima facie evidence of the validity of registration, of the which must first be definitely resolved.
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 Section 5 of Rule 111 of the Rules of Court provides that:
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).
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.
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:
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
xxx xxx xxx 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.
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. In Flordelis v. Castillo (58 SCRA 301), we held that:

xxx xxx xxx 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.
The reason is explained by a leading commentator on Philippine Commercial Laws: 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.
The registration of a mark upon the supplemental register is not, as in the case of the principal register, Montesa, 4 SCRA 510; Jimenez v. Averia, 22 SCRA 1380.) In Buenaventura v. Ocampo (55 SCRA 271) the
prima facie evidence of (1) the validity of registration; (2) registrant's ownership of the mark; and (3) doctrine of prejudicial question was held inapplicable because no criminal case but merely an administrative
registrant's exclusive right to use the mark. It is not subject to opposition, although it may be cancelled after case and a civil suit were involved. The Court, however, held that, in view of the peculiar circumstances of
its issuance. Neither may it be the subject of interference proceedings. Registration on the supplemental that case, the respondents' suit for damages in the lower court was premature as it was filed during the
register is not constructive notice of registrant's claim of ownership. A supplemental register is provided for pendency of an administrative case against the respondents before the POLCOM. 'The possibility cannot be
the registration of marks which are not registrable on the principal register because of some defects overlooked,' said the Court, 'that the POLCOM may hand down a decision adverse to the respondents, in
(conversely, defects which make a mark unregistrable on the principal register, yet do not bar them from the which case the damage suit will become unfounded and baseless for wanting in cause of action.') the
supplemental register.) (Agbayani, II Commercial Laws of the Philippines, 1978, p. 514, citing Uy Hong Mo v. doctrine of pre-judicial question comes into play generally in a situation where a civil action and a criminal
Titay & Co., et al., Dec. No. 254 of Director of Patents, Apr. 30, 1963); 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.
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
In the present case, no civil action pends nor has any been instituted. What was pending was an administrative case before the obliged to refuse or to cancel the registration of the mark by any other person or authority. In this case, it is
Patent Office. 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.
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 The issue of due process was raised and fully discussed in the appellate court's decision. The court ruled that due process was not
present in this case. violated.

Moreover, we take note of the action taken by the Patents Office and the Minister of Trade and affirmed by the Intermediate In the light of the foregoing it is quite plain that the prejudicial question argument is without merit.
Appellate Court in the case of La Chemise Lacoste S. A. v. Ram Sadhwani (AC-G.R. No. SP-13356, June 17, 1983).
We have carefully gone over the records of all the cases filed in this Court and find more than enough evidence to sustain a
The same November 20, 1980 memorandum of the Minister of Trade discussed in this decision was involved in the appellate finding that the petitioner is the owner of the trademarks "LACOSTE", "CHEMISE LACOSTE", the crocodile or alligator device, and
court's decision. The Minister as the "implementing authority" under Article 6bis of the Paris Convention for the protection of the composite mark of LACOSTE and the representation of the crocodile or alligator. Any pretensions of the private respondent
Industrial Property instructed the Director of Patents to reject applications for Philippine registration of signature and other world that he is the owner are absolutely without basis. Any further ventilation of the issue of ownership before the Patent Office will
famous trademarks by applicants other than its original owners or users. The brand "Lacoste" was specifically cited together with be a superfluity and a dilatory tactic.
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 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 such trademarks to surrender their certificates of registration. Compliance by the Director of Patents was challenged. 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 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 The purpose of the law protecting a trademark cannot be overemphasized. They are to point out distinctly the origin or ownership
records, affirmed the decision of the Director of Patents declaring La Chemise Lacoste &A. the owner of the disputed trademark of the article to which it is affixed, to secure to him, who has been instrumental in bringing into market a superior article of
and crocodile or alligator device. The Intermediate Appellate Court speaking through Mr. Justice Vicente V. Mendoza stated: merchandise, the fruit of his industry and skill, and to prevent fraud and imposition (Etepha v. Director of Patents, 16 SCRA 495).

In the case at bar, the Minister of Trade, as 'the competent authority of the country of registration,' has The legislature has enacted laws to regulate the use of trademarks and provide for the protection thereof. Modern trade and
found that among other well-known trademarks 'Lacoste' is the subject of conflicting claims. For this reason, commerce demands that depredations on legitimate trade marks of non-nationals including those who have not shown prior
applications for its registration must be rejected or refused, pursuant to the treaty obligation of the registration thereof should not be countenanced. The law against such depredations is not only for the protection of the owner of
Philippines. 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
Apart from this finding, the annexes to the opposition, which La Chemise Lacoste S.A. filed in the Patent 50).
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 law on trademarks and tradenames is based on the principle of business integrity and common justice' This law, both in letter
the like. La Chemise Lacoste S.A, obtained registration of these mark and device and was in fact issued and spirit, is laid upon the premise that, while it encourages fair trade in every way and aims to foster, and not to hamper,
renewal certificates by the French National Industry Property Office. 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
xxx xxx xxx another (Baltimore v. Moses, 182 Md 229, 34 A (2d) 338).

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 records show that the goodwill and reputation of the petitioner's products bearing the trademark LACOSTE date back even
the undisputed fact of ownership of the trademark by the appellee but on a prior determination by the before 1964 when LACOSTE clothing apparels were first marketed in the Philippines. To allow Hemandas to continue using the
Minister of Trade, as the competent authority under the Paris Convention, that the trademark and device trademark Lacoste for the simple reason that he was the first registrant in the Supplemental Register of a trademark used in
sought to be registered by the appellant are well-known marks which the Philippines, as party to the international commerce and not belonging to him is to render nugatory the very essence of the law on trademarks and
Convention, is bound to protect in favor of its owners. it would be to exalt form over substance to say that tradenames.
under the circumstances, due process requires that a hearing should be held before the application is acted
upon. We now proceed to the consideration of the petition in Gobindram Hemandas Suianani u. Hon. Roberto V Ongpin, et al. (G.R. No.
65659).
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 Actually, three other petitions involving the same trademark and device have been filed with this Court.
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
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 4. Awarding such other and further relief as may be just and equitable in the premises.
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 As earlier stated, this petition was dismissed for lack of merit on September 12, 1983. Acting on a motion for reconsideration, the
the corresponding registration certificate in the Principal Register; and (c) granting upon the petitioner such Court on November 23, 1983 resolved to deny the motion for lack of merit and declared the denial to be final.
other legal and equitable remedies as are justified by the premises.

Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659) is the third petition.
On December 5, 1983, we issued the following resolution:

In this last petition, the petitioner prays for the setting aside as null and void and for the prohibiting of the enforcement of the
Considering the allegations contained, issues raised and the arguments adduced in the petition for review, following memorandum of respondent Minister Roberto Ongpin:
the respondent's comment thereon, and petitioner's reply to said comment, the Court Resolved to DENY the
petition for lack of merit.
MEMORANDUM:
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 FOR: THE DIRECTOR OF PATENTS
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 Philippine Patent Office
on September 12, 1983. Both petitions involve the same dispute over the use of the trademark 'Chemise
Lacoste'. xxx xxx xxx

The second case of Gobindram Hemandas vs. La Chemise Lacoste, S.A., et al. (G.R. No. 63928-29) prayed for the following: 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
I. On the petition for issuance of writ of preliminary injunction, an order be issued after due hearing: 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
l. Enjoining and restraining respondents Company, attorneys-in-fact, and Estanislao Granados from further Intermediate Appellate Court in the case of LA CHEMISE LACOSTE, S.A., versus RAM SADWHANI [AC-G.R. Sp. No. 13359 (17) June
proceedings in the unfair competition charges pending with the Ministry of Justice filed against petitioner; 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
2. Enjoining and restraining respondents Company and its attorneys-in-fact from causing undue publication under said convention in general, and, more specifically, to honor our commitment under Section 6 bis thereof, as follows:
in newspapers of general circulation on their unwarranted claim that petitioner's products are FAKE pending
proceedings hereof; and
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
3. Enjoining and restraining respondents Company and its attorneys-in-fact from sending further threatening Philippine Patent Office procedures in inter partes and ex parte cases, according to any of the following
letters to petitioner's customers unjustly stating that petitioner's products they are dealing in are FAKE and criteria or any combination thereof:
threatening them with confiscation and seizure thereof.

(a) a declaration by the Minister of Trade and Industry that' the trademark being considered is already well-
II. On the main petition, judgment be rendered: 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;
l. Awarding and granting the issuance of the Writ of Prohibition, prohibiting, stopping, and restraining
respondents from further committing the acts complained of; (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,
2. Awarding and granting the issuance of the Writ of Mandamus, ordering and compelling respondents distributorships, and the like, in different countries, including volume or other measure of international trade
National Bureau of Investigation, its aforenamed agents, and State Prosecutor Estanislao Granados to and commerce;
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 (c) that the trademark is duly registered in the industrial property office(s) of another country or countries,
Nos. 83-128 and 83-129; taking into consideration the dates of such registration;

3. Making permanent any writ of injunction that may have been previously issued by this Honorable Court in (d) that the trademark has been long established and obtained goodwill and general international consumer
the petition at bar: and 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 household tool, perfume, face powder, other toilet articles, watches, brandy or whisky, and items of clothing like jeans, T-shirts,
the provisions of the aforestated PARIS CONVENTION. 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
2. The word trademark, as used in this MEMORANDUM, shall include tradenames, service marks, logos, shoddy imitation, albeit a clever looking counterfeit, of the quality product. Judges all over the country are well advised to
signs, emblems, insignia or other similar devices used for Identification and recognition by consumers. 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.
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 WHEREFORE, the petition in G.R. NOS. 63797-97 is hereby GRANTED. The order dated April 22, 1983 of the respondent regional
PROPERTY. 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.
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 bis of said PARIS CONVENTION as
outlined above, by remanding applications filed by one not entitled to such protection for final disallowance SO ORDERED.
by the Examination Division.
Teehankee (Chairman), Melencio-Herrera, Plana, Relova and De la Fuente, JJ., concur.
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
G.R. No. L-18289 March 31, 1964 Hence, this appeal.

ANDRES ROMERO, petitioner, Appellant claims that the trademark "Adagio" has become a common descriptive name of a particular style of brassiere and is,
vs. therefore, unregistrable. It is urged that said trademark had been used by local brassiere manufacturers since 1948, without
MAIDEN FORM BRASSIERE CO., INC., and THE DIRECTOR OF PATENTS, respondents. objection on the part of respondent company.

Alafriz Law Office for petitioner. This claim is without basis in fact. The evidence shows that the trademark "Adagio" is a musical term, which means slowly or in an
Ross, Selph & Carrascoso for respondent Maiden Form Brassiere Co., Inc. easy manner, and was used as a trademark by the owners thereof (the Rosenthals of Maiden Form Co., New York) because they
Office of the Solicitor General and Tiburcio S. Evalle for respondent Director of Patents. 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"
BARRERA, J.: (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
From the decision of the Director of Patents (of January 17, 1961) dismissing his petition for cancellation of the registration of the Motors, Inc., 111 USPQ 105).1äwphï1.ñët
trademark "Adagio" for brassieres manufactured by respondent Maiden Form Brassiere Co., Inc., petitioner Andres Romero,
interposed this appeal.
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
On February 12, 1957, respondent company, a foreign corporation, filed with respondent Director of Patents an application for desist from the sale of the "Adagio" Royal Form brassieres manufactured by petitioner (t.s.n., pp. 27-28, Oct. 7, 1958), and even
registration (pursuant to Republic Act No. 166) of the trademark "Adagio" for the brassieres manufactured by it. In its application, placed an advertisement (Exhs. 3 & 4) in the local newspapers (Manila Daily Bulletin, Manila Times, Fookien Times, and others)
respondent company alleged that said trademark was first used by it in the United States on October 26, 1937, and in the warning the public against unlawful use of said trademark (t.s.n., p. 15, Aug. 17, 1959). The advertisement (Exh. U) in the Manila
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 Times made by respondent company on February 9, 1958, was brought to petitioner's attention (t.s.n., p. 24, Oct. 7, 1958), which
said trademark "is on the date of this application, actually used by respondent company on the following goods, classified must have prompted him to file this present petition for cancellation, on February 26, 1958.
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.
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
Acting on said application, respondent Director, on August 13, 1957, approved for publication in the Official Gazette said not justify the defendants in the use of the trademark.
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 Veronal has been widely sold in this country by the plaintiff; over 5,250,000 packages have been sold since 1919. This is
that the mark as used by respondent company convincingly shows that it identifies and distinguishes respondent company's a consequence of the long and continued use by the plaintiff of this trademark and is the result of its efforts to inform
goods from others." 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
On October 17, 1957, respondent Director issued to respondent company a certificate of registration of with, trademark "Adagio". 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.)
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 Appellant next contends that the trademark "Adagio at the time it was registered (in the Philippines) on October 17, 1957, had
fraudulently or contrary to the provisions of Section 4, Chapter II of Republic Act No. 166; and that the application for its long been used by respondent company, only "to designate a particular style or quality of brassiere and, therefore, is
registration was not filed in accordance with the provisions of Section 37, Chapter XI of the same Act. Petitioner also alleged that unregistrable as a trademark. In support of the contention, he alleges that the sentence "Maidenform bras are packaged for your
said trademark has not become distinctive of respondent company's goods or business; that it has been used by respondent quick shopping convenience. For other popular Maidenform styles writ for free style booklet to: Maiden Form Brassiere Co., Inc
company to classify the goods (the brassieres) manufactured by it, in the same manner as petitioner uses the same; that said 200 Madison Avenue, New York 16, N.Y." printed on the package (Exh. W), shows that the trademark "Adagio" is used to
trademark has been used by petitioner for almost 6 years; that it has become a common descriptive name; and that it is not designate a particular style or quality of brassiere. He also cites portions of the testimonies of his witnesses Bautista and Barro, to
registered in accordance with the requirements of Section 37(a), Chapter XI of Republic Act No. 166. the effect that said trademark refers to the style of brassieres sold in the stores of which they are salesmen.

Issues having been joined, the case was heard and, after hearing, respondent Director (on January 17, 1961) rendered the This contention is untenable. Said sentence appearing on the package (Exh. W), standing alone, does not conclusively indicate
decision above adverted to. that the trademark "Adagio" is merely a style of brassiere. The testimony of Mr. Schwartz, witness of respondent company, belies
petitioner's claim:
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.
Q. There is a statement at the bottom of Exhibit W which reads, 'There is a Maidenform for every type of figure'. As you "SEC. 2. What are registrable — Trademarks, ... own by persons, corporations, partnerships or associations domiciled ...
stated you are very familiar with these bras manufacture by Maidenform Brassiere Company, what are these types of in any foreign country may be registered in accordance with the provisions of this Act: Provided, That said trademarks,
figures this Exhibit W refer to? 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: ..."
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 Section 37 of Republic Act No. 166 can be availed of only where the Philippines is a party to an international convention or treaty
United States. We do not sell it here; it is very expensive an import restrictions do not allow our dollar allocations for relating to trademarks, in which the trade-mark sought to be registered need not be use in the Philippines. The applicability of
such sort. Section 37 has been commented on by the Director of Patents, in this wise:

As to the testimonies of Bautista and Barro, they are me conclusions of said witnesses. Note that when Bautista was asked why he Trademark rights in the Philippines, without actual use the trademark in this country can, of course, be created
considered the trademark "Adagio" as a style, he replied that the brand "Adagio" is attached distinguish the style. He stated as artificially by means of a treaty or convention with another country or countries. Section 37 of the present Philippine
follows: 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
Q. You said that those bras mentioned by you such as Adagio, Prelude, Alloette, are styles, will you please tell us the applications filed thereunder need not allege use in the Philippines of the trade mark sought to be registered. The
reason why you said that those are styles? 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.)
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.
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
Barro, on the other hand, said that "Adagio" is a mark. She declared as follows: 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
Q. You state that you used to sell brassieres in the store in which you work; when customers come to your store and registration of the mark was made in accordance with the Trademark Law. Granting that appellant used the mark when appellee
ask for brassieres, what do they usually ask from you? 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
A. Well, I tell you there are so many types and certain types of people ask for certain brassiere. There are people who restrictions and was not permanent, intentional, and voluntary.
ask for Royal Form Adagio and there are others who ask for Duchess Ideal Form, and so many kinds of marks.
To work an abandonment, the disuse must be permanent and not ephemeral; it must be intentional and voluntary, and
Brassieres are usually of different types or styles, and appellee has used different trademarks for every type as shown by its not involuntary or even compulsory. There must be a thorough-going discontinuance of any trade-mark use of the mark
labels, Exhibits W-2 (Etude), W-3 (Chansonette), W-4 (Prelude), W-5 (Maidenette), and W-6, (Overture). The mere fact that in question (Callman, Unfair Competition and Trademark, 2nd Ed., p. 1341).
appellee uses "Adagio" for one type or style, does not affect the validity of 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 The use of the trademark by other manufacturers did not indicate an intention on the part of appellee to abandon it.
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 "The instances of the use by others of the term 'Budweiser, cited by the defendant, fail, even when liberally construed,
mark was used only for its medium price and medium quality denture-base materials. The Assistant Commissioner of Patents to indicate an intention upon the part of the complainant to abandon its rights to that name. 'To establish the defense
held: 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.
It clearly appears, however, that the mark serves to indicate origin of applicant's goods; and the fact that it is used on Budweiser Malt Products Corp., 287 F. 245.)
only one of several types or grades does not affect its registrability as a trade mark.
Appellant next argues that respondent Director erred in declaring illegal the appropriation in the Philippines of the trademark in
Appellant also claims that respondent Director erred in registering the trademark in question, despite appellee's non-compliance question by appellant and, therefore, said appropriation did not affect appellee's right thereto and the subsequent registration
with Section 37, paragraphs 1 and 4 (a) of Republic Act No. 166. 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
This contention flows from a misconception of the application for registration of trademark of respondent. As we see it, the provision invoked by respondent because the Philippines is not as yet a party to any international convention or treaty
respondent's application was filed under the provisions of Section 2 of Republic Act No. 166 as amended by Section 1 of Republic 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
Act 865 which reads as follows: 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.
G.R. No. L-23791 November 23, 1966 The fact, however, is that there is other substantial evidence adduced by petitioner tending to show that he first used the
trademark in question as early as February 1952. For a long time petitioner was the purchasing agent for his father-in-law, who
CHUNG TE, petitioner, owned the Liong Bee Shirt Factory. Afterwards he decided to go into the same business for himself. His father-in-law, who
vs. theretofore had been using the trademark "Marca Piña", transferred it to him. In January 1951 he started laying the groundwork
NG KIAN GIAB and THE HONORABLE DIRECTOR OF PATENTS, respondents. for his own factory. Jose Lim,8 whom he had engaged the previous year, helped him with the preliminary paper work, registered
the factory's first books of accounts with the Bureau of Internal Revenue, and when the business was officially launched in 1952,
continued therein as bookkeeper. In January 1951 petitioner started producing undershirts labeled "Marca Piña". However, he
Generoso V. Jacinto for petitioner. sold them under the firm name of his father-in-law because he had yet no license in his own name.
Federico Diaz for respondents.
Julieta Francisco testified that she started working with petitioner in 1951. Her job was to sew skippers and "sandos" and to fix
MAKALINTAL, J.: the trademark "Marca Pi_¤_a" (Exhibit B-1) and "Pineapple" on the nape of the neck of each finished undershirt. The trademark,
(Exhibit B-2), she added, as well as the legend indicating the size of the undershirt (Exhibit B-3) were pressed on the lower portion
Petitioner Chung Te interposed this appeal from the decision of the Director of Patents giving due course to the application of of the garment (Exhibits E and E-1). The undershirts were then placed inside cellophane wrappers (Exhibit C), put together in half
respondent Ng Kian Giab for registration of the trademark "Marca Piña" and representation thereof, and rejecting his own dozens by means of paper labels (Exhibits F and F-1), and then placed in box containers (Exhibit D). All these exhibits (Exhibits C, F,
application for registration of the same trademark and a similar representation. F-1 and D) bear the trademark in question.

Petitioner filed his application on November 25, 1958, alleging therein that since January 8, 1951 he had been using the On November 29, 1951 the factory became a member of the Philippine Chinese Underwear Manufacturers Association (certificate
trademark on undershirts (de hilo), T-shirts, and baby dresses. Because of the confusing similarity between said trademark and of membership, Exhibit N). According to Juanito Vitug, secretary of the association, before a firm was admitted as member it was
that applied for on July 16, 1957 by Ng Kian Giab, an interference was declared as existing between the two applications. 1 Ng Kian required to inform the association of the trademark it was using to notify its products; and he found that among the files of the
Giab stated in his application that he had been using the trademark on undershirts since December 6, 1955. At the hearing both association the sample labels "Marca Piña" (Exhibit O) submitted by petitioner when he applied for membership were included.
parties presented testimonial as well as documentary evidence to prove their respective claims of priority of adoption and use.
Respondent Director of Patents, however, declared that neither of them "satisfactorily adduced definite and conclusive proof of On January 31, 1952 the City of Manila granted petitioner a permit to operate a shirt factory (Exhibit T). On February 1, 1952 he
their asserted dates of first use of the trademark "Marca Piña"; and relying on the rule that "in inter partes cases, when neither of paid the corresponding business taxes (Exhibits U, U-1 to U-3). On Feb. 5, 1952 the Bureau of Commerce issued to him a
the parties have (has) satisfactorily proven the date of first use alleged in their applications, such date shall be confined to the registration as private merchant (Exhibit V) and two days later a certificate of registration of the business name "Liong Sun Shirt
filing date of the said application,"2 granted the application of senior party applicant Ng Kian Giab. Junior party applicant Chung Te Factory" (Exhibit W). It appears from his application that he had commenced business on February 1, 1952.
moved for reconsideration of the decision, but the Director declined to reconsider, hence this appeal.
He obtained the labels he was using from the Asiatic Press. On February 7, 1952 he bought 5000 pieces of "Marca Piña" box labels
Chung Te avers that respondent Director erred (1) in not giving due weight to his documentary evidence which tends to prove (Exhibit Q). On December 29 1952 he purchased 100,000 "Marca Piña" shirt labels and 10,000 "Marca Piña" cover labels (Exhibit
that he has been using the trademark since 1951; (2) in not finding that respondent Ng Kian Giab had admitted he first used the Q-1). And on July 21, 1954 he bought 100,000 sheets of "Pineapple Brand" shirt labels (Exhibit Q-2). The box labels were delivered
trademark only in 1955; (3) in disregarding petitioner's prior application No. 5544, and thus finding that respondent had filed his by him to the Avenue Paper Box Factory, which used them in covering the cardboard boxes (a sample is Exhibit D) which
application earlier than petitioner; and (4) in declaring respondent as the prior user when there is no substantial evidence in petitioner had ordered from it (Exhibit S, dated March 17, 1952; Exhibits S-1 to S-7). Petitioner also ordered boxes from the De
support thereof. Luxe Cardboard Box Factory (Exhibits AA and AA-1). Co In, manager of the Asiatic Printing Press, affirmed that petitioner had
purchased "Marca Piña" labels from him, while Tan Dy, manager of the Avenue Paper Box Factory, attested that he used the
The rule is that the findings of fact by the Director of Patents are conclusive on the Supreme Court provided they are supported by "Marca Piña" box covers in covering the boxes which petitioner had ordered from him.9
substantial evidence.3
On November 19, 1952 petitioner ordered from the Victory Printing Company 500 calendars (Exhibit Z), one of which (Exhibit Z-1)
Respondent Director disregarded all the evidence submitted by both parties and relied exclusively on the filing dates of the was submitted in evidence. Written thereon are the words: "LIONG SUN Shirt Factory, Manufacturer of the well known brand
applications in reaching his conclusion as to the junior party applicant, respectively. Even if the evidence for both parties were "Pineapple and Piña" the best cotton and De Hilo Skippers."
entirely unreliable — and we do not find it so — we cannot completely disregard the fact that on March 31, 1957 an application
for the registration of the same trademark "MARCA PIÑA and Representation" was filed by Chung Te (Application No. 5544), Petitioner first sold skippers under his firm name "Liong Sun Shirt Factory" on February 1, 1952 to Tay Liong Kian (Receipt No. 1,
although it was subsequently considered abandoned by reason of his failure to answer 4 the communication of the Principal Exhibit L) and Yap Suy Yu (Receipt No. 2, Exhibit R). Both of these customers regularly bought skippers and undershirts by the
Trademark Examiner dated September 25, 1957.5 To be sure, for the purpose of determining who was the junior party dozens as shown by receipts dated from that time up to July 14, 1952 (Exhibits L-1 to L-9, R-1 to R-10). Although the receipts do
applicant in the interference6 the filing date of said abandoned application may not properly be considered. But in the peculiar not state that the merchandise purchased bore the trademark "Marca Piña", both customers testified that what they bought had
situation obtaining in this case, where the testimonial evidence for both parties has been entirely disregarded, and reliance is that label. At the time of the hearing Tay Liong Kian 10 had a store in Yangco Market. On the other hand, at the time he bought
placed solely on the filing dates of the applications as proof of the respective dates of first use, then the abandoned application undershirts, Yap Suy Yu had a store at Tabora Market.
filed by the junior party applicant becomes cogent evidence to show that he first used the trademark as of the date of its
filing.7Chung Te's petition in said abandoned case was duly submitted in evidence and forms part of the record (Exhibits X, X-1, to
X-3). According to the statement (Exhibit G-1) attached to the application (Exhibit G) of respondent Ng Kian Giab he first used the
trademark on December 6, 1955. At the hearing he sought to prove that his family had been using it since 1946. Where an
applicant for registration of a trademark states under oath the date of his earliest use, and later on he wishes to carry back his
first date of use to an earlier date he then takes on the greater burden of presenting "clear and convincing evidence" of adoption
and use as of that earlier date.11

To prove such earlier date respondent relies purely on testimonial evidence consisting of the declarations of his father Ng Kian
Soy, his brother Ng Kian Kee, their supposed seamstress Genoveva Santos, and two customers Diego Magpantay and Cleto
Sarmiento. The substance of their testimony is as follows: since 1946 Ng Kian Soy operated a general merchandise store, the Sin
Kian Hing Store,12 in Batangas, Batangas, where he sold polo shirts bearing the trademark. After the fire in 1953 the family rebuilt
their store and expanded the business by including undershirts with the same trademark. The name of the store was changed to
Hongkong Bazar. From 1946 to 1955 they merely bought ready-made polo shirts and undershirts to each of which they then
sewed the label "Marca Piña" before resale to the public. In 1965 the father transferred the business to Ng Kian Kee, who put up a
factory — the Hongkong T-Shirt Manufacturer — and started producing undershirts bearing the trademark. When he decided to
continue his studies in 1957, he, in turn, transferred the business to respondent.

Such testimonial evidence falls short of the kind of proof required of respondent. It is doubtful that respondent's father would pay
Genoveva Santos as high as P0.20 per label (which did not even bear his name) on polo shirts which he had purchased ready-
made, and which he could very well have sold without any label. Santos testified that the stamped label used was only "Marca
Piña" without any representation or name of the owner (Exhibit 1-D), while Magpantay said there was the representation of a
pineapple on the labels used by respondent's family. To explain the discrepancy, Sarmiento, who testified later, declared that
there were three kinds of labels used (Exhibits 1-A, 1-B and 1-C), two of which bore the representation of a pineapple, and these
were attached to the goods of better quality.

While Ng Kian Kee declared that they rebuilt their store several months after the fire in 1953, Sarmiento, who was supposed to be
a regular customer, said they had no store in 1954, and they resumed selling garments only in 1955. Santos declared that from
1954 up to the time the business moved to Manila (in 1958) her job was to sew labels on ready made polo shirts. In answer to a
leading question, she added "undershirts". But in 1955 the factory was already in operation and producing undershirts to which
labels were attached in the process of production thus rendering her services unnecessary.

The documentary evidence show clearly that respondent's use began only in 1955. The business tax receipt in the name of Ng
Kian Kee is dated October 18, 1955 (Exhibit 6). In his application for original registration of the business name "Hongkong T-Shirt
Manufacturer," Ng Kian Kee stated that his business was that of manufacturing T-shirts, and that as of that date, October 25,
1955, the same was not yet in operation. It seems that it actually started operations on December 3, 1955, the date of its receipt
No. 1 (Exhibit 4-A). It sold its first half dozen undershirts bearing the trademark on December 5, 1955 (Receipt No. 7, Exhibit 4-G).
Noteworthy is the fact that in his statement attached to the application respondent alleged that he first used the trademark "on
or about December 6, 1955," which statement appears to be the truth.

From all the foregoing we are convinced that petitioner has established prior use and adoption of the questioned trademark, for
which reason he and not respondent Ng Giab is the one entitled to registration thereof.

WHEREFORE, the decision of the Director of Patents is reversed. Petitioner is adjudged prior user of the trademark MARCA PIÑA
and Representation thereof, and its registration in his name is hereby ordered; and the resolution of this Court dated December
24, 1965, enjoining petitioner to comply with the decision appealed from is set aside. Costs against respondent Ng Kian Giab.
Republic of the Philippines

Supreme Court DECISION

Baguio City

BRION, J.:

We review in this petition for review on certiorari[1] the (1) decision[2] 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.
SECOND DIVISION (SPORTS CONCEPT); and (2) the CA resolution[4] that denied SUPERIORs 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 attorneys fees, and costs of the suit.

SUPERIOR COMMERCIAL ENTERPRISES, INC., G.R. No. 169974


THE FACTUAL ANTECEDENTS
Petitioner,

Present:
On February 23, 1993, SUPERIOR[5] filed a complaint for trademark infringement and unfair competition with preliminary
injunction against KUNNAN[6] and SPORTS CONCEPT[7] with the RTC, docketed as Civil Case No. Q-93014888.

- versus - CARPIO, J., Chairperson,

BRION, In support of its complaint, SUPERIOR first claimed to be the owner of the trademarks, trading styles, company names and
business names[8] KENNEX,[9] KENNEX & DEVICE,[10] PRO KENNEX[11] and PRO-KENNEX (disputed trademarks).[12] Second, it also
DEL CASTILLO, 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
ABAD, and 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 ENTERPRISES LTD. AND SPORTS CONCEPT & PEREZ, JJ. KUNNAN, which states:
DISTRIBUTOR, INC.,

Respondents. -- -
Promulgated: 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
April 20, 2010 territory of the Philippines. [Emphasis supplied.][13]

x-----------------------------------------------------------------------------------------x In its defense, KUNNAN disputed SUPERIORs claim of ownership and maintained that SUPERIOR as mere distributor from October
6, 1982 until December 31, 1991fraudulently 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 5. The Superior will be granted from [sic] KUNNANs approval before making and selling any KENNEX products made in
equipment; it commercially marketed its products in different countries, including the Philippines since 1972.[14] It created and 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
first used PRO KENNEX, derived from its original corporate name, as a distinctive trademark for its products in 1976. KUNNAN also right.
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.
6. Without KUNNANs 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.]
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]
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), SUPERIORs President and General Manager, misled KUNNANs officers into believing
Whereas, KUNNAN intends to acquire ownership of KENNEX trademark registered by the Superior in the Philippines. Whereas, that KUNNAN was not qualified to hold the same due to the many requirements set by the Philippine Patent Office that KUNNAN
the Superior is desirous of having been appointed [sic] as the sole distributor by KUNNAN in the territory of the Philippines. 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]

Now, therefore, the parties hereto agree as follows:

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
1. KUNNAN in accordance with this Agreement, will appoint the sole distributorship right to Superior in the Philippines, and the Philippines to Superior who is the buyer in the distributorship relationship.
this Agreement could be renewed with the consent of both parties upon the time of expiration.

Trademark Application Number Class


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. PROKENNEX 49999 28

PROKENNEX 49998 25

3. KUNNAN will guarantee to the Superior that no other third parties will be permitted to supply the KENNEX PRODUCTS in PROKENNEX 49997 18
the Philippines except only to the Superior. If KUNNAN violates this stipulation, the transfer of the KENNEX trademark shall be null
and void.

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
4. If there is a necessity, the Superior will be appointed, for the protection of interest of both parties, as the agent in the harmful to KUNNAN.
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.
3. Superior agrees that it will return back the abovementioned trademarks to KUNNAN without hesitation at the by SUPERIORin the Philippines. According to the RTC, this clause amounts to KUNNANs express recognition of SUPERIORs
request of KUNNAN at any time. KUNNAN agrees that the cost for the concerned assignment of the abovementioned trademarks ownership of the KENNEX trademarks.[24]
shall be compensated by KUNNAN.
KUNNAN and SPORTS CONCEPT appealed the RTCs decision to the CA where the appeal was docketed as CA-G.R. CV No.
60777. KUNNAN maintained that SUPERIORwas 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.
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 Intervening Developments:
license the said trademarks to any other parties except KUNNAN. [Emphasis supplied]
The IPO and CA Rulings

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 Transfer[19] separate Petitions for the Cancellation of Registration In the course of its appeal to the CA, KUNNAN filed on December 19, 2003 a Manifestation and Motion praying that the decision
Trademark Nos. 41032, SR 6663, 40326, 39254, 4730 and 49998, docketed as Inter Partes Cases Nos. 3709, 3710, 3811, 3812, of the Bureau of Legal Affairs (BLA) of the Intellectual Property Office (IPO), dated October 30, 2003, in the Consolidated
3813 and 3814, as well as Opposition to Application Serial Nos. 84565 and 84566, docketed as Inter Partes Cases Nos. 4101 and Petitions for Cancellation be made of record and be considered by the CA in resolving the case.[25] The BLA ruled in this decision
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
In the case at bar, Petitioner-Opposer (Kunnan) has overwhelmingly and convincingly established its rights to the mark PRO
trademarks in violation of the terms of the Distributorship Agreement and Sections 2-A and 17 of Republic Act No. 166, as
KENNEX. It was proven that actual use by Respondent-Registrant is not in the concept of an owner but as a mere distributor
amended.[21]
(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
On December 3, 1991, upon the termination of its distributorship agreement with SUPERIOR, KUNNAN appointed SPORTS 406, a mere distributor of a product bearing a trademark, even if permitted to use said trademark has no right to and cannot
CONCEPT as its new distributor.Subsequently, KUNNAN also caused the publication of a Notice and Warning in the Manila register the said trademark.
Bulletins 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] 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 RTC Ruling 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.

On March 31, 1998, the RTC issued its decision[23] 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.
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]
The RTC found that SUPERIOR sufficiently proved that it was the first user 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 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 trademark registered
On February 4, 2005, KUNNAN again filed another Manifestation requesting that the IPO Director Generals decision on appeal
dated December 8, 2004, denying SUPERIORs appeal, be given weight in the disposition of the case.[27] The dispositive portion of
the decision reads:[28] (1) that SUPERIOR was desirous of [being] appointed as the sole distributor by KUNNAN in the territory of the Philippines;

WHEREFORE, premises considered, there is no cogent reason to disturb Decision No. 2003-35 dated 30 October 2003 rendered by (2) that KUNNAN will appoint the sole distributorship right to Superior in the Philippines; and
the Director of the Bureau of Legal Affairs.Accordingly, the instant appeal is DENIED and the appealed decision is hereby
AFFIRMED.

(3) that no third parties will be permitted to supply KENNEX PRODUCTS in the Philippines except only to Superior.

We take judicial notice that SUPERIOR questioned the IPO Director Generals ruling before the Court of Appeals on a petition for
review under Rule 43 of the Rules of Court, docketed as CAG.R. SP No. 87928 (Registration Cancellation Case). On August 30,
The CA thus emphasized that the RTC erred in unduly relying on the first whereas clause, which states that KUNNAN intends to
2007, the CA rendered its decision dismissing SUPERIORs petition.[29] On December 3, 2007, the CA decision was declared final
acquire ownership of [the] KENNEX trademark registered by SUPERIOR in the Philippines without considering the entirety of the
and executory and entry of judgment was accordingly made. Hence, SUPERIORs registration of the disputed trademarks now
Distributorship Agreement indicating that SUPERIOR had been merely appointed by KUNNAN as its distributor.
stands effectively cancelled.
Second, the CA also noted that SUPERIOR made the express undertaking in the Assignment Agreement to acknowledge
The CA Ruling
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 SUPERIORs claim of ownership of the disputed trademarks. The CA also observed that although the
On June 22, 2005, the CA issued its decision in CA-G.R. CV No. 60777, reversing and setting aside the RTCs decision of March 31, Assignment Agreement was a private document, its authenticity and due execution was proven by the similarity of Mr. Tan Bon
1998.[30] It dismissed SUPERIORs Complaint for Infringement of Trademark and Unfair Competition with Preliminary Injunction on Diongs signature in the Distributorship Agreement and the Assignment Agreement.
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 SUPERIORs claim of ownership over the disputed trademarks.
Third, the CA also took note of SUPERIORs 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
The CA stressed that SUPERIORs possession of the aforementioned Certificates of Principal Registration does not conclusively concluded that in this letter, SUPERIOR acknowledged its status as a distributor in its dealings with KUNNAN, and even in its
establish its ownership of the disputed trademarks as dominion over trademarks is not acquired by the fact of registration transactions with third persons.
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 SUPERIORs 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
Based on these reasons, the CA ruled that SUPERIOR was a mere distributor and had no right to the registration of the disputed
validity of registration or of the registrants exclusive right to use the trademarks in connection with the goods, business, or
trademarks since the right to register a trademark is based on ownership. Citing Section 4 of Republic Act No. 166[34] and
services specified in the certificate.[33]
established jurisprudence,[35] the CA held that SUPERIOR as an exclusive distributor did not acquire any proprietary interest in the
In contrast with the failure of SUPERIORs evidence, the CA found that KUNNAN presented sufficient evidence to rebut SUPERIORs principals (KUNNANs) trademark.
presumption of ownership over the trademarks. KUNNAN established that SUPERIOR, far from being the rightful owner of the
disputed trademarks, was merely KUNNANs 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. The CA denied SUPERIORs motion for reconsideration for lack of merit in its Resolution dated October 4, 2005.

First, the CA found that the Distributorship Agreement, considered in its entirety, positively confirmed that SUPERIOR sought to THE PETITION
be the KUNNANs exclusive distributor.The CA based this conclusion on the following provisions of the Distributorship Agreement:
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
In the present petition, SUPERIOR raises the following issues: 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.
I. 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
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER SUPERIOR IS NOT THE TRUE AND RIGHTFUL
popularity in various countries and had been distributed worldwide, particularly among the sports and tennis enthusiasts since
OWNER OF THE TRADEMARKS KENNEX AND PRO-KENNEX IN THE PHILIPPINES
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
II. the Philippines.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER SUPERIOR IS A MERE While Superior accepted the obligation to assign Certificates of Registration Nos. SR-4730 and 33487 to Kunnan in exchange for
DISTRIBUTOR OF RESPONDENT KUNNAN IN THE PHILIPPINES 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 (Kunnans) own application for
the disputed trademarks. In the same assignment document, however. Superior was bound to ensure that the PROKENNEX
III. trademarks under Registration Nos. 40326, 39254, and 49998 shall be returned to Kunnan clean and without any incumbency
when requested by the latter.

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 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
AGAINST RESPONDENTS KUNNAN AND SPORTS CONCEPT AND DISMISSING THE COMPLAINT FOR INFRINGEMENT OF TRADEMARK Bureau of Legal Affairs canceling the registration of the questioned marks in the name of petitioner Superior and denying its new
AND UNFAIR COMPETITION WITH PRELIMINARY INJUNCTION 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
not the owner of, and could not in the first place have validly registered these trademarks. Thus, as of the finality of the CA
THE COURTS RULING decision on December 3, 2007, these trademark registrations were effectively cancelled and SUPERIOR was no longer the
registrant of the disputed trademarks.

We do not find the petition meritorious.


Section 22 of Republic Act No. 166, as amended (RA 166), [36] the law applicable to this case, defines trademark infringement as
follows:
On the Issue of Trademark Infringement
Section 22. Infringement, what constitutes. Any person who [1] shall use, without the consent of fiduciary relationship does not terminate before application for registration is filed.[40] Thus, the CA in the Registration
the registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or trade-name in connection Cancellation Case correctly held:
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 As a mere distributor, petitioner Superior undoubtedly had no right to register the questioned mark in its name. Well-entrenched
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 in our jurisdiction is the rule that the right to register a trademark should be based on ownership. When the applicant is not the
of the remedies herein provided. [Emphasis supplied] 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 principals trademark and cannot register it in his own name unless it is has been validly assigned to him.
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 166[37] terminates when the
judgment or order of cancellation has become final, viz:
In addition, we also note that the doctrine of res judicata bars SUPERIORs present case for trademark infringement. The doctrine
Section 19. Cancellation of registration. - If the Director finds that a case for cancellation has been made out he shall order the of res judicata embraces two (2) concepts: the first is "bar by prior judgment" under paragraph (b) of Rule 39, Section 47, and the
cancellation of the registration. The order shall not become effective until the period for appeal has elapsed, or if appeal is taken, second is "conclusiveness of judgment" under paragraph (c) thereof.
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.]
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
Thus, we have previously held that the cancellation of registration of a trademark has the effect of depriving the registrant of actually and directly resolved in a former suit cannot again be raised in any future case between the same parties, even if the
protection from infringement from the moment judgment or order of cancellation has become final. [38] 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]

In the present case, by operation of law, specifically Section 19 of RA 166, the trademark infringement aspect of SUPERIORs case
has been rendered moot and academic in view of the finality of the decision in the Registration Cancellation Case. In Because the Registration Cancellation Case and the present case involve the same parties, litigating with respect to and disputing
short, SUPERIOR is left without any cause of action for trademark infringement since the cancellation of registration of a the same trademarks, we are bound to examine how one case would affect the other. In the present case, even if the causes of
trademark deprived it of protection from infringement from the moment judgment or order of cancellation became final. To be action of the Registration Cancellation Case (the cancellation of trademark registration) differs from that of the present case (the
sure, in a trademark infringement, title to the trademark is indispensable to a valid cause of action and such title is shown by its improper or unauthorized use of trademarks), the final judgment in the Registration Cancellation Case is nevertheless conclusive
certificate of registration.[39] With its certificates of registration over the disputed trademarks effectively cancelled with on the particular facts and issues that are determinative of the present case.
finality, SUPERIORs case for trademark infringement lost its legal basis and no longer presented a valid cause of action.

To establish trademark infringement, the following elements must be proven: (1) the validity of plaintiffs mark; (2) the plaintiffs
Even assuming that SUPERIORs case for trademark infringement had not been rendered moot and academic, there can be no ownership of the mark; and (3) the use of the mark or its colorable imitation by the alleged infringer results in likelihood of
infringement committed by KUNNAN who was adjudged with finality to be the rightful owner of the disputed trademarks in the confusion.[44]
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
Based on these elements, we find it immediately obvious that the second element the plaintiffs ownership of the mark was what
the manufacturer, an exclusive distributor who employs the trademark of the manufacturer does not acquire proprietary rights of
the Registration Cancellation Case decided with finality. On this element depended the validity of the registrations that, on their
the manufacturer, and a registration of the trademark by the distributor as such belongs to the manufacturer, provided the
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 From jurisprudence, unfair competition has been defined as the passing off (or palming off) or attempting to pass off upon the
could not have been the owner, and was thus an invalid registrant of the disputed trademarks. Significantly, these are the exact public of the goods or business of one person as the goods or business of another with the end and probable effect of deceiving
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 the public. The essential elements of unfair competition[47] are (1) confusing similarity in the general appearance of the goods; and
on the issue of ownership of the trademarks is the same. Given, however, the final and executory ruling in the Registration (2) intent to deceive the public and defraud a competitor.[48]
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.
Jurisprudence also formulated the following true test of unfair competition: whether the acts of the defendant have the intent of
deceiving or are calculated to deceive the ordinary buyer making his purchases under the ordinary conditions of the particular
trade to which the controversy relates. One of the essential requisites in an action to restrain unfair competition is proof of fraud;
On the Issue of Unfair Competition the intent to deceive, actual or probable must be shown before the right to recover can exist.[49]

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 In the present case, no evidence exists showing that KUNNAN ever attempted to pass off the goods it sold (i.e. sportswear,
competition. In its Complaint, SUPERIOR alleged that:[46] 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 McDonalds Corporation v. L.C. Big Mak Burger, Inc.,[50] we held that there can be trademark infringement without unfair
17. In January 1993, the plaintiff learned that the defendant Kunnan Enterprises, Ltd., is intending to appoint the defendant competition such as when the infringer discloses on the labels containing the mark that he manufactures the goods, thus
Sports Concept and Distributors, Inc. as its alleged distributor for sportswear and sporting goods bearing the trademark PRO- preventing the public from being deceived that the goods originate from the trademark owner. In this case, no issue of
KENNEX. For this reason, on January 20, 1993, the plaintiff, through counsel, wrote the defendant Sports Concept and Distributors confusion arises because the same manufactured products are sold; only the ownership of the trademarks is at
Inc. advising said defendant that the trademark PRO-KENNEX was registered and owned by the plaintiff herein. issue. Furthermore, KUNNANs 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]
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 NOTICE AND WARNING
which trademarks are owned by and registered in the name of plaintiff herein as alleged hereinabove.

Kunnan Enterprises Ltd. is the owner and first user of the internationally-renowned trademarks KENNEX and PRO KENNEX for
xxxx 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.
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 plaintiffs business and the defendants acts are likely to discredit the commercial activities and future growth of Kunnan Enterprises Ltd. further informs the public that it had terminated its Distributorship Agreement with Superior Commercial
plaintiffs business. 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 SUPERIORs name, the latter is left with no effective right to make a
claim. In other words, with the CAs final ruling in the Registration Cancellation Case, SUPERIORs case no longer presents a valid
cause of action. For this reason, the unfair competition aspect of the SUPERIORs case likewise falls.

WHEREFORE, premises considered, we DENY Superior Commercial Enterprises, Inc.s petition for review on certiorari for lack of
merit. Cost against petitioner Superior Commercial Enterprises, Inc.

SO ORDERED.
IN-N-OUT BURGER, INC, G . R . N o . 1 7 91 27
Petitioner, Present: 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.


YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO, Petitioner eventually filed on 4 June 2001 before the Bureau of Legal Affairs (BLA) of the IPO an administrative
NACHURA, and
REYES, JJ. complaint against respondents for unfair competition and cancellation of trademark registration. Petitioner averred in its
SEHWANI, INCORPORATED AND/OR BENITAS FRITES,
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 &
INC., Promulgated:
R e s p on d e n t s. Arrow Design; and (3) IN-N-OUT Burger Logo. These trademarks are registered with the Trademark Office of the US and in various
December 24, 2008
x -------------------------------------------------x parts of the world, are internationally well-known, and have become distinctive of its business and goods through its long and

DECISION 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
CHICO-NAZARIO, J.: 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 petitioners products.[7]

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse the Decision[1] dated 18 July

2006 rendered by the Court of Appeals in CA-G.R. SP No. 92785, which reversed the Decision[2] dated 23 December 2005 of the Following the filing of its complaint, petitioner sent on 18 October 2000 a demand letter directing respondent Sehwani,

Director General of the Intellectual Property Office (IPO) in Appeal No. 10-05-01. The Court of Appeals, in its assailed Decision, Incorporated to cease and desist from claiming ownership of the mark IN-N-OUT and to voluntarily cancel its trademark

decreed that the IPO Director of Legal Affairs and the IPO Director General do not have jurisdiction over cases involving unfair registration. In a letter-reply dated 23 October 2000, respondents refused to accede to petitioner demand, but expressed

competition. willingness to surrender the registration of respondent Sehwani, Incorporated of the IN N OUT trademark for a fair and

reasonable consideration. [8]

Petitioner IN-N-OUT BURGER, INC., a business entity incorporated under the laws of California, United States (US) of Petitioner was able to register the mark Double Double on 4 July 2002, based on their application filed on 2 June

America, which is a signatory to the Convention of Paris on Protection of Industrial Property and the Agreement on Trade Related 1997.[9] It alleged that respondents also used this mark, as well as the menu color scheme. Petitioners also averred that

Aspects of Intellectual Property Rights (TRIPS). Petitioner is engaged mainly in the restaurant business, but it has never engaged in respondent Benitas receipts bore the phrase, representing IN-N-OUT Burger.[10] It should be noted that that although

business in the Philippines. [3] 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]

Respondents Sehwani, Incorporated and Benita Frites, Inc. are corporations organized in the Philippines.[4] To counter petitioners 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,

On 2 June 1997, petitioner filed trademark and service mark applications with the Bureau of Trademarks (BOT) of the respondent Sehwani, Incorporated filed with the then Bureau of Patents, Trademarks and Technology Transfer (BPTTT) an

IPO for IN-N-OUT and IN-N-OUT Burger & Arrow Design. Petitioner later found out, through the Official Action Papers issued by application for the registration of the mark IN N OUT (the inside of the letter O formed like a star). Upon approval of its

the IPO on 31 May 2000, that respondent Sehwani, Incorporated had already obtained Trademark Registration for the mark IN N 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 Subsequent events would give rise to two cases before this Court, G.R. No. 171053 and G.R. No. 179127, the case at

valid registration of its mark with the exclusive right to use the same. Respondents argued that none of the grounds provided bar.

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] G.R. No. 171053

Subsequently, the IPO Director of Legal Affairs, Estrellita Beltran-Abelardo, rendered a Decision dated 22 December On 29 October 2004, respondents received a copy of Resolution No. 2004-18 dated 28 October 2004 denying their
[13]
2003, in favor of petitioner. According to said Decision, petitioner had the legal capacity to sue in the Philippines, since its Motion for Reconsideration. Thus, on 18 November 2004, respondents filed an Appeal Memorandum with IPO Director General

country of origin or domicile was a member of and a signatory to the Convention of Paris on Protection of Industrial Property. And Emma Francisco (Director General Francisco). However, in an Order dated 7 December 2004, the appeal was dismissed by the IPO

although petitioner had never done business in the Philippines, it was widely known in this country through the use herein of Director General for being filed beyond the 15-day reglementary period to appeal.

products bearing its corporate and trade name. Petitioners 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 Respondents appealed to the Court of Appeals via a Petition for Review under Rule 43 of the Rules of Court, filed on 20

IPO had already declared in a previous inter partes case that In-N-Out Burger and Arrow Design was an internationally well-known December 2004 and docketed as CA-G.R. SP No. 88004, challenging the dismissal of their appeal by the IPO Director General,

mark. Given these circumstances, the IPO Director for Legal Affairs pronounced in her Decision that petitioner had the right to use which effectively affirmed the Decision dated 22 December 2003 of the IPO Director for Legal Affairs ordering the cancellation of

its tradename and mark IN-N-OUT in the Philippines to the exclusion of others, including the respondents. However, respondents the registration of the disputed trademark in the name of respondent Sehwani, Incorporated and enjoining respondents from

used the mark IN N OUT in good faith and were not guilty of unfair competition, since respondent Sehwani, Incorporated did not using the same. In particular, respondents based their Petition on the following grounds:

evince any intent to ride upon petitioners goodwill by copying the mark IN-N-OUT Burger exactly. The inside of the letter O in the
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN DISMISSING APPEAL NO. 14-2004-00004 ON A
mark used by respondents formed a star. In addition, the simple act of respondent Sehwani, Incorporated of inquiring into the MERE TECHNICALITY
existence of a pending application for registration of the IN-N-OUT mark was not deemed fraudulent. The dispositive part of the
THE BUREAU OF LEGAL AFFAIRS (SIC) DECISION AND RESOLUTION (1) CANCELLING RESPONDENTS
Decision of the IPO Director for Legal Affairs reads: 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.
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 Benitas Frites are hereby ordered to
permanently cease and desist from using the mark IN-N-OUT and IN-N-OUT BURGER LOGO on its goods and Respondents thus prayed:
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
WHEREFORE, petitioners respectfully pray that this Honorable Court give due course to this petition, and
said mark, Respondents are so hereby ordered to permanently cease and desist from using the mark Double-
thereafter order the Office of the Director General of the Intellectual Property Office to reinstate and give
Double. NO COSTS. [14]
due course to [respondent]s Appeal No. 14-2004-00004.

Other reliefs, just and equitable under the premises, are likewise prayed for.
Both parties filed their respective Motions for Reconsideration of the aforementioned Decision. Respondents Motion

for Reconsideration[15] and petitioners Motion for Partial Reconsideration[16] were denied by the IPO Director for Legal Affairs in
On 21 October 2005, the Court of Appeals rendered a Decision denying respondents Petition in CA-G.R SP No. 88004
Resolution No. 2004-18[17] dated 28 October 2004 and Resolution No. 2005-05 dated 25 April 2005,[18] respectively.
and affirming the Order dated 7 December 2004 of the IPO Director General. The appellate court confirmed that respondents
appeal before the IPO Director General was filed out of time and that it was only proper to cancel the registration of the disputed only started constructing their restaurant sometime in 2000, after petitioner had already demanded that they desist from

trademark in the name of respondent Sehwani, Incorporated and to permanently enjoin respondents from using the claiming ownership of the mark IN-N-OUT. Moreover, the sole distinction of the mark registered in the name of

same. Effectively, the 22 December 2003 Decision of IPO Director of Legal Affairs was likewise affirmed. On 10 November 2005, respondent Sehwani, Incorporated, from those of the petitioner was the star inside the letter O, a minor difference which still

respondents moved for the reconsideration of the said Decision. On 16 January 2006, the Court of Appeals denied their motion deceived purchasers. Respondents were not even actually using the star in their mark because it was allegedly difficult to

for reconsideration. 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 petitioners registered mark Double-Double as a sign of bad faith and an

Dismayed with the outcome of their petition before the Court of Appeals, respondents raised the matter to the intent to mislead the public. Thus, the IPO Director General ruled that petitioner was entitled to an award for the actual damages

Supreme Court in a Petition for Review under Rule 45 of the Rules of Court, filed on 30 January 2006, bearing the title Sehwani, it suffered by reason of respondents acts of unfair competition, exemplary damages, and attorneys fees. [21] The fallo of the

Incorporated v. In-N-Out Burger and docketed as G.R. No. 171053.[19] Decision reads:

WHEREFORE, premises considered, the [herein respondents] are held guilty of unfair
This Court promulgated a Decision in G.R. No. 171053 on 15 October 2007,[20] finding that herein respondents failed to competition. Accordingly, Decision No. 2003-02 dated 22 December 2003 is hereby MODIFIED as follows:
file their Appeal Memorandum before the IPO Director General within the period prescribed by law and, consequently, they lost
[Herein Respondents] are hereby ordered to jointly and severally pay [herein petitioner]:
their right to appeal. The Court further affirmed the Decision dated 22 December 2003 of the IPO Director of Legal Affairs holding
1. Damages in the amount of TWO HUNDRED TWELVE THOUSAND FIVE HUNDRED SEVENTY FOUR
that herein petitioner had the legal capacity to sue for the protection of its trademarks, even though it was not doing business in AND 28/100(P212,574.28);

the Philippines, and ordering the cancellation of the registration obtained by herein respondent Sehwani, Incorporated of the 2. Exemplary damages in the amount of FIVE HUNDRED THOUSAND PESOS (P500,000.00);
internationally well-known marks of petitioner, and directing respondents to stop using the said marks. Respondents filed a
3. Attorneys fees and expenses of litigation in the amount of FIVE HUNDRED THOUSAND PESOS
Motion for Reconsideration of the Decision of this Court in G.R. No. 171053, but it was denied with finality in a Resolution (P500,000.00).

dated 21 January 2008. 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.
G.R. No. 179127
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
Upon the denial of its Partial Motion for Reconsideration of the Decision dated 22 December 2003 of the IPO Director purposes.[22]
for Legal Affairs, petitioner was able to file a timely appeal before the IPO Director General on 27 May 2005.

Aggrieved, respondents were thus constrained to file on 11 January 2006 before the Court of Appeals another Petition
During the pendency of petitioners appeal before the IPO Director General, the Court of Appeals already rendered
for Review under Rule 43 of the Rules of Court, docketed as CA-G.R. SP No. 92785. Respondents based their second Petition
on 21 October 2005 its Decision dismissing respondents Petition in CA-G.R. SP No. 88004.
before the appellate court on the following grounds:

In a Decision dated 23 December 2005, IPO Director General Adrian Cristobal, Jr. found petitioners appeal meritorious THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN HOLDING PETITIONERS LIABLE FOR UNFAIR
COMPETITION AND IN ORDERING THEM TO PAY DAMAGES AND ATTORNEYS FEES TO RESPONDENTS
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
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN AFFIRMING THE BUREAU OF LEGAL AFFAIRS [Respondents] also pray for other reliefs, as may deemed just or equitable.[24]
DECISION (1) CANCELLING PETITIONERS 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
On 18 July 2006, the Court of Appeals promulgated a Decision [25] in CA-G.R. SP No. 92785 reversing the Decision

dated 23 December 2005 of the IPO Director General.


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
The Court of Appeals, in its Decision, initially addressed petitioners assertion that respondents had committed forum
damages. They argued that petitioner had never entered into any transaction involving its goods and services in
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
the Philippines and, therefore, could not claim that its goods and services had already been identified in the mind of the
shopping, distinguishing between the respondents two Petitions. The subject of Respondents Petition in CA-G.R SP No. 88004 was
public. Respondents added that the disputed mark was not well-known. Finally, they maintained that petitioners complaint was
the 7 December 2004 Decision of the IPO Director General dismissing respondents appeal of the 22 December 2003 Decision of
already barred by laches.[23]
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
At the end of their Petition in CA-G.R. SP No. 92785, respondents presented the following prayer:
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
WHEREFORE, [respondents herein] respectfully pray that this Honorable Court:
different issues in their second petition before the appellate court, mainly concerning the finding of the IPO Director General that
(a) upon the filing of this petition, issue a temporary restraining order enjoining the IPO and [petitioner],
their agents, successors and assigns, from executing, enforcing and implementing the IPO Director respondents were guilty of unfair competition and the awarding of actual and exemplary damages, as well as attorneys fees, to
Generals 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. petitioner.

(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 The Court of Appeals then proceeded to resolve CA-G.R. SP No. 92785 on jurisdictional grounds not raised by the
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 parties. The appellate court declared that Section 163 of the Intellectual Property Code specifically confers upon the regular

(c) after giving due course to this petition: 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
(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 2005 on supposed violations of these provisions of the Intellectual Property Code.
and awarding damages and attorneys fees to the respondent

(ii) in lieu thereof, affirm Decision No. 2003-02 of the BLA dated 22 December 2003 and
In the end, the Court of Appeals decreed:
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
attorneys fees; 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
(iii) reverse Decision No. 2003-02 of the BLA dated 22 December 2003, and Resolution No. is REVERSED and SET ASIDE. Insofar as they pertain to acts governed by Article 168 of R.A. 8293 and other
2005-05 of the BLA dated 25 April 2005, insofar as it upheld [petitioner]s legal capacity sections enumerated in Section 163 of the same Code, respondents claims in its Complaint docketed as IPV
to sue; that [petitioner]s trademarks are well-known; and that respondent has the No. 10-2001-00004 are hereby DISMISSED.[26]
exclusive right to use the same; and

(iv) make the injunction permanent.


The Court of Appeals, in a Resolution dated 31 July 2007,[27] denied petitioners Motion for Reconsideration of its

aforementioned Decision. Respondents point out that the Secretarys Certificate executed by Arnold M. Wensinger on 20 August 2007, stating that

petitioner had authorized the lawyers of Villarazaand Angangco to represent it in the present Petition and to sign the Verification

Hence, the present Petition, where petitioner raises the following issues: and Certification against Forum Shopping, among other acts, was not properly notarized. The jurat of the aforementioned

Secretarys Certificate reads:


I
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE QUESTIONED DECISION DATED 18 JULY
2006 AND RESOLUTION DATED 31 JULY 2007 DECLARING THAT THE IPO HAS NO JURISDICTION OVER Subscribed and sworn to me this 20th day of August 2007 in Irving California.
ADMINISTRATIVE COMPLAINTS FOR INTELLECTUAL PROPERTY RIGHTS VIOLATIONS;
Rachel A. Blake (Sgd.)
II Notary Public[30]

WHETHER OR NOT THE INSTANT PETITION IS FORMALLY DEFECTIVE; AND


Respondents aver that the said Secretarys Certificate cannot properly authorize Atty. Barranda to sign the
III Verification/Certification on behalf of petitioner because the notary public Rachel A. Blake failed to state that: (1) petitioners

WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE QUESTIONED DECISION DATED 18 JULY Corporate Secretary, Mr. Wensinger, was known to her; (2) he was the same person who acknowledged the instrument; and (3)
2006 AND RESOLUTION DATED 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 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
PROPER.[28]
the Philippines.[31]

As previously narrated herein, on 15 October 2007, during the pendency of the present Petition, this Court already Respondents likewise impugn the validity of the notarial certificate of Atty. Aldrich Fitz B. Uy, on
[29]
promulgated its Decision in G.R. No. 171053 on 15 October 2007, which affirmed the IPO Director Generals dismissal of Atty. Barandas Verification/Certification attached to the instant Petition, noting the absence of (1) the serial number of the
respondents appeal for being filed beyond the reglementary period, and left the 22 December 2003 Decision of the IPO Director commission of the notary public; (2) the office address of the notary public; (3) the roll of attorneys number and the IBP
for Legal Affairs, canceling the trademark registration of respondent Sehwani, Incorporated and enjoining respondents from using membership number; and (4) a statement that the Verification/Certification was notarized within the notary publics territorial
the disputed marks. jurisdiction, as required under the 2004 Rules on Notarial Practice. [32]

Before discussing the merits of this case, this Court must first rule on the procedural flaws that each party has Section 2 of Act No. 2103 and Landingin v. Republic of the Philippines are not applicable to the present case. The
attributed to the other. requirements enumerated therein refer to documents which require an acknowledgement, and not a mere jurat.

Formal Defects of the Petition 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
Respondents contend that the Verification/Certification executed by Atty. Edmund before the notary public. In contrast, an acknowledgment is the act of one who has executed a deed in going before some
Jason Barranda of Villaraza and Angangco, which petitioner attached to the present Petition, is defective and should result in the competent officer or court and declaring it to be his act or deed. It involves an extra step undertaken whereby the signor actually
dismissal of the said Petition. 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 Secretarys Certificate, as that executed by petitioner in favor of the lawyers of the Angangco and Villaraza law office, of Appeals a patently false Certification of Non-forum Shopping in CA-G.R. SP No. 92785, when they failed to mention therein

only requires a jurat.[34] the pendency of CA-G.R SP No. 88004.

Even assuming that the Secretarys Certificate was flawed, Atty. Barranda may still sign the Verification attached to the Forum shopping is the institution of two or more actions or proceedings grounded on the same cause on 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 supposition that one or the other court would make a favorable disposition. It is an act of malpractice and is prohibited and

and correct of his personal knowledge or based on authentic records. [35] The party itself need not sign the verification. A partys condemned as trifling with courts and abusing their processes. In determining whether or not there is forum shopping, what is

representative, lawyer or any other person who personally knows the truth of the facts alleged in the pleading may sign the important is the vexation caused the courts and parties-litigants by a party who asks different courts and/or administrative bodies

verification.[36] Atty. Barranda, as petitioners counsel, was in the position to verify the truth and correctness of the allegations of to rule on the same or related causes and/or grant the same or substantially the same reliefs and in the process creates the

the present Petition. Hence, the Verification signed by Atty. Barrandasubstantially complies with the formal requirements for possibility of conflicting decisions being rendered by the different bodies upon the same issues. [38]

such.

Forum shopping is present when, in two or more cases pending, there is identity of (1) parties (2) rights or causes of

Moreover, the Court deems it proper not to focus on the supposed technical infirmities of Atty. Barandas Verification. It action and reliefs prayed for, and (3) the identity of the two preceding particulars is such that any judgment rendered in the other

must be borne in mind that the purpose of requiring a verification is to secure an assurance that the allegations of the petition action, will, regardless of which party is successful, amount to res judicata in the action under consideration.[39]

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 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

formal, not a jurisdictional requirement. In the interest of substantial justice, strict observance of procedural rules may be respondents are guilty of forum shopping.
[37]
dispensed with for compelling reasons. 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 There is no question that both Petitions involved identical parties, and raised at least one similar ground for which they

give the said Petition due course and resolve the same on the merits. 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 Affairs (sic) Decision and Resolution (1) canceling [herein respondent Sehwani, Incorporated]s certificate of

This Court agrees, nevertheless, that the notaries public, Rachel A. Blake and Aldrich Fitz B. Uy, were less than careful registration for the mark IN-N-OUT and (2) ordering [herein respondents] to permanently cease and desist from using the subject

with their jurats or notarial certificates. Parties and their counsel should take care not to abuse the Courts zeal to resolve cases on mark on its goods and business are contrary to law and/or is (sic) not supported by evidence. [40] The same ground was again

their merits. Notaries public in the Philippines are reminded to exert utmost care and effort in complying with the 2004 Rules invoked by respondents in their Petition in CA-G.R. SP No. 92785, rephrased as follows: The IPO Director General committed grave

on Notarial Practice. Parties and their counsel are further charged with the responsibility of ensuring that documents notarized error in affirming the Bureau of Legal Affairs (sic) Decision (1) canceling [herein respondent Sehwani, Incorporated]s certificate of

abroad be in their proper form before presenting said documents before Philippine courts. 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

Forum Shopping 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

Petitioner next avers that respondents are guilty of forum shopping in filing the Petition in CA-G.R. SP No. 92785, following their other Petition, under the principle of res judicata.

earlier filing of the Petition in CA-G.R SP No. 88004. Petitioner also asserts that respondents were guilty of submitting to the Court
Upon a closer scrutiny of the two Petitions, however, the Court takes notice of one issue which respondents did not and the IPO Director General had no jurisdiction over the administrative proceedings below to rule on issue of unfair competition,

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 because Section 163 of the Intellectual Property Code confers jurisdiction over particular provisions in the law on trademarks on

competition. Hence, respondents seek additional reliefs in CA-G.R. SP No. 92785, seeking the reversal of the finding of the IPO regular courts exclusively. According to the said provision:

Director General that they are guilty of unfair competition, and the nullification of the award of damages in favor of petitioner
Section 163. Jurisdiction of Court.All actions under Sections 150, 155, 164, and 166 to 169 shall be
resulting from said finding.Undoubtedly, respondents could not have raised the issue of unfair competition in CA-G.R. SP No. brought before the proper courts with appropriate jurisdiction under existing laws.
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.
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
In arguing in their Petition in CA-G.R. SP No. 92785 that they are not liable for unfair competition, it is only predictable,
Names; Section 167 on Collective Marks; Section 168 on Unfair Competition, Rights, Regulation and Remedies; and Section 169 on
although not necessarily legally tenable, for respondents to reassert their right to register, own, and use the disputed
False Designations of Origin, False Description or Representation.
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
The Court disagrees with the Court of Appeals.
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.
Section 10 of the Intellectual Property Code specifically identifies the functions of the Bureau of Legal Affairs, thus:
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 Section 10. The Bureau of Legal Affairs.The Bureau of Legal Affairs shall have the following
functions:
resolving the jurisdictional and substantive issues raised herein, justify the relaxation of another procedural rule. Although the
10.1 Hear and decide opposition to the application for registration of marks; cancellation of
submission of a certificate against forum shopping is deemed obligatory, it is not jurisdictional. [42] Hence, in this case in which such trademarks; subject to the provisions of Section 64, cancellation of patents and utility models, and industrial
designs; and petitions for compulsory licensing of patents;
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. 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
The parties and their counsel, however, are once again warned against taking procedural rules lightly. It will do them with the Rules of Court. The Director of Legal Affairs shall have the power to hold and punish for contempt
well to remember that the Courts have taken a stricter stance against the disregard of procedural rules, especially in connection all those who disregard orders or writs issued in the course of the proceedings.

with the submission of the certificate against forum shopping, and it will not hesitate to dismiss a Petition for non-compliance (b) After formal investigation, the Director for Legal Affairs may impose one (1) or more of the
following administrative penalties:
therewith in the absence of justifiable circumstances.
(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
The Jurisdiction of the IPO 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:
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
(1) An assurance to comply with the provisions of the intellectual
Unquestionably, petitioners complaint, which seeks the cancellation of the disputed mark in the name of respondent Sehwani,
property law violated;
Incorporated, and damages for violation of petitioners intellectual property rights, falls within the jurisdiction of the IPO Director
(2) An assurance to refrain from engaging in unlawful and
of Legal Affairs.
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 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:
(4) An assurance to reimburse the complainant the
expenses and costs incurred in prosecuting the case in the Bureau of Legal
Affairs. Section 7. The Director General and Deputies Director General. 7.1 Fuctions.The Director
General shall exercise the following powers and functions:
The Director of Legal Affairs may also require the respondent to
submit periodic compliance reports and file a bond to guarantee compliance xxxx
of his undertaking.
b) Exercise exclusive appellate jurisdiction over all decisions rendered by the Director of Legal
(iii) The condemnation or seizure of products which are subject of the offense. The Affairs, the Director of Patents, the Director of Trademarks, and the Director of Documentation, Information
goods seized hereunder shall be disposed of in such manner as may be deemed appropriate by the and Technology Transfer Bureau. The decisions of the Director General in the exercise of his appellate
Director of Legal Affairs, such as by sale, donation to distressed local governments or to charitable jurisdiction in respect of the decisions of the Director of Patents, and the Director of Trademarks shall
or relief institutions, exportation, recycling into other goods, or any combination thereof, under be appealable to the Court of Appeals in accordance with the Rules of Court; and those in respect of the
such guidelines as he may provide; decisions of the Director of Documentation, Information and Technology Transfer Bureau shall
be appealable to the Secretary of Trade and Industry;
(iv) The forfeiture of paraphernalia and all real and personal properties which
have been used in the commission of the offense;
The Court of Appeals erroneously reasoned that Section 10(a) of the Intellectual Property Code, conferring upon the
(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) BLA-IPO jurisdiction over administrative complaints for violations of intellectual property rights, is a general provision, over which
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; the specific provision of Section 163 of the same Code, found under Part III thereof particularly governing trademarks, service

(vi) The cancellation of any permit, license, authority, or registration which may marks, and tradenames, must prevail. Proceeding therefrom, the Court of Appeals incorrectly concluded that all actions involving
have been granted by the Office, or the suspension of the validity thereof for such period of time trademarks, including charges of unfair competition, are under the exclusive jurisdiction of civil courts.
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; 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
(viii) The assessment of damages;
sole jurisdiction over unfair competition cases, to the exclusion of administrative bodies. On the contrary, Sections 160 and 170,
(ix) Censure; and
which are also found under Part III of the Intellectual Property Code, recognize the concurrent jurisdiction of civil courts and the
(x) Other analogous penalties or sanctions.
IPO over unfair competition cases. These two provisions read:
10.3 The Director General may by Regulations establish the procedure to govern the
implementation of this Section.[43] (Emphasis provided.)
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
deceive and defraud may be inferred from the similarity of the appearance of the goods as offered for sale to the
Section 170. Penalties.Independent of the civil and administrative sanctions imposed by law, a
public. Actual fraudulent intent need not be shown.[46]
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.
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:


Based on the foregoing discussion, the IPO Director of Legal Affairs had jurisdiction to decide the petitioners

administrative case against respondents and the IPO Director General had exclusive jurisdiction over the appeal of the judgment 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
of the IPO Director of Legal Affairs. 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
Unfair Competition ownership of the mark IN-N-OUT and voluntarily cancel their trademark registration. Moreover,
[respondents] are also using [petitioners] 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 [petitioners] IN-N-OUT Burgers name and trademark IN-N-OUT with
The Court will no longer touch on the issue of the validity or propriety of the 22 December 2003 Decision of the IPO Arrow design.
Director of Legal Affairs which: (1) directed the cancellation of the certificate of registration of respondent Sehwani, Incorporated
There is no evidence that the [respondents] were authorized by the [petitioner] to use the latters
for the mark IN-N-OUT and (2) ordered respondents to permanently cease and desist from using the disputed mark on its goods 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 [petitioners] trademark
and business. Such an issue has already been settled by this Court in its final and executory Decision dated 15 October 2007 in instead.

G.R. No. 171053, Sehwani, Incorporated v. In-N-Out Burger,[44] ultimately affirming the foregoing judgment of the IPO Director of 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
Legal Affairs. That petitioner has the superior right to own and use the IN-N-OUT trademarks vis--vis respondents is a finding
inferred from the similarity of the goods as packed and offered for sale, and, thus, action will lie to restrain
which this Court may no longer disturb under the doctrine of conclusiveness of judgment. In conclusiveness of judgment, any such unfair competition. x x x.

right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent xxxx
court in which judgment is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated [Respondents] use of IN-N-OUT BURGER in busineses signages reveals fraudulent intent to deceive
between the parties and their privies whether or not the claims, demands, purposes, or subject matters of the two actions are the purchasers. Exhibit GG, which shows the business establishment of [respondents] illustrates the imitation of
[petitioners] corporate name IN-N-OUT and signage IN-N-OUT BURGER. Even the Director noticed it and
same.[45] held:

We also note that In-N-Out Burger is likewise, [petitioners] corporate name. It


has used the IN-N-OUT Burger name in its restaurant business in Baldwin
Thus, the only remaining issue for this Court to resolve is whether the IPO Director General correctly found respondents
Park, California in the United States of America since 1948. Thus it has the exclusive
guilty of unfair competition for which he awarded damages to petitioner. 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 [respondents] claim of good faith and that they have
The essential elements of an action for unfair competition are (1) confusing similarity in the general appearance of the 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
goods and (2) intent to deceive the public and defraud a competitor. The confusing similarity may or may not result from
by the [petitioner], the purported exclusive right to the use of the subject mark based on such foreign
similarity in the marks, but may result from other external factors in the packaging or presentation ofthe goods. The intent to 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
Taking into account the deliberate intent of respondents to engage in unfair competition, it is only proper that
offered evidence of use of their registered trademark, which they claimed to be using as early as 1982, but
did not. petitioner be awarded exemplary damages. Article 2229 of the Civil Code provides that such damages may be imposed by way of

[Respondents] also failed to explain why they are using the marks of [petitioner] particularly example or correction for the public good, such as the enhancement of the protection accorded to intellectual property and the
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 prevention of similar acts of unfair competition. However, exemplary damages are not meant to enrich one party or to impoverish
addition, in the wrappers and receptacles being used by the [respondents] which also contained the marks of
another, but to serve as a deterrent against or as a negative incentive to curb socially deleterious action.[50] While there is no hard
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 and fast rule in determining the fair amount of exemplary damages, the award of exemplary damages should be commensurate
representing IN-N-OUT. These acts cannot be considered acts in good faith. [47]
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.


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
In accordance with Article 2208(1) of the Civil Code, attorneys fees may likewise be awarded to petitioner since
the complaint or formal charge. As defined, substantial evidence is such relevant evidence as a reasonable mind may accept as
exemplary damages are awarded to it. Petitioner was compelled to protect its rights over the disputed mark. The amount
adequate to support a conclusion.[48] As recounted by the IPO Director General in his decision, there is more than enough
of P500,000.00 is more than reasonable, given the fact that the case has dragged on for more than seven years, despite the
substantial evidence to support his finding that respondents are guilty of unfair competition.
respondents failure to present countervailing evidence. Considering moreover the reputation of petitioners counsel, the actual

attorneys fees paid by petitioner would far exceed the amount that was awarded to it.[52]
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
IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R.
apply mutatis mutandis to unfair competition. The remedies provided under Section 156 include the right to damages, to be
SP No. 92785, promulgated on 18 July 2006, is REVERSED. The Decision of the IPO Director General, dated 23 December 2005, is
computed in the following manner:
hereby REINSTATED IN PART, with the modification that the amount of exemplary damages awarded be reduced to P250,000.00.

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 SO ORDERED.
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.