INTELLECTUAL PROPERTY – TRADEMARK CASES In 1979, however, Escobar failed to file with the Bureau of Patents the
Affidavit of Use of the trademark required under Section 12 of
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 114508 November 19, 1999
PRIBHDAS J. MIRPURI, petitioner,
vs.
COURT OF APPEALS, DIRECTOR OF PATENTS and the BARBIZON
CORPORATION, respondents.
PUNO, J.:
The Convention of Paris for the Protection of Industrial Property is a
multi-lateral treaty which the Philippines bound itself to honor and
enforce in this country. As to whether or not the treaty affords
protection to a foreign corporation against a Philippine applicant for
the registration of a similar trademark is the principal issue in this
case.
On June 15, 1970, one Lolita Escobar, the predecessor-in-interest of
petitioner Pribhdas J. Mirpuri, filed an application with the Bureau of
Patents for the registration of the trademark "Barbizon" for use in
brassieres and ladies undergarments. Escobar alleged that she had
been manufacturing and selling these products under the firm name
"L & BM Commercial" since March 3, 1970.
Private respondent Barbizon Corporation, a corporation organized
and doing business under the laws of New York, U.S.A., opposed the
application. It claimed that:
The mark BARBIZON of respondent-applicant is confusingly similar to
the trademark BARBIZON which opposer owns and has not
abandoned.
That opposer will be damaged by the registration of the mark
BARBIZON and its business reputation and goodwill will suffer great
and irreparable injury.
That the respondent-applicant's use of the said mark BARBIZON
which resembles the trademark used and owned by opposer,
constitutes an unlawful appropriation of a mark previously used in the
Philippines and not abandoned and therefore a statutory violation of
Section 4 (d) of Republic Act No. 166, as amended. 1
This was docketed as Inter Partes Case No. 686 (IPC No. 686). After
filing of the pleadings, the parties submitted the case for decision.
On June 18, 1974, the Director of Patents rendered judgment
dismissing the opposition and giving due course to Escobar's
application, thus:
WHEREFORE, the opposition should be, as it is hereby, DISMISSED.
Accordingly, Application Serial No. 19010 for the registration of the
trademark BARBIZON, of respondent Lolita R. Escobar, is given due
course.
IT IS SO ORDERED. 2
This decision became final and on September 11, 1974, Lolita Escobar
was issued a certificate of registration for the trademark "Barbizon."
The trademark was "for use in "brassieres and lady's underwear
garments like panties." 3
Escobar later assigned all her rights and interest over the trademark
to petitioner Pribhdas J. Mirpuri who, under his firm name then, the
"Bonito Enterprises," was the sole and exclusive distributor of
Escobar's "Barbizon" products.
Republic Act (R.A.) No. 166, the Philippine Trademark Law. Due to this
failure, the Bureau of Patents cancelled Escobar's certificate of
registration.
On May 27, 1981, Escobar reapplied for registration of the cancelled
trademark. Mirpuri filed his own application for registration of
Escobar's trademark. Escobar later assigned her application to herein
petitioner and this application was opposed by private respondent.
The case was docketed as Inter Partes Case No. 2049 (IPC No. 2049).
In its opposition, private respondent alleged that:
(a) The Opposer has adopted the trademark BARBIZON (word),
sometime in June 1933 and has then used it on various kinds of
wearing apparel. On August 14, 1934, Opposer obtained from the
United States Patent Office a more recent registration of the said
mark under Certificate of Registration No. 316,161. On March 1, 1949,
Opposer obtained from the United States Patent Office a more recent
registration for the said trademark under Certificate of Registration
No. 507,214, a copy of which is herewith attached as Annex "A." Said
Certificate of Registration covers the following goods — wearing
apparel: robes, pajamas, lingerie, nightgowns and slips;
(b) Sometime in March 1976, Opposer further adopted the trademark
BARBIZON and Bee design and used the said mark in various kinds of
wearing apparel. On March 15, 1977, Opposer secured from the
United States Patent Office a registration of the said mark under
Certificate of Registration No. 1,061,277, a copy of which is herein
enclosed as Annex "B." The said Certificate of Registration covers the
following goods: robes, pajamas, lingerie, nightgowns and slips;
(c) Still further, sometime in 1961, Opposer adopted the trademark
BARBIZON and a Representation of a Woman and thereafter used the
said trademark on various kinds of wearing apparel. Opposer
obtained from the United States Patent Office registration of the said
mark on April 5, 1983 under Certificate of Registration No. 1,233,666
for the following goods: wearing apparel: robes, pajamas, nightgowns
and lingerie. A copy of the said certificate of registration is herewith
enclosed as Annex "C."
(d) All the above registrations are subsisting and in force and Opposer
has not abandoned the use of the said trademarks. In fact, Opposer,
through a wholly-owned Philippine subsidiary, the Philippine Lingerie
Corporation, has been manufacturing the goods covered by said
registrations and selling them to various countries, thereby earning
valuable foreign exchange for the country. As a result of respondent-
applicant's misappropriation of Opposer's BARBIZON trademark,
Philippine Lingerie Corporation is prevented from selling its goods in
the local market, to the damage and prejudice of Opposer and its
wholly-owned subsidiary.
(e) The Opposer's goods bearing the trademark BARBIZON have been
used in many countries, including the Philippines, for at least 40 years
and has enjoyed international reputation and good will for their
quality. To protect its registrations in countries where the goods
covered by the registrations are being sold, Opposer has procured the
registration of the trademark BARBIZON in the following countries:
Australia, Austria, Abu Dhabi, Argentina, Belgium, Bolivia, Bahrain,
Canada, Chile, Colombia, Denmark, Ecuador, France, West Germany,
Greece, Guatemala, Hongkong, Honduras, Italy, Japan, Jordan,
Lebanon, Mexico, Morocco, Panama, New Zealand, Norway, Sweden,
Switzerland, Syria, El Salvador, South Africa, Zambia, Egypt, and Iran,
among others;
1
(f) To enhance its international reputation for quality goods and to
further promote goodwill over its name, marks and products,
Opposer has extensively advertised its products, trademarks and
name in various publications which are circulated in the United States
and many countries around the world, including the Philippines;
(g) The trademark BARBIZON was fraudulently registered in the
Philippines by one Lolita R. Escobar under Registration No. 21920,
issued on September 11, 1974, in violation of Article 189 (3) of the
Revised Penal Code and Section 4 (d) of the Trademark Law. Herein
respondent applicant acquired by assignment the "rights" to the said
mark previously registered by Lolita Escobar, hence respondent-
applicant's title is vitiated by the same fraud and criminal act. Besides,
Certificate of Registration No. 21920 has been cancelled for failure of
either Lolita Escobar or herein respondent-applicant, to seasonably
file the statutory affidavit of use. By applying for a re-registration of
the mark BARBIZON subject of this opposition, respondent-applicant
seeks to perpetuate the fraud and criminal act committed by Lolita
Escobar.
(h) Opposer's BARBIZON as well as its BARBIZON and Bee Design and
BARBIZON and Representation of a Woman trademarks qualify as
well-known trademarks entitled to protection under Article 6bis of
the Convention of Paris for the Protection of Industrial Property and
further amplified by the Memorandum of the Minister of Trade to the
Honorable Director of Patents dated October 25, 1983
[sic], 4 Executive Order No. 913 dated October 7, 1963 and the
Memorandum of the Minister of Trade and Industry to the Honorable
Director of Patents dated October 25, 1983.
(i) The trademark applied for by respondent applicant is identical to
Opposer's BARBIZON trademark and constitutes the dominant part of
Opposer's two other marks namely, BARBIZON and Bee design and
BARBIZON and a Representation of a Woman. The continued use by
respondent-applicant of Opposer's trademark BARBIZON on goods
belonging to Class 25 constitutes a clear case of commercial and
criminal piracy and if allowed registration will violate not only the
Trademark Law but also Article 189 of the Revised Penal Code and the
commitment of the Philippines to an international treaty. 5
Replying to private respondent's opposition, petitioner raised the
defense of res judicata.
On March 2, 1982, Escobar assigned to petitioner the use of the
business name "Barbizon International." Petitioner registered the
name with the Department of Trade and Industry (DTI) for which a
certificate of registration was issued in 1987.
Forthwith, private respondent filed before the Office of Legal Affairs
of the DTI a petition for cancellation of petitioner's business name.
On November 26, 1991, the DTI, Office of Legal Affairs, cancelled
petitioner's certificate of registration, and declared private
respondent the owner and prior user of the business name "Barbizon
International." Thus:
WHEREFORE, the petition is hereby GRANTED and petitioner is
declared the owner and prior user of the business name "BARBIZON
INTERNATIONAL" under Certificate of Registration No. 87-09000
dated March 10, 1987 and issued in the name of respondent, is [sic]
hereby ordered revoked and cancelled. . . . . 6
Meanwhile, in IPC No. 2049, the evidence of both parties were
received by the Director of Patents. On June 18, 1992, the Director
rendered a decision declaring private respondent's opposition barred
by res judicata and giving due course to petitioner's application for
registration, to wit:
WHEREFORE, the present Opposition in Inter Partes Case No. 2049 is
hereby DECLARED BARRED by res judicata and is hereby DISMISSED.
Accordingly, Application Serial No. 45011 for trademark BARBIZON
filed by Pribhdas J. Mirpuri is GIVEN DUE COURSE.
SO ORDERED. 7
Private respondent questioned this decision before the Court of
Appeals in CA-G.R. SP No. 28415. On April 30, 1993, the Court of
Appeals reversed the Director of Patents finding that IPC No. 686 was
not barred by judgment in IPC No. 2049 and ordered that the case be
remanded to the Bureau of Patents for further proceedings, viz:
WHEREFORE, the appealed Decision No. 92-13 dated June 18, 1992 of
the Director of Patents in Inter Partes Case No. 2049 is hereby SET
ASIDE; and the case is hereby remanded to the Bureau of Patents for
further proceedings, in accordance with this pronouncement. No
costs. 8
In a Resolution dated March 16, 1994, the Court of Appeals denied
reconsideration of its decision. 9 Hence, this recourse.
Before us, petitioner raises the following issues:
1. WHETHER OR NOT THE DECISION OF THE DIRECTOR OF PATENTS
IN INTER PARTES CASE NO. 686 RENDERED ON JUNE 18, 1974, ANNEX
C HEREOF, CONSTITUTED RES JUDICATA IN SO FAR AS THE CASE
BEFORE THE DIRECTOR OF PATENTS IS CONCERNED;
2. WHETHER OR NOT THE DIRECTOR OF PATENTS CORRECTLY
APPLIED THE PRINCIPLE OF RES JUDICATA IN DISMISSING PRIVATE
RESPONDENT BARBIZON'S OPPOSITION TO PETITIONER'S
APPLICATION FOR REGISTRATION FOR THE TRADEMARK BARBIZON,
WHICH HAS SINCE RIPENED TO CERTIFICATE OF REGISTRATION NO.
53920 ON NOVEMBER 16, 1992;
3. WHETHER OR NOT THE REQUISITE THAT A "JUDGMENT ON THE
MERITS" REQUIRED A "HEARING WHERE BOTH PARTIES ARE
SUPPOSED TO ADDUCE EVIDENCE" AND WHETHER THE JOINT
SUBMISSION OF THE PARTIES TO A CASE ON THE BASIS OF THEIR
RESPECTIVE PLEADINGS WITHOUT PRESENTING TESTIMONIAL OR
DOCUMENTARY EVIDENCE FALLS WITHIN THE MEANING OF
"JUDGMENT ON THE MERITS" AS ONE OF THE REQUISITES TO
CONSTITUTE RES JUDICATA;
4. WHETHER A DECISION OF THE DEPARTMENT OF TRADE AND
INDUSTRY CANCELLING PETITIONER'S FIRM NAME "BARBIZON
INTERNATIONAL" AND WHICH DECISION IS STILL PENDING
RECONSIDERATION NEVER OFFERED IN EVIDENCE BEFORE THE
DIRECTOR OF PATENTS IN INTER PARTES CASE NO. 2049 HAS THE
RIGHT TO DECIDE SUCH CANCELLATION NOT ON THE BASIS OF THE
BUSINESS NAME LAW (AS IMPLEMENTED BY THE BUREAU OF
DOMESTIC TRADE) BUT ON THE BASIS OF THE PARIS CONVENTION
AND THE TRADEMARK LAW (R.A. 166) WHICH IS WITHIN THE
ORIGINAL AND EXCLUSIVE JURISDICTION OF THE DIRECTOR OF
PATENTS. 10
Before ruling on the issues of the case, there is need for a brief
background on the function and historical development of
trademarks and trademark law.
A "trademark" is defined under R.A. 166, the Trademark Law, as
including "any word, name, symbol, emblem, sign or device or any
combination thereof adopted and used by a manufacturer or
merchant to identify his goods and distinguish them from those
manufactured, sold or dealt in by others. 11 This definition has been
simplified in R.A. No. 8293, the Intellectual Property Code of the
Philippines, which defines a "trademark" as "any visible sign capable
of distinguishing goods." 12 In Philippine jurisprudence, the function
of a trademark is to point out distinctly the origin or ownership of the
2
goods to which it is affixed; to secure to him, who has been
instrumental in bringing into the market a superior article of
merchandise, the fruit of his industry and skill; to assure the public
that they are procuring the genuine article; to prevent fraud and
imposition; and to protect the manufacturer against substitution and
sale of an inferior and different article as his product. 13
3 distinct functions
Modern authorities on trademark law view trademarks as performing
three distinct functions: (1) they indicate origin or ownership of the
articles to which they are attached; (2) they guarantee that those
articles come up to a certain standard of quality; and (3) they
advertise the articles they symbolize. 14
Symbols have been used to identify the ownership or origin of articles
for several centuries. 15 As early as 5,000 B.C., markings on pottery
have been found by archaeologists. Cave drawings in southwestern
Europe show bison with symbols on their flanks. 16 Archaeological
discoveries of ancient Greek and Roman inscriptions on sculptural
works, paintings, vases, precious stones, glassworks, bricks, etc.
reveal some features which are thought to be marks or symbols.
These marks were affixed by the creator or maker of the article, or by
public authorities as indicators for the payment of tax, for disclosing
state monopoly, or devices for the settlement of accounts between
an entrepreneur and his workmen. 17
In the Middle Ages, the use of many kinds of marks on a variety of
goods was commonplace. Fifteenth century England saw the
compulsory use of identifying marks in certain trades. There were the
baker's mark on bread, bottlemaker's marks, smith's marks, tanner's
marks, watermarks on paper, etc. 18 Every guild had its own mark and
every master belonging to it had a special mark of his own. The marks
were not trademarks but police marks compulsorily imposed by the
sovereign to let the public know that the goods were not "foreign"
goods smuggled into an area where the guild had a monopoly, as well
as to aid in tracing defective work or poor craftsmanship to the
artisan. 19 For a similar reason, merchants also used merchants'
marks. Merchants dealt in goods acquired from many sources and the
marks enabled them to identify and reclaim their goods upon
recovery after shipwreck or piracy. 20
With constant use, the mark acquired popularity and became
voluntarily adopted. It was not intended to create or continue
monopoly but to give the customer an index or guarantee of
quality. 21 It was in the late 18th century when the industrial
revolution gave rise to mass production and distribution of consumer
goods that the mark became an important instrumentality of trade
and commerce. 22 By this time, trademarks did not merely identify the
goods; they also indicated the goods to be of satisfactory quality, and
thereby stimulated further purchases by the consuming
public. 23 Eventually, they came to symbolize the goodwill and
business reputation of the owner of the product and became a
property right protected by law. 24 The common law developed the
doctrine of trademarks and tradenames "to prevent a person from
palming off his goods as another's, from getting another's business or
injuring his reputation by unfair means, and, from defrauding the
public." 25 Subsequently, England and the United States enacted
national legislation on trademarks as part of the law regulating unfair
trade. 26 It became the right of the trademark owner to exclude
others from the use of his mark, or of a confusingly similar mark
where confusion resulted in diversion of trade or financial injury. At
the same time, the trademark served as a warning against the
imitation or faking of products to prevent the imposition of fraud
upon the public. 27
Today, the trademark is not merely a symbol of origin and goodwill; it
is often the most effective agent for the actual creation and
protection of goodwill. It imprints upon the public mind an
anonymous and impersonal guaranty of satisfaction, creating a desire
for further satisfaction. In other words, the mark actually sells the
goods. 28 The mark has become the "silent salesman," the conduit
through which direct contact between the trademark owner and the
consumer is assured. It has invaded popular culture in ways never
anticipated that it has become a more convincing selling point than
even the quality of the article to which it refers. 29 In the last half
century, the unparalleled growth of industry and the rapid
development of communications technology have enabled
trademarks, tradenames and other distinctive signs of a product to
penetrate regions where the owner does not actually manufacture or
sell the product itself. Goodwill is no longer confined to the territory
of actual market penetration; it extends to zones where the marked
article has been fixed in the public mind through
advertising. 30 Whether in the print, broadcast or electronic
communications medium, particularly on the Internet, 31 advertising
has paved the way for growth and expansion of the product by
creating and earning a reputation that crosses over borders, virtually
turning the whole world into one vast marketplace.
This is the mise-en-scene of the present controversy. Petitioner brings
this action claiming that "Barbizon" products have been sold in the
Philippines since 1970. Petitioner developed this market by working
long hours and spending considerable sums of money on
advertisements and promotion of the trademark and its products.
Now, almost thirty years later, private respondent, a foreign
corporation, "swaggers into the country like a conquering hero,"
usurps the trademark and invades petitioner's market. 32 Justice and
fairness dictate that private respondent be prevented from
appropriating what is not its own. Legally, at the same time, private
respondent is barred from questioning petitioner's ownership of the
trademark because of res judicata. 33
Literally, res judicata means a matter adjudged, a thing judicially
acted upon or decided; a thing or matter settled by judgment. 34 In res
judicata, the judgment in the first action is considered conclusive as
to every matter offered and received therein, as to any other
admissible matter which might have been offered for that purpose,
and all other matters that could have been adjudged therein. 35 Res
judicata is an absolute bar to a subsequent action for the same cause;
and its requisites are: (a) the former judgment or order must be final;
(b) the judgment or order must be one on the merits; (c) it must have
been rendered by a court having jurisdiction over the subject matter
and parties; (d) there must be between the first and second actions,
identity of parties, of subject matter and of causes of action. 36
The Solicitor General, on behalf of respondent Director of Patents,
has joined cause with petitioner. Both claim that all the four elements
of res judicata have been complied with: that the judgment in IPC No.
686 was final and was rendered by the Director of Patents who had
jurisdiction over the subject matter and parties; that the judgment in
IPC No. 686 was on the merits; and that the lack of a hearing was
immaterial because substantial issues were raised by the parties and
passed upon by the Director of Patents. 37
The decision in IPC No. 686 reads as follows:
xxx xxx xxx.
3
Neither party took testimony nor adduced documentary evidence.
They submitted the case for decision based on the pleadings which,
together with the pertinent records, have all been carefully
considered.
Accordingly, the only issue for my disposition is whether or not the
herein opposer would probably be damaged by the registration of the
trademark BARBIZON sought by the respondent-applicant on the
ground that it so resembles the trademark BARBIZON allegedly used
and owned by the former to be "likely to cause confusion, mistake or
to deceive purchasers."
On record, there can be no doubt that respondent-applicant's sought-
to-be-registered trademark BARBIZON is similar, in fact obviously
identical, to opposer's alleged trademark BARBIZON, in spelling and
pronunciation. The only appreciable but very negligible difference lies
in their respective appearances or manner of presentation.
Respondent-applicant's trademark is in bold letters (set against a
black background), while that of the opposer is offered in stylish script
letters.
It is opposer's assertion that its trademark BARBIZON has been used
in trade or commerce in the Philippines prior to the date of
application for the registration of the identical mark BARBIZON by the
respondent-applicant. However, the allegation of facts in opposer's
verified notice of opposition is devoid of such material information.
In fact, a reading of the text of said verified opposition reveals an
apparent, if not deliberate, omission of the date (or year) when
opposer's alleged trademark BARBIZON was first used in trade in the
Philippines (see par. No. 1, p. 2, Verified Notice of Opposition, Rec.).
Thus, it cannot here and now be ascertained whether opposer's
alleged use of the trademark BARBIZON could be prior to the use of
the identical mark by the herein respondent-applicant, since the
opposer attempted neither to substantiate its claim of use in local
commerce with any proof or evidence. Instead, the opposer
submitted the case for decision based merely on the pleadings.
On the other hand, respondent-applicant asserted in her amended
application for registration that she first used the trademark
BARBIZON for brassiere (or "brasseire") and ladies underwear
garments and panties as early as March 3, 1970. Be that as it may,
there being no testimony taken as to said date of first use,
respondent-applicant will be limited to the filing date, June 15, 1970,
of her application as the date of first use (Rule 173, Rules of Practice
in Trademark Cases).
From the foregoing, I conclude that the opposer has not made out a
case of probable damage by the registration of the respondent-
applicant's mark BARBIZON.
WHEREFORE, the opposition should be, as it is hereby, DISMISSED.
Accordingly, Application Serial No. 19010, for the registration of the
trademark BARBIZON of respondent Lolita R. Escobar, is given due
course.38
The decision in IPC No. 686 was a judgment on the merits and it was
error for the Court of Appeals to rule that it was not. A judgment is on
the merits when it determines the rights and liabilities of the parties
based on the disclosed facts, irrespective of formal, technical or
dilatory objections. 39 It is not necessary that a trial should have been
conducted. If the court's judgment is general, and not based on any
technical defect or objection, and the parties had a full legal
opportunity to be heard on their respective claims and contentions,
it is on the merits although there was no actual hearing or arguments
on the facts of the case. 40 In the case at bar, the Director of Patents
did not dismiss private respondent's opposition on a sheer
technicality. Although no hearing was conducted, both parties filed
their respective pleadings and were given opportunity to present
evidence. They, however, waived their right to do so and submitted
the case for decision based on their pleadings. The lack of evidence
did not deter the Director of Patents from ruling on the case,
particularly on the issue of prior use, which goes into the very
substance of the relief sought by the parties. Since private respondent
failed to prove prior use of its trademark, Escobar's claim of first use
was upheld.
The judgment in IPC No. 686 being on the merits, petitioner and the
Solicitor General allege that IPC No. 686 and IPC No. 2049 also comply
with the fourth requisite of res judicata, i.e., they involve the same
parties and the same subject matter, and have identical causes of
action.
Undisputedly, IPC No. 686 and IPC No. 2049 involve the same parties
and the same subject matter. Petitioner herein is the assignee of
Escobar while private respondent is the same American corporation
in the first case. The subject matter of both cases is the trademark
"Barbizon." Private respondent counter-argues, however, that the
two cases do not have identical causes of action. New causes of action
were allegedly introduced in IPC No. 2049, such as the prior use and
registration of the trademark in the United States and other countries
worldwide, prior use in the Philippines, and the fraudulent
registration of the mark in violation of Article 189 of the Revised Penal
Code. Private respondent also cited protection of the trademark
under the Convention of Paris for the Protection of Industrial
Property, specifically Article 6bis thereof, and the implementation of
Article 6bis by two Memoranda dated November 20, 1980 and
October 25, 1983 of the Minister of Trade and Industry to the Director
of Patents, as well as Executive Order (E.O.) No. 913.
The Convention of Paris for the Protection of Industrial Property,
otherwise known as the Paris Convention, is a multilateral treaty that
seeks to protect industrial property consisting of patents, utility
models, industrial designs, trademarks, service marks, trade names
and indications of source or appellations of origin, and at the same
time aims to repress unfair competition. 41 The Convention is
essentially a compact among various countries which, as members of
the Union, have pledged to accord to citizens of the other member
countries trademark and other rights comparable to those accorded
their own citizens by their domestic laws for an effective protection
against unfair competition. 42 In short, foreign nationals are to be
given the same treatment in each of the member countries as that
country makes available to its own citizens. 43 Nationals of the various
member nations are thus assured of a certain minimum of
international protection of their industrial property. 44
The Convention was first signed by eleven countries in Paris on March
20, 1883. 45 It underwent several revisions — at Brussels in 1900, at
Washington in 1911, at The Hague in 1925, at London in 1934, at
Lisbon in 1958, 46 and at Stockholm in 1967. Both the Philippines and
the United States of America, herein private respondent's country,
are signatories to the Convention. The United States acceded on May
30, 1887 while the Philippines, through its Senate, concurred on May
10, 1965. 47 The Philippines' adhesion became effective on
September 27, 1965, 48 and from this date, the country obligated
itself to honor and enforce the provisions of the Convention. 49
In the case at bar, private respondent anchors its cause of action on
the first paragraph of Article 6bis of the Paris Convention which reads
as follows:
Article 6bis
4
(1) The countries of the Union undertake, either administratively if
their legislation so permits, or at the request of an interested party,
to refuse or to cancel the registration and to prohibit the use, of a
trademark which constitutes a reproduction, an imitation, or a
translation, liable to create confusion, of a mark considered by the
competent authority of the country of registration or use to be well-
known in that country as being already the mark of a person entitled
to the benefits of this Convention and used for identical or similar
goods. These provisions shall also apply when the essential part of the
mark constitutes a reproduction of any such well-known mark or an
imitation liable to create confusion therewith.
(2) A period of at least five years from the date of registration shall be
allowed for seeking the cancellation of such a mark. The countries of
the Union may provide for a period within which the prohibition of
use must be sought.
(3) No time limit shall be fixed for seeking the cancellation or the
prohibition of the use of marks registered or used in bad faith. 50
This Article governs protection of well-known trademarks. Under the
first paragraph, each country of the Union bound itself to undertake
to refuse or cancel the registration, and prohibit the use of a
trademark which is a reproduction, imitation or translation, or any
essential part of which trademark constitutes a reproduction, liable
to create confusion, of a mark considered by the competent authority
of the country where protection is sought, to be well-known in the
country as being already the mark of a person entitled to the benefits
of the Convention, and used for identical or similar goods.
Art. 6bis was first introduced at The Hague in 1925 and amended in
Lisbon in 1952. 51 It is a self-executing provision and does not require
legislative enactment to give it effect in the member country. 52 It
may be applied directly by the tribunals and officials of each member
country by the mere publication or proclamation of the Convention,
after its ratification according to the public law of each state and the
order for its execution. 53
The essential requirement under Article 6bis is that the trademark to
be protected must be "well-known" in the country where protection
is sought. The power to determine whether a trademark is well-
known lies in the "competent authority of the country of registration
or use." This competent authority would be either the registering
authority if it has the power to decide this, or the courts of the
country in question if the issue comes before a court. 54
Pursuant to Article 6bis, on November 20, 1980, then Minister Luis
Villafuerte of the Ministry of Trade issued a Memorandum to the
Director of Patents. The Minister ordered the Director that:
Pursuant to the Paris Convention for the Protection of Industrial
Property to which the Philippines is a signatory, you are hereby
directed to reject all pending applications for Philippine registration
of signature and other world-famous trademarks by applicants other
than its original owners or users.
The conflicting claims over internationally known trademarks involve
such name brands as Lacoste, Jordache, Vanderbilt, Sasson, Fila,
Pierre Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein,
Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.
It is further directed that, in cases where warranted, Philippine
registrants of such trademarks should be asked to surrender their
certificates of registration, if any, to avoid suits for damages and other
legal action by the trademarks' foreign or local owners or original
users.
You are also required to submit to the undersigned a progress report
on the matter.
For immediate compliance. 55
Three years later, on October 25, 1983, then Minister Roberto Ongpin
issued another Memorandum to the Director of Patents, viz:
Pursuant to Executive Order No. 913 dated 7 October 1983 which
strengthens the rule-making and adjudicatory powers of the Minister
of Trade and Industry and provides inter alia, that "such rule-making
and adjudicatory powers should be revitalized in order that the
Minister of Trade and Industry can . . . apply more swift and effective
solutions and remedies to old and new problems . . . such as
infringement of internationally-known tradenames and trademarks .
. ." and in view of the decision of the Intermediate Appellate Court in
the case of LA CHEMISE LACOSTE, S.A., versus RAM SADWHANI [AC-
G.R. SP NO. 13359 (17) June 1983] 56 which affirms the validity of the
MEMORANDUM of then Minister Luis R. Villafuerte dated 20
November 1980 confirming our obligations under the PARIS
CONVENTION FOR THE PROTECTION OF INDUSTRIAL PROPERTY to
which the Republic of the Philippines is a signatory, you are hereby
directed to implement measures necessary to effect compliance with
our obligations under said Convention in general, and, more
specifically, to honor our commitment under
Section 6bis 57 thereof, as follows:
1. Whether the trademark under consideration is well-known in the
Philippines or is a mark already belonging to a person entitled to the
benefits of the CONVENTION, this should be established, pursuant to
Philippine Patent Office procedures in inter partes and ex partecases,
according to any of the following criteria or any combination thereof:
(a) a declaration by the Minister of Trade and Industry that the
trademark being considered is already well-known in the Philippines
such that permission for its use by other than its original owner will
constitute a reproduction, imitation, translation or other
infringement;
(b) that the trademark is used in commerce internationally, supported
by proof that goods bearing the trademark are sold on an
international scale, advertisements, the establishment of factories,
sales offices, distributorships, and the like, in different countries,
including volume or other measure of international trade and
commerce;
(c) that the trademark is duly registered in the industrial property
office(s) of another country or countries, taking into consideration the
date of such registration;
(d) that the trademark has long been established and obtained
goodwill and international consumer recognition as belonging to one
owner or source;
(e) that the trademark actually belongs to a party claiming ownership
and has the right to registration under the provisions of the
aforestated PARIS CONVENTION.
2. The word trademark, as used in this MEMORANDUM, shall include
tradenames, service marks, logos, signs, emblems, insignia or other
similar devices used for identification and recognition by consumers.
3. The Philippine Patent Office shall refuse all applications for, or
cancel the registration of, trademarks which constitute a
reproduction, translation or imitation of a trademark owned by a
person, natural or corporate, who is a citizen of a country signatory
to the PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL
PROPERTY.
4. The Philippine Patent Office shall give due course to the Opposition
in cases already or hereafter filed against the registration of
trademarks entitled to protection of Section 6bisof said PARIS
CONVENTION as outlined above, by remanding applications filed by
5
one not entitled to such protection for final disallowance by the
Examination Division.
5. All pending applications for Philippine registration of signature and
other world-famous trademarks filed by applicants other than their
original owners or users shall be rejected forthwith. Where such
applicants have already obtained registration contrary to the
abovementioned PARIS CONVENTION and/or Philippine Law, they
shall be directed to surrender their Certificates of Registration to the
Philippine Patent Office for immediate cancellation proceedings.
xxx xxx xxx. 58
In the Villafuerte Memorandum, the Minister of Trade instructed the
Director of Patents to reject all pending applications for Philippine
registration of signature and other world-famous trademarks by
applicants other than their original owners or users. The Minister
enumerated several internationally-known trademarks and ordered
the Director of Patents to require Philippine registrants of such marks
to surrender their certificates of registration.
In the Ongpin Memorandum, the Minister of Trade and Industry did
not enumerate well-known trademarks but laid down guidelines for
the Director of Patents to observe in determining whether a
trademark is entitled to protection as a well-known mark in the
Philippines under Article 6bis of the Paris Convention. This was to be
established through Philippine Patent Office procedures in inter
partes and ex parte cases pursuant to the criteria enumerated
therein. The Philippine Patent Office was ordered to refuse
applications for, or cancel the registration of, trademarks which
constitute a reproduction, translation or imitation of a trademark
owned by a person who is a citizen of a member of the Union. All
pending applications for registration of world-famous trademarks by
persons other than their original owners were to be rejected
forthwith. The Ongpin Memorandum was issued pursuant to
Executive Order No. 913 dated October 7, 1983 of then President
Marcos which strengthened the rule-making and adjudicatory powers
of the Minister of Trade and Industry for the effective protection of
consumers and the application of swift solutions to problems in trade
and industry. 59
Both the Villafuerte and Ongpin Memoranda were sustained by the
Supreme Court in the 1984 landmark case of La Chemise Lacoste, S.A.
v. Fernandez. 60 This court ruled therein that under the provisions of
Article 6bis of the Paris Convention, the Minister of Trade and
Industry was the "competent authority" to determine whether a
trademark is well-known in this country. 61
The Villafuerte Memorandum was issued in 1980, i.e., fifteen (15)
years after the adoption of the Paris Convention in 1965. In the case
at bar, the first inter partes case, IPC No. 686, was filed in
1970, before the Villafuerte Memorandum but five (5) years after the
effectivity of the Paris Convention. Article 6bis was already in effect
five years before the first case was instituted. Private respondent,
however, did not cite the protection of Article 6bis, neither did it
mention the Paris Convention at all. It was only in 1981 when IPC No.
2049 was instituted that the Paris Convention and the Villafuerte
Memorandum, and, during the pendency of the case, the 1983
Ongpin Memorandum were invoked by private respondent.
The Solicitor General argues that the issue of whether the protection
of Article 6bis of the Convention and the two Memoranda is barred
by res judicata has already been answered in Wolverine
Worldwide, Inc. v. Court of
Appeals. 62 In this case, petitioner Wolverine, a foreign corporation,
filed with the Philippine Patent Office a petition for cancellation of the
registration certificate of private respondent, a Filipino citizen, for the
trademark "Hush Puppies" and "Dog Device." Petitioner alleged that
it was the registrant of the internationally-known trademark in the
United States and other countries, and cited protection under the
Paris Convention and the Ongpin Memorandum. The petition was
dismissed by the Patent Office on the ground of res judicata. It was
found that in 1973 petitioner's predecessor-in-interest filed two
petitions for cancellation of the same trademark against respondent's
predecessor-in-interest. The Patent Office dismissed the petitions,
ordered the cancellation of registration of petitioner's trademark, and
gave due course to respondent's application for registration. This
decision was sustained by the Court of Appeals, which decision was
not elevated to us and became final and
executory. 63
Wolverine claimed that while its previous petitions were filed under
R.A. No. 166, the Trademark Law, its subsequent petition was based
on a new cause of action, i.e., the Ongpin Memorandum and E.O. No.
913 issued in 1983, after finality of the previous decision. We held
that the said Memorandum and E.O. did not grant a new cause of
action because it did "not amend the Trademark Law," . . . "nor did it
indicate a new policy with respect to the registration in the
Philippines of world-famous trademarks." 64 This conclusion was
based on the finding that Wolverine's two previous petitions and
subsequent petition dealt with the same issue of ownership of the
trademark. 65 In other words, since the first and second cases
involved the same issue of ownership, then the first case was a bar to
the second case.
In the instant case, the issue of ownership of the trademark
"Barbizon" was not raised in IPC No. 686. Private respondent's
opposition therein was merely anchored on:
(a) "confusing similarity" of its trademark with that of Escobar's;
(b) that the registration of Escobar's similar trademark will cause
damage to private respondent's business reputation and goodwill;
and
(c) that Escobar's use of the trademark amounts to an unlawful
appropriation of a mark previously used in the Philippines which act
is penalized under Section 4 (d) of the Trademark Law.
In IPC No. 2049, private respondent's opposition set forth several
issues summarized as follows:
(a) as early as 1933, it adopted the word "BARBIZON" as trademark
on its products such as robes, pajamas, lingerie, nightgowns and slips;
(b) that the trademark "BARBIZON" was registered with the United
States Patent Office in 1934 and 1949; and that variations of the same
trademark, i.e., "BARBIZON" with Bee design and "BARBIZON" with
the representation of a woman were also registered with the U.S.
Patent Office in 1961 and 1976;
(c) that these marks have been in use in the Philippines and in many
countries all over the world for over forty years. "Barbizon" products
have been advertised in international publications and the marks
registered in 36 countries worldwide;
(d) Escobar's registration of the similar trademark "BARBIZON" in
1974 was based on fraud; and this fraudulent registration was
cancelled in 1979, stripping Escobar of whatsoever right she had to
the said mark;
(e) Private respondent's trademark is entitled to protection as a well-
known mark under Article 6bis of the Paris Convention, Executive
Order No. 913, and the two Memoranda dated November 20, 1980
and October 25, 1983 of the Minister of Trade and Industry to the
Director of Patents;
6
(f) Escobar's trademark is identical to private respondent's and its use
on the same class of goods as the latter's amounts to a violation of
the Trademark Law and Article 189 of the Revised Penal Code.
IPC No. 2049 raised the issue of ownership of the trademark, the first
registration and use of the trademark in the United States and other
countries, and the international recognition and reputation of the
trademark established by extensive use and advertisement of private
respondent's products for over forty years here and abroad. These
are different from the issues of confusing similarity and damage in IPC
No. 686. The issue of prior use may have been raised in IPC No. 686
but this claim was limited to prior use in the Philippines only. Prior use
in IPC No. 2049 stems from private respondent's claim as originator of
the word and symbol "Barbizon," 66 as the first and registered user of
the mark attached to its products which have been sold and
advertised worldwide for a considerable number of years prior to
petitioner's first application for registration of her trademark in the
Philippines. Indeed, these are substantial allegations that raised new
issues and necessarily gave private respondent a new cause of
action. Res judicata does not apply to rights, claims or demands,
although growing out of the same subject matter, which constitute
separate or distinct causes of action and were not put in issue in the
former action. 67
Respondent corporation also introduced in the second case a fact that
did not exist at the time the first case was filed and terminated. The
cancellation of petitioner's certificate of registration for failure to file
the affidavit of use arose only after IPC No. 686. It did not and could
not have occurred in the first case, and this gave respondent another
cause to oppose the second application. Res judicata extends only to
facts and conditions as they existed at the time judgment was
rendered and to the legal rights and relations of the parties fixed by
the facts so determined. 68 When new facts or conditions intervene
before the second suit, furnishing a new basis for the claims and
defenses of the parties, the issues are no longer the same, and the
former judgment cannot be pleaded as a bar to the subsequent
action. 69
It is also noted that the oppositions in the first and second cases are
based on different laws. The opposition in IPC No. 686 was based on
specific provisions of the Trademark Law, i.e., Section 4 (d) 70 on
confusing similarity of trademarks and Section 8 71 on the requisite
damage to file an opposition to a petition for registration. The
opposition in IPC No. 2049 invoked the Paris Convention, particularly
Article 6bis thereof, E.O. No. 913 and the two Memoranda of the
Minister of Trade and Industry. This opposition also invoked Article
189 of the Revised Penal Code which is a statute totally different from
the Trademark Law. 72 Causes of action which are distinct and
independent from each other, although arising out of the same
contract, transaction, or state of facts, may be sued on separately,
recovery on one being no bar to subsequent actions on others. 73 The
mere fact that the same relief is sought in the subsequent action will
not render the judgment in the prior action operative as res judicata,
such as where the two actions are based on different statutes. 74 Res
judicata therefore does not apply to the instant case and respondent
Court of Appeals did not err in so ruling.
Intellectual and industrial property rights cases are not simple
property cases. Trademarks deal with the psychological function of
symbols and the effect of these symbols on the public at
large. 75 Trademarks play a significant role in communication,
commerce and trade, and serve valuable and interrelated business
functions, both nationally and internationally. For this reason, all
agreements concerning industrial property, like those on trademarks
and tradenames, are intimately connected with economic
development. 76 Industrial property encourages investments in new
ideas and inventions and stimulates creative efforts for the
satisfaction of human needs. They speed up transfer of technology
and industrialization, and thereby bring about social and economic
progress. 77 These advantages have been acknowledged by the
Philippine government itself. The Intellectual Property Code of the
Philippines declares that "an effective intellectual and industrial
property system is vital to the development of domestic and creative
activity, facilitates transfer of technology, it attracts foreign
investments, and ensures market access for our products." 78 The
Intellectual Property Code took effect on January 1, 1998 and by its
express provision, 79 repealed the Trademark Law, 80 the Patent
Law, 81 Articles 188 and 189 of the Revised Penal Code, the Decree on
Intellectual Property, 82 and the Decree on Compulsory Reprinting of
Foreign Textbooks. 83 The Code was enacted to strengthen the
intellectual and industrial property system in the Philippines as
mandated by the country's accession to the Agreement Establishing
the World Trade Organization (WTO). 84
The WTO is a common institutional framework for the conduct of
trade relations among its members in matters related to the
multilateral and plurilateral trade agreements annexed to the WTO
Agreement. 85 The WTO framework ensures a "single undertaking
approach" to the administration and operation of all agreements and
arrangements attached to the WTO Agreement. Among those
annexed is the Agreement on Trade-Related Aspects of Intellectual
Property Rights or TRIPs. 86 Members to this Agreement "desire to
reduce distortions and impediments to international trade, taking
into account the need to promote effective and adequate protection
of intellectual property rights, and to ensure that measures and
procedures to enforce intellectual property rights do not themselves
become barriers to legitimate trade." To fulfill these objectives, the
members have agreed to adhere to minimum standards of protection
set by several Conventions. 87 These Conventions are: the Berne
Convention for the Protection of Literary and Artistic Works (1971),
the Rome Convention or the International Convention for the
Protection of Performers, Producers of Phonograms and Broadcasting
Organisations, the Treaty on Intellectual Property in Respect of
Integrated Circuits, and the Paris Convention (1967), as revised in
Stockholm on July 14, 1967. 88
A major proportion of international trade depends on the protection
of intellectual property rights. 89 Since the late 1970's, the
unauthorized counterfeiting of industrial property and trademarked
products has had a considerable adverse impact on domestic and
international trade revenues. 90 The TRIPs Agreement seeks to grant
adequate protection of intellectual property rights by creating a
favorable economic environment to encourage the inflow of foreign
investments, and strengthening the multi-lateral trading system to
bring about economic, cultural and technological independence. 91
The Philippines and the United States of America have acceded to the
WTO Agreement. This Agreement has revolutionized international
business and economic relations among states, and has propelled the
world towards trade liberalization and economic
globalization. 92 Protectionism and isolationism belong to the past.
Trade is no longer confined to a bilateral system. There is now "a new
era of global economic cooperation, reflecting the widespread desire
to operate in a fairer and more open multilateral trading
system." 93 Conformably, the State must reaffirm its commitment to
7
the global community and take part in evolving a new international
economic order at the dawn of the new millenium.
IN VIEW WHEREOF, the petition is denied and the Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 28415 are
affirmed.
SO ORDERED.

8
G.R. No. 185917 June 1, 2011
6. China P.R. 31. Peru
FREDCO MANUFACTURING CORPORATION Petitioner,
vs. 7. Colombia 32. Philippines
PRESIDENT AND FELLOWS OF HARVARD COLLEGE (HARVARD
UNIVERSITY), Respondents. 8. Costa Rica 33. Poland
DECISION
CARPIO, J.: 9. Cyprus 34. Portugal
The Case
10. Czech Republic 35. Russia
Before the Court is a petition for review 1 assailing the 24 October
2008 Decision2 and 8 January 2009 Resolution3of the Court of Appeals 11. Denmark 36. South Africa
in CA-G.R. SP No. 103394.
The Antecedent Facts 12. Ecuador 37. Switzerland
On 10 August 2005, petitioner Fredco Manufacturing Corporation
(Fredco), a corporation organized and existing under the laws of the 13. Egypt 38. Singapore
Philippines, filed a Petition for Cancellation of Registration No. 56561
14. Finland 39. Slovak Republic
before the Bureau of Legal Affairs of the Intellectual Property Office
(IPO) against respondents President and Fellows of Harvard College 15. France 40. Spain
(Harvard University), a corporation organized and existing under the
laws of Massachusetts, United States of America. The case was 16. Great Britain 41. Sweden
docketed as Inter Partes Case No. 14-2005-00094.
Fredco alleged that Registration No. 56561 was issued to Harvard 17. Germany 42. Taiwan
University on 25 November 1993 for the mark "Harvard Veritas Shield
18. Greece 43. Thailand
Symbol" for decals, tote bags, serving trays, sweatshirts, t-shirts, hats
and flying discs under Classes 16, 18, 21, 25 and 28 of the Nice 19. Hong Kong 44. Turkey
International Classification of Goods and Services. Fredco alleged that
the mark "Harvard" for t-shirts, polo shirts, sandos, briefs, jackets and 20. India 45. United Arab Emirates
slacks was first used in the Philippines on 2 January 1982 by New York
Garments Manufacturing & Export Co., Inc. (New York Garments), a 21. Indonesia 46. Uruguay
domestic corporation and Fredco’s predecessor-in-interest. On 24
22. Ireland 47. United States of America
January 1985, New York Garments filed for trademark registration of
the mark "Harvard" for goods under Class 25. The application 23. Israel 48. Venezuela
matured into a registration and a Certificate of Registration was
issued on 12 December 1988, with a 20-year term subject to renewal 24. Italy 49. Zimbabwe
at the end of the term. The registration was later assigned to Romeo
Chuateco, a member of the family that owned New York Garments. 25. Japan 50. European Community5
Fredco alleged that it was formed and registered with the Securities The name and mark "Harvard" was adopted in 1639 as the name of
and Exchange Commission on 9 November 1995 and had since then Harvard College6 of Cambridge, Massachusetts, U.S.A. The name and
handled the manufacture, promotion and marketing of "Harvard" mark "Harvard" was allegedly used in commerce as early as 1872.
clothing articles. Fredco alleged that at the time of issuance of Harvard University is over 350 years old and is a highly regarded
Registration No. 56561 to Harvard University, New York Garments institution of higher learning in the United States and throughout the
had already registered the mark "Harvard" for goods under Class 25. world. Harvard University promotes, uses, and advertises its name
Fredco alleged that the registration was cancelled on 30 July 1998 "Harvard" through various publications, services, and products in
when New York Garments inadvertently failed to file an affidavit of foreign countries, including the Philippines. Harvard University
use/non-use on the fifth anniversary of the registration but the right further alleged that the name and the mark have been rated as one
to the mark "Harvard" remained with its predecessor New York of the most famous brands in the world, valued between US
Garments and now with Fredco. $750,000,000 and US $1,000,000,000.
Harvard University, on the other hand, alleged that it is the lawful Harvard University alleged that in March 2002, it discovered, through
owner of the name and mark "Harvard" in numerous countries its international trademark watch program, Fredco’s website
worldwide, including the Philippines. Among the countries where www.harvard-usa.com. The website advertises and promotes the
Harvard University has registered its name and mark "Harvard" are: brand name "Harvard Jeans USA" without Harvard University’s
1. Argentina 26. South Korea consent. The website’s main page shows an oblong logo bearing the
mark "Harvard Jeans USA®," "Established 1936," and "Cambridge,
2. Benelux4 27. Malaysia Massachusetts." On 20 April 2004, Harvard University filed an
administrative complaint against Fredco before the IPO for trademark
3. Brazil 28. Mexico infringement and/or unfair competition with damages.lawphi1
Harvard University alleged that its valid and existing certificates of
4. Canada 29. New Zealand
trademark registration in the Philippines are:
5. Chile 30. Norway 1. Trademark Registration No. 56561 issued on 25 November 1993 for
"Harvard Veritas Shield Design" for goods and services in Classes 16,

9
18, 21, 25 and 28 (decals, tote bags, serving trays, sweatshirts, t-
shirts, hats and flying discs) of the Nice International Classification of
Goods and Services;
2. Trademark Registration No. 57526 issued on 24 March 1994 for
"Harvard Veritas Shield Symbol" for services in Class 41; Trademark
Registration No. 56539 issued on 25 November 1998 for "Harvard" for
services in Class 41; and
3. Trademark Registration No. 66677 issued on 8 December 1998 for
"Harvard Graphics" for goods in Class 9. Harvard University further
alleged that it filed the requisite affidavits of use for the mark
"Harvard Veritas Shield Symbol" with the IPO.
Further, on 7 May 2003 Harvard University filed Trademark
Application No. 4-2003-04090 for "Harvard Medical International &
Shield Design" for services in Classes 41 and 44. In 1989, Harvard
University established the Harvard Trademark Licensing Program,
operated by the Office for Technology and Trademark Licensing, to
oversee and manage the worldwide licensing of the "Harvard" name
and trademarks for various goods and services. Harvard University
stated that it never authorized or licensed any person to use its name
and mark "Harvard" in connection with any goods or services in the
Philippines.
In a Decision7 dated 22 December 2006, Director Estrellita Beltran-
Abelardo of the Bureau of Legal Affairs, IPO cancelled Harvard
University’s registration of the mark "Harvard" under Class 25, as
follows:
WHEREFORE, premises considered, the Petition for Cancellation is
hereby GRANTED. Consequently, Trademark Registration Number
56561 for the trademark "HARVARD VE RI TAS ‘SHIELD’ SYMBOL"
issued on November 25, 1993 to PRESIDENT AND FELLOWS OF
HARVARD COLLEGE (HARVARD UNIVERSITY) should be CANCELLED
only with respect to goods falling under Class 25. On the other hand,
considering that the goods of Respondent-Registrant falling under
Classes 16, 18, 21 and 28 are not confusingly similar with the
Petitioner’s goods, the Respondent-Registrant has acquired vested
right over the same and therefore, should not be cancelled.
Let the filewrapper of the Trademark Registration No. 56561 issued
on November 25, 1993 for the trademark "HARVARD VE RI TAS
‘SHIELD’ SYMBOL", subject matter of this case together with a copy of
this Decision be forwarded to the Bureau of Trademarks (BOT) for
appropriate action.
SO ORDERED.8
Harvard University filed an appeal before the Office of the Director
General of the IPO. In a Decision9 dated 21 April 2008, the Office of
the Director General, IPO reversed the decision of the Bureau of Legal
Affairs, IPO.
The Director General ruled that more than the use of the trademark
in the Philippines, the applicant must be the owner of the mark
sought to be registered. The Director General ruled that the right to
register a trademark is based on ownership and when the applicant is
not the owner, he has no right to register the mark. The Director
General noted that the mark covered by Harvard University’s
Registration No. 56561 is not only the word "Harvard" but also the
logo, emblem or symbol of Harvard University. The Director General
ruled that Fredco failed to explain how its predecessor New York
Garments came up with the mark "Harvard." In addition, there was
no evidence that Fredco or New York Garments was licensed or
authorized by Harvard University to use its name in commerce or for
any other use.
The dispositive portion of the decision of the Office of the Director
General, IPO reads:
WHEREFORE, premises considered, the instant appeal is GRANTED.
The appealed decision is hereby REVERSED and SET ASIDE. Let a copy
of this Decision as well as the trademark application and records be
furnished and returned to the Director of Bureau of Legal Affairs for
appropriate action. Further, let also the Directors of the Bureau of
Trademarks and the Administrative, Financial and Human Resources
Development Services Bureau, and the library of the Documentation,
Information and Technology Transfer Bureau be furnished a copy of
this Decision for information, guidance, and records purposes.
SO ORDERED.10
Fredco filed a petition for review before the Court of Appeals assailing
the decision of the Director General.
The Decision of the Court of Appeals
In its assailed decision, the Court of Appeals affirmed the decision of
the Office of the Director General of the IPO.
The Court of Appeals adopted the findings of the Office of the Director
General and ruled that the latter correctly set aside the cancellation
by the Director of the Bureau of Legal Affairs of Harvard University’s
trademark registration under Class 25. The Court of Appeals ruled
that Harvard University was able to substantiate that it appropriated
and used the marks "Harvard" and "Harvard Veritas Shield Symbol" in
Class 25 way ahead of Fredco and its predecessor New York
Garments. The Court of Appeals also ruled that the records failed to
disclose any explanation for Fredco’s use of the name and mark
"Harvard" and the words "USA," "Established 1936," and "Cambridge,
Massachusetts" within an oblong device, "US Legend" and "Europe’s
No. 1 Brand." Citing Shangri-La International Hotel Management, Ltd.
v. Developers Group of Companies, Inc.,11 the Court of Appeals ruled:
One who has imitated the trademark of another cannot bring an
action for infringement, particularly against the true owner of the
mark, because he would be coming to court with unclean hands.
Priority is of no avail to the bad faith plaintiff. Good faith is required
in order to ensure that a second user may not merely take advantage
of the goodwill established by the true owner.12
The dispositive portion of the decision of the Court of Appeals reads:
WHEREFORE, premises considered, the petition for review is DENIED.
The Decision dated April 21, 2008 of the Director General of the IPO
in Appeal No. 14-07-09 Inter Partes Case No. 14-2005-00094 is hereby
AFFIRMED.
SO ORDERED.13
Fredco filed a motion for reconsideration.
In its Resolution promulgated on 8 January 2009, the Court of Appeals
denied the motion for lack of merit.
Hence, this petition before the Court.
The Issue
The issue in this case is whether the Court of Appeals committed a
reversible error in affirming the decision of the Office of the Director
General of the IPO.
The Ruling of this Court
The petition has no merit.
There is no dispute that the mark "Harvard" used by Fredco is the
same as the mark "Harvard" in the "Harvard Veritas Shield Symbol" of
Harvard University. It is also not disputed that Harvard University was
named Harvard College in 1639 and that then, as now, Harvard
University is located in Cambridge, Massachusetts, U.S.A. It is also
unrefuted that Harvard University has been using the mark "Harvard"
in commerce since 1872. It is also established that Harvard University
10
has been using the marks "Harvard" and "Harvard Veritas Shield
Symbol" for Class 25 goods in the United States since 1953. Further,
there is no dispute that Harvard University has registered the name
and mark "Harvard" in at least 50 countries.
On the other hand, Fredco’s predecessor-in-interest, New York
Garments, started using the mark "Harvard" in the Philippines only in
1982. New York Garments filed an application with the Philippine
Patent Office in 1985 to register the mark "Harvard," which
application was approved in 1988. Fredco insists that the date of
actual use in the Philippines should prevail on the issue of who has
the better right to register the marks.
Under Section 2 of Republic Act No. 166, 14 as amended (R.A. No. 166),
before a trademark can be registered, it must have been actually used
in commerce for not less than two months in the Philippines prior to
the filing of an application for its registration. While Harvard
University had actual prior use of its marks abroad for a long time, it
did not have actual prior use in the Philippines of the mark "Harvard
Veritas Shield Symbol" before its application for registration of the
mark "Harvard" with the then Philippine Patents Office. However,
Harvard University’s registration of the name "Harvard" is based on
home registration which is allowed under Section 37 of R.A. No.
166.15 As pointed out by Harvard University in its Comment:
Although Section 2 of the Trademark law (R.A. 166) requires for the
registration of trademark that the applicant thereof must prove that
the same has been actually in use in commerce or services for not less
than two (2) months in the Philippines before the application for
registration is filed, where the trademark sought to be registered has
already been registered in a foreign country that is a member of the
Paris Convention, the requirement of proof of use in the commerce
in the Philippines for the said period is not necessary. An applicant for
registration based on home certificate of registration need not even
have used the mark or trade name in this country.16
Indeed, in its Petition for Cancellation of Registration No. 56561,
Fredco alleged that Harvard University’s registration "is based on
‘home registration’ for the mark ‘Harvard Veritas Shield’ for Class
25."17
In any event, under Section 239.2 of Republic Act No. 8293 (R.A. No.
8293),18 "[m]arks registered under Republic Act No. 166 shall remain
in force but shall be deemed to have been granted under this Act x
x x," which does not require actual prior use of the mark in the
Philippines. Since the mark "Harvard Veritas Shield Symbol" is now
deemed granted under R.A. No. 8293, any alleged defect arising from
the absence of actual prior use in the Philippines has been cured by
Section 239.2.19 In addition, Fredco’s registration was already
cancelled on 30 July 1998 when it failed to file the required affidavit
of use/non-use for the fifth anniversary of the mark’s registration.
Hence, at the time of Fredco’s filing of the Petition for Cancellation
before the Bureau of Legal Affairs of the IPO, Fredco was no longer
the registrant or presumptive owner of the mark "Harvard."
There are two compelling reasons why Fredco’s petition must fail.
First, Fredco’s registration of the mark "Harvard" and its identification
of origin as "Cambridge, Massachusetts" falsely suggest that Fredco
or its goods are connected with Harvard University, which uses the
same mark "Harvard" and is also located in Cambridge,
Massachusetts. This can easily be gleaned from the following oblong
logo of Fredco that it attaches to its clothing line:
Fredco’s registration of the mark "Harvard" should not have been
allowed because Section 4(a) of R.A. No. 166 prohibits the registration
of a mark "which may disparage or falsely suggest a connection
with persons, living or dead, institutions, beliefs x x x." Section 4(a) of
R.A. No. 166 provides:
Section 4. Registration of trade-marks, trade-names and service-
marks on the principal register. ‒ There is hereby established a
register of trade-mark, trade-names and service-marks which shall be
known as the principal register. The owner of a trade-mark, a trade-
name or service-mark used to distinguish his goods, business or
services from the goods, business or services of others shall have the
right to register the same on the principal register, unless it:
(a) Consists of or comprises immoral, deceptive or scandalous
manner, or matter which may disparage or falsely suggest a
connection with persons, living or dead, institutions, beliefs, or
national symbols, or bring them into contempt or disrepute;
(b) x x x (emphasis supplied)
Fredco’s use of the mark "Harvard," coupled with its claimed origin in
Cambridge, Massachusetts, obviously suggests a false connection
with Harvard University. On this ground alone, Fredco’s registration
of the mark "Harvard" should have been disallowed.
Indisputably, Fredco does not have any affiliation or connection with
Harvard University, or even with Cambridge, Massachusetts. Fredco
or its predecessor New York Garments was not established in 1936,
or in the U.S.A. as indicated by Fredco in its oblong logo. Fredco
offered no explanation to the Court of Appeals or to the IPO why it
used the mark "Harvard" on its oblong logo with the words
"Cambridge, Massachusetts," "Established in 1936," and "USA."
Fredco now claims before this Court that it used these words "to
evoke a ‘lifestyle’ or suggest a ‘desirable aura’ of petitioner’s clothing
lines." Fredco’s belated justification merely confirms that it sought to
connect or associate its products with Harvard University, riding on
the prestige and popularity of Harvard University, and thus
appropriating part of Harvard University’s goodwill without the
latter’s consent.
Section 4(a) of R.A. No. 166 is identical to Section 2(a) of the Lanham
Act,20 the trademark law of the United States. These provisions are
intended to protect the right of publicity of famous individuals and
institutions from commercial exploitation of their goodwill by
others.21 What Fredco has done in using the mark "Harvard" and the
words "Cambridge, Massachusetts," "USA" to evoke a "desirable
aura" to its products is precisely to exploit commercially the goodwill
of Harvard University without the latter’s consent. This is a clear
violation of Section 4(a) of R.A. No. 166. Under Section 17(c)22 of R.A.
No. 166, such violation is a ground for cancellation of Fredco’s
registration of the mark "Harvard" because the registration was
obtained in violation of Section 4 of R.A. No. 166.
Second, the Philippines and the United States of America are both
signatories to the Paris Convention for the Protection of Industrial
Property (Paris Convention). The Philippines became a signatory to
the Paris Convention on 27 September 1965. Articles 6bis and 8 of the
Paris Convention state:
ARTICLE 6bis
(i) The countries of the Union undertake either administratively if
their legislation so permits, or at the request of an interested party,
to refuse or to cancel the registration and to prohibit the use of a
trademark which constitutes a reproduction, imitation or translation,
liable to create confusion or a mark considered by the competent
authority of the country as being already the mark of a person
entitled to the benefits of the present Convention and used for
identical or similar goods. These provisions shall also apply when
the essential part of the mark constitutes a reproduction of any such
11
well-known mark or an imitation liable to create confusion
therewith.
ARTICLE 8
A trade name shall be protected in all the countries of the
Union without the obligation of filing or registration, whether or not
it forms part of a trademark. (Emphasis supplied)
Thus, this Court has ruled that the Philippines is obligated to assure
nationals of countries of the Paris Convention that they are afforded
an effective protection against violation of their intellectual property
rights in the Philippines in the same way that their own countries are
obligated to accord similar protection to Philippine nationals.23
Article 8 of the Paris Convention has been incorporated in Section 37
of R.A. No. 166, as follows:
Section 37. Rights of foreign registrants. — Persons who are nationals
of, domiciled in, or have a bona fide or effective business or
commercial establishment in any foreign country, which is a party to
any international convention or treaty relating to marks or trade-
names, or the repression of unfair competition to which the
Philippines may be a party, shall be entitled to the benefits and
subject to the provisions of this Act to the extent and under the
conditions essential to give effect to any such convention and treaties
so long as the Philippines shall continue to be a party thereto, except
as provided in the following paragraphs of this section.
xxxx
Trade-names of persons described in the first paragraph of this
section shall be protected without the obligation of filing or
registration whether or not they form parts of marks.24
x x x x (Emphasis supplied)
Thus, under Philippine law, a trade name of a national of a State that
is a party to the Paris Convention, whether or not the trade name
forms part of a trademark, is protected "without the obligation of
filing or registration."
"Harvard" is the trade name of the world famous Harvard University,
and it is also a trademark of Harvard University. Under Article 8 of the
Paris Convention, as well as Section 37 of R.A. No. 166, Harvard
University is entitled to protection in the Philippines of its trade name
"Harvard" even without registration of such trade name in the
Philippines. This means that no educational entity in the Philippines
can use the trade name "Harvard" without the consent of Harvard
University. Likewise, no entity in the Philippines can claim, expressly
or impliedly through the use of the name and mark "Harvard," that its
products or services are authorized, approved, or licensed by, or
sourced from, Harvard University without the latter’s consent.
Article 6bis of the Paris Convention has been administratively
implemented in the Philippines through two directives of the then
Ministry (now Department) of Trade, which directives were upheld by
this Court in several cases.25 On 20 November 1980, then Minister of
Trade Secretary Luis Villafuerte issued a Memorandum directing the
Director of Patents to reject, pursuant to the Paris Convention, all
pending applications for Philippine registration of signature and other
world-famous trademarks by applicants other than their original
owners.26 The Memorandum states:
Pursuant to the Paris Convention for the Protection of Industrial
Property to which the Philippines is a signatory, you are hereby
directed to reject all pending applications for Philippine registration
of signature and other world-famous trademarks by applicants other
than its original owners or users.
The conflicting claims over internationally known trademarks involve
such name brands as Lacoste, Jordache, Vanderbilt, Sasson, Fila,
Pierre Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein,
Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.
It is further directed that, in cases where warranted, Philippine
registrants of such trademarks should be asked to surrender their
certificates of registration, if any, to avoid suits for damages and other
legal action by the trademarks’ foreign or local owners or original
users.
You are also required to submit to the undersigned a progress report
on the matter.
For immediate compliance.27
In a Memorandum dated 25 October 1983, then Minister of Trade and
Industry Roberto Ongpin affirmed the earlier Memorandum of
Minister Villafuerte. Minister Ongpin directed the Director of Patents
to implement measures necessary to comply with the Philippines’
obligations under the Paris Convention, thus:
1. Whether the trademark under consideration is well-known in the
Philippines or is a mark already belonging to a person entitled to the
benefits of the CONVENTION, this should be established, pursuant to
Philippine Patent Office procedures in inter partes and ex parte cases,
according to any of the following criteria or any combination thereof:
(a) a declaration by the Minister of Trade and Industry that the
trademark being considered is already well-known in the Philippines
such that permission for its use by other than its original owner will
constitute a reproduction, imitation, translation or other
infringement;
(b) that the trademark is used in commerce internationally, supported
by proof that goods bearing the trademark are sold on an
international scale, advertisements, the establishment of factories,
sales offices, distributorships, and the like, in different countries,
including volume or other measure of international trade and
commerce;
(c) that the trademark is duly registered in the industrial property
office(s) of another country or countries, taking into consideration
the dates of such registration;
(d) that the trademark has been long established and obtained
goodwill and general international consumer recognition as
belonging to one owner or source;
(e) that the trademark actually belongs to a party claiming ownership
and has the right to registration under the provisions of the
aforestated PARIS CONVENTION.
2. The word trademark, as used in this MEMORANDUM, shall
include tradenames, service marks, logos, signs, emblems, insignia
or other similar devices used for identification and recognition by
consumers.
3. The Philippine Patent Office shall refuse all applications for, or
cancel the registration of, trademarks which constitute a
reproduction, translation or imitation of a trademark owned by a
person, natural or corporate, who is a citizen of a country signatory
to the PARIS CONVENTION FOR THE PROTECTION OF INDUSTRIAL
PROPERTY.
x x x x28 (Emphasis supplied)
In Mirpuri, the Court ruled that the essential requirement under
Article 6bis of the Paris Convention is that the trademark to be
protected must be "well-known" in the country where protection is
sought.29 The Court declared that the power to determine whether a
trademark is well-known lies in the competent authority of the
country of registration or use.30 The Court then stated that the
competent authority would either be the registering authority if it has
12
the power to decide this, or the courts of the country in question if
the issue comes before the courts.31
To be protected under the two directives of the Ministry of Trade, an
internationally well-known mark need not be registered or used in the
Philippines.32 All that is required is that the mark is well-known
internationally and in the Philippines for identical or similar goods,
whether or not the mark is registered or used in the Philippines. The
Court ruled in Sehwani, Incorporated v. In-N-Out Burger, Inc.:33
The fact that respondent’s marks are neither registered nor used in
the Philippines is of no moment. The scope of protection initially
afforded by Article 6bis of the Paris Convention has been expanded in
the 1999 Joint Recommendation Concerning Provisions on the
Protection of Well-Known Marks, wherein the World Intellectual
Property Organization (WIPO) General Assembly and the Paris Union
agreed to a nonbinding recommendation that a well-known mark
should be protected in a country even if the mark is neither
registered nor used in that country. Part I, Article 2(3) thereof
provides:
(3) [Factors Which Shall Not Be Required] (a) A Member State shall
not require, as a condition for determining whether a mark is a well-
known mark:
(i) that the mark has been used in, or that the mark has been
registered or that an application for registration of the mark has been
filed in or in respect of, the Member State:
(ii) that the mark is well known in, or that the mark has been
registered or that an application for registration of the mark has been
filed in or in respect of, any jurisdiction other than the Member State;
or
(iii) that the mark is well known by the public at large in the Member
State.34 (Italics in the original decision; boldface supplied)
Indeed, Section 123.1(e) of R.A. No. 8293 now categorically states
that "a mark which is considered by the competent authority of the
Philippines to be well-known internationally and in the Philippines,
whether or not it is registered here," cannot be registered by another
in the Philippines. Section 123.1(e) does not require that the well-
known mark be used in commerce in the Philippines but only that it
be well-known in the Philippines. Moreover, Rule 102 of the Rules and
Regulations on Trademarks, Service Marks, Trade Names and Marked
or Stamped Containers, which implement R.A. No. 8293, provides:
Rule 102. Criteria for determining whether a mark is well-known. In
determining whether a mark is well-known, the following criteria
or any combination thereof may be taken into account:
(a) the duration, extent and geographical area of any use of the mark,
in particular, the duration, extent and geographical area of any
promotion of the mark, including advertising or publicity and the
presentation, at fairs or exhibitions, of the goods and/or services to
which the mark applies;
(b) the market share, in the Philippines and in other countries, of the
goods and/or services to which the mark applies;
(c) the degree of the inherent or acquired distinction of the mark;
(d) the quality-image or reputation acquired by the mark;
(e) the extent to which the mark has been registered in the world;
(f) the exclusivity of registration attained by the mark in the world;
(g) the extent to which the mark has been used in the world;
(h) the exclusivity of use attained by the mark in the world;
(i) the commercial value attributed to the mark in the world;
(j) the record of successful protection of the rights in the mark;
(k) the outcome of litigations dealing with the issue of whether the
mark is a well-known mark; and
(l) the presence or absence of identical or similar marks validly
registered for or used on identical or similar goods or services and
owned by persons other than the person claiming that his mark is a
well-known mark. (Emphasis supplied)
Since "any combination" of the foregoing criteria is sufficient to
determine that a mark is well-known, it is clearly not necessary that
the mark be used in commerce in the Philippines. Thus, while under
the territoriality principle a mark must be used in commerce in the
Philippines to be entitled to protection, internationally well-known
marks are the exceptions to this rule.
In the assailed Decision of the Office of the Director General dated 21
April 2008, the Director General found that:
Traced to its roots or origin, HARVARD is not an ordinary word. It
refers to no other than Harvard University, a recognized and
respected institution of higher learning located in Cambridge,
Massachusetts, U.S.A. Initially referred to simply as "the new college,"
the institution was named "Harvard College" on 13 March 1639, after
its first principal donor, a young clergyman named John Harvard. A
graduate of Emmanuel College, Cambridge in England, John Harvard
bequeathed about four hundred books in his will to form the basis of
the college library collection, along with half his personal wealth
worth several hundred pounds. The earliest known official reference
to Harvard as a "university" rather than "college" occurred in the new
Massachusetts Constitution of 1780.
Records also show that the first use of the name HARVARD was in
1638 for educational services, policy courses of instructions and
training at the university level. It has a Charter. Its first commercial
use of the name or mark HARVARD for Class 25 was on 31 December
1953 covered by UPTON Reg. No. 2,119,339 and 2,101,295.
Assuming in arguendo, that the Appellate may have used the mark
HARVARD in the Philippines ahead of the Appellant, it still cannot be
denied that the Appellant’s use thereof was decades, even centuries,
ahead of the Appellee’s. More importantly, the name HARVARD was
the name of a person whose deeds were considered to be a
cornerstone of the university. The Appellant’s logos, emblems or
symbols are owned by Harvard University. The name HARVARD and
the logos, emblems or symbols are endemic and cannot be separated
from the institution.35
Finally, in its assailed Decision, the Court of Appeals ruled:
Records show that Harvard University is the oldest and one of the
foremost educational institutions in the United States, it being
established in 1636. It is located primarily in Cambridge,
Massachusetts and was named after John Harvard, a puritan minister
who left to the college his books and half of his estate.
The mark "Harvard College" was first used in commerce in the United
States in 1638 for educational services, specifically, providing courses
of instruction and training at the university level (Class 41). Its
application for registration with the United States Patent and
Trademark Office was filed on September 20, 2000 and it was
registered on October 16, 2001. The marks "Harvard" and "Harvard
Ve ri tas ‘Shield’ Symbol" were first used in commerce in the the
United States on December 31, 1953 for athletic uniforms, boxer
shorts, briefs, caps, coats, leather coats, sports coats, gym shorts,
infant jackets, leather jackets, night shirts, shirts, socks, sweat pants,
sweatshirts, sweaters and underwear (Class 25). The applications for
registration with the USPTO were filed on September 9, 1996, the
mark "Harvard" was registered on December 9, 1997 and the mark
"Harvard Ve ri tas ‘Shield’ Symbol" was registered on September 30,
1997.36
13
We also note that in a Decision37 dated 18 December 2008 involving
a separate case between Harvard University and Streetward
International, Inc.,38 the Bureau of Legal Affairs of the IPO ruled that
the mark "Harvard" is a "well-known mark." This Decision, which cites
among others the numerous trademark registrations of Harvard
University in various countries, has become final and executory.
There is no question then, and this Court so declares, that "Harvard"
is a well-known name and mark not only in the United States but also
internationally, including the Philippines. The mark "Harvard" is rated
as one of the most famous marks in the world. It has been registered
in at least 50 countries. It has been used and promoted extensively in
numerous publications worldwide. It has established a considerable
goodwill worldwide since the founding of Harvard University more
than 350 years ago. It is easily recognizable as the trade name and
mark of Harvard University of Cambridge, Massachusetts, U.S.A.,
internationally known as one of the leading educational institutions
in the world. As such, even before Harvard University applied for
registration of the mark "Harvard" in the Philippines, the mark was
already protected under Article 6bis and Article 8 of the Paris
Convention. Again, even without applying the Paris Convention,
Harvard University can invoke Section 4(a) of R.A. No. 166 which
prohibits the registration of a mark "which may disparage or falsely
suggest a connection with persons, living or dead, institutions,
beliefs x x x."
WHEREFORE, we DENY the petition. We AFFIRM the 24 October
2008 Decision and 8 January 2009 Resolution of the Court of Appeals
in CA-G.R. SP No. 103394.
SO ORDERED.

14
G.R. No. L-75420 November 15, 1991
KABUSHI KAISHA ISETAN, also known and trading as ISETAN CO.,
LTD., petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT, THE DIRECTOR OF PATENTS,
and ISETANN DEPARTMENT STORE, INC., respondents.
GUTIERREZ, JR., J.:
This is a petition for review on certiorari which seeks to set aside - (1)
the decision of the Court of Appeals dated June 2, 1986 in AC-G.R. SP
No. 008873 entitled "Kabushi Kaisha Isetan, also known and trading
as Isetan Company Limited v. Isetann Department Store, Inc."
dismissing the petitioner's appeal from the decision of the Director of
Patents; and (2) the Resolution dated July 11, 1986 denying the
petitioner's motion for reconsideration.
As gathered from the records, the facts are as follows:
Petitioner Kabushi Kaisha Isetan is a foreign corporation organized
and existing under the laws of Japan with business address at 14-1
Shinjuku, 3-Chrome, Shinjuku, Tokyo, Japan. It is the owner of the
trademark "Isetan" and the "Young Leaves Design".
The petitioner alleges that it first used the trademark Isetan on
November 5, 1936. It states that the trademark is a combination of
"Ise" taken from "Iseya" the first name of the rice dealer in Kondo,
Tokyo in which the establishment was first located and "Tan" which
was taken from "Tanji Kosuge the First". The petitioner claims to have
expanded its line of business internationally from 1936 to 1974. The
trademark "Isetan" and "Young Leaves Design" were registered in
Japan covering more than 34 classes of goods. On October 3, 1983,
the petitioner applied for the registration of "Isetan" and "Young
Leaves Design" with the Philippine Patent Office under Permanent
Serial Nos. 52422 and 52423 respectively. (Rollo, p. 43)
Private respondent, Isetann Department Store, on the other hand, is
a domestic corporation organized and existing under the laws of the
Philippines with business address at 423-430 Rizal Avenue, Sta. Cruz,
Manila, Philippines.
It claims that it used the word "Isetann" as part of its corporated name
and on its products particularly on shirts in Joymart Department Store
sometime in January 1979. The suffix "Tann" means an altar, the place
of offering in Chinese and this was adopted to harmonize the
corporate name and the corporate logo of two hands in cup that
symbolizes the act of offering to the Supreme Being for business
blessing.
On May 30, 1980 and May 20, 1980, the private respondent
registered "Isetann Department Store, Inc." and Isetann and Flower
Design in the Philippine Patent Office under SR. Reg. No. 4701 and
4714, respectively, as well as with the Bureau of Domestic Trade
under Certificate of Registration No. 32020. (Rollo, pp. 43-44)
On November 28, 1980, the petitioner filed with the Phil. Patent
Office two (2) petitions for the cancellation of Certificates of
Supplemental Registration Nos. SR-4714 and SR-4701 stating among
others that:
. . . except for the additional letter "N" in the word "Isetan", the mark
registered by the registrant is exactly the same as the trademark
ISETAN owned by the petitioner and that the young leaves registered
by the registrant is exactly the same as the young leaves design
owned by the petitioner.
The petitioner further alleged that private respondent's act of
registering a trademark which is exactly the same as its trademark and
adopting a corporate name similar to that of the petitioner were with
the illegal and immoral intention of cashing in on the long established
goodwill and popularity of the petitioner's reputation, thereby
causing great and irreparable injury and damage to it (Rollo, p. 521).
It argued that both the petitioner's and respondent's goods move in
the same channels of trade, and ordinary people will be misled to
believe that the products of the private respondent originated or
emanated from, are associated with, or are manufactured or sold, or
sponsored by the petitioner by reason of the use of the challenged
trademark.
The petitioner also invoked the Convention of Paris of March 20, 1883
for the Protection of Industrial Property of which the Philippines and
Japan are both members. The petitioner stressed that the Philippines'
adherence to the Paris Convention committed to the government to
the protection of trademarks belonging not only to Filipino citizens
but also to those belonging to nationals of other member countries
who may seek protection in the Philippines. (Rollo, p. 522)
The petition was docketed as Inter Partes Cases Nos. 1460 and 1461
(Rollo, p. 514)
Meanwhile, the petitioner also filed with the Securities and Exchange
Commission (SEC) a petition to cancel the mark "ISETAN" as part of
the registered corporate name of Isetann Department Store, Inc.
which petition was docketed as SEC Case No. 2051 (Rollo, p. 524) On
May 17, 1985, this petition was denied in a decision rendered by SEC's
Hearing Officer, Atty. Joaquin C. Garaygay.
On appeal, the Commission reversed the decision of the Hearing
Officer on February 25, 1986. It directed the private respondent to
amend its Articles of Incorporation within 30 days from finality of the
decision.
On April 15, 1986, however, respondent Isetann Department Store
filed a motion for reconsideration. (Rollo, pp. 325-353). And on
September 10, 1987, the Commission reversed its earlier decision
dated February 25, 1986 thereby affirming the decision rendered by
the Hearing Officer on May 17, 1985. The Commission stated that
since the petitioner's trademark and tradename have never been
used in commerce on the petitioner's products marketed in the
Philippines, the trademark or tradename have not acquired a
reputation and goodwill deserving of protection from usurpation by
local competitors. (Rollo, p. 392).
This SEC decision which denied and dismissed the petition to cancel
was submitted to the Director of Patents as part of the evidence for
the private respondent.
On January 24, 1986, the Director of Patents after notice and hearing
rendered a joint decision in Inter Partes Cases Nos. 1460 and 1461,
the dispositive portion of which reads:
WHEREFORE, all the foregoing considered, this Office is constrained
to hold that the herein Petitioner has not successfully made out a case
of cancellation. Accordingly, Inter Partes Cases Nos. 1460 and 1461
are, as they are hereby, DISMISSED. Hence, Respondent's Certificate
of Supplemental Registration No. 4714 issued on May 20, 1980
covering the tradename "ISETANN DEPT. STORE, INC. & FLOWER
DESIGN" are, as they are hereby, ordered to remain in full force and
effect for the duration of their term unless sooner or later terminated
by law.
The corresponding application for registration in the Principal
Register of the Trademark and of the tradename aforesaid are hereby
given due course.
15
Let the records of these cases be transmitted to the Trademark
Examining Division for appropriate action in accordance with this
Decision.
On February 21, 1986, Isetan Company Limited moved for the
reconsideration of said decision but the motion was denied on April
2, 1986 (Rollo, pp. 355-359).
From this adverse decision of the Director of Patents, the petitioner
appealed to the Intermediate Appellate Court (now Court of Appeals).
On June 2, 1986, the IAC dismissed the appeal on the ground that it
was filed out of time.
The petitioner's motion for reconsideration was likewise denied in a
resolution dated July 11, 1986.
Hence, this petition.
Initially, the Court dismissed the petition in a resolution dated July 8,
1987, on the ground that it was filed fourteen (14) days late. However,
on motion for reconsideration, whereby the petitioner appealed to
this Court on equitable grounds stating that it has a strong and
meritorious case, the petition was given due course in a resolution
dated May 19, 1988 to enable us to examine more fully any possible
denial of substantive justice. The parties were then required to
submit their memoranda. (Rollo, pp. 2-28; Resolution, pp. 271; 453)
After carefully considering the records of this case, we reiterate our
July 8, 1987 resolution dismissing the petition. There are no
compelling equitable considerations which call for the application of
the rule enunciated in Serrano v. Court of Appeals (139 SCRA 179
[1985]) and Orata v. Intermediate Appellate Court, et al. (185 SCRA
148 [1990]) that considerations of substantial justice manifest in the
petition may relax the stringent application of technical rules so as
not to defeat an exceptionally meritorious petition.
There is no dispute and the petitioner does not question the fact that
the appeal was filed out of time.
Not only was the appeal filed late in the Court of Appeals, the petition
for review was also filed late with us. In common parlance, the
petitioner's case is "twice dead" and may no longer be reviewed.
The Court of Appeals correctly rejected the appeal on the sole ground
of late filing when it ruled:
Perfection of an appeal within the time provided by law is
jurisdictional, and failure to observe the period is fatal.
The decision sought to be appealed is one rendered by the Philippine
Patent Office, a quasi-judicial body. Consequently, under Section
23(c) of the Interim Rules of Court, the appeal shall be governed by
the provisions of Republic Act No. 5434, which provides in its Section
2;
Sec. 2. Appeals to Court of Appeals. - Appeals to the Court of Appeals
shall be filed within fifteen (15) days from notice of the ruling, award,
order, decision or judgment or from the date of its last publication, if
publication is required by law for its effectivity; or in case a motion
for reconsideration is filed within that period of fifteen (15) days, then
within ten (10) days from notice or publication, when required by law,
of the resolution denying the motion for reconsideration. No more
than one motion for reconsideration shall be allowed any party. If no
appeal is filed within the periods here fixed, the ruling, award, order,
decision or judgment shall become final and may be executed as
provided by existing law.
Attention is invited to that portion of Section 2 which states that in
case a motion for reconsideration is filed, an appeal should be filed
within ten (10) days from notice of the resolution denying the motion
for reconsideration.
The petitioner received a copy of the Court of Appeals' resolution
denying and received by us on August 8, 1986, its motion for
reconsideration on July 17, 1986. It had only up to August 1, 1986 to
file a petition for review with us. The present petition was posted on
August 2, 1986. There is no question that it was, again, filed late
because the petitioner filed an ex-parte motion for admission
explaining the delay.
The decision of the Patent Office has long become final and
executory. So has the Court of Appeal decision.
Regarding the petitioner's claims of substantial justice which led us to
give due course, we decline to disturb the rulings of the Patent Office
and the Court of Appeals.
A fundamental principle of Philippine Trademark Law is that actual
use in commerce in the Philippines is a pre-requisite to the acquisition
of ownership over a trademark or a tradename.
The trademark Law, Republic Act No. 166, as amended, under which
this case heard and decided provides:
SEC. 2. What are registrable.- Trademark, tradenames and service
marks owned by persons, corporation, partnerships or associations
domiciled in the Philippines and by persons, corporations,
partnerships or associations domicided in any foreign country may be
registered in accordance with the provisions of this Act: Provided,
That said trademarks, tradenames, or service marks are actually in
use in commerce and services not less than two months in the
Philippines before the time the applications for registration are filed:
And provided, further, That the country of which the applicant for
registration is a citizen grants by law substantially similar privileges to
citizens of the Philippines, and such fact is officially certified, with a
certified true copy of the foreign law translated into the English
language, by the government of the foreign country to the
Government of the Republic of the Philippines. (As amended by R.A.
No. 865).
SEC. 2-A. Ownership of trademarks, tradenames and service marks;
how acquired. - Anyone who lawfully produces or deals in
merchandise of any kind or who engages in any lawful business, or
who renders any lawful service in commerce, by actual use thereof in
manufacture or trade, in business, and in the service rendered, may
appropriate to his exclusive use a trademark, a tradename, or a
service mark not so appropriated by another, to distinguish his
merchandise, business or service from the merchandise, business or
service of others. The ownership or possession of a trademark,
tradename, service mark, heretofore or hereafter appropriated, as in
this section provided, shall be recognized and protected in the same
manner and to the same extent as are other property rights known to
the law. (As amended by R.A. No. 638)"
These provisions have been interpreted in Sterling Products
International, Inc. v. Farbenfabriken Bayer Actiengesellschaft (27
SCRA 1214 [1969]) in this way:
A rule widely accepted and firmly entrenched because it has come
down through the years is that actual use in commerce or business is
a prerequisite to the acquisition of the right of ownership over a
trademark.
xxx xxx xxx
... Adoption alone of a trademark would not give exclusive right
thereto. Such right grows out of their actual use. Adoption is not use.
One way make advertisements, issue circulars, give out price lists on
certain goods; but these alone would not give exclusive right of
use.For trademark is a creation of use. The underlying reason for all
these is that purchasers have come to understand the mark as
16
indicating the origin of the wares. Flowing from this is the trader's
right to protection in the trade he has built up and the goodwill he
has accumulated from use of the trademark. ...
In fact, a prior registrant cannot claim exclusive use of the trademark
unless it uses it in commerce.
We ruled in Pagasa Industrial Corporation v. Court of Appeals (118
SCRA 526 [1982]):
3. The Trademark Law is very clear. It requires actual commercial use
of the mark prior to its registration. - There is no dispute that
respondent corporation was the first registrant, yet it failed to fully
substantiate its claim that it used in trade or business in the
Philippines the subject mark; it did not present proof to invest it with
exclusive, continuous adoption of the trademark which should consist
among others, of considerable sales since its first use. The invoices
(Exhibits 7, 7-a, and 8-b) submitted by respondent which were dated
way back in 1957 show that the zippers sent to the Philippines were
to be used as "samples" and "of no commercial value". The evidence
for respondent must be clear, definite and free from incosistencies.
(Sy Ching v. Gaw Lui. 44 SCRA 148-149) "Samples" are not for sale and
therefore, the fact of exporting them to the Philippines cannot be
considered to be equivalent to the "use" contemplated by the law.
Respondent did not expect income from such "samples". "There were
no receipts to establish sale, and no proof were presented to show
that they were subsequently sold in the Philippines." (Pagasa
Industrial Corp. v. Court of Appeals, 118 SCRA 526 [1982]; Emphasis
Supplied)
The records show that the petitioner has never conducted any
business in the Philippines. It has never promoted its tradename or
trademark in the Philippines. It has absolutely no business goodwill in
the Philippines. It is unknown to Filipinos except the very few who
may have noticed it while travelling abroad. It has never paid a single
centavo of tax to the Philippine government. Under the law, it has no
right to the remedy it seeks.
There can be no question from the records that the petitioner has
never used its tradename or trademark in the Philippines.
The petitioner's witnesses, Mr. Mayumi Takayama and Mr. Hieoya
Murakami, admitted that:
1) The petitioner's company is not licensed to do business in the
Philippines;
2) The petitioner's trademark is not registered under Philippine law;
and
3) The petitioner's trademark is not being used on products in trade,
manufacture, or business in the Philippines.
It was also established from the testimony of Atty. Villasanta,
petitioner's witness, that the petitioner has never engaged in
promotional activities in the Philippines to popularize its trademark
because not being engaged in business in the Philippines, there is no
need for advertising. The claim of the petitioner that millions of
dollars have been spent in advertising the petitioner's products,
refers to advertising in Japan or other foreign places. No promotional
activities have been undertaken in the Philippines, by the petitioner's
own admission.
Any goodwill, reputation, or knowledge regarding the name Isetann
is purely the work of the private respondent. Evidence was introduced
on the extensive promotional activities of the private respondent.
It might be pertinent at this point to stress that what is involved in
this case is not so much a trademark as a tradename. Isetann
Department Store, Inc. is the name of a store and not of product sold
in various parts of the country. This case must be differentiated from
cases involving products bearing such familiar names as "colgate",
"Singer". "Toyota", or "Sony" where the products are marketed
widely in the Philippines. There is not product with the name
"Isetann" popularized with that brand name in the Philippines. Unless
one goes to the store called Isetann in Manila, he would never know
what the name means. Similarly, until a Filipino buyer steps inside a
store called "Isetan" in Tokyo or Hongkong, that name would be
completely alien to him. The records show that among Filipinos, the
name cannot claim to be internationally well-known.
The rule is that the findings of facts of the Director of Patents are
conclusive on the Supreme Court, provided they are supported by
substantial evidence. (Chua Che v. Phil. Patent Office, 13 SCRA 67
[1965]; Chung Te v. Ng Kian Giab, 18 SCRA 747 [1966]; Marvex
Commercial Co., Inc. v. Petra Hawpia & Co., 18 SCRA 1178 [1966]; Lim
Kiah v. Kaynee, Co. 25 SCRA 485 [1968]; Kee Boc v. Dir. of Patents, 34
SCRA 570 [1970]).
The conclusions of the Director of Patents are likewise based on
applicable law and jurisprudence:
What is to be secured from unfair competition in a given territory is
the trade which one has in that particular territory. There is where his
business is carried on where the goodwill symbolized by the
trademark has immediate value; where the infringer may profit by
infringement.
There is nothing new in what we now say. Plaintiff itself concedes
(Brief for Plaintiff-Appellant, p. 88) that the principle of territoriality
of the Trademark Law has been recognized in the Philippines, citing
Ingenohl v. Walter E. Olsen, 71 L. ed. 762. As Callmann puts it, the law
of trademarks "rests upon the doctrine of nationality or territoriality."
(2 Callmann, Unfair Competition and Trademarks, 1945 ed., p. 1006)
(Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellachaft, 27 SCRA 1214 [1969]; Emphasis supplied)
The mere origination or adoption of a particular tradename without
actual use thereof in the market is insufficient to give any exclusive
right to its use (Johnson Mfg. Co. v. Leader Filling Stations Corp. 196
N.E. 852, 291 Mass. 394), even though such adoption is publicly
declared, such as by use of the name in advertisements, circulars,
price lists, and on signs and stationery. (Consumers Petrolum Co. v.
Consumers Co. of ILL. 169 F 2d 153)
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.
As stated by the Director of Patents -
Indeed, the Philippines is a signatory to this Treaty and, hence, we
must honor our obligation thereunder on matters concerning
internationally known or well known marks. However, this Treaty
provision clearly indicated the conditions which must exist before any
trademark owner can claim and be afforded rights such as the
Petitioner herein seeks and those conditions are that:
a) the mark must be internationally known or well known;
b) the subject of the right must be a trademark, not a patent or
copyright or anything else;
c) the mark must be for use in the same or similar kinds of goods; and
d) the person claiming must be the owner of the mark (The Parties
Convention Commentary on the Paris Convention. Article by Dr.
17
Bogach, Director General of the World Intellectual Property
Organization, Geneva, Switzerland, 1985)
The respondent registered its trademark in 1979. It has continuously
used that name in commerce. It has established a goodwill through
extensive advertising. The people who buy at Isetann Store do so
because of Isetann's efforts. There is no showing that the Japanese
firm's registration in Japan or Hongkong has any influence whatsoever
on the Filipino buying public.
WHEREFORE, premises considered, the petition is hereby DISMISSED.
SO ORDERED.
Fernan, C.J., Paras and Bidin, JJ., concur.
Separate Opinions
PADILLA, J., separate opinion:
It appears that on 28 November 1980, petitioner filed with the
Philippines Patent Office two (2) petitions for cancellation of
Certificates of Supplemental Registration Nos. SR-4717 and SR-4701,
docketed therein as inter Partes Cases Nos. 1460 and 1461.
On 24 January 1986, the Director of Patents rendered a joint decision
dismissing the petitions in the aforesaid cases.
Petitioner moved for reconsideration on 21 February 1986 but the
motion was denied on 2 April 1986.
Petitioner appealed to the Intermediate Appellate Court (now Court
of Appeals), the appeal docketed therein as AC-G.R. SP NO. 08873. On
2 June 1986, the appellate court rendered a decision dismissing the
appeal for having been filed out of time. It held:
In the case at bar, appellant admits that it received on April 11, 1986,
a copy of the Resolution dated April 2, 1986, denying its motion for
reconsideration. Under the law, therefore, appellant had only up to
April 21, 1986 within which to file its notice of appeal to this Court.
Upon these premises, it becomes all but too obvious that the notice
of appeal which was filed only on May 5, 1986, was filed when the
decision sought to be appealed had already become final. The notice
of appeal was in fact filed 24 days after receipt of the Resolution
denying appellant's motion for reconsideration, which period is
beyong the original period of 15 days provided for under Section 2 of
Republic Act No. 5434 and, of course, also of the 15 days provided
under Batas Pambansa Bilang 129.
Petitioner moved for reconsideration but its motion was denied in the
resolution of the Court of Appeals dated 11 July 1986.
Hence, the present petition for review on certiorari.
In Bello vs. Fernando, G.R. No. L-16970, 30 January 1962, 4 SCRA 135,
the Court speaking thru Mr. Justice J.B.L. Reyes held:
The right to appeal is not a natural right nor a part of due process; it
is merely a statutory privilege, and may be exercised onlu in the
manner and in accordance with the provisions of the law (Aguila v.
Navarro, 55 Phil, 898; Santiago v. Valenzuela, 78 Phil. 397) ...; and
compliance with the (this) period for appeal is considered absolutely
indispensable for the prevention of needless delays and to the orderly
and speedy discharge of judicial business (Altavas Conlu v. C.A., L-
14027, January 29, 1960), so that if said period is not complied with,
the judgment becomes final and executory and the appellate court
does not acquire jurisdiction over the appeal (Layda v. Legaspi, 38
Phil. 83; Pampolina v. Suiza, 12 Phil. 99; Caisip v. Cabangon, L-14684,
Aug. 26, 1960).
"Indeed, this Court had ruled, time and again, that compliance with
the reglementary period for perfecting an appeal is not merely
mandatory, but jurisdictional." (Aguilar vs. Blanco, G.R. No. L-32392,
31 August 1988, 165 SCRA 180).
The perfection of an appeal within the reglementary period is not,
therefore, a mere technicality but mandatory and jurisdictional. Since
petitioner's appeal to the Court of Appeals from the decision of the
Director of Patents was admittedly filed out of time, and there was no
compelling reason given as to why the appeal was filed out of time,
the appellate court acquired no jurisdiction over said appeal and the
decision of the Director of Patents had become final and executory. I
see, therefore, no need or reason to go into the merits of the abortive
appeal.
The decision of the Court of Appeals dismissing the peititioner's
appeal should, therefore, be AFFIRMED and the present petition
should be DISMISSED.
# Separate Opinions
PADILLA, J., separate opinion:
It appears that on 28 November 1980, petitioner filed with the
Philippines Patent Office two (2) petitions for cancellation of
Certificates of Supplemental Registration Nos. SR-4717 and SR-4701,
docketed therein as inter Partes Cases Nos. 1460 and 1461.
On 24 January 1986, the Director of Patents rendered a joint decision
dismissing the petitions in the aforesaid cases.
Petitioner moved for reconsideration on 21 February 1986 but the
motion was denied on 2 April 1986.
Petitioner appealed to the Intermediate Appellate Court (now Court
of Appeals), the appeal docketed therein as AC-G.R. SP NO. 08873. On
2 June 1986, the appellate court rendered a decision dismissing the
appeal for having been filed out of time. It held:
In the case at bar, appellant admits that it received on April 11, 1986,
a copy of the Resolution dated April 2, 1986, denying its motion for
reconsideration. Under the law, therefore, appellant had only up to
April 21, 1986 within which to file its notice of appeal to this Court.
Upon these premises, it becomes all but too obvious that the notice
of appeal which was filed only on May 5, 1986, was filed when the
decision sought to be appealed had already become final. The notice
of appeal was in fact filed 24 days after receipt of the Resolution
denying appellant's motion for reconsideration, which period is
beyong the original period of 15 days provided for under Section 2 of
Republic Act No. 5434 and, of course, also of the 15 days provided
under Batas Pambansa Bilang 129.
Petitioner moved for reconsideration but its motion was denied in the
resolution of the Court of Appeals dated 11 July 1986.
Hence, the present petition for review on certiorari.
In Bello vs. Fernando, G.R. No. L-16970, 30 January 1962, 4 SCRA 135,
the Court speaking thru Mr. Justice J.B.L. Reyes held:
The right to appeal is not a natural right nor a part of due process; it
is merely a statutory privilege, and may be exercised onlu in the
manner and in accordance with the provisions of the law (Aguila v.
Navarro, 55 Phil, 898; Santiago v. Valenzuela, 78 Phil. 397) ...; and
compliance with the (this) period for appeal is considered absolutely
indispensable for the prevention of needless delays and to the orderly
and speedy discharge of judicial business (Altavas Conlu v. C.A., L-
14027, January 29, 1960), so that if said period is not complied with,
the judgment becomes final and executory and the appellate court
does not acquire jurisdiction over the appeal (Layda v. Legaspi, 38
Phil. 83; Pampolina v. Suiza, 12 Phil. 99; Caisip v. Cabangon, L-14684,
Aug. 26, 1960).
18
"Indeed, this Court had ruled, time and again, that compliance with
the reglementary period for perfecting an appeal is not merely
mandatory, but jurisdictional." (Aguilar vs. Blanco, G.R. No. L-32392,
31 August 1988, 165 SCRA 180).
The perfection of an appeal within the reglementary period is not,
therefore, a mere technicality but mandatory and jurisdictional. Since
petitioner's appeal to the Court of Appeals from the decision of the
Director of Patents was admittedly filed out of time, and there was no
compelling reason given as to why the appeal was filed out of time,
the appellate court acquired no jurisdiction over said appeal and the
decision of the Director of Patents had become final and executory. I
see, therefore, no need or reason to go into the merits of the abortive
appeal.
The decision of the Court of Appeals dismissing the peititioner's
appeal should, therefore, be AFFIRMED and the present petition
should be DISMISSED.

19
Republic of the Philippines
SUPREME COURT
SECOND DIVISION
G.R. No. 138900 September 20, 2005
LEVI STRAUSS & CO., & LEVI STRAUSS (PHILS.), INC., Petitioners,
vs.
CLINTON APPARELLE, INC., Respondent.
DECISION
Tinga, J.:
Before us is a petition for review on 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’ Decision2 and Resolution3 respectively dated 21 December
1998 and 10 May 1999. The questioned Decision granted
respondent’s prayer for a writ of preliminary injunction in
its Petition4 and set aside the trial court’s orders dated 15 May
19985 and 4 June 19986 which respectively granted petitioners’
prayer for the issuance of a temporary restraining order (TRO) and
application for the issuance of a writ of preliminary injunction.
This case stemmed from the Complaint7 for Trademark Infringement,
Injunction and Damages filed by petitioners LS & Co. and LSPI against
respondent Clinton Apparelle, Inc.* (Clinton Aparelle) together with
an alternative defendant, Olympian Garments, Inc. (Olympian
Garments), before the Regional Trial Court of Quezon City, Branch
90.8 The Complaint was docketed as Civil Case No. Q-98-34252,
entitled "Levi Strauss & Co. and Levi Strauss (Phils.), Inc. v. Clinton
Aparelle, Inc. and/or Olympian Garments, Inc."
The Complaint alleged that LS & Co., a foreign corporation duly
organized and existing under the laws of the State of Delaware,
U.S.A., and engaged in the apparel business, is the owner by prior
adoption and use since 1986 of the internationally famous "Dockers
and Design" trademark. This ownership is evidenced by its valid and
existing registrations in various member countries of the Paris
Convention. In the Philippines, it has a Certificate of Registration No.
46619 in the Principal Register for use of said trademark on pants,
shirts, blouses, skirts, shorts, sweatshirts and jackets under Class 25.9
The "Dockers and Design" trademark was first used in the Philippines
in or about May 1988, by LSPI, a domestic corporation engaged in the
manufacture, sale and distribution of various products bearing
trademarks owned by LS & Co. To date, LSPI continues to manufacture
and sell Dockers Pants with the "Dockers and Design" trademark.10
LS & Co. and LSPI further alleged that they discovered the presence in
the local market of jeans under the brand name "Paddocks" using a
device which is substantially, if not exactly, similar to the "Dockers
and Design" trademark owned by and registered in the name of LS &
Co., without its consent. Based on their information and belief, they
added, Clinton Apparelle manufactured and continues to
manufacture such "Paddocks" jeans and other apparel.
However, since LS & Co. and LSPI are unsure if both, or just one of
impleaded defendants are behind the manufacture and sale of the
"Paddocks" jeans complained of, they brought this suit under Section
13, Rule 311 of the 1997 Rules of Civil Procedure.12
The Complaint contained a prayer that reads as follows:
1. That upon the filing of this complaint, a temporary restraining order
be immediately issued restraining defendants, their officers,
employees, agents, representatives, dealers, retailers or assigns from
committing the acts herein complained of, and, specifically, for the
defendants, their officers, employees, agents, representatives,
dealers and retailers or assigns, to cease and desist from
manufacturing, distributing, selling, offering for sale, advertising, or
otherwise using denims, jeans or pants with the design herein
complained of as substantially, if not exactly similar, to plaintiffs’
"Dockers and Design" trademark.
2. That after notice and hearing, and pending trial on the merits, a
writ of preliminary injunction be issued enjoining defendants, their
officers, employees, agents, dealers, retailers, or assigns from
manufacturing, distributing, selling, offering for sale, advertising,
jeans the design herein complained of as substantially, if not exactly
similar, to plaintiffs’ "Dockers and Design" trademark.
3. That after trial on the merits, judgment be rendered as follows:
a. Affirming and making permanent the writ of preliminary injunction;
b. Ordering that all infringing jeans in the possession of either or both
defendants as the evidence may warrant, their officers, employees,
agents, retailers, dealers or assigns, be delivered to the Honorable
Court of plaintiffs, and be accordingly destroyed; 13
Acting on the prayer for the issuance of a TRO, the trial court issued
an Order14 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
On 14 May 1998, neither Clinton Apparelle nor Olympian Garments
appeared. Clinton Apparelle claimed that it was not notified of such
hearing. Only Olympian Garments allegedly had been issued with
summons. Despite the absence of the defendants, the hearing on the
application for the issuance of a TRO continued. 16
The following day, the trial court issued an Order17 granting the TRO
applied for, the pertinent portions of which state:
…Considering the absence of counsel/s for the defendant/s during the
summary hearing scheduled on May 5, 1998 and also during the re-
scheduled summary hearing held on May 14, 1998 set for the purpose
of determining whether or not a Temporary Restraining Order shall
be issued, this Court allowed the counsel for the plaintiffs to present
on May 14, 1998 their arguments/evidences in support of their
application. After hearing the arguments presented by the counsel for
the plaintiffs during the summary hearing, this Court is of the
considered and humble view that grave injustice and irreparable
injury to the plaintiffs would arise before the matter of whether or
not the application for the issuance of a Writ of Preliminary Injunction
can be heard, and that, in the interest of justice, and in the meantime,
a Temporary Restraining Order be issued.
WHEREFORE, let this Temporary Restraining Order be issued
restraining the defendants, their officers, employees, agents,
representatives, dealers, retailers or assigns from committing the acts
complained of in the verified Complaint, and specifically, for the
defendants, their officers, employees, agents, representatives,
dealers and retailers or assigns, to cease and desist from
manufacturing, distributing, selling, offering for sale, advertising or
otherwise using denims, jeans or pants with the design complained of
in the verified Complaint as substantially, if not exactly similar, to
plaintiffs’ "Dockers and Design" trademark; until after the
application/prayer for the issuance of a Writ of Preliminary Injunction
is heard/resolved, or until further orders from this Court.
The hearing on the application for the issuance of a Writ of
Preliminary Injunction as embodied in the verified Complaint is set on
May 26, 1998 (Tuesday) at 2:00 P.M. which setting is intransferable in
character considering that the lifetime of this Temporary Restraining
Order is twenty (20) days from date hereof.18
20
On 4 June 1998, the trial court issued another Order19 granting the
writ of preliminary injunction, to wit:
ORDER
This resolves the plaintiffs’ application or prayer for the issuance of a
writ of preliminary injunction as embodied in the verified complaint
in this case. Parenthetically, this Court earlier issued a temporary
restraining order. (see Order dated May 15, 1998; 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 the status quo shall be maintained and that an injunction bond of
₱2,500,000.00 appears to be in order. (see Sections 3 and 4, Rule 58,
1997 Rules of Civil Procedure)
IN VIEW OF THE FOREGOING, the plaintiffs’ prayer for the issuance of
a writ of preliminary injunction is GRANTED. Accordingly, upon the
plaintiffs’ filing, within ten (10) days from their receipt hereof, an
injunction bond of ₱2,500,000.00 executed to the defendants to the
effect that the plaintiffs will pay all damages the defendants may
sustain by reason of this injunction in case the Court should finally
decide that the plaintiffs are not entitled thereto, let a writ of
preliminary injunction issue enjoining or restraining the commission
of the acts complained of in the verified Complaint in this case, and
specifically, for the defendants, their officers, employees, agents,
representatives, dealers and retailers or assigns or persons acting in
their behalf to cease and desist from manufacturing, distributing,
selling, offering for sale, advertising, or otherwise using, denims,
jeans or pants with the design complained of in the verified Complaint
in this case, which is substantially, if not exactly, similar to plaintiffs’
"DOCKERS and DESIGN" trademark or logo as covered by the Bureau
of Patents, Trademarks and Technology Transfer Certificate of
Registration No. 46619, until after this case shall have been decided
on the merits and/or until further orders from this Court.20
The evidence considered by the trial court in granting injunctive relief
were as follows: (1) a certified true copy of the certificate of
trademark registration for "Dockers and Design"; (2) a pair of
DOCKERS pants bearing the "Dockers and Design" trademark; (3) a
pair of "Paddocks" pants bearing respondent’s assailed logo; (4) the
Trends MBL Survey Report purportedly proving that there was
confusing similarity between two marks; (5) the affidavit of one
Bernabe Alajar which recounted petitioners’ prior adoption, use and
registration of the "Dockers and Design" trademark; and (6) the
affidavit of one Mercedes Abad of Trends MBL, Inc. which detailed
the methodology and procedure used in their survey and the results
thereof.21
Clinton Apparelle thereafter filed a Motion to Dismiss22 and a Motion
for Reconsideration23 of the Order granting the writ of preliminary
injunction. Meantime, the trial court issued an Order24 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 Court
decisions" on whether or not the trial court may issue the writ of
preliminary injunction pending the resolution of the Motion for
Reconsideration and the Motion to Dismiss filed by respondent.
On 2 October 1998, the trial court denied Clinton Apparelle’s Motion
to Dismiss and Motion for Reconsideration in an Omnibus
Order,26 the pertinent portions of which provide:
After carefully going over the contents of the pleadings in relation to
pertinent portions of the records, this Court is of the considered and
humble view that:
On the first motion, the arguments raised in the plaintiffs’ aforecited
Consolidated Opposition appears to be meritorious. Be that as it may,
this Court would like to emphasize, among other things, that the
complaint states a cause of action as provided under paragraphs 1 to
18 thereof.
On the second motion, the arguments raised in the plaintiffs’
aforecited Consolidated Opposition likewise appear to be impressed
with merit. Besides, there appears to be no strong and cogent reason
to reconsider and set aside this Court’s Order dated June 4, 1998 as it
has been shown so far that the trademark or logo of defendants is
substantially, if not exactly, similar to plaintiffs’ "DOCKERS and
DESIGN" trademark or logo as covered by BPTTT Certificate of
Registration No. 46619 even as the BPTTT Certificate of Registration
No. 49579 of Clinton Apparelle, Inc. is only for the mark or word
"PADDOCKS" (see Records, p. 377) In any event, this Court had issued
an Order dated June 18, 1998 for the issuance of the writ of
preliminary injunction after the plaintiffs filed the required bond of
₱2,500,000.00.
IN VIEW OF THE FOREGOING, the aforecited Motion To Dismiss and
Motion For Reconsideration are both DENIED for lack of merit, and
accordingly, this Court’s Order dated June 18, 1998 for the issuance
of the writ of preliminary injunction is REITERATED so the writ of
preliminary injunction could be implemented unless the
implementation thereof is restrained by the Honorable Court of
Appeals or Supreme Court.
The writ of preliminary injunction was thereafter issued on 8 October
1998.27
Thus, Clinton Apparelle filed with the Court of Appeals a Petition28 for
certiorari, prohibition and mandamus with prayer for the issuance of
a temporary restraining order and/or writ of preliminary injunction,
assailing the orders of the trial court dated 15 May 1998, 4 June 1998
and 2 October 1998.
On 20 October 1998, the Court of Appeals issued
a Resolution29 requiring herein petitioners to file their comment on
the Petition and at the same time issued the prayed-for temporary
restraining order.
The appellate court rendered on 21 December 1998 its now
assailed Decision granting Clinton Apparelle’s petition. The Court of
Appeals held that the trial court did not follow the procedure required
by law for the issuance of a temporary restraining order as Clinton
Apparelle was not duly notified of the date of the summary hearing
for its issuance. Thus, the Court of Appeals ruled that the TRO had
been improperly issued.30
The Court of Appeals also held that the issuance of the writ of
preliminary injunction is questionable. In its opinion, herein
petitioners failed to sufficiently establish its material and substantial
right to have the writ issued. Secondly, the Court of Appeals observed
that the survey presented by petitioners to support their contentions
was commissioned by petitioners. The Court of Appeals remarked
that affidavits taken ex-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
21
may be compensated in terms of monetary consideration, if after
trial, a final judgment shall be rendered in their favor.31
In addition, the Court of Appeals strongly believed that the
implementation of the questioned writ would effectively shut down
respondent’s business, which in its opinion should not be sanctioned.
The Court of Appeals thus set aside the orders of the trial court dated
15 May 1998 and 4 June 1998, respectively issuing a temporary
restraining order and granting the issuance of a writ of preliminary
injunction.
With the denial of their Motion for Reconsideration,32 petitioners are
now before this Court seeking a review of the appellate
court’s Decision and Resolution. LS & Co. and LSPI claim that the Court
of Appeals committed serious error in: (1) disregarding the well-
defined limits of the writ of certiorari that questions on the sufficiency
of evidence are not to be resolved in such a petition; (2) in holding
that there was no confusion between the two marks; (3) in ruling that
the erosion of petitioners’ trademark is not protectable by injunction;
(4) in ignoring the procedure previously agreed on by the parties and
which was adopted by the trial court; and (5) in declaring that the
preliminary injunction issued by the trial court will lead to the closure
of respondent’s business.
In its Comment,33 Clinton Apparelle maintains that only questions of
law may be raised in an appeal by certiorari under Rule 45 of the Rules
of Court. It asserts that the question of whether the Court of Appeals
erred in: (1) disregarding the survey evidence; (2) ruling that there
was no confusion between the two marks; and (c) finding that the
erosion of petitioners’ trademark may not be protected by injunction,
are issues not within the ambit of a petition for review on certiorari
under Rule 45. Clinton Apparelle also contends that the Court of
Appeals acted correctly when it overturned the writ of preliminary
injunction issued by the trial court. It believes that the issued writ in
effect disturbed the status quo and disposed of the main case without
trial.
There is no merit in the petition.
At issue is whether the issuance of the writ of preliminary injunction
by the trial court was proper and whether the Court of Appeals erred
in setting aside the orders of the trial court.
Section 1, Rule 58 of the Rules of Court defines a preliminary
injunction as an order granted at any stage of an action prior to the
judgment or final order requiring a party or a court, agency or a
person to refrain from a particular act or acts. Injunction is accepted
as the strong arm of equity or a transcendent remedy to be used
cautiously as it affects the respective rights of the parties, and only
upon full conviction on the part of the court of its extreme necessity.
An extraordinary remedy, injunction is designed to preserve or
maintain the status quo of things and is generally availed of to
prevent actual or threatened acts until the merits of the case can be
heard.34 It may be resorted to only by a litigant for the preservation
or protection of his rights or interests and for no other purpose during
the pendency of the principal action. 35 It is resorted to only when
there is a pressing necessity to avoid injurious consequences, which
cannot be remedied under any standard compensation. The
resolution of an application for a writ of preliminary injunction rests
upon the existence of an emergency or of a special recourse before
the main case can be heard in due course of proceedings.36
Section 3, Rule 58, of the Rules of Court enumerates the grounds for
the issuance of a preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. – A preliminary
injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the
whole or part of such relief consists in restraining the commission or
continuance of the act or acts complained of, or in requiring the
performance of an act or acts, either for a limited period or
perpetually;
(b) That the commission, continuance, or non-performance of the act
or acts complained of during the litigation would probably work
injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is
attempting to do, or is procuring or suffering to be done, some act or
acts probably in violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to render the
judgment ineffectual.
Under the cited provision, a clear and positive right especially calling
for judicial protection must be shown. Injunction is not a remedy to
protect or enforce contingent, abstract, or future rights; it will not
issue to protect a right not in esse and which may never arise, or to
restrain an act which does not give rise to a cause of action. There
must exist an actual right.37 There must be a patent showing by the
complaint that there exists a right to be protected and that the acts
against which the writ is to be directed are violative of said right. 38
There are generally two kinds of preliminary injunction: (1) a
prohibitory injunction which commands a party to refrain from doing
a particular act; and (2) a mandatory injunction which commands the
performance of some positive act to correct a wrong in the past.39
The Court of Appeals did not err in reviewing proof adduced by
petitioners to support its application for the issuance of the writ.
While the matter of the issuance of a writ of preliminary injunction is
addressed to the sound discretion of the trial court, this discretion
must be exercised based upon the grounds and in the manner
provided by law. The exercise of discretion by the trial court in
injunctive matters is generally not interfered with save in cases of
manifest abuse.40 And to determine whether there was abuse of
discretion, a scrutiny must be made of the bases, if any, considered
by the trial court in granting injunctive relief. Be it stressed that
injunction is the strong arm of equity which must be issued with great
caution and deliberation, and only in cases of great injury where there
is no commensurate remedy in damages.41
In the present case, we find that there was scant justification for the
issuance of the writ of preliminary injunction.
Petitioners anchor their legal right to "Dockers and Design" trademark
on the Certificate of Registration issued in their favor by the Bureau
of Patents, Trademarks and Technology Transfer.* According to
Section 138 of Republic Act No. 8293,42 this Certificate of Registration
is prima facie evidence of the validity of the registration, the
registrant’s ownership of the mark and of the exclusive right to use
the same in connection with the goods or services and those that are
related thereto specified in the certificate. Section 147.1 of said law
likewise grants the owner of the registered mark the exclusive right
to prevent all third parties not having the owner’s consent from using
in the course of trade identical or similar signs for goods or services
which are identical or similar to those in respect of which the
trademark is registered if such use results in a likelihood of confusion.
However, attention should be given to the fact that petitioners’
registered trademark consists of two elements: (1) the word mark
"Dockers" and (2) the wing-shaped design or logo. Notably, there is
only one registration for both features of the trademark giving the
impression that the two should be considered as a single unit. Clinton
Apparelle’s trademark, on the other hand, uses the "Paddocks" word
22
mark on top of a logo which according to petitioners is a slavish
imitation of the "Dockers" design. The two trademarks apparently
differ in their word marks ("Dockers" and "Paddocks"), but again
according to petitioners, they employ similar or identical logos. It
could thus be said that respondent only "appropriates" petitioners’
logo and not the word mark "Dockers"; it uses only a portion of the
registered trademark and not the whole.
Given the single registration of the trademark "Dockers and Design"
and considering that respondent only uses the assailed device but a
different word mark, the right to prevent the latter from using the
challenged "Paddocks" device is far from clear. Stated otherwise, it is
not evident whether the single registration of the trademark "Dockers
and Design" confers on the owner the right to prevent the use of a
fraction thereof in the course of trade. It is also unclear whether the
use without the owner’s consent of a portion of a trademark
registered in its entirety constitutes material or substantial invasion
of the owner’s right.
It is likewise not settled whether the wing-shaped logo, as opposed to
the word mark, is the dominant or central feature of petitioners’
trademark—the feature that prevails or is retained in the minds of the
public—an imitation of which creates the likelihood of deceiving the
public and constitutes trademark infringement.43 In sum, there are
vital matters which have yet and may only be established through a
full-blown trial.
From the above discussion, we find that petitioners’ right to injunctive
relief has not been clearly and unmistakably demonstrated. The right
has yet to be determined. Petitioners also failed to show proof that
there is material and substantial invasion of their right to warrant the
issuance of an injunctive writ. Neither were petitioners able to show
any urgent and permanent necessity for the writ to prevent serious
damage.
Petitioners wish to impress upon the Court the urgent necessity for
injunctive relief, urging that the erosion or dilution of their
trademark is protectable. They assert that a trademark owner does
not have to wait until the mark loses its distinctiveness to obtain
injunctive relief, and that the mere use by an infringer of a registered
mark is already actionable even if he has not yet profited thereby or
has damaged the trademark owner.
Trademark dilution is the lessening of the capacity of a famous mark
to identify and distinguish goods or services, regardless of the
presence or absence of: (1) competition between the owner of the
famous mark and other parties; or (2) likelihood of confusion, mistake
or deception. Subject to the principles of equity, the owner of a
famous mark is entitled to an injunction "against another person’s
commercial use in commerce of a mark or trade name, if such use
begins after the mark has become famous and causes dilution of the
distinctive quality of the mark." This is intended to protect famous
marks from subsequent uses that blur distinctiveness of the mark or
tarnish or disparage it.44
Based on the foregoing, to be eligible for protection from dilution,
there has to be a finding that: (1) the trademark sought to be
protected is famous and distinctive; (2) the use by respondent of
"Paddocks and Design" began after the petitioners’ mark became
famous; and (3) such subsequent use defames petitioners’ mark. In
the case at bar, petitioners have yet to establish whether "Dockers
and Design" has acquired a strong degree of distinctiveness and
whether the other two elements are present for their cause to fall
within the ambit of the invoked protection. The Trends MBL Survey
Report which petitioners presented in a bid to establish that there
was confusing similarity between two marks is not sufficient proof of
any dilution that the trial court must enjoin.
The Court also finds that the trial court’s order granting the writ did
not adequately detail the reasons for the grant, contrary to our ruling
in University of the Philippines v. Hon. Catungal Jr., 45 wherein we held
that:
The trial court must state its own findings of fact and cite particular
law to justify grant of preliminary injunction. Utmost care in this
regard is demanded.46
The trial court in granting the injunctive relief tersely ratiocinated that
"the plaintiffs appear to be entitled to the relief prayed for and this
Court is of the considered belief and humble view that, without
necessarily delving on the merits, the paramount interest of justice
will be better served if the status quo shall be maintained." Clearly,
this statement falls short of the requirement laid down by the above-
quoted case. Similarly, in Developers Group of Companies, Inc. v.
Court of Appeals,47 we held that it was "not enough" for the trial
court, in its order granting the writ, to simply say that it appeared
"after hearing that plaintiff is entitled to the relief prayed for."
In addition, we agree with the Court of Appeals in its holding that the
damages the petitioners had suffered or continue to suffer may be
compensated in terms of monetary consideration. As held
in Government Service Insurance System v. Florendo:48
…a writ of injunction should never have been issued when an action
for damages would adequately compensate the injuries caused. The
very foundation of the jurisdiction to issue the writ of injunction rests
in the probability of irreparable injury, inadequacy of pecuniary
estimation and the prevention of the multiplicity of suits, and where
facts are not shown to bring the case within these conditions, the
relief of injunction should be refused.49
We also believe that the issued injunctive writ, if allowed, would
dispose of the case on the merits as it would effectively enjoin the use
of the "Paddocks" device without proof that there is basis for such
action. The prevailing rule is that courts should avoid issuing a writ of
preliminary injunction that would in effect dispose of the main case
without trial.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
Parenthetically, we find no flaw in the Court of Appeals’ disquisition
on the consequences of the issued injunction. An exercise of caution,
we believe that such reflection is necessary to weigh the alleged
entitlement to the writ vis-à-vis its possible effects. The injunction
issued in the instant case is of a serious nature as it tends to do more
than to maintain the status quo. In fact, the assailed injunction if
sustained would bring about the result desired by petitioners without
a trial on the merits.
Then again, we believe the Court of Appeals overstepped its authority
when it declared that the "alleged similarity as to the two logos is
hardly confusing to the public." The only issue brought before the
Court of Appeals through respondent’s Petition under Rule 65 of the
Rules of Court involved the grave abuse of discretion allegedly
committed by the trial court in granting the TRO and the writ of
preliminary injunction. The appellate court in making such a
statement went beyond that issue and touched on the merits of the
infringement case, which remains to be decided by the trial court. In
our view, it was premature for the Court of Appeals to declare that
there is no confusion between the two devices or logos. That matter
remains to be decided on by the trial court.
23
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.
SO ORDERED.

24
FIRST DIVISION
G.R. No. 157216 November 20, 2003
246 CORPORATION, doing business under the name and style of
ROLEX MUSIC LOUNGE, petitioner,
vs.
HON. REYNALDO B. DAWAY, in his capacity as Presiding Judge of
Branch 90 of the Regional Trial Court of Quezon City, MONTRES
ROLEX S.A. and ROLEX CENTRE PHIL. LIMITED, respondents.
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure assailing the November 28, 2002 Decision1 of
the Court of Appeals in CA-G.R. SP No. 64660 which dismissed the
petition for certiorari filed by petitioner, as well as the
Resolution2 dated February 13, 2003 denying its motion for
reconsideration.
The undisputed facts show that on November 26, 1998, respondents
Montres Rolex S.A. and Rolex Centre Phil., Limited,
owners/proprietors of Rolex and Crown Device, filed against
petitioner 246 Corporation the instant suit for trademark
infringement and damages with prayer for the issuance of a
restraining order or writ of preliminary injunction 3 before the
Regional Trial Court of Quezon City, Branch 90. Respondents alleged
that sometime in July 1996, petitioner adopted and, since then, has
been using without authority the mark "Rolex" in its business name
"Rolex Music Lounge" as well as in its newspaper advertisements as –
"Rolex Music Lounge, KTV, Disco & Party Club."
In its answer raising special affirmative defenses, petitioner argued
that respondents have no cause of action because no trademark
infringement exist; that no confusion would arise from the use by
petitioner of the mark "Rolex" considering that its entertainment
business is totally unrelated to the items catered by respondents such
as watches, clocks, bracelets and parts thereof. It also contended that
the complaint was not properly verified and certified against forum
shopping considering that Atty. Alonzo Ancheta, the counsel of record
of respondents who signed the verification and certification, was not
authorized to represent respondents.4
On July 21, 2000, petitioner filed a motion for preliminary hearing on
its affirmative defenses.5 Subsequently, on motion of petitioner, the
trial court issued a subpoena ad testificandum requiring Atty. Alonzo
Ancheta to appear at the preliminary hearing.6 Respondents, in the
meantime, filed a Comment and Opposition 7 to the motion for
preliminary hearing and a motion to quash the subpoena
ad testificandum.
In an Order dated October 27, 2000, the trial court quashed the
subpoena ad testificandum and denied petitioner’s motion for
preliminary hearing on affirmative defenses with motion to dismiss. 8
With the denial of the motion for reconsideration on March 16, 2001,
petitioner filed a petition for certiorari with the Court of Appeals
contending that the trial court gravely abused its discretion in issuing
the October 27, 2000 and March 16, 2001 orders.
On November 28, 2002, the Court of Appeals dismissed the petition.
The motion for reconsideration filed by petitioner was denied. Hence,
the instant petition anchored on the following grounds:
I COMPLAINT A QUO. BY REASON THEREOF, PRIVATE RESPONDENTS
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 OF APPEALS AND UNITED
CIGARETTE CORPORATION AND OTHER COMPANION CASES HOLDING
THAT NO TRADEMARK INFRINGEMENT CAN POSSIBLY OCCUR WHERE
THE CONTENDING PARTIES DEAL WITH GOODS AND SERVICES THAT
ARE TOTALLY UNRELATED AND NON-COMPETING WITH EACH OTHER.
II
IN ARBITRARILY AND CAPRICIOUSLY RULING THAT THE ISSUES RAISED
IN PETITIONER’S CERTIORARI PETITION ARE QUESTIONS OF FACT, THE
HONORABLE COURT OF APPEALS VIOLATED NOT ONLY PETITIONERS
SUBSTANTIVE DUE PROCESS RIGHTS BUT ALSO THE WELL-SETTLED
RULE THAT THE ALLEGATIONS OF THE COMPLAINT IS
HYPOTHETICALLY ADMITTED WHEN THE MOTION TO DISMISS IS
GROUNDED UPON LACK OF CAUSE OF ACTION. MOREOVER,
INDEPENDENT OF THE HYPOTHETICALLY ADMITTED FACTS
EMBODIED IN THE COMPLAINT A QUO, THERE ARE SELF-EVIDENT
FACTS AND IMPLIEDLY ADMITTED FACTS CONTAINED IN PRIVATE
RESPONDENTS’ PLEADINGS THAT WOULD CLEARLY AND
UNMISTAKABLY SHOW PRIVATE RESPONDENTS’ LACK OF CAUSE OF
ACTION AGAINST HEREIN PETITIONER.
III
THE HONORABLE COURT OF APPEALS VIOLATED PETITIONER’S RIGHT
TO SUBSTANTIVE DUE PROCESS WHEN IT ARBITRARILY AND
CAPRICIOUSLY RULED THAT WHAT WAS SPECIFICALLY DENIED IN THE
ASSAILED OCTOBER 20, 2000 ORDER IS PETITIONER’S MOTION FOR
PRELIMINARY HEARING ON DEFENDANT’S AFFIRMATIVE DEFENSES
AND NOT PETITIONER’S MOTION TO DISMISS PER SE CONSIDERING
THAT:
A. THERE IS ABSOLUTELY NOTHING IN THE ORDER DATED OCTOBER
20, 2000 OF RESPONDENT JUDGE WHICH SUGGESTS THAT THE
RESOLUTION OF PETITIONER’S MOTION TO DISMISS PER SE WAS
HELD IN ABEYANCE BY THE RESPONDENT JUDGE. HENCE THE SAID
ORDER DATED OCTOBER 20, 2000 ALSO CONSTITUTES A DENIAL ON
THE MERITS OF PETITIONER’S MOTION TO DISMISS PER SE AND NOT
MERELY OF PETITIONER’S MOTION FOR PRELIMINARY HEARING
THEREON.
B. PRIVATE RESPONDENTS’ COMMENT AND OPPOSITION DATED 11
AUGUST 2000, WHICH WAS CITED AND SUSTAINED BY RESPONDENT
JUDGE, CLEARLY TRAVERSED THE MERITS OF THE GROUNDS FOR
PETITIONER’S MOTION TO DISMISS PER SE. HENCE, THE SAID 20
OCTOBER 2000 ORDER’S DENIAL OF PETITIONER’S MOTION IS NOT
LIMITED TO THE MOTION FOR PRELIMINARY HEARING BUT ALSO
CONSTITUTES A DENIAL OF PETITIONER’S MOTION TO DISMISS PER
SE.
IV
IN ARBITRARILY AND CAPRICIOUSLY RULING THAT ATTY. ALONZO
ANCHETA PROPERLY VERIFIED AND CERTIFIED PRIVATE
RESPONDENTS’ COMPLAINT A QUO, THE HONORABLE COURT OF
APPEALS VIOLATED NOT ONLY PETITIONER’S SUBSTANTIVE DUE
PROCESS RIGHTS, BUT ALSO THE DOCTRINE OF SEPARATE
CORPORATE PERSONALITY; CONSIDERING THAT THE RECORDS OF
THIS CASE IS (sic) COMPLETELY BEREFT AND DEVOID OF ANY DULY
EXECUTED SPECIAL POWER OF ATTORNEY, EMANATING FROM
PRIVATE RESPONDENTS, WHICH EXPLICITLY AND SPECIFICALLY
AUTHORIZES ATTY. ALONZO ANCHETA TO REPRESENT PRIVATE
RESPONDENTS MONTRES ROLEX S.A. IN THE FILING OF THE
COULD NOT BE DEEMED TO HAVE VOLUNTARILY APPEARED BEFORE
THE RESPONDENT JUDGE; CONSEQUENTLY, THE TRIAL COURT COULD
NOT HAVE VALIDLY ACQUIRED JURISDICTION OVER THE PERSON OF
PRIVATE RESPONDENTS.
V
25
IN ARBITRARILY AND CAPRICIOUSLY AFFIRMING RESPONDENT
JUDGE’S QUASHAL OF THE SUBPOENA DATED 14 AUGUST 2000
DIRECTED AGAINST ATTY. ALONZO ANCHETA, THE HONORABLE
COURT OF APPEALS VIOLATED NOT ONLY PETITIONER’S SUBSTANTIVE
DUE PROCESS RIGHTS, BUT ALSO SECTION 9, RULE 132 AND SECTION
7 RULE 133 OF THE 1989 REVISED RULES ON EVIDENCE, AND THE
RULING OF THIS HONORABLE COURT IN THE CASE OF PEOPLE VS.
RIVERA.9
Simply put, the issues are as follows – (1) whether the trial court
denied not only petitioner’s motion for preliminary hearing on its
affirmative defenses but its motion to dismiss as well; (2) if the answer
is in the affirmative, whether or not the trial court gravely abused its
discretion in denying said motions; and (3) whether the trial court
gravely abused its discretion in quashing the subpoena ad
testificandum issued against Atty. Ancheta.
Anent the first issue, we find that what was denied in the order dated
October 27, 2000 was not only the motion for preliminary hearing but
the motion to dismiss as well. A reading of the dispositive portion of
said order shows that the trial court neither qualified its denial nor
held in abeyance the ruling on petitioner’s motion to dismiss thus –
IN VIEW OF THE FOREGOING, the aforecited Motion To Quash
Subpoena Ad Testificandum is granted; and the aforecited Motion For
Preliminary Hearing On Defendant’s Affirmative Defenses With
Motion To dismiss The Instant Complaint Based On Said Affirmative
Defenses is denied.10 (Emphasis supplied)
In issuing the assailed order, the trial court ruled on the merits of
petitioner’s Motion to Dismiss vis-à-visrespondents’ Comment and
Opposition which clearly traversed the affirmative defenses raised by
petitioner, to wit:
After carefully going over the pleadings, this Court finds, on the first
motion that the arguments raised in the said motion and the reply
filed in connection thereto appear to be meritorious; and on the
second motion, that the arguments raised in the comments and
opposition and the rejoinder filed by the plaintiffs likewise appear to
be meritorious.11
Moreover, it is presumed that all matters within an issue raised in a
case were passed upon by the court. In the absence of evidence to
the contrary, the presumption is that the court a quo discharged its
task properly.12
In Municipality of Biñan Laguna v. Court of Appeals,13 decided under
the old Rules of Civil Procedure, it was held that a preliminary hearing
permitted under Rule 16, Section 5, is not mandatory even when the
same is prayed for. It rests largely on the sound discretion of the trial
court, thus –
SEC. 5. Pleading grounds as affirmative defenses. — Any of the
grounds for dismissal provided for in this Rule, except improper
venue, may be pleaded as an affirmative defense, and a preliminary
hearing may be had thereon as if a motion to dismiss had been filed.
(Emphasis supplied)
The use of the word "may" in the aforequoted provision shows that
such a hearing is not a matter of right demandable from the trial
court; it is not mandatory but discretionary. "May" is an auxiliary verb
indicating liberty, opportunity, permission and possibility. 14 Such
interpretation is specifically stated under the 1997 Rules of 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
– registered for or used on identical or similar goods or services and
SEC. 6. Pleading grounds as affirmative defenses.— If no motion to
dismiss has been filed, any of the grounds for dismissal provided for
in this Rule may be pleaded as an affirmative defense in the answer
and, in the discretion of the court, a preliminary hearing may be had
thereon as if a motion to dismiss had been filed. (Emphasis supplied)
In the case at bar, the Court of Appeals did not err in finding that no
abuse of discretion could be ascribed to the trial court’s denial of
petitioner’s motion for preliminary hearing on its affirmative
defenses with motion to dismiss. The issue of whether or not a
trademark infringement exists, is a question of fact that could best be
determined by the trial court.
Under the old Trademark Law15 where the goods for which the
identical marks are used are unrelated, there can be no likelihood of
confusion and there is therefore no infringement in the use by the
junior user of the registered mark on the entirely different
goods.16 This ruling, however, has been to some extent, modified by
Section 123.1(f) of the Intellectual Property Code (Republic Act No.
8293), which took effect on January 1, 1998. The said section reads:
Sec. 123. Registrability. – 123.1. A mark cannot be registered if it:
xxx xxx xxx
(f) Is identical with, or confusingly similar to, or constitutes a
translation of a mark considered well-known in accordance with the
preceding paragraph, which is registered in the Philippines with
respect to goods or services which are not similar to those with
respect to which registration is applied for: Provided, That use of the
mark in relation to those goods or services would indicate a
connection between those goods or services, and the owner of the
registered mark: Provided, further, That the interest of the owner of
the registered mark are likely to be damaged by such use; (Emphasis
supplied)
A junior user of a well-known mark on goods or services which are not
similar to the goods or services, and are therefore unrelated, to those
specified in the certificate of registration of the well-known mark is
precluded from using the same on the entirely unrelated goods or
services, subject to the following requisites, to wit:
1. The mark is well-known internationally and in the Philippines.
Under Rule 102 of the Rules and Regulations on Trademarks, Service
Marks, Trade Names and Marked or Stamped Containers, 17 in
determining whether a mark is well known, the following criteria or
any combination thereof may be taken into account:
(a) the duration, extent and geographical area of any use of the mark,
in particular, the duration, extent and geographical area of any
promotion of the mark, including advertising or publicity and
presentation, at fairs or exhibitions, of the goods and/or services to
which the mark applies;
(b) the market share in the Philippines and in other countries, of the
goods and/or services to which the mark applies;
(c) the degree of the inherent or acquired distinction of the mark;
(d) the quality-image or reputation acquired by the mark;
(e) the extent to which the mark has been registered in the world;
(f) the exclusivity of the registration attained by the mark in the world;
(g) the extent to which the mark has been used in the world;
(h) the exclusivity of use attained by the mark in the world;
(i) the commercial value attributed to the mark in the world;
(j) the record of successful protection of the rights in the mark;
(k) the outcome of litigations dealing with the issue of whether the
mark is a well-known mark; and
(l) the presence of absence of identical or similar marks validly
owned by persons other than the person claiming that his mark is a
well-known mark.
26
2. The use of the well-known mark on the entirely unrelated goods or
services would indicate a connection between such unrelated goods
or services and those goods or services specified in the certificate of
registration in the well known mark. This requirement refers to the
likelihood of confusion of origin or business or some business
connection or relationship between the registrant and the user of the
mark.
3. The interests of the owner of the well-known mark are likely to be
damaged. For instance, if the registrant will be precluded from
expanding its business to those unrelated good or services, or if the
interests of the registrant of the well-known mark will be damaged
because of the inferior quality of the good or services of the user. 18
Section 123.1(f) is clearly in point because the Music Lounge of
petitioner is entirely unrelated to respondents’ business involving
watches, clocks, bracelets, etc. However, the Court cannot yet resolve
the merits of the present controversy considering that the requisites
for the application of Section 123.1(f), which constitute the kernel
issue at bar, clearly require determination facts of which need to be
resolved at the trial court. The existence or absence of these
requisites should be addressed in a full blown hearing and not on a
mere preliminary hearing. The respondent must be given ample
opportunity to prove its claim, and the petitioner to debunk the same.
The same is true with respect to the issue of whether Atty. Alonzo
Ancheta was properly authorized to sign the verification and
certification against forum shopping in behalf of respondents. This
could be properly resolved during the trial together with the
substantive issues raised by petitioner.
Considering that the trial court correctly denied petitioner’s motion
for preliminary hearing on its affirmative defenses with motion to
dismiss, there exists no reason to compel Atty. Ancheta to testify.
Hence, no abuse of discretion was committed by the trial court in
quashing the subpoena ad testificandum issued against Atty.
Ancheta.
Grave abuse of discretion implies such capricious and whimsical
exercise of judgment as equivalent to lack of jurisdiction, or, in other
words, where the power is exercised in an arbitrary or despotic
manner by reason of passion or personal hostility, and it must be so
patent and gross as to amount to an evasion of positive duty or to a
virtual refusal to perform the duty enjoined or to act at all in
contemplation of law. None of these was committed by the trial
court; hence, the Court of Appeals correctly dismissed the petition.
WHEREFORE, in view of all the foregoing, the petition for review on
certiorari filed by petitioner is DENIED. The November 28, 2002
Decision and the February 13, 2003 Resolution of the Court of Appeals
in CA-G.R. SP No. 64660 which dismissed the petition for certiorari
filed by petitioner are AFFIRMED.
SO ORDERED.

27
G.R. No. L-29971 August 31, 1982
ESSO STANDARD EASTERN, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS ** and UNITED CIGARETTE
CORPORATION, respondents.
& or mistake or to deceive purchasers or others as to the source or
TEEHANKEE, J.:1äwphï1.ñët
The Court affirms on the basis of controlling doctrine the appealed
decision of the Court of Appeals reversing that of the Court of First
Instance of Manila and dismissing the complaint filed by herein
petitioner against private respondent for trade infringement for using
petitioner's trademark ESSO, since it clearly appears that the goods
on which the trademark ESSO is used by respondent is non-competing
and entirely unrelated to the products of petitioner so that there is
no likelihood of confusion or deception on the part of the purchasing
public as to the origin or source of the goods.
Petitioner Esso Standard Eastern, Inc., 1 then a foreign corporation
duly licensed to do business in the Philippines, is engaged in the sale
of petroleum products which are Identified with its trademark ESSO
(which as successor of the defunct Standard Vacuum Oil Co. it
registered as a business name with the Bureaus of Commerce and
Internal Revenue in April and May, 1962). Private respondent in turn
is a domestic corporation then engaged in the manufacture and sale
of cigarettes, after it acquired in November, 1963 the business,
factory and patent rights of its predecessor La Oriental Tobacco
Corporation, one of the rights thus acquired having been the use of
the trademark ESSO on its cigarettes, for which a permit had been
duly granted by the Bureau of Internal Revenue.
Barely had respondent as such successor started manufacturing
cigarettes with the trademark ESSO, when petitioner commenced a
case for trademark infringement in the Court of First Instance of
Manila. The complaint alleged that the petitioner had been for many
years engaged in the sale of petroleum products and its trademark
ESSO had acquired a considerable goodwill to such an extent that the
buying public had always taken the trademark ESSO as equivalent to
high quality petroleum products. Petitioner asserted that the
continued use by private respondent of the same trademark ESSO on
its cigarettes was being carried out for the purpose of deceiving the
public as to its quality and origin to the detriment and disadvantage
of its own products.
In its answer, respondent admitted that it used the trademark ESSO
on its own product of cigarettes, which was not Identical to those
produced and sold by petitioner and therefore did not in any way
infringe on or imitate petitioner's trademark. Respondent contended
that in order that there may be trademark infringement, it is
indispensable that the mark must be used by one person in
connection or competition with goods of the same kind as the
complainant's.
The trial court, relying on the old cases of Ang vs. Teodoro 2 and Arce
& Sons, Inc. vs. Selecta Biscuit Company, 3referring to related
products, decided in favor of petitioner and ruled that respondent
was guilty of infringement of trademark.
On appeal, respondent Court of Appeals found that there was no
trademark infringement and dismissed the complaint.
Reconsideration of the decision having been denied, petitioner
appealed to this Court by way of certiorari to reverse the decision of
the Court of Appeals and to reinstate the decision of the Court of First
Instance of Manila. The Court finds no ground for granting the
petition.
The law defines infringement as the use without consent of the
trademark owner of any "reproduction, counterfeit, copy or colorable
limitation of any registered mark or tradename in connection with the
sale, offering for sale, or advertising of any goods, business or services
on or in connection with which such use is likely to cause confusion
origin of such goods or services, or Identity of such business; or
reproduce, counterfeit, copy or colorably imitate any such mark or
tradename and apply such reproduction, counterfeit, copy or
colorable limitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in
connection with such goods, business or services." 4 Implicit in this
definition is the concept that the goods must be so related that there
is a likelihood either of confusion of goods or business. 5But likelihood
of confusion is a relative concept; to be determined only according to
the particular, and sometimes peculiar, circumstances of each
case. 6 It is unquestionably true that, as stated in Coburn vs. Puritan
Mills, Inc. 7 "In trademark cases, even more than in other litigation,
precedent must be studied in the light of the facts of the particular
case.
It is undisputed that the goods on which petitioner uses the
trademark ESSO, petroleum products, and the product of respondent,
cigarettes, are non-competing. But as to whether trademark
infringement exists depends for the most part upon whether or not
the goods are so related that the public may be, or is actually,
deceived and misled that they came from the same maker or
manufacturer. For non-competing goods may be those which, though
they are not in actual competition, are so related to each other that
it might reasonably be assumed that they originate from one
manufacturer. Non-competing goods may also be those which, being
entirely unrelated, could not reasonably be assumed to have a
common source. in the former case of related goods, confusion of
business could arise out of the use of similar marks; in the latter case
of non-related goods, it could not. 8 The vast majority of courts today
follow the modern theory or concept of "related goods" 9 which the
Court has likewise adopted and uniformly recognized and applied. 10
Goods are related when they belong to the same class or have the
same descriptive properties; when they possess the same physical
attributes or essential characteristics with reference to their form,
composition, texture or quality. They may also be related because
they serve the same purpose or are sold in grocery stores. 11 Thus,
biscuits were held related to milk because they are both food
products. 12 Soap and perfume, lipstick and nail polish are similarly
related because they are common household items now a
days. 13 The trademark "Ang Tibay" for shoes and slippers was
disallowed to be used for shirts and pants because they belong to the
same general class of goods. 14 Soap and pomade although non-
competitive, were held to be similar or to belong to the same class,
since both are toilet articles. 15 But no confusion or deception can
possibly result or arise when the name "Wellington" which is the
trademark for shirts, pants, drawers and other articles of wear for
men, women and children is used as a name of a department store. 16
Thus, in Acoje Mining Co., Inc. vs. Director of Patents, 17 the Court,
through now Chief Justice Fernando, reversed the patent director's
decision on the question of "May petitioner Acoje Mining Company
register for the purpose of advertising its product, soy sauce, the
trademark LOTUS, there being already in existence one such
registered in favor of the Philippine Refining Company for its
product, edible oil, it being further shown that the trademark applied
28
for is in smaller type, colored differently, set on a background which
is dissimilar as to yield a distinct appearance?" and ordered the
granting of petitioner's application for registration ruling that "there
is quite a difference between soy sauce and edible oil. If one is in the
market for the former, he is not likely to purchase the latter just
because of the trademark LOTUS" and "when regard is had for the
principle that the two trademarks in their entirety as they appear in
their respective labels should be considered in relation to the goods
advertised before registration could be denied, the conclusion is
inescapable that respondent Director ought to have reached a
different conclusion. "
By the same token, in the recent case of Philippine Refining Co., Inc.
vs. Ng Sam and Director of Patents, 18 the Court upheld the patent
director's registration of the same trademark CAMIA for therein
respondent's product of ham notwithstanding its already being used
by therein petitioner for a wide range of products: lard butter,
cooking oil, abrasive detergents, polishing materials and soap of all
kinds. The Court, after noting that the same CAMIA trademark had
been registered by two other companies, Everbright Development
Company and F. E. Zuellig, Inc. for their respective products of thread
and yarn (for the former) and textiles, embroideries and laces (for the
latter) ruled that "while ham and some of the products of petitioner
are classified under Class 47 (Foods and Ingredients of Food), this
alone cannot serve as the decisive factor in the resolution of whether
or not they are related goods. Emphasis should be on the similarity of
the products involved and not on the arbitrary classification or
general description of their properties or characteristics." The Court,
therefore, concluded that "In fine, We hold that the businesses of the
parties are non-competitive and their products so unrelated that the
use of Identical trademarks is not likely to give rise to confusion, much
less cause damage to petitioner."
In the situation before us, the goods are obviously different from each
other with "absolutely no iota of similitude" 19as stressed in
respondent court's judgment. They are so foreign to each other as to
make it unlikely that purchasers would think that petitioner is the
manufacturer of respondent's goods.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
ACCORDINGLY, the petition is dismissed and the decision of
respondent Court of Appeals is hereby affirmed.
29
Melencio-Herrera, Plana, Relova and Gutierrez, Jr., JJ.,
concur.1äwphï1.ñët
Makasiar, J., is on leave.
Vasquez, J., took no part.

30

G.R. No. 190065 August 16, 2010
DERMALINE, INC., Petitioner,
vs.
MYRA PHARMACEUTICALS, INC. Respondent.
DECISION
NACHURA, J.:
This is a petition for review on certiorari 1 seeking to reverse and set
aside the Decision dated August 7, 2009 2 and the Resolution dated
October 28, 20093 of the Court of Appeals (CA) in CA-G.R. SP No.
108627.
The antecedent facts and proceedings—
On October 21, 2006, petitioner Dermaline, Inc. (Dermaline) filed
before the Intellectual Property Office (IPO) an application for
registration of the trademark "DERMALINE DERMALINE, INC."
(Application No. 4-2006011536). The application was published for
Opposition in the IPO E-Gazette on March 9, 2007.
On May 8, 2007, respondent Myra Pharmaceuticals, Inc. (Myra) filed
a Verified Opposition4 alleging that the trademark sought to be
registered by Dermaline so resembles its trademark "DERMALIN" and
will likely cause confusion, mistake and deception to the purchasing
public. Myra said that the registration of Dermaline’s trademark will
violate Section 1235 of Republic Act (R.A.) No. 8293 (Intellectual
Property Code of the Philippines). It further alleged that Dermaline’s
use and registration of its applied trademark will diminish the
distinctiveness and dilute the goodwill of Myra’s "DERMALIN,"
registered with the IPO way back July 8, 1986, renewed for ten (10)
years on July 8, 2006. Myra has been extensively using "DERMALIN"
commercially since October 31, 1977, and said mark is still valid and
subsisting.
Myra claimed that, despite Dermaline’s attempt to differentiate its
applied mark, the dominant feature is the term "DERMALINE," which
is practically identical with its own "DERMALIN," more particularly
that the first eight (8) letters of the marks are identical, and that
notwithstanding the additional letter "E" by Dermaline, the
pronunciation for both marks are identical. Further, both marks have
three (3) syllables each, with each syllable identical in sound and
appearance, even if the last syllable of "DERMALINE" consisted of four
(4) letters while "DERMALIN" consisted only of three (3).
Myra also pointed out that Dermaline applied for the same mark
"DERMALINE" on June 3, 2003 and was already refused registration
by the IPO. By filing this new application for registration, Dermaline
appears to have engaged in a fishing expedition for the approval of its
mark. Myra argued that its intellectual property right over its
trademark is protected under Section 147 6 of R.A. No. 8293.
Myra asserted that the mark "DERMALINE DERMALINE, INC." is
aurally similar to its own mark such that the registration and use of
Dermaline’s applied mark will enable it to obtain benefit from Myra’s
reputation, goodwill and advertising and will lead the public into
believing that Dermaline is, in any way, connected to Myra. Myra
added that even if the subject application was under Classification
447 for various skin treatments, it could still be connected to the
"DERMALIN" mark under Classification 5 8 for pharmaceutical
products, since ultimately these goods are very closely related.
In its Verified Answer,9 Dermaline countered that a simple
comparison of the trademark "DERMALINE DERMALINE, INC." vis-à-
vis Myra’s "DERMALIN" trademark would show that they have
entirely different features and distinctive presentation, thus it cannot
result in confusion, mistake or deception on the part of the
purchasing public. Dermaline contended that, in determining if the
subject trademarks are confusingly similar, a comparison of the words
is not the only determinant, but their entirety must be considered in
relation to the goods to which they are attached, including the other
features appearing in both labels. It claimed that there were glaring
and striking dissimilarities between the two trademarks, such that its
trademark "DERMALINE DERMALINE, INC." speaks for itself (Res ipsa
loquitur). Dermaline further argued that there could not be any
relation between its trademark for health and beauty services from
Myra’s trademark classified under medicinal goods against skin
disorders.
The parties failed to settle amicably. Consequently, the preliminary
conference was terminated and they were directed to file their
respective position papers.10
On April 10, 2008, the IPO-Bureau of Legal Affairs rendered Decision
No. 2008-7011 sustaining Myra’s opposition pursuant to Section
123.1(d) of R.A. No. 8293. It disposed—
WHEREFORE, the Verified Opposition is, as it is, hereby SUSTAINED.
Consequently, Application Serial No. 4-2006-011536 for the mark
‘DERMALINE, DERMALINE, INC. Stylized Wordmark’ for Dermaline,
Inc. under class 44 covering the aforementioned goods filed on 21
October 2006, is as it is hereby, REJECTED.
Let the file wrapper of ‘DERMALINE, DERMALINE, INC. Stylized
Wordmark’ subject matter of this case be forwarded to the Bureau of
Trademarks (BOT) for appropriate action in accordance with this
Decision.
SO ORDERED.12
Aggrieved, Dermaline filed a motion for reconsideration, but it was
denied under Resolution No. 2009-12(D)13 dated January 16, 2009.
Expectedly, Dermaline appealed to the Office of the Director General
of the IPO. However, in an Order14 dated April 17, 2009, the appeal
was dismissed for being filed out of time.
Undaunted, Dermaline appealed to the CA, but it affirmed and upheld
the Order dated April 17, 2009 and the rejection of Dermaline’s
application for registration of trademark. The CA likewise denied
Dermaline’s motion for reconsideration; hence, this petition raising
the issue of whether the CA erred in upholding the IPO’s rejection of
Dermaline’s application for registration of trademark.
The petition is without merit.
A trademark is any distinctive word, name, symbol, emblem, sign, or
device, or any combination thereof, adopted and used by a
manufacturer or merchant on his goods to identify and distinguish
them from those manufactured, sold, or dealt by others. 15 Inarguably,
it is an intellectual property deserving protection by law. In trademark
controversies, each case must be scrutinized according to its peculiar
circumstances, such that jurisprudential precedents should only be
made to apply if they are specifically in point.16
As Myra correctly posits, as a registered trademark owner, it has the
right under Section 147 of R.A. No. 8293 to prevent third parties from
using a trademark, or similar signs or containers for goods or services,
without its consent, identical or similar to its registered trademark,
where such use would result in a likelihood of confusion.
In determining likelihood of confusion, case law has developed two
(2) tests, the Dominancy Test and the Holistic or Totality Test.
The Dominancy Test focuses on the similarity of the prevalent
features of the competing trademarks that might cause confusion or
deception.17 It is applied when the trademark sought to be registered
contains the main, essential and dominant features of the earlier
registered trademark, and confusion or deception is likely to result.
31
Duplication or imitation is not even required; neither is it necessary
that the label of the applied mark for registration should suggest an
effort to imitate. The important issue is whether the use of the marks
involved would likely cause confusion or mistake in the mind of or
deceive the ordinary purchaser, or one who is accustomed to buy, and
therefore to some extent familiar with, the goods in question. 18 Given
greater consideration are the aural and visual impressions created by
the marks in the public mind, giving little weight to factors like prices,
quality, sales outlets, and market segments. 19 The test of dominancy
is now explicitly incorporated into law in Section 155.1 of R.A. No.
8293 which provides—
155.1. Use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for
sale, distribution, advertising of any goods or services including
other preparatory steps necessary to carry out the sale of any goods
or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; (emphasis supplied)
On the other hand, the Holistic Test entails a consideration of the
entirety of the marks as applied to the products, including labels and
packaging, in determining confusing similarity. The scrutinizing eye of
the observer must focus not only on the predominant words but also
on the other features appearing in both labels so that a conclusion
may be drawn as to whether one is confusingly similar to the other. 20
Relative to the question on confusion of marks and trade names,
jurisprudence has noted two (2) types of confusion, viz: (1) confusion
of goods (product confusion), where the ordinarily prudent purchaser
would be induced to purchase one product in the belief that he was
purchasing the other; and (2) confusion of business (source or origin
confusion), where, although the goods of the parties are different, the
product, the mark of which registration is applied for by one party, is
such as might reasonably be assumed to originate with the registrant
of an earlier product, and the public would then be deceived either
into that belief or into the belief that there is some connection
between the two parties, though inexistent. 21
In rejecting the application of Dermaline for the registration of its
mark "DERMALINE DERMALINE, INC.," the IPO applied the Dominancy
Test. It declared that both confusion of goods and service and
confusion of business or of origin were apparent in both trademarks.
It also noted that, per Bureau Decision No. 2007-179 dated December
4, 2007, it already sustained the opposition of Myra involving the
trademark "DERMALINE" of Dermaline under Classification 5. The IPO
also upheld Myra’s right under Section 138 of R.A. No. 8293, which
provides that a certification of registration of a mark is prima facie
evidence of the validity of the registration, the registrant’s ownership
of the mark, and of the registrant’s exclusive right to use the same in
connection with the goods and those that are related thereto
specified in the certificate.
We agree with the findings of the IPO. As correctly applied by the IPO
in this case, while there are no set rules that can be deduced as what
constitutes a dominant feature with respect to trademarks applied for
registration; usually, what are taken into account are signs, color,
design, peculiar shape or name, or some special, easily remembered
earmarks of the brand that readily attracts and catches the attention
of the ordinary consumer.22
Dermaline’s insistence that its applied trademark "DERMALINE
DERMALINE, INC." had differences "too striking to be mistaken" from
Myra’s "DERMALIN" cannot, therefore, be sustained. While it is true
that the two marks are presented differently – Dermaline’s mark is
written with the first "DERMALINE" in script going diagonally upwards
from left to right, with an upper case "D" followed by the rest of the
letters in lower case, and the portion "DERMALINE, INC." is written in
upper case letters, below and smaller than the long-hand portion;
while Myra’s mark "DERMALIN" is written in an upright font, with a
capital "D" and followed by lower case letters – the likelihood of
confusion is still apparent. This is because they are almost spelled in
the same way, except for Dermaline’s mark which ends with the letter
"E," and they are pronounced practically in the same manner in three
(3) syllables, with the ending letter "E" in Dermaline’s mark
pronounced silently. Thus, when an ordinary purchaser, for example,
hears an advertisement of Dermaline’s applied trademark over the
radio, chances are he will associate it with Myra’s registered mark.
Further, Dermaline’s stance that its product belongs to a separate and
different classification from Myra’s products with the registered
trademark does not eradicate the possibility of mistake on the part of
the purchasing public to associate the former with the latter,
especially considering that both classifications pertain to treatments
for the skin.1avvphi1
Indeed, the registered trademark owner may use its mark on the
same or similar products, in different segments of the market, and at
different price levels depending on variations of the products for
specific segments of the market. The Court is cognizant that the
registered trademark owner enjoys protection in product and market
areas that are the normal potential expansion of his business. Thus,
we have held –
Modern law recognizes that the protection to which the owner of a
trademark is entitled is not limited to guarding his goods or business
from actual market competition with identical or similar products of
the parties, but extends to all cases in which the use by a junior
appropriator of a trade-mark or trade-name is likely to lead to a
confusion of source, as where prospective purchasers would be
misled into thinking that the complaining party has extended his
business into the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or is in
any way connected with the activities of the infringer; or when it
forestalls the normal potential expansion of his business (v. 148 ALR
77, 84; 52 Am. Jur. 576, 577).23 (Emphasis supplied)
Thus, the public may mistakenly think that Dermaline is connected to
or associated with Myra, such that, considering the current
proliferation of health and beauty products in the market, the
purchasers would likely be misled that Myra has already expanded its
business through Dermaline from merely carrying pharmaceutical
topical applications for the skin to health and beauty services.
Verily, when one applies for the registration of a trademark or label
which is almost the same or that very closely resembles one already
used and registered by another, the application should be rejected
and dismissed outright, even without any opposition on the part of
the owner and user of a previously registered label or trademark. This
is intended not only to avoid confusion on the part of the public, but
also to protect an already used and registered trademark and an
established goodwill.24
Besides, the issue on protection of intellectual property, such as
trademarks, is factual in nature. The findings of the IPO, upheld on
appeal by the same office, and further sustained by the CA, bear great
weight and deserves respect from this Court. Moreover, the decision
of the IPO had already attained finality when Dermaline failed to
timely file its appeal with the IPO Office of the Director General.
WHEREFORE, the petition is DENIED. The Decision dated August 7,
2009 and the Resolution dated October 28, 2009 of the Court of
32
Appeals in CA-G.R. SP No. 108627 are AFFIRMED. Costs against
petitioner.
SO ORDERED.

33
G.R. No. 194307 November 20, 2013
BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly
BIRKENSTOCK ORTHOPAEDIE GMBH),Petitioner,
vs.
PHILIPPINE SHOE EXPO MARKETING CORPORATION, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this Petition for Review on Certiorari 1 are the Court of
Appeals (CA) Decision2 dated June 25, 2010 and Resolution 3 dated
October 27, 2010 in CA-G.R. SP No. 112278 which reversed and set
aside the Intellectual Property Office (IPO) Director General’s
Decision4 dated December 22, 2009 that allowed the registration of
various trademarks in favor of petitioner Birkenstock Orthopaedie
GmbH & Co. KG.
The Facts
Petitioner, a corporation duly organized and existing under the laws
of Germany, applied for various trademark registrations before the
IPO, namely: (a) "BIRKENSTOCK" under Trademark Application Serial
No. (TASN) 4-1994-091508 for goods falling under Class 25 of the
International Classification of Goods and Services (Nice Classification)
with filing date of March 11, 1994; (b) "BIRKENSTOCK BAD HONNEF -
RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL AND
REPRESENTATION OF A FOOT, CROSS AND SUNBEA M" under TASN 4-
1994-091509 for goods falling under Class 25 of the Nice Classification
with filing date of March 11, 1994; and (c) "BIRKENSTOCK BAD
HONNEF-RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL
AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM" under
TASN 4-1994-095043 for goods falling under Class 10 of the Nice
Classification with filing date of September 5, 1994 (subject
applications).5
However, registration proceedings of the subject applications were
suspended in view of an existing registration of the mark
"BIRKENSTOCK AND DEVICE" under Registration No. 56334 dated
October 21, 1993 (Registration No. 56334) in the name of Shoe Town
International and Industrial Corporation, the predecessor-in-interest
of respondent Philippine Shoe Expo Marketing Corporation.6 In this
regard, on May 27, 1997 petitioner filed a petition for cancellation of
Registration No. 56334 on the ground that it is the lawful and rightful
owner of the Birkenstock marks (Cancellation Case).7 During its
pendency, however, respondent and/or its predecessor-in-interest
failed to file the required 10th Year Declaration of Actual Use (10th
Year DAU) for Registration No. 56334 on or before October 21,
2004,8 thereby resulting in the cancellation of such
mark.9 Accordingly, the cancellation case was dismissed for being
moot and academic.10
The aforesaid cancellation of Registration No. 56334 paved the way
for the publication of the subject applications in the IPO e-Gazette on
February 2, 2007.11 In response, respondent filed three (3) separate
verified notices of oppositions to the subject applications docketed as
Inter Partes Case Nos. 14-2007-00108, 14-2007-00115, and 14-2007-
00116,12 claiming, inter alia, that: (a) it, together with its predecessor-
in-interest, has been using Birkenstock marks in the Philippines for
more than 16 years through the mark "BIRKENSTOCK AND DEVICE";
(b) the marks covered by the subject applications are identical to the
one covered by Registration No. 56334 and thus, petitioner has no
right to the registration of such marks; (c) on November 15, 1991,
respondent’s predecessor-in-interest likewise obtained a Certificate
of Copyright Registration No. 0-11193 for the word "BIRKENSTOCK" ;
(d) while respondent and its predecessor-in-interest failed to file the
10th Yea r DAU, it continued the use of "BIRKENSTOCK AND DEVICE"
in lawful commerce; and (e) to record its continued ownership and
exclusive right to use the "BIRKENSTOCK" marks, it has filed TASN 4-
2006-010273 as a " re-application " of its old registration, Registration
No. 56334.13 On November 13, 2007, the Bureau of Legal Affairs (BLA)
of the IPO issued Order No. 2007-2051 consolidating the aforesaid
inter partes cases (Consolidated Opposition Cases).14
The Ruling of the BLA
In its Decision15 dated May 28, 2008, the BLA of the IPO sustained
respondent’s opposition, thus, ordering the rejection of the subject
applications. It ruled that the competing marks of the parties are
confusingly similar since they contained the word "BIRKENSTOCK"
and are used on the same and related goods. It found respondent and
its predecessor-in-interest as the prior user and adopter of
"BIRKENSTOCK" in the Philippines, while on the other hand, petitioner
failed to present evidence of actual use in the trade and business in
this country. It opined that while Registration No. 56334 was
cancelled, it does not follow that prior right over the mark was lost,
as proof of continuous and uninterrupted use in trade and business in
the Philippines was presented. The BLA likewise opined that
petitioner’s marks are not well -known in the Philippines and
internationally and that the various certificates of registration
submitted by petitioners were all photocopies and, therefore, not
admissible as evidence.16
Aggrieved, petitioner appealed to the IPO Director General.
The Ruling of the IPO Director General
In his Decision17 dated December 22, 2009, the IPO Director General
reversed and set aside the ruling of the BLA, thus allowing the
registration of the subject applications. He held that with the
cancellation of Registration No. 56334 for respondent’s failure to file
the 10th Year DAU, there is no more reason to reject the subject
applications on the ground of prior registration by another
proprietor.18 More importantly, he found that the evidence
presented proved that petitioner is the true and lawful owner and
prior user of "BIRKENSTOCK" marks and thus, entitled to the
registration of the marks covered by the subject applications. 19 The
IPO Director General further held that respondent’s copyright for the
word "BIRKENSTOCK" is of no moment since copyright and trademark
are different forms of intellectual property that cannot be
interchanged.20
Finding the IPO Director General’s reversal of the BLA unacceptable,
respondent filed a petition for review with the CA.
Ruling of the CA
In its Decision21 dated June 25, 2010, the CA reversed and set aside
the ruling of the IPO Director General and reinstated that of the BLA.
It disallowed the registration of the subject applications on the
ground that the marks covered by such applications "are confusingly
similar, if not outright identical" with respondent’s mark. 22 It equally
held that respondent’s failure to file the 10th Year DAU for
Registration No. 56334 "did not deprive petitioner of its ownership of
the ‘BIRKENSTOCK’ mark since it has submitted substantial evidence
showing its continued use, promotion and advertisement thereof up
to the present."23 It opined that when respondent’s predecessor-in-
interest adopted and started its actual use of "BIRKENSTOCK," there
is neither an existing registration nor a pending application for the
same and thus, it cannot be said that it acted in bad faith in adopting
and starting the use of such mark.24 Finally, the CA agreed with
respondent that petitioner’s documentary evidence, being mere
34
photocopies, were submitted in violation of Section 8.1 of Office
Order No. 79, Series of 2005 (Rules on Inter Partes Proceedings).
Dissatisfied, petitioner filed a Motion for Reconsideration25 dated July
20, 2010, which was, however, denied in a Resolution 26 dated
October 27, 2010. Hence, this petition.27
Issues Before the Court
The primordial issue raised for the Court’s resolution is whether or
not the subject marks should be allowed registration in the name of
petitioner.
The Court’s Ruling
The petition is meritorious.
A. Admissibility of Petitioner’s Documentary Evidence.
In its Comment28 dated April 29, 2011, respondent asserts that the
documentary evidence submitted by petitioner in the Consolidated
Opposition Cases, which are mere photocopies, are violative of
Section 8.1 of the Rules on Inter Partes Proceedings, which requires
certified true copies of documents and evidence presented by parties
in lieu of originals.29 As such, they should be deemed inadmissible.
The Court is not convinced.
It is well-settled that "the rules of procedure are mere tools aimed at
facilitating the attainment of justice, rather than its frustration. A
strict and rigid application of the rules must always be eschewed
when it would subvert the primary objective of the rules, that is, to
enhance fair trials and expedite justice. Technicalities should never be
used to defeat the substantive rights of the other party. Every party-
litigant must be afforded the amplest opportunity for the proper and
just determination of his cause, free from the constraints of
technicalities."30 "Indeed, the primordial policy is a faithful
observance of [procedural rules], and their relaxation or suspension
should only be for persuasive reasons and only in meritorious cases,
to relieve a litigant of an injustice not commensurate with the degree
of his thoughtlessness in not complying with the procedure
prescribed."31 This is especially true with quasi-judicial and
administrative bodies, such as the IPO, which are not bound by
technical rules of procedure.32 On this score, Section 5 of the Rules on
Inter Partes Proceedings provides:
Sec. 5. Rules of Procedure to be followed in the conduct of hearing of
Inter Partes cases. – The rules of procedure herein contained
primarily apply in the conduct of hearing of Inter Partes cases. The
Rules of Court may be applied suppletorily. The Bureau shall not be
bound by strict technical rules of procedure and evidence but may
adopt, in the absence of any applicable rule herein, such mode of
proceedings which is consistent with the requirements of fair play and
conducive to the just, speedy and inexpensive disposition of cases,
and which will give the Bureau the greatest possibility to focus on the
contentious issues before it. (Emphasis and underscoring supplied)
In the case at bar, while petitioner submitted mere photocopies as
documentary evidence in the Consolidated Opposition Cases, it
should be noted that the IPO had already obtained the originals of
such documentary evidence in the related Cancellation Case earlier
filed before it. Under this circumstance and the merits of the instant
case as will be subsequently discussed, the Court holds that the IPO
Director General’s relaxation of procedure was a valid exercise of his
discretion in the interest of substantial justice. 33
Having settled the foregoing procedural matter, the Court now
proceeds to resolve the substantive issues.
B. Registration and ownership of "BIRKENSTOCK."
Republic Act No. (RA) 166,34 the governing law for Registration No.
56334, requires the filing of a DAU on specified periods,35 to wit:
Section 12. Duration. – Each certificate of registration shall remain
in force for twenty years: Provided, That registrations under the
provisions of this Act shall be cancelled by the Director, unless within
one year following the fifth, tenth and fifteenth anniversaries of the
date of issue of the certificate of registration, the registrant shall file
in the Patent Office an affidavit showing that the mark or trade-
name is still in use or showing that its non-use is due to special
circumstance which excuse such non-use and is not due to any
intention to abandon the same, and pay the required fee.
The Director shall notify the registrant who files the above- prescribed
affidavits of his acceptance or refusal thereof and, if a refusal, the
reasons therefor. (Emphasis and underscoring supplied)
The aforementioned provision clearly reveals that failure to file the
DAU within the requisite period results in the automatic cancellation
of registration of a trademark. In turn, such failure is tantamount to
the abandonment or withdrawal of any right or interest the registrant
has over his trademark.36
In this case, respondent admitted that it failed to file the 10th Year
DAU for Registration No. 56334 within the requisite period, or on or
before October 21, 2004. As a consequence, it was deemed to have
abandoned or withdrawn any right or interest over the mark
"BIRKENSTOCK." Neither can it invoke Section 236 37 of the IP Code
which pertains to intellectual property rights obtained under previous
intellectual property laws, e.g., RA 166, precisely because it already
lost any right or interest over the said mark.
Besides, petitioner has duly established its true and lawful ownership
of the mark "BIRKENSTOCK."
Under Section 238 of RA 166, which is also the law governing the
subject applications, in order to register a trademark, one must be the
owner thereof and must have actually used the mark in commerce in
the Philippines for two (2) months prior to the application for
registration. Section 2-A39 of the same law sets out to define how one
goes about acquiring ownership thereof. Under the same section, it is
clear that actual use in commerce is also the test of ownership but
the provision went further by saying that the mark must not have
been so appropriated by another. Significantly, to be an owner,
Section 2-A does not require that the actual use of a trademark must
be within the Philippines. Thus, under RA 166, one may be an owner
of a mark due to its actual use but may not yet have the right to
register such ownership here due to the owner’s failure to use the
same in the Philippines for two (2) months prior to registration.40
It must be emphasized that registration of a trademark, by itself, is
not a mode of acquiring ownership.1âwphi1 If the applicant is not the
owner of the trademark, he has no right to apply for its registration.
Registration merely creates a prima facie presumption of the validity
of the registration, of the registrant’s ownership of the trademark,
and of the exclusive right to the use thereof. Such presumption, just
like the presumptive regularity in the performance of official
functions, is rebuttable and must give way to evidence to the
contrary.41
Clearly, it is not the application or registration of a trademark that
vests ownership thereof, but it is the ownership of a trademark that
confers the right to register the same. A trademark is an industrial
property over which its owner is entitled to property rights which
cannot be appropriated by unscrupulous entities that, in one way or
another, happen to register such trademark ahead of its true and
lawful owner. The presumption of ownership accorded to a registrant
must then necessarily yield to superior evidence of actual and real
ownership of a trademark.
35
The Court’s pronouncement in Berris Agricultural Co., Inc. v. the Decision dated December 22, 2009 of the IPO Director General is
Abyadang42 is instructive on this point: hereby REINSTATED.
The ownership of a trademark is acquired by its registration and its SO ORDERED.
actual use by the manufacturer or distributor of the goods made
available to the purchasing public. x x x A certificate of registration of
a mark, once issued, constitutes prima facie evidence of the validity
of the registration, of the registrant’s ownership of the mark, and of
the registrant’s exclusive right to use the same in connection with the
goods or services and those that are related thereto specified in the
certificate. x x x In other words, the prima facie presumption brought
about by the registration of a mark may be challenged and overcome
in an appropriate action, x x x by evidence of prior use by another
person, i.e. , it will controvert a claim of legal appropriation or of
ownership based on registration by a subsequent user. This is because
a trademark is a creation of use and belongs to one who first used it
in trade or commerce.43(Emphasis and underscoring supplied)
In the instant case, petitioner was able to establish that it is the
owner of the mark "BIRKENSTOCK." It submitted evidence relating
to the origin and history of "BIRKENSTOCK" and its use in commerce
long before respondent was able to register the same here in the
Philippines. It has sufficiently proven that "BIRKENSTOCK" was first
adopted in Europe in 1774 by its inventor, Johann Birkenstock, a
shoemaker, on his line of quality footwear and thereafter, numerous
generations of his kin continuously engaged in the manufacture and
sale of shoes and sandals bearing the mark "BIRKENSTOCK" until it
became the entity now known as the petitioner. Petitioner also
submitted various certificates of registration of the mark
"BIRKENSTOCK" in various countries and that it has used such mark
in different countries worldwide, including the Philippines. 44
On the other hand, aside from Registration No. 56334 which had
been cancelled, respondent only presented copies of sales invoices
and advertisements, which are not conclusive evidence of its claim
of ownership of the mark "BIRKENSTOCK" as these merely show the
transactions made by respondent involving the same.45
In view of the foregoing circumstances, the Court finds the petitioner
to be the true and lawful owner of the mark "BIRKENSTOCK" and
entitled to its registration, and that respondent was in bad faith in
having it registered in its name. In this regard, the Court quotes with
approval the words of the IPO Director General, viz.:
The facts and evidence fail to show that [respondent] was in good
faith in using and in registering the mark BIRKENSTOCK.
BIRKENSTOCK, obviously of German origin, is a highly distinct and
arbitrary mark. It is very remote that two persons did coin the same
or identical marks. To come up with a highly distinct and uncommon
mark previously appropriated by another, for use in the same line of
business, and without any plausible explanation, is incredible. The
field from which a person may select a trademark is practically
unlimited. As in all other cases of colorable imitations, the
unanswered riddle is why, of the millions of terms and combinations
of letters and designs available, [respondent] had to come up with a
mark identical or so closely similar to the [petitioner’s] if there was no
intent to take advantage of the goodwill generated by the
[petitioner’s] mark. Being on the same line of business, it is highly
probable that the [respondent] knew of the existence of
BIRKENSTOCK and its use by the [petitioner], before [respondent]
appropriated the same mark and had it registered in its name. 46
WHEREFORE, the petition is GRANTED. The Decision dated June 25,
2010 and Resolution dated October 27, 2010 of the Court of Appeals
in CA-G.R. SP No. 112278 are REVERSED and SET ASIDE. Accordingly,

36
 EN BANC
G.R. No. L-14377 December 29, 1960
THE EAST PACIFIC MERCHANDISING CORPORATION, petitioner,
vs.
THE DIRECTOR OF PATENTS and LUIS P. PELLICER, respondents.
Antonio M. Sikat and Pacifico Ma. Castro for petitioner.
Alberto de Joya for respondent.
REYES, J.B.L., J.:
Petition for review of the resolution of the respondent Directors of
Patents, dated June 24, 1958, insofar as he denied the petitioner's
application for registration of a trademark; and of the order of the
same respondent dated July 21, 1958, denying petitioner's motion for
reconsideration and, at the same time, reinstating respondent Luis P.
Pellicer's opposition to the registration.
The records disclose that on June 14, 1947, Marcelo T. Pua filed with
the Office of the Director of Commerce an application for the
registration under Act 666 of the composite trademark consisting of
the word "Verbena" and representation of a Spanish lady, more
particularly described as follows:
Against a blue background is the bust figure of a Spanish Señorita
dressed in a typically pink dancer's attire with her upper arms partly
covered with a Spanish shawl of green and white. The figure appears
with black well-groomed hair adorned by red roses. The figure also
appears to be wearing two green earrings. At the left of this figure is
shown a balcony decked with plants and flowers characteristics of
Spanish houses. (p. 10, Records)
The applicant further alleged that the trademark applied for has
continuously been used by him in commerce since August 15, 1947
on such merchandise as lotion, face powder, hair pomade, brillantine,
and other allied products.
On or about November 4, 1953, Pua assigned his rights to the
trademark in question, as well as to pending application for the
registration thereof, to the herein petitioner. East Pacific
Merchandising Corporation. The latter renewed the application
under the new trademark law (R.A. 166) at the Patents Office on
November 8, 1957.
The usual proceedings that follow after the filing of applications for
registration were had in the office of the respondent Director of
Patents. On March 5, 1957, an examiner of the Patents Office
submitted a report to the Director, recommending the allowance of
the application, and the latter acting on the said report, approved
petitioner's application for publication in the Official Gazette.
On May 23, 1957, Luis P. Pellicer filed an opposition to the application
on the following grounds: (a) that the picture of a lady is common in
trade and the name "Verbena" is the generic name of a flower and,
therefore, neither may be exclusively appropriated or registered by
the applicant; (b) the applicant should not be allowed to bar from
employing this term those whose the genuine verbena essence in the
manufacture of their products; and(c) the applicant in the adoption
and used of said trademark is deceiving the public In support of his
allegation that he would be damaged by the registration of the
trademark applied for, Pellicer attached to the opposition certain
labels bearing the trademark "Lupel Verbena", which trademark,
oppositor avers, was registered in his favor. under Certificate of
Registration No. 5851, issued by the Patents Office on April 27, 1957,
and actually being used him in commerce to identify his hair pomade.
Petitioner moved to dismiss the opposition, averring, among other
things, (a) that the oppositor, respondent Pellicer herein, was ordered
by the Court of Appeals in CA-G.R. No. 10698 (Luis P. Pellicer vs.
Marcelo T. Pua) to refrain from using the trademark "Verbena" in any
form in connection with his business; and (b) that its own mark had
already acquired a secondary significance as a trademark.
After due hearing on the motion to dismiss the opposition, with both
parties submitting evidence in support of their respective
contentions, the Director of Patents promulgated the appealed
resolution of June 24, 1958, wherein said Director opined that the
term "Verbena" is "generically descriptive or misdescriptive of the
products, namely lotion, face powder, hair pomade and brillantine,
while the representation of a Spanish lady is not only deceptively
misdescriptive of the source or origin, but also common in trade,"
and, consequently, denied their registration. In dismissing
respondent Pellicer's opposition, the respondent director ruled that,
since the question of who has the exclusive right to the use of the
trademark in question has already been finally adjudicated by the
courts 1 in favor of Marcelo T. Pua, the herein petitioner's
predecessor-in-interests, as against Luis P. Pellicer, the latter is now
barred from perfecting any opposition to the application.
Upon motions for reconsideration filed by both parties, the Director
of Patents issued an order, dated July 21, 1958, reiterating his denial
of the registration applied for by petitioner Merchandising
Corporation, but on the other hand, reinstating Pellicer's opposition
upon the ground that a closer study of the court decisions and
resolutions already referred to revealed that the same did not
actually pass upon the validity of the word "Verbena" as a registerable
trademark.
Hence, this petition for review by the East Pacific Merchandising
Corporation.
Petitioner's first proposition relates to a procedural point. It urges
that once the publication of the application for registration is Commented [1]:
approved by the Director of Patents, it becomes his ministerial duty
to issue the corresponding certificate of registration upon payment
of the required fees. This same contention has already been resolved
by this Court in the case of Ong Ai Gui vs. the Director of Patents, 96
Phil., 673; 51 Off. Gaz., No. 4,1848, wherein, among other things, we
said:
. . . It will be noted that there are two steps in the proceedings for the
approval of an application for registration; the first is that conducted
in the Office of the Director and taking place prior to publication,
and the second, that conducted after publication, in which the public
is given the opportunity to contest the application. In the first, the
application is referred to an examiner, who, after study and
investigation makes a report and recommendation to the Director
who, upon finding that applicant is entitled to registration, orders
publication of the application. (Sec. 7, Rep. Act No. 166) If he finds
that applicant is not entitled to registration, he may then and there
dismiss the application. In the second, opportunity is offered the
public or any interested party to come in and object to the petition.
(Sec. 8, id.), giving proofs and reasons for the objection, applicant
being given opportunity also to submit proofs or arguments in
support of the application. (Sec. 9, Id.) It is the decision of the
Director, given after this hearing, or opportunity to every interested
party to be heard, that finally terminates the proceedings and in
which the registration is finally approved or disapproved. Thereafter,
37
notice of the issuance of the certificate of registration is published.
(Sec. 10, id.)
It is evident that the decision of the Director after the first step,
ordering publication, can not have any finality. Of what use is the
second step in the proceedings, if the Director is bound by his first
decision, giving course to the publication? His first decision is merely
provisional, in the sense that the application appears to be
meritorious and is entitled to be given course leading to the more
formal and important second step of hearing and trial, where the
public and interested parties are allowed to take part.
Like the petitioner here, Ong Ai Gui questioned in the case cited the
propriety of the denial of his application for registration,
notwithstanding the previous order of publication and the dismissal
of the opposition by the Director; and the same conclusion is
warranted in this case.
Petitioner, however, argues that it was error for the Director of
Patents to have ruled on the registerability of the trademark in
question, when what was only submitted and heard for this
resolution was petitioner's motion to dismiss the opposition of
Pellicer. The premise is not accurate. The opposition did not put in
issue the registerability of the composite trademark applied for, thus:
(a) The picture of a lady is common in trade and the name "Verbena"
is the generic name of a flower and therefore both cannot be
exclusively appropriated or registered by the applicant; (b) the
applicant should not be allowed to prevent others from using this
term who uses the genuine verbena essence in the manufacture of
his products; and (c) the applicant in the adoption and use of said
trademark is deceiving the public.
and petitioner East Pacific Merchandising Corporation impliedly met
this issue in its motion to dismiss, with the allegation that "the word
mark "Verbena" has already attained a secondary meaning." When
the incident was heard in due course, the parties were expected, and
were given the opportunity, to submit arguments and present
evidence to sustain their respective contentions. The transcript of
stenographic notes taken during the hearing reveals that the parties
actually made use of that opportunity(see p. 13, et seq., t.s.n., hearing
of September 11, 1957). Consequently, when the Director of Patents
also resolved the question of whether or not the trademark applied
for was registerable, he cannot be charged with having gone beyond
the matters then before him for resolution.
Moreover, the respondent Director based his denial of the
registration upon the provisions of the Republic Act No. 166 (Sec. 4),
on the theory that the questioned trademark is generically
descriptive or misdescriptive of the products, and that the
representation of a Spanish lady is not only deceptively
misdescriptive of the source or origin (the goods covered being
produce in the Islands and not in Spain), but likewise common in
trade. There seems to be little doubt but that the questioned
resolution of the Director could have well been made upon those
grounds even prior to the order of publication in view of the
statements found in the application and in the supporting documents
found in the application and in the supporting documents thereto
attached (see Section 7 of Republic Act No. 166). That the Director
instead caused the dismissal of the application only after its due
publication is not, in our opinion, a procedural error that is reversible
on appeal. Neither did such publication divest the Director of the
prerogative to dismiss the application.
The petitioner next questions the legality of the order of the
respondent Director of Patents, reinstating Pellicer's opposition.
Petitioner argues that there was no valid motion for reconsideration
filed by respondent Pellicer as a basis for reinstatement; the
petitioner was deprived of its right to file an answer to its opposition;
and, finally, that the fundamental principle of estoppel was
erroneously disregarded by the Director.
There is clearly no merit on petitioner's first ground. The Director of
Patents could have reinstated Pellicer's opposition even motu
proprio, with or without a valid motion for reconsideration, provided,
of course, the same was done by him in due time or while he still had
jurisdiction over the case(and the contrary has not been shown in this
case). Granting, therefore, that the motion for reconsideration filed
by petitioner Pellicer was, as petitioner had put it, "a mere scrap of
paper", such fact does not, by itself alone, invalidate the order which
was otherwise regularly issued.
Also without merit is the petitioner's contention that it should have
been allowed by the respondent director to answer the opposition
when it was reinstated. It does not appear that the petitioner had
reasons other than those alleged by it in the rejected application and
motion of reconsideration of July 30, 1958; nor that petitioner asked
for an opportunity to reply to Pellicer's opposition after the same was
reinstated.1
As its third ground, petitioner urges that respondent Pellicer is now in
estoppel to claim any damage on account of the registration prayed
of (a condition precedent before one may validly file an opposition),
or deny the validity of the trademark in question. In support of this
contention, petitioner calls our attention to the decision of the Court
of Appeals in CA G.R. No. 10698-R, promulgated May 30, 1955
(entitled Luis P. Pellicer vs. Marcelo Pua), which affirmed that of the
Court of First Instance of Manila (Civil Case No. 6262), dismissing Luis
P. Pellicer's "complaint" 1 to enjoin Marcelo T. Pua, his
representatives or assigns —
. . . from manufacturing and selling, or causing to be manufactured or
sold, articles and products with "Verbena" and/or "Povil" labels and
from manufacturing, using and selling, or causing to be
manufactured, used or sold, jars and bottles closely resembling his
patented jars and bottles; to seek the payment of damages by the
defendant to the plaintiff as a result of the acts done by the said
defendant sought to be restrained by the said plaintiff; and to order
the defendant to surrender to the court all articles and products used,
or intended to be used, by the said defendant in violation of plaintiff's
trademark and patent rights, so that the Court may order the
destruction of said articles and products, in accordance with law.
Perusal of the decision relied upon by petitioner reveals that Pellicer
had sought to enjoin Marcelo Pua (petitioner's predecessor in
interest) from using the "Verbena" trademark on the ground that
Pua's purchase thereof from the Alien Property Administrator had
been declared void in a prior suit to which Pua was not a party;
naturally, the Court of Appeals refused to issue the injunction
because it felt that the validity of Pua's acquisition "must first be
overcome in a proper action where he is accorded full opportunity to
defend it". Neither the regiserability of the "Verbena" trademark,
38
nor the possible confusion with respondent Pellicer's own "Lupel
Verbena" trademark, was in issue in the preceeding litigation;
wherefore the decision of the Court of Appeals does not work an
estoppel on respondent Pellicer, barring him from contesting the
registration of petitioner's trademark.
At any rate, even if Pellicer were so estopped, the Director of Patents
would not be foreclosed thereby from inquiring into the
registerability of the trademark applied for, since he can do so
whether or not there is opposition by private parties (sec. 7, R.A. 166).
Petitioner urges that it was entitled to the registration for the
reason that —
firstly, that the composite trademark "Verbena" and the figure of a
lady, considered as a whole, is not generic in nature or descriptive
or deceptively misdescriptive of the products to which it is
associated; secondly, that the trademark has acquired a secondary
meaning before the public; and, thirdly, that appropriation of the
trademark having occured under the former law (Commonwealth
Act 666), the right thereto cannot be taken away under the
subsequent law.
The term "Verbena" being descriptive of a whole genus of garden
plants with fragrant flowers (Verbenaceae), its use in connection with
cosmetic products, wherein fragrance is of substantial import, evokes
the idea that the products are perfumed with the extract of verbena
flowers, or of some oil of similar aroma; and, regardless of other
connotations of the word, the use of the term cannot be denied to
other traders using such extract or oils in their own products. It
follows that the Director of Patents correctly held the term to be
non-registerable in the sense that petitioner company would be
entitled to appropriate its use to the exclusion of others legitimately
entitled, such as oppositor Pellicer. The denial of registration is
further strengthened by the Director's express findings that
petitioner does not use verbena essences in his products.
In a leading case, Caswell vs. Davis, 17 Am. Rep. 233, 241, 242, the
court, on a similar issue, said:
There is no principle more firmly settled in the law of trademarks,
than that words or phrases which have been in common use and
which indicate the character, kind, quality and composition of the
thing, may not be appropriated by any one to his exclusive use. In
the exclusive use of them the law will not protect. . . . Nor does it
matter that the form of the words or phrases adopted also indicate
the origin and maker of the article. The combination of words must
only express the latter. It is the result of all the decisions, that known
words and phrases indicative of quality and composition are the
common property of mankind. They may not be appropriated by
one to mark an article of his manufacture, when they may be used
truthfully by another to inform the public of the ingredients which
make up an article made by him. Even when the sole purpose of the
one who first uses them is to form of them a trademark for himself
expressing only of origin with himself, if they do in fact show forth
the quality and composition of the article sold by him, he may not
be protected in the exclusive use of them. Still less, then, when
joined to the fact that they do thus show forth the quality and
composition, there is a purpose that they should do so. It is right
which everyone has, and from the exercise of which he may not
debarred, to make an article of the same ingredients, of the same
composition and of as good quality as that made by another, when
that other has no exclusive privilege of manufacture confered by
law. Having this right to make, he has also the right to indicate the
ingredients; the composition and quality of that which he has made,
by any usual words or phrase apt therefor. Hence, when he adopts
usual phrases which do no more than this, he but takes from a stock
common to all mankind, and does not infringe upon any exclusive
right of another, who has, before that, used the same, or like words
or phrases. . . . (cited with approval in 52 Am. Jur., Sec. 58, pp. 544-
545)
The result would not change even if the Director erred in ruling that
the figure of a lady, as previously described, is likewise is not
registerable as a trademark. The figure, it may be granted, was drawn
on arbitrary on whimsical lines and styled in a peculiary distinctive
manner; but the fact will not qualify the word "Verbena" for
registration, since the combination of the two marks would still be
inadequate to guard against the misleading effects that flow from the
use of the term by petitioner.
The claim that the petitioner is entitled to registration because the
term "Verbena" has already acquired a secondary significance is
without merit. The provisions of law (Rep. Act No. 166, sec. 4) require
that the trademark applied for must have "become distinctive of the
applicant's goods", and that a prima facie proof of this fact exists
when the applicant has been in the "substantially exclusive and
continuous use thereof as a mark or tradename ..for five years next
preceding the date of the filing of the application for its registration".
Here it appears not only that applicant and his assignor(Pua) only
began use of the alleged mark in the year 1947, the same year when
the application was filed; but that such trademarks as "Verbena Povil"
and "Lupel Verbena" had long been in use by respondent Pellicer on
his own cosmetic products, and that, as a matter of fact, he is the
holder of the certificate of registration from the Patents Office for the
trademark "Lupel Verbena". Said facts preclude us from concluding
that the trademark in question has become distinctive of applicant's
goods within the meaning of the law.lawphil.net
Finally petitioner corporation argues that for the Director of Patents
to deny registration of his trademark under Republic Act 166 would
violate the rule against ex post facto laws, because when the
trademark was sold to its predecessor Marcelo Pua, it was already
registered. The question of trademark registerability being without
any penal aspect, the prohibition against ex post facto legislation
evidently does not apply. But considering the argument as one
against infringement of vested rights (which is what petitioner
probably meant), it should be recalled that Pua applied in 1947 for
a new registration under the old law (Act 666) while petitioner
corporation reiterated the application in 1957 under Republic Act No.
166. Neither applied for a renewal of registration under section 41 of
the new Act, nor did petitioner surrender the original certificate of
registration of the trademark for revalidation as the Act requires. This
conduct of petitioner shows that either the trademark had not been
validly registered under the old trademark law, or else that such
registration, if any, had already expired when the new application was
filed. Director of Patents, therefore, did not err in deciding the
application as a new one under the new trademark law. Republic Act
No. 166 .
39
Conformably to the foregoing, unless the petitioner makes a
disclaimer of the word "Verbena", the application should be held as
properly denied by the Director of Patents. The orders reinstating
respondent Pellicer's opposition are affirmed.
The case is ordered remanded to the Director of Patents for further
proceedings in accordance with this opinion. Without special
pronouncement as to costs.
Bengzon, Bautista Angelo, Labrador, Concepcion, Gutierrez David,
Paredes, and Dizon JJ., concur.

40
 G.R. NO. 175278
GSIS FAMILY BANK - THRIFT BANK [Formerly Inc.], Petitioner,
vs.
BPI FAMILY BANK, Respondent.
DECISION
JARDELEZA, J.:
This is a Petition for Review on Certiorari filed by GSIS Family Bank -
Thrift Bank1 assailing the Court of Appeals Decision2 dated March 29,
2006 (Decision) and Resolution 3 dated October 23, 2006 which
denied petitioner's petition for review of the Securities and Ex.change
Commission Decision dated February 22, 2005 (SEC En Banc Decision).
The SEC En Banc Decision 4 prohibited petitioner from using the word
"Family" as part of its corporate name and ordered petitioner to
delete the word from its name.5
Facts
GSIS was originally organized as Royal Savings Bank and started
operations in 1971. Beginning 1983 and 1984, petitioner encountered
liquidity problems. On July 9, 1984, it was placed under receivership
and later temporarily closed by the Central Bank of the Philippines.
Two (2) months after its closure, petitioner reopened and was
renamed Comsavings Bank, Inc. under the management of the
Commercial Bank of Manila.6
In 1987, the Government Service Insurance System (GSIS) acquired
petitioner from the Commercial Bank of Manila. Petitioner's
management and control was thus transferred to GSIS.7 To improve
its marketability to the public, especially to the members of the GSIS,
petitioner sought Securities and Exchange Commission (SEC) approval
to change its corporate name to "GSIS Family Bank, a Thrift
Bank."8 Petitioner likewise applied with the Department of Trade and
Industry (DTI) and Bangko Sentral ng Pilpinas (BSP) for authority to
use "GSIS Family Bank, a Thrift Bank" as its business name. The DTI
and the BSP approved the applications.9 Thus, petitioner operates
under the corporate name "GSIS Family Bank – a Thrift Bank,"
pursuant to the DTI Certificate of Registration No. 741375 and the
Monetary Board Circular approval.10
Respondent BPI Family Bank was a product of the merger between
the Family Bank and Trust Company (FBTC) and the Bank of the
Philippine Islands (BPI).11 On June 27, 1969, the Gotianum family
registered with the SEC the corporate name "Family First Savings
Bank," which was amended to "Family Savings Bank," and then later
to "Family Bank and Trust Company."12 Since its incorporation, the
bank has been commonly known as "Family Bank." In 1985, Family
Bank merged with BPI, and the latter acquired all the rights,
privileges, properties, and interests of Family Bank, including the right
to use names, such as "Family First Savings Bank,"
"Family Bank," and "Family Bank and Trust Company." BPI Family
Savings Bank was registered with the SEC as a wholly-owned
subsidiary of BPI. BPI Family Savings Bank then registered with the
Bureau of Domestic Trade the trade or business name "BPI Family
Bank," and acquired a reputation and goodwill under the name.13
Proceedings before the SEC
Eventually, it reached respondent’s attention that petitioner is using
or attempting to use the name "Family Bank." Thus, on March 8,
2002, respondent petitioned the SEC Company Registration and
Monitoring Department (SEC CRMD) to disallow or prevent the
registration of the name "GSIS Family Bank" or any other corporate
name with the words "Family Bank" in it. Respondent claimed
exclusive ownership to the name "Family Bank," having acquired the
name since its purchase and merger with Family Bank and Trust
Company way back 1985.14 Respondent also alleged that through the
years, it has been known as "BPI Family Bank" or simply "Family Bank"
both locally and internationally. As such, it has acquired a reputation
and goodwill under the name, not only with clients here and abroad,
but also with correspondent and competitor banks, and the public in
general.15
Respondent prayed the SEC CRMD to disallow or prevent the
registration of the name "GSIS Family Bank" or any other corporate
name with the words "Family Bank" should the same be presented
for registration.
Respondent likewise prayed the SEC CRMD to issue an order directing
petitioner or any other corporation to change its corporate name if
the names have already been registered with the SEC. 16
The SEC CRMD was thus confronted with the issue of whether the
names BPI Family Bank and GSIS Family Bank are confusingly similar
as to require the amendment of the name of the latter corporation.
The SEC CRMD declared that upon the merger of FBTC with the BPI in
1985, the latter acquired the right to the use of the name of the
absorbed corporation. Thus, BPI Family Bank has a prior right to the
use of the name
Family Bank in the banking industry, arising from its long and
extensive nationwide use, coupled with its registration with the
Intellectual Property Office (IPO) of the name "Family Bank" as its
trade name. Applying the rule of "priority in registration" based on
the legal maxim first in time, first in right, the SEC CRMD concluded
that BPI has the preferential right to the use of the name "Family
Bank." More, GSIS and Comsavings Bank were then fully aware of the
existence and use of the name "Family Bank" by FBTC prior to the
latter's merger with BPI.17
The SEC CRMD also held that there exists a confusing similarity
between the corporate names BPI Family Bank and GSIS Family Bank.
It explained that although not identical, the corporate names are
indisputably similar, as to cause confusion in the public mind, even
with the exercise of reasonable care and observation, especially so
since both corporations are engaged in the banking business. 18
In a decision19 dated May 19, 2003, the SEC CRMD said, PREMISES
CONSIDERED respondent GSIS FAMILY BANK is hereby directed to
refrain from using the word "Family" as part of its name and make
good its commitment to change its name by deleting or dropping the
subject word from its corporate name within [thirty (30) days] from
the date of actual receipt hereof.20
Petitioner appealed21 the decision to the SEC En Banc, which denied
the appeal, and upheld the SEC CRMD in the SEC En Banc
Decision.22 Petitioner elevated the SEC En Banc Decision to the Court
of Appeals, raising the following issues:
1. Whether the use by GSIS Family Bank of the words "Family Bank" is
deceptively and confusingly similar to the name BPI Family Bank;
2. Whether the use by Comsavings Bank of "GSIS Family Bank" as its
business constitutes unfair competition;
3. Whether BPI Family Bank is guilty of forum shopping;
4. Whether the approval of the DTI and the BSP of petitioner's
application to use the name GSIS Family Bank constitutes its authority
to the lawful and valid use of such trade name or trade mark;
5. Whether the application of respondent BPI Family Bank for the
exclusive use of the name "Family Bank," a generic name, though not
yet approved by IPO of the Bureau of Patents, has barred the GSIS
Family Bank from using such trade mark or name.23
Court of Appeals Ruling
41
The Court of Appeals ruled that the approvals by the BSP and by the
DTI of petitioner’s application to use the name "GSIS Family Bank" do
not constitute authority for its lawful and valid use. It said that the
SEC has absolute jurisdiction, supervision and control over all
corporations.24 The Court of Appeals held that respondent was
entitled to the exclusive use of the corporate name because of its
prior adoption of the name "Family Bank" since 1969. 25There is
confusing similarity in the corporate names because "[c]onfusion as
to the possible association with GSIS might arise if we were to allow
Comsavings Bank to add its parent company’s acronym, ‘GSIS’ to
‘Family Bank.’ This is true especially considering both companies
belong to the banking industry. Proof of actual confusion need not be
shown. It suffices that confusion is probably or likely to occur."26The
Court of Appeals also ruled out forum shopping because not all the
requirements of litis pendentia are present.27
The dispositive portion of the decision read,
WHEREFORE, the instant petition for review is hereby DISMISSED for
lack of merit.28
After its Motion for Reconsideration was denied, 29 petitioner brought
the decision to this Court via a Petition for Review on Certiorari.30
Issues in the Petition
Petitioner raised the following issues in its petition:
I. The Court of Appeals gravely erred in affirming the SEC Resolution
finding the word "Family" not generic despite its unregistered status
with the IPO of the Bureau of Patents and the use by GSIS-Family Bank
in its corporate name of the words "[F]amily [B]ank" as deceptive and
[confusingly similar] to the name BPI Family Bank;31
II. The Court of Appeals gravely erred when it ruled that the
respondent is not guilty of forum shopping despite the filing of three
(3) similar complaints before the DTI and BSP and with the SEC
without the requisite certification of non-forum shopping attached
thereto;32
III. The Court of Appeals gravely erred when it completely disregarded
the opinion of the Banko Sentral ng Pilipinas that the use by the
herein petitioner of the trade name GSIS Family Bank – Thrift Bank is
not similar or does not deceive or likely cause any deception to the
public.33
Court's Ruling
We uphold the decision of the Court of Appeals.
Section 18 of the Corporation Code provides,
Section 18. Corporate name. – No corporate name may be allowed by
the Securities and Exchange Commission if the proposed name is
identical or deceptively or confusingly similar to that of any existing
corporation or to any other name already protected by law or is
patently deceptive, confusing or contrary to existing laws. When a
change in the corporate name is approved, the Commission shall issue
an amended certificate of incorporation under the amended name.
REQUISITES
In Philips Export B.V. v. Court of Appeals,34 this Court ruled that to fall
within the prohibition of the law on the right to the exclusive use of a
corporate name, two requisites must be proven, namely:
(1) that the complainant corporation acquired a prior right over the
use of such corporate name; and
(2) the proposed name is either
(a) identical or
(b) deceptive or confusingly similar to that of any existing corporation
or to any other name already protected by law; or
(c) patently deceptive, confusing or contrary to existing law. 35
These two requisites are present in this case. On the first requisite of
a prior right, Industrial Refractories Corporation of the Philippines v.
Court of Appeals (IRCP case)36 is instructive. In that case, Refractories
Corporation of the Philippines (RCP) filed before the SEC a petition to
compel Industrial Refractories Corporation of the Philippines (IRCP)
to change its corporate name on the ground that its corporate name
is confusingly similar with that of RCP’s such that the public may be
confused into believing that they are one and the same corporation.
The SEC and the Court of Appeals found for petitioner, and ordered
IRCP to delete or drop from its corporate name the word
"Refractories." Upon appeal of IRCP, this Court upheld the decision of
the CA.
Applying the priority of adoption rule to determine prior right, this
Court said that RCP has acquired the right to use the word
"Refractories" as part of its corporate name, being its prior registrant.
In arriving at this conclusion, the Court considered that RCP was
incorporated on October 13, 1976 and since then continuously used
the corporate name "Refractories Corp. of the Philippines."
Meanwhile, IRCP only started using its corporate name "Industrial
Refractories Corp. of the Philippines" when it amended its Articles of
Incorporation on August 23, 1985.37
In this case, respondent was incorporated in 1969 as Family Savings
Bank and in 1985 as BPI Family Bank. Petitioner, on the other hand,
was incorporated as GSIS Family – Thrift Bank only in 2002,38 or at
least seventeen (17) years after respondent started using its name.
Following the precedent in the IRCP case, we rule that respondent has
the prior right over the use of the corporate name.
The second requisite in the Philips Export case likewise obtains on two
points: the proposed name is (a) identical or (b) deceptive or
confusingly similar to that of any existing corporation or to any other
name already protected by law.
On the first point (a), the words "Family Bank" present in both
petitioner and respondent's corporate name satisfy the requirement
that there be identical names in the existing corporate name and the
proposed one.
Respondent cannot justify its claim under Section 3 of the Revised
Guidelines in the Approval of Corporate and Partnership Names, 39 to
wit:
3. The name shall not be identical, misleading or confusingly similar
to one already registered by another corporation or partnership with
the Commission or a sole proprietorship registered with the
Department of Trade and Industry.
If the proposed name is similar to the name of a registered firm, the
proposed name must contain at least one distinctive word different
from the name of the company already registered.
Section 3 states that if there be identical, misleading or confusingly
similar name to one already registered by another corporation or
partnership with the SEC, the proposed name must contain at least
one distinctive word different from the name of the company already
registered. To show contrast with respondent's corporate name,
petitioner used the words "GSIS" and "thrift." But these are not
sufficiently distinct words that differentiate petitioner's corporate
name from respondent's. While "GSIS" is merely an acronym of the
proper name by which petitioner is identified, the word "thrift" is
simply a classification of the type of bank that petitioner is. Even if
the classification of the bank as "thrift" is appended to petitioner's
proposed corporate name, it will not make the said corporate name
42
distinct from respondent's because the latter is likewise engaged in
the banking business.
This Court used the same analysis in Ang mga Kaanib sa Iglesia ng
Dios Kay Kristo Hesus, H.S.K. sa Bansang Pilipinas, Inc. v. Iglesia ng
Dios Kay Cristo Jesus, Haligi at Suhay ng Katotohanan.40 In that case,
Iglesia ng Dios Kay Cristo Jesus filed a case before the SEC to compel
Ang mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus to change its
corporate name, and to prevent it from using the same or similar
name on the ground that the same causes confusion among their
members as well as the public. Ang mga Kaanib sa Iglesia ng Dios Kay
Kristo Hesus claimed that it complied with SEC Memorandum Circular
No. 14-2000 by adding not only two, but eight words to their
registered name, to wit: "Ang Mga Kaanib" and "Sa Bansang Pilipinas,
Inc.," which effectively distinguished it from Iglesia ng Dios Kay Cristo
Jesus. This Court rejected the argument, thus:
The additional words "Ang Mga Kaanib" and "Sa Bansang Pilipinas,
Inc." in petitioner's name are, as correctly observed by the SEC,
merely descriptive of and also referring to the members, or kaanib,
of respondent who are likewise residing in the Philippines. These
words can hardly serve as an effective differentiating medium
necessary to avoid confusion or difficulty in distinguishing petitioner
from respondent. This is especially so, since both petitioner and
respondent corporations are using the same acronym – H.S.K.; not to
mention the fact that both are espousing religious beliefs and
operating in the same place. Xxx41
TEST OF SIMILARITY
On the second point (b), there is a deceptive and confusing similarity
between petitioner's proposed name and respondent's corporate
name, as found by the SEC.42 In determining the existence of
confusing similarity in corporate names, the test is whether the
similarity is such as to mislead a person using ordinary care and
discrimination.43 And even without such proof of actual confusion
between the two corporate names, it suffices that confusion is
probable or likely to occur.44
Petitioner's corporate name is "GSIS Family Bank—A Thrift Bank" and
respondent's corporate name is "BPI Family Bank." The only words
that distinguish the two are "BPI," "GSIS," and "Thrift." The first two
words are merely the acronyms of the proper names by which the
two corporations identify themselves; and the third word simply
describes the classification of the bank. The overriding consideration
in determining whether a person, using ordinary care and
discrimination, might be misled is the circumstance that both
petitioner and respondent are engaged in the same business of
banking. "The likelihood of confusion is accentuated in cases where
the goods or business of one corporation are the same or
substantially the same to that of another corporation."45
Respondent alleged that upon seeing a Comsavings Bank branch
with the signage "GSIS Family Bank" displayed at its premises, some
of the respondent’s officers and their clients began asking
questions. These include whether GSIS has acquired Family Bank;
whether there is a joint arrangement between GSIS and Family
Bank; whether there is a joint arrangement between BPI and GSIS
regarding Family Bank; whether Comsavings Bank has acquired
Family Bank; and whether there is there an arrangement among
Comsavings Bank, GSIS, BPI, and Family Bank regarding BPI Family
Bank and GSIS Family Bank.46 The SEC made a finding that "[i]t is not
a remote possibility that the public may entertain the idea that a
relationship or arrangement indeed exists between BPI and GSIS
due to the use of the term ‘Family Bank’ in their corporate names."47
Findings of fact of quasi-judicial agencies, like the SEC, are generally
accorded respect and even finality by this Court, if supported by
substantial evidence, in recognition of their expertise on the specific
matters under their consideration, more so if the same has been
upheld by the appellate court, as in this case.48
Petitioner cannot argue that the word "family" is a generic or
descriptive name, which cannot be appropriated exclusively by
respondent. "Family," as used in respondent's corporate name, is
not generic. Generic marks are commonly used as the name or
description of a kind of goods, such as "Lite" for beer or "Chocolate
Fudge" for chocolate soda drink. Descriptive marks, on the other
hand, convey the characteristics, function, qualities or ingredients of
a product to one who has never seen it or does not know it exists,
such as "Arthriticare" for arthritis medication.49
FAMILY IS AN ARBITRARY MARK
Under the facts of this case, the word "family" cannot be separated
from the word "bank."50 In asserting their claims before the SEC up
to the Court of Appeals, both petitioner and respondent refer to the
phrase "Family Bank" in their submissions. This coined phrase, neither
being generic nor descriptive, is merely suggestive and may properly
be regarded as arbitrary. Arbitrary marks are "words or phrases used
as a mark that appear to be random in the context of its use. They
are generally considered to be easily remembered because of their
arbitrariness. They are original and unexpected in relation to the
products they endorse, thus, becoming themselves distinctive."51
SUGGESTIVE MARK
Suggestive marks, on the other hand, "are marks which merely
suggest some quality or ingredient of goods. xxx The strength of the
suggestive marks lies on how the public perceives the word in relation
to the product or service."52
In Ang v. Teodoro,53 this Court ruled that the words "Ang Tibay" is not
a descriptive term within the meaning of the Trademark Law but
rather a fanciful or coined phrase.54 In so ruling, this Court considered
the etymology and meaning of the Tagalog words, "Ang Tibay" to
determine whether they relate to the quality or description of the
merchandise to which respondent therein applied them as
trademark, thus:
We find it necessary to go into the etymology and meaning of the
Tagalog words "Ang Tibay" to determine whether they are a
descriptive term, i.e., whether they relate to the quality or description
of the merchandise to which respondent has applied them as a trade-
mark. The word "ang" is a definite article meaning "the" in English. It
is also used as an adverb, a contraction of the word "anong" (what or
how). For instance, instead of saying, "Anong ganda!" ("How
beautiful!"), we ordinarily say, "Ang ganda!" Tibay is a root word from
which are derived the verb magpatibay (to strengthen); the nouns
pagkamatibay (strength, durability), katibayan (proof, support,
strength), katibaytibayan (superior strength); and the adjectives
matibay (strong, durable, lasting), napakatibay (very strong),
kasintibay or magkasintibay (as strong as, or of equal strength). The
phrase "Ang Tibay" is an exclamation denoting admiration of strength
43
or durability. For instance, one who tries hard but fails to break an
object exclaims, "Ang tibay!" ("How strong!") It may also be used in a
sentence thus, "Ang tibay ng sapatos mo!" ("How durable your shoes
are!") The phrase "ang tibay" is never used adjectively to define or
describe an object. One does not say, "ang tibay sapatos" or "sapatos
ang tibay" to mean "durable shoes," but "matibay na sapatos" or
"sapatos na matibay."
From all of this we deduce that "Ang Tibay" is not a descriptive term
within the meaning of the Trade-Mark Law but rather a fanciful or
coined phrase which may properly and legally be appropriated as a
trade-mark or trade-name. xxx55 (Underscoring supplied).
FAMILY AND BANK
The word "family" is defined as "a group consisting of parents and
children living together in a household" or "a group of people
related to one another by blood or marriage." 56 Bank, on the other
hand, is defined as "a financial establishment that invests money
deposited by customers, pays it out when requested, makes loans
at interest, and exchanges currency."57 By definition, there can be no
expected relation between the word "family" and the banking
business of respondent. Rather, the words suggest that respondent’s
bank is where family savings should be deposited. More, as in the Ang
case, the phrase "family bank" cannot be used to define an object.
Petitioner’s argument that the opinion of the BSP and the certificate
of registration granted to it by the DTI constitute authority for it to
use "GSIS Family Bank" as corporate name is also untenable.
The enforcement of the protection accorded by Section 18 of the
Corporation Code to corporate names is lodged exclusively in the SEC.
The jurisdiction of the SEC is not merely confined to the adjudicative
functions provided in Section 5 of the SEC Reorganization Act, 58 as
amended.59 By express mandate, the SEC has absolute jurisdiction,
supervision and control over all corporations. 60 It is the SEC’s duty to
prevent confusion in the use of corporate names not only for the
protection of the corporations involved, but more so for the
protection of the public. It has authority to de-register at all times,
and under all circumstances corporate names which in its estimation
are likely to generate confusion.61
The SEC62 correctly applied Section 18 of the Corporation Code, and
Section 15 of SEC Memorandum Circular No. 14-2000, pertinent
portions of which provide:
In implementing Section 18 of the Corporation Code of the Philippines
(BP 69), the following revised guidelines in the approval of corporate
and partnership names are hereby adopted for the information and
guidance of all concerned:
xxx
15. Registrant corporations or partnership shall submit a letter
undertaking to change their corporate or partnership name in case
another person or firm has acquired a prior right to the use of the said
firm name or the same is deceptively or confusingly similar to one
already registered unless this undertaking is already included as one
of the provisions of the articles of incorporation or partnership of the
registrant.
The SEC, after finding merit in respondent's claims, can compel
petitioner to abide by its commitment "to change its corporate name
in the event that another person, firm or entity has acquired a prior
right to use of said name or one similar to it."63
Clearly, the only determination relevant to this case is that one made
by the SEC in the exercise of its express mandate under the law. The
BSP opinion invoked by petitioner even acknowledges that "the issue
on whether a proposed name is identical or deceptively similar to that
of any of existing corporation is matter within the official jurisdiction
and competence of the SEC."64
Judicial notice65 may also be taken of the action of the IPO in
approving respondent’s registration of the trademark "BPI Family
Bank" and its logo on October 17, 2008. The certificate of registration
of a mark shall be prima facie evidence of the validity of the
registration, the registrant’s ownership of the mark, and of the
registrant’s exclusive right to use the same in connection with the
goods or services and those that are related thereto specified in the
certificate.66
Finally, we uphold the Court of Appeals' finding that the issue of
forum shopping was belatedly raised by petitioner and, thus, cannot
anymore be considered at the appellate stage of the proceedings.
Petitioner raised the issue of forum shopping for the first time only
on appeal.67 Petitioner argued that the complaints filed by
respondent did not contain certifications against non-forum
shopping, in violation of Section 5, Rule 7 of the Rules of Court.68
In S.C. Megaworld Construction and Development Corporation vs.
Parada,69 this Court said that objections relating to non-compliance
with the verification and certification of non-forum shopping should
be raised in the proceedings below, and not for the first time on
appeal. In that case, S.C. Megaworld argued that the complaint for
collection of sum of money should have been dismissed outright by
the trial court on account of an invalid nonforum shopping
certification. It alleged that the Special Power of Attorney granted to
Parada did not specifically include an authority for the latter to sign
the verification and certification of non-forum shopping, thus
rendering the complaint defective for violation of Sections 4 and 5 of
Rule 7 of the Rules of Court. On motion for reconsideration of the
decision of the Court of Appeals, petitioner raised for the first time,
the issue of forum shopping. The Court ruled against S.C. Megaworld,
thus:
It is well-settled that no question will be entertained on appeal unless
it has been raised in the proceedings below. Points of law, theories,
issues and arguments not brought to the attention of the lower court,
administrative agency or quasi-judicial body, need not be considered
by a reviewing court, as they cannot be raised for the first time at that
late stage. Basic considerations of fairness and due process impel this
rule. Any issue raised for the first time on appeal is barred by
estoppel.70
In this case, the fact that respondent filed a case before the DTI was
made known to petitioner71 long before the SEC rendered its
decision. Yet, despite its knowledge, petitioner failed to question the
alleged forum shopping before the SEC. The exceptions to the general
rule that forum shopping should be raised in the earliest opportunity,
as explained in the cited case of Young v. Keng Seng, 72 do not obtain
in this case.
WHEREFORE, the petition is DENIED. The decision of the Court of
Appeals dated March 29, 2006 is hereby AFFIRMED.
SO ORDERED.
44
G.R. No. 217194
SOCIETE DES PRODUITS, NESTLE, S.A., Petitioner
vs.
PUREGOLD PRICE CLUB, INC.,, Respondent
DECISION
CARPIO, Acting C.J.:
The Case
Before the Court is a petition for review on certiorari1 assailing the 15
May 2014 Resolution2 and the 14 October 2014 Resolution 3 of the
Court of Appeals (CA) in CA-G.R. SP No. 134592.
The Facts
Petitioner Societe des Produits Nestle, S.A. (Nestle) is a corporation
organized and existing under the laws of Switzerland which is
engaged in the business of marketing and selling of coffee, ice cream,
chocolates, cereals, sauces, soups, condiment mixes, dairy and non-
dairy products, etc.4 Respondent Puregold Price Club, Inc. (Puregold)
is a corporation organized under Philippine law which is engaged in
the business of trading goods such as consumer goods on wholesale
or on retail basis.5
On 14 June 2007, Puregold filed an application 6 for the registration of
the trademark "COFFEE MATCH" with the lqtellectual Property Office
(IPO). The registration was filed by Puregold for use on coffee, tea,
cocoa, sugar, artificial coffee, flour and preparations made from
cereals, bread, pastry and confectionery, and honey under Class 30 of
the International Classification of Goods. 7
On 5 December 2008, Nestle filed an opposition8 against Puregold's
application for registration. Nestle alleged that it is the exclusive
owner of the "COFFEE-MATE" trademark and that there is confusing
similarity between the "COFFEE-MATE" trademark and Puregold's
"COFFEE MATCH" application.9
Nestle alleged that "COFFEE-MATE" has been declared an
internationally well-known mark and Puregold's use of "COFFEE
MATCH" would indicate a connection with the goods covered in
Nestle's "COFFEE-MATE" mark because of its distinct similarity. Nestle
claimed that it would suffer damages if the application were granted
since Puregold's "COFFEE MATCH" would likely mislead the public
that the mark originated from Nestle.10
The Decision of the Bureau of Legal Affairs-Intellectual Property
Office
In a Decision11 dated 16 April 2012, the Bureau of Legal Affairs
Intellectual Property Office (BLA-IPO) dismissed Nestle's opposition.
The BLA-IPO ruled that Nestle's opposition was defective because the
verification and certification against forum shopping attached to
Nestle's opposition did not include a board of directors' resolution or
secretary's certificate stating Mr. Dennis Jose R. Barot's (Barot)
authority to act on behalf of Nestle. The BLA-IPO ruled that the defect
in Nestle's opposition was sufficient ground to dismiss. 12
The BLA-IPO held that the word "COFFEE" as a mark, or as part of a
trademark, which is used on coffee and similar or closely related
goods, is not unique or highly distinctive. Nestle combined the word
"COFFEE" with the word "-MATE," while Puregold combined the word
"COFFEE" with the word "MATCH." The BLA-IPO ruled that while both
Nestle's "-MATE" and Puregold's "MATCH" contain the same first
three letters, the last two in Puregold's mark rendered a visual and
aural character that makes it easily distinguishable from Nestle's
"COFFEE-MATE."13 Also, the letter "M" in Puregold's mark is written
as an upper case character and the eyes of a consumer would not be
confused or deceived by Nestle's "COFFEEMATE" where the letter
"M" is written in lower case. Consequently, the BLA-IPO held that the
consumer cannot mistake the mark and the products of Nestle as
those of Puregold's.14
The dispositive portion of the Decision states:
WHEREFORE, premises considered, the instant opposition is hereby
DISMISSED. Let the filewrapper of Trademark Application Serial No.
4-2007-006134 be returned, together with a copy of this DECISION,
to the Bureau of Trademarks for information and appropriate action.
SO ORDERED.15
On 11 June 2012, Nestle filed an appeal 16 with the Office of the
Director General of the Intellectual Property Office (ODG-IPO).
The Decision of the ODG-IPO
In a Decision17 dated 7 February 2014, the Office of the ODG-IPO
dismissed Nestle's appeal. The ODG-IPO held that Barot's authority to
sign the certification against forum shopping was not sufficiently
proven by Nestle. The ODG-IPO ruled that Barot's authority, which
was contained in the power of attorney executed, should not be given
weight unless accompanied by proof or evidence of his authority from
Nestle.18 The ODG-IPO held that the competing marks are not
confusingly similar and that consumers would unlikely be deceived or
confused from Puregold's use of "COFFEE MATCH." The ODG-IPO
ruled that the common feature of "COFFEE" between the two marks
cannot be exclusively appropriated since it is generic or descriptive of
the goods in question. The ODG-IPO ruled that there is no visual,
phonetic, or conceptual similarity between the two marks. Visual
similarity is not present in the two marks, as Nestle's mark consists of
a hyphenated word with the paired word being "MATE" while
Puregold's mark consists of the paired word "MATCH." While it is true
that the first three letters "M," "A," and "T" are common in the two
marks, Puregold's mark, which are two separate words, with the
capitalization of the letters "C" and "M," is readily apparent when
"COFFEE MATCH" and "COFFEE-MATE" are compared side by side.19
The dispositive portion of the Decision states:
WHEREFORE, premises considered, the appeal is hereby DISMISSED.
Let a copy of this Decision and the records of this case be furnished
and returned to the Director of Bureau of Legal Affairs for appropriate
action. Further, let also the Director of the Bureau of Trademarks and
the library of the Documentation, Information and Technology
Transfer Bureau be furnished a copy of this Decision for information,
guidance, and records purposes.
SO ORDERED.20
On 14 April 2014, Nestle filed a Petition for Review 21 with the Court
of Appeals.
The Decision of the CA
In a Resolution dated 15 May 2014, the CA dismissed Nestle's petition
for review on procedural grounds.
The Resolution states:
A perusal of the Petition for Review shows that:
1. the title thereof does not bear the name of party respondent
Puregold Price Club, Inc.
2. there is no board resolution and/or secretary's certificate to prove
the authority of Dennis Jose R. Barnt to file the petition and to sign
the Verification/Certification of Non-Forum Shopping on behalf of
petitioner-corporation; and
3. certified true copies of material [portions] of the record which were
mentioned therein were not attached, such as respondent's
trademark application (rollo, p. 12), petitioner's Opposition thereto,
Reply, the parties' respective position papers, petitioner's appeal,
45
respondent's Comment, the parties' respective memoranda, etc. The
above considering, the Court RESOLVES to DISMISS the petition
outright.22
On 13 June 2014, Nestle filed a Motion for Reconsideration 23 which
was denied by the CA on 14 October 2014.24The Resolution of the CA
states: >>
We DENY the Motion for Reconsideration because it is without merit.
The petitioner filed the Petition beyond the 15-day reglementary
period.
Under Rule 43, Section 4 of the Rules of Court, a party may file an
appeal to this Court from quasi-judicial bodies like the Intellectual
Property Office, within 15 days from receipt of the assailed judgment,
order, or resolution.
Petitioner's counsel of record before the Intellectual Property Office
("IPO"), the Sapalo Velez Bundang & Bulilan Law Offices ("SVBB Law
Offices") received a copy of the assailed Decision on 19 February
2014. Thus, petitioner had until 7 March 2014 to appeal. While the
Bengzon Negre & Untalan Law Offices ("Bengzon Law Offices")
entered its appearance before the IPO, no evidence was submitted
before this Court showing that the Bengzon Law Offices was properly
substituted as petitioner's counsel in place of SVBB Law Offices
(petitioner's counsel of record). Thus, the 15-day reglementary period
started to run from the date SVBB Law Offices received a copy of the
Decision.
Clearly, when petitioner filed the Motion for Extension on 27 March
2014, and the Petition on 14 April 2014, the reglementary period had
already lapsed.
Further, the petitioner obstinately refuses to cure the procedural
infirmities we observed in the Resolution of 15 May 2014.
SO ORDERED.25
The Issues
Nestle presented the following issues in this petition:
1. The Honorable Court of Appeals erred in dismissing petitioner's
motion for reconsideration upon an erroneous appreciation of certain
antecedent facts, and similarly erred in dismissing the petition for
review onyrocedural grounds.
2. There is merit to the substantive issues raised by petitioner, which
deserves to be given due course and a final ruling.26
The Ruling of this Court
We deny the petition.
Before discussing the substantive issues, we shall first discuss the
procedural issues in this case.
Nestle filed its petition for review
within the period granted by the Court of Appeals.
The CA dismissed Nestle's petition for review on the ground that
Nestle filed its petition for review after the 15-day reglementary
period required by Section 4, Rule 43 of the Rules of Court.
The CA is wrong.
Section 4, Rule 43 of the Rules of Court states:
Section 4. Period of appeal. - The appeal shall be taken within fifteen
(15) days from notice of the award, judgment, final order or
resolution, or from the date of its last publication, if publication is
required by law for its effectivity, or of the denial of petitioner's
motion for new trial or reconsideration duly filed in accordance with
the governing law of the court or agency a quo. Only one (1) motion
for reconsideration shall be allowed. Upon proper motion and the
payment of the full amount of the docket fee before the expiration of
the reglementary period, the Court of Appeals may grant an
additional period of fifteen (15) days only within which to file the
petition for review. No further extension shall be granted except for
the most compelling reason and in no case to exceed fifteen (15) days.
During the proceedings in the ODG-IPO, Nestle substituted its
counsel, Sapalo, Velez, Bundang and Bulilan Law Offices, with
Bengzon, Negre and Untalan Law Offices (Nestle's substituted
counsel). On 20 September 2013, Nestle's substituted counsel
entered its appearance in the ODG-IP0.27 In an Order28 dated 1
October 2013, the ODG-IPO noted the appearance of Nestle's
substituted counsel and included their appearance in the records of
the case, to wit:
Wherefore, the APPEARANCE is hereby noted and included in the
records. Accordingly, let copies of all pleadings, orders, notices and
communications, be sent to the aforementioned address.
SO ORDERED.29
The Decision of the ODG-IPO was received by Nestle's substituted
counsel on 14 March 2014. On 27 March 2014, within the 15-day
reglementary period provided for by Section 4 of Rule 43, Nestle filed
a Motion for Extension of Time to file Verified Petition for
Review30 (motion for extension) with the CA. In a Resolution31 dated
3 April 2014, the CA granted Nestle's motion for extension and gave
Nestle until 13 April 2014 to file its petition for review. The resolution
states:
The Court GRANTS petitioner's Motion for Extension of Time to File
Verified Petition for Review and gives petitioner until April 13, 2014
within which to do so.32
Since 13 April 2014 fell on a Sunday, Nestle had until 14 April 2014,
which was the next working day, within which to file the petition for
review. Nestle did file the petition for review with the CA on 14 April
2014. Accordingly, the CA committed a grave error when it ruled that
Nestle's petition for review was filed beyond the prescribed period.
Nestle failed to properly execute a
certification against forum shopping
as required by Section 5, Rule 7
of the Rules of Court.
Section 5, Rule 7 of the Rules of Court provides:
Section 5. Certification against forum shopping. -The plaintiff or
principal party shall certify under oath in the complaint or other
initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed therewith: (a)
that he has not theretofore commenced any action or filed any claim
involving the same issues in any court, tribunal or quasi-judicial
agency and, to the best of his knowledge, no such other action or
claim is pending therein; (b) if there is such other pending action or
claim, a complete statement of the present status thereof; and (c) ifhe
should thereafter learn that the same or similar action or claim has
been filed or is pending, he shall report that fact within five (5) days
therefrom to the court wherein his aforesaid complaint or initiatory
pleading has been filed.
Failure to comply with the foregoing requirements shall not be
curable by mere amendment of the complaint or other initiatory
pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after hearing.
The submission of a false certification or non-compliance with any of
the undertakings therein shall constitute indirect contempt of court,
without prejudice to the corresponding administrative and criminal
actions. If the acts of the party or his counsel clearly constitute willful
and deliberate forum shopping, the same shall be ground for
summary dismissal with prejudice and shall constitute direct
46
contempt, as well as a cause for administrative sanctions. (Emphasis
supplied)
In Zulueta v. Asia Brewery, Inc.,33 this Court ruled that the
requirements under the Rules of Court involving the certification
against forum shopping apply both to natural and juridical persons, to
wit: "[t]he requirement that the petitioner should sign the certificate
of non-forum shopping applies even to corporations, considering that
the mandatory directives of the Circular and the Rules of Court make
no distinction between natural and juridical persons." 34
In Fuentebella v. Castro,35 this Court held that the certification against
forum shopping must be signed by the principal party. In case the
principal party cannot sign, the one signing on his or her behalf must
have been duly authorized, to wit: "the petitioner or the principal
party must execute the certification against forum shopping. The
reason for this is that the principal party has actual knowledge
whether a petition has previously been filed involving the same case
or substantially the same issues. If, for any reason, the principal party
cannot sign the petition, the one signing on his behalf must have been
duly authorized."36
Juridical persons, including corporations, that cannot personally sign
the certification against forum shopping, must act through an
authorized representative.1âwphi1 The exercise of corporate powers
including the power to sue is lodged with the board of directors which
acts as a body representing the stockholders. For corporations, the
authorized representative to sign the certification against forum
shopping must be selected or authorized collectively by the board of
directors. In Eslaban, Jr. v. Vda. de Onorio,37 this Court ruled that if
the real party in interest is a corporation, an officer of the corporation
acting alone has no authority to sign the certification against forum
shopping. An officer of the corporation can only validly sign the
certification against forum shopping if he or she is authorized by the
board of directors through a board resolution or secretary's
certificate. In Gonzales v. Climax Mining Ltd. ,38 this Court ruled that
a board resolution authorizing a corporate officer to execute the
certification against forum shopping is a necessary requirement
under the Rules. A certification signed by a person who was not duly
authorized by the board of directors renders the petition for review
subject to dismissal.39
The authority of the representative of a corporation to sign the
certification against forum shopping originates from the board of
directors through either a board of directors' resolution or secretary's
certificate which must be submitted together with the certification
against forum shopping. In Zulueta, this Court declared invalid a
petition for review with a certification against forum shopping signed
by the party's counsel which was not supported by a board resolution
or secretary's certificate proving the counsel's authority. This Court
dismissed the case and held: "[t]he signatory in the Certification of
the Petition before the CA should not have been respondents'
retained counsel, who would not know whether there were other
similar cases of the corporation. Otherwise, this requirement would
easily be circumvented by the signature of every counsel representing
corporate parties."40 Likewise, in Eslaban, this Court held that a
certification signed by counsel alone is defective and constitutes a
valid cause for the dismissal of the petition.41
Nestle, itself, acknowledged in this petition the absence of a board
resolution or secretary's certificate issued by the board of directors of
Nestle to prove the authority of Barot to sign the certification against
forum shopping on behalf of Nestle, to wit: "[t]hus, while there is no
board resolution and/or secretary's certificate to prove the
authority of Dennis Jose R. Barot to file the petition and
Verification/Certification of NonForum Shopping on behalf of
petitioner-corporation, there is a Power of Attorney evidencing such
authority."42 The power of attorney submitted by Nestle in favor of
Barot was signed by Celine Jorge. However, the authority of Celine
Jorge to sign the power of attorney on behalf of Nestle, allowing Barot
to represent Nestle, was not accompanied by a board resolution or
secretary's certificate from Nestle showing that Celine Jorge was
authorized by the board of directors of Nestle to execute the power
of attorney in favor of Barot. In Development Bank of the Philippines
v. Court of Appeals,43 this Court held that the failure to attach a copy
of a board resolution proving the authority of the representative to
sign the certification against forum shopping was fatal to its petition
and was sufficient ground to dismiss since the courts are not expected
to take judicial notice of board resolutions or secretary's certificates
issued by corporations, to wit:
What petitioners failed to explain, however, is their failure to attach
a certified true copy of Resolution No. 0912 to their petition
for certiorari in CA-G.R. SP No. 60838. Their omission is fatal to their
case. Courts are not, after all, expected to take judicial notice of
corporate board resolutions or a corporate officer's authority to
represent a corporation. To be sure, petitioners' failure to submit
proof that Atty. Demecillo has been authorized by the DBP to file the
petition is a "sufficient ground for the dismissal thereof." 44 (Emphasis
supplied)
Accordingly, the CA did not err in ruling that the petition for review
should be dismissed due to the failure of Nestle to comply with the
proper execution of the certification against forum shopping required
by Section 5, Rule 7 of the Rules of Court.
HERE
Puregold's mark may be registered.
A trademark is any distinctive word, name~ symbol, emblem, sign, or
device, or any combination thereof, adopted and used by a
manufacturer or merchant on his goods to identify and distinguish
them from those manufactured, sold, or dealt by others. 45 Section
123 of Republic Act No. 8293 46 (RA 8293) provides for trademarks
which cannot be registered, to wit:
Sec. 123. Registrability. -
123 .1 A mark47 cannot be registered if it:
xxxx
(d) Is identical with a registered mark belonging to a different
proprietor or a mark with an earlier filing or priority date, in respect
of:
(i) The same goods or services, or
(ii) Closely related goods or services, or
(iii) If it nearly resembles such a mark as to be likely to deceive or
cause confusion;
(e) Is identical with, or confusingly similar to, or constitutes a
translation of a mark which is considered by the competent authority
of the Philippines to be wellknown internationally and in the
Philippines, whether or not it is registered here, as being already the
mark of a person other than the applicant for registration, and used
for identical or similar goods or services: Provided, That in
determining whether a mark is well-known, account shall be taken of
the knowledge of the relevant sector of the public, rather than of the
public at large, including knowledge in the Philippines which has been
obtained as a result of the promotion of the mark;
47
(f) Is identical with, or confusingly similar to, or constitutes a
translation of a mark considered well-known in accordance with the
preceding paragraph, which is registered in the Philippines with
respect to goods or services which are not similar to those with
respect to which registration is applied for: Provided, That use of the
mark in relation to those goods or services would indicate a
connection between those goods or services, and the owner of the
registered mark: Provided further, That the interests of the owner of
the registered mark are likely to be damaged by such use;
(g) Is likely to mislead the public, particularly as to the nature, quality,
characteristics or geographical origin of the goods or services;
(h) Consists exclusively of signs that are generic for the goods or
services that they seek to identify; x x x x (Emphasis supplied)
In Coffee Partners, Inc. v. San Francisco & Roastery, Inc.,48 this Court
held that the gravamen of trademark infringement is the likelihood of
confusion. There is no absolute standard for the likelihood of
confusion. Only the particular, and sometimes peculiar,
circumstances of each case can determine its existence. Thus, in
infringement cases, precedents must be evaluated in the light of each
particular case.49
TWO TESTS TO DETERMINE LIKELIHOOD OF CONFUSION
In determining similarity or likelihood of confusion, our jurisprudence
has developed two tests: the dominancy test and the holistic test.50
The dominancy test focuses on the similarity of the prevalent
features of the competing trademarks that might cause confusion and
deception. If the competing trademark contains the main, essential,
and dominant features of another, and confusion or deception is
likely to result, likelihood of confusion exists. The question is whether
the use of the marks involved is likely to cause confusion or mistake
in the mind of the public or to deceive consumers. 51 In McDonald's
Corporation v. L.C. Big Mak Burger, lnc.,52 this Court gave greater
weight to the similarity of the appearance of the product arising from
the adoption of the dominant features of the registered mark, to wit:
"[c]ourts will consider more the aural and visual impressions created
by the marks in the public mind, giving little weight to factors like
prices, quality, sales outlets and market segments." 53 The dominancy
test is now incorporated into law in Section 155.1 of RA 8293 which
states:
SECTION 155. Remedies; Infringement. - Any person who shall,
without the consent of the owner of the registered mark:
155.l Use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for
sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or
services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; (Emphasis supplied)
In contrast, the holistic test entails a consideration of the entirety of
the marks as applied to the products, including the labels and
packaging, in determining confusing similarity. The discerning eye of
the observer must focus not only on the predominant words but also
on the other features appearing on both marks in order that the
observer may draw his conclusion whether one is confusingly similar
to the other.54
IN THIS CASE;
The word "COFFEE" is the common dominant feature between
Nestle's mark "COFFEE-MATE" and Puregold's mark "COFFEE
MATCH." However, following Section 123, paragraph (h) of RA 8293
which prohibits exclusive registration of generic marks, the word
"COFFEE" cannot be exclusively appropriated by either Nestle or
Puregold since it is generic or descriptive of the goods they seek to
identify. In Asia Brewery, Inc. v. Court of Appeals, 55 this Court held
that generic or descriptive words are not subject to registration and
belong to the public domain. Consequently, we must look at the
word or words paired with the generic or descriptive word, in this
particular case "-MATE" for Nestle's mark and "MATCH" for
Puregold's mark, to determine the distinctiveness and registrability
of Puregold's mark "COFFEE MATCH."
We agree with the findings of the BLA-IPO and ODG-IPO. The
distinctive features of both marks are sufficient to warn the
purchasing public which are Nestle's products and which are
Puregold's products. While both "-MATE" and "MATCH" contain the
same first three letters, the last two letters in Puregold's mark, "C"
and "H," rendered a visual and aural character that made it easily
distinguishable from Nestle's mark. Also, the distinctiveness of
Puregold's mark with two separate words with capital letters "C" and
"M" made it distinguishable from Nestle's mark which is one word
with a hyphenated small letter "-m" in its mark. In addition, there is a
phonetic difference in pronunciation between Nestle's "-MATE" and
Puregold's "MATCH." As a result, the eyes and ears of the consumer
would not mistake Nestle's product for Puregold's product.
Accordingly, this Court sustains the findings of the BLA-IPO and ODG-
IPO that the likelihood of confusion between Nestle's product and
Puregold's product does not exist and upholds the registration of
Puregold's mark.
WHEREFORE, we DENY the petition. We AFFIRM the 15 May 2014
Resolution and the 14 October 2014 Resolution of the Court of
Appeals in CA-G.R. SP No. 134592.
SO ORDERED.
48
 G.R. No. L-48226 December 14, 1942
ANA L. ANG, petitioner,
vs.
TORIBIO TEODORO, respondent.
Cirilo Lim for petitioner.
Marcial P. Lichauco and Manuel M. Mejia for respondent.
OZAETA, J.:
Petitioner has appealed to this Court by certiorari to reverse the
judgment of the Court of Appeals reversing that of the Court of First
Instance of Manila and directing the Director of Commerce to cancel
the registration of the trade-mark "Ang Tibay" in favor of said
petitioner, and perpetually enjoining the latter from using said trade-
mark on goods manufactured and sold by her.
Respondent Toribio Teodoro, at first in partnership with Juan Katindig
and later as sole proprietor, has continuously used "Ang Tibay," both
as a trade-mark and as a trade-name, in the manufacture and sale of
slippers, shoes, and indoor baseballs since 1910. He formally
registered it as trade-mark on September 29, 1915, and as trade-
name on January 3, 1933. The growth of his business is a thrilling epic
of Filipino industry and business capacity. Starting in an obscure shop
in 1910 with a modest capital of P210 but with tireless industry and
unlimited perseverance, Toribio Teodoro, then an unknown young
man making slippers with his own hands but now a prominent
business magnate and manufacturer with a large factory operated
with modern machinery by a great number of employees, has steadily
grown with his business to which he has dedicated the best years of
his life and which he has expanded to such proportions that his gross
sales from 1918 to 1938 aggregated P8,787,025.65. His sales in 1937
amounted to P1,299,343.10 and in 1938, P1,133,165.77. His expenses
for advertisement from 1919 to 1938 aggregated P210,641.56.
Petitioner (defendant below) registered the same trade-mark "Ang
Tibay" for pants and shirts on April 11, 1932, and established a factory
for the manufacture of said articles in the year 1937. In the following
year (1938) her gross sales amounted to P422,682.09. Neither the
decision of the trial court nor that of the Court of Appeals shows how
much petitioner has spent or advertisement. But respondent in his
brief says that petitioner "was unable to prove that she had spent a
single centavo advertising "Ang Tibay" shirts and pants prior to
1938. In that year she advertised the factory which she had just built
and it was when this was brought to the attention of the appellee
that he consulted his attorneys and eventually brought the present
suit."
The trial court (Judge Quirico Abeto) presiding absolved the
defendant from the complaint, with costs against the plaintiff, on the
grounds that the two trademarks are dissimilar and are used on
different and non-competing goods; that there had been no exclusive
use of the trade-mark by the plaintiff; and that there had been no
fraud in the use of the said trade-mark by the defendant because the
goods on which it is used are essentially different from those of the
plaintiff. The second division of the Court of Appeals, composed of
Justices Bengson, Padilla, Lopez Vito, Tuason, and Alex Reyes, with
Justice Padilla as ponente, reversed that judgment, holding that by
uninterrupted an exclusive use since 191 in the manufacture of
slippers and shoes, respondent's trade-mark has acquired a
secondary meaning; that the goods or articles on which the two
trade-marks are used are similar or belong to the same class; and that
the use by petitioner of said trade-mark constitutes a violation of
sections 3 and 7 of Act No. 666. The defendant Director of Commerce
did not appeal from the decision of the Court of Appeals.
First. Counsel for the petitioner, in a well-written brief, makes a
frontal sledge-hammer attack on the validity of respondent's trade-
mark "Ang Tibay." He contends that the phrase "Ang Tibay" as
employed by the respondent on the articles manufactured by him is
a descriptive term because, "freely translate in English," it means
"strong, durable, lasting." He invokes section 2 of Act No. 666, which
provides that words or devices which related only to the name,
quality, or description of the merchandise cannot be the subject of a
trade-mark. He cites among others the case of Baxter vs. Zuazua (5
Phil., 16), which involved the trade-mark "Agua de Kananga" used on
toilet water, and in which this Court held that the word "Kananga,"
which is the name of a well-known Philippine tree or its flower, could
not be appropriated as a trade-mark any more than could the words
"sugar," "tobacco," or "coffee." On the other hand, counsel for the
respondent, in an equally well-prepared and exhaustive brief,
contend that the words "Ang Tibay" are not descriptive but merely
suggestive and may properly be regarded as fanciful or arbitrary in
the legal sense. The cite several cases in which similar words have
been sustained as valid trade-marks, such as "Holeproof" for
hosiery, 1 "ideal for tooth brushes, 2 and "Fashionknit" for neckties
and sweaters. 3
We find it necessary to go into the etymology and meaning of the
Tagalog words "Ang Tibay" to determine whether they are a
descriptive term, i.e., whether they relate to the quality or description
of the merchandise to which respondent has applied them as a trade-
mark.
The word "ang" is a definite article meaning "the" in English. It is also
used as an adverb, a contraction of the word "anong" (what or how).
For instance, instead of saying, "Anong ganda!" ("How beautiful!"),
we ordinarily say, "Ang ganda!"
Tibay is a root word from which are derived the verb magpatibay (to
strenghten; the nouns pagkamatibay (strength,
durability), katibayan (proof, support, strength), katibay-
tibayan (superior strength); and the adjectives matibay (strong,
durable, lasting), napakatibay (very strong), kasintibay or
magkasintibay (as strong as, or of equal strength).
The phrase "Ang Tibay" is an exclamation denoting administration of
strength or durability. For instance, one who tries hard but fails to
break an object exclaims, "Ang tibay!" (How strong!") It may also be
used in a sentence thus, "Ang tibay ng sapatos mo!" (How durable
your shoes are!") The phrase "ang tibay" is never used adjectively to
define or describe an object. One does not say, "ang tibay sapatos"
or "sapatos ang tibay" is never used adjectively to define or describe
an object. One does not say, "ang tibay sapatos" or "sapatos ang
tibay" to mean "durable shoes," but "matibay na sapatos" or
"sapatos na matibay."
From all of this we deduce that "Ang Tibay" is not a descriptive term
within the meaning of the Trade-Mark Law but rather a fanciful or
coined phrase which may properly and legally be appropriated as a
49
trade-mark or trade-name. In this connection we do not fail to note
that when the petitioner herself took the trouble and expense of
securing the registration of these same words as a trademark of her
products she or her attorney as well as the Director of Commerce
was undoubtedly convinced that said words (Ang Tibay) were not a
descriptive term and hence could be legally used and validly
registered as a trade-mark. It seems stultifying and puerile for her
now to contend otherwise, suggestive of the story of sour grapes.
Counsel for the petitioner says that the function of a trade-mark is to
point distinctively, either by its own meaning or by association, to the
origin or ownership of the wares to which it is applied. That is correct,
and we find that "Ang Tibay," as used by the respondent to designate
his wares, had exactly performed that function for twenty-two years
before the petitioner adopted it as a trade-mark in her own business.
Ang Tibay shoes and slippers are, by association, known throughout
the Philippines as products of the Ang Tibay factory owned and
operated by the respondent Toribio Teodoro.
Second. In her second assignment of error petitioner contends that
the Court of Appeals erred in holding that the words "Ang Tibay" had
acquired a secondary meaning. In view of the conclusion we have
reached upon the first assignment of error, it is unnecessary to apply
here the doctrine of "secondary meaning" in trade-mark parlance.
DOCTRINE OF SECONDARY MEANING
This doctrine is to the effect that a word or phrase originally incapable
of exclusive appropriation with reference to an article of the market,
because geographically or otherwise descriptive, might nevertheless
have been used so long and so exclusively by one producer with
reference to his article that, in that trade and to that branch of the
purchasing public, the word or phrase has come to mean that the
article was his product. (G. & C. Merriam Co. vs. Salfield, 198 F., 369,
373.) We have said that the phrase "Ang Tibay," being neither
geographic nor descriptive, was originally capable of exclusive
appropriation as a trade-mark. But were it not so, the application of
the doctrine of secondary meaning made by the Court of Appeals
could nevertheless be fully sustained because, in any event, by
respondent's long and exclusive use of said phrase with reference to
his products and his business, it has acquired a proprietary
connotation. (Landers, Frary, and Clark vs. Universal Cooler
Corporation, 85 F. [2d], 46.)
Third. Petitioner's third assignment of error is, that the Court of
Appeals erred in holding that pants and shirts are goods similar to
shoes and slippers within the meaning of sections 3 and 7 of Act No.
666. She also contends under her fourth assignment of error (which
we deem convenient to pass upon together with the third) that there
can neither be infringement of trade-mark under section 3 nor unfair
competition under section 7 through her use of the words "Ang Tibay"
in connection with pants and shirts, because those articles do not
belong to the same class of merchandise as shoes and slippers.
The question raised by petitioner involve the scope and application of
sections 3,7, 11, 13, and 20 of the Trade-Mark Law (Act No. 666.)
Section 3 provides that "any person entitled to the exclusive use of a
trade-mark to designate the origin or ownership of goods he has
made or deals in, may recover damages in a civil actions from any
person who has sold goods of a similar kind, bearing such trade-mark
. . . The complaining party . . . may have a preliminary injunction, . . .
and such injunction upon final hearing, if the complainant's property
in the trade-mark and the defendant's violation thereof shall be fully
established, shall be made perpetual, and this injunction shall be part
of the judgment for damages to be rendered in the same cause."
Section 7 provides that any person who, in selling his goods, shall
give them the general appearance of the goods of another either in
the wrapping of the packages, or in the devices or words thereon,
or in any other feature of their appearance, which would be likely
to influence purchasers to believe that the goods offered are those
of the complainant, shall be guilty of unfair competition, and shall
be liable to an action for damages and to an injunction, as in the
cases of trade-mark infringement under section 3. Section 11
requires the applicant for registration of a trade-mark to state, among
others, "the general class of merchandise to which the trade-mark
claimed has been appropriated." Section 13 provides that no alleged
trade-mark or trade name shall be registered which is identical with
a registered or known trade-mark owned by another and
appropriate to the same class of merchandise, or which to nearly
resembles another person's lawful trade-mark or trade-name as to
be likely to cause confusion or mistake in the mind of the public, or
to deceive purchasers. And section 2 authorizes the Director of
Commerce to establish classes of merchandise for the purpose of the
registration of trade-marks and to determine the particular
description of articles included in each class; it also provides that "an
application for registration of a trade-mark shall be registered only for
one class of articles and only for the particular description of articles
mentioned in said application."
We have underlined the key words used in the statute: "goods of a
similar kin," "general class of merchandise," "same class of
merchandise," "classes of merchandise," and "class of articles,"
because it is upon their implications that the result of the case
hinges. These phrases, which refer to the same thing, have the same
meaning as the phrase "merchandise of the same descriptive
properties" used in the statutes and jurisprudence of other
jurisdictions.
The burden of petitioner's argument is that under sections 11 and 20
the registration by respondent of the trade-mark "Ang Tibay" for
shoes and slippers is no safe-guard against its being used by petitioner
for pants and shirts because the latter do not belong to the same class
of merchandise or articles as the former; that she cannot be held
guilty of infringement of trade-mark under section 3 because
respondent's mark is not a valid trade-mark, nor has it acquired a
secondary meaning; that pants and shirts do not possess the same
descriptive properties as shoes and slippers; that neither can she be
held guilty of unfair competition under section 7 because the use by
her of the trade-mark "Ang Tibay" upon pants and shirts is not likely
to mislead the general public as to their origin or ownership; and that
there is now showing that she in unfairly or fraudulently using that
mark "Ang Tibay" against the respondent. If we were interpreting the
statute for the first time and in the first decade of the twentieth
century, when it was enacted, and were to construe it strictly and
literally, we might uphold petitioner's contentions. But law and
jurisprudence must keep abreast with the progress of mankind, and
the courts must breathe life into the statutes if they are to serve their
50
purpose. Our Trade-mark Law, enacted nearly forty years ago, has
grown in its implications and practical application, like a constitution,
in virtue of the life continually breathed into it. It is not of merely local
application; it has its counterpart in other jurisdictions of the civilized
world from whose jurisprudence it has also received vitalizing
nourishment. We have to apply this law as it has grown and not as it
was born. Its growth or development abreast with that of sister
statutes and jurisprudence in other jurisdictions is reflected in the
following observation of a well-known author:
This fundamental change in attitude first manifested itself in the year
1915-1917. Until about then, the courts had proceeded on the theory
that the same trade-mark, used on un-like goods, could not cause
confusion in trade and that, therefore, there could be no objection to
the use and registration of a well-known mark by a third party for a
different class of goods. Since 1916 however, a growing sentiment
began to arise that in the selection of a famous mark by a third party,
there was generally the hidden intention to "have a free ride" on the
trade-mark owner's reputation and good will. (Derenberg, Trade-
Mark Protection & Unfair Trading, 1936 edition, p. 409.)
In the present state of development of the law on Trade-Marks,
Unfair Competition, and Unfair Trading, the test employed by the
courts to determine whether noncompeting goods are or are not of
the same class is confusion as to the origin of the goods of the second
user. Although two noncompeting articles may be classified under
two different classes by the Patent Office because they are deemed
not to possess the same descriptive properties, they would,
nevertheless, be held by the courts to belong to the same class if the
simultaneous use on them of identical or closely similar trade-marks
would be likely to cause confusion as to the origin, or personal source,
of the second user's goods. They would be considered as not falling
under the same class only if they are so dissimilar or so foreign to each
other as to make it unlikely that the purchaser would think the first
user made the second user's goods.
Such construction of the law is induced by cogent reasons of equity
and fair dealing. The courts have come to realize that there can be
unfair competition or unfair trading even if the goods are non-
competing, and that such unfair trading can cause injury or damage
to the first user of a given trade-mark, first, by prevention of the
natural expansion of his business and, second, by having his business
reputation confused with and put at the mercy of the second user.
Then noncompetitive products are sold under the same mark, the
gradual whittling away or dispersion of the identity and hold upon the
public mind of the mark created by its first user, inevitably results.
The original owner is entitled to the preservation of the valuable link
between him and the public that has been created by his ingenuity
and the merit of his wares or services. Experience has demonstrated
that when a well-known trade-mark is adopted by another even for a
totally different class of goods, it is done to get the benefit of the
reputation and advertisements of the originator of said mark, to
convey to the public a false impression of some supposed connection
between the manufacturer of the article sold under the original mark
and the new articles being tendered to the public under the same or
similar mark. As trade has developed and commercial changes have
come about, the law of unfair competition has expanded to keep pace
with the times and the element of strict competition in itself has
ceased to be the determining factor. The owner of a trade-mark or
trade-name has a property right in which he is entitled to protection,
since there is damage to him from confusion of reputation or goodwill
in the mind of the public as well as from confusion of goods. The
modern trend is to give emphasis to the unfairness of the acts and to
classify and treat the issue as a fraud.
A few of the numerous cases in which the foregoing doctrines have
been laid down in one form or another will now be cited: (1)
In Teodoro Kalaw Ng Khe vs. Level Brothers Company (G.R. No.
46817), decided by this Court on April 18, 1941, the respondent
company (plaintiff below) was granted injunctive relief against the
use by the petitioner of the trade-mark "Lux" and "Lifebuoy" for hair
pomade, they having been originally used by the respondent for soap;
The Court held in effect that although said articles are
noncompetitive, they are similar or belong to the same class. (2)
In Lincoln Motor Co. vs. Lincoln Automobile Co. (44 F. [2d], 812), the
manufacturer of the well-known Lincoln automobile was granted
injunctive relief against the use of the word "Lincoln" by another
company as part of its firm name. (3) The case of Aunt Jemima Mills
Co. vs. Rigney & Co. (247 F., 407), involved the trade-mark "Aunt
Jemima," originally used on flour, which the defendant attempted to
use on syrup, and there the court held that the goods, though
different, are so related as to fall within the mischief which equity
should prevent. (4) In Tiffany & Co., vs. Tiffany Productions, Inc. (264
N.Y.S., 459; 23 Trade-mark Reporter, 183), the plaintiff, a jewelry
concern, was granted injunctive relief against the defendant, a
manufacturer of motion pictures, from using the name "Tiffany."
Other famous cases cited on the margin, wherein the courts granted
injunctive relief, involved the following trade-marks or trade-names:
"Kodak," for cameras and photographic supplies, against its use for
bicycles. 4 "Penslar," for medicines and toilet articles, against its use
for cigars; 5 "Rolls-Royce," for automobiles. against its use for radio
tubes; 6 "Vogue," as the name of a magazine, against its use for
hats; 7 "Kotex," for sanitary napkins, against the use of "Rotex" for
vaginal syringes; 8 "Sun-Maid," for raisins, against its use for
flour; 9 "Yale," for locks and keys, against its use for electric
flashlights; 10 and "Waterman," for fountain pens, against its use for
razor blades. 11lawphil.net
Against this array of famous cases, the industry of counsel for the
petitioner has enabled him to cite on this point only the following
cases: (1) Mohawk Milk Products vs. General Distilleries
Corporation (95 F. [2d], 334), wherein the court held that gin and
canned milk and cream do not belong to the same class; (2) Fawcett
Publications, Inc. vs. Popular Mechanics Co. (80 F. [2d], 194), wherein
the court held that the words "Popular Mechanics" used as the title
of a magazine and duly registered as a trade-mark were not infringed
by defendant's use of the words "Modern Mechanics and Inventions"
on a competitive magazine, because the word "mechanics" is merely
a descriptive name; and (3) Oxford Book Co. vs. College Entrance Book
Co. (98 F. [2d], 688), wherein the plaintiff unsuccessfully attempted
to enjoin the defendant from using the word "Visualized" in
connection with history books, the court holding that said word is
merely descriptive. These cases cites and relied upon by petitioner
are obviously of no decisive application to the case at bar.
We think reasonable men may not disagree that shoes and shirts are
not as unrelated as fountain pens and razor blades, for instance. The
mere relation or association of the articles is not controlling. As may
readily be noted from what we have heretofore said, the proprietary
connotation that a trade-mark or trade-name has acquired is of more
51
paramount consideration. The Court of Appeals found in this case
that by uninterrupted and exclusive use since 1910 of respondent's
registered trade-mark on slippers and shoes manufactured by him, it
has come to indicate the origin and ownership of said goods. It is
certainly not farfetched to surmise that the selection by petitioner of
the same trade-mark for pants and shirts was motivated by a desire
to get a free ride on the reputation and selling power it has acquired
at the hands of the respondent. As observed in another case, 12 the
field from which a person may select a trade-mark is practically
unlimited, and hence there is no excuse for impinging upon or even
closely approaching the mark of a business rival. In the unlimited field
of choice, what could have been petitioner's purpose in selecting
"Ang Tibay" if not for its fame?

Lastly, in her fifth assignment of error petitioner seems to make a

frantic effort to retain the use of the mark "Ang Tibay." Her counsel
suggests that instead of enjoining her from using it, she may be
required to state in her labels affixed to her products the inscription:
"Not manufactured by Toribio Teodoro." We think such practice
would be unethical and unworthy of a reputable businessman. To
the suggestion of petitioner, respondent may say, not without
justice though with a tinge of bitterness: "Why offer a perpetual
apology or explanation as to the origin of your products in order to
use my trade-mark instead of creating one of your own?" On our
part may we add, without meaning to be harsh, that a self-
respecting person does not remain in the shelter of another but
builds one of his own. (PAK GNERN)

The judgment of the Court of Appeals is affirmed, with costs against

the petitioner in the three instances. So ordered.
Yulo, C.J., Moran, Paras and Bocobo, JJ., concur.

52

G.R. No. 101897. March 5, 1993.
LYCEUM OF THE PHILIPPINES, INC., petitioner, vs. COURT OF
APPEALS, LYCEUM OF APARRI, LYCEUM OF CABAGAN, LYCEUM OF
CAMALANIUGAN, INC., LYCEUM OF LALLO, INC., LYCEUM OF TUAO,
INC., BUHI LYCEUM, CENTRAL LYCEUM OF CATANDUANES, LYCEUM
OF SOUTHERN PHILIPPINES, LYCEUM OF EASTERN MINDANAO, INC.
and WESTERN PANGASINAN LYCEUM, INC., respondents.
DECISION
FELICIANO, J p:
Petitioner is an educational institution duly registered with the
Securities and Exchange Commission ("SEC"). When it first registered
with the SEC on 21 September 1950, it used the corporate name
Lyceum of the Philippines, Inc. and has used that name ever since
. petitioner claims as its proprietary right to the word "Lyceum." The
On 24 February 1984, petitioner instituted proceedings before the
SEC to compel the private respondents, which are also educational
institutions, to delete the word "Lyceum" from their corporate names
and permanently to enjoin them from using "Lyceum" as part of their
respective names.
Some of the private respondents actively participated in the
proceedings before the SEC. These are the following, the dates of
their original SEC registration being set out below opposite their
respective names:
Western Pangasinan Lyceum — 27 October 1950
Lyceum of Cabagan — 31 October 1962
Lyceum of Lallo, Inc. — 26 March 1972
Lyceum of Aparri — 28 March 1972
Lyceum of Tuao, Inc. — 28 March 1972
Lyceum of Camalaniugan — 28 March 1972
The following private respondents were declared in default for failure
to file an answer despite service of summons:
Buhi Lyceum;
Central Lyceum of Catanduanes;
Lyceum of Eastern Mindanao, Inc.; and
Lyceum of Southern Philippines
Petitioner's original complaint before the SEC had included three (3)
other entities:
1. The Lyceum of Malacanay;
2. The Lyceum of Marbel; and
3. The Lyceum of Araullo
The complaint was later withdrawn insofar as concerned the Lyceum
of Malacanay and the Lyceum of Marbel, for failure to serve summons
upon these two (2) entities. The case against the Liceum of Araullo
was dismissed when that school motu proprio change its corporate
name to "Pamantasan ng Araullo."
The background of the case at bar needs some recounting. Petitioner
had sometime before commenced in the SEC a proceeding (SEC-Case
No. 1241) against the Lyceum of Baguio, Inc. to require it to change
its corporate name and to adopt another name not "similar [to] or
identical" with that of petitioner. In an Order dated 20 April 1977,
Associate Commissioner Julio Sulit held that the corporate name of
petitioner and that of the Lyceum of Baguio, Inc. were substantially
identical because of the presence of a "dominant" word, i.e.,
"Lyceum," the name of the geographical location of the campus being
the only word which distinguished one from the other corporate
name. The SEC also noted that petitioner had registered as a
corporation ahead of the Lyceum of Baguio, Inc. in point of time, 1
and ordered the latter to change its name to another name "not
similar or identical [with]" the names of previously registered entities.
The Lyceum of Baguio, Inc. assailed the Order of the SEC before the
Supreme Court in a case docketed as G.R. No. L-46595. In a Minute
Resolution dated 14 September 1977, the Court denied the Petition
for Review for lack of merit. Entry of judgment in that case was made
on 21 October 1977. 2
Armed with the Resolution of this Court in G.R. No. L-46595,
petitioner then wrote all the educational institutions it could find
using the word "Lyceum" as part of their corporate name, and advised
them to discontinue such use of "Lyceum." When, with the passage
of time, it became clear that this recourse had failed, petitioner
instituted before the SEC SEC-Case No. 2579 to enforce what
SEC hearing officer rendered a decision sustaining petitioner's claim
to an exclusive right to use the word "Lyceum." The hearing officer
relied upon the SEC ruling in the Lyceum of Baguio, Inc. case (SEC-
Case No. 1241) and held that the word "Lyceum" was capable of
appropriation and that petitioner had acquired an enforceable
exclusive right to the use of that word.
On appeal, however, by private respondents to the SEC En Banc, the
decision of the hearing officer was reversed and set aside. The SEC En
Banc did not consider the word "Lyceum" to have become so
identified with petitioner as to render use thereof by other
institutions as productive of confusion about the identity of the
schools concerned in the mind of the general public. Unlike its hearing
officer, the SEC En Banc held that the attaching of geographical names
to the word "Lyceum" served sufficiently to distinguish the schools
from one another, especially in view of the fact that the campuses of
petitioner and those of the private respondents were physically quite
remote from each other. 3
Petitioner then went on appeal to the Court of Appeals. In its Decision
dated 28 June 1991, however, the Court of Appeals affirmed the
questioned Orders of the SEC En Banc. 4 Petitioner filed a motion for
reconsideration, without success.
Before this Court, petitioner asserts that the Court of Appeals
committed the following errors:
1. The Court of Appeals erred in holding that the Resolution of the
Supreme Court in G.R. No. L-46595 did not constitute stare decisis as
to apply to this case and in not holding that said Resolution bound
subsequent determinations on the right to exclusive use of the word
Lyceum.
2. The Court of Appeals erred in holding that respondent Western
Pangasinan Lyceum, Inc. was incorporated earlier than petitioner.
3. The Court of Appeals erred in holding that the word Lyceum has
not acquired a secondary meaning in favor of petitioner.
4. The Court of Appeals erred in holding that Lyceum as a generic
word cannot be appropriated by the petitioner to the exclusion of
others. 5
We will consider all the foregoing ascribed errors, though not
necessarily seriatim. We begin by noting that the Resolution of the
Court in G.R. No. L-46595 does not, of course, constitute res
adjudicata in respect of the case at bar, since there is no identity of
parties. Neither is stare decisis pertinent, if only because the SEC En
Banc itself has re-examined Associate Commissioner Sulit's ruling in
the Lyceum of Baguio case. The Minute Resolution of the Court in G.R.
No. L-46595 was not a reasoned adoption of the Sulit ruling.
53
The Articles of Incorporation of a corporation must, among other
things, set out the name of the corporation. 6 Section 18 of the
Corporation Code establishes a restrictive rule insofar as corporate
names are concerned:
"SECTION 18. Corporate name. — No corporate name may be allowed
by the Securities an Exchange Commission if the proposed name is
identical or deceptively or confusingly similar to that of any existing
corporation or to any other name already protected by law or is
patently deceptive, confusing or contrary to existing laws. When a
change in the corporate name is approved, the Commission shall issue
an amended certificate of incorporation under the amended name."
(Emphasis supplied)
The policy underlying the prohibition in Section 18 against the
registration of a corporate name which is "identical or deceptively or
confusingly similar" to that of any existing corporation or which is
"patently deceptive" or "patently confusing" or "contrary to existing
laws," is the avoidance of fraud upon the public which would have
occasion to deal with the entity concerned, the evasion of legal
obligations and duties, and the reduction of difficulties of
administration and supervision over corporations. 7
IN THIS CASE
We do not consider that the corporate names of private respondent
institutions are "identical with, or deceptively or confusingly similar"
to that of the petitioner institution. True enough, the corporate
names of private respondent entities all carry the word "Lyceum" but
confusion and deception are effectively precluded by the appending
of geographic names to the word "Lyceum." Thus, we do not believe
that the "Lyceum of Aparri" can be mistaken by the general public for
the Lyceum of the Philippines, or that the "Lyceum of Camalaniugan"
would be confused with the Lyceum of the Philippines.
LYCEUM
Etymologically, the word "Lyceum" is the Latin word for the Greek
lykeion which in turn referred to a locality on the river Ilissius in
ancient Athens "comprising an enclosure dedicated to Apollo and
adorned with fountains and buildings erected by Pisistratus, Pericles
and Lycurgus frequented by the youth for exercise and by the
philosopher Aristotle and his followers for teaching." 8 In time, the
word "Lyceum" became associated with schools and other
institutions providing public lectures and concerts and public
discussions. Thus today, the word "Lyceum" generally refers to a
school or an institution of learning.
While the Latin word "lyceum" has been incorporated into the English
language, the word is also found in Spanish (liceo) and in French
(lycee). As the Court of Appeals noted in its Decision, Roman Catholic
schools frequently use the term; e.g., "Liceo de Manila," "Liceo de
Baleno" (in Baleno, Masbate), "Liceo de Masbate," "Liceo de Albay."
9 "Lyceum" is in fact as generic in character as the word "university."
In the name of the petitioner, "Lyceum" appears to be a substitute for
"university;" in other places, however, "Lyceum," or "Liceo" or
"Lycee" frequently denotes a secondary school or a college.
It may be (though this is a question of fact which we need not resolve)
that the use of the word "Lyceum" may not yet be as widespread as
the use of "university," but it is clear that a not inconsiderable number
of educational institutions have adopted "Lyceum" or "Liceo" as part
of their corporate names. Since "Lyceum" or "Liceo" denotes a school
or institution of learning, it is not unnatural to use this word to
designate an entity which is organized and operating as an
educational institution.
It is claimed, however, by petitioner that the word "Lyceum" has
acquired a secondary meaning in relation to petitioner with the
result that that word, although originally a generic, has become
appropriable by petitioner to the exclusion of other institutions like
private respondents herein.
DOCTRINE OF SECONDARY MEANING
The doctrine of secondary meaning originated in the field of
trademark law. Its application has, however, been extended to
corporate names sine the right to use a corporate name to the
exclusion of others is based upon the same principle which underlies
the right to use a particular trademark or tradename. 10 In Philippine
Nut Industry, Inc. v. Standard Brands, Inc., 11 the doctrine of
secondary meaning was elaborated in the following terms:
" . . . a word or phrase originally incapable of exclusive appropriation
with reference to an article on the market, because geographically
or otherwise descriptive, might nevertheless have been used so long
and so exclusively by one producer with reference to his article that,
in that trade and to that branch of the purchasing public, the word
or phrase has come to mean that the article was his product." 12
The question which arises, therefore, is whether or not the use by
petitioner of "Lyceum" in its corporate name has been for such
length of time and with such exclusivity as to have become
associated or identified with the petitioner institution in the mind of
the general public (or at least that portion of the general public which
has to do with schools).
The Court of Appeals recognized this issue and answered it in the
negative:
"Under the doctrine of secondary meaning, a word or phrase
originally incapable of exclusive appropriation with reference to an
article in the market, because geographical or otherwise descriptive
might nevertheless have been used so long and so exclusively by one
producer with reference to this article that, in that trade and to that
group of the purchasing public, the word or phrase has come to mean
that the article was his produce (Ana Ang vs. Toribio Teodoro, 74 Phil.
56). This circumstance has been referred to as the distinctiveness into
which the name or phrase has evolved through the substantial and
exclusive use of the same for a considerable period of time.
Consequently, the same doctrine or principle cannot be made to
apply where the evidence did not prove that the business (of the
plaintiff) has continued for so long a time that it has become of
consequence and acquired a good will of considerable value such that
its articles and produce have acquired a well-known reputation, and
confusion will result by the use of the disputed name (by the
defendant) (Ang Si Heng vs. Wellington Department Store, Inc., 92
Phil. 448).
IN THIS CASE
With the foregoing as a yardstick, [we] believe the appellant failed to
satisfy the aforementioned requisites. No evidence was ever
presented in the hearing before the Commission which sufficiently
proved that the word 'Lyceum' has indeed acquired secondary
meaning in favor of the appellant. If there was any of this kind, the
same tend to prove only that the appellant had been using the
54
disputed word for a long period of time. Nevertheless, its (appellant)
exclusive use of the word (Lyceum) was never established or proven
as in fact the evidence tend to convey that the cross-claimant was
already using the word 'Lyceum' seventeen (17) years prior to the
date the appellant started using the same word in its corporate name.
Furthermore, educational institutions of the Roman Catholic Church
had been using the same or similar word like 'Liceo de Manila,' 'Liceo
de Baleno' (in Baleno, Masbate), 'Liceo de Masbate,' 'Liceo de Albay'
long before appellant started using the word 'Lyceum'. The appellant
also failed to prove that the word 'Lyceum' has become so identified
with its educational institution that confusion will surely arise in the
minds of the public if the same word were to be used by other
educational institutions.
In other words, while the appellant may have proved that it had
been using the word 'Lyceum' for a long period of time, this fact
alone did not amount to mean that the said word had acquired
secondary meaning in its favor because the appellant failed to prove
that it had been using the same word all by itself to the exclusion of
others. More so, there was no evidence presented to prove that
confusion will surely arise if the same word were to be used by other
educational institutions. Consequently, the allegations of the
appellant in its first two assigned errors must necessarily fail." 13
(Underscoring partly in the original and partly supplied)
We conclude and so hold that petitioner institution is not entitled to
a legally enforceable exclusive right to use the word "Lyceum" in its
corporate name and that other institutions may use "Lyceum" as part
of their corporate names. To determine whether a given corporate
name is "identical" or "confusingly or deceptively similar" with
another entity's corporate name, it is not enough to ascertain the
presence of "Lyceum" or "Liceo" in both names. One must evaluate
corporate names in their entirety and when the name of petitioner is
juxtaposed with the names of private respondents, they are not
reasonably regarded as "identical" or "confusingly or deceptively
similar" with each other.
WHEREFORE, the petitioner having failed to show any reversible error
on the part of the public respondent Court of Appeals, the Petition for
Review is DENIED for lack of merit, and the Decision of the Court of
Appeals dated 28 June 1991 is hereby AFFIRMED. No pronouncement
as to costs.
SO ORDERED.

We agree with the Court of Appeals. The number alone of the private
respondents in the case at bar suggests strongly that petitioner's use
of the word "Lyceum" has not been attended with the exclusivity
essential for applicability of the doctrine of secondary meaning. It
may be noted also that at least one of the private respondents, i.e.,
the Western Pangasinan Lyceum, Inc., used the term "Lyceum"
seventeen (17) years before the petitioner registered its own
corporate name with the SEC and began using the word "Lyceum." It
follows that if any institution had acquired an exclusive right to the
word "Lyceum," that institution would have been the Western
Pangasinan Lyceum, Inc. rather than the petitioner institution.

In this connection, petitioner argues that because the Western

Pangasinan Lyceum, Inc. failed to reconstruct its records before the
SEC in accordance with the provisions of R.A. No. 62, which records
had been destroyed during World War II, Western Pangasinan
Lyceum should be deemed to have lost all rights it may have acquired
by virtue of its past registration. It might be noted that the Western
Pangasinan Lyceum, Inc. registered with the SEC soon after petitioner
had filed its own registration on 21 September 1950. Whether or not
Western Pangasinan Lyceum, Inc. must be deemed to have lost its
rights under its original 1933 registration, appears to us to be quite
secondary in importance; we refer to this earlier registration simply
to underscore the fact that petitioner's use of the word "Lyceum"
was neither the first use of that term in the Philippines nor an
exclusive use thereof. Petitioner's use of the word "Lyceum" was not
exclusive but was in truth shared with the Western Pangasinan
Lyceum and a little later with other private respondent institutions
which registered with the SEC using "Lyceum" as part of their
corporation names. There may well be other schools using Lyceum or
Liceo in their names, but not registered with the SEC because they
have not adopted the corporate form of organization.

55
 FIRST DIVISION
G.R. No. 205548, February 07, 2018
DE LA SALLE MONTESSORI INTERNATIONAL OF MALOLOS,
INC., Petitioner, v. DE LA SALLE BROTHERS, INC., DE LA SALLE
UNIVERSITY, INC., LA SALLE ACADEMY, INC., DE LA SALLE-
SANTIAGO ZOBEL SCHOOL, INC. (FORMERLY NAMED DE LA SALLE-
SOUTH INC.), DE LA SALLE CANLUBANG, INC. (FORMERLY NAMED
DE LA SALLE UNIVERSITY-CANLUBANG, INC.), Respondents.
DECISION
JARDELEZA, J.:
Petitioner De La Salle Montessori International of Malolos, Inc. filed
this petition for review on certiorari1under Rule 45 of the Rules of
Court to challenge the Decision2 of the Court of Appeals (CA) dated
September 27, 2012 in CA-G.R. SP No. 116439 and its
Resolution3 dated January 21, 2013 which denied petitioner's motion
for reconsideration. The CA affirmed the Decision 4 of the Securities
and Exchange Commission (SEC) En Banc dated September 30, 2010,
which in turn affirmed the Order5 of the SEC Office of the General
Counsel (OGC) dated May 12, 2010 directing petitioner to change or
modify its corporate name.
Petitioner reserved with the SEC its corporate name De La Salle
Montessori International Malolos, Inc.from June 4 to August 3,
2007,6 after which the SEC indorsed petitioner's articles of
incorporation and by-laws to the Department of Education (DepEd)
for comments and recommendation.7 The DepEd returned the
indorsement without objections.8 Consequently, the SEC issued a
certificate of incorporation to petitioner.9
Afterwards, DepEd Region III, City of San Fernando, Pampanga
granted petitioner government recognition for its pre-elementary
and elementary courses on June 30, 2008, 10 and for its secondary
courses on February 15, 2010.11
On January 29, 2010, respondents De La Salle Brothers, Inc., De La
Salle University, Inc., La Salle Academy, Inc., De La Salle-Santiago
Zobel School, Inc. (formerly De La Salle-South, Inc.), and De La Salle
Canlubang, Inc. (formerly De La Salle University-Canlubang, Inc.) filed
a petition with the SEC seeking to compel petitioner to change its
corporate name. Respondents claim that petitioner's corporate name
is misleading or confusingly similar to that which respondents have
acquired a prior right to use, and that respondents' consent to use
such name was not obtained. According to respondents, petitioner's
use of the dominant phrases "La Salle" and "De La Salle" gives an
erroneous impression that De La Salle Montessori International of
Malolos, Inc. is part of the "La Salle" group, which violates Section 18
of the Corporation Code of the Philippines. Moreover, being the prior
registrant, respondents have acquired the use of said phrases as part
of their corporate names and have freedom from infringement of the
same.12
On May 12, 2010, the SEC OGC issued an Order 13 directing petitioner
to change or modify its corporate name. It held, among others, that
respondents have acquired the right to the exclusive use of the name
"La Salle" with freedom from infringement by priority of adoption, as
they have all been incorporated using the name ahead of petitioner.
Furthermore, the name "La Salle" is not generic in that it does not
particularly refer to the basic or inherent nature of the services
provided by respondents. Neither is it descriptive in the sense that it
does not forthwith and clearly convey an immediate idea of what
respondents' services are. In fact, it merely gives a hint, and requires
imagination, thought and perception to reach a conclusion as to the
nature of such services. Hence, the SEC OGC concluded that
respondents' use of the phrase "De La Salle" or "La Salle" is arbitrary,
fanciful, whimsical and distinctive, and thus legally protectable. As
regards petitioner's argument that its use of the name does not result
to confusion, the SEC OGC held otherwise, noting that confusion is
probably or likely to occur considering not only the similarity in the
parties' names but also the business or industry they are engaged in,
which is providing courses of study in pre-elementary, elementary
and secondary education.14 The SEC OGC disagreed with petitioner's
argument that the case of Lyceum of the Philippines, Inc. v. Court of
Appeals15 (Lyceum of the Philippines) applies since the word "lyceum"
is clearly descriptive of the very being and defining purpose of an
educational corporation, unlike the term "De La Salle" or "La
Salle."16Hence, the Court held in that case that the Lyceum of the
Philippines, Inc. cannot claim exclusive use of the name "lyceum."
Petitioner filed an appeal before the SEC En Banc, which rendered a
Decision17 on September 30, 2010 affirming the Order of the SEC
OGC. It held, among others, that the Lyceum of the Philippines case
does not apply since the word "lyceum" is a generic word that
pertains to a category of educational institutions and is widely used
around the world. Further, the Lyceum of the Philippines failed to
prove that "lyceum" acquired secondary meaning capable of
exclusive appropriation. Petitioner also failed to establish that the
term "De La Salle" is generic for the principle enunciated in Lyceum of
the Philippines to apply.18
Petitioner consequently filed a petition for review with the CA. On
September 27, 2012, the CA rendered its Decision 19 affirming the
Order of the SEC OGC and the Decision of the SEC En Banc in toto.
Hence, this petition, which raises the lone issue of "[w]hether or not
the [CA] acted with grave abuse of discretion amounting to lack or in
excess of jurisdiction when it erred in not applying the doctrine laid
down in the case of [Lyceum of the Philippines], that LYCEUM is not
attended with exclusivity."20
The Court cannot at the outset fail to note the erroneous wording of
the issue. Petitioner alleged grave abuse of discretion while also
attributing error of judgment on the part of the CA in not applying a
certain doctrine. Certainly, these grounds do not coincide in the same
remedy. A petition for review on certiorariunder Rule 45 of the Rules
of Court is a separate remedy from a petition for certiorari under Rule
65. A petition for review on certiorari under Rule 45 brings up for
review errors of judgment, while a petition for certiorari under Rule
65 covers errors of jurisdiction or grave abuse of discretion amounting
to excess or lack of jurisdiction. Grave abuse of discretion is not an
allowable ground under Rule 45.21 Nonetheless, as the petition
argues on the basis of errors of judgment allegedly committed by the
CA, the Court will excuse the error in terminology.
The main thrust of the petition is that the CA erred in not applying the
ruling in the Lyceum of the Philippines case which petitioner argues
have "the same facts and events"22 as in this case.
We DENY the petition and uphold the Decision of the CA.
56

As early as Western Equipment and Supply Co. v. Reyes,23 the Court
declared that a corporation's right to use its corporate and trade
name is a property right, a right in rem, which it may assert and
protect against the world in the same manner as it may protect its
tangible property, real or personal, against trespass or conversion. 24 It
is regarded, to a certain extent, as a property right and one which
cannot be impaired or defeated by subsequent appropriation by
another corporation in the same field.25Furthermore, in Philips Export
B.V. v. Court of Appeals,26 we held:
A name is peculiarly important as necessary to the very existence of a
corporation x x x. Its name is one of its attributes, an element of its
existence, and essential to its identity x x x. The general rule as to
corporations is that each corporation must have a name by which it is
to sue and be sued and do all legal acts. The name of a corporation
in this respect designates the corporation in the same manner as the
name of an individual designates the person x x x; and the right to
use its corporate name is as much a part of the corporate franchise
as any other privilege granted x x x.
A corporation acquires its name by choice and need not select a name
identical with or similar to one already appropriated by a senior
corporation while an individual's name is thrust upon him x x x. A
corporation can no more use a corporate name in violation of the
rights of others than an individual can use his nan1e legally acquired
so as to mislead the public and injure another x x x. 27
Recognizing the intrinsic importance of corporate names, our
Corporation Code established a restrictive rule insofar as corporate
names are concerned.28 Thus, Section 18 thereof provides:
Sec. 18. Corporate name. - No corporate name may be allowed by the
Securities and Exchange Commission if the proposed name is identical
or deceptively or confusingly similar to that of any existing
corporation or to any other name already protected by law or is
patently deceptive, confusing or contrary to existing laws. When a
change in the corporate name is approved, the Commission shall issue
an amended certificate of incorporation under the amended name.
The policy underlying the prohibition in Section 18 against the
registration of a corporate name which is "identical or deceptively or
confusingly similar" to that of any existing corporation or which is
"patently deceptive" or "patently confusing" or "contrary to existing
laws," is the avoidance of fraud upon the public which would have
occasion to deal with the entity concerned, the evasion of legal
obligations and duties, and the reduction of difficulties of
administration and supervision over corporations.29
Indeed, parties organizing a corporation must choose a name at their
peril; and the use of a name similar to one adopted by another
corporation, whether a business or a non-profit organization, if
misleading or likely to injure in the exercise of its corporate functions,
regardless of intent, may be prevented by the corporation having a
prior right, by a suit for injunction against the new corporation to
prevent the use of the name.30
In Philips Export B.V. v. Court of Appeals,31 the Court held that to fall
within the prohibition of Section 18, two requisites must be proven,
to wit: (1) that the complainant corporation acquired a prior right
over the use of such corporate name; and (2) the proposed name is
either: (a) identical, or (b) deceptively or confusingly similar to that of
any existing corporation or to any other name already protected by
law; or (c) patently deceptive, confusing or contrary to existing law.
With respect to the first requisite, the Court has held that the right to
the exclusive use of a corporate name with freedom from
infringement by similarity is determined by priority of adoption. 33
In this case, respondents' corporate names were registered
on the following dates:
(1) De La Salle Brothers, Inc. on October 9, 1961 under SEC
Registration No. 19569;
(2) De La Salle University, Inc. on December 19, 1975 under SEC
Registration No. 65138;
(3) La Salle Academy, Inc. on January 26, 1960 under SEC Registration
No. 16293;
(4) De La SalleSantiago Zobel School, Inc. on October 7, 1976 under
SEC Registration No. 69997; and (5) De La Salle Canlubang, Inc. on
August 5, 1998 under SEC Registration No. Al998-01021.34
On the other hand, petitioner was issued a Certificate of Registration
only on July 5, 2007 under Company Registration No.
CN200710647.35 It being clear that respondents are the prior
registrants, they certainly have acquired the right to use the words
"De La Salle" or "La Salle" as part of their corporate names.
The second requisite is also satisfied since there is a confusing
similarity between petitioner's and respondents' corporate names.
While these corporate names are not identical, it is evident that the
phrase "De La Salle" is the dominant phrase used.
Petitioner asserts that it has the right to use the phrase "De La Salle"
in its corporate name as respondents did not obtain the right to its
exclusive use, nor did the words acquire secondary meaning. It
endeavoured to demonstrate that no confusion will arise from its
use of the said phrase by stating that its complete name, "De La Salle
Montessori International of Malolos, Inc.," contains four other
distinctive words that are not found in respondents' corporate
names. Moreover, it obtained the words "De La Salle" from the
French word meaning "classroom," while respondents obtained it
from the French priest named Saint Jean Baptiste de La Salle.
Petitioner also compared its logo to that of respondent De La Salle
University and argued that they are different. Further, petitioner
argued that it does not charge as much fees as respondents, that its
clients knew that it is not part of respondents' schools, and that it
never misrepresented nor claimed to be an affiliate of respondents.
Additionally, it has gained goodwill and a name worthy of trust in its
own right.36
We are not persuaded.
In determining the existence of confusing similarity in corporate
names, the test is whether the similarity is such as to mislead a person
57
using ordinary care and discrimination. In so doing, the Court must
look to the record as well as the names themselves. 37
Petitioner's assertion that the words "Montessori International of
Malolos, Inc." are four distinctive words that are not found in
respondents' corporate names so that their corporate name is not
identical, confusingly similar, patently deceptive or contrary to
existing laws,38 does not avail. As correctly held by the SEC OGC, all
these words, when used with the name "De La Salle," can reasonably
mislead a person using ordinary care and discretion into thinking that
petitioner is an affiliate or a branch of, or is likewise founded by, any
or all of the respondents, thereby causing confusion.39
Petitioner's argument that it obtained the words "De La Salle" from
the French word meaning "classroom," while respondents obtained
it from the French priest named Saint Jean Baptiste de La
Salle,40 similarly does not hold water. We quote with approval the
ruling of the SEC En Banc on this matter. Thus:
Generic terms are those which constitute "the common descriptive
name of an article or substance," or comprise the "genus of which the
particular product is a species," or are "commonly used as the name
or description of a kind of goods," or "characters," or "refer to the
basic nature of the wares or services provided rather than to the more
idiosyncratic characteristics of a particular product," and are not
legally protectable. It has been held that if a mark is so commonplace
that it cannot be readily distinguished from others, then it is apparent
that it cannot identify a particular business; and he who first adopted
it cannot be injured by any subsequent appropriation or imitation by
others, and the public will not be deceived.
Contrary to [petitioner's] claim, the word salle only means "room" in
French. The word la, on the other hand, is a definite article ("the")
used to modify salle. Thus, since salle is nothing more than a room,
[respondents'] use of the term is actually suggestive.
Suggestive mark
A suggestive mark is therefore a word, picture, or other symbol that
suggests, but does not directly describe something about the goods
or services in connection with which it is used as a mark and gives a
hint as to the quality or nature of the product. Suggestive
trademarks therefore can be distinctive and are registrable.
The appropriation of the term "la salle" to associate the words with
the lofty ideals of education and learning is in fact suggestive
because roughly translated, the words only mean "the room." Thus,
the room could be anything - a room in a house, a room in a
building, or a room in an office.
xxx
In fact, the appropriation by [respondents] is fanciful, whimsical and
arbitrary because there is no inherent connection between the
words la salle and education, and it is through [respondents']
painstaking efforts that the term has become associated with one of
the top educational institutions in the country. Even
assuming arguendo that la salle means "classroom" in French,
imagination is required in order to associate the term with an
educational institution and its particular brand of service. 41
We affirm that the phrase "De La Salle" is not merely a generic term.
Respondents' use of the phrase being suggestive and may properly be
regarded as fanciful, arbitrary and whimsical, it is entitled to legal
protection.42 Petitioner's use of the phrase "De La Salle" in its
corporate name is patently similar to that of respondents that even
with reasonable care and observation, confusion might arise.
The Court notes not only the similarity in the parties' names, but also
the business they are engaged in. They are all private educational
institutions offering pre-elementary, elementary and secondary
courses.43 As aptly observed by the SEC En Banc, petitioner's name
gives the impression that it is a branch or affiliate of respondents. 44 It
is settled that proof of actual confusion need not be shown. It suffices
that confusion is probable or likely to occur. 45
Finally, the Court's ruling in Lyceum of the Philippines46 does not
apply.
In that case, the Lyceum of the Philippines, Inc., an educational
institution registered with the SEC, commenced proceedings before
the SEC to compel therein private respondents who were all
educational institutions, to delete the word "Lyceum" from their
corporate names and permanently enjoin them from using the word
as part of their respective names.
The Court there held that the word "Lyceum" today generally refers
to a school or institution of learning. It is as generic in character as the
word "university." Since "Lyceum" denotes a school or institution of
learning, it is not unnatural to use this word to designate an entity
which is organized and operating as an educational institution.
Moreover, the Lyceum of the Philippines, Inc.'s use of the word
"Lyceum" for a long period of time did not amount to mean that the
word had acquired secondary meaning in its favor because it failed to
prove that it had been using the word all by itself to the exclusion of
others. More so, there was no evidence presented to prove that the
word has been so identified with the Lyceum of the Philippines, Inc.
as an educational institution that confusion will surely arise if the
same word were to be used by other educational institutions. 47
Here, the phrase "De La Salle" is not generic in relation to
respondents. It is not descriptive of respondent's business as
institutes of learning, unlike the meaning ascribed to "Lyceum."
Moreover, respondent De La Salle Brothers, Inc. was registered in
1961 and the De La Salle group had been using the name decades
before petitioner's corporate registration. In contrast, there was no
evidence of the Lyceum of the Philippines, Inc.'s exclusive use of the
word "Lyceum," as in fact another educational institution had used
the word 17 years before the former registered its corporate name
with the SEC. Also, at least nine other educational institutions
included the word in their corporate names. There is thus no similarity
between the Lyceum of the Philippines case and this case that would
call for a similar ruling.
The enforcement of the protection accorded by Section 18 of the
Corporation Code to corporate names is lodged exclusively in the SEC.
By express mandate, the SEC has absolute jurisdiction, supervision
and control over all corporations. It is the SEC's duty to prevent
confusion in the use of corporate names not only for the protection
of the corporations involved, but more so for the protection of the
58
public. It has authority to de-register at all times, and under all
circumstances, corporate names which in its estimation are likely to
generate confusion.48

Clearly, the only determination relevant to this case is that one made
by the SEC in the exercise of its express mandate under the law.49

Time and again, we have held that findings of fact of quasi-judicial

agencies, like the SEC, are generally accorded respect and even
finality by this Court, if supported by substantial evidence, in
recognition of their expertise on the specific matters under their
consideration, more so if the same has been upheld by the appellate
court, as in this case.50

WHEREFORE, the Petition is DENIED. The assailed Decision of the CA

dated September 27, 2012 is AFFIRMED.

SO ORDERED.

Sereno, C.J., (Chairperson), Leonardo-De Castro, Del Castillo,

and Tijam, JJ., concur.
EN BANC

59

G.R. No. 103543 July 5, 1993
ASIA BREWERY, INC., petitioner,
vs.
THE HON. COURT OF APPEALS and SAN MIGUEL
CORPORATION, respondents.
Abad Santos & Associates and Sycip, Salazar, Hernandez &
Gatmaitan for petitioner.
Roco, Bunag, Kapunan Law Office for private respondent.
GRIÑO-AQUINO, J.:
On September 15, 1988, San Miguel Corporation (SMC) filed a
complaint against Asia Brewery Inc. (ABI) for infringement of
trademark and unfair competition on account of the latter's BEER
PALE PILSEN or BEER NA BEER product which has been competing
with SMC's SAN MIGUEL PALE PILSEN for a share of the local beer
market. (San Miguel Corporation vs. Asia Brewery Inc., Civ. Case. No.
56390, RTC Branch 166, Pasig, Metro Manila.).
On August 27, 1990, a decision was rendered by the trial Court,
presided over by Judge Jesus O. Bersamira, dismissing SMC's
complaint because ABI "has not committed trademark infringement
or unfair competition against" SMC (p. 189, Rollo).
SMC appealed to the Court of Appeals (C.A.-G.R. CV No. 28104). On
September 30, 1991, the Court of Appeals (Sixth Division composed
of Justice Jose C. Campos, Jr., chairman and ponente, and Justices
Venancio D. Aldecoa Jr. and Filemon H. Mendoza, as members)
reversed the trial court. The dispositive part of the decision reads as
follows:
In the light of the foregoing analysis and under the plain language of
the applicable rule and principle on the matter, We find the
defendant Asia Brewery Incorporated GUILTY of infringement of
trademark and unfair competition. The decision of the trial court is
hereby REVERSED, and a new judgment entered in favor of the
plaintiff and against the defendant as follows:
(1) The defendant Asia Brewery Inc. its officers, agents, servants and
employees are hereby permanently enjoined and restrained from
manufacturing, putting up, selling, advertising, offering or
announcing for sale, or supplying Beer Pale Pilsen, or any similar
preparation, manufacture or beer in bottles and under labels
substantially identical with or like the said bottles and labels of
plaintiff San Miguel Corporation employed for that purpose, or
substantially identical with or like the bottles and labels now
employed by the defendant for that purpose, or in bottles or under
labels which are calculated to deceive purchasers and consumers into
the belief that the beer is the product of the plaintiff or which will
enable others to substitute, sell or palm off the said beer of the
defendant as and for the beer of the plaintiff-complainant.
(2) The defendant Asia Brewery Inc. is hereby ordered to render an
accounting and pay the San Miguel Corporation double any and all
the payments derived by defendant from operations of its business
and the sale of goods bearing the mark "Beer Pale Pilsen" estimated
at approximately Five Million Pesos (P5,000,000.00); to recall all its
products bearing the mark "Beer Pale Pilsen" from its retailers and
deliver these as well as all labels, signs, prints, packages, wrappers,
receptacles and advertisements bearing the infringing mark and all
plates, molds, materials and other means of making the same to the
Court authorized to execute this judgment for destruction.
(3) The defendant is hereby ordered to pay plaintiff the sum of Two
Million Pesos (P2,000,000.00) as moral damages and Half a Million
Pesos (P5,000,000.00) by way of exemplary damages.
(4) The defendant is further ordered to pay the plaintiff attorney's
fees in the amount of P250,000.00 plus costs to this suit. (p. 90, Rollo.)
Upon a motion for reconsideration filed by ABI, the above dispositive
part of the decision, was modified by the separate opinions of the
Special Sixth Division 1 so that it should read thus:
In the light of the foregoing analysis and under the plain language of
the applicable rule and principle on the matter, We find the
defendant Asia Brewery Incorporated GUILTY of infringement of
trademark and unfair competition. The decision of the trial court is
hereby REVERSED, and a new judgment entered in favor of the
plaintiff and against the defendant as follows:
(1) The defendant Asia Brewery Inc., its officers, agents, servants and
employees are hereby permanently enjoined and restrained from
manufacturing, putting up, selling, advertising, offering or
announcing for sale, or supplying Beer Pale Pilsen, or any similar
preparation, manufacture or beer in bottles and under labels
substantially identical with or like the said bottles and labels of
plaintiff San Miguel Corporation employed for that purpose, or
substantially identical with or like the bottles and labels now
employed by the defendant for that purpose, or in bottles or under
labels which are calculated to deceive purchasers and consumers into
the belief that the beer if the product of the plaintiff or which will
enable others to substitute, sell or palm off the said beer of the
defendant as and for the beer of the plaintiff-complainant.
(2) The defendant Asia Brewery Inc. is hereby ordered 2 to recall all its
products bearing the mark Beer Pale Pilsen from its retailers and
deliver these as well as all labels, signs, prints, packages, wrappers,
receptacles and advertisements bearing the infringing mark and all
plates, molds, materials and other means of making the same to the
Court authorized to execute this judgment for destruction.
(3) The defendant is hereby ordered to pay plaintiff the sum of Two
Million Pesos (P2,000,000.00) as moral damages and Half a Million
Pesos (P500,000.00) by way of exemplary damages.
(4) The defendant is further ordered to pay the plaintiff attorney's
fees in the amount of P250,000.00 plus costs of this suit.
In due time, ABI appealed to this Court by a petition
for certiorari under Rule 45 of the Rules of Court. The lone issue in
this appeal is whether ABI infringes SMC's trademark: San Miguel Pale
Pilsen with Rectangular Hops and Malt Design, and thereby commits
unfair competition against the latter. It is a factual issue (Phil. Nut
Industry Inc. v. Standard Brands Inc., 65 SCRA 575) and as a general
rule, the findings of the Court of Appeals upon factual questions are
conclusive and ought not to be disturbed by us. However, there are
exceptions to this general rule, and they are:
(1) When the conclusion is grounded entirely on speculation,
surmises and conjectures;
(2) When the inference of the Court of Appeals from its findings of
fact is manifestly mistaken, absurd and impossible;
(3) Where there is grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the appellate court, in making its findings, went beyond the
issues of the case, and the same are contrary to the admissions of
both the appellant and the appellee;
(6) When the findings of said court are contrary to those of the trial
court;
60
(7) When the findings are without citation of specific evidence on
which they are based;
(8) When the facts set forth in the petition as well as in the petitioner's
main and reply briefs are not disputed by the respondents; and
(9) When the findings of facts of the Court of Appeals are premised
on the absence of evidence and are contradicted on record. (Reynolds
Philippine Corporation vs. Court of Appeals, 169 SCRA 220, 223 citing,
Mendoza vs. Court of Appeals, 156 SCRA 597; Manlapaz vs. Court of
Appeals, 147 SCRA 238; Sacay vs. Sandiganbayan, 142 SCRA 593, 609;
Guita vs. CA, 139 SCRA 576; Casanayan vs. Court of Appeals, 198 SCRA
333, 336; also Apex Investment and Financing Corp. vs. IAC, 166 SCRA
458 [citing Tolentino vs. De Jesus, 56 SCRA 167; Carolina Industries,
Inc. vs. CMS Stock Brokerage, Inc., 97 SCRA 734; Manero vs. CA, 102
SCRA 817; and Moran, Jr. vs. CA, 133 SCRA 88].)
Under any of these exceptions, the Court has to review the evidence
in order to arrive at the correct findings based on the record (Roman
Catholic Bishop of Malolos, Inc. vs. IAC, 191 SCRA 411, 420.) Where
findings of the Court of Appeals and trial court are contrary to each
other, the Supreme Court may scrutinize the evidence on record.
(Cruz vs. CA, 129 SCRA 222, 227.)
The present case is one of the exceptions because there is no
concurrence between the trial court and the Court of Appeals on the
lone factual issue of whether ABI, by manufacturing and selling its
BEER PALE PILSEN in amber colored steinie bottles of 320 ml. capacity
with a white painted rectangular label has committed trademark
infringement and unfair competition against SMC.
Infringement of trademark is a form of unfair competition (Clarke vs.
Manila Candy Co., 36 Phil. 100, 106). Sec. 22 of Republic Act No. 166,
otherwise known as the Trademark Law, defines what constitutes
infringement:
Sec. 22. Infringement, what constitutes. — Any person who shall use,
without the consent of the registrant, any reproduction, counterfeit,
copy or colorable imitation of any registered mark or trade-name in
connection with the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely
to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services, or identity of such
business; or reproduce, counterfeit, copy or colorably imitate any
such mark or trade-name and apply such reproduction, counterfeit,
copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business or services, shall be liable
to a civil action by the registrant for any or all of the remedies herein
provided. (Emphasis supplied.)
This definition implies that only registered trade marks, trade names
and service marks are protected against infringement or
unauthorized use by another or others. The use of someone else's
registered trademark, trade name or service mark is unauthorized,
hence, actionable, if it is done "without the consent of the registrant."
(Ibid.)
The registered trademark of SMC for its pale pilsen beer is:
San Miguel Pale Pilsen With Rectangular Hops and Malt
Design. (Philippine Bureau of Patents, Trademarks and Technology
Transfer Trademark Certificate of Registration No. 36103, dated 23
Oct. 1986,
(p. 174, Rollo.)
As described by the trial court in its decision (Page 177, Rollo):
. . . . a rectangular design [is] bordered by what appears to be minute
grains arranged in rows of three in which there appear in each corner
hop designs. At the top is a phrase written in small print "Reg. Phil.
Pat. Off." and at the bottom "Net Contents: 320 Ml." The dominant
feature is the phrase "San Miguel" written horizontally at the upper
portion. Below are the words "Pale Pilsen" written diagonally across
the middle of the rectangular design. In between is a coat of arms and
the phrase "Expertly Brewed." The "S" in "San" and the "M" of
"Miguel," "P" of "Pale" and "Pilsen" are written in Gothic letters with
fine strokes of serifs, the kind that first appeared in the 1780s in
England and used for printing German as distinguished from Roman
and Italic. Below "Pale Pilsen" is the statement "And Bottled by" (first
line, "San Miguel Brewery" (second line), and "Philippines" (third
line). (p. 177, Rollo; Emphasis supplied.)
On the other hand, ABI's trademark, as described by the trial court,
consists of:
. . . a rectangular design bordered by what appear to
be buds of flowers with leaves. The dominant feature is "Beer"
written across the upper portion of the rectangular design. The
phrase "Pale Pilsen" appears immediately below in smaller block
letters. To the left is a hop design and to the right, written in small
prints, is the phrase "Net Contents 320 ml." Immediately below "Pale
Pilsen" is the statement written in three lines "Especially brewed and
bottled by" (first line), "Asia Brewery Incorporated" (second line), and
"Philippines" (third line), (p. 177, Rollo; Emphasis supplied.)
Does ABI's BEER PALE PILSEN label or "design" infringe upon SMC's
SAN MIGUEL PALE PILSEN WITH RECTANGULAR MALT AND HOPS
DESIGN? The answer is "No."
Infringement is determined by the "test of dominancy" rather than
by differences or variations in the details of one trademark and of
another. The rule was formulated in Co Tiong Sa vs. Director of
Patents, 95 Phil. 1, 4 (1954); reiterated in Lim Hoa vs. Director of
Patents, 100 Phil. 214, 216-217 (1956), thus:
It has been consistently held that the question of infringement of a
trademark is to be determined by the test of dominancy. Similarity in
size, form and color, while relevant, is not conclusive. If the competing
trademark contains the main or essential or dominant features of
another, and confusion and deception is likely to result, infringement
takes place. Duplication or imitation is not necessary; nor it is
necessary that the infringing label should suggest an effort to imitate.
[C. Neilman Brewing Co. vs. Independent Brewing Co., 191 F., 489,
495, citing Eagle White Lead Co., vs. Pflugh (CC) 180 Fed. 579]. The
question at issue in cases of infringement of trademarks is whether
the use of the marks involved would be likely to cause confusion or
mistakes in the mind of the public or deceive purchasers. (Auburn
Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; . . . .)
(Emphasis supplied.)
In Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272, 275, the test
was similarity or "resemblance between the two (trademarks) such as
would be likely to cause the one mark to be mistaken for the other. .
. . [But] this is not such similitude as amounts to identity."
61
In Phil. Nut Industry Inc. vs. Standard Brands Inc., 65 SCRA 575, the
court was more specific: the test is "similarity in the dominant
features of the trademarks."
What are the dominant features of the competing trademarks
before us?
There is hardly any dispute that the dominant feature of SMC's
trademark is the name of the product: SAN MIGUEL PALE PILSEN,
written in white Gothic letters with elaborate serifs at the beginning
and end of the letters "S" and "M" on an amber background across
the upper portion of the rectangular design.
On the other hand, the dominant feature of ABI's trademark is the
name: BEER PALE PILSEN, with the word "Beer" written in large
amber letters, larger than any of the letters found in the SMC label.
The trial court perceptively observed that the word "BEER" does not
appear in SMC's trademark, just as the words "SAN MIGUEL" do not
appear in ABI's trademark. Hence, there is absolutely no similarity in
the dominant features of both trademarks.
Neither in sound, spelling or appearance can BEER PALE PILSEN be
said to be confusingly similar to SAN MIGUEL PALE PILSEN. No one
who purchases BEER PALE PILSEN can possibly be deceived that it is
SAN MIGUEL PALE PILSEN. No evidence whatsoever was presented by
SMC proving otherwise.
Besides the dissimilarity in their names, the following other
dissimilarities in the trade dress or appearance of the competing
products abound:
(1) The SAN MIGUEL PALE PILSEN bottle has a slender tapered neck.
The BEER PALE PILSEN bottle has a fat, bulging neck.
(2) The words "pale pilsen" on SMC's label are printed in bold and
laced letters along a diagonal band, whereas the words "pale pilsen"
on ABI's bottle are half the size and printed in slender block letters on
a straight horizontal band. (See Exhibit "8-a".).
(3) The names of the manufacturers are prominently printed on their
respective bottles.
SAN MIGUEL PALE PILSEN is "Bottled by the San Miguel Brewery,
Philippines," whereas BEER PALE PILSEN is "Especially brewed and
bottled by Asia Brewery Incorporated, Philippines."
(4) On the back of ABI's bottle is printed in big, bold letters, under a
row of flower buds and leaves, its copyrighted slogan:
"BEER NA BEER!"
Whereas SMC's bottle carries no slogan.
(5) The back of the SAN MIGUEL PALE PILSEN bottle carries the SMC
logo, whereas the BEER PALE PILSEN bottle has no logo.
(6) The SAN MIGUEL PALE PILSEN bottle cap is stamped with a coat of
arms and the words "San Miguel Brewery Philippines" encircling the
same.
The BEER PALE PILSEN bottle cap is stamped with the name "BEER" in
the center, surrounded by the words "Asia Brewery Incorporated
Philippines."
(7) Finally, there is a substantial price difference between BEER PALE
PILSEN (currently at P4.25 per bottle) and SAN MIGUEL PALE PILSEN
(currently at P7.00 per bottle). One who pays only P4.25 for a bottle
of beer cannot expect to receive San Miguel Pale Pilsen from the
storekeeper or bartender.
PALE PILSEN
The fact that the words pale pilsen are part of ABI's trademark does
not constitute an infringement of SMC's trademark: SAN MIGUEL
PALE PILSEN, for "pale pilsen" are generic words descriptive of the
color ("pale"), of a type of beer ("pilsen"), which is a light bohemian
beer with a strong hops flavor that originated in the City of Pilsen in
Czechoslovakia and became famous in the Middle Ages. (Webster's
Third New International Dictionary of the English Language,
Unabridged. Edited by Philip Babcock Gove. Springfield, Mass.: G & C
Merriam Co., [c] 1976, page 1716.) "Pilsen" is a "primarily
geographically descriptive word," (Sec. 4, subpar. [e] Republic Act
No. 166, as inserted by Sec. 2 of R.A. No. 638) hence, non-registerable
and not appropriable by any beer manufacturer
. The Trademark Law provides:
Sec. 4. . . .. The owner of trade-mark, trade-name or service-mark
used to distinguish his goods, business or services from the goods,
business or services of others shall have the right to register the same
[on the principal register], unless it:
xxx xxx xxx
(e) Consists of a mark or trade-name which, when applied to or used
in connection with the goods, business or services of the applicant
is merely descriptive or deceptively misdescriptive of them, or when
applied to or used in connection with the goods, business or services
of the applicant is primarily geographically descriptive or deceptively
misdescriptive of them, or is primarily merely a surname." (Emphasis
supplied.)
The words "pale pilsen" may not be appropriated by SMC for its
exclusive use even if they are part of its registered trademark: SAN
MIGUEL PALE PILSEN, any more than such descriptive words as
"evaporated milk," "tomato ketchup," "cheddar cheese," "corn
flakes" and "cooking oil" may be appropriated by any single
manufacturer of these food products, for no other reason than that
he was the first to use them in his registered trademark.
In Masso Hermanos, S.A. vs. Director of Patents, 94 Phil. 136, 139
(1953), it was held that a dealer in shoes cannot register "Leather
Shoes" as his trademark because that would be merely descriptive
and it would be unjust to deprive other dealers in leather shoes of the
right to use the same words with reference to their merchandise. No
one may appropriate generic or descriptive words. They belong to the
public domain (Ong Ai Gui vs. Director of Patents, 96 Phil. 673, 676
[1955]):
A word or a combination of words which is merely descriptive of an
article of trade, or of its composition, characteristics, or qualities,
cannot be appropriated and protected as a trademark to the
exclusion of its use by others. . . . inasmuch as all persons have an
equal right to produce and vend similar articles, they also have the
right to describe them properly and to use any appropriate language
or words for that purpose, and no person can appropriate to himself
exclusively any word or expression, properly descriptive of the article,
its qualities, ingredients or characteristics, and thus limit other
persons in the use of language appropriate to the description of their
manufactures, the right to the use of such language being common to
all. This rule excluding descriptive terms has also been held to apply
to trade-names. As to whether words employed fall within this
62

prohibition, it is said that the true test is not whether
they are exhaustively descriptive of the article designated, but
whether in themselves, and as they are commonly used by those who
understand their meaning, they are reasonably indicative and
descriptive of the thing intended. If they are thus descriptive, and not
arbitrary, they cannot be appropriated from general use and become
the exclusive property of anyone. (52 Am. Jur. 542-543.)
. . . . Others may use the same or similar descriptive word in
connection with their own wares, provided they take proper steps to
prevent the public being deceived. (Richmond Remedies Co. vs. Dr.
Miles Medical Co., 16 E. [2d] 598.)
. . . . A descriptive word may be admittedly distinctive, especially if the
user is the first creator of the article. It will, however, be denied
protection, not because it lacks distinctiveness, but rather because
others are equally entitled to its use. (2 Callman. Unfair Competition
and Trademarks, pp. 869-870.)" (Emphasis supplied.)
The circumstance that the manufacturer of BEER PALE PILSEN, Asia
Brewery Incorporated, has printed its name all over the bottle of its
beer product: on the label, on the back of the bottle, as well as on the
bottle cap, disproves SMC's charge that ABI dishonestly and
fraudulently intends to palm off its BEER PALE PILSEN as SMC's
product. In view of the visible differences between the two products,
the Court believes it is quite unlikely that a customer of average
intelligence would mistake a bottle of BEER PALE PILSEN for SAN
MIGUEL PALE PILSEN.
The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN is
bottled in amber-colored steinie bottles of 320 ml. capacity and is
also advertised in print, broadcast, and television media, does not
necessarily constitute unfair competition.
Unfair competition is the employment of deception or any other
means contrary to good faith by which a person shall pass off the
goods manufactured by him or in which he deals, or his business, or
services, for those of another who has already established goodwill
for his similar goods, business or services, or any acts calculated to
produce the same result. (Sec. 29, Republic Act No. 166, as amended.)
The law further enumerates the more common ways of committing
unfair competition, thus:
Sec. 29. . . .
In particular, and without in any way limiting the scope of unfair
competition, the following shall be deemed guilty of unfair
competition:
(a) Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as to
the goods themselves or in the wrapping of the packages in which
they are contained, or the devices or words thereon, or in any other
feature of their appearance, which would be likely to influence
purchasers to believe that the goods offered are those of a
manufacturer or dealer other than the actual manufacturer or dealer,
or who otherwise clothes the goods with such appearance as shall
deceive the public and defraud another of his legitimate trade, or any
subsequent vendor of such goods or any agent of any vendor engaged
in selling such goods with a like purpose.
(b) Any person who by any artifice, or device, or who employs any
other means calculated to induce the false belief that such person is
offering the services of another who has identified such services in
the mind of the public; or
(c) Any person who shall make any false statement in the course of
trade or who shall commit any other act contrary to good faith of a
nature calculated to discredit the goods, business or services of
another.
In this case, the question to be determined is whether ABI is using a
name or mark for its beer that has previously come to designate
SMC's beer, or whether ABI is passing off its BEER PALE PILSEN as
SMC's SAN MIGUEL PALE PILSEN.
. . ..The universal test question is whether the public is likely to be
deceived. Nothing less than conduct tending to pass off one man's
goods or business as that of another will constitute unfair
competition. Actual or probable deception and confusion on the part
of the customers by reason of defendant's practices must always
appear. (Shell Co., of the Philippines, Ltd. vs. Insular Petroleum
Refining Co. Ltd. et al., 120 Phil. 434, 439.)
The use of ABI of the steinie bottle, similar but not identical to the
SAN MIGUEL PALE PILSEN bottle, is not unlawful. As pointed out by
ABI's counsel, SMC did not invent but merely borrowed the steinie
bottle from abroad and it claims neither patent nor trademark
protection for that bottle shape and design. (See rollo, page 55.) The
Cerveza Especial and the Efes Pale Pilsen use the "steinie" bottle. (See
Exhibits 57-D, 57-E.) The trial court found no infringement of SMC's
bottle —
The court agrees with defendant that there is no infringement of
plaintiff's bottle, firstly, because according to plaintiff's witness
Deogracias Villadolid, it is a standard type of bottle called steinie, and
to witness Jose Antonio Garcia, it is not a San Miguel Corporation
design but a design originally developed in the United States by the
Glass Container Manufacturer's Institute and therefore lacks
exclusivity. Secondly, the shape was never registered as a trademark.
Exhibit "C" is not a registration of a beer bottle design required under
Rep. Act 165 but the registration of the name and other marks of
ownership stamped on containers as required by Rep. Act 623.
Thirdly, the neck of defendant's bottle is much larger and has a
distinct bulge in its uppermost part. (p. 186, Rollo.)
The petitioner's contention that bottle size, shape and color may not
be the exclusive property of any one beer manufacturer is well
taken. SMC's being the first to use the steinie bottle does not give
SMC a vested right to use it to the exclusion of everyone else. Being
of functional or common use, and not the exclusive invention of any
one, it is available to all who might need to use it within the
industry. Nobody can acquire any exclusive right to market articles
supplying simple human needs in containers or wrappers of the
general form, size and character commonly and immediately used in
marketing such articles (Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190, 194-
195.)
. . . protection against imitation should be properly confined to
nonfunctional features. Even if purely functional elements are
63
slavishly copied, the resemblance will not support an action for unfair
competition, and the first user cannot claim secondary meaning
protection. Nor can the first user predicate his claim to protection on
the argument that his business was established in reliance on any
such unpatented nonfunctional feature, even "at large expenditure of
money." (Callman Unfair Competition, Trademarks and Monopolies,
Sec. 19.33 [4th Ed.].) (Petition for Review, p. 28.)
ABI does not use SMC's steinie bottle. Neither did ABI copy it. ABI
makes its own steinie bottle which has a fat bulging neck to
differentiate it from SMC's bottle. The amber color is a functional
feature of the beer bottle. As pointed out by ABI, all bottled beer
produced in the Philippines is contained and sold in amber-colored
bottles because amber is the most effective color in preventing
transmission of light and provides the maximum protection to beer.
As was ruled in California Crushed Fruit Corporation vs. Taylor B. and
Candy Co., 38 F2d 885, a merchant cannot be enjoined from using a
type or color of bottle where the same has the useful purpose of
protecting the contents from the deleterious effects of light rays.
Moreover, no one may have a monopoly of any color. Not only beer,
but most medicines, whether in liquid or tablet form, are sold in
amber-colored bottles.
That the ABI bottle has a 320 ml. capacity is not due to a desire to
imitate SMC's bottle because that bottle capacity is the standard
prescribed under Metrication Circular No. 778, dated 4 December
1979, of the Department of Trade, Metric System Board.
With regard to the white label of both beer bottles, ABI explained
that it used the color white for its label because white presents the
strongest contrast to the amber color of ABI's bottle; it is also the
most economical to use on labels, and the easiest to "bake" in the
furnace (p. 16, TSN of September 20, 1988). No one can have a
monopoly of the color amber for bottles, nor of white for labels, nor
of the rectangular shape which is the usual configuration of labels.
Needless to say, the shape of the bottle and of the label is
unimportant. What is all important is the name of the product written
on the label of the bottle for that is how one beer may be
distinguished form the others.
In Dy Buncio v. Tan Tiao Bok, 42 Phil. 190, 196-197, where two
competing tea products were both labelled as Formosan tea, both
sold in 5-ounce packages made of ordinary wrapping paper of
conventional color, both with labels containing designs drawn in
green ink and Chinese characters written in red ink, one label showing
a double-decked jar in the center, the other, a flower pot, this court
found that the resemblances between the designs were not sufficient
to mislead the ordinary intelligent buyer, hence, there was no unfair
competition. The Court held:
. . . . In order that there may be deception of the buying public in the
sense necessary to constitute unfair competition, it is necessary to
suppose a public accustomed to buy, and therefore to some extent
familiar with, the goods in question. The test of fraudulent simulation
is to be found in the likelihood of the deception of persons in some
measure acquainted with an established design and desirous of
purchasing the commodity with which that design has been
associated. The test is not found in the deception, or possibility of the
deception, of the person who knows nothing about the design which
has been counterfeited, and who must be indifferent as between that
and the other. The simulation, in order to be objectionable, must be
such as appears likely to mislead the ordinarily intelligent buyer who
has a need to supply and is familiar with the article that he seeks to
purchase.
The main thrust of SMC's complaint if not infringement of its
trademark, but unfair competition arising form the allegedly
"confusing similarity" in the general appearance or trade dress of
ABI's BEER PALE PILSEN beside SMC's SAN MIGUEL PALE PILSEN (p.
209, Rollo)
SMC claims that the "trade dress" of BEER PALE PILSEN is
"confusingly similar" to its SAN MIGUEL PALE PILSEN because both
are bottled in 320 ml. steinie type, amber-colored bottles with white
rectangular labels.
However, when as in this case, the names of the competing products
are clearly different and their respective sources are prominently
printed on the label and on other parts of the bottle, mere similarity
in the shape and size of the container and label, does not constitute
unfair competition. The steinie bottle is a standard bottle for beer
and is universally used. SMC did not invent it nor patent it. The fact
that SMC's bottle is registered under R.A. No. 623 (as amended by RA
5700, An Act to Regulate the Use of Duly Stamped or Marked Bottles,
Boxes, Casks, Kegs, Barrels and Other Similar Containers) simply
prohibits manufacturers of other foodstuffs from the unauthorized
use of SMC's bottles by refilling these with their products. It was not
uncommon then for products such as patis (fish sauce) and toyo (soy
sauce) to be sold in recycled SAN MIGUEL PALE PILSEN bottles.
Registration of SMC's beer bottles did not give SMC a patent on the
steinie or on bottles of similar size, shape or color.
Most containers are standardized because they are usually made by
the same manufacturer. Milk, whether in powdered or liquid form, is
sold in uniform tin cans. The same can be said of the standard ketchup
or vinegar bottle with its familiar elongated neck. Many other grocery
items such as coffee, mayonnaise, pickles and peanut butter are sold
in standard glass jars. The manufacturers of these foodstuffs have
equal right to use these standards tins, bottles and jars for their
products. Only their respective labels distinguish them from each
other. Just as no milk producer may sue the others for unfair
competition because they sell their milk in the same size and shape
of milk can which he uses, neither may SMC claim unfair competition
arising from the fact that ABI's BEER PALE PILSEN is sold, like SMC's
SAN MIGUEL PALE PILSEN in amber steinie bottles.
The record does not bear out SMC's apprehension that BEER PALE
PILSEN is being passed off as SAN MIGUEL PALE PILSEN. This is unlikely
to happen for consumers or buyers of beer generally order their beer
by brand. As pointed out by ABI's counsel, in supermarkets
and tiendas, beer is ordered by brand, and the customer surrenders
his empty replacement bottles or pays a deposit to guarantee the
return of the empties. If his empties are SAN MIGUEL PALE PILSEN, he
will get SAN MIGUEL PALE PILSEN as replacement. In sari-sari stores,
beer is also ordered from the tindera by brand. The same is true in
restaurants, pubs and beer gardens — beer is ordered from the
waiters by brand. (Op. cit. page 50.)
Considering further that SAN MIGUEL PALE PILSEN has virtually
monopolized the domestic beer market for the past hundred years,
those who have been drinking no other beer but SAN MIGUEL PALE
64
PILSEN these many years certainly know their beer too well to be
deceived by a newcomer in the market. If they gravitate to ABI's
cheaper beer, it will not be because they are confused or deceived,
but because they find the competing product to their taste.
Our decision in this case will not diminish our ruling in "Del Monte
Corporation vs. Court of Appeals and Sunshine Sauce Manufacturing
Industries," 181 SCRA 410, 419, 3 that:
. . . to determine whether a trademark has been infringed, we must
consider the mark as a whole and not as dissected. If the buyer is
deceived, it is attributable to the marks as a totality, not usually to
any part of it.
That ruling may not apply to all kinds of products. The Court itself
cautioned that in resolving cases of infringement and unfair
competition, the courts should "take into consideration several
factors which would affect its conclusion, to wit: the age, training and
education of the usual purchaser, the nature and cost of the article,
whether the article is bought for immediate consumption and also the
conditions under which it is usually purchased" (181 SCRA 410, 418-
419).
The Del Monte case involved catsup, a common household item
which is bought off the store shelves by housewives and house help
who, if they are illiterate and cannot identify the product by name or
brand, would very likely identify it by mere recollection of its
appearance. Since the competitor, Sunshine Sauce Mfg. Industries,
not only used recycled Del Monte bottles for its catsup (despite the
warning embossed on the bottles: "Del Monte Corporation. Not to be
refilled.") but also used labels which were "a colorable imitation" of
Del Monte's label, we held that there was infringement of Del
Monte's trademark and unfair competition by Sunshine.
Our ruling in Del Monte would not apply to beer which is not usually
picked from a store shelf but ordered by brand by the beer drinker
himself from the storekeeper or waiter in a pub or restaurant.

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

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

Petitioner ABI has neither infringed SMC's trademark nor committed

unfair competition with the latter's SAN MIGUEL PALE PILSEN
product. While its BEER PALE PILSEN admittedly competes with the
latter in the open market, that competition is neither unfair nor
fraudulent. Hence, we must deny SMC's prayer to suppress it.
WHEREFORE, finding the petition for review meritorious, the same is
hereby granted. The decision and resolution of the Court of Appeals
in CA-G.R. CV No. 28104 are hereby set aside and that of the trial court
is REINSTATED and AFFIRMED. Costs against the private respondent.
SO ORDERED.
Narvasa, C.J., Bidin, Regalado, Romero, Nocon, Bellosillo and Melo, JJ.,
concur.
Feliciano, J., took no part.

65

TESTS TO DETERMINE
CONFUSING SIMILARITY
BETWEEN MARKS
G.R. No. 154342 July 14, 2004
MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO,
INC., petitioner,
vs.
E. & J. GALLO WINERY and THE ANDRESONS GROUP,
INC., respondents.
DECISION
CORONA, J.:
In this petition for review on certiorari under Rule 45, petitioners
Mighty Corporation and La Campana Fabrica de Tabaco, Inc. (La
Campana) seek to annul, reverse and set aside: (a) the November 15,
2001 decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 65175
affirming the November 26, 1998 decision,2 as modified by the June
24, 1999 order,3 of the Regional Trial Court of Makati City, Branch 57
(Makati RTC) in Civil Case No. 93-850, which held petitioners liable
for, and permanently enjoined them from, committing trademark
infringement and unfair competition, and which ordered them to pay
damages to respondents E. & J. Gallo Winery (Gallo Winery) and The
Andresons Group, Inc. (Andresons); (b) the July 11, 2002 CA
resolution denying their motion for reconsideration 4and (c) the
aforesaid Makati RTC decision itself.
I.
The Factual Background
Respondent Gallo Winery is a foreign corporation not doing business
in the Philippines but organized and existing under the laws of the
State of California, United States of America (U.S.), where all its
wineries are located. Gallo Winery produces different kinds of wines
and brandy products and sells them in many countries under different
registered trademarks, including the GALLO and ERNEST & JULIO
GALLO wine trademarks.
Respondent domestic corporation, Andresons, has been Gallo
Winery’s exclusive wine importer and distributor in the Philippines
since 1991, selling these products in its own name and for its own
account.5
Gallo Winery’s GALLO wine trademark was registered in the principal
register of the Philippine Patent Office (now Intellectual Property
Office) on November 16, 1971 under Certificate of Registration No.
17021 which was renewed on November 16, 1991 for another 20
years.6 Gallo Winery also applied for registration of its ERNEST &
JULIO GALLO wine trademark on October 11, 1990 under Application
Serial No. 901011-00073599-PN but the records do not disclose if it
was ever approved by the Director of Patents.7
On the other hand, petitioners Mighty Corporation and La Campana
and their sister company, Tobacco Industries of the Philippines
(Tobacco Industries), are engaged in the cultivation, manufacture,
distribution and sale of tobacco products for which they have been
using the GALLO cigarette trademark since 1973. 8
The Bureau of Internal Revenue (BIR) approved Tobacco Industries’
use of GALLO 100’s cigarette mark on September 14, 1973 and GALLO
filter cigarette mark on March 26, 1976, both for the manufacture and
sale of its cigarette products. In 1976, Tobacco Industries filed its
manufacturer’s sworn statement as basis for BIR’s collection of
specific tax on GALLO cigarettes.9
On February 5, 1974, Tobacco Industries applied for, but eventually
did not pursue, the registration of the GALLO cigarette trademark in
the principal register of the then Philippine Patent Office.10
In May 1984, Tobacco Industries assigned the GALLO cigarette
trademark to La Campana which, on July 16, 1985, applied for
trademark registration in the Philippine Patent Office.11 On July 17,
1985, the National Library issued Certificate of Copyright Registration
No. 5834 for La Campana’s lifetime copyright claim over GALLO
cigarette labels.12
Subsequently, La Campana authorized Mighty Corporation to
manufacture and sell cigarettes bearing the GALLO trademark.13 BIR
approved Mighty Corporation’s use of GALLO 100’s cigarette brand,
under licensing agreement with Tobacco Industries, on May 18, 1988,
and GALLO SPECIAL MENTHOL 100’s cigarette brand on April 3,
1989.14
Petitioners claim that GALLO cigarettes have been sold in the
Philippines since 1973, initially by Tobacco Industries, then by La
Campana and finally by Mighty Corporation.15
On the other hand, although the GALLO wine trademark was
registered in the Philippines in 1971, respondents claim that they first
introduced and sold the GALLO and ERNEST & JULIO GALLO wines in
the Philippines circa1974 within the then U.S. military facilities only.
By 1979, they had expanded their Philippine market through
authorized distributors and independent outlets.16
Respondents claim that they first learned about the existence of
GALLO cigarettes in the latter part of 1992 when an Andresons
employee saw such cigarettes on display with GALLO wines in a Davao
supermarket wine cellar section.17 Forthwith, respondents sent a
demand letter to petitioners asking them to stop using the GALLO
trademark, to no avail.
II.
The Legal Dispute
On March 12, 1993, respondents sued petitioners in the Makati RTC
for trademark and tradename infringement and unfair competition,
with a prayer for damages and preliminary injunction.
Respondents charged petitioners with violating Article 6 bis of the Paris
Convention for the Protection of Industrial Property (Paris
Convention)18 and RA 166 (Trademark Law),19 specifically, Sections 22
and 23 (for trademark infringement),20 29 and 3021 (for unfair
competition and false designation of origin) and 37 (for tradename
infringement).22 They claimed that petitioners adopted the GALLO
trademark to ride on Gallo Winery’s GALLO and ERNEST & JULIO
GALLO trademarks’ established reputation and popularity, thus
causing confusion, deception and mistake on the part of the
purchasing public who had always associated GALLO and ERNEST &
JULIO GALLO trademarks with Gallo Winery’s wines. Respondents
prayed for the issuance of a writ of preliminary injunction and ex
66
parte restraining order, plus P2 million as actual and compensatory
damages, at least P500,000 as exemplary and moral damages, and at
least P500,000 as attorney’s fees and litigation expenses.23
In their answer, petitioners alleged, among other affirmative
defenses, that: petitioner’s GALLO cigarettes and Gallo Winery’s
wines were totally unrelated products; Gallo Winery’s GALLO
trademark registration certificate covered wines only, not cigarettes;
GALLO cigarettes and GALLO wines were sold through different
channels of trade; GALLO cigarettes, sold at P4.60 for GALLO filters
and P3 for GALLO menthols, were low-cost items compared to Gallo
Winery’s high-priced luxury wines which cost between P98
to P242.50; the target market of Gallo Winery’s wines was the middle
or high-income bracket with at least P10,000 monthly income while
GALLO cigarette buyers were farmers, fishermen, laborers and other
low-income workers; the dominant feature of the GALLO cigarette
mark was the rooster device with the manufacturer’s name clearly
indicated as MIGHTY CORPORATION while, in the case of Gallo
Winery’s wines, it was the full names of the founders-owners ERNEST
& JULIO GALLO or just their surname GALLO; by their inaction and
conduct, respondents were guilty of laches and estoppel; and
petitioners acted with honesty, justice and good faith in the exercise
of their right to manufacture and sell GALLO cigarettes.
In an order dated April 21, 1993, 24 the Makati RTC denied, for lack of
merit, respondent’s prayer for the issuance of a writ of preliminary
injunction,25 holding that respondent’s GALLO trademark registration
certificate covered wines only, that respondents’ wines and
petitioners’ cigarettes were not related goods and respondents failed
to prove material damage or great irreparable injury as required by
Section 5, Rule 58 of the Rules of Court.26
On August 19, 1993, the Makati RTC denied, for lack of merit,
respondents’ motion for reconsideration. The court reiterated that
respondents’ wines and petitioners’ cigarettes were not related
goods since the likelihood of deception and confusion on the part of
the consuming public was very remote. The trial court emphasized
that it could not rely on foreign rulings cited by respondents "because
the[se] cases were decided by foreign courts on the basis of unknown
facts peculiar to each case or upon factual surroundings which may
exist only within their jurisdiction. Moreover, there [was] no showing
that [these cases had] been tested or found applicable in our
jurisdiction."27
On February 20, 1995, the CA likewise dismissed respondents’
petition for review on certiorari, docketed as CA-G.R. No. 32626,
thereby affirming the Makati RTC’s denial of the application for
issuance of a writ of preliminary injunction against petitioners.28
After trial on the merits, however, the Makati RTC, on November 26,
1998, held petitioners liable for, and permanently enjoined them
from, committing trademark infringement and unfair competition
with respect to the GALLO trademark:
WHEREFORE, judgment is rendered in favor of the plaintiff (sic) and
against the defendant (sic), to wit:
a. permanently restraining and enjoining defendants, their
distributors, trade outlets, and all persons acting for them or under
their instructions, from (i) using E & J’s registered trademark GALLO
or any other reproduction, counterfeit, copy or colorable imitation of
said trademark, either singly or in conjunction with other words,
designs or emblems and other acts of similar nature, and (ii)
committing other acts of unfair competition against plaintiffs by
manufacturing and selling their cigarettes in the domestic or export
markets under the GALLO trademark.
b. ordering defendants to pay plaintiffs –
(i) actual and compensatory damages for the injury and prejudice and
impairment of plaintiffs’ business and goodwill as a result of the acts
and conduct pleaded as basis for this suit, in an amount equal to 10%
of FOURTEEN MILLION TWO HUNDRED THIRTY FIVE THOUSAND
PESOS (PHP14,235,000.00) from the filing of the complaint until fully
paid;
(ii) exemplary damages in the amount of PHP100,000.00;
(iii) attorney’s fees and expenses of litigation in the amount of
PHP1,130,068.91;
(iv) the cost of suit.
SO ORDERED."29
On June 24, 1999, the Makati RTC granted respondent’s motion for
partial reconsideration and increased the award of actual and
compensatory damages to 10% of P199,290,000 or P19,929,000.30
On appeal, the CA affirmed the Makati RTC decision and subsequently
denied petitioner’s motion for reconsideration.
III.
The Issues
Petitioners now seek relief from this Court contending that the CA did
not follow prevailing laws and jurisprudence when it held that: [a] RA
8293 (Intellectual Property Code of the Philippines [IP Code]) was
applicable in this case; [b] GALLO cigarettes and GALLO wines were
identical, similar or related goods for the reason alone that they were
purportedly forms of vice; [c] both goods passed through the same
channels of trade and [d] petitioners were liable for trademark
infringement, unfair competition and damages. 31
Respondents, on the other hand, assert that this petition which
invokes Rule 45 does not involve pure questions of law, and hence,
must be dismissed outright.
IV.
Discussion
THE EXCEPTIONAL CIRCUMSTANCES
IN THIS CASE OBLIGE THE COURT TO REVIEW
THE CA’S FACTUAL FINDINGS
As a general rule, a petition for review on certiorari under Rule 45
must raise only "questions of law"32 (that is, the doubt pertains to the
application and interpretation of law to a certain set of facts) and not
"questions of fact" (where the doubt concerns the truth or falsehood
of alleged facts),33 otherwise, the petition will be denied. We are not
a trier of facts and the Court of Appeals’ factual findings are generally
conclusive upon us.34
This case involves questions of fact which are directly related and
intertwined with questions of law. The resolution of the factual issues
concerning the goods’ similarity, identity, relation, channels of trade,
and acts of trademark infringement and unfair competition is greatly
dependent on the interpretation of applicable laws. The controversy
here is not simply the identity or similarity of both parties’ trademarks
but whether or not infringement or unfair competition was
committed, a conclusion based on statutory interpretation.
Furthermore, one or more of the following exceptional circumstances
oblige us to review the evidence on record: 35
(1) the conclusion is grounded entirely on speculation, surmises, and
conjectures;
(2) the inference of the Court of Appeals from its findings of fact is
manifestly mistaken, absurd and impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of facts;
67
(5) the appellate court, in making its findings, went beyond the issues
of the case, and the same are contrary to the admissions of both the
appellant and the appellee;
(6) the findings are without citation of specific evidence on which they
are based;
(7) the facts set forth in the petition as well as in the petitioner's main
and reply briefs are not disputed by the respondents; and
(8) the findings of fact of the Court of Appeals are premised on the
absence of evidence and are contradicted [by the evidence] on
record.36
In this light, after thoroughly examining the evidence on record,
weighing, analyzing and balancing all factors to determine whether
trademark infringement and/or unfair competition has been
committed, we conclude that both the Court of Appeals and the trial
court veered away from the law and well-settled jurisprudence.
Thus, we give due course to the petition.
THE TRADEMARK LAW AND THE PARIS
CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE
We note that respondents sued petitioners on March 12, 1993 for
trademark infringement and unfair competition committed during
the effectivity of the Paris Convention and the Trademark Law.
Yet, in the Makati RTC decision of November 26, 1998, petitioners
were held liable not only under the aforesaid governing laws but also
under the IP Code which took effect only on January 1, 1998, 37 or
about five years after the filing of the complaint:
Defendants’ unauthorized use of the GALLO trademark constitutes
trademark infringement pursuant to Section 22 of Republic Act No.
166, Section 155 of the IP Code, Article 6bis of the Paris Convention,
and Article 16 (1) of the TRIPS Agreement as it causes confusion,
deception and mistake on the part of the purchasing
public.38 (Emphasis and underscoring supplied)
The CA apparently did not notice the error and affirmed the Makati
RTC decision:
In the light of its finding that appellants’ use of the GALLO trademark
on its cigarettes is likely to create confusion with the GALLO
trademark on wines previously registered and used in the Philippines
by appellee E & J Gallo Winery, the trial court thus did not err in
holding that appellants’ acts not only violated the provisions of the
our trademark laws (R.A. No. 166 and R.A. Nos. (sic) 8293) but also
Article 6bis of the Paris Convention.39 (Emphasis and underscoring
supplied)
We therefore hold that the courts a quo erred in retroactively
applying the IP Code in this case.
It is a fundamental principle that the validity and obligatory force of a
law proceed from the fact that it has first been promulgated. A law
that is not yet effective cannot be considered as conclusively known
by the populace. To make a law binding even before it takes effect
may lead to the arbitrary exercise of the legislative power. 40 Nova
constitutio futuris formam imponere debet non praeteritis. A new
state of the law ought to affect the future, not the past. Any doubt
must generally be resolved against the retroactive operation of laws,
whether these are original enactments, amendments or
repeals.41 There are only a few instances when laws may be given
retroactive effect,42 none of which is present in this case.
The IP Code, repealing the Trademark Law,43 was approved on June 6,
1997. Section 241 thereof expressly decreed that it was to take effect
only on January 1, 1998, without any provision for retroactive
application. Thus, the Makati RTC and the CA should have limited the
consideration of the present case within the parameters of the
Trademark Law and the Paris Convention, the laws in force at the time
of the filing of the complaint.
DISTINCTIONS BETWEEN
TRADEMARK INFRINGEMENT
AND UNFAIR COMPETITION
Although the laws on trademark infringement and unfair competition
have a common conception at their root, that is, a person shall not be
permitted to misrepresent his goods or his business as the goods or
business of another, the law on unfair competition is broader and
more inclusive than the law on trademark infringement. The latter is
more limited but it recognizes a more exclusive right derived from the
trademark adoption and registration by the person whose goods or
business is first associated with it. The law on trademarks is thus a
specialized subject distinct from the law on unfair competition,
although the two subjects are entwined with each other and are dealt
with together in the Trademark Law (now, both are covered by the IP
Code). Hence, even if one fails to establish his exclusive property right
to a trademark, he may still obtain relief on the ground of his
competitor’s unfairness or fraud. Conduct constitutes unfair
competition if the effect is to pass off on the public the goods of one
man as the goods of another. It is not necessary that any particular
means should be used to this end.44
In Del Monte Corporation vs. Court of Appeals,45 we distinguished
trademark infringement from unfair competition:
(1) Infringement of trademark is the unauthorized use of a trademark,
whereas unfair competition is the passing off of one's goods as those
of another.
(2) In infringement of trademark fraudulent intent is unnecessary,
whereas in unfair competition fraudulent intent is essential.
(3) In infringement of trademark the prior registration of the
trademark is a prerequisite to the action, whereas in unfair
competition registration is not necessary.
Pertinent Provisions on Trademark
Infringement under the Paris
Convention and the Trademark Law
Article 6bis of the Paris Convention,46 an international agreement
binding on the Philippines and the United States (Gallo Winery’s
country of domicile and origin) prohibits "the [registration] or use of
a trademark which constitutes a reproduction, imitation or
translation, liable to create confusion, of a mark considered by the
competent authority of the country of registration or use to be well-
known in that country as being already the mark of a person entitled
to the benefits of the [Paris] Convention and used for identical
or similar goods. [This rule also applies] when the essential part of the
mark constitutes a reproduction of any such well-known mark or an
imitation liable to createconfusion therewith." There is no time limit
for seeking the prohibition of the use of marks used in bad faith. 47
Thus, under Article 6bis of the Paris Convention, the following are the
elements of trademark infringement:
(a) registration or use by another person of a trademark which is a
reproduction, imitation or translation liable to create confusion,
(b) of a mark considered by the competent authority of the country
of registration or use48 to be well-known in that country and is already
the mark of a person entitled to the benefits of the Paris Convention,
and
(c) such trademark is used for identical or similar goods.
On the other hand, Section 22 of the Trademark Law holds a person
liable for infringement when, among others, he "uses without the
68
consent of the registrant, any reproduction, counterfeit, copy or
colorable imitation of any registered mark or tradename in
connection with the sale, offering for sale, or advertising of any goods,
business or services or in connection with which such use is likely to
cause confusion or mistake or to deceive purchasers or others as to
the source or origin of such goods or services, or identity of such
business; or reproduce, counterfeit, copy or colorably imitate any
such mark or tradename and apply such reproduction, counterfeit,
copy or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business or services." 49 Trademark
registration and actual use are material to the complaining party’s
cause of action.
Corollary to this, Section 20 of the Trademark Law 50 considers the
trademark registration certificate as prima facieevidence of the
validity of the registration, the registrant’s ownership and exclusive
right to use the trademark in connection with the goods, business or
services as classified by the Director of Patents 51 and as specified in
the certificate, subject to the conditions and limitations stated
therein. Sections 2 and 2-A52 of the Trademark Law emphasize the
importance of the trademark’s actual use in commerce in the
Philippines prior to its registration. In the adjudication of trademark
rights between contending parties, equitable principles of laches,
estoppel, and acquiescence may be considered and applied. 53
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore,
the following constitute the elements of trademark infringement:
(a) a trademark actually used in commerce in the Philippines and
registered in the principal register of the Philippine Patent Office
(b) is used by another person in connection with the sale, offering for
sale, or advertising of any goods, business or services or in connection
with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods
or services, or identity of such business; or such trademark is
reproduced, counterfeited, copied or colorably imitated by another
person and such reproduction, counterfeit, copy or colorable
imitation is applied to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in
connection with such goods, business or services as to likely cause
confusion or mistake or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant
or assignee.
In summary, the Paris Convention protects well-known trademarks
only (to be determined by domestic authorities), while the Trademark
Law protects all trademarks, whether well-known or not, provided
that they have been registered and are in actual commercial use in
the Philippines. Following universal acquiescence and comity, in case
of domestic legal disputes on any conflicting provisions between the
Paris Convention (which is an international agreement) and the
Trademark law (which is a municipal law) the latter will prevail.54
Under both the Paris Convention and the Trademark Law, the
protection of a registered trademark is limited only to goods identical
or similar to those in respect of which such trademark is registered
and only when there is likelihood of confusion. Under both laws, the
time element in commencing infringement cases is material in
ascertaining the registrant’s express or implied consent to another’s
use of its trademark or a colorable imitation thereof. This is why
acquiescence, estoppel or laches may defeat the registrant’s
otherwise valid cause of action.
Hence, proof of all the elements of trademark infringement is a
condition precedent to any finding of liability.
THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.
By respondents’ own judicial admission, the GALLO wine trademark
was registered in the Philippines in November 1971 but the wine itself
was first marketed and sold in the country only in 1974 and only
within the former U.S. military facilities, and outside thereof, only in
1979. To prove commercial use of the GALLO wine trademark in the
Philippines, respondents presented sales invoice no. 29991 dated July
9, 1981 addressed to Conrad Company Inc., Makati, Philippines and
sales invoice no. 85926 dated March 22, 1996 addressed to
Andresons Global, Inc., Quezon City, Philippines. Both invoices were
for the sale and shipment of GALLO wines to the Philippines during
that period.55 Nothing at all, however, was presented to evidence the
alleged sales of GALLO wines in the Philippines in 1974 or, for that
matter, prior to July 9, 1981.
On the other hand, by testimonial evidence supported by the BIR
authorization letters, forms and manufacturer’s sworn statement, it
appears that petitioners and its predecessor-in-interest, Tobacco
Industries, have indeed been using and selling GALLO cigarettes in the
Philippines since 1973 or before July 9, 1981. 56
In Emerald Garment Manufacturing Corporation vs. Court of
Appeals,57 we reiterated our rulings in Pagasa Industrial Corporation
vs. Court of Appeals,58 Converse Rubber Corporation vs. Universal
Rubber Products, Inc.,59 Sterling Products International, Inc. vs.
Farbenfabriken Bayer Aktiengesellschaft,60 Kabushi Kaisha Isetan vs.
Intermediate Appellate Court,61 and Philip Morris vs. Court of
Appeals,62 giving utmost importance to the actual commercial useof
a trademark in the Philippines prior to its registration,
notwithstanding the provisions of the Paris Convention:
xxx xxx xxx
In addition to the foregoing, we are constrained to agree with
petitioner's contention that private respondent failed to prove prior
actual commercial use of its "LEE" trademark in the Philippines
before filing its application for registration with the BPTTT and
hence, has not acquired ownership over said mark.
Actual use in commerce in the Philippines is an essential
prerequisite for the acquisition of ownership over a
trademark pursuant to Sec. 2 and 2-A of the Philippine Trademark
Law (R.A. No. 166) x x x
xxx xxx xxx
The provisions of the 1965 Paris Convention for the Protection of
Industrial Property relied upon by private respondent and Sec. 21-A
of the Trademark Law (R.A. No. 166) were sufficiently expounded
upon and qualified in the recent case of Philip Morris, Inc. v. Court
of Appeals (224 SCRA 576 [1993]):
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirement of actual use in the
Philippines must subordinate an international agreement inasmuch
as the apparent clash is being decided by a municipal
tribunal (Mortisen vs. Peters, Great Britain, High Court of Judiciary of
Scotland, 1906, 8 Sessions, 93; Paras, International Law and World
Organization, 1971 Ed., p. 20). Withal, the fact that international law
has been made part of the law of the land does not by any means
imply the primacy of international law over national law in the
69
municipal sphere. Under the doctrine of incorporation as applied in
most countries, rules of international law are given a standing equal,
not superior, to national legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue
for infringement irrespective of lack of business activity in the
Philippines on account of Section 21-A of the Trademark Law but the
question of whether they have an exclusive right over their symbol
as to justify issuance of the controversial writ will depend on actual
use of their trademarks in the Philippines in line with Sections 2 and
2-A of the same law. It is thus incongruous for petitioners to claim
that when a foreign corporation not licensed to do business in the
Philippines files a complaint for infringement, the entity need not be
actually using the trademark in commerce in the Philippines. Such a
foreign corporation may have the personality to file a suit for
infringement but it may not necessarily be entitled to protection due
to absence of actual use of the emblem in the local market.
xxx xxx xxx
Undisputably, private respondent is the senior registrant, having
obtained several registration certificates for its various trademarks
"LEE," "LEE RIDERS," and "LEESURES" in both the supplemental and
principal registers, as early as 1969 to 1973. However, registration
alone will not suffice. In Sterling Products International, Inc. v.
Farbenfabriken Bayer Aktiengesellschaft (27 SCRA 1214 [1969];
Reiterated inKabushi Isetan vs. Intermediate Appellate Court (203
SCRA 583 [1991]) we declared:
xxx xxx xxx
A rule widely accepted and firmly entrenched because it has come
down through the years is that actual use in commerce or business is
a prerequisite in the acquisition of the right of ownership over a
trademark.
xxx xxx xxx
The credibility placed on a certificate of registration of one's
trademark, or its weight as evidence of validity, ownership and
exclusive use, is qualified. A registration certificate serves merely
as prima facieevidence. It is not conclusive but can and may be
rebutted by controverting evidence.
xxx xxx xxx
In the case at bench, however, we reverse the findings of the Director
of Patents and the Court of Appeals. After a meticulous study of the
records, we observe that the Director of Patents and the Court of
Appeals relied mainly on the registration certificates as proof of use
by private respondent of the trademark "LEE" which, as we have
previously discussed are not sufficient. We cannot give credence to
private respondent's claim that its "LEE" mark first reached the
Philippines in the 1960's through local sales by the Post Exchanges
of the U.S. Military Bases in the Philippines (Rollo, p. 177) based as
it was solely on the self-serving statements of Mr. Edward Poste,
General Manager of Lee (Phils.), Inc., a wholly owned subsidiary of
the H.D. Lee, Co., Inc., U.S.A., herein private respondent. (Original
Records, p. 52) Similarly, we give little weight to the numerous
vouchers representing various advertising expenses in the
Philippines for "LEE" products. It is well to note that these expenses
were incurred only in 1981 and 1982 by LEE (Phils.), Inc. after it
entered into a licensing agreement with private respondent on 11
May 1981. (Exhibit E)
On the other hand, petitioner has sufficiently shown that it has been
in the business of selling jeans and other garments adopting its
"STYLISTIC MR. LEE" trademark since 1975 as evidenced by
appropriate sales invoices to various stores and retailers. (Exhibit 1-e
to 1-o)
Our rulings in Pagasa Industrial Corp. v. Court of Appeals (118 SCRA
526 [1982]) and Converse Rubber Corp. v. Universal Rubber Products,
Inc., (147 SCRA 154 [1987]), respectively, are instructive:
The Trademark Law is very clear. It requires actual commercial use of
the mark prior to its registration. There is no dispute that respondent
corporation was the first registrant, yet it failed to fully substantiate
its claim that it used in trade or business in the Philippines the
subject mark; it did not present proof to invest it with exclusive,
continuous adoption of the trademark which should consist among
others, of considerable sales since its first use. The invoices
submitted by respondent which were dated way back in 1957 show
that the zippers sent to the Philippines were to be used as "samples"
and "of no commercial value." The evidence for respondent must be
clear, definite and free from inconsistencies. "Samples" are not for
sale and therefore, the fact of exporting them to the Philippines
cannot be considered to be equivalent to the "use" contemplated by
law. Respondent did not expect income from such "samples." There
were no receipts to establish sale, and no proof were presented to
show that they were subsequently sold in the Philippines.
xxx xxx xxx
For lack of adequate proof of actual use of its trademark in the
Philippines prior to petitioner's use of its own mark and for failure
to establish confusing similarity between said trademarks, private
respondent's action for infringement must necessarily
fail. (Emphasis supplied.)
In view of the foregoing jurisprudence and respondents’ judicial
admission that the actual commercial use of the GALLO wine
trademark was subsequent to its registration in 1971 and to Tobacco
Industries’ commercial use of the GALLO cigarette trademark in 1973,
we rule that, on this account, respondents never enjoyed the
exclusive right to use the GALLO wine trademark to the prejudice of
Tobacco Industries and its successors-in-interest, herein petitioners,
either under the Trademark Law or the Paris Convention.
Respondents’ GALLO trademark
registration is limited to wines only
We also note that the GALLO trademark registration certificates in the
Philippines and in other countries expressly state that they
cover wines only, without any evidence or indication that registrant
Gallo Winery expanded or intended to expand its business to
cigarettes.63
Thus, by strict application of Section 20 of the Trademark Law, Gallo
Winery’s exclusive right to use the GALLO trademark should be
limited to wines, the only product indicated in its registration
certificates. This strict statutory limitation on the exclusive right to
use trademarks was amply clarified in our ruling in Faberge, Inc. vs.
Intermediate Appellate Court:64
Having thus reviewed the laws applicable to the case before Us, it is
not difficult to discern from the foregoing statutory enactments that
private respondent may be permitted to register the trademark
"BRUTE" for briefs produced by it notwithstanding petitioner's
vehement protestations of unfair dealings in marketing its own set of
items which are limited to: after-shave lotion, shaving cream,
deodorant, talcum powder and toilet soap. Inasmuch as petitioner
has not ventured in the production of briefs, an item which is not
listed in its certificate of registration, petitioner cannot and should
not be allowed to feign that private respondent had invaded
petitioner's exclusive domain. To be sure, it is significant that
70
petitioner failed to annex in its Brief the so-called "eloquent proof
that petitioner indeed intended to expand its mark ‘BRUT’ to other
goods" (Page 27, Brief for the Petitioner; page 202, Rollo). Even then,
a mere application by petitioner in this aspect does not suffice and
may not vest an exclusive right in its favor that can ordinarily be
protected by the Trademark Law. In short, paraphrasing Section 20
of the Trademark Law as applied to the documentary evidence
adduced by petitioner, the certificate of registration issued by the
Director of Patents can confer upon petitioner the exclusive right to
use its own symbol only to those goods specified in the
certificate, subject to any conditions and limitations stated therein.
This basic point is perhaps the unwritten rationale of Justice Escolin
in Philippine Refining Co., Inc. vs. Ng Sam (115 SCRA 472 [1982]),
when he stressed the principle enunciated by the United States
Supreme Court in American Foundries vs. Robertson (269 U.S. 372,
381, 70 L ed 317, 46 Sct. 160) that one who has adopted and used a
trademark on his goods does not prevent the adoption and use of
the same trademark by others for products which are of a different
description. Verily, this Court had the occasion to observe in the 1966
case of George W. Luft Co., Inc. vs. Ngo Guan (18 SCRA 944 [1966])
that no serious objection was posed by the petitioner therein since
the applicant utilized the emblem "Tango" for no other product than
hair pomade in which petitioner does not deal.
This brings Us back to the incidental issue raised by petitioner which
private respondent sought to belie as regards petitioner's alleged
expansion of its business. It may be recalled that petitioner claimed
that it has a pending application for registration of the emblem "BRUT
33" for briefs (page 25, Brief for the Petitioner; page 202, Rollo) to
impress upon Us the Solomonic wisdom imparted by Justice JBL Reyes
in Sta. Ana vs. Maliwat (24 SCRA 1018 [1968]), to the effect that
dissimilarity of goods will not preclude relief if the junior user's
goods are not remote from any other product which the first user
would be likely to make or sell (vide, at page 1025). Commenting on
the former provision of the Trademark Law now embodied
substantially under Section 4(d) of Republic Act No. 166, as amended,
the erudite jurist opined that the law in point "does not require that
the articles of manufacture of the previous user and late user of the
mark should possess the same descriptive properties or should fall
into the same categories as to bar the latter from registering his mark
in the principal register." (supra at page 1026).
Yet, it is equally true that as aforesaid, the protective mantle of the
Trademark Law extends only to the goods used by the first user as
specified in the certificate of registration following the clear
message conveyed by Section 20.
How do We now reconcile the apparent conflict between Section
4(d) which was relied upon by Justice JBL Reyes in the Sta. Ana case
and Section 20? It would seem that Section 4(d) does not require
that the goods manufactured by the second user be related to the
goods produced by the senior user while Section 20 limits the
exclusive right of the senior user only to those goods specified in the
certificate of registration. But the rule has been laid down that the
clause which comes later shall be given paramount significance over
an anterior proviso upon the presumption that it expresses the latest
and dominant purpose. (Graham Paper Co. vs. National Newspapers
Asso. (Mo. App.) 193 S.W. 1003; Barnett vs. Merchant's L. Ins. Co., 87
Okl. 42; State ex nel Atty. Gen. vs. Toledo, 26 N.E., p. 1061; cited
by Martin, Statutory Construction Sixth ed., 1980 Reprinted, p. 144).
It ineluctably follows that Section 20 is controlling and, therefore,
private respondent can appropriate its symbol for the briefs it
manufactures because as aptly remarked by Justice Sanchez
in Sterling Products International Inc. vs. Farbenfabriken Bayer(27
SCRA 1214 [1969]):
"Really, if the certificate of registration were to be deemed as
including goods not specified therein, then a situation may arise
whereby an applicant may be tempted to register a trademark on
any and all goods which his mind may conceive even if he had never
intended to use the trademark for the said goods. We believe that
such omnibus registration is not contemplated by our Trademark
Law." (1226).
NO LIKELIHOOD OF CONFUSION, MISTAKE
OR DECEIT AS TO THE IDENTITY OR SOURCE
OF PETITIONERS’ AND RESPONDENTS’
GOODS OR BUSINESS
A crucial issue in any trademark infringement case is the likelihood of
confusion, mistake or deceit as to the identity, source or origin of the
goods or identity of the business as a consequence of using a certain
mark. Likelihood of confusion is admittedly a relative term, to be
determined rigidly according to the particular (and sometimes
peculiar) circumstances of each case. Thus, in trademark cases, more
than in other kinds of litigation, precedents must be studied in the
light of each particular case. 65
There are two types of confusion in
trademark infringement.
The first is "confusion of goods"
when an otherwise prudent purchaser is induced to purchase one
product in the belief that he is purchasing another, in which case
defendant’s goods are then bought as the plaintiff’s and its poor
quality reflects badly on the plaintiff’s reputation.
The other is "confusion of business"
wherein the goods of the parties are different but the defendant’s
product can reasonably (though mistakenly) be assumed to originate
from the plaintiff, thus deceiving the public into believing that there
is some connection between the plaintiff and defendant which, in
fact, does not exist.66
In determining the likelihood of confusion, the Court must consider:
[a] the resemblance between the trademarks;
[b] the similarity of the goods to which the trademarks are attached;
[c] the likely effect on the purchaser and
[d] the registrant’s express or implied consent and other fair and
equitable considerations.
IN THIS CASE
Petitioners and respondents both use "GALLO" in the labels of their
respective cigarette and wine products. But, as held in the following
cases, the use of an identical mark does not, by itself, lead to a legal
conclusion that there is trademark infringement:
(a) in Acoje Mining Co., Inc. vs. Director of Patent, 67 we
ordered the approval of Acoje Mining’s application for
registration of the trademark LOTUS for its soy sauce even
though Philippine Refining Company had prior registration
and use of such identical mark for its edible oil which, like
soy sauce, also belonged to Class 47;
71
 (b) in Philippine Refining Co., Inc. vs. Ng Sam and Director of
Patents,68 we upheld the Patent Director’s registration of
the same trademark CAMIA for Ng Sam’s ham under Class
47, despite Philippine Refining Company’s prior trademark
registration and actual use of such mark on its lard, butter,
cooking oil (all of which belonged to Class 47), abrasive
detergents, polishing materials and soaps;
(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals
and Santos Lim Bun Liong,69 we dismissed Hickok’s petition
to cancel private respondent’s HICKOK trademark
registration for its Marikina shoes as against petitioner’s
earlier registration of the same trademark for
handkerchiefs, briefs, belts and wallets;
(d) in Shell Company of the Philippines vs. Court of
Appeals,70 in a minute resolution, we dismissed the petition
for review for lack of merit and affirmed the Patent Office’s
registration of the trademark SHELL used in the cigarettes
manufactured by respondent Fortune Tobacco Corporation,
notwithstanding Shell Company’s opposition as the prior
registrant of the same trademark for its gasoline and other
petroleum products;
(e) in Esso Standard Eastern, Inc. vs. Court of Appeals,71 we
dismissed ESSO’s complaint for trademark infringement
against United Cigarette Corporation and allowed the latter
to use the trademark ESSO for its cigarettes, the same
trademark used by ESSO for its petroleum products, and
(f) in Canon Kabushiki Kaisha vs. Court of Appeals and NSR
Rubber Corporation,72 we affirmed the rulings of the Patent
Office and the CA that NSR Rubber Corporation could use
the trademark CANON for its sandals (Class 25) despite
Canon Kabushiki Kaisha’s prior registration and use of the
same trademark for its paints, chemical products, toner and
dyestuff (Class 2).
Colorable Imitation
Whether a trademark causes confusion and is likely to deceive the
public hinges on "colorable imitation"73 which has been defined as
"such similarity in form, content, words, sound, meaning, special
arrangement or general appearance of the trademark or tradename
in their overall presentation or in their essential and substantive and
distinctive parts as would likely mislead or confuse persons in the
ordinary course of purchasing the genuine article."74
TWO TESTS
Jurisprudence has developed two tests in determining similarity and
likelihood of confusion in trademark resemblance:75
(a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of
Appeals76 and other cases,77 and
(b) the Holistic or Totality Test used in Del Monte Corporation vs.
Court of Appeals78 and its preceding cases.79
The Dominancy Test
focuses on the similarity of the prevalent features of the competing
trademarks which might cause confusion or deception, and thus
infringement. If the competing trademark contains the main,
essential or dominant features of another, and confusion or
deception is likely to result, infringement takes place. Duplication or
imitation is not necessary; nor is it necessary that the infringing label
should suggest an effort to imitate. The question is whether the use
of the marks involved is likely to cause confusion or mistake in the
mind of the public or deceive purchasers.80
Holistic Test
On the other hand, the Holistic Test requires that the entirety of the
marks in question be considered in resolving confusing similarity.
Comparison of words is not the only determining factor. The
trademarks in their entirety as they appear in their respective labels
or hang tags must also be considered in relation to the goods to which
they are attached. The discerning eye of the observer must focus not
only on the predominant words but also on the other features
appearing in both labels in order that he may draw his conclusion
whether one is confusingly similar to the other.81In comparing the
resemblance or colorable imitation of marks, various factors have
been considered, such as the dominant color, style, size, form,
meaning of letters, words, designs and emblems used, the likelihood
of deception of the mark or name's tendency to confuse 82 and the
commercial impression likely to be conveyed by the trademarks if
used in conjunction with the respective goods of the parties. 83
IN THIS CASE
Applying the Dominancy and Holistic Tests, we find that the dominant
feature of the GALLO cigarette trademark is the device of a large
rooster facing left, outlined in black against a gold background. The
rooster’s color is either green or red – green for GALLO menthols and
red for GALLO filters. Directly below the large rooster device is the
word GALLO. The rooster device is given prominence in the GALLO
cigarette packs in terms of size and location on the labels.84
The GALLO mark appears to be a fanciful and arbitrary mark for the
cigarettes as it has no relation at all to the product but was chosen
merely as a trademark due to the fondness for fighting cocks of the
son of petitioners’ president. Furthermore, petitioners adopted
GALLO, the Spanish word for rooster, as a cigarette trademark to
appeal to one of their target markets,
the sabungeros (cockfight aficionados).85
Also, as admitted by respondents themselves,86 on the side of the
GALLO cigarette packs are the words "MADE BY MIGHTY
CORPORATION," thus clearly informing the public as to the identity of
the manufacturer of the cigarettes.
On the other hand, GALLO Winery’s wine and brandy labels are
diverse. In many of them, the labels are embellished with sketches of
buildings and trees, vineyards or a bunch of grapes while in a few, one
or two small roosters facing right or facing each other (atop the EJG
crest, surrounded by leaves or ribbons), with additional designs in
green, red and yellow colors, appear as minor features
thereof.87 Directly below or above these sketches is the entire printed
name of the founder-owners, "ERNEST & JULIO GALLO" or just their
surname "GALLO,"88which appears in different fonts, sizes, styles and
labels, unlike petitioners’ uniform casque-font bold-lettered GALLO
mark.
Moreover, on the labels of Gallo Winery’s wines are printed the words
"VINTED AND BOTTLED BY ERNEST & JULIO GALLO, MODESTO,
CALIFORNIA."89
72
The many different features like color schemes, art works and other
markings of both products drown out the similarity between them –
the use of the word “GALLO” ― a family surname for the Gallo
Winery’s wines and a Spanish word for rooster for petitioners’
cigarettes.
WINES AND CIGARETTES ARE NOT
IDENTICAL, SIMILAR, COMPETING OR
RELATED GOODS
Confusion of goods is evident where the litigants are actually in
competition; but confusion of business may arise between non-
competing interests as well.90
Thus, apart from the strict application of Section 20 of the Trademark
Law and Article 6bis of the Paris Convention which proscribe
trademark infringement not only of goods specified in the certificate
of registration but also of identical or similar goods, we have also
uniformly recognized and applied the modern concept of "related
goods."91Simply stated, when goods are so related that the public
may be, or is actually, deceived and misled that they come from the
same maker or manufacturer, trademark infringement occurs.92
Non-competing goods may be those which, though they are not in
actual competition, are so related to each other that it can reasonably
be assumed that they originate from one manufacturer, in which
case, confusion of business can arise out of the use of similar
marks.93 They may also be those which, being entirely unrelated,
cannot be assumed to have a common source; hence, there is no
confusion of business, even though similar marks are used.94 Thus,
there is no trademark infringement if the public does not expect the
plaintiff to make or sell the same class of goods as those made or sold
by the defendant.95
In resolving whether goods are related,96 several factors come into
play:
(a) the business (and its location) to which the goods belong
(b) the class of product to which the goods belong
(c) the product's quality, quantity, or size, including the nature of the
package, wrapper or container 97
(d) the nature and cost of the articles 98
(e) the descriptive properties, physical attributes or essential
characteristics with reference to their form, composition, texture or
quality
(f) the purpose of the goods99
(g) whether the article is bought for immediate consumption,100 that
is, day-to-day household items101
(h) the fields of manufacture102
(i) the conditions under which the article is usually purchased 103 and
(j) the channels of trade through which the goods flow, 104 how they
are distributed, marketed, displayed and sold.105
The wisdom of this approach is its recognition that each trademark
infringement case presents its own unique set of facts. No single
factor is preeminent, nor can the presence or absence of one
determine, without analysis of the others, the outcome of an
infringement suit. Rather, the court is required to sift the evidence
relevant to each of the criteria. This requires that the entire panoply
of elements constituting the relevant factual landscape be
comprehensively examined.106 It is a weighing and balancing process.
With reference to this ultimate question, and from a balancing of the
determinations reached on all of the factors, a conclusion is reached
whether the parties have a right to the relief sought.107
A very important circumstance though is whether there exists a
likelihood that an appreciable number of ordinarily prudent
purchasers will be misled, or simply confused, as to the source of the
goods in question.108 The "purchaser" is not the "completely unwary
consumer" but is the "ordinarily intelligent buyer" considering the
type of product involved.109 He is "accustomed to buy, and therefore
to some extent familiar with, the goods in question. The test of
fraudulent simulation is to be found in the likelihood of the deception
of some persons in some measure acquainted with an established
design and desirous of purchasing the commodity with which that
design has been associated. The test is not found in the deception, or
the possibility of deception, of the person who knows nothing about
the design which has been counterfeited, and who must be
indifferent between that and the other. The simulation, in order to be
objectionable, must be such as appears likely to mislead the ordinary
intelligent buyer who has a need to supply and is familiar with the
article that he seeks to purchase."110
Hence, in the adjudication of trademark infringement, we give due
regard to the goods’ usual purchaser’s character, attitude, habits,
age, training and education. 111
Applying these legal precepts to the present case, petitioner’s use of
the GALLO cigarette trademark is not likely to cause confusion or
mistake, or to deceive the "ordinarily intelligent buyer" of either
wines or cigarettes or both as to the identity of the goods, their source
and origin, or identity of the business of petitioners and respondents.
Obviously, wines and cigarettes are not identical or competing
products. Neither do they belong to the same class of goods.
Respondents’ GALLO wines belong to Class 33 under Rule 84[a]
Chapter III, Part II of the Rules of Practice in Trademark Cases while
petitioners’ GALLO cigarettes fall under Class 34.
We are mindful that product classification alone cannot serve as the
decisive factor in the resolution of whether or not wines and
cigarettes are related goods. Emphasis should be on the similarity of
the products involved and not on the arbitrary classification or
general description of their properties or characteristics. But the
mere fact that one person has adopted and used a particular
trademark for his goods does not prevent the adoption and use of the
same trademark by others on articles of a different description. 112
Both the Makati RTC and the CA held that wines and cigarettes are
related products because: (1) "they are related forms of vice, harmful
when taken in excess, and used for pleasure and relaxation" and (2)
"they are grouped or classified in the same section of supermarkets
and groceries."
We find these premises patently insufficient and too arbitrary to
support the legal conclusion that wines and cigarettes are related
products within the contemplation of the Trademark Law and the
Paris Convention.
First, anything –- not only wines and cigarettes ― can be used for
pleasure and relaxation and can be harmful when taken in excess.
Indeed, it would be a grave abuse of discretion to treat wines and
cigarettes as similar or related products likely to cause confusion just
because they are pleasure-giving, relaxing or potentially harmful.
Such reasoning makes no sense.
73
Second, it is common knowledge that supermarkets sell an infinite
variety of wholly unrelated products and the goods here involved,
wines and cigarettes, have nothing whatsoever in common with
respect to their essential characteristics, quality, quantity, size,
including the nature of their packages, wrappers or containers.113
Accordingly, the U.S. patent office and courts have consistently held
that the mere fact that goods are sold in one store under the same
roof does not automatically mean that buyers are likely to be
confused as to the goods’ respective sources, connections or
sponsorships. The fact that different products are available in the
same store is an insufficient standard, in and of itself, to warrant a
finding of likelihood of confusion.114
In this regard, we adopted the Director of Patents’ finding
in Philippine Refining Co., Inc. vs. Ng Sam and the Director of
Patents:115
In his decision, the Director of Patents enumerated the factors that
set respondent’s products apart from the goods of petitioner. He
opined and we quote:
"I have taken into account such factors as probable purchaser attitude
and habits, marketing activities, retail outlets, and commercial
impression likely to be conveyed by the trademarks if used in
conjunction with the respective goods of the parties, I believe that
ham on one hand, and lard, butter, oil, and soap on the other are
products that would not move in the same manner through the
same channels of trade. They pertain to unrelated fields of
manufacture, might be distributed and marketed under dissimilar
conditions, and are displayed separately even though they
frequently may be sold through the same retail food
establishments. Opposer’s products are ordinary day-to-day
household items whereas ham is not necessarily so. Thus, the goods
of the parties are not of a character which purchasers would likely
attribute to a common origin.
The observations and conclusion of the Director of Patents are
correct. The particular goods of the parties are so unrelated that
consumers, would not, in any probability mistake one as the source
of origin of the product of the other. (Emphasis supplied).
The same is true in the present case. Wines and cigarettes are non-
competing and are totally unrelated products not likely to cause
confusion vis-à-vis the goods or the business of the petitioners and
respondents.
Wines are bottled and consumed by drinking while cigarettes are
packed in cartons or packages and smoked. There is a whale of a
difference between their descriptive properties, physical attributes or
essential characteristics like form, composition, texture and quality.
GALLO cigarettes are inexpensive items while GALLO wines are not.
GALLO wines are patronized by middle-to-high-income earners while
GALLO cigarettes appeal only to simple folks like farmers, fishermen,
laborers and other low-income workers.116 Indeed, the big price
difference of these two products is an important factor in proving that
they are in fact unrelated and that they travel in different channels of
trade. There is a distinct price segmentation based on vastly different
social classes of purchasers.117
GALLO cigarettes and GALLO wines are not sold through the same
channels of trade. GALLO cigarettes are Philippine-made and
petitioners neither claim nor pass off their goods as imported or
emanating from Gallo Winery. GALLO cigarettes are distributed,
marketed and sold through ambulant and sidewalk vendors, small
local sari-saristores and grocery stores in Philippine rural areas,
mainly in Misamis Oriental, Pangasinan, Bohol, and Cebu. 118 On the
other hand, GALLO wines are imported, distributed and sold in the
Philippines through Gallo Winery’s exclusive contracts with a
domestic entity, which is currently Andresons. By respondents’ own
testimonial evidence, GALLO wines are sold in hotels, expensive bars
and restaurants, and high-end grocery stores and supermarkets, not
through sari-sari stores or ambulant vendors.119
Furthermore, the Makati RTC and the CA erred in relying on Carling
Brewing Company vs. Philip Morris, Inc.120 to support its finding that
GALLO wines and GALLO cigarettes are related goods. The courts a
quo should have taken into consideration the subsequent case of IDV
North America, Inc. and R & A Bailey Co. Limited vs. S & M Brands,
Inc.:121
IDV correctly acknowledges, however, that there is no per se rule that
the use of the same mark on alcohol and tobacco products always will
result in a likelihood of confusion. Nonetheless, IDV relies heavily on
the decision in John Walker & Sons, Ltd. vs. Tampa Cigar Co., 124 F.
Supp. 254, 256 (S.D. Fla. 1954), aff’d, 222 F. 2d 460 (5th Cir. 1955),
wherein the court enjoined the use of the mark "JOHNNIE WALKER"
on cigars because the fame of the plaintiff’s mark for scotch whiskey
and because the plaintiff advertised its scotch whiskey on, or in
connection with tobacco products. The court, in John Walker &
Sons, placed great significance on the finding that the infringers use
was a deliberate attempt to capitalize on the senior marks’
fame. Id. At 256. IDV also relies on Carling Brewing Co. v. Philip
Morris, Inc., 297 F. Supp. 1330, 1338 (N.D. Ga. 1968), in which the
court enjoined the defendant’s use of the mark "BLACK LABEL" for
cigarettes because it was likely to cause confusion with the
plaintiff’s well-known mark "BLACK LABEL" for beer.
xxx xxx xxx
Those decisions, however, must be considered in perspective of the
principle that tobacco products and alcohol products should be
considered related only in cases involving special
circumstances.Schenley Distillers, Inc. v. General Cigar
Co., 57C.C.P.A. 1213, 427 F. 2d 783, 785 (1970). The presence of
special circumstances has been found to exist where there is a
finding of unfair competition or where a ‘famous’ or ‘well-known
mark’ is involved and there is a demonstrated intent to capitalize on
that mark. For example, in John Walker & Sons, the court was
persuaded to find a relationship between products, and hence a
likelihood of confusion, because of the plaintiff’s long use and
extensive advertising of its mark and placed great emphasis on the
fact that the defendant used the trademark ‘Johnnie Walker with full
knowledge of its fame and reputation and with the intention of taking
advantage thereof.’ John Walker & Sons, 124 F. Supp. At 256; see
Mckesson & Robbins, Inc. v. P. Lorillard Co., 1959 WL 5894, 120
U.S.P.Q. 306, 307 (1959) (holding that the decision in John Walker &
Sons was ‘merely the law on the particular case based upon its own
peculiar facts’); see also Alfred Dunhill, 350 F. Supp. At 1363
(defendant’s adoption of ‘Dunhill’ mark was not innocent). However,
in Schenley, the court noted that the relation between tobacco and
whiskey products is significant where a widely known arbitrary mark
has long been used for diversified products emanating from a single
source and a newcomer seeks to use the same mark on unrelated
goods. Schenley, 427 F.2d. at 785. Significantly, in Schenley, the court
looked at the industry practice and the facts of the case in order to
determine the nature and extent of the relationship between the
mark on the tobacco product and the mark on the alcohol product.
74
The record here establishes conclusively that IDV has never
advertised BAILEYS liqueurs in conjunction with tobacco or tobacco
accessory products and that IDV has no intent to do so. And, unlike
the defendant in Dunhill, S & M Brands does not market bar
accessories, or liqueur related products, with its cigarettes. The
advertising and promotional materials presented a trial in this action
demonstrate a complete lack of affiliation between the tobacco and
liqueur products bearing the marks here at issue.
xxx xxx xxx
Of equal significance, it is undisputed that S & M Brands had no intent,
by adopting the family name ‘Bailey’s’ as the mark for its cigarettes,
to capitalize upon the fame of the ‘BAILEYS’ mark for liqueurs. See
Schenley, 427 F. 2d at 785. Moreover, as will be discussed below, and
as found in Mckesson & Robbins, the survey evidence refutes the
contention that cigarettes and alcoholic beverages are so intimately
associated in the public mind that they cannot under any
circumstances be sold under the same mark without causing
confusion. See Mckesson & Robbins, 120 U.S.P.Q. at 308.
Taken as a whole, the evidence here demonstrates the absence of the
‘special circumstances’ in which courts have found a relationship
between tobacco and alcohol products sufficient to tip the similarity
of goods analysis in favor of the protected mark and against the
allegedly infringing mark. It is true that BAILEYS liqueur, the world’s
best selling liqueur and the second best selling in the United States,
is a well-known product. That fact alone, however, is insufficient to
invoke the special circumstances connection here where so much
other evidence and so many other factors disprove a likelihood of
confusion. The similarity of products analysis, therefore, augers
against finding that there is a likelihood of confusion. (Emphasis
supplied).
In short, tobacco and alcohol products may be considered related
only in cases involving special circumstanceswhich exist only if a
famous mark is involved and there is a demonstrated intent to
capitalize on it. Both of these are absent in the present case.
THE GALLO WINE TRADEMARK IS NOT A copyright or anything else;
WELL-KNOWN MARK IN THE CONTEXT
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT
IDENTICAL OR SIMILAR GOODS
First, the records bear out that most of the trademark registrations
took place in the late 1980s and the 1990s, that is, after Tobacco
Industries’ use of the GALLO cigarette trademark in 1973 and
petitioners’ use of the same mark in 1984.
GALLO wines and GALLO cigarettes are neither the same, identical,
similar nor related goods, a requisite elementunder both the
Trademark Law and the Paris Convention.
Second, the GALLO trademark cannot be considered a strong and
distinct mark in the Philippines. Respondents do not dispute the
documentary evidence that aside from Gallo Winery’s GALLO
trademark registration, the Bureau of Patents, Trademarks and
Technology Transfer also issued on September 4, 1992 Certificate of
Registration No. 53356 under the Principal Register
approving Productos Alimenticios Gallo, S.A’s April 19, 1990
application for GALLO trademark registration and use for its "noodles,
prepared food or canned noodles, ready or canned sauces for
noodles, semolina, wheat flour and bread crumbs, pastry,
confectionery, ice cream, honey, molasses syrup, yeast, baking
powder, salt, mustard, vinegar, species and ice."122
Third and most important, pursuant to our ruling in Canon Kabushiki
Kaisha vs. Court of Appeals and NSR Rubber Corporation,123 "GALLO"
cannot be considered a "well-known" mark within the contemplation
and protection of the Paris Convention in this case since wines and
cigarettes are not identical or similar goods:
We agree with public respondents that the controlling doctrine with
respect to the applicability of Article 8 of the Paris Convention is that
established in Kabushi Kaisha Isetan vs. Intermediate Appellate
Court (203 SCRA 59 [1991]). As pointed out by the BPTTT:
"Regarding the applicability of Article 8 of the Paris Convention, this
Office believes that there is no automatic protection afforded an
entity whose tradename is alleged to have been infringed through
the use of that name as a trademark by a local entity.
In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et.
al., G.R. No. 75420, 15 November 1991, the Honorable Supreme Court
held that:
‘The Paris Convention for the Protection of Industrial Property does
not automatically exclude all countries of the world which have
signed it from using a tradename which happens to be used in one
country. To illustrate — if a taxicab or bus company in a town in the
United Kingdom or India happens to use the tradename ‘Rapid
Transportation,’ it does not necessarily follow that ‘Rapid’ can no
longer be registered in Uganda, Fiji, or the Philippines.
This office is not unmindful that in (sic) 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 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
c) the mark must be for use in the same or similar kinds of goods; and
d) the person claiming must be the owner of the mark (The Parties
Convention Commentary on the Paris Convention. Article by Dr.
Bogsch, Director General of the World Intellectual Property
Organization, Geneva, Switzerland, 1985)’
From the set of facts found in the records, it is ruled that
the Petitioner failed to comply with the third requirement of the
said memorandum that is the mark must be for use in the same or
similar kinds of goods. The Petitioner is using the mark "CANON" for
products belonging to class 2 (paints, chemical products) while the
Respondent is using the same mark for sandals (class 25).
Hence, Petitioner's contention that its mark is well-known at the
time the Respondent filed its application for the same mark should
fail." (Emphasis supplied.)
Consent of the Registrant and
Other air, Just and Equitable
Considerations
Each trademark infringement case presents a unique problem which
must be answered by weighing the conflicting interests of the
litigants.124
Respondents claim that GALLO wines and GALLO cigarettes flow
through the same channels of trade, that is, retail trade. If
respondents’ assertion is true, then both goods co-existed peacefully
75
for a considerable period of time. It took respondents almost 20 years Makati, Branch 57 in Civil Case No. 93-850 are hereby REVERSED and
to know about the existence of GALLO cigarettes and sue petitioners SET ASIDE and the complaint against petitioners DISMISSED.
for trademark infringement. Given, on one hand, the long period of Costs against respondents.
time that petitioners were engaged in the manufacture, marketing, SO ORDERED.
distribution and sale of GALLO cigarettes and, on the other,
respondents’ delay in enforcing their rights (not to mention implied
consent, acquiescence or negligence) we hold that equity, justice and
fairness require us to rule in favor of petitioners. The scales of
conscience and reason tip far more readily in favor of petitioners than
respondents.
Moreover, there exists no evidence that petitioners employed malice,
bad faith or fraud, or that they intended to capitalize on respondents’
goodwill in adopting the GALLO mark for their cigarettes which are
totally unrelated to respondents’ GALLO wines. Thus, we rule out
trademark infringement on the part of petitioners.

PETITIONERS ARE ALSO NOT LIABLE

FOR UNFAIR COMPETITION
Under Section 29 of the Trademark Law, any person who employs
deception or any other means contrary to good faith by which he
passes off the goods manufactured by him or in which he deals, or his
business, or services for those of the one having established such
goodwill, or who commits any acts calculated to produce said result,
is guilty of unfair competition. It includes the following acts:
(a) Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as to
the goods themselves or in the wrapping of the packages in which
they are contained, or the devices or words thereon, or in any other
feature of their appearance, which would be likely to influence
purchasers to believe that the goods offered are those of a
manufacturer or dealer other than the actual manufacturer or dealer,
or who otherwise clothes the goods with such appearance as shall
deceive the public and defraud another of his legitimate trade, or any
subsequent vendor of such goods or any agent of any vendor engaged
in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any
other means calculated to induce the false belief that such person is
offering the services of another who has identified such services in
the mind of the public;
(c) Any person who shall make any false statement in the course of
trade or who shall commit any other act contrary to good faith of a
nature calculated to discredit the goods, business or services of
another.
The universal test question is whether the public is likely to be
deceived. Nothing less than conduct tending to pass off one man’s
goods or business as that of another constitutes unfair competition.
Actual or probable deception and confusion on the part of customers
by reason of defendant’s practices must always appear. 125 On this
score, we find that petitioners never attempted to pass off their
cigarettes as those of respondents. There is no evidence of bad faith
or fraud imputable to petitioners in using their GALLO cigarette mark.
All told, after applying all the tests provided by the governing laws as
well as those recognized by jurisprudence, we conclude that
petitioners are not liable for trademark infringement, unfair
competition or damages.
WHEREFORE, finding the petition for review meritorious, the same is
hereby GRANTED. The questioned decision and resolution of the
Court of Appeals in CA-G.R. CV No. 65175 and the November 26, 1998
decision and the June 24, 1999 order of the Regional Trial Court of

76
 G.R. No. L-19906 April 30, 1969
STERLING PRODUCTS INTERNATIONAL, INCORPORATED, plaintiff-
appellant,
vs.
FARBENFABRIKEN BAYER AKTIENGESELLSCHAFT, and ALLIED
MANUFACTURING AND TRADING CO., INC., defendant-appellants.
SANCHEZ, J.:
In this, a case for trademark infringement and unfair competition,
each of the principal suitors, namely, plaintiff Sterling Products
International, Inc.,1 and defendant Farbenfabriken Bayer
Aktiengesellschaft,2 seeks to exclude the other from use in the
Philippines of the trademarks BAYER and BAYER CROSS IN CIRCLE. SPI
asks this Court to strike down FBA's registration of BAYER CROSS IN
CIRCLE covering industrial and agricultural products — insecticides
and other chemicals, not medicines — from the supplemental
register. FBA, for its part, prays for the cancellation from the principal
register of SPI's certificates of registration of the trademarks aforesaid
for medicines.
Contending parties are doing business in the Philippines. SPI markets
Bayer Aspirin, Aspirin for Children and Cafiaspirina. The BAYER and
BAYER CROSS IN CIRCLE are being used by SPI in the Philippines only
for said products — Bayer Aspirin, Cafiaspirina and Bayer Aspirin for
Children. On the containers (bottles or printed celophane strips,
which, in turn, are placed in cardboard boxes) of Bayer Aspirin, Aspirin
for Children and Cafiaspirina, SPI features the trademarks BAYER and
BAYER CROSS IN CIRCLE.
FBA thru Allied Manufacturing & Trading Co., Inc. 3 distributes
"Folidol" and other industrial and agricultural chemicals. FBA's
"Folidol" (in steel or fiber drums or aluminum containers) displays a
replica of SPI's trademark BAYER CROSS IN CIRCLE; on the tin cap and
label of the container.
The conflict apparent, suit followed.
The trial court declared itself "in favor of the solution that favors
division of the market rather than monopoly." But to avoid confusion,
it directed defendants "to add a distinctive word, or words in their
mark to indicate that their products come from Germany." The
judgment below reads:
IN VIEW WHEREOF, both complaint and counterclaim are dismissed
without costs; the Court sustains plaintiff's right to use the Bayer
trademark for its medicines, and defendants' right to use it for
chemicals, insecticides, and other products not medicines, but the
Court orders defendants to add a distinctive word or words in their
mark to indicate that their products come from Germany.4
Both parties appealed: Plaintiff, insofar as the judgment "dismisses
plaintiff's complaint and sustains defendants' right to use the BAYER
trademark for their chemicals, insecticides, and other products not
medicines";5 and defendants, from the portions of the
aforementioned decision particularly those which dismiss the
counterclaim of the defendants for the cancellation of the
registrations by the plaintiff of the trademarks Bayer and Bayer Cross
and which allow the plaintiff "to continue using the Bayer trademarks
for medicines."6
And now to the facts.
The word BAYER was the surname of Friedrich Bayer, a German, who,
on August 1, 1868, organized a drug company bearing his name —
Friedr Bayer et comp. — at Barmen, Germany. The company was at
first engaged in the manufacture and sale of chemicals. At about the
year 1888 it started to manufacture pharmaceutical preparations
also. A change of name from Friedr Bayer to Farbenfabriken vorm.
Friedr. Bayer & Co. (FFB, for short) effective July 1, 1881 was followed
in 1912 by a change of principal place of business from Elberfeld to
Luverkusen, Germany.7 Its products came to be known outside
Germany. With the discovery in 1899 of the Bayer Aspirin, the mark
BAYER acquired prestige. The time was ripe to register the
trademarks. The record, however, does not clearly show when the
word BAYER was registered as a trademark in Germany. The BAYER
CROSS IN CIRCLE trademark was registered in Germany on January 6,
1904 — No. 65777.8 It was intended to be used on "medicines for
human beings and animals, disinfectants preservatives, tar dyestuffs
and chemical preparations for dyes and for photographic
purposes."9 This registered trademark consists of the BAYER CROSS
encircled by the company's name Farbenfabriken vorm. Friedr. Bayer
& Co. Elberfeld.
When the company was merged with other German companies in
1925 to form the I.G. Farbenindustrie, the name of the former
company was deleted from the trademark and what remained was
the present BAYER CROSS IN CIRCLE. A new registration was effected
on June 17, 1929 in Germany and for which it was issued a certificate
with serial no. 404341. The trademark BAYER CROSS IN CIRCLE was
registered by FFB and its subsidiaries in other parts of the world, viz,
in Norway, England, Denmark, and Argentina in 1904; in Japan and
the United States in 1908; in Spain in 1911; in Peru in 1913.
Sometime in 1895, FFB established a subsidiary in New York, United
States. It was named Farbenfabriken of Elberfeld Co. Its purpose was
to sell FFB's products in the United States and Canada. It was this
subsidiary that registered the trademarks BAYER and BAYER CROSS IN
CIRCLE in the United States between the years 1907-1908.
Sometime in 1913, FFB organized another subsidiary — The Bayer Co.,
Inc. of New York. This new subsidiary was authorized by FFB to
negotiate for and acquire the trademarks, goodwill, assets and
property of Farbenfabriken of Elberfeld Co. By an agreement dated
June 12, 1913 (Exh. 106) Bayer of New York purchased for the sum of
US $750,000.00 Farbenfabriken of Elberfeld Co.'s "right for the sale in
the United States and Canada of the drugs, chemicals,
pharmaceuticals and any and all other products and articles
manufactured and (or) controlled by Leverkusen" (FFB) and its
"trademarks, good will and other assets and property."
On April 6, 1917,10 the United States declared war on Germany.
Pursuant to the provisions of the Trading with the Enemy Act, the
Alien Property Custodian classified The Bayer Co., Inc. of New York as
an enemy-controlled corporation. Hence, the Alien Property
Custodian seized its assets about the early part of 1918. Between
December 1918 and January 1919, all the assets of The Bayer Co., Inc.
of New York were sold by the Alien Property Custodian to Sterling
Drug, Inc. for the sum of US $5,310,000.00. The Bayer Co., Inc. of New
York then became a subsidiary of Sterling Drug, Inc. Winthrop
Chemical Co., Inc. was later organized as a new subsidiary of Sterling
Drug, Inc. to manufacture and sell the physicians' drugs which had
been acquired" by the purchase of the Bayer Co., Inc. Winthrop's
operation was evidently hampered because 'the Germans had kept
77
manufacturing processes secret, so that the manufacture of
physicians' drugs on a commercial scale became an almost insoluble
problem.11
Sterling Drug, Inc. secured registrations of the BAYER trademarks in
different countries of the world.12
It would appear that the trademark BAYER for medicines was known
in the Philippines about the close of the 19th century. This appears
on page 88 of the Revista Farmaceutica de Filipinos Año I, Numero 7,
3 de Julio de 1893. Before World War I, BAYER products entering the
Philippines came from Germany.
In 1922, a worldwide conflict of interests occurred between
Farbenfabriken vorm. Friedrich Bayer & Co. and The Bayer Co., Inc. of
New York, in reference to the trademarks BAYER and BAYER CROSS IN
CIRCLE as they were applied to various products.
Two agreements resolved this conflict, both executed on April 9, 1923
in London, England: one, between FFB and Winthrop Chemical Co.,
Inc. (Exh. 66), and the other between FFB and Bayer New York (Exh.
WWW). Under the terms of the agreement with Winthrop Chemical
Co., Inc., FFB stipulated, amongst others: (1) not to contest anymore
Winthrop's right over the trademarks BAYER and BAYER CROSS IN
CIRCLE; (2) to discontinue the use of said trademarks in the United
States which was understood to include the Philippines under par. 16
of said agreement; and (3) to disclose all secrets of other processes
relating to the manufacture of pharmaceuticals.
Paragraph 26 of the FFB — Bayer New York agreement reads —
26. NEW YORK (The Bayer Company, Inc. of New York) agree that they
will not sell or offer for sale any goods other than hereunder or those
they may market for Winthrop as hereinbefore provided and other
than Aspirin and compounds of Aspirin which New York shall continue
to market for their own account in the United States of America,
Puerto Rico, the Philippines and Hawaiian Islands and the Panama
Zone.13
In 1925, Farbenfabriken vorm. Friedrich Bayer & Co. became I.G.
Farbenindustrie, AG. This necessitated a new agreement
incorporating Exh. 66 with modifications. Said new agreement was
signed on November 15, 1926 between I.G. Farbenindustrie and
Winthrop.
On September 5, 1941, in the anti-trust suits against Sterling Drug,
Inc., Winthrop Chemicals Co. and The Bayer Co., of New York, two
consent decrees [Exh. 68 (No. 15-363) and Exh. 69: (No. 15-364)] were
promulgated by the U.S. District Court for Southern New York. Said
consent decrees declared the April 9 1923, cartel agreements
violative of the U.S. anti-trust laws. One reason given is that the
German company, FFB (later I.G. Farbenindustrie) — FBA's
predecessors — was excluded from the U.S. pharmaceutical market.
The sentence, however, contains a saving clause, thus —
The Bayer contract of 1923, the Bayer contract of 1926, and any and
all amendments or supplements thereto are declared and adjudged
to be unlawful under the Anti-Trust Laws of the United States, and the
defendants Bayer and Sterling, and their respective successors an
subsidiaries, or any of them, be and they are hereby enjoined and
restrained from carrying out or enforcing any of the aforesaid
contracts, or any supplements, amendments or modifications
thereof, or from paying to I.G. Farben, its subsidiaries, successors, or
assigns, any royalties or share of profits pursuant to said contracts
with respect to sales following the effective date of this decree.
Provided, however, that nothing herein contained in this Sec. III
shall:lawphi1.nêt
xxx xxx xxx
Affect in any way the rights or title of the defendant Bayer, its
successors, subsidiaries or assigns, in or to the name "Bayer" and the
"Bayer Cross" mark or registrations thereof, or
Affect or diminish any right, title or interest of said defendants, their
successor subsidiaries or assigns, in or to or under any heretofore
acquired and presently existing patents, patent applications, patent
licenses, trade-marks, trade-names (such as the name "Bayer" and
the "Bayer Cross" mark and registrations thereof), processes or
formulae relating to the manufacturing, processing, use or sale of
aspirin, aspirin compounds, pharmaceutical or other drug or chemical
products, or impair any rights or remedies of said defendants, their
successors, subsidiaries or assigns, provided by statute or convention,
and by suits for damages, injunction or other remedy with respect to
any such patents, patent applications, patent licenses or
trademarks....14
Meanwhile, in 1935, plaintiff Sterling Products International, Inc. (SPI)
a Delaware corporation, a subsidiary of Sterling Drug, Inc. of New
York, was issued a license to do business in the Philippines. 15 The
trademarks BAYER and BAYER CROSS IN CIRCLE were then registered
in the Philippines under the old Trademark Law (Act 666) by The Bayer
Co., Inc.; the BAYER CROSS IN CIRCLE trademark on April 18, 1939 for
which it was issued Certificate of Registration No. 13081; the BAYER
trademark on April 22, 1939 for which it was issued Registration
Certificate No. 13089. These trademark rights were assigned to SPI on
December 30, 1942 and the assignment was recorded in the
Philippines Patent Office on March 5, 1947. With the passage of
Republic Act 166 repealing the old Trademark Law (Act 666), SPI was
issued by the Philippines Patent Office on June 18, 1948 two new
certificates of registration: No. 1260-S for BAYER CROSS IN CIRCLE;
No. 1262-S for BAYER. The registration of these trademarks was only
for "Medicines".
Came World War II. I.G. Farbenindustrie AG. was seized by the allied
powers. In 1945, after World War II, I.G. Farbenindustrie AG. was
decartelized by the Allied High Commission. The unit known as
Farbenfabriken Bayer was transferred in 1953 to Farbenfabriken
Bayer Aktiengesellschaft (FBA), one of the defendants in this case,
which was organized in 1951.
Sometime in 1958, defendant Allied Manufacturing & Trading Co., Inc.
(AMATCO) started selling FBA's products especially "Folidol" a
chemical insecticide which bears the BAYER CROSS IN CIRCLE
trademark.16
On November 18, 1959, FBA applied for the registration of the BAYER
CROSS IN CIRCLE trademark with the Philippines Patent Office for
animal and plant destroying agents. The examiner's report dated
December 17, 1959 stated that the subject mark appears to be similar
to SPI's registered BAYER trademarks as covered by Certificates of
Registration Nos. 1260-S and 1262-S. He concluded that
"[r]egistration of applicant's mark is proscribed by Section 4-d of the
Statute because it would cause confusion or mistake or [to] deceive
purchasers."17 This action of the Philippines Patent Office drew a
reply from FBA. In its letter dated February 1, 1960 applicant FBA, thru
counsel, said that it "offers no question or objection to the assertion
of the Examiner that the registrant's mark and that of the applicant
are similar to each other. It emphasized the fact that it was seeking
registration in the Supplemental Register. Its concluding statement
runs thus:.
78
Being aware of the duties and obligations of a trademark user in the
Philippines and the penalties provided for in the pertinent law on
tradermarks and being aware also that Supplemental Registration is
not a prima facie evidence of ownership of mark but merely a
recordation of the use as in fact the mark is actually being used by the
applicant in the Philippines, it is respectfully urged that this
[application] be given due course.18
On February 25, 1960, FBA was issued a certificate of registration in
the Supplemental Register, SR-304.
We now grapple with the problems raised in the separate appeals.
1. A rule widely accepted and firmly entrenched because it has come
down through the years is that actual use in commerce or business
is a prerequisite to the acquisition of the right of ownership over a
trademark. This rule is spelled out in our. Trademark Law thus:
SEC. 2-A. Ownership of trade-marks, trademark names and service-
mark; how acquired. — Anyone who lawfully produces or deals in
merchandise of any kind or who engages in any lawful business, or
who renders any lawful service in commerce, by actual use thereof in
manufacture or trade, in business, and in the service rendered, may
appropriate to his, exclusive use a trademark, a trade-name, or a
service-mark not so appropriated by another, to distinguish his
merchandise, business, or service from the merchandise, business or
service of others. The ownership or possession of a trademark, trade-
name, service mark, heretofore or hereafter appropriated, as in this
section provided, shall be recognized and protected in the same
manner and to the same extent as are other property rights known to
the law. (As inserted by Section 1 of Republic Act 638)
It would seem quite clear that adoption alone of a trademark would
not give exclusive right thereto. Such right grows out of their actual
use."19 Adoption is not use. One may make advertisements, issue
circulars, give out price lists on certain goods; but these alone would
not give exclusive right of use. For trademark is a creation of use. The
underlying reason for all these is that Purchasers have come to
understand the mark as indicating the origin of the wares. 20 Flowing
from this is the trader's right to protection in the trade he has built up
and the goodwill he has accumulated from use of the trademark.
Registration of a trademark, of course, has value: it is an
administrative act declaratory of a pre-existing right. Registration
does not, however, perfect a trademark right.
The BAYER trademarks registered in the Philippines to which plaintiff
SPI may lay claim, as correctly stated in the decision below, are those
which cover medicines only. For, it was on said goods that the BAYER
trademarks were actually used by it in the Philippines. Therefore, the
certificates of registration for medicines issued by the Director of
Patents upon which the protection is enjoyed are only for medicines.
Nothing in those certificates recited would include chemical or
insecticides.
But plaintiff insists that the statement of the applicant (The Bayer Co.,
Inc.) in its registrations of the BAYER marks states that "the
merchandise for which the trademark is appropriated is d. —
Chemicals, Medicines and Pharmaceutical Preparations." Plaintiff's
position is that such statement determines the goods for which said
marks had been registered. Validity does not attach to this
proposition. First, the statement itself admits that "the particular
description of the articles comprised in said class (d) on which the
trademark is used is Medicines."21 It is not used for chemicals.
Then, Section 11 of the Trademark Law requires that the certificate of
registration state "the particular goods . . . for which it is
registered." This is controlling. Under Section 11 aforesaid, likewise to
be entered in the certificate of registration is "the date of the first
use in commerce or business. SPI may not claim "first use" of the
trademarks prior to the registrations thereof on any product other
than medicines.
Besides, Section 7 of the same Trademark Act directs that upon the
filing of the application and the payment of the required fee, the
"Director [of Patents] shall cause an examination of the application"
— for registration of the trademark — "to be made, and, if on such
examination it shall appear that the applicant is entitled to
registration, the Director . . . shall cause the mark . . . to be published
in the Official Gazette." This examination, it would seem to us, is
necessary in order that the Director of Patents may be satisfied that
the application conforms to the requirement of actual use in
commerce of the trademark in Section 2 and 2-A of the Trademark
Law; and that the statement in said application — as to the "first use"
thereof and "the goods . . . in connection with which the mark . . . is
used" (Section 5) — is true.
Really, if the certificate of registration were to be deemed as including
goods not specified therein, then a situation may arise whereby an
applicant may be tempted to register a trademark on any and all
goods which his mind may conceive even if he had never intended to
use the trademark for the said goods. We believe that such omnibus
registration is not contemplated by our Trademark Law.
Because of this and of the fact that the Bayer trademarks were never
used in the Philippines by plaintiff except for medicines — Aspirin,
Aspirin for Children and Cafiaspirina — we find ourselves unwilling to
draw a hard and fast rule which would absolutely and under all
circumstances give unqualified protection to plaintiff against the use
of said trademarks by all others on goods other than medicines.
2. Neither will the 1927 registration in the United States of the BAYER
trademark for insecticides serve plaintiff any. The United States is not
the Philippines. Registration in the United States is not registration in
the Philippines. At the time of the United States registration in 1927,
we had our own Trademark Law, Act No. 666 aforesaid of the
Philippine Commission, which provided for registration here of
trademarks owned by persons domiciled in the United States.
What is to be secured from unfair competition in a given territory is
the trade which one has in that particular territory. There is where his
business is carried on; where the goodwill symbolized by the
trademark has immediate value; where the infringer may profit by
infringement.
There is nothing new in what we now say. Plaintiff itself
concedes22 that the principle of territoriality of the Trademark Law
has been recognized in the Philippines, citing Ingenohl vs. Walter E.
Olsen, 71 L. ed. 762. As Callmann puts it, the law of trademarks "rests
upon the doctrine of nationality or territoriality."23
Accordingly, the 1927 registration in the United States of the BAYER
trademark would not of itself afford plaintiff protection for the use by
defendants in the Philippines of the same trademark for the same or
different products.
3. A question basic in the field of trademarks and unfair competition
is the extent to which a registrant of a trademark covering one
product may invoke the right to protection against the use by other(s)
of the same trademark to identify merchandise different from those
for which the trademark has been appropriated.
79
Plaintiff's trenchant claim is that it should not be turned away
because its case comes within the protection of the confusion of
origin rule. Callmann notes two types of confusion.
The first is the confusion of goods "in which event the ordinarily
prudent purchaser would be induced to purchase one product in the
belief that he was purchasing the other." In which case, "defendant's
goods are then bought as the plaintiff's, and the poorer quality of the
former reflects adversely on the plaintiff's reputation."
The other is the confusion of business: "Here though the goods of the
parties are different, the defendant's product is such as might
reasonably be assumed to originate with the plaintiff, and the public
would then be deceived either into that belief or into the belief that
there is some connection between the plaintiff and defendant which,
in fact, does not exist."24
A judicial test giving the scope of the rule of confusion of origin is Ang
vs. Teodoro (December 14, 1942), 74 Phil. 50. Briefly, the facts of the
just cited case are as follows: Toribio Teodoro, at first in partnership
with Juan Katindig and later as sole proprietor, had continuously used
"Ang Tibay" both as trademark and as tradename in the manufacture
and sale of slippers, shoes and indoor baseballs since 1910. He
formally registered it as a trademark on September 29, 1915 and as a
tradename on January 3, 1933. Ana L. Ang registered the same
trademark "Ang Tibay" for pants and shirts on April 11, 1932 and
established a factory for the manufacture of said articles in 1937. Suit
was lodged by Teodoro against Ang to cancel the latter's registration
of the trademark "Ang Tibay" and to perpetually enjoin her from using
the said trademark on goods manufactured and sold by her. The
judgment of the trial court absolved defendant (Ana L. Ang) from the
complaint with costs against the plaintiff. The Court of Appeals
reversed. On appeal by certiorari, we affirmed the judgment of the
Court of Appeals. We there said:
"In the present state of development of the law on Trade-Marks,
Unfair Competition, and Unfair Trading, the test employed by the
courts to determine whether noncompeting goods are or are not of
the same class is confusion as to the origin of the goods of the second
user. Although two noncompeting articles may be classified under
two different classes by the Patent Office because they are deemed
not to possess the same descriptive properties, they would,
nevertheless, be held by the courts to belong to the same class if the
simultaneous use on them of identical or closely similar trademarks
would be likely to cause confusion as to the origin, or personal source,
of the second user's goods.
They would be considered as not falling under the same class only if
they are so dissimilar or so foreign to each other as to make it unlikely
that the purchaser would think the first user made the second user's
goods.
Such construction of the law is induced by cogent reasons of equity
and fair dealing. The courts have come to realize that there can be
unfair competition or unfair trading even if the goods are
noncompeting, and that such unfair trading can cause injury or
damage to the first user of a given trademark, first, by prevention of
the natural expansion of his business and, second, by having his
business reputation confused with and put at the mercy of the second
user. When noncompetitive products are sold under the mark, the
gradual whittling away or dispersion of the identity and hold upon the
public mind of the mark created by its first user, inevitably results.
The original owner is entitled to the preservation of the vauable link
between him and the public that has been created by his ingenuity
and the merit of his wares or services. Experience has demonstrated
that when a well-known trademark is adopted by another even for a
totally different class of goods, it is done to get the benefit of the
reputation and advertisements of the originator of said mark, to
convey to the public a false impression of some supposed connection
between the manufacturer of the article sold under the original mark
and the new articles being tendered to the public under the same or
similar mark. As trade has developed and commercial changes have
come about, the law of unfair competition has expanded to keep pace
with the times and the element of strict competition in itself has
ceased to be the determining factor. The owner of a trademark or
trade-name has a property right in which he is entitled to protection,
since there is damage to him from confusion of reputation or goodwill
in the mind of the public as well as from confusion of goods. The
modern trend is to give emphasis to the unfairness of the acts and to
classify and treat the issue as a fraud.25
The thoughts expressed in Ang Tibay command respect Conduct of
business should conform to ethical business standards. Unfairness is
proscribed. The invocation of equity is bottomed upon the injunction
that no one should "reap where he has not sown."26
Nonetheless, "[i]t has been emphasized that each case presents a
unique problem which must be answered by weighing the conflicting
interests of the litigants."27 With this in mind, we are convinced that
the case before us is not to be analogized with Ang Tibay. The factual
setting is different. His Honor, Judge Magno S. Gatmaitan (now
Associate Justice of the Court of Appeals), the trial judge, so found.
He reached a conclusion likewise different. And the reasons, so well
stated by His Honor, are these:
1st). — It was not plaintiff's predecessor but defendant's namely
Farbenfabriken or Bayer Germany that first introduced the medical
products into the Philippine market and household with the Bayer
mark half a century ago; this is what the Court gathers from the
testimony of Frederick Umbreit and this is the implication even of
Exhs. 48, 49, 66 and as already shown a few pages back;28
2nd). — There is thus reason plausible enough for defendant' plea
that as Sterling was not the "originator" of the Bayer mark, the rule in
Ang vs. Teodoro, supra, is not applicable; and this is correct
notwithstanding Exhs. 106 and 63 and even giving unto these
documents full force and virtue, because purchase of the assets of
Elberfeld, defendants' previous affiliate in New York, by Bayer of New
York, even if that were to be held to include purchase of the Bayer
mark, did not make the purchaser Bayer of New York the originator
of the mark; especially since Bayer of New York was only another
subsidiary of Bayer Germany or Farbenfabriken which was the real
originator;
3rd). — The Court is also impelled to believe that the evidence
establishes that among the common people of the Philippines the
"Bayer" medicines come from Germany; this the Court deduces from
the testimony of witness Florisa Pestano who only reproduced the
belief of her grandmother; the Court might as well say that plaintiff
itself has not discouraged that belief because the drug and its
literature that came from the plaintiff and its affiliate would show that
80
it represented its medicines to have come from defendant29 and were
manufactured in Germany with that Bayer mark; thus Exh. 7030 which
is the price list of 1928 of Botica de Sta. Cruz on page 6 indicates that
Winthrop Chemical Company of New York, — plaintiff's subsidiary —
was a distributor of I.G. Farbenindustrie, A.G. Leverkusen Germany;
Exh. 8031 which is a medical diary published by Winthrop for 1934 on
page 148 manifested that the journal, "Practical Therapeutics" was
published by I.G. Farbenindustrie Aktiengesellachaft for Winthrop
Chemical Company, Inc.; "with particular reference to the
pharmacological products, sera and vaccines originated and prepared
in the laboratories of the I.G. Farbenindustrie A.G."; and Exh. 79 a, b,
c, d and e which are prospectuses for the medicines, Mitigal, Afridol,
Aspirins, Novalgina and My-Salvarsan32 showed that these products
were manufactured for Winthrop by I.G. Farbenindustrie; and then
Exh. 81 the Revista Boie of 1928 would show that Winthrop
represented itself as the distributor of the products of Bayer of
Germany otherwise known as I.G. Farbenindustrie, "segun la alta
calidad de la marca original";33 the Court being also impelled to add
in this connection that it has to take judicial notice of a belief of long
standing common among the people in the Philippines that German
products are of very high quality and it is only natural for a distributor
or a retailer to take advantage of that, and as it is not debated that
"Bayer" is a German surname, (see plaintiff's rebuttal Exh. QQQQ, see
also p. 7 plaintiff's reply memorandum wherein it is said that this
surname is a "pretty common one among members of the Germany
race") it is all so very easy to associate the Bayer trademark with
products that come from Germany and to believe that they are of high
quality;
4th). — The rationale of the doctrine in Ang vs. Teodoro, supra being
that:
The Courts have come to realize that there can be unfair competition
or unfair trading even if the goods are non-competing, and that such
unfair trading can cause injury or damage to the first user of a given
trade mark, first, by prevention of the natural expansion of his
business, and second, by having his business reputation confused
with and put at the mercy of the second user. 74 Phil. 55-56;
and the Court having found out that the 'first user' was Bayer
Germany and it was this that had built up the Bayer mark and plaintiff
apparently having itself encouraged that belief even after it had
acquired the Bayer mark in America, thru forced sale, of defendant's
subsidiary there in 1918, Exhs. 79, 80, 81, to apply the Ang Tibay rule
in the manner advocated by Sterling would, the Court fears, produce
the reverse result and the consequence would be not equity but
injustice.34
It would seem to us that the fact that plaintiff rode on the German
reputation in the Bayer trademark has diluted the rationally of its
exclusionary claim. Not that the free ride in the name of defendant's
German predecessor was sporadic. It is continuing. Proof of this is the
label on the box used by plaintiff (Exhibit U) in the distribution of
Bayer Aspirin. This box bears prominently on the front part the legend
"Genuine" in red color and two arrows: the first pointing to BAYER
CROSS IN CIRCLE, and the second, to BAYER Aspirin. At the back
thereof in big letters are the words "BAYER ASPIRIN", followed in
small letters "Used since 1900" and down below the small words
"Mfd. in the Phil. by Winthrop Stearns, Inc. for STERLING PRODUCTS
INTERNATIONAL, INCORPORATED." In plaintiff's prospectus (Exhibit
1) found in the box of Bayer Aspirin tablets, children's size, there is
the significant statement: "GENUINE BAYER — Each Children's Size
Bayer Aspirin tablet is stamped with the Bayer Cross, the trademark
of the genuine Bayer product. This means that your child is getting
the same gentle-to-the-system Bayer Aspirin that has been used for
over 50 years by millions of normal people without ill effect."
With the background of prior use in the Philippines of the word BAYER
by FBA's German predecessor and the prior representations that
plaintiff's medicines sold in the Philippines were manufactured in
Germany, the facts just recited hammer on the mind of the public that
the Aspirin. Cafiaspirina and Aspirin for Children being marketed for
plaintiff in the Philippines come from the same source — the German
source — and in use since 1900. That this view is far from far-fetched,
is illustrated by the testimony of plaintiff's own witness, Dr. Antonio
Vasquez, viz:
Q. Have you ever heard of a pharmaceutical company of Bayer of
Germany, or a company in Germany named Bayer?
A. Yes, sir.
Q. Since when have you heard of this pharmaceutical company in
Germany with the name Bayer, since when have you heard of that?
A. I have always taken the name Bayer as associated with Winthrop &
Stearns.
Q. But, you said a while ago....
Witness.
.... Yes .....
xxx xxx xxx
Q. ... that you have heard of a pharmaceutical company with the
name of Bayer in Germany?
A. Yes, sir.
Q. Do you know if this Winthrop & Stearns you mentioned has ever
been connected with Bayer Company of Germany?
A. I have always understood that they were distributing drugs of
Bayer & Company.35
4. The Ang Tibay doctrine, we believe, is not to be read as shunting
aside the time-honored teaching that he who comes into equity must
do so with clean hands. 36 Plaintiff cannot now say that the present
worth of its BAYER trademarks it owes solely to its own efforts; it is
not insulated from the charge that as it marketed its medicines it did
so with an eye to the goodwill as to quality that defendants'
predecessor had established.
There is no whittling away of the identity of plaintiff's trademarks.
Plaintiff is not the first user thereof in the Philippines. The trademarks
do not necessarily link plaintiff with the public. Plaintiff must show
injury; it has not. On the contrary, representations as to the place of
manufacture of plaintiff's medicines were untrue, misleading.
Plaintiff could still be tagged with the same deception "which (it)
complains of in the defendant(s)."37 Appropriate it is to recall here our
observation in the Ang Tibay opinion, viz: "On our part may we add,
without meaning to be harsh, that a self-respecting person does not
remain in the shelter of another but builds one of his own." 38
Plaintiff, the owner in this country of the trademarks BAYER for
medicines, has thus forfeited its right to protection from the use of
the same trademarks by defendants for products different therefrom
— insecticides and other chemicals.
5. But defendants ask us to delist plaintiff's BAYER trademarks for
medicines from the Principal Register, claiming right thereto for said
81
use. Said trademarks had been registered since 1939 by plaintiff's
predecessor. The Bayer Co., Inc.
Defendants' claim is stale; it suffers from the defect of non-
use.39 While it is conceded that FBA's predecessors first introduced
medical products with the BAYER trademarks in the Philippine
market, it is equally true that, after World War I, no definite evidence
there is that defendants or their professors traded in the Philippines
in medicines with the BAYER trademarks thereafter. FBA did not
seasonably voice its objection. Lack of protest thereto connoted
acquiescence. And this; notwithstanding the fact that the 1923 and
1926 agreements were set aside in the anti-trust suits. Defendants
did use the marks; but it was much later, i.e., in 1958 — and on
chemicals and insecticides — not on medicines. FBA only bestirred
itself and challenged plaintiff's right to the trademarks on medicines
when this suit was filed. Vigilantibus non dormientibus equitas
subvenit.40
The net result is that, as the trial court aptly observed, plaintiff may
hold on to its BAYER trademarks for medicines. And defendants may
continue using the same trademarks for insecticides and other
chemicals, not medicines.
6. Defendants balk at the ruling below which directs them "to add a
distinctive word or words in their mark to indicate that their products
come from Germany."41
We are left under no doubt as to the reasonableness of the formula
thus fashioned. It avoids the mischief of confusion of origin —
defendant FBA's product would not be mistaken for those of plaintiff.
It reduces friction. We perceive of no prejudice to defendants. The
order does not visit defendant FBA with reprobation or
condemnation. Rather, said defendant would be enhancing the value
of and would be sponsoring its own products. Anyway, a statement
that its products come from Germany is but a statement of fact.
FOR THE REASONS GIVEN, the judgment under review is hereby
affirmed. No costs. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando,
Capistrano, Teehankee and Barredo, JJ., concur.
Castro, J., is on leave.

82

DOMINANCY TEST
G.R. No. 221717
MANG INASAL PHILIPPINES, INC., Petitioner
vs.
IFP MANUFACTURING CORPORATION, Respondent
DECISION
VELASCO, JR., J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court of the Resolutions dated June 10, 2015 1 and December
2, 2015 2 of the Court of Appeals (CA) in CA-G.R. SP No. 139020.
The Facts
The Trademark Application and the Opposition Respondent IFP
Manufacturing Corporation is a local manufacturer of snacks and
beverages.
On May 26, 2011, respondent filed with the Intellectual Property
Office (IPO) an application 3 for the registration of the mark "OK
Hotdog Inasal Cheese Hotdog Flavor Mark" (OK Hotdog Inasal mark)
in connection with goods under Class 30 of the Nice Classification.4
The said mark, which respondent intends to use on one of its curl
snack products, appears as follows:
The application of respondent was opposed 5 by petitioner Mang
Inasal Philippines, Inc.
Petitioner is a domestic fast food company and the owner of the
mark "Mang Inasal, Home of Real Pinoy Style Barbeque and Device"
(Mang Inasal mark) for services under Class 43 of the Nice
Classification. 6 The said mark, which was registered with the IPO in
2006 7 and had been used by petitioner for its chain of restaurants
since 2003, 8 consists of the following Insignia:
Petitioner, in its opposition, contended that the registration of
respondent's OK Hotdog Inasal mark is prohibited under Section 123.l
(d)(iii) of Republic Act No. (RA) 8293. 9 Petitioner averred that the OK
Hotdog Inasal mark and the Mang Inasal mark share similarities-both
as to their appearance and as to the goods or services that they
represent which tend to suggest a false connection or association
between the said marks and, in that regard, would likely cause
confusion on the part of the public. 10 As petitioner explained:
1. The OK Hotdog Inasal mark is similar to the Mang Inasal mark. Both
marks feature the same dominant element-i.e., the word "INASAL"-
printed and stylized in the exact same manner, viz:
a. In both marks, the word "INASAL" is spelled using the same font
style and red color;
b. In both marks, the word "INASAL" is placed inside the same black
outline and yellow background; and
c. In both marks, the word "INASAL" is arranged in the same
staggered format.
2. The goods that the OK Hotdog Inasal mark is intended to identify
(i.e., curl snack products) are also closely related to the services
represented by the Mang Inasal mark (i.e., fast food restaurants).
Both marks cover inasal or inasal-flavored food products.
Petitioner's opposition was referred to the Bureau of Legal Affairs
(BLA) of the IPO for hearing and disposition.
Decisions of the IPO-BLA and the IPO-DG
On September 19, 2013, after due proceedings, the IPO-BLA issued a
Decision 11 dismissing petitioner's opposition. The dispositive portion
of the Decision reads:
WHEREFORE, premises considered, the instant opposition is hereby
DISMISSED. Let the filewrapper [sic] of Trademark Application Serial
No. 4-2011-006098 be returned, together with a copy of this Decision,
to the Bureau of Trademarks for further information and appropriate
action.
SO ORDERED.
Aggrieved, petitioner appealed the Decision of IPO-BLA to the
Director General (DG) of the IPO. 12
On December 15, 2014, the IPO-DG rendered a Decision 13 dismissing
the appeal of petitioner. The fallo of the Decision accordingly reads:
Wherefore, premises considered, the appeal is hereby dismissed. Let
a copy of this Decision be furnished to the Director of Bureau of Legal
Affairs and the Director of Bureau of Trademarks for their appropriate
action and information. Further, let a copy of this Decision be
furnished to the library of the Documentation, Information and
Technology Transfer Bureau for records purposes.
SO ORDERED.
Both the IPO-BLA and the IPO-DG were not convinced that the OK
Hotdog Inasal mark is confusingly similar to the Mang Inasal mark.
They rebuffed petitioner's contention, thusly:
1. The OK Hotdog Inasal mark is not similar to the Mang !nasal mark.
In terms of appearance, the only similarity between the two marks is
the word "INASAL." However, there are other words like "OK,"
"HOTDOG," and "CHEESE' and images like that of curls and cheese
that are found in the OK Hotdog Inasal mark but are not present in
the Mang Inasal mark. 14
In addition, petitioner cannot prevent the application of the
word "INASAL" in the OK Hotdog Inasal mark. No person or entity can
claim exclusive right to use the word "INASAL" because it is merely a
generic or descriptive word that means barbeque or barbeque
products. 15
Neither can the underlying goods and services of the two marks be
considered as closely related. The products represented by the two
marks are not competitive and are sold in different channels of trade.
The curl snack products of the OK Hotdog Inasal mark are sold in sari-
83
sari stores, grocery stores and other small distributor outlets,
whereas the food products associated with the Mang Inasal mark are
sold in petitioner's restaurants. 16
Undeterred, petitioner appealed to the CA.
Resolutions of the CA and the Instant Appeal
On June 10, 2015, the CA issued a Resolution 17 denying the appeal of
petitioner. Petitioner filed a motion for reconsideration, but this too
was denied by the CA through its Resolution18 dated December 2,
2015. The CA, in its Resolutions, simply agreed with the ratiocinations
of the IPOBLA and IPO-DG.
Hence, the instant appeal.
Here, petitioner prays for the reversal of the CA Resolutions.
Petitioner maintains that the OK Hotdog Inasal mark is confusingly
similar to the Mang Inasal mark and insists that the trademark
application of respondent ought to be denied for that reason.
Our Ruling
We have examined the OK Hotdog Inasal and Mang Inasal marks
under the lens of pertinent law and jurisprudence. And, through it,
we have determined the justness of petitioner's claim. By our legal
and jurisprudential standards, the respondent's OK Hotdog Inasal
mark is, indeed, likely to cause deception or confusion on the part of
the public. Hence, contrary to what the IPO-BLA, IPO-DG, and the CA
had ruled, the respondent's application should have been denied.
We, therefore, grant the appeal.
I
The Proscription: Sec. 123.l(d)(iii) of RA 8293
A mark that is similar to a registered mark or a mark with an earlier
filing or priority date (earlier mark) and which is likely to cause
confusion on the part of the public cannot be registered with the IPO.
Such is the import of Sec. 123.l(d)(iii) of RA 8293:
SECTION 123. Registrability. –
123. 1. A mark cannot be registered if it:
xxxx
d. xxx:
1. x x x
11. x x x
iii. ... nearly resembles [a registered mark belonging to a different
proprietor or a mark with an earlier filing or priority date] as to be
likely to deceive or cause confusion.
The concept of confusion, which is at the heart of the proscription,
could either refer to confusion of goods or confusion of business.
In Skechers U.S.A., Inc. v. Trendworks International
Corporation, 19 we discussed and differentiated both types of
confusion, as follows:
Relative to the question on confusion of marks and trade names,
jurisprudence has noted two (2) types of confusion, viz.:
(1) confusion of goods (product confusion), where the ordinarily
prudent purchaser would be induced to purchase one product in the
belief that he was purchasing the other; and
(2) confusion of business (source or origin confusion), where,
although the goods of the parties are different, the product, the mark
of which registration is applied for by one party, is such as might
reasonably be assumed to originate with the registrant of an earlier
product, and the public would then be deceived either into that belief
or into the belief that there is some connection between the two
parties, though inexistent.
Confusion, in either of its forms, is, thus, only possible when the goods
or services covered by allegedly similar marks are identical, similar or
related in some manner. 20
Verily, to fall under the ambit of Sec. 123. l(d)(iii) and be regarded as
likely to deceive or cause confusion upon the purchasing public, a
prospective mark must be shown to meet two (2) minimum
conditions:
1. The prospective mark must nearly resemble or be similar to an
earlier mark; and
2. The prospective mark must pertain to goods or services that are
either identical, similar or related to the goods or services
represented by the earlier mark.
The rulings of the IPO-BLA, IPO-DG, and the CA all rest on the notion
that the OK Hotdog Inasal mark does not fulfill both conditions and so
may be granted registration.
We disagree.
II
The OK Hotdog Inasal Mark Is Similar to the Mang Inasal Mark
The first condition of the proscription requires resemblance
or similarity between a prospective mark and an earlier mark.
Similarity does not mean absolute identity of marks. 21 To be
regarded as similar to an earlier mark, it is enough that a prospective
mark be a colorable imitation of the former. 22 Colorable imitation
denotes such likeness in form, content, words, sound, meaning,
special arrangement or general appearance of one mark with respect
to another as would likely mislead an average buyer in the ordinary
course of purchase. 23
TO DETERMINE COLORABLE IMITATION BETWEEN TWO MARKS:
DOMINANCY AND HOLISTIC TEST
In determining whether there is similarity or colorable imitation
between two marks, authorities employ either the dominancy test or
the holistic test.24 In Mighty Corporation v. E. & J. Gallo Winery,25 we
distinguished between the two tests as follows:
The Dominancy Test
focuses on the similarity of the prevalent features of the competing
trademarks which might cause confusion or deception, and thus
infringement. If the competing trademark contains the main,
essential or dominant features of another, and confusion or
deception is likely to result, infringement takes place. Duplication or
imitation is not necessary; nor is it necessary that the infringing label
should suggest an effort to imitate. The question is whether the use
of the marks involved is likely to cause confusion or mistake in the
mind of the public or deceive purchasers.
On the other hand, the Holistic Test
requires that the entirety of the marks in question be considered in
resolving confusing similarity. Comparison of words is not the only
determining factor. The trademarks in their entirety as they appear in
their respective labels or hang tags must also be considered in
relation to the goods to which they are attached. The discerning eye
of the observer must focus not only on the predominant words but
also on the other features appearing in both labels in order that he
84
may draw his conclusion whether one is confusingly similar to the
other. (citations omitted and emphasis supplied)
There are currently no fixed rules as to which of the two tests can be
applied in any given case. 26 However, recent case law on trademark
seems to indicate an overwhelming judicial preference towards
applying the dominancy test. 27 We conform.
IN THIS CASE
Our examination of the marks in controversy yielded the following
findings:
1. The petitioner's Mang Inasal mark has a single dominant feature-
the word "INASAL" written in a bold red typeface against a black
outline and yellow background with staggered design. The other
perceptible elements of the mark-such as the word "MANG" written
in black colored font at the upper left side of the mark and the
phrase "HOME OF REAL PINOY STYLE BARBEQUF' written in a black
colored stylized font at the lower portion of the mark-are not as
visually outstanding as the mentioned feature.
2. Being the sole dominant element, the word "INASAL," as stylized
in the Mang Inasal mark, is also the most distinctive and
recognizable feature of the said mark.
3. The dominant element "INASAL," as stylized in the Mang Inasal
mark, is different from the term "inasal' per se. The term "inasal"
per se is a descriptive term that cannot be appropriated. However,
the dominant element "INASAL," as stylized in the Mang Inasal
mark, is not. Petitioner, as the registered owner of the Mang Inasal
mark, can claim exclusive use of such element
. the earlier mark.
4. The respondent's OK Hotdog Inasal mark, on the other hand, has
three (3) dominant features:
(a) the word "INASAL" written in a bold red typeface against a black
and yellow outline with staggered design;
(b) the word "HOTDOG" written in green colored font; and
(c) a picture of three pieces of curls.
Though there are other observable elements in the mark-such as the
word "OK'' written in red colored font at the upper left side of the
mark, the small red banner overlaying the picture of the curls with
the words "CHEESE HOTDOG FLAVOR" written on it, and the image
of a block of cheese beside the picture of the curls-none of those are
as prevalent as the two features aforementioned.
5. The dominant element "INASAL" in the OK Hotdog Inasal mark is
exactly the same as the dominant element "INASAL" in the Mang
Inasal mark. Both elements in both marks are printed using the exact
same red colored font, against the exact same black outline and
yellow background and is arranged in the exact same staggered
format.
6. Apart from the element "INASAL," there appear no other
perceivable similarities between the two marks.
Given the foregoing premises, and applying the dominancy test, we
hold that the OK Hotdog Inasal mark is a colorable imitation of the
Mang Inasal mark.
First. The fact that the conflicting marks have exactly the same
dominant element is key. It is undisputed that the OK Hotdog Inasal
mark copied and adopted as one of its dominant features
the "INASAL" element of the Mang Inasal mark. Given that
the "INASAL" element is, at the same time, the dominant and most
distinctive feature of the Mang Inasal mark, the said element's
incorporation in the OK Hotdog Inasal mark, thus, has the potential to
project the deceptive and false impression that the latter mark is
somehow linked or associated with the former mark.
Second. The differences between the two marks are I trumped by the
overall impression created by their similarity. The mere fact that there
are other elements in the OK Hotdog Inasal mark that are not present
in the Mang Inasal mark actually does little to change the probable
public perception that both marks are linked or associated.1âwphi1 It
is worth reiterating that the OK Hotdog Inasal mark actually
brandishes a literal copy of the most recognizable feature of the
Mang Inasal mark. We doubt that an average buyer catching a casual
glimpse of the OK Hotdog Inasal mark would pay more attention to
the peripheral details of the said mark than it would to the mark's
more prominent feature, especially when the same invokes the
distinctive feature of another more popular brand.
All in all, we find that the OK Hotdog Inasal mark is similar to the
Mang Inasal mark.
III
The Goods for which the Registration of the OK Hotdog Inasal Mark
Is Sought Are Related to the Services Being Represented by the
Mang Inasal Mark
The second condition of the proscription requires that the
prospective mark pertain to goods or services that are either
identical, similar or related to the goods or services represented by
While there can be no quibble that the curl snack product for which
the registration of the OK Hotdog Inasal mark is sought cannot be
considered as identical or similar to the restaurant services
represented by the Mang Inasal mark, there is ample reason to
conclude that the said product and services may nonetheless be
regarded as related to each other.
Related goods and services are those that, though
non-identical or non-similar, are so logically connected to each other
that they may reasonably be assumed to originate from one
manufacturer or from economically-linked manufacturers. 28
FACTORS TO DETERMINE WHETHER GOODS ARE RELATED
In determining whether goods or services are related, several factors
may be considered. Some of those factors recognized in our
jurisprudence are: 29
1. the business (and its location) to which the goods belong;
2. the class of product to which the goods belong;
3. the product's quality, quantity, or size, including the nature of the
package, wrapper or container;
4. the nature and cost of the articles;
5. the descriptive properties, physical attributes or essential
characteristics with reference to their form, composition, texture or
quality;
6. the purpose of the goods;
85
7. whether the article is bought for immediate consumption, that is,
day-to-day household items;
8. the fields of manufacture;
9. the conditions under which the article is usually purchased, and
10. the channels of trade through which the goods flow, how they are
distributed, marketed, displayed and sold.
Relative to the consideration of the foregoing factors,
however, Mighty Corporation 30 significantly imparted:
The wisdom of this approach is its recognition that each trademark
infringement case presents its own unique set of facts. No single
factor is preeminent, nor can the presence or absence of one
determine, without analysis of the others, the outcome of an
infringement suit. Rather, the court is required to sift the evidence
relevant to each of the criteria. This requires that the entire panoply
of elements constituting the relevant factual landscape be
comprehensively examined. It is a weighing and balancing process.
With reference to this ultimate question, and from a balancing of the
determinations reached on all of the factors, a conclusion is reached
whether the parties have a right to the relief sought.
A very important circumstance though is whether there exists a
likelihood that an appreciable number of ordinarily prudent
purchasers will be misled, or simply confused, as to the source of the
goods in question. The "purchaser" is not the "completely unwary
consumer" but is the "ordinarily intelligent buyer" considering the
type of product involved he is accustomed to buy, and therefore to
some extent familiar with, the goods in question. The test of
fraudulent simulation is to be found in the likelihood of the deception
of some persons in some measure acquainted with an established
design and desirous of purchasing the commodity with which that
design has been associated. The test is not found in the deception, or
the possibility of deception, of the person who knows nothing about
the design which has been counterfeited, and who must be
indifferent between that and the other. The simulation, in order to be
objectionable, must be such as appears likely to mislead the ordinary
intelligent buyer who has a need to supply and is familiar with the
article that he seeks to purchase. (citations omitted and emphasis
supplied)
IN THIS CASE
Mindful of the foregoing precepts, we hold that the curl snack
product for which the registration of the OK Hotdog Inasal mark is
sought is related to the restaurant services represented by the Mang
!nasal mark, in such a way that may lead to a confusion of business.
In holding so, we took into account the specific kind of restaurant
business that petitioner is engaged in, the reputation of the
petitioner's mark, and the particular type of curls sought to be
marketed by the respondent, thus:
First. Petitioner uses the Mang Inasal mark in connection with its
restaurant services that is particularly known for its
chicken inasal, i.e., grilled chicken doused in a Director of the Bureau of Legal Affairs of the Intellectual Property
special inasal marinade. 31 The inasal marinade is different from the
typical barbeque marinade and it is what gives the chicken inasal its
unique taste and distinct orange color. 32 Inasal refers to the manner
of grilling meat products using an inasal marinade.
Second. The Mang Inasal mark has been used for petitioner's
restaurant business since 2003. The restaurant started in Iloilo but
has since expanded its business throughout the country. Currently,
the Mang Inasal chain of restaurants has a total of 464 branches
scattered throughout the nation's three major islands. 33 It is, thus,
fair to say that a sizeable portion of the population is knowledgeable
of the Mang Inasal mark.
Third. Respondent, on the other hand, seeks to market under the OK
Hotdog Inasal mark curl snack products which it publicizes as having
a cheese hotdog inasal flavor. 34
Accordingly, it is the fact that the underlying goods and services of
both marks deal with inasal and inasal-flavored products which
ultimately fixes the relations between such goods and services. Given
the foregoing circumstances and the aforesaid similarity between the
marks in controversy, we are convinced that an average buyer who
comes across the curls marketed under the OK Hotdog Inasal mark is
likely to be confused as to the true source of such curls.
To our mind, it is not unlikely that such buyer would be led into the
assumption that the curls are of petitioner and that the latter has
ventured into snack manufacturing or, if not, that the petitioner has
supplied the flavorings for respondent's product. Either way, the
reputation of petitioner would be taken advantage of and placed at
the mercy of respondent.
All in all, we find that the goods for which the registration of the OK
Hotdog Inasal mark is sought are related to the services being
represented by the Mang Inasal mark.1âwphi1
IV
Conclusion
The OK Hotdog Inasal mark meets the two conditions of the
proscription under Sec. 123.l(d)(iii) of RA 8293. First, it is similar to the
Mang Inasal mark, an earlier mark. Second, it pertains to goods that
are related to the services represented by such earlier mark.
Petitioner was, therefore, correct; and the IPO-BLA, IPO-DG, and the
CA's rulings must be reversed. The OK Hotdog Inasal mark is not
entitled to be registered as its use will likely deceive or cause
confusion on the part of the public and, thus, also likely to infringe the
Mang Inasal mark. The law, in instances such as this, must come to
the succor of the owner of the earlier mark.
WHEREFORE, premises considered, the petition is
hereby GRANTED. We hereby render a decision as follows:
1. REVERSING and SETTING ASIDE the Resolutions dated June 10,
2015 and December 2, 2015 of the Court of Appeals in CA-G.R. SP No.
139020;
2. SETTING ASIDE the Decision dated December 15, 2014 of the
Director General of the Intellectual Property Office in Appeal No. 14-
2013-0052;
3. SETTING ASIDE the Decision dated September 19, 2013 of the
Office in IPC No. 14-2012-00369; and
4. DIRECTING the incumbent Director General and Director of the
Bureau of Legal Affairs of the Intellectual Property Office
to DENY respondent's Application No. 4-2011-006098 for the
86
registration of the mark "OK Hotdog Inasal Cheese Hotdog Flavor
Mark"
SO ORDERED.

87
 G.R. No. 164321 March 23, 2011
SKECHERS, U.S.A., INC., Petitioner,
vs.
INTER PACIFIC INDUSTRIAL TRADING CORP., and/or INTER PACIFIC
TRADING CORP. and/or STRONG SPORTS GEAR CO., LTD., and/or
STRONGSHOES WAREHOUSE and/or STRONG FASHION SHOES
TRADING and/or TAN TUAN HONG and/or VIOLETA T. MAGAYAGA
and/or JEFFREY R. MORALES and/or any of its other proprietor/s,
directors, officers, employees and/or occupants of its premises
located at S-7, Ed & Joe's Commercial Arcade, No. 153 Quirino
Avenue, Parañaque City, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
TRENDWORKS INTERNATIONAL CORPORATION, Petitioner-
Intervenor,
vs.
INTER PACIFIC INDUSTRIAL TRADING CORP. and/or INTER PACIFIC
TRADING CORP. and/or STRONG SPORTS GEAR CO., LTD., and/or
STRONGSHOES WAREHOUSE and/or STRONG FASHION SHOES
TRADING and/or TAN TUAN HONG and/or VIOLETA T. MAGAYAGA
and/or JEFFREY R. MORALES and/or any of its other proprietor/s,
directors, officers, employees and/or occupants of its premises
located at S-7, Ed & Joe's Commercial Arcade, No. 153 Quirino
Avenue, Parañaque City, Respondents.
RESOLUTION
PERALTA, J.:
For resolution are the twin Motions for Reconsideration 1 filed by
petitioner and petitioner-intervenor from the Decision rendered in
favor of respondents, dated November 30, 2006.
At the outset, a brief narration of the factual and procedural
antecedents that transpired and led to the filing of the motions is in
order.
The present controversy arose when petitioner filed with Branch 24
of the Regional Trial Court (RTC) of Manila an application for the
issuance of search warrants against an outlet and warehouse
operated by respondents for infringement of trademark under
Section 155, in relation to Section 170 of Republic Act No. 8293,
otherwise known as the Intellectual Property Code of the
Philippines.2
In the course of its business, petitioner has registered the trademark
"SKECHERS"3 and the trademark "S" (within an oval design)4 with the
Intellectual Property Office (IPO).
Two search warrants5 were issued by the RTC and were served on the
premises of respondents. As a result of the raid, more than 6,000 pairs
of shoes bearing the "S" logo were seized.
Later, respondents moved to quash the search warrants, arguing that
there was no confusing similarity between petitioner’s "Skechers"
rubber shoes and its "Strong" rubber shoes.
On November 7, 2002, the RTC issued an Order6 quashing the search
warrants and directing the NBI to return the seized goods. The RTC
agreed with respondent’s view that Skechers rubber shoes and Strong
rubber shoes have glaring differences such that an ordinary prudent
purchaser would not likely be misled or confused in purchasing the
wrong article.
Aggrieved, petitioner filed a petition for certiorari 7 with the Court of
Appeals (CA) assailing the RTC Order. On November 17, 2003, the CA
issued a Decision8 affirming the ruling of the RTC.
Subsequently, petitioner filed the present petition 9 before this Court
which puts forth the following assignment of errors:
A. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN CONSIDERING MATTERS OF DEFENSE IN A CRIMINAL
TRIAL FOR TRADEMARK INFRINGEMENT IN PASSING UPON THE
VALIDITY OF THE SEARCH WARRANT WHEN IT SHOULD HAVE LIMITED
ITSELF TO A DETERMINATION OF WHETHER THE TRIAL COURT
COMMITTED GRAVE ABUSE OF DISCRETION IN QUASHING THE
SEARCH WARRANTS.
B. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN FINDING THAT RESPONDENTS ARE NOT GUILTY OF
TRADEMARK INFRINGEMENT IN THE CASE WHERE THE SOLE TRIABLE
ISSUE IS THE EXISTENCE OF PROBABLE CAUSE TO ISSUE A SEARCH
WARRANT.10
In the meantime, petitioner-intervenor filed a Petition-in-
Intervention11 with this Court claiming to be the sole licensed
distributor of Skechers products here in the Philippines.
On November 30, 2006, this Court rendered a Decision 12 dismissing
the petition.
Both petitioner and petitioner-intervenor filed separate motions for
reconsideration.
In petitioner’s motion for reconsideration, petitioner moved for a
reconsideration of the earlier decision on the following grounds:
(a) THIS HONORABLE COURT MUST RE-EXAMINE THE FACTS OF THIS
CASE DUE TO THE SIGNIFICANCE AND REPERCUSSIONS OF ITS
DECISION.
(b) COMMERCIAL QUANTITIES OF THE SEIZED ITEMS WITH THE
UNAUTHORIZED REPRODUCTIONS OF THE "S" TRADEMARK OWNED
BY PETITIONER WERE INTENDED FOR DISTRIBUTION IN THE
PHILIPPINE MARKET TO THE DETRIMENT OF PETITIONER –
RETURNING THE GOODS TO RESPONDENTS WILL ADVERSELY AFFECT
THE GOODWILL AND REPUTATION OF PETITIONER.
(c) THE SEARCH WARRANT COURT AND THE COURT OF APPEALS BOTH
ACTED WITH GRAVE ABUSE OF DISCRETION.
(d) THE SEARCH WARRANT COURT DID NOT PROPERLY RE-EVALUATE
THE EVIDENCE PRESENTED DURING THE SEARCH WARRANT
APPLICATION PROCEEDINGS.
(e) THE SOLID TRIANGLE CASE IS NOT APPLICABLE IN THIS CASE, AS IT
IS BASED ON A DIFFERENT FACTUAL MILIEU. PRELIMINARY FINDING
OF GUILT (OR ABSENCE THEREOF) MADE BY THE SEARCH WARRANT
COURT AND THE COURT OF APPEALS WAS IMPROPER.
(f) THE SEARCH WARRANT COURT OVERSTEPPED ITS DISCRETION.
THE LAW IS CLEAR. THE DOMINANCY TEST SHOULD BE USED.
(g) THE COURT OF APPEALS COMMITTED ERRORS OF JURISDICTION.13
On the other hand, petitioner-intervenor’s motion for
reconsideration raises the following errors for this Court’s
consideration, to wit:
(a) THE COURT OF APPEALS AND THE SEARCH WARRANT COURT
ACTED CONTRARY TO LAW AND JURISPRUDENCE IN ADOPTING THE
ALREADY-REJECTED HOLISTIC TEST IN DETERMINING THE ISSUE OF
CONFUSING SIMILARITY;
(b) THE COURT OF APPEALS AND THE SEARCH WARRANT COURT
ACTED CONTRARY TO LAW IN HOLDING THAT THERE IS NO PROBABLE
CAUSE FOR TRADEMARK INFRINGEMENT; AND
(c) THE COURT OF APPEALS SANCTIONED THE TRIAL COURT’S
DEPARTURE FROM THE USUAL AND ACCEPTED COURSE OF JUDICIAL
PROCEEDINGS WHEN IT UPHELD THE QUASHAL OF THE SEARCH
WARRANT ON THE BASIS SOLELY OF A FINDING THAT THERE IS NO
CONFUSING SIMILARITY.14
88
A perusal of the motions submitted by petitioner and petitioner-
intervenor would show that the primary issue posed by them dwells
on the issue of whether or not respondent is guilty of trademark
infringement.
After a thorough review of the arguments raised herein, this Court
reconsiders its earlier decision.
The basic law on trademark, infringement, and unfair competition is
Republic Act (R.A.) No. 8293. Specifically, Section 155 of R.A. No.
8293 states:
Remedies; Infringement. — Any person who shall, without the
consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for
sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or
services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered
mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be
used in commerce upon or in connection with the sale, offering for
sale, distribution, or advertising of goods or services on or in
connection with which such use is likely to cause confusion, or to
cause mistake, or to deceive, shall be liable in a civil action for
infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the
acts stated in Subsection 155.1 or this subsection are committed
regardless of whether there is actual sale of goods or services using
the infringing material.15
The essential element of infringement under R.A. No. 8293 is that the
infringing mark is likely to cause confusion. In determining similarity
and likelihood of confusion, jurisprudence has developed tests the
Dominancy Test and the Holistic or Totality Test.
The Dominancy Test focuses on the similarity of the prevalent or
dominant features of the competing trademarks that might cause
confusion, mistake, and deception in the mind of the purchasing
public. Duplication or imitation is not necessary; neither is it required
that the mark sought to be registered suggests an effort to imitate.
Given more consideration are the aural and visual impressions
created by the marks on the buyers of goods, giving little weight to
factors like prices, quality, sales outlets, and market segments.16
In contrast, the Holistic or Totality Test necessitates a consideration
of the entirety of the marks as applied to the products, including the
labels and packaging, in determining confusing similarity. The
discerning eye of the observer must focus not only on the
predominant words, but also on the other features appearing on both
labels so that the observer may draw conclusion on whether one is
confusingly similar to the other.17
Relative to the question on confusion of marks and trade names,
jurisprudence has noted two (2) types of confusion, viz.: (1) confusion
of goods (product confusion), where the ordinarily prudent purchaser
would be induced to purchase one product in the belief that he was
purchasing the other; and (2) confusion of business (source or origin
confusion), where, although the goods of the parties are different, the
product, the mark of which registration is applied for by one party, is
such as might reasonably be assumed to originate with the registrant
of an earlier product, and the public would then be deceived either
into that belief or into the belief that there is some connection
between the two parties, though inexistent.18
Applying the Dominancy Test to the case at bar, this Court finds that
the use of the stylized "S" by respondent in its Strong rubber shoes
infringes on the mark already registered by petitioner with the IPO.
While it is undisputed that petitioner’s stylized "S" is within an oval
design, to this Court’s mind, the dominant feature of the trademark
is the stylized "S," as it is precisely the stylized "S" which catches the
eye of the purchaser. Thus, even if respondent did not use an oval
design, the mere fact that it used the same stylized "S", the same
being the dominant feature of petitioner’s trademark, already
constitutes infringement under the Dominancy Test.
This Court cannot agree with the observation of the CA that the use
of the letter "S" could hardly be considered as highly identifiable to
the products of petitioner alone. The CA even supported its
conclusion by stating that the letter "S" has been used in so many
existing trademarks, the most popular of which is the trademark "S"
enclosed by an inverted triangle, which the CA says is identifiable to
Superman. Such reasoning, however, misses the entire point, which
is that respondent had used a stylized "S," which is the
same stylized "S" which petitioner has a registered trademark for. The
letter "S" used in the Superman logo, on the other hand, has a block-
like tip on the upper portion and a round elongated tip on the lower
portion. Accordingly, the comparison made by the CA of the letter "S"
used in the Superman trademark with petitioner’s stylized "S" is not
appropriate to the case at bar.
Furthermore, respondent did not simply use the letter "S," but it
appears to this Court that based on the font and the size of the
lettering, the stylized "S" utilized by respondent is the very same
stylized "S" used by petitioner; a stylized "S" which is unique and
distinguishes petitioner’s trademark. Indubitably, the likelihood of
confusion is present as purchasers will associate the respondent’s
use of the stylized "S" as having been authorized by petitioner or
that respondent’s product is connected with petitioner’s business.
Both the RTC and the CA applied the Holistic Test in ruling that
respondent had not infringed petitioner’s trademark. For its part, the
RTC noted the following supposed dissimilarities between the shoes,
to wit:
1. The mark "S" found in Strong Shoes is not enclosed in an "oval
design."
2. The word "Strong" is conspicuously placed at the backside and
insoles.
3. The hang tags and labels attached to the shoes bears the word
"Strong" for respondent and "Skechers U.S.A." for private
complainant;
4. Strong shoes are modestly priced compared to the costs of
Skechers Shoes.19
While there may be dissimilarities between the appearances of the
shoes, to this Court’s mind such dissimilarities do not outweigh the
89
stark and blatant similarities in their general features. As can be
readily observed by simply comparing petitioner’s Energy 20 model
and respondent’s Strong21 rubber shoes, respondent also used the
color scheme of blue, white and gray utilized by petitioner. Even the
design and "wavelike" pattern of the midsole and outer sole of
respondent’s shoes are very similar to petitioner’s shoes, if not
exact patterns thereof. At the side of the midsole near the heel of
both shoes are two elongated designs in practically the same
location. Even the outer soles of both shoes have the same number
of ridges, five at the back and six in front. On the side of
respondent’s shoes, near the upper part, appears the stylized "S,"
placed in the exact location as that of the stylized "S" on petitioner’s
shoes. On top of the "tongue" of both shoes appears the stylized "S"
in practically the same location and size. Moreover, at the back of
petitioner’s shoes, near the heel counter, appears "Skechers Sport
Trail" written in white lettering. However, on respondent’s shoes
appears "Strong Sport Trail" noticeably written in the same white
lettering, font size, direction and orientation as that of petitioner’s
shoes. On top of the heel collar of petitioner’s shoes are two grayish-
white semi-transparent circles. Not surprisingly, respondent’s shoes
also have two grayish-white semi-transparent circles in the exact
same location.lihpwa1
Based on the foregoing, this Court is at a loss as to how the RTC and
the CA, in applying the holistic test, ruled that there was no colorable
imitation, when it cannot be any more clear and apparent to this
Court that there is colorable imitation. The dissimilarities between
the shoes are too trifling and frivolous that it is indubitable that
respondent’s products will cause confusion and mistake in the eyes
of the public. Respondent’s shoes may not be an exact replica of
petitioner’s shoes, but the features and overall design are so similar
and alike that confusion is highly likely.1avvphi1
In Converse Rubber Corporation v. Jacinto Rubber & Plastic Co.,
Inc.,22 this Court, in a case for unfair competition, had opined that
even if not all the details are identical, as long as the general
appearance of the two products are such that any ordinary purchaser
would be deceived, the imitator should be liable, to wit:
From said examination, We find the shoes manufactured by
defendants to contain, as found by the trial court, practically all the
features of those of the plaintiff Converse Rubber Corporation and
manufactured, sold or marketed by plaintiff Edwardson
Manufacturing Corporation, except for their respective brands, of
course. We fully agree with the trial court that "the respective
designs, shapes, the colors of the ankle patches, the bands, the toe
patch and the soles of the two products are exactly the same ... (such
that) at a distance of a few meters, it is impossible to distinguish
"Custombuilt" from "Chuck Taylor." These elements are more than
sufficient to serve as basis for a charge of unfair competition. Even if
not all the details just mentioned were identical, with the general
appearances alone of the two products, any ordinary, or even
perhaps even a not too perceptive and discriminating customer could
be deceived, and, therefore, Custombuilt could easily be passed off
for Chuck Taylor. Jurisprudence supports the view that under such
circumstances, the imitator must be held liable. x x x 23
Neither can the difference in price be a complete defense in
trademark infringement. In McDonald’s Corporation v. L.C. Big Mak
Burger. Inc.,24 this Court held:
Modern law recognizes that the protection to which the owner of a
trademark is entitled is not limited to guarding his goods or business
from actual market competition with identical or similar products of
the parties, but extends to all cases in which the use by a junior
appropriator of a trade-mark or trade-name is likely to lead to a
confusion of source, as where prospective purchasers would be
misled into thinking that the complaining party has extended his
business into the field (see 148 ALR 56 et seq; 53 Am. Jur. 576) or is
in any way connected with the activities of the infringer; or when it
forestalls the normal potential expansion of his business (v. 148 ALR
77, 84; 52 Am. Jur. 576, 577). x x x25
Indeed, the registered trademark owner may use its mark on the
same or similar products, in different segments of the market, and at
different price levels depending on variations of the products for
specific segments of the market.26 The purchasing public might be
mistaken in thinking that petitioner had ventured into a lower market
segment such that it is not inconceivable for the public to think that
Strong or Strong Sport Trail might be associated or connected with
petitioner’s brand, which scenario is plausible especially since both
petitioner and respondent manufacture rubber shoes.
Withal, the protection of trademarks as intellectual property is
intended not only to preserve the goodwill and reputation of the
business established on the goods bearing the mark through actual
use over a period of time, but also to safeguard the public as
consumers against confusion on these goods.27 While respondent’s
shoes contain some dissimilarities with petitioner’s shoes, this Court
cannot close its eye to the fact that for all intents and purpose,
respondent had deliberately attempted to copy petitioner’s mark and
overall design and features of the shoes. Let it be remembered, that
defendants in cases of infringement do not normally copy but only
make colorable changes.28The most successful form of copying is to
employ enough points of similarity to confuse the public, with enough
points of difference to confuse the courts.29
WHEREFORE, premises considered, the Motion for Reconsideration is
GRANTED. The Decision dated November 30, 2006 is RECONSIDERED
and SET ASIDE.
SO ORDERED.
90
 EN BANC
[G.R. No. L-8072. October 31, 1956.]
LIM HOA, Petitioner, vs. DIRECTOR OF PATENTS, Respondent.
DECISION
MONTEMAYOR, J.:
On April 26, 1949, the Petitioner, Lim Hoa, filed with the Patent Office
an application for the registration of a trademark, consisting of a
representation of two midget roosters in an attitude of combat with
the word “Bantam” printed above them, he claiming that he had used
said trademark on a food seasoning product since April 25 of that
year. The application was published in the Official Gazette in its issue
of February, 1953, released for circulation on April 18, of the same
year.
On April 30, 1953, the Agricom Development Co., Inc., a domestic
corporation, opposed the application on several grounds, among
others, that the trademark sought to be registered was confusingly
similar to its register mark, consisting of a pictorial representation of
a hen with the words “Hen Brand” and “Marca Manok”, which mark
or brand was also used on a food seasoning product, before the use
of the trademark by the applicant.
It is a fact that the family of C. Javier Advincula, since the year 1946,
had adopted and used as a trademark of said food seasoning product
manufactured by it, the pictorial representation of a hen. In 1947, the
members of the Advincula family organized the Agricom
Development Co., Inc., the Oppositor in this case, and said
corporation took over the manufacture of the same food product of
the Advincula family, including the use of the brand of the pictorial
representation of a hen but adding to it the word “Hen”. In the year
1948, an addition was made to the brand with the words “Ve-Tsin,
Hen Brand” and “Marca Manok,” and since then, on its food
seasoning product at different times, labels were used, in different
colors but bearing the representation of a hen and the words just
mentioned. So that the application to register applicant’s brand,
consisting of two roosters is an attitude of combat, with the word
“Bantam” printed above them, came along after the use and
registration of the mark or brand of the Oppositor corporation and its
predecessor, the Advincula family.
After considering the application and the opposition thereto, and
after comparing the two brands, the Director of Patents issued his
order dated June 26, 1954, wherein he found and held that to allow
the registration of the applicant’s trademark would likely cause
confusion or mistake or deceive purchasers, and he refused
registration of said trademark, under Rule 178 of the Revised Rules of
Practice in Trademark Cases, 1953. The Petitioner is now appealling
said order.
After a careful examination of the facts above mentioned, and after
comparing the two brands, we do not hesitate to say and to hold that
there is such similarity between the two brands as to cause confusion
in the mind of the public that buys the food seasoning product on the
strength and on the indication of the trademark or brand identifying
or distinguishing the same. In the case of Go Tiong Sa vs. Director of
Patents, (95 Phil., 1), we had occasion to say the
following:chanroblesvirtuallawlibrary
“ cralaw
It has been consistently held that the question of infringement of a
trademark is to be determined by the test of dominancy. Similarity in
size, form, and color, while relevant, is not conclusive. If the
competing trademark contains the main or essential or dominant
features of another, and confusion and deception is likely to result,
infringement takes place. Duplication or imitation is not
necessary; chan roblesvirtualawlibrarynor it is necessary that the
infringing label should suggest an effort to imitate. (C. Neilman
Brewing Co. vs. Independent Brewing Co., 191 F. 489, 495, citing Eagle
White Lead Co. v. Pflugh (CC) 180 Fed. 579).
The question at issue in cases of infringement of trademarks is
whether the use of the marks involved would be likely to cause
confusion or mistakes in the mind of the public or deceive purchasers.
(Auburn Rubber Corporation vs. Honover Rubber Co., 107 F 2d 588,
590, citing Procter and Gamble Co. vs. J. L. Prescot Co., 49 F 2d 959,
18 CCPA, Patents, 1433; chan roblesvirtualawlibraryPepsodent Co. vs.
Comfort Manufacturing Co., 83 F 2d 906; chan
roblesvirtualawlibrary23 CCPA, Patents, 124)”
The danger of confusion in trademarks and brands which are similar
may not be so great in the case of commodities or articles of
relatively great value, such as, radio and television sets, air
conditioning units, machinery, etc., for the prospective buyer,
generally the head of the family or a businessman, before making
the purchase, reads the pamphlets and all literature available,
describing the article he is planning to buy, and perhaps even makes
comparisons with similar articles in the market. He is not likely to be
deceived by similarity in the trademarks because he makes a more or
less thorough study of the same and may even consult his friends
about the relative merit and performance of the article or machinery,
as compared to others also for sale. But in the sale of a food
seasoning product, a kitchen article of everyday consumption, the
circumstances are far different. Said product is generally purchased
by cooks and household help, sometimes illiterate who are guided
by pictorial representations and the sound of the word descriptive
of said representation.
IN this case
The two roosters appearing in the trademark of the applicant and the
hen appearing on the trademark of the Oppositor, although of
different sexes, belong to the same family of chicken, known as
manok in all the principal dialects of the Philippines, and when a cook
or a household help or even a housewife buys a food seasoning
product for the kitchen the brand of “Manok” or “Marca Manok”
would most likely be upper most in her mind and would influence her
in selecting the product, regardless of whether the brand pictures a
hen or a rooster or two roosters. To her, they are all manok. Therein
lies the confusion, even deception.
We do not see why applicant could not have stretched his imagination
even a little and extended his choice to other members of the animal
kingdom, as a brand to differentiate his product from similar products
in the market. In a similar case decided by this Tribunal wherein,
although one brand consisting of the representation of a rooster was
already being used by one party, another party wanted to register a
similar brand, consisting of two roosters on a similar product, namely,
candy, this Court said:chanroblesvirtuallawlibrary
91
“Counsel for Defendant insists that there is no real resemblance
between a picture of one rooster and a picture of two roosters; chan
roblesvirtualawlibrarythat no person could or would be deceived by
the use by the Defendant of a trade-mark wholly distinct from that of
the Plaintiff; chan roblesvirtualawlibrarythat the fact that
the Defendant used two roosters as its trademark clearly discloses its
innocence of any intent to deceive, since a comparison of the trade-
mark of the Plaintiff with that of the Defendant makes apparent at
once that was not intended to be an imitation of the other.

“We ask, however, why, with all the birds in the air, and all the fishes
in the sea, and all the animals on the face of the earth to chose from,
the Defendant company selected two roosters as its trade- mark,
although its directors, and managers must have been well aware of
the long-continued use of a rooster by the Plaintiff in connection with
the sale and advertisement of his goods?

“There is nothing in the picture of one or more roosters which in itself

is descriptive of the goods sold by the Plaintiff or by
the Defendant corporation, or suggestive of the quality of these
goods. A cat, or dog, a carabao, a shark, or an eagle stamped upon
the container in which candies are sold would serve as well as a
rooster for purposes of identification as the product of Defendant’s
factory. Why did Defendant select two roosters as its trade-mark? We
cannot doubt that it was because the Plaintiff’s candies had acquired
a certain reputation under the trade-mark of a rooster, and
the Defendant corporation hoped to profit unjustly by that
reputation. Defendant knew that the use of a single rooster would be
prohibited as a technical infringement of Plaintiff’s trade-mark, but it
hoped that it could avoid that danger by the use of two roosters; chan
roblesvirtualawlibraryand at the same time get such advantage as it
must have believed it could secure from the use of a design on the
containers of its goods, not absolutely identical with that used by
the Plaintiff, but so similar in the dominant idea as to confuse or
mislead the purchasers cralaw .” (Clarke vs. Manila Candy Co., 100
Phil. 36)

In view of the foregoing, the order appealed from is hereby affirmed,

with costs. We do not deem it necessary to discuss and rule upon the
other questions raised in the appeal.
Paras, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.
B. L., and Felix, JJ., concur.

92
 FIRST DIVISION
G.R. No. L-23035 July 31, 1975
PHILIPPINE NUT INDUSTRY, INC., petitioner,
vs.
STANDARD BRANDS INCORPORATED and TIBURCIO S. EVALLE as
Director of Patents, respondents.
Perfecta E. De Vera for petitioner.
Paredes, Poblador, Cruz and Nazareno for private respondent.
Office of the Solicitor General Arturo A. Alafriz, Acting Assistant
Solicitor General Isidro C. Borromeo and Solicitor Francisco J.
Bautista for respondent Director.
MUNOZ PALMA, J.:
Challenged in this petition for review is the decision of respondent
Director of Patents which orders the cancellation of Certificate of
Registration No. SR-416 issued in favor of herein petitioner Philippine
Nut Industry, Inc. (hereinafter called Philippine Nut) for the
trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS," upon
complaint of Standard Brands Inc. (hereinafter to be called Standard
Brands).
The records of the case show the following incidents:
Philippine Nut, a domestic corporation, obtained from the Patent
Office on August 10, 1961, Certificate of Registration No. SR-416
covering the trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS,"
the label used on its product of salted peanuts.
On May 14, 1962, Standard Brands a foreign corporation,1 filed with
the Director of Patents Inter Partes Case No. 268 asking for the
cancellation of Philippine Nut's certificate of registration on the
ground that "the registrant was not entitled to register the mark at
the time of its application for registration thereof" for the reason that
it (Standard Brands) is the owner of the trademark "PLANTERS
COCKTAIL PEANUTS" covered by Certificate of Registration No. SR-
172, issued by the Patent Office on July 28, 1958. Standard Brands
alleged in its petition that Philippine Nut's trademark "PHILIPPINE
PLANTERS CORDIAL PEANUTS" closely resembles and is confusingly
similar to its trademark "PLANTERS COCKTAIL PEANUTS" used also on
salted peanuts, and that the registration of the former is likely to
deceive the buying public and cause damage to it.
On June 1, 1962, Philippine Nut filed its answer invoking the special
defense that its registered label is not confusingly similar to that of
Standard Brands as the latter alleges.
At the hearing of October 4, 1962, the parties submitted a partial
stipulation of facts. On December 12, 1962, an amended partial
stipulation of facts was submitted, the pertinent agreements
contained in which are: (1) that Standard Brands is the present owner
of the trademark "PLANTERS COCKTAIL PEANUTS" covered by
Certificate of Registration No. SR-172 issued on July 28, 1958; (2) that
Standard Brands trademark was first used in commerce in the
Philippines in December, 1938 and (3) that Philippine Nut's trademark
"PHILIPPINE PLANTERS CORDIAL PEANUTS" was first used in the
Philippines on December 20, 1958 and registered with the Patent
Office on August 10, 1961.
On December 10, 1963, after the presentation of oral and
documentary evidence and the filing by the parties of their
memoranda, respondent Director of Patents rendered Decision No.
281 giving due course to Standard Brand's petition and ordering the
cancellation of Philippine Nut's Certificate of Registration No. SR-416.
The Director of Patents found and held that in the labels using the two
trademarks in question, the dominant part is the word "Planters",
displayed "in a very similar manner" so much so that "as to
appearance and general impression" there is "a very confusing
similarity," and he concluded that Philippine Nut "was not entitled to
register the mark at the time of its filing the application for
registration" as Standard Brands will be damaged by the registration
of the same. Its motion for reconsideration having been denied,
Philippine Nut came up to this Court for a review of said decision.
In seeking a reversal of the decision of respondent Director of Patents,
petitioner brings forth eleven assigned errors all of which revolve
around one main issue: is the trademark "PHILIPPINE PLANTERS
CORDIAL PEANUTS" used by Philippine Nut on its label for salted
peanuts confusingly similar to the trademark "PLANTERS COCKTAIL
PEANUTS" used by Standard Brands on its product so as to constitute
an infringement of the latter's trademark rights and justify its
cancellation?2
The applicable law to the case is found in Republic Act 166 otherwise
known as the Trade-Mark Law from which We quote the following
pertinent provisions:
Chapter II-A. —
Sec. 4. Registration of trade-marks, trade-names and service-marks
on the principal register. — There is hereby established a register of
trade-marks, trade-names and service-marks which shall be known as
the principal register. The owner of a trade-mark, trade-name or
service-mark used to distinguish his goods, business or services from
the goods, business or services of others shall have the right to
register the same on the principal register, unless it:
(d) Consists of or comprises a mark or trade-name which so resembles
a mark or trade-name registered in the Philippines or a mark or trade-
name previously used in the Philippines by another and not
abandoned, as to be likely, when applied to or used in connection
with the goods, business or services of the applicant, to cause
confusion or mistake or to deceive purchasers; ... (emphasis Ours)
Sec. 17. Grounds for cancellation — Any person, who believes that he
is or will be damaged by the registration of a mark or trade-name,
may, upon the payment of the prescribed fee, apply to cancel said
registration upon any of the following grounds:
(c) That the registration was obtained fraudulently or contrary to the
provisions of section four, Chapter II hereof; ....
Sec. 22. Infringement, what constitutes. — Any person who shall use,
without the consent of the registrant, any reproduction, counterfeit,
copy or colorable imitation of any registered mark or trade-name in
connection with the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely
to cause confusion or mistake or to deceive purchasers or others as to
the source or origin of such goods or services, or identity of such
business; or reproduce, counterfeit, copy or colorably imitate any
such mark or trade-name and apply such reproduction, counterfeit,
copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business or services, shall be liable
to a civil action by the registrant for any or all of the remedies herein
provided. (emphasis supplied).
In the cases involving infringement of trademark brought before the
Court it has been consistently held that there is infringement of
trademark when the use of the mark involved would be likely to cause
confusion or mistake in the mind of the public or to deceive
purchasers as to the origin or source of the commodity; that whether
93
or not a trademark causes confusion and is likely to deceive the public
is a question of fact which is to be resolved by applying the "test of
dominancy", meaning, if the competing trademark contains the main
or essential or dominant features of another by reason of which
confusion and deception are likely to result, then infringement takes
pIace; that duplication or imitation is not necessary, a similarity in the
dominant features of the trademarks would be sufficient.3
1. The first argument advanced by petitioner which We believe goes
to the core of the matter in litigation is that the Director of Patents
erred in holding that the dominant portion of the label of Standard
Brands in its cans of salted peanuts consists of the word PLANTERS
which has been used in the label of Philippine Nut for its own product.
According to petitioner, PLANTERS cannot be considered as the
dominant feature of the trademarks in question because it is a mere
descriptive term, an ordinary word which is defined in Webster
International Dictionary as "one who or that which plants or sows, a
farmer or an agriculturist." (pp. 10-11, petitioner's brief)
We find the argument without merit. While it is true that PLANTERS
is an ordinary word, nevertheless it is used in the labels not to
describe the nature of the product, but to project the source or origin
of the salted peanuts contained in the cans. The word PLANTERS
printed across the upper portion of the label in bold letters easily
attracts and catches the eye of the ordinary consumer and it is that
word and none other that sticks in his mind when he thinks of salted
peanuts.
In cases of this nature there can be no better evidence as to what is
the dominant feature of a label and as to whether there is a confusing
similarity in the contesting trademarks than the labels themselves. A
visual and graphic presentation of the labels will constitute the best
argument for one or the other, hence, we are reproducing hereunder
a picture of the cans of salted peanuts of the parties to the case.
The picture below is part of the documentary evidence appearing in
the original records, and it clearly demonstrates the correctness of
the finding of respondent Director that the word PLANTERS is the
dominant, striking mark of the labels in question.
It is true that there are other words used such as "Cordial" in
petitioner's can and "Cocktail" in Standard Brands', which are also
prominently displayed, but these words are mere adjectives
describing the type of peanuts in the labeled containers and are not
sufficient to warn the unwary customer that the two products come
form distinct sources. As a whole it is the word PLANTERS which draws
the attention of the buyer and leads him to conclude that the salted
peanuts contained in the two cans originate from one and the same
manufacturer. In fact, when a housewife sends her housemaid to the
market to buy canned salted peanuts, she will describe the brand she
wants by using the word PLANTERS and not "Cordial" nor "Cocktail".
2. The next argument of petitioner is that respondent Director should
not have based his decision simply on the use of the term PLANTERS,
and that what he should have resolved is whether there is a confusing
similarity in the trademarks of the parties.
It is quite obvious from the record, that respondent Director's
decision is based not only on the fact that petitioner herein adopted
the same dominant mark of Standard Brands, that is, the word
PLANTERS, but that it also used in its label the same coloring scheme
of gold, blue, and white, and basically the same lay-out of words such
as "salted peanuts" and "vacuum packed" with similar type and size
of lettering as appearing in Standard Brands' own trademark, all of
which result in a confusing similarity between the two labels. 4 Thus,
the decision states: "Furthermore, as to appearance and general
impression of the two trademarks, I find a very confusing similarity."
(Emphasis supplied)5
Referring again to the picture We have reproduced, the striking
similarity between the two labels is quite evident not only in the
common use of PLANTERS but also in the other words employed. As
a matter of fact, the capital letter "C" of petitioner's "Cordial" is alike
to the capital "C" of Standard's "Cocktail", with both words ending
with an "1".
Admittedly, no producer or manufacturer may have a monopoly of
any color scheme or form of words in a label. But when a competitor
adopts a distinctive or dominant mark or feature of another's
trademark and with it makes use of the same color ensemble,
employs similar words written in a style, type and size of lettering
almost identical with those found in the other trademark, the intent
to pass to the public his product as that of the other is quite obvious.
Hence, there is good reason for Standard Brands' to ask why did
petitioner herein use the word PLANTERS, the same coloring
scheme, even almost identical size and contour of the cans, the
same lay-out of words on its label when there is a myriad of other
words, colors, phrases, symbols, and arrangements to choose from
to distinguish its product from Standard Brands, if petitioner was
not motivated to simulate the label of the latter for its own can of
salted peanuts, and thereby deceive the public?
A similar question was asked by this Court in Clarke vs. Manila Candy
Co., 36 Phil. 100, when it resolved in favor of plaintiff a case of unfair
competition based on an imitation of Clarke's packages and wrappers
of its candies the main feature of which was one rooster. The Court
queried thus: "... why, with all the birds in the air, and all the fishes in
the sea, and all the animals on the face of the earth to choose from,
the defendant company (Manila Candy Co.) selected two roosters as
its trademark, although its directors and managers must have been
well aware of the long-continued use of a rooster by the plaintiff with
the sale and advertisement of its goods? ... A cat, a dog, a carabao, a
shark or an eagle stamped upon the container in which candies are
sold would serve as well as a rooster for purposes of identification as
the product of defendant's factory. Why did defendant select two
roosters as its trademark ?" (p.109, supra)
Petitioner contends, however, that there are differences between
the two trademarks, such as, the presence of the word "Philippine"
above PLANTERS on its label, and other phrases, to wit: "For Quality
and Price, Its Your Outstanding Buy", the address of the
manufacturer in Quezon City, etc., plus a pictorial representation of
peanuts overflowing from a tin can, while in the label of Standard
Brands it is stated that the product is manufactured in San Francisco,
California, and on top of the tin can is printed "Mr. Peanut" and the
representation of a "humanized peanut". (pp. 30-33, petitioner's
brief)
We have taken note of those alleged differences but We find them
insignificant in the sense that they are not sufficient to call the
attention of the ordinary buyer that the labeled cans come from
distinct and separate sources. The word "Philippine" printed in
small type in petitioner's label may simply give to the purchaser the
impression that that particular can of PLANTERS salted peanuts is
94
locally produced or canned but that what he is buying is still
PLANTERS canned salted peanuts and nothing else. As regards "Mr.
Peanut" on Standard Brands' label, the same appears on the top cover
and is not visible when the cans are displayed on the shelves, aside
from the fact that the figure of "Mr. Peanut" is printed on the tin cover
which is thrown away after opening the can, leaving no lasting
impression on the consumer. It is also for this reason that We do not
agree with petitioner that it is "Mr. Peanut and the Humanized
Peanut" which is the trademark of Standard Brands salted peanuts, it
being a mere descriptive pictorial representation of a peanut not
prominently displayed on the very body of the label covering the can,
unlike the term PLANTERS which dominates the label.
It is correctly observed by respondent Director that the merchandize
or goods being sold by the parties herein are very ordinary
commodities purchased by the average person and many times by the
ignorant and unlettered 6 and these are the persons who will not as
a rule examine the printed small letterings on the container but will
simply be guided by the presence of the striking mark PLANTERS on
the label. Differences there will always be, but whatever differences
exist, these pale into insignificance in the face of an evident similarity
in the dominant feature and overall appearance of the labels of the
parties.
It is not necessary, to constitute trademark "infringement", that every
word of a trade-mark should be appropriated, but it is sufficient that
enough be taken to deceive the public in the purchase of a protected
article. (Bunte Bros. v. Standard Chocolates, D.C. Mass., 45 F. Supp.
478, 481)
A trade-name in order to be an `infringement' upon another need not
be exactly like it in form and sound, but it is enough if the one so
resembles another as to deceive or mislead persons of ordinary
caution into the belief that they are dealing with the one concern
when in fact they are dealing with the other. (Foss v. Culbertson, 136
P. 2d 711, 718, 17 Wash. 2d 610)
Where a trade-mark contains a dominating or distinguishing word,
and purchasing public has come to know and designate the article by
such dominating word, the use of such word by another in marking
similar goods may constitute Infringement though the marks aside
from such dominating word may be dissimilar. (Queen Mfg. Co. v.
lsaac Ginsberg & Bros., C.C.A. Mon., 25 F. 2d 284, 287)
(d) "Infringement" of trade-mark does not depend on the use of
identical words, nor on the question whether they are so similar that
a person looking at one would be deceived into the belief that it was
the other; it being sufficient if one mark is so like another in form,
spelling, or sound that one with not a very definite or clear
recollection as to the real mark is likely to be confused or misled.
(Northam Warren Corporation v. Universal Cosmetic Co., C. C. A; III.,
18 F. 2d 774, 775)
3. What is next submitted by petitioner is that it was error for
respondent Director to have enjoined it from using PLANTERS in the
absence of evidence showing that the term has acquired secondary
meaning. Petitioner, invoking American jurisprudence, asserts that
the first user of a tradename composed of common words is given no
special preference unless it is shown that such words have acquired
secondary meaning, and this, respondent Standard Brands failed to
do when no evidence was presented to establish that fact. (pp. 14-16,
petitioner's brief)
The doctrine of secondary meaning is found in Sec. 4 (f), Chapter II-A
of the Trade-Mark Law, viz:
Except as expressly excluded in paragraphs (a), (b), (c) and (d) of this
section, nothing herein shall prevent the registration of a mark or
trade-name used by the applicant which has become distinctive of the
applicant's goods, business or services. The Director may accept
as prima facie evidence that the mark or trade-name has become
distinctive, as applied to or used in connection with the applicant's
goods, business or services, proof of substantially exclusive and
continuous use thereof as a mark or trade-name by the applicant in
connection with the sale of goods, business or services for the five
years next preceding the date of the filing of the application for its
registration. (As amended by Sec. 3, Rep. Act No. 638.)
This Court held that the doctrine is to the effect that a word or phrase
originally incapable of exclusive appropriation with reference to an
article on the market, because geographically or otherwise
descriptive, might nevertheless have been used so long and so
exclusively by one producer with reference to his article that, in that
trade and to that branch of the purchasing public, the word or phrase
has come to mean that the article was his product.7
By way of illustration, is the word "Selecta" which according to this
Court is a common ordinary term in the sense that it may be used or
employed by any one in promoting his business or enterprise, but
which once adopted or coined in connection with one's business as
an emblem, sign or device to characterize its products, or as a badge
of authenticity, may acquire a secondary meaning as to be exclusively
associated with its products and business, so that its use by another
may lead to confusion in trade and cause damage to its business. 8
The applicability of the doctrine of secondary meaning to the
situation now before Us is appropriate because there is oral and
documentary evidence showing that the word PLANTERS has been
used by and closely associated with Standard Brands for its canned
salted peanuts since 1938 in this country. Not only is that fact
admitted by petitioner in the amended stipulation of facts (see p. 2 of
this Decision), but the matter has been established by testimonial (tsn
October 4, 1962, pp. 2-8) and documentary evidence consisting of
invoices covering the sale of "PLANTERS cocktail peanuts". (Exhibits C
to C-4; D to D-10; E to E-10; F to F-2) In other words, there is evidence
to show that the term PLANTERS has become a distinctive mark or
symbol insofar as salted peanuts are concerned, and by priority of use
dating as far back as 1938, respondent Standard Brands has acquired
a preferential right to its adoption as its trademark warranting
protection against its usurpation by another. Ubi jus ibi remedium.
Where there is a right there is a remedy. Standard Brands has shown
the existence of a property right(Arce Sons & Co. vs. Selecta Biscuit
Co., Inc., supra, pp. 262-263) and respondent Director, has afforded
the remedy.
Still on this point, petitioner contends that Standard Brands' use of
the trademark PLANTERS was interrupted during the Japanese
occupation and in fact was discontinued when the importation of
peanuts was prohibited by Central Bank regulations effective July 1,
1953, hence it cannot be presumed that it has acquired a secondary
meaning. We hold otherwise. Respondent Director correctly applied
the rule that non-use of a trademark on an article of merchandize due
to legal restrictions or circumstances beyond one's control is not to
be considered as an abandonment.
In the case of Andres Romero vs. Maiden Form Brassiere Co., Inc., L-
18289, March 31, 1964, 10 SCRA 556, the same question was raised
by petitioner Romero when he filed with the Bureau of Patents a
petition to cancel the registration of the trademark "Adagio" for
brassieres manufactured by Maiden Form Brassiere Co., Inc. His
95
petition having been dismissed by the Director of Patents, Romero secondary meaning in relation to salted peanuts; and (3) there has
appealed to this Court and one of the issues posed by him was that been no abandonment or non-use of said trademark by Standard
when the Government imposed restrictions on importations of Brands which would justify its adoption by petitioner or any other
brassieres bearing that particular trademark, there was competitor for the sale of salted peanuts in the market.
abandonment of the same by respondent company which entitled PREMISES CONSIDERED, We AFFIRM the decision of respondent
petitioner to adopt it for his own use and which in fact he had been Director of Patents with costs against petitioner.
using for a number of years. That argument was met by the Court in So Ordered.
the words of Justice Jesus Barrera thus:
... The evidence on record shows, on the other hand, that the
trademark "Adagio" was first used exlusively in the Philippines by
appellee in the year 1932. There being no evidence of use of the mark
by others before 1932, or that appellee abandoned use thereof, the
registration of the mark was made in accordance with the Trademark
Law. Granting that appellant used the mark when appellee stopped
using it during the period of time that the Government imposed
restrictions on importation of respondent's brassiere being the
trademark, such temporary non-use did not affect the rights of
appellee because it was occasioned by government restrictions and
was not permanent, intentional, and voluntary.
To work an abandonment, the disuse must be permanent and not
ephemeral; it must, be intentional and voluntary, and not involuntary
or even compulsory. There must be a thoroughgoing discontinuance
of any trade-mark use of the mark in question (Callman, Unfair
Competition and Trademark, 2nd Ed., p. 1341).1äwphï1.ñët
The use of the trademark by other manufacturers did not indicate an
intention on the part of appellee to abandon it.
The instances of the use by others of the term Budweiser, cited by the
defendant, fail, even when liberally construed, to indicate an
intention upon the part of the complainant to abandon its rights to
that name. "To establish the defense of abandonment, it is necessary
to show not only acts indicating a practical abandonment, but an
actual intention to abandon." Sanlehner v. Eisener & Mendelson Co.,
179 U.S. 19, 21 S. Ct. 7 (45 L. Ed. 6.0).(Anheuser-Busch, Inc, v.
Budweiser Malt Products Corp., 287 F. 245.)
xxx xxx xxx
Non-use because of legal restrictions is not evidence of an intent to
abandon. Non-use of their ancient trade-mark and the adoption of
new marks by the Carthusian Monks after they had been compelled
to leave France was consistent with an intention to retain their right
to use their old mark. Abandonment will not be inferred from a disuse
over a period of years occasioned by statutory restrictions on the
name of liquor. (Nims, Unfair Competition and Trade-Mark, p. 1269.)
(pp. 562-564, supra) (emphasis Ours)
Applying the words of Justice Roman Ozaeta in the "Ang Tibay" case
(Ang vs. Toribio Teodoro, p. 56, supra) to the case now before Us,
petitioner herein must not be allowed to get a free ride on the
reputation and selling power of Standard Brands PLANTERS salted
peanuts, for a self-respecting person, or a reputable business concern
as is the case here, does not remain in the shelter of another's
popularity and goodwill but builds one of his own.
4. Findings of fact by the Director of Patents are conclusive and
binding on this Court provided they are supported by substantial
evidence. 9 The testimonial and documentary evidence in addition to
the stipulation of facts submitted by the parties fully support the
findings of respondent Director that(1) there is a confusing similarity
between the labels or trademarks of Philippine Nut and Standard
Brands used in their respective canned salted peanuts; (2) respondent
Standard Brands has priority of adoption and use of the label with
PLANTERS as the dominant feature and the same has acquired

96
 G.R. No. L-27906 January 8, 1987
CONVERSE RUBBER CORPORATION, petitioner,
vs.
UNIVERSAL RUBBER PRODUCTS, INC. and TIBURCIO S. EVALLE,
DIRECTOR OF PATENTS, respondents.
Parades, Poblador, Nazareno, Azada & Tomacruz for petitioner.
RESOLUTION
FERNAN, J.:
The undisputed facts of the case are as follows:
Respondent Universal Rubber Products, Inc. filed an application with
the Philippine Patent office for registration of the trademark
"UNIVERSAL CONVERSE AND DEVICE" used on rubber shoes and
rubber slippers.
Petitioner Converse Rubber Corporation filed its opposition to the
application for registration on grounds that:
a] The trademark sought to be registered is confusingly similar to the
word "CONVERSE" which is part of petitioner's corporate name
"CONVERSE RUBBER CORPORATION" as to likely deceive purchasers
of products on which it is to be used to an extent that said products
may be mistaken by the unwary public to be manufactured by the
petitioner; and,
b] The registration of respondent's trademark will cause great and
irreparable injury to the business reputation and goodwill of
petitioner in the Philippines and would cause damage to said
petitioner within the, meaning of Section 8, R.A. No. 166, as amended.
Thereafter, respondent filed its answer and at the pre-trial, the
parties submitted the following partial stipulation of facts:
1] The petitioner's corporate name is "CONVERSE RUBBER
CORPORATION" and has been in existence since July 31, 1946; it is
duly organized under the laws of Massachusetts, USA and doing
business at 392 Pearl St., Malden, County of Middle sex,
Massachusetts;
2] Petitioner is not licensed to do business in the Philippines and it is
not doing business on its own in the Philippines; and,
3] Petitioner manufacturers rubber shoes and uses thereon the
trademarks "CHUCK TAYLOR "and "ALL STAR AND DEVICE". 1
At the trial, petitioner's lone witness, Mrs. Carmen B. Pacquing, a duly
licensed private merchant with stores at the Sta. Mesa Market and in
Davao City, testified that she had been selling CONVERSE rubber
shoes in the local market since 1956 and that sales of petitioner's
rubber shoes in her stores averaged twelve to twenty pairs a month
purchased mostly by basketball players of local private educational
institutions like Ateneo, La Salle and San Beda.
Mrs. Pacquing, further stated that she knew petitioner's rubber shoes
came from the United States "because it says there in the trademark
Converse Chuck Taylor with star red or blue and is a round figure and
made in U.S.A. " 2 In the invoices issued by her store, the rubber shoes
were described as "Converse Chuck Taylor", 3 "Converse All
Star," 4 "All Star Converse Chuck Taylor," 5 or "Converse Shoes Chuck
Taylor." 6 She also affirmed that she had no business connection with
the petitioner.
Respondent, on the other hand, presented as its lone witness the
secretary of said corporation who testified that respondent has been
selling on wholesale basis "Universal Converse" sandals since 1962
and "Universal Converse" rubber shoes since 1963. Invoices were
submitted as evidence of such sales. The witness also testified that
she had no Idea why respondent chose "Universal Converse" as a
trademark and that she was unaware of the name "Converse" prior
to her corporation's sale of "Universal Converse" rubber shoes and
rubber sandals.
Eventually, the Director of Patents dismissed the opposition of the
petitioner and gave due course to respondent's application. His
decision reads in part:
... the only question for determination is whether or not the
applicant's partial appropriation of the Opposer's [petitioner']
corporate name is of such character that in this particular case, it is
calculated to deceive or confuse the public to the injury of the
corporation to which the name belongs ...
I cannot find anything that will prevent registration of the word
'UNIVERSAL CONVERSE' in favor of the respondent. In arriving at this
conclusion, I am guided by the fact that the opposer failed to present
proof that the single word "CONVERSE' in its corporate name has
become so Identified with the corporation that whenever used, it
designates to the mind of the public that particular corporation.
The proofs herein are sales made by a single witness who had never
dealt with the petitioner . . . the entry of Opposer's [petitioner's]
goods in the Philippines were not only effected in a very insignificant
quantity but without the opposer [petitioner] having a direct or
indirect hand in the transaction so as to be made the basis for
trademark pre- exemption.
Opposer's proof of its corporate personality cannot establish the use
of the word "CONVERSE" in any sense, as it is already stipulated that
it is not licensed to do business in the Philippines, and is not doing
business of its own in the Philippines. If so, it will be futile for it to
establish that "CONVERSE" as part of its corporate name Identifies its
rubber shoes. Besides, it was also stipulated that opposer [petitioner],
in manufacturing rubber shoes uses thereon the trademark "CHUCK
TAYLOR" and "ALL STAR and DEVICE" and none other.
Furthermore, inasmuch as the Opposer never presented any label
herein, or specimen of its shoes, whereon the label may be seen,
notwithstanding its witness' testimony touching upon her
Identification of the rubber shoes sold in her stores, no determination
can be made as to whether the word 'CONVERSE' appears thereon.
. . .the record is wanting in proof to establish likelihood of confusion
so as to cause probable damage to the Opposer. 7
Its motion for reconsideration having been denied by the respondent
Director of Patents, petitioner instituted the instant petition for
review.
As correctly phrased by public respondent Director of Patents, the
basic issue presented for our consideration is whether or not the
respondent's partial appropriation of petitioner's corporate name is
of such character that it is calculated to deceive or confuse the public
to the injury of the petitioner to which the name belongs.
ruling
A trade name is any individual name or surname, firm name, device
or word used by manufacturers, industrialists, merchants and others
to Identify their businesses, vocations or occupations. 8 As the trade
name refers to the business and its goodwill ... the trademark refers
to the goods." 9 The ownership of a trademark or tradename is a
property right which the owner is entitled to protect "since there is
damage to him from confusion or reputation or goodwill in the mind
of the public as well as from confusion of goods. The modern trend is
to give emphasis to the unfairness of the acts and to classify and treat
the issue as fraud. 10
From a cursory appreciation of the petitioner's corporate name
"CONVERSE RUBBER CORPORATION,' it is evident that the word
97
"CONVERSE" is the dominant word which Identifies petitioner from
other corporations engaged in similar business. Respondent, in the
stipulation of facts, admitted petitioner's existence since 1946 as a
duly organized foreign corporation engaged in the manufacture of
rubber shoes. This admission necessarily betrays its knowledge of the
reputation and business of petitioner even before it applied for
registration of the trademark in question. Knowing, therefore, that
the word "CONVERSE" belongs to and is being used by petitioner, and
is in fact the dominant word in petitioner's corporate name,
respondent has no right to appropriate the same for use on its
products which are similar to those being produced by petitioner.
A corporation is entitled to the cancellation of a mark that is
confusingly similar to its corporate name."11"Appropriation by
another of the dominant part of a corporate name is an
infringement."12
Respondent's witness had no Idea why respondent chose
"UNIVERSAL CONVERSE" as trademark and the record discloses no
reasonable explanation for respondent's use of the word
"CONVERSE" in its trademark. Such unexplained use by respondent of
the dominant word of petitioner's corporate name lends itself open
to the suspicion of fraudulent motive to trade upon petitioner's
reputation, thus:
A boundless choice of words, phrases and symbols is available to
one who wishes a trademark sufficient unto itself to distinguish his
product from those of others. When, however, there is no
reasonable explanation for the defendant's choice of such a mark
though the field for his selection was so broad, the inference is
inevitable that it was chosen deliberately to deceive. 13
The testimony of petitioner's witness, who is a legitimate trader as
well as the invoices evidencing sales of petitioner's products in the
Philippines, give credence to petitioner's claim that it has earned a
business reputation and goodwill in this country. The sales invoices
submitted by petitioner's lone witness show that it is the word
"CONVERSE" that mainly Identifies petitioner's products, i.e.
"CONVERSE CHUCK TAYLOR, 14 "CONVERSE ALL STAR," 15 ALL STAR
CONVERSE CHUCK TAYLOR," 16 or "CONVERSE SHOES CHUCK and
TAYLOR." 17 Thus, contrary to the determination of the respondent
Director of Patents, the word "CONVERSE" has grown to be Identified
with petitioner's products, and in this sense, has acquired a second
meaning within the context of trademark and tradename laws.
Furthermore, said sales invoices provide the best proof that there
were actual sales of petitioner's products in the country and that
there was actual use for a protracted period of petitioner's trademark
or part thereof through these sales. "The most convincing proof of
use of a mark in commerce is testimony of such witnesses as
customers, or the orders of buyers during a certain
period. 18 Petitioner's witness, having affirmed her lack of business
connections with petitioner, has testified as such customer,
supporting strongly petitioner's move for trademark pre-emption.
The sales of 12 to 20 pairs a month of petitioner's rubber shoes
cannot be considered insignificant, considering that they appear to be
of high expensive quality, which not too many basketball players can
afford to buy. Any sale made by a legitimate trader from his store is a
commercial act establishing trademark rights since such sales are
made in due course of business to the general public, not only to
limited individuals. It is a matter of public knowledge that all brands
of goods filter into the market, indiscriminately sold by jobbers
dealers and merchants not necessarily with the knowledge or consent
of the manufacturer. Such actual sale of goods in the local market
establishes trademark use which serves as the basis for any action
aimed at trademark pre- exemption. It is a corollary logical deduction
that while Converse Rubber Corporation is not licensed to do
business in the country and is not actually doing business here, it
does not mean that its goods are not being sold here or that it has
not earned a reputation or goodwill as regards its products. The
Director of Patents was, therefore, remiss in ruling that the proofs of
sales presented "was made by a single witness who had never dealt
with nor had never known opposer [petitioner] x x x without Opposer
having a direct or indirect hand in the transaction to be the basis of
trademark pre- exemption."
Another factor why respondent's applications should be denied is the
confusing similarity between its trademark "UNIVERSAL CONVERSE
AND DEVICE" and petitioner's corporate name and/or its trademarks
"CHUCK TAYLOR" and "ALL STAR DEVICE" which could confuse the
purchasing public to the prejudice of petitioner,
The trademark of respondent "UNIVERSAL CONVERSE and DEVICE" is
imprinted in a circular manner on the side of its rubber shoes. In the
same manner, the trademark of petitioner which reads "CONVERSE
CHUCK TAYLOR" is imprinted on a circular base attached to the side
of its rubber shoes.
The deteminative factor in ascertaining whether or not marks are
confusingly similar to each other "is not whether the challenged
mark would actually cause confusion or deception of the purchasers
but whether the use of such mark would likely cause confusion or
mistake on the part of the buying public. It would be sufficient, for
purposes of the law, that the similarity between the two labels is
such that there is a possibility or likelihood of the purchaser of the
older brand mistaking the new brand for it." 19 Even if not an the
details just mentioned were identical, with the general appearance
alone of the two products, any ordinary, or even perhaps even [sic]
a not too perceptive and discriminating customer could be deceived
... "20
When the law speaks co-purchaser," the reference is to ordinary
average purchaser. 21 It is not necessary in either case that the
resemblance be sufficient to deceive experts, dealers, or other
persons specially familiar with the trademark or goods involve." 22
The similarity y in the general appearance of respondent's trademark
and that of petitioner would evidently create a likelihood of confusion
among the purchasing public. But even assuming, arguendo, that the
trademark sought to be registered by respondent is distinctively
dissimilar from those of the petitioner, the likelihood of confusion
would still subsists, not on the purchaser's perception of the goods
but on the origins thereof. By appropriating the word "CONVERSE,"
respondent's products are likely to be mistaken as having been
produced by petitioner. "The risk of damage is not limited to a
possible confusion of goods but also includes confusion of reputation
if the public could reasonably assume that the goods of the parties
originated from the same source. 23
It is unfortunate that respondent Director of Patents has concluded
that since the petitioner is not licensed to do business in the country
and is actually not doing business on its own in the Philippines, it has
no name to protect iN the forum and thus, it is futile for it to establish
that "CONVERSE" as part of its corporate name identifies its rubber
shoes. That a foreign corporation has a right to maintain an action in
the forum even if it is not licensed to do business and is not actually
doing business on its own therein has been enunciated many times
by this Court. In La Chemise Lacoste, S.A. vs. Fernandez, 129 SCRA
98
373, this Court, reiterating Western Equipment and Supply Co. vs. Tradenames of persons described in the first paragraph of this section
Reyes, 51 Phil. 115, stated that: shall be protected without the obligation of filing or registration
... a foreign corporation which has never done any business in the whether or not they form parts of marks. [emphasis supplied]
Philippines and which is unlicensed and unregistered to do business WHEREFORE, the decision of the Director of Patents is hereby set
here, but is widely and favorably known in the Philippines through the aside and a new one entered denying Respondent Universal Rubber
use therein of its products bearing its corporate and tradename, has Products, Inc.'s application for registration of the trademark
a legal right to maintain an action in the Philippines to restrain the "UNIVERSAL CONVERSE AND DEVICE" on its rubber shoes and
residents and inhabitants thereof from organizing a corporation slippers.
therein bearing the same name as the foreign corporation, when it SO ORDERED.
appears that they have personal knowledge of the existence of such
a foreign corporation, and it is apparent that the purpose of the
proposed domestic corporation is to deal and trade in the same goods
as those of the foreign corporation.
We further held:
xxx xxx xxx
That company is not here seeking to enforce any legal or control rights
arising from or growing out of, any business which it has transacted
in the Philippine Islands. The sole purpose of the action:
Is to protect its reputation, its corporate name, its goodwill whenever
that reputation, corporate name or goodwill have, through the
natural development of its trade, established themselves.' And it
contends that its rights to the use of its corporate and trade name:
Is a property right, a right in recess which it may assert and protect
against all the world, in any of the courts of the world even in
jurisdictions where it does not transact business-just the same as it
may protect its tangible property, real or personal against trespass, or
conversion. Citing sec. 10, Nims on Unfair Competition and
Trademarks and cases cited; secs. 21-22, Hopkins on Trademarks,
Trade Names and Unfair Competition and cases cited That point is
sustained by the authorities, and is well stated in Hanover Star Milling
Co. vs. Allen and Wheeler Co. [208 Fed., 5131, in which the syllabus
says:
Since it is the trade and not the mark that is to be protected, a
trademark 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.
The ruling in the aforecited case is in consonance with the Convention
of the Union of Paris for the Protection of Industrial Property to which
the Philippines became a party on September 27, 1965. Article 8
thereof provides that "a trade name [corporate name] shall be
protected in all the countries of the Union without the obligation of
filing or registration, whether or not it forms part of the trademark. "
[emphasis supplied]
The object of the Convention is to accord a national of a member
nation extensive protection "against infringement and other types of
unfair competition" [Vanitary Fair Mills, Inc. vs. T. Eaton Co., 234 F. 2d
6331.
The mandate of the aforementioned Convention finds
implementation in Sec. 37 of RA No. 166, otherwise known as the
Trademark Law:
Sec. 37. Rights of Foreign Registrants-Persons who are nationals of,
domiciled or have a bona fide or effective business or commercial
establishment in any foreign country, which is a party to an
international convention or treaty relating to marks or tradenames on
the repression of unfair competition to which the Philippines may be
a party, shall be entitled to the benefits and subject to the provisions
of this Act . . . ...

99
G.R. No. 139300 March 14, 2001
AMIGO MANUFACTURING, INC., petitioner,
vs.
CLUETT PEABODY CO., INC., respondent.
PANGANIBAN, J.:
The findings of the Bureau of Patents that two trademarks are
confusingly and deceptively similar to each other are binding upon
the courts, absent any sufficient evidence to the contrary. In the
present case, the Bureau considered the totality of the similarities
between the two sets of marks and found that they were of such
degree, number and quality as to give the overall impression that the
two products are confusingly if not deceptively the same.
Statement of the Case
Petitioner Amigo Manufacturing Inc. challenges, under Rule 45 of the
Rules of Court, the January 14, 1999 Resolution 1 of the Court of
Appeals (CA) in CA-GR SP No. 22792, which reversed, on
reconsideration, its own September 29, 1998 Decision.2 The
dispositive portion of the assailed Resolution reads as follows:
"WHEREFORE, the Motion for Reconsideration is GRANTED, and the
Decision dated September 29, 1998 REVERSED. Consequently, the
decision rendered by the Director of Patents dated September 3,
1990 is hereby AFFIRMED."
The Decision of the Director of Patents, referred to by the CA,
disposed as follows:
"WHEREFORE, the Petition is GRANTED. Consequently, Certificate of
Registration No. SR-2206 issued to Respondent-Registrant [herein
petitioner] is hereby cancelled.
"Let the records of this case be remanded to the Patent/Trademark
Registry and EDP Division for appropriate action in accordance with
this Decision."
Petitioner also seeks the reversal of the June 30, 1999 CA
Resolution3 denying its own Motion for Reconsideration.
The Facts
The facts, which are undisputed, are summarized by the Court of
Appeals in its original Decision, as follows:
"The source of the controversy that precipitated the filing by [herein
Respondent] Cluett Peabody Co., Inc. (a New York corporation) of the
present case against [herein Petitioner] Amigo Manufacturing Inc. (a
Philippine corporation) for cancellation of trademark is
[respondent's] claim of exclusive ownership (as successor in interest
of Great American Knitting Mills, Inc.) of the following trademark and
devices, as used on men's socks:
a) GOLD TOE, under Certificate of Registration No. 6797 dated
September 22, 1958;
b) DEVICE, representation of a sock and magnifying glass on the toe
of a sock, under Certificate of Registration No. 13465 dated January
25, 1968;
c) DEVICE, consisting of a 'plurality of gold colored lines arranged in
parallel relation within a triangular area of toe of the stocking and
spread from each other by lines of contrasting color of the major part
of the stocking' under Certificate of Registration No. 13887 dated May
9, 1968; and
d) LINENIZED, under Certificate of Registration No. 15440 dated April
13, 1970.
On the other hand, [petitioner's] trademark and device 'GOLD TOP,
Linenized for Extra Wear' has the dominant color 'white' at the center
and a 'blackish brown' background with a magnified design of the
sock's garter, and is labeled 'Amigo Manufacturing Inc.,
Mandaluyong, Metro Manila, Made in the Philippines'.
In the Patent Office, this case was heard by no less than six Hearing
Officers: Attys. Rodolfo Gilbang, Rustico Casia, M. Yadao, Fabian
Rufina, Neptali Bulilan and Pausi Sapak. The last named officer
drafted the decision under appeal which was in due court signed and
issued by the Director of Patents (who never presided over any
hearing) adversely against the respondent Amigo Manufacturing, Inc.
as heretofore mentioned (supra, p.1).
The decision pivots on two point: the application of the rule of idem
sonans and the existence of a confusing similarity in appearance
between two trademarks (Rollo, p. 33)."4
Ruling of the Court of Appeals
In its assailed Resolution, the CA held as follows:
"After a careful consideration of [respondent's] arguments and a re-
appreciation of the records of this case. [w]e find [respondent's]
motion for reconsideration meritorious. As shown by the records, and
as correctly held by the Director of Patents, there is hardly any
variance in the appearance of the marks 'GOLD TOP' and 'GOLD TOE'
since both show a representation of a man's foot wearing a sock, and
the marks are printed in identical lettering. Section 4(d) of R.A. No.
166 declares to be unregistrable, 'a mark which consists o[r]
comprises a mark or trademark which so resembles a mark or
tradename registered in the Philippines of tradename previously used
in the Philippines by another and not abandoned, as to be likely, when
applied to or used in connection with the goods, business or services
of the applicant, to cause confusion or mistake or to deceive the
purchasers. [Petitioner]'s mark is a combination of the different
registered marks owned by [respondent]. As held in Del Monte
Corporation v. Court of Appeals, 181 SCRA 410 (1990), the question is
not whether the two articles are distinguishable by their label when
set aside but whether the general confusion made by the article upon
the eye of the casual purchaser who is unsuspicious and off his guard,
is such as to likely result in confounding it with the original. As held by
the Court in the same decision[,] 'The most successful form of copying
is to employ enough points of similarity to confuse the public with
enough points of difference to confuse the courts.' Furthermore,
[petitioner]'s mark is only registered with the Supplemental Registry
which gives no right of exclusivity to the owner and cannot overturn
the presumption of validity and exclusiv[ity] given to a registered
mark.
"Finally, the Philippines and the United States are parties to the Union
Convention for the Protection of Industrial Property adopted in Paris
on March 20, 1883, otherwise known as the Paris Convention. (Puma
Sportschuhfabriken Rudolf Dassler K.G. v. Intermediate Appellate
Court, 158 SCRA 233). [Respondent] is domiciled in the United States
of America and is the lawful owner of several trademark registrations
in the United States for the mark 'GOLD TOE'.
xxx xxx x x x'
By virtue of the Philippines' membership to the Paris Union,
trademark rights in favor of the [respondent] were created. The
object of the Convention is to accord a national of a member nation
extensive protection against infringement and other types of unfair
competition. (Puma Sportschuhfabriken Rudolf Dassler K.G. v.
Intermediate Appellate Court, 158 SCRA 233; La Chemise Lacoste, S.A.
v. Fernandez, 129 SCRA 373)"5
Hence, this Petition.6
Issues
In its Memorandum,7 petitioner raises the following issues for the
consideration of this Court:
"I
100
Whether or not the Court of Appeals overlooked that petitioner's
trademark was used in commerce in the Philippines earlier than
respondent's actual use of its trademarks, hence the Court of Appeals
erred in affirming the Decision of the Director of Patents dated
September 3, 1990.
II
Since the petitioner's actual use of its trademark was ahead of the
respondent, whether or not the Court of Appeals erred in canceling
the registration of petitioner's trademark instead of canceling the
trademark of the respondent.
III
Whether or not the Court of Appeals erred in affirming the findings of
the Director of Patents that petitioner's trademark [was] confusingly
similar to respondent's trademarks.
IV
Whether or not the Court of Appeals erred in applying the Paris
Convention in holding that respondent ha[d] an exclusive right to the
trademark 'gold toe' without taking into consideration the absence of
actual use in the Philippines."8
In the main, the Court will resolve three issues: (1) the date of actual
use of the two trademarks; (2) their confusing similarities, and (3) the
applicability of the Paris Convention.
The Court's Ruling
The Petition has no merit.
First Issue:
Dates of First Use of Trademark and Devices
Petitioner claims that it started the actual use of the trademark "Gold
Top and Device" in September 1956, while respondent began using
the trademark "Gold Toe" only on May 15, 1962. It contends that the
claim of respondent that it had been using the "Gold Toe" trademark
at an earlier date was not substantiated. The latter's witnesses
supposedly contradicted themselves as to the date of first actual use
of their trademark, coming up with different dates such as 1952, 1947
and 1938.
We do not agree. Based on the evidence presented, this Court
concurs in the findings of the Bureau of Patents that respondent had
actually used the trademark and the devices in question prior to
petitioner's use of its own. During the hearing at the Bureau of
Patents, respondent presented Bureau registrations indicating the
dates of first use in the Philippines of the trademark and the devices
as follows: a) March 16, 1954, Gold Toe; b) February 1, 1952, the
Representation of a Sock and a Magnifying Glass; c) January 30, 1932,
the Gold Toe Representation; and d) February 28, 1952, "Linenized."
The registration of the above marks in favor of respondent constitutes
prima facie evidence, which petitioner failed to overturn
satisfactorily, of respondent's ownership of those marks, the dates of
appropriation and the validity of other pertinent facts stated therein.
Indeed, Section 20 of Republic Act 166 provides as follows:
"Sec. 20. Certificate of registration prima facie evidence of validity. -
A certificate of registration of a mark or trade-name shall be prima
facie evidence of the validity of the registration, the registrant's
ownership of the mark or trade-name, and of the registrant's
exclusive right to use the same in connection with the goods, business
or services specified in the certificate, subject to any conditions and
limitations stated therein."9
Moreover, the validity of the Certificates of Registration was not
questioned. Neither did petitioner present any evidence to indicate
that they were fraudulently issued. Consequently, the claimed dates
of respondent's first use of the marks are presumed valid. Clearly,
they were ahead of petitioner's claimed date of first use of "Gold Top
and Device" in 1958.
Section 5-A of Republic Act No. 166 10 states that an applicant for a
trademark or trade name shall, among others, state the date of first
use. The fact that the marks were indeed registered by respondent
shows that it did use them on the date indicated in the Certificate of
Registration.
On the other hand, petitioner failed to present proof of the date of
alleged first use of the trademark "Gold Top and Device". Thus, even
assuming that respondent started using it only on May 15, 1962, we
can make no finding that petitioner had started using it ahead of
respondent.
Furthermore, petitioner registered its trademark only with the
supplemental register. In La Chemise Lacoste v. Fernandez,11 the
Court held that registration with the supplemental register gives no
presumption of ownership of the trademark. Said the Court:
"The registration of a mark upon the supplemental register is not, as
in the case of the principal register, prima facie evidence of (1) the
validity of registration; (2) registrant's ownership of the mark; and (3)
registrant's exclusive right to use the mark. It is not subject to
opposition, although it may be cancelled after its issuance. Neither
may it be the subject of interference proceedings. Registration [i]n
the supplemental register is not constructive notice of registrant's
claim of ownership. A supplemental register is provided for the
registration because of some defects (conversely, defects which make
a mark unregistrable on the principal register, yet do not bar them
from the supplemental register.)' (Agbayani, II Commercial Laws of
the Philippines, 1978, p. 514, citing Uy Hong Mo v. Titay & Co., et al.,
Dec. No. 254 of Director of Patents, Apr. 30, 1968."
As to the actual date of first use by respondent of the four marks it
registered, the seeming confusion may have stemmed from the fact
that the marks have different dates of first use. Clearly, however,
these dates are indicated in the Certificates of Registration.
In any case, absent any clear showing to the contrary, this Court
accepts the finding of the Bureau of Patents that it was respondent
which had prior use of its trademark, as shown in the various
Certificates of Registration issued in its favor. Verily, administrative
agencies' findings of fact in matters falling under their jurisdiction are
generally accorded great respect, if not finality. Thus, the Court has
held:
"x x x. By reason of the special knowledge and expertise of said
administrative agencies over matters falling under their jurisdiction,
they are in a better position to pass judgment thereon; thus, their
findings of fact in that regard are generally accorded great respect, if
not finality, by the courts. The findings of fact of an administrative
agency must be respected as long as they are supported by
substantial evidence, even if such evidence might not be
overwhelming or even preponderant. It is not the task of an appellate
court to weigh once more the evidence submitted before the
administrative body and to substitute its own judgment for that of the
administrative agency in respect of sufficiency of evidence." 12
Second Issue:
Similarity of Trademarks
Citing various differences between the two sets of marks, petitioner
assails the finding of the director of patents that its trademark is
confusingly similar to that of respondent. Petitioner points out that
the director of patents erred in its application of the idem sonans rule,
claiming that the two trademarks "Gold Toe" and "Gold Top" do not
sound alike and are pronounced differently. It avers that since the
101
words gold and toe are generic, respondent has no right to their
exclusive use.
The arguments of petitioner are incorrect. True, it would not be guilty
of infringement on the basis alone of the similarity in the sound of
petitioner's "Gold Top" with that of respondent's "Gold Toe."
Admittedly, the pronunciations of the two do not, by themselves,
create confusion.
The Bureau of Patents, however, did not rely on the idem sonans test
alone in arriving at its conclusion. This fact is shown in the following
portion of its Decision:
"As shown by the drawings and labels on file, the mark registered by
Respondent-Registrant under Registration No. SR-2206 is a
combination of the abovementioned trademarks registered
separately by the petitioner in the Philippines and the United States.
"With respect to the issue of confusing similarity between the marks
of the petitioner and that of the respondent-registrant applying the
tests of idem sonans, the mark 'GOLD TOP & DEVICE' is confusingly
similar with the mark 'GOLD TOE'. The difference in sound occurs only
in the final letter at the end of the marks. For the same reason, hardly
is there any variance in their appearance. 'GOLD TOE' and 'GOLD TOP'
are printed in identical lettering. Both show [a] representation of a
man's foot wearing a sock. 'GOLD TOP' blatantly incorporates
petitioner's 'LINENIZED' which by itself is a registered mark." 13
bIn Emerald Garment Manufacturing Corporation v. Court of
Appeals,14 this Court stated that in determining whether trademarks
are confusingly similar, jurisprudence has developed two kinds of
tests, the Dominancy Test15 and the Holistic Test.16 In its words:
"In determining whether colorable imitation exists, jurisprudence has
developed two kinds of tests – the Dominancy Test applied in Asia
Brewery, Inc. v. Court of Appeals and other cases and the Holistic Test
developed in Del Monte Corporation v. Court of Appeals and its
proponent cases.
As its title implies, the test of dominancy focuses on the similarity of
the prevalent features of the competing trademarks which might
cause confusion or deception and thus constitutes infringement.
xxx xxx xxx
. . . . If the competing trademark contains the main or essential or
dominant features of another, and confusion and deception is likely
to result, infringement takes place. Duplication or imitation is not
necessary; nor is it necessary that the infringing label should suggest
an effort to imitate. [C. Neilman Brewing Co. v. Independent Brewing
Co., 191 F., 489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180
Fed. 579]. The question at issue in cases of infringement of
trademarks is whether the use of the marks involved would be likely
to cause confusion or mistakes in the mind of the public or deceive
purchasers. (Auburn Rubber Corporation vs. Hanover Rubber Co., 107
F. 2d 588; x x x.)
xxx xxx xxx
On the other side of the spectrum, the holistic test mandates that the
entirety of the marks in question must be considered in determining
confusing similarity."
In the present case, a resort to either the Dominancy Test or the
Holistic Test shows that colorable imitation exists between
respondent's "Gold Toe" and petitioner's "Gold Top." A glance at
petitioner's mark shows that it definitely has a lot of similarities and
in fact looks like a combination of the trademark and devices that
respondent has already registered; namely, "Gold Toe," the
representation of a sock with a magnifying glass, the "Gold Toe"
representation and "linenized."
Admittedly, there are some minor differences between the two sets
of marks. The similarities, however, are of such degree, number and
quality that the overall impression given is that the two brands of
socks are deceptively the same, or at least very similar to each
another. An examination of the products in question shows that their
dominant features are gold checkered lines against a predominantly
black background and a representation of a sock with a magnifying
glass. In addition, both products use the same type of lettering. Both
also include a representation of a man's foot wearing a sock and the
word "linenized" with arrows printed on the label. Lastly, the names
of the brands are similar -- "Gold Top" and "Gold Toe." Moreover, it
must also be considered that petitioner and respondent are engaged
in the same line of business.
Petitioner cannot therefore ignore the fact that, when compared,
most of the features of its trademark are strikingly similar to those of
respondent. In addition, these representations are at the same
location, either in the sock itself or on the label. Petitioner presents
no explanation why it chose those representations, considering that
these were the exact symbols used in respondent's marks. Thus, the
overall impression created is that the two products are deceptively
and confusingly similar to each other. Clearly, petitioner violated the
applicable trademark provisions during that time.
Let it be remembered that duly registered trademarks are protected
by law as intellectual properties and cannot be appropriated by
others without violating the due process clause. An infringement of
intellectual rights is no less vicious and condemnable as theft of
material property, whether personal or real.
Third Issue:
The Paris Convention
Petitioner claims that the Court of Appeals erred in applying the Paris
Convention. Although respondent registered its trademark ahead,
petitioner argues that the actual use of the said mark is necessary in
order to be entitled to the protection of the rights acquired through
registration.
As already discussed, respondent registered its trademarks under the
principal register, which means that the requirement of prior use had
already been fulfilled. To emphasize, Section 5-A of Republic Act 166
requires the date of first use to be specified in the application for
registration. Since the trademark was successfully registered, there
exists a prima facie presumption of the correctness of the contents
thereof, including the date of first use. Petitioner has failed to rebut
this presumption.
Thus, applicable is the Union Convention for the Protection of
Industrial Property adopted in Paris on March 20, 1883, otherwise
known as the Paris Convention, of which the Philippines and the
United States are members. Respondent is domiciled in the United
States and is the registered owner of the "Gold Toe" trademark.
Hence, it is entitled to the protection of the Convention. A foreign-
based trademark owner, whose country of domicile is a party to an
international convention relating to protection of trademarks, 17 is
accorded protection against infringement or any unfair competition
as provided in Section 37 of Republic Act 166, the Trademark Law
which was the law in force at the time this case was instituted.
In sum, petitioner has failed to show any reversible error on the part
of the Court of Appeals. Hence, its Petition must fail.
WHEREFORE, the Petition is hereby DENIED and the assailed
Resolution AFFIRMED. Costs against petitioner.
102
SO ORDERED.

103
G.R. No. 166115 February 2, 2007
McDONALD’S CORPORATION, Petitioner,
vs.
MACJOY FASTFOOD CORPORATION, Respondent.
DECISION
GARCIA, J.:
In this petition for review on certiorari under Rule 45 of the Rules of
Court, herein petitioner McDonald’s Corporation seeks the reversal
and setting aside of the following issuances of the Court of Appeals
(CA) in CA-G.R. SP No. 57247, to wit:
1. Decision dated 29 July 20041 reversing an earlier decision of the
Intellectual Property Office (IPO) which rejected herein respondent
MacJoy FastFood Corporation’s application for registration of the
trademark "MACJOY & DEVICE"; and
2. Resolution dated 12 November 2004 2 denying the petitioner’s
motion for reconsideration.
As culled from the record, the facts are as follows:
On 14 March 1991, respondent MacJoy Fastfood Corporation, a
domestic corporation engaged in the sale of fast food products in
Cebu City, filed with the then Bureau of Patents, Trademarks and
Technology Transfer (BPTT), now the Intellectual Property Office
(IPO), an application, thereat identified as Application Serial No.
75274, for the registration of the trademark "MACJOY & DEVICE" for
fried chicken, chicken barbeque, burgers, fries, spaghetti, palabok,
tacos, sandwiches, halo-halo and steaks under classes 29 and 30 of
the International Classification of Goods.
Petitioner McDonald’s Corporation, a corporation duly organized and
existing under the laws of the State of Delaware, USA, filed a verified
Notice of Opposition 3 against the respondent’s application claiming
that the trademark "MACJOY & DEVICE" so resembles its corporate
logo, otherwise known as the Golden Arches or "M" design, and its
marks "McDonalds," McChicken," "MacFries," "BigMac," "McDo,"
"McSpaghetti," "McSnack," and "Mc," (hereinafter collectively known
as the MCDONALD’S marks) such that when used on identical or
related goods, the trademark applied for would confuse or deceive
purchasers into believing that the goods originate from the same
source or origin. Likewise, the petitioner alleged that the
respondent’s use and adoption in bad faith of the "MACJOY &
DEVICE" mark would falsely tend to suggest a connection or affiliation
with petitioner’s restaurant services and food products, thus,
constituting a fraud upon the general public and further cause the
dilution of the distinctiveness of petitioner’s registered and
internationally recognized MCDONALD’S marks to its prejudice and
irreparable damage. The application and the opposition thereto was
docketed as Inter Partes Case No. 3861.
Respondent denied the aforementioned allegations of the petitioner
and averred that it has used the mark "MACJOY" for the past many
years in good faith and has spent considerable sums of money for said
mark’s extensive promotion in tri-media, especially in Cebu City
where it has been doing business long before the petitioner opened
its outlet thereat sometime in 1992; and that its use of said mark
would not confuse affiliation with the petitioner’s restaurant services
and food products because of the differences in the design and detail
of the two (2) marks.
In a decision4 dated December 28, 1998, the IPO, ratiocinating that
the predominance of the letter "M," and the prefixes "Mac/Mc" in
both the "MACJOY" and the "MCDONALDS" marks lead to the
conclusion that there is confusing similarity between them especially
since both are used on almost the same products falling under classes
29 and 30 of the International Classification of Goods, i.e., food and
ingredients of food, sustained the petitioner’s opposition and
rejected the respondent’s application, viz:
WHEREFORE, the Opposition to the registration of the mark MACJOY
& DEVICE for use in fried chicken and chicken barbecue, burgers, fries,
spaghetti, palabok, tacos, sandwiches, halo-halo, and steaks is, as it is
hereby, SUSTAINED. Accordingly, Application Serial No. 75274 of the
herein Respondent-Applicant is REJECTED.
Let the filewrapper of MACJOY subject matter of this case be sent to
the Administrative, Financial and Human Resources Development
Bureau for appropriate action in accordance with this Decision, with
a copy to be furnished the Bureau of Trademarks for information and
to update its record.
SO ORDERED.
In time, the respondent moved for a reconsideration but the IPO
denied the motion in its Order5 of January 14, 2000.
Therefrom, the respondent went to the CA via a Petition for Review
with prayer for Preliminary Injunction6 under Rule 43 of the Rules of
Court, whereat its appellate recourse was docketed as CA-G.R. SP No.
57247.
Finding no confusing similarity between the marks "MACJOY" and
"MCDONALD’S," the CA, in its herein assailed Decision 7 dated July 29,
2004, reversed and set aside the appealed IPO decision and order,
thus:
WHEREFORE, in view of the foregoing, judgment is hereby rendered
by us REVERSING and SETTING ASIDE the Decision of the IPO dated 28
December 1998 and its Order dated 14 January 2000 and ORDERING
the IPO to give due course to petitioner’s Application Serial No.
75274.
SO ORDERED.
Explains the CA in its decision:
xxx, it is clear that the IPO brushed aside and rendered useless the
glaring and drastic differences and variations in style of the two
trademarks and even decreed that these pronounced differences are
"miniscule" and considered them to have been "overshadowed by the
appearance of the predominant features" such as "M," "Mc," and
"Mac" appearing in both MCDONALD’S and MACJOY marks. Instead
of taking into account these differences, the IPO unreasonably
shrugged off these differences in the device, letters and marks in the
trademark sought to be registered. The IPO brushed aside and
ignored the following irrefutable facts and circumstances showing
differences between the marks of MACJOY and MCDONALD’S. They
are, as averred by the petitioner [now respondent]:
1. The word "MacJoy" is written in round script while the word
"McDonald’s" is written in single stroke gothic;
2. The word "MacJoy" comes with the picture of a chicken head with
cap and bowtie and wings sprouting on both sides, while the word
"McDonald’s" comes with an arches "M" in gold colors, and
absolutely without any picture of a chicken;
3. The word "MacJoy" is set in deep pink and white color scheme
while "McDonald’s" is written in red, yellow and black color
combination;
4. The façade of the respective stores of the parties are entirely
different. Exhibits 1 and 1-A, show that [respondent’s] restaurant is
set also in the same bold, brilliant and noticeable color scheme as that
of its wrappers, containers, cups, etc., while [petitioner’s] restaurant
is in yellow and red colors, and with the mascot of "Ronald McDonald"
being prominently displayed therein." (Words in brackets supplied.)
104
Petitioner promptly filed a motion for reconsideration. However, in
its similarly challenged Resolution 8 of November 12, 2004, the CA
denied the motion, as it further held:
Whether a mark or label of a competitor resembles another is to be
determined by an inspection of the points of difference and
resemblance as a whole, and not merely the points of resemblance.
The articles and trademarks employed and used by the [respondent]
Macjoy Fastfood Corporation are so different and distinct as to
preclude any probability or likelihood of confusion or deception on
the part of the public to the injury of the trade or business of the
[petitioner] McDonald’s Corporation. The "Macjoy & Device" mark is
dissimilar in color, design, spelling, size, concept and appearance to
the McDonald’s marks. (Words in brackets supplied.)
Hence, the petitioner’s present recourse on the following grounds:
I.
THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT’S
"MACJOY & DEVICE" MARK IS NOT CONFUSINGLY SIMILAR TO
PETITIONER’S "McDONALD’S MARKS." IT FAILED TO CORRECTLY
APPLY THE DOMINANCY TEST WHICH HAS BEEN CONSISTENTLY
APPLIED BY THIS HONORABLE COURT IN DETERMINING THE
EXISTENCE OF CONFUSING SIMILARITY BETWEEN COMPETING
MARKS.
A. The McDonald’s Marks belong to a well-known and established
"family of marks" distinguished by the use of the prefix "Mc" and/or
"Mac" and the corporate "M" logo design.
B. The prefix "Mc" and/or "Mac" is the dominant portion of both
Petitioner’s McDonald’s Marks and the Respondent’s "Macjoy &
Device" mark. As such, the marks are confusingly similar under the
Dominancy Test.
C. Petitioner’s McDonald’s Marks are well-known and world-famous
marks which must be protected under the Paris Convention.
II.
THE COURT OF APPEALS ERRED IN RULING THAT THE DECISION OF
THE IPO DATED 28 DECEMBER 1998 AND ITS ORDER DATED 14
JANUARY 2000 WERE NOT BASED ON SUBSTANTIAL EVIDENCE.
In its Comment,9 the respondent asserts that the petition should be
dismissed outright for being procedurally defective: first, because the
person who signed the certification against forum shopping in behalf
of the petitioner was not specifically authorized to do so, and second,
because the petition does not present a reviewable issue as what it
challenges are the factual findings of the CA. In any event, the
respondent insists that the CA committed no reversible error in
finding no confusing similarity between the trademarks in question.
The petition is impressed with merit.
Contrary to respondent’s claim, the petitioner’s Managing Counsel,
Sheila Lehr, was specifically authorized to sign on behalf of the
petitioner the Verification and Certification 10 attached to the petition.
As can be gleaned from the petitioner’s Board of Director’s Resolution
dated December 5, 2002, as embodied in the Certificate of the
Assistant Secretary dated December 21, 2004,11 Sheila Lehr was one
of those authorized and empowered "to execute and deliver for and
on behalf of [the petitioner] all documents as may be required in
connection with x x x the protection and maintenance of any foreign
patents, trademarks, trade-names, and copyrights owned now or
hereafter by [the petitioner], including, but not limited to, x x x
documents required to institute opposition or cancellation
proceedings against conflicting trademarks, and to do such other acts
and things and to execute such other documents as may be necessary
and appropriate to effect and carry out the intent of this resolution."
Indeed, the afore-stated authority given to Lehr necessarily includes
the authority to execute and sign the mandatorily required
certification of non-forum shopping to support the instant petition for
review which stemmed from the "opposition proceedings" lodged by
the petitioner before the IPO. Considering that the person who
executed and signed the certification against forum shopping has the
authority to do so, the petition, therefore, is not procedurally
defective.
As regards the respondent’s argument that the petition raises only
questions of fact which are not proper in a petition for review, suffice
it to say that the contradictory findings of the IPO and the CA
constrain us to give due course to the petition, this being one of the
recognized exceptions to Section 1, Rule 45 of the Rules of Court.
True, this Court is not the proper venue to consider factual issues as
it is not a trier of facts.12 Nevertheless, when the factual findings of
the appellate court are mistaken, absurd, speculative, conjectural,
conflicting, tainted with grave abuse of discretion, or contrary to the
findings culled by the court of origin, 13 as here, this Court will review
them.
The old Trademark Law, Republic Act (R.A.) No. 166, as amended,
defines a "trademark" as any distinctive word, name, symbol,
emblem, sign, or device, or any combination thereof adopted and
used by a manufacturer or merchant on his goods to identify and
distinguish them from those manufactured, sold, or dealt in by
others.14
Under the same law, the registration of a trademark is subject to the
provisions of Section 4 thereof, paragraph (d) of which is pertinent to
this case. The provision reads:
Section 4. Registration of trademarks, trade-names and service-marks
on the principal register. – There is hereby established a register of
trademarks, tradenames and service-marks which shall be known as
the principal register. The owner of the trade-mark, trade-name or
service-mark used to distinguish his goods, business or services of
others shall have the right to register the same on the principal
register, unless it:
xxx xxx xxx
(d) Consists of or comprises a mark or trade-name which so resembles
a mark or trade-name registered in the Philippines or a mark or trade-
name previously used in the Philippines by another and not
abandoned, as to be likely, when applied to or used in connection
with the goods, business or services of the applicant, to cause
confusion or mistake or to deceive purchasers;
xxx xxx xxx
Essentially, the issue here is whether there is a confusing similarity
between the MCDONALD’S marks of the petitioner and the
respondent’s "MACJOY & DEVICE" trademark when applied to Classes
29 and 30 of the International Classification of Goods, i.e., food and
ingredients of food.
In determining similarity and likelihood of confusion, jurisprudence
has developed two tests, the dominancy test and the holistic
test.15 The dominancy test focuses on the similarity of the prevalent
features of the competing trademarks that might cause confusion or
deception.16 In contrast, the holistic test requires the court to
consider the entirety of the marks as applied to the products,
including the labels and packaging, in determining confusing
similarity.17 Under the latter test, a comparison of the words is not
the only determinant factor.18 1awphi1.net
Here, the IPO used the dominancy test in concluding that there was
confusing similarity between the two (2) trademarks in question as it
105
took note of the appearance of the predominant features "M", "Mc"
and/or "Mac" in both the marks. In reversing the conclusion reached
by the IPO, the CA, while seemingly applying the dominancy test, in
fact actually applied the holistic test. The appellate court ruled in this
wise:
Applying the Dominancy test to the present case, the IPO should have
taken into consideration the entirety of the two marks instead of
simply fixing its gaze on the single letter "M" or on the combinations
"Mc" or "Mac". A mere cursory look of the subject marks will reveal
that, save for the letters "M" and "c", no other similarity exists in the
subject marks.
We agree with the [respondent] that it is entirely unwarranted for the
IPO to consider the prefix "Mac" as the predominant feature and the
rest of the designs in [respondent’s] mark as details. Taking into
account such paramount factors as color, designs, spelling, sound,
concept, sizes and audio and visual effects, the prefix "Mc" will appear
to be the only similarity in the two completely different marks; and it
is the prefix "Mc" that would thus appear as the miniscule detail.
When pitted against each other, the two marks reflect a distinct and
disparate visual impression that negates any possible confusing
similarity in the mind of the buying public. (Words in brackets
supplied.)
Petitioner now vigorously points out that the dominancy test should
be the one applied in this case.
We agree.
In trademark cases, particularly in ascertaining whether one
trademark is confusingly similar to another, no set rules can be
deduced because each case must be decided on its merits. 19 In such
cases, even more than in any other litigation, precedent must be
studied in the light of the facts of the particular case.20 That is the
reason why in trademark cases, jurisprudential precedents should be
applied only to a case if they are specifically in point. 21
While we agree with the CA’s detailed enumeration of differences
between the two (2) competing trademarks herein involved, we
believe that the holistic test is not the one applicable in this case, the
dominancy test being the one more suitable. In recent cases with a
similar factual milieu as here, the Court has consistently used and
applied the dominancy test in determining confusing similarity or
likelihood of confusion between competing trademarks. 22
Notably, in McDonalds Corp. v. LC Big Mak Burger, Inc.,23 a case where
the trademark "Big Mak" was found to be confusingly similar with the
"Big Mac" mark of the herein the petitioner, the Court explicitly held:
This Court, xxx, has relied on the dominancy test rather than the
holistic test. The dominancy test considers the dominant features in
the competing marks in determining whether they are confusingly
similar. Under the dominancy test, courts give greater weight to the
similarity of the appearance of the product arising from the adoption
of the dominant features of the registered mark, disregarding minor
differences. Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving little
weight to factors like prices, quality, sales outlets and market
segments.
Moreover, in Societe Des Produits Nestle, S.A. v. CA24 the Court,
applying the dominancy test, concluded that the use by the
respondent therein of the word "MASTER" for its coffee product
"FLAVOR MASTER" was likely to cause confusion with therein
petitioner’s coffee products’ "MASTER ROAST" and "MASTER BLEND"
and further ruled:
xxx, the totality or holistic test is contrary to the elementary postulate
of the law on trademarks and unfair competition that confusing
similarity is to be determined on the basis of visual, aural, connotative
comparisons and overall impressions engendered by the marks in
controversy as they are encountered in the marketplace. The totality
or holistic test only relies on visual comparisons 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.
Applying the dominancy test to the instant case, the Court finds that
herein petitioner’s "MCDONALD’S" and respondent’s "MACJOY"
marks are confusingly similar with each other such that an ordinary
purchaser can conclude an association or relation between the marks.
To begin with, both marks use the corporate "M" design logo and the
prefixes "Mc" and/or "Mac" as dominant features. The first letter "M"
in both marks puts emphasis on the prefixes "Mc" and/or "Mac" by
the similar way in which they are depicted i.e. in an arch-like,
capitalized and stylized manner.25
For sure, it is the prefix "Mc," an abbreviation of "Mac," which visually
and aurally catches the attention of the consuming public. Verily, the
word "MACJOY" attracts attention the same way as did "McDonalds,"
"MacFries," "McSpaghetti," "McDo," "Big Mac" and the rest of the
MCDONALD’S marks which all use the prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale
of fastfood products. Indisputably, the respondent’s trademark
application for the "MACJOY & DEVICE" trademark covers goods
under Classes 29 and 30 of the International Classification of Goods,
namely, fried chicken, chicken barbeque, burgers, fries, spaghetti, etc.
Likewise, the petitioner’s trademark registration for the
MCDONALD’S marks in the Philippines covers goods which are similar
if not identical to those covered by the respondent’s application.
Thus, we concur with the IPO’s findings that:
In the case at bar, the predominant features such as the "M," "Mc,"
and "Mac" appearing in both McDonald’s marks and the MACJOY &
DEVICE" easily attract the attention of would-be customers. Even
non-regular customers of their fastfood restaurants would readily
notice the predominance of the "M" design, "Mc/Mac" prefixes
shown in both marks. Such that the common awareness or perception
of customers that the trademarks McDonalds mark and MACJOY &
DEVICE are one and the same, or an affiliate, or under the sponsorship
of the other is not far-fetched.
The differences and variations in styles as the device depicting a head
of chicken with cap and bowtie and wings sprouting on both sides of
the chicken head, the heart-shaped "M," and the stylistic letters in
"MACJOY & DEVICE;" in contrast to the arch-like "M" and the one-
styled gothic letters in McDonald’s marks are of no moment. These
minuscule variations are overshadowed by the appearance of the
predominant features mentioned hereinabove.
Thus, with the predominance of the letter "M," and prefixes
"Mac/Mc" found in both marks, the inevitable conclusion is there is
confusing similarity between the trademarks Mc Donald’s marks and
"MACJOY AND DEVICE" especially considering the fact that both
marks are being used on almost the same products falling under
Classes 29 and 30 of the International Classification of Goods i.e. Food
and ingredients of food.
With the existence of confusing similarity between the subject
trademarks, the resulting issue to be resolved is who, as between the
parties, has the rightful claim of ownership over the said marks.
We rule for the petitioner.
106
A mark is valid if it is distinctive and hence not barred from to petitioner’s restaurant business and food products, is undoubtedly
registration under the Trademark Law. However, once registered, not beyond question.
only the mark’s validity but also the registrant’s ownership thereof is Thus, the IPO was correct in rejecting and denying the respondent’s
prima facie presumed.26 application for registration of the trademark "MACJOY & DEVICE." As
Pursuant to Section 3727 of R.A. No. 166, as amended, as well as the this Court ruled in Faberge Inc. v. IAC, 35 citing Chuanchow Soy &
provision regarding the protection of industrial property of foreign Canning Co. v. Dir. of Patents and Villapanta:36
nationals in this country as embodied in the Paris Convention28 under When one applies for the registration of a trademark or label which is
which the Philippines and the petitioner’s domicile, the United States, almost the same or very closely resembles one already used and
are adherent-members, the petitioner was able to register its registered by another, the application should be rejected and
MCDONALD’S marks successively, i.e., "McDonald’s" in 04 October, dismissed outright, even without any opposition on the part of the
197129 ; the corporate logo which is the "M" or the golden arches owner and user of a previously registered label or trademark, this not
design and the "McDonald’s" with the "M" or golden arches design only to avoid confusion on the part of the public, but also to protect
both in 30 June 1977 30 ; and so on and so forth.31 an already used and registered trademark and an established
On the other hand, it is not disputed that the respondent’s application goodwill.
for registration of its trademark "MACJOY & DEVICE" was filed only WHEREFORE, the instant petition is GRANTED. Accordingly, the
on March 14, 1991 albeit the date of first use in the Philippines was assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP
December 7, 1987.32 NO. 57247, are REVERSED and SET ASIDE and the Decision of the
Hence, from the evidence on record, it is clear that the petitioner has Intellectual Property Office in Inter Partes Case No. 3861 is
duly established its ownership of the mark/s. REINSTATED.
Respondent’s contention that it was the first user of the mark in the No pronouncement as to costs.
Philippines having used "MACJOY & DEVICE" on its restaurant SO ORDERED.
business and food products since December, 1987 at Cebu City while
the first McDonald’s outlet of the petitioner thereat was opened only
in 1992, is downright unmeritorious. For the requirement of "actual
use in commerce x x x in the Philippines" before one may register a
trademark, trade-name and service mark under the Trademark
Law33 pertains to the territorial jurisdiction of the Philippines and is
not only confined to a certain region, province, city or barangay.
Likewise wanting in merit is the respondent’s claim that the petitioner
cannot acquire ownership of the word "Mac" because it is a personal
name which may not be monopolized as a trademark as against
others of the same name or surname. As stated earlier, once a
trademark has been registered, the validity of the mark is prima facie
presumed. In this case, the respondent failed to overcome such
presumption. We agree with the observations of the petitioner
regarding the respondent’s explanation that the word "MACJOY" is
based on the name of its president’s niece, Scarlett Yu Carcell. In the
words of the petitioner:
First of all, Respondent failed to present evidence to support the
foregoing claim which, at best, is a mere self-serving assertion.
Secondly, it cannot be denied that there is absolutely no connection
between the name "Scarlett Yu Carcel" and "MacJoy" to merit the
coinage of the latter word. Even assuming that the word "MacJoy"
was chosen as a term of endearment, fondness and affection for a
certain Scarlett Yu Carcel, allegedly the niece of Respondent’s
president, as well as to supposedly bring good luck to Respondent’s
business, one cannot help but wonder why out of all the possible
letters or combinations of letters available to Respondent, its
president had to choose and adopt a mark with the prefix "Mac" as
the dominant feature thereof. A more plausible explanation perhaps
is that the niece of Respondent’s president was fond of the food
products and services of the Respondent, but that is beside the
point." 34
By reason of the respondent’s implausible and insufficient
explanation as to how and why out of the many choices of words it
could have used for its trade-name and/or trademark, it chose the
word "MACJOY," the only logical conclusion deducible therefrom is
that the respondent would want to ride high on the established
reputation and goodwill of the MCDONALD’s marks, which, as applied

107
 FIRST DIVISION
G.R. No. L-78325 January 25, 1990
DEL MONTE CORPORATION and PHILIPPINE PACKING
CORPORATION, petitioners,
vs.
COURT OF APPEALS and SUNSHINE SAUCE MANUFACTURING
INDUSTRIES, respondents.
Bito, Misa & Lozada for petitioners.
Reynaldo F. Singson for private respondent.
CRUZ, J.:
The petitioners are questioning the decision of the respondent court
upholding the dismissal by the trial court of their complaint against
the private respondent for infringement of trademark and unfair
competition.
Petitioner Del Monte Corporation is a foreign company organized
under the laws of the United States and not engaged in business in
the Philippines. Both the Philippines and the United States are
signatories to the Convention of Paris of September 27, 1965, which
grants to the nationals of the parties rights and advantages which
their own nationals enjoy for the repression of acts of infringement
and unfair competition.
Petitioner Philippine Packing Corporation (Philpack) is a domestic
corporation duly organized under the laws of the Philippines. On April
11, 1969, Del Monte granted Philpack the right to manufacture,
distribute and sell in the Philippines various agricultural products,
including catsup, under the Del Monte trademark and logo.
On October 27,1965, Del Monte authorized Philpack to register with
the Philippine Patent Office the Del Monte catsup bottle
configuration, for which it was granted Certificate of Trademark
Registration No. SR-913 by the Philippine Patent Office under the
Supplemental Register. 1 On November 20, 1972, Del Monte also
obtained two registration certificates for its trademark "DEL MONTE"
and its logo. 2
Respondent Sunshine Sauce Manufacturing Industries was issued a
Certificate of Registration by the Bureau of Domestic Trade on April
17,1980, to engage in the manufacture, packing, distribution and sale
of various kinds of sauce, identified by the logo Sunshine Fruit
Catsup.3
This logo was registered in the Supplemental Register on September
20, 1983. 4
The product itself was contained in various kinds of bottles,
including the Del Monte bottle, which the private respondent bought
from the junk shops for recycling.
Having received reports that the private respondent was using its
exclusively designed bottles and a logo confusingly similar to Del
Monte's, Philpack warned it to desist from doing so on pain of legal
action. Thereafter, claiming that the demand had been ignored,
Philpack and Del Monte filed a complaint against the private
respondent for infringement of trademark and unfair competition,
with a prayer for damages and the issuance of a writ of preliminary
injunction. 5
In its answer, Sunshine alleged that it had long ceased to use the Del
Monte bottle and that its logo was substantially different from the
Del Monte logo and would not confuse the buying public to the
detriment of the petitioners. 6
After trial, the Regional Trial Court of Makati dismissed the complaint.
It held that there were substantial differences between the logos or
trademarks of the parties; that the defendant had ceased using the
petitioners' bottles; and that in any case the defendant became the
owner of the said bottles upon its purchase thereof from the junk
yards. Furthermore, the complainants had failed to establish the
defendant's malice or bad faith, which was an essential element of
infringement of trademark or unfair competition. 7
This decision was affirmed in toto by the respondent court, which is
now faulted in this petition for certiorari under Rule 45 of the Rules
of Court.
Section 22 of R.A. No. 166, otherwise known as the Trademark Law,
provides in part as follows:
Sec. 22. Infringement, what constitutes. — Any person who shall use,
without the consent of the registrant, any reproduction, counterfeit,
copy or colorable imitation of any registered mark or trade-name in
connection with the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely
to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services or identity of such
business; or reproduce, counterfeit copy or colorably imitate any such
mark or trade name and apply such reproduction, counterfeit copy or
colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in
connection with such goods, business or services, shall be liable to a
civil action by the registrant for any or all of the remedies herein
provided.
Sec. 29 of the same law states as follows:
Sec. 29. Unfair competition, rights and remedies. — A person who
has identified in the mind of the public the goods he manufactures or
deals in, his business or services from those of others, whether or not
a mark or tradename is employed, has a property right in the goodwill
of the said goods, business or services so identified, which will be
protected in the same manner as other property rights. Such a person
shall have the remedies provided in section twenty- three, Chapter V
hereof.
Any person who shall employ deception or any other means contrary
to good faith by which he shall pass off the goods manufactured by
him or in which he deals, or his business, or services for those of the
one having established such goodwill, or who shall commit any acts
calculated to produce said result, shall be guilty of unfair competition,
and shall be subject to an action therefor.
In particular, and without in any way limiting the scope of unfair
competition, the following shall be deemed guilty of unfair
competition:
(a) Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as to
the goods themselves or in the wrapping of the packages in which
they are contained, or the devices or words thereon, or in any other
feature of their appearance, which would likely influence purchasers
to believe that the goods offered are those of a manufacturer or
dealer other than the actual manufacturer or dealer, or who
otherwise clothes the goods with such appearance as shall deceive
the public and defraud another of his legitimate trade, or any
subsequent vendor of such goods or any agent of any vendor engaged
in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs ally
other means calculated to induce the false belief that such person is
offering the services of another who has identified such services in
the mind of the public; or
108
(c) Any person who shall make any false statement in the course of
trade or who shall commit any other act contrary to good faith of a
nature calculated to discredit the goods, business or services of
another.
To arrive at a proper resolution of this case, it is important to bear in
mind the following distinctions between infringement of trademark
and unfair competition.
(1) Infringement of trademark is the unauthorized use of a
trademark, whereas unfair competition is the passing off of one's
goods as those of another.
(2) In infringement of trademark fraudulent intent is unnecessary
whereas in unfair competition fraudulent intent is essential.
(3) In infringement of trademark the prior registration of the
trademark is a prerequisite to the action, whereas in unfair
competition registration is not necessary. 8
In the challenged decision, the respondent court cited the following
test laid down by this Court in a number of cases:
In determining whether two trademarks are confusingly similar, the
two marks in their entirety as they appear in the respective labels
must be considered in relation to the goods to which they are
attached; the discerning eye of the observer must focus not only on
the predorninant words but also on the other features appearing on
both labels. 9
and applying the same, held that there was no colorable imitation of
the petitioners' trademark and logo by the private respondent. The
respondent court agreed with the findings of the trial court that:
In order to resolve the said issue, the Court now attempts to make a
comparison of the two products, to wit:
1. As to the shape of label or make:
Del Monte: Semi-rectangular with a crown or tomato shape design
on top of the rectangle.
Sunshine: Regular rectangle.
2. As to brand printed on label:
Del Monte: Tomato catsup mark.
Sunshine: Fruit catsup.
3. As to the words or lettering on label or mark:
Del Monte: Clearly indicated words packed by Sysu International,
Inc., Q.C., Philippines.
Sunshine: Sunshine fruit catsup is clearly indicated "made in the
Philippines by Sunshine Sauce Manufacturing Industries" No. 1 Del
Monte Avenue, Malabon, Metro Manila.
4. As to color of logo:
Del Monte: Combination of yellow and dark red, with words "Del
Monte Quality" in white.
Sunshine: White, light green and light red, with words "Sunshine
Brand" in yellow.
5. As to shape of logo:
Del Monte: In the shape of a tomato.
Sunshine: Entirely different in shape.
6. As to label below the cap:
Del Monte: Seal covering the cap down to the neck of the bottle,
with picture of tomatoes with words "made from real tomatoes."
Sunshine: There is a label below the cap which says "Sunshine
Brand."
7. As to the color of the products:
Del Monte: Darker red.
Sunshine: Lighter than Del Monte.
While the Court does recognize these distinctions, it does not agree
with the conclusion that there was no infringement or unfair
competition. It seems to us that the lower courts have been so pre-
occupied with the details that they have not seen the total picture.
It has been correctly held that side-by-side comparison is not the final
test of similarity. 10 Such comparison requires a careful scrutiny to
determine in what points the labels of the products differ, as was
done by the trial judge. The ordinary buyer does not usually make
such scrutiny nor does he usually have the time to do so. The
average shopper is usually in a hurry and does not inspect every
product on the shelf as if he were browsing in a library. Where the
housewife has to return home as soon as possible to her baby or the
working woman has to make quick purchases during her off hours,
she is apt to be confused by similar labels even if they do have
minute differences. The male shopper is worse as he usually does
not bother about such distinctions.
The question is not whether the two articles are distinguishable by
their label when set side by side but whether the general confusion
made by the article upon the eye of the casual purchaser who is
unsuspicious and off his guard, is such as to likely result in his
confounding it with the original. 11 As observed in several cases, the
general impression of the ordinary purchaser, buying under the
normally prevalent conditions in trade and giving the attention such
purchasers usually give in buying that class of goods is the
touchstone. 12
It has been held that in making purchases, the consumer must
depend upon his recollection of the appearance of the product
which he intends to purchase. 13 The buyer having in mind the
mark/label of the respondent must rely upon his memory of the
petitioner's mark. 14 Unlike the judge who has ample time to
minutely examine the labels in question in the comfort of his sala,
the ordinary shopper does not enjoy the same opportunity.
A number of courts have held that to determine whether a trademark
has been infringed, we must consider the mark as a whole and not as
dissected. If the buyer is deceived, it is attributable to the marks as a
totality, not usually to any part of it. 15 The court therefore should be
guided by its first impression, 16 for a buyer acts quickly and is
governed by a casual glance, the value of which may be dissipated as
soon as the court assumes to analyze carefully the respective features
of the mark. 17
It has also been held that it is not the function of the court in cases of
infringement and unfair competition to educate purchasers but
rather to take their carelessness for granted, and to be ever conscious
of the fact that marks need not be identical. A confusing similarity will
justify the intervention of equity. 18 The judge must also be aware of
the fact that usually a defendant in cases of infringement does not
normally copy but makes only colorable changes. 19Well has it been
said that the most successful form of copying is to employ enough
points of similarity to confuse the public with enough points of
difference to confuse the courts. 20
We also note that the respondent court failed to take into
consideration several factors which should have affected its
conclusion, to wit: age, training and education of the usual purchaser,
the nature and cost of the article, whether the article is bought for
immediate consumption and also the conditions under which it is
109
usually purchased . 21Among these, what essentially determines the
attitude of the purchaser, specifically his inclination to be cautious, is
the cost of the goods. To be sure, a person who buys a box of candies
will not exercise as much care as one who buys an expensive watch.
As a general rule, an ordinary buyer does not exercise as much
prudence in buying an article for which he pays a few centavos as he
does in purchasing a more valuable thing. 22 Expensive and valuable
items are normally bought only after deliberate, comparative and
analytical investigation. But mass products, low priced articles in wide
use, and matters of everyday purchase requiring frequent
replacement are bought by the casual consumer without great
care. 23 In this latter category is catsup.
IN THIS CASE;
At that, even if the labels were analyzed together it is not difficult
to see that the Sunshine label is a colorable imitation of the Del
Monte trademark. The predominant colors used in the Del Monte
label are green and red-orange, the same with Sunshine. The word
"catsup" in both bottles is printed in white and the style of the
print/letter is the same. Although the logo of Sunshine is not a
tomato, the figure nevertheless approximates that of a tomato.
As previously stated, the person who infringes a trade mark does not
normally copy out but only makes colorable changes, employing
enough points of similarity to confuse the public with enough points
of differences to confuse the courts. What is undeniable is the fact
that when a manufacturer prepares to package his product, he has
before him a boundless choice of words, phrases, colors and
symbols sufficient to distinguish his product from the others. When
as in this case, Sunshine chose, without a reasonable explanation,
to use the same colors and letters as those used by Del Monte
though the field of its selection was so broad, the inevitable
conclusion is that it was done deliberately to deceive .24
It has been aptly observed that the ultimate ratio in cases of grave
doubt is the rule that as between a newcomer who by the confusion
has nothing to lose and everything to gain and one who by honest
dealing has already achieved favor with the public, any doubt should
be resolved against the newcomer inasmuch as the field from which
he can select a desirable trademark to indicate the origin of his
product is obviously a large one. 25
Coming now to the second issue, we find that the private respondent
is not guilty of infringement for having used the Del Monte bottle. The
reason is that the configuration of the said bottle was merely
registered in the Supplemental Register. In the case of Lorenzana v.
Macagba, 26 we declared that:
(1) Registration in the Principal Register gives rise to a presumption of
the validity of the registration, the registrant's ownership of the mark
and his right to the exclusive use thereof. There is no such
presumption in the registration in the Supplemental Register.
(2) Registration in the Principal Register is limited to the actual owner
of the trademark and proceedings therein on the issue of ownership
which may be contested through opposition or interference
proceedings or, after registration, in a petition for cancellation.
Registration in the Principal Register is constructive notice of the
registrant's claim of ownership, while registration in the
Supplemental Register is merely proof of actual use of the trademark
and notice that the registrant has used or appropriated it. It is not
subject to opposition although it may be cancelled after the issuance.
Corollarily, registration in the Principal Register is a basis for an action
for infringement while registration in the Supplemental Register is
not.
(3) In applications for registration in the Principal Register, publication
of the application is necessary. This is not so in applications for
registrations in the Supplemental Register.
It can be inferred from the foregoing that although Del Monte has
actual use of the bottle's configuration, the petitioners cannot claim
exclusive use thereof because it has not been registered in the
Principal Register. However, we find that Sunshine, despite the many
choices available to it and notwithstanding that the caution "Del
Monte Corporation, Not to be Refilled" was embossed on the bottle,
still opted to use the petitioners' bottle to market a product which
Philpack also produces. This clearly shows the private respondent's
bad faith and its intention to capitalize on the latter's reputation and
goodwill and pass off its own product as that of Del Monte.
The Court observes that the reasons given by the respondent court in
resolving the case in favor of Sunshine are untenable. First, it declared
that the registration of the Sunshine label belied the company's
malicious intent to imitate petitioner's product. Second, it held that
the Sunshine label was not improper because the Bureau of Patent
presumably considered other trademarks before approving it. Third,
it cited the case of Shell Co. v. Insular Petroleum, 27 where this Court
declared that selling oil in containers of another with markings
erased, without intent to deceive, was not unfair competition.
Regarding the fact of registration, it is to be noted that the Sunshine
label was registered not in the Principal Register but only in the
Supplemental Register where the presumption of the validity of the
trademark, the registrant's ownership of the mark and his right to its
exclusive use are all absent.
Anent the assumption that the Bureau of Patent had considered other
existing patents, it is reiterated that since registration was only in the
Supplemental Register, this did not vest the registrant with the
exclusive right to use the label nor did it give rise to the presumption
of the validity of the registration.
On the argument that no unfair competition was committed, the Shell
Case is not on all fours with the case at bar because:
(1) In Shell, the absence of intent to deceive was supported by the
fact that the respondent therein, before marketing its product, totally
obliterated and erased the brands/mark of the different companies
stenciled on the containers thereof, except for a single isolated
transaction. The respondent in the present case made no similar
effort.
(2) In Shell, what was involved was a single isolated transaction. Of
the many drums used, there was only one container where the Shell
label was not erased, while in the case at hand, the respondent
admitted that it made use of several Del Monte bottles and without
obliterating the embossed warning.
(3) In Shell, the product of respondent was sold to dealers, not to
ultimate consumers. As a general rule, dealers are well acquainted
with the manufacturer from whom they make their purchases and
since they are more experienced, they cannot be so easily deceived
like the inexperienced public. There may well be similarities and
imitations which deceive all, but generally the interests of the dealers
are not regarded with the same solicitude as are the interests of the
ordinary consumer. For it is the form in which the wares come to the
final buyer that is of significance. 28
As Sunshine's label is an infringement of the Del Monte's trademark,
law and equity call for the cancellation of the private respondent's
registration and withdrawal of all its products bearing the
questioned label from the market. With regard to the use of Del
Monte's bottle, the same constitutes unfair competition; hence, the
110
respondent should be permanently enjoined from the use of such
bottles.
The court must rule, however, that the damage prayed for cannot be
granted because the petitioner has not presented evidence to prove
the amount thereof. Section 23 of R.A. No. 166 provides:
Sec. 23. Actions and damages and injunction for infringement. — Any
person entitled to the exclusive use of a registered mark or trade
name may recover damages in a civil action from any person who
infringes his rights, and the measure of the damages suffered shall be
either the reasonable profit which the complaining party would have
made, had the defendant not infringed his said 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 the court may award as damages 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 cases where actual intent to mislead the public or to defraud
the complaining party shall be shown, in the discretion of the court,
the damages may be doubled.
The complaining party, upon proper showing may also be granted
injunction.1âwphi1
Fortunately for the petitioners, they may still find some small comfort
in Art. 2222 of the Civil Code, which provides:
Art. 2222. The court may award nominal damages in every obligation
arising from any source enumerated in Art. 1157, or in every case
where any property right has been invaded.
Accordingly, the Court can only award to the petitioners, as it hereby
does award, nominal damages in the amount of Pl,000.00.
WHEREFORE, the petition is GRANTED. The decision of the Court of
Appeals dated December 24, 1986 and the Resolution dated April
27,1987, are REVERSED and SET ASIDE and a new judgment is hereby
rendered:
(1) Canceling the private respondent's Certificate of Register No. SR-
6310 and permanently enjoining the private respondent from using a
label similar to that of the petitioners.
(2) Prohibiting the private respondent from using the empty bottles
of the petitioners as containers for its own products.
(3) Ordering the private respondent to pay the petitioners nominal
damages in the amount of Pl,000.00, and the costs of the suit.
SO ORDERED.

111
 G.R. No. 100098 December 29, 1995
EMERALD GARMENT MANUFACTURING CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS, BUREAU OF PATENTS, TRADEMARKS
AND TECHNOLOGY TRANSFER and H.D. LEE COMPANY,
INC., respondents.
KAPUNAN, J.:
In this petition for review on certiorari under Rule 45 of the Revised
Rules of Court, Emerald Garment Manufacturing Corporation seeks to
annul the decision of the Court of Appeals dated 29 November 1990
in CA-G.R. SP No. 15266 declaring petitioner's trademark to be
confusingly similar to that of private respondent and the resolution
dated 17 May 1991 denying petitioner's motion for reconsideration.
The record reveals the following antecedent facts:
On 18 September 1981, private respondent H.D. Lee Co., Inc., a
foreign corporation organized under the laws of Delaware, U.S.A.,
filed with the Bureau of Patents, Trademarks & Technology Transfer
(BPTTT) a Petition for Cancellation of Registration No. SR 5054
(Supplemental Register) for the trademark "STYLISTIC MR. LEE" used
on skirts, jeans, blouses, socks, briefs, jackets, jogging suits, dresses,
shorts, shirts and lingerie under Class 25, issued on 27 October 1980
in the name of petitioner Emerald Garment Manufacturing
Corporation, a domestic corporation organized and existing under
Philippine laws. The petition was docketed as Inter Partes Case No.
1558.1
Private respondent, invoking Sec. 37 of R.A. No. 166 (Trademark Law)
and Art. VIII of the Paris Convention for the Protection of Industrial
Property, averred that petitioner's trademark "so closely resembled
its own trademark, 'LEE' as previously registered and used in the
Philippines, and not abandoned, as to be likely, when applied to or
used in connection with petitioner's goods, to cause confusion,
mistake and deception on the part of the purchasing public as to the
origin of the goods."2
In its answer dated 23 March 1982, petitioner contended that its
trademark was entirely and unmistakably different from that of
private respondent and that its certificate of registration was legally
and validly granted.3
On 20 February 1984, petitioner caused the publication of its
application for registration of the trademark "STYLISTIC MR. LEE" in
the Principal Register."4
On 27 July 1984, private respondent filed a notice of opposition to
petitioner's application for registration also on grounds that
petitioner's trademark was confusingly similar to its "LEE"
trademark.5 The case was docketed as Inter Partes Case No. 1860.
On 21 June 1985, the Director of Patents, on motion filed by private
respondent dated 15 May 1985, issued an order consolidating Inter
Partes Cases Nos. 1558 and 1860 on grounds that a common question
of law was involved.6
On 19 July 1988, the Director of Patents rendered a decision granting
private respondent's petition for cancellation and opposition to
registration.
The Director of Patents found private respondent to be the prior
registrant of the trademark "LEE" in the Philippines and that it had
been using said mark in the Philippines.7
Moreover, the Director of Patents, using the test of dominancy,
declared that petitioner's trademark was confusingly similar to
private respondent's mark because "it is the word 'Lee' which draws
the attention of the buyer and leads him to conclude that the goods
originated from the same manufacturer. It is undeniably the
dominant feature of the mark."8
On 3 August 1988, petitioner appealed to the Court of Appeals and on
8 August 1988, it filed with the BPTTT a Motion to Stay Execution of
the 19 July 1988 decision of the Director of Patents on grounds that
the same would cause it great and irreparable damage and injury.
Private respondent submitted its opposition on 22 August 1988. 9
On 23 September 1988, the BPTTT issued Resolution No. 88-33
granting petitioner's motion to stay execution subject to the following
terms and conditions:
1. That under this resolution, Respondent-Registrant is authorized
only to dispose of its current stock using the mark "STYLISTIC MR.
LEE";
2. That Respondent-Registrant is strictly prohibited from further
production, regardless of mode and source, of the mark in question
(STYLISTIC MR. LEE) in addition to its current stock;
3. That this relief Order shall automatically cease upon resolution of
the Appeal by the Court of Appeals and, if the Respondent's appeal
loses, all goods bearing the mark "STYLISTIC MR. LEE" shall be
removed from the market, otherwise such goods shall be seized in
accordance with the law.
SO ORDERED.10
On 29 November 1990, the Court of Appeals promulgated its decision
affirming the decision of the Director of Patents dated 19 July 1988 in
all respects.11
In said decision the Court of Appeals expounded, thus:
xxx xxx xxx
Whether or not a trademark causes confusion and is likely to deceive
the public is a question of fact which is to be resolved by applying the
"test of dominancy", meaning, if the competing trademark contains
the main or essential or dominant features of another by reason of
which confusion and deception are likely to result, then infringement
takes place; that duplication or imitation is not necessary, a similarity
in the dominant features of the trademark would be sufficient.
The word "LEE" is the most prominent and distinctive feature of the
appellant's trademark and all of the appellee's "LEE" trademarks. It is
the mark which draws the attention of the buyer and leads him to
conclude that the goods originated from the same manufacturer.
While it is true that there are other words such as "STYLISTIC", printed
in the appellant's label, such word is printed in such small letters over
the word "LEE" that it is not conspicuous enough to draw the
attention of ordinary buyers whereas the word "LEE" is printed across
the label in big, bold letters and of the same color, style, type and size
of lettering as that of the trademark of the appellee. The alleged
difference is too insubstantial to be noticeable. Even
granting arguendo that the word "STYLISTIC" is conspicuous enough
to draw attention, the goods may easily be mistaken for just another
variation or line of garments under the ap appelle's "LEE" trademarks
in view of the fact that the appellee has registered trademarks which
use other words in addition to the principal mark "LEE" such as "LEE
RIDERS", "LEESURES" and "LEE LEENS". The likelihood of confusion is
further made more probable by the fact that both parties are engaged
in the same line of business. It is well to reiterate that the
determinative factor in ascertaining whether or not the marks are
confusingly similar to each other is not whether the challenged mark
would actually cause confusion or deception of the purchasers but
whether the use of such mark would likely cause confusion or mistake
on the part of the buying public.
112
xxx xxx xxx
The appellee has sufficiently established its right to prior use and
registration of the trademark "LEE" in the Philippines and is thus
entitled to protection from any infringement upon the same. It is thus
axiomatic that one who has identified a peculiar symbol or mark with
his goods thereby acquires a property right in such symbol or mark,
and if another infringes the trademark, he thereby invokes this
property right.
The merchandise or goods being sold by the parties are not that
expensive as alleged to be by the appellant and are quite ordinary
commodities purchased by the average person and at times, by the
ignorant and the unlettered. Ordinary purchasers will not as a rule
examine the small letterings printed on the label but will simply be
guided by the presence of the striking mark "LEE". Whatever
difference there may be will pale in insignificance in the face of an
evident similarity in the dominant features and overall appearance of
the labels of the parties.12
xxx xxx xxx
On 19 December 1990, petitioner filed a motion for reconsideration
of the above-mentioned decision of the Court of Appeals.
Private respondent opposed said motion on 8 January 1991 on
grounds that it involved an impermissible change of theory on appeal.
Petitioner allegedly raised entirely new and unrelated arguments and
defenses not previously raised in the proceedings below such as
laches and a claim that private respondent appropriated the style and
appearance of petitioner's trademark when it registered its "LEE"
mark under Registration No. 44220.13
On 17 May 1991, the Court of Appeals issued a resolution rejecting
petitioner's motion for reconsideration and ruled thus:
xxx xxx xxx
A defense not raised in the trial court cannot be raised on appeal for
the first time. An issue raised for the first time on appeal and not
raised timely in the proceedings in the lower court is barred by
estoppel.
The object of requiring the parties to present all questions and issues
to the lower court before they can be presented to this Court is to
have the lower court rule upon them, so that this Court on appeal
may determine whether or not such ruling was erroneous. The
purpose is also in furtherance of justice to require the party to first
present the question he contends for in the lower court so that the
other party may not be taken by surprise and may present evidence
to properly meet the issues raised.
Moreover, for a question to be raised on appeal, the same must also
be within the issues raised by the parties in their pleadings.
Consequently, when a party deliberately adopts a certain theory, and
the case is tried and decided based upon such theory presented in the
court below, he will not be permitted to change his theory on appeal.
To permit him to do so would be unfair to the adverse party. A
question raised for the first time on appeal, there having opportunity
to raise them in the court of origin constitutes a change of theory
which is not permissible on appeal.
In the instant case, appellant's main defense pleaded in its answer
dated March 23, 1982 was that there was "no confusing similarity
between the competing trademark involved. On appeal, the appellant
raised a single issue, to wit:
The only issue involved in this case is whether or not respondent-
registrant's trademark "STYLISTIC MR. LEE" is confusingly similar with
the petitioner's trademarks "LEE or LEERIDERS, LEE-LEENS and LEE-
SURES."
Appellant's main argument in this motion for reconsideration on the
other hand is that the appellee is estopped by laches from asserting
its right to its trademark. Appellant claims although belatedly that
appellee went to court with "unclean hands" by changing the
appearance of its trademark to make it identical to the appellant's
trademark.
Neither defenses were raised by the appellant in the proceedings
before the Bureau of Patents. Appellant cannot raise them now for
the first time on appeal, let alone on a mere motion for
reconsideration of the decision of this Court dismissing the
appellant's appeal.
While there may be instances and situations justifying relaxation of
this rule, the circumstance of the instant case, equity would be better
served by applying the settled rule it appearing that appellant has not
given any reason at all as to why the defenses raised in its motion for
reconsideration was not invoked earlier.14
xxx xxx xxx
Twice rebuffed, petitioner presents its case before this Court on the
following assignment of errors:
I. THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE
RESPONDENT CAUSED THE ISSUANCE OF A FOURTH "LEE"
TRADEMARK IMITATING THAT OF THE PETITIONER'S ON MAY 5,
1989 OR MORE THAN EIGHT MONTHS AFTER THE BUREAU OF
PATENT'S DECISION DATED JULY 19, 1988.
II. THE COURT OF APPEALS ERRED IN RULING THAT THE DEFENSE OF
ESTOPPEL BY LACHES MUST BE RAISED IN THE PROCEEDINGS BEFORE
THE BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY
TRANSFER.
III. THE COURT OF APPEALS ERRED WHEN IT CONSIDERED PRIVATE
RESPONDENT'S PRIOR REGISTRATION OF ITS TRADEMARK AND
DISREGARDED THE FACT THAT PRIVATE RESPONDENT HAD FAILED TO
PROVE COMMERCIAL
USE THEREOF BEFORE FILING OF APPLICATION FOR REGISTRATION. 15
In addition, petitioner reiterates the issues it raised in the Court of
Appeals:
I. THE ISSUE INVOLVED IN THIS CASE IS WHETHER OR NOT
PETITIONER'S TRADEMARK SYTLISTIC MR. LEE, IS CONFUSINGLY
SIMILAR WITH THE PRIVATE RESPONDENT'S TRADEMARK LEE OR LEE-
RIDER, LEE-LEENS AND LEE-SURES.
II. PETITIONER'S EVIDENCES ARE CLEAR AND SUFFICIENT TO SHOW
THAT IT IS THE PRIOR USER AND ITS TRADEMARK IS DIFFERENT FROM
THAT OF THE PRIVATE RESPONDENT.
III. PETITIONER'S TRADEMARK IS ENTIRELY DIFFERENT FROM THE
PRIVATE RESPONDENT'S AND THE REGISTRATION OF ITS TRADEMARK
IS PRIMA FACIE EVIDENCE OF GOOD FAITH.
IV. PETITIONER'S "STYLISTIC MR. LEE" TRADEMARK CANNOT BE
CONFUSED WITH PRIVATE RESPONDENT'S LEE TRADEMARK.16
Petitioner contends that private respondent is estopped from
instituting an action for infringement before the BPTTT under the
equitable principle of laches pursuant to Sec. 9-A of R.A. No. 166,
otherwise known as the Law on Trade-marks, Trade-names and Unfair
Competition:
Sec. 9-A. Equitable principles to govern proceedings. — In opposition
proceedings and in all other inter partes proceedings in the patent
office under this act, equitable principles of laches, estoppel, and
acquiescence, where applicable, may be considered and applied.
Petitioner alleges that it has been using its trademark "STYLISTIC MR.
LEE" since 1 May 1975, yet, it was only on 18 September 1981 that
private respondent filed a petition for cancellation of petitioner's
113
certificate of registration for the said trademark. Similarly, private
respondent's notice of opposition to petitioner's application for
registration in the principal register was belatedly filed on 27 July
1984.17
Private respondent counters by maintaining that petitioner was
barred from raising new issues on appeal, the only contention in the
proceedings below being the presence or absence of confusing
similarity between the two trademarks in question.18
We reject petitioner's contention.
Petitioner's trademark is registered in the supplemental register. The
Trademark Law (R.A. No. 166) provides that "marks and tradenames
for the supplemental register shall not be published for or be subject
to opposition, but shall be published on registration in the Official
Gazette."19 The reckoning point, therefore, should not be 1 May 1975,
the date of alleged use by petitioner of its assailed trademark but 27
October 1980,20 the date the certificate of registration SR No. 5054
was published in the Official Gazette and issued to petitioner.
It was only on the date of publication and issuance of the registration
certificate that private respondent may be considered "officially" put
on notice that petitioner has appropriated or is using said mark,
which, after all, is the function and purpose of registration in the
supplemental register.21 The record is bereft of evidence that private
respondent was aware of petitioner's trademark before the date of
said publication and issuance. Hence, when private respondent
instituted cancellation proceedings on 18 September 1981, less than
a year had passed.
Corollarily, private respondent could hardly be accused of inexcusable
delay in filing its notice of opposition to petitioner's application for
registration in the principal register since said application was
published only on 20 February 1984.22 From the time of publication
to the time of filing the opposition on 27 July 1984 barely five (5)
months had elapsed. To be barred from bringing suit on grounds of
estoppel and laches, the delay must be
lengthy.23
More crucial is the issue of confusing similarity between the two
trademarks. Petitioner vehemently contends that its trademark
"STYLISTIC MR. LEE" is entirely different from and not confusingly
similar to private respondent's "LEE" trademark.
Private respondent maintains otherwise. It asserts that petitioner's
trademark tends to mislead and confuse the public and thus
constitutes an infringement of its own mark, since the dominant
feature therein is the word "LEE."
The pertinent provision of R.A. No. 166 (Trademark Law) states thus:
Sec. 22. Infringement, what constitutes. — Any person who shall use,
without the consent of the registrant, any reproduction, counterfeit,
copy or colorable imitation of any registered mark or trade-name in
connection with the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely
to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services, or identity of such
business; or reproduce, counterfeit, copy or colorably imitable any
such mark or trade-name and apply such reproduction, counterfeit,
copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business or services; shall be liable
to a civil action by the registrant for any or all of the remedies herein
provided.
Practical application, however, of the aforesaid provision is easier said
than done. In the history of trademark cases in the Philippines,
particularly in ascertaining whether one trademark is confusingly
similar to or is a colorable imitation of another, no set rules can be
deduced. Each case must be decided on its own merits.
In Esso Standard Eastern, Inc. v. Court of Appeals,24 we held:
. . . But likelihood of confusion is a relative concept; to be determined
only according to the particular, and sometimes peculiar,
circumstances of each case. It is unquestionably true that, as stated
in Coburn vs. Puritan Mills, Inc.: "In trademark cases, even more than
in other litigation, precedent must be studied in the light of the facts
of the particular case."
xxx xxx xxx
Likewise, it has been observed that:
In determining whether a particular name or mark is a "colorable
imitation" of another, no all-embracing rule seems possible in view of
the great number of factors which must necessarily be considered in
resolving this question of fact, such as the class of product or business
to which the article belongs; the product's quality, quantity, or size,
including its wrapper or container; the dominant color, style, size,
form, meaning of letters, words, designs and emblems used; the
nature of the package, wrapper or container; the character of the
product's purchasers; location of the business; the likelihood of
deception or the mark or name's tendency to confuse;
etc.25
Proceeding to the task at hand, the essential element of infringement
is colorable imitation. This term has been defined as "such a close or
ingenious imitation as to be calculated to deceive ordinary purchasers,
or such resemblance of the infringing mark to the original as to
deceive an ordinary purchaser giving such attention as a purchaser
usually gives, and to cause him to purchase the one supposing it to be
the other."26
Colorable imitation does not mean such similitude as amounts to
identity. Nor does it require that all the details be literally copied.
Colorable imitation refers to such similarity in form, content, words,
sound, meaning, special arrangement, or general appearance of the
trademark or tradename with that of the other mark or tradename in
their over-all presentation or in their essential, substantive and
distinctive parts as would likely mislead or confuse persons in the
ordinary course of purchasing the genuine article.27
In determining whether colorable imitation exists, jurisprudence has
developed two kinds of tests — the Dominancy Test applied in Asia
Brewery, Inc. v. Court of Appeals 28 and other cases 29 and the Holistic
Test developed in Del Monte Corporation v. Court of Appeals 30 and
its proponent cases.31
As its title implies, the test of dominancy focuses on the similarity of
the prevalent features of the competing trademarks which might
cause confusion or deception and thus constitutes infringement.
xxx xxx xxx
. . . If the competing trademark contains the main or essential or
dominant features of another, and confusion and deception is likely
to result, infringement takes place. Duplication or imitation is not
necessary; nor it is necessary that the infringing label should suggest
an effort to imitate. [C. Neilman Brewing Co. v. Independent Brewing
Co., 191 F., 489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180
Fed. 579]. The question at issue in cases of infringement of
trademarks is whether the use of the marks involved would be likely
to cause confusion or mistakes in the mind of the public or deceive
114
purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107
F. 2d 588; . . .)32
xxx xxx xxx
On the other side of the spectrum, the holistic test mandates that the
entirety of the marks in question must be considered in determining
confusing similarity.
xxx xxx xxx
In determining whether the trademarks are confusingly similar, a
comparison of the words is not the only determinant factor. The
trademarks in their entirety as they appear in their respective labels
or hang tags must also be considered in relation to the goods to which
they are attached. The discerning eye of the observer must focus not
only on the predominant words but also on the other features
appearing in both labels in order that he may draw his conclusion
whether one is confusingly similar to the other.33
xxx xxx xxx
In THIS CASE;
Applying the foregoing tenets to the present controversy and taking
into account the factual circumstances of this case, we considered the
trademarks involved as a whole and rule that petitioner's "STYLISTIC
MR. LEE" is not confusingly similar to private respondent's "LEE"
trademark.
Petitioner's trademark is the whole "STYLISTIC MR. LEE." Although on
its label the word "LEE" is prominent, the trademark should be
considered as a whole and not piecemeal. The dissimilarities between
the two marks become conspicuous, noticeable and substantial
enough to matter especially in the light of the following variables that
must be factored in.
First, the products involved in the case at bar are, in the main, various
kinds of jeans. These are not your ordinary household items like
catsup, soysauce or soap which are of minimal cost. Maong pants or
jeans are not inexpensive. Accordingly, the casual buyer is
predisposed to be more cautious and discriminating in and would
prefer to mull over his purchase. Confusion and deception, then, is
less likely.
In Del Monte Corporation v. Court of Appeals, 34 we noted that:
. . . Among these, what essentially determines the attitudes of the
purchaser, specifically his inclination to be cautious, is the cost of the
goods. To be sure, a person who buys a box of candies will not exercise
as much care as one who buys an expensive watch. As a general rule,
an ordinary buyer does not exercise as much prudence in buying an
article for which he pays a few centavos as he does in purchasing a
more valuable thing. Expensive and valuable items are normally
bought only after deliberate, comparative and analytical
investigation. But mass products, low priced articles in wide use, and
matters of everyday purchase requiring frequent replacement are
bought by the casual consumer without great
care. . . .
Second, like his beer, the average Filipino consumer generally buys his
jeans by brand. He does not ask the sales clerk for generic jeans but
for, say, a Levis, Guess, Wrangler or even an Armani. He is, therefore,
more or less knowledgeable and familiar with his preference and will
not easily be distracted.
Finally, in line with the foregoing discussions, more credit should be
given to the "ordinary purchaser." Cast in this particular controversy,
the ordinary purchaser is not the "completely unwary consumer" but
is the "ordinarily intelligent buyer" considering the type of product
involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok 35 is better suited
to the present case. There, the "ordinary purchaser" was defined as
one "accustomed to buy, and therefore to some extent familiar with,
the goods in question. The test of fraudulent simulation is to be found
in the likelihood of the deception of some persons in some measure
acquainted with an established design and desirous of purchasing the
commodity with which that design has been associated. The test is not
found in the deception, or the possibility of deception, of the person
who knows nothing about the design which has been counterfeited,
and who must be indifferent between that and the other. The
simulation, in order to be objectionable, must be such as appears likely
to mislead the ordinary intelligent buyer who has a need to supply and
is familiar with the article that he seeks to purchase."
There is no cause for the Court of Appeal's apprehension that
petitioner's products might be mistaken as "another variation or line
of garments under private respondent's 'LEE' trademark". 36 As one
would readily observe, private respondent's variation follows a
standard format "LEERIDERS," "LEESURES" and "LEELEENS." It is,
therefore, improbable that the public would immediately and
naturally conclude that petitioner's "STYLISTIC MR. LEE" is but
another variation under private respondent's "LEE" mark.
As we have previously intimated the issue of confusing similarity
between trademarks is resolved by considering the distinct
characteristics of each case. In the present controversy, taking into
account these unique factors, we conclude that the similarities in the
trademarks in question are not sufficient as to likely cause deception
and confusion tantamount to infringement.
Another way of resolving the conflict is to consider the marks involved
from the point of view of what marks are registrable pursuant to Sec.
4 of R.A. No. 166, particularly paragraph 4 (e):
CHAPTER II-A.— The Principal Register
(Inserted by Sec. 2, Rep. Act No. 638.)
Sec. 4. Registration of trade-marks, trade-names and service-marks
on the principal register. — There is hereby established a register of
trade-marks, trade-names and service-marks which shall be known as
the principal register. The owner of a trade-mark, trade-name or
service-mark used to distinguish his goods, business or services from
the goods, business or services of others shall have the right to
register the same on the principal register, unless it:
xxx xxx xxx
(e) Consists of a mark or trade-name which, when applied to or used
in connection with the goods, business or services of the applicant is
merely descriptive or deceptively misdescriptive of them, or when
applied to or used in connection with the goods, business or services
of the applicant is primarily geographically descriptive or deceptively
misdescriptive of them, or is primarily merely a surname; (Emphasis
ours.)
xxx xxx xxx
"LEE" is primarily a surname. Private respondent cannot, therefore,
acquire exclusive ownership over and singular use of said term.
. . . It has been held that a personal name or surname may not be
monopolized as a trademark or tradename as against others of the
115
same name or surname. For in the absence of contract, fraud, or
estoppel, any man may use his name or surname in all legitimate
ways. Thus, "Wellington" is a surname, and its first user has no cause
of action against the junior user of "Wellington" as it is incapable of
exclusive appropriation.37
In addition to the foregoing, we are constrained to agree with
petitioner's contention that private respondent failed to prove prior
actual commercial use of its "LEE" trademark in the Philippines before
filing its application for registration with the BPTTT and hence, has not
acquired ownership over said mark.
Actual use in commerce in the Philippines is an essential prerequisite
for the acquisition of ownership over a trademark pursuant to Sec. 2
and 2-A of the Philippine Trademark Law (R.A. No. 166) which
explicitly provides that:
CHAPTER II. Registration of Marks and Trade-names.
Sec. 2. What are registrable. — Trade-marks, trade-names, and
service marks owned by persons, corporations, partnerships or
associations domiciled in the Philippines and by persons,
corporations, partnerships, or associations domiciled in any foreign
country may be registered in accordance with the provisions of this
act: Provided, That said trade-marks, trade-names, or service marks
are actually in use in commerce and services not less than two months
in the Philippines before the time the applications for registration are
filed: And Provided, further, That the country of which the applicant
for registration is a citizen grants by law substantially similar privileges
to citizens of the Philippines, and such fact is officially certified, with
a certified true copy of the foreign law translated into the English
language, by the government of the foreign country to the
Government of the Republic of the Philippines. (As amended.)
(Emphasis ours.)
Sec. 2-A. Ownership of trade-marks, trade-names and service-
marks; how acquired. — Anyone who lawfully produces or deals in
merchandise of any kind or who engages in lawful business, or who
renders any lawful service in commerce, by actual use hereof in
manufacture or trade, in business, and in the service rendered; may
appropriate to his exclusive use a trade-mark, a trade-name, or a
service-mark not so appropriated by another, to distinguish his
merchandise, business or services from others. The ownership or
possession of trade-mark, trade-name, service-mark, heretofore or
hereafter appropriated, as in this section provided, shall be
recognized and protected in the same manner and to the same extent
as are other property rights to the law. (As amended.) (Emphasis
ours.)
The provisions of the 1965 Paris Convention for the Protection of
Industrial Property 38 relied upon by private respondent and Sec. 21-
A of the Trademark Law (R.A. No. 166)39 were sufficiently expounded
upon and qualified in the recent case of Philip Morris, Inc. v. Court of
Appeals:40
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirement of actual use in the Philippines
must subordinate an international agreement inasmuch as the
apparent clash is being decided by a municipal tribunal (Mortisen vs.
Peters, Great Britain, High Court of Judiciary of Scotland, 1906, 8
Sessions, 93; Paras, International Law and World Organization, 1971
Ed., p. 20). Withal, the fact that international law has been made part
of the law of the land does not by any means imply the primacy of
international law over national law in the municipal sphere. Under the
doctrine of incorporation as applied in most countries, rules of
international law are given a standing equal, not superior, to national
legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue
for infringement irrespective of lack of business activity in the
Philippines on account of Section 21-A of the Trademark Law but the
question of whether they have an exclusive right over their symbol as
to justify issuance of the controversial writ will depend on actual use
of their trademarks in the Philippines in line with Sections 2 and 2-A
of the same law. It is thus incongruous for petitioners to claim that
when a foreign corporation not licensed to do business in the
Philippines files a complaint for infringement, the entity need not be
actually using its trademark in commerce in the Philippines. Such a
foreign corporation may have the personality to file a suit for
infringement but it may not necessarily be entitled to protection due
to absence of actual use of the emblem in the local market.
xxx xxx xxx
Undisputably, private respondent is the senior registrant, having
obtained several registration certificates for its various trademarks
"LEE," "LEERIDERS," and "LEESURES" in both the supplemental and
principal registers, as early as 1969 to 1973.41 However, registration
alone will not suffice. In Sterling Products
International, Inc. v.Farbenfabriken Bayer Aktiengesellschaft,42 we
declared:
xxx xxx xxx
A rule widely accepted and firmly entrenched because it has come
down through the years is that actual use in commerce or business is
a prerequisite in the acquisition of the right of ownership over a
trademark.
xxx xxx xxx
It would seem quite clear that adoption alone of a trademark would
not give exclusive right thereto. Such right "grows out of their actual
use." Adoption is not use. One may make advertisements, issue
circulars, give out price lists on certain goods; but these alone would
not give exclusive right of use. For trademark is a creation of use. The
underlying reason for all these is that purchasers have come to
understand the mark as indicating the origin of the wares. Flowing
from this is the trader's right to protection in the trade he has built up
and the goodwill he has accumulated from use of the trademark.
Registration of a trademark, of course, has value: it is an
administrative act declaratory of a pre-existing right. Registration
does not, however, perfect a trademark right. (Emphasis ours.)
xxx xxx xxx
To augment its arguments that it was, not only the prior registrant,
but also the prior user, private respondent invokes Sec. 20 of the
Trademark Law, thus:
Sec. 20. Certificate of registration prima facie evidence of validity. —
A certificate of registration of a mark or tradename shall be a prima
facie evidence of the validity of the registration, the registrant's
ownership of the mark or trade-name, and of the registrant's
exclusive right to use the same in connection with the goods, business
or services specified in the certificate, subject to any conditions and
limitations stated therein.
The credibility placed on a certificate of registration of one's
trademark, or its weight as evidence of validity, ownership and
exclusive use, is qualified. A registration certificate serves merely
as prima facie evidence. It is not conclusive but can and may be
rebutted by controverting evidence.
116
Moreover, the aforequoted provision applies only to registrations in establish confusing similarity between said trademarks, private
the principal register.43 Registrations in the supplemental register do respondent's action for infringement must necessarily fail.
not enjoy a similar privilege. A supplemental register was created WHEREFORE, premises considered, the questioned decision and
precisely for the registration of marks which are not registrable on the resolution are hereby REVERSED and SET ASIDE.
principal register due to some defects.44 SO ORDERED.
The determination as to who is the prior user of the trademark is a Bellosillo and Hermosisima, Jr., JJ., concur.
question of fact and it is this Court's working principle not to disturb
the findings of the Director of Patents on this issue in the absence of
any showing of grave abuse of discretion. The findings of facts of the
Director of Patents are conclusive upon the Supreme
Court provided they are supported by substantial evidence. 45
In the case at bench, however, we reverse the findings of the Director
of Patents and the Court of Appeals. After a meticulous study of the
records, we observe that the Director of Patents and the Court of
Appeals relied mainly on the registration certificates as proof of use
by private respondent of the trademark "LEE" which, as we have
previously discussed are not sufficient. We cannot give credence to
private respondent's claim that its "LEE" mark first reached the
Philippines in the 1960's through local sales by the Post Exchanges of
the U.S. Military Bases in the Philippines46 based as it was solely on
the self-serving statements of Mr. Edward Poste, General Manager of
Lee (Phils.), Inc., a wholly owned subsidiary of the H.D. Lee, Co., Inc.,
U.S.A., herein private respondent. 47Similarly, we give little weight to
the numerous
vouchers representing various advertising expenses in the Philippines
for "LEE" products. 48 It is well to note that these expenses were
incurred only in 1981 and 1982 by LEE (Phils.), Inc. after it entered into
a licensing agreement with private respondent on 11 May 1981. 49
On the other hand, petitioner has sufficiently shown that it has been
in the business of selling jeans and other garments adopting its
"STYLISTIC MR. LEE" trademark since 1975 as evidenced by
appropriate sales invoices to various stores and retailers.50
Our rulings in Pagasa Industrial Corp. v. Court of
Appeals 51 and Converse Rubber Corp. v. Universal Rubber
52
Products, Inc., respectively, are instructive:
The Trademark Law is very clear. It requires actual commercial use
of the mark prior to its registration. There is no dispute that
respondent corporation was the first registrant, yet it failed to fully
substantiate its claim that it used in trade or business in the
Philippines the subject mark; it did not present proof to invest it
with exclusive, continuous adoption of the trademark which should
consist among others, of considerable sales since its first use. The
invoices submitted by respondent which were dated way back in 1957
show that the zippers sent to the Philippines were to be used as
"samples" and "of no commercial value." The evidence for
respondent must be clear, definite and free from inconsistencies.
"Samples" are not for sale and therefore, the fact of exporting them
to the Philippines cannot be considered to be equivalent to the "use"
contemplated by law. Respondent did not expect income from such
"samples." There were no receipts to establish sale, and no proof
were presented to show that they were subsequently sold in the
Philippines.
xxx xxx xxx
The sales invoices provide the best proof that there were actual
sales of petitioner's product in the country and that there was actual
use for a protracted period of petitioner's trademark or part thereof
through these sales.
For lack of adequate proof of actual use of its trademark in the
Philippines prior to petitioner's use of its own mark and for failure to

117
 G.R. No. 180677 February 18, 2013
VICTORIO P. DIAZ, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES AND LEVI STRAUSS [PHILS.],
INC., Respondents.
DECISION
BERSAMIN, J.:
It is the tendency of the allegedly infringing mark to be confused with
the registered trademark that is the gravamen of the offense of
infringement of a registered trademark. The acquittal of the accused
should follow if the allegedly infringing mark is not likely to cause
confusion. Thereby, the evidence of the State does not satisfy the
quantum of proof beyond reasonable doubt.
Accused Victorio P. Diaz (Diaz) appeals the resolutions promulgated
on July 17, 20071 and November 22, 2007,2whereby the Court of
Appeals (CA), respectively, dismissed his appeal in C.A.-G.R. CR No.
30133 for the belated filing of the appellant's brief, and denied his
motion for reconsideration. Thereby, the decision rendered on
February 13, 2006 in Criminal Case No. 00-0318 and Criminal Case No.
00-0319 by the Regional Trial Court, Branch 255, in Las Pifias City
(RTC) convicting him for two counts of infringement of trademark
were affirmed.3
Antecedents
On February 10, 2000, the Department of Justice filed two
informations in the RTC of Las Piñas City, charging Diaz with violation
of Section 155, in relation to Section 170, of Republic Act No. 8293,
also known as the Intellectual Property Code of the
Philippines (Intellectual Property Code), to wit:
Criminal Case No. 00-0318
That on or about August 28, 1998, and on dates prior thereto, in Las
Pinas City, and within the jurisdiction of this Honorable Court, the
abovenamed accused, with, criminal intent to defraud Levi’s Strauss
(Phil.) Inc. (hereinafter referred to as LEVI’S), did then and there,
willfully, unlawfully, feloniously knowingly and intentionally engaged
in commerce by reproducing, counterfeiting, copying and colorably
imitating Levi’s registered trademarks or dominant features thereof
such as the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE
PATCH, TWO HORSE LABEL WITH PATTERNED ARCUATE DESIGN, TAB
AND COMPOSITE ARCUATE/TAB/TWO HORSE PATCH, and in
connection thereto, sold, offered for sale, manufactured, distributed
counterfeit patches and jeans, including other preparatory steps
necessary to carry out the sale of said patches and jeans, which likely
caused confusion, mistake, and /or deceived the general consuming
public, without the consent, permit or authority of the registered
owner, LEVI’S, thus depriving and defrauding the latter of its right to
the exclusive use of its trademarks and legitimate trade, to the
damage and prejudice of LEVI’S.
CONTRARY TO LAW.4
Criminal Case No. 00-0319
That on or about August 28, 1998, and on dates prior thereto, in Las
Pinas City, and within the jurisdiction of this Honorable Court, the
abovenamed accused, with criminal intent to defraud Levi’s Strauss
(Phil.) Inc. (hereinafter referred to as LEVI’S), did then and there,
willfully, unlawfully, feloniously, knowingly and intentionally engaged
in commerce by reproducing, counterfeiting, copying and colorably
imitating Levi’s registered trademarks or dominant features thereof
such as the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE
PATCH, TWO HORSE LABEL WITH PATTERNED ARCUATE DESIGN, TAB
AND COMPOSITE ARCUATE/TAB/TWO HORSE PATCH, and in
connection thereto, sold, offered for sale, manufactured, distributed
counterfeit patches and jeans, including other preparatory steps
necessary to carry out the sale of said patches and jeans, which likely
caused confusion, mistake, and /or deceived the general consuming
public, without the consent, permit or authority of the registered
owner, LEVI’S, thus depriving and defrauding the latter of its right to
the exclusive use of its trademarks and legitimate trade, to the
damage and prejudice of LEVI’S.
CONTRARY TO LAW.5
The cases were consolidated for a joint trial. Diaz entered his pleas
of not guilty to each information on June 21, 2000. 6
1.
Evidence of the Prosecution
Levi Strauss and Company (Levi’s), a foreign corporation based in the
State of Delaware, United States of America, had been engaged in the
apparel business. It is the owner of trademarks and designs of Levi’s
jeans like LEVI’S 501, the arcuate design, the two-horse brand, the
two-horse patch, the two-horse patch with pattern arcuate, and the
composite tab arcuate.
LEVI’S 501 has the following registered trademarks, to wit:
(1) the leather patch showing two horses pulling a pair of pants;
(2) the arcuate pattern with the inscription "LEVI STRAUSS & CO;"
(3) the arcuate design that refers to "the two parallel stitching curving
downward that are being sewn on both back pockets of a Levi’s
Jeans;" and (4) the tab or piece of cloth located on the structural seam
of the right back pocket, upper left side. All these trademarks were
registered in the Philippine Patent Office in the 1970’s, 1980’s and
early part of 1990’s.7
Levi Strauss Philippines, Inc. (Levi’s Philippines) is a licensee of Levi’s.
After receiving information that Diaz was selling counterfeit LEVI’S
501 jeans in his tailoring shops in Almanza and Talon, Las Piñas City,
Levi’s Philippines hired a private investigation group to verify the
information. Surveillance and the purchase of jeans from the tailoring
shops of Diaz established that the jeans bought from the tailoring
shops of Diaz were counterfeit or imitations of LEVI’S 501. Levi’s
Philippines then sought the assistance of the National Bureau of
Investigation (NBI) for purposes of applying for a search warrant
against Diaz to be served at his tailoring shops. The search warrants
were issued in due course. Armed with the search warrants, NBI
agents searched the tailoring shops of Diaz and seized several fake
LEVI’S 501 jeans from them. Levi’s Philippines claimed that it did not
authorize the making and selling of the seized jeans; that each of the
jeans were mere imitations of genuine LEVI’S 501 jeans by each of
them bearing the registered trademarks, like the arcuate design, the
tab, and the leather patch; and that the seized jeans could be
mistaken for original LEVI’S 501 jeans due to the placement of the
arcuate, tab, and two-horse leather patch.8
2.
Evidence of the Defense
On his part, Diaz admitted being the owner of the shops searched, but
he denied any criminal liability.
Diaz stated that he did not manufacture Levi’s jeans, and that he used
the label "LS Jeans Tailoring" in the jeans that he made and sold; that
the label "LS Jeans Tailoring" was registered with the Intellectual
Property Office; that his shops received clothes for sewing or repair;
that his shops offered made-to-order jeans, whose styles or designs
118
were done in accordance with instructions of the customers; that
since the time his shops began operating in 1992, he had received no
notice or warning regarding his operations; that the jeans he
produced were easily recognizable because the label "LS Jeans
Tailoring," and the names of the customers were placed inside the
pockets, and each of the jeans had an "LSJT" red tab; that "LS" stood
for "Latest Style;" and that the leather patch on his jeans had two
buffaloes, not two horses.9
Ruling of the RTC
On February 13, 2006, the RTC rendered its decision finding Diaz
guilty as charged, disposing thus:
WHEREFORE, premises considered, the Court finds accused Victorio
P. Diaz, a.k.a. Vic Diaz, GUILTY beyond reasonable doubt of twice
violating Sec. 155, in relation to Sec. 170, of RA No. 8293, as alleged
in the Informations in Criminal Case Nos. 00-0318 & 00-0319,
respectively, and hereby sentences him to suffer in each of the cases
the penalty of imprisonment of TWO (2) YEARS of prision correcional,
as minimum, up to FIVE (5) YEARS of prision correcional, as maximum,
as well as pay a fine of ₱50,000.00 for each of the herein cases, with
subsidiary imprisonment in case of insolvency, and to suffer the
accessory penalties provided for by law.
Also, accused Diaz is hereby ordered to pay to the private
complainant Levi’s Strauss (Phils.), Inc. the following, thus:
1. ₱50,000.00 in exemplary damages; and
2. ₱222,000.00 as and by way of attorney’s fees.
Costs de officio.
SO ORDERED.10
Ruling of the CA
Diaz appealed, but the CA dismissed the appeal on July 17, 2007 on
the ground that Diaz had not filed his appellant’s brief on time despite
being granted his requested several extension periods.
Upon denial of his motion for reconsideration, Diaz is now before the
Court to plead for his acquittal.
Issue : WON THERE IS A COLORABLE
IMITATION BETWEEN LEVIS STRAUSS
LEVIS 501 JEANS AND LS JEANS
APPLYING THE HOLISTIC TEST
Diaz submits that:
THE COURT OF APPEALS VIOLATED EXISTING LAW AND
JURISPRUDENCE WHEN IT APPLIED RIGIDLY THE RULE ON
TECHNICALITIES AND OVERRIDE SUBSTANTIAL JUSTICE BY
DISMISSING THE APPEAL OF THE PETITIONER FOR LATE FILING OF
APPELLANT’S BRIEF.11
Ruling
The Court first resolves whether the CA properly dismissed the appeal
of Diaz due to the late filing of his appellant’s brief.
Under Section 7, Rule 44 of the Rules of Court, the appellant is
required to file the appellant’s brief in the CA "within forty-five (45)
days from receipt of the notice of the clerk that all the evidence, oral
and documentary, are attached to the record, seven (7) copies of his
legibly typewritten, mimeographed or printed brief, with proof of
service of two (2) copies thereof upon the appellee." Section 1(e) of
Rule 50 of the Rules of Court grants to the CA the discretion to dismiss
an appeal either motu proprio or on motion of the appellee should
the appellant fail to serve and file the required number of copies of
the appellant’s brief within the time provided by the Rules of Court.12
The usage of the word may in Section 1(e) of Rule 50 indicates that
the dismissal of the appeal upon failure to file the appellant’s brief is
not mandatory, but discretionary. Verily, the failure to serve and file
the required number of copies of the appellant’s brief within the time
provided by the Rules of Court does not have the immediate effect of
causing the outright dismissal of the appeal. This means that the
discretion to dismiss the appeal on that basis is lodged in the CA, by
virtue of which the CA may still allow the appeal to proceed despite
the late filing of the appellant’s brief, when the circumstances so
warrant its liberality. In deciding to dismiss the appeal, then, the CA is
bound to exercise its sound discretion upon taking all the pertinent
circumstances into due consideration.
The records reveal that Diaz’s counsel thrice sought an extension of
the period to file the appellant’s brief. The first time was on March
12, 2007, the request being for an extension of 30 days to commence
on March 11, 2007. The CA granted his motion under its resolution of
March 21, 2007. On April 10, 2007, the last day of the 30-day
extension, the counsel filed another motion, seeking an additional 15
days. The CA allowed the counsel until April 25, 2007 to serve and file
the appellant’s brief. On April 25, 2007, the counsel went a third time
to the CA with another request for 15 days. The CA still granted such
third motion for extension, giving the counsel until May 10, 2007.
Notwithstanding the liberality of the CA, the counsel did not literally
comply, filing the appellant’s brief only on May 28, 2007, which was
the 18th day beyond the third extension period granted.
Under the circumstances, the failure to file the appellant’s brief on
time rightly deserved the outright rejection of the appeal. The acts of
his counsel bound Diaz like any other client. It was, of course, only the
counsel who was well aware that the Rules of Court fixed the periods
to file pleadings and equally significant papers like the appellant’s
brief with the lofty objective of avoiding delays in the administration
of justice.
Yet, we have before us an appeal in two criminal cases in which the
appellant lost his chance to be heard by the CA on appeal because of
the failure of his counsel to serve and file the appellant’s brief on time
despite the grant of several extensions the counsel requested. Diaz
was convicted and sentenced to suffer two indeterminate sentences
that would require him to spend time in detention for each conviction
lasting two years, as minimum, to five years, as maximum, and to pay
fines totaling ₱100,000.00 (with subsidiary imprisonment in case of
his insolvency). His personal liberty is now no less at stake. This reality
impels us to look beyond the technicality and delve into the merits of
the case to see for ourselves if the appeal, had it not been dismissed,
would have been worth the time of the CA to pass upon. After all, his
appellant’s brief had been meanwhile submitted to the CA. While
delving into the merits of the case, we have uncovered a weakness in
the evidence of guilt that cannot be simply ignored and glossed over
if we were to be true to our oaths to do justice to everyone.
We feel that despite the CA being probably right in dismissing the
excuses of oversight and excusable negligence tendered by Diaz’s
counsel to justify the belated filing of the appellant’s brief as
unworthy of serious consideration, Diaz should not be made to suffer
the dire consequence. Any accused in his shoes, with his personal
119
liberty as well as his personal fortune at stake, expectedly but
innocently put his fullest trust in his counsel’s abilities and
professionalism in the handling of his appeal. He thereby delivered
his fate to the hands of his counsel. Whether or not those hands were
efficient or trained enough for the job of handling the appeal was a
learning that he would get only in the end. Likelier than not, he was
probably even unaware of the three times that his counsel had
requested the CA for extensions. If he were now to be left to his
unwanted fate, he would surely suffer despite his innocence. How
costly a learning it would be for him! That is where the Court comes
in. It is most important for us as dispensers of justice not to allow the
inadvertence or incompetence of any counsel to result in the outright
deprivation of an appellant’s right to life, liberty or property.13
We do not mind if this softening of judicial attitudes be mislabeled as
excessive leniency. With so much on the line, the people whose
futures hang in a balance should not be left to suffer from the
incompetence, mindlessness or lack of professionalism of any
member of the Law Profession. They reasonably expect a just result
in every litigation. The courts must give them that just result. That
assurance is the people’s birthright. Thus, we have to undo Diaz’s dire
fate.
Even as we now set aside the CA’s rejection of the appeal of Diaz, we
will not remand the records to the CA for its review. In an appeal of
criminal convictions, the records are laid open for review. To avoid
further delays, therefore, we take it upon ourselves to review the
records and resolve the issue of guilt, considering that the records are
already before us.
Section 155 of R.A. No. 8293 defines the acts that constitute
infringement of trademark, viz:
Remedies; Infringement. — Any person who shall, without the
consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for
sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or
services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered
mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be
used in commerce upon or in connection with the sale, offering for
sale, distribution, or advertising of goods or services on or in
connection with which such use is likely to cause confusion, or to
cause mistake, or to deceive, shall be liable in a civil action for
infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the
acts stated in Subsection 155.1 or this subsection are committed
regardless of whether there is actual sale of goods or services using
the infringing material.
Elements of Trademark infringement
The elements of the offense of trademark infringement under
the Intellectual Property Code are, therefore, the following:
1. The trademark being infringed is registered in the Intellectual
Property Office;
2. The trademark is reproduced, counterfeited, copied, or colorably
imitated by the infringer;
3. The infringing mark is used in connection with the sale, offering for
sale, or advertising of any goods, business or services; or the infringing
mark is applied to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in
connection with such goods, business or services;
4. The use or application of the infringing mark is likely to cause
confusion or mistake or to deceive purchasers or others as to the
goods or services themselves or as to the source or origin of such
goods or services or the identity of such business; and
5. The use or application of the infringing mark is without the consent
of the trademark owner or the assignee thereof.14
As can be seen, the likelihood of confusion is the gravamen of the
offense of trademark infringement.15 There are two tests to
determine likelihood of confusion, namely: the dominancy test, and
the holistic test. The contrasting concept of these tests was explained
in Societes Des Produits Nestle, S.A. v. Dy, Jr., thus:
x x x. The dominancy test focuses on the similarity of the main,
prevalent or essential features of the competing trademarks that
might cause confusion. Infringement takes place when the competing
trademark contains the essential features of another. Imitation or an
effort to imitate is unnecessary. The question is whether the use of
the marks is likely to cause confusion or deceive purchasers.
The holistic test considers the entirety of the marks, including labels
and packaging, in determining confusing similarity. The focus is not
only on the predominant words but also on the other features
appearing on the labels.16
As to what test should be applied in a trademark infringement case,
we said in McDonald’s Corporation v. Macjoy Fastfood
Corporation17 that:
In trademark cases, particularly in ascertaining whether one
trademark is confusingly similar to another, no set rules can be
deduced because each case must be decided on its merits. In such
cases, even more than in any other litigation, precedent must be
studied in the light of the facts of the particular case. That is the
reason why in trademark cases, jurisprudential precedents should be
applied only to a case if they are specifically in point.
The case of Emerald Garment Manufacturing Corporation v. Court of
Appeals,18 which involved an alleged trademark infringement of jeans
products, is worth referring to. There, H.D. Lee Co., Inc. (H.D. Lee), a
corporation based in the United States of America, claimed that
Emerald Garment’s trademark of "STYLISTIC MR. LEE" that it used on
its jeans products was confusingly similar to the "LEE" trademark that
H.D. Lee used on its own jeans products. Applying the holistic test, the
Court ruled that there was no infringement.
The holistic test is applicable here considering that the herein criminal
cases also involved trademark infringement in relation to jeans
products.
IN this case; Accordingly, the jeans trademarks of Levi’s Philippines
and Diaz must be considered as a whole in determining the likelihood
of confusion between them.
120
The maong pants or jeans made and sold by Levi’s Philippines, which
included LEVI’S 501, were very popular in the Philippines. The
consuming public knew that the original LEVI’S 501 jeans were under
a foreign brand and quite expensive. Such jeans could be purchased
only in malls or boutiques as ready-to-wear items, and were not
available in tailoring shops like those of Diaz’s as well as not acquired
on a "made-to-order" basis.
Under the circumstances, the consuming public could easily discern if
the jeans were original or fake LEVI’S 501, or were manufactured by
other brands of jeans. Confusion and deception were remote, for, as
the Court has observed in Emerald Garments:
First, the products involved in the case at bar are, in the main,
various kinds of jeans. These are not your ordinary household items
like catsup, soy sauce or soap which are of minimal cost. Maong pants
or jeans are not inexpensive. Accordingly, the casual buyer is
predisposed to be more cautious and discriminating in and would
prefer to mull over his purchase. Confusion and deception, then, is
less likely.
In Del Monte Corporation v. Court of Appeals, we noted that:
.... Among these, what essentially determines the attitudes of the
purchaser, specifically his inclination to be cautious, is the cost of the
goods. To be sure, a person who buys a box of candies will not
exercise as much care as one who buys an expensive watch. As a
general rule, an ordinary buyer does not exercise as much prudence in
buying an article for which he pays a few centavos as he does in
purchasing a more valuable thing. Expensive and valuable items are
normally bought only after deliberate, comparative and analytical
investigation. But mass products, low priced articles in wide use, and
matters of everyday purchase requiring frequent replacement are
bought by the casual consumer without great care....
Second, like his beer, the average Filipino consumer generally
buys his jeans by brand. He does not ask the sales clerk for generic
jeans but for, say, a Levis, Guess, Wrangler or even an Armani. He is,
therefore, more or less knowledgeable and familiar with his
preference and will not easily be distracted.
ANENT ORDINARY PURCHASER
Finally, in line with the foregoing discussions, more credit should
be given to the "ordinary purchaser." Cast in this particular
controversy, the ordinary purchaser is not the "completely unwary
consumer" but is the "ordinarily intelligent buyer" considering the
type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok is better suited
to the present case. There, the "ordinary purchaser" was defined as
one "accustomed to buy, and therefore to some extent familiar with,
the goods in question. The test of fraudulent simulation is to be
found in the likelihood of the deception of some persons in some
measure acquainted with an established design and desirous of
purchasing the commodity with which that design has been
associated. The test is not found in the deception, or the possibility of
deception, of the person who knows nothing about the design which
has been counterfeited, and who must be indifferent between that
and the other. The simulation, in order to be objectionable, must be
such as appears likely to mislead the ordinary intelligent buyer who
has a need to supply and is familiar with the article that he seeks to
purchase.19
IN this case
Diaz used the trademark "LS JEANS TAILORING" for the jeans he
produced and sold in his tailoring shops. His trademark was visually
and aurally different from the trademark "LEVI STRAUSS & CO"
appearing on the patch of original jeans under the trademark LEVI’S
501.
The word "LS" could not be confused as a derivative from "LEVI
STRAUSS" by virtue of the "LS" being connected to the word
"TAILORING", thereby openly suggesting that the jeans bearing the
trademark "LS JEANS TAILORING" came or were bought from the
tailoring shops of Diaz, not from the malls or boutiques selling original
LEVI’S 501 jeans to the consuming public.
There were other remarkable differences between the two
trademarks that the consuming public would easily perceive. Diaz
aptly noted such differences, as follows:
1. The prosecution also alleged that the accused copied the
"two horse design" of the petitioner-private complainant
but the evidence will show that there was no such design in
the seized jeans. Instead, what is shown is "buffalo design."
Again, a horse and a buffalo are two different animals
which an ordinary customer can easily distinguish. x x x.
2. The prosecution further alleged that the red tab was copied
by the accused. However, evidence will show that the red
tab used by the private complainant indicates the word
"LEVI’S" while that of the accused indicates the letters
"LSJT" which means LS JEANS TAILORING. Again, even an
ordinary customer can distinguish the word LEVI’S from
the letters LSJT.
xxxx
In terms of classes of customers and channels of trade, the jeans
products of the private complainant and the accused cater to
different classes of customers and flow through the different
channels of trade. The customers of the private complainant are
mall goers belonging to class A and B market group – while that of
the accused are those who belong to class D and E market who can
only afford Php 300 for a pair of made-toorder pants.20 x x x.
Moreover, based on the certificate issued by the Intellectual Property
Office, "LS JEANS TAILORING" was a registered trademark of Diaz. He
had registered his trademark prior to the filing of the present
cases.21 The Intellectual Property Office would certainly not have
allowed the registration had Diaz’s trademark been confusingly
similar with the registered trademark for LEVI’S 501 jeans.
Given the foregoing, it should be plain that there was no likelihood of
confusion between the trademarks involved. Thereby, the evidence
of guilt did not satisfy the quantum of proof required for a criminal
conviction, which is proof beyond reasonable doubt. According to
Section 2, Rule 133 of the Rules of Court, proof beyond a reasonable
doubt does not mean such a degree of proof as, excluding possibility
of error, produces absolute certainty. Moral certainty only is required,
or that degree of proof which produces conviction in an unprejudiced
mind. Consequently, Diaz should be acquitted of the charges.
121
WHEREFORE, the Court ACQUITS petitioner VICTORIO P. DIAZ of the
crimes of infringement of trademark charged in Criminal Case No. 00-
0318 and Criminal Case No. 00-0319 for failure of the State to
establish his guilt by proof beyond reasonable doubt.
No pronouncement on costs of suit.
SO ORDERED.

122
 G.R. No. L-21587 May 19, 1966 and colds; and because words "BIOFERIN and "BUFFERIN" are
BRISTOL MYERS COMPANY, petitioner, practically the same in spelling and pronunciation.
vs.
THE DIRECTOR OF PATENTS and UNITED AMERICAN In determining whether two trademarks are confusingly similar, the
PHARMACEUTICALS, INC., respondents. test is not simply to take their words and compare the spelling and
Picazo and Agcaoili for petitioner. pronunciation of said words. Rather, it is to consider the two marks in
Sycip, Salazar, Luna and Associates for respondent United American their entirety, as they appear in the respective labels, in relation to the
Pharmaceuticals, Inc. goods to which they are attached. Said rule was enunciated by this by
Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor
General A. A. Torres and Solicitor A. V. Sempio-Diy, for Director of this Court through Justice Felix Bautista Angelo in Mead Johnson &
Patents. Co. vs. N.V.J Van Dorp, Ltd., L,17501, April 27, 1963, thus:
BENGZON, J.P., J.: It is true that between petitioner's trademark "ALACTA" and
A petition for registration in the Principal Register of the Patent Office respondent's "ALASKA" there are similarities in spelling, appearance
of the trademark "BIOFERIN" was filed on October 21, 1957 by and sound for both are composed of six letters of three syllables each
United American Pharmaceuticals, Inc. Said domestic corporation and each syllable has the same vowel, but in determining if they are
first used the afore-stated trademark in the Philippines on August 13, confusingly similar a comparison of said words is not the only
1957. It covers "a medicinal preparation of antihistamic, analgesic, determining factor. The two marks in their entirety as they appear in
antipyritic with vitamin C and Bioflavenoid used in the treatment of the respective labels must also be considered in relation to the goods
common colds, influenza and other febrile diseases with capillary to which they are attached. The discerning eye of the observer must
hemmorrhagic tendencies." The product falls under Class 6 of the focus not only on the predominant words but also on the other
official classification, that is, "Medicines and Pharmaceutical features appearing in both labels in order that he may draw his
Preparations". conclusion whether one is confusingly similar to the other. ...
Bristol Myers Co., a corporation of the State of Delaware, U.S.A., filed
on January 6, 1959 an opposition to the application. Said oppositor is Applying this test to the trademarks involved in this case, it is at once
the owner in the Philippines of the trademark "BUFFERIN" under evident that the Director of Patents did not err in finding no confusing
Certificate of Registration No. 4578 issued by the Philippine Patent similarity. For though the words "BIOFERIN" and "BUFFERIN" have
Office on March 3, 1954. Its trademark is also registered in the United the same suffix and similar sounding prefixes, they appear in their
States under Certificate of Registration No. 566190 issued on respective labels with strikingly different backgrounds and
November 4, 1952. It was first used in the Philippines on May 13, surroundings, as to color , size and design.
1953. The product covered by "BUFFERIN" also belongs to Class 6, For convenience we sum up these differences, as follows:
Medicines and Pharmaceutical Preparations. Designated as "Antacid
analgesic", it is intended for relief in cases of "simple headaches, Relevant
"BIOFERIN" "BUFFERIN"
neuralgia, colds, menstrual pain and minor muscular aches." Factors
The thrust of oppositor's contention was that the registration of the
applicant's trademark "BIOFERIN would violate its rights and interests 1. Shape & Rectangular, Rectangular, 3-
in its registered trademark "BUFFERIN" as well as mislead and confuse Size of about 3-3/4" 2- 3/4"' 1-1/4"
the public as to the source and origin of the goods covered by the Label 1/4"
respective marks, in view of the allegedly practically the same
spelling, pronunciation and letter-type design of the two trademarks
covering goods of the same class. 2. Color of Predominantly Predominantly
The parties thereafter filed on January 18, 1961 a joint petition Label Yellow White
stipulating as to the facts and submitting the case upon the issue of
whether or not, considering all the factors involved, in both 3. Color Olive-green Blue
trademarks — as the parties would discuss in their backgroun
memoranda,— there will be such confusing similarity between the d of Word-
two trademarks as will be likely to deceive the purchasing public. mark
After submission of memoranda, on June 21, 1963 the Director of
Patents rendered a decision granting the petition for registration and
dismissing the opposition, on the ground that, all factors considered 4. Over-all At the top center- At left side of
the trademarks in question are not confusingly similar, so that the Layout word label — Wood-
damage feared by the oppositor will not result. mark "BIOFERIN"; mark "BUFFERI
From said decision the oppositor appealed to this Court by petition below it N"; with "Bristol
for review filed on July 24, 1963. The sole issue raised thereby is: Are are contents of Myers Co., New
the trademarks "BIOFERIN" and "BUFFERIN", as presented to the medicine, York, N.Y."
public in their respective labels, confusingly similar? arranged below at right
horizontally; side, contents,
Appellant contends that confusing similarity will obtain because both at bottom, center indications
products are primarily used for the relief of pains such as headaches , "United dosage are
Pharmaceuticals, grouped

123
 Inc." in olivegreen together,
background. At printed
left side perpendicularly
— dosage, printe
d
perpendicularly;
at right
side,indications,al
so
perpendicularly
printed.

5. Form of Capsules — Tablets —

product label says: "50 label says: "36
capsules" Tablets"

6. Label states: No such

Prescriptio "To be dispensed statement
n only by or on the
prescription of a
physician"

Accordingly, taken as they will appear to a prospective customer, the

trademark in question are not apt to confuse. Furthermore, the
product of the applicant is expressly stated as dispensable only upon
doctor's prescription, while that of oppositor does not require the
same.

The chances of being confused into purchasing one for the other are
therefore all the more rendered negligible. Although oppositor avers
that some drugstores sell "BIOFERIN" without asking for a doctor's
prescription, the same if true would be an irregularity not attributable
to the applicant, who has already clearly stated the requirement of a
doctor's prescription upon the face of the label of its product.
Wherefore, the decision of the Director of Patents appealed from is
hereby affirmed without costs. So ordered.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera,
Dizon, Regala, Makalintal, Zaldivar and Sanchez, JJ., concur.

124

Trademark Infringment
G.R. No. 180073 November 25, 2009
PROSOURCE INTERNATIONAL, INC., Petitioner,
vs.
HORPHAG RESEARCH MANAGEMENT SA, Respondent.
DECISION
NACHURA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking to reverse and set aside the Court of Appeals (CA)
Decision1 dated July 27, 2007 and Resolution 2 dated October 15, 2007
in CA-G.R. CV No. 87556. The assailed decision affirmed the Regional
Trial Court (RTC)3 Decision4 dated January 16, 2006 and Order5 dated
May 3, 2006 in Civil Case No. 68048; while the assailed resolution
denied petitioner’s motion for reconsideration.
The facts are as follows:
Respondent Horphag Research Management SA is a corporation duly
organized and existing under the laws of Switzerland and the
owner6 of trademark PYCNOGENOL, a food supplement sold and
distributed by Zuellig Pharma Corporation. Respondent later
discovered that petitioner Prosource International, Inc. was also
distributing a similar food supplement using the mark PCO-GENOLS
since 1996.7 This prompted respondent to demand that petitioner
cease and desist from using the aforesaid mark.8
Without notifying respondent, petitioner discontinued the use of, and
withdrew from the market, the products under the name PCO-
GENOLS as of June 19, 2000. It, likewise, changed its mark from PCO-
GENOLS to PCO-PLUS.9
On August 22, 2000, respondent filed a Complaint10 for Infringement
of Trademark with Prayer for Preliminary Injunction against
petitioner, praying that the latter cease and desist from using the
brand PCO-GENOLS for being confusingly similar with respondent’s
trademark PYCNOGENOL. It, likewise, prayed for actual and nominal
damages, as well as attorney’s fees.11
In its Answer,12 petitioner contended that respondent could not file
the infringement case considering that the latter is not the
registered owner of the trademark PYCNOGENOL, but one Horphag
Research Limited. It, likewise, claimed that the two marks were not
confusingly similar. Finally, it denied liability, since it discontinued
the use of the mark prior to the institution of the infringement case.
Petitioner thus prayed for the dismissal of the complaint. By way of
counterclaim, petitioner prayed that respondent be directed to pay
exemplary damages and attorney’s fees.13
During the pre-trial, the parties admitted the following:
1. Defendant [petitioner] is a corporation duly organized and existing
under the laws of the Republic of the Philippines with business
address at No. 7 Annapolis Street, Greenhills, San Juan, Metro Manila;
2. The trademark PYCNOGENOL of the plaintiff is duly registered with
the Intellectual Property Office but not with the Bureau of Food and
Drug (BFAD).
3. The defendant’s product PCO-GENOLS is duly registered with the
BFAD but not with the Intellectual Property Office (IPO).
4. The defendant corporation discontinued the use of and had
withdrawn from the market the products under the name of PCO-
GENOLS as of June 19, 2000, with its trademark changed from PCO-
GENOLS to PCO-PLUS.
5. Plaintiff corporation sent a demand letter to the defendant dated
02 June 2000.14
On January 16, 2006, the RTC decided in favor of respondent. It
observed that PYCNOGENOL and PCO-GENOLS have the same suffix
"GENOL" which appears to be merely descriptive and thus open for
trademark registration by combining it with other words. The trial
court, likewise, concluded that the marks, when read, sound similar,
and thus confusingly similar especially since they both refer to food
supplements. The court added that petitioner’s liability was not
negated by its act of pulling out of the market the products bearing
the questioned mark since the fact remains that from 1996 until June
2000, petitioner had infringed respondent’s product by using the
trademark PCO-GENOLS. As respondent manifested that it was no
longer interested in recovering actual damages, petitioner was made
to answer only for attorney’s fees amounting to ₱50,000.00.15 For
lack of sufficient factual and legal basis, the court dismissed
petitioner’s counterclaim. Petitioner’s motion for reconsideration
was likewise denied.
On appeal to the CA, petitioner failed to obtain a favorable decision.
The appellate court explained that under the Dominancy or the
Holistic Test, PCO-GENOLS is deceptively similar to PYCNOGENOL. It
also found just and equitable the award of attorney’s fees especially
since respondent was compelled to litigate.16
Hence, this petition, assigning the following errors:
I. THAT THE COURT OF APPEALS ERRED IN AFFRIMING THE RULING OF
THE LOWER [COURT] THAT RESPONDENT’S TRADEMARK
P[YC]NOGENOLS (SIC) WAS INFRINGED BY PETITIONER’S PCO-
GENOLS.
II. THAT THE COURT OF APPEALS ERRED IN AFFIRMING THE AWARD
OF ATTORNEY’S FEES IN FAVOR OF RESPONDENT HORPHAG
RESEARCH MANAGEMENT S.A. IN THE AMOUNT OF Php50,000.00.17
The petition is without merit.
It must be recalled that respondent filed a complaint for trademark
infringement against petitioner for the latter’s use of the mark PCO-
GENOLS which the former claimed to be confusingly similar to its
trademark PYCNOGENOL. Petitioner’s use of the questioned mark
started in 1996 and ended in June 2000.
The instant case should thus be decided in light of the provisions of
Republic Act (R.A.) No. 16618 for the acts committed until
December 31, 1997, and
R.A. No. 829319 for those committed from January 1, 1998 until
June 19, 2000.
A trademark is any distinctive word, name, symbol, emblem, sign, or
device, or any combination thereof, adopted and used by a
manufacturer or merchant on his goods to identify and distinguish
them from those manufactured, sold, or dealt by others. Inarguably,
a trademark deserves protection.20
Section 22 of R.A. No. 166, as amended, and Section 155 of R.A. No.
8293 define what constitutes trademark infringement, as follows:
Sec. 22. Infringement, what constitutes. – Any person who shall use,
without the consent of the registrant, any reproduction, counterfeit,
copy or colorable imitation of any registered mark or tradename in
connection with the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely
125
to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services, or identity of such
business; or reproduce, counterfeit, copy of colorably imitate any
such mark or tradename and apply such reproduction, counterfeit,
copy or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business, or services, shall be liable
to a civil action by the registrant for any or all of the remedies herein
provided.
Sec. 155. Remedies; Infringement. – Any person who shall, without
the consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for
sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or
services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered
mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be
used in commerce upon or in connection with the sale, offering for
sale, distribution, or advertising of goods or services on or in
connection with which such use is likely to cause confusion, or to
cause mistake, or to deceive, shall be liable in a civil action for
infringement by the registrant for the remedies hereinafter set forth:
Provided, That infringement takes place at the moment any of the
acts stated in Subsection 155.1 or this subsection are committed
regardless of whether there is actual sale of goods or services using
the infringing material.
ELEMENTS OF TRADEMARK INFRINGEMENT SEC 22 RA 166
In accordance with Section 22 of R.A. No. 166, as well as Sections 2,
2-A, 9-A, and 20 thereof, the following constitute the elements of
trademark infringement:
(a) A trademark actually used in commerce in the Philippines and
registered in the principal register of the Philippine Patent Office[;]
(b) [It] is used by another person in connection with the sale,
offering for sale, or advertising of any goods, business or services or
in connection with which such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or origin
of such goods or services, or identity of such business; or such
trademark is reproduced, counterfeited, copied or colorably imitated
by another person and such reproduction, counterfeit, copy or
colorable imitation is applied to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business or services as to likely
cause confusion or mistake or to deceive purchasers[;]
(c) [T]he trademark is used for identical or similar goods[;] and
(d) [S]uch act is done without the consent of the trademark registrant
or assignee.21
ELEMENTS OF TRADEMARK INFRINGEMENT RA 8293
On the other hand, the elements of infringement under R.A. No. 8293
are as follows:
(1) The trademark being infringed is registered in the Intellectual
Property Office; however, in infringement of trade name, the same
need not be registered;
(2) The trademark or trade name is reproduced, counterfeited,
copied, or colorably imitated by the infringer;
(3) The infringing mark or trade name is used in connection with the
sale, offering for sale, or advertising of any goods, business or
services; or the infringing mark or trade name is applied to labels,
signs, prints, packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such goods, business
or services;
(4) The use or application of the infringing mark or trade name is
likely to cause confusion or mistake or to deceive purchasers or
others as to the goods or services themselves or as to the source or
origin of such goods or services or the identity of such business; and
(5) It is without the consent of the trademark or trade name owner
or the assignee thereof.22
126

In the foregoing enumeration, it is the element of "likelihood of
confusion" that is the gravamen of trademark infringement. But
"likelihood of confusion" is a relative concept. The particular, and
sometimes peculiar, circumstances of each case are determinative
of its existence. Thus, in trademark infringement cases, precedents
must be evaluated in the light of each particular case.23
In determining similarity and likelihood of confusion, jurisprudence
has developed two tests: the Dominancy Test and the Holistic or
Totality Test. The Dominancy Test focuses on the similarity of the
prevalent features of the competing trademarks that might cause
confusion and deception, thus constituting infringement.24 If the
competing trademark contains the main, essential and dominant
features of another, and confusion or deception is likely to result,
infringement takes place. Duplication or imitation is not necessary;
nor is it necessary that the infringing label should suggest an effort to
imitate. The question is whether the use of the marks involved is likely
to cause confusion or mistake in the mind of the public or to deceive
purchasers.25 Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving little
weight to factors like prices, quality, sales outlets, and market
segments.26
In contrast, the Holistic Test entails a consideration of the entirety of
the marks as applied to the products, including the labels and
packaging, in determining confusing similarity.27 The discerning eye of
the observer must focus not only on the predominant words but also
on the other features appearing on both labels in order that the
observer may draw his conclusion whether one is confusingly similar
to the other.28
The trial and appellate courts applied the Dominancy Test in
determining whether there was a confusing similarity between the
marks PYCNOGENOL and PCO-GENOL. Applying the test, the trial
court found, and the CA affirmed, that:
Both the word[s] PYCNOGENOL and PCO-GENOLS have the same
suffix "GENOL" which on evidence, appears to be merely descriptive
and furnish no indication of the origin of the article and hence, open
for trademark registration by the plaintiff thru combination with
another word or phrase such as PYCNOGENOL, Exhibits "A" to "A-3."
Furthermore, although the letters "Y" between P and C, "N" between
O and C and "S" after L are missing in the [petitioner’s] mark PCO-
GENOLS, nevertheless, when the two words are pronounced, the
sound effects are confusingly similar not to mention that they are
both described by their manufacturers as a food supplement and
thus, identified as such by their public consumers. And although
there were dissimilarities in the trademark due to the type of letters
used as well as the size, color and design employed on their
individual packages/bottles, still the close relationship of the
competing products’ name in sounds as they were pronounced,
clearly indicates that purchasers could be misled into believing that
they are the same and/or originates from a common source and
manufacturer.29
We find no cogent reason to depart from such conclusion.
This is not the first time that the Court takes into account the aural
effects of the words and letters contained in the marks in
determining the issue of confusing similarity. In Marvex Commercial
Co., Inc. v. Petra Hawpia & Co., et al., 30 cited in McDonald’s
Corporation v. L.C. Big Mak Burger, Inc.,31 the Court held:
The following random list of confusingly similar sounds in the matter
of trademarks, culled from Nims, Unfair Competition and Trade
Marks, 1947, Vol. 1, will reinforce our view that "SALONPAS" and
"LIONPAS" are confusingly similar in sound: "Gold Dust" and "Gold
Drop"; "Jantzen" and "Jass-Sea"; "Silver Flash" and "Supper Flash";
"Cascarete" and "Celborite"; "Celluloid" and "Cellonite"; "Chartreuse"
and "Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and "Meje";
"Kotex" and "Femetex"; "Zuso" and "Hoo Hoo." Leon Amdur, in his
book "Trade-Mark Law and Practice," pp. 419-421, cities, as
coming within the purview of the idem sonans rule, "Yusea" and "U-C-
A," "Steinway Pianos" and "Steinberg Pianos," and "Seven-Up" and
"Lemon-Up." In Co Tiong vs. Director of Patents, this Court
unequivocally said that "Celdura" and "Cordura" are confusingly
similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil.
795 that the name "Lusolin" is an infringement of the trademark
"Sapolin," as the sound of the two names is almost the same.32
Finally, we reiterate that the issue of trademark infringement is
factual, with both the trial and appellate courts finding the allegations
of infringement to be meritorious. As we have consistently held,
factual determinations of the trial court, concurred in by the CA, are
final and binding on this Court.33 Hence, petitioner is liable for
trademark infringement.
We, likewise, sustain the award of attorney’s fees in favor of
respondent. Article 2208 of the Civil Code enumerates the instances
when attorney’s fees are awarded, viz.:
Art. 2208. In the absence of stipulation, attorney’s fees and expenses
of litigation, other than judicial costs, cannot be recovered, except:
1. When exemplary damages are awarded;
2. When the defendant’s act or omission has compelled the plaintiff
to litigate with third persons or to incur expenses to protect his
interest;
3. In criminal cases of malicious prosecution against the plaintiff;
4. In case of a clearly unfounded civil action or proceeding against the
plaintiff;
5. Where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiff"s plainly valid, just and demandable
claim;
6. In actions for legal support;
7. In actions for the recovery of wages of household helpers, laborers
and skilled workers;
8. In actions for indemnity under workmen’s compensation and
employer’s liability laws;
9. In a separate civil action to recover civil liability arising from a
crime;
10. When at least double judicial costs are awarded;
11. In any other case where the court deems it just and equitable that
attorney’s fees and expenses of litigation should be recovered.
In all cases, the attorney’s fees and expenses of litigation must be
reasonable.
As a rule, an award of attorney’s fees should be deleted where the
award of moral and exemplary damages is not
granted.34 Nonetheless, attorney’s fees may be awarded where the
court deems it just and equitable even if moral and exemplary
damages are unavailing.35 In the instant case, we find no reversible
error in the grant of attorney’s fees by the CA.
WHEREFORE, premises considered, the petition is DENIED for lack of
merit. The Court of Appeals Decision dated July 27, 2007 and its
127
Resolution dated October 15, 2007 in CA-G.R. CV No. 87556 are
AFFIRMED.
SO ORDERED.

128
 SECOND DIVISION
G.R. No. L-32747 November 29, 1984
FRUIT OF THE LOOM, INC., petitioner,
vs.
COURT OF APPEALS and GENERAL GARMENTS
CORPORATION, respondents.
Lichauco, Picazo & Agcaoli Law Office for petitioner.
MAKASIAR, J.:
This is a petition for review on certiorari of the decision dated October
8, 1970 of the former Court of Appeals reversing the decision of the
defunct Court of First Instance of Manila, Branch XIV, ordering the
cancellation of private respondent's registration of the trademark
FRUIT FOR EVE, enjoining it permanently from using trademark and
ordering it to pay herein petitioner P10,000.00 as attorney's fees.
Petitioner, a corporation duly organized and existing under the laws
of the State of Rhode Island, United States of America, is the
registrant of a trademark, FRUIT OF THE LOOM, in the Philippines
Patent Office and was issued two Certificates of Registration Nos.
6227 and 6680, on November 29, 1957 and July 26, 1958,
respectively. The classes of merchandise covered by Registration
Certificate No. 6227 are, among others, men's, women's and
children's underwear, which includes women's panties and which fall
under class 40 in the Philippine Patent Office's classification of goods.
Registration Certificate No. 6680 covers knitted, netted and textile
fabrics.
General Garments Corporation is a domestic corporation, is the
registrant of a trademark FRUIT FOR EVE in the Philippine Patent
Office and was issued a Certificate of Registration No. 10160, on
January 10, 1963 covering garments similar to petitioner's products
like women's panties and pajamas.
On March 31, 1965 Fruit of the Loom filed before the lower court, a
complaint for infringement of trademark and unfair competition
against the herein private respondent. Petitioner principally alleged
in the complaint that private respondent's trademark FRUIT FOR EVE
is confusingly similar to its trademark FRUIT OF THE LOOM used also
on women's panties and other textile products. Furthermore, it was
also alleged therein that the color get-up and general appearance of
private respondent's hang tag consisting of a big red apple is a
colorable imitation to the hang tag of petitioner.
On April 19, 1965, private respondent filed an answer invoking the
special defense that its registered trademark is not confusingly
similar to that of petitioner as the latter alleged. Likewise, private
respondent stated that the trademark FRUIT FOR EVE is being used
on ladies' panties and pajamas only whereas petitioner's trademark
is used even on men's underwear and pajamas.
At the pre-trial on May 5, 1965, the following admissions were made:
(1) That the trademark FRUIT OF THE LOOM has been registered with
the Bureau of Patents and it does not bear the notice 'Reg. Phil. Patent
Off.', and (2) That the trademark FRUIT FOR EVE has been registered
with the Bureau of Patents and it bears the notice "Reg. Phil. Patent
Off." and (3) That at the time of its registration, plaintiff filed no
opposition thereto.
After trial, judgment was rendered by the lower court in favor of
herein petitioner, the dispositive portion of which reads as follows:
Judgment is, therefore, rendered ordering the Bureau of Patents to
cancel the registration of the Trademark "Fruit for Eve", permanently
enjoining Defendant from using the trademark "Fruit for Eve",
ordering Defendant to pay plaintiff the sum of P10,000.00 as
attorney's fees and to pay the costs.
Both parties appealed to the former Court of Appeals, herein
petitioner's appeal being centered on the failure of the trial court to
award damages in its favor. Private respondent, on the other hand,
sought the reversal of the lower court's decision.
On October 8, 1970, the former Court of Appeals, as already stated,
rendered its questioned decision reversing the judgment of the lower
court and dismissing herein petitioner's complaint.
Petitioner's motion for reconsideration having been denied, the
present petition was filed before this Court.
The first and second arguments advanced by petitioner are that the
respondent court committed an error in holding that the word FRUIT,
being a generic word, is not capable of exclusive appropriation by
petitioner and that the registrant of a trademark is not entitled to the
exclusive use of every word of his mark. Otherwise stated, petitioner
argues that the respondent court committed an error in ruling that
petitioner cannot appropriate exclusively the word FRUIT in its
trademark FRUIT OF THE LOOM.
The third and fourth arguments submitted by petitioner which We
believe is the core of the present controversy, are that the
respondent court erred in holding that there is no confusing similarity
in sound and appearance between the two trademarks in question.
According to petitioner, the prominent and dominant features in both
of petitioner's and private respondent's trademark are the word
FRUIT and the big red apple design; that ordinary or average
purchasers upon seeing the word FRUIT and the big red apple in
private respondent's label or hang tag would be led to believe that
the latter's products are those of the petitioner, The resolution of
these two assigned errors in the negative will lay to rest the matter in
litigation and there is no need to touch on the other issues raised by
petitioner. Should the said questions be resolved in favor of
petitioner, then the other matters may be considered.
Petitioner, on its fifth assigned error, blames the former Court of
Appeals for not touching the question of the fraudulent registration
of private respondent's trademark FRUIT FOR EVE. As may be gleaned
from the questioned decision, respondent court did not pass upon the
argument of petitioner that private respondent obtained the
registration of its trademark thru fraud or misrepresentation because
of the said court's findings that there is no confusing similarity
between the two trademarks in question. Hence, said court has
allegedly nothing to determine as to who has the right to registration
because both parties have the right to have their respective
trademarks registered.
Lastly, petitioner asserts that respondent court should have awarded
damages in its favor because private respondent had clearly profited
from the infringement of the former's trademark.
The main issue involved in this case is whether or not private
respondent's trademark FRUIT FOR EVE and its hang tag are
confusingly similar to petitioner's trademark FRUIT OF THE LOOM and
its hang tag so as to constitute an infringement of the latter's
trademark rights and justify the cancellation of the former.
In cases involving infringement of trademark brought before this
Court it has been consistently held that there is infringement of
trademark when the use of the mark involved would be likely to
cause confusion or mistake in the mind of the public or to deceive
purchasers as to the origin or source of the commodity (Co Tiong Sa
129
vs. Director of Patents, 95 Phil. 1; Alhambra Cigar & Cigarette Co. vs.
Mojica, 27 Phil. 266; Sapolin Co. vs. Balmaceda, 67 Phil. 705; La Insular
vs. Jao Oge, 47 Phil. 75).
In cases of this nature, there can be no better evidence as to whether
there is a confusing similarity in the contesting trademarks than the
labels or hang tags themselves. A visual presentation of the labels or
hang tags is the best argument for one or the other, hence, We are
reproducing hereunder pictures of the hang tags of the products of
the parties to the case. The pictures below are part of the
documentary evidence appearing on page 124 of the original records.
Petitioner asseverates in the third and fourth assignment of errors,
which, as We have said, constitute the main argument, that the
dominant features of both trademarks is the word FRUIT. In
determining whether the trademarks are confusingly similar, a
comparison of the words is not the only determinant factor. The
trademarks in their entirety as they appear in their respective labels
or hang tags must also be considered in relation to the goods to which
they are attached. The discerning eye of the observer must focus not
only on the predominant words but also on the other features
appearing in both labels in order that he may draw his conclusion
whether one is confusingly similar to the other (Bristol Myers Co. vs.
Director of Patents, 17 SCRA 131).
parties and We are impressed more by the dissimilarities than by the
similarities appearing therein. WE hold that the trademarks FRUIT OF
THE LOOM and FRUIT FOR EVE do not resemble each other as to
confuse or deceive an ordinary purchaser. The ordinary purchaser
must be thought of as having, and credited with, at least a modicum
of intelligence (Carnation Co. vs. California Growers Wineries, 97 F. 2d
80; Hyram Walke and Sons vs. Penn-Maryland Corp., 79 F. 2d 836) to
be able to see the obvious differences between the two trademarks
in question. Furthermore, We believe that a person who buys
petitioner's products and starts to have a liking for it, will not get
confused and reach out for private respondent's products when she
goes to a garment store.
These findings in effect render immaterial the other errors assigned
by petitioner which are premised on the assumption that private
respondent's trademark FRUIT FOR EVE had infringed petitioner's
trademark FRUIT OF THE LOOM.
WHEREFORE, THE DECISION APPEALED FROM IS AFFIRMED. COSTS
AGAINST PETITIONER.
SO ORDERED.
Aquino, Concepcion, Jr., Abad Santos, Escolin and Cuevas, JJ., concur.

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

As to the design and coloring scheme of the hang tags, We believe

that while there are similarities in the two marks like the red apple at
the center of each mark, We also find differences or dissimilarities
which are glaring and striking to the eye such as:
1. The shape of petitioner's hang tag is round with a base
that looks like a paper rolled a few inches in both ends;
while that of private respondent is plain rectangle without
any base.
2. The designs differ. Petitioner's trademark is written in
almost semi-circle while that of private respondent is
written in straight line in bigger letters than petitioner's.
Private respondent's tag has only an apple in its center but
that of petitioner has also clusters of grapes that surround
the apple in the center.
3. The colors of the hang tag are also very distinct from each
other. Petitioner's hang tag is fight brown while that of
respondent is pink with a white colored center piece. The
apples which are the only similarities in the hang tag are
differently colored. Petitioner's apple is colored dark red,
while that of private respondent is light red.
The similarities of the competing trademarks in this case are
completely lost in the substantial differences in the design and
general appearance of their respective hang tags. WE have examined
the two trademarks as they appear in the hang tags submitted by the

130
 FIRST DIVISION
G.R. No. 143993 August 18, 2004
MCDONALD'S CORPORATION and MCGEORGE FOOD INDUSTRIES,
INC., petitioners,
vs.
L.C. BIG MAK BURGER, INC., FRANCIS B. DY, EDNA A. DY, RENE B.
DY, WILLIAM B. DY, JESUS AYCARDO, ARACELI AYCARDO, and
GRACE HUERTO, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the Decision dated 26 November 1999
of the Court of Appeals 2 finding respondent L.C. Big Mak Burger, Inc.
not liable for trademark infringement and unfair competition and
ordering petitioners to pay respondents P1,900,000 in damages, and
of its Resolution dated 11 July 2000 denying reconsideration. The
Court of Appeals' Decision reversed the 5 September 1994
Decision3 of the Regional Trial Court of Makati, Branch 137, finding
respondent L.C. Big Mak Burger, Inc. liable for trademark
infringement and unfair competition.
The Facts
Petitioner McDonald's Corporation ("McDonald's") is a corporation
organized under the laws of Delaware, United States. McDonald's
operates, by itself or through its franchisees, a global chain of fast-
food restaurants. McDonald's4 owns a family of marks5 including the
"Big Mac" mark for its "double-decker hamburger sandwich."6
McDonald's registered this trademark with the United States
Trademark Registry on 16 October 1979.7 Based on this Home
Registration, McDonald's applied for the registration of the same
mark in the Principal Register of the then Philippine Bureau of
Patents, Trademarks and Technology ("PBPTT"), now the Intellectual
Property Office ("IPO"). Pending approval of its application,
McDonald's introduced its "Big Mac" hamburger sandwiches in the
Philippine market in September 1981. On 18 July 1985, the PBPTT
allowed registration of the "Big Mac" mark in the Principal Register
based on its Home Registration in the United States.
Like its other marks, McDonald's displays the "Big Mac" mark in
items8 and paraphernalia9 in its restaurants, and in its outdoor and
indoor signages. From 1982 to 1990, McDonald's spent P10.5 million
in advertisement for "Big Mac" hamburger sandwiches alone.10
Petitioner McGeorge Food Industries ("petitioner McGeorge"), a
domestic corporation, is McDonald's Philippine franchisee. 11
Respondent L.C. Big Mak Burger, Inc. ("respondent corporation") is a
domestic corporation which operates fast-food outlets and snack
vans in Metro Manila and nearby provinces.12 Respondent
corporation's menu includes hamburger sandwiches and other food
items.13 Respondents Francis B. Dy, Edna A. Dy, Rene B. Dy, William B.
Dy, Jesus Aycardo, Araceli Aycardo, and Grace Huerto ("private
respondents") are the incorporators, stockholders and directors of
respondent corporation.14
On 21 October 1988, respondent corporation applied with the PBPTT
for the registration of the "Big Mak" mark for its hamburger
sandwiches. McDonald's opposed respondent corporation's
application on the ground that "Big Mak" was a colorable imitation of
its registered "Big Mac" mark for the same food products. McDonald's
also informed respondent Francis Dy ("respondent Dy"), the chairman
of the Board of Directors of respondent corporation, of its exclusive
right to the "Big Mac" mark and requested him to desist from using
the "Big Mac" mark or any similar mark.
Having received no reply from respondent Dy, petitioners on 6 June
1990 sued respondents in the Regional Trial Court of Makati, Branch
137 ("RTC"), for trademark infringement and unfair competition. In its
Order of 11 July 1990, the RTC issued a temporary restraining order
("TRO") against respondents enjoining them from using the "Big Mak"
mark in the operation of their business in the National Capital
Region.15 On 16 August 1990, the RTC issued a writ of preliminary
injunction replacing the TRO.16
In their Answer, respondents admitted that they have been using the
name "Big Mak Burger" for their fast-food business. Respondents
claimed, however, that McDonald's does not have an exclusive right
to the "Big Mac" mark or to any other similar mark. Respondents
point out that the Isaiyas Group of Corporations ("Isaiyas Group")
registered the same mark for hamburger sandwiches with the PBPTT
on 31 March 1979. One Rodolfo Topacio ("Topacio") similarly
registered the same mark on 24 June 1983, prior to McDonald's
registration on 18 July 1985. Alternatively, respondents claimed that
they are not liable for trademark infringement or for unfair
competition, as the "Big Mak" mark they sought to register does not
constitute a colorable imitation of the "Big Mac" mark. Respondents
asserted that they did not fraudulently pass off their hamburger
sandwiches as those of petitioners' Big Mac
hamburgers.17 Respondents sought damages in their counterclaim.
In their Reply, petitioners denied respondents' claim that McDonald's
is not the exclusive owner of the "Big Mac" mark. Petitioners asserted
that while the Isaiyas Group and Topacio did register the "Big Mac"
mark ahead of McDonald's, the Isaiyas Group did so only in the
Supplemental Register of the PBPTT and such registration does not
provide any protection. McDonald's disclosed that it
had acquired Topacio's rights to his registration in a Deed of
Assignment dated 18 May 1981.18
The Trial Court's Ruling
On 5 September 1994, the RTC rendered judgment ("RTC Decision")
finding respondent corporation liable for trademark infringement and
unfair competition. However, the RTC dismissed the complaint
against private respondents and the counterclaim against petitioners
for lack of merit and insufficiency of evidence. The RTC held:
Undeniably, the mark "B[ig] M[ac]" is a registered trademark for
plaintiff McDonald's, and as such, it is entitled [to] protection against
infringement.
xxxx
There exist some distinctions between the names "B[ig] M[ac]" and
"B[ig] M[ak]" as appearing in the respective signages, wrappers and
containers of the food products of the parties. But infringement goes
beyond the physical features of the questioned name and the original
name. There are still other factors to be considered.
xxxx
Significantly, the contending parties are both in the business of fast-
food chains and restaurants. An average person who is hungry and
wants to eat a hamburger sandwich may not be discriminating
131
enough to look for a McDonald's restaurant and buy a "B[ig] M[ac]"
hamburger. Once he sees a stall selling hamburger sandwich, in all
likelihood, he will dip into his pocket and order a "B[ig] M[ak]"
hamburger sandwich. Plaintiff McDonald's fast-food chain
has attained wide popularity and acceptance by the consuming public
so much so that its air-conditioned food outlets and restaurants will
perhaps not be mistaken by many to be the same as defendant
corporation's mobile snack vans located along busy streets or
highways. But the thing is that what is being sold by both contending
parties is a food item – a hamburger sandwich which is for immediate
consumption, so that a buyer may easily be confused or deceived into
thinking that the "B[ig] M[ak]" hamburger sandwich he bought is a
food-product of plaintiff McDonald's, or a subsidiary or allied
outlet thereof. Surely, defendant corporation has its own secret
ingredients to make its hamburger sandwiches as palatable and as
tasty as the other brands in the market, considering the keen
competition among mushrooming hamburger stands and
multinational fast-food chains and restaurants. Hence, the trademark
"B[ig] M[ac]" has been infringed by defendant corporation when it
used the name "B[ig] M[ak]" in its signages, wrappers, and
containers in connection with its food business. xxxx
Did the same acts of defendants in using the name "B[ig] M[ak]" as a
trademark or tradename in their signages, or in causing the name
"B[ig] M[ak]" to be printed on the wrappers and containers of their
food products also constitute an act of unfair competition under
Section 29 of the Trademark Law?
The answer is in the affirmative. xxxx
The xxx provision of the law concerning unfair competition is broader
and more inclusive than the law concerning the infringement of
trademark, which is of more limited range, but within its narrower
range recognizes a more exclusive right derived by the adoption and
registration of the trademark by the person whose goods or services
are first associated therewith. xxx Notwithstanding the distinction
between an action for trademark infringement and an action for
unfair competition, however, the law extends substantially the same
relief to the injured party for both cases. (See Sections 23 and 29 of
Republic Act No. 166)
Any conduct may be said to constitute unfair competition if the effect
is to pass off on the public the goods of one man as the goods of
another. The choice of "B[ig] M[ak]" as tradename by defendant
corporation is not merely for sentimental reasons but was clearly
made to take advantage of the reputation, popularity and the
established goodwill of plaintiff McDonald's. For, as stated in Section
29, a person is guilty of unfair competition who in selling his
goods shall give them the general appearance, of goods of another
manufacturer or dealer, either as to the goods themselves or in the
wrapping of the packages in which they are contained, or the devices
or words thereon, or in any other feature of their appearance, which
would likely influence purchasers to believe that the goods offered
are those of a manufacturer or dealer other
than the actual manufacturer or dealer. Thus, plaintiffs have
established their valid cause of action against the defendants for
trademark infringement and unfair competition and for damages.19
The dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is rendered in favor of plaintiffs McDonald's
Corporation and McGeorge Food Industries, Inc. and against
defendant L.C. Big Mak Burger, Inc., as follows:
1. The writ of preliminary injunction issued in this case on [16 August
1990] is made permanent;
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay
plaintiffs actual damages in the amount ofP400,000.00, exemplary
damages in the amount of P100,000.00, and attorney's fees and
expenses of litigation in the amount of P100,000.00;
3. The complaint against defendants Francis B. Dy, Edna A. Dy, Rene
B. Dy, Wiliam B. Dy, Jesus Aycardo, Araceli Aycardo and Grace
Huerto, as well as all counter-claims, are dismissed for lack of
merit as well as for insufficiency of evidence.20
Respondents appealed to the Court of Appeals.
The Ruling of the Court of Appeals
On 26 November 1999, the Court of Appeals rendered judgment
("Court of Appeals' Decision") reversing the RTC Decision and
ordering McDonald's to pay respondents P1,600,000 as actual and
compensatory damages and P300,000 as moral damages. The Court
of Appeals held:
Plaintiffs-appellees in the instant case would like to impress on this
Court that the use of defendants-appellants of its corporate name –
the whole "L.C. B[ig] M[ak] B[urger], I[nc]." which appears on their
food packages, signages and advertisements is an infringement of
their trademark "B[ig] M[ac]" which they use to identify [their] double
decker sandwich, sold in a Styrofoam box packaging material with the
McDonald's logo of umbrella "M" stamped thereon, together
with the printed mark in red bl[o]ck capital letters, the words being
separated by a single space. Specifically, plaintiffs-appellees argue
that defendants-appellants' use of their corporate name is a colorable
imitation of their trademark "Big Mac".
xxxx
To Our mind, however, this Court is fully convinced that no colorable
imitation exists. As the definition dictates, it is not sufficient that a
similarity exists in both names, but that more importantly, the over-
all presentation, or in their essential, substantive and distinctive parts
is such as would likely MISLEAD or CONFUSE persons in the ordinary
course of purchasing the genuine article. A careful comparison of the
way the trademark "B[ig] M[ac]" is being used by plaintiffs-appellees
and corporate name L.C. Big Mak Burger, Inc. by defendants-
appellants, would readily reveal that no confusion could take place,
or that the ordinary purchasers would be misled by it. As pointed out
by defendants-appellants, the plaintiffs-appellees' trademark is used
to designate only one product, a double decker sandwich sold in a
Styrofoam box with the "McDonalds" logo. On the other hand, what
the defendants-appellants corporation is using is not a trademark for
its food product but a business or corporate name. They use the
business name "L.C. Big Mak Burger, Inc." in their restaurant business
which serves diversified food items such as siopao, noodles, pizza, and
sandwiches such as hotdog, ham, fish burger and
hamburger. Secondly, defendants-appellants' corporate or business
name appearing in the food packages and signages are written in
silhouette red-orange letters with the "b" and "m" in upper case
letters. Above the words "Big Mak" are the upper case letter "L.C.".
Below the words "Big Mak" are the words "Burger, Inc." spelled out
in upper case letters. Furthermore, said corporate or business name
appearing in such food packages and signages is always accompanied
by the company mascot, a young chubby boy named Maky who wears
a red T-shirt with the upper case "m" appearing thereinand a blue
lower garment. Finally, the defendants-appellants' food packages are
made of plastic material.
xxxx
xxx [I]t is readily apparent to the naked eye that there appears a vast
difference in the appearance of the product and the manner that the
132
tradename "Big Mak" is being used and presented to the public. As
earlier noted, there are glaring dissimilarities between plaintiffs-
appellees' trademark and defendants-appellants' corporate name.
Plaintiffs-appellees' product carrying the trademark "B[ig] M[ac]" is a
double decker sandwich (depicted in the tray mat containing
photographs of the various food products xxx sold in a Styrofoam box
with the "McDonald's" logo and trademark in red, bl[o]ck capital
letters printed thereon xxx at a price which is more expensive than
the defendants-appellants' comparable food products. In order
to buy a "Big Mac", a customer needs to visit an air-conditioned
"McDonald's" restaurant usually located in a nearby commercial
center, advertised and identified by its logo - the umbrella "M", and
its mascot – "Ronald McDonald". A typical McDonald's restaurant
boasts of a playground for kids, a second floor to
accommodate additional customers, a drive-thru to allow customers
with cars to make orders without alighting from their vehicles, the
interiors of the building are well-lighted, distinctly decorated and
painted with pastel colors xxx. In buying a "B[ig] M[ac]", it
is necessary to specify it by its trademark. Thus, a customer needs to
look for a "McDonald's" and enter it first before he can find a
hamburger sandwich which carry the mark "Big Mac". On the other
hand,defendants-appellants sell their goods through snack vans xxxx
Anent the allegation that defendants-appellants are guilty of unfair
competition, We likewise find the same untenable.
Unfair competition is defined as "the employment of deception
or any other means contrary to good faith by which a
person shall pass off the goods manufactured by him or in which he
deals, or his business, or service, for those of another who has already
established good will for his similar good, business or services,
or any acts calculated to produce the same result" (Sec. 29, Rep. Act
No. 166, as amended).
To constitute unfair competition therefore it must necessarily follow
that there was malice and that the entity concerned was in bad faith.
In the case at bar, We find no sufficient evidence adduced by
plaintiffs-appellees that defendants-appellants deliberately tried to
pass off the goods manufactured by them for those of plaintiffs-
appellees. The mere suspected similarity in the sound of the
defendants-appellants' corporate name with the plaintiffs-appellees'
trademark is not sufficient evidence to conclude unfair competition.
Defendants-appellants explained that the name "M[ak]" in their
corporate name was derived from both the first names of the mother
and father of defendant Francis Dy, whose names are Maxima and
Kimsoy. With this explanation, it is up to the plaintiffs-appellees to
prove bad faith on the part of defendants-appellants. It is a settled
rule that the law always presumes good faith such that any person
who seeks to be awarded damages due to acts of another has the
burden of proving that the latter acted in bad faith or with ill
motive. 21
Petitioners sought reconsideration of the Court of Appeals' Decision
but the appellate court denied their motion in its Resolution of 11 July
2000.
Hence, this petition for review.
Petitioners raise the following grounds for their petition:
I. THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENTS'
CORPORATE NAME "L.C. BIG MAK BURGER, INC." IS NOT A
COLORABLE IMITATION OF THE MCDONALD'S TRADEMARK "BIG
MAC", SUCH COLORABLE IMITATION BEING AN ELEMENT
OF TRADEMARK INFRINGEMENT.
A. Respondents use the words "Big Mak" as trademark for their
products and not merely as their business or corporate name.
B. As a trademark, respondents' "Big Mak" is undeniably and
unquestionably similar to petitioners' "Big Mac" trademark based on
the dominancy test and the idem sonans test resulting inexorably in
confusion on the part of the consuming public.
II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER THE
INHERENT SIMILARITY BETWEEN THE MARK "BIG MAK" AND THE
WORD MARK "BIG MAC" AS AN INDICATION OF RESPONDENTS'
INTENT TO DECEIVE OR DEFRAUD FOR PURPOSES OF
ESTABLISHING UNFAIR COMPETITION.22
Petitioners pray that we set aside the Court of Appeals' Decision and
reinstate the RTC Decision.
In their Comment to the petition, respondents question the propriety
of this petition as it allegedly raises only questions of fact. On the
merits, respondents contend that the Court of Appeals committed no
reversible error in finding them not liable for trademark infringement
and unfair competition and in ordering petitioners to pay damages.
The Issues
The issues are:
1. Procedurally, whether the questions raised in this petition are
proper for a petition for review under Rule 45.
2. On the merits, (a) whether respondents used the words "Big Mak"
not only as part of the corporate name "L.C. Big Mak Burger, Inc." but
also as a trademark for their hamburger products, and (b) whether
respondent corporation is liable for trademark infringement and
unfair competition.23
The Court's Ruling
The petition has merit.
On Whether the Questions Raised in the Petition are Proper for a
Petition for Review
A party intending to appeal from a judgment of the Court of Appeals
may file with this Court a petition for review under Section 1 of Rule
45 ("Section 1")24 raising only questions of law. A question of law
exists when the doubt or difference arises on what the law is on a
certain state of facts. There is a question of fact when the doubt or
difference arises on the truth or falsity of the alleged facts. 25
Here, petitioners raise questions of fact and law in assailing the Court
of Appeals' findings on respondent corporation's non-liability for
trademark infringement and unfair competition. Ordinarily, the Court
can deny due course to such a petition. In view, however, of the
contradictory findings of fact of the RTC and Court of Appeals, the
Court opts to accept the petition, this being one of the recognized
exceptions to Section 1.26 We took a similar course of action in Asia
Brewery, Inc. v. Court of Appeals27 which also involved a suit for
trademark infringement and unfair competition in which the trial
court and the Court of Appeals arrived at conflicting findings.
On the Manner Respondents Used
"Big Mak" in their Business
Petitioners contend that the Court of Appeals erred in ruling that the
corporate name "L.C. Big Mak Burger, Inc." appears in the packaging
for respondents' hamburger products and not the words "Big Mak"
only.
The contention has merit.
The evidence presented during the hearings on petitioners' motion
for the issuance of a writ of preliminary injunction shows that the
plastic wrappings and plastic bags used by respondents for their
hamburger sandwiches bore the words "Big Mak." The other
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descriptive words "burger" and "100% pure beef" were set in smaller
type, along with the locations of branches.28 Respondents' cash
invoices simply refer to their hamburger sandwiches as "Big Mak."29It
is respondents' snack vans that carry the words "L.C. Big Mak Burger,
Inc."30
It was only during the trial that respondents presented in evidence
the plastic wrappers and bags for their hamburger sandwiches relied
on by the Court of Appeals.31 Respondents' plastic wrappers and bags
were identical with those petitioners presented during the hearings
for the injunctive writ except that the letters "L.C." and the words
"Burger, Inc." in respondents' evidence were added above and below
the words "Big Mak," respectively. Since petitioners' complaint was
based on facts existing before and during the hearings on the
injunctive writ, the facts established during those hearings are the
proper factual bases for the disposition of the issues raised in this
petition.
On the Issue of Trademark
Infringement
Section 22 ("Section 22) of Republic Act No. 166, as amended ("RA
166"), the law applicable to this case,32 defines trademark
infringement as follows:
Infringement, what constitutes. — Any person who [1] shall use,
without the consent of the registrant, anyreproduction, counterfeit,
copy or colorable imitation of any registered mark or trade-name in
connection withthe sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely
to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services, or identity of such
business; or [2] reproduce, counterfeit, copy, or colorably
imitate any such mark or trade-name and apply such reproduction,
counterfeit, copy, or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be
used upon or in connection with such goods, business or
services, shall be liable to a civil action by the registrant for any or all
of the remedies herein provided.33
Petitioners base their cause of action under the first part of Section
22, i.e. respondents allegedly used, without petitioners' consent, a
colorable imitation of the "Big Mac" mark in advertising and selling
respondents' hamburger sandwiches. This likely caused confusion in
the mind of the purchasing public on the source of the hamburgers or
the identity of the business.
To establish trademark infringement, the following elements must
be shown:
(1) the validity of plaintiff's mark;
(2) the plaintiff's ownership of the mark; and
(3) the use of the mark or its colorable imitation by
the alleged infringer results in "likelihood of confusion."
34 Of these, it is the element of likelihood of confusion that is the
gravamen of trademark infringement.35
On the Validity of the "Big Mac"Mark
and McDonald's Ownership of such Mark
A mark is valid if it is "distinctive" and thus not barred from
registration under Section 436 of RA 166 ("Section 4"). However, once
registered, not only the mark's validity but also the registrant's
ownership of the mark is prima facie presumed.37
Respondents contend that of the two words in the "Big Mac" mark, it
is only the word "Mac" that is valid because the word "Big" is generic
and descriptive (proscribed under Section 4[e]), and thus "incapable
of exclusive appropriation."38
The contention has no merit. The "Big Mac" mark, which should be
treated in its entirety and not dissected word for word,39 is neither
generic nor descriptive.
Generic marks are commonly used as the name or
description of a kind ofgoods,40 such as "Lite" for beer41 or
"Chocolate Fudge" for chocolate soda drink.42
Descriptive marks, on the other hand, convey the
characteristics, functions, qualities or ingredients of a
product to one who has never seen it or does not know it
exists,43 such as "Arthriticare" for arthritis medication.44
On the contrary, "Big Mac" falls under theclass of fanciful or arbitrary
marks as it bears no logical relation to the actual characteristics of the
product it represents.45 As such, it is highly distinctive and thus valid.
Significantly, the trademark "Little Debbie" for snack cakes was found
arbitrary or fanciful.46
The Court also finds that petitioners have duly established
McDonald's exclusive ownership of the "Big Mac" mark. Although
Topacio and the Isaiyas Group registered the "Big Mac" mark ahead
of McDonald's, Topacio, as petitioners disclosed, had already
assigned his rights to McDonald's. The Isaiyas Group, on the other
hand, registered its trademark only in the Supplemental Register. A
mark which is not registered in the Principal Register, and thus not
distinctive, has no real protection. 47 Indeed, we have held that
registration in the Supplemental Register is not even a prima facie
evidence of the validity of the registrant's exclusive right to use the
mark on the goods specified in the certificate.48
On Types of Confusion
Section 22 covers two types of confusion arising from the use
of similar or colorable imitation marks, namely, confusion of goods
(product confusion) and confusion of business (source or origin
confusion). In Sterling Products International, Incorporated v.
Farbenfabriken Bayer Aktiengesellschaft, et al.,49 the Court
distinguished these two types of confusion, thus:
[Rudolf] Callman notes two types of confusion. The first is the
confusion of goods "in which event the ordinarily prudent purchaser
would be induced to purchase one product in the belief that he was
purchasing the other." xxx The other is the confusion of business:
"Here though the goods of the parties are different, the defendant's
product is such as might reasonably be assumed to originate with the
plaintiff, and the public would then be deceived either into that belief
or into the belief that there is some connection between the plaintiff
and defendant which, in fact, does not exist."
Under Act No. 666,50 the first trademark law, infringement was
limited to confusion of goods only, when the infringing mark is used
on "goods of a similar kind."51 Thus, no relief was afforded to the party
whose registered mark or its colorable imitation is used on different
although related goods. To remedy this situation, Congress enacted
RA 166 on 20 June 1947. In defining trademark infringement, Section
22 of RA 166 deleted the requirement in question and expanded its
134
scope to include such use of the mark or its colorable imitation that is
likely to result in confusion on "the source or origin of such goods or
services, or identity of such business."52 Thus, while there is confusion
of goods when the products are competing, confusion of business
exists when the products are non-competing but related enough to
produce confusion of affiliation.53
On Whether Confusion of Goods and
Confusion of Business are Applicable
Petitioners claim that respondents' use of the "Big Mak" mark on
respondents' hamburgers results in confusion of goods,
particularly with respect to petitioners' hamburgers labeled "Big
Mac." Thus, petitioners alleged in their complaint:
1.15. Defendants have unduly prejudiced and clearly
infringed upon the property rights of plaintiffs in the McDonald's
Marks, particularly the mark "B[ig] M[ac]". Defendants' unauthorized
acts are likely, and calculated, to confuse, mislead or deceive the
public into believing that the products and services offered by
defendant Big Mak Burger, and the business it is engaged in, are
approved and sponsored by, or affiliated with, plaintiffs.54 (Emphasis
supplied)
Since respondents used the "Big Mak" mark on the same
goods, i.e. hamburger sandwiches, that petitioners' "Big Mac" mark is
used, trademark infringement through confusion of goods is a proper
issue in this case.
Petitioners also claim that respondents' use of the "Big Mak" mark in
the sale of hamburgers, the same business that petitioners are
engaged in, results in confusion of business. Petitioners alleged in
their complaint:
1.10. For some period of time, and without the consent of
plaintiff McDonald's nor its licensee/franchisee, plaintiff
McGeorge, and in clear violation of plaintiffs' exclusive right
to use and/or appropriate the McDonald's marks,
defendant Big Mak Burger acting through individual
defendants, has been operating "Big Mak Burger", a fast
food restaurant business dealing in the sale of hamburger
and cheeseburger sandwiches, french fries and other food
products, and has caused to be printed on the wrapper of
defendant's food products and incorporated in its signages
the name "Big Mak Burger", which is confusingly similar
to and/or is a colorable imitation of the plaintiff McDonald's
mark "B[ig] M[ac]", xxx. Defendant Big Mak Burger has
thus unjustly created the impression that its business is
approved and sponsored by, or affiliated with,
plaintiffs.xxxx
2.2 As a consequence of the acts committed by defendants,
which unduly prejudice and infringe upon the property
rights of plaintiffs McDonald's and McGeorge as the real
owner and rightful proprietor, and the
licensee/franchisee, respectively, of the McDonald's
marks, and which are likely to have caused confusion or
deceived the public as to the true source, sponsorship or
affiliation of defendants' food products and restaurant
business, plaintiffs have suffered and continue to
suffer actual damages in the form of injury to their business
reputation and goodwill, and of the dilution of the
distinctive quality of the McDonald's marks, in particular,
the mark "B[ig] M[ac]".55 (Emphasis supplied)
Respondents admit that their business includes selling hamburger
sandwiches, the same food product that petitioners sell using the "Big
Mac" mark. Thus, trademark infringement through confusion of
business is also a proper issue in this case.
Respondents assert that their "Big Mak" hamburgers cater mainly to
the low-income group while petitioners' "Big Mac" hamburgers cater
to the middle and upper income groups. Even if this is true, the
likelihood of confusion of business remains, since the low-income
group might be led to believe that the "Big Mak" hamburgers are the
low-end hamburgers marketed by petitioners. After all, petitioners
have the exclusive right to use the "Big Mac" mark. On the other
hand, respondents would benefit by associating their low-end
hamburgers, through the use of the "Big Mak" mark, with petitioners'
high-end "Big Mac" hamburgers, leading to likelihood of confusion in
the identity of business.
Respondents further claim that petitioners use the "Big Mac" mark
only on petitioners' double-decker hamburgers, while respondents
use the "Big Mak" mark on hamburgers and other products like
siopao, noodles and pizza. Respondents also point out that
petitioners sell their Big Mac double-deckers in a styrofoam box with
the "McDonald's" logo and trademark in red, block letters at a price
more expensive than the hamburgers of respondents. In contrast,
respondents sell their Big Mak hamburgers in plastic wrappers and
plastic bags. Respondents further point out that petitioners'
restaurants are air-conditioned buildings with drive-thru service,
compared to respondents' mobile vans.
These and other factors respondents cite cannot negate the
undisputed fact that respondents use their "Big Mak" mark on
hamburgers, the same food product that petitioners' sell with the use
of their registered mark "Big Mac." Whether a hamburger is single,
double or triple-decker, and whether wrapped in plastic or styrofoam,
it remains the same hamburger food product. Even respondents' use
of the "Big Mak" mark on non-hamburger food products cannot
excuse their infringement of petitioners' registered mark, otherwise
registered marks will lose their protection under the law.
The registered trademark owner may use his mark on the same or
similar products, in different segments of the market, and at different
price levels depending on variations of the products for specific
segments of the market. The Court has recognized that the registered
trademark owner enjoys protection in product and market areas that
are the normal potential expansion of his business. Thus, the Court
has declared:
Modern law recognizes that the protection to which the owner of a
trademark is entitled is not limited to guarding his goods or business
from actual market competition with identical or similar products of
the parties, but extends to all cases in which the use by a junior
appropriator of a trade-mark or trade-name is likely to lead to a
confusion of source, as where prospective purchasers would be
misled into thinking that the complaining party has extended his
business into the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or is
in any way connected with the activities of the infringer; or when it
forestalls the normal potential expansion of his business (v. 148 ALR,
77, 84; 52 Am. Jur. 576, 577).56 (Emphasis supplied)
On Whether Respondents' Use of the "Big Mak"
Mark Results in Likelihood of Confusion
In determining likelihood of confusion, jurisprudence has developed
two tests, the dominancy test and the holistic test. 57 The dominancy
test focuses on the similarity of the prevalent features of the
135
competing trademarks that might cause confusion. In contrast, the
holistic test requires the court to consider the entirety of the marks
as applied to the products, including the labels and packaging,
in determining confusing similarity.
The Court of Appeals, in finding that there is no likelihood of
confusion that could arise in the use of respondents' "Big Mak"
mark on hamburgers, relied on the holistic test. Thus, the Court of
Appeals ruled that "it is not sufficientthat a similarity exists
in both name(s), but that more importantly, the overall presentation,
or in their essential, substantive and distinctive parts is such as would
likely MISLEAD or CONFUSE persons in the ordinary course of
purchasing the genuine article." The holistic test considers the two
marks in their entirety, as they appear on the goods with their labels
and packaging. It is not enough to consider their words and
compare the spelling and pronunciation of the words.58
Respondents now vigorously argue that the Court of Appeals'
application of the holistic test to this case is correct and in accord with
prevailing jurisprudence.
This Court, however, has relied on the dominancy test rather than the
holistic test. The dominancy test considers the dominant features in
the competing marks in determining whether they are confusingly
similar. Under the dominancy test, courts give greater weight to the
similarity of the appearance of the product arising from the adoption
of the dominant features of the registered mark,
disregarding minor differences.59 Courts will consider more the aural
and visual impressions created by the marks in the public mind, giving
little weight to factors like prices, quality, sales outlets and market
segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of
Patents,60 the Court ruled:
xxx It has been consistently held that the question of
infringement of a trademark is to be determined by the test
of dominancy. Similarity in size, form and color, while
relevant, is not conclusive. If the competing trademark
contains the main or essential or dominant features of
another, and confusion and deception is likely to result,
infringement takes place. Duplication or imitation is
not necessary; nor is it necessary that the infringing label
should suggest an effort to imitate. (G. Heilman Brewing Co.
vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle
White Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question
at issue in cases of infringement of trademarks is
whether the use of the marks involved would be likely to
cause confusion or mistakes in the mind of the public or
deceive purchasers. (Auburn Rubber Corporation vs.
Honover Rubber Co., 107 F. 2d 588; xxx) (Emphasis
supplied.)
The Court reiterated the dominancy test in Lim Hoa v.
Director of Patents,61 Phil. Nut Industry, Inc. v. Standard
Brands Inc.,62 Converse Rubber Corporation v. Universal
Rubber Products, Inc.,63 and Asia Brewery, Inc. v. Court of
Appeals.64 In the 2001 case of Societe Des Produits Nestlé,
S.A. v. Court of Appeals,65 the Court explicitly rejected the
holistic test in this wise:
[T]he totality or holistic test is contrary to the elementary
postulate of the law on trademarks and unfair
competition that confusing similarity is to be determined
on the basis of visual, aural, connotative comparisons
and overall impressions engendered by the marks in
controversy as they are encountered in the realities of the
marketplace. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into
law in Section 155.1 of the Intellectual Property Code which
defines infringement as the "colorable imitation of a
registered mark xxx or a dominant feature thereof."
Applying the dominancy test, the Court finds that respondents' use of
the "Big Mak" mark results in likelihood of confusion. First, "Big Mak"
sounds exactly the same as "Big Mac." Second, the first word in "Big
Mak" is exactly the same as the first word in "Big Mac." Third, the first
two letters in "Mak" are the same as the first two letters in "Mac."
Fourth, the last letter in "Mak" while a "k" sounds the same as "c"
when the word "Mak" is pronounced. Fifth, in Filipino, the letter "k"
replaces "c" in spelling, thus "Caloocan" is spelled "Kalookan."
In short, aurally the two marks are the same, with the first word
of both marks phonetically the same, and the second word
of both marks also phonetically the same.
Visually, the two marks have both two words and six letters, with the
first word of both marks having the same letters and the second word
having the same first two letters.
In spelling, considering the Filipino language, even the last letters
of both marks are the same.
Clearly, respondents have adopted in "Big Mak" not only the
dominant but also almost all the features of "Big Mac." Applied to
the same food product of hamburgers, the two marks will likely result
in confusion in the public mind.
The Court has taken into account the aural effects of the
words and letters contained in the marks in determining the
issue of confusing similarity. Thus, in Marvex Commercial
Co., Inc. v. Petra Hawpia & Co., et al.,66 the Court held:
The following random list of confusingly similar sounds in
the matter of trademarks, culled from Nims, Unfair
Competition and Trade Marks, 1947, Vol. 1, will reinforce
our view that "SALONPAS" and "LIONPAS" are confusingly
similar in sound: "Gold Dust" and "Gold Drop"; "Jantzen"
and "Jass-Sea"; "Silver Flash" and "Supper Flash";
"Cascarete" and "Celborite"; "Celluloid" and "Cellonite";
"Chartreuse" and "Charseurs"; "Cutex" and "Cuticlean";
"Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and
"Hoo Hoo". Leon Amdur, in his book "Trade-Mark Law and
Practice", pp. 419-421, cities, as coming within the purview
of the idem sonans rule, "Yusea" and "U-C-A", "Steinway
Pianos" and "Steinberg Pianos", and "Seven-Up" and
"Lemon-Up". In Co Tiong vs. Director of Patents, this Court
unequivocally said that "Celdura" and "Cordura" are
confusingly similar in sound; this Court held in Sapolin Co.
vs. Balmaceda, 67 Phil. 795 that the name "Lusolin" is an
infringement of the trademark "Sapolin", as the sound of
the two names is almost the same. (Emphasis supplied)
Certainly, "Big Mac" and "Big Mak" for hamburgers create even
greater confusion, not only aurally but also visually.
Indeed, a person cannot distinguish "Big Mac" from "Big Mak" by their
sound. When one hears a "Big Mac" or "Big Mak" hamburger
136
advertisement over the radio, one would not know whether the
"Mac" or "Mak" ends with a "c" or a "k."
Petitioners' aggressive promotion of the "Big Mac" mark, as borne by
their advertisement expenses, has built goodwill and reputation for
such mark making it one of the easily recognizable marks in the
market today. This increases the likelihood that consumers will
mistakenly associate petitioners' hamburgers and business with those
of respondents'.
Respondents' inability to explain sufficiently how and why they came
to choose "Big Mak" for their hamburger sandwiches indicates their
intent to imitate petitioners' "Big Mac" mark. Contrary to the Court of
Appeals' finding, respondents' claim that their "Big Mak" mark was
inspired by the first names of respondent Dy's mother (Maxima) and
father (Kimsoy) is not credible. As petitioners well noted:
[R]espondents, particularly Respondent Mr. Francis Dy, could have
arrived at a more creative choice for a corporate name by using the
names of his parents, especially since he was allegedly driven by
sentimental reasons. For one, he could have put his father's name
ahead of his mother's, as is usually done in this patriarchal society,
and derived letters from said names in that order. Or, he could have
taken an equal number of letters (i.e., two) from each name, as is the
more usual thing done. Surely, the more plausible reason behind
Respondents' choice of the word "M[ak]", especially when taken in
conjunction with the word "B[ig]", was their intent to take advantage
of Petitioners' xxx "B[ig] M[ac]" trademark, with
their allegedsentiment-focused "explanation" merely thought of as a
convenient, albeit unavailing, excuse or defense for such an unfair
choice of name.67
Absent proof that respondents' adoption of the "Big Mak" mark
was due to honest mistake or was fortuitous,68 the inescapable
conclusion is that respondents adopted the "Big Mak" mark to "ride
on the coattails" of the more established "Big Mac" mark.69 This saves
respondents much of the expense in advertising to create market
recognition of their mark and hamburgers.70
Thus, we hold that confusion is likely to result in the public mind. We
sustain petitioners' claim of trademark infringement.
On the Lack of Proof of
Actual Confusion
Petitioners' failure to present proof of actual confusion does not
negate their claim of trademark infringement.
As noted in American Wire & Cable Co. v. Director of
Patents,71 Section 22 requires the less stringent standard of
"likelihood of confusion" only. While proof of actual confusion is the
best evidence of infringement, its absence is inconsequential.72
On the Issue of Unfair Competition
Section 29 ("Section 29")73 of RA 166 defines unfair competition, thus:
xxxx
Any person who will employ deception or any other means contrary
to good faith by which he shall pass off the goods manufactured by
him or in which he deals, or his business, or services for those of the
one having established such goodwill, or who shall commit any acts
calculated to produce said result, shall be guilty of unfair competition,
and shall be subject to an action therefor.
In particular, and without in any way limiting the scope of unfair
competition, the following shall be deemed guilty of unfair
competition:
(a) Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as
to the goods themselves or in the wrapping of the packages in which
they are contained, or the devices or words thereon, or
in any feature of their appearance, which would be likely to influence
purchasers to believe that the goods offered are those of a
manufacturer or dealer, other than the actual manufacturer or
dealer, or who otherwise clothes the goods with such appearance
as shalldeceive the public and defraud another of his legitimate trade,
or any subsequent vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs
any other means calculated to induce the false belief that such person
is offering the services of another who has identified such services in
the mind of the public; or
(c) Any person who shall make any false statement in the course
of trade or who shall commit any other act contrary to good faith of
a nature calculated to discredit the goods, business or services of
another. (Emphasis supplied)
The essential elements of an action for unfair competition are
(1) confusing similarity in the general appearance of the goods, and
(2) intent to deceive the public and defraud a competitor. 74
The confusing similarity may or may not result from similarity in the
marks, but may result from other external factors in the packaging or
presentation of the goods. The intent to deceive and defraud may be
inferred from the similarity of the appearance of the goods as offered
for sale to the public.75
Actual fraudulent intent need not be shown.76
Unfair competition is broader than trademark infringement and
includes passing off goods with or without trademark infringement.
Trademark infringement is a form of unfair competition.77 Trademark
infringement constitutes unfair competition when there is not merely
likelihood of confusion, but also actual or probable deception on the
public because of the general appearance of the goods. There can be
trademark infringement without unfair competition as when the
infringer discloses on the labels containing the mark that he
manufactures the goods, thus preventing the public from being
deceived that the goods originate from the trademark owner.78
To support their claim of unfair competition, petitioners allege that
respondents fraudulently passed off their hamburgers as "Big Mac"
hamburgers. Petitioners add that respondents' fraudulent intent can
be inferred from the similarity of the marks in question.79
Passing off (or palming off) takes place where the defendant, by
imitative devices on the general appearance of the goods, misleads
prospective purchasers into buying his merchandise under the
impression that they are buying that of his competitors.80 Thus, the
defendant gives his goods the general appearance of the goods of
his competitor with the intention of deceiving the public that the
goods are those of his competitor.
137
The RTC described the respective marks and the goods of petitioners mark. This clearly shows respondents' intent to deceive the public.
and respondents in this wise: Had respondents' placed a notice on their plastic wrappers and bags
The mark "B[ig] M[ac]" is used by plaintiff McDonald's to identify its that the hamburgers are sold by "L.C. Big Mak Burger, Inc.", then they
double decker hamburger sandwich. The packaging material is could validly claim that they did not intend to deceive the public. In
a styrofoam box with the McDonald's logo and trademark in red with such case, there is only trademark infringement but no unfair
block capital letters printed on it. All letters of the "B[ig] M[ac]" mark competition.82 Respondents, however, did not give such notice. We
are also in red and block capital letters. On the other hold that as found by the RTC, respondent corporation is liable for
hand,defendants' "B[ig] M[ak]" script print is in orange with only the unfair competition.
letter "B" and "M" being capitalized and the packaging material
is plastic wrapper. xxxx Further, plaintiffs' logo and mascot are the The Remedies Available to Petitioners
umbrella "M" and "Ronald McDonald's", respectively, compared to Under Section 2383 ("Section 23") in relation to Section 29 of RA 166,
the mascot of defendant Corporation which is a chubby boy called a plaintiff who successfully maintains trademark infringement and
"Macky" displayed or printed between the words "Big" and unfair competition claims is entitled to injunctive and monetary
"Mak."81 (Emphasis supplied) reliefs. Here, the RTC did not err in issuing the injunctive writ of 16
Respondents point to these dissimilarities as proof that they did not August 1990 (made permanent in its Decision of 5 September 1994)
give their hamburgers the general appearance of petitioners' "Big and in ordering the payment of P400,000 actual damages in favor of
Mac" hamburgers. petitioners. The injunctive writ is indispensable to prevent further
acts of infringement by respondent corporation. Also, the amount of
The dissimilarities in the packaging are minor compared to the stark actual damages is a reasonable percentage (11.9%) of respondent
similarities in the words that give respondents' "Big Mak" corporation's gross sales for three (1988-1989 and 1991) of the six
hamburgers the general appearance of petitioners' "Big Mac" years (1984-1990) respondents have used the "Big Mak" mark.84
hamburgers. Section 29(a) expressly provides that the similarity in the T
general appearance of the goods may be in the "devices or words" he RTC also did not err in awarding exemplary damages by way of
used on the wrappings. Respondents have applied on their plastic correction for the public good85 in view of the finding of unfair
wrappers and bags almost the same words that petitioners use on competition where intent to deceive the public is essential. The award
their styrofoam box. What attracts the attention of the buying public of attorney's fees and expenses of litigation is also in order.86
are the words "Big Mak" which are almost the same, aurally and
visually, as the words "Big Mac." The dissimilarities in the material and WHEREFORE, we GRANT the instant petition. We SET ASIDE the
other devices are insignificant compared to the glaring similarity in Decision dated 26 November 1999 of the Court of Appeals and its
the words used in the wrappings. Resolution dated 11 July 2000 and REINSTATE the Decision dated 5
September 1994 of the Regional Trial Court of Makati, Branch 137,
Section 29(a) also provides that the defendant gives "his goods the finding respondent L.C. Big Mak Burger, Inc. liable for trademark
general appearance of goods of another manufacturer." infringement and unfair competition.
Respondents' goods are hamburgers which are also the goods of SO ORDERED.
petitioners. If respondents sold egg sandwiches only instead
of hamburger sandwiches, their use of the "Big Mak" mark would not
give their goods the general appearance of petitioners' "Big Mac"
hamburgers. In such case, there is only trademark infringement but
no unfair competition. However, since respondents chose to apply
the "Big Mak" mark on hamburgers, just like petitioner's use of the
"Big Mac" mark on hamburgers, respondents have obviously clothed
their goods with the general appearance of petitioners' goods.
Moreover, there is no notice to the public that the "Big Mak"
hamburgers are products of "L.C. Big Mak Burger, Inc." Respondents
introduced during the trial plastic wrappers and bags with the words
"L.C. Big Mak Burger, Inc." to inform the public of the name of the
seller of the hamburgers. However, petitioners introduced during the
injunctive hearings plastic wrappers and bags with the "Big Mak"
mark without the name "L.C. Big Mak Burger, Inc." Respondents'
belated presentation of plastic wrappers and bags bearing the name
of "L.C. Big Mak Burger, Inc." as the seller of the hamburgers is an
after-thought designed to exculpate them from their unfair business
conduct. As earlier stated, we cannot consider respondents' evidence
since petitioners' complaint was based on facts existing before and
during the injunctive hearings.

Thus, there is actually no notice to the public that the "Big Mak"
hamburgers are products of "L.C. Big Mak Burger, Inc." and not
those of petitioners who have the exclusive right to the "Big Mac"

138
 EN BANC
G.R. No. L-20635 March 31, 1966
ETEPHA, A.G., petitioner,
vs.
DIRECTOR OF PATENTS and WESTMONT PHARMACEUTICALS,
INC., respondents.
McClure, Salas and Gonzalez, for petitioner.
Sycip, Salazar, Manalo, Luna and Associates, for respondent.
SANCHEZ, J.:
To the question: May trademark ATUSSIN be registered, given the fact
that PERTUSSIN, another trademark, had been previously registered
in the Patent Office? — the Director of Patents answered
affirmatively. Hence this appeal.
On April 23, 1959, respondent Westmont Pharmaceuticals, Inc., a
New York corporation, sought registration of trademark "Atussin"
placed on its "medicinal preparation of expectorant antihistaminic,
bronchodilator sedative, ascorbic acid (Vitamin C) used in the
treatment of cough". The trademark is used exclusively in the
Philippines since January 21, 1959.1
Petitioner, Etepha, A. G., a Liechtenstin (principality) corporation,
objected. Petitioner claims that it will be damaged because Atussin is
so confusedly similar to its Pertussin (Registration No. 6089, issued
on September 25, 1957) used on a preparation for the treatment of
coughs, that the buying public will be misled into believing that
Westmont's product is that of petitioner's which allegedly enjoys
goodwill.
1. The objects of a trademark are "to point out distinctly the
origin or ownership of the articles to which it is affixed, to
secure to him who has been instrumental in bringing into
market a superior article or merchandise the fruit of his
industry and skill, and to prevent fraud and
imposition."2 Our over-all task then is to ascertain whether
or not Atussin so resembles Pertussin "as to be likely, when
applied to or used in connection with the goods ... of the
applicant, to cause confusion or mistake or to deceive
purchasers".3 And, we are to be guided by the rule that the
validity of a cause for infringement is predicated upon
colorable imitation. The phrase "colorable imitation"
denotes such a "close or ingenious imitation as to be
calculated to deceive ordinary persons, or such a
resemblance to the original as to deceive an ordinary
purchaser, giving such attention as a purchaser usually
gives, and to cause him to purchase the one supposing it to
be the other."4
2. That the word "tussin" figures as a component of both
trademarks is nothing to wonder at. The Director of Patents
aptly observes that it is "the common practice in the drug
and pharmaceutical industries to 'fabricate' marks by using
syllables or words suggestive of the ailments for which they
are intended and adding thereto distinctive prefixes or
suffixes".5 And appropriately to be considered now is the
fact that, concededly, the "tussin" (in Pertussin and Atussin)
was derived from the Latin root-word "tussis" meaning
cough.6
"Tussin" is merely descriptive; it is generic; it furnishes to the
buyer no indication of the origin of the goods; it is open for
appropriation by anyone. It is accordingly barred from
registration as trademark. With jurisprudence holding the
line, we feel safe in making the statement that any other
conclusion would result in "appellant having practically a
monopoly"7 of the word "tussin" in a trademark.8
While "tussin" by itself cannot thus be used exclusively to
identify one's goods, it may properly become the subject of
a trademark "by combination with another word or
phrase".9 And this union of words is reflected in
petitioner's Pertussin and respondent's Atussin, the first
with prefix "Per" and the second with Prefix
"A".1äwphï1.ñët
3. A practical approach to the problem of similarity or
dissimilarity is to go into the whole of the two trademarks
pictured in their manner of display. Inspection should be
undertaken from the viewpoint of a prospective buyer. The
trademark complained of should be compared and
contrasted with the purchaser's memory (not in
juxtaposition) of the trademark said to be infringed. 10 Some
such factors as "sound; appearance; form, style, shape, size
or format; color; ideas connoted by marks; the meaning,
spelling, and pronunciation, of words used; and the setting
in which the words appear" may be considered. 11 For,
indeed, trademark infringement is a form of unfair
competition. 12
We take a casual look at the two labels — without spelling
out the details — bearing in mind the easy-to-remember
earmarks thereof. Respondent's label underscores the
trademark Atussin in bold, block letters horizontally written.
In petitioner's, on the other hand, Pertussin is printed
diagonally upwards and across in semiscript style with
flourishes and with only the first letter "P" capitalized. Each
label plainly shows the source of the medicine: petitioner's
at the foot bears "Etepha Ltd. Schaan Fl", and on top,
"Apothecary E. Taeschner's"; respondent's projects
"Westmont Pharmaceuticals, Inc. New York, USA" at the
bottoms, and on the lower left side the word "Westmont"
upon a white diamond shaped enclosure and in red ink — a
color different from that of the words above and below it.
Printed prominently along the left, bottom and right edges
of petitioner's label are indications of the use: "for bronchial
catarrh — whopping-cough — coughs and asthma".
Respondent's for its part briefly represents what its produce
actually is - a "cough syrup". The two labels are entirely
different in colors, contents, arrangement of words
thereon, sizes, shapes and general appearance. The
contrasts in pictorial effects and appeals to the eye is so
pronounced that the label of one cannot be mistaken for
that of the other, not even by persons unfamiliar with the
two trademarks. 13
On this point the following culled from a recent decision of the United
States Court of Customs and Patent Appeals (June 15, 1956) is
persuasive: 14
Confusion is likely between trademarks, however, only if their over-
all presentations in any of the particulars of sound, appearance, or
meaning are such as would lead the purchasing public into believing
139
that the products to which the marks are applied emanated from
the same source. In testing this issue, fixed legal rules exist — if not
in harmony, certainly in abundance — but, in the final analysis, the
application of these rules in any given situation necessarily reflects a
matter of individual judgment largely predicated on opinion. There is,
however, and can be no disagreement with the rule that the
purchaser is confused, if at all, by the marks as a whole.
4. We now consider exclusively the two words — Pertussin
and Atussin — as they appear on the respective labels. As
previously adverted to, these words are presented to the
public in different styles of writing and methods of design.
The horizontal plain, block letters of Atussin and the
diagonally and artistically upward writing of Pertussin leave
distinct visual impressions. One look is enough to denude
the mind of that illuminating similarity so essential for a
trademark infringement case to prosper.
We concede the possibility that buyers might be able to obtain
Pertussin or Attusin without prescription. When this happens, then
the buyer must be one throughly familiar with what he intends to
get, else he would not have the temerity to ask for a medicine —
specifically needed to cure a given ailment. In which case, the more
improbable it will be to palm off one for the other. For a person who
purchases with open eyes is hardly the man to be deceived.
For the reasons given, the appealed decision of the respondent
Director of Patents — giving due course to the application for the
registration of trademark ATTUSIN is hereby affirmed. Costa against
petitioner. So ordered.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera,
Regala, Makalintal, Bengzon, J. P., and Zaldivar, JJ., concur.
Dizon, J., took no part.

5. As we take up Pertussin and Atussin once again, we

cannot escape notice of the fact that the two words do not
sound alike — when pronounced. There is not much
phonetic similarity between the two. The Solicitor General
well-observed that in Pertussin the pronunciation of the
prefix "Per", whether correct or incorrect, includes a
combination of three letters P, e and r; whereas, in Atussin
the whole starts with the single letter A added to suffix
"tussin". Appeals to the ear are disimilar. And this, because
in a word combination, the part that comes first is the most
pronounced. An expositor of the applicable rule here is the
decision in the Syrocol-Cheracol controversy. 15 There, the
ruling is that trademark Syrocol (a cough medicine
preparation) is not confusedly similar to
trademark Cheracol (also a cough medicine preparation).
Reason: the two words "do not look or sound enough alike
to justify a holding of trademark infringement", and the
"only similarity is in the last syllable, and that is not
uncommon in names given drug compounds".

6. In the solution of a trademark infringement problem,

regard too should be given to the class of persons who buy
the particular product and the circumstances ordinarily
attendant to its acquisition. 16 The medicinal preparation
clothed with the trademarks in question, are unlike articles
of everyday use such as candies, ice cream, milk, soft drinks
and the like which may be freely obtained by anyone,
anytime, anywhere. Petitioner's and respondent's products
are to be dispensed upon medical prescription. The
respective labels say so. An intending buyer must have to go
first to a licensed doctor of medicine; he receives
instructions as to what to purchase; he reads the doctor's
prescription; he knows what he is to buy. He is not of the
incautious, unwary, unobservant or unsuspecting type; he
examines the product sold to him; he checks to find out
whether it conforms to the medical prescription. The
common trade channel is the pharmacy or the drugstore.
Similarly, the pharmacist or druggist verifies the medicine
sold. The margin of error in the acquisition of one for the
other is quite remote.

140
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-19297 December 22, 1966
MARVEX COMMERCIAL CO., INC., petitioner,
vs.
PETRA HAWPIA and CO., and THE DIRECTOR OF
PATENTS, respondents.
Sta. Ana and Lasam for petitioner.
A.S. Donato for respondent Petra Hawpia and Co.
Office of the Solicitor General for respondent Director of Patents.
CASTRO, J.:
Petra Hawpia & Co., a partnership duly organized under the laws of
the Philippines and doing business at 543 M. de Santos (Botica
Divisoria), Manila (hereinafter referred to as the applicant), on
October 14, 1958 filed a petition for the registration of the trademark
"LIONPAS" used on medicated plaster, with the Philippine Patent
Office, asserting its continuous use in the Philippines since June 9,
1958.1
The Marvex Commercial Co., Inc., a corporation also duly organized
under the laws of the Philippines (hereinafter referred to as the
oppositor), on July 24, 1959 filed an opposition thereto, alleging that
the registration of such trademark would violate its right to and
interest in the trademark "SALONPAS" used on another medicated
plaster, which is registered in its name under Certificate of
Registration 5486, issued by the Director of Patents on September 29,
1956, and that both trademarks when used on medicated plaster
would mislead the public as they are confusingly similar.
After due hearing, the Director of Patents in his decision of August 18,
1961 dismissed the opposition and gave due course to the petition,
stating in part that "confusion, mistake, or deception among the
purchasers will not likely and reasonably occur" when both
trademarks are applied to medicated plaster. The oppositor moved to
have the decision reconsidered. This motion was denied in a
resolution of November 27, 1961. The oppositor then interposed the
present appeal.
The issues stated by the Director of Patents in his decision are the
same ones now tendered by the oppositor for resolution, namely,
(1) Is the applicant the owner of the trademark "LIONPAS"?; (2)
Should the application be rejected on the ground that the applicant
made false representations in placing the phrase "Reg. Phil. Pat. Off."
below the trademark "LIONPAS" on its cartons?, and (3) Is the
trademark "LIONPAS" confusingly similar to the trademark
"SALONPAS"?
We do not consider the second issue of any importance; we will thus
proceed to resolve the first and third issues.
Is the applicant the owner of the trademark "LIONPAS?"
Under sections 2 and 2-A of the Trade Mark Law, as amended, the
right to register trademarks, tradenames and service marks by any
person, corporation, partnership or association domiciled in the
Philippines or in any foreign country, is based on ownership, and the
burden is upon the applicant to prove such ownership (Operators, Inc.
vs. The Director of Patents, et al., L-17901, Oct. 29, 1965).
The Director of Patents found, on the strength of exhibits 5 and 6 for
the applicant, that the latter has "satisfactorily shown" its ownership
of the trademark sought to be registered. Exhibit 5 is a letter dated
June 20, 1958, sent by "OSAKA BOEKI KAISHA, LTD." to the applicant
which tends to show that the former, for a $1 consideration, has
assigned, ceded, and conveyed all its "rights, interests and goodwill in
the tradename LIONPAS Medicated Plaster . . ." in favor of the latter.
Exhibit 6 is a joint "SWORN STATEMENT" which appears to have been
executed by the presidents of "OSAKA BOEKI KAISHA, LTD." and
"ASUNARO PHARMACEUTICAL INDUSTRY CO.", and tends to confirm
the contents of exhibit 5.
A careful scrutiny of exh. 5 will reveal, however, that the sender of
the letter, "OSAKA BOEKI KAISHA LTD.", and which appears to be the
seller, is merely a representative of the manufacturer "ASUNARO
PHARMACEUTICAL INDUSTRY CO." There is no proof that as such
representative, the former has been authorized by the latter to sell
the trademark in question. Moreover, exh. 5 on its face appears to
have been signed only by someone whose position in the company's
"Sundries Dept." is not described; the signature is not legible. It is
even contradicted by exh. 6. While exh. 5 shows that "OSAKA BOEKI
KAISHA, LTD." is a representative of "ASUNARO PHARMACEUTICAL
INDUSTRY CO."; exh. 6 asserts that the former is not a representative
of the latter, but that it is the owner of the trademark "LIONPAS" (par.
2, exh. 6). At all events, neither averment can be accorded the weight
of an assignment of ownership of the trademark in question under
the Trade Mark Law. Exh. 5 is not acknowledged. Exh. 6 does not bear
the acknowledgment contemplated by the aforesaid law, particularly
by the last paragraph of section 37 and paragraph 2 of section 31 of
R.A. 166, as amended, which provide as follows:
The registration of a mark under the provisions of this section shall be
independent of the registration in the country of origin and the
duration, validity or transfer in the Philippines of such registration
shall be governed by the provisions of this Act. (Sec. 37, last par.)
(Emphasis ours)
The assignment must be in writing, acknowledged before a notary
public or other officer authorized to administer oaths or perform
other notarial acts and certified under the hand and official seal of the
notary or other officer. (Sec. 31, par. 2)
In this case, although a sheet of paper is attached to exh. 6, on which
is typewritten a certification that the signatures of the presidents of
the two named companies (referring to the signatures in exh. 6) "have
been duly written by themselves", this sheet is unmarked, unpaged,
unsigned, undated and unsealed. We have thumbed the record in
quest of any definitive evidence that it is a correct translation of the
Japanese characters found on another unmarked and unpaged sheet,
and have found none.
It follows from the above disquisition that exhs. 5 and 6 are legally
insufficient to prove that the applicant is the owner of the trademark
in question.
As a matter of fact, the other evidence on record conclusively belies
the import of exh. 6. Thus exh. A states that the applicant is merely
the "exclusive distributor" in the Philippines of the "LIONPAS"
penetrative plaster; exh. A-1 describes the applicant as the
"Philippine sole distributor" of "LIONPAS"; exh. B simply states that
141
"LIONPAS" is "manufactured exclusively for Petra Hawpia & Co. for
distribution in the Philippines."
Not being the owner of the trademark "LIONPAS" but being merely
an importer and/or distributor of the said penetrative plaster, the
applicant is not entitled under the law to register it in its name
(Operators, Inc. vs. Director of Patents, supra).
Upon the third issue, the applicant preliminarily asserts that there is
no justification for this Court to disturb any finding made by the
Director of Patents on appeal. This assertion is not tenable. Although
the Director of Patents is the official vested by law with the power to
administer the registration of trademarks and tradenames, his
opinion on the matter of similarity or dissimilarity of trademarks and
tradenames is not conclusive upon this Court which may pass upon
such determination.
unequivocally said that "Celdura" and "Cordura" are confusingly
similar in sound; this Court held in Sapolin Co. vs. Balmaceda, 67 Phil.
795 that the name "Lusolin" is an infringement of the trademark
"Sapolin", as the sound of the two names is almost the same.
In the case at bar, "SALONPAS" and "LIONPAS", when spoken, sound
very much alike. Similarity of sound is sufficient ground for this Court
to rule that the two marks are confusingly similar when applied to
merchandise of the same descriptive properties (see Celanese
Corporation of America vs. E. I. Du Pont, 154 F. 2d. 146, 148).
The registration of "LIONPAS" cannot therefore be given due course.
ACCORDINGLY, the decision of the respondent Director of Patents is
set aside, and the petition below of the respondent Petra Hawpia &
Co. is hereby dismissed, at the cost of the latter respondent.
Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon,
J.P., Zaldivar and Sanchez, JJ., concur.

The "SALONPAS" mark is not before this Court. Our meticulous

examination of the entire record has failed to yield a sample of such
mark. We have therefore proceeded to analyze the two marks, vis-a-
vis each other, on the basis of what we can derive from the record for
a comparative study. And our conclusion, in disagreement with that
of the Director of Patents, is not based on a comparison of the
appearance, form, style, shape, size or format of the trademarks,
which we can not make because, as we have already observed, the
"SALONPAS" mark is not before us, but on a comparison of the
spelling, sound and pronunciation of the two words.
It is our considered view that the trademarks "SALONPAS" and
"LIONPAS" are confusingly similar in sound.
Both these words have the same suffix, "PAS", which is used to denote
a plaster that adheres to the body with curative powers. "Pas, being
merely descriptive, furnishes no indication of the origin of the article
and therefore is open for appropriation by anyone (Ethepa vs.
Director of Patents, L-20635, March 31, 1966) and may properly
become the subject of a trademark by combination with another
word or phrase.
Two letters of "SALONPAS" are missing in "LIONPAS"; the first letter a
and the letter s. Be that as it may, when the two words are
pronounced, the sound effects are confusingly similar. And where
goods are advertised over the radio, similarity in sound is of especial
significance (Co Tiong Sa vs. Director of Patents, 95 Phil. 1 citing Nims,
The Law of Unfair Competition and Trademarks, 4th ed., vol. 2, pp.
678-679). "The importance of this rule is emphasized by the increase
of radio advertising in which we are deprived of help of our eyes and
must depend entirely on the ear" (Operators, Inc. vs. Director of
Patents, supra).

The following random list of confusingly similar sounds in the matter

of trademarks, culled from Nims, Unfair Competition and Trade
Marks, 1947, vol. 1, will reinforce our view that "SALONPAS" and
"LIONPAS" are confusingly similar in sound: "Gold Dust" and "Gold
Drop"; "Jantzen" and "Jazz-Sea"; "Silver Flash" and "Supper-Flash";
"Cascarete" and "Celborite"; "Celluloid" and "Cellonite"; "Chartreuse"
and "Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and "Meje";
"Kotex" and "Femetex"; "Zuso" and "Hoo Hoo". Leon Amdur, in his
book "TradeMark Law and Practice", pp. 419-421, cites, as coming
within the purview of the idem sonans rule, "Yusea" and "U-C-A",
"Steinway Pianos" and "Steinberg Pianos", and "Seven-Up" and
"Lemon-Up". In Co Tiong vs. Director of Patents, this Court
142
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 172276 August 8, 2010
SOCIETE DES PRODUITS NESTLE, S.A., Petitioner,
vs.
MARTIN T. DY, JR., Respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari under Rule 45 of the Rules of
Court. The petition challenges the 1 September 2005 Decision and 4
April 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 62730,
finding respondent Martin T. Dy, Jr. (Dy, Jr.) not liable for trademark
infringement. The Court of Appeals reversed the 18 September 1998
Decision of the Regional Trial Court (RTC), Judicial Region 7, Branch 9,
Cebu City, in Civil Case No. CEB-19345.
The Facts
Petitioner Societe Des Produits Nestle, S.A. (Nestle) is a foreign
corporation organized under the laws of Switzerland. It manufactures
food products and beverages. As evidenced by Certificate of
Registration No. R-14621 issued on 7 April 1969 by the then Bureau
of Patents, Trademarks and Technology Transfer, Nestle owns the
"NAN" trademark for its line of infant powdered milk products,
consisting of PRE-NAN, NAN-H.A., NAN-1, and NAN-2. NAN is
classified under Class 6 — "diatetic preparations for infant feeding."
Nestle distributes and sells its NAN milk products all over the
Philippines. It has been investing tremendous amounts of resources
to train its sales force and to promote the NAN milk products through
advertisements and press releases.
Dy, Jr. owns 5M Enterprises. He imports Sunny Boy powdered milk
from Australia and repacks the powdered milk into three sizes of
plastic packs bearing the name "NANNY." The packs weigh 80, 180
and 450 grams and are sold for ₱8.90, ₱17.50 and ₱39.90,
respectively. NANNY is is also classified under Class 6 — "full cream
milk for adults in [sic] all ages." Dy, Jr. distributes and sells the
powdered milk in Dumaguete, Negros Oriental, Cagayan de Oro, and
parts of Mindanao.
In a letter dated 1 August 1985, Nestle requested Dy, Jr. to refrain
from using "NANNY" and to undertake that he would stop infringing
the "NAN" trademark. Dy, Jr. did not act on Nestle’s request. On 1
March 1990, Nestle filed before the RTC, Judicial Region 7, Branch 31,
Dumaguete City, a complaint against Dy, Jr. for infringement. Dy, Jr.
filed a motion to dismiss alleging that the complaint did not state a
cause of action. In its 4 June 1990 order, the trial court dismissed the
complaint. Nestle appealed the 4 June 1990 order to the Court of
Appeals. In its 16 February 1993 Resolution, the Court of Appeals set
aside the 4 June 1990 order and remanded the case to the trial court
for further proceedings.
Pursuant to Supreme Court Administrative Order No. 113-95, Nestle
filed with the trial court a motion to transfer the case to the RTC,
Judicial Region 7, Branch 9, Cebu City, which was designated as a
special court for intellectual property rights.
The RTC’s Ruling
In its 18 September 1998 Decision, the trial court found Dy, Jr. liable
for infringement. The trial court held:
If determination of infringement shall only be limited on whether or
not the mark used would likely cause confusion or mistake in the
minds of the buying public or deceive customers, such in [sic] the
most considered view of this forum would be highly unlikely to
happen in the instant case. This is because upon comparison of the
plaintiff’s NAN and defendant’s NANNY, the following features would
reveal the absence of any deceptive tendency in defendant’s NANNY:
(1) all NAN products are contained tin cans [sic], while NANNY are
contained in plastic packs; (2) the predominant colors used in the
labels of NAN products are blue and white, while the predominant
colors in the plastic packings of NANNY are blue and green; (3) the
labels of NAN products have at the bottom portion an elliptical
shaped figure containing inside it a drawing of nestling birds, which is
overlapped by the trade-name "Nestle", while the plastic packs of
NANNY have a drawing of milking cows lazing on a vast green field,
back-dropped with snow covered mountains; (4) the word NAN are
[sic] all in large, formal and conservative-like block letters, while the
word NANNY are [sic] all in small and irregular style of letters with
curved ends; and (5) all NAN products are milk formulas intended for
use of [sic] infants, while NANNY is an instant full cream powdered
milk intended for use of [sic] adults.
The foregoing has clearly shown that infringement in the instant case
cannot be proven with the use of the "test of dominancy" because
the deceptive tendency of the unregistered trademark NANNY is not
apparent from the essential features of the registered trademark
NAN.
However, in Esso Standard Eastern, Inc. vs. Court of Appeals, et al. L-
29971, Aug. 31, 1982, the Supreme Court took the occasion of
discussing what is implied in the definition of "infringement" when it
stated: "Implicit in this definition is the concept that the goods must
be so related that there is likelihood either of confusion of goods or
business. x x x But as to whether trademark infringement exists
depends for the most part upon whether or not the goods are so
related that the public may be, or is actually, deceived and misled that
they came from the same maker or manufacturer. For non-competing
goods may be those which, though they are not in actual competition,
are so related to each other that it might reasonably be assumed that
they originate from one manufacturer. Non-competing goods may
also be those which, being entirely unrelated, could not reasonably
be assumed to have a common source. In the former case of related
goods, confusion of business could arise out of the use of similar
marks; in the latter case of non-related goods, it could not."
Furthermore, in said case the Supreme Court as well discussed on
when goods may become so related for purposes of infringement
when it stated: "Goods are related when they belong to the same
class or have same descriptive properties; when they possess the
same physical attributes or essential characteristics with reference to
their form, composition, texture or quality. They may also be related
because they serve the same purpose or are sold in grocery stores. x
xx
Considering that defendant’s NANNY belongs to the same class as
that of plaintiff’s NAN because both are food products, the
defendant’s unregistered trade mark NANNY should be held an
infringement to plaintiff’s registered trademark NAN because
defendant’s use of NANNY would imply that it came from the
manufacturer of NAN. Furthermore, since the word "nanny" means a
"child’s nurse," there might result the not so remote probability that
143
defendant’s NANNY may be confused with infant formula NAN
despite the aparent [sic] disparity between the features of the two
products.
Dy, Jr. appealed the 18 September 1998 Decision to the Court of
Appeals.
The Court of Appeals’ Ruling
In its 1 September 2005 Decision, the Court of Appeals reversed the
trial court’s 18 September 1998 Decision and found Dy, Jr. not liable
for infringement. The Court of Appeals held:
[T]he trial court appeared to have made a finding that there is no
colorable imitation of the registered mark "NAN" in Dy’s use of
"NANNY" for his own milk packs. Yet it did not stop there. It continued
on applying the "concept of related goods."
The Supreme Court utlilized the "concept of related goods" in the said
case of Esso Standard Easter, Inc. versus Court of Appeals, et
al. wherein two contending parties used the same trademark "ESSO"
for two different goods, i.e. petroleum products and cigarettes. It
rules that there is infringement of trademark involving two goods
bearing the same mark or label, even if the said goods are non-
competing, if and only if they are so related that the public may be,
or is actually, deceived that they originate from the one maker or
manufacturer. Since petroleum products and cigarettes, in kind and
nature, flow through different trade channels, and since the
possibility of confusion is unlikely in the general appearances of each
mark as a whole, the Court held in this case that they cannot be so
related in the context of infringement.
In applying the concept of related goods in the present case, the trial
court haphazardly concluded that since plaintiff-appellee’s NAN and
defendant-appellant’s NANNY belong to the same class being food
products, the unregistered NANNY should be held an infringement of
Nestle’s NAN because "the use of NANNY would imply that it came
from the manufacturer of NAN." Said court went on to elaborate
further: "since the word "NANNY" means a "child’s nurse," there
might result the not so remote probability that defendant’s NANNY
may be confused with infant formula NAN despite the aparent (sic)
disparity between the features of the two products as discussed
above."
The trial court’s application of the doctrine laid down by the Supreme
Court in the Esso Standard case aforementioned and the cases cited
therein is quite misplaced. The goods of the two contending parties
in those cases bear similar marks or labels: "Esso" for petroleum
products and cigarettes, "Selecta" for biscuits and milk, "X-7" for soap
and perfume, lipstick and nail polish. In the instant case, two
dissimilar marks are involved — plaintiff-appellee’s "NAN" and
defendant-appellant’s "NANNY." Obviously, the concept of related
goods cannot be utilized in the instant case in the same way that it
was used in the Esso Standard case.
In the Esso Standard case, the Supreme Court even cautioned judges
that in resolving infringement or trademark cases in the Philippines,
particularly in ascertaining whether one trademark is confusingly
similar to or is a colorable imitation of another, precedent must be
studied in the light of the facts of the particular case. Each case must
be decided on its own merits. In the more recent case of Societe Des
Produits Nestle S.A. Versus Court of Appeals, the High Court further
stressed that due to the peculiarity of the facts of each infringement
case, a judicial forum should not readily apply a certain test or
standard just because of seeming similarities. The entire panoply of
elements constituting the relevant factual landscape should be
comprehensively examined.
While it is true that both NAN and NANNY are milk products and that
the word "NAN" is contained in the word "NANNY," there are more
glaring dissimilarities in the entirety of their trademarks as they
appear in their respective labels and also in relation to the goods to
which they are attached. The discerning eye of the observer must
focus not only on the predominant words but also on the other
features appearing in both labels in order that he may draw his
conclusion whether one is confusingly similar to the other. Even the
trial court found these glaring dissimilarities as above-quoted. We
need not add more of these factual dissimilarities.
NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1 and NAN-
2, are all infant preparations, while NANNY is a full cream milk for
adults in [sic] all ages. NAN milk products are sold in tin cans and
hence, far expensive than the full cream milk NANNY sold in three (3)
plastic packs containing 80, 180 and 450 grams and worth ₱8.90,
₱17.50 and ₱39.90 per milk pack. The labels of NAN products are of
the colors blue and white and have at the bottom portion an elliptical
shaped figure containing inside it a drawing of nestling birds, which is
overlapped by the trade-name "Nestle." On the other hand, the
plastic packs NANNY have a drawing of milking cows lazing on a vast
green field, back-dropped with snow-capped mountains and using
the predominant colors of blue and green. The word NAN are [sic] all
in large, formal and conservative-like block letters, while the word
NANNY are [sic] all in small and irregular style of letters with curved
ends. With these material differences apparent in the packaging of
both milk products, NANNY full cream milk cannot possibly be an
infringement of NAN infant milk.1avvphi1
Moreover, NAN infant milk preparation is more expensive than
NANNY instant full cream milk. The cheaper price of NANNY would
give, at the very first instance, a considerable warning to the ordinary
purchaser on whether he is buying an infant milk or a full cream milk
for adults. A cursory examination of the packaging would confirm the
striking differences between the products in question.
In view of the foregoing, we find that the mark NANNY is not
confusingly similar to NAN. Dy therefore cannot be held liable for
infringement.
Nestle filed a motion for reconsideration. In its 4 April 2006
Resolution, the Court of Appeals denied the motion for lack of merit.
Hence, the present petition.
Issue
The issue is whether Dy, Jr. is liable for infringement.
The Court’s Ruling
The petition is meritorious.
Section 22 of Republic Act (R.A.) No. 166, as amended, states:
Infringement, what constitutes. — Any person who shall use, without
the consent of the registrant, any reproduction, counterfeit, copy or
colorable imitation of any registered mark or trade-name in
connection with the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely
to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services, or identity of such
business; or reproduce, counterfeit, copy or colorably imitate any
such mark or trade-name and apply such reproduction, counterfeit,
copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon
or in connection with such goods, business or services, shall be liable
144
to a civil action by the registrant for any or all of the remedies herein
provided.
Section 155 of R.A. No. 8293 states:
Remedies; Infringement. — Any person who shall, without the
consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark or the same container or a
dominant feature thereof in connection with the sale, offering for
sale, distribution, advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any goods or
services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered
mark or a dominant feature thereof and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be
used in commerce upon or in connection with the sale, offering for
sale, distribution, or advertising of goods or services on or in
connection with which such use is likely to cause confusion, or to
cause mistake, or to deceive, shall be liable in a civil action for
infringement by the registrant for the remedies hereinafter set forth:
Provided, That the infringement takes place at the moment any of the
acts stated in Subsection 155.1 or this subsection are committed
regardless of whether there is actual sale of goods or services using
the infringing material.
In Prosource International, Inc. v. Horphag Research Management
SA, the Court laid down the
elements of infringement under R.A. Nos. 166 and 8293:
In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-
A, 9-A, and 20 thereof, the following constitute the elements of
trademark infringement:
"(a) A trademark actually used in commerce in the Philippines and
registered in the principal register of the Philippine Patent Office[;]
(b) [It] is used by another person in connection with the sale, offering
for sale, or advertising of any goods, business or services or in
connection with which such use is likely to cause confusion or mistake
or to deceive purchasers or others as to the source or origin of such
goods or services, or identity of such business; or such trademark is
reproduced, counterfeited, copied or colorably imitated by another
person and such reproduction, counterfeit, copy or colorable imitation
is applied to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such
goods, business or services as to likely cause confusion or mistake or
to deceive purchasers[;]
(c) [T]he trademark is used for identical or similar goods[;] and
(d) [S]uch act is done without the consent of the trademark registrant
or assignee."
On the other hand, the elements of infringement under R.A. No.
8293 are as follows:
·The trademark being infringed is registered in the Intellectual
Property Office; however, in infringement of trade name, the same
need not be registered;
·The trademark or trade name is reproduced, counterfeited, copied, or
colorably imitated by the infringer;
·The infringing mark or trade name is used in connection with the sale,
offering for sale, or advertising of any goods, business or services; or
the infringing mark or trade name is applied to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be
used upon or in connection with such goods, business or services;
·The use or application of the infringing mark or trade name is likely
to cause confusion or mistake or to deceive purchasers or others as to
the goods or services themselves or as to the source or origin of such
goods or services or the idenity of such business; and
·It is without the consent of the trademark or trade name owner or
the assignee thereof.
Among the elements, the element of likelihood of confusion is the
gravamen of trademark infringement. There are two types of
confusion in trademark infringement: confusion of goods and
confusion of business.
In Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft, the Court distinguished the two types of
confusion:
Callman notes two types of confusion. The first is the confusion of
goods "in which event the ordinarily prudent purchaser would be
induced to purchase one product in the belief that he was purchasing
the other." In which case, "defendant’s goods are then bought as the
plaintiff’s, and the poorer quality of the former reflects adversely on
the plaintiff’s reputation." The other is the confusion of business:
"Here though the goods of the parties are different, the defendant’s
product is such as might reasonably be assumed to originate with the
plaintiff, and the public would then be deceived either into that belief
or into the belief that there is some connection between the plaintiff
and defendant which, in fact, does not exist."
There are two tests to determine likelihood of confusion: the
dominancy test and holistic test. The dominancy test focuses on the
similarity of the main, prevalent or essential features of the
competing trademarks that might cause confusion. Infringement
takes place when the competing trademark contains the essential
features of another. Imitation or an effort to imitate is unnecessary.
The question is whether the use of the marks is likely to cause
confusion or deceive purchasers.
The holistic test considers the entirety of the marks, including labels
and packaging, in determining confusing similarity. The focus is not
only on the predominant words but also on the other features
appearing on the labels.
In cases involving trademark infringement, no set of rules can be
deduced. Each case must be decided on its own merits.
Jurisprudential precedents must be studied in the light of the facts of
each particular case.
In McDonald’s Corporation v. MacJoy Fastfood Corporation, the Court
held:
In trademark cases, particularly in ascertaining whether one
trademark is confusingly similar to another, no set rules can be
deduced because each case must be decided on its merits. In such
cases, even more than in any other litigation, precedent must be
studied in the light of the facts of the particular case. That is the
reason why in trademark cases, jurisprudential precedents should be
applied only to a case if they are specifically in point.
145
In the light of the facts of the present case, the Court holds that the
dominancy test is applicable. In recent cases with similar factual
milieus, the Court has consistently applied the dominancy test.
In Prosource International, Inc., the Court applied the dominancy test
in holding that "PCO-GENOLS" is confusingly similar to
"PYCNOGENOL." The Court held:
The trial and appellate courts applied the Dominancy Test in
determining whether there was a confusing similarity between the
marks PYCNOGENOL and PCO-GENOL. Applying the test, the trial
court found, and the CA affirmed, that:
"Both the word[s] PYCNOGENOL and PCO-GENOLS have the same
suffix "GENOL" which on evidence, appears to be merely descriptive
and furnish no indication of the origin of the article and hence, open
for trademark registration by the plaintiff through combination with
another word or phrase such as PYCNOGENOL, Exhibits "A" to "A-3."
Furthermore, although the letters "Y" between P and C, "N" between
O and C and "S" after L are missing in the [petitioner’s] mark PCO-
GENOLS, nevertheless, when the two words are pronounced, the
sound effects are confusingly similar not to mention that they are both
described by their manufacturers as a food supplement and thus,
identified as such by their public consumers. And although there were
dissimilarities in the trademark due to the type of letters used as well
as the size, color and design employed on their individual
packages/bottles, still the close relationship of the competing
product’s name is sounds as they were pronounced, clearly indicates
that purchasers could be misled into believing that they are the same
and/or originates from a common source and manufacturer."
We find no cogent reason to depart from such conclusion.
This is not the first time the Court takes into account the aural effects
of the words and letters contained in the marks in determining the
issue of confusing similarity.
In Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et
al., cited in McDonald’s Corporation v. L.C. Big Mak Burger,
Inc., the Court held:
"The following random list of confusingly similar sounds in
the matter of trademarks, culled from Nims, Unfair
Competition and Trade Marks, 1947, Vol. 1, will reinforce
our view that "SALONPAS" and "LIONPAS" are confusingly
similar in sound: "Gold Dust" and ""Gold Drop"; "Jantzen"
and "Jass-Sea"; "Silver Flash" and Supper Flash";
"Cascarete" and "Celborite"; "Celluloid" and "Cellonite";
"Chartreuse" and Charseurs"; "Cutex" and "Cuticlean";
"Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and
Hoo Hoo." Leon Amdur, in his book "Trade-Mark Law and
Practice," pp. 419-421, cities [sic], as coming within the
purview of the idem sonans rule, "Yusea" and "U-C-A,"
"Steinway Pianos" and "Steinberg Pianos," and "Seven-Up"
and "Lemon-Up." In Co Tiong vs. Director of Patents, this
Court unequivocally said that "Celdura" and "Condura" are
confusingly similar in sound; this Court held in Sapolin Co.
vs. Balmaceda, 67 Phil. 795 that the name "Lusolin" is an
infringement of the trademark "Sapolin," as the sound of
the two names is almost the same."
In McDonald’s Corporation v. MacJoy Fastfood
Corporation, the Court applied the dominancy test in
holding that "MACJOY" is confusingly similar to
"MCDONALD’S." The Court held:
While we agree with the CA’s detailed enumeration of
differences between the two (2) competing trademarks
herein involved, we believe that the holistic test is not the
one applicable in this case, the dominancy test being the
one more suitable. In recent cases with a similar factual
milieu as here, the Court has consistently used and applied
the dominancy test in determining confusing similarity or
likelihood of confusion between competing trademarks.
xxxx
Applying the dominancy test to the instant case, the Court
finds that herein petitioner’s "MCDONALD’S" and
respondent’s "MACJOY" marks are are confusingly similar
with each other that an ordinary purchaser can conclude an
association or relation between the marks.
To begin with, both marks use the corporate "M" design
logo and the prefixes "Mc" and/or "Mac" as dominant
features. x x x
For sure, it is the prefix "Mc," and abbreviation of "Mac,"
which visually and aurally catches the attention of the
consuming public. Verily, the word "MACJOY" attracts
attention the same way as did "McDonalds," "MacFries,"
"McSpaghetti," "McDo," "Big Mac" and the rest of the
MCDONALD’S marks which all use the prefixes Mc and/or
Mac.
Besides and most importantly, both trademarks are used in
the sale of fastfood products. Indisputably, the
respondent’s trademark application for the "MACJOY &
DEVICE" trademark covers goods under Classes 29 and 30
of the International Classification of Goods, namely, fried
chicken, chicken barbeque, burgers, fries, spaghetti, etc.
Likewise, the petitioner’s trademark registration for the
MCDONALD’S marks in the Philippines covers goods which
are similar if not identical to those covered by the
respondent’s application.
In McDonald’s Corporation v. L.C. Big Mak Burger, Inc., the
Court applied the dominancy test in holding that "BIG MAK"
is confusingly similar to "BIG MAC." The Court held:
This Court x x x has relied on the dominancy test rather than
the holistic test. The dominancy test considers the
dominant features in the competing marks in determining
whether they are confusingly similar. Under the dominancy
test, courts give greater weight to the similarity of the
appearance of the product arising from the adoption of the
dominant features of the registered mark, disregarding
minor differences. Courts will consider more the aural and
visual impressions created by the marks in the public mind,
giving little weight to factors like prices, quality, sales
outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,
the Court ruled:
x x x It has been consistently held that the question of
infringement of a trademark is to be determined by the test
of dominancy. Similarity in size, form and color, while
relevant, is not conclusive. If the competing trademark
contains the main or essential or dominant features of
another, and confusion and deception is likely to result,
146
infringement takes place. Duplication or imitation is not
necessary; nor is it necessary that the infringing label should
suggest an effort to imitate. (G. Heilman Brewing Co. vs.
Independent Brewing Co., 191 F., 489, 495, citing Eagle
White Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question
at issue in cases of infringement of trademarks is whether
the use of the marks involved would be likely to cause
confusion or mistakes in the mind of the public or deceive
purchasers. (Auburn Rubber Corporation vs. Honover
Rubber Co., 107 F. 2d 588; x x x)
xxxx
The test of dominancy is now explicitly incorporated into
law in Section 155.1 of the Intellectual Property Code which
defines infringement as the "colorable imitation of a
registered mark x x x or a dominant feature thereof."
Applying the dominancy test, the Court finds that
respondents’ use of the "Big Mak" mark results in likelihood
of confusion. First, "Big Mak" sounds exactly the same as
"Big Mac." Second, the first word in "Big Mak" is exactly the
same as the first word in "Big Mac." Third, the first two
letters in "Mak" are the same as the first two letters in
"Mac." Fourth, the last letter "Mak" while a "k" sounds the
same as "c" when the word "Mak" is pronounced. Fifth, in
Filipino, the letter "k" replaces "c" in spelling, thus
"Caloocan" is spelled "Kalookan."
In Societe Des Produits Nestle, S.A v. Court of Appeals, the
Court applied the dominancy test in holding that "FLAVOR
MASTER" is confusingly similar to "MASTER ROAST" and
"MASTER BLEND." The Court held:
While this Court agrees with the Court of Appeals’ detailed
enumeration of differences between the respective
trademarks of the two coffee products, this Court cannot
agree that totality test is the one applicable in this case.
Rather, this Court believes that the dominancy test is more
suitable to this case in light of its peculiar factual milieu.
Moreover, the totality or holistic test is contrary to the
elementary postulate of the law on trademarks and unfair
competition that confusing similarity is to be determined on
the basis of visual, aural, connotative comparisons and
overall impressions engendered by the marks in controversy
as they are encountered in the realities of the marketplace.
The totality or holistic test only relies on visual comparison
between two trademarks whereas the dominancy test relies
not only on the visual but also on the aural and connotative
comparisons and overall impressions between the two
trademarks.
For this reason, this Court agrees with the BPTTT when it
applied the test of dominancy and held that:
From the evidence at hand, it is sufficiently established that
the word MASTER is the dominant feature of opposer’s
mark. The word MASTER is printed across the middle
portion of the label in bold letters almost twice the size of
the printed word ROAST. Further, the word MASTER has
always been given emphasis in the TV and radio
commercials and other advertisements made in promoting
the product. x x x In due time, because of these advertising
schemes the mind of the buying public had come to learn to
associate the word MASTER with the opposer’s goods.
x x x. It is the observation of this Office that much of the
dominance which the word MASTER has acquired through
Opposer’s advertising schemes is carried over when the
same is incorporated into respondent-applicant’s
trademark FLAVOR MASTER. Thus, when one looks at the
label bearing the trademark FLAVOR MASTER (exh. 4) one’s
attention is easily attracted to the word MASTER, rather
than to the dissimilarities that exist. Therefore, the
possibility of confusion as to the goods which bear the
competing marks or as to the origins thereof is not
farfetched.
Applying the dominancy test in the present case, the Court finds that
"NANNY" is confusingly similar to "NAN." "NAN" is the prevalent
feature of Nestle’s line of infant powdered milk products. It is written
in bold letters and used in all products. The line consists of PRE-
NAN, NAN-H.A., NAN-1, and NAN-2. Clearly, "NANNY" contains the
prevalent feature "NAN." The first three letters of "NANNY" are
exactly the same as the letters of "NAN." When "NAN" and "NANNY"
are pronounced, the aural effect is confusingly similar.
In determining the issue of confusing similarity, the Court takes into
account the aural effect of the letters contained in the marks.
In Marvex Commercial Company, Inc. v. Petra Hawpia &
Company, the Court held:
It is our considered view that the trademarks "SALONPAS"
and "LIONPAS" are confusingly similar in sound.
Both these words have the same suffix, "PAS", which is used
to denote a plaster that adheres to the body with curative
powers. "PAS," being merely descriptive, furnishes no
indication of the origin of the article and therefore is open
for appropriation by anyone (Ethepa vs. Director of Patents,
L-20635, March 31, 1966) and may properly become the
subject of a trademark by combination with another word
or phrase.
xxxx
The following random list of confusingly similar sounds in
the matter of trademarks, culled from Nims, Unfair
Competition and Trade Marks, 1947, Vol. 1, will reinforce
our view that "SALONPAS" and "LIONPAS" are confusingly
similar in sound: "Gold Dust" and ""Gold Drop"; "Jantzen"
and "Jass-Sea"; "Silver Flash" and Supper Flash";
"Cascarete" and "Celborite"; "Celluloid" and "Cellonite";
"Chartreuse" and Charseurs"; "Cutex" and "Cuticlean";
"Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and
Hoo Hoo." Leon Amdur, in his book "Trade-Mark Law and
Practice," pp. 419-421, cities [sic], as coming within the
purview of the idem sonans rule, "Yusea" and "U-C-A,"
"Steinway Pianos" and "Steinberg Pianos," and "Seven-Up"
and "Lemon-Up." In Co Tiong vs. Director of Patents, this
Court unequivocally said that "Celdura" and "Condura" are
confusingly similar in sound; this Court held in Sapolin Co.
vs. Balmaceda, 67 Phil. 795 that the name "Lusolin" is an
infringement of the trademark "Sapolin," as the sound of
the two names is almost the same.
The scope of protection afforded to registered trademark owners is
not limited to protection from infringers with identical goods. The
147
scope of protection extends to protection from infringers with related any way connected with the activities of the infringer; or when it
goods, and to market areas that are the normal expansion of business forestalls the normal potential expansion of his business (v. 148 ALR,
of the registered trademark owners. Section 138 of R.A. No. 8293 77, 84; 52 Am. Jur. 576, 577). (Emphasis supplied)
states: WHEREFORE, we GRANT the petition. We SET ASIDE the 1
Certificates of Registration. — A certificate of registration of a mark September 2005 Decision and 4 April 2006 Resolution of the Court of
shall be prima facie evidence of validity of the registration, the Appeals in CA-G.R. CV No. 62730 and REINSTATE the 18 September
registrant’s ownership of the mark, and of the registrant’s exclusive 1998 Decision of the Regional Trial Court, Judicial Region 7, Branch 9,
right to use the same in connection with the goods or services and Cebu City, in Civil Case No. CEB-19345.
those that are related thereto specified in the certificate. (Emphasis SO ORDERED.
supplied)
In Mighty Corporation v. E. & J. Gallo Winery, the Court held that,
"Non-competing goods may be those which, though they are not in
actual competition, are so related to each other that it can reasonably
be assumed that they originate from one manufacturer, in which
case, confusion of business can arise out of the use of similar marks."
In that case, the Court enumerated factors in determining whether
goods are related: (1) classification of the goods; (2) nature of the
goods; (3) descriptive properties, physical attributes or essential
characteristics of the goods, with reference to their form,
composition, texture or quality; and (4) style of distribution and
marketing of the goods, including how the goods are displayed and
sold.
NANNY and NAN have the same classification, descriptive properties
and physical attributes. Both are classified under Class 6, both are
milk products, and both are in powder form. Also, NANNY and NAN
are displayed in the same section of stores — the milk section.
The Court agrees with the lower courts that there are differences
between NAN and NANNY: (1) NAN is intended for infants while
NANNY is intended for children past their infancy and for adults; and
(2) NAN is more expensive than NANNY. However, as the registered
owner of the "NAN" mark, Nestle should be free to use its mark on
similar products, in different segments of the market, and at different
price levels.

In McDonald’s Corporation v. L.C. Big Mak Burger, Inc., the

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

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

trademark is entitled is not limited to guarding his goods or business
from actual market competition with identical or similar products of
the parties, but extends to all cases in which the use by a junior
appropriator of a trade-mark or trade-name is likely to lead to a
confusion of source, as where prospective purchasers would be
misled into thinking that the complaining party has extended his
business into the field (see 148 ALR 56 et sq; 53 Am. Jur. 576) or is in

148
 G.R. No. L-11490 October 14, 1916
THE ALHAMBRA CIGAR AND CIGARETTE MANUFACTURING
CO., plaintiff-appellant,
vs.
COMPAÑIA GENERAL DE TABACOS DE FILIPINAS, defendant-
appellee.
Rohde & Wright for appellant.
Gilbert, Cohn & Fisher for appellee.
JOHNSON, J.:
The only question presented by this appeal is whether or not the
defendant is guilty of unfair competition in the manufacture and
sale of a certain cigar. The plaintiff attempted to show that the
defendant was guilty of a violation of section 7 of Act No. 666 of the
Philippine Commission, and claimed that it had been damaged in the
sum of P20,000, and prayed for a permanent injunction to restrain
the defendant from the further manufacture or sale of the cigars
alleged to have been made in imitation of a cigar manufactured by
the plaintiff, and for an accounting.
Upon the issues presented the lower court reached the conclusion
that the defendant was not guilty of a violation of said Act and
absolved it from all liability under the complaint, with costs against
the plaintiff. From that conclusion the plaintiff appealed to this court
and made several assignments of error here.
An examination of the argument of the appellant with reference to
said assignments of errors should that the observation made by the
appellee concerning the same in quite true. The appellee says:
While the appellant has made an assignment of errors, it has
practically abandoned them in its brief. There is no discussion of any
specific error. The argument is directed to the subject matter in
general. It is like discharging a shotgun loaded with birdshot. If it
scatters sufficiently something may be brought down. No criticism of
counsel is intended. It was practically the only course they had open.
There was not error at which a rifle ball could be directed.
An examination of the record discloses the following facts: The
plaintiff and defendant are corporations engaged in manufacturing
products of tobacco in the city of Manila. The Alahambra Cigar and
Cigarette Manufacturing alleged that it had engaged in
manufacturing a certain brand of cigars which it named Especiales
Alhambra, since the year 1906;
that these cigars are made of superior quality of tobacco
and wrapped with perfect leaves of Sumatra tobacco; that
each cigar is encircled with a band of a brown color, on
which is imprinted in gold color the word Especiales
Alhambra; that the cigars are packed with distinguishable
labels and marks; that the cigars present a very definite
appearance; that the plaintiff had extensively advertised
the said cigar as "The little brown label cigar." The plaintiff
further alleged that the cigars had acquired a reputation for
their excellence and had been a source of great profit.
It was alleged that three months preceding the filing of the complaint
(July 19, 1915) the Compania General de tabacos de filipina "in
disregard of plaintiff's rights and with intent to deceive the public and
defraud the plaintiff," had soles and was selling a cigar "made in
similar form, size, and appearance and in simulation of plaintiff's said
cigar: that defendant's cigar was named Especiales, and is "encircled
with a brown collared band, with the words 'Especiales Isabela,'
printed in gold letters upon it, with the intent to thereby imitate
plaintiff's said cigars; that the defendant had so packed and
ornamented the receptacles and boxes containing its cigars, in colors
and forms of devices, as to give its said cigars, when offered for sale,
the general appearance of plaintiff's said brand of cigars." The
plaintiff further alleged that all of said acts of the defendant were
done with the intent to deceive the public and to defraud the plaintiff
and that such acts did actually deceive the buyers of plaintiff's cigars.
To the foregoing allegations of the plaintiff, the defendant appeared
and denied generally all of the allegations of plaintiff's petition. Upon
the issue presented by the petition and answer, the cause was
brought on for trial, with the result above indicated.
Said section 7 of Act No. 666, for the alleged violation of which the
present action was instituted, provides:
Any person who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either in the
wrapping of the packages in which they are contained, or the devices
or words thereon, or in any other feature of their appearance, which
would be likely to influence purchasers to believe that the goods
offered are those of a manufacturer or dealer other than the actual
manufacturer or dealer, and who clothes the goods with such
appearance for the purpose of deceiving the public and defrauding
another of his legitimate trade, or any subsequent vendor of such
goods or any agent of any vendor engaged in selling such goods with
a like purpose, shall be guilty of unfair competition, and shall be liable
to an action for damages, in which the measure shall be the same as
that provided for a violation of trade-mark rights, together with
discretionary power in the court to impose double damages, if the
circumstances call for the same. The injured party may also have a
remedy by injunction similar to that provided for in cases of violation
of trade-marks. This section applies in cases where the deceitful
appearance of the goods, misleading as to origin or ownership, is
affected not by means of technical trademarks, emblems, signs, or
devices, but by the general appearance of the package containing the
goods, or by the devices or words thereon, even though such
packages, devices or words are not by al capable of appropriation as
trade-marks; and in order that the action shall lie under this section,
actual intent to deceive the public and defraud a competitor shall
affirmatively appear on the part of the person sought to be made
liable, but such intent may be inferred from similarity in the
appearance of the goods as packed or offered for sale to those of the
complaining party.
In addition to the oral testimony, the plaintiff presented Exhibits A
and B. Exhibit A is a box of cigars which the plaintiff claims the
defendant was attempting to imitate. Exhibit B is a box of cigars which
the plaintiff claims is an imitation of the cigars in Exhibit A and
constitutes the infringement or unfair competition complained of.
Exhibits A and B, including the size of the box, labels, etc., are as
follows:
Exhibit A.
Exhibit A of the plaintiff was a box containing twenty-five cigars and
was 8 ½ inches long, by 5 1/4 inches wide and 1 3/8 inches deep.
On the top of said box and in the center thereof there appeared the
following label:
149
 On each cigar was the following band:

On the immediate front of the box there appeared the following label:

The box contained twenty-five cigars, of which the following is one:

On the inside of the top cover there appeared the following label:
Exhibit B.
Exhibit B of the defendant was a box containing fifty cigars and was 7
3/1 inches long, by 5 1/8 inches wide, by 2 inches deep.
On the top of the said box and in the center thereof, there appeared
the following label:

On the loose leaf immediately over the cigars there was the following
label: On the inside of the cover there appeared the following label:

On the loose leaf immediately over the cigars there appeared the
Over the end of the box and pasted on the outside thereof, there following label:
appeared the following label:

150

Over the end of the box and pasted on the outside thereof, there
appeared the following label:
On each cigar was the following band:
On the immediate front of the box there appeared the following label:
The box contained fifty cigars, of which the following is one:
The lower court, after an examination of the evidence, states in the
course of his opinion:
There certainly is not sufficient similarity to justify the inference of
actual intent on defendant's part to deceive the public and defraud
a competitor, and this is an essential element of unfair competition.
An action for unfair competition is distinguished from an action for a
violation of technical trade-marks and is based upon the proposition
that no dealer in merchandise should be allowed to dress his goods in
simulation of the goods of another dealer, so that purchasers desiring
to buy the goods of the latter would be induced to buy the goods of
the former. The policy of the law is not to prevent competition but to
prevent deceit and fraud. A merchant is entitled to the fruits of his
reputation and his ingenuity and no other merchant will be allowed
to simulate the appearance of the goods of the former, for the
purpose of taking advantage his reputation and ingenuity in business.
The law does not, however pretend to prohibit or enjoin every
similarity. The similarity must be such that the ordinary purchaser
will be deceived into the belief that the goods are those of another.
It must be a "similarity in the general appearance," or in the goods
"taken as a whole." (Alhambra Cigar, etc., Co. vs. Mojica, 27 Phil.
Rep., 566; Coats vs.Merrick Thread Company, 149 U. U., 562; Enoch
Morgan's Sons Company vs. Peper, 86 Fed. REp., 956.) It frequently
happens that goods of a particular class are labeled by all
manufacturers in a common manner. In cases of that sort, no
manufacturer may appropriate to himself the method of labeling or
packing his merchandise and then enjoin other merchants from using
it. Instances of such articles are spools of thread, soap, cigars, etc.
Thread, for example, is commonly put up on wodden spools of
substantially the same size. That is a result of business demands. Soap
is commonly sold in a similar sort of wrapper. Cigar, as a rule, have
the same general shape and are usually labeled with bands of
somewhat similar color. They are generally put up in packages or
boxes of like shape, size, and form.
A manufacturer of any one of these articles may put up his particular
brand of goods in the common form, without running the risk of
being enjoined by another manufacturer. He will, however, be
enjoined if it clearly appears that there is a studied attempt to
imitate or simulate certain distinctive features, adopted by one
manufacturer, for the purpose of identifying or distinguishing his
goods from others of the same general class and appearance.
In the case of Coats vs. Merrick Thread Company, supra,
the question presented to the court was with regard to the
similarity of the labels on spools of thread. The labels of both
parties were black and gold, with the name of the
manufacturer, kind of thread, and the number of the thread
stamped upon it. These labels were small and were attached
to the end of the spools. The court found that the small black
and gold labels was in common use among manufacturers
of that quality of thread. The court held, that in view of the
limited space upon the label, and in view of the common
right to use such label, the defendants were fully within their
rights.
In the case of Enoch Morgan's Sons Company vs. Troxell.
supra. the question was raised with reference to the
method of packing and wrapping soap. In discussing that
question, the court said:
The only points of similarity between the two articles sold
are that they are both small cakes of soap covered with tin-
foil or tinned paper and having a blue band around them,
with gilt lettering. The cakes are not even of the same
shape, one being nearly square, and the other oblong. But
we are of the opinion that this form of package, with a blue
band and gift lettering, can not be appropriated by the
plaintiff as a trade-mark. There is nothing peculiar about it,
it is an appropriate and usual form in which to put up small
cakes of soap and the law of trade-marks has not yet gone
so far as to enable a party to appropriate such a form of
package and fashion of label and exclude every one else
from its use, or from the use of anything resembling it.
(Fleischmann vs. Newman, 4 N. Y., Supp., 642.)
151
 In the case of Fleischmann vs. Newman, supra, we have a
further discussion of the right of merchants to pack their
merchandise in the ordinary and usual form adopted by
other. In the course of the discussion, the court said:
The only point of similarity between the two (packages) is
in the shade of yellow which the groundwork of the labels
has. In the case of both plaintiffs and defendant the shade
is lighter than that used by other dealers for twelve years
past, but each has its distinctive characteristics, none of
which would be liable to mislead even a careless purchaser,
as may plainly be seen by an inspection of the labels
contained in the preliminary statement. Under these
circumstances the defendant can not be deemed to have
simulated the design of the plaintiffs' package so as to give
a right of action against him, for the simple reason that he
has done no more than other dealers have done in putting
up packages of this description, which must necessarily be
about of a prescribed size in order to be marketable, and
there is no law of this state which prohibits a manufacturer
or dealer from using the words "Compressed Yeast." The
manufacture of this article is open to all competitors and
they can not be held liable in any action to restrain them
where they plainly put ttheir name upon the label, even
though they do happen to use light yellow for the
background of the paper upon which the description of the
commodity is given.
With reference to Exhibits A and B, upon a close examination some
points of resemblance may possibly be found. A casual examination,
however, shows clearly that there is an essential and marked
difference.
The allegation of unfair competition, however, can not be based upon
the fact that by a close examination a similarity may be found. The
similarity or simulation must be use as to defraud and deceive the
purchaser into the belief that he is purchasing the goods of one
person believing them to be the goods of another. The question is
whether, taking the defendant's package and label as a whole, it so
far copies or resembles the plaintiff's package and label, that a person
of ordinary intelligence would be misled into buying the one
supposing he was buying the other. No inflexible definition can be
given as to what will constitute unfair competition. Each case must
depend upon its own particular facts. The rule which we are
discussing can not be better stated that the plaintiff himself states it
in his brief:
The resemblance spoken of in the law of unfair competition is a
resemblance in the general appearance of the goods, in the wrapping
of the packages, or in the devices or words thereon, or in any other
feature of their appearance which would be likely to deceive
purchasers. It is not enough for the plaintiff's cause that in certain
details there may be discovered something of similarity, provided that
in the general appearance there is a decided dissimilarity.
Nor is it enough to save the defendant that experts, on examination,
can point to differences in details of the component parts of the
markings or wrappings. Details may present differences and yet the
whole be very much alike and very deceptive to the ordinary
purchaser using ordinary care. . . . An inspection of the cigars in
question will afford the best test of their likeness in general
appearance.
The late Mr. Justice Brewer of the Supreme Court of the
United States, in the case of P. Lorillard Co. vs. Peper (86
Fed. REp., 956), in discussing the general question of how
unfair competition may be determined, said:
Summing it all up, while there are certain minor points of
resemblance which have been forcibly urged upon our
attention by the counsel for plaintiff, yet, looking at the two
packages with their labels, — taking the tout ensemble— it
appears to us clear that they are so essentially different that
no one of ordinary intelligence, desiring to buy the one kind
of tobacco, would be misled into buying a package of the
other. We shall not stop to review the testimony which is
offered upon the question whether the resemblance
between the two packages and labels were calculated to
mislead, or whether in fact they did operate to mislead. It is
enough to say that there was testimony on both sides of
these questions, and perhaps, looking at the matter of the
testimony alone, it might be difficult to say on which was
the preponderance; but such testimony, giving it all the
weight that it is entitled to, does not disturb the conclusions
which we have reached from an inspection of the packages
and labels themselves. We can not surrender our own
judgment in this matter because others may be of a
different opinion, or because it happens, in isolated
instances, that some purchaser was so careless as not to
detect the differences.
In the present case there is no proof in the record that any persons
had been deceived into purchasing the cigars of the defendant,
believing that he was purchasing the cigars of the plaintiff. There is
no proof that any person or persons were actually deceived. During
the trial the plaintiff practically abandoned its contention that there
was any resemblance or any attempt to simulate its cigars by the
defendant, except in the color of the band or ring used on said cigars.
Marker, a witness called by the plaintiff, testified:
Q. In what particular way do you think a man might get these cigars
mixed? — A. Well, they are both made with Sumatra wrappers, the
label being brown. It is true, so far as the shape of the cigar is
concerned, there is no resemblance.
Q. As an expert, Mr. Marker, do you think any person would be likely
to mistake the general appearance of the package or container of the
Alhambra cigar for that of the Tabacalera? — A. The package, no;
there would be no chance of his getting that mixed.
Q. None whatever? — A. No.
Q. Isn't it a fact, Mr. Marker, that the shapes of these two cigars are
what may be termed in trade as distinctive shapes? —A. Yes, sir.
Q. They come under different distinctions? — A. Yes, sir.
Q. And this is a very different shape, is it not? -- A. A very different
shape; yes, sir.
Q. How many other factories manufacture Especiales? — A. Probably
four or five of them I should think.
Q. And have been for many years? — A. Yes, sir.
Q. You do not contend that the Alhambra were the first to use the
word Especial, by any means, do you? — A. No.
Strickler, testifying for the defendant states:
Q. I say, if you were looking for the cigar known as Especiales
Alhambra (Exhibit A) and were familiar with that cigar and liked it, do
152
you think you would be at all likely to take the cigar in Exhibit B, a
different shaped cigar and ring?— A. If I was familiar with Especiales
Alhambra, I would not take an Expeciales Flor de Isabela for it.
From an examination on the band of the cigars of the plaintiff and a
comparison of it with the ring of the cigars of the defendant (See
Exhibits A and B above), it will at once be seen that there is no
similarity in the shape of the two. The color is not exactly the same.
The lettering is different; the names are different. It is difficult to
understand, as Strickler testified, how any person familiar with the
cigars of the plaintiff could be deceived into accepting the cigars of
the defendant. The shape of the band is very different from the shape
of the ring. There is also a marked difference in the color of the two.
A most casual examination of the two will show a wide difference.
The judgment of the eye upon the two is more satisfactory than
evidence from any other source as to the possibility of parties being
misled, so as to take one of the cigars for the other; seeing in such
cases is believing, existing differences being at once perceived and
remaining in the mind of the careful observer. There is no evidence in
the record that any one was ever misled by the alleged resemblance
between the two cigars. (Liggett & Myers Tobacco Co. vs. Finzer, 128
U. S., 182.)
The plaintiff makes no pretention that it has any absolute exclusive
right to the use of the brown color or of the use of the Sumatra
wrapper, nor to any of the infinite shapes and cigars, nor to any of the
words of the alphabet.
It does contend, however, that when it has fashioned a special cigar,
has clothed it in a certain wrapper, has branded it with a brown ring
with gold letter and has named it Especiales, and has established a
trade for that cigar and made it popular and stylish because of its
form, quality, and attractive appearance, that no other manufacturer
can thereafter commence to make a similar cigar, resembling it in size
and shape, using the Sam Sumatra wrapper, using a similar brown
ring with equal gold letters, and with the identical name. That
contention of the appellant is certainly in conformity with the
provisions of the ale. The difficulty with it, however, is that the cigars
in the present case are not similar, either in size or shape. The bands
or rings are not similar, whether in their shape or the lettering
thereon; neither are the names found upon the different bands or
rings identically the same; neither are the colors exactly the same.
As has been stated in effect, any one who sells goods packed, or
labeled, or otherwise prepared in such a manner to induce intending
purchasers to believe that the goods are of a make or origin other
than the true, or who clothes his goods with a certain appearance for
the purpose of deceiving the public, is deemed guilty of unfair
competition as defined in section 7 of Act No. 666. (Brook
Bros. vs. Froelich & Kuttner, 8 Phil. Rep., 580.) The true test of unfair
competition is whether certain goods have been intentionally clothed
with an appearance which is likely to deceive the ordinary purchaser,
exercising ordinary care, and not whether a certain limited class of
purchasers, with special knowledge not possessed by the ordinary
purchaser, could avoid a mistake by the exercise of this special
knowledge. (U. S. vs. Manuel, 7 Phil. Rep., 221; Song Fo & Co. vs. Tiu
Ca Siong, 13 Phil. Rep., 143; Inchausti & Co. vs. Song Fo & Co., 21 Phil.
Rep., 278; Baxter and Baxter & Co. vs. Zuazua, 5 Phil. Rep., 160;
Nelle vs. Baer, Senior & Co., 5 Phil. Rep., 608.) lawphil.net
With reference to the similarity of bands or rings upon cigars, we held
in the case of Nelle vs. Baer, Senior & Co., supra, in the absence of
other proof, that the mere similarity in the appearance of two cigars
rings is not sufficient to show the actual intent to deceive the public
which is required by Act No. 666, section 7.
Facsimiles of the two rings are in the record before us, and they are
so nearly alike in general appearance that one might pass for the
other. These rings so used on cigars are, however, so small, and are
necessary so similar in design and appearance, that we should
hesitate to say that actual intent to deceive the public and defraud a
competitor . . . may be inferred from the similarity in the goods.
In view of all of the foregoing and summing up all the arguments pro
and con, while there are certain minor prints of resemblance in the
bands of the two cigars presented, which have been forcibly urged
upon our attention by the respective counsel, yet, looking at the two
cigars, with special reference to the rings or bands used by the
plaintiff and the defendant, we are convinced that the two cigars,
including their rings or bands, are so essentially different that no
one of ordinary intelligence desiring to buy one would be misled or
deceived into buying the other.
"It is not enough fro plaintiff's cause that in certain details and upon
a close examination there may be discovered something of a
similarity in the general appearance of the cigars, or bands or rings.
The similarity must be such as to deceive and to defraud." It must be
such as to induce a person to buy the cigars of the plaintiff, believing
that he is buying the cigars of the defendant. In our opinion no such
similarity exists.
The boxes in which the cigars are packed are different. They are
different in size and color. One contains fifty cigars while the other
contains but twenty-five. The labels, as will appear from Exhibits A
and B above, are entirely different. There is no attempt on the part of
the defendant to simulate, in the slightest degree, the box or the label
used by the plaintiff. With reference to cigars, the slightest
examination discloses that they are of an entirely different shape.
One is thick and blunt. The other is much thinner, pointed, and
shorter. With reference to the bands or labels encircling the cigars,
from an examination of the same, it is found, by reference to Exhibits
A and B, that while both are of a brownish color they are not of the
same brown color. Neither are the bands of the same shape. One is
generally called a band while the other is a ring. We are unable to see
or to understand how a person with reasonable or ordinary care,
knowing and accustomed to use the cigar of the plaintiff, could ever
be deceived into purchasing the cigar of the defendant.
For all of the foregoing reasons, we are of the opinion that the
judgment of the lower court should be affirmed with costs. So
ordered.
Torres, Carson, Moreland, Trent and Araullo, JJ., concur.
153
 G.R. No. 209843
TAIWAN KOLIN CORPORATION, LTD., Petitioner,
vs.
KOLIN ELECTRONICS CO., INC., Respondent.
DECISION
VELASCO, JR., J.:
Nature of the Case
Before the Court is a petition for review under Rule 45 of the Rules of
Court interposed by petitioner Taiwan Kolin Corporation, Ltd. (Taiwan
Kolin), assailing the April 30, 2013 Decision 1 of the Court of Appeals
(CA) in CA-G.R. SP No. 122565 and its subsequent November 6, 2013
Resolution.2 The assailed issuances effectively denied petitioner's
trademark application for the use of "KOLIN" on its television and DVD
players.
The Facts
On February 29, 1996, Taiwan Kolin filed with the Intellectual
Property Office (IPO), then Bureau of Patents, Trademarks, and
Technology Transfer, a trademark application, docketed as
Application No. 4-1996-106310, for the use of "KOLIN" on a
combination of goods, including colored televisions, refrigerators,
window-type and split-type air conditioners, electric fans and water
dispensers. Said goods allegedly fall under Classes 9, 11, and 21 of the
Nice Classification (NCL).
Application No. 4-1996-106310 would eventually be considered
abandoned for Taiwan Kolin’s failure to respond to IPO’s Paper No. 5
requiring it to elect one class of good for its coverage. However, the
same application was subsequently revived through Application Serial
No. 4-2002-011002,3 with petitioner electing Class 9 as the subject of
its application, particularly: television sets, cassette recorder, VCD
Amplifiers, camcorders and other audio/video electronic equipment,
flat iron, vacuum cleaners, cordless handsets, videophones, facsimile
machines, teleprinters, cellular phones and automatic goods vending
machine. The application would in time be duly published. 4
On July 13, 2006, respondent Kolin Electronics Co., Inc. (Kolin
Electronics) opposed petitioner’s revived application, docketed as
Inter Partes Case No. 14-2006-00096. As argued, the mark Taiwan
Kolin seeks to register is identical, if not confusingly similar, with its
"KOLIN" mark registered on November 23, 2003, covering the
following products under Class 9 of the NCL: automatic voltage
regulator, converter, recharger, stereo booster, AC-DC regulated
power supply, step-down transformer, and PA amplified AC-DC.5
To digress a bit, Kolin Electronics’ "KOLIN" registration was, as it turns
out, the subject of a prior legal dispute between the parties in Inter
Partes Case No. 14-1998-00050 beforethe IPO. In the said case, Kolin
Electronics’ own application was opposed by Taiwan Kolin, being, as
Taiwan Kolin claimed, the prior registrant and user of the "KOLIN"
trademark, having registered the same in Taipei, Taiwan on
December 1, 1988. The Bureau of Legal Affairs of the IPO (BLA-IPO),
however, did not accord priority right to Taiwan Kolin’s Taipei
registration absent evidence to prove that it has already used the said
mark in the Philippines as early as 1988. On appeal, the IPO Director
General affirmed the BLA-IPO’s Decision. Taiwan Kolin elevated the
case to the CA, but without injunctive relief, Kolin Electronics was able
to register the "KOLIN" trademark on November 23, 2003for its
products.6 Subsequently, the CA, on July 31, 2006, affirmed 7 the
Decision of the Director General.
In answer to respondent’s opposition in Inter Partes Case No. 14-
2006-00096, petitioner argued that it should be accorded the benefits
of a foreign-registered mark under Secs. 3 and 131.1 of Republic Act
No. 8293, otherwise known as the Intellectual Property Code of the
Philippines (IP Code);8 that it has already registered the "KOLIN" mark
in the People’s Republic of China, Malaysia and Vietnam, all of which
are parties to the Paris Convention for the Protection of Industrial
Property (Paris Convention) and the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS); and that benefits
accorded to a well-known mark should be accorded to petitioner. 9
Ruling of the BLA-IPO
By Decision10 dated August 16, 2007, the BLA-IPO denied petitioner’s
application disposing as follows:
In view of all the foregoing, the instant Opposition is as, it is hereby
SUSTAINED. Accordingly, application bearing Serial No. 4-1996-
106310 for the mark "KOLIN" filed in the name of TAIWAN KOLIN.,
LTD. on February 29, 1996 for goods falling under Class 09 of the
International Classification of Goods such as cassette recorder, VCD,
woofer, amplifiers, camcorders and other audio/video electronic
equipment, flat iron, vacuum cleaners, cordless handsets,
videophones, facsimile machines, teleprinters, cellular phones,
automatic goods vending machines and other electronic equipment
is hereby REJECTED.
Let the file wrapper of "KOLIN", subject of this case be forwarded to
the Bureau of Trademarks (BOT) for appropriate action in accordance
with this Decision.
SO ORDERED.
Citing Sec. 123(d) of the IP Code,11 the BLA-IPO held that a mark
cannot be registered if it is identical with a registered mark belonging
to a different proprietor in respect of the same or closely-related
goods. Accordingly, respondent, as the registered owner of the mark
"KOLIN" for goods falling under Class 9 of the NCL, should then be
protected against anyone who impinges on its right, including
petitioner who seeks to register an identical mark to be used on goods
also belonging to Class 9 of the NCL.12 The BLA-IPO also noted that
there was proof of actual confusion in the form of consumers writing
numerous e-mails to respondent asking for information, service, and
complaints about petitioner’s products.13
Petitioner moved for reconsideration but the same was denied on
January 26, 2009 for lack of merit.14 Thus, petitioner appealed the
above Decision to the Office of the Director General of the IPO.
Ruling of the IPO Director General
On November 23, 2011, the IPO Director General rendered a
Decision15 reversing that of the BLA-IPO in the following wise:
Wherefore, premises considered, the appeal is hereby GRANTED. The
Appellant’s Trademark Application No. 4-1996-106310 is hereby
GIVEN DUE COURSE subject to the use limitation or restriction for the
goods "television and DVD player". Let a copy of this Decision as well
as the trademark application and records be furnished and returned
to the Director of the Bureau of Legal Affairs for appropriate action.
Further, let the Director of the Bureau of Trademarks and the library
of the Documentation, Information and Technology Transfer Bureau
be furnished a copy of this Decision for information, guidance, and
records purposes.
SO ORDERED.
In so ruling, the IPO Director General ratiocinated that product
classification alone cannot serve as the decisive factor in the
resolution of whether or not the goods are related and that emphasis
154
should be on the similarity of the products involved and not on the
arbitrary classification or general description of their properties or
characteristics. As held, the mere fact that one person has adopted
and used a particular trademark for his goods does not prevent the
adoption and use of the same trademark by others on articles of a
different description.16
Aggrieved, respondent elevated the case to the CA.
Ruling of the Court of Appeals
In its assailed Decision, the CA found for Kolin Electronics, on the
strength of the following premises: (a) the mark sought to be
registered by Taiwan Kolin is confusingly similar to the one already
registered in favor of Kolin Electronics; (b) there are no other designs,
special shape or easily identifiable earmarks that would differentiate
the products of both competing companies; 17 and (c) the intertwined
use of television sets with amplifier, booster and voltage regulator
bolstered the fact that televisions can be considered as within the
normal expansion of Kolin Electronics, 18 and is thereby deemed
covered by its trademark as explicitly protected under Sec. 138 19 of
the IP Code.20 Resultantly, the CA granted respondent’s appeal thusly:
WHEREFORE, the appeal is GRANTED. The November 23, 2011
Decision of the Director General of the Intellectual Property Office in
Inter Partes Case No. 14-2006-0096 is REVERSED and SET ASIDE. The
September 17, 2007 Decision of the Bureau of Legal Affairs of the
same office is REINSTATED.
SO ORDERED.
Petitioner moved for reconsideration only to be denied by the CA
through its equally assailed November 6, 2013 Resolution. Hence, the
instant recourse.
The Issue
The primordial issue to be resolved boils down to whether or not
Tawiwan Kolin is entitled to its trademark registration of "KOLIN" over
its specific goods of television sets and DVD players. Petitioner
postulates, in the main, that its goods are not closely related to those
of Kolin Electronics. On the other hand, respondent hinges its case on
the CA’s findings that its and petitioner’s products are closely-related.
Thus, granting petitioner’s application for trademark registration,
according to respondent, would cause confusion as to the public.
The Court's Ruling
The petition is impressed with merit.
Identical marks may be registered for
products from the same classification
To bolster its opposition against petitioner’s application to register
trademark "KOLIN," respondent maintains that the element of mark
identity argues against approval of such application, quoting the BLA
IPO’s ruling in this regard:21
Indubitably, Respondent-Applicant’s [herein petitioner] mark is
identical to the registered mark of herein Opposer [herein
respondent] and the identical mark is used on goods belonging to
Class 9 to which Opposer’s goods are also classified. On this point
alone, Respondent-Applicant’s application should already be denied.
The argument is specious.
The parties admit that their respective sets of goods belong to Class
9 of the NCL, which includes the following: 22
Class 9
Scientific, nautical, surveying, photographic, cinematographic,
optical, weighing, measuring, signalling, checking (supervision), life-
saving and teaching apparatus and instruments; apparatus and
instruments for conducting, switching, transforming, accumulating,
regulating or controlling electricity; apparatus for recording,
transmission or reproduction of sound or images; magneticdata
carriers, recording discs; compact discs, DVDs and other digital
recording media; mechanisms for coin-operated apparatus; cash
registers, calculating machines, data processing equipment,
computers; computer software; fire-extinguishing apparatus.
But mere uniformity in categorization, by itself, does not
automatically preclude the registration of what appears to be an
identical mark, if that be the case. In fact, this Court, in a long line of
cases, has held that such circumstance does not necessarily result in
any trademark infringement. The survey of jurisprudence cited in
Mighty Corporation v. E. & J Gallo Winery23 is enlightening on this
point:
(a) in Acoje Mining Co., Inc. vs. Director of Patents, 24 we ordered the
approval of Acoje Mining’s application for registration of the
trademark LOTUS for its soy sauce even though Philippine Refining
Company had prior registration and use of such identical mark for its
edible oil which, like soy sauce, also belonged to Class 47;
(b) in Philippine Refining Co., Inc. vs. Ng Sam and Director of
Patents,25 we upheld the Patent Director’s registration of the same
trademark CAMIA for Ng Sam’s ham under Class 47, despite Philippine
Refining Company’s prior trademark registration and actual use of
such mark on its lard, butter, cooking oil (all of which belonged to
Class 47), abrasive detergents, polishing materials and soaps;
(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos
Lim Bun Liong,26 we dismissed Hickok’s petition to cancel private
respondent’s HICKOK trademark registration for its Marikina shoes as
against petitioner’s earlier registration of the same trademark for
handkerchiefs, briefs, belts and wallets.
Verily, whether or not the products covered by the trademark sought
to be registered by Taiwan Kolin, on the one hand, and those covered
by the prior issued certificate of registration in favor of Kolin
Electronics, on the other, fall under the same categories in the NCL is
not the sole and decisive factor in determining a possible violation of
Kolin Electronics’ intellectual property right should petitioner’s
application be granted.
It is hornbook doctrine, as held in the above-cited cases, that
emphasis should be on the similarity of the products involved and
not on the arbitrary classification or general description of their
properties or characteristics.
The mere fact that one person has adopted and used a trademark
on his goods would not, without more, prevent the adoption and
use of the same trademark by others on unrelated articles of a
different kind.27
The CA erred in denying petitioner’s registration application
Respondent next parlays the idea of relation between products as a
factor militating against petitioner’s application. Citing Esso Standard
Eastern, Inc. v. Court of Appeals,28 respondent argues that the goods
covered by petitioner’s application and those covered by its
registration are actually related belonging as they do to the same
class or have the same physical characteristics with reference to their
form, composition, texture, or quality, or if they serve the same
purpose. Respondent likewise draws parallelisms between the present
controversy and the following cases:29
155
(a) In Arce & Sons, Inc. vs. Selecta Biscuit Company, 30 biscuits were
held related to milk because they were both food products;
(b) In Chua Che vs. Phil. Patents Office,31 soap and perfume, lipstick
and nail polish are held to be similarly related because they are
common household items;
(c) In Ang vs. Teodoro,32 the trademark "Ang Tibay" for shoes and
slippers was disallowed to be used for shirts and pants because they
belong to the same general class of goods; and
(d) In Khe vs. Lever Bros. Co.,33 soap and pomade, although
noncompetitive, were held to be similar or belong to the same class,
since both are toilet articles.
Respondent avers that Kolin Electronics’ and Taiwan Kolin’s products
are closely-related not only because both fall under Class 9 of the NCL,
but mainly because they both relate to electronic products,
instruments, apparatus, or appliances.34 Pushing the point,
respondent would argue that Taiwan Kolin and Kolin Electronics’
goods are inherently similar in that they are all plugged into electric
sockets and perform a useful function.35 Furthermore, respondent
echoes the appellate court’s ratiocination in denying petitioner’s
application, viz:36
Significantly, Kolin Electronics’ goods (automatic voltage regulator;
converter; recharger; stereo booster; AC-DC regulated power supply;
step-down transformer; and PA amplified AC-DC) and Taiwan Kolin’s
television sets and DVD players are both classified under class 9 of the
NICE agreement. At first glance, it is also evident that all these goods
are generally described as electrical devices. x x x [T]he goods of both
Kolin Electronics and Taiwan Kolin will inevitably be introduced to the
public as "KOLIN" products and will be offered for sale in the same
channels of trade. Contrary to Taiwan Kolin’s claim, power supply as
well as audio and stereo equipment like booster and amplifier are not
only sold in hardware and electrical shops. These products are
commonly found in appliance stores alongside television sets and DVD
players. With the present trend in today’s entertainment of having a
home theater system, it is not unlikely to see a stereo booster,
amplifier and automatic voltage regulator displayed together with the
television sets and DVD players. With the intertwined use of these
products bearing the identical "KOLIN" mark, the ordinary intelligent
consumer would likely assume that they are produced by the same
manufacturer.
In sum, the intertwined use, the same classification of the products as
class 9 under the NICE Agreement, and the fact that they generally
flow through the same channel of trade clearly establish that Taiwan
Kolin’s television sets and DVD players are closely related to Kolin
Electronics’ goods. As correctly pointed out by the BLA-IPO, allowing
Taiwan Kolin’s registration would only confuse consumers as to the
origin of the products they intend to purchase. Accordingly, protection
should be afforded to Kolin Electronics, as the registered owner of the
"KOLIN" trademark.37(emphasis added)
The CA’s approach and reasoning to arrive at the assailed holding that
the approval of petitioner’s application is likely to cause confusion or
deceive fail to persuade.
a. The products covered by
petitioner’s application and
respondent’s registration are
unrelated
A certificate of trademark registration confers upon the trademark
owner the exclusive right to sue those who have adopted a similar
mark not only in connection with the goods or services specified in
the certificate, but also with those that are related thereto. 38
In resolving one of the pivotal issues in this case––whether or not the
products of the parties involved are related––the doctrine in Mighty
Corporation is authoritative. There, the Court held that the goods
should be tested against several factors before arriving at a sound
conclusion on the question of relatedness. Among these are:
(a) the business (and its location) to which the goods belong;
(b) the class of product to which the goods belong;
(c) the product’s quality, quantity, or size, including the nature of the
package, wrapper or container;
(d) the nature and cost of the articles;
(e) the descriptive properties, physical attributes or essential
characteristics with reference to their form, composition, texture or
quality;
(f) the purpose of the goods;
(g) whether the article is bought for immediate consumption, that is,
day-to-day household items;
(h) the fields of manufacture;
(i) the conditions under which the article is usually purchased; and
(j) the channels of trade through which the goods flow, how they are
distributed, marketed, displayed and sold. 39
As mentioned, the classification of the products under the NCL is
merely part and parcel of the factors to be considered in ascertaining
whether the goods are related.
It is not sufficient to state that the goods involved herein
are electronic products under Class 9 in order to establish
relatedness between the goods, for this only accounts for
one of many considerations enumerated in Mighty
Corporation. In this case, credence is accorded to
petitioner’s assertions that: 40
a. Taiwan Kolin’s goods are classified as home appliances as
opposed to Kolin Electronics’ goods which are power supply
and audio equipment accessories;
b. Taiwan Kolin’s television sets and DVD players perform
distinct function and purpose from Kolin Electronics’ power
supply and audio equipment; and
c. Taiwan Kolin sells and distributes its various home
appliance products on wholesale and to accredited dealers,
whereas Kolin Electronics’ goods are sold and flow through
electrical and hardware stores.
Clearly then, it was erroneous for respondent to assume over the CA
to conclude that all electronic products are related and that the
coverage of one electronic product necessarily precludes the
registration of a similar mark over another. In this digital age wherein
electronic products have not only diversified by leaps and bounds,
and are geared towards interoperability, it is difficult to assert readily,
as respondent simplistically did, that all devices that require plugging
into sockets are necessarily related goods.
It bears to stress at this point that the list of products included in Class
941 can be sub-categorized into five (5) classifications, namely: (1)
apparatus and instruments for scientific or research purposes, (2)
information technology and audiovisual equipment, (3) apparatus
156
and devices for controlling the distribution and use of electricity, (4)
optical apparatus and instruments, and (5) safety equipment.42 From
this sub-classification, it becomes apparent that petitioner’s
products, i.e., televisions and DVD players, belong to audio visiual
equipment, while that of respondent, consisting of automatic voltage
regulator, converter, recharger, stereo booster, AC-DC regulated
power supply, step-down transformer, and PA amplified AC-DC,
generally fall under devices for controlling the distribution and use of
electricity.
b. The ordinarily intelligent
buyer is not likely to be
confused
In trademark cases, particularly in ascertaining whether one
trademark is confusingly similar to another, no rigid set rules can
plausible be formulated. Each case must be decided on its merits,
with due regard to the goods or services involved, the usual
purchaser’s character and attitude, among others. In such cases, even
more than in any other litigation, precedent must be studied in the
light of the facts of a particular case. That is the reason why in
trademark cases, jurisprudential precedents should be applied only to
a case if they are specifically in point. 43 For a clearer perspective and
as matter of record, the following image on the left44 is the trademark
applied for by petitioner, while the image juxtaposed to its right 45 is
the trademark registered by respondent:
While both competing marks refer to the word "KOLIN" written in
upper case letters and in bold font, the Court at once notes the
distinct visual and aural differences between them: Kolin Electronics’
mark is italicized and colored black while that of Taiwan Kolin is white
in pantone red color background. The differing features between the
two, though they may appear minimal, are sufficient to distinguish
one brand from the other.
It cannot be stressed enough that the products involved in the case
at bar are, generally speaking, various kinds of electronic products.
These are not ordinary consumable household items, like catsup, soy
sauce or soap which are of minimal cost.46 The products of the
contending parties are relatively luxury items not easily considered
affordable. Accordingly, the casual buyer is predisposed to be more
cautious and discriminating in and would prefer to mull over his
purchase. Confusion and deception, then, is less likely.47
As further elucidated in Del Monte Corporation v. Court of
Appeals:48
x x x Among these, what essentially determines the
attitudes of the purchaser, specifically his inclination to be
cautious, is the cost of the goods. To be sure, a person who
buys a box of candies will not exercise as much care as one
who buys an expensive watch. As a general rule, an ordinary
buyer does not exercise as much prudence in buying an
article for which he pays a few centavos as he does in
purchasing a more valuable thing. Expensive and valuable
items are normally bought only after deliberate,
comparative and analytical investigation. But mass
products, low priced articles in wide use, and matters of
everyday purchase requiring frequent replacement are
bought by the casual consumer without great care x x x.
(emphasis added) Respondent has made much reliance on
Arce & Sons, Chua Che, Ang, and Khe, oblivious that they
involved common household items––i.e., biscuits and milk,
cosmetics, clothes, and toilet articles, respectively––
whereas the extant case involves luxury items not regularly
and inexpensively purchased by the consuming public. In
accord with common empirical experience, the useful lives
of televisions and DVD players last for about five (5) years,
minimum, making replacement purchases very infrequent.
The same goes true with converters and regulators that are
seldom replaced despite the acquisition of new equipment
to be plugged onto it. In addition, the amount the buyer
would be parting with cannot be deemed minimal
considering that the price of televisions or DVD players can
exceed today’s monthly minimum wage. In light of these
circumstances, it is then expected that the ordinary
intelligent buyer would be more discerning when it comes
to deciding which electronic product they are going to
purchase, and it is this standard which this Court applies
herein in determining the likelihood of confusion should
petitioner’s application be granted.
To be sure, the extant case is reminiscent of Emerald
Garment Manufacturing Corporation v. Court of
Appeals,49wherein the opposing trademarks are that of
Emerald Garment Manufacturing Corporation’s "Stylistic
Mr. Lee" and H.D. Lee’s "LEE." In the said case, the appellate
court affirmed the decision of the Director of Patents
denying Emerald Garment’s application for registration due
to confusing similarity with H.D. Lee’s trademark. This
Court, however, was of a different beat and ruled that there
is no confusing similarity between the marks, given that the
products covered by the trademark, i.e., jeans, were, at that
time, considered pricey, typically purchased by intelligent
buyers familiar with the products and are more
circumspect, and, therefore, would not easily be deceived.
As held:
Finally, in line with the foregoing discussions, more credit
should be given to the "ordinary purchaser." Cast in this
particular controversy, the ordinary purchaser is not the
"completely unwary consumer" but is the "ordinarily
intelligent buyer" considering the type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok 50 is
better suited to the present case. There, the "ordinary
purchaser" was defined as one "accustomed to buy, and
therefore to some extent familiar with, the goods in
question. The test of fraudulent simulation is to be found in
the likelihood of the deception of some persons in some
measure acquainted with an established design and
desirous of purchasing the commodity with which that
design has been associated. The test is not found in the
deception, or the possibility of deception, of the person
who knows nothing about the design which has been
counterfeited, and who must be indifferent between that
157
 and the other. The simulation, in order to be objectionable,
must be such as appears likely to mislead the ordinary
intelligent buyer who has a need to supply and is familiar
with the article that he seeks to purchase." 51 (emphasis
added)

Consistent with the above ruling, this Court finds that the differences
between the two marks, subtle as they may be, are sufficient to
prevent any confusion that may ensue should petitioner’s trademark
application be granted.

As held in Esso Standard Eastern, Inc.: 52

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."
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."
All told, We are convinced that petitioner's trademark registration not
only covers unrelated good, but is also incapable of deceiving the
ordinary intelligent buyer. The ordinary purchaser must be thought of
as having, and credited with, at least a modicum of intelligence to be
able to see the differences between the two trademarks in
question.53
Questions of fact may still be entertained
On a final note, the policy according factual findings of courts a quo
great respect, if not finality, is not binding where they have
overlooked, misapprehended, or misapplied any fact or circumstance
of weight and substances. 54 So it must be here; the nature of the
products involved materially affects the outcome of the instant case.
A reversal of the appellate Court's Decision is then in order.
WHEREFORE, in view of the foregoing, the petition is hereby
GRANTED. The Decision and the Resolution of the Court of Appeals in
CA-G.R. SP No. 122565, dated April 30, 2013 and November 6, 2013,
respectively, are hereby REVERSED and SET ASIDE. Accordingly, the
Decision of the Intellectual Property Office Director General in Inter
Partes Case No. 14-2006-00096, dated November 23, 2011, is hereby
REINSTATED.
SO ORDERED.
158

Unfair Competition
FIRST DIVISION
G.R. No. L-78325 January 25, 1990
DEL MONTE CORPORATION and PHILIPPINE PACKING
CORPORATION, petitioners,
vs.
COURT OF APPEALS and SUNSHINE SAUCE MANUFACTURING
INDUSTRIES, respondents.
Bito, Misa & Lozada for petitioners.
Reynaldo F. Singson for private respondent.
CRUZ, J.:
The petitioners are questioning the decision of the respondent court
upholding the dismissal by the trial court of their complaint against
the private respondent for infringement of trademark and unfair
competition.
Petitioner Del Monte Corporation is a foreign company organized
under the laws of the United States and not engaged in business in
the Philippines. Both the Philippines and the United States are
signatories to the Convention of Paris of September 27, 1965, which
grants to the nationals of the parties rights and advantages which
their own nationals enjoy for the repression of acts of infringement
and unfair competition.
Petitioner Philippine Packing Corporation (Philpack) is a domestic
corporation duly organized under the laws of the Philippines. On April
11, 1969, Del Monte granted Philpack the right to manufacture,
distribute and sell in the Philippines various agricultural products,
including catsup, under the Del Monte trademark and logo.
On October 27,1965, Del Monte authorized Philpack to register with
the Philippine Patent Office the Del Monte catsup bottle
configuration, for which it was granted Certificate of Trademark
Registration No. SR-913 by the Philippine Patent Office under the
Supplemental Register. 1 On November 20, 1972, Del Monte also
obtained two registration certificates for its trademark "DEL MONTE"
and its logo. 2
Respondent Sunshine Sauce Manufacturing Industries was issued a
Certificate of Registration by the Bureau of Domestic Trade on April
17,1980, to engage in the manufacture, packing, distribution and sale
of various kinds of sauce, identified by the logo Sunshine Fruit
Catsup.3
This logo was registered in the Supplemental Register on September
20, 1983. 4
The product itself was contained in various kinds of bottles,
including the Del Monte bottle, which the private respondent bought
from the junk shops for recycling.
Having received reports that the private respondent was using its
exclusively designed bottles and a logo confusingly similar to Del
Monte's, Philpack warned it to desist from doing so on pain of legal
action. Thereafter, claiming that the demand had been ignored,
Philpack and Del Monte filed a complaint against the private
respondent for infringement of trademark and unfair competition,
with a prayer for damages and the issuance of a writ of preliminary
injunction. 5
In its answer, Sunshine alleged that it had long ceased to use the Del
Monte bottle and that its logo was substantially different from the
Del Monte logo and would not confuse the buying public to the
detriment of the petitioners. 6
After trial, the Regional Trial Court of Makati dismissed the complaint.
It held that there were substantial differences between the logos or
trademarks of the parties; that the defendant had ceased using the
petitioners' bottles; and that in any case the defendant became the
owner of the said bottles upon its purchase thereof from the junk
yards. Furthermore, the complainants had failed to establish the
defendant's malice or bad faith, which was an essential element of
infringement of trademark or unfair competition. 7
This decision was affirmed in toto by the respondent court, which is
now faulted in this petition for certiorari under Rule 45 of the Rules
of Court.
Section 22 of R.A. No. 166, otherwise known as the Trademark Law,
provides in part as follows:
Sec. 22. Infringement, what constitutes. — Any person who shall use,
without the consent of the registrant, any reproduction, counterfeit,
copy or colorable imitation of any registered mark or trade-name in
connection with the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely
to cause confusion or mistake or to deceive purchasers or others as
to the source or origin of such goods or services or identity of such
business; or reproduce, counterfeit copy or colorably imitate any such
mark or trade name and apply such reproduction, counterfeit copy or
colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in
connection with such goods, business or services, shall be liable to a
civil action by the registrant for any or all of the remedies herein
provided.
Sec. 29 of the same law states as follows:
Sec. 29. Unfair competition, rights and remedies. — A person who
has identified in the mind of the public the goods he manufactures or
deals in, his business or services from those of others, whether or not
a mark or tradename is employed, has a property right in the goodwill
of the said goods, business or services so identified, which will be
protected in the same manner as other property rights. Such a person
shall have the remedies provided in section twenty- three, Chapter V
hereof.
Any person who shall employ deception or any other means contrary
to good faith by which he shall pass off the goods manufactured by
him or in which he deals, or his business, or services for those of the
one having established such goodwill, or who shall commit any acts
calculated to produce said result, shall be guilty of unfair competition,
and shall be subject to an action therefor.
In particular, and without in any way limiting the scope of unfair
competition, the following shall be deemed guilty of unfair
competition:
(a) Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as to
the goods themselves or in the wrapping of the packages in which
they are contained, or the devices or words thereon, or in any other
feature of their appearance, which would likely influence purchasers
to believe that the goods offered are those of a manufacturer or
dealer other than the actual manufacturer or dealer, or who
otherwise clothes the goods with such appearance as shall deceive
the public and defraud another of his legitimate trade, or any
subsequent vendor of such goods or any agent of any vendor engaged
in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs ally
other means calculated to induce the false belief that such person is
offering the services of another who has identified such services in
the mind of the public; or
159
(c) Any person who shall make any false statement in the course of
trade or who shall commit any other act contrary to good faith of a
nature calculated to discredit the goods, business or services of
another.
To arrive at a proper resolution of this case, it is important to bear in
mind the following distinctions between infringement of trademark
and unfair competition.
(1) Infringement of trademark is the unauthorized use of a
trademark, whereas unfair competition is the passing off of one's
goods as those of another.
(2) In infringement of trademark fraudulent intent is unnecessary
whereas in unfair competition fraudulent intent is essential.
(3) In infringement of trademark the prior registration of the
trademark is a prerequisite to the action, whereas in unfair
competition registration is not necessary. 8
In the challenged decision, the respondent court cited the following
test laid down by this Court in a number of cases:
In determining whether two trademarks are confusingly similar, the
two marks in their entirety as they appear in the respective labels
must be considered in relation to the goods to which they are
attached; the discerning eye of the observer must focus not only on
the predorninant words but also on the other features appearing on
both labels. 9
and applying the same, held that there was no colorable imitation of
the petitioners' trademark and logo by the private respondent. The
respondent court agreed with the findings of the trial court that:
In order to resolve the said issue, the Court now attempts to make a
comparison of the two products, to wit:
1. As to the shape of label or make:
Del Monte: Semi-rectangular with a crown or tomato shape design
on top of the rectangle.
Sunshine: Regular rectangle.
2. As to brand printed on label:
Del Monte: Tomato catsup mark.
Sunshine: Fruit catsup.
3. As to the words or lettering on label or mark:
Del Monte: Clearly indicated words packed by Sysu International,
Inc., Q.C., Philippines.
Sunshine: Sunshine fruit catsup is clearly indicated "made in the
Philippines by Sunshine Sauce Manufacturing Industries" No. 1 Del
Monte Avenue, Malabon, Metro Manila.
4. As to color of logo:
Del Monte: Combination of yellow and dark red, with words "Del
Monte Quality" in white.
Sunshine: White, light green and light red, with words "Sunshine
Brand" in yellow.
5. As to shape of logo:
Del Monte: In the shape of a tomato.
Sunshine: Entirely different in shape.
6. As to label below the cap:
Del Monte: Seal covering the cap down to the neck of the bottle,
with picture of tomatoes with words "made from real tomatoes."
Sunshine: There is a label below the cap which says "Sunshine
Brand."
7. As to the color of the products:
Del Monte: Darker red.
Sunshine: Lighter than Del Monte.
While the Court does recognize these distinctions, it does not agree
with the conclusion that there was no infringement or unfair
competition. It seems to us that the lower courts have been so pre-
occupied with the details that they have not seen the total picture.
It has been correctly held that side-by-side comparison is not the final
test of similarity. 10 Such comparison requires a careful scrutiny to
determine in what points the labels of the products differ, as was
done by the trial judge. The ordinary buyer does not usually make
such scrutiny nor does he usually have the time to do so. The
average shopper is usually in a hurry and does not inspect every
product on the shelf as if he were browsing in a library. Where the
housewife has to return home as soon as possible to her baby or the
working woman has to make quick purchases during her off hours,
she is apt to be confused by similar labels even if they do have
minute differences. The male shopper is worse as he usually does
not bother about such distinctions.
The question is not whether the two articles are distinguishable by
their label when set side by side but whether the general confusion
made by the article upon the eye of the casual purchaser who is
unsuspicious and off his guard, is such as to likely result in his
confounding it with the original. 11 As observed in several cases, the
general impression of the ordinary purchaser, buying under the
normally prevalent conditions in trade and giving the attention such
purchasers usually give in buying that class of goods is the
touchstone. 12
It has been held that in making purchases, the consumer must
depend upon his recollection of the appearance of the product
which he intends to purchase. 13 The buyer having in mind the
mark/label of the respondent must rely upon his memory of the
petitioner's mark. 14 Unlike the judge who has ample time to
minutely examine the labels in question in the comfort of his sala,
the ordinary shopper does not enjoy the same opportunity.
A number of courts have held that to determine whether a trademark
has been infringed, we must consider the mark as a whole and not as
dissected. If the buyer is deceived, it is attributable to the marks as a
totality, not usually to any part of it. 15 The court therefore should be
guided by its first impression, 16 for a buyer acts quickly and is
governed by a casual glance, the value of which may be dissipated as
soon as the court assumes to analyze carefully the respective features
of the mark. 17
It has also been held that it is not the function of the court in cases of
infringement and unfair competition to educate purchasers but
rather to take their carelessness for granted, and to be ever conscious
of the fact that marks need not be identical. A confusing similarity will
justify the intervention of equity. 18 The judge must also be aware of
the fact that usually a defendant in cases of infringement does not
normally copy but makes only colorable changes. 19Well has it been
said that the most successful form of copying is to employ enough
points of similarity to confuse the public with enough points of
difference to confuse the courts. 20
We also note that the respondent court failed to take into
consideration several factors which should have affected its
conclusion, to wit: age, training and education of the usual purchaser,
the nature and cost of the article, whether the article is bought for
immediate consumption and also the conditions under which it is
160
usually purchased . 21Among these, what essentially determines the
attitude of the purchaser, specifically his inclination to be cautious, is
the cost of the goods. To be sure, a person who buys a box of candies
will not exercise as much care as one who buys an expensive watch.
As a general rule, an ordinary buyer does not exercise as much
prudence in buying an article for which he pays a few centavos as he
does in purchasing a more valuable thing. 22 Expensive and valuable
items are normally bought only after deliberate, comparative and
analytical investigation. But mass products, low priced articles in wide
use, and matters of everyday purchase requiring frequent
replacement are bought by the casual consumer without great
care. 23 In this latter category is catsup.
IN THIS CASE;
At that, even if the labels were analyzed together it is not difficult
to see that the Sunshine label is a colorable imitation of the Del
Monte trademark. The predominant colors used in the Del Monte
label are green and red-orange, the same with Sunshine. The word
"catsup" in both bottles is printed in white and the style of the
print/letter is the same. Although the logo of Sunshine is not a
tomato, the figure nevertheless approximates that of a tomato.
As previously stated, the person who infringes a trade mark does not
normally copy out but only makes colorable changes, employing
enough points of similarity to confuse the public with enough points
of differences to confuse the courts. What is undeniable is the fact
that when a manufacturer prepares to package his product, he has
before him a boundless choice of words, phrases, colors and
symbols sufficient to distinguish his product from the others. When
as in this case, Sunshine chose, without a reasonable explanation,
to use the same colors and letters as those used by Del Monte
though the field of its selection was so broad, the inevitable
conclusion is that it was done deliberately to deceive .24
It has been aptly observed that the ultimate ratio in cases of grave
doubt is the rule that as between a newcomer who by the confusion
has nothing to lose and everything to gain and one who by honest
dealing has already achieved favor with the public, any doubt should
be resolved against the newcomer inasmuch as the field from which
he can select a desirable trademark to indicate the origin of his
product is obviously a large one. 25
Coming now to the second issue, we find that the private respondent
is not guilty of infringement for having used the Del Monte bottle. The
reason is that the configuration of the said bottle was merely
registered in the Supplemental Register. In the case of Lorenzana v.
Macagba, 26 we declared that:
(1) Registration in the Principal Register gives rise to a presumption of
the validity of the registration, the registrant's ownership of the mark
and his right to the exclusive use thereof. There is no such
presumption in the registration in the Supplemental Register.
(2) Registration in the Principal Register is limited to the actual owner
of the trademark and proceedings therein on the issue of ownership
which may be contested through opposition or interference
proceedings or, after registration, in a petition for cancellation.
Registration in the Principal Register is constructive notice of the
registrant's claim of ownership, while registration in the
Supplemental Register is merely proof of actual use of the trademark
and notice that the registrant has used or appropriated it. It is not
subject to opposition although it may be cancelled after the issuance.
Corollarily, registration in the Principal Register is a basis for an action
for infringement while registration in the Supplemental Register is
not.
(3) In applications for registration in the Principal Register, publication
of the application is necessary. This is not so in applications for
registrations in the Supplemental Register.
It can be inferred from the foregoing that although Del Monte has
actual use of the bottle's configuration, the petitioners cannot claim
exclusive use thereof because it has not been registered in the
Principal Register. However, we find that Sunshine, despite the many
choices available to it and notwithstanding that the caution "Del
Monte Corporation, Not to be Refilled" was embossed on the bottle,
still opted to use the petitioners' bottle to market a product which
Philpack also produces. This clearly shows the private respondent's
bad faith and its intention to capitalize on the latter's reputation and
goodwill and pass off its own product as that of Del Monte.
The Court observes that the reasons given by the respondent court in
resolving the case in favor of Sunshine are untenable. First, it declared
that the registration of the Sunshine label belied the company's
malicious intent to imitate petitioner's product. Second, it held that
the Sunshine label was not improper because the Bureau of Patent
presumably considered other trademarks before approving it. Third,
it cited the case of Shell Co. v. Insular Petroleum, 27 where this Court
declared that selling oil in containers of another with markings
erased, without intent to deceive, was not unfair competition.
Regarding the fact of registration, it is to be noted that the Sunshine
label was registered not in the Principal Register but only in the
Supplemental Register where the presumption of the validity of the
trademark, the registrant's ownership of the mark and his right to its
exclusive use are all absent.
Anent the assumption that the Bureau of Patent had considered other
existing patents, it is reiterated that since registration was only in the
Supplemental Register, this did not vest the registrant with the
exclusive right to use the label nor did it give rise to the presumption
of the validity of the registration.
On the argument that no unfair competition was committed, the Shell
Case is not on all fours with the case at bar because:
(1) In Shell, the absence of intent to deceive was supported by the
fact that the respondent therein, before marketing its product, totally
obliterated and erased the brands/mark of the different companies
stenciled on the containers thereof, except for a single isolated
transaction. The respondent in the present case made no similar
effort.
(2) In Shell, what was involved was a single isolated transaction. Of
the many drums used, there was only one container where the Shell
label was not erased, while in the case at hand, the respondent
admitted that it made use of several Del Monte bottles and without
obliterating the embossed warning.
(3) In Shell, the product of respondent was sold to dealers, not to
ultimate consumers. As a general rule, dealers are well acquainted
with the manufacturer from whom they make their purchases and
since they are more experienced, they cannot be so easily deceived
like the inexperienced public. There may well be similarities and
imitations which deceive all, but generally the interests of the dealers
are not regarded with the same solicitude as are the interests of the
ordinary consumer. For it is the form in which the wares come to the
final buyer that is of significance. 28
As Sunshine's label is an infringement of the Del Monte's trademark,
law and equity call for the cancellation of the private respondent's
registration and withdrawal of all its products bearing the
questioned label from the market. With regard to the use of Del
Monte's bottle, the same constitutes unfair competition; hence, the
161
respondent should be permanently enjoined from the use of such
bottles.
The court must rule, however, that the damage prayed for cannot be
granted because the petitioner has not presented evidence to prove
the amount thereof. Section 23 of R.A. No. 166 provides:
Sec. 23. Actions and damages and injunction for infringement. — Any
person entitled to the exclusive use of a registered mark or trade
name may recover damages in a civil action from any person who
infringes his rights, and the measure of the damages suffered shall be
either the reasonable profit which the complaining party would have
made, had the defendant not infringed his said 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 the court may award as damages 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 cases where actual intent to mislead the public or to defraud
the complaining party shall be shown, in the discretion of the court,
the damages may be doubled.
The complaining party, upon proper showing may also be granted
injunction.1âwphi1
Fortunately for the petitioners, they may still find some small comfort
in Art. 2222 of the Civil Code, which provides:
Art. 2222. The court may award nominal damages in every obligation
arising from any source enumerated in Art. 1157, or in every case
where any property right has been invaded.
Accordingly, the Court can only award to the petitioners, as it hereby
does award, nominal damages in the amount of Pl,000.00.
WHEREFORE, the petition is GRANTED. The decision of the Court of
Appeals dated December 24, 1986 and the Resolution dated April
27,1987, are REVERSED and SET ASIDE and a new judgment is hereby
rendered:
(1) Canceling the private respondent's Certificate of Register No. SR-
6310 and permanently enjoining the private respondent from using a
label similar to that of the petitioners.
(2) Prohibiting the private respondent from using the empty bottles
of the petitioners as containers for its own products.
(3) Ordering the private respondent to pay the petitioners nominal
damages in the amount of Pl,000.00, and the costs of the suit.
SO ORDERED.

162

SECOND DIVISION
G.R. No. 154491 November 14, 2008
COCA-COLA BOTTLERS, PHILS., INC. (CCBPI), Naga Plant, petitioner,
vs.
QUINTIN J. GOMEZ, a.k.a. "KIT" GOMEZ and DANILO E. GALICIA,
a.k.a. "DANNY GALICIA", respondents.
DECISION
BRION, J.:
Is the hoarding of a competitor's product containers punishable as
unfair competition under the Intellectual Property Code (IP Code,
Republic Act No. 8293) that would entitle the aggrieved party to a
search warrant against the hoarder? This is the issue we grapple with
in this petition for review on certiorari involving two rival
multinational softdrink giants; petitioner Coca-Cola Bottlers, Phils.,
Inc. (Coca-Cola) accuses Pepsi Cola Products Phils., Inc. (Pepsi),
represented by the respondents, of hoarding empty Coke bottles in
bad faith to discredit its business and to sabotage its operation in
Bicolandia.
BACKGROUND
The facts, as culled from the records, are summarized below.
On July 2, 2001, Coca-Cola applied for a search warrant against Pepsi
for hoarding Coke empty bottles in Pepsi's yard in Concepcion
Grande, Naga City, an act allegedly penalized as unfair competition
under the IP Code. Coca-Cola claimed that the bottles must be
confiscated to preclude their illegal use, destruction or concealment
by the respondents.1 In support of the application, Coca-Cola
submitted the sworn statements of three witnesses:
1. Naga plant representative Arnel John Ponce said he was
informed that one of their plant security guards had gained
access into the Pepsi compound and had seen empty Coke
bottles;
2. acting plant security officer Ylano A. Regaspi said he
investigated reports that Pepsi was hoarding large
quantities of Coke bottles by requesting their security
guard to enter the Pepsi plant and he was informed by the
security guard that Pepsi hoarded several Coke bottles;
3. security guard Edwin Lirio stated that he entered Pepsi's
yard on July 2, 2001 at 4 p.m. and saw empty Coke bottles
inside Pepsi shells or cases.2
Municipal Trial Court (MTC) Executive Judge Julian C. Ocampo of Naga
City, after taking the joint deposition of the witnesses, issued Search
Warrant No. 2001-013 to seize 2,500 Litro and 3,000 eight and 12
ounces empty Coke bottles at Pepsi's Naga yard for violation of
Section 168.3 (c) of the IP Code. 4 The local police seized and brought
to the MTC's custody 2,464 Litro and 4,036 eight and 12 ounces empty
Coke bottles, 205 Pepsi shells for Litro, and 168 Pepsi shells for
smaller (eight and 12 ounces) empty Coke bottles, and later filed with
the Office of the City Prosecutor of Naga a complaint against two
Pepsi officers for violation of Section 168.3 (c) in relation to Section
170 of the IP Code.5 The named respondents, also the respondents in
this petition, were Pepsi regional sales manager Danilo E.
Galicia (Galicia) and its Naga general manager Quintin J. Gomez,
Jr. (Gomez).
In their counter-affidavits, Galicia and Gomez claimed that the bottles
came from various Pepsi retailers and wholesalers who included them
in their return to make up for shortages of empty Pepsi bottles; they
had no way of ascertaining beforehand the return of empty Coke
bottles as they simply received what had been delivered; the
presence of the bottles in their yard was not intentional nor
deliberate; Ponce and Regaspi's statements are hearsay as they had
no personal knowledge of the alleged crime; there is no mention in
the IP Code of the crime of possession of empty bottles; and that the
ambiguity of the law, which has a penal nature, must be construed
strictly against the State and liberally in their favor. Pepsi security
guards Eduardo E. Miral and Rene Acebuche executed a joint affidavit
stating that per their logbook, Lirio did not visit or enter the plant
premises in the afternoon of July 2, 2001.
The respondents also filed motions for the return of their shells and
to quash the search warrant. They contended that no probable cause
existed to justify the issuance of the search warrant; the facts charged
do not constitute an offense; and their Naga plant was in urgent need
of the shells.
Coca-Cola opposed the motions as the shells were part of the
evidence of the crime, arguing that Pepsi used the shells in hoarding
the bottles. It insisted that the issuance of warrant was based on
probable cause for unfair competition under the IP Code, and that the
respondents violated R.A. 623, the law regulating the use of stamped
or marked bottles, boxes, and other similar containers.
THE MTC RULINGS
On September 19, 2001, the MTC issued the first assailed
order6 denying the twin motions. It explained there was an
exhaustive examination of the applicant and its witnesses through
searching questions and that the Pepsi shells are prima facie evidence
that the bottles were placed there by the respondents.
In their motion for reconsideration, the respondents argued for the
quashal of the warrant as the MTC did not conduct a probing and
exhaustive examination; the applicant and its witnesses had no
personal knowledge of facts surrounding the hoarding; the court
failed to order the return of the "borrowed" shells; there was no
crime involved; the warrant was issued based on hearsay evidence;
and the seizure of the shells was illegal because they were not
included in the warrant.
On November 14, 2001, the MTC denied the motion for
reconsideration in the second assailed order,7 explaining that the
issue of whether there was unfair competition can only be resolved
during trial.
The respondents responded by filing a petition for certiorari under
Rule 65 of the Revised Rules of Court before the Regional Trial Court
(RTC) of Naga City on the ground that the subject search warrant was
issued without probable cause and that the empty shells were neither
mentioned in the warrant nor the objects of the perceived crime.
THE RTC RULINGS
On May 8, 2002, the RTC voided the warrant for lack of probable
cause and the non-commission of the crime of unfair competition,
even as it implied that other laws may have been violated by the
respondents. The RTC, though, found no grave abuse of discretion on
the part of the issuing MTC judge.8 Thus,
Accordingly, as prayed for, Search Warrant No. 2001-02 issued by the
Honorable Judge Julian C. Ocampo III on July 2, 2001 is ANNULLED and
SET ASIDE. The Orders issued by the Pairing Judge of Br. 1, MTCC of
Naga City dated September 19, 2001 and November 14, 2001 are also
declared VOID and SET ASIDE. The City Prosecutor of Naga City and
SPO1 Ernesto Paredes are directed to return to the Petitioner the
properties seized by virtue of Search Warrant No. 2001-02. No costs.
SO ORDERED.9
163
In a motion for reconsideration, which the RTC denied on July 12,
2002, the petitioner stressed that the decision of the RTC was
contradictory because it absolved Judge Ocampo of grave abuse of
discretion in issuing the search warrant, but at the same time nullified
the issued warrant. The MTC should have dismissed the petition when
it found out that Judge Ocampo did not commit any grave abuse of
discretion.
Bypassing the Court of Appeals, the petitioner asks us through this
petition for review on certiorari under Rule 45 of the Rules of Court
to reverse the decision of the RTC. Essentially, the petition raises
questions against the RTC's nullification of the warrant when it found
no grave abuse of discretion committed by the issuing judge.
THE PETITION and
THE PARTIES' POSITIONS
In its petition, the petitioner insists the RTC should have dismissed the
respondents' petition for certiorari because it found no grave abuse
of discretion by the MTC in issuing the search warrant. The petitioner
further argues that the IP Code was enacted into law to remedy
various forms of unfair competition accompanying globalization as
well as to replace the inutile provision of unfair competition under
Article 189 of the Revised Penal Code. Section 168.3(c) of the IP Code
does not limit the scope of protection on the particular acts
enumerated as it expands the meaning of unfair competition to
include "other acts contrary to good faith of a nature calculated to
discredit the goods, business or services of another." The inherent
element of unfair competition is fraud or deceit, and that hoarding of
large quantities of a competitor's empty bottles is necessarily
characterized by bad faith. It claims that its Bicol bottling operation
was prejudiced by the respondents' hoarding and destruction of its
empty bottles.
The petitioner also argues that the quashal of the search warrant was
improper because it complied with all the essential requisites of a
valid warrant. The empty bottles were concealed in Pepsi shells to
prevent discovery while they were systematically being destroyed to
hamper the petitioner's bottling operation and to undermine the
capability of its bottling operations in Bicol.
The respondents counter-argue that although Judge Ocampo
conducted his own examination, he gravely erred and abused his
discretion when he ignored the rule on the need of sufficient evidence
to establish probable cause; satisfactory and convincing evidence is
essential to hold them guilty of unfair competition; the hoarding of
empty Coke bottles did not cause actual or probable deception and
confusion on the part of the general public; the alleged criminal acts
do not show conduct aimed at deceiving the public; there was no
attempt to use the empty bottles or pass them off as the respondents'
goods.
The respondents also argue that the IP Code does not criminalize
bottle hoarding, as the acts penalized must always involve fraud and
deceit. The hoarding does not make them liable for unfair
competition as there was no deception or fraud on the end-users.
THE ISSUE
Based on the parties' positions, the basic issue submitted to us for
resolution is whether the Naga MTC was correct in issuing Search
Warrant No. 2001-01 for the seizure of the empty Coke bottles from
Pepsi's yard for probable violation of Section 168.3 (c) of the IP Code.
This basic issue involves two sub-issues, namely, the substantive issue
of whether the application for search warrant effectively charged an
offense, i.e., a violation of Section 168.3 (c) of the IP Code; and the
procedural issue of whether the MTC observed the procedures
required by the Rules of Court in the issuance of search warrants.
OUR RULING
We resolve to deny the petition for lack of merit.
We clarify at the outset that while we agree with the RTC decision,
our agreement is more in the result than in the reasons that
supported it. The decision is correct in nullifying the search warrant
because it was issued on an invalid substantive basis - the acts
imputed on the respondents do not violate Section 168.3 (c) of the IP
Code. For this reason, we deny the present petition.
The issuance of a search warrant10 against a personal property11 is
governed by Rule 126 of the Revised Rules of Court whose relevant
sections state:
Section 4. Requisites for issuing search warrant. - A search warrant
shall not issue except upon probable cause in connection with one
specific offense to be determined personally by the judge after
examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be
searched and the things to be seized which may be anywhere in the
Philippines.
Section 5. Examination of complainant; record. - The judge must,
before issuing the warrant, personally examine in the form of
searching questions and answers, in writing and under oath, the
complainant and the witnesseshe may produce on facts personally
known to them and attach to the record their sworn statements
together with the affidavits submitted.
Section 6. Issuance and form of search warrant. - If the judge is
satisfied of the existence of facts upon which the application is based
or that there is probable cause to believe that they exist, he shall issue
the warrant, which must be substantially in the form prescribed by
these Rules. [Emphasis supplied]
To paraphrase this rule, a search warrant may be issued only if there
is probable cause in connection with a specific offense alleged in an
application based on the personal knowledge of the applicant and his
or her witnesses. This is the substantive requirement in the issuance
of a search warrant. Procedurally, the determination of probable
cause is a personal task of the judge before whom the application for
search warrant is filed, as he has to examine under oath or affirmation
the applicant and his or her witnesses in the form of "searching
questions and answers" in writing and under oath. The warrant, if
issued, must particularly describe the place to be searched and the
things to be seized.
We paraphrase these requirements to stress that they have
substantive and procedural aspects. Apparently, the RTC recognized
this dual nature of the requirements and, hence, treated them
separately; it approved of the way the MTC handled the procedural
aspects of the issuance of the search warrant but found its action on
the substantive aspect wanting. It therefore resolved to nullify the
warrant, without however expressly declaring that the MTC gravely
abused its discretion when it issued the warrant applied for. The RTC's
error, however, is in the form rather than the substance of the
decision as the nullification of the issued warrant for the reason the
RTC gave was equivalent to the declaration that grave abuse of
discretion was committed. In fact, we so rule as the discussions below
will show.
164
Jurisprudence teaches us that probable cause, as a condition for the
issuance of a search warrant, is such reasons supported by facts and
circumstances as will warrant a cautious man in the belief that his
action and the means taken in prosecuting it are legally just and
proper. Probable cause requires facts and circumstances that would
lead a reasonably prudent man to believe that an offense has been
committed and the objects sought in connection with that offense are
in the place to be searched.12 Implicit in this statement is the
recognition that an underlying offense must, in the first place, exist.
In other words, the acts alleged, taken together, must constitute an
offense and that these acts are imputable to an offender in relation
with whom a search warrant is applied for.
ISSUE:
In the context of the present case, the question is whether the act
charged - alleged to be hoarding of empty Coke bottles - constitutes
an offense under Section 168.3 (c) of the IP Code.
Section 168 in its entirety states:
SECTION 168. Unfair Competition, Rights, Regulation and
Remedies.-
168.1. A person who has identified in the mind of the public the goods
he manufactures or deals in, his business or services from those of
others, whether or not a registered mark is employed, has a property
right in the goodwill of the said goods, business or services so
identified, which will be protected in the same manner as other
property rights.
168.2. Any person who shall employ deception or any other means
contrary to good faith by which he shall pass off the goods
manufactured by him or in which he deals, or his business, or services
for those of the one having established such goodwill, or who shall
commit any acts calculated to produce said result, shall be guilty of
unfair competition, and shall be subject to an action therefor.
168.3. In particular, and without in any way limiting the scope of
protection against unfair competition, the following shall be deemed
guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general
appearance of goods of another manufacturer or dealer, either as to
the goods themselves or in the wrapping of the packages in which
they are contained, or the devices or words thereon, or in any other
feature of their appearance, which would be likely to influence
purchasers to believe that the goods offered are those of a
manufacturer or dealer, other than the actual manufacturer or
dealer, or who otherwise clothes the goods with such appearance as
shall deceive the public and defraud another of his legitimate trade,
or any subsequent vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any
other means calculated to induce the false belief that such person is
offering the services of another who has identified such services in
the mind of the public; or
(c) Any person who shall make any false statement in the course of
trade or who shall commit any other act contrary to good faith of a
nature calculated to discredit the goods, business or services of
another.
168.4. The remedies provided by Sections 156, 157 and 161 shall
apply mutatis mutandis. (Sec. 29,R.A. No. 166a)
The petitioner theorizes that the above section does not limit the
scope of protection on the particular acts enumerated as it expands
the meaning of unfair competition to include "other acts contrary to
good faith of a nature calculated to discredit the goods, business or
services of another." Allegedly, the respondents' hoarding of Coca
Cola empty bottles is one such act.
We do not agree with the petitioner's expansive interpretation of
Section 168.3 (c).
"Unfair competition," previously defined in Philippine jurisprudence
in relation with R.A. No. 166 and Articles 188 and 189 of the Revised
Penal Code, is now covered by Section 168 of the IP Code as this Code
has expressly repealed R.A. No. 165 and R.A. No. 166, and Articles 188
and 189 of the Revised Penal Code.
Articles 168.1 and 168.2, as quoted above, provide the concept and
general rule on the definition of unfair competition.
The law does not thereby cover every unfair act committed in the
course of business; it covers only acts characterized by "deception or
any other means contrary to good faith" in the passing off of goods
and services as those of another who has established goodwill in
relation with these goods or services, or any other act calculated to
produce the same result.
What unfair competition is, is further particularized under Section
168.3 when it provides specifics of what unfair competition is
"without in any way limiting the scope of protection against unfair
competition." Part of these particulars is provided under Section
168.3(c) which provides the general "catch-all" phrase that the
petitioner cites. Under this phrase, a person shall be guilty of unfair
competition "who shall commit any other act contrary to good faith
of a nature calculated to discredit the goods, business or services of
another."
From jurisprudence, unfair competition has been defined as the
passing off (or palming off) or attempting to pass off upon the public
the goods or business of one person as the goods or business of
another with the end and probable effect of deceiving the public.
It formulated the "true test" of unfair competition: whether the acts
of defendant are such as are calculated to deceive the ordinary
buyer making his purchases under the ordinary conditions which
prevail in the particular trade to which the controversy relates.13
One of the essential requisites in an action to restrain unfair
competition is proof of fraud; the intent to deceive must be shown
before the right to recover can exist. 14 The advent of the IP Code has
not significantly changed these rulings as they are fully in accord with
what Section 168 of the Code in its entirety provides. Deception,
passing off and fraud upon the public are still the key elements that
must be present for unfair competition to exist.
IN THIS CASE;
The act alleged to violate the petitioner's rights under Section 168.3
(c) is hoarding which we gather to be the collection of the petitioner's
empty bottles so that they can be withdrawn from circulation and
thus impede the circulation of the petitioner's bottled products. This,
according to the petitioner, is an act contrary to good faith - a
conclusion that, if true, is indeed an unfair act on the part of the
respondents. The critical question, however, is not the intrinsic
165
unfairness of the act of hoarding; what is critical for purposes of
Section 168.3 (c) is to determine if the hoarding, as charged, "is of a
nature calculated to discredit the goods, business or services" of the
petitioner.
We hold that it is not. Hoarding as defined by the petitioner is not
even an act within the contemplation of the IP Code.
The petitioner's cited basis is a provision of the IP Code, a set of rules
that refer to a very specific subject - intellectual property. Aside from
the IP Code's actual substantive contents (which relate specifically to
patents, licensing, trademarks, trade names, service marks,
copyrights, and the protection and infringement of the intellectual
properties that these protective measures embody), the coverage
and intent of the Code is expressly reflected in its "
Declaration of State Policy" which states:
Section 2. Declaration of State Policy. - The State recognizes that an
effective intellectual and industrial property system is vital to the
development of domestic and creative activity, facilitates transfer of
technology, attracts foreign investments, and ensures market access
for our products. It shall protect and secure the exclusive rights of
scientists, inventors, artists and other gifted citizens to their
intellectual property and creations, particularly when beneficial to the
people, for such periods as provided in this Act.
The use of intellectual property bears a social function. To this end,
the State shall promote the diffusion of knowledge and information
for the promotion of national development and progress and the
common good.
It is also the policy of the State to streamline administrative
procedures of registering patents, trademarks and copyright, to
liberalize the registration on the transfer of technology, and to
enhance the enforcement of intellectual property rights in the
Philippines. (n)
"Intellectual property rights" have furthermore been defined under
Section 4 of the Code to consist of: a) Copyright and Related Rights;
b) Trademarks and Service Marks; c) Geographic Indications; d)
IndustrialDesigns; e) Patents; f) Layout-Designs (Topographies) of
Integrated Circuits; and g)Protection of Undisclosed Information.
Given the IP Code's specific focus, a first test that should be made
when a question arises on whether a matter is covered by the Code
is to ask if it refers to an intellectual property as defined in the Code.
If it does not, then coverage by the Code may be negated.
A second test, if a disputed matter does not expressly refer to an
intellectual property right as defined above, is whether it falls under
the general "unfair competition" concept and definition under
Sections 168.1 and 168.2 of the Code. The question then is whether
there is "deception" or any other similar act in "passing off" of goods
or services to be those of another who enjoys established goodwill.
Separately from these tests is the application of the principles of
statutory construction giving particular attention, not so much to the
focus of the IP Code generally, but to the terms of Section 168 in
particular. Under the principle of "noscitur a sociis," when a particular
word or phrase is ambiguous in itself or is equally susceptible of
various meanings, its correct construction may be made clear and
specific by considering the company of words in which it is found or
with which it is associated.15
As basis for this interpretative analysis, we note that Section
168.1 speaks of a person who has earned goodwill with respect to his
goods and services and who is entitled to protection under the Code,
with or without a registered mark.
Section 168.2, as previously discussed, refers to the general definition
of unfair competition.
Section 168.3, on the other hand, refers to the specific instances of
unfair competition, with
Section 168.1 referring to the sale of goods given the appearance of
the goods of another;
Section 168.2, to the inducement of belief that his or her goods or
services are that of another who has earned goodwill; while the
disputed
Section 168.3 being a "catch all" clause whose coverage the parties
now dispute.
IN THIS CASE;
Under all the above approaches, we conclude that the "hoarding" - as
defined and charged by the petitioner - does not fall within the
coverage of the IP Code and of Section 168 in particular. It does not
relate to any patent, trademark, trade name or service mark that the
respondents have invaded, intruded into or used without proper
authority from the petitioner.
Nor are the respondents alleged to be fraudulently "passing off" their
products or services as those of the petitioner. The respondents are
not also alleged to be undertaking any representation or
misrepresentation that would confuse or tend to confuse the goods
of the petitioner with those of the respondents, or vice versa. What
in fact the petitioner alleges is an act foreign to the Code, to the
concepts it embodies and to the acts it regulates; as alleged, hoarding
inflicts unfairness by seeking to limit the opposition's sales by
depriving it of the bottles it can use for these sales.
In this light, hoarding for purposes of destruction is closer to what
another law - R.A. No. 623 - covers, to wit:
SECTION 1. Persons engaged or licensed to engage in the
manufacture, bottling or selling of soda water, mineral or
aerated waters, cider, milk, cream, or other lawful
beverages in bottles, boxes, casks, kegs, or barrels, and
other similar containers, with their names or the names of
their principals or products, or other marks of ownership
stamped or marked thereon, may register with the
Philippine Patent Office a description of the names or are
used by them, under the same conditions, rules, and
regulations, made applicable by law or regulation to the
issuance of trademarks.
SECTION 2. It shall be unlawful for any person, without the
written consent of the manufacturer, bottler or seller who
has successfully registered the marks of ownership in
accordance with the provisions of the next preceding
section, to fill such bottles, boxes, kegs, barrels, or other
similar containers so marked or stamped, for the purpose
of sale, or to sell, dispose of, buy, or traffic in, or wantonly
destroy the same, whether filled or not, or to use the same
for drinking vessels or glasses or for any other purpose
166
 than that registered by the manufacturer, bottler or seller. WHEREFORE, we hereby DENY the petition for lack of merit.
Any violation of this section shall be punished by a fine or Accordingly, we confirm that Search Warrant No. 2001-01, issued by
not more than one hundred pesos or imprisonment of not the Municipal Trial Court, Branch 1, Naga City, is NULL and VOID.
more than thirty days or both. Costs against the petitioner.
As its coverage is defined under Section 1, the Act appears to be a SO ORDERED.
measure that may overlap or be affected by the provisions of Part II
of the IP Code on "The Law on Trademarks, Service Marks and Trade
Names." What is certain is that the IP Code has not expressly repealed
this Act. The Act appears, too, to have specific reference to a special
type of registrants - the manufacturers, bottlers or sellers of soda
water, mineral or aerated waters, cider, milk, cream, or other lawful
beverages in bottles, boxes, casks, kegs, or barrels, and other similar
containers - who are given special protection with respect to the
containers they use. In this sense, it is in fact a law of specific coverage
and application, compared with the general terms and application of
the IP Code. Thus, under its Section 2, it speaks specifically of unlawful
use of containers and even of the unlawfulness of their wanton
destruction - a matter that escapes the IP Code's generalities unless
linked with the concepts of "deception" and "passing off" as discussed
above.
Unfortunately, the Act is not the law in issue in the present case and
one that the parties did not consider at all in the search warrant
application. The petitioner in fact could not have cited it in its search
warrant application since the "one specific offense" that the law
allows and which the petitioner used was Section 168.3 (c). If it serves
any purpose at all in our discussions, it is to show that the underlying
factual situation of the present case is in fact covered by another law,
not by the IP Code that the petitioner cites. Viewed in this light, the
lack of probable cause to support the disputed search warrant at once
becomes apparent.
Where, as in this case, the imputed acts do not violate the cited
offense, the ruling of this Court penned by Mr. Justice Bellosillo is
particularly instructive:
In the issuance of search warrants, the Rules of Court requires a
finding of probable cause in connection with one specific offense to
be determined personally by the judge after examination of the
complainant and the witnesses he may produce, and particularly
describing the place to be searched and the things to be seized.
Hence, since there is no crime to speak of, the search warrant does
not even begin to fulfill these stringent requirements and is
therefore defective on its face. The nullity of the warrant renders
moot and academic the other issues raised in petitioners' Motion to
Quash and Motion for Reconsideration. Since the assailed search
warrant is null and void, all property seized by virtue thereof should
be returned to petitioners in accordance with established
jurisprudence.16

Based on the foregoing, we conclude that the RTC correctly ruled that
the petitioner's search warrant should properly be quashed for the
petitioner's failure to show that the acts imputed to the respondents
do not violate the cited offense. There could not have been any
probable cause to support the issuance of a search warrant because
no crime in the first place was effectively charged. This conclusion
renders unnecessary any further discussion on whether the search
warrant application properly alleged that the imputed act of holding
Coke empties was in fact a "hoarding" in bad faith aimed to prejudice
the petitioner's operations, or whether the MTC duly complied with
the procedural requirements for the issuance of a search warrant
under Rule 126 of the Rules of Court.

167
 SECOND DIVISION
G.R. No. 169974 April 20, 2010
SUPERIOR COMMERCIAL ENTERPRISES, INC., Petitioner,
vs.
KUNNAN ENTERPRISES LTD. AND SPORTS CONCEPT &
DISTRIBUTOR, INC., Respondents.
DECISION
BRION, J.:
We review in this petition for review on certiorari1 the (1) decision2 of
the Court of Appeals (CA) in CA-G.R. CV No. 60777 that reversed the
ruling of the Regional Trial Court of Quezon City, Branch 85
(RTC),3 and dismissed the petitioner Superior Commercial
Enterprises, Inc.’s (SUPERIOR) complaint for trademark infringement
and unfair competition (with prayer for preliminary injunction)
against the respondents Kunnan Enterprises Ltd. (KUNNAN) and
Sports Concept and Distributor, Inc. (SPORTS CONCEPT); and (2) the
CA resolution4 that denied SUPERIOR’s subsequent motion for
reconsideration. The RTC decision that the CA reversed found the
respondents liable for trademark infringement and unfair
competition, and ordered them to pay SUPERIOR ₱2,000,000.00 in
damages, ₱500,000.00 as attorney’s fees, and costs of the suit.
THE FACTUAL ANTECEDENTS
On February 23, 1993, SUPERIOR5 filed a complaint for trademark
infringement and unfair competition with preliminary injunction
against KUNNAN6 and SPORTS CONCEPT7 with the RTC, docketed as
Civil Case No. Q-93014888.
In support of its complaint,
SUPERIOR first claimed to be the owner of the trademarks, trading
styles, company names and business names8 "KENNEX",9 "KENNEX &
DEVICE",10 "PRO KENNEX"11 and "PRO-KENNEX" (disputed
trademarks).12
Second, it also asserted its prior use of these trademarks, presenting
as evidence of ownership the Principal and Supplemental
Registrations of these trademarks in its name.
Third, SUPERIOR also alleged that it extensively sold and advertised
sporting goods and products covered by its trademark registrations.
Finally, SUPERIOR presented as evidence of its ownership of the
disputed trademarks the preambular clause of the Distributorship
Agreement dated October 1, 1982 (Distributorship Agreement) it
executed with KUNNAN, which states:
Whereas, KUNNAN intends to acquire the ownership of KENNEX
trademark registered by the [sic] Superior in the Philippines.
Whereas, the [sic] Superior is desirous of having been appointed [sic]
as the sole distributor by KUNNAN in the territory of the Philippines."
[Emphasis supplied.]13
In its defense, KUNNAN disputed SUPERIOR’s claim of ownership and
maintained that SUPERIOR – as mere distributor from October 6,
1982 until December 31, 1991 – fraudulently registered the
trademarks in its name. KUNNAN alleged that it was incorporated in
1972, under the name KENNEX Sports Corporation for the purpose
of manufacturing and selling sportswear and sports equipment; it
commercially marketed its products in different countries, including
the Philippines since 1972.14 It created and first used "PRO KENNEX,"
derived from its original corporate name, as a distinctive trademark
for its products in 1976. KUNNAN also alleged that it registered the
"PRO KENNEX" trademark not only in the Philippines but also in 31
other countries, and widely promoted the "KENNEX" and "PRO
KENNEX" trademarks through worldwide advertisements in print
media and sponsorships of known tennis players.
On October 1, 1982, after the expiration of its initial distributorship
agreement with another company,15 KUNNAN appointed SUPERIOR
as its exclusive distributor in the Philippines under a Distributorship
Agreement whose pertinent provisions state: 16
Whereas, KUNNAN intends to acquire ownership of KENNEX
trademark registered by the Superior in the Philippines.
Whereas, the Superior is desirous of having been appointed
[sic] as the sole distributor by KUNNAN in the territory of the
Philippines.
Now, therefore, the parties hereto agree as follows:
1. KUNNAN in accordance with this Agreement, will appoint
the sole distributorship right to Superior in the Philippines,
and this Agreement could be renewed with the consent of
both parties upon the time of expiration.
2. The Superior, in accordance with this Agreement, shall
assign the ownership of KENNEX trademark, under the
registration of Patent Certificate No. 4730 dated 23 May
1980 to KUNNAN on the effects [sic] of its ten (10) years
contract of distributorship, and it is required that the
ownership of the said trademark shall be genuine, complete
as a whole and without any defects.
3. KUNNAN will guarantee to the Superior that no other
third parties will be permitted to supply the KENNEX
PRODUCTS in the Philippines except only to the Superior. If
KUNNAN violates this stipulation, the transfer of the
KENNEX trademark shall be null and void.
4. If there is a necessity, the Superior will be appointed, for
the protection of interest of both parties, as the agent in the
Philippines with full power to exercise and granted the
power of attorney, to pursue any case of Pirating,
Infringement and Counterfeiting the [sic] KENNEX trade
mark in the Philippine territory.
5. The Superior will be granted from [sic] KUNNAN’s
approval before making and selling any KENNEX products
made in the Philippines and the other countries, and if this
is the situation, KUNNAN is entitled to have a royalty of 5%-
8% of FOB as the right.
6. Without KUNNAN’s permission, the Superior cannot
procure other goods supply under KENNEX brand of which
are not available to supply [sic] by KUNNAN. However, in
connection with the sporting goods, it is permitted that the
Superior can procure them under KENNEX brand of which
are not available to be supplied by KUNNAN. [Emphasis
supplied.]
Even though this Agreement clearly stated that SUPERIOR was
obligated to assign the ownership of the KENNEX trademark to
KUNNAN, the latter claimed that the Certificate of Registration for the
KENNEX trademark remained with SUPERIOR because Mariano Tan
Bon Diong (Mr. Tan Bon Diong), SUPERIOR’s President and General
Manager, misled KUNNAN’s officers into believing that KUNNAN was
not qualified to hold the same due to the "many requirements set by
the Philippine Patent Office" that KUNNAN could not
meet.17 KUNNAN further asserted that SUPERIOR deceived it into
assigning its applications for registration of the "PRO KENNEX"
168
trademark in favor of SUPERIOR, through an Assignment Agreement
dated June 14, 1983 whose pertinent provisions state: 18
1. In consideration of the distributorship relationship between
KUNNAN and Superior, KUNNAN, who is the seller in the
distributorship relationship, agrees to assign the following trademark
applications owned by itself in the Philippines to Superior who is the
buyer in the distributorship relationship.
Trademark Application Number Class
PROKENNEX 49999 28
PROKENNEX 49998 25
PROKENNEX 49997 18
2. Superior shall acknowledge that KUNNAN is still the real and
truthful owner of the abovementioned trademarks, and shall agree
that it will not use the right of the abovementioned trademarks to do
anything which is unfavourable or harmful to KUNNAN.
3. Superior agrees that it will return back the abovementioned
trademarks to KUNNAN without hesitation at the request of KUNNAN
at any time. KUNNAN agrees that the cost for the concerned
assignment of the abovementioned trademarks shall be
compensated by KUNNAN.1avvphi1
4. Superior agrees that the abovementioned trademarks when
requested by KUNNAN shall be clean and without any incumbency.
5. Superior agrees that after the assignment of the abovementioned
trademarks, it shall have no right to reassign or license the said
trademarks to any other parties except KUNNAN. [Emphasis supplied]
Prior to and during the pendency of the infringement and unfair
competition case before the RTC, KUNNAN filed with the now defunct
Bureau of Patents, Trademarks and Technology Transfer19 separate
Petitions for the Cancellation of Registration Trademark Nos. 41032,
SR 6663, 40326, 39254, 4730 and 49998, docketed as Inter Partes
Cases Nos. 3709, 3710, 3811, 3812, 3813 and 3814, as well as
Opposition to Application Serial Nos. 84565 and 84566, docketed as
Inter Partes Cases Nos. 4101 and 4102 (Consolidated Petitions for
Cancellation) involving the KENNEX and PRO KENNEX trademarks. 20 In
essence, KUNNAN filed the Petition for Cancellation and Opposition
on the ground that SUPERIOR fraudulently registered and
appropriated the disputed trademarks; as mere distributor and not as
lawful owner, it obtained the registrations and assignments of the
disputed trademarks in violation of the terms of the Distributorship
Agreement and Sections 2-A and 17 of Republic Act No. 166, as
amended.21
On December 3, 1991, upon the termination of its distributorship
agreement with SUPERIOR, KUNNAN appointed SPORTS CONCEPT as
its new distributor. Subsequently, KUNNAN also caused the
publication of a Notice and Warning in the Manila Bulletin’s January
29, 1993 issue, stating that (1) it is the owner of the disputed
trademarks; (2) it terminated its Distributorship Agreement with
SUPERIOR; and (3) it appointed SPORTS CONCEPT as its exclusive
distributor. This notice prompted SUPERIOR to file its Complaint for
Infringement of Trademark and Unfair Competition with Preliminary
Injunction against KUNNAN.22
The RTC Ruling
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.
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 by SUPERIOR in the Philippines."
According to the RTC, this clause amounts to KUNNAN’s express
recognition of SUPERIOR’s ownership of the KENNEX trademarks. 24
KUNNAN and SPORTS CONCEPT appealed the RTC’s decision to the CA
where the appeal was docketed as CA-G.R. CV No. 60777. KUNNAN
maintained that SUPERIOR was merely its distributor and could not
be the owner of the disputed trademarks. SUPERIOR, for its part,
claimed ownership based on its prior use and numerous valid
registrations.
Intervening Developments:
The IPO and CA Rulings
In the course of its appeal to the CA, KUNNAN filed on December 19,
2003 a Manifestation and Motion praying that the decision of the
Bureau of Legal Affairs (BLA) of the Intellectual Property Office (IPO),
dated October 30, 2003, in the Consolidated Petitions for Cancellation
be made of record and be considered by the CA in resolving the
case.25The BLA ruled in this decision –
In the case at bar, Petitioner-Opposer (Kunnan) has overwhelmingly
and convincingly established its rights to the mark "PRO KENNEX". It
was proven that actual use by Respondent-Registrant is not in the
concept of an owner but as a mere distributor (Exhibits "I", "S" to "S-
1", "P" and "P-1" and "Q" and "Q-2") and as enunciated in the case of
Crisanta Y. Gabriel vs. Dr. Jose R. Perez, 50 SCRA 406, "a mere
distributor of a product bearing a trademark, even if permitted to use
said trademark has no right to and cannot register the said
trademark."
WHEREFORE, there being sufficient evidence to prove that the
Petitioner-Opposer (KUNNAN) is the prior user and owner of the
trademark "PRO-KENNEX", the consolidated Petitions for
Cancellation and the Notices of Opposition are hereby GRANTED.
Consequently, the trademark "PRO-KENNEX" bearing Registration
Nos. 41032, 40326, 39254, 4730, 49998 for the mark PRO-KENNEX
issued in favor of Superior Commercial Enterprises, Inc., herein
Respondent-Registrant under the Principal Register and SR No. 6663
are hereby CANCELLED. Accordingly, trademark application Nos.
84565 and 84566, likewise for the registration of the mark PRO-
KENNEX are hereby REJECTED.
Let the file wrappers of PRO-KENNEX subject matter of these cases be
forwarded to the Administrative Finance and Human Resources
Development Services Bureau (AFHRDSB) for appropriate action in
accordance with this Decision and a copy thereof be furnished the
Bureau of Trademarks (BOT) for information and update of its
record.26
On February 4, 2005, KUNNAN again filed another Manifestation
requesting that the IPO Director General’s decision on appeal dated
December 8, 2004, denying SUPERIOR’s appeal, be given weight in the
disposition of the case.27 The dispositive portion of the decision
reads:28
WHEREFORE, premises considered, there is no cogent reason to
disturb Decision No. 2003-35 dated 30 October 2003 rendered by the
Director of the Bureau of Legal Affairs. Accordingly, the instant appeal
is DENIED and the appealed decision is hereby AFFIRMED.
169
We take judicial notice that SUPERIOR questioned the IPO Director
General’s ruling before the Court of Appeals on a petition for review
under Rule 43 of the Rules of Court, docketed as CA–G.R. SP No.
87928 (Registration Cancellation Case). On August 30, 2007, the CA
rendered its decision dismissing SUPERIOR’s petition. 29 On December
3, 2007, the CA decision was declared final and executory and entry
of judgment was accordingly made. Hence, SUPERIOR’s registration
of the disputed trademarks now stands effectively cancelled.
The CA Ruling
On June 22, 2005, the CA issued its decision in CA-G.R. CV No. 60777,
reversing and setting aside the RTC’s decision of March 31, 1998. 30 It
dismissed SUPERIOR’s Complaint for Infringement of Trademark and
Unfair Competition with Preliminary Injunction on the ground that
SUPERIOR failed to establish by preponderance of evidence its claim
of ownership over the KENNEX and PRO KENNEX trademarks. The CA
found the Certificates of Principal and Supplemental Registrations
and the "whereas clause" of the Distributorship Agreement
insufficient to support SUPERIOR’s claim of ownership over the
disputed trademarks.
The CA stressed that SUPERIOR’s possession of the aforementioned
Certificates of Principal Registration does not conclusively establish
its ownership of the disputed trademarks as dominion over
trademarks is not acquired by the fact of registration alone;31 at best,
registration merely raises a presumption of ownership that can be
rebutted by contrary evidence.32 The CA further emphasized that the
Certificates of Supplemental Registration issued in SUPERIOR’s name
do not even enjoy the presumption of ownership accorded to
registration in the principal register; it does not amount to a prima
facie evidence of the validity of registration or of the registrant’s
exclusive right to use the trademarks in connection with the goods,
business, or services specified in the certificate. 33
In contrast with the failure of SUPERIOR’s evidence, the CA found that
KUNNAN presented sufficient evidence to rebut SUPERIOR’s
presumption of ownership over the trademarks. KUNNAN established
that SUPERIOR, far from being the rightful owner of the disputed
trademarks, was merely KUNNAN’s exclusive distributor. This
conclusion was based on three pieces of evidence that, to the CA,
clearly established that SUPERIOR had no proprietary interest over
the disputed trademarks.
First, the CA found that the Distributorship Agreement, considered in
its entirety, positively confirmed that SUPERIOR sought to be the
KUNNAN’s exclusive distributor. The CA based this conclusion on the
following provisions of the Distributorship Agreement:
(1) that SUPERIOR was "desirous of [being] appointed as the sole
distributor by KUNNAN in the territory of the Philippines;"
(2) that "KUNNAN will appoint the sole distributorship right to
Superior in the Philippines;" and
(3) that "no third parties will be permitted to supply KENNEX
PRODUCTS in the Philippines except only to Superior."
The CA thus emphasized that the RTC erred in unduly relying on the
first whereas clause, which states that "KUNNAN intends to acquire
ownership of [the] KENNEX trademark registered by SUPERIOR in the
Philippines" without considering the entirety of the Distributorship
Agreement indicating that SUPERIOR had been merely appointed by
KUNNAN as its distributor.
Second, the CA also noted that SUPERIOR made the express
undertaking in the Assignment Agreement to "acknowledge that
KUNNAN is still the real and truthful owner of the [PRO KENNEX]
trademarks," and that it "shall agree that it will not use the right of
the abovementioned trademarks to do anything which is
unfavourable or harmful to KUNNAN." To the CA, these provisions are
clearly inconsistent with SUPERIOR’s claim of ownership of the
disputed trademarks. The CA also observed that although the
Assignment Agreement was a private document, its authenticity and
due execution was proven by the similarity of Mr. Tan Bon Diong’s
signature in the Distributorship Agreement and the Assignment
Agreement.
Third, the CA also took note of SUPERIOR’s Letter dated November
12, 1986 addressed to Brig. Gen. Jose Almonte, identifying itself as
the "sole and exclusive licensee and distributor in the Philippines of
all its KENNEX and PRO-KENNEX products." Attached to the letter was
an agreement with KUNNAN, identifying the latter as the "foreign
manufacturer of all KENNEX products." The CA concluded that in this
letter, SUPERIOR acknowledged its status as a distributor in its
dealings with KUNNAN, and even in its transactions with third
persons.
Based on these reasons, the CA ruled that SUPERIOR was a mere
distributor and had no right to the registration of the disputed
trademarks since the right to register a trademark is based on
ownership. Citing Section 4 of Republic Act No. 166 34 and established
jurisprudence,35 the CA held that SUPERIOR – as an exclusive
distributor – did not acquire any proprietary interest in the principal’s
(KUNNAN’s) trademark.
The CA denied SUPERIOR’s motion for reconsideration for lack of
merit in its Resolution dated October 4, 2005.
THE PETITION
In the present petition, SUPERIOR raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT
PETITIONER SUPERIOR IS NOT THE TRUE AND RIGHTFUL OWNER OF
THE TRADEMARKS "KENNEX" AND "PRO-KENNEX" IN THE PHILIPPINES
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
HOLDING THAT PETITIONER SUPERIOR IS A MERE DISTRIBUTOR OF
RESPONDENT KUNNAN IN THE PHILIPPINES
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN
REVERSING AND SETTING ASIDE THE DECISION OF THE REGIONAL
TRIAL COURT OF QUEZON CITY IN CIVIL CASE NO. Q-93-14888,
LIFTING THE PRELIMINARY INJUNCTION ISSUED AGAINST
RESPONDENTS KUNNAN AND SPORTS CONCEPT AND DISMISSING
THE COMPLAINT FOR INFRINGEMENT OF TRADEMARK AND UNFAIR
COMPETITION WITH PRELIMINARY INJUNCTION
THE COURT’S RULING
We do not find the petition meritorious.
On the Issue of Trademark Infringement
We first consider the effect of the final and executory decision in the
Registration Cancellation Case on the present case. This decision -
rendered after the CA decision for trademark infringement and unfair
competition in CA-G.R. CV No. 60777 (root of the present case) -
states:
As to whether respondent Kunnan was able to overcome the
presumption of ownership in favor of Superior, the former sufficiently
established the fraudulent registration of the questioned trademarks
by Superior. The Certificates of Registration No. SR-4730
(Supplemental Register) and 33487 (Principal Register) for the
KENNEX trademark were fraudulently obtained by petitioner
170
Superior. Even before PROKENNEX products were imported by
Superior into the Philippines, the same already enjoyed popularity in
various countries and had been distributed worldwide, particularly
among the sports and tennis enthusiasts since 1976. Riding on the
said popularity, Superior caused the registration thereof in the
Philippines under its name when it knew fully well that it did not own
nor did it manufacture the PROKENNEX products. Superior claimed
ownership of the subject marks and failed to disclose in its application
with the IPO that it was merely a distributor of KENNEX and
PROKENNEX products in the Philippines.
While Superior accepted the obligation to assign Certificates of
Registration Nos. SR-4730 and 33487 to Kunnan in exchange for the
appointment by the latter as its exclusive distributor, Superior
however breached its obligation and failed to assign the same to
Kunnan. In a letter dated 13 February 1987, Superior, through Mr. Tan
Bon Diong, misrepresented to Kunnan that the latter cannot own
trademarks in the Philippines. Thus, Kunnan was misled into assigning
to Superior its (Kunnan’s) own application for the disputed
trademarks. In the same assignment document, however. Superior
was bound to ensure that the PROKENNEX trademarks under
Registration Nos. 40326, 39254, and 49998 shall be returned to
Kunnan clean and without any incumbency when requested by the
latter.
In fine, We see no error in the decision of the Director General of the
IPO which affirmed the decision of the Director of the Bureau of Legal
Affairs canceling the registration of the questioned marks in the name
of petitioner Superior and denying its new application for registration,
upon a finding that Superior is not the rightful owner of the subject
marks.
WHEREFORE, the foregoing considered, the petition is DISMISSED.
The CA decided that the registration of the "KENNEX" and "PRO
KENNEX" trademarks should be cancelled because SUPERIOR was not
the owner of, and could not in the first place have validly registered
these trademarks. Thus, as of the finality of the CA decision on
December 3, 2007, these trademark registrations were effectively
cancelled and SUPERIOR was no longer the registrant of the disputed
trademarks.
Section 22 of Republic Act No. 166, as amended ("RA 166"),36 the law
applicable to this case, defines trademark infringement as follows:
Section 22. Infringement, what constitutes. — Any person who
[1] shall use, without the consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation of any registered mark or
trade-name in connection withthe sale, offering for sale, or
advertising of any goods, business or services on or in connection
with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods
or services, or identity of such business; or [2] reproduce, counterfeit,
copy, or colorably imitate any such mark or trade-name and apply
such reproduction, counterfeit, copy, or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or advertisements
intended to be used upon or in connection with such goods, business
or services, shall be liable to a civil action by the registrant
for any or all of the remedies herein provided. [Emphasis supplied]
Essentially, Section 22 of RA 166 states that only a registrant of a
mark can file a case for infringement. Corollary to this, Section 19 of
RA 166 provides that any right conferred upon the registrant under
the provisions of RA 16637terminates when the judgment or order
of cancellation has become final, viz:
Section 19. Cancellation of registration. - If the Director finds that a
case for cancellation has been made out he shall order the
cancellation of the registration. The order shall not become effective
until the period for appeal has elapsed, or if appeal is taken, until the
judgment on appeal becomes final. When the order or judgment
becomes final, any right conferred by such registration upon the
registrant or any person in interest of record shall terminate. Notice
of cancellation shall be published in the Official Gazette. [Emphasis
supplied.]
Thus, we have previously held that the cancellation of registration
of a trademark has the effect of depriving the registrant of
protection from infringement from the moment judgment or order
of cancellation has become final.38
IN THIS CASE;
In the present case, by operation of law, specifically Section 19 of RA
166, the trademark infringement aspect of SUPERIOR’s case has been
rendered moot and academic in view of the finality of the decision in
the Registration Cancellation Case. In short, SUPERIOR is left without
any cause of action for trademark infringement since the cancellation
of registration of a trademark deprived it of protection from
infringement from the moment judgment or order of cancellation
became final.
To be sure, in a trademark infringement, title to the trademark is
indispensable to a valid cause of action and such title is shown by its
certificate of registration.39 With its certificates of registration over
the disputed trademarks effectively cancelled with finality,
SUPERIOR’s case for trademark infringement lost its legal basis and
no longer presented a valid cause of action.
Even assuming that SUPERIOR’s case for trademark infringement had
not been rendered moot and academic, there can be no infringement
committed by KUNNAN who was adjudged with finality to be the
rightful owner of the disputed trademarks in the Registration
Cancellation Case. Even prior to the cancellation of the registration
of the disputed trademarks, SUPERIOR – as a mere distributor and
not the owner – cannot assert any protection from trademark
infringement as it had no right in the first place to the registration
of the disputed trademarks
. In fact, jurisprudence holds that in the absence of any inequitable
conduct on the part of the manufacturer, an exclusive distributor who
employs the trademark of the manufacturer does not acquire
proprietary rights of the manufacturer, and a registration of the
trademark by the distributor as such belongs to the manufacturer,
provided the fiduciary relationship does not terminate before
application for registration is filed.40 Thus, the CA in the Registration
Cancellation Case correctly held:
As a mere distributor, petitioner Superior undoubtedly had no right
to register the questioned mark in its name. Well-entrenched in our
jurisdiction is the rule that the right to register a trademark should be
based on ownership. When the applicant is not the owner of the
trademark being applied for, he has no right to apply for the
registration of the same. Under the Trademark Law, only the owner
171
of the trademark, trade name or service mark used to distinguish his
goods, business or service from the goods, business or service of
others is entitled to register the same. An exclusive distributor does
not acquire any proprietary interest in the principal’s trademark and
cannot register it in his own name unless it is has been validly assigned
to him.
In addition, we also note that the doctrine of res judicata bars
SUPERIOR’s present case for trademark infringement. The doctrine of
res judicata embraces two (2) concepts: the first is "bar by prior
judgment" under paragraph (b) of Rule 39, Section 47, and the second
is "conclusiveness of judgment" under paragraph (c) thereof.
In the present case, the second concept – conclusiveness of judgment
– applies. Under the concept of res judicata by conclusiveness of
judgment, a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the parties or
their privies in all later suits on points and matters determined in the
former suit.41 Stated differently, facts and issues actually and directly
resolved in a former suit cannot again be raised in any future case
between the same parties, even if the latter suit may involve a
different cause of action.42 This second branch of the principle of res
judicata bars the re-litigation of particular facts or issues in another
litigation between the same parties on a different claim or cause of
action.43
Because the Registration Cancellation Case and the present case
involve the same parties, litigating with respect to and disputing the
same trademarks, we are bound to examine how one case would
affect the other. In the present case, even if the causes of action of
the Registration Cancellation Case (the cancellation of trademark
registration) differs from that of the present case (the improper or
unauthorized use of trademarks), the final judgment in the
Registration Cancellation Case is nevertheless conclusive on the
particular facts and issues that are determinative of the present
case.
To establish trademark infringement, the following elements must be
proven: (1) the validity of plaintiff’s mark; (2) the plaintiff’s ownership
of the mark; and (3) the use of the mark or its colorable imitation by
the alleged infringer results in "likelihood of confusion."44
Based on these elements, we find it immediately obvious that the
second element – the plaintiff’s ownership of the mark – was what
the Registration Cancellation Case decided with finality. On this
element depended the validity of the registrations that, on their own,
only gave rise to the presumption of, but was not conclusive on, the
issue of ownership.45
In no uncertain terms, the appellate court in the Registration
Cancellation Case ruled that SUPERIOR was a mere distributor and
could not have been the owner, and was thus an invalid registrant of
the disputed trademarks. Significantly, these are the exact terms of
the ruling the CA arrived at in the present petition now under our
review. Thus, whether with one or the other, the ruling on the issue
of ownership of the trademarks is the same. Given, however, the final
and executory ruling in the Registration Cancellation Case on the issue
of ownership that binds us and the parties, any further discussion and
review of the issue of ownership – although the current CA ruling is
legally correct and can stand on its own merits – becomes a pointless
academic discussion.
On the Issue of Unfair Competition
Our review of the records shows that the neither the RTC nor the CA
made any factual findings with respect to the issue of unfair
competition. In its Complaint, SUPERIOR alleged that: 46
17. In January 1993, the plaintiff learned that the defendant
Kunnan Enterprises, Ltd., is intending to appoint the
defendant Sports Concept and Distributors, Inc. as its
alleged distributor for sportswear and sporting goods
bearing the trademark "PRO-KENNEX." For this reason, on
January 20, 1993, the plaintiff, through counsel, wrote the
defendant Sports Concept and Distributor’s Inc. advising
said defendant that the trademark "PRO-KENNEX" was
registered and owned by the plaintiff herein.
18. The above information was affirmed by an
announcement made by the defendants in The Manila
Bulletin issue of January 29, 1993, informing the public that
defendant Kunnan Enterprises, Ltd. has appointed the
defendant Sports Concept and Distributors, Inc. as its
alleged distributor of sportswear and sporting goods and
equipment bearing the trademarks "KENNEX and "PRO-
KENNEX" which trademarks are owned by and registered in
the name of plaintiff herein as alleged hereinabove.
xxxx
27. The acts of defendants, as previously complained herein,
were designed to and are of the nature so as to create
confusion with the commercial activities of plaintiff in the
Philippines and is liable to mislead the public as to the
nature and suitability for their purposes of plaintiff’s
business and the defendant’s acts are likely to discredit the
commercial activities and future growth of plaintiff’s
business.
From jurisprudence, unfair competition has been defined as
the passing off (or palming off) or attempting to pass off
upon the public of the goods or business of one person as
the goods or business of another with the end and probable
effect of deceiving the public. The essential elements of
unfair competition47 are (1) confusing similarity in the
general appearance of the goods; and (2) intent to deceive
the public and defraud a competitor.48
Jurisprudence also formulated the following "true test" of unfair
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; the intent to
deceive, actual or probable must be shown before the right to recover
can exist.49
In the present case, no evidence exists showing that KUNNAN ever
attempted to pass off the goods it sold (i.e. sportswear, sporting
goods and equipment) as those of SUPERIOR. In addition, there is no
evidence of bad faith or fraud imputable to KUNNAN in using the
disputed trademarks. Specifically, SUPERIOR failed to adduce any
evidence to show that KUNNAN by the above-cited acts intended to
deceive the public as to the identity of the goods sold or of the
manufacturer of the goods sold.
In McDonald’s Corporation v. L.C. Big Mak Burger, Inc.,50 we held
that there can be trademark infringement without unfair
172
competition such as when the infringer discloses on the labels
containing the mark that he manufactures the goods, thus
preventing the public from being deceived that the goods originate
from the trademark owner. In this case, no issue of confusion arises
because the same manufactured products are sold; only the
ownership of the trademarks is at issue. Furthermore, KUNNAN’s
January 29, 1993 notice by its terms prevents the public from being
deceived that the goods originated from SUPERIOR since the notice
clearly indicated that KUNNAN is the manufacturer of the goods
bearing the trademarks "KENNEX" and "PRO KENNEX." This notice
states in full:51
NOTICE AND WARNING
Kunnan Enterprises Ltd. is the owner and first user of the
internationally-renowned trademarks KENNEX and PRO
KENNEX for sportswear and sporting goods and equipment.
Kunnan Enterprises Ltd. has registered the trademarks
KENNEX and PRO KENNEX in the industrial property offices
of at least 31 countries worldwide where KUNNAN
Enterprises Ltd. has been selling its sportswear and sporting
goods and equipment bearing the KENNEX and PRO
KENNEX trademarks.
Kunnan Enterprises Ltd. further informs the public that it
had terminated its Distributorship Agreement with Superior
Commercial Enterprises, Inc. on December 31, 1991. As a
result, Superior Commercial Enterprises, Inc. is no longer
authorized to sell sportswear and sporting goods and
equipment manufactured by Kunnan Enterprises Ltd. and
bearing the trademarks KENNEX and PRO KENNEX.
xxxx
In its place, KUNNAN has appointed SPORTS CONCEPT AND
DISTRIBUTORS, INC. as its exclusive Philippine distributor of
sportswear and sporting goods and equipment bearing the
trademarks KENNEX and PRO KENNEX. The public is advised
to buy sporting goods and equipment bearing these
trademarks only from SPORTS CONCEPT AND
DISTRIBUTORS, INC. to ensure that the products they are
buying are manufactured by Kunnan Enterprises Ltd.
[Emphasis supplied.]
Finally, with the established ruling that KUNNAN is the rightful owner
of the trademarks of the goods that SUPERIOR asserts are being
unfairly sold by KUNNAN under trademarks registered in SUPERIOR’s
name, the latter is left with no effective right to make a claim. In other
words, with the CA’s final ruling in the Registration Cancellation Case,
SUPERIOR’s case no longer presents a valid cause of action. For this
reason, the unfair competition aspect of the SUPERIOR’s 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.

173
 EN BANC
G.R. No. L-19441 June 30, 1964
SHELL COMPANY OF THE PHILIPPINES, LTD., petitioner,
vs.
INSULAR PETROLEUM REFINING CO., LTD., and COURT OF
APPEALS, respondents.
Lichauco, Picazo and Agcaoili for petitioner.
Paredes, Poblador, Cruz & Nazareno for respondents.
PAREDES, J.:
Petitioner, Shell Co. of the Phil., Ltd. (Shell for short), is a corporation
engaged in the sale of petroleum products, including lubricating oil.
The packages and containers of its goods bear its trademark, labeled
or stenciled thereon.
Defendant Insular Petroleum Refining Co., Ltd. (Insular for short), is
a registered limited partnership, whose principal business is
collecting used lubricating oil which, thru a scientific process, is
refined and marketed to the public at a price much lower than that
of new lubricating oil. From the used oil, respondent produces two
types of lubricating oil one, a straight mineral oil classified as second
grade or low-grade oil; and another, a first grade or high-grade oil.
The essential difference between the two types lies in the fact that
the high-grade oil contains an additive element which is not found in
the other type. In marketing these two types of oil, respondent, as a
practice, utilizes for the high grade oil containers, painted black on
the sides and yellow on top and on the bottom with its tradename
stenciled thereon, with a special sealing device at its opening which
cannot be removed unless the oil is used. In selling its low-grade oil,
respondent use miscellaneous containers, which its general manager
Donald Mead describes, "generally, we used miscellaneous
containers which we have on hand, several drums, may be all drums,
with marks, on them, we have several used drums may be belonging
to the U.S. Army or other drums may be belonging to the Caltex, or
the Stanvac we have some that belonged to the Union, miscellaneous
drums of other companies, but they are used drums. ... And some of
those miscellaneous containers are the Shell containers. ... but
before filling the empty drums we obliterate the markings of the
drums, whether it is army type drums or whether it is a Union brand
or whether it is a Valvoline or Caltex or Shell or Standard Vacuum
drum". In one transaction, however, which was consummated with
Conrado Uichangco a dealer of petitioner's gasoline and lubricating
oil, the low-grade oil that was sold to said operator was contained
in a drum with the petitioner's mark or brand "Shell" still stenciled
without having been erased. The circumstances leading to the
consummation of this isolated transaction, have been summed, up by
the Court of Appeals as follows:
This single transaction between plaintiff and defendant was effected,
according to Conrado Uichangco an operator of a Shell service station
at the corner of San Andres and Tuason Privado Streets, Manila, and
who has been losing during the first eight and ten months of
operation of his station, although he had money to back up his losses,
when a certain F. Pecson Lozano, in agent of the defendant, repaired
at his station and "tried to convince me that Insoil is a good oil". As a
matter of fact, he tried to show me a chemical analysis of Insoil which
he claimed was very close to the analysis of Shell oil; and he also told
me that he could sell this kind of oil (Insoil) to me at a much cheaper
price so that I could make a bigger margin of profits Q. What did you
reply? A. I told Mr. F. Pecson Lozano that if his intention was to sell
me Insoil for me to pass as any of the Shell oils, I was not agreeable
because I did not want to cheat my customers. ... . Q. You ordered a
Shell drum from Mr. Lozano on your own volition or on orders of the
Shell management? A. Well, this is the story as to how I happened to
order that one drum of Insoil oil that was inside that Shell drum.
When Mr. Lozano was insistent that I buy Insoil package in a Shell
drum I called up Mr. Crespo and I risked him in effect why we have to
kill ourselves when there is a man here who came to my station and
told me that he has oil that approximates the analysis of Shell oil
which he could sell to me at a very much cheaper price, and Mr.
Crespo told me "that is not true", and then he further added, "can you
order one drum of that oil for me. Charge it against me." I told him
"Yes I will." So I ordered that one drum of Insoil from Mr. F. Pecson
Lozano. Q. Do you know whether that one drum of oil was ever sold
by you or by the Shell company to the public? A. It was never re-sold
to the public. I re-sold it to the Shell Company of the Philippines. Q.
You mean you bought in your own name and you sold it to the Shell
company at a profit? A. I sold it to the Shell company because it was
an order of Mr. Crespo. I did not profit anything from it, I just charged
them the invoice price. ... . Q. My question to you is: He never made
any misrepresentation to you that he was selling you any oil other
than Insoil Motor oil, straight mineral SAE No. 30? A. That is what he
told me. ... . Q. And it is also a fact that you stated in the Fiscal's Office
and in the Court of First Instance during the trial there that there was
no seal whatsoever appearing in the opening of the drum; is that
correct? A. There was no seal by the Insoil or by the Shell Company.
The evidence of the above transaction was an Invoice issued by the
defendant's agent, describing the goods sold as "Insoil Motor
Oil (straight mineral) SAE 30 — 1 drum — P76.00 — (seller's drum)."
The incident between petitioner's operator and respondent's agent,
brought about the presentation with the Manila CFI, a case for
damages on the allegation of unfair competition and a Criminal Case
No. 42020 under the Revised Penal Code (Art. 189) against Donald
Mead, Manager, Pedro Kayanan and F. Tecson Lozano. In the criminal
case, the accused therein were acquitted, the Court having found that
the element of deceit was absent.
In the civil case, petitioner herein invoked two causes of action: (1)
that respondent in selling its low-grade oil in Shell containers,
without erasing the marks or brands labeled or stencilled thereon,
intended to mislead the buying public to the prejudice of petitioner
and the general public; and (2) defendant had attempted to
persuade Shell dealers to purchase its low-grade oil and to pass the
same to the public as Shell oil, by reason of which petitioner bad
suffered damages in the form of decrease in sales, estimated at least
P10,000.00. A prayer for double the actual damages was made,
pursuant to section 23 of Republic Act 166, P5,000.00 for attorneys
fees, P1,000.00 for legal expenses and P25,000.00 for exemplary
damages. A writ of preliminary injunction was requested to enjoin
respondent herein to cease and desist from using for the sale of any
of its products and more particularly for the sale of its low-grade
lubricating oil. Shell containers with Shell markings still on them. The
motion to dissolve the injunction granted, was denied by the court a
quo. 1äwphï1.ñët
Respondent Insular answering the complaint, after the usual
admissions and denials, alleged that it "has never attempted to pass
off its products as that of another nor to persuade anyone to do the
same", and that the action is barred by the decision in the criminal
case No. 42020. A counterclaim for P81,000.00 for actual, moral and
174
exemplary damages, P4,000.00 for attorney's fees and P5,000.00 for
legal expenses with interposed by respondent.
After trial, the CFI found for Shell and ordered respondent to pay
P20,000.00 for actual damages, P5,000.00 for attorney's fees,
P1,000.00 for legal expenses and P10,000.00 by way of exemplary
damages and the costs.
In reversing the above judgment, the Court of Appeals, disquisitioned:
On the question of whether or not, as a matter of fact, the
defendant is guilty of unfair competition in the conduct of
its trade or business in the marketing of its low-grade oil,
particularly in the single transaction between defendant's
agent and plaintiff's dealer, as hereinabove narrated, we
deem it wise to preface the discussion by citing certain
passages in the decision of the Supreme Court in the case
of Alhambra Cigar, etc. v. Mojica, 27 Phil. Rep. 266, thus:
"No inflexible rule can be laid down as to what will
constitute unfair competition. Each case is, in a measure, a
law unto itself. Unfair competition is dumps a question of
fact. The question to be determined in every case is
whether or not, as a matter of fact, the name or mark used
by the defendant has previously come to indicate and
designate plaintiffs goods, or, to state it in another way,
whether defendant, as a matter of fact, is, by his conduct,
passing off defendant's goods as plaintiffs goods or his
business as plaintiff's business. The universal test question
is whether the public is likely to be deceived. ... . Nothing less
than conduct tending to pass off one man's goods or
business as that of another will constitute unfair
competition. Actual or probable deception and confusion on
the part of the customers by reason of defendant's practices
must always appear."
Encompassing the facts of the case to the foregoing ruling in the
Alhambra case, it clearly appears that defendant's practices in
marketing its low-grade oil did not cause actual or probable
deception and confusion on the part of the general public, because,
as shown from the established facts, with the exception of that single
transaction regarding the one drum of oil sold by the defendant's
agent to the plaintiff's dealer, as aforesaid, before marketing to the
public its low-grade oil in containers the brands or marks of the
different companies stenciled on the containers are totally
obliterated and erased. The defendant did not pass off or attempt to
pass off upon the public its goods as the goods of another. There is
neither express nor implied representation to that effect. The
practices do not show a conduct to the end and probable effect to
which is to deceive the public, or pass off its goods as those of
another. Proof of this may be clearly deduced from the fact that, with
the exception of the sale of one drum of low-grade oil by defendant's
agent to Uichangco no other companies whose drums or containers
have been used by the defendant in its business have filed any
complaint to protect against the practices of the defendant. ... .
Now we shall dwell on the transaction between defendant's agent
and plaintiff's dealer, Uichangco to determine
whether or not, as a matter of fact, the defendant is guilty of unfair
competition.
There is evidence showing that the use of the defendant of the drum
or container with the Shell brand stenciled thereon was with the
knowledge and consent of Uichangco. There is also the categorical
testimony of Uichangco that defendant's agent did not make any
representation that said agent was selling any oil other than Insoil
motor oil. The sales invoice states that Insoil Oil was sold. True, that
a drum with the brand Shell remaining unerased was used by the
defendant. But, Uichangco was apprised beforehand that a Shell
drum would be used, and in fact the instruction of Crespo to
Uichangco could mean — to buy Insoil oil contained in a Shell drum.
The buyer could not have been deceived or confused that he was not
buying Insoil Oil. There is reason to believe that the transaction was
consummated in pursuance of a plan of Mr. Crespo to obtain evidence
for the filing of a case. The oil was never sold to the public because
the plaintiff never intended or contemplated doing so.
The other issue discussed by the Court of Appeals, that is, whether
the acquittal of the officers and employees of the respondent in the
criminal case (supra), constituted a bar to the filing of the civil case or
amounted to res judicata, is, to our mind, not necessary to resolve in
the instant appeal. However, We agree with the appellate court that
there is no res judicata.
In the petition, Shell claims three (3) errors allegedly committed by
the Court of Appeals, all of which pose the singular issue of whether
respondent in the isolated transaction, stated elsewhere in this
opinion, committed an act of unfair competition and should be held
liable.
The complaint was predicated on section 29 of Rep. Act No. 166,
defining unfair competition, to wit:
Any person who shall employ deception or any other means contrary
to good faith by which he shall pass off the goods manufactured by
him or in which he deals, ... for those of the one having established
such goodwill, or who shall commit any act calculated to produce said
result, shall be guilty of unfair competition, and shall be subject to an
action therefor.
From the above definition and authorities interpretative of the same,
it is seen that to hold a defendant guilty of unfair competition, no less
than satisfactory and convincing evidence is essential, showing that
the defendant has passed of or attempted to pass off his own goods
as those of another and that the customer was deceived with respect
to the origin of the goods. In other words, the inherent element of
unfair competition is fraud or deceit. (I Nim's The Law of Unfair
Competition and Trademarks, 4th ed. pp. 52-53, and cases cited
therein; U. S. v. Kyburz, 28 Phil. 475, citing Paul on Trademarks, sec.
209; I Callman's, The Law of Unfair Competition and Trademarks, 329;
Roger's New Directions in the Law of Unfair Competition, (1940) N. Y.
L. Rev. 317, 320; Alhambra Cigar, etc. v. Mojica, 29 Phil. 266, refer to
passage quoted in the decision of C.A. supra).
As no inflexible rule can be laid down as to what will constitute
unfair competition; as each case is, in a measure, a law unto itself
and as unfair competition is always a question of fact, the
determination of whether unfair competition was committed in the
case at bar, must have to depend upon the fact as found by the Court
of Appeals, to the definitiveness of which We are bound (I Moran's
Rules of Court, 1957 Ed. p. 699 & cases cited therein). "... The
Supreme Court can not examine the question of whether or not the
Court of Appeals was right when that tribunal concluded from the
uncontroverted evidence that there had been no deceit." (De Luna,
et al. v. Linatoc, 74 Phil. 15). And the facts of the case at bar, are, as
found and exposed by the Court of Appeals in the portion of its
decision above-quoted.
175
Not just because a manufacturer used a container still bearing a
competitor's marking in the sale of one's products, irrespective of to
whom and how the sale is made, can there be a conclusion that the
buying public has been misled or will be misled, and, therefore, unfair
competition is born. The single transaction at bar will not render
defendant's act an unfair competition, much in the same way that
the appearance of one swallow does not make a season, summer.
It was found by the Court of Appeals that in all transactions of the
low-grade Insoil, except the present one, all the marks and brands on
the containers used were erased or obliterated. The drum in question
did not reach the buying public. It was merely a shell dealer or an
operator of a Shell Station who purchased the drum not to be resold
to the public, but to be sold to the petitioner company, with a view of
obtaining evidence against someone who might have been
committing unfair business practices, for the dealer had found that
his income was dwindling in his gasoline station. Uichangco the Shell
dealer, testified that Lozano (respondent's agent) did not all make any
representation that he (Lozano) was selling any oil other than Insoil
motor oil, a fact which finds corroboration in the receipt issued for
the sale of the drum. Uichangco was apprised beforehand that Lozano
would sell Insoil oil in a Shell drum. There was no evidence that
defendant or its agent attempted to persuade Uichangco or any Shell
dealer, for that matter, to purchase its low-grade oil and to pass the
same to the public as Shell oil. It was shown that Shell and other oil
companies, deliver oil to oil dealers or gasoline stations in drums,
these dealers transfer the contents of the drums to retailing
dispensers known as "tall boys", from which the oil is retailed to the
public by liters.
This Court is not unaware of the decisions cited by petitioner to
bolster its contention. We find those cases, however, not applicable
to the one at bar. Those cases were predicated on facts and
circumstances different from those of the present. In one case, the
trade name of plaintiff was stamped on the goods of defendant and
they were being passed as those of the plaintiff. This circumstance
does not obtain here. From these cases, one feature common to all
comes out in bold relief and that is, the competing products involving
the offending bottles, wrappers, packages or marks reached, the
hands of the ultimate consumer, so bottled, wrapped, package or
marked. In other words, it is the form in which the wares or products
come to the ultimate consumer that was significant; for, as has been
well said, the law of unfair competition does not protect purchasers
against falsehood which the tradesman may tell; the falsehood must
be told by the article itself in order to make the law of unfair
competition applicable.
Petitioner contends that there had been a marked decrease in the
volume of sales of low-grade oil of the company, for which reason it
argues that the sale of respondent's low-grade oil in Shell containers
was the cause. We are reluctant to share the logic of the argument.
We are more inclined to believe that several factors contributed to
the decrease of such sales.
MAY DECREASE IN SALES AMOUNT TO UNFAIR COMPETITION?
But let us assume, for purposes of argument, that the presence of
respondent's low-grade oil in the market contributed to such
decrease. May such eventuality make respondent liable for unfair
competition? There is no prohibition for respondent to sell its goods,
even in places where the goods of petitioner had long been sold or
extensively advertised. Respondent should not be blamed if some
petitioner's dealers by Insoil oil, as long as respondent does not
deceive said dealers. If petitioner's dealers pass off Insoil oil as Shell
oil, that is their responsibility. If there was any such effort to deceive
the public, the dealers to whom the defendant (respondent) sold its
products and not the latter, were. legally responsible for such
deception
. The passing of said oil, therefore, as product of Shell was not
performed by the respondent or its agent, but petitioner's dealers,
which act respondent had no control whatever. And this could easily
be done, for, as respondents' counsel put it —
The point we would like to drive home is that if a SHELL dealer wants
to fool the public by passing off INSOIL as SHELL oil he could do this
by the simple expedient of placing the INSOIL oil or any other oil for
that matter in the "tall boys" and dispense it to the public as SHELL
oil. Whatever container INSOIL uses would be of no moment. ...
absence of a clear showing, that INSOIL and the SHELL dealer
connived or conspired, we respectfully maintain that the
responsibility of INSOIL ceases from the moment its oil, if ever it has
ever been done, is transferred by a SHELL dealer to a SHELL "tall
boy".
And the existence of connivance or conspiracy, between dealer
Uichangco and Agent Lozano has not in the least been insinuated.
Petitioner submits the adoption in the case at bar of the "service
station is package theory" — that the service stations of oil
companies are packages in themselves, such that all products
emanating therefrom are expected to be those of the company
whose marks the station bear, that when a motorist drives to a Shell
station, he does so with the intention of buying Shell products and
that he is naturally guided by the marking of the station itself. Hence,
it constitutes a deceit on the buying public, to sell to said motorist any
other kind of products without apprising them beforehand that they
are not Shell products. (Third assignment of error). In view, however,
of the findings and conclusions reached, there seem to be no need of
discussing the merits and demerits of the theory, or whether the
same is applicable or not, to the present case.
CONFORMABLY WITH ALL THE FOREGOING, We find that the decision
of the Court of Appeals appealed from, is in accordance with the fact,
the law and jurisprudence on the matter. The same is affirmed, with
costs against petitioner, in both instances.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes,
J.B.L., Regala and Makalintal, JJ., concur.
Barrera and Dizon, JJ., took no part.
176
 [G.R. No. 118192. October 23, 1997]
PRO LINE SPORTS CENTER, INC., and QUESTOR
CORPORATION, petitioners, vs. COURT OF APPEALS, UNIVERSAL
ATHLETICS INDUSTRIAL PRODUCTS, INC., and MONICO
SEHWANI, respondents.
DECISION
BELLOSILLO, J.:
This case calls for a revisit of the demesne of malicious prosecution
and its implications.
This petition stemmed from a criminal case for unfair competition
filed by Pro Line Sports Center, Inc. (PRO LINE) and Questor
Corporation (QUESTOR) against Monico Sehwani, president of
Universal Athletics and Industrial Products, Inc. (UNIVERSAL). In that
case Sehwani was exonerated. As a retaliatory move, Sehwani and
UNIVERSAL filed a civil case for damages against PRO LINE and
QUESTOR for what they perceived as the wrongful and malicious filing
of the criminal action for unfair competition against them.
But first, the dramatis personae. By virtue of its merger with A.G.
Spalding Bros., Inc., on 31 December 1971, [1] petitioner QUESTOR, a
US-based corporation, became the owner of the trademark
"Spalding" appearing in sporting goods, implements and
apparatuses. Co-petitioner PRO LINE, a domestic corporation, is the
exclusive distributor of "Spalding" sports products in the
Philippines.[2]
Respondent UNIVERSAL, on the other hand, is a domestic corporation
engaged in the sale and manufacture of sporting goods while co-
respondent Monico Sehwani is impleaded in his capacity as president
of the corporation.
On 11 February 1981, or sixteen years ago, Edwin Dy Buncio, General
Manager of PRO LINE, sent a letter-complaint to the National Bureau
of Investigation (NBI) regarding the alleged manufacture of fake
"Spalding" balls by UNIVERSAL. On 23 February 1981 the NBI applied
for a search warrant with the then Court of First Instance, Br. 23,
Pasig, Rizal, then presided over by Judge Rizalina Bonifacio Vera. On
that same day Judge Vera issued Search Warrant No. 2-81 authorizing
the search of the premises of UNIVERSAL in Pasig. In the course of the
search, some 1,200 basketballs and volleyballs marked "Spalding"
were seized and confiscated by the NBI. Three (3) days later, on
motion of the NBI, Judge Vera issued another order, this time to seal
and padlock the molds, rubber mixer, boiler and other instruments at
UNIVERSAL's factory. All these were used to manufacture the fake
"Spalding" products, but were simply too heavy to be removed from
the premises and brought under the actual physical custody of the
court. However, on 28 April 1981, on motion of UNIVERSAL, Judge
Vera ordered the lifting of the seal and padlock on the machineries,
prompting the People of the Philippines, the NBI, together with PRO
LINE and QUESTOR, to file with the Court of Appeals a joint petition
for certiorari and prohibition with preliminary injunction (CA G.R. No.
12413) seeking the annulment of the order of 28 April 1981. On 18
May 1981, the appellate court issued a temporary restraining order
enjoining Judge Vera from implementing her latest order.
Meanwhile, on 26 February 1981, PRO LINE and QUESTOR filed a
criminal complaint for unfair competition against respondent Monico
Sehwani together with Robert, Kisnu, Arjan and Sawtri, all surnamed
Sehwani, and Arcadio del los Reyes before the Provincial Fiscal of Rizal
(I. S. No. 81-2040). The complaint was dropped on 24 June 1981 for
the reason that it was doubtful whether QUESTOR had indeed
acquired the registration rights over the mark "Spalding" from A. G.
Spalding Bros., Inc., and complainants failed to adduce an actual
receipt for the sale of "Spalding" balls by UNIVERSAL.[3]
On 9 July 1981 a petition for review seeking reversal of the dismissal
of the complaint was filed with the Ministry of Justice. While this was
pending, the Court of Appeals rendered judgment on 4 August 1981
in CA G.R. No. 12413 affirming the order of Judge Vera which lifted
the seal and padlock on the machineries of UNIVERSAL. The People,
NBI, PRO LINE and QUESTOR challenged the decision of the appellate
court before this Court in G.R. No. 57814. On 31 August 1981 we
issued a temporary restraining order against the Court of Appeals vis-
a-vis the aforesaid decision.
In connection with the criminal complaint for unfair competition, the
Minister of Justice issued on 10 September 1981 a Resolution
overturning the earlier dismissal of the complaint and ordered the
Provincial Fiscal of Rizal to file an Information for unfair competition
against Monico Sehwani. The Information was accordingly filed on 29
December 1981 with then Court of First Instance of Rizal, docketed as
Crim. Case No. 45284, and raffled to Br. 21 presided over by Judge
Gregorio Pineda.
Sehwani pleaded not guilty to the charge. But, while he admitted to
having manufactured "Spalding" basketballs and volleyballs, he
nevertheless stressed that this was only for the purpose of complying
with the requirement of trademark registration with the Philippine
Patent Office. He cited Chapter 1, Rule 43, of the Rules of Practice on
Trademark Cases, which requires that the mark applied for be used
on applicant's goods for at least sixty (60) days prior to the filing of
the trademark application and that the applicant must show
substantial investment in the use of the mark. He also disclosed that
UNIVERSAL applied for registration with the Patent Office on 20
February 1981.
After the prosecution rested its case, Sehwani filed a demurrer to
evidence arguing that the act of selling the manufactured goods was
an essential and constitutive element of the crime of unfair
competition under Art. 189 of the Revised Penal Code, and the
prosecution was not able to prove that he sold the products. In its
Order of 12 January 1981 the trial court granted the demurrer and
dismissed the charge against Sehwani.
PRO LINE and QUESTOR impugned before us in G.R. No. 63055 the
dismissal of the criminal case. In our Resolution of 2 March 1983 we
consolidated G.R. No. 63055 with G.R. No. 57814 earlier filed. On 20
April 1983 we dismissed the petition in G.R. No. 63055 finding that
the dismissal by the trial court of Crim. Case No. 45284 was based on
the merits of the case which amounted to an acquittal of
Sehwani. Considering that the issue raised in G.R. No. 58714 had
already been rendered moot and academic by the dismissal of Crim.
Case No. 45284 and the fact that the petition in G.R. No. 63055
seeking a review of such dismissal had also been denied, the Court
likewise dismissed the petition in G.R. No. 58714. The dismissal
became final and executory with the entry of judgment made on 10
August 1983.
Thereafter, UNIVERSAL and Sehwani filed a civil case for damages
with the Regional Trial Court of Pasig[4] charging that PRO LINE and
QUESTOR maliciously and without legal basis committed the
following acts to their damage and prejudice: (a) procuring the
issuance by the Pasig trial court of Search Warrant No. 2-81
authorizing the NBI to raid the premises of UNIVERSAL; (b) procuring
an order from the same court authorizing the sealing and padlocking
177
of UNIVERSAL's machineries and equipment resulting in the
paralyzation and virtual closure of its operations; (c) securing a
temporary restraining order from the Court of Appeals to prevent the
implementation of the trial court's order of 28 April 1981 which
authorized the lifting of the seal and padlock on the subject
machineries and equipment to allow UNIVERSAL to resume
operations; (d) securing a temporary restraining order from the High
Tribunal against the Court of Appeals and charging the latter with
grave abuse of discretion for holding that the order of 28 April 1981
was judiciously issued, thus prolonging the continued closure of
UNIVERSAL's business; (e) initiating the criminal prosecution of
Monico Sehwani for unfair competition under Art. 189 of the Penal
Code; and, (g) appealing the order of acquittal in Crim. Case No. 45284
directly to the Supreme Court with no other purpose than to delay
the proceedings of the case and prolong the wrongful invasion of
UNIVERSAL's rights and interests.
Defendants PRO LINE and QUESTOR denied all the allegations in the
complaint and filed a counterclaim for damages based mainly on the
unauthorized and illegal manufacture by UNIVERSAL of athletic balls
bearing the trademark "Spalding."
The trial court granted the claim of UNIVERSAL declaring that the
series of acts complained of were "instituted with improper,
malicious, capricious motives and without sufficient justification." It
ordered PRO LINE and QUESTOR jointly and severally to pay
UNIVERSAL and Sehwani P676,000.00 as actual and compensatory
damages, P250,000.00 as moral damages, P250,000.00 as exemplary
damages.[5] and P50,000.00 as attorney's fees. The trial court at the
same time dismissed the counterclaim of PRO LINE and QUESTOR.
The Court of Appeals affirmed the decision of the lower court but
reduced the amount of moral damages to P150,000.00 and
exemplary damages to P100,000.00.
Two (2) issues are raised before us: (a) whether private respondents
Sehwani and UNIVERSAL are entitled to recover damages for the
alleged wrongful recourse to court proceedings by petitioners PRO
LINE and QUESTOR; and, (b) whether petitioners' counterclaim should
be sustained.
PRO LINE and QUESTOR cannot be adjudged liable for damages for
the alleged unfounded suit. The complainants were unable to prove
two (2) essential elements of the crime of malicious prosecution,
namely, absence of probable cause and legal malice on the part of
petitioners.
UNIVERSAL failed to show that the filing of Crim. Case No. 45284 was
bereft of probable cause. Probable cause is the existence of such facts
and circumstances as would excite the belief in a reasonable mind,
acting on the facts within the knowledge of the prosecutor, that the
person charged was guilty of the crime for which he was
prosecuted.[6] In the case before us, then Minister of Justice Ricardo
C. Puno found probable cause when he reversed the Provincial Fiscal
who initially dismissed the complaint and directed him instead to file
the corresponding Information for unfair competition against private
respondents herein.[7] The relevant portions of the directive are
quoted hereunder:
The intent on the part of Universal Sports to deceive the
public and to defraud a competitor by the use of the
trademark "Spalding" on basketballs and volleyballs
seems apparent. As President of Universal and as Vice
President of the Association of Sporting Goods
Manufacturers, Monico Sehwani should have known of the
prior registration of the trademark "Spalding" on
basketballs and volleyballs when he filed the application for
registration of the same trademark on February 20, 1981, in
behalf of Universal, with the Philippine Patent Office. He
was even notified by the Patent Office through counsel on
March 9, 1981, that "Spalding" was duly registered with
said office in connection with sporting goods, implements
and apparatus by A.G. Spalding & Bros., Inc. of the U.S.A.
That Universal has been selling these allegedly misbranded
"Spalding" balls has been controverted by the firms
allegedly selling the goods. However, there is sufficient
proof that Universal manufactured balls with the trademark
"Spalding" as admitted by Monico himself and as shown by
the goods confiscated by virtue of the search warrant.
Jurisprudence abounds to the effect that either a seller or a
manufacturer of imitation goods may be liable for violation of Section
29 of Rep. Act No. 166 (Alexander v. Sy Bok, 97 Phil. 57). This is
substantially the same rule obtaining in statutes and judicial
construction since 1903 when Act No. 666 was approved (Finlay
Fleming vs. Ong Tan Chuan, 26 Phil. 579) x x x x[8]
The existence of probable cause for unfair competition by UNIVERSAL
is derivable from the facts and circumstances of the case. The
affidavit of Graciano Lacanaria, a former employee of UNIVERSAL,
attesting to the illegal sale and manufacture of "Spalding" balls and
seized "Spalding" products and instruments from UNIVERSAL's
factory was sufficient prima facie evidence to warrant the
prosecution of private respondents. That a corporation other than
the certified owner of the trademark is engaged in the unauthorized
manufacture of products bearing the same trademark engenders a
reasonable belief that a criminal offense for unfair competition is
being committed.
Petitioners PRO LINE and QUESTOR could not have been moved by
legal malice in instituting the criminal complaint for unfair
competition which led to the filing of the Information against
Sehwani. Malice is an inexcusable intent to injure, oppress, vex,
annoy or humiliate. We cannot conclude that petitioners were
impelled solely by a desire to inflict needless and unjustified vexation
and injury on UNIVERSAL's business interests. A resort to judicial
processes is not per se evidence of ill will upon which a claim for
damages may be based. A contrary rule would discourage peaceful
recourse to the courts of justice and induce resort to methods less
than legal, and perhaps even violent.[9]
We are more disposed, under the circumstances, to hold that PRO
LINE as the authorized agent of QUESTOR exercised sound judgment
in taking the necessary legal steps to safeguard the interest of its
principal with respect to the trademark in question. If the process
resulted in the closure and padlocking of UNIVERSAL's factory and
the cessation of its business operations, these were unavoidable
consequences of petitioners' valid and lawful exercise of their
right. One who makes use of his own legal right does no injury. Qui
jure suo utitur nullum damnum facit. If damage results from a
person's exercising his legal rights, it is damnum absque injuria.[10]
Admittedly, UNIVERSAL incurred expenses and other costs in
defending itself from the accusation. But, as Chief Justice Fernando
would put it, "the expenses and annoyance of litigation form part of
178
the social burden of living in a society which seeks to attain social
control through law."[11] Thus we see no cogent reason for the award
of damages, exorbitant as it may seem, in favor of UNIVERSAL. To do
so would be to arbitrarily impose a penalty on petitioners' right to
litigate.
The criminal complaint for unfair competition, including all other legal
remedies incidental thereto, was initiated by petitioners in their
honest belief that the charge was meritorious. For indeed it was. The
law brands business practices which are unfair, unjust or deceitful not
only as contrary to public policy but also as inimical to private
interests. In the instant case, we find quite aberrant Sehwani's reason
for the manufacture of 1,200 "Spalding" balls, i.e., the pending
application for trademark registration of UNIVERSAL with the Patent
Office, when viewed in the light of his admission that the application
for registration with the Patent Office was filed on 20 February 1981,
a good nine (9) days after the goods were confiscated by the NBI. This
apparently was an afterthought but nonetheless too late a
remedy. Be that as it may, what is essential for registrability is proof
of actual use in commerce for at least sixty (60) days and not the
capability to manufacture and distribute samples of the product to
clients.
ANENT CONTENTION THAT THERE WAS NOACT OF SELLING; the LAW
PUNISHES THE MANUFACTURER
Arguably, respondents' act may constitute unfair competition even if
the element of selling has not been proved. To hold that the act of
selling is an indispensable element of the crime of unfair
competition is illogical because if the law punishes the seller of
imitation goods, then with more reason should the law penalize the
manufacturer.
In U. S. v. Manuel,[12] the Court ruled that the test of unfair
competition is whether certain goods have been intentionally clothed
with an appearance which is likely to deceive the ordinary purchasers
exercising ordinary care.
In this case, it was observed by the Minister of Justice that the
manufacture of the "Spalding" balls was obviously done to deceive
would-be buyers. The projected sale would have pushed through
were it not for the timely seizure of the goods made by the NBI.
That there was intent to sell or distribute the product to the public
cannot also be disputed given the number of goods manufactured
and the nature of the machinery and other equipment installed in the
factory.
We nonetheless affirm the dismissal of petitioners' counterclaim for
damages. A counterclaim partakes of the nature of a complaint
and/or a cause of action against the plaintiffs.[13] It is in itself a distinct
and independent cause of action, so that when properly stated as
such, the defendant becomes, in respect to the matter stated by him,
an actor, and there are two simultaneous actions pending between
the same parties, where each is at the same time both a plaintiff and
defendant.[14] A counterclaim stands on the same footing and is to be
tested by the same rules, as if it were an independent action. [15]
Petitioners' counterclaim for damages based on the illegal and
unauthorized manufacture of "Spalding" balls certainly constitutes an
independent cause of action which can be the subject of a separate
complaint for damages against UNIVERSAL. However, this separate
civil action cannot anymore be pursued as it is already barred by res
judicata, the judgment in the criminal case (against Sehwani)
involving both the criminal and civil aspects of the case for unfair
competition.[16] To recall, petitioners PRO LINE and QUESTOR, upon
whose initiative the criminal action for unfair competition against
respondent UNIVERSAL was filed, did not institute a separate civil
action for damages nor reserve their right to do so. Thus the civil
aspect for damages was deemed instituted in the criminal case. No
better manifestation of the intent of petitioners to recover damages
in the criminal case can be expressed than their active participation
in the prosecution of the civil aspect of the criminal case through the
intervention of their private prosecutor. Obviously, such intervention
could only be for the purpose of recovering damages or indemnity
because the offended party is not entitled to represent the People of
the Philippines in the prosecution of a public offense. [17] Section 16,
Rule 110, of the Rules of Court requires that the intervention of the
offended party in the criminal action can be made only if he has not
waived the civil action nor expressly reserved his right to institute it
separately.[18] In an acquittal on the ground that an essential element
of the crime was not proved, it is fundamental that the accused
cannot be held criminally nor civilly liable for the offense. Although
Art. 28 of the New Civil Code[19] authorizes the filing of a civil action
separate and distinct from the criminal proceedings, the right of
petitioners to institute the same is not unfettered. Civil liability arising
from the crime is deemed instituted and determined in the criminal
proceedings where the offended party did not waive nor reserve his
right to institute it separately.[20] This is why we now hold that the
final judgment rendered therein constitutes a bar to the present
counterclaim for damages based upon the same cause.[21]
WHEREFORE, the petition is partly GRANTED. The decision of
respondent Court of Appeals is MODIFIED by deleting the award in
favor of private respondents UNIVERSAL and Monico Sehwani of
actual, moral and exemplary damages as well as attorney's fees.
The dismissal of petitioners' counterclaim is AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
179
False designation and False Origin

Remedies
END OF CASES FOR FIRST EXAMINATION

180