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G.R. No.

180073 November 25, 2009


PROSOURCE INTERNATIONAL, INC., Petitioner,
vs.
HORPHAG RESEARCH MANAGEMENT SA, Respondent.
D E C I S I O N
NACHURA, J .:
This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and
set aside the Court of Appeals (CA) Decision
1
dated July 27, 2007 and Resolution
2
dated October 15,
2007 in CA-G.R. CV No. 87556. The assailed decision affirmed the Regional Trial Court (RTC)
3

Decision
4
dated January 16, 2006 and Order
5
dated May 3, 2006 in Civil Case No. 68048; while the
assailed resolution denied petitioners motion for reconsideration.
The facts are as follows:
Respondent Horphag Research Management SA is a corporation duly organized and existing under
the laws of Switzerland and the owner
6
of trademark PYCNOGENOL, a food supplement sold and
distributed by Zuellig Pharma Corporation. Respondent later discovered that petitioner Prosource
International, Inc. was also distributing a similar food supplement using the mark PCO-GENOLS
since 1996.
7
This prompted respondent to demand that petitioner cease and desist from using the
aforesaid mark.
8

Without notifying respondent, petitioner discontinued the use of, and withdrew from the market, the
products under the name 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 Complaint
10
for Infringement of Trademark with Prayer for
Preliminary Injunction against petitioner, praying that the latter cease and desist from using the brand
PCO-GENOLS for being confusingly similar with respondents trademark PYCNOGENOL. It, likewise,
prayed for actual and nominal damages, as well as attorneys fees.
11

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

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

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 petitioners liability was not negated by its act of pulling out of
the market the products bearing the questioned mark since the fact remains that from 1996 until June
2000, petitioner had infringed respondents product by using the trademark PCO-GENOLS. As
respondent manifested that it was no longer interested in recovering actual damages, petitioner was
made to answer only for attorneys fees amounting to P50,000.00.
15
For lack of sufficient factual and
legal basis, the court dismissed petitioners counterclaim. Petitioners motion for reconsideration was
likewise denied.
On appeal to the CA, petitioner failed to obtain a favorable decision. The appellate court explained
that under the Dominancy or the Holistic Test, PCO-GENOLS is deceptively similar to
PYCNOGENOL. It also found just and equitable the award of attorneys fees especially since
respondent was compelled to litigate.
16

Hence, this petition, assigning the following errors:
I. THAT THE COURT OF APPEALS ERRED IN AFFRIMING THE RULING OF THE
LOWER [COURT] THAT RESPONDENTS TRADEMARK P[YC]NOGENOLS (SIC)
WAS INFRINGED BY PETITIONERS PCO-GENOLS.
II. THAT THE COURT OF APPEALS ERRED IN AFFIRMING THE AWARD OF
ATTORNEYS FEES IN FAVOR OF RESPONDENT HORPHAG RESEARCH
MANAGEMENT S.A. IN THE AMOUNT OF Php50,000.00.
17

The petition is without merit.
It must be recalled that respondent filed a complaint for trademark infringement against petitioner for
the latters use of the mark PCO-GENOLS which the former claimed to be confusingly similar to its
trademark PYCNOGENOL. Petitioners use of the questioned mark started in 1996 and ended in
June 2000. The instant case should thus be decided in light of the provisions of Republic Act (R.A.)
No. 166
18
for the acts committed until December 31, 1997, and R.A. No. 8293
19
for those committed
from January 1, 1998 until June 19, 2000.
A trademark is any distinctive word, name, symbol, emblem, sign, or device, or any combination
thereof, adopted and used by a manufacturer or merchant on his goods to identify and distinguish
them from those manufactured, sold, or dealt by others. Inarguably, a trademark deserves
protection.
20

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 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.
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

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

In 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 [petitioners] mark PCO-GENOLS,
nevertheless, when the two words are pronounced, the sound effects are confusingly similar not to
mention that they are both described by their manufacturers as a food suppl ement and thus, identified
as such by their public consumers. And although there were dissimilarities in the trademark due to the
type of letters used as well as the size, color and design employed on their individual
packages/bottles, still the close relationship of the competing products name in sounds as they were
pronounced, clearly indicates that purchasers could be misled into believing that they are the same
and/or originates from a common source and manufacturer.
29

We find no cogent reason to depart from such conclusion.
This is not the first time that the Court takes into account the aural effects of the words and letters
contained in the marks in determining the issue of confusing similarity. In Marvex Commercial Co.,
Inc. v. Petra Hawpia & Co., et al.,
30
cited in McDonalds Corporation v. L.C. Big Mak Burger, Inc.,
31

the Court held:
The following random list of confusingly similar sounds in the matter of trademarks, culled from Nims,
Unfair Competition and Trade Marks, 1947, Vol. 1, will reinforce our view that "SALONPAS" and
"LIONPAS" are confusingly similar in sound: "Gold Dust" and "Gold Drop"; "Jantzen" and "Jass-Sea";
"Silver Flash" and "Supper Flash"; "Cascarete" and "Celborite"; "Celluloid" and "Cellonite";
"Chartreuse" and "Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex";
"Zuso" and "Hoo Hoo." Leon Amdur, in his book "Trade-Mark Law and Practice," pp. 419-421, cities,
as coming within the purview of the idem sonans rule, "Yusea" and "U-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 attorneys fees in favor of respondent. Article 2208 of the Civil
Code enumerates the instances when attorneys fees are awarded, viz.:
Art. 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial
costs, cannot be recovered, except:
1. When exemplary damages are awarded;
2. When the defendants 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 workmens compensation and employers 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 attorneys fees
and expenses of litigation should be recovered.
In all cases, the attorneys fees and expenses of litigation must be reasonable.
As a rule, an award of attorneys fees should be deleted where the award of moral and exemplary
damages is not granted.
34
Nonetheless, attorneys 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 attorneys 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 Resolution dated October 15, 2007 in CA-G.R. CV No. 87556
are AFFIRMED.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice
WE CONCUR:










G.R. No. 166115 February 2, 2007
McDONALDS CORPORATION, Petitioner,
vs.
MACJOY FASTFOOD CORPORATION, Respondent.
D E C I S I O N
GARCIA, J .:
In this petition for review on certiorari under Rule 45 of the Rules of Court, herein petitioner
McDonalds 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 2004
1
reversing an earlier decision of the Intellectual Property Office
(IPO) which rejected herein respondent MacJoy FastFood Corporations application for
registration of the trademark "MACJOY & DEVICE"; and
2. Resolution dated 12 November 2004
2
denying the petitioners 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 McDonalds 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 respondents 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 MCDONALDS
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 respondents use and adoption in bad faith of the "MACJOY & DEVICE"
mark would falsely tend to suggest a connection or affiliation with petitioners restaurant services and
food products, thus, constituting a fraud upon the general public and further cause the dilution of the
distinctiveness of petitioners registered and internationally recognized MCDONALDS 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 marks 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 petitioners restaurant services and food products
because of the differences in the design and detail of the two (2) marks.
In a decision
4
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 petitioners opposition and rejected the respondents
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 Order
5
of
January 14, 2000.
Therefrom, the respondent went to the CA via a Petition for Review with prayer for Preliminary
Injunction
6
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 "MCDONALDS," 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 petitioners 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 MCDONALDS 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 MCDONALDS. They are, as averred by the petitioner [now respondent]:
1. The word "MacJoy" is written in round script while the word "McDonalds" 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 "McDonalds" 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 "McDonalds" is written
in red, yellow and black color combination;
4. The faade of the respective stores of the parties are entirely different. Exhibits 1 and 1-A,
show that [respondents] restaurant is set also in the same bold, brilliant and noticeable color
scheme as that of its wrappers, containers, cups, etc., while [petitioners] restaurant is in yellow
and red colors, and with the mascot of "Ronald McDonald" being prominently displayed
therein." (Words in brackets supplied.)
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] McDonalds Corporation. The
"Macjoy & Device" mark is dissimilar in color, design, spelling, size, concept and appearance to the
McDonalds marks. (Words in brackets supplied.)
Hence, the petitioners present recourse on the following grounds:
I.
THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENTS "MACJOY & DEVICE"
MARK IS NOT CONFUSINGLY SIMILAR TO PETITIONERS "McDONALDS 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 McDonalds 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 Petitioners McDonalds Marks
and the Respondents "Macjoy & Device" mark. As such, the marks are confusingly similar
under the Dominancy Test.
C. Petitioners McDonalds 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 respondents claim, the petitioners 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 petitioners Board of Directors 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 procedural ly defective.
As regards the respondents 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 MCDONALDS
marks of the petitioner and the respondents "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 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, whi le
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 [respondents] 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 CAs detailed enumeration of differences between the two (2) competing
trademarks herein involved, we believe that the holistic test is not the one applicable in this case, the
dominancy test being the one more suitable. In recent cases with a similar factual milieu as here, the
Court has consistently used and applied the dominancy test in determining confusing similarity or
likelihood of confusion between competing trademarks.
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. CA
24
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 petitioners 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 petitioners
"MCDONALDS" and respondents "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 MCDONALDS marks
which all use the prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale of fastfood products.
Indisputably, the respondents trademark application f or the "MACJOY & DEVICE" trademark covers
goods under Classes 29 and 30 of the International Classification of Goods, namely, fried chicken,
chicken barbeque, burgers, fries, spaghetti, etc. Likewise, the petitioners trademark registration for
the MCDONALDS marks in the Philippines covers goods which are similar if not identical to those
covered by the respondents application.
Thus, we concur with the IPOs findings that:
In the case at bar, the predominant features such as the "M," "Mc," and "Mac" appearing in both
McDonalds 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
McDonalds 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 Donalds 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.
A mark is valid if it is distinctive and hence not barred from registration under the Trademark Law.
However, once registered, not only the marks validity but also the registrants ownership thereof is
prima facie presumed.
26

Pursuant to Section 37
27
of R.A. No. 166, as amended, as well as the provision regarding the
protection of industrial property of foreign nationals in this country as embodied in the Paris
Convention
28
under which the Philippines and the petitioners domicile, the United States, are
adherent-members, the petitioner was able to register its MCDONALDS marks successively, i.e.,
"McDonalds" in 04 October, 1971
29
; the corporate logo which is the "M" or the golden arches design
and the "McDonalds" with the "M" or golden arches design both in 30 June 1977
30
; and so on and so
forth.
31

On the other hand, it is not disputed that the respondents application for registration of its trademark
"MACJOY & DEVICE" was filed only on March 14, 1991 albeit the date of first use in the Philippines
was December 7, 1987.
32

Hence, from the evidence on record, it is clear that the petitioner has duly established its ownership of
the mark/s.
Respondents contention that it was the first user of the mark in the Philippines having used
"MACJOY & DEVICE" on its restaurant business and food products since December, 1987 at Cebu
City while the first McDonalds 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 Law
33
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 respondents 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 respondents explanation
that the word "MACJOY" is based on the name of its presidents 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 Respondents president, as well as to supposedly
bring good luck to Respondents 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 Respondents president was fond of the food products and services of the
Respondent, but that is beside the point."
34

By reason of the respondents 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 MCDONALDs marks, which, as applied to
petitioners restaurant business and food products, is undoubtedly beyond question.
Thus, the IPO was correct in rejecting and denying the respondents application for registration of the
trademark "MACJOY & DEVICE." As this Court ruled in Faberge Inc. v. IAC,
35
citing Chuanchow Soy
& Canning Co. v. Dir. of Patents and Villapanta:
36

When one applies for the registration of a trademark or label which is almost the same or very closely
resembles one already used and registered by another, the application should be rejected and
dismissed outright, even without any opposition on the part of the owner and user of a previously
registered label or trademark, this not only to avoid confusion on the part of the public, but also to
protect an already used and registered trademark and an established goodwill.
WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed Decision and Resolution
of the Court of Appeals in CA-G.R. SP NO. 57247, are REVERSED and SET ASIDE and the
Decision of the Intellectual Property Office in Inter Partes Case No. 3861 is REINSTATED.
No pronouncement as to costs.
SO ORDERED.
CANCIO C. GARCIA
Associate Justice





















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.

D E C I S I O N

CARPIO, J .:
The Case
This is a petition for review
1
of the Decision dated 26 November 1999 of the Court of Appeals
2
finding
respondent L.C. Big Mak Burger, Inc. not liable for trademark infringement and unfair competition and
ordering petitioners to pay respondents P1,900,000 in damages, and of its Resolution dated 11 July
2000 denying reconsideration. The Court of Appeals' Decision reversed the 5 September 1994
Decision
3
of the Regional Trial Court of Makati, Branch 137, finding respondent L.C. Big Mak Burger,
Inc. liable for trademark infringement and unfair competition.
The Facts
Petitioner 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's
4
owns a family of marks
5
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 items
8
and paraphernalia
9
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 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 i n 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 of P400,000.00, 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 therein and a blue lower garment.
Finally, the defendants-appellants' food packages are made of plastic
material.
xxxx
xxx [I]t is readily apparent to the naked eye that there appears a vast
difference in the appearance of the product and the manner that the
tradename "Big Mak" is being used and presented to the public. As
earlier noted, there are glaring dissimilarities between plaintiffs-
appellees' trademark and defendants-appellants' corporate name.
Plaintiffs-appellees' product carrying the trademark "B[ig] M[ac]" is a
double decker sandwich (depicted in the tray mat containing
photographs of the various food products xxx sold in a Styrofoam box
with the "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 Appeals
27
which also involved a suit for trademark infringement and unfair competition in
which the trial court and the Court of Appeals arrived at conflicting findings.
On the Manner Respondents Used
"Big Mak" in their Business
Petitioners contend that the Court of Appeals erred in ruling that the corporate name "L.C. Big Mak
Burger, Inc." appears in the packaging for respondents' hamburger products and not the words "Big
Mak" only.
The contention has merit.
The evidence presented during the hearings on petitioners' motion for the issuance of a writ of
preliminary injunction shows that the plastic wrappings and plastic bags used by respondents for their
hamburger sandwiches bore the words "Big Mak." The other descriptive words "burger" and "100%
pure beef" were set in smaller type, along with the locations of branches.
28
Respondents' cash
invoices simply refer to their hamburger sandwiches as "Big Mak."
29
It 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, any reproduction, counterfeit,
copy or colorable imitation of any registered mark or trade-name in
connection with the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely
to cause confusion or mistake or to deceive purchasers or others as to
the source or origin of such goods or services, or identity of such
business; or [2] reproduce, counterfeit, copy, or colorably imitate any
such mark or trade-name and apply such reproduction, counterfeit,
copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or
in connection with such goods, business or services, shall be liable to
a civil action by the registrant for any or all of the remedies herein
provided.
33

Petitioners base their cause of action under the first part of Section 22, i.e. respondents allegedly
used, without petitioners' consent, a colorable imitation of the "Big Mac" mark in advertising and
selling respondents' hamburger sandwiches. This likely caused confusion in the mind of the
purchasing public on the source of the hamburgers or the identity of the business.
To establish trademark infringement, the following elements must be shown: (1) the validity of
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 4
36
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 of goods,
40
such as "Lite" for beer
41
or "Chocolate Fudge" for
chocolate soda drink.
42
Descriptive marks, on the other hand, convey the characteristics, functions,
qualities or ingredients of a product to one who has never seen it or does not know it exists,
43
such as
"Arthriticare" for arthritis medication.
44
On the contrary, "Big Mac" falls under the class of fanciful or
arbitrary marks as it bears no logical relation to the actual characteristics of the product it
represents.
45
As such, it is highly distinctive and thus valid. Significantly, the trademark "Little Debbie"
for snack cakes was found arbitrary or fanciful.
46

The Court also finds that petitioners have duly established 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 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
competing trademarks that might cause confusion. In contrast, the holistic test requires the court to
consider the entirety of the marks as applied to the products, including the labels and packaging, in
determining confusing similarity.
The Court of Appeals, in finding that there is no likelihood of confusion that could arise in the use of
respondents' "Big Mak" mark on hamburgers, relied on the holistic test. Thus, the Court of Appeals
ruled that "it is not sufficient that a similarity exists in both name(s), but that more importantly, the
overall presentation, or in their essential, substantive and distinctive parts is such as would likely
MISLEAD or CONFUSE persons in the ordinary course of purchasing the genuine article." The
holistic test considers the two marks in their entirety, as they appear on the goods with their labels
and packaging. It is not enough to consider their words and compare the spelling and pronunciation
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
Nestl, S.A. v. Court of Appeals,
65
the Court explicitly rejected the holistic test in this wise:
[T]he totality or holistic test is contrary to the elementary
postulate of the law on trademarks and unfair competition that
confusing similarity is to be determined on the basis of visual, aural,
connotative comparisons and overall impressions engendered by the
marks in controversy as they are 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 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 alleged sentiment-
focused "explanation" merely thought of as a convenient, albeit
unavailing, excuse or defense for such an unfair choice of name.
67

Absent proof that respondents' adoption of the "Big Mak" mark was due 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 shall
deceive the public and defraud another of his legitimate trade, or any
subsequent vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any
other means calculated to induce the false belief that such person is
offering the services of another who has identified such services in the
mind of the public; or
(c) Any person who shall make any false statement in the course of
trade or who shall commit any other act contrary to good faith of a
nature calculated to discredit the goods, business or services of
another. (Emphasis supplied)
The essential elements of an action for unfair competition are (1) confusing similarity in the general
appearance of the goods, and (2) intent to deceive the public and defraud a competitor.
74
The
confusing similarity may or may not result from similarity in the marks, but may result from other
external factors in the packaging or presentation of the goods. The intent to deceive and defraud may
be inferred from the similarity of the appearance of the goods as offered for sale to the public.
75

Actual fraudulent intent need not be shown.
76

Unfair competition is broader than trademark infringement and includes passing off goods with or
without trademark infringement. Trademark infringement is a form of unfair competition.
77
Trademark
infringement constitutes unfair competition when there is not merely likelihood of confusion, but also
actual or probable deception on the public because of the general appearance of the goods. There
can be trademark infringement without unfair competition as when the infringer discloses on the
labels containing the mark that he manufactures the goods, thus preventing the public from being
deceived that the goods originate from the trademark owner.
78

To support their claim of unfair competition, petitioners allege that respondents fraudulently passed
off their hamburgers as "Big Mac" hamburgers. Petitioners add that respondents' fraudulent intent can
be inferred from the similarity of the marks in question.
79

Passing off (or palming off) takes place where the defendant, by imitative devices on the general
appearance of the goods, misleads prospective purchasers into buying his merchandise under the
impression that they are buying that of his competitors.
80
Thus, the defendant gives his goods the
general appearance of the goods of his competitor with the intention of deceiving the public that the
goods are those of his competitor.
The RTC described the respective marks and the goods of petitioners and respondents in this wise:
The mark "B[ig] M[ac]" is used by plaintiff McDonald's to identify its
double decker hamburger sandwich. The packaging material is a
styrofoam box with the McDonald's logo and trademark in red with
block capital letters printed on it. All letters of the "B[ig] M[ac]" mark
are also in red and block capital letters. On the other hand,
defendants' "B[ig] M[ak]" script print is in orange with only the letter "B"
and "M" being capitalized and the packaging material is plastic
wrapper. xxxx Further, plaintiffs' logo and mascot are the umbrella "M"
and "Ronald McDonald's", respectively, compared to the mascot of
defendant Corporation which is a chubby boy called "Macky" displayed
or printed between the words "Big" and "Mak."
81
(Emphasis supplied)
Respondents point to these dissimilarities as proof that they did not give their hamburgers the general
appearance of petitioners' "Big Mac" hamburgers.
The dissimilarities in the packaging are minor compared to the stark similarities in the words that
give respondents' "Big Mak" hamburgers the general appearance of petitioners' "Big Mac"
hamburgers. Section 29(a) expressly provides that the similarity in the general appearance of the
goods may be in the "devices or words" used on the wrappings. Respondents have applied on their
plastic wrappers and bags almost the same words that petitioners use on their styrofoam box. What
attracts the attention of the buying public are the words "Big Mak" which are almost the same, aurally
and visually, as the words "Big Mac." The dissimilarities in the material and other devices are
insignificant compared to the glaring similarity in the words used in the wrappings.
Section 29(a) also provides that the defendant gives "his goods the general appearance of goods of
another manufacturer." Respondents' goods are hamburgers which are also the goods of petitioners.
If respondents sold egg sandwiches only instead of hamburger sandwiches, their use of the "Big
Mak" mark would not give their goods the general appearance of petitioners' "Big Mac" hamburgers.
In such case, there is only trademark infringement but no unfair competition. However, since
respondents chose to apply the "Big Mak" mark on hamburgers, just like 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" mark.
This clearly shows respondents' intent to deceive the public. Had respondents' placed a notice on
their plastic wrappers and bags that the hamburgers are sold by "L.C. Big Mak Burger, Inc.", then
they could validly claim that they did not intend to deceive the public. In such case, there is only
trademark infringement but no unfair competition.
82
Respondents, however, did not give such notice.
We hold that as found by the RTC, respondent corporation is liable for unfair competition.
The Remedies Available to Petitioners
Under Section 23
83
("Section 23") in relation to Section 29 of RA 166, a plaintiff who successfully
maintains trademark infringement and unfair competition claims is entitled to injunctive and monetary
reliefs. Here, the RTC did not err in issuing the injunctive writ of 16 August 1990 (made permanent in
its Decision of 5 September 1994) and in ordering the payment of P400,000 actual damages in favor
of petitioners. The injunctive writ is indispensable to prevent further acts of infringement by
respondent corporation. Also, the amount of actual damages is a reasonable percentage (11.9%) of
respondent corporation's gross sales for three (1988-1989 and 1991) of the six years (1984-1990)
respondents have used the "Big Mak" mark.
84

The RTC also did not err in awarding exemplary damages by way of correction for the public good
85

in view of the finding of unfair competition where intent to deceive the public is essential. The award
of attorney's fees and expenses of litigation is also in order.
86

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










G.R. No. L-5378 May 24, 1954
In Re Petition for Registration of Trademark "Freedom" under section 4 of Republic Act No.
166 filed in the Philippine Patent Office bearing Serial No. 38. CO TIONG SA, applicant-
petitioner,
vs.
DIRECTOR OF PATENTS, respondent,
SAW WOO CHIONG AND CO., oppositor.
Antonio Fa., Quesada, Floro Crisologo, Manuel A. Panis and Rizalino L. Favilla for petitioner.
Eufemio E. de Mesa and E. L. Gonzales for oppositor.
First Assistant Solicitor General Ruperto Kapunan Jr. and Solicitor Pacifico P. de Castro for
respondent.
LABRADOR, J .:
This is an appeal filed by Co Tiong Sa, applicant for registration of the trademark "Freedom" and its
corresponding design, against a decision of the Director of Patents sustaining the opposition thereto
of Saw Woo Chiong and Co., and denying the application. The application in said registration
proceeding, now petitioner in this Court, has used the trademark on undershirts and T-shirts since
March, 1947. The trademark sought to be registered is "Freedom". The word "Freedom" is in hand
print, with a slight to the right. In the facsimiles attached to the original application, there are no
letters, lines, or figures around the word, but in the label, Exhibit D-1, the said word is preceded by a
triangle, with the letter "F" inside and small letters "H.L." under. A capital letter "L" is on the lower
right-hand corner; and all of these are enclosed in a rectangle of double lines. In Exhibit D-2, the label
is the same word "Freedom" with a capital letter "M" above it, a flourish under the word "Freedom",
and the words "HIGH QUALITY" thereunder. The label used for boxes is similar to label Exhibit D-1,
except that the rectangle is in a heavy line and is longer.
The label presented by Saw Woo Chiong and Co., oppositor-respondent herein (Exhibit D-3), consist
of the word "Freeman" in hand print, with a right slant, above the middle of which is a vignette of a
man wearing a to what, which vignette is preceded by the small word "The" in print and followed by
two parallel lines close to each other, and the words "PERFECT WEAR" in smaller letters under the
word "FREEMAN". This trademark was registered in 1947 in the Bureau of Commerce and re-
registered in the Patent Office on September 22, 1948. This trademark is used not only on shirts, but
also on polo shirts, undershirts, pajamas, skippers, and T-shirts, although in the year 1947 Saw Woo
Chiong and Co. discontinued manufacturing skippers and T-shirts on the ground of scarcity of
materials. This trademark has been used since 1938, and it had been advertised extensively in
newspapers, magazines, etc.
The applicant-petitioner claims that in sustaining the objection of the oppositor-respondent, the
Director of Patents erred: (1) in holding that in determining an opposition in the registration of
trademarks, attention should be centered upon the central idea of each trademark, disregarding their
differences in details; (2) in holding that if the central idea of each trademark gives the same general
impression, the two trademarks should be adjudged as confusingly similar; (3) in holding that the
word "FREEDOM" and "FREEMAN" convey the same general impression, hence must be adjudged
to be confusingly similar; (4) in holding that if the word "FREEDOM" is allowed to be registered as
trademark, although no confusion and deception will actually take place, the oppositor will
nevertheless be damaged; and (5) in holding that the oppositor is not required to introduce testimony
on substantiate the claim made in its opposition.
The first four assignments of error are related to each other and may be considered together. There is
no question that if the details of the two trademarks are to be considered, many differences would be
noted that would enable a careful and scrutinizing eye to distinguish one trademark from the other.
Thus, we have the vignette of a man wearing a to what, which would distinguish the oppositor's label
from the triangle with the letter "F" on the right hand corner of applicant's label. Then we also have
the rectangle enclosing the applicant's mark, which rectangle is absent in that of the oppositor's. But
differences of variations in the details of one trademark and of another are not the legally accepted
tests of similarity in trademarks. 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, infrigement takes place.
Duplication or limitation 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 mistake
in the mind of the public or to deceive purchasers. (Auburn Rubber Corporation vs. Honover Rubber
Co., 107 F. 2d, 588, citing Procter and Gamble Co. vs. J. L. Prescott Co., 49 F. 2d, 959, 18 CCPA,
Patent, 1433; Pepsodent Co. vs. Comfort Manufacturing Co., 83 F. 2d 906, 23 CCPA, Patents, 1224.)
When would a trademark cause confusion in the mind of the public or in those unwary customers or
purchasers? It must be remembered that infringement of a trademark is a form of unfair competition
(Clarke vs. Manila Candy Co., 36 Phil., 100), and unfair competition is always a question of fact. The
universal test has been said to be whether the public is likely to be deceived. (Alhambra Cigar and
Cigarette Co. vs. Mojica, 27 Phil., 266.)
When a person sees an object, a central or dominant idea or picture thereof is formed in his mind.
This dominant picture or idea is retained in the mind, and the decorations or details are forgotten.
When one sees the city hall of Baguio, the dominant characteristics which are likely to be retained in
the mind are the portico in the middle of the building, the tower thereon, the four columns supporting
it, and the wings on both sides. The features that are retained are the peculiar, dominant features.
When on sees the Legislative Building in Manila, the picture that is retained is that of a majestic low
building with concrete columns all around. In this mind-picture the slight or minor decorations are lost
sight of, and the central figure only is retained. So is it with a customer or purchaser who sees a label.
He retains in his mind the dominant characteristics or features or central idea in the label, and does
not retain or forgets the attendant decorations, flourishes, or variations. The ordinary customer does
not scrutinize the details of the label; he forgets or overlooks these, but retains a general impression,
or a central figure, or a dominant characteristic. The reason for the above has been explained in the
following manner:
. . . This rule has a basis in experience. The average person usually will not, and often can not,
take in at a casual glance all, or even a large part of the details of what he looks at. What part
or parts of two trademarks which are alleged to be similar does the average ordinary buyer see
when he looks at them? What features of them are remembered by the average buyer? We do
not really hear all that is spoken in our hearing. Far from all we see or hear casually is retained
sufficiently clearly or insufficient detail for us to get a lasting impression of it which we can
remember when we encounter the mark again. The importance of this rule is emphasi zed by
the increase of radio advertising in which we are deprived of the help of our eyes and must
depend entirely on the ear.
The average buyer usually seeks a sign, some special, easily remembered earmarks of the
brand he has in mind. It may be the color, sound, design, or a peculiar shape or name. Once
his eyes see that or his ear hears it, he is satisfied. An unfair competitor need not copy the
entire mark to accomplish his fraudulent purpose. It is enough if he takes the one feature which
the average buyer is likely to remember. (Nims, The Law of Unfair Competition and
Trademarks, 4th ed., Vol. 2, pp. 678-679).
The question of infringement is to be determined by the test of dominancy. The dissimilarity in
size, form and color of the label and the place where applied are not conclusive. If the
competing label contains the trademark of another, and confusion or deception is likely to
result, infringement takes place, regardless of the fact that the accessories are dissimilar.
Duplication or exact 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, citing Eagle Co. vs. Pflugh (C.C.) 180 F., 579.)
In order to constitute infringement, it is not necessary that the trademark be literally copied. ... .
Neither is it necessary that every word be appropriated. There may be infringement where the
substantial and distinctive part of the trademark is copied or imitated .... Dissimilarity in size,
form and color of the label and place where it is applied are not conclusive against
infringement. ... . The resemblances may so far dominate the differences as to be likely to
deceive ordinary purchasers. (Queen Mfg. Co. vs. Isaac Ginsberg Bros. Co., 25 F 2d 284, 287.
See also Finchley, Inc. vs. George Hess Co., Inc., et al., 24 F., Supp. 94.)
Upon examination of the trademark of the oppositor-respondent, one will readily see that the
dominant feature is the word "FREEMAN" written in a peculiar print, slightly slanting to the right, with
a peculiarly written capital letters "FF". These dominant features or characteristics of oppositor's
trademarks are reproduced or imitated in applicant's trademark. In the first place, the word
"FREEDOM" conveys a similar idea as the word "FREEMAN". In the second place, the style in which
both capital "F" are written are similar. The print and slant of the letters are also similar. An ordinary
purchaser or an unsuspecting customer who has seen the oppositor's label sometime before will not
recognize the difference between that label and applicant's label. He may notice some variations, but
he will ignore these, believing that they are variations of the same trademark to distinguish one kind
or quality of goods from another.
For purposes of illustration, the following words have been held to have the same significance or to
have the same appearance and meaning.
"CELDURA" and "CORDURA". That both marks considered as a whole are similar in
meaning and appearance can not be doubted. When spoken as written they sound very much
alike. Similarity of sound alone, under such circumstances, is sufficient to cause the marks to
be regarded as confusingly similar when applied to merchandise of the same descriptive
properties. (Celanes Corporation of America vs. E. I. Du Pont de Nemours and Co. (1946),154
F. 2d 146, 148.)
"SKOAL" and "SKOL", and "SKOAL" was held identical in sound and meaning to "SKOL".
(SKOL Co., Inc., vs. Olson, 151 F. 2d, 200.)
In this jurisdiction we have held that that name "Lusolin" is an infringement of the trademark "Sapolin,"
as the sound of the two names is almost the same, and the labels of containers being almost the
same in respect to color, size, and other characteristics. (Sapolin Co. vs. Balmeceda and Germann
and Co., 67 Phil., 705.)
In the case of La Insular vs. Jao Oge, 47 Phil., 75, plaintiff's label represented an European female,
while defendant's was a Filipino, but both labels exhibited a matron seated on a platform with a view
of Manila Bay looking towards Mariveles at sunset. In spite of the fact that the posture and coloring
were slightly different, defendant's labels were declared to constitute an infringement of plaintiff's
labels.
After a careful study, we find that the dominant characteristic of oppositor's trademark "FREEMAN"
has been imitated in applicant's trademark "FREEDOM," such as to confuse the public and unwary
customers and puchasers, and to deceive them into believing that the articles bearing one label are
similar or produced by the same manufacturer as those carrying the other label. The decision of the
Director of Patents sustaining the opposition and denying the application must, therefore, be affirmed.
With respect to the fifth assignment of error (first in petitioner's brief), it must be remembered that the
question of similarity or dissimilarity while it is a question of opinion, is to be determined by the court
mainly on the basis of the facsimiles or labels or pictures submitted to the Director of Patents. In the
case at bar, innumerable exhibits were presented to show the similarity. Similarity or dissimilarity can
be determined by the Director of Patents, or by this Court on appeal, by a mere examination and
comparison of the competing trademarks. Failure on the part of the oppositor to submit the testimony
of witnesses, who are to give opinions on the alleged similarity or dissimilarity, can not, therefore, be
a ground for a dismissal of an opposition. We hold that the Director of Patents did not err in denying
the motion for dismissal presented by the applicant upon the failure of the oppositor to submit
witnesses to sustain his opposition.
Finding no error in the decision appealed from, the same is hereby affirmed, with costs against the
applicant-petitioner Co Tiong Sa.
Paras, C. J., Pablo, Bengzon, Montemayor, Reyes, A., Jugo, Bautista Angelo, and Concepcion, JJ.,
concur.




SOCIETE DES PRODUITS G.R. No. 172276
NESTLE, S.A.,
Petitioner,
Present:

CARPIO, J., Chairperson,
NACHURA,
- versus - PERALTA,
ABAD, and
MENDOZA, JJ.


MARTIN T. DY, JR., Promulgated:
Respondent. August 8, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

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 promot e the NAN milk
products through advertisements and press releases.

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

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

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

The RTCs Ruling

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

If determination of infringement shall only be limited on whether or not the mark
used would likely cause confusion or mistake in the minds of the buying public or
deceive customers, such in [sic] the most considered view of this forum would be highly
unlikely to happen in the instant case. This is because upon comparison of the
plaintiffs NAN and defendants NANNY, the following features would reveal the
absence of any deceptive tendency in defendants NANNY: (1) all NAN products are
contained tin cans [sic], while NANNY are contained in plastic packs; (2) the
predominant colors used in the labels of NAN products are blue and white, while the
predominant colors in the plastic packings of NANNY are blue and green; (3) the labels
of NAN products have at the bottom portion an elliptical shaped figure containing inside
it a drawing of nestling birds, which is overlapped by the trade-name Nestle, while the
plastic packs of NANNY have a drawing of milking cows lazing on a vast green field,
back-dropped with snow covered mountains; (4) the word NAN are [sic] all in large,
formal and conservative-like block letters, while the word NANNY are [sic] all in small
and irregular style of letters with curved ends; and (5) all NAN products are milk
formulas intended for use of [sic] infants, while NANNY is an instant full cream
powdered milk intended for use of [sic] adults.



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

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

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

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

Dy, Jr. appealed the 18 September 1998 Decision to the Court of Appeals.

The Court of Appeals Ruling

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

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

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

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

The trial courts application of the doctrine laid down by the Supreme Court in the
Esso Standard case aforementioned and the cases cited therein is quite misplaced.
The goods of the two contending parties in those cases bear similar marks or labels:
Esso for petroleum products and cigarettes, Selecta for biscuits and milk, X-7 for
soap and perfume, lipstick and nail polish. In the instant case, two dissimilar marks are
involved plaintiff-appellees NAN and defendant-appellants NANNY. Obviously,
the concept of related goods cannot be utilized in the instant case in the same way that
it was used in the Esso Standard case.

In the Esso Standard case, the Supreme Court even cautioned judges that in
resolving infringement or trademark cases in the Philippines, particularly in ascertaining
whether one trademark is confusingly similar to or is a colorable imitation of another,
precedent must be studied in the light of the facts of the particular case. Each case
must be decided on its own merits. In the more recent case of Societe Des Produits
Nestle S.A. Versus Court of Appeals, the High Court further stressed that due to the
peculiarity of the facts of each infringement case, a judicial forum should not readily
apply a certain test or standard just because of seeming similarities. The entire panoply
of elements constituting the relevant factual landscape should be comprehensively
examined.

While it is true that both NAN and NANNY are milk products and that the word
NAN is contained in the word NANNY, there are more glaring dissimilarities in the
entirety of their trademarks as they appear in their respective labels and also in r elation
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 si milar to the
other. Even the trial court found these glaring dissimilarities as above-quoted. We
need not add more of these factual dissimilarities.

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

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

In view of the foregoing, we find that the mark NANNY is not confusingly similar
to NAN. Dy therefore cannot be held liable for infringement.

Nestle filed a motion for reconsideration. In its 4 April 2006 Resolution, the Court of Appeals
denied the motion for lack of merit. Hence, the present petition.

Issue

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

The Courts Ruling

The petition is meritorious.

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

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

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

Remedies; Infringement. Any person who shall, without the consent of the
owner of the registered mark:

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable
imitation of a registered mark or the same container or a dominant feature thereof in
connection with the sale, offering for sale, distribution, advertising of any goods or
services including other preparatory steps necessary to carry out the sale of any goods
or services on or in connection with which such use is likely to cause confusion, or to
cause mistake, or to deceive; or

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

In Prosource International, Inc. v. Horphag Research Management SA, the Court laid down the
elements of infringement under R.A. Nos. 166 and 8293:

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

(a) A trademark actually used in commerce in the Philippines and
registered in the principal register of the Philippine Patent Office[;]

(b) [It] is used by another person in connection with the sale, offering for
sale, or advertising of any goods, business or services or in connection
with which such use is likely to cause confusion or mistake or to deceive
purchasers or others as to the source or origin of such goods or services,
or identity of such business; or such trademark is reproduced,
counterfeited, copied or colorably imitated by another person and such
reproduction, counterfeit, copy or colorable imitation is applied to labels,
signs, prints, packages, wrappers, receptacles or advertisements intended
to be used upon or in connection with such goods, business or services as
to likely cause confusion or mistake or to deceive purchasers[;]

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

(d) [S]uch act is done without the consent of the trademark registrant or
assignee.

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

The trademark being infringed is registered in the Intellectual
Property Office; however, in infringement of trade name, the same need
not be registered;

The trademark or trade name is reproduced, counterfeited, copied,
or colorably imitated by the infringer;

The infringing mark or trade name is used in connection with the
sale, offering for sale, or advertising of any goods, business or services; or
the infringing mark or trade name is applied to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used
upon or in connection with such goods, business or services;

The use or application of the infringing mark or trade name is likely
to cause confusion or mistake or to deceive purchasers or others as to the
goods or services themselves or as to the source or origin of such goods
or services or the idenity of such business; and

It is without the consent of the trademark or trade name owner or
the assignee thereof.

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

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

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

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

In cases involving trademark infringement, no set of rules can be deduced. Each case must
be decided on its own merits. Jurisprudential precedents must be studied in the light of the facts of
each particular case. In McDonalds Corporation v. MacJoy Fastfood Corporation, the Court held:

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


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

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

Both the word[s] PYCNOGENOL and PCO-GENOLS have the same
suffix GENOL which on evidence, appears to be merely descriptive and
furnish no indication of the origin of the article and hence, open for
trademark registration by the plaintiff through combination with another
word or phrase such as PYCNOGENOL, Exhibits A to A-3.
Furthermore, although the letters Y between P and C, N between O
and C and S after L are missing in the [petitioners] mark PCO-GENOLS,
nevertheless, when the two words are pronounced, the sound effects are
confusingly similar not to mention that they are both described by their
manufacturers as a food supplement and thus, identified as such by their
public consumers. And although there were dissimilarities in the
trademark due to the type of letters used as well as the size, color and
design employed on their individual packages/bottles, still the close
relationship of the competing products name is sounds as they were
pronounced, clearly indicates that purchasers could be misled into
believing that they are the same and/or originates from a common source
and manufacturer.

We find no cogent reason to depart from such conclusion.

This is not the first time the Court takes into account the aural effects of the
words and letters contained in the marks in determining the issue of confusing similarity.
In Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al., cited in McDonalds
Corporation v. L.C. Big Mak Burger, Inc., the Court held:

The following random list of confusingly similar sounds in the matter of
trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947,
Vol. 1, will reinforce our view that SALONPAS and LIONPAS are
confusingly similar in sound: Gold Dust and Gold Drop; Jantzen and
Jass-Sea; Silver Flash and Supper Flash; Cascarete and Celborite;
Celluloid and Cellonite; Chartreuse and Charseurs; Cutex and
Cuticlean; Hebe and Meje; Kotex and Femetex; Zuso and Hoo
Hoo. Leon Amdur, in his book Trade-Mark Law and Practice, pp. 419-
421, cities [sic], as coming within the purview of the idem sonans rule,
Yusea and U-C-A, Steinway Pianos and Steinberg Pianos, and
Seven-Up and Lemon-Up. In Co Tiong vs. Director of Patents, this
Court unequivocally said that Celdura and 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 McDonalds Corporation v. MacJoy Fastfood Corporation, the Court applied the dominancy
test in holding that MACJOY is confusingly similar to MCDONALDS. The Court held:

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

x x x x

Applying the dominancy test to the instant case, the Court finds that herein
petitioners MCDONALDS and respondents 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 MCDONALDS marks which all use the prefixes Mc and/or
Mac.

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

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

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

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

x x x It has been consistently held that the question of infringement of a
trademark is to be determined by the test of dominancy. Similarity in size,
form and color, while relevant, is not conclusive. If the competing
trademark contains the main or essential or dominant features of another,
and confusion and deception is likely to result, infringement takes place.
Duplication or imitation is not necessary; nor is it necessary that the
infringing label should suggest an effort to imitate. (G. Heilman Brewing
Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White
Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue in cases of
infringement of trademarks is whether the use of the marks involved would
be likely to cause confusion or mistakes in the mind of the public or
deceive purchasers. (Auburn Rubber Corporation vs. Honover Rubber
Co., 107 F. 2d 588; x x x)
x x x x

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

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

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

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

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

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


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

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

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

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

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

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

x x x x

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

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

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

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

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

x x x

Even respondents use of the Big Mak mark on non-hamburger food products cannot
excuse their infringement of petitioners registered mark, otherwise registered marks will
lose their protection under the law.

The registered trademark owner may use his mark on the same or similar
products, in different segments of the market, and at different price levels
depending on variations of the products for specific segments of the market. The
Court has recognized that the registered trademark owner enjoys protection in
product and market areas that are the normal potential expansion of his
business. Thus, the Court has declared:

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



WHEREFORE, we GRANT the petition. We SET ASIDE the 1 September 2005 Decision
and 4 April 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 62730 and REINSTATE the
18 September 1998 Decision of the Regional Trial Court, Judicial Region 7, Branch 9, Cebu City, in
Civil Case No. CEB-19345.

SO ORDERED.













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 "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.
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 t hat 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
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.

Footnotes
1
Sec. 2 of the Trade Mark Law requires actual use in the Philippines of not less than
two months before application may be filed.














G.R. No. 180677 February 18, 2013
VICTORIO P. DIAZ, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES AND LEVI STRAUSS [PHILS.], INC., Respondents.
D E C I S I O N
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, 2007
1
and
November 22, 2007,
2
whereby 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 Pias 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 Levis
Strauss (Phil.) Inc. (hereinafter referred to as LEVIS), did then and there, willfully, unlawfully,
feloniously, knowingly and intentionally engaged in commerce by reproducing, counterfeiting, copying
and colorably imitating Levis 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, LEVIS, 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
LEVIS.
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 Levis
Strauss (Phil.) Inc. (hereinafter referred to as LEVIS), did then and there, willfully, unlawfully,
feloniously, knowingly and intentionally engaged in commerce by reproducing, counterfeiting, copying
and colorably imitating Levis 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, LEVIS, 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
LEVIS.
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 (Levis), 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 Levis jeans like LEVIS 501, the arcuate design, the two-horse brand, the two-horse patch,
the two-horse patch with pattern arcuate, and the composite tab arcuate. LEVIS 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
Levis 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 1970s,
1980s and early part of 1990s.
7

Levi Strauss Philippines, Inc. (Levis Philippines) is a licensee of Levis. After receiving information
that Diaz was selling counterfeit LEVIS 501 jeans in his tailoring shops in Almanza and Talon, Las
Pias City, Levis 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 LEVIS 501. Levis 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 LEVIS 501 jeans from them. Levis 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 LEVIS 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 LEVIS 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 Levis 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 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 P50,000.00 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 Levis Strauss (Phils.), Inc.
the following, thus:
1. P50,000.00 in exemplary damages; and
2. P222,000.00 as and by way of attorneys 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 appellants 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
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 APPELLANTS
BRIEF.
11

Ruling
The Court first resolves whether the CA properly dismissed the appeal of Diaz due to the late filing of
his appellants brief.
Under Section 7, Rule 44 of the Rules of Court, the appellant is required to file the appellants 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
appellants 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 appellants brief is not mandatory, but discretionary. Verily, the failure to serve and
file the required number of copies of the appellants 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 appellants 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 Diazs counsel thrice sought an extension of the period to file the appellants
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 appellants
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 appellants 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 appellants 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 appellants 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 appellants 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
P100,000.00 (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 appellants 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 Diazs counsel to justify the belated filing of the appellants brief as
unworthy of serious consideration, Diaz should not be made to suffer the dire consequence. Any
accused in his shoes, with his personal liberty as well as his personal fortune at stake, expectedly but
innocently put his fullest trust in his counsels 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 appellants 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 peoples birthright. Thus, we have to undo Diazs dire fat e.
Even as we now set aside the CAs 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.
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 McDonalds
Corporation v. Macjoy Fastfood Corporation
17
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 Garments
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. Accordingly, the jeans trademarks of Levis Philippines and
Diaz must be considered as a whole in determining the likelihood of confusion between them. The
maong pants or jeans made and sold by Levis Philippines, which included LEVIS 501, were very
popular in the Philippines. The consuming public knew that the original LEVIS 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 Diazs 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 LEVIS 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.
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

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 LEVIS 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 LEVIS 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:
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.
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 "LEVIS" while that of the
accused indicates the letters "LSJT" which means LS JEANS TAILORING. Again, even an ordinary
customer can distinguish the word LEVIS from the letters LSJT.
x x x x
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 Diazs
trademark been confusingly similar with the registered trademark for LEVIS 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.
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.
LUCAS P. BERSAMIN
Associate Justice




















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.
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 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;
(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 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

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 centur ies.
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.
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 dil atory 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 uphel d.
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 registr ation 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
(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 soluti ons 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 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 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 Oppositi on in
cases already or hereafter filed against the registration of trademarks
entitled to protection of Section 6bis of said PARIS CONVENTION as
outlined above, by remanding applications filed by one not entitled to such
protection for final disallowance by the Examination Division.
5. All pending applications for Philippine registration of signature and other
world-famous trademarks filed by applicants other than their original
owners or users shall be rejected forthwith. Where such applicants have
already obtained registration contrary to the abovementioned PARIS
CONVENTION and/or Philippine Law, they shall be directed to surrender
their Certificates of Registration to the Philippine Patent Office for
immediate cancellation proceedings.
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;
(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 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.




COFFEE PARTNERS, INC., G.R. No. 169504
Petitioner,
Present:

CARPIO, J ., Chairperson,
VELASCO, JR.,
*

DEL CASTILLO,
- versus - ABAD, and
PEREZ, JJ.


SAN FRANCISCO COFFEE & Promulgated:
ROASTERY, INC.,
Respondent. March 3, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x


D E C I S I O N


CARPIO, J .:


The Case

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

The Facts

Petitioner Coffee Partners, Inc. is a local corporation engaged in the business of establishing
and maintaining coffee shops in the country. It registered with the Securities and Exchange
Commission (SEC) in January 2001. It has a franchise agreement
6[6]
with Coffee Partners Ltd. (CPL),
a business entity organized and existing under the laws of British Virgin Islands, for a non-exclusive
right to operate coffee shops in the Philippines using trademarks designed by CPL such as SAN
FRANCISCO COFFEE.









Respondent is a local corporation engaged in the wholesale and retail sale of coffee. It
registered with the SEC in May 1995. It registered the business name SAN FRANCISCO COFFEE &
ROASTERY, INC. with the Department of Trade and Industry (DTI) in June 1995. Respondent had
since built a customer base that included Figaro Company, Tagaytay Highlands, Fat Willys, and
other coffee companies.

In 1998, respondent formed a joint venture company with Boyd Coffee USA under the
company name Boyd Coffee Company Philippines, Inc. (BCCPI). BCCPI engaged in the processing,
roasting, and wholesale selling of coffee. Respondent later embarked on a project study of setting up
coffee carts in malls and other commercial establishments in Metro Manila.

In June 2001, respondent discovered that petitioner was about to open a coffee shop under
the name SAN FRANCISCO COFFEE in Libis, Quezon City. According to respondent, petitioners
shop caused confusion in the minds of the public as it bore a similar name and it also engaged in the
business of selling coffee. Respondent sent a letter to petitioner demanding that the latter stop using
the name SAN FRANCISCO COFFEE. Respondent also filed a complaint with the Bureau of Legal
Affairs-Intellectual Property Office (BLA-IPO) for infringement and/or unfair competition with claims for
damages.

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

Mr. David Puyat, president of petitioner corporation, testified that the coffee shop in Libis,
Quezon City opened sometime in June 2001 and that another coffee shop would be opened in
Glorietta Mall, Makati City. He stated that the coffee shop was set up pursuant to a franchise
agreement executed in January 2001 with CPL, a British Virgin Island Company owned by Robert
Boxwell. Mr. Puyat said he became involved in the business when one Arthur Gindang invited him to
invest in a coffee shop and introduced him to Mr. Boxwell. For his part, Mr. Boxwell attested that the
coffee shop SAN FRANCISCO COFFEE has branches in Malaysia and Singapore. He added that
he formed CPL in 1997 along with two other colleagues, Shirley Miller John and Leah Warren, who
were former managers of Starbucks Coffee Shop in the United States. He said they decided to invest
in a similar venture and adopted the name SAN FRANCISCO COFFEE from the famous city in
California where he and his former colleagues once lived and where special coffee roasts came from.

The Ruling of the Bureau of Legal Affairs-Intellectual Property Office

In its 14 August 2002 Decision, the BLA-IPO held that petitioners trademark infringed on
respondents trade name. It ruled that the right to the exclusive use of a trade name with freedom
from infringement by similarity is determined from priority of adoption. Since respondent registered its
business name with the DTI in 1995 and petitioner registered its trademark with the IPO in 2001 in
the Philippines and in 1997 in other countries, then respondent must be protected from infringement
of its trade name.

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

The BLA-IPO held that petitioners use of the trademark SAN FRANCISCO COFFEE will
likely cause confusion because of the exact similarity in sound, spelling, pronunciation, and
commercial impression of the words SAN FRANCISCO which is the dominant portion of
respondents trade name and petitioners trademark. It held that no significant difference resulted
even with a diamond-shaped figure with a cup in the center in petitioner's trademark because greater
weight is given to words the medium consumers use in ordering coffee products.

On the issue of unfair competition, the BLA-IPO absolved petitioner from liability. It found that
petitioner adopted the trademark SAN FRANCISCO COFFEE because of the authority granted to it
by its franchisor. The BLA-IPO held there was no evidence of intent to defraud on the part of
petitioner.

The BLA-IPO also dismissed respondents claim of actual damages because its claims of profit
loss were based on mere assumptions as respondent had not even started the operati on of its coffee
carts. The BLA-IPO likewise dismissed respondents claim of moral damages, but granted its claim of
attorneys fees.

Both parties moved for partial reconsideration. Petitioner protested the finding of infringement,
while respondent questioned the denial of actual damages. The BLA-IPO denied the parties partial
motion for reconsideration. The parties appealed to the Office of the Director General -Intellectual
Property Office (ODG-IPO).

The Ruling of the Office of the Director General-
Intellectual Property Office

In its 22 October 2003 Decision, the ODG-IPO reversed the BLA-IPO. It ruled that petitioners
use of the trademark SAN FRANCISCO COFFEE did not infringe on respondent's trade name. The
ODG-IPO found that respondent had stopped using its trade name after it entered into a joint venture
with Boyd Coffee USA in 1998 while petitioner continuously used the trademark since June 2001
when it opened its first coffee shop in Libis, Quezon City. It ruled that between a subsequent user of a
trade name in good faith and a prior user who had stopped using such trade name, it would be
inequitable to rule in favor of the latter.

The Ruling of the Court of Appeals

In its 15 June 2005 Decision, the Court of Appeals set aside the 22 October 2003 decision
of the ODG-IPO in so far as it ruled that there was no infringement. It reinstated the 14 August 2002
decision of the BLA-IPO finding infringement. The appellate court denied respondents claim for
actual damages and retained the award of attorneys fees. In its 1 September 2005 Resolution, the
Court of Appeals denied petitioners motion for reconsideration and respondents motion for partial
reconsideration.

The Issue

The sole issue is whether petitioners use of the trademark SAN FRANCISCO COFFEE
constitutes infringement of respondents trade name SAN FRANCISCO COFFEE & ROASTERY,
INC., even if the trade name is not registered with the Intellectual Property Office (IPO).

The Courts Ruling

The petition has no merit.

Petitioner contends that when a trade name is not registered, a suit for infringement is not
available. Petitioner alleges respondent has abandoned its trade name. Petitioner points out that
respondents registration of its business name with the DTI expired on 16 June 2000 and it was only
in 2001 when petitioner opened a coffee shop in Libis, Quezon City that respondent made a belated
effort to seek the renewal of its business name registration. Petitioner stresses respondents failure to
continue the use of its trade name to designate its goods negates any allegation of infringement.
Petitioner claims no confusion is likely to occur between its trademark and respondents trade name
because of a wide divergence in the channels of trade, petitioner serving ready-made coffee while
respondent is in wholesale blending, roasting, and distribution of coffee. Lastly, petitioner avers the
proper noun San Francisco and the generic word coffee are not capable of exclusive
appropriation.

Respondent maintains the law protects trade names from infringement even if they are not
registered with the IPO. Respondent claims Republic Act No. 8293 (RA 8293)
7[7]
dispensed with
registration of a trade name with the IPO as a requirement for the filing of an action for inf ringement.
All that is required is that the trade name is previously used in trade or commerce in the Philippines.
Respondent insists it never abandoned the use of its trade name as evidenced by its letter to
petitioner demanding immediate discontinuation of the use of its trademark and by the filing of the
infringement case. Respondent alleges petitioners trademark is confusingly similar to respondents
trade name. Respondent stresses ordinarily prudent consumers are likely to be misled about the
source, affiliation, or sponsorship of petitioners coffee.

As to the issue of alleged abandonment of trade name by respondent, the BLA-IPO found that
respondent continued to make plans and do research on the retailing of coffee and the establishment
of coffee carts, which negates abandonment. This finding was upheld by the Court of Appeals, which
further found that while respondent stopped using its trade name in its business of selling coffee, it
continued to import and sell coffee machines, one of the services for which the use of the business
name has been registered. The binding effect of the factual findings of the Court of Appeals on this
Court applies with greater force when both the quasi-judicial body or tribunal like the BLA-IPO and the
Court of Appeals are in complete agreement on their factual findings. It is also settled that absent any
circumstance requiring the overturning of the factual conclusions made by the quasi-judicial body or
tribunal, particularly if affirmed by the Court of Appeals, the Court necessarily upholds such findings
of fact.
8[8]


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



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

(1) The trademark being infringed is registered in the Intellectual Property Office;
however, in infringement of trade name, the same need not be registered;
(2) The trademark or trade name is reproduced, counterfeited, copied, or colorably
imitated by the infringer;
(3) The infringing mark or trade name is used in connection with the sale, offering for
sale, or advertising of any goods, business or services; or the infringing mark or trade
name is applied to labels, signs, prints, packages, wrappers, receptacles, or
advertisements intended to be used upon or in connection with such goods, business,
or services;
(4) The use or application of the infringing mark or trade name is likely to cause confusion or
mistake or to deceive purchasers or others as to the goods or services themselves or as to the
source or origin of such goods or services or the identity of such business; and
(5) It is without the consent of the trademark or trade name owner or the assignee thereof.
10[10]

(Emphasis supplied)

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


Section 22 of Republic Act No. 166,
12[12]
as amended, required registration of a trade name as
a condition for the institution of an infringement suit, to wit:

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)


HOWEVER, RA 8293, WHICH TOOK EFFECT ON 1 JANUARY 1998, HAS DISPENSED
WITH THE REGISTRATION REQUIREMENT. SECTION 165.2 OF RA 8293 CATEGORICALLY
STATES THAT TRADE NAMES SHALL BE PROTECTED, EVEN PRIOR TO OR WITHOUT
REGISTRATION WITH THE IPO, AGAINST ANY UNLAWFUL ACT INCLUDING ANY
SUBSEQUENT USE OF THE TRADE NAME BY A THIRD PARTY, WHETHER AS A TRADE NAME
OR A TRADEMARK LIKELY TO MISLEAD THE PUBLIC. THUS:






SEC. 165.2 (A) NOTWITHSTANDING ANY LAWS OR REGULATIONS
PROVIDING FOR ANY OBLIGATION TO REGISTER TRADE NAMES, SUCH NAMES
SHALL BE PROTECTED, EVEN PRIOR TO OR WITHOUT REGISTRATION,
AGAINST ANY UNLAWFUL ACT COMMITTED BY THIRD PARTIES.

(B) IN PARTICULAR, ANY SUBSEQUENT USE OF A TRADE NAME BY A THIRD PARTY,
WHETHER AS A TRADE NAME OR A MARK OR COLLECTIVE MARK, OR ANY SUCH USE OF A
SIMILAR TRADE NAME OR MARK, LIKELY TO MISLEAD THE PUBLIC, SHALL BE DEEMED
UNLAWFUL. (EMPHASIS SUPPLIED)


IT IS THE LIKELIHOOD OF CONFUSION THAT IS THE GRAVAMEN OF INFRINGEMENT.
BUT THERE IS NO ABSOLUTE STANDARD FOR LIKELIHOOD OF CONFUSION. ONLY THE
PARTICULAR, AND SOMETIMES PECULIAR, CIRCUMSTANCES OF EACH CASE CAN
DETERMINE ITS EXISTENCE. THUS, IN INFRINGEMENT CASES, PRECEDENTS MUST BE
EVALUATED IN THE LIGHT OF EACH PARTICULAR CASE.
13[13]


IN DETERMINING SIMILARITY AND LIKELIHOOD OF CONFUSION, OUR
JURISPRUDENCE HAS DEVELOPED TWO TESTS: THE DOMINANCY TEST AND THE HOLISTIC
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. IF THE COMPETING TRADEMARK
CONTAINS THE MAIN, ESSENTIAL, AND DOMINANT FEATURES OF ANOTHER, AND
CONFUSION OR DECEPTION IS LIKELY TO RESULT, INFRINGEMENT OCCURS. EXACT
DUPLICATION OR IMITATION IS NOT REQUIRED. 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.
14[14]


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


APPLYING EITHER THE DOMINANCY TEST OR THE HOLISTIC TEST, PETITIONERS
SAN FRANCISCO COFFEE TRADEMARK IS A CLEAR INFRINGEMENT OF RESPONDENTS
SAN FRANCISCO COFFEE & ROASTERY, INC. TRADE NAME. THE DESCRIPTIVE WORDS
SAN FRANCISCO COFFEE ARE PRECISELY THE DOMINANT FEATURES OF RESPONDENTS





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

IN PHILIPS EXPORT B.V. V. COURT OF APPEALS,
17[17]
THIS COURT HELD THAT A
CORPORATION HAS AN EXCLUSIVE RIGHT TO THE USE OF ITS NAME. THE RIGHT
PROCEEDS FROM THE THEORY THAT IT IS A FRAUD ON THE CORPORATION WHICH HAS
ACQUIRED A RIGHT TO THAT NAME AND PERHAPS CARRIED ON ITS BUSINESS
THEREUNDER, THAT ANOTHER SHOULD ATTEMPT TO USE THE SAME NAME, OR THE SAME
NAME WITH A SLIGHT VARIATION IN SUCH A WAY AS TO INDUCE PERSONS TO DEAL WITH
IT IN THE BELIEF THAT THEY ARE DEALING WITH THE CORPORATION WHICH HAS GIVEN A
REPUTATION TO THE NAME.
18[18]


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

THE COURT OF APPEALS WAS CORRECT IN SETTING ASIDE THE 22 OCTOBER 2003
DECISION OF THE OFFICE OF THE DIRECTOR GENERAL-INTELLECTUAL PROPERTY OFFICE
AND IN REINSTATING THE 14 AUGUST 2002 DECISION OF THE BUREAU OF LEGAL AFFAIRS-
INTELLECTUAL PROPERTY OFFICE.

WHEREFORE, WE DENY THE PETITION FOR REVIEW. WE AFFIRM THE 15 JUNE 2005
DECISION AND 1 SEPTEMBER 2005 RESOLUTION OF THE COURT OF APPEALS IN CA-G.R.
SP NO. 80396.

COSTS AGAINST PETITIONER.

SO ORDERED.







G.R. No. 139983 March 26, 2008
MANUEL P. SAMSON, Petitioner,
vs.
COURT OF APPEALS and WILFRO LUMINLUN, Respondents.
D E C I S I O N
CARPIO, J .:
The Case
This is a petition for review of the Decision
1
dated 6 September 1999 of the Court of Appeals in CA-
G.R. CV No. 31904 reversing the Decision
2
dated 15 May 1990 and the Order dated 7 December
1990 of the Regional Trial Court, Branch 160, Pasig City in Civil Case No. 58052.
The Antecedent Facts
On 26 February 1982, petitioner Manuel P. Samson (Samson) applied for the registration of the
"OTTO" trademark with the Philippine Patent Office on belts, bags, t-shirts, blouses, briefs, pants,
jackets, jeans, and bra. On 21 January 1983, respondent Wilfro Luminlun (Luminlun) likewise filed for
the registration of the "OTTO" trademark on jeans, sportswear, skirts, and socks.
On 29 December 1983, Samson executed the following document
3
granting Luminlun the authority to
use the "OTTO" trademark for jeans only:
AUTHORITY TO USE TRADEMARK
KNOW ALL MEN BY THESE PRESENTS:
I, MANUEL P. SAMSON, Filipino, of legal age and a resident of Doa Betang Subdivision, Santolan,
Metro Manila, am the registered owner of the trademark OTTO for bags, shoes, sandals and slippers
under Registration Certificate No. 29840 issued on September 29, 1981, and the applicant in
Application hearing Serial No. 47626 for the same trademark OTTO filed on February 26, 1982 for
belts, bags, t-shirts, blouses, briefs, pants, jackets, jeans and bras, which application was duly
approved for publication in the Official Gazette last November 18, 1982;
That for valuable consideration, I hereby grant unto WILFRO P. LUMINLUN, Filipino, of legal age and
with business address at No. 959 Soler Street, Binondo, Manila, a non-transferable, non-assignable,
non-exclusive right and license to use said trademark OTTO for jeans only. This authority shall
remain valid and existing for as long as I remain the owner of the trademark OTTO unless said
WILFRO P. LUMINLUN should do or cause to be done any act which in any way prejudice or
discredit the trademark OTTO not only in connection with its use for jeans but as well as for other
products enumerated in my registration certificates/application documents.
IN WITNESS WHEREOF, I have hereunto affixed my signature this 29th day of December, 1983.
SGD. MANUEL P. SAMSON
On 19 March 1984, the Philippine Patent Office issued to Samson a Certificate of Registration for the
mark "OTTO" in the principal register for use on belts, bags, t-shirts, blouses, briefs, pants, jackets,
jeans, and bra.
In a letter
4
dated 29 March 1989, Samson, through counsel, informed Luminlun that he was revoking
the latters authority to use the trademark "OTTO." Samson advised Luminlun to "cease and desist
from further manufacturing and distributing OTTO jeans" otherwise he would confiscate jeans using
the unauthorized "OTTO" trademark. Samson likewise demanded the payment of royalties, thus:
Dear Mr. Luminlun:
On behalf of my client, Mr. Manuel P. Samson, this is to demand that you CEASE and DESIST from
further manufacturing and distributing OTTO jeans effective as of receipt of this notice considering
that my aforesaid client had already revoked the authority granted to you for the use of the trademark
OTTO in jeans. A copy of the Revocation of Authority To Use Trademark filed in the Patent Office on
March 21, 1989 is attached.
Further, you have to account for the sale of OTTO jeans beginning January 1984 up to March 1989
as we will get a percentage thereof for the royalty due to my client of not less than P5,000,000.00 for
your use of said trademark for more than five (5) years.
Kindly give us the name and address of your sales outlet in order that they maybe properly appraised
(sic) of this development.
Should you fail to heed this advice, we will be constrained to file an action for damages and we will
pray for issuance of injunction against you and for the confiscation and removal of jeans with the use
of an unauthorized trademark OTTO.
I trust for your compliance within five (5) days from receipt hereof to obviate being embroiled in a
costly and cumbersome litigation.
Very truly yours,
SGD. NELSON Y. NG
Samson also filed with the Philippine Patent Office a Revocation of Authority to Use Trademark.
5

As a result, Luminlun filed a complaint before the Regional Trial Court, Pasig City questi oning the
validity of Samsons revocation of his authority to use the "OTTO" trademark. Luminlun likewise
prayed that he be compensated for the loss of sales he suffered since the sales outlets refused to
accept his deliveries for fear that the goods would be confiscated and removed from their stores.
On 10 April 1989, the trial court issued an Order restraining Samson from "proceeding and carrying
out the confiscation and the removal of jeans with trademark OTTO pending hearing on the petition
for preliminary injunction." On 19 April 1989, Samson filed an "Opposition to Motion for Issuance of
preliminary injunction and/or Motion to Lift Restraining Order."
After presentation of evidence and submission of memoranda by both parties, on 28 April 1989, the
trial court issued an Order granting Luminluns prayer for preliminary injunction.
On 9 May 1989, Samson filed his Answer. Samson raised, among others, the defenses that: (1)
Luminlun failed to pay royalties for the use of the trademark; and (2) Luminlun violated the terms and
conditions of the Authority to Use Trademark when he used the "OTTO" trademark for other products.
The Ruling of the Trial Court
In its Decision dated 15 May 1990, the trial court dismissed Luminluns complaint. The dispositive
portion of the decision reads:
WHEREFORE, foregoing considered, the complaint is ordered DISMISSED. With costs against
plaintiff.
The writ of preliminary injunction earlier issued by the Court is set aside and recalled.
On the counterclaim, plaintiff is ordered to pay defendant attorneys fees of P25,000.00.
SO ORDERED.
6

The trial court ruled that Samson was justified in revoking the authority of Luminlun to use the
trademark. The trial court found that Luminluns acts of manufacturing and selling products bearing
the trademark "OTTO LTD." like skirts, shorts, pants, jeans, as as well as products with the trademark
"OTTO" like belts, buttons, and bags, clearly violated the authority granted by Samson to use the
"OTTO" trademark for jeans only. The trial court, however, ruled that Samson failed to prove that he
was entitled to royalties.
Upon motion for reconsideration of both parties, the trial court in an Order dated 7 December 1990
7

affirmed its decision with the modification of an award of moral damages of P20,000 in favor of
Samson.
The Ruling of the Court of Appeals
On appeal, the Court of Appeals reversed the ruling of the trial court. The appellate court found that
Samson revoked the authority on the sole ground that Luminlun failed to pay royalties. According to
the appellate court, Samson could not validly revoke the authority based on this ground since he
failed to prove that royalties were due him. The appellate court further ruled that Luminlun suffered
losses as a result of the revocation and thus awarded damages. The dispositive portion of the Court
of Appeals decision reads:
WHEREFORE, judgment is hereby rendered setting aside the decision appealed from and a new one
issue making the injunction permanent and ordering appellee to pay appellant the following sums of
money:
a) actual and compensatory damages in the amount of P2,257,872.20.
b) attorneys fees in the amount of P50,000.00.
Costs against appellee.
SO ORDERED.
8

The Issues
Thus, in this petition, Samson raises the following assignment of errors:
9

(a) The Court of Appeals erred in concluding that the revocation of the Authority to Use
Trademark made by Samson was unjustified;
(b) The Court of Appeals erred in awarding actual or compensatory damages of P2,257,872.20
in spite of the total absence of evidence to show that Luminlun sustained such damages as a
consequence of the revocation of the Authority to Use Trademark;
(c) The Court of Appeals erred in awarding attorneys fees of P50,000 in spite of the absence
of any legal ground for such award; and
d) The Court of Appeals erred in not sustaining the trial courts award of moral damages and
attorneys fees in favor of Samson.
The Courts Ruling
The resolution of this case hinges on whether Samson was justified in revoking Luminluns authority
to use the "OTTO" trademark.
We rule in the affirmative.
In finding for respondent Luminlun, the appellate court rationalized:
x x x In appellees Opposition to Motion for Issuance of Preliminary Injunction and/or Motion to
Lift Restraining Order dated April 18, 1989 (p. 37, Records), it is clearly stated that he revoked
the Authority to Use Trademark on the sole ground that appellant failed to pay royalty tax,
thus:
"x x x. When plaintiff unjustly and illegally failed, refused and neglected and still fails, refuse, and
neglects to pay royalty tax, defendant revoked the grant of authority and the same was filed with the
Patent Office on March 21, 1989, a copy of which was served on plaintiff and received by him
contained in a letter dated March 29, 1989. (at page 3 of Opposition)
x x x x x x x x x
"It is defendant who is entitled to the issuance of injunction to restrain plantiff from further
manufacturing and distributing OTTO jeans after plaintiffs authority had been revoked for failure to
comply with his obligation to pay royalty tax due to defendant."
As correctly pointed out by appellant, the issue that appellee had been allegedly affected and his
products allegedly discredited by appellants use of the trademark OTTO and OTTO Ltd. was but a
belated attempt on the part of the appellee to justify his illegal act of revoking the Authority to Use
Trademark issued to the appellant. It was only after realizing the weakness of his sole ground for
revoking the authority that he raised said issue.
It is evident that when appellee executed the Revocation of Authority to Use Trademark on
March 28, 1989 he was not concerned with appellants use of the trademark OTTO Ltd. on
appellants product and the trademark OTTO on belts and buttons because there was no
prejudice on his part. Otherwise, he could have mentioned the same in the Revocation and in the
demand letter dated March 29, 1989 of his counsel, Atty Nelson Y. Ng.
10
(Emphasis supplied)
We disagree with the appellate courts ruling.
The authority granted to Luminlun to use the "OTTO" trademark was limited for use on jeans only.
Under the agreement, Samson could revoke the authority if Luminlun "should do or cause to be done
any act which would in any way prejudice or discredit the trademark OTTO not only in connection
with its use for jeans but as well as for other products" enumerated in Samsons registration
certificates.
As correctly found by the trial court, Luminlun manufactured "OTTO" belts, buttons, and bags as well
as "OTTO LTD." clothing in violation of the terms and conditions of the authority which affected
Samson and discredited his products, thus:
On the second issue, the Court finds that defendant has been affected and his products
discredited by plaintiffs use of trademark "OTTO" and OTTO LTD." on other products, aside
from jeans. Plaintiff admitted manufacturing and selling products bearing the trademark
"OTTO LTD." like skirts, shorts, pants, jeans; also plaintiff manufactures and sells products
with the trademark "OTTO", like belts, buttons and bags. (Exh. "3"; also pp. 67, 68, 69, 91, rec.)
The authority given to plaintiff was a non-transferable, non-assignable, non-exclusive right and
license to use said trademark "OTTO" for jeans only x x x". (Underlining supplied) Clearly, plaintiff
failed to comply with the terms and conditions enumerated in the agreement. Plaintiff had the option
to use the trademark "OTTO" but he had done acts constituting bad faith, necessarily discrediting the
interest of defendant on his products which were duly registered with the Philippine Patent Office,
such as: Exh. "6," photograph of over all with trademark "OTTO"; Exh. "7", issue of Panorama
Magazine; Exh. "7-A", trousers with "OTTO LTD.", Exh. "8", t-shirt with brand "OTTO [LTD.]"; Exh.
"14", pants bearing "OTTO [LTD.]", Exh. "14-A" & Exh. "14-B"; belt and pant with "OTTO LTD." &
"OTTO"; Exh. "15" Cash invoice, pants "OTTO"; Exh. "17"- .", jeans classic with trademark "OTTO".
Defendant therefore was justified when he served notice of revocation of the authority of plaintiff to
use the trademark.
11
(Emphasis supplied)
Under the circumstances and in accordance with the terms and conditions of the Authority to Use
Trademark, we find that Samson was justified in revoking Luminluns authority to use the "OTTO"
trademark.
However, the appellate court chose to ignore Luminluns glaring violation of the terms and conditions
of the Authority. The appellate court instead resorted to hair-splitting and ruled that Samson could not
justify the revocation since he did not raise this ground in his "Opposition to Motion for Issuance of
Preliminary Injunction and/or Motion to Lift Restraining Order."
We find such reasoning flawed.
The records reveal that Samson, in his Answer, raised, among others, the affirmative defense that he
had the right to revoke the Authority to Use Trademark because Luminlun manufactured other
"OTTO" products aside from jeans:
Defendant had every right and prerogative to revoke the authority granted to plaintiff on the use of the
trademark for "OTTO" for jeans only when plaintiff failed to pay a single centavo of royalty and had
likewise violated the grant of authority by illegally manufacturing and distributing aside from
jeans, other products like jackets, skirts, shirts, blouses and shorts which are not covered by
the grant of authority granted to him.
12
(Emphasis supplied)
We find that Samson seasonably raised this defense and we do not see any basis for the apellate
courts ruling that Samson could not invoke this ground.
The appellate court further makes issue of the fact that Samson did not mention in both the
Revocation of Authority to Use Trademark and his demand letter dated 29 March 1989 that
Luminluns manufacture of other "OTTO" products such as belts and buttons was prejudicial to him
and was the cause for the revocation.
We note that the Revocation of Authority simply mentioned that "it was Luminluns failure to comply
with his undertaking when the authority was executed as the reason for the revocation." The fact that
Samson did not indicate the specific reason for the revocation is of no moment and should not be
taken against him.lavvphil Thus, we find no basis for the appellate courts conclusion that when
Samson executed the Revocation of Authority he was not concerned with Luminluns use of the
"OTTO" trademark on other products because there was no prejudice on his part. Samson was
affected and his products discredited by Luminluns unauthorized manufacture of other "OTTO"
products. Thus, in its Order resolving the Motions for Reconsideration filed by the parties, the trial
court stated:
x x x it is not denied defendant was given the authority by the Patent Office and has been the
registered owner of the trademark "OTTO" under principal register no. 33064 and 29840 and
supplemental register 7390 and 4166. The license was issued to the defendant for the protection of
his rights as a registered owner of the trademark in order to identify the lawful user. It was intended to
protect the public to be deceived of the use of the products.
On the issue of the violation of the conditions involving the claim of royalty, the Court said that
defendant has been affected and his products discredited by the plaintiffs use of trademark "OTTO"
and "OTTO LTD," on other products. Plaintiff had admitted manufacturing and selling products
with the same trademark on skirts, shorts, pants and jeans. Bad faith was evident from the
acts of plaintiff. The authority of plaintiff to use the trademark "OTTO" for jeans was revoked
for violation of the terms of the agreement.
13
(Emphasis supplied)
Considering that Samson was justified in revoking the authority of Luminlun to use the "OTTO"
trademark, it necessarily follows that the damages awarded by the appellate court in favor of
Luminlun have no basis.
WHEREFORE, we GRANT the Petition. We SET ASIDE the assailed Decision and Resolution of the
Court of Appeals and REINSTATE the 15 May 1990 Decision and the 7 December 1990 Order of the
Regional Trial Court, Branch 160, Pasig City.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:





G.R. No. 158589 June 27, 2006
PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., and FABRIQUES DE TABAC
REUNIES, S.A., (now known as PHILIP MORRIS PRODUCTS S.A.), Petitioners,
vs.
FORTUNE TOBACCO CORPORATION, Respondent.
D E C I S I O N
GARCIA, J .:
Via this petition for review under Rule 45 of the Rules of Court, herein petitioners Philip Morris, Inc.,
Benson & Hedges (Canada) Inc., and Fabriques de Tabac Reunies, S.A. (now Philip Morris Products
S.A.) seek the reversal and setting aside of the following issuances of the Court of Appeals (CA) in
CA-G.R. CV No. 66619, to wit:
1. Decision dated January 21, 2003
1
affirming an earlier decision of the Regional Trial
Court of Pasig City, Branch 166, in its Civil Case No. 47374, which dismissed the
complaint for trademark infringement and damages thereat commenced by the
petitioners against respondent Fortune Tobacco Corporation; and
2. Resolution dated May 30, 2003
2
denying petitioners motion for reconsideration.
Petitioner Philip Morris, Inc., a corporation organized under the laws of the State of Virginia, United
States of America, is, per Certificate of Registration No. 18723 issued on April 26, 1973 by the
Philippine Patents Office (PPO), the registered owner of the trademark "MARK VII" for cigarettes.
Similarly, petitioner Benson & Hedges (Canada), Inc., a subsidiary of Philip Morris, Inc., is the
registered owner of the trademark "MARK TEN" for cigarettes as evidenced by PPO Certificate of
Registration No. 11147. And as can be seen in Trademark Certificate of Registration No. 19053,
another subsidiary of Philip Morris, Inc., the Swiss company Fabriques de Tabac Reunies, S.A., is the
assignee of the trademark "LARK," which was originally registered in 1964 by Ligget and Myers
Tobacco Company. On the other hand, respondent Fortune Tobacco Corporation, a company
organized in the Philippines, manufactures and sells cigarettes using the trademark "MARK."
The legal dispute between the parties started when the herein petitioners, on the claim that an
infringement of their respective trademarks had been committed, filed, on August 18, 1982, a
Complaint for Infringement of Trademark and Damages against respondent Fortune Tobacco
Corporation, docketed as Civil Case No. 47374 of the Regional Trial Court of Pasig, Branch 166.
The decision under review summarized what happened next, as follows:
In the Complaint xxx with prayer for the issuance of a preliminary injunction, [petitioners] alleged that
they are foreign corporations not doing business in the Philippines and are suing on an isolated
transaction. xxx they averred that the countries in which they are domiciled grant xxx to corporate or
juristic persons of the Philippines the privilege to bring action for infringement, xxx without need of a
license to do business in those countries. [Petitioners] likewise manifested [being registered owners
of the trademark "MARK VII" and "MARK TEN" for cigarettes as evidenced by the corresponding
certificates of registration and an applicant for the registration of the trademark "LARK MILDS"]. xxx.
[Petitioners] claimed that they have registered the aforementioned trademarks in their respective
countries of origin and that, by virtue of the long and extensive usage of the same, these trademarks
have already gained international fame and acceptance. Imputing bad fait h on the part of the
[respondent], petitioners claimed that the [respondent], without any previous consent from any of the
[petitioners], manufactured and sold cigarettes bearing the identical and/or confusingly similar
trademark "MARK" xxx Accordingly, they argued that [respondents] use of the trademark "MARK" in
its cigarette products have caused and is likely to cause confusion or mistake, or would deceive
purchasers and the public in general into buying these products under the impression and mistaken
belief that they are buying [petitioners] products.
Invoking the provisions of the Paris Convention for the Protection of Industrial and Intellectual
Property (Paris Convention, for brevity), to which the Philippines is a signatory xxx, [petitioners]
pointed out that upon the request of an interested party, a country of the Union may prohibit the use
of a trademark which constitutes a reproduction, imitation, or translation of a mark already belonging
to a person entitled to the benefits of the said Convention. They likewise argued that, in accordance
with Section 21-A in relation to Section 23 of Republic Act 166, as amended, they are entitled to relief
in the form of damages xxx [and] the issuance of a writ of preliminary injunction which should be
made permanent to enjoin perpetually the [respondent] from violating [petitioners] right to the
exclusive use of their aforementioned trademarks.
[Respondent] filed its Answer xxx denying [petitioners] material allegations and xxx averred [among
other things] xxx that "MARK" is a common word, which cannot particularly identify a product to be
the product of the [petitioners] xxx
xxx xxx xxx.
lawphil.net
Meanwhile, after the [respondent] filed its Opposition (Records, Vo. I, p. 26), the matter of the
[petitioners] prayer for the issuance of a writ of preliminary injunction was negatively resolved by the
court in an Order xxx dated March 28, 1973. [The incidental issue of the propriety of an injunction
would eventually be elevated to the CA and would finally be resolved by the Supreme Court in its
Decision dated July 16, 1993 in G.R. No. 91332]. xxx.
xxx xxx xxx
After the termination of the trial on the merits xxx trial court rendered its Decision xxx dated
November 3, 1999 dismissing the complaint and counterclaim after making a finding that the
[respondent] did not commit trademark infringement against the [petitioners]. Resolving first the issue
of whether or not [petitioners] have capacity to institute the instant action, the trial court opined that
[petitioners] failure to present evidence to support their allegation that their respective countries
indeed grant Philippine corporations reciprocal or similar privileges by law xxx justifies the dismissal
of the complaint xxx. It added that the testimonies of [petitioners] witnesses xxx essentially declared
that [petitioners] are in fact doing business in the Philippines, but [petitioners] failed to establish that
they are doing so in accordance with the legal requirement of first securing a license. Hence, the
court declared that [petitioners] are barred from maintaining any action in Philippine courts pursuant
to Section 133 of the Corporation Code.
The issue of whether or not there was infringement of the [petitioners] trademarks by the
[respondent] was likewise answered xxx in the negative. It expounded that "in order for a name,
symbol or device to constitute a trademark, it must, either by itself or by association, point distinctly to
the origin or ownership of the article to which it is applied and be of such nature as to permit an
exclusive appropriation by one person". Applying such principle to the instant case, the trial court was
of the opinion that the words "MARK", "TEN", "LARK" and the Roman Numerals "VII", either alone or
in combination of each other do not by themselves or by association point distinctly to the origin or
ownership of the cigarettes to which they refer, such that the buying public could not be deceived into
believing that [respondents] "MARK" cigarettes originated either from the USA, Canada, or
Switzerland.
Emphasizing that the test in an infringement case is the likelihood of confusion or deception, the trial
court stated that the general rule is that an infringement exists if the resemblance is so close that it
deceives or is likely to deceive a customer exercising ordinary caution in his dealings and induces
him to purchase the goods of one manufacturer in the belief that they are those of another. xxx. The
trial court ruled that the [petitioners] failed to pass these tests as it neither presented witnesses or
purchasers attesting that they have bought [respondents] product believing that they bought
[petitioners] "MARK VII", "MARK TEN" or "LARK", and have also failed to introduce in evidence a
specific magazine or periodical circulated locally, which promotes and popularizes their products in
the Philippines. It, moreover, elucidated that the words consisting of the trademarks allegedly
infringed by [respondent] failed to show that they have acquired a secondary meaning as to identify
them as [petitioners] products. Hence, the court ruled that the [petitioners] cannot avail themselves of
the doctrine of secondary meaning.
As to the issue of damages, the trial court deemed it just not to award any to either party stating that,
since the [petitioners] filed the action in the belief that they were aggrieved by what they perceived to
be an infringement of their trademark, no wrongful act or omission can be attributed to them. xxx.
3

(Words in brackets supplied)
Maintaining to have the standing to sue in the local forum and that respondent has committed
trademark infringement, petitioners went on appeal to the CA whereat their appellate recourse was
docketed as CA-G.R. CV No. 66619.
Eventually, the CA, in its Decision dated January 21, 2003, while ruling for petitioners on the matter of
their legal capacity to sue in this country for trademark infringement, nevertheless affirmed the trial
courts decision on the underlying issue of respondents liability for infringement as it found that:
xxx the appellants [petitioners] trademarks, i.e., "MARK VII", "MARK TEN" and "LARK", do not
qualify as well-known marks entitled to protection even without the benefit of actual use in the local
market and that the similarities in the trademarks in question are insufficient as to cause decept ion or
confusion tantamount to infringement. Consequently, as regards the third issue, there is likewise no
basis for the award of damages prayed for by the appellants herein.
4
(Word in bracket supplied)
With their motion for reconsideration having been denied by the CA in its equally challenged
Resolution of May 30, 2003, petitioners are now with this Court via this petition for review essentially
raising the following issues: (1) whether or not petitioners, as Philippine registrants of trademarks, are
entitled to enforce trademark rights in this country; and (2) whether or not respondent has committed
trademark infringement against petitioners by its use of the mark "MARK" for its cigarettes, hence
liable for damages.
In its Comment,
5
respondent, aside from asserting the correctness of the CAs finding on its liability
for trademark infringement and damages, also puts in issue the propriety of the petition as it allegedly
raises questions of fact.
The petition is bereft of merit.
Dealing first with the procedural matter interposed by respondent, we find that the petition raises both
questions of fact and law contrary to the prescription against raising factual questions in a petition for
review on certiorari filed before the Court. A question of law exists when the doubt or difference arises
as to what the law is on a certain state of facts; there is a question of fact when the doubt or
difference arises as to the truth or falsity of alleged facts.
6

Indeed, the Court is not the proper venue to consider factual issues as it is not a trier of facts.
7
Unless
the factual findings of the appellate court are mistaken, absurd, speculative, conflicting, tainted with
grave abuse of discretion, or contrary to the findings culled by the court of origin,
8
we will not disturb
them.
It is petitioners posture, however, that their contentions should
be treated as purely legal since they are assailing erroneous conclusions deduced from a set of
undisputed facts.
Concededly, when the facts are undisputed, the question of whether or not the conclusion drawn
therefrom by the CA is correct is one of law.
9
But, even if we consider and accept as pure questions
of law the issues raised in this petition, still, the Court is not inclined to disturb the conclusions
reached by the appellate court, the established rule being that all doubts shall be resolved in favor of
the correctness of such conclusions.
10

Be that as it may, we shall deal with the issues tendered and determine whether the CA ruled in
accordance with law and established jurisprudence in arriving at its assailed decision.
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 in by others.
11
Inarguably, a trademark deserves
protection. For, as Mr. Justice Frankfurter observed in Mishawaka Mfg. Co. v. Kresge Co.:
12

The protection of trademarks is the laws recognition of the psychological function of symbols. If it is
true that we live by symbols, it is no less true that we purchase goods by them. A trade-mark is a
merchandising short-cut which induces a purchaser to select what he wants, or what he has been led
to believe what he wants. The owner of a mark exploits this human propensity by making every effort
to impregnate the atmosphere of the market with the drawing power of a congenial symbol. Whatever
the means employed, the aim is the same - to convey through the mark, in the minds of potential
customers, the desirability of the commodity upon which it appears. Once this is attained, the trade-
mark owner has something of value. If another poaches upon the commercial magnetism of the
symbol he has created, the owner can obtain legal redress.
It is thus understandable for petitioners to invoke in this recourse their entitlement to enforce
trademark rights in this country, specifically, the right to sue for trademark infringement in Philippine
courts and be accorded protection against unauthorized use of their Philippine-registered trademarks.
In support of their contention respecting their right of action, petitioners assert that, as corporate
nationals of member-countries of the Paris Union, they can sue before Philippine courts for
infringement of trademarks, or for unfair competition, without need of obtaining registration or a
license to do business in the Philippines, and without necessity of actual ly doing business in the
Philippines. To petitioners, these grievance right and mechanism are accorded not only by Section
21-A of Republic Act (R.A.) No. 166, as amended, or the Trademark Law, but also by Article 2 of the
Paris Convention for the Protection of Industrial Property, otherwise known as the Paris Convention.
In any event, petitioners point out that there is actual use of their trademarks in the Philippines as
evidenced by the certificates of registration of their trademarks. The marks "MARK TEN" and "LARK"
were registered on the basis of actual use in accordance with Sections 2-A
13
and 5(a)
14
of R.A. No.
166, as amended, providing for a 2-month pre-registration use in local commerce and trade while the
registration of "MARK VII" was on the basis of registration in the foreign country of origin pursuant to
Section 37 of the same law wherein it is explicitly provided that prior use in commerce need not be
alleged.
15

Besides, petitioners argue that their not doing business in the Philippines, if that be the case, does
not mean that cigarettes bearing their trademarks are not available and sold locally. Citing Converse
Rubber Corporation v. Universal Rubber Products, Inc.,
16
petitioners state that such availability and
sale may be effected through the acts of importers and distributors.
Finally, petitioners would press on their entitlement to protection even in the absence of actual use of
trademarks in the country in view of the Philippines adherence to the Trade Related Aspects of
Intellectual Property Rights or the TRIPS Agreement and the enactment of R.A. No. 8293, or the
Intellectual Property Code (hereinafter the "IP Code"), both of which provide that the fame of a
trademark may be acquired through promotion or advertising with no explicit requirement of actual
use in local trade or commerce.
Before discussing petitioners claimed entitlement to enforce trademark rights in the Philippines, it
must be emphasized that their standing to sue in Philippine courts had been recognized, and rightly
so, by the CA. It ought to be pointed out, however, that the appellate court qualified its holding with a
statement, following G.R. No. 91332, entitled Philip Morris, Inc., et al. v. The Court of Appeals and
Fortune Tobacco Corporation,
17
that such right to sue does not necessarily mean protection of their
registered marks in the absence of actual use in the Philippines.
Thus clarified, what petitioners now harp about is their entitlement to protection on the strength of
registration of their trademarks in the Philippines.
As we ruled in G.R. No. 91332,
18
supra, so it must be here.
Admittedly, the registration of a trademark gives the registrant, such as petitioners, advantages
denied non-registrants or ordinary users, like respondent. But while petitioners enjoy the statutory
presumptions arising from such registration,
19
i.e., as to the validity of the registration, ownership and
the exclusive right to use the registered marks, they may not successfully sue on the basis alone of
their respective certificates of registration of trademarks. For, petitioners are still foreign corporations.
As such, they ought, as a condition to availment of the rights and privileges vis--vis their trademarks
in this country, to show proof that, on top of Philippine registration, their country grants substantially
similar rights and privileges to Filipino citizens pursuant to Section 21-A
20
of R.A. No. 166.
In Leviton Industries v. Salvador,
21
the Court further held that the aforementioned reciprocity
requirement is a condition sine qua non to filing a suit by a foreign corporation which, unless alleged
in the complaint, would justify dismissal thereof, a mere allegation that the suit is being pursued under
Section 21-A of R.A. No. 166 not being sufficient. In a subsequent case,
22
however, the Court held
that where the complainant is a national of a Paris Convention- adhering country, its allegation that it
is suing under said Section 21-A would suffice, because the reciprocal agreement between the two
countries is embodied and supplied by the Paris Convention which, being considered part of
Philippine municipal laws, can be taken judicial notice of in infringement suits.
23

As well, the fact that their respective home countries, namely, the United States, Switzerland and
Canada, are, together with the Philippines, members of the Paris Union does not automatically entitle
petitioners to the protection of their trademarks in this country absent actual use of the marks in local
commerce and trade.
True, the Philippines adherence to the Paris Convention
24
effectively obligates the country to honor
and enforce its provisions
25
as regards the protection of industrial property of foreign nationals in this
country. However, any protection accorded has to be made subject to the limitations of Philippine
laws.
26
Hence, despite Article 2 of the Paris Convention which substantially provides that (1) nationals
of member-countries shall have in this country rights specially provided by the Convention as are
consistent with Philippine laws, and enjoy the privileges that Philippine laws now grant or may
hereafter grant to its nationals, and (2) while no domicile requirement in the country where protection
is claimed shall be required of persons entitled to the benefits of the Union for the enjoyment of any
industrial property rights,
27
foreign nationals must still observe and comply with the conditions
imposed by Philippine law on its nationals.
Considering that R.A. No. 166, as amended, specifically Sections 2
28
and 2-A
29
thereof, mandates
actual use of the marks and/or emblems in local commerce and trade before they may be registered
and ownership thereof acquired, the petitioners cannot, therefore, dispense with the element of actual
use. Their being nationals of member-countries of the Paris Union does not alter the legal situation.
In Emerald Garment Mfg. Corporation v. Court of Appeals,
30
the Court reiterated its rulings in Sterling
Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft,
31
Kabushi Kaisha Isetan v.
Intermediate Appellate Court,
32
and Philip Morris v. Court of Appeals and Fortune Tobacco
Corporation
33
on the importance of actual commercial use of a trademark in the Philippines
notwithstanding the Paris Convention:
The provisions of the 1965 Paris Convention relied upon by private respondent and Sec. 21-A of
the Trademark Law were sufficiently expounded upon and qualified in the recent case of Philip
Morris, Inc., et. al. vs. Court of Appeals:
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on trademarks regarding the
requirements of actual use in the Philippines must subordinate an international agreement inasmuch
as the apparent clash is being decided by a municipal tribunal. Xxx. 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 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.
Contrary to what petitioners suggest, the registration of trademark cannot be deemed conclusive as
to the actual use of such trademark in local commerce. As it were, registration does not confer upon
the registrant an absolute right to the registered mark. The certificate of registration merely
constitutes prima facie evidence that the registrant is the owner of the registered mark. Evidence of
non-usage of the mark rebuts the presumption of trademark ownership,
34
as what happened here
when petitioners no less admitted not doing business in this country.
35

Most importantly, we stress that registration in the Philippines of trademarks does not ipso facto
convey an absolute right or exclusive ownership thereof. To borrow from Shangri-La International
Hotel Management, Ltd. v. Development Group of Companies, Inc.
36
trademark is a creation of use
and, therefore, actual use is a pre-requisite to exclusive ownership; registration is only an
administrative confirmation of the existence of the right of ownership of the mark, but does not perfect
such right; actual use thereof is the perfecting ingredient.
37

Petitioners reliance on Converse Rubber Corporation
38
is quite misplaced, that case being cast in a
different factual milieu. There, we ruled that a foreign owner of a Philippine trademark, albeit not
licensed to do, and not so engaged in, business in the Philippines, may actually earn reputation or
goodwill for its goods in the country. But unlike in the instant case, evidence of actual sales of
Converse rubber shoes, such as sales invoices, receipts and the testimony of a legitimate trader, was
presented in Converse.
This Court also finds the IP Code and the TRIPS Agreement to be inapplicable, the infringement
complaint herein having been filed in August 1982 and tried under the aegis of R.A. No. 166, as
amended. The IP Code, however, took effect only on January 1, 1998 without a provision as to its
retroactivity.
39
In the same vein, the TRIPS Agreement was inexistent when the suit for infringement
was filed, the Philippines having adhered thereto only on December 16, 1994.
With the foregoing perspective, it may be stated right off that the registration of a trademark
unaccompanied by actual use thereof in the country accords the registrant only the standing to sue
for infringement in Philippine courts. Entitlement to protection of such trademark in the country is
entirely a different matter.
This brings us to the principal issue of infringement.
Section 22 of R.A. No. 166, as amended, defines 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 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 color ably 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.
Petitioners would insist on their thesis of infringement since respondents mark "MARK" for cigarettes
is confusingly or deceptively similar with their duly registered "MARK VII," "MARK TEN" and "LARK"
marks likewise for cigarettes. To them, the word "MARK" would likely cause confusion in the trade, or
deceive purchasers, particularly as to the source or origin of respondents cigarettes.
The "likelihood of confusion" is the gravamen of trademark infringement.
40
But likelihood of confusion
is a relative concept, the particular, and sometimes peculiar, circumstances of each case being
determinative of its existence. Thus, in trademark infringement cases, more than in other kinds of
litigation, precedents must be evaluated in the light of each particular case.
41

In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the
dominancy test and the holistic test.
42
The dominancy test
43
sets sight on the similarity of the
prevalent features of the competing trademarks that might cause confusion and deception, thus
constitutes infringement. Under this norm, the question at issue turns on whether the use of the
marks involved would be likely to cause confusion or mistake in the mind of the public or deceive
purchasers.
44

In contrast, the holistic test
45
entails a consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity.
Upon consideration of the foregoing in the light of the peculiarity of this case, we rule against the
likelihood of confusion resulting in infringement arising from the respondents use of the trademark
"MARK" for its particular cigarette product.
For one, as rightly concluded by the CA after comparing the trademarks involved in their entirety as
they appear on the products,
46
the striking dissimilarities are significant enough to warn any
purchaser that one is different from the other. Indeed, although the perceived offending word "MARK"
is itself prominent in petitioners trademarks "MARK VII" and "MARK TEN," the entire marking system
should be considered as a whole and not dissected, because a discerning eye would focus not only
on the predominant word but also on the other features appearing in the labels. Only then would such
discerning observer draw his conclusion whether one mark would be confusingly similar to the other
and whether or not sufficient differences existed between the marks.
47

This said, the CA then, in finding that respondents goods cannot be mistaken as any of the three
cigarette brands of the petitioners, correctly relied on the holistic test.
But, even if the dominancy test were to be used, as urged by the petitioners, but bearing in mind that
a trademark serves as a tool to point out distinctly the origin or ownership of the goods to which it is
affixed,
48
the likelihood of confusion tantamount to infringement appears to be farfetched. The reason
for the origin and/or ownership angle is that unless the words or devices do so point out the origin or
ownership, the person who first adopted them cannot be injured by any appropri ation or imitation of
them by others, nor can the public be deceived.
49

Since the word "MARK," be it alone or in combination with the word "TEN" and the Roman numeral
"VII," does not point to the origin or ownership of the cigarettes to which they apply, the local buying
public could not possibly be confused or deceived that respondents "MARK" is the product of
petitioners and/or originated from the U.S.A., Canada or Switzerland. And lest it be overlooked, no
actual commercial use of petitioners marks in local commerce was proven. There can thus be no
occasion for the public in this country, unfamiliar in the first place with petitioners marks, to be
confused.
For another, a comparison of the trademarks as they appear on the goods is just one of the
appreciable circumstances in determining likelihood of confusion. Del Monte Corp. v. CA
50
dealt with
another, where we instructed to give due regard to the "ordinary purchaser," thus:
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. 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.
When we spoke of an "ordinary purchaser," the reference was not to the "completely unwary
customer" but to the "ordinarily intelligent buyer" considering the type of product involved.
51

It cannot be over-emphasized that the products involved are addicting cigarettes purchased mainly by
those who are already predisposed to a certain brand. Accordingly, the ordinary buyer thereof would
be all too familiar with his brand and discriminating as well. We, thus, concur with the CA when it
held, citing a definition found in Dy Buncio v. Tan Tiao Bok,
52
that the "ordinary purchaser" in this
case means "one accustomed to buy, and therefore to some extent familiar with, the goods in
question."
Pressing on with their contention respecting the commission of trademark infringement, petitioners
finally point to Section 22 of R.A. No. 166, as amended. As argued, actual use of trademarks in local
commerce is, under said section, not a requisite before an aggrieved trademark owner can restrain
the use of his trademark upon goods manufactured or dealt in by another, it being sufficient that he
had registered the trademark or trade-name with the IP Office. In fine, petitioners submit that
respondent is liable for infringement, having manufactured and sold cigarettes with the trademark
"MARK" which, as it were, are identical and/or confusingly similar with their duly registered
trademarks "MARK VII," "MARK TEN" and "LARK".
This Court is not persuaded.
In Mighty Corporation v. E & J Gallo Winery,
53
the Court held that the following constitute the
elements of trademark infringement in accordance not only with Section 22 of R.A. No. 166, as
amended, but also Sections 2, 2-A, 9-A
54
and 20 thereof:
(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.lawphil.net
As already found herein, while petitioners have registered the trademarks "MARK VII," "MARK TEN"
and "LARK" for cigarettes in the Philippines, prior actual commercial use thereof had not been
proven. In fact, petitioners judicial admission of not doing business in this country effectively belies
any pretension to the contrary.
Likewise, we note that petitioners even failed to support their claim that their respective marks are
well-known and/or have acquired goodwill in the Philippines so as to be entitled to protection even
without actual use in this country in accordance with Article 6bis
55
of the Paris Convention. As
correctly found by the CA, affirming that of the trial court:
xxx the records are bereft of evidence to establish that the appellants [petitioners] products are
indeed well-known in the Philippines, either through actual sale of the product or through different
forms of advertising. This finding is supported by the fact that appellants admit in their Complaint that
they are not doing business in the Philippines, hence, admitting that their products are not being sold
in the local market. We likewise see no cogent reason to disturb the trial courts finding that the
appellants failed to establish that their products are widely known by local purchasers as "(n)o
specific magazine or periodical published in the Philippines, or in other countries but circulated
locally" have been presented by the appellants during trial. The appellants also were not able to show
the length of time or the extent of the promotion or advertisement made to popularize their products in
the Philippines.
56

Last, but not least, we must reiterate that the issue of trademark infringement is factual, with both the
trial and appellate courts having peremptorily found allegations of infringement on the part of
respondent to be without basis. As we said time and time again, factual determinations of the trial
court, concurred in by the CA, are final and binding on this Court.
57

For lack of convincing proof on the part of the petitioners of actual use of their registered trademarks
prior to respondents use of its mark and for petitioners failure to demonstrate confusing similarity
between said trademarks, the dismissal of their basic complaint for infringement and the concomitant
plea for damages must be affirmed. The law, the surrounding circumstances and the equities of the
situation call for this disposition.
WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed decision and resolution of
the Court of Appeals are AFFIRMED.
Costs against the petitioners.
SO ORDERED.
CANCIO C. GARCIA
G.R. No. 161051 July 23, 2009
COMPANIA GENERAL DE TABACOS DE FILIPINAS and LA FLOR DE LA ISABELA, INC.,
Petitioners,
vs.
HON. VIRGILIO A. SEVANDAL, as Director and DTI Adjudication Officer, ATTY. RUBEN S.
EXTRAMADURA, as Hearing Officer - Office of the Legal Affairs, Department of Trade and
Industry, TABAQUERIA DE FILIPINAS, INC., and GABRIEL RIPOLL, JR., Respondents.
D E C I S I O N
VELASCO, JR., J .:
The Case
This Petition for Review on Certiorari under Rule 45 seeks the reversal of the June 16, 2003
Decision
1
and December 1, 2003 Resolution
2
of the Court of Appeals (CA) in CA-G.R. SP No. 42881.
The CA denied petitioners Petition for Certiorari (With Urgent Application for Temporary Restraining
Order and/or Writ of Preliminary Injunction) and their motion for reconsideration.
The Facts
Petitioner Compania General de Tabacos de Filipinas, also known as "Tabacalera," is a foreign
corporation organized and existing under the laws of Spain. It is the owner of 24 trademarks
registered with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) of the
Department of Trade and Industry (DTI). Tabacalera authorized petitioner La Flor de la Isabela, Inc.
to manufacture and sell cigars and cigarettes using the Tabacalera trademarks.
Respondent Gabriel Ripoll, Jr. was an employee of petitioners for 28 years and was the General
Manager before he retired sometime in 1993.
3
In the same year, Ripoll organized Tabaqueria de
Filipinas, Inc. (Tabaqueria), a domestic corporation also engaged in the manufacture of tobacco
products like cigars.
4
Ripoll is the managing director of Tabaqueria.
On October 1, 1993, petitioners filed a Letter-Complaint
5
with the Securities and Exchange
Commission praying for the cancellation of the corporate name of Tabaqueria on the following
ground:
Tabaqueria, being engaged in the same business as Tabacalera, cannot be allowed to continue using
"tabaqueria" which will confuse and deceive the public into believing that Tabaqueria is operated and
managed by, and part of, Tabacalera and that its business is approved, sponsored by, and affiliated
with, Tabacalera.
Thereafter, petitioners also filed with the Department of Justice (DOJ)-Task Force on Anti-Intellectual
Property Piracy a criminal complaint against Ripoll for Infringement of Trademark and Unfair
Competition for violation of Articles 188 and 189 of the Revised Penal Code. The case was docketed
as I.S. No. 94C-07941, entitled Compania General de Tabacos de Filipinas & La Flor de la Isabela,
Inc. (Attys. Ferdinand S. Fider and Ma. Dolores T. Syquia v. Gabriel Ripoll, Jr. (Tabaqueria de
Filipinas, Inc.).
On February 8, 1994, petitioners filed with the DTI a Complaint dated February 4, 1994
6
for Unfair
Competition, docketed as Administrative Case No. 94-19 and entitled Compania General de Tabacos
de Filipinas and La Flor de la Isabela, Inc. v. Tabaqueria de Filipinas, Inc. and Gabriel Ripoll, Jr.
Petitioners alleged in the Complaint that Tabaqueria deliberately sought to adopt/simulate the
Tabacalera trademarks to confuse the public into believing that the Tabaqueria cigars are the same
or are somehow connected with the Tabacalera products.
7

In the Complaint petitioners sought, among others, the issuance of a "preliminary order requiring
respondents to refrain from manufacturing, distributing and/or selling the Tabaqueria products."
8

In their Answer dated April 9, 1994, Tabaqueria and Ripoll opposed the issuance of injunctive relief
pending investigation on the ground that petitioners allegation of unfair competition is unproved and
unsubstantiated. They alleged that petitioners failed to establish the following elements required for
the issuance of an injunctive writ:
The party applying for preliminary injunction must show (a) The invasion of the right sought to be
protected is material and substantial; (b) The right of complainant is clear and unmistakable; and (c)
There is an urgent and paramount necessity for the writ to prevent serious damage. (Director of
Forest Administration vs. Fernandez, 192 SCRA 121 [1990]; Phil. Virginia Tobacco Administration vs.
De los Angeles, 164 SCRA 543 [1988])
9

Meanwhile, on September 1, 1994, the DOJ issued a Resolution
10
in I.S. No. 94C-07941, the
dispositive portion of which reads:
Accordingly, it is hereby recommended that the complaint for unfair competition and/or infringement
of trademark be dismissed against respondent Gabriel Ripoll Jr. for insufficiency of evidence.
Petitioners moved reconsideration of the above resolution, but their motion was denied in a Letter
dated October 18, 1994.
11
Later, the Secretary of Justice reversed the Resolution dated September 1,
1994. Upon reconsideration, the Secretary, however, issued a Letter dated February 5, 1997
12

reaffirming the Resolution dated September 1, 1994.
On March 24, 1995, petitioners filed a Motion to Issue Cease and Desist Order
13
with the DTI, praying
for the issuance of an order: (1) directing private respondents to immediately cease and desist from
manufacturing, distributing, and selling cigar products bearing the marks and design of petitioners; (2)
for the immediate seizure of all cigar products of private respondents bearing the marks and design of
petitioners; and (3) for the immediate closure of private respondents establishment involved in the
production of those products.
In response, private respondents filed an Opposition to Complainants Mot ion to Issue Cease and
Desist Order, with Motion to Dismiss Complaint dated March 30, 1995.
14
Private respondents
anchored their motion to dismiss on the ground of forum shopping due to petitioners filing of prior
cases of infringement and unfair competition with the DOJ. As to the Motion to Issue Cease and
Desist Order, private respondents claimed that such motion was premature considering that the
alleged evidence for the issuance of the order was just then marked. Moreover, they alleged that the
acts that petitioners sought to be restrained would not cause irreparable injury to them.
Subsequently, the DTI issued a Temporary Restraining Order dated September 18, 1995
15
with a
validity period of 20 days from receipt by private respondents.
In an Order dated April 30, 1996, the Office of Legal Affairs of the DTI ruled that there was no
similarity in the general appearance of the products of the parties and that consumers would not be
misled. In the same order, the DTI partially granted petitioners prayer for the issuance of a writ of
preliminary injunction. The pertinent portions of the DTI Order state:
DETERMINATION OF SIMILARITY IN GENERAL APPEARANCE AND LIKELIHOOD OF
CONFUSION; PRODUCT COMPARISON; USUAL PURCHASER
x x x [L]et us now determine if there is similarity in general appearance between Tabacalera products
and Respondents products, such that it will likely mislead, confuse or deceive the usual purchasers
of cigars into buying Respondents products thinking that what they are buying are the Tabacalera
products they intended to buy.
The competing products should be viewed in their totality. But certain features, have to be excluded
first. That is what the Supreme Court did in determining similarity between SAN MIGUEL PALE
PILSEN (of San Miguel Corporation) and BEER PALE PILSEN (of Asia Brewery, Inc.) in the case of
Asia Brewery, Inc. vs. C.A. and San Miguel Corp. (G.R. No. 103543, prom. July 5, 1993). In said
case, the Supreme Court found that the two competing beer products have certain features in
common. Therefore, the two competing products are similar as far as those features are concerned.
But the Supreme Court excluded said features. Apparently the Court wanted to distinguish between
"similarity as a matter of fact" and "similarity as a matter of law", the latter having a limited scope
considering the many exclusions that have to be made. Hereunder are the said features and the
reasons cited by the Supreme Court for their exclusion:
COMMON FEATURES REASONS FOR EXCLUSION
1. The container is steinie
bottle.
It is a standard type of bottle
and therefore lacks exclusivity.
It is of functional or common
use. It is universally used.
2. The color of the bottle is
amber.
It is a functional feature. Its
function is to prevent the
transmission of light into the
said bottle and thus protect the
beer inside the bottle.
3. The phrase "pale pilsen" is
carried in their trademark.
This phrase is a generic one
even if respective included in
their trademarks.
4. The bottle has a capacity of
320 ML and is printed on the
label.
It is a metrication and
standardization requirement of
the defunct Metric System
Board (now a function of the
Bureau of Product Standards,
DTI).
5. The color of the words and
design on the label is white.
It is the most economical to use
on the label and easiest to bake
in the furnace. Hence, a
functional feature.
6. Rectangular shape of the
label.
It is the usual configuration of
labels.
7. The bottle's shape is round
with a neck.
It is commonly and universally
used.
In the same case of Supreme Court stated the following, citing Callman, Unfair Competition,
Trademarks and Monopolies:
"Protection against imitation should be properly confined to non-functional features. Even if purely
functional elements are 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 in reliance of any such unpatented functional feature, even at large expenditure of
money."
Following the Supreme Courts way of determining similarity, OLA will exclude t he features which
arise from industry practices of cigar manufacturers worldwide, features commonly used by cigar
manufacturers, standard features, functional features, features arising from labeling rights and
obligations, and generic words and phrases. All of these features have been listed and/or discussed
above. Now this needs clarification. When we say that we are excluding the logo because it is a
functional and universal feature, what we mean to say is that, the fact that both products bear a logo
(and therefore they are similar in that respect), will be excluded; but the design, words, drawings of
the respective logo of the contending parties will be considered. This clarification is also true for the
other excluded features.
Before we view the products in their totality, we will first compare the products as to their respective
details. The competing products of the Parties consist of around thirty-two (32) wooden boxes. We
note the following glaring differences/distinctions:
1. As to the logo engraved on the top and/or back of the cover of the box:
TABACALERAS:
Tabacalera uses two variants of their logo, one for the ordinary plywood boxes and
another for the narra boxes. The logo on the ordinary plywood box is as follows:
There are word/phrases thereon, namely:
1st line the brand "TABACALERA" (in big letters);
2nd line the representation "THE FINEST CIGARS SINCE 1881";
3rd line the representation "HAND MADE 100% TOBACCO";
4th line the address "MANILA, PHILIPPINES";
5th line the code "A-4-2".
Between the 2nd line and 3rd line is inscribed the crest and coat of arms of Tabacalera
which consists of a shield placed vertically, and divided into 4 parts with
inscriptions/drawings in each part. Within the center of the shield is an oval vertically
placed with drawings in it. The crest consists of the uppermost part of a watchtower
used in ancient times in watching for enemies coming.
As regards the logo on the narra boxes, it is oblong or egg-shaped, in two parallel lines
interrupted at its sides with semi-oblong two parallel lines and inscripted within such
latter parallel lines on the left side is "100% TABACO" and on the right side "HECHO A
MANO". On the lower portion between the oblong lines are the words "COMPANIA
GENERAL DE TABACOS DE FILIPINAS MANILA, PHILIPPINES, A-4-2". Within the
center of the smaller oblong is inscribed the crest and coat (described already above).
At each side of the crest/coat are tobacco leaves tied together. On top of the crest is the
corporate name "LA FLOR DE LA ISABELA" and this makes the logo confusing
because it does not explain the respective role of the two firms mentioned in the logo,
such as which one is the manufacturer, the distributor, the licensor, licensee, and
trademarks owner.
RESPONDENTS:
A bar curved into a U-shape. It is flanked at the bottom and on its sides with tobacco
leaves curved into a "U" also and joined together as in a "laurel". Engraved at the center
of said bar is the coat consists of a "shield", on top of which is the crest consists of a
princes crown with a cross on top. The "shield" is divided at its center by a line drawn
horizontally with small circles marked at intervals. At the upper portion of said dividing
line is a rooster (adopted by Mr. Ripoll from the coat of arms of his clan Exh. "48") and
the lower portion contains three tobacco leaves (representing Mr. Ripolls 3 sons) joined
into one. Encircling the crest and coat is the corporate name "TABAQUERIA DE
FILIPINAS, INC." as well as the brand "FLOR DE MANILA". Immediately bel ow the
leaves shaped as in a "laurel" is the phrase "HECHO A MANO 100% TOBACO".
2. As to the brand of the product:
TABACALERAS:
The brand "TABACALERA" is printed in big white Roman letters with black shadows on
a red rectangular background, and the latter is set over a gold and red rectangular
background with a design which appears to be an inverted letter "Z" leaning to the right
side, and said "Z" is used repeatedly forming a "chain" that surrounds the said red
background. Said "Z" also fills the left and right sides of the label. The same brand and
markings appear on three sides of the box. The back side bears the Government
Warning that cigar smoking is dangerous to health.
The brand "FLOR DE MANILA" is not used on Tabacaleras products except on a
cardboard pack of cigars, which is just slightly bigger than a pack of 100 mm cigarettes.
(Exh. "DD").
RESPONDENTS:
The brand "FLOR DE MANILA" is printed in red letters with black shadows on a white
rectangular background, and the latter is set over a gold rectangular background filled
with a red design that looks like the letter "P" with its head touching the ground. These
brand and markings appear on two sides of the box. The other two sides are occupied
by the seal of guaranty and by the said Government Warning.
Both Complainants and Respondents have no trademark registration yet of the brand
"Flor de Manila".
3. As to markings on edges of ordinary plywood box:
TABACALERAS:
The phrase "FLOR FINA" is printed in red Roman letters over a white rectangular
background, and the latter is set over a red background with 2 parallel gold lines and
the above-mentioned "Z" design in gold used repeatedly forming a straight chain. A tiny
company logo colored blue and yellow is marked at intervals.
RESPONDENTS:
The phrase "TABACO FINO" is printed in red letters with strokes that resemble those in
Chinese letters, on a white rectangular background, and the latter is set over a gold
background with red designs that look like ornate letters "X" and "J". A tiny company
logo is marked at intervals.
4. As to "seal of guaranty":
TABACALERAS:
Colored green and white; with the phrase "REPUBLIC OF THE PHILIPPINES" in big
letters and the phrase "sello de garantia de la Flor de la Isabela, Inc."; pasted
horizontally at the middle of the left portion of the cigar box if viewed from its top.
RESPONDENTS:
Colored gold and red; with the phrase in big letters "sello de garantia"; bears in big print
the company logo; pasted vertically at the middle of the left portion of the cigar box if
viewed from its top.
5. As to predominant colors:
TABACALERAS:
Red, gold, and green, in that order. Has blue and yellow.
RESPONDENTS:
Gold and red, in that order. No green, blue and yellow.
6. Other differences/distinctions
Tabacalera products have the following features:
a. The corporate name "LA FLOR DE LA ISABELA" (engraved on the narra wood
boxes; also printed on the seal of guaranty).
b. The brand "TABACALERA" surrounded by said "Z" design.
c. The representation "THE FINEST CIGARS SINCE 1881".
d. The address "MANILA, PHILIPPINES".
e. The code "A-4-2".
f. The phrase "REPUBLIC OF THE PHILIPPINES" in the seal of guaranty. Below said
phrase is a mountain which resembles the mountain printed in the old Philippine money.
This appears to be a misrepresentation that the Philippine government is a co-guarantor
in the seal of guaranty. This seal of guaranty was possibly copied from the seal of
guaranty of Cuban-made boxes of cigars. But in Cuba, the government really
guarantees the cigars made in Cuba because cigars are one of the main exports of that
country. In the Philippines, the government does not guaranty cigars made in the
Philippines.
g. The phrase "FLOR FINA" with the said "Z" design.
These seven (7) features are NOT found in Respondents products.
One of the rules in adjudicating unfair competition cases was laid down by the Supreme Court in the
case of Del Monte Corp. vs. C.A. et al. (181 SCRA 410) as follows:
We note that 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 condition under which it is usually purchased. Among those,
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. Expensive and
valuable items are normally bought after deliberate, comparative and analytical
investigation. But mass products, low priced articles as in wide use, and the matters of
everyday purchase requiring frequent replacement are bought by the causal consumer
without great care.
Certainly, not everybody buys cigars. Very few people buy cigars for they are expensive, have health
implications, and its smoke annoys non-smokers. It is really not the "sari-sari" store variety. OLA
takes judicial notice that even big department stores and malls do not ordinarily sell cigars. The usual
purchasers of cigars are older people not necessarily an elder or professional, besides those cigar
aficionados and cigar lovers, who are able and willing to pay and are capable of discerning the
products they buy. Definitely the "impulse buyers" (those who make a very quick decision (e.g., 6
seconds) to buy a certain product) are not the usual purchasers of cigars.
"The ordinary purchasers must be thought of as having, and credited with, at least a modicum of
intelligence to be able to see the obvious differences between the two trademarks in question." (Fruit
of the Loom, Inc. vs. C.A., 133 SCRA 405). From this Supreme Court decision we can say that if the
buyer can see the obvious differences between two trademarks, there is more reason for him to see
the obvious differences of the whole of the two products themselves even if sold at a glance.
Viewing briefly the competing products in their totality, the two are readily distinguished by their
respective brand as appearing in the box: "TABACALERA" is the brand of the Tabacalera products
while "FLOR DE MANILA" is the brand of Respondents products. In fact, per Certification of BIR
dated March 15, 1994, "Flor de Manila" is the brand registered by the Respondents with said bureau
(Annex "B", Answer). The Complainants allege in the Complaint (Par. 1.12) that Respondents are
using the word "TABAQUERIA" as the brand of their products. This allegation is belied by an
inspection of the boxes of Respondents none of them shows that the word "TABAQUERIA" was
detached from the firm name "TABAQUERIA DE FILIPINAS, INC." and used separately as a brand.
Also readily distinguishing the two products are their respective distinctive logo: Tabacaleras logo is
quite big and ornate while Respondents logo is quite small and simple. Their respective seal of
guaranty are also conspicuous. Tabacaleras seal of guaranty is colored green and white and pasted
horizontally while that of Respondents is colored gold and red and pasted vertically. The other glaring
differences between the two, which we have listed above, are revealed at once upon a brief look at
the competing products.
Confusion becomes more remote when we consider the usual buyers of cigars. We have already
discussed that above. They know their brand and they will not be confused by the various words,
marks, and designs on the products. This is specially true for purchasers who have been using
Tabacalera products for a long time (Tabacalera products have been available since 1881 [per logo
of Tabacalera] or 1917 [per Complaint]), and therefore know very well their favorite brand.
If they switch to Respondents products, it is not because they are deceived and confused but
because they find Respondents products to their taste.
We should also consider that cigars are expensive. Hereunder are sample prices of Respondents
products (Exhs. "EEE" and "III"):
a. Chest Coronas Largas 25 - P/ 619.75
b. Corona 50 - 739.75
c. Corona Largas 50 - 959.75
d. Corona Humidor De Luxe 50 - 1,749.75
Tabacalera products are priced higher. The point we are driving at is that with these high prices
(which are like prices of writs watches, electric fans, tape recorders, and other electrical/electronic
appliances), the usual purchasers will be cautious in buying and he will give the product he is buying
that examination that corresponds to the amount of money that he will part with.
Therefore, there is definitely no similarity in the general appearance of the competing products and
hence there is no likelihood that purchasers will be [misled], deceived and confused into buying
Respondents products thinking that they are buying the Tabacalera products that they intended to
buy.
Complainants allege in their Complaint that they have been using the trademark (brand) "FLOR DE
MANILA" for their products since 1992. However, Complainants presented only a pack of cigars
made by La Flor de la Isabela, Inc., with the brand "Flor de Manila", colored white and gray, and the
size is just slightly bigger than a pack of 100 mm. cigarettes. (Exh. "DD"). Buyers cannot possibl y
make the mistake of buying Respondents wooden boxes of cigars thinking that what they are buying
is this carton pack of cigars of La Flor de la Isabela, Inc.
x x x x
In view of all the foregoing, the injunction prayed for cannot be granted in toto but only partially, i.e.,
with respect to the barrel type of container, the existence of which has to be explained and justified
further by Respondents, and certain features in the packaging which are confusingly similar to the
containers/packaging of Complainants products x x x.
16
(Emphasis supplied.)
The DTI disposed of the complaint this way:
WHEREFORE:
1. Respondents are hereby enjoined and restrained from further manufacturing and
using the wooden barrel type of container as container for their cigars (typified by Exh.
"DDD-1"). However, current stocks thereof, which are in their finished product state,
now in possession of Respondents distributors or retailers may be sold/disposed of in
the ordinary course of business, but those still in the possession of Respondents shall
be transferred to the box containers.
2. In connection with the label used on the sides of the boxes (which contain the
dominant colors gold and red), Respondents are ordered to:
a. change either the gold or the red with another color (not blue); or
b. maintain the said gold and red color combination but add another dominant
color (not blue). This injunction no. 2 covers only products yet to be
manufactured and not products which are already in the possession of
Respondents distributors/retailers. This injunction is for the purpose only of
making said label of Respondents very distinct.
3. In connection with the narra wood boxes, Respondents are ordered to make
distinctive and conspicuous etchings/engravings on the top and/or sides of the said
bozes. The etchings/engravings thereon (which are stripe/s) shall be transferred to
other exterior parts of the boxes or done away with. This injunction no. 3 covers only
products yet to be manufactured and not products which are already in their finished-
product state and already in the possession of Respondents distributors/retailers. This
injunction is for the purpose only of making said narra wood boxes of Respondents very
distinct, hence, the present boxes can no longer be used by Respondents unless the
above-stated changes thereon, as herein ordered, are complied with.
x x x x
SO ORDERED.
17

On June 10, 1996, petitioners filed a Motion for Reconsideration dated June 4, 1996
18
of the above
Order contending that: (1) the DTI erroneously passed upon the entire merits of the case where the
only pending issue for resolution is the issuance of a preliminary injunction; (2) the findings of facts of
the Order are not in accordance with the evidence presented by the parties; and (3) the DTI
misapplied the law and jurisprudence applicable on the issues in the instant case.1awph!1 The
Motion was denied by the DTI in an Order dated December 10, 1996.
19

Thus, on December 26, 1996, petitioners filed a Petition for Certiorari (With Urgent Application for
Temporary Restraining Order and/or Writ of Preliminary Injunction) dated December 19, 1996
20
with
the CA. Petitioners raised substantially the same issues as in their Motion for Reconsideration dated
June 4, 1996. The case was docketed as CA-G.R. SP No. 42881 entitled Compania General de
Tabacos de Filipinas and La Flor de la Isabela, Inc. v. Hon. Virgilio A. Sevandal, as Director and DTI
Adjudication Officer, Atty. Ruben S. Extramadura,as Hearing Officer Office of the Legal Affairs,
Department of Trade and Industry, Tabaqueria De Filipinas, Inc. and Gabriel Ripoll, Jr.
The CA, thus, issued the assailed decision dated June 16, 2003 wherein it determined the issues as:
1) Whether or not the Order dated April 30, 1996 disposed of the merits of the case; and
2) Whether or not public respondent committed grave abuse of discretion in refusing to
grant petitioners prayer for injunctive relief.
21

The CA ruled that the findings of the DTI were premature having passed upon the main issues of the
case when the pending incident was only a motion for preliminary injunction. The CA added that the
evidence necessary in such a hearing was a mere sampling, not being conclusive of the principal
action itself. Thus, the CA ruled that the DTI had prejudged the case and that its findings were
premature, to wit:
By holding thus, public respondent OLA-DTI had pre-judged the main case. In fact, there was
practically nothing left for the Hearing Officer to try except for private respondents clai m for attorneys
fees.
x x x x
We therefore rule that public respondent OLA-DTIs finding was premature.
22
(Emphasis supplied)
As to the second issue, the CA ruled that the dismissal of the infringement of trademarks and unfair
competition case against respondent Ripoll, Jr., renders petitioners right to an injunctive relief
doubtful. Thus, the issuance of an injunction in that case would not be proper. The CA further ruled
that petitioners failed to show that there was an urgent and paramount necessity for the issuance of
the writ having failed to substantiate their claim that the abrupt drop in the sales of their products was
the direct result of the acts of respondents.
23

Thus, the CA denied the petition.
24

The petitioners then filed a Motion for Reconsideration dated July 4, 2003
25
to the above decision.
This motion was denied for lack of merit in the assailed resolution.
Hence, we have this petition.
The Courts Ruling
This petition must be denied.
The Issues
I.
The Court of Appeals gravely erred in not declaring the Orders of Public Respondent dated 30 April
1996 and 10 December 1996 as completely null and void for having been rendered with Grave Abuse
of Discretion amounting to Lack [or] Excess of Jurisdiction.
II.
The Court of Appeals gravely erred in not ruling that the invasion of/to petitioners rights are
substantial and material.
III.
The Court of Appeals gravely erred in ruling that the petitioners right to the exclusive use of the
Tabacalera Trademarks and Design was not shown to be clear and unmistakable.
IV.
The Court of Appeals gravely erred in ruling that there is no urgent and paramount necessity for the
issuance of a writ of injunction.
26

The Orders of the DTI were not rendered in grave abuse
of discretion amounting to lack of or in excess of jurisdiction
Petitioners argue that because the CA ruled that the DTI had prejudged the main case, the Decision
of the DTI was, therefore, issued in grave abuse of discretion amounting to lack of or in excess of
jurisdiction. Thus, petitioners conclude that the DTI Orders dated April 30, 1996 and December 10,
1996 must be considered as null and void.
27

There is no merit in such contention.
In First Womens Credit Corporation v. Perez,
28
we defined grave abuse of discretion as:
By grave abuse of discretion is meant such capricious and whimsical exercise of judgment which is
equivalent to an excess or lack of jurisdiction. The abuse of discretion must be so patent and gross as
to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to
act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic
manner by reason of passion or hostility.
We further clarified such principle later in Buan v. Matugas:
29

There is grave abuse of discretion only when there is a capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, such as where the power is exercised in an arbitrary
and despotic manner by reason of passion and personal hostility, and it must be so patent or gross as
to constitute an evasion of a positive duty or a virtual refusal to perform the duty or to act at all in
contemplation of law. Not every error in the proceedings, or every erroneous conclusion of law or fact,
is grave abuse of discretion. (Emphasis supplied)1avvphi1
Petitioners must prove that the elements above-mentioned were present in the rendering of the
questioned Orders of the DTI in order to establish grave abuse of discretion. The mere fact that the
CA ruled that the DTI prejudged the main case filed before it does not by itself establish grave abuse
of discretion.
Moreover, there is no grave abuse of discretion in the instant case because the DTI merely tried to
justify the issuance of the writ of preliminary injunction. Sometimes a discussion in passing of the
issues to be resolved on the merits is necessary in order to deny or grant an application for the writ.
This cannot, however, be considered as a whimsical or capricious exercise of discretion.
The next three issues shall be discussed simultaneously for being interrelated.
Petitioners failed to establish that
they are entitled to a writ of preliminary injunction
Section 3 of Rule 58 provides for 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.
Thus, the Court has repeatedly held that, in order that an injunctive relief may be issued, the applicant
must show that: "(1) the right of the complainant is clear and unmistakable; (2) the invasion of the
right sought to be protected is material and substantial; and (3) there is an urgent and paramount
necessity for the writ to prevent serious damage."
30

In establishing the above elements, it bears pointing out that the Court used the term "and" in
enumerating the said elements. In Mapa v. Arroyo,
31
this Court defined the term "and" as follows:
In the present case, the employment of the word "and" between "facilities, improvements,
infrastructures" and "other forms of development," far from supporting petitioners theory, enervates it
instead since it is basic in legal hermeneutics that "and" is not meant to separate words but is a
conjunction used to denote a joinder or union.
While in Republic v. David,
32
we applied the above definition with regard an enumeration of conditions
or requisites in this wise:
The conditions that were allegedly violated by respondent are contained in paragraph 10 of the Deed
of Conditional Sale, as follows:
"10. The Contract shall further [provide] the following terms and conditions:
x x x x
(c) The VENDEE, and his heirs and/or successors, shall actually occupy and be in possession of the
PROPERTY at all times"
x x x x
The use of the conjunctive and in subparagraph (c) is not by any chance a surplusage. Neither is it
meant to be without any legal signification. Its use is confirmatory of the restrictive intent that the
houses provided by petitioner should be for the exclusive use and benefit of the SSS employee-
beneficiary.
It is easily discernible, therefore, that both "actual occupancy" and "possession at all times" -- not just
one or the other -- were imposed as conditions upon respondent. The word and -- whether it is used
to connect words, phrases or full sentences -- must be accepted in its common and usual meaning as
"binding together and as relating to one another." And implies a conjunction, joinder or union.
(Emphasis supplied)
In the instant case, the import of the use of the term "and" means that all of the elements mentioned
above must concur in order that an injunctive writ may be issued. The absence of even one of the
elements would be fatal in petitioners application for the writ.
In finding that the third element was absent, that there is no urgent and paramount necessity for the
writ to prevent serious damage to petitioners, the CA ruled that:
Second, petitioners have failed to show that there is an urgent and paramount necessity for the
issuance of writ of injunction to prevent serious damage. In Olalia vs. Hizon (196 SCRA 665, 672),
the Supreme Court held:
"While, to reiterate, the evidence to be submitted at the hearing on the motion for preliminary
injunction need not be conclusive and complete, we find that the private respondent has not shown,
at least tentatively, that she has been irrepairably injured during the five month period the petitioner
was operating under the trade name of Pampangas Pride. On this ground alone, we find that the
preliminary injunction should not have been issued by the trial court. It bears repeating that as a
preliminary injunction is intended to prevent irreparable injury to the plaintiff, that possibility should be
clearly established, if only provisionally, to justify the restraint of the act complained against. No such
injury has been shown by the private respondent. Consequently, we must conclude that the issuance
of the preliminary injunction in this case, being utterly without basis, was tainted with grave abuse of
discretion that we can correct on certiorari."
In the case at bench, petitioner failed to substantiate their claim that the abrupt drop in sales was the
result of the acts complained of against private respondent.
33
(Emphasis supplied.)
Petitioners claim that as a result of private respondents "fraudulent and malicious entry into the
market, Petitioners sales dropped by twenty-five [percent] (25%)."
34

Petitioners further aver that the writ of preliminary injunction is necessary as the general appearance
of private respondents products is confusingly similar to that of petitioners products. Petitioners claim
that this has resulted in a marked drop in their sales. Thus, petitioners argue that unless private
respondents use similar marks, packaging, and labeling as that of petitioners products, they will
continue to suffer damages.
35

Petitioners postulations are bereft of merit.
Petitioners failed to present one iota of evidence in support of their allegations. They failed to present
evidence that indeed their sales dropped by an alleged 25% and that such losses resulted from the
alleged infringement by private respondents. Without presenting evidence to prove their allegations,
petitioners arguments cannot be given any merit. Thus, we ruled in Olalia v. Hizon:
36

A preliminary injunction is an order granted at any stage of an action prior to final judgment, requiring
a person to refrain from a particular act. As the term itself suggest, it is merely temporary, subject to
the final disposition of the principal action. The justification for the preliminary injunction is urgency. It
is based on evidence tending to show that the action complained of must be stayed lest the movant
suffer irreparable injury or the final judgment granting him relief sought become ineffectual.
Necessarily, that evidence need only be a "sampling," as it were, and intended merely to give the
court an idea of the justification for the preliminary injunction pending the decision of the case on the
merits. The evidence submitted at the hearing on the motion for the preliminary injunction is not
conclusive of the principal action, which has yet to be decided.
Due to the absence of the third requisite for the issuance of a preliminary injunction, petitioners
application for the injunctive writ must already fail; the absence or presence of the other requisites
need no longer be discussed.
Such denial is grounded on the oft-repeated principle enunciated in Vera v. Arca,
37
where this Court
held that:
As far back as March 23, 1909, more than 60 years ago, this Court, in the leading case of Devesa v.
Arbes, made the categorical pronouncement that the issuance of an injunction is addressed to the
sound discretion of the Court, the exercise of which is controlled not so much by the then applicable
sections of the Code of Civil Procedure, now the Rules of Court, but by the accepted doctrines, one of
which is that it should not be granted while the rights between the parties are undetermined except in
extraordinary cases where material and irreparable injury will be done. For it is an action in equity
appropriate only when there can be no compensation in damages for the injury thus sustained and
where no adequate remedy in law exists. Such a holding reflected the prevailing American doctrine
that there is no power "the exercise of which is more delicate, which requires greater caution,
deliberation and sound discretion or more dangerous in a doubtful case," being "the strong arm of
equity, that never ought to be extended," except where the injury is great and irreparable.
While in Olalia,
38
we reiterated the above ruling, as follows:
It has been consistently held that there is no power the exercise of which is more delicate, which
requires greater caution, deliberation and sound discretion, or more dangerous in a doubtful case,
than the issuance of an injunction. It is the strong arm of equity that should never be extended unless
to cases of great injury, where courts of law cannot afford an adequate or commensurate remedy in
damages.
Every court should remember that an injunction is a limitation upon the freedom of action of the
defendant and should not be granted lightly or precipitately. It should be granted only when the court
is fully satisfied that the law permits it and the emergency demands it.
We again ruled in Hernandez v. National Power Corporation:
39

At times referred to as the "Strong Arm of Equity," we have consistently ruled that there is no power
the exercise of which is more delicate and which calls for greater circumspection than the issuance of
an injunction. It should only be extended in cases of great injury where courts of law cannot afford an
adequate or commensurate remedy in damages; "in cases of extreme urgency; where the right is
very clear; where considerations of relative inconvenience bear strongly in complainants favor; where
there is a willful and unlawful invasion of plaintiffs right against his protest and remonstrance, the
injury being a continuing one, and where the effect of the mandatory injunction is rather to reestablish
and maintain a preexisting continuing relation between the parties, recently and arbitrarily interrupted
by the defendant, than to establish a new relation." (Emphasis supplied)
Clearly, it was incumbent upon the petitioners to support with evidence their claim for the issuance of
a preliminary injunction. They failed to do so. Hence, the instant petition must fail.
WHEREFORE, the petition is hereby DENIED. The assailed June 16, 2003 Decision and December
1, 2003 Resolution of the CA in CA-G.R. SP No. 42881 are AFFIRMED. Costs against petitioners.
SO ORDERED.
PRESBITERO J. VELASCO, JR.
Associate Justice



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, Paraaque 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, Paraaque City, Respondents.
R E S O L U T I O N
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 warrants
5
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 petitioners "Skechers" rubber shoes and its "Strong" rubber shoes.
On November 7, 2002, the RTC issued an Order
6
quashing the search warrants and directing the NBI
to return the seized goods. The RTC agreed with respondents 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 Decision
8
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-Intervention
11
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 petitioners 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-intervenors motion for reconsideration raises the following errors for
this Courts 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 COURTS 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

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 petiti oner with the
IPO. While it is undisputed that petitioners stylized "S" is within an oval design, to this Courts 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 petitioners 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 petitioners 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 petitioners trademark.
Indubitably, the likelihood of confusion is present as purchasers will associate the respondents use of
the stylized "S" as having been authorized by petitioner or that respondents product is connected
with petitioners business.
Both the RTC and the CA applied the Holistic Test in ruling that respondent had not infringed
petitioners 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 Courts mind such
dissimilarities do not outweigh the stark and blatant similarities in their general features. As can be
readily observed by simply comparing petitioners Energy
20
model and respondents Strong
21
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 respondents shoes are very similar to
petitioners 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 respondents shoes, near
the upper part, appears the stylized "S," placed in the exact location as that of the stylized "S" on
petitioners 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 petitioners shoes, near the heel counter, appears
"Skechers Sport Trail" written in white lettering. However, on respondents shoes appears "Strong
Sport Trail" noticeably written in the same white lettering, font size, direction and orient ation as that of
petitioners shoes. On top of the heel collar of petitioners shoes are two grayish-white semi-
transparent circles. Not surprisingly, respondents 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 respondents products will cause confusion and mistake in the eyes
of the public. Respondents shoes may not be an exact replica of petitioners 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 i dentical, 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 McDonalds
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 x
25

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 petitioners 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 respondents shoes contain some dissimilarities with petitioners shoes, this Court
cannot close its eye to the fact that for all intents and purpose, respondent had deliberately attempted
to copy petitioners 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.
28
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.
29

WHEREFORE, premises considered, the Motion for Reconsideration is GRANTED. The Decision
dated November 30, 2006 is RECONSIDERED and SET ASIDE.
SO ORDERED.
DIOSDADO M. PERALTA














G.R. No. 169974 April 20, 2010
SUPERIOR COMMERCIAL ENTERPRISES, INC., Petitioner,
vs.
KUNNAN ENTERPRISES LTD. AND SPORTS CONCEPT & DISTRIBUTOR, INC., Respondents.
D E C I S I O N
BRION, J .:
We review in this petition for review on certiorari
1
the (1) decision
2
of the Court of Appeals (CA) in CA-
G.R. CV No. 60777 that reversed the ruling of the Regional Trial Court of Quezon City, Branch 85
(RTC),
3
and dismissed the petitioner Superior Commercial Enterprises, Inc.s (SUPERIOR) complaint
for trademark infringement and unfair competition (with prayer for preliminary injunction) against the
respondents Kunnan Enterprises Ltd. (KUNNAN) and Sports Concept and Distributor, Inc. (SPORTS
CONCEPT); and (2) the CA resolution
4
that denied SUPERIORs subsequent motion for
reconsideration. The RTC decision that the CA reversed found the respondents liable for trademark
infringement and unfair competition, and ordered them to pay SUPERIOR P2,000,000.00 in
damages, P500,000.00 as attorneys fees, and costs of the suit.
THE FACTUAL ANTECEDENTS
On February 23, 1993, SUPERIOR
5
filed a complaint for trademark infringement and unfair
competition with preliminary injunction against KUNNAN
6
and SPORTS CONCEPT
7
with the RTC,
docketed as Civil Case No. Q-93014888.
In support of its complaint, SUPERIOR first claimed to be the owner of the trademarks, trading styles,
company names and business names
8
"KENNEX",
9
"KENNEX & DEVICE",
10
"PRO KENNEX"
11
and
"PRO-KENNEX" (disputed trademarks).
12
Second, it also 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 sol d 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 SUPERIORs claim of ownership and maint ained 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] KUNNANs 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 KUNNANs permission, the Superior cannot procure other goods supply
under KENNEX brand of which are not available to supply [sic] by KUNNAN. However,
in connection with the sporting goods, it is permitted that the Superior can procure them
under KENNEX brand of which are not available to be supplied by KUNNAN. [Emphasis
supplied.]
Even though this Agreement clearly stated that SUPERIOR was obligated to assign the ownership of
the KENNEX trademark to KUNNAN, the latter claimed that the Certificate of Registration for the
KENNEX trademark remained with SUPERIOR because Mariano Tan Bon Diong (Mr. Tan Bon
Diong), SUPERIORs President and General Manager, misled KUNNANs officers into believing that
KUNNAN was not qualified to hold the same due to the "many requirements set by the Philippine
Patent Office" that KUNNAN could not meet.
17
KUNNAN further asserted that SUPERIOR deceived it
into assigning its applications for registration of the "PRO KENNEX" trademark in favor of
SUPERIOR, through an Assignment Agreement dated June 14, 1983 whose pertinent provisions
state:
18

1. In consideration of the distributorship relationship between KUNNAN and Superior,
KUNNAN, who is the seller in the distributorship relationship, agrees to assign the
following trademark applications owned by itself in the Philippines to Superior who is the
buyer in the distributorship relationship.
Trademark Application Number 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 Transfer
19

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 Bulletins January 29, 1993 issue, stating that
(1) it is the owner of the disputed trademarks; (2) it terminated its Distributorship Agreement with
SUPERIOR; and (3) it appointed SPORTS CONCEPT as its exclusive distributor. This notice
prompted SUPERIOR to file its Complaint for Infringement of Trademark and Unfair Competition with
Preliminary Injunction against KUNNAN.
22

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
KUNNANs express recognition of SUPERIORs ownership of the KENNEX trademarks.
24

KUNNAN and SPORTS CONCEPT appealed the RTCs decision to the CA where the appeal was
docketed as CA-G.R. CV No. 60777. KUNNAN maintained that SUPERIOR was merely its distributor
and could not be the owner of the disputed trademarks. SUPERIOR, for its part, claimed ownership
based on its prior use and numerous valid registrations.
Intervening Developments:
The IPO and CA Rulings
In the course of its appeal to the CA, KUNNAN filed on December 19, 2003 a Manifestation and
Motion praying that the decision of the Bureau of Legal Affairs (BLA) of the Intellectual Property Office
(IPO), dated October 30, 2003, in the Consolidated Petitions for Cancellation be made of record and
be considered by the CA in resolving the case.
25
The BLA ruled in this decision
In the case at bar, Petitioner-Opposer (Kunnan) has overwhelmingly and convincingly established its
rights to the mark "PRO KENNEX". It was proven that actual use by Respondent-Registrant is not in
the concept of an owner but as a mere distributor (Exhibits "I", "S" to "S-1", "P" and "P-1" and "Q" and
"Q-2") and as enunciated in the case of Crisanta Y. Gabriel vs. Dr. Jose R. Perez, 50 SCRA 406, "a
mere distributor of a product bearing a trademark, even if permitted to use said trademark has no
right to and cannot register the said trademark."
WHEREFORE, there being sufficient evidence to prove that the Petitioner-Opposer (KUNNAN) is the
prior user and owner of the trademark "PRO-KENNEX", the consolidated Petitions for Cancellation
and the Notices of Opposition are hereby GRANTED. Consequently, the trademark "PRO-KENNEX"
bearing Registration Nos. 41032, 40326, 39254, 4730, 49998 for the mark PRO-KENNEX issued in
favor of Superior Commercial Enterprises, Inc., herein Respondent-Registrant under the Principal
Register and SR No. 6663 are hereby CANCELLED. Accordingly, trademark application Nos. 84565
and 84566, likewise for the registration of the mark PRO-KENNEX are hereby REJECTED.
Let the file wrappers of PRO-KENNEX subject matter of these cases be forwarded to the
Administrative Finance and Human Resources Development Services Bureau (AFHRDSB) for
appropriate action in accordance with this Decision and a copy thereof be furnished the Bureau of
Trademarks (BOT) for information and update of its record.
26

On February 4, 2005, KUNNAN again filed another Manifestation requesting that the IPO Director
Generals decision on appeal dated December 8, 2004, denying SUPERIORs appeal, be given
weight in the disposition of the case.
27
The dispositive portion of the decision reads:
28

WHEREFORE, premises considered, there is no cogent reason to disturb Decision No. 2003-35
dated 30 October 2003 rendered by the Director of the Bureau of Legal Affairs. Accordingly, the
instant appeal is DENIED and the appealed decision is hereby AFFIRMED.
We take judicial notice that SUPERIOR questioned the IPO Director Generals ruling before the Court
of Appeals on a petition for review under Rule 43 of the Rules of Court, docketed as CAG.R. SP No.
87928 (Registration Cancellation Case). On August 30, 2007, the CA rendered its decision dismissing
SUPERIORs petition.
29
On December 3, 2007, the CA decision was declared final and executory and
entry of judgment was accordingly made. Hence, SUPERIORs 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 RTCs decision of March 31, 1998.
30
It dismissed SUPERIORs 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 SUPERIORs claim of
ownership over the disputed trademarks.
The CA stressed that SUPERIORs 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 SUPERIORs name do not even enjoy the
presumption of ownership accorded to registration in the principal register; it does not amount to a
prima facie evidence of the validity of registration or of the registrants 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 SUPERIORs evidence, the CA found that KUNNAN presented sufficient
evidence to rebut SUPERIORs presumption of ownership over the trademarks. KUNNAN established
that SUPERIOR, far from being the rightful owner of the disputed trademarks, was merely KUNNANs
exclusive distributor. This conclusion was based on three pieces of evidence that, to the CA, clearly
established that SUPERIOR had no proprietary interest over the disputed trademarks.
First, the CA found that the Distributorship Agreement, considered in its entirety, positively confirmed
that SUPERIOR sought to be the KUNNANs 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 SUPERIORs 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 Diongs signature in the Distributorship Agreement and
the Assignment Agreement.
Third, the CA also took note of SUPERIORs Letter dated November 12, 1986 addressed to Brig.
Gen. Jose Almonte, identifying itself as the "sole and exclusive licensee and distributor in the
Philippines of all its KENNEX and PRO-KENNEX products." Attached to the letter was an agreement
with KUNNAN, identifying the latter as the "foreign manufacturer of all KENNEX products." The CA
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 principals
(KUNNANs) trademark.
The CA denied SUPERIORs 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 COURTS RULING
We do not find the petition meritorious.
On the Issue of Trademark Infringement
We first consider the effect of the final and executory decision in the Registration Cancellation Case
on the present case. This decision - rendered after the CA decision for trademark infringement and
unfair competition in CA-G.R. CV No. 60777 (root of the present case) - states:
As to whether respondent Kunnan was able to overcome the presumption of ownership in favor of
Superior, the former sufficiently established the fraudulent registration of the questioned trademarks
by Superior. The Certificates of Registration No. SR-4730 (Supplemental Register) and 33487
(Principal Register) for the KENNEX trademark were fraudulently obtained by petitioner Superior.
Even before PROKENNEX products were imported by Superior into the Philippines, the same already
enjoyed popularity in various countries and had been distributed worldwide, particularly among the
sports and tennis enthusiasts since 1976. Riding on the said popularity, Superior caused the
registration thereof in the Philippines under its name when it knew fully well that it did not own nor did
it manufacture the PROKENNEX products. Superior claimed ownership of the subject marks and
failed to disclose in its application with the IPO that it was merely a distributor of KENNEX and
PROKENNEX products in the Philippines.
While Superior accepted the obligation to assign Certificates of Registration Nos. SR-4730 and 33487
to Kunnan in exchange for the appointment by the latter as its exclusive distributor, Superior however
breached its obligation and failed to assign the same to Kunnan. In a letter dated 13 February 1987,
Superior, through Mr. Tan Bon Diong, misrepresented to Kunnan that the latter cannot own
trademarks in the Philippines. Thus, Kunnan was misled into assigning to Superior its (Kunnans) 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 with the sale, offering for sale, or advertising of any goods, business or
services on or in connection with which such use is likely to cause confusion or mistake or to deceive
purchasers or others as to the source or origin of such goods or services, or identity of such business;
or [2] reproduce, counterfeit, copy, or colorably imitate any such mark or trade-name and apply such
reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in connection with such goods, business
or services, shall be liable to a civil action by the registrant for any or all of the remedies herein
provided. [Emphasis supplied]
Essentially, Section 22 of RA 166 states that only a registrant of a mark can file a case for
infringement. Corollary to this, Section 19 of RA 166 provides that any right conferred upon the
registrant under the provisions of RA 166
37
terminates when the judgment or order of cancellation has
become final, viz:
Section 19. Cancellation of registration. - If the Director finds that a case for cancellation has been
made out he shall order the cancellation of the registration. The order shall not become effective until
the period for appeal has elapsed, or if appeal is taken, until the judgment on appeal becomes final.
When the order or judgment becomes final, any right conferred by such registration upon the
registrant or any person in interest of record shall terminate. Notice of cancellation shall be published
in the Official Gazette. [Emphasis supplied.]
Thus, we have previously held that the cancellation of registration of a trademark has the effect of
depriving the registrant of protection from infringement from the moment judgment or order of
cancellation has become final.
38

In the present case, by operation of law, specifically Section 19 of RA 166, the trademark
infringement aspect of SUPERIORs 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, SUPERIORs case for trademark
infringement lost its legal basis and no longer presented a valid cause of action.
Even assuming that SUPERIORs case for trademark infringement had not been rendered moot and
academic, there can be no infringement committed by KUNNAN who was adjudged with finality to be
the rightful owner of the disputed trademarks in the Registration Cancellation Case. Even prior to the
cancellation of the registration of the disputed trademarks, SUPERIOR as a mere distributor and
not the owner cannot assert any protection from trademark infringement as it had no right in the first
place to the registration of the disputed trademarks. In fact, jurisprudence holds that in the absence of
any inequitable conduct on the part of the manufacturer, an exclusive distributor who employs the
trademark of the manufacturer does not acquire proprietary rights of the manufacturer, and a
registration of the trademark by the distributor as such belongs to the manufacturer, provided the
fiduciary relationship does not terminate before application for registration is filed.
40
Thus, the CA in
the Registration Cancellation Case correctly held:
As a mere distributor, petitioner Superior undoubtedly had no right to register the questioned mark in
its name. Well-entrenched in our jurisdiction is the rule that the right to register a trademark should be
based on ownership. When the applicant is not the owner of the trademark being applied for, he has
no right to apply for the registration of the same. Under the Trademark Law, only the owner of the
trademark, trade name or service mark used to distinguish his goods, business or service from the
goods, business or service of others is entitled to register the same. An exclusive distributor does not
acquire any proprietary interest in the principals 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 SUPERIORs 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
plaintiffs mark; (2) the plaintiffs 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 plaintiffs
ownership of the mark was what the Registration Cancellation Case decided with fi nality. 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 i ts 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 Distributors 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.
x x x x
27. The acts of defendants, as previously complained herein, were designed to and are of the nature
so as to create confusion with the commercial activities of plaintiff in the Philippines and is liable to
mislead the public as to the nature and suitability for their purposes of plaintiffs business and the
defendants acts are likely to discredit the commercial activities and future growth of plaintiffs
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 competition
47
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
McDonalds Corporation v. L.C. Big Mak Burger, Inc.,
50
we held that there can be trademark
infringement without unfair competition such as when the infringer discloses on the labels containing
the mark that he manufactures the goods, thus preventing the public from being deceived that the
goods originate from the trademark owner. In this case, no issue of confusion arises because the
same manufactured products are sold; only the ownership of the trademarks is at issue. Furthermore,
KUNNANs January 29, 1993 notice by its terms prevents the public from being deceived that the
goods originated from SUPERIOR since the notice clearly indicated that KUNNAN is the
manufacturer of the goods bearing the trademarks "KENNEX" and "PRO KENNEX." This notice
states in full:
51

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.
x x x x
In its place, KUNNAN has appointed SPORTS CONCEPT AND DISTRIBUTORS, INC. as its
exclusive Philippine distributor of sportswear and sporting goods and equipment bearing the
trademarks KENNEX and PRO KENNEX. The public is advised to buy sporting goods and equipment
bearing these trademarks only from SPORTS CONCEPT AND DISTRIBUTORS, INC. to ensure that
the products they are buying are manufactured by Kunnan Enterprises Ltd. [Emphasis supplied.]
Finally, with the established ruling that KUNNAN is the rightful owner of the trademarks of the goods
that SUPERIOR asserts are being unfairly sold by KUNNAN under trademarks registered in
SUPERIORs name, the latter is left with no effective right to make a claim. In other words, with the
CAs final ruling in the Registration Cancellation Case, SUPERIORs case no longer presents a valid
cause of action. For this reason, the unfair competition aspect of the SUPERIORs case likewise falls.
WHEREFORE, premises considered, we DENY Superior Commercial Enterprises, Inc.s petition for
review on certiorari for lack of merit. Cost against petitioner Superior Commercial Enterprises, Inc.
SO ORDERED.












G.R. No. 170891 November 24, 2009
MANUEL C. ESPIRITU, JR., AUDIE LLONA, FREIDA F. ESPIRITU, CARLO F. ESPIRITU,
RAFAEL F. ESPIRITU, ROLANDO M. MIRABUNA, HERMILYN A. MIRABUNA, KIM ROLAND A.
MIRABUNA, KAYE ANN A. MIRABUNA, KEN RYAN A. MIRABUNA, JUANITO P. DE CASTRO,
GERONIMA A. ALMONITE and MANUEL C. DEE, who are the officers and directors of BICOL
GAS REFILLING PLANT CORPORATION, Petitioners,
vs.
PETRON CORPORATION and CARMEN J. DOLOIRAS, doing business under the name
"KRISTINA PATRICIA ENTERPRISES," Respondents.
DECISION
ABAD, J .:
This case is about the offense or offenses that arise from the reloading of the liquefied petroleum gas
cylinder container of one brand with the liquefied petroleum gas of another brand.
The Facts and the Case
Respondent Petron Corporation (Petron) sold and distributed liquefied petroleum gas (LPG) in
cylinder tanks that carried its trademark "Gasul."
1
Respondent Carmen J. Doloiras owned and
operated Kristina Patricia Enterprises (KPE), the exclusive distributor of Gasul LPGs in the whole of
Sorsogon.
2
Jose Nelson Doloiras (Jose) served as KPEs manager.
Bicol Gas Refilling Plant Corporation (Bicol Gas) was also in the business of selling and distributing
LPGs in Sorsogon but theirs carried the trademark "Bicol Savers Gas." Petitioner Audie Llona
managed Bicol Gas.
In the course of trade and competition, any given distributor of LPGs at times acquired possession of
LPG cylinder tanks belonging to other distributors operating in the same area. They called these
"captured cylinders." According to Jose, KPEs manager, in April 2001 Bicol Gas agreed with KPE for
the swapping of "captured cylinders" since one distributor could not refill captured cylinders with its
own brand of LPG. At one time, in the course of implementing this arrangement, KPEs Jose visited
the Bicol Gas refilling plant. While there, he noticed several Gasul tanks in Bicol Gas possession. He
requested a swap but Audie Llona of Bicol Gas replied that he first needed to ask the permission of
the Bicol Gas owners. That permission was given and they had a swap involving around 30 Gasul
tanks held by Bicol Gas in exchange for assorted tanks held by KPE.
KPEs Jose noticed, however, that Bicol Gas still had a number of Gasul tanks in its yard. He offered
to make a swap for these but Llona declined, saying the Bicol Gas owners wanted to send those
tanks to Batangas. Later Bicol Gas told Jose that it had no more Gasul tanks left in its possession.
Jose observed on almost a daily basis, however, that Bicol Gas trucks which plied the streets of the
province carried a load of Gasul tanks. He noted that KPEs volume of sales dropped significantly
from June to July 2001.
On August 4, 2001 KPEs Jose saw a particular Bicol Gas truck on the Maharlika Highway. While the
truck carried mostly Bicol Savers LPG tanks, it had on it one unsealed 50-kg Gasul tank and one 50-
kg Shellane tank. Jose followed the truck and when it stopped at a store, he asked the driver, Jun
Leorena, and the Bicol Gas sales representative, Jerome Misal, about the Gasul tank in their truck.
They said it was empty but, when Jose turned open its valve, he noted that it was not. Misal and
Leorena then admitted that the Gasul and Shellane tanks on their truck belonged to a customer who
had them filled up by Bicol Gas. Misal then mentioned that his manager was a certain Rolly Mirabena.
Because of the above incident, KPE filed a complaint
3
for violations of Republic Act (R.A.) 623
(illegally filling up registered cylinder tanks), as amended, and Sections 155 (infringement of trade
marks) and 169.1 (unfair competition) of the Intellectual Property Code (R.A. 8293). The complaint
charged the following: Jerome Misal, Jun Leorena, Rolly Mirabena, Audie Llona, and several John
and Jane Does, described as the directors, officers, and stockholders of Bicol Gas. These directors,
officers, and stockholders were eventually identified during the preliminary investigation.
Subsequently, the provincial prosecutor ruled that there was probable cause only for violation of R.A.
623 (unlawfully filling up registered tanks) and that only the four Bicol Gas employees, Mirabena,
Misal, Leorena, and petitioner Llona, could be charged. The charge against the other petitioners who
were the stockholders and directors of the company was dismissed.
Dissatisfied, Petron and KPE filed a petition for review with the Office of the Regional State
Prosecutor, Region V, which initially denied the petition but partially granted it on motion for
reconsideration. The Office of the Regional State Prosecutor ordered the filing of additional
informations against the four employees of Bicol Gas for unfair competition. It ruled, however, that no
case for trademark infringement was present. The Secretary of Justice denied the appeal of Petron
and KPE and their motion for reconsideration.
Undaunted, Petron and KPE filed a special civil action for certiorari with the Court of Appeals
4
but the
Bicol Gas employees and stockholders concerned opposed it, assailing the inadequacy in its
certificate of non-forum shopping, given that only Atty. Joel Angelo C. Cruz signed it on behalf of
Petron. In its Decision
5
dated October 17, 2005, the Court of Appeals ruled, however, that Atty. Cruzs
certification constituted sufficient compliance. As to the substanti ve aspect of the case, the Court of
Appeals reversed the Secretary of Justices ruling. It held that unfair competition does not necessarily
absorb trademark infringement. Consequently, the court ordered the filing of additional charges of
trademark infringement against the concerned Bicol Gas employees as well.
Since the Bicol Gas employees presumably acted under the direct order and control of its owners, the
Court of Appeals also ordered the inclusion of the stockholders of Bicol Gas in the various charges,
bringing to 16 the number of persons to be charged, now including petitioners Manuel C. Espiritu, Jr.,
Freida F. Espiritu, Carlo F. Espiritu, Rafael F. Espiritu, Rolando M. Mirabuna, Hermilyn A. Mirabuna,
Kim Roland A. Mirabuna, Kaye Ann A. Mirabuna, Ken Ryan A. Mirabuna, Juanito P. de Castro,
Geronima A. Almonite, and Manuel C. Dee (together with Audie Llona), collectively, petitioners
Espiritu, et al. The court denied the motion for reconsideration of these employees and stockholders
in its Resolution dated January 6, 2006, hence, the present petition for review
6
before this Court.
The Issues Presented
The petition presents the following issues:
1. Whether or not the certificate of non-forum shopping that accompanied the petition filed with
the Court of Appeals, signed only by Atty. Cruz on behalf of Petron, complied with what the
rules require;
2. Whether or not the facts of the case warranted the filing of charges against the Bicol Gas
people for:
a) Filling up the LPG tanks registered to another manufacturer without the latters
consent in violation of R.A. 623, as amended;
b) Trademark infringement consisting in Bicol Gas use of a trademark that is
confusingly similar to Petrons registered "Gasul" trademark in violation of section 155
also of R.A. 8293; and
c) Unfair competition consisting in passing off Bicol Gas-produced LPGs for Petron-
produced Gasul LPG in violation of Section 168.3 of R.A. 8293.
The Courts Rulings
First. Petitioners Espiritu, et al. point out that the certificate of non-forum shopping that respondents
KPE and Petron attached to the petition they filed with the Court of Appeals was inadequate, having
been signed only by Petron, through Atty. Cruz.
But, while procedural requirements such as that of submittal of a certificate of non-forum shopping
cannot be totally disregarded, they may be deemed substantially complied with under justifiable
circumstances.
7
One of these circumstances is where the petitioners filed a collective action in which
they share a common interest in its subject matter or raise a common cause of action. In such a case,
the certification by one of the petitioners may be deemed sufficient.
8

Here, KPE and Petron shared a common cause of action against petitioners Espiritu, et al., namely,
the violation of their proprietary rights with respect to the use of Gasul tanks and trademark.
Furthermore, Atty. Cruz said in his certification that he was executing it "for and on behalf of the
Corporation, and co-petitioner Carmen J. Doloiras."
9
Thus, the object of the requirement to ensure
that a party takes no recourse to multiple forums was substantially achieved. Besides, the failure of
KPE to sign the certificate of non-forum shopping does not render the petition defective with respect
to Petron which signed it through Atty. Cruz.
10
The Court of Appeals, therefore, acted correctly in
giving due course to the petition before it.
Second. The Court of Appeals held that under the facts of the case, there is probable cause that
petitioners Espiritu, et al. committed all three crimes: (a) illegally filling up an LPG tank registered to
Petron without the latters consent in violation of R.A. 623, as amended; (b) trademark infringement
which consists in Bicol Gas use of a trademark that is confusingly similar to Petrons registered
"Gasul" trademark in violation of Section 155 of R.A. 8293; and (c) unfair competition which consists
in petitioners Espiritu, et al. passing off Bicol Gas-produced LPGs for Petron-produced Gasul LPG in
violation of Section 168.3 of R.A. 8293.
Here, the complaint adduced at the preliminary investigation shows that the one 50-kg Petron Gasul
LPG tank found on the Bicol Gas truck "belonged to [a Bicol Gas] customer who had the same filled
up by BICOL GAS."
11
In other words, the customer had that one Gasul LPG tank brought to Bicol Gas
for refilling and the latter obliged.
R.A. 623, as amended,
12
punishes any person who, without the written consent of the manufacturer
or seller of gases contained in duly registered steel cylinders or tanks, fills the steel cylinder or tank,
for the purpose of sale, disposal or trafficking, other than the purpose for which the manufactur er or
seller registered the same. This was what happened in this case, assuming the allegations of KPEs
manager to be true. Bicol Gas employees filled up with their firms gas the tank registered to Petron
and bearing its mark without the latters written authority. Consequently, they may be prosecuted for
that offense.
But, as for the crime of trademark infringement, Section 155 of R.A. 8293 (in relation to Section 170
13

) provides that it is committed by any person who shall, without the consent of the owner of the
registered mark:
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
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.
KPE and Petron have to show that the alleged infringer, the responsible officers and staff of Bicol
Gas, used Petrons Gasul trademark or a confusingly similar trademark on Bicol Gas tanks with intent
to deceive the public and defraud its competitor as to what it is selling.
14
Examples of this would be
the acts of an underground shoe manufacturer in Malabon producing "Nike" branded rubber shoes or
the acts of a local shirt company with no connection to La Coste, producing and selling shirts that
bear the stitched logos of an open-jawed alligator.
Here, however, the allegations in the complaint do not show that Bicol Gas painted on its own tanks
Petrons Gasul trademark or a confusingly similar version of the same to deceive its customers and
cheat Petron. Indeed, in this case, the one tank bearing the mark of Petron Gasul found in a truck full
of Bicol Gas tanks was a genuine Petron Gasul tank, more of a captured cylinder belonging to
competition. No proof has been shown that Bicol Gas has gone into the business of distributing
imitation Petron Gasul LPGs.
As to the charge of unfair competition, Section 168.3 (a) of R.A. 8293 (also in relation to Section 170)
describes the acts constituting the offense as follows:
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;
Essentially, what the law punishes is the act of giving ones goods the general appearance of the
goods of another, which would likely mislead the buyer into believing that such goods belong to the
latter. Examples of this would be the act of manufacturing or selling shirts bearing the logo of an
alligator, similar in design to the open-jawed alligator in La Coste shirts, except that the jaw of the
alligator in the former is closed, or the act of a producer or seller of tea bags with red tags showing
the shadow of a black dog when his competitor is producing or selli ng popular tea bags with red tags
showing the shadow of a black cat.
Here, there is no showing that Bicol Gas has been giving its LPG tanks the general appearance of the
tanks of Petrons Gasul. As already stated, the truckfull of Bicol Gas tanks that the KPE manager
arrested on a road in Sorsogon just happened to have mixed up with them one authentic Gasul tank
that belonged to Petron.
The only point left is the question of the liability of the stockholders and members of the board of
directors of Bicol Gas with respect to the charge of unlawfully filling up a steel cylinder or tank that
belonged to Petron. The Court of Appeals ruled that they should be charged along with the Bicol Gas
employees who were pointed to as directly involved in overt acts constituting the offense.1avvphi1
Bicol Gas is a corporation. As such, it is an entity separate and distinct from the persons of its
officers, directors, and stockholders. It has been held, however, that corporate officers or employees,
through whose act, default or omission the corporation commits a crime, may themselves be
individually held answerable for the crime.
15

Jose claimed in his affidavit that, when he negotiated the swapping of captured cylinders with Bicol
Gas, its manager, petitioner Audie Llona, claimed that he would be consulting with the owners of
Bicol Gas about it. Subsequently, Bicol Gas declined the offer to swap cylinders for the reason that
the owners wanted to send their captured cylinders to Batangas. The Court of Appeals seized on this
as evidence that the employees of Bicol Gas acted under the direct orders of its owners and that "the
owners of Bicol Gas have full control of the operations of the business."
16

The "owners" of a corporate organization are its stockholders and they are to be distinguished from
its directors and officers. The petitioners here, with the exception of Audie Llona, are being charged in
their capacities as stockholders of Bicol Gas. But the Court of Appeals forgets that in a corporation,
the management of its business is generally vested in its board of directors, not its stockholders.
17

Stockholders are basically investors in a corporation. They do not have a hand in running the day-to-
day business operations of the corporation unless they are at the same time directors or officers of
the corporation. Before a stockholder may be held criminally liable for acts committed by the
corporation, therefore, it must be shown that he had knowledge of the criminal act committed in the
name of the corporation and that he took part in the same or gave his consent to its commission,
whether by action or inaction.
The finding of the Court of Appeals that the employees "could not have committed the crimes without
the consent, [abetment], permission, or participation of the owners of Bicol Gas"
18
is a sweeping
speculation especially since, as demonstrated above, what was involved was just one Petron Gasul
tank found in a truck filled with Bicol Gas tanks. Although the KPE manager heard petitioner Llona
say that he was going to consult the owners of Bicol Gas regarding the offer to swap additional
captured cylinders, no indication was given as to which Bicol Gas stockholders Llona consulted. It
would be unfair to charge all the stockholders involved, some of whom were proved to be minors.
19

No evidence was presented establishing the names of the stockholders who were charged with
running the operations of Bicol Gas. The complaint even failed to allege who among the stockholders
sat in the board of directors of the company or served as its officers.
The Court of Appeals of course specifically mentioned petitioner stockholder Manuel C. Espiritu, Jr.
as the registered owner of the truck that the KPE manager brought to the police for investigation
because that truck carried a tank of Petron Gasul. But the act that R.A. 623 punishes is the unlawful
filling up of registered tanks of another. It does not punish the act of transporting such tanks. And the
complaint did not allege that the truck owner connived with those responsible for filling up that Gasul
tank with Bicol Gas LPG.
WHEREFORE, the Court REVERSES and SETS ASIDE the Decision of the Court of Appeals in CA-
G.R. SP 87711 dated October 17, 2005 as well as its Resolution dated January 6, 2006, the
Resolutions of the Secretary of Justice dated March 11, 2004 and August 31, 2004, and the Order of
the Office of the Regional State Prosecutor, Region V, dated February 19, 2003. The Court
REINSTATES the Resolution of the Office of the Provincial Prosecutor of Sorsogon in I.S. 2001-9231
(inadvertently referred in the Resolution itself as I.S. 2001-9234), dated February 26, 2002. The
names of petitioners Manuel C. Espiritu, Jr., Freida F. Espititu, Carlo F. Espiritu, Rafael F. Espiritu,
Rolando M. Mirabuna, Hermilyn A. Mirabuna, Kim Roland A. Mirabuna, Kaye Ann A. Mirabuna, Ken
Ryan A. Mirabuna, Juanito P. De Castro, Geronima A. Almonite and Manuel C. Dee are ORDERED
excluded from the charge.
SO ORDERED.
ROBERTO A. ABAD
Associate Justice



















G.R. No. 179127 December 24, 2008
IN-N-OUT BURGER, INC., petitioner,
vs.
SEHWANI, INCORPORATED AND/OR BENITAS FRITES, INC., respondents.
D E C I S I O N
CHICO-NAZARIO, J .:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse the
Decision
1
dated 18 July 2006 rendered by the Court of Appeals in CA-G.R. SP No. 92785, which
reversed the Decision
2
dated 23 December 2005 of the Director General of the Intellectual Property
Office (IPO) in Appeal No. 10-05-01. The Court of Appeals, in its assailed Decision, decreed that the
IPO Director of Legal Affairs and the IPO Director General do not have jurisdiction over cases
involving unfair competition.
Petitioner IN-N-OUT BURGER, INC., a business entity incorporated under the laws of California,
United States (US) of America, which is a signatory to the Convention of Paris on Protection of
Industrial Property and the Agreement on Trade Related Aspects of Intellectual Property Rights
(TRIPS). Petitioner is engaged mainly in the restaurant business, but it has never engaged in
business in the Philippines.
3

Respondents Sehwani, Incorporated and Benita Frites, Inc. are corporations organized in the
Philippines.
4

On 2 June 1997, petitioner filed trademark and service mark applications with the Bureau of
Trademarks (BOT) of the IPO for "IN-N-OUT" and "IN-N-OUT Burger & Arrow Design." Petitioner later
found out, through the Official Action Papers issued by the IPO on 31 May 2000, that respondent
Sehwani, Incorporated had already obtained Trademark Registration for the mark "IN N OUT (the
inside of the letter "O" formed like a star)."
5
By virtue of a licensing agreement, Benita Frites, Inc. was
able to use the registered mark of respondent Sehwani, Incorporated.
Petitioner eventually filed on 4 June 2001 before the Bureau of Legal Affairs (BLA) of the IPO an
administrative complaint against respondents for unfair competition and cancellation of trademark
registration. Petitioner averred in its complaint that it is the owner of the trade name IN-N-OUT and
the following trademarks: (1) "IN-N-OUT"; (2) "IN-N-OUT Burger & Arrow Design"; and (3) "IN-N-OUT
Burger Logo." These trademarks are registered with the Trademark Office of the US and in various
parts of the world, are internationally well-known, and have become distinctive of its business and
goods through its long and exclusive commercial use.
6
Petitioner pointed out that its internationally
well-known trademarks and the mark of the respondents are all registered for the restaurant business
and are clearly identical and confusingly similar. Petitioner claimed that respondents are making it
appear that their goods and services are those of the petitioner, thus, misleading ordinary and
unsuspecting consumers that they are purchasing petitioners products.
7

Following the filing of its complaint, petitioner sent on 18 October 2000 a demand letter directing
respondent Sehwani, Incorporated to cease and desist from claiming ownership of the mark "IN-N-
OUT" and to voluntarily cancel its trademark registration. In a letter-reply dated 23 October 2000,
respondents refused to accede to petitioner demand, but expressed willingness to surrender the
registration of respondent Sehwani, Incorporated of the "IN N OUT" trademark for a fair and
reasonable consideration.
8

Petitioner was able to register the mark "Double Double" on 4 July 2002, based on their application
filed on 2 June 1997.
9
It alleged that respondents also used this mark, as well as the menu color
scheme. Petitioners also averred that respondent Benitas receipts bore the phrase, "representing IN-
N-OUT Burger."
10
It should be noted that that although respondent Sehwahi, Incorporated registered
a mark which appeared as "IN N OUT (the inside of the letter "O" formed like a star)," respondents
used the mark "IN-N-OUT."
11

To counter petitioners complaint, respondents filed before the BLA-IPO an Answer with
Counterclaim. Respondents asserted therein that they had been using the mark "IN N OUT" in the
Philippines since 15 October 1982. On 15 November 1991, respondent Sehwani, Incorporated filed
with the then Bureau of Patents, Trademarks and Technology Transfer (BPTTT) an application for the
registration of the mark "IN N OUT (the inside of the letter "O" formed like a star)." Upon approval of
its application, a certificate of registration of the said mark was issued in the name of respondent
Sehwani, Incorporated on 17 December 1993. On 30 August 2000, respondents Sehwani,
Incorporated and Benita Frites, Inc. entered into a Licensing Agreement, wherein the former entitled
the latter to use its registered mark, "IN N OUT." Respondents asserted that respondent Sehwani,
Incorporated, being the registered owner of the mark "IN N OUT," should be accorded the
presumption of a valid registration of its mark with the exclusive right to use the same. Respondents
argued that none of the grounds provided under the Intellectual Property Code for the cancellation of
a certificate of registration are present in this case. Additionally, respondents maintained that
petitioner had no legal capacity to sue as it had never operated in the Philippines.
12

Subsequently, the IPO Director of Legal Affairs, Estrellita Beltran-Abelardo, rendered a Decision
dated 22 December 2003,
13
in favor of petitioner. According to said Decision, petitioner had the legal
capacity to sue in the Philippines, since its country of origin or domicile was a member of and a
signatory to the Convention of Paris on Protection of Industrial Property. And although petitioner had
never done business in the Philippines, it was widely known in this country through the use herein of
products bearing its corporate and trade name. Petitioners marks are internationally well-known,
given the world-wide registration of the mark "IN-N-OUT," and its numerous advertisements in various
publications and in the Internet. Moreover, the IPO had already declared in a previous int er partes
case that "In-N-Out Burger and Arrow Design" was an internationally well -known mark. Given these
circumstances, the IPO Director for Legal Affairs pronounced in her Decision that petitioner had the
right to use its tradename and mark "IN-N-OUT" in the Philippines to the exclusion of others, including
the respondents. However, respondents used the mark "IN N OUT" in good faith and were not guilty
of unfair competition, since respondent Sehwani, Incorporated did not evince any intent to ride upon
petitioners goodwill by copying the mark "IN-N-OUT Burger" exactly. The inside of the letter "O" in
the mark used by respondents formed a star. In addition, the simple act of respondent Sehwani,
Incorporated of inquiring into the existence of a pending application for registration of the "IN-N-OUT"
mark was not deemed fraudulent. The dispositive part of the Decision of the IPO Director for Legal
Affairs reads:
With the foregoing disquisition, Certificate of Registration No. 56666 dated 17
December 1993 for the mark "IN-N-OUT" (the inside of the letter "O" formed like a star)
issued in favor of Sehwani, Incorporated is hereby CANCELLED. Consequently,
respondents Sehwani, Inc. and Benitas Frites are hereby ordered to permanently cease
and desist from using the mark "IN-N-OUT" and "IN-N-OUT BURGER LOGO" on its
goods and in its business. With regards the mark "Double-Double," considering that as
earlier discussed, the mark has been approved by this Office for publication and that as
shown by evidence, Complainant is the owner of the said mark, Respondents are so
hereby ordered to permanently cease and desist from using the mark Double-Double.
NO COSTS.
14

Both parties filed their respective Motions for Reconsideration of the aforementioned Decision.
Respondents Motion for Reconsideration
15
and petitioners Motion for Partial Reconsideration
16
were
denied by the IPO Director for Legal Affairs in Resolution No. 2004-18
17
dated 28 October 2004 and
Resolution No. 2005-05 dated 25 April 2005,
18
respectively.
Subsequent events would give rise to two cases before this Court, G.R. No. 171053 and G.R. No.
179127, the case at bar.
G.R. No. 171053
On 29 October 2004, respondents received a copy of Resolution No. 2004-18 dated 28 October 2004
denying their Motion for Reconsideration. Thus, on 18 November 2004, respondents filed an Appeal
Memorandum with IPO Director General Emma Francisco (Director General Francisco). However, in
an Order dated 7 December 2004, the appeal was dismissed by the IPO Director General for being
filed beyond the 15-day reglementary period to appeal.
Respondents appealed to the Court of Appeals via a Petition for Review under Rule 43 of the Rules
of Court, filed on 20 December 2004 and docketed as CA-G.R. SP No. 88004, challenging the
dismissal of their appeal by the IPO Director General, which effectively affirmed the Decision dated
22 December 2003 of the IPO Director for Legal Affairs ordering the cancellation of the registration of
the disputed trademark in the name of respondent Sehwani, Incorporated and enjoining respondents
from using the same. In particular, respondents based their Petition on the following grounds:
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN DISMISSING
APPEAL NO. 14-2004-00004 ON A MERE TECHNICALITY
THE BUREAU OF LEGAL AFFAIRS (SIC) DECISION AND RESOLUTION (1)
CANCELLING RESPONDENTS CERTIFICATE OF REGISTRATION FOR THE MARK
"IN-N-OUT," AND (2) ORDERING PETITIONERS TO PERMANENTLY CEASE AND
DESIST FROM USING THE SUBJECT MARK ON ITS GOODS AND BUSINESS ARE
CONTRARY TO LAW AND/OR IS NOT SUPPORTED BY EVIDENCE.
Respondents thus prayed:
WHEREFORE, petitioners respectfully pray that this Honorable Court give due course
to this petition, and thereafter order the Office of the Director General of the Intellectual
Property Office to reinstate and give due course to [respondent]s Appeal No. 14-2004-
00004.
Other reliefs, just and equitable under the premises, are likewise prayed for.
On 21 October 2005, the Court of Appeals rendered a Decision denying respondents Petition in CA-
G.R SP No. 88004 and affirming the Order dated 7 December 2004 of the IPO Director General. The
appellate court confirmed that respondents appeal before the IPO Director General was filed out of
time and that it was only proper to cancel the registration of the disputed trademark in the name of
respondent Sehwani, Incorporated and to permanently enjoin respondents from using the same.
Effectively, the 22 December 2003 Decision of IPO Director of Legal Affairs was likewise affirmed. On
10 November 2005, respondents moved for the reconsideration of the said Decision. On 16 January
2006, the Court of Appeals denied their motion for reconsideration.
Dismayed with the outcome of their petition before the Court of Appeals, respondents raised the
matter to the Supreme Court in a Petition for Review under Rule 45 of the Rules of Court, filed on 30
January 2006, bearing the title Sehwani, Incorporated v. In-N-Out Burger and docketed as G.R. No.
171053.
19

This Court promulgated a Decision in G.R. No. 171053 on 15 October 2007,
20
finding that herein
respondents failed to file their Appeal Memorandum before the IPO Director General within the period
prescribed by law and, consequently, they lost their right to appeal. The Court further affirmed the
Decision dated 22 December 2003 of the IPO Director of Legal Affairs holding that herein petitioner
had the legal capacity to sue for the protection of its trademarks, even though it was not doing
business in the Philippines, and ordering the cancellation of the registration obtained by herein
respondent Sehwani, Incorporated of the internationally well-known marks of petitioner, and directing
respondents to stop using the said marks. Respondents filed a Motion for Reconsideration of the
Decision of this Court in G.R. No. 171053, but it was denied with finality in a Resolution dated 21
January 2008.
G.R. No. 179127
Upon the denial of its Partial Motion for Reconsideration of the Decision dated 22 December 2003 of
the IPO Director for Legal Affairs, petitioner was able to file a timely appeal before the IPO Director
General on 27 May 2005.
During the pendency of petitioners appeal before the IPO Director General, the Court of Appeals
already rendered on 21 October 2005 its Decision dismissing respondents Petition in CA-G.R. SP
No. 88004.
In a Decision dated 23 December 2005, IPO Director General Adrian Cristobal, Jr. found petitioners
appeal meritorious and modified the Decision dated 22 December 2003 of the IPO Director of Legal
Affairs. The IPO Director General declared that respondents were guilty of unfair competition. Despite
respondents claims that they had been using the mark since 1982, they only started constructing
their restaurant sometime in 2000, after petitioner had already demanded that they desist from
claiming ownership of the mark "IN-N-OUT." Moreover, the sole distinction of the mark registered in
the name of respondent Sehwani, Incorporated, from those of the petitioner was the star inside the
letter "O," a minor difference which still deceived purchasers. Respondents were not even actually
using the star in their mark because it was allegedly difficult to print. The IPO Director General
expressed his disbelief over the respondents reasoning for the non-use of the star symbol. The IPO
Director General also considered respondents use of petitioners registered mark "Double-Double" as
a sign of bad faith and an intent to mislead the public. Thus, the IPO Director General ruled that
petitioner was entitled to an award for the actual damages it suffered by reason of respondents acts
of unfair competition, exemplary damages, and attorneys fees.
21
The fallo of the Decision reads:
WHEREFORE, premises considered, the [herein respondents] are held guilty of unfair
competition. Accordingly, Decision No. 2003-02 dated 22 December 2003 is hereby
MODIFIED as follows:
[Herein Respondents] are hereby ordered to jointly and severally pay [herein petitioner]:
1. Damages in the amount of TWO HUNDRED TWELVE THOUSAND FIVE HUNDRED
SEVENTY FOUR AND 28/100(P212,574.28);
2. Exemplary damages in the amount of FIVE HUNDRED THOUSAND PESOS
(P500,000.00);
3. Attorneys fees and expenses of litigation in the amount of FIVE HUNDRED
THOUSAND PESOS (P500,000.00).
All products of [herein respondents] including the labels, signs, prints, packages,
wrappers, receptacles and materials used by them in committing unfair competition
should be without compensation of any sort be seized and disposed of outside the
channels of commerce.
Let a copy of this Decision be furnished the Director of Bureau of Legal Affairs for
appropriate action, and the records be returned to her for proper disposition. Further, let
a copy of this Decision be furnished the Documentation, Information and Technology
Transfer Bureau for their information and records purposes.
22

Aggrieved, respondents were thus constrained to file on 11 January 2006 before the Court of Appeals
another Petition for Review under Rule 43 of the Rules of Court, docketed as CA-G.R. SP No. 92785.
Respondents based their second Petition before the appellate court on the following grounds:
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN HOLDING
PETITIONERS LIABLE FOR UNFAIR COMPETITION AND IN ORDERING THEM TO
PAY DAMAGES AND ATTORNEYS FEES TO RESPONDENTS
THE IPO DIRECTOR GENERAL COMMITTED GRAVE ERROR IN AFFIRMING THE
BUREAU OF LEGAL AFFAIRS DECISION (1) CANCELLING PETITIONERS
CERTIFICATE OF REGISTRATION FOR THE MARK "IN-N-OUT," AND (2)
ORDERING PETITIONERS TO PERMANENTLY CEASE AND DESIST FROM USING
THE SUBJECT MARK ON ITS GOODS AND BUSINESS
Respondents assailed before the appellate court the foregoing 23 December 2005 Decision of the
IPO Director General, alleging that their use of the disputed mark was not tainted with fraudulent
intent; hence, they should not be held liable for damages. They argued that petitioner had never
entered into any transaction involving its goods and services in the Philippines and, therefore, could
not claim that its goods and services had already been identified in the mind of the public.
Respondents added that the disputed mark was not well-known. Finally, they maintained that
petitioners complaint was already barred by laches.
23

At the end of their Petition in CA-G.R. SP No. 92785, respondents presented the following prayer:
WHEREFORE, [respondents herein] respectfully pray that this Honorable Court:
(a) upon the filing of this petition, issue a temporary restraining order enjoining the IPO
and [petitioner], their agents, successors and assigns, from executing, enforcing and
implementing the IPO Director Generals Decision dated 23 December 2005, which
modified the Decision No. 2003-02 dated 22 December 2003 of the BLA, until further
orders from this Honorable Court.
(b) after notice and hearing, enjoin the IPO and [petitioner], their agents, successors
and assigns, from executing, enforcing and implementing the Decision dated 23
December 2005 of the Director General of the IPO in IPV No. 10-2001-00004 and to
maintain the status quo ante pending the resolution of the merits of this petition; and
(c) after giving due course to this petition:
(i) reverse and set aside the Decision dated 23 December 2005 of the Director
General of the IPO in IPV No. 10-2001-00004 finding the [respondents] guilty of
unfair competition and awarding damages and attorneys fees to the respondent
(ii) in lieu thereof, affirm Decision No. 2003-02 of the BLA dated 22 December
2003 and Resolution No. 2005-05 of the BLA dated 25 April 2005, insofar as it
finds [respondents] not guilty of unfair competition and hence not liable to the
[petitioner] for damages and attorneys fees;
(iii) reverse Decision No. 2003-02 of the BLA dated 22 December 2003, and
Resolution No. 2005-05 of the BLA dated 25 April 2005, insofar as it upheld
[petitioner]s legal capacity to sue; that [petitioner]s trademarks are well-known;
and that respondent has the exclusive right to use the same; and
(iv) make the injunction permanent.
[Respondents] also pray for other reliefs, as may deemed just or equitable.
24

On 18 July 2006, the Court of Appeals promulgated a Decision
25
in CA-G.R. SP No. 92785 reversing
the Decision dated 23 December 2005 of the IPO Director General.
The Court of Appeals, in its Decision, initially addressed petitioners assertion that respondents had
committed forum shopping by the institution of CA-G.R. SP No. 88004 and CA-G.R. SP No. 92785. It
ruled that respondents were not guilty of forum shopping, distinguishing between the respondents
two Petitions. The subject of Respondents Petition in CA-G.R SP No. 88004 was the 7 December
2004 Decision of the IPO Director General dismissing respondents appeal of the 22 December 2003
Decision of the IPO Director of Legal Affairs. Respondents questioned therein the cancellation of the
trademark registration of respondent Sehwani, Incorporated and the order permanently enjoining
respondents from using the disputed trademark. Respondents Petition in CA-G.R. SP No. 92785
sought the review of the 23 December 2005 Decision of the IPO Director General partially modifying
the 22 December 2003 Decision of the IPO Director of Legal Affairs. Respondents raised different
issues in their second petition before the appellate court, mainly concerning the finding of the IPO
Director General that respondents were guilty of unfair competition and the awarding of actual and
exemplary damages, as well as attorneys fees, to petitioner.
The Court of Appeals then proceeded to resolve CA-G.R. SP No. 92785 on jurisdictional grounds not
raised by the parties. The appellate court declared that Section 163 of the Intellectual Property Code
specifically confers upon the regular courts, and not the BLA-IPO, sole jurisdiction to hear and decide
cases involving provisions of the Intellectual Property Code, particularly trademarks. Consequently,
the IPO Director General had no jurisdiction to rule in its Decision dated 23 December 2005 on
supposed violations of these provisions of the Intellectual Property Code.
In the end, the Court of Appeals decreed:
WHEREFORE, the Petition is GRANTED. The Decision dated 23 December 2005
rendered by the Director General of the Intellectual Property Office of the Philippines in
Appeal No. 10-05-01 is REVERSED and SET ASIDE. Insofar as they pertain to acts
governed by Article 168 of R.A. 8293 and other sections enumerated in Section 163 of
the same Code, respondents claims in its Complaint docketed as IPV No. 10-2001-
00004 are hereby DISMISSED.
26

The Court of Appeals, in a Resolution dated 31 July 2007,
27
denied petitioners Motion for
Reconsideration of its aforementioned Decision.
Hence, the present Petition, where petitioner raises the following issues:
I
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE
QUESTIONED DECISION DATED 18 JULY 2006 AND RESOLUTION DATED 31 JULY
2007 DECLARING THAT THE IPO HAS NO JURISDICTION OVER ADMINISTRATIVE
COMPLAINTS FOR INTELLECTUAL PROPERTY RIGHTS VIOLATIONS;
II
WHETHER OR NOT THE INSTANT PETITION IS FORMALLY DEFECTIVE; AND
III
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ISSUING THE
QUESTIONED DECISION DATED 18 JULY 2006 AND RESOLUTION DATED 31 JULY
2007 DECLARING THAT SEHWANI AND BENITA ARE NOT GUILTY OF: (A)
SUBMITTING A PATENTLY FALSE CERTIFICATION OF NON-FORUM SHOPPING;
AND (B) FORUM SHOPPING PROPER.
28

As previously narrated herein, on 15 October 2007, during the pendency of the present Petition, this
Court already promulgated its Decision
29
in G.R. No. 171053 on 15 October 2007, which affirmed the
IPO Director Generals dismissal of respondents appeal for being filed beyond the reglementary
period, and left the 22 December 2003 Decision of the IPO Director for Legal Affairs, canceling the
trademark registration of respondent Sehwani, Incorporated and enjoining respondents from using
the disputed marks.
Before discussing the merits of this case, this Court must first rule on the procedural flaws that each
party has attributed to the other.
Formal Defects of the Petition
Respondents contend that the Verification/Certification executed by Atty. Edmund Jason Barranda of
Villaraza and Angangco, which petitioner attached to the present Petition, is defective and should
result in the dismissal of the said Petition.
Respondents point out that the Secretarys Certificate executed by Arnold M. Wensinger on 20
August 2007, stating that petitioner had authorized the lawyers of Villaraza and Angangco to
represent it in the present Petition and to sign the Verification and Certification against Forum
Shopping, among other acts, was not properly notarized. The jurat of the aforementioned Secretarys
Certificate reads:
Subscribed and sworn to me this 20
th
day of August 2007 in Irving California.
Rachel A. Blake (Sgd.)
Notary Public
30

Respondents aver that the said Secretarys Certificate cannot properly authorize Atty. Barranda to
sign the Verification/Certification on behalf of petitioner because the notary public Rachel A. Blake
failed to state that: (1) petitioners Corporate Secretary, Mr. Wensinger, was known to her; (2) he was
the same person who acknowledged the instrument; and (3) he acknowledged the same to be his
free act and deed, as required under Section 2 of Act No. 2103 and Landingin v. Republic of the
Philippines.
31

Respondents likewise impugn the validity of the notarial certificate of Atty. Aldrich Fitz B. Uy, on Atty.
Barandas Verification/Certification attached to the instant Petition, noting the absence of (1) the serial
number of the commission of the notary public; (2) the office address of the notary public; (3) the roll
of attorneys number and the IBP membership number; and (4) a statement that the
Verification/Certification was notarized within the notary publics territorial jurisdiction, as required
under the 2004 Rules on Notarial Practice.
32

Section 2 of Act No. 2103 and Landingin v. Republic of the Philippines are not applicable to the
present case. The requirements enumerated therein refer to documents which require an
acknowledgement, and not a mere jurat.
A jurat is that part of an affidavit in which the notary certifies that before him/her, the document was
subscribed and sworn to by the executor. Ordinarily, the language of the jurat should avow that the
document was subscribed and sworn to before the notary public. In contrast, an acknowledgment is
the act of one who has executed a deed in going before some competent officer or court and
declaring it to be his act or deed. It involves an extra step undertaken whereby the signor actually
declares to the notary that the executor of a document has attested to the notary that the same is
his/her own free act and deed.
33
A Secretarys Certificate, as that executed by petitioner in favor of
the lawyers of the Angangco and Villaraza law office, only requires a jurat.
34

Even assuming that the Secretarys Certificate was flawed, Atty. Barranda may still sign the
Verification attached to the Petition at bar. A pleading is verified by an affidavit that the affiant has
read the pleading and that the allegations therein are true and correct of his personal knowledge or
based on authentic records.
35
The party itself need not sign the verification. A partys representative,
lawyer or any other person who personally knows the truth of the facts alleged in the pleading may
sign the verification.
36
Atty. Barranda, as petitioners counsel, was in the position to verify the truth
and correctness of the allegations of the present Petition. Hence, the Verification signed by Atty.
Barranda substantially complies with the formal requirements for such.
Moreover, the Court deems it proper not to focus on the supposed technical infirmities of Atty.
Barandas Verification. It must be borne in mind that the purpose of requiring a verification is to
secure an assurance that the allegations of the petition has been made in good faith; or are true and
correct, not merely speculative. This requirement is simply a condition affecting the form of pleadings,
and non-compliance therewith does not necessarily render it fatally defective. Indeed, verification is
only a formal, not a jurisdictional requirement. In the interest of substantial justice, strict observance
of procedural rules may be dispensed with for compelling reasons.
37
The vital issues raised in the
instant Petition on the jurisdiction of the IPO Director for Legal Affairs and the IPO Director General
over trademark cases justify the liberal application of the rules, so that the Court may give the said
Petition due course and resolve the same on the merits.
This Court agrees, nevertheless, that the notaries public, Rachel A. Blake and Aldrich Fitz B. Uy,
were less than careful with their jurats or notarial certificates. Parties and their counsel should take
care not to abuse the Courts zeal to resolve cases on their merits. Notaries public in the Philippines
are reminded to exert utmost care and effort in complying with the 2004 Rules on Notarial Practice.
Parties and their counsel are further charged with the responsibility of ensuring that documents
notarized abroad be in their proper form before presenting said documents before Philippine courts.
Forum Shopping
Petitioner next avers that respondents are guilty of forum shopping in filing the Petition in CA-G.R. SP
No. 92785, following their earlier filing of the Petition in CA-G.R SP No. 88004. Petitioner also asserts
that respondents were guilty of submitting to the Court of Appeals a patently false Certification of
Non-forum Shopping in CA-G.R. SP No. 92785, when they failed to mention therein the pendency of
CA-G.R SP No. 88004.
Forum shopping is the institution of two or more actions or proceedings grounded on the same cause
on the supposition that one or the other court would make a favorable disposition. It is an act of
malpractice and is prohibited and condemned as trifling with courts and abusing their processes. In
determining whether or not there is forum shopping, what is important is the vexation caused the
courts and parties-litigants by a party who asks different courts and/or administrative bodies to rule on
the same or related causes and/or grant the same or substantially the same reliefs and in the process
creates the possibility of conflicting decisions being rendered by the different bodies upon the same
issues.
38

Forum shopping is present when, in two or more cases pending, there is identity of (1) parties (2)
rights or causes of action and reliefs prayed for, and (3) the identity of the two preceding particulars is
such that any judgment rendered in the other action, will, regardless of which party is successful,
amount to res judicata in the action under consideration.
39

After a cursory look into the two Petitions in CA-G.R. SP No. 88004 and CA-G.R. SP No. 92785, it
would at first seem that respondents are guilty of forum shopping.
There is no question that both Petitions involved identical parties, and raised at least one similar
ground for which they sought the same relief. Among the grounds stated by the respondents for their
Petition in CA-G.R SP No. 88004 was that "[T]he Bureau of Legal Affairs (sic) Decision and
Resolution (1) canceling [herein respondent Sehwani, Incorporated]s certificate of registration for the
mark IN-N-OUT and (2) ordering [herein respondents] to permanently cease and desist from using
the subject mark on its goods and business are contrary to law and/or is (sic) not supported by
evidence."
40
The same ground was again invoked by respondents in their Petition in CA-G.R. SP No.
92785, rephrased as follows: "The IPO Director General committed grave error in affirming the
Bureau of Legal Affairs (sic) Decision (1) canceling [herein respondent Sehwani, Incorporated]s
certificate of registration for the mark "IN-N-OUT," and (2) ordering [herein respondents] to
permanently cease and desist from using the subject mark on its goods and business."
41
Both
Petitions, in effect, seek the reversal of the 22 December 2003 Decision of the IPO Director of Legal
Affairs. Undoubtedly, a judgment in either one of these Petitions affirming or reversing the said
Decision of the IPO Director of Legal Affairs based on the merits thereof would bar the Court of
Appeals from making a contrary ruling in the other Petition, under the principle of res judicata.
Upon a closer scrutiny of the two Petitions, however, the Court takes notice of one issue which
respondents did not raise in CA-G.R. SP No. 88004, but can be found in CA-G.R. SP No. 92785, i.e.,
whether respondents are liable for unfair competition. Hence, respondents seek additional reliefs in
CA-G.R. SP No. 92785, seeking the reversal of the finding of the IPO Director General that they are
guilty of unfair competition, and the nullification of the award of damages in favor of petitioner
resulting from said finding. Undoubtedly, respondents could not have raised the issue of unfair
competition in CA-G.R. SP No. 88004 because at the time they filed their Petition therein on 28
December 2004, the IPO Director General had not yet rendered its Decision dated 23 December
2005 wherein it ruled that respondents were guilty thereof and awarded damages to petitioner.
In arguing in their Petition in CA-G.R. SP No. 92785 that they are not liable for unfair competition, it is
only predictable, although not necessarily legally tenable, for respondents to reassert their right to
register, own, and use the disputed mark. Respondents again raise the issue of who has the better
right to the disputed mark, because their defense from the award of damages for unfair competition
depends on the resolution of said issue in their favor. While this reasoning may be legally unsound,
this Court cannot readily presume bad faith on the part of respondents in filing their Petition in CA-
G.R. SP No. 92785; or hold that respondents breached the rule on forum shopping by the mere filing
of the second petition before the Court of Appeals.
True, respondents should have referred to CA-G.R. SP No. 88004 in the Certification of Non-Forum
Shopping, which they attached to their Petition in CA-G.R. SP No. 92785. Nonetheless, the factual
background of this case and the importance of resolving the jurisdictional and substantive issues
raised herein, justify the relaxation of another procedural rule. Although the submission of a certificate
against forum shopping is deemed obligatory, it is not jurisdictional.
42
Hence, in this case in which
such a certification was in fact submitted, only it was defective, the Court may still refuse to dismiss
and, instead, give due course to the Petition in light of attendant exceptional circumstances.
The parties and their counsel, however, are once again warned against taking procedural rules lightly.
It will do them well to remember that the Courts have taken a stricter stance against the disregard of
procedural rules, especially in connection with the submission of the certificate against forum
shopping, and it will not hesitate to dismiss a Petition for non-compliance therewith in the absence of
justifiable circumstances.
The J urisdiction of the IPO
The Court now proceeds to resolve an important issue which arose from the Court of Appeals
Decision dated 18 July 2006 in CA-G.R. SP No. 92785. In the afore-stated Decision, the Court of
Appeals adjudged that the IPO Director for Legal Affairs and the IPO Director General had no
jurisdiction over the administrative proceedings below to rule on issue of unfair competition, because
Section 163 of the Intellectual Property Code confers jurisdiction over particular provisions in the law
on trademarks on regular courts exclusively. According to the said provision:
Section 163. Jurisdiction of Court.All actions under Sections 150, 155, 164, and 166 to
169 shall be brought before the proper courts with appropriate jurisdiction under existing
laws.
The provisions referred to in Section 163 are: Section 150 on License Contracts; Section 155 on
Remedies on Infringement; Section 164 on Notice of Filing Suit Given to the Director; Section 166 on
Goods Bearing Infringing Marks or Trade Names; Section 167 on Collective Marks; Section 168 on
Unfair Competition, Rights, Regulation and Remedies; and Section 169 on False Designations of
Origin, False Description or Representation.
The Court disagrees with the Court of Appeals.
Section 10 of the Intellectual Property Code specifically identifies the functions of the Bureau of Legal
Affairs, thus:
Section 10. The Bureau of Legal Affairs.The Bureau of Legal Affairs shall have the
following functions:
10.1 Hear and decide opposition to the application for registration of marks;
cancellation of trademarks; subject to the provisions of Section 64, cancellation of
patents and utility models, and industrial designs; and petitions for compulsory licensing
of patents;
10.2 (a) Exercise original jurisdiction in administrative complaints for violations of
laws involving intellectual property rights; Provided, That its jurisdiction is limited
to complaints where the total damages claimed are not less than Two hundred
thousand pesos (P200,000): Provided, futher, That availment of the provisional
remedies may be granted in accordance with the Rules of Court. The Director of
Legal Affairs shall have the power to hold and punish for contempt all those who
disregard orders or writs issued in the course of the proceedings.
(b) After formal investigation, the Director for Legal Affairs may impose one (1) or more
of the following administrative penalties:
(i) The issuance of a cease and desist order which shall specify the acts that the
respondent shall cease and desist from and shall require him to submit a
compliance report within a reasonable time which shall be fixed in the order;
(ii) The acceptance of a voluntary assurance of compliance or discontinuance as
may be imposed. Such voluntary assurance may include one or more of the
following:
(1) An assurance to comply with the provisions of the intellectual property
law violated;
(2) An assurance to refrain from engaging in unlawful and unfair acts and
practices subject of the formal investigation
(3) An assurance to recall, replace, repair, or refund the money value of
defective goods distributed in commerce; and
(4) An assurance to reimburse the complainant the expenses and costs
incurred in prosecuting the case in the Bureau of Legal Affairs.
The Director of Legal Affairs may also require the respondent to submit
periodic compliance reports and file a bond to guarantee compliance of his
undertaking.
(iii) The condemnation or seizure of products which are subject of the offense.
The goods seized hereunder shall be disposed of in such manner as may be
deemed appropriate by the Director of Legal Affairs, such as by sale, donation to
distressed local governments or to charitable or relief institutions, exportation,
recycling into other goods, or any combination thereof, under such guidelines as
he may provide;
(iv) The forfeiture of paraphernalia and all real and personal properties which
have been used in the commission of the offense;
(v) The imposition of administrative fines in such amount as deemed reasonable
by the Director of Legal Affairs, which shall in no case be less than Five thousand
pesos (P5,000) nor more than One hundred fifty thousand pesos (P150,000). In
addition, an additional fine of not more than One thousand pesos (P1,000) shall
be imposed for each day of continuing violation;
(vi) The cancellation of any permit, license, authority, or registration which
may have been granted by the Office, or the suspension of the validity thereof
for such period of time as the Director of Legal Affairs may deem reasonable
which shall not exceed one (1) year;
(vii) The withholding of any permit, license, authority, or registration which is
being secured by the respondent from the Office;
(viii) The assessment of damages;
(ix) Censure; and
(x) Other analogous penalties or sanctions.
10.3 The Director General may by Regulations establish the procedure to govern the
implementation of this Section.
43
(Emphasis provided.)
Unquestionably, petitioners complaint, which seeks the cancellation of the disputed mark in the name
of respondent Sehwani, Incorporated, and damages for violation of petitioners intellectual property
rights, falls within the jurisdiction of the IPO Director of Legal Affairs.
The Intellectual Property Code also expressly recognizes the appellate jurisdiction of the IPO Director
General over the decisions of the IPO Director of Legal Affairs, to wit:
Section 7. The Director General and Deputies Director General. 7.1 Fuctions.The
Director General shall exercise the following powers and functions:
x x x x
b) Exercise exclusive appellate jurisdiction over all decisions rendered by the Director of
Legal Affairs, the Director of Patents, the Director of Trademarks, and the Director of
Documentation, Information and Technology Transfer Bureau. The decisions of the
Director General in the exercise of his appellate jurisdiction in respect of the decisions
of the Director of Patents, and the Director of Trademarks shall be appealable to the
Court of Appeals in accordance with the Rules of Court; and those in respect of the
decisions of the Director of Documentation, Information and Technology Transfer
Bureau shall be appealable to the Secretary of Trade and Industry;
The Court of Appeals erroneously reasoned that Section 10(a) of the Intellectual Property Code,
conferring upon the BLA-IPO jurisdiction over administrative complaints for violations of intellectual
property rights, is a general provision, over which the specific provision of Section 163 of the same
Code, found under Part III thereof particularly governing trademarks, service marks, and tradenames,
must prevail. Proceeding therefrom, the Court of Appeals incorrectly concluded that all actions
involving trademarks, including charges of unfair competition, are under the exclusive jurisdiction of
civil courts.
Such interpretation is not supported by the provisions of the Intellectual Property Code. While Section
163 thereof vests in civil courts jurisdiction over cases of unfair competition, nothing in the said
section states that the regular courts have sole jurisdiction over unfair competition cases, to the
exclusion of administrative bodies. On the contrary, Sections 160 and 170, which are also found
under Part III of the Intellectual Property Code, recognize the concurrent jurisdiction of civil courts and
the IPO over unfair competition cases. These two provisions read:
Section 160. Right of Foreign Corporation to Sue in Trademark or Service Mark
Enforcement Action.Any foreign national or juridical person who meets the
requirements of Section 3 of this Act and does not engage in business in the Philippi nes
may bring a civil or administrative action hereunder for opposition, cancellation,
infringement, unfair competition, or false designation of origin and false description,
whether or not it is licensed to do business in the Philippines under existing laws.
x x x x
Section 170. Penalties.Independent of the civil and administrative sanctions
imposed by law, a criminal penalty of imprisonment from two (2) years to five (5) years
and a fine ranging from Fifty thousand pesos (P50,000) to Two hundred thousand
pesos (P200,000), shall be imposed on any person who is found guilty of committing
any of the acts mentioned in Section 155, Section168, and Subsection169.1.
Based on the foregoing discussion, the IPO Director of Legal Affairs had jurisdiction to decide t he
petitioners administrative case against respondents and the IPO Director General had exclusive
jurisdiction over the appeal of the judgment of the IPO Director of Legal Affairs.
Unfair Competition
The Court will no longer touch on the issue of the validity or propriety of the 22 December 2003
Decision of the IPO Director of Legal Affairs which: (1) directed the cancellation of the certificate of
registration of respondent Sehwani, Incorporated for the mark "IN-N-OUT" and (2) ordered
respondents to permanently cease and desist from using the disputed mark on its goods and
business. Such an issue has already been settled by this Court in its final and executory Decision
dated 15 October 2007 in G.R. No. 171053, Sehwani, Incorporated v. In-N-Out Burger,
44
ultimately
affirming the foregoing judgment of the IPO Director of Legal Affairs. That petitioner has the superior
right to own and use the "IN-N-OUT" trademarks vis--vis respondents is a finding which this Court
may no longer disturb under the doctrine of conclusiveness of judgment. In conclusiveness of
judgment, any right, fact, or matter in issue directly adjudicated or necessarily involved in the
determination of an action before a competent court in which judgment is rendered on the merits is
conclusively settled by the judgment therein and cannot again be litigated between the parties and
their privies whether or not the claims, demands, purposes, or subject matters of the two actions are
the same.
45

Thus, the only remaining issue for this Court to resolve is whether the IPO Director General correctly
found respondents guilty of unfair competition for which he awarded damages to petitioner.
The essential elements of an action for unfair competition are (1) confusing similarity in the general
appearance of the goods and (2) intent to deceive the public and defraud a competitor. The confusing
similarity may or may not result from similarity in the marks, but may result from other external factors
in the packaging or presentation of the goods. The intent to deceive and defraud may be inferred from
the similarity of the appearance of the goods as offered for sale to the public. Actual fraudulent intent
need not be shown.
46

In his Decision dated 23 December 2005, the IPO Director General ably explains the basis for his
finding of the existence of unfair competition in this case, viz:
The evidence on record shows that the [herein respondents] were not using their
registered trademark but that of the [petitioner]. [Respondent] SEHWANI, INC. was
issued a Certificate of Registration for IN N OUT (with the Inside of the Letter "O"
Formed like a Star) for restaurant business in 1993. The restaurant opened only in 2000
but under the name IN-N-OUT BURGER. Apparently, the [respondents] started
constructing the restaurant only after the [petitioner] demanded that the latter desist
from claiming ownership of the mark IN-N-OUT and voluntarily cancel their trademark
registration. Moreover, [respondents] are also using [petitioners] registered mark
Double-Double for use on hamburger products. In fact, the burger wrappers and the
French fries receptacles the [respondents] are using do not bear the mark registered by
the [respondent], but the [petitioners] IN-N-OUT Burgers name and trademark IN-N-
OUT with Arrow design.
There is no evidence that the [respondents] were authorized by the [petitioner] to use
the latters marks in the business. [Respondents] explanation that they are not using
their own registered trademark due to the difficulty in printing the "star" does not justify
the unauthorized use of the [petitioners] trademark instead.
Further, [respondents] are giving their products the general appearance that would likely
influence purchasers to believe that these products are those of the [petitioner]. The
intention to deceive may be inferred from the similarity of the goods as packed and
offered for sale, and, thus, action will lie to restrain such unfair competition. x x x.
x x x x
[Respondents] use of IN-N-OUT BURGER in busineses signages reveals fraudulent
intent to deceive purchasers. Exhibit "GG," which shows the business establishment of
[respondents] illustrates the imitation of [petitioners] corporate name IN-N-OUT and
signage IN-N-OUT BURGER. Even the Director noticed it and held:
"We also note that In-N-Out Burger is likewise, [petitioners] corporate name. It
has used the "IN-N-OUT" Burger name in its restaurant business in Baldwin
Park, California in the United States of America since 1948. Thus it has the
exclusive right to use the tradenems "In-N-Out" Burger in the Philippines and the
respondents are unlawfully using and appropriating the same."
The Office cannot give credence to the [respondents] claim of good faith and that they
have openly and continuously used the subject mark since 1982 and is (sic) in the
process of expanding its business. They contend that assuming that there is value in
the foreign registrations presented as evidence by the [petitioner], the purported
exclusive right to the use of the subject mark based on such foreign registrations is not
essential to a right of action for unfair competition. [Respondents] also claim that actual
or probable deception and confusion on the part of customers by reason of
respondents practices must always appear, and in the present case, the BLA has found
none. This Office finds the arguments untenable.
In contrast, the [respondents] have the burden of evidence to prove that they do not
have fraudulent intent in using the mark IN-N-OUT. To prove their good faith,
[respondents] could have easily offered evidence of use of their registered trademark,
which they claimed to be using as early as 1982, but did not.
[Respondents] also failed to explain why they are using the marks of [petitioner]
particularly DOUBLE DOUBLE, and the mark IN-N-OUT Burger and Arrow Design.
Even in their listing of menus, [respondents] used [Appellants] marks of DOUBLE
DOUBLE and IN-N-OUT Burger and Arrow Design. In addition, in the wrappers and
receptacles being used by the [respondents] which also contained the marks of the
[petitioner], there is no notice in such wrappers and receptacles that the hamburger and
French fries are products of the [respondents]. Furthermore, the receipts issued by the
[respondents] even indicate "representing IN-N-OUT." These acts cannot be considered
acts in good faith.
47

Administrative proceedings are governed by the "substantial evidence rule." A finding of guilt in an
administrative case would have to be sustained for as long as it is supported by substantial evidence
that the respondent has committed acts stated in the complaint or formal charge. As defined,
substantial evidence is such relevant evidence as a reasonable mind may accept as adequate to
support a conclusion.
48
As recounted by the IPO Director General in his decision, there is more than
enough substantial evidence to support his finding that respondents are guilty of unfair competition.
With such finding, the award of damages in favor of petitioner is but proper. This is in accordance with
Section 168.4 of the Intellectual Property Code, which provides that the remedies under Sections
156, 157 and 161 for infringement shall apply mutatis mutandis to unfair competition. The remedies
provided under Section 156 include the right to damages, to be computed in the following manner:
Section 156. Actions, and Damages and Injunction for Infringement.156.1 The owner
of a registered mark may recover damages from any person who infringes his rights,
and the measure of the damages suffered shall be either the reasonable profit which the
complaining party would have made, had the defendant not infringed his rights, or the
profit which the defendant actually made out of the infringement, or in the event such
measure of damages cannot be readily ascertained with reasonable certainty, then the
court may award as damages a reasonable percentage based upon the amount of
gross sales of the defendant or the value of the services in connection with which the
mark or trade name was used in the infringement of the rights of the complaining party.
In the present case, the Court deems it just and fair that the IPO Director General computed the
damages due to petitioner by applying the reasonable percentage of 30% to the respondents gross
sales, and then doubling the amount thereof on account of respondents actual intent to mislead the
public or defraud the petitioner,
49
thus, arriving at the amount of actual damages of P212,574.28.
Taking into account the deliberate intent of respondents to engage in unfair competition, it is only
proper that petitioner be awarded exemplary damages. Article 2229 of the Civil Code provides that
such damages may be imposed by way of example or correction for the public good, such as the
enhancement of the protection accorded to intellectual property and the prevention of similar acts of
unfair competition. However, exemplary damages are not meant to enrich one party or to impoverish
another, but to serve as a deterrent against or as a negative incentive to curb socially deleterious
action.
50
While there is no hard and fast rule in determining the fair amount of exemplary damages,
the award of exemplary damages should be commensurate with the actual loss or injury suffered.
51

Thus, exemplary damages of P500,000.00 should be reduced to P250,000.00 which more closely
approximates the actual damages awarded.
In accordance with Article 2208(1) of the Civil Code, attorneys fees may likewise be awarded to
petitioner since exemplary damages are awarded to it. Petitioner was compelled to protect its rights
over the disputed mark. The amount of P500,000.00 is more than reasonable, given the fact that the
case has dragged on for more than seven years, despite the respondents failure to present
countervailing evidence. Considering moreover the reputation of petitioners counsel, the actual
attorneys fees paid by petitioner would far exceed the amount that was awarded to it.
52

IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The assailed Decision of the
Court of Appeals in CA-G.R. SP No. 92785, promulgated on 18 July 2006, is REVERSED. The
Decision of the IPO Director General, dated 23 December 2005, is hereby REINSTATED IN PART,
with the modification that the amount of exemplary damages awarded be reduced to P250,000.00.
SO ORDERED.







G.R. No. 184850 October 20, 2010
E.Y. INDUSTRIAL SALES, INC. and ENGRACIO YAP, Petitioners,
vs.
SHEN DAR ELECTRICITY AND MACHINERY CO., LTD., Respondent.
D E C I S I O N
VELASCO, JR., J .:
The Case
This Petition for Review on Certiorari under Rule 45 seeks to nullify and reverse the February 21,
2008 Decision
1
and the October 6, 2008 Resolution
2
rendered by the Court of Appeals (CA) in CA-
G.R. SP No. 99356 entitled Shen Dar Electricity and Machinery Co., Ltd. v. E.Y. Industrial Sales, Inc.
and Engracio Yap.
The assailed decision reversed the Decision dated May 25, 2007
3
issued by the Director General of
the Intellectual Property Office (IPO) in Inter Partes Case No. 14-2004-00084. The IPO Director
General upheld Certificate of Registration (COR) No. 4-1999-005393 issued by the IPO for the
trademark "VESPA" in favor of petitioner E.Y. Industrial Sales, Inc. (EYIS), but ordered the
cancellation of COR No. 4-1997-121492, also for the trademark "VESPA," issued in favor of
respondent Shen Dar Electricity and Machinery Co., Ltd. (Shen Dar). The Decision of the IPO
Director General, in effect, affirmed the Decision dated May 29, 2006
4
issued by the Director of the
Bureau of Legal Affairs (BLA) of the IPO.
The Facts
EYIS is a domestic corporation engaged in the production, distribution and sale of air compressors
and other industrial tools and equipment.
5
Petitioner Engracio Yap is the Chairman of the Board of
Directors of EYIS.
6

Respondent Shen Dar is a Taiwan-based foreign corporation engaged in the manufacture of air
compressors.
7

Both companies claimed to have the right to register the trademark "VESPA" for air compressors.
From 1997 to 2004, EYIS imported air compressors from Shen Dar through sales contracts. In the
Sales Contract dated April 20, 2002,
8
for example, Shen Dar would supply EYIS in one (1) year with
24 to 30 units of 40-ft. containers worth of air compressors identified in the Packing/Weight Lists
simply as SD-23, SD-29, SD-31, SD-32, SD-39, SD-67 and SD-68. In the corresponding Bill of
Ladings, the items were described merely as air compressors.
9
There is no documentary evidence to
show that such air compressors were marked "VESPA."
On June 9, 1997, Shen Dar filed Trademark Application Serial No. 4-1997-121492 with the IPO for
the mark "VESPA, Chinese Characters and Device" for use on air compressors and welding
machines.
10

On July 28, 1999, EYIS filed Trademark Application Serial No. 4-1999-005393, also for the mark
"VESPA," for use on air compressors.
11
On January 18, 2004, the IPO issued COR No. 4-1999-
005393 in favor of EYIS.
12
Thereafter, on February 8, 2007, Shen Dar was also issued COR No. 4-
1997-121492.
13

In the meantime, on June 21, 2004, Shen Dar filed a Petition for Cancellation of EYIS COR with the
BLA.
14
In the Petition, Shen Dar primarily argued that the issuance of the COR in favor of EYIS
violated Section 123.1 paragraphs (d), (e) and (f) of Republic Act No. (RA) 8293, otherwise known as
the Intellectual Property Code (IP Code), having first filed an application for the mark. Shen Dar
further alleged that EYIS was a mere distributor of air compressors bearing the mark "VESPA" which
it imported from Shen Dar. Shen Dar also argued that it had prior and exclusive right to the use and
registration of the mark "VESPA" in the Philippines under the provisions of the Paris Convention.
15

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

Thereafter, the Director of the BLA issued its Decision dated May 29, 2006 in favor of EYIS and
against Shen Dar, the dispositive portion of which reads:
WHEREFORE, premises considered, the Petition for Cancellation is, as it is hereby, DENIED.
Consequently, Certificate of Registration No. 4-1999-[005393] for the mark "VESPA" granted in the
name of E.Y. Industrial Sales, Inc. on 9 January 2007 is hereby upheld.
Let the filewrapper of VESPA subject matter of this case be forwarded to the Administrative, Financial
and Human Resource Development Services Bureau for issuance and appropriate action in
accordance with this DECISION and a copy thereof furnished to the Bureau of Trademarks for
information and update of its records.
SO ORDERED.
17

Shen Dar appealed the decision of the BLA Director to the Director General of the IPO. In the appeal,
Shen Dar raised the following issues:
1. Whether the BLA Director erred in ruling that Shen Dar failed to present evidence;
2. Whether the registration of EYIS application was proper considering that Shen Dar was the
first to file an application for the mark; and
3. Whether the BLA Director correctly ruled that EYIS is the true owner of the mark.
18

Later, the IPO Director General issued a Decision dated May 25, 2007 upholding the COR issued in
favor of EYIS while cancelling the COR of Shen Dar, the dispositive portion of which reads:
WHEREFORE, premises considered, the appeal is DENIED. Certificate of Registration No. 4-1999-
005393 for the mark VESPA for air compressor issued in favor of Appellee is hereby upheld.
Consequently, Certificate of Registration No. 4-1997-121492 for the mark VESPA, Chinese
Characters & Device for goods air compressor and spot welding machine issued in favor of Appellant
is hereby ordered cancelled.
Let a copy of this Decision as well as the records of this case be furnished and returned to the
Director of Bureau of Legal Affairs for appropriate action. Further, let also the Directors of the Bureau
of Trademarks, the Administrative, Financial and Human Resources Development Services Bureau,
and the Documentation, Information and Technology Transfer Bureau be furnished a copy of this
Decision for information, guidance, and records purposes.
19

Shen Dar appealed the above decision of the IPO Director General to the CA where Shen Dar raised
the following issues:
1. Whether Shen Dar is guilty of forum shopping;
2. Whether the first-to-file rule applies to the instant case;
3. Whether Shen Dar presented evidence of actual use;
4. Whether EYIS is the true owner of the mark "VESPA";
5. Whether the IPO Director General erred in cancelling Shen Dars COR No. 4-1997-121492
without a petition for cancellation; and
6. Whether Shen Dar sustained damages.
20

In the assailed decision, the CA reversed the IPO Director General and ruled in favor of Shen Dar.
The dispositive portion states:
WHEREFORE, premises considered, the petition is GRANTED. Consequently, the assailed decision
of the Director General of the Intellectual Property Office dated May 25, 2007 is hereby REVERSED
and SET ASIDE. In lieu thereof, a new one is entered: a) ordering the cancellation of Certificate of
Registration No. 4-1999-005393 issued on January 19, 2004 for the trademark VESPA in favor of
E.Y. Industrial Sales, Inc.; b) ordering the restoration of the validity of Certificate of Registration No. 4-
1997-121492 for the trademark VESPA in favor of Shen Dar Electricity and Machinery Co., Ltd. No
pronouncement as to costs.
SO ORDERED.
21

In ruling for Shen Dar, the CA ruled that, despite the fact that Shen Dar did not formally offer its
evidence before the BLA, such evidence was properly attached to the Petition for Cancellation. As
such, Shen Dars evidence may be properly considered. The CA also enunciated that the IPO failed
to properly apply the provisions of Sec. 123.1(d) of RA 8293, which prohibits the registration of a
trademark in favor of a party when there is an earlier filed application for the same mark. The CA
further ruled that Shen Dar should be considered to have prior use of the mark based on the
statements made by the parties in their respective Declarations of Actual Use. The CA added that
EYIS is a mere importer of the air compressors with the mark "VESPA" as may be gleaned from its
receipts which indicated that EYIS is an importer, wholesaler and retailer, and therefore, cannot be
considered an owner of the mark.
22

EYIS filed a motion for reconsideration of the assailed decision which the CA denied in the assailed
resolution.
Hence, the instant appeal.
Issues
EYIS and Yap raise the following issues in their petition:
A. Whether the Director General of the IPO correctly upheld the rights of Petitioners over the
trademark VESPA.
B. Whether the Director General of the IPO can, under the circumstances, order the
cancellation of Respondents certificate of registration for VESPA, which has been fraudulently
obtained and erroneously issued.
C. Whether the Honorable Court of Appeals was justified in reversing the findings of fact of the
IPO, which affirm the rights of Petitioner EYIS over the trademark VESPA and when such
findings are supported by the evidence on record.
D. Whether this Honorable Court may review questions of fact considering that the findings of
the Court of Appeals and the IPO are in conflict and the conclusions of the appellee court are
contradicted by the evidence on record.
23

The Ruling of the Court
The appeal is meritorious.
First Issue:
Whether this Court may review the questions of fact presented
Petitioners raise the factual issue of who the true owner of the mark is. As a general rule, this Court i s
not a trier of facts. However, such rule is subject to exceptions.
In New City Builders, Inc. v. National Labor Relations Commission,
24
the Court ruled that:
We are very much aware that the rule to the effect that this Court is not a trier of facts admits of
exceptions. As we have stated in Insular Life Assurance Company, Ltd. vs. CA:
[i]t is a settled rule that in the exercise of the Supreme Courts power of review, the Court is not a trier
of facts and does not normally undertake the re-examination of the evidence presented by the
contending parties during the trial of the case considering that the findings of facts of the CA are
conclusive and binding on the Court. However, the Court had recognized several exceptions to this
rule, to wit: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2)
when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse
of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of
facts are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of
the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7)
when the findings are contrary to the trial court; (8) when the findings are conclusions without
citation of specific evidence on which they are based; (9) when the facts set forth in the petition as
well as in the petitioners main and reply briefs are not disputed by the respondent; (10) when the
findings of fact are premised on the supposed absence of evidence and contradicted by the evidence
on record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not
disputed by the parties, which, if properly considered, would justify a different conclusion. (Emphasis
supplied.)
In the instant case, the records will show that the IPO and the CA made differing conclusions on the
issue of ownership based on the evidence presented by the parties. Hence, this issue may be the
subject of this Courts review.
Second Issue:
Whether evidence presented before the BLA must be formally offered
Preliminarily, it must be noted that the BLA ruled that Shen Dar failed to adduce evidence in support
of its allegations as required under Office Order No. 79, Series of 2005, Amendments to the
Regulations on Inter Partes Proceedings, having failed to formally offer its evidence during the
proceedings before it. The BLA ruled:
At the outset, we note petitioners failure to adduce any evidence in support of its allegations in the
Petition for Cancellation. Petitioner did not file nor submit its marked evidence as required in this
Bureaus Order No. 2006-157 dated 25 January 2006 in compliance with Office Order No. 79, Series
of 2005, Amendments to the Regulations on Inter Partes Proceedings.
25
x x x
In reversing such finding, the CA cited Sec. 2.4 of BLA Memorandum Circular No. 03, Series of 2005,
which states:
Section 2.4. In all cases, failure to file the documentary evidences in accordance with Sections 7 and
8 of the rules on summary proceedings shall be construed as a waiver on the part of the parties. In
such a case, the original petition, opposition, answer and the supporting documents therein shall
constitute the entire evidence for the parties subject to applicable rules.
The CA concluded that Shen Dar needed not formally offer its evidence but merely needed to attach
its evidence to its position paper with the proper markings,
26
which it did in this case.
The IP Code provides under its Sec. 10.3 that the Director General of the IPO shall establish the
procedure for the application for the registration of a trademark, as well as the opposition to it:
Section 10. The Bureau of Legal Affairs.The Bureau of Legal Affairs shall have the following
functions:
x x x x
10.3. The Director General may by Regulations establish the procedure to govern the implementation
of this Section.
Thus, the Director General issued Office Order No. 79, Series of 2005 amending the regulations on
Inter Partes Proceedings, Sec. 12.1 of which provides:
Section 12. Evidence for the Parties
12.1. The verified petition or opposition, reply if any, duly marked affidavits of the witnesses, and the
documents submitted, shall constitute the entire evidence for the petitioner or opposer. The verified
answer, rejoinder if any, and the duly marked affidavits and documents submitted shall constitute the
evidence for the respondent. Affidavits, documents and other evidence not submitted and duly
marked in accordance with the preceding sections shall not be admitted as evidence.
The preceding sections referred to in the above provision refer to Secs. 7.1, 8.1 and 9 which, in turn,
provide:
Section 7. Filing of Petition or Opposition
7.1. The petition or opposition, together with the affidavits of witnesses and originals of the
documents and other requirements, shall be filed with the Bureau, provided, that in case of public
documents, certified copies shall be allowed in lieu of the originals. The Bureau shall check if the
petition or opposition is in due form as provided in the Regulations particularly Rule 3, Section 3; Rule
4, Section 2; Rule 5, Section 3; Rule 6, Section 9; Rule 7, Sections 3 and 5; Rule 8, Sections 3 and 4.
For petition for cancellation of layout design (topography) of integrated circuits, Rule 3, Section 3
applies as to the form and requirements. The affidavits, documents and other evidence shall be
marked consecutively as "Exhibits" beginning with the letter "A".
Section 8. Answer
8.1. Within three (3) working days from receipt of the petition or opposition, the Bureau shall issue an
order for the respondent to file an answer together with the affidavits of witnesses and originals of
documents, and at the same time shall notify all parties required to be notified in the IP Code and
these Regulations, provided, that in case of public documents, certified true copies may be submitted
in lieu of the originals. The affidavits and documents shall be marked consecutively as "Exhibi ts"
beginning with the number "1".
Section 9. Petition or Opposition and Answer must be verified Subject to Rules 7 and 8 of these
regulations, the petition or opposition and the answer must be verified. Otherwise, the same shall not
be considered as having been filed.
In other words, as long as the petition is verified and the pieces of evidence consisting of the
affidavits of the witnesses and the original of other documentary evidence are attached to the petition
and properly marked in accordance with Secs. 7.1 and 8.1 abovementioned, these shall be
considered as the evidence of the petitioner. There is no requirement under the abovementioned
rules that the evidence of the parties must be formally offered to the BLA.
In any case, as a quasi-judicial agency and as stated in Rule 2, Sec. 5 of the Regulations on Inter
Partes Proceedings, the BLA is not bound by technical rules of procedure. The evidence attached to
the petition may, therefore, be properly considered in the resolution of the case.
Third Issue:
Whether the IPO Director General can
validly cancel Shen Dars Certificate of Registration
In his Decision, the IPO Director General stated that, despite the fact that the instant case was for the
cancellation of the COR issued in favor of EYIS, the interests of justice dictate, and in view of its
findings, that the COR of Shen Dar must be cancelled. The Director General explained:
Accordingly, while the instant case involves a petition to cancel the registration of the Appellees
trademark VESPA, the interest of justice requires that Certificate of Registration No. 4-1997-121492
be cancelled. While the normal course of proceedings should have been the filing of a petition for
cancellation of Certificate of Registration No. 4-1997-121492, that would involve critical facts and
issues that have already been resolved in this case. To allow the Applicant to still maintain in the
Trademark Registry Certificate of Registration No. 4-1997-121492 would nullify the exclusive rights of
Appellee as the true and registered owner of the mark VESPA and defeat the purpose of the
trademark registration system.
27

Shen Dar challenges the propriety of such cancellation on the ground that there was no petition for
cancellation as required under Sec. 151 of RA 8293.
Office Order No. 79, Series of 2005, provides under its Sec. 5 that:
Section 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 supplied.)
The above rule reflects the oft-repeated legal principle that quasi-judicial and administrative bodies
are not bound by technical rules of procedure. Such principle, however, is tempered by fundamental
evidentiary rules, including due process. Thus, we ruled in Aya-ay, Sr. v. Arpaphil Shipping Corp.:
28

That administrative quasi-judicial bodies like the NLRC are not bound by technical rules of procedure
in the adjudication of cases does not mean that the basic rules on proving allegations should be
entirely dispensed with. A party alleging a critical fact must still support his allegation with substantial
evidence. Any decision based on unsubstantiated allegation cannot stand as it will offend due
process.
x x x The liberality of procedure in administrative actions is subject to limitations imposed by basic
requirements of due process. As this Court said in Ang Tibay v. CIR, the provision for flexibility in
administrative procedure "does not go so far as to justify orders without a basis in evidence having
rational probative value." More specifically, as held in Uichico v. NLRC:
It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the technical
rules of procedure in the adjudication of cases. However, this procedural rule should not be construed
as a license to disregard certain fundamental evidentiary rules.
This was later reiterated in Lepanto Consolidated Mining Company v. Dumapis:
29

While it is true that administrative or quasi-judicial bodies like the NLRC are not bound by the
technical rules of procedure in the adjudication of cases, this procedural rule should not be construed
as a license to disregard certain fundamental evidentiary rules. The evidence presented must at least
have a modicum of admissibility for it to have probative value. Not only must there be some evidence
to support a finding or conclusion, but the evidence must be substantial. Substantial evidence is more
than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion. Thus, even though technical rules of evidence are not strictly
complied with before the LA and the NLRC, their decision must be based on evidence that must, at
the very least, be substantial.
The fact that no petition for cancellation was filed against the COR issued to Shen Dar does not
preclude the cancellation of Shen Dars COR. It must be emphasized that, during the hearing for the
cancellation of EYIS COR before the BLA, Shen Dar tried to establish that it, not EYIS, was the true
owner of the mark "VESPA" and, thus, entitled to have it registered. Shen Dar had more than
sufficient opportunity to present its evidence and argue its case, and it did. It was given its day in
court and its right to due process was respected. The IPO Director Generals disregard of the
procedure for the cancellation of a registered mark was a valid exercise of his discretion.
Fourth Issue:
Whether the factual findings of the IPO are binding on the CA
Next, petitioners challenge the CAs reversal of the factual findings of the BLA that Shen Dar and not
EYIS is the prior user and, therefore, true owner of the mark. In arguing its position, petitioners cite
numerous rulings of this Court where it was enunciated that the factual findings of administrative
bodies are given great weight if not conclusive upon the courts when supported by substantial
evidence.
We agree with petitioners that the general rule in this jurisdiction is that the factual findings of
administrative bodies deserve utmost respect when supported by evidence. However, such general
rule is subject to exceptions.
In Fuentes v. Court of Appeals,
30
the Court established the rule of conclusiveness of factual findings
of the CA as follows:
Jurisprudence teaches us that "(a)s a rule, the jurisdiction of this Court in cases brought to it from the
Court of Appeals x x x is limited to the review and revision of errors of law allegedly committed by the
appellate court, as its findings of fact are deemed conclusive. As such this Court is not duty-bound to
analyze and weigh all over again the evidence already considered in the proceedings below. This
rule, however, is not without exceptions." The findings of fact of the Court of Appeals, which are as a
general rule deemed conclusive, may admit of review by this Court:
(1) when the factual findings of the Court of Appeals and the trial court are contradictory;
(2) when the findings are grounded entirely on speculation, surmises, or conjectures;
(3) when the inference made by the Court of Appeals from its findings of fact is manifestly
mistaken, absurd, or impossible;
(4) when there is grave abuse of discretion in the appreciation of facts;
(5) when the appellate court, in making its findings, goes beyond the issues of the case, and
such findings are contrary to the admissions of both appellant and appellee;
(6) when the judgment of the Court of Appeals is premised on a misapprehension of facts;
(7) when the Court of Appeals fails to notice certain relevant facts which, if properly
considered, will justify a different conclusion;
(8) when the findings of fact are themselves conflicting;
(9) when the findings of fact are conclusions without citation of the specific evidence on which
they are based; and
(10) when the findings of fact of the Court of Appeals are premised on the absence of evidence
but such findings are contradicted by the evidence on record. (Emphasis supplied.)
Thereafter, in Villaflor v. Court of Appeals,
31
this Court applied the above principle to factual findings
of quasi-judicial bodies, to wit:
Proceeding by analogy, the exceptions to the rule on conclusiveness of factual findings of the Court
of Appeals, enumerated in Fuentes vs. Court of Appeals, can also be applied to those of quasi-
judicial bodies x x x. (Emphasis supplied.)
Here, the CA identified certain material facts that were allegedly overlooked by the BLA and the IPO
Director General which it opined, when correctly appreciated, would alter the result of the case. An
examination of the IPO Decisions, however, would show that no such evidence was overlooked.
First, as to the date of first use of the mark by the parties, the CA stated:
To begin with, when respondents-appellees filed its application for registration of the VESPA
trademark on July 28, 1999, they stated under oath, as found in their DECLARATION OF ACTUAL
USE, that their first use of the mark was on December 22, 1998. On the other hand, [Shen Dar] in its
application dated June 09, 1997 stated, likewise under oath in their DECLARATION OF ACTUAL
USE, that its first use of the mark was in June 1996. This cannot be made any clearer. [Shen Dar]
was not only the first to file an application for registration but likewise first to use said registrable
mark.
32

Evidently, the CA anchors its finding that Shen Dar was the first to use the mark on the statements of
the parties in their respective Declarations of Actual Use. Such conclusion is premature at best. While
a Declaration of Actual Use is a notarized document, hence, a public document, it is not conclusive as
to the fact of first use of a mark. The declaration must be accompanied by proof of actual use as of
the date claimed. In a declaration of actual use, the applicant must, therefore, present evidence of
such actual use.
The BLA ruled on the same issue, as follows:
More importantly, the private respondents prior adoption and continuous use of the mark VESPA on
air compressors is bolstered by numerous documentary evidence consisting of sales invoices issued
in the name of E.Y. Industrial and Bill of Lading (Exhibits 4 to 375). Sales Invoice No. 12075 dated
March 27, 1995 antedates petitioners date of first use on January 1, 1997 indicated in its trademark
application filed on June 9, 1997 as well as the date of first use in June of 1996 as indicated in the
Declaration of Actual Use submitted on December 3, 2001 (Exhibit 385). The use by respondent
registrant in the concept of owner is shown by commercial documents, sales invoices unambiguously
describing the goods as "VESPA" air compressors. Private respondents have sold the air
compressors bearing the "VESPA" to various locations in the Philippines, as far as Mindanao and the
Visayas since the early 1990s. We carefully inspected the evidence consisting of three hundred
seventy-one (371) invoices and shipment documents which show that VESPA air compressors were
sold not only in Manila, but to locations such as Iloilo City, Cebu City, Dumaguete City, Zamboanga
City, Cagayan de Oro City, Davao City, to name a few. There is no doubt that it is through private
respondents efforts that the mark "VESPA" used on air compressors has gained business goodwill
and reputation in the Philippines for which it has validly acquired trademark rights. Respondent E.Y.
Industrials right has been preserved until the passage of RA 8293 which entitles it to register the
same.
33

Comparatively, the BLAs findings were founded upon the evidence presented by the parties. An
example of such evidence is Invoice No. 12075 dated March 29, 1995
34
where EYIS sold four units of
VESPA air compressors to Veteran Paint Trade Center. Shen Dar f ailed to rebut such evidence. The
truth, as supported by the evidence on record, is that EYIS was first to use the mark.
Moreover, the discrepancy in the date provided in the Declaration of Actual Use filed by EYIS and the
proof submitted was appropriately considered by the BLA, ruling as follows:
On the contrary, respondent EY Industrial was able to prove the use of the mark "VESPA" on the
concept of an owner as early as 1991. Although Respondent E.Y. indicated in its trademark
application that its first use was in December 22, 1998, it was able to prove by clear and positive
evidence of use prior to such date.
In Chuang Te v. Ng Kian-Guiab and Director of Patents, L-23791, 23 November 1966, the High Court
clarified: Where an applicant for registration of a trademark states under oath the date of his earliest
use, and later on he wishes to carry back his first date of use to an earlier date, he then takes on the
greater burden of presenting "clear and convincing evidence" of adoption and use as of that earli er
date. (B.R. Baker Co. vs. Lebrow Bros., 150 F. 2d 580.)
35

The CA further found that EYIS is not a manufacturer of air compressors but merely imports and sell s
them as a wholesaler and retailer. The CA reasoned:
Conversely, a careful perusal of appellees own submitted receipts shows that it is not manufacturer
but an importer, wholesaler and retailer. This fact is corroborated by the testimony of a former
employee of appellees. Admittedly too, appellees are importing air compressors from [Shen Dar] from
1997 to 2004. These matters, lend credence to [Shen Dars] claim that the letters SD followed by a
number inscribed in the air compressor is only to describe its type, manufacturer business name and
capacity. The VESPA mark is in the sticker which is attached to the air compressors. The ruling of the
Supreme Court, in the case of UNNO Commercial Enterprises, Inc. vs. General Milling Corporation et
al., is quite enlightening, thus We quote:
"The term owner does not include the importer of the goods bearing the trademark, trade name,
service mark, or other mark of ownership, unless such importer is actually the owner thereof in the
country from which the goods are imported. Thus, this Court, has on several occasions ruled that
where the applicants alleged ownership is not shown in any notarial document and the applicant
appears to be merely an importer or distributor of the merchandise covered by said trademark, its
application cannot be granted."
36

This is a non sequitur. It does not follow. The fact that EYIS described itself in its sales invoice as an
importer, wholesaler and retailer does not preclude its being a manufacturer. Sec. 237 of the National
Internal Revenue Code states:
Section 237. Issuance of Receipts or Sales or Commercial Invoices.All persons subject to an
internal revenue tax shall, for each sale and transfer of merchandise or for services rendered valued
at Twenty-five pesos (P25.00) or more, issue duly registered receipts or sale or commercial invoices,
prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of
merchandise or nature of service: Provided, however, That where the receipt is issued to cover
payment made as rentals, commissions, compensation or fees, receipts or invoices shall be issued
which shall show the name, business style, if any, and address of the purchaser, customer or client.
The original of each receipt or invoice shall be issued to the purchaser, customer or client at the time
the transaction is effected, who, if engaged in business or in the exercise of profession, shall keep
and preserve the same in his place of business for a period of three (3) years from the close of the
taxable year in which such invoice or receipt was issued, while the duplicate shall be kept and
preserved by the issuer, also in his place of business, for a like period.
The Commissioner may, in meritorious cases, exempt any person subject to an internal revenue tax
from compliance with the provisions of this Section. (Emphasis supplied.)
Correlatively, in Revenue Memorandum No. 16-2003 dated May 20, 2003, the Bureau of Internal
Revenue defined a Sales Invoice and identified its required information as follows:
Sales Invoices (SI)/Cash Invoice (CI) is written account of goods sold or services rendered and the
prices charged therefor used in the ordinary course of business evidencing sale and transfer or
agreement to sell or transfer of goods and services. It contains the same information found in the
Official Receipt.
Official Receipt (OR) is a receipt issued for the payment of services rendered or goods sold. It
contains the following information:
a. Business name and address;
b. Taxpayer Identification Number;
c. Name of printer (BIR Permit No.) with inclusive serial number of booklets and date of
issuance of receipts.
There is no requirement that a sales invoice should accurately state the nature of all the businesses
of the seller. There is no legal ground to state that EYIS "declaration" in its sales invoices that it is an
importer, wholesaler and retailer is restrictive and would preclude its being a manufacturer.
From the above findings, there was no justifiable reason for the CA to disregard the factual findings of
the IPO. The rulings of the IPO Director General and the BLA Director were supported by clear and
convincing evidence. The facts cited by the CA and Shen Dar do not justify a different conclusion
from that of the IPO. Hence, the findings of the BLA Director and the IPO Director General must be
deemed as conclusive on the CA.
Fifth Issue:
Whether EYIS is the true owner of the mark "VESPA"
In any event, given the length of time already invested by the parties in the instant case, this Court
must write finis to the instant controversy by determining, once and for all, the true owner of the mark
"VESPA" based on the evidence presented.
RA 8293 espouses the "first-to-file" rule as stated under Sec. 123.1(d) which states:
Section 123. Registrability. - 123.1. A mark cannot be registered if it:
x x x x
(d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier filing
or priority date, in respect of:
(i) The same goods or services, or
(ii) Closely related goods or services, or
(iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion. (Emphasis
supplied.)
Under this provision, the registration of a mark is prevented with the filing of an earlier application for
registration. This must not, however, be interpreted to mean that ownership should be based upon an
earlier filing date. While RA 8293 removed the previous requirement of proof of actual use prior to the
filing of an application for registration of a mark, proof of prior and continuous use is necessary to
establish ownership of a mark. Such ownership constitutes sufficient evidence to oppose the
registration of a mark.
Sec. 134 of the IP Code provides that "any person who believes that he would be damaged by the
registration of a mark x x x" may file an opposition to the application. The term "any person"
encompasses the true owner of the markthe prior and continuous user.
Notably, the Court has ruled that the prior and continuous use of a mark may even overcome the
presumptive ownership of the registrant and be held as the owner of the mark. As aptly stated by the
Court in Shangri-la International Hotel Management, Ltd. v. Developers Group of Companies, Inc.:
37

Registration, without more, does not confer upon the registrant an absolute right to the registered
mark. The certificate of registration is merely a prima facie proof that the registrant is the owner of the
registered mark or trade name. Evidence of prior and continuous use of the mark or trade name by
another can overcome the presumptive ownership of the registrant and may very well entitle the
former to be declared owner in an appropriate case.
x x x x
Ownership of a mark or trade name may be acquired not necessarily by registration but by adoption
and use in trade or commerce. As between actual use of a mark without registrati on, and registration
of the mark without actual use thereof, the former prevails over the latter. For a rule widely accepted
and firmly entrenched, because it has come down through the years, is that actual use in commerce
or business is a pre-requisite to the acquisition of the right of ownership.
x x x x
By itself, registration is not a mode of acquiring ownership. When the applicant is not the owner of the
trademark being applied for, he has no right to apply for registration of the same. Registration merely
creates a prima facie presumption of the validity of the registration, of the registrants ownership of
the trademark and of the exclusive right to the use thereof. Such presumption, just like the
presumptive regularity in the performance of official functions, is rebuttable and must give way to
evidence to the contrary.
Here, the incontrovertible truth, as established by the evidence submitted by the parties, is that EYIS
is the prior user of the mark. The exhaustive discussion on the matter made by the BLA sufficiently
addresses the issue:
Based on the evidence, Respondent E.Y. Industrial is a legitimate corporation engaged in buying,
importing, selling, industrial machineries and tools, manufacturing, among others since its
incorporation in 1988. (Exhibit "1"). Indeed private respondents have submitted photographs (Exhibit
"376", "377", "378", "379") showing an assembly line of its manufacturing or assembly
process.1avvphi1
More importantly, the private respondents prior adoption and continuous use of the mark "VESPA"
on air compressors is bolstered by numerous documentary evidence consisting of sales invoices
issued in the name of respondent EY Industrial and Bills of Lading. (Exhibits "4" to "375"). Sales
Invoice No. 12075 dated March 27, 1995 antedates petitioners date of first use in January 1, 1997
indicated in its trademark application filed in June 9, 1997 as well as the date of first use in June of
1996 as indicated in the Declaration of Actual Use submitted on December 3, 2001 (Exhibit "385").
The use by respondent-registrant in the concept of owner is shown by commercial documents, sales
invoices unambiguously describing the goods as "VESPA" air compressors. Private respondents
have sold the air compressors bearing the "VESPA" to various locations in the Philippines, as far as
Mindanao and the Visayas since the early 1990s. We carefully inspected the evidence consisting of
three hundred seventy one (371) invoices and shipment documents which show that "VESPA" air
compressors were sold not only in Manila, but to locations such as Iloilo City, Cebu City, Dumaguete
City, Zamboanga City, Cagayan de Oro City, Davao City to name a few. There is no doubt that it is
through private respondents efforts that the mark "VESPA" used on air compressors has gained
business goodwill and reputation in the Philippines for which it has validly acquired trademark rights.
Respondent EY Industrials right has been preserved until the passage of RA 8293 which entitles it to
register the same. x x x
38

On the other hand, Shen Dar failed to refute the evidence cited by the BLA in its decision. More
importantly, Shen Dar failed to present sufficient evidence to prove its own prior use of the mark
"VESPA." We cite with approval the ruling of the BLA:
[Shen Dar] avers that it is the true and rightful owner of the trademark "VESPA" used on air
compressors. The thrust of [Shen Dars] argument is that respondent E.Y. Industrial Sales, Inc. is a
mere distributor of the "VESPA" air compressors. We disagree.
This conclusion is belied by the evidence. We have gone over each and every document attached as
Annexes "A", "A" 1-48 which consist of Bill of Lading and Packing Weight List. Not one of these
documents referred to a "VESPA" air compressor. Instead, it simply describes the goods plainly as air
compressors which is type "SD" and not "VESPA". More importantly, the earliest date reflected on the
Bill of Lading was on May 5, 1997. (Annex "A"-1). [Shen Dar] also attached as Annex "B" a
purported Sales Contract with respondent EY Industrial Sales dated April 20, 2002. Surprisingly,
nowhere in the document does it state that respondent EY Industrial agreed to sell "VESPA" air
compressors. The document only mentions air compressors which if genuine merely bolsters
respondent Engracio Yaps contention that [Shen Dar] approached them if it could sell the "Shen Dar"
or "SD" air compressor. (Exhibit "386") In its position paper, [Shen Dar] merel y mentions of Bill of
Lading constituting respondent as consignee in 1993 but never submitted the same for consideration
of this Bureau. The document is also not signed by [Shen Dar]. The agreement was not even drafted
in the letterhead of either [Shen Dar] nor [sic] respondent registrant. Our only conclusion is that
[Shen Dar] was not able to prove to be the owner of the VESPA mark by appropriation. Neither was it
able to prove actual commercial use in the Philippines of the mark VESPA prior to its filing of a
trademark application in 9 June 1997.
39

As such, EYIS must be considered as the prior and continuous user of the mark "VESPA" and its true
owner. Hence, EYIS is entitled to the registration of the mark in its name.
WHEREFORE, the petition is hereby GRANTED. The CAs February 21, 2008 Decision and October
6, 2008 Resolution in CA-G.R. SP No. 99356 are hereby REVERSED and SET ASIDE. The Decision
dated May 25, 2007 issued by the IPO Director General in Inter Partes Case No. 14-2004-00084 and
the Decision dated May 29, 2006 of the BLA Director of the IPO are hereby REINSTATED.
No costs.
SO ORDERED.
PRESBITERO J. VELASCO, JR.
Associate Justice


G.R. No. 185917 June 1, 2011
FREDCO MANUFACTURING CORPORATION Petitioner,
vs.
PRESIDENT AND FELLOWS OF HARVARD COLLEGE (HARVARD UNIVERSITY), Respondents.
D E C I S I O N
CARPIO, J .:
The Case
Before the Court is a petition for review
1
assailing the 24 October 2008 Decision
2
and 8 January 2009
Resolution
3
of the Court of Appeals in CA-G.R. SP No. 103394.
The Antecedent Facts
On 10 August 2005, petitioner Fredco Manufacturing Corporation (Fredco), a corporation organized
and existing under the laws of the Philippines, filed a Petition for Cancellation of Registration No.
56561 before the Bureau of Legal Affairs of the Intellectual Property Office (IPO) against respondents
President and Fellows of Harvard College (Harvard University), a corporation organized and existing
under the laws of Massachusetts, United States of America. The case was docketed as Inter Partes
Case No. 14-2005-00094.
Fredco alleged that Registration No. 56561 was issued to Harvard University on 25 November 1993
for the mark "Harvard Veritas Shield Symbol" for decals, tote bags, serving trays, sweatshirts, t-shirts,
hats and flying discs under Classes 16, 18, 21, 25 and 28 of the Nice International Classification of
Goods and Services. Fredco alleged that the mark "Harvard" for t-shirts, polo shirts, sandos, briefs,
jackets and slacks was first used in the Philippines on 2 January 1982 by New York Garments
Manufacturing & Export Co., Inc. (New York Garments), a domestic corporation and Fredcos
predecessor-in-interest. On 24 January 1985, New York Garments filed for trademark registration of
the mark "Harvard" for goods under Class 25. The application matured into a registration and a
Certificate of Registration was issued on 12 December 1988, with a 20-year term subject to renewal
at the end of the term. The registration was later assigned to Romeo Chuateco, a member of the
family that owned New York Garments.
Fredco alleged that it was formed and registered with the Securities and Exchange Commission on 9
November 1995 and had since then handled the manufacture, promotion and marketing of "Harvard"
clothing articles. Fredco alleged that at the time of issuance of Registration No. 56561 to Harvard
University, New York Garments had already registered the mark "Harvard" for goods under Class 25.
Fredco alleged that the registration was cancelled on 30 July 1998 when New York Garments
inadvertently failed to file an affidavit of use/non-use on the fifth anniversary of the registration but the
right to the mark "Harvard" remained with its predecessor New York Garments and now with Fredco.
Harvard University, on the other hand, alleged that it is the lawful owner of the name and mark
"Harvard" in numerous countries worldwide, including the Philippines. Among the countries where
Harvard University has registered its name and mark "Harvard" are:
1. Argentina 26. South Korea
2. Benelux
4
27. Malaysia
3. Brazil 28. Mexico
4. Canada 29. New Zealand
5. Chile 30. Norway
6. China P.R. 31. Peru
7. Colombia 32. Philippines
8. Costa Rica 33. Poland
9. Cyprus 34. Portugal
10. Czech Republic 35. Russia
11. Denmark 36. South Africa
12. Ecuador 37. Switzerland
13. Egypt 38. Singapore
14. Finland 39. Slovak Republic
15. France 40. Spain
16. Great Britain 41. Sweden
17. Germany 42. Taiwan
18. Greece 43. Thailand
19. Hong Kong 44. Turkey
20. India 45. United Arab Emirates
21. Indonesia 46. Uruguay
22. Ireland 47. United States of America
23. Israel 48. Venezuela
24. Italy 49. Zimbabwe
25. Japan 50. European Community
5

The name and mark "Harvard" was adopted in 1639 as the name of Harvard College
6
of Cambridge,
Massachusetts, U.S.A. The name and mark "Harvard" was allegedly used in commerce as early as
1872. Harvard University is over 350 years old and is a highly regarded institution of higher learning
in the United States and throughout the world. Harvard University promotes, uses, and advertises its
name "Harvard" through various publications, services, and products in foreign countries, including
the Philippines. Harvard University further alleged that the name and the mark have been rated as
one of the most famous brands in the world, valued between US $750,000,000 and US
$1,000,000,000.
Harvard University alleged that in March 2002, it discovered, through its international trademark
watch program, Fredcos website www.harvard-usa.com. The website advertises and promotes the
brand name "Harvard Jeans USA" without Harvard Universitys consent. The websites main page
shows an oblong logo bearing the mark "Harvard Jeans USA," "Established 1936," and "Cambridge,
Massachusetts." On 20 April 2004, Harvard University filed an administrative complaint against
Fredco before the IPO for trademark infringement and/or unfair competition with damages. lawphi1
Harvard University alleged that its valid and existing certificates of trademark registration in the
Philippines are:
1. Trademark Registration No. 56561 issued on 25 November 1993 for "Harvard Veritas
Shield Design" for goods and services in Classes 16, 18, 21, 25 and 28 (decals, tote
bags, serving trays, sweatshirts, t-shirts, hats and flying discs) of the Nice International
Classification of Goods and Services;
2. Trademark Registration No. 57526 issued on 24 March 1994 for "Harvard Veritas
Shield Symbol" for services in Class 41; Trademark Registration No. 56539 issued on
25 November 1998 for "Harvard" for services in Class 41; and
3. Trademark Registration No. 66677 issued on 8 December 1998 for "Harvard
Graphics" for goods in Class 9. Harvard University further alleged that it filed the
requisite affidavits of use for the mark "Harvard Veritas Shield Symbol" with the IPO.
Further, on 7 May 2003 Harvard University filed Trademark Application No. 4-2003-04090 for
"Harvard Medical International & Shield Design" for services in Classes 41 and 44. In 1989, Harvard
University established the Harvard Trademark Licensing Program, operated by the Office for
Technology and Trademark Licensing, to oversee and manage the worldwide licensing of the
"Harvard" name and trademarks for various goods and services. Harvard University stated that it
never authorized or licensed any person to use its name and mark "Harvard" in connection with any
goods or services in the Philippines.
In a Decision
7
dated 22 December 2006, Director Estrellita Beltran-Abelardo of the Bureau of Legal
Affairs, IPO cancelled Harvard Universitys registration of the mark "Harvard" under Class 25, as
follows:
WHEREFORE, premises considered, the Petition for Cancellation is hereby GRANTED.
Consequently, Trademark Registration Number 56561 for the trademark "HARVARD VE RI TAS
SHIELD SYMBOL" issued on November 25, 1993 to PRESIDENT AND FELLOWS OF HARVARD
COLLEGE (HARVARD UNIVERSITY) should be CANCELLED only with respect to goods falling
under Class 25. On the other hand, considering that the goods of Respondent-Registrant falling
under Classes 16, 18, 21 and 28 are not confusingly similar with the Petitioners goods, the
Respondent-Registrant has acquired vested right over the same and therefore, should not be
cancelled.
Let the filewrapper of the Trademark Registration No. 56561 issued on November 25, 1993 for the
trademark "HARVARD VE RI TAS SHIELD SYMBOL", subject matter of this case together with a
copy of this Decision be forwarded to the Bureau of Trademarks (BOT) for appropriate action.
SO ORDERED.
8

Harvard University filed an appeal before the Office of the Director General of the IPO. In a Decision
9

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 t o
register a trademark is based on ownership and when the applicant is not the owner, he has no right
to register the mark. The Director General noted that the mark covered by Harvard Universitys
Registration No. 56561 is not only the word "Harvard" but also the logo, emblem or symbol of Harvard
University. The Director General ruled that Fredco failed to explain how its predecessor New York
Garments came up with the mark "Harvard." In addition, there was no evidence that Fredco or New
York Garments was licensed or authorized by Harvard University to use its name in commerce or for
any other use.
The dispositive portion of the decision of the Office of the Director General, IPO reads:
WHEREFORE, premises considered, the instant appeal is GRANTED. The appeal ed decision is
hereby REVERSED and SET ASIDE. Let a copy of this Decision as well as the trademark application
and records be furnished and returned to the Director of Bureau of Legal Affairs for appropriate
action. Further, let also the Directors of the Bureau of Trademarks and the Administrative, Financial
and Human Resources Development Services Bureau, and the library of the Documentation,
Information and Technology Transfer Bureau be furnished a copy of this Decision for information,
guidance, and records purposes.
SO ORDERED.
10

Fredco filed a petition for review before the Court of Appeals assailing the decision of the Director
General.
The Decision of the Court of Appeals
In its assailed decision, the Court of Appeals affirmed the decision of the Office of the Director
General of the IPO.
The Court of Appeals adopted the findings of the Office of the Director General and ruled that the
latter correctly set aside the cancellation by the Director of the Bureau of Legal Affairs of Harvard
Universitys trademark registration under Class 25. The Court of Appeals ruled that Harvard
University was able to substantiate that it appropriated and used the marks "Harvard" and "Harvard
Veritas Shield Symbol" in Class 25 way ahead of Fredco and its predecessor New York Garments.
The Court of Appeals also ruled that the records failed to disclose any explanation for Fredcos use of
the name and mark "Harvard" and the words "USA," "Established 1936," and "Cambridge,
Massachusetts" within an oblong device, "US Legend" and "Europes No. 1 Brand." Citing Shangri-La
International Hotel Management, Ltd. v. Developers Group of Companies, Inc.,
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 has been using
the marks "Harvard" and "Harvard Veritas Shield Symbol" for Class 25 goods in the United States
since 1953. Further, there is no dispute that Harvard University has registered the name and mark
"Harvard" in at least 50 countries.
On the other hand, Fredcos predecessor-in-interest, New York Garments, started using the mark
"Harvard" in the Philippines only in 1982. New York Garments filed an application with the Philippine
Patent Office in 1985 to register the mark "Harvard," which application was approved in 1988. Fredco
insists that the date of actual use in the Philippines should prevail on the issue of who has the better
right to register the marks.
Under Section 2 of Republic Act No. 166,
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 Universitys 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
Universitys registration "is based on home registration for the mark Harvard Veritas Shield for
Class 25."
17

In any event, under Section 239.2 of Republic Act No. 8293 (R.A. No. 8293),
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, Fredcos registration was already cancelled on 30 July 1998 when it failed to file the required
affidavit of use/non-use for the fifth anniversary of the marks registration. Hence, at the time of
Fredcos filing of the Petition for Cancellation before the Bureau of Legal Affairs of the IPO, Fredco
was no longer the registrant or presumptive owner of the mark "Harvard."
There are two compelling reasons why Fredcos petition must fail.
First, Fredcos registration of the mark "Harvard" and its identification of origin as "Cambridge,
Massachusetts" falsely suggest that Fredco or its goods are connected with Harvard University, which
uses the same mark "Harvard" and is also located in Cambridge, Massachusetts. This can easily be
gleaned from the following oblong logo of Fredco that it attaches to its clothing line:
Fredcos registration of the mark "Harvard" should not have been allowed because Sect ion 4(a) of
R.A. No. 166 prohibits the registration of a mark "which may disparage or falsely suggest a
connection with persons, living or dead, institutions, beliefs x x x." Section 4(a) of R.A. No. 166
provides:
Section 4. Registration of trade-marks, trade-names and service- marks on the principal register.
There is hereby established a register of trade-mark, trade-names and service-marks which shall be
known as the principal register. The owner of a trade-mark, a trade-name or service-mark used to
distinguish his goods, business or services from the goods, business or services of others shall have
the right to register the same on the principal register, unless it:
(a) Consists of or comprises immoral, deceptive or scandalous manner, or matter which may
disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or
national symbols, or bring them into contempt or disrepute;
(b) x x x (emphasis supplied)
Fredcos use of the mark "Harvard," coupled with its claimed origin in Cambridge, Massachusetts,
obviously suggests a false connection with Harvard University. On this ground alone, Fredcos
registration of the mark "Harvard" should have been disallowed.
Indisputably, Fredco does not have any affiliation or connection with Harvard University, or even with
Cambridge, Massachusetts. Fredco or its predecessor New York Garments was not established in
1936, or in the U.S.A. as indicated by Fredco in its oblong logo. Fredco offered no explanation to the
Court of Appeals or to the IPO why it used the mark "Harvard" on its oblong l ogo with the words
"Cambridge, Massachusetts," "Established in 1936," and "USA." Fredco now claims before this Court
that it used these words "to evoke a lifestyle or suggest a desirable aura of petitioners clothing
lines." Fredcos belated justification merely confirms that it sought to connect or associate its products
with Harvard University, riding on the prestige and popularity of Harvard University, and thus
appropriating part of Harvard Universitys goodwill without the latters consent.
Section 4(a) of R.A. No. 166 is identical to Section 2(a) of the Lanham Act,
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 latters
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 Fredcos registration of the mark "Harvard" because
the registration was obtained in violation of Section 4 of R.A. No. 166.
Second, the Philippines and the United States of America are both signatories to the Paris
Convention for the Protection of Industrial Property (Paris Convention). The Philippines became a
signatory to the Paris Convention on 27 September 1965. Articles 6bis and 8 of the Paris Convention
state:
ARTICLE 6bis
(i) The countries of the Union undertake either administratively if their legislation so permits, or at the
request of an interested party, to refuse or to cancel the registration and to prohibit the use of a
trademark which constitutes a reproduction, imitation or translation, liable to create confusion or a
mark considered by the competent authority of the country as being already the mark of a person
entitled to the benefits of the present Convention and used for identical or similar goods.
These provisions shall also apply when the essential part of the mark constitutes a
reproduction of any such well-known mark or an imitation liable to create confusion therewith.
ARTICLE 8
A trade name shall be protected in all the countries of the Union without the obligation of filing or
registration, whether or not it forms part of a trademark. (Emphasis supplied)
Thus, this Court has ruled that the Philippines is obligated to assure nationals of countries of the Paris
Convention that they are afforded an effective protection against violation of their intellectual property
rights in the Philippines in the same way that their own countries are obligated to accord similar
protection to Philippine nationals.
23

Article 8 of the Paris Convention has been incorporated in Section 37 of R.A. No. 166, as follows:
Section 37. Rights of foreign registrants. Persons who are nationals of, domiciled in, or have a
bona fide or effective business or commercial establishment in any foreign country, which is a party to
any international convention or treaty relating to marks or trade-names, or the repression of unfair
competition to which the Philippines may be a party, shall be entitled to the benefits and subject to the
provisions of this Act to the extent and under the conditions essential to give effect to any such
convention and treaties so long as the Philippines shall continue to be a party thereto, except as
provided in the following paragraphs of this section.
x x x x
Trade-names of persons described in the first paragraph of this section shall be protected
without the obligation of filing or registration whether or not they form parts of marks.
24

x x x x (Emphasis supplied)
Thus, under Philippine law, a trade name of a national of a State that is a party to the Paris
Convention, whether or not the trade name forms part of a trademark, is protected "without the
obligation of filing or registration."
"Harvard" is the trade name of the world famous Harvard University, and it is also a trademark of
Harvard University. Under Article 8 of the Paris Convention, as well as Section 37 of R.A. No. 166,
Harvard University is entitled to protection in the Philippines of its trade name "Harvard" even without
registration of such trade name in the Philippines. This means that no educational entity in the
Philippines can use the trade name "Harvard" without the consent of Harvard University. Likewise, no
entity in the Philippines can claim, expressly or impliedly through the use of the name and mark
"Harvard," that its products or services are authorized, approved, or licensed by, or sourced from,
Harvard University without the latters consent.
Article 6bis of the Paris Convention has been administratively implemented in the Philippines through
two directives of the then Ministry (now Department) of Trade, which directives were upheld by this
Court in several cases.
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 x
28
(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 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 respondents marks are neither registered nor used in the Philippines is of no
moment. The scope of protection initially afforded by Article 6bis of the Paris Convention has been
expanded in the 1999 Joint Recommendation Concerning Provisions on the Protection of Well-Known
Marks, wherein the World Intellectual Property Organization (WIPO) General Assembly and the Paris
Union agreed to a nonbinding recommendation that a well-known mark should be protected in a
country even if the mark is neither registered nor used in that country. Part I, Article 2(3) thereof
provides:
(3) [Factors Which Shall Not Be Required] (a) A Member State shall not require, as a condition for
determining whether a mark is a well-known mark:
(i) that the mark has been used in, or that the mark has been registered or that an
application for registration of the mark has been filed in or in respect of, the Member
State:
(ii) that the mark is well known in, or that the mark has been registered or that an
application for registration of the mark has been filed in or in respect of, any jurisdiction
other than the Member State; or
(iii) that the mark is well known by the public at large in the Member State.
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, whi le under
the territoriality principle a mark must be used in commerce in the Philippines to be entitled to
protection, internationally well-known marks are the exceptions to this rule.
In the assailed Decision of the Office of the Director General dated 21 April 2008, the Director
General found that:
Traced to its roots or origin, HARVARD is not an ordinary word. It refers to no other than Harvard
University, a recognized and respected institution of higher learning located in Cambridge,
Massachusetts, U.S.A. Initially referred to simply as "the new college," the institution was named
"Harvard College" on 13 March 1639, after its first principal donor, a young clergyman named John
Harvard. A graduate of Emmanuel College, Cambridge in England, John Harvard bequeathed about
four hundred books in his will to form the basis of the college library collection, along with half his
personal wealth worth several hundred pounds. The earliest known official reference to Harvard as a
"university" rather than "college" occurred in the new Massachusetts Constitution of 1780.
Records also show that the first use of the name HARVARD was in 1638 for educational services,
policy courses of instructions and training at the university level. It has a Charter. Its first commercial
use of the name or mark HARVARD for Class 25 was on 31 December 1953 covered by UPTON
Reg. No. 2,119,339 and 2,101,295. Assuming in arguendo, that the Appellate may have used the
mark HARVARD in the Philippines ahead of the Appellant, it still cannot be denied that the
Appellants use thereof was decades, even centuries, ahead of the Appellees. More importantly, the
name HARVARD was the name of a person whose deeds were considered to be a cornerstone of the
university. The Appellants logos, emblems or symbols are owned by Harvard University. The name
HARVARD and the logos, emblems or symbols are endemic and cannot be separated from the
institution.
35

Finally, in its assailed Decision, the Court of Appeals ruled:
Records show that Harvard University is the oldest and one of the foremost educational institutions in
the United States, it being established in 1636. It is located primarily in Cambridge, Massachusetts
and was named after John Harvard, a puritan minister who left to the college his books and half of his
estate.
The mark "Harvard College" was first used in commerce in the United States in 1638 for educational
services, specifically, providing courses of instruction and training at the university level (Class 41). Its
application for registration with the United States Patent and Trademark Office was filed on
September 20, 2000 and it was registered on October 16, 2001. The marks "Harvard" and "Harvard
Ve ri tas Shield Symbol" were first used in commerce in the the United States on December 31,
1953 for athletic uniforms, boxer shorts, briefs, caps, coats, leather coats, sports coats, gym shorts,
infant jackets, leather jackets, night shirts, shirts, socks, sweat pants, sweatshirts, sweaters and
underwear (Class 25). The applications for registration with the USPTO were filed on September 9,
1996, the mark "Harvard" was registered on December 9, 1997 and the mark "Harvard Ve ri tas
Shield Symbol" was registered on September 30, 1997.
36

We also note that in a Decision
37
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.
ANTONIO T. CARPIO
Associate Justice


















G.R. No. 190065 August 16, 2010
DERMALINE, INC., Petitioner,
vs.
MYRA PHARMACEUTICALS, INC. Respondent.
D E C I S I O N
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, 2009
3
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 Opposition
4
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 Dermalines trademark will violate Section 123
5
of Republic Act (R.A.) No. 8293
(Intellectual Property Code of the Philippines). It further alleged that Dermalines use and registration
of its applied trademark will diminish the distinctiveness and dilute the goodwill of Myras
"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 Dermalines 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 Dermalines applied mark will enable it to obtain benefit from Myras
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 44
7

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--vis Myras "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 Myras 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. 2008-70
11
sustaining
Myras 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
Order
14
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 Dermalines application for registration of trademark. The CA likewise denied
Dermalines motion for reconsideration; hence, this petition raising the issue of whether the CA erred
in upholding the IPOs rejection of Dermalines 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 devel oped 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. 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 Myras 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 registrants ownership of the mark, and of
the registrants 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

Dermalines insistence that its applied trademark "DERMALINE DERMALINE, INC." had differences
"too striking to be mistaken" from Myras "DERMALIN" cannot, therefore, be sustained. While it is true
that the two marks are presented differently Dermalines 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 Myras 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 Dermalines 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 Dermalines mark pronounced silently. Thus, when an ordinary purchaser, for
example, hears an advertisement of Dermalines applied trademark over the radio, chances are he
will associate it with Myras registered mark.
Further, Dermalines stance that its product belongs to a separate and different classification from
Myras 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 t he
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 Appeals in CA-G.R. SP No. 108627 are AFFIRMED. Costs against
petitioner.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice

















G.R. No. 100098 December 29, 1995
EMERALD GARMENT MANUFACTURING CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS, BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY
TRANSFER and H.D. LEE COMPANY, INC., respondents.

KAPUNAN, J .:
In this petition for review on certiorari under Rule 45 of the Revised Rules of Court, Emerald Garment
Manufacturing Corporation seeks to annul the decision of the Court of Appeals dated 29 November
1990 in CA-G.R. SP No. 15266 declaring petitioner's trademark to be confusingly similar to that of
private respondent and the resolution dated 17 May 1991 denying petitioner's motion for
reconsideration.
The record reveals the following antecedent facts:
On 18 September 1981, private respondent H.D. Lee Co., Inc., a foreign corporation organized under
the laws of Delaware, U.S.A., filed with the Bureau of Patents, Trademarks & Technology Transfer
(BPTTT) a Petition for Cancellation of Registration No. SR 5054 (Supplemental Register) for the
trademark "STYLISTIC MR. LEE" used on skirts, jeans, blouses, socks, briefs, jackets, jogging suits,
dresses, shorts, shirts and lingerie under Class 25, issued on 27 October 1980 in the name of
petitioner Emerald Garment Manufacturing Corporation, a domestic corporation organized and
existing under Philippine laws. The petition was docketed as Inter Partes Case No. 1558.
1

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

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

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

On 27 July 1984, private respondent filed a notice of opposition to petitioner's application for
registration also on grounds that petitioner's trademark was confusingly similar to its "LEE" trademark.

5
The case was docketed as Inter Partes Case No. 1860.
On 21 June 1985, the Director of Patents, on motion filed by private respondent dated 15 May 1985,
issued an order consolidating Inter Partes Cases Nos. 1558 and 1860 on grounds that a common
question of law was involved.
6

On 19 July 1988, the Director of Patents rendered a decision granting private respondent's petition for
cancellation and opposition to registration.
The Director of Patents found private respondent to be the prior registrant of the trademark "LEE" in
the Philippines and that it had been using said mark in the Philippines.
7

Moreover, the Director of Patents, using the test of dominancy, declared that petitioner's trademark
was confusingly similar to private respondent's mark because "it is the word 'Lee' which draws the
attention of the buyer and leads him to conclude that the goods originated from the same
manufacturer. It is undeniably the dominant feature of the mark."
8

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

On 23 September 1988, the BPTTT issued Resolution No. 88-33 granting petitioner's motion to stay
execution subject to the following terms and conditions:
1. That under this resolution, Respondent-Registrant is authorized only to dispose of its
current stock using the mark "STYLISTIC MR. LEE";
2. That Respondent-Registrant is strictly prohibited from further production, regardless
of mode and source, of the mark in question (STYLISTIC MR. LEE) in addition to its
current stock;
3. That this relief Order shall automatically cease upon resolution of the Appeal by the
Court of Appeals and, if the Respondent's appeal loses, all goods bearing the mark
"STYLISTIC MR. LEE" shall be removed from the market, otherwise such goods shall
be seized in accordance with the law.
SO ORDERED.
10

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

In said decision the Court of Appeals expounded, thus:
xxx xxx xxx
Whether or not a trademark causes confusion and is likely to deceive the public is a
question of fact which is to be resolved by applying the "test of dominancy", meaning, if
the competing trademark contains the main or essential or dominant features of another
by reason of which confusion and deception are likely to result, then infringement takes
place; that duplication or imitation is not necessary, a similarity in the dominant features
of the trademark would be sufficient.
The word "LEE" is the most prominent and distinctive feature of the appellant's
trademark and all of the appellee's "LEE" trademarks. It is the mark which draws the
attention of the buyer and leads him to conclude that the goods originated from the
same manufacturer. While it is true that there are other words such as "STYLISTIC",
printed in the appellant's label, such word is printed in such small letters over the word
"LEE" that it is not conspicuous enough to draw the attention of ordinary buyers
whereas the word "LEE" is printed across the label in big, bold letters and of the same
color, style, type and size of lettering as that of the trademark of the appellee. The
alleged difference is too insubstantial to be noticeable. Even granting arguendo that the
word "STYLISTIC" is conspicuous enough to draw attention, the goods may easily be
mistaken for just another variation or line of garments under the ap appelle's "LEE"
trademarks in view of the fact that the appellee has registered trademarks which use
other words in addition to the principal mark "LEE" such as "LEE RIDERS",
"LEESURES" and "LEE LEENS". The likelihood of confusion is further made more
probable by the fact that both parties are engaged in the same line of business. It is well
to reiterate that the determinative factor in ascertaining whether or not the marks are
confusingly similar to each other is not whether the challenged mark would actually
cause confusion or deception of the purchasers but whether the use of such mark would
likely cause confusion or mistake on the part of the buying public.
xxx xxx xxx
The appellee has sufficiently established its right to prior use and registration of the
trademark "LEE" in the Philippines and is thus entitled to protection from any
infringement upon the same. It is thus axiomatic that one who has identified a peculiar
symbol or mark with his goods thereby acquires a property right in such symbol or mark,
and if another infringes the trademark, he thereby invokes this property right.
The merchandise or goods being sold by the parties are not that expensive as alleged
to be by the appellant and are quite ordinary commodities purchased by the average
person and at times, by the ignorant and the unlettered. Ordinary purchasers will not as
a rule examine the small letterings printed on the label but will simply be guided by the
presence of the striking mark "LEE". Whatever difference there may be will pale in
insignificance in the face of an evident similarity in the dominant features and overall
appearance of the labels of the parties.
12

xxx xxx xxx
On 19 December 1990, petitioner filed a motion for reconsideration of the above-mentioned decision
of the Court of Appeals.
Private respondent opposed said motion on 8 January 1991 on grounds that it involved an
impermissible change of theory on appeal. Petitioner allegedly raised entirely new and unrelated
arguments and defenses not previously raised in the proceedings below such as laches and a claim
that private respondent appropriated the style and appearance of petitioner's trademark when it
registered its "LEE" mark under Registration No. 44220.
13

On 17 May 1991, the Court of Appeals issued a resolution rejecting petitioner's motion for
reconsideration and ruled thus:
xxx xxx xxx
A defense not raised in the trial court cannot be raised on appeal for the first time. An
issue raised for the first time on appeal and not raised timely in the proceedings in the
lower court is barred by estoppel.
The object of requiring the parties to present all questions and issues to the lower court
before they can be presented to this Court is to have the lower court rule upon them, so
that this Court on appeal may determine whether or not such ruling was erroneous. The
purpose is also in furtherance of justice to require the party to first present the question
he contends for in the lower court so that the other party may not be taken by surprise
and may present evidence to properly meet the issues raised.
Moreover, for a question to be raised on appeal, the same must also be within the
issues raised by the parties in their pleadings. Consequently, when a party deliberately
adopts a certain theory, and the case is tried and decided based upon such theory
presented in the court below, he will not be permitted to change his theory on appeal.
To permit him to do so would be unfair to the adverse party. A question raised for the
first time on appeal, there having opportunity to raise them in the court of origin
constitutes a change of theory which is not permissible on appeal.
In the instant case, appellant's main defense pleaded in its answer dated March 23,
1982 was that there was "no confusing similarity between the competing trademark
involved. On appeal, the appellant raised a single issue, to wit:
The only issue involved in this case is whether or not respondent-
registrant's trademark "STYLISTIC MR. LEE" is confusingly similar with
the petitioner's trademarks "LEE or LEERIDERS, LEE-LEENS and LEE-
SURES."
Appellant's main argument in this motion for reconsideration on the other hand is that
the appellee is estopped by laches from asserting its right to its trademark. Appellant
claims although belatedly that appellee went to court with "unclean hands" by changing
the appearance of its trademark to make it identical to the appellant's trademark.
Neither defenses were raised by the appellant in the proceedings before the Bureau of
Patents. Appellant cannot raise them now for the first time on appeal, let alone on a
mere motion for reconsideration of the decision of this Court dismissing the appellant's
appeal.
While there may be instances and situations justifying relaxation of this rule, the
circumstance of the instant case, equity would be better served by applying the settled
rule it appearing that appellant has not given any reason at all as to why the defenses
raised in its motion for reconsideration was not invoked earlier.
14

xxx xxx xxx
Twice rebuffed, petitioner presents its case before this Court on the following assignment of errors:
I. THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE
RESPONDENT CAUSED THE ISSUANCE OF A FOURTH "LEE" TRADEMARK
IMITATING THAT OF THE PETITIONER'S ON MAY 5, 1989 OR MORE THAN EIGHT
MONTHS AFTER THE BUREAU OF PATENT'S DECISION DATED JULY 19, 1988.
II. THE COURT OF APPEALS ERRED IN RULING THAT THE DEFENSE OF
ESTOPPEL BY LACHES MUST BE RAISED IN THE PROCEEDINGS BEFORE THE
BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY TRANSFER.
III. THE COURT OF APPEALS ERRED WHEN IT CONSIDERED PRIVATE
RESPONDENT'S PRIOR REGISTRATION OF ITS TRADEMARK AND
DISREGARDED THE FACT THAT PRIVATE RESPONDENT HAD FAILED TO PROVE
COMMERCIAL
USE THEREOF BEFORE FILING OF APPLICATION FOR REGISTRATION.
15

In addition, petitioner reiterates the issues it raised in the Court of Appeals:
I. THE ISSUE INVOLVED IN THIS CASE IS WHETHER OR NOT PETITIONER'S
TRADEMARK SYTLISTIC MR. LEE, IS CONFUSINGLY SIMILAR WITH THE PRIVATE
RESPONDENT'S TRADEMARK LEE OR LEE-RIDER, LEE-LEENS AND LEE-SURES.
II. PETITIONER'S EVIDENCES ARE CLEAR AND SUFFICIENT TO SHOW THAT IT IS
THE PRIOR USER AND ITS TRADEMARK IS DIFFERENT FROM THAT OF THE
PRIVATE RESPONDENT.
III. PETITIONER'S TRADEMARK IS ENTIRELY DIFFERENT FROM THE PRIVATE
RESPONDENT'S AND THE REGISTRATION OF ITS TRADEMARK IS PRIMA FACIE
EVIDENCE OF GOOD FAITH.
IV. PETITIONER'S "STYLISTIC MR. LEE" TRADEMARK CANNOT BE CONFUSED
WITH PRIVATE RESPONDENT'S LEE TRADEMARK.
16

Petitioner contends that private respondent is estopped from instituting an action for infringement
before the BPTTT under the equitable principle of laches pursuant to Sec. 9-A of R.A. No. 166,
otherwise known as the Law on Trade-marks, Trade-names and Unfair Competition:
Sec. 9-A. Equitable principles to govern proceedings. In opposition proceedings and
in all other inter partes proceedings in the patent office under this act, equitable
principles of laches, estoppel, and acquiescence, where applicable, may be considered
and applied.
Petitioner alleges that it has been using its trademark "STYLISTIC MR. LEE" since 1 May 1975, yet, it
was only on 18 September 1981 that private respondent filed a petition for cancellation of petitioner's
certificate of registration for the said trademark. Similarly, private respondent's notice of opposition to
petitioner's application for registration in the principal register was belatedly filed on 27 July 1984.
17

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

We reject petitioner's contention.
Petitioner's trademark is registered in the supplemental register. The Trademark Law (R.A. No. 166)
provides that "marks and tradenames for the supplemental register shall not be published for or be
subject to opposition, but shall be published on registration in the Official Gazette."
19
The reckoning
point, therefore, should not be 1 May 1975, the date of alleged use by petitioner of its assailed
trademark but 27 October 1980,
20
the date the certificate of registration SR No. 5054 was published
in the Official Gazette and issued to petitioner.
It was only on the date of publication and issuance of the registration certificate that private
respondent may be considered "officially" put on notice that petitioner has appropriated or is using
said mark, which, after all, is the function and purpose of registration in the supplemental register.
21

The record is bereft of evidence that private respondent was aware of petitioner's trademark before
the date of said publication and issuance. Hence, when private respondent instituted cancellation
proceedings on 18 September 1981, less than a year had passed.
Corollarily, private respondent could hardly be accused of inexcusable delay in filing its notice of
opposition to petitioner's application for registration in the principal register since said applicati on was
published only on 20 February 1984.
22
From the time of publication to the time of filing the opposition
on 27 July 1984 barely five (5) months had elapsed. To be barred from bringing suit on grounds of
estoppel and laches, the delay must be
lengthy.
23

More crucial is the issue of confusing similarity between the two trademarks. Petitioner vehemently
contends that its trademark "STYLISTIC MR. LEE" is entirely different from and not confusingly
similar to private respondent's "LEE" trademark.
Private respondent maintains otherwise. It asserts that petitioner's trademark tends to mislead and
confuse the public and thus constitutes an infringement of its own mark, since the dominant feature
therein is the word "LEE."
The pertinent provision of R.A. No. 166 (Trademark Law) states thus:
Sec. 22. Infringement, what constitutes. Any person who shall use, without the
consent of the registrant, any reproduction, counterfeit, copy or colorable imitation of
any registered mark or trade-name in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection with which such use
is likely to cause confusion or mistake or to deceive purchasers or others as to the
source or origin of such goods or services, or identity of such business; or reproduce,
counterfeit, copy or colorably imitable any such mark or trade-name and apply such
reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in connection with
such goods, business or services; shall be liable to a civil action by the registrant for any
or all of the remedies herein provided.
Practical application, however, of the aforesaid provision is easier said than done. In the history of
trademark cases in the Philippines, particularly in ascertaining whether one trademark is confusingly
similar to or is a colorable imitation of another, no set rules can be deduced. Each case must be
decided on its own merits.
In Esso Standard Eastern, Inc. v. Court of Appeals,
24
we held:
. . . But likelihood of confusion is a relative concept; to be determined only according to
the particular, and sometimes peculiar, circumstances of each case. It is unquestionably
true that, as stated in Coburn vs. Puritan Mills, Inc.: "In trademark cases, even more
than in other litigation, precedent must be studied in the light of the facts of the
particular case."
xxx xxx xxx
Likewise, it has been observed that:
In determining whether a particular name or mark is a "colorable imitation" of another,
no all-embracing rule seems possible in view of the great number of factors which must
necessarily be considered in resolving this question of fact, such as the class of product
or business to which the article belongs; the product's quality, quantity, or size, including
its wrapper or container; the dominant color, style, size, form, meaning of letters, words,
designs and emblems used; the nature of the package, wrapper or container; the
character of the product's purchasers; location of the business; the likelihood of
deception or the mark or name's tendency to confuse;
etc.
25

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

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

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

As its title implies, the test of dominancy focuses on the similarity of the prevalent features of the
competing trademarks which might cause confusion or deception and thus constitutes infringement.
xxx xxx xxx
. . . If the competing trademark contains the main or essential or dominant features of
another, and confusion and deception is likely to result, infringement takes place.
Duplication or imitation is not necessary; nor it is necessary that the infringing label
should suggest an effort to imitate. [C. Neilman Brewing Co. v. Independent Brewing
Co., 191 F., 489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180 Fed. 579]. The
question at issue in cases of infringement of trademarks is whether the use of the marks
involved would be likely to cause confusion or mistakes in the mind of the public or
deceive purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d
588; . . .)
32

xxx xxx xxx
On the other side of the spectrum, the holistic test mandates that the entirety of the marks in question
must be considered in determining confusing similarity.
xxx xxx xxx
In determining whether the trademarks are confusingly similar, a comparison of the
words is not the only determinant factor. The trademarks in their entirety as they appear
in their respective labels or hang tags must also be considered in relation to the goods
to which they are attached. The discerning eye of the observer must focus not only on
the predominant words but also on the other features appearing in both labels in order
that he may draw his conclusion whether one is confusingly similar to the other.
33

xxx xxx xxx
Applying the foregoing tenets to the present controversy and taking into account the factual
circumstances of this case, we considered the trademarks involved as a whole and rule that
petitioner's "STYLISTIC MR. LEE" is not confusingly similar to private respondent's "LEE" trademark.
Petitioner's trademark is the whole "STYLISTIC MR. LEE." Although on its label the word "LEE" is
prominent, the trademark should be considered as a whole and not piecemeal. The dissimilarities
between the two marks become conspicuous, noticeable and substantial enough to matter especially
in the light of the following variables that must be factored in.
First, the products involved in the case at bar are, in the main, various kinds of jeans. These are not
your ordinary household items like catsup, soysauce or soap which are of minimal cost. Maong pants
or jeans are not inexpensive. Accordingly, the casual buyer is predisposed to be more cautious and
discriminating in and would prefer to mull over his purchase. Confusion and deception, then, is less
likely. In Del Monte Corporation v. Court of Appeals,
34
we noted that:
. . . Among these, what essentially determines the attitudes of the purchaser,
specifically his inclination to be cautious, is the cost of the goods. To be sure, a person
who buys a box of candies will not exercise as much care as one who buys an
expensive watch. As a general rule, an ordinary buyer does not exercise as much
prudence in buying an article for which he pays a few centavos as he does in
purchasing a more valuable thing. Expensive and valuable items are normally bought
only after deliberate, comparative and analytical investigation. But mass products, low
priced articles in wide use, and matters of everyday purchase requiring frequent
replacement are bought by the casual consumer without great
care. . . .
Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does not
ask the sales clerk for generic jeans but for, say, a Levis, Guess, Wrangler or even an Armani. He is,
therefore, more or less knowledgeable and familiar with his preference and will not easily be
distracted.
Finally, in line with the foregoing discussions, more credit should be given to the "ordinary purchaser."
Cast in this particular controversy, the ordinary purchaser is not the "completely unwary consumer"
but is the "ordinarily intelligent buyer" considering the type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok
35
is better suited to the present case. There,
the "ordinary purchaser" was defined as one "accustomed to buy, and therefore to some extent
familiar with, the goods in question. The test of fraudulent simulation is to be found in the likelihood of
the deception of some persons in some measure acquainted with an established design and desirous
of purchasing the commodity with which that design has been associated. The test is not found in the
deception, or the possibility of deception, of the person who knows nothing about the design which
has been counterfeited, and who must be indifferent between that and the other. The simulation, in
order to be objectionable, must be such as appears likely to mislead the ordinary intelligent buyer
who has a need to supply and is familiar with the article that he seeks to purchase."
There is no cause for the Court of Appeal's apprehension that petitioner's products might be mistaken
as "another variation or line of garments under private respondent's 'LEE' trademark".
36
As one would
readily observe, private respondent's variation follows a standard format "LEERIDERS,"
"LEESURES" and "LEELEENS." It is, therefore, improbable that the public would immediately and
naturally conclude that petitioner's "STYLISTIC MR. LEE" is but another variation under private
respondent's "LEE" mark.
As we have previously intimated the issue of confusing si milarity between trademarks is resolved by
considering the distinct characteristics of each case. In the present controversy, taking into account
these unique factors, we conclude that the similarities in the trademarks in question are not sufficient
as to likely cause deception and confusion tantamount to infringement.
Another way of resolving the conflict is to consider the marks involved from the point of view of what
marks are registrable pursuant to Sec. 4 of R.A. No. 166, particularly paragraph 4 (e):
CHAPTER II-A. The Principal Register
(Inserted by Sec. 2, Rep. Act No. 638.)
Sec. 4. Registration of trade-marks, trade-names and service-marks on the principal
register. There is hereby established a register of trade-marks, trade-names and
service-marks which shall be known as the principal register. The owner of a trade-
mark, trade-name or service-mark used to distinguish his goods, business or services
from the goods, business or services of others shall have the right to register the same
on the principal register, unless it:
xxx xxx xxx
(e) Consists of a mark or trade-name which, when applied to or used in connection with
the goods, business or services of the applicant is merely descriptive or deceptively
misdescriptive of them, or when applied to or used in connection with the goods,
business or services of the applicant is primarily geographically descriptive or
deceptively misdescriptive of them, or is primarily merely a surname; (Emphasis ours.)
xxx xxx xxx
"LEE" is primarily a surname. Private respondent cannot, therefore, acquire exclusive ownership over
and singular use of said term.
. . . It has been held that a personal name or surname may not be monopolized as a
trademark or tradename as against others of the same name or surname. For in t he
absence of contract, fraud, or estoppel, any man may use his name or surname in all
legitimate ways. Thus, "Wellington" is a surname, and its first user has no cause of
action against the junior user of "Wellington" as it is incapable of exclusive
appropriation.
37

In addition to the foregoing, we are constrained to agree with petitioner's contention that private
respondent failed to prove prior actual commercial use of its "LEE" trademark in the Philippines
before filing its application for registration with the BPTTT and hence, has not acquired ownership
over said mark.
Actual use in commerce in the Philippines is an essential prerequisite for the acquisition of ownership
over a trademark pursuant to Sec. 2 and 2-A of the Philippine Trademark Law (R.A. No. 166) which
explicitly provides that:
CHAPTER II. Registration of Marks and Trade-names.
Sec. 2. What are registrable. Trade-marks, trade-names, and service marks owned
by persons, corporations, partnerships or associations domiciled in the Philippines and
by persons, corporations, partnerships, or associations domiciled in any foreign country
may be registered in accordance with the provisions of this act: Provided, That said
trade-marks, trade-names, or service marks are actually in use in commerce and
services not less than two months in the Philippines before the time the applications for
registration are filed: And Provided, further, That the country of which the applicant for
registration is a citizen grants by law substantially similar privileges to citizens of the
Philippines, and such fact is officially certified, with a certified true copy of the foreign
law translated into the English language, by the government of the foreign country to the
Government of the Republic of the Philippines. (As amended.) (Emphasis ours.)
Sec. 2-A. Ownership of trade-marks, trade-names and service-marks; how acquired.
Anyone who lawfully produces or deals in merchandise of any kind or who engages in
lawful business, or who renders any lawful service in commerce, by actual use hereof in
manufacture or trade, in business, and in the service rendered; may appropriate to his
exclusive use a trade-mark, a trade-name, or a service-mark not so appropriated by
another, to distinguish his merchandise, business or services from others. The
ownership or possession of trade-mark, trade-name, service-mark, heretofore or
hereafter appropriated, as in this section provided, shall be recognized and protected in
the same manner and to the same extent as are other property rights to the law. (As
amended.) (Emphasis ours.)
The provisions of the 1965 Paris Convention for the Protection of Industrial Property
38
relied upon by
private respondent and Sec. 21-A of the Trademark Law (R.A. No. 166)
39
were sufficiently
expounded upon and qualified in the recent case of Philip Morris, Inc. v. Court of Appeals:
40

xxx xxx xxx
Following universal acquiescence and comity, our municipal law on trademarks
regarding the requirement of actual use in the Philippines must subordinate an
international agreement inasmuch as the apparent clash is being decided by a
municipal tribunal (Mortisen vs. Peters, Great Britain, High Court of Judiciary of
Scotland, 1906, 8 Sessions, 93; Paras, International Law and World Organization, 1971
Ed., p. 20). Withal, the fact that international law has been made part of the law of the
land does not by any means imply the primacy of international law over national law in
the municipal sphere. Under the doctrine of incorporation as applied in most countries,
rules of international law are given a standing equal, not superior, to national legislative
enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for infringement
irrespective of lack of business activity in the Philippines on account of Section 21-A of
the Trademark Law but the question of whether they have an exclusive right over their
symbol as to justify issuance of the controversial writ will depend on actual use of their
trademarks in the Philippines in line with Sections 2 and 2-A of the same law. It is thus
incongruous for petitioners to claim that when a foreign corporation not licensed to do
business in the Philippines files a complaint for infringement, the entity need not be
actually using its trademark in commerce in the Philippines. Such a foreign corporation
may have the personality to file a suit for infringement but it may not necessarily be
entitled to protection due to absence of actual use of the emblem in the local market.
xxx xxx xxx
Undisputably, private respondent is the senior registrant, having obtained several registration
certificates for its various trademarks "LEE," "LEERIDERS," and "LEESURES" in both the
supplemental and principal registers, as early as 1969 to 1973.
41
However, registration alone will not
suffice. In Sterling Products International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft,
42
we
declared:
xxx xxx xxx
A rule widely accepted and firmly entrenched because it has come down through the
years is that actual use in commerce or business is a prerequisite in the acquisition of
the right of ownership over a trademark.
xxx xxx xxx
It would seem quite clear that adoption alone of a trademark would not give exclusive
right thereto. Such right "grows out of their actual use." Adoption is not use. One may
make advertisements, issue circulars, give out price lists on certain goods; but these
alone would not give exclusive right of use. For trademark is a creation of use. The
underlying reason for all these is that purchasers have come to understand the mark as
indicating the origin of the wares. Flowing from this is the trader's right to protection in
the trade he has built up and the goodwill he has accumulated from use of the
trademark. Registration of a trademark, of course, has value: it is an administrative act
declaratory of a pre-existing right. Registration does not, however, perfect a trademark
right. (Emphasis ours.)
xxx xxx xxx
To augment its arguments that it was, not only the prior registrant, but also the prior user, private
respondent invokes Sec. 20 of the Trademark Law, thus:
Sec. 20. Certificate of registration prima facie evidence of validity. A certificate of
registration of a mark or tradename shall be a prima facie evidence of the validity of the
registration, the registrant's ownership of the mark or trade-name, and of the registrant's
exclusive right to use the same in connection with the goods, business or services
specified in the certificate, subject to any conditions and limitations stated therein.
The credibility placed on a certificate of registration of one's trademark, or its weight as evidence of
validity, ownership and exclusive use, is qualified. A registration certificate serves merely as prima
facie evidence. It is not conclusive but can and may be rebutted by controverting evidence.
Moreover, the aforequoted provision applies only to registrations in the principal register.
43

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

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

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

On the other hand, petitioner has sufficiently shown that it has been in the business of selling jeans
and other garments adopting its "STYLISTIC MR. LEE" trademark since 1975 as evi denced by
appropriate sales invoices to various stores and retailers.
50

Our rulings in Pagasa Industrial Corp. v. Court of Appeals 51 and Converse Rubber Corp. v.
Universal Rubber Products, Inc.,
52
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 establish confusing similarity between said trademarks, private
respondent's action for infringement must necessarily fail.
WHEREFORE, premises considered, the questioned decision and resolution are hereby REVERSED
and SET ASIDE.
SO ORDERED.
































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 articl es 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 t hat 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
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. 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 complai nant,
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 descr iptive
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 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.
11
lawphil.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 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.
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.

















G.R. No. 91385 January 4, 1994
HEIRS OF CRISANTA Y. GABRIEL-ALMORADIE, herein represented by the special
administrator LORENZO B. ALMORADIE of the Intestate Estate of the Late Crisanta Y. Gabriel-
Almoradie and LORENZO B. ALMORADIE, petitioners,
vs.
COURT OF APPEALS and EMILIA M. SUMERA, herein sued in her capacity as special
administratrix of the Testate Estate of the late DR. JOSE R. PEREZ, respondents.
Romeo Lagman, Valdecantos, Evangelista Law Offices for petitioners.
Jesus I. Santos Law Office for private respondent.

NOCON, J .:
Just for the record, the present case, involving the same parties and the same trademark has been
twice before the Director of Patents, twice before the trial courts, four times before the Court of
Appeals and twice before this Court.
On review before us is the decision of the Court of Appeals in the case entitled "Emilia M. Sumera v.
Crisanta Y. Gabriel, CA-G.R. CV No. 12866"
1
which reversed and set aside the order of the Regional
Trial Court in Civil Case No. C-8147,
2
dismissing the complaint filed by private respondent, Emilia M.
Sumera against Crisanta Y. Gabriel for Infringement of Trademarks and Damages with Prayer for
Issuance of a Writ of Preliminary Injunction.
Historical antecedents of the case at bar relate as far back as 1953 when the late Dr. Jose Perez
discovered a beauty soap for bleaching, which whitens or sometimes softens the skin. A certificate of
label approval was issued in his name by the Bureau of Health on June 6, 1958 for the said product
with the label reading "Dr. Perez' Wonder Beauty Soap." Not surprisingly, he later developed an
improved formula for his soap after continued laboratory experimentation, for which he obtained
another certificate of label approval from the Bureau of Health on August 10, 1959, also describing
the product as "Dr. Perez Wonder Beauty Soap (Improved Formula)."
3

Needing a marketing firm for wider distribution of his soap, he entered into an agreement on January
1959 with a certain company named "Manserco," owned and managed by Mariano S. Yangga, for the
distribution of his soap.
This venture, however, did not last long, as the corporation allegedly went bankrupt. He then
terminated his agreement with Manserco and forged an "Exclusive Distributorship Agreement" with
Crisanta Y. Gabriel, who happened to be the sister of Mariano S. Yangga. What could have been a
good business relation turned sour; instead a series of legal battles transpired thereafter between
them in the Patent and Trademark Office, the trial court, the Court of Appeals and this Court.
I. On October 3, 1960, Gabriel filed an application with the Patent Office to register the trademark
"WONDER." Said application was denied on November 18, 1960 on the ground that Gabriel was not
the owner of the trademark sought to be registered and that as shown in the labels submitted, it
appeared that Dr. Jose R. Perez is the owner of the said mark. On the other hand, on May 11, 1961,
Perez obtained in his name a certificate of registration No. SR-389 covering the same trademark
"WONDER" for beauty soap.
4

II. Thereafter, Perez filed a complaint for Unfair Competition with Injunction and Damages, dated
August 8, 1961, docketed as Civil Case
No. 2422, against Gabriel. In the said complaint, Perez alleged that Gabriel, without just cause and in
violation of the terms of the distributorship agreement, stopped selling and distributing "WONDER"
soap, and instead on October 3, 1960 Gabriel tried to register the trademark "WONDER" in her
name.
On September 7, 1961, a writ of preliminary injunction was issued against Gabriel, restraining her
"from making, manufacturing, and producing 'Wonder Bleaching Beauty Soap' with the same labels
and chemical ingredients as those of the plaintiff, and from advertising, selling and distributing the
same products."
5
As to what happened to this civil suit, or whether the case was ever terminated
remains unknown and is not on record.
III. Meanwhile, on October 19, 1962, Gabriel, in Inter Partes Case
No. 280, filed a Petition to Cancel Certificate of Registration No. SR-389 covering the trademark
"WONDER" for beauty soap in the name of Dr. Perez. On July 15, 1964, a decision was rendered by
Director of Patents Tiburcio S. Evalle denying said petition. Her motion for reconsideration thereof
having been denied, Gabriel filed a petition for review before this Court, entitled "Crisanta Y. Gabriel
v. Dr. Jose R. Perez and Hon. Tiburcio Evalle as Director of Patents," G.R. No. L-24075.
6

The above case was decided in favor of Perez since the court found out that:
. . . the trademark "WONDER" has long been identified and associated with the product
manufactured and produced by the Dr. Jose R. Perez Cosmetic Laboratory. It would
thus appear that the decision under review is but in consonance with the sound
purposes or objects of a trademark. Indeed, a contrary ruling would have resulted in the
cancellation of the trademark in question and in granting the pending application of
herein petitioner to register the same trademark in her favor to be used on her bleaching
soap, which is of the same class as that of respondent. And the effect on the public as
well as on respondent Dr. Jose R. Perez would have been disastrous. Such a situation
would sanction a false implication that the product to be sold by her (Gabriel) is still that
manufactured by respondent
7

xxx xxx xxx
On the claim of Gabriel that the exclusive ownership of the trademark "WONDER" is vested in her by
virtue of her agreement with Perez, the court further said:
The fact that paragraph 6 (Exh. "F-2") of the (Distributorship) agreement provides that
the petitioner 'has the exclusive right of ownership of the packages and that said party is
responsible for the costs as well as the design and manner of packaging the same' did
not necessarily grant her the right to the exclusive use of the trademark; because the
agreement never mentioned transfer of ownership of the trademark. It merely empowers
the petitioner as exclusive distributor to own the package and to create a design at her
pleasure, but not the right to appropriate unto herself the sole ownership of the
trademark so as to entitle her to registration in the Patent Office. . . . (emphasis
supplied)
The exclusive distributor does not acquire any proprietary interest in the principal's
trademark.
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
interest in the mark which will extinguish the 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. (87 CJS 258-259, citing cases.)
8

IV. The issue of ownership of the trademark "WONDER" having been settled as pronounced in the
above decision, Emilia M. Sumera, in her capacity as special administratrix of the estate of Dr. Jose
R. Perez, who died on October 9, 1971, filed on January 31, 1975, with the Philippine Patent Office
an application for registration of the trademark "WONDER" for beauty soap in the Principal Register.
The application was later amended to change the name of the applicant to "The Testate of the late
Dr. Jose R. Perez, represented by Emilia Sumera as Special Administratrix." Gabriel opposed anew
the application alleging among others that 1) she is the owner of the trademark "WONDER" used for
beauty soap and had been using it prior to the alleged date of first use of applicant (Sumera); 2) that
the trademark "WONDER" which she created and adopted is well known throughout the Philippines
and even abroad, that the use thereof by the applicant (Sumera) would result in confusion in her
business to her damage and prejudice.
9

The Director of Patents dismissed the opposition on the ground of res judicata, the issues having
been resolved in G.R. No. L-24075. The application was approved and Certificate of Registration No.
25610 in the Principal Register was issued for the trademark "WONDER" in the name of "The Testate
Estate of Dr. Jose R. Perez."
10

The foregoing decision of the Director of Patents was appealed before the Court of Appeals and the
appellate court in CA-G.R. SP-07446-R
11
said:
Appellant Gabriel's insistence that there is no identity of parties between G.R. No. L-
24075 and the case at bar is untenable. The fact that Emilia Sumera was not a party in
the first case is of no moment, inasmuch as her participation in the case at bar is merely
as representative of the estate of the late Dr. Perez, being the Special Administratrix. It
should be noted that the application for registration of the trademark filed by Emilia
Sumera was amended and the name of the applicant was changed to the Testate
Estate of the late Dr. Jose R. Perez, who is deemed the owner of the trademark.
xxx xxx xxx
It should be noted that appellant Gabriel's petition for cancellation of the trademark in
the supplemental register in the name of Dr. Perez was based on her claim of
ownership of said trademark. The decision in said case, (G.R. No. L-24075) shows that
both parties endevored to prove their rights of ownership of the trademark "Wonder". In
the case at bar, the same parties again assert their rights of ownership of the same
trademark. It is clear, therefore, that between the two suits, there is identity of cause of
action, i.e., the same parties' claim of ownership of the trademark "Wonder." What is
different here only is the form of action. But the employment of two different forms of
action does not enable one to escape the operation of the principle that one and the
same cause of action shall not be twice litigated. (Yusingco v. Ong Hing Lian, G.R. No.
L-26523, Dec. 24, 1971, 42 SCRA 589, 605).
12

V. Despite the foregoing, Gabriel continued distributing and selling beauty soap products using the
mark "Wonder." Thus, on December 18, 1979, Sumera filed an action against Gabriel for
Infringement of Trademark with Damages and a Prayer for a Writ of Preliminary Injunction before the
Regional Trial Court (Civil Case No. C-8147, case at bar under our review). The trial court granted a
temporary restraining order and in the Order of February 28, 1980, Gabriel was enjoined from using
the trademark "Wonder."
13
Subsequently, Gabriel filed a motion to quash the temporary restraining
order invoking as a ground res judicata, alleging the pendency of Civil Case
No. 2422, filed before the Court of First Instance of Bulacan, Branch III, involving the same parties
and trademark. Perhaps unaware of the events prior to the filing of the present complaint,
14
or so we
would like to think, the court, on March 17, 1980, ordered the lifting of the temporary restraining order
issued on February 28, 1980.
As a consequence, on March 28, 1980, Sumera filed a motion to reinstate the restraining order
issued on February 28, 1980, while Gabriel filed a reply to the opposition on April 15, 1980 and on
April 25, 1980, she filed her answer with counterclaim and a prayer for the issuance of a writ of
preliminary injunction. In her answer, she again alleged that 1) the registrations of the trademark
"WONDER" (SR-2138 and Reg. No. 25610) in the name of Dr. Perez were unlawfully, irregularly and
fraudulently procured; 2) that the trademark "WONDER" has been registered with the Patents Office
in the name of a certain Go hay as early as 1959, which registration was assigned to her and as
successor-in-interest, her right to the trademark dates back from 1959; 3) and that she created and
developed the package bearing the trademark "WONDER" and is the true and lawful owner thereof.
In an order dated September 15, 1980, the trial court issued a writ of preliminary injunction against
Sumera and the estate of Dr. Jose R. Perez.
15
This prompted Sumera to elevate the matter to the
Court of Appeals in a petition for certiorari questioning the court's order. Initially, the appellate court
sustained the order of the trial court. Nevertheless, upon motion for reconsideration of Sumera, the
appellate court on September 8, 1961
16
modified its earlier decision of February 24, 1981 and said:
While it is true that it is not Our role in this present posture of the case to decide who of
the parties is entitled (to) the use of the trademark "Wonder" for that has to be decided
by respondent Court on the merits of the case before it, the fact remains that the Patent
Office had issued in favor of petitioner a certificate of registration for the use of the
trademark "Wonder" for the manufacture, sale, etc. of bleaching and beauty soap in the
same way that the Patent Office had also issued a certificate of registration in favor of
Go Hay, private respondents' assignor, for the use of the trademark "Wonder" in the
manufacture, sale, etc. of laundry soap in bars and cakes. Private respondents,
however, claimed that they are entitled to the use of said trademark not only on laundry
soaps in cakes and bars but to all goods falling under Classification No. 3 which
includes 'bleaching preparations and other substances for laundry use; cleaning,
polishing, scouring abrasive preparations; soap, perfumery, essential oils, cosmetics,
hair lotions, dentifrices which, according to private respondents, includes bleaching and
beauty soap and, therefore, under the patent which was issued on June 30, 1959 prior
to one issued to Dr. Perez on May 11, 1961, private respondents were entitled to the
exclusive use of said trademark and to restrain petitioner from the use of said trademark
even on bleaching soap. (emphasis ours).
On the other hand, petitioner claimed that the right of the Estate of Dr. Perez to use the
said trademark, especially as against private respondents, had been sustained by the
Supreme Court in its decision in Gabriel vs. Perez, 55 SCRA 406.
While We maintain Our original position that We should not decide in the case bef ore
Us who is better entitled to the use of said trademark, We are bound to accord prima
facie validity to the certificates of registration issued to both petitioner and private
respondents until the certificates of registration issued by the Patent Office in favor of
petitioner or to private respondents as assignee of Go Hay are annulled or set aside in a
proper proceedings. Accordingly, We find it necessary to reconsider Our decision
sustaining the order of respondent Court issuing a preliminary injunction against
petitioner, for an injunction against petitioner preventing her to avail of the right to the
use of the trademark "Wonder" under the certificate of registration issued by the Patent
Office in favor of Dr. Perez which until now remained valid as it had not been set aside
by competent authority, would be clearly iniquitous and unjust. In the same manner,
private respondents should not be restrained from availing of their rights to the use of
the trademark "Wonder." The end result would be, during the pendency of the case
before the lower Court, both petitioner and private respondents should be permitted to
manufacture and distribute articles which are covered by their respective trademarks.
IN VIEW OF THE FOREGOING, Our decision of February 24, 1981 is hereby
MODIFIED in the sense that the order of respondent Court of September 15, 1980 to
the extent that it granted the issuance of a preliminary injunction restraining petitioner
from using the trademark "Wonder" in the manufacture, advertisement, packing,
marketing, distribution and sale of beauty soap is hereby SET ASIDE and the
preliminary injunction issued pursuant to said order declared NULL and VOID.
17

VI. While Civil Case No. C-8147 was still pending, Luis M. Duka, Jr., Assistant to the Director,
Philippine Patent Office, in an order dated
November 16, 1984, cancelled Certificate of Registration No. SR-2138 in the Supplemental Registrar
and No. 25610 in the Principal Registrar, of the trademark "WONDER" both in the name of the
"Testate Estate of Dr. Jose R. Perez," for failure to file the required Fifth Anniversary Affidavit of
Use/Non Use.
18
Gabriel then, alleging the above cancellation, filed an "Omnibus Motion" on
December 19, 1984, for the issuance of a restraining order,
19
which was granted by the trial court on
January 4, 1985.
20

However, on June 5, 1985, upon motion for reconsideration of Sumera, the court lifted its order of
January 4, 1985 and ordered the Sheriff to return to respondent the equipment, machineries and
products seized.
21
Nevertheless, on July 17, 1985, the trial court, upon motion for reconsideration of
Gabriel and despite the opposition of Sumera to said motion, lifted its Order of June 5, 1985,
reinstated its Order of January 4, 1985, and ordered anew the seizing of respondent's equipment,
machineries and products.
22

Hence, Sumera sought again the intervention of the Court of Appeals and filed a petition for review on
certiorari. On July 25, 1986, the appellate court in AC-G.R. SP No. 06915
23
granted the petition of
Sumera and said:
The only issue this Court has to resolve is whether or not the respondent Judge acted
with grave abuse of discretion amounting to want or absence of jurisdiction in issuing
the questioned order dated January 4, 1985, ordering the confiscation of the
equipments of the petitioners and the Order dated July 17, 1985, ordering the
reinstatement of his Order of January 4, 1985, after it was recalled in his Order of June
5, 1985.
In fact, the issue raised in the instant case, appears to be the same as the issue raised
in the above quoted decision of the Court of Appeals in CA-G.R. SP 07446-R, where
the trademark already registered already registered in the name of Dr. Jose R. Perez
was also cancelled for failure to file an affidavit of use within one year following the fifth
anniversary of the date of issue of the certificate of registration, as required under
Section 12 of Republic Act No. 166. The petition for registration of Emilia M. Sumera, in
her capacity as Special Administratrix of the estate of Dr. Jose R. Perez, was also
opposed by Crisanta Y. Gabriel. And in said case, the Court of Appeals decided against
the opposition of Crisanta Gabriel of the registration of the application filed by Emilia M.
Sumera, in representation of the testate estate of Dr. Jose R. Perez, for the registration
of the trademark "WONDER" for beauty soap, granted by the Director of Patents. The
Court of Appeals, and as already above quoted, held that the question of ownership of
the trademark "WONDER" having been decided in
G.R. No. L-24075, the employment of two different forms of action shall not be twice
litigated.
Furthermore, the Former Third Division of the Appellate Court (in CA-G.R. No SP-1167-
R
24
[sic]) in its decision dated February 4, 1981, as amended by its Resolution dated
September 8, 1981, declared null and void the Order of the same respondent Judge
ordering a preliminary injunction, restraining Sumera from using the trademark
"WONDER" in the manufacture, advertisements, packaging, marketing, distribution and
sale of beauty soap.
25

xxx xxx xxx
We find merit in the petition. Considering the previous decisions not only of the former
Court of Appeals but of the Supreme Court, the questioned Order in effect pre-judged
the very issues raised in the pleadings of the parties, without the benefit of a full blown
trial or hearing as required by the Rules. The sole justification of the respondent Judge
in issuing the Order of July 17, 1985 reinstating its Order of January 4, 1985 is the
alleged cancellation of the trademark of petitioner by the Bureau of Patents on
November 16, 1984. Such, however, is without legal basis, as the cancellation Order
was not yet final, considering the filing of a motion to set aside the order of cancellation
based on the ground that the period for filing of the affidavit of use had not yet expired.
Until such time that the motion to set aside the order of cancellation is final, trademark
of petitioners was prematurely deemed or non-existent. The only effect of said
cancellation, assuming it to be valid, is that it would deprive the registrant of the
protection afforded him by law, which is the protection from infringement of trademark,
and it was erroneous and a grave abuse of discretion for the respondent Judge to
assume that when the registration of petitioner was cancelled, private respondent
became exclusive owner of the exclusion of plaintiff Sumera, of the trademark
'WONDER' and thus, plaintiff Sumera in pending case Civil Case No. C-8147 should,
during the pendency of said case, be preliminary enjoined, as provided in the
questioned order of July 17, 1985 in relation to the Order of January 4, 1985.
Private respondents (sic) claim that, "(p)petitioner's invocation of the decision in G.R.
No. L-24075 (Crisanta Y. Gabriel v. Dr. Jose R. Perez, et al) wherein she alleged that
the ownership of the trademark "WONDER" for beauty soap in favor of petitioner was
upheld," as well as the decision of the hen Court of Appeals in CA-G.R. No. SP No.
07746-R is now of no moment because after the promulgation of the decisions in said
cases the circumstances between the parties (petitioner and private respondents
herein) have changed materially with the private respondent Gabriel's acquisition of Go
Hay's prior trademark "Wonder." Thus under existing jurisprudence, the said decisions
could not be enforced or made applicable as this would produce inequity and injustice to
private respondent Gabriel." . . . is without merit, considering that she merely stepped
into the shoes of Go Hay, and thus, could have no better right than Go Hay as against
Emilia Sumera (in her capacity as Special Administratrix of the Estate of the late Dr.
Jose R. Perez).
26

VII. Unfortunately, even before the foregoing decision was rendered, petitioner Gabriel on August 13,
1985, filed with the Court a Manifestation and Motion to Dismiss Plaintiff's Complaint for having been
Rendered Moot and Academic.
27
In the said motion, petitioner reiterated that since Certificate
No. SR-2138 and Certificate No. 25610 both of the registration of the trademark "WONDER" in the
name of the Estate of Dr. Jose R. Perez, had been cancelled in Cancellation Order No. 143, dated
November 16, 1984, respondent Sumera's cause of action had become non-existent, as she no
longer had rights to protect and interest to pursue. Thus, finally, on December 24, 1985, the court
without waiting for the resolution of the Court of Appeals in AC-G.R. SP No. 06915, resolved to
dismiss the case.
28

Once more respondent Sumera pleaded before the Court of Appeals to review and set aside the
order of the trial court dismissing Civil Case
No. C-8147. The Court of Appeals granted the petition and in its considered opinion, said:
The court a quo in dismissing the complaint for "Infringement of Trademark, Damages
and with a prayer for Issuance of a Writ of Preliminary Injunction," only considered the
injunctive relief which was issued to protect the present right of the defendants confining
as basis for dismissal the second paragraph of Section 23 of RA 166, as amended,
providing that "the complaining party upon proper showing may also be granted
injunction," but it failed to consider the main paragraph of
Section 23, supra, providing that any person entitled to the exclusive use of a trademark
"may recover damages in a civil action from any person who infringes his right . . . ."
This section is clear. It allows a party to file "actions; and damages and injunction for
infringement."
29

xxx xxx xxx
The order is half-baked because the court a quo failed to make a definite ruling on the
pivotal question of whether or not plaintiff is entitled to damages as a consequence of
the infringement of the trademark which she claims to be the registered owner at the
very least from the time the (trademark) was registered in her (predecessor's) name up
to the time that it was cancelled on November 19, 1984.
Indeed, this Court already interdicted to the same presiding judge in Emilia M. Sumera,
etc. vs. Hon. Alfredo M. Gorgonio etc., Et Al.,
AC-G.R. SP No. 06915, July 25, 1986, of the necessity of a "full blown trial" or hearing
of the issues raised in the pleadings as required by the Rules to avoid any conception of
judgment without hearing of full examination.
30

Petitioner now comes to us arguing that our decision in the case of Gabriel v. Perez, supra, has
become functus officio on account of the prior registration of the trademark "WONDER" by Go Hay
and its subsequent assignment to petitioner's predecessors; and that the Cancellation No. 143, dated
November 16, 1984 involving private respondent's trademark rendered the Civil Case No. C-8147
moot and academic.
We are not convinced. Suffice it to say that these issues herein raised have been squarely met in the
decisions (CA-G.R. SP-07446-R; CA-G.R.
No. SP-11670-R; AC-G.R. SP No. 06915 and CA-G.R.R. CV No. 12886) rendered by the appellate
court, all of which we agree with. We find that the trial court erred in dismissing the complaint of
private respondent, Sumera, without determining whether there was indeed infringement. Because,
contrary to the presumption of the trial court, the complaint in Civil Case No. C-8147 is not merely for
preliminary injunction, but for infringement of trademark and for damages.
In the interest of the public and for the expeditious administration of justice the issue on infringement
shall be resolved by the court considering that this case has dragged on for years and has gone from
one forum to another.
It is a rule of procedure for the Supreme Court to strive to settle the entire controversy in a single
proceeding leaving no root or branch to bear the seeds of future litigation. No useful purpose will be
served if the case or the determination of an issue in a case is remanded to the trial court only to
have its decision raised again to the Court of Appeals and from there to the Supreme Court.
31

We laid down the rule that the remand of the case or of an issue to the lower court for further
reception of evidence is not necessary where the Court is in position to resolve the dispute based on
the records before it and particularly where the ends of justice would not be subserved by the remand
thereof.
32
Moreover, the Supreme Court is clothed with ample authority to review matters, even
though those not raised on appeal if it finds that their consideration is necessary in arriving at a just
disposition of the case.
33

R.A. 166 describes 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.
The law also provides that any person whose trademark or trade name is infringed may recover
damages in a civil action, and upon proper showing, may also be granted injunction.
34

We cannot help but note Gabriel's propensity to infringe Dr. Perez' trademark, an act which she has
been doing since 1960. Assuming arguendo that she was able to obtain a valid assignment of the
trademark "Wonder GH" from Go Hay, still there is no reason to believe that Gabriel, or her assigns,
has been infringing respondent's trademark since 1960, when she violated the distributorship
agreement and appropriated the mark as her own and went on, even when the trademark "Wonder
GH" was allegedly assigned to her.
The records at hand, show the two marks as registered in the Patents Office as follows:
DRAWING
Glaring is the fact that the only difference in the above figures is the "supposed origin" of the product
("Dr. Perez" as against "C.Y. Gabriel") which are not even as eye catching as the word "WONDER"
itself. Apparently, Gabriel never used or adopted the trademark of Go Hay in her products, instead
she has all along been using the trademark registered in the name of Perez.
Petitioner's continued use of respondent's trademark on her product, instead of the assigned mark
"WONDER GH" is a clear act of abandonment due to non-use, which is in fact a ground for
cancellation of registration under Sec. 17 (b) of R.A. 166. What is worse is that there is obvious bad
faith on the part of Gabriel in acquiring the mark "Wonder GH." Undoubtedly her intent in having the
mark assigned to her is merely to give color to the use of the mark "WONDER" on her products.
Particularly so since the Director of Patents in October 1960, denied the registration to Gabriel of the
trademark "WONDER" because it was found that the mark was already in use and is owned by Dr.
Jose Perez. And then again i 1978, petitioner failed to convince the Director of Patents and the Court
of Appeals that she has a right over the same trademark.
Petitioner's argument that the word "Wonder" could not be appropriated exclusively as a trademark by
private respondent has no leg to stand on. The matter restricting the exclusive use of a trademark is
only true over unrelated goods. The law requires that in the adoption of a mark there should not be
any likelihood of confusion, mistake or deception to the consumer.
35
Records show that the
trademark Gabriel claims to own, through assignment from Go Hay, with certificate of registration no.
33957 in the Principal Register and registration no. SR-4217 in the Supplemental Register is
principally for laundry soap in bars and cakes.
36
On the other hand, the mark "WONDER" registered
to the testate estate of Jose R. Perez was registered principally for beauty soap.
37
This fact would
not have been relevant if no confusion results thereby. In the case at bar, although the presentation of
the marks as registered appears to be different, still confusion is bound to result, since the marks are
used on related goods (bleaching beauty soap as against laundry soap).
There is likewise no merit in petitioner's assertion that Cancellation Order No. 143, dated November
16, 1984, rendered Civil Case No. C-8147 moot and academic. We reiterate the findings of the Court
of Appeals in AC G.R.
Sp. 06915, supra. The cancellation order was issued allegedly due to respondent's failure to file the
affidavit of use as required by Sec. 12 of
R.A. 166. It is not, however, clear whether such order has become final as respondent filed a motion
to set aside the order, alleging that it was issued prematurely.
Even assuming that the order has become final, still petitioner could not have acquired an exclusive
right over the mark "WONDER" as a matter of course. The only effect of cancellation is that it would
deprive the registrant protection from infringement. Sec. 22 of R.A. 166, states that only a registrant
of a mark can file a case for infringement. On the other hand, Sec. 19 states that any right conferred
upon the registrant under the provisions of R.A. 166 terminates/only when judgment or order of
cancellation has become final. The present complaint was filed sometime in December 1979, almost
5 years prior to the alleged cancellation order. Thus, until the time that the right is finally terminated,
respondent still has a cause of action against petitioners.
Ultimately, what draws the axe against petitioners is the principle of
"first to use" on which our Trademark Law is based. We have said and reiterated in the case of La
Chemise Lacoste v. Fernandez, that:
The purpose of the law protecting a trademark cannot be overemphasized. They are to
point out distinctly the origin of ownership of the article to which it is affixed, to secure to
him, who has been instrumental in bringing into market a superior article of
merchandise, the fruit of his industry and skill, and to prevent fraud and imposition.
38

(emphasis ours)
Sec. 2 of R.A. 166 states that as a condition precedent to registration the trademark, trade name or
service marks should have been in actual use in commerce in the Philippines before the time of the
filing of the application. A careful perusal of the record shows that although Go Hay, assignor of
Gabriel, first registered the trademark "Wonder GH" on October 17, 1958
39
while the registration of
the trademark "WONDER" in the name of Dr. Perez was registered in the Supplemental Register on
May 11, 1961 and then the Principal Register on January 3, 1978, the certificate of registration issued
to Go Hay showed that the mark "Wonder GH" was first used on July 1, 1958,
40
while that of the
mark "WONDER" in favor of Dr. Perez was recorded to have been in use since March 3, 1953,
41
or
five (5) years prior to Go Hay's use. Thus, all things being equal, it is then safe to conclude that Dr.
Perez had a better right to the mark "WONDER." The registration of the mark "Wonder GH" should
have been cancelled in the first place because its use in commerce was much later and its existence
would likely cause confusion to the consumer being attached on the product of the same class as that
of the mark "WONDER."
Considering the foregoing, we find that petitioners have been infringing the trademark "WONDER"
which rightfully belongs to respondent. However since the original complaint calls for a determination
of damages as a result of the infringement, the trial court is ordered to receive evidence to ascertain
the amount thereof. As an incident thereto, the trial court will also have to find out whether the
cancellation order has become final and if it did, when it became final. On the other hand the
registration of the trademark "Wonder G.H." assigned to C.Y. Gabriel should be and is hereby
ordered cancelled since we found that: a) its procurement was tainted with bad faith; b) its continued
existence would cause confusion to the consumers; and c) it is not being used by the assignees.
42

WHEREFORE, the petition is hereby DISMISSED for lack of merit. Petitioners, having been found to
be infringing the mark "WONDER", are permanently enjoined from using the mark. This case is
hereby REMANDED to the trial court only for the purpose of determining the amount of damages due
to the respondent. Finally, the registration of the trademark "Wonder G.H." is hereby ORDERED
cancelled. Let a certification of this case be issued to the Director of Patents for appropriate action.
SO ORDERED.



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 Certif icate
No. 6227 are, among others, men's, women's and children's underwear, which includes women's
panties and which fall under class 40 in the Philippine Patent Office's classification of goods.
Registration Certificate No. 6680 covers knitted, netted and textile fabrics.
Private respondent, a domestic corporation, is the registrant of a trademark FRUIT FOR EVE in the
Philippine Patent Office and was issued a Certificate of Registration No. 10160, on January 10, 1963
covering garments similar to petitioner's products like women's panties and pajamas.
On March 31, 1965 petitioner filed before the lower court, a complaint for infringement of trademark
and unfair competition against the herein private respondent. Petitioner principally alleged in the
complaint that private respondent's trademark FRUIT FOR EVE is confusingly similar to its trademark
FRUIT OF THE LOOM used also on women's panties and other textile products. Furthermore, it was
also alleged therein that the color get-up and general appearance of private respondent's hang tag
consisting of a big red apple is a colorable imitation to the hang tag of petitioner.
On April 19, 1965, private respondent filed an answer invoking the special defense that its registered
trademark is not confusingly similar to that of petitioner as the latter alleged. Likewise, private
respondent stated that the trademark FRUIT FOR EVE is being used on ladies' panties and pajamas
only whereas petitioner's trademark is used even on men's underwear and pajamas.
At the pre-trial on May 5, 1965, the following admissions were made: (1) That the trademark FRUIT
OF THE LOOM has been registered with the Bureau of Patents and it does not bear the notice 'Reg.
Phil. Patent Off.', and (2) That the trademark FRUIT FOR EVE has been registered with the Bureau of
Patents and it bears the notice "Reg. Phil. Patent Off." and (3) That at the time of its registration,
plaintiff filed no opposition thereto.
After trial, judgment was rendered by the lower court in favor of herein petitioner, the dispositive
portion of which reads as follows:
Judgment is, therefore, rendered ordering the Bureau of Patents to cancel the
registration of the Trademark "Fruit for Eve", permanently enjoining Defendant from
using the trademark "Fruit for Eve", ordering Defendant to pay plaintiff the sum of
P10,000.00 as attorney's fees and to pay the costs.
Both parties appealed to the former Court of Appeals, herein petitioner's appeal being centered on
the failure of the trial court to award damages in its favor. Pri vate respondent, on the other hand,
sought the reversal of the lower court's decision.
On October 8, 1970, the former Court of Appeals, as already stated, rendered its questioned decision
reversing the judgment of the lower court and dismissing herein petitioner's complaint.
Petitioner's motion for reconsideration having been denied, the present petition was filed before this
Court.
The first and second arguments advanced by petitioner are that the respondent court committed an
error in holding that the word FRUIT, being a generic word, is not capable of exclusive appropriation
by petitioner and that the registrant of a trademark is not entitled to the exclusive use of every word of
his mark. Otherwise stated, petitioner argues that the respondent court committed an error in ruling
that petitioner cannot appropriate exclusively the word FRUIT in its trademark FRUIT OF THE LOOM.
The third and fourth arguments submitted by petitioner which We believe is the core of the present
controversy, are that the respondent court erred in holding that there is no confusing similarity in
sound and appearance between the two trademarks in question. According to petitioner, the
prominent and dominant features in both of petitioner's and private respondent's trademark are the
word FRUIT and the big red apple design; that ordinary or average purchasers upon seeing the word
FRUIT and the big red apple in private respondent's label or hang tag would be led to believe that the
latter's products are those of the petitioner, The resolution of these two assigned errors in the
negative will lay to rest the matter in litigation and there is no need to touch on the other issues raised
by petitioner. Should the said questions be resolved in favor of petitioner, then the other matters may
be considered.
Petitioner, on its fifth assigned error, blames the former Court of Appeals for not touching the question
of the fraudulent registration of private respondent's trademark FRUIT FOR EVE. As may be gleaned
from the questioned decision, respondent court did not pass upon the argument of petitioner that
private respondent obtained the registration of its trademark thru fraud or misrepresentation because
of the said court's findings that there is no confusing similarity between the two trademarks in
question. Hence, said court has allegedly nothing to determine as to who has the right to registration
because both parties have the right to have their respective trademarks registered.
Lastly, petitioner asserts that respondent court should have awarded damages in its favor because
private respondent had clearly profited from the infringement of the former's trademark.
The main issue involved in this case is whether or not private respondent's trademark FRUIT FOR
EVE and its hang tag are confusingly similar to petitioner's trademark FRUIT OF THE LOOM and its
hang tag so as to constitute an infringement of the latter's trademark rights and justify the cancellation
of the former.
In cases involving infringement of trademark brought before this Court it has been consistently held
that there is infringement of trademark when the use of the mark involved would be likely to cause
confusion or mistake in the mind of the public or to deceive purchasers as to the origin or source of
the commodity (Co Tiong Sa vs. Director of Patents, 95 Phil. 1; Alhambra Cigar & Cigarette Co. vs.
Mojica, 27 Phil. 266; Sapolin Co. vs. Balmaceda, 67 Phil. 705; La Insular vs. Jao Oge, 47 Phil. 75).
In cases of this nature, there can be no better evidence as to whether there is a confusing similarity in
the contesting trademarks than the labels or hang tags themselves. A visual presentation of the labels
or hang tags is the best argument for one or the other, hence, We are reproducing hereunder pictures
of the hang tags of the products of the parties to the case. The pictures below are part of the
documentary evidence appearing on page 124 of the original records.
Petitioner asseverates in the third and fourth assignment of errors, which, as We have said, constitute
the main argument, that the dominant features of both trademarks is the word FRUIT. In determining
whether the trademarks are confusingly similar, a comparison of the words is not the only determinant
factor. The trademarks in their entirety as they appear in their respective labels or hang tags must
also be considered in relation to the goods to which they are attached. The discerning eye of the
observer must focus not only on the predominant words but also on the other features appearing in
both labels in order that he may draw his conclusion whether one is confusingly similar to the other
(Bristol Myers Co. vs. Director of Patents, 17 SCRA 131).
In the trademarks FRUIT OF THE LOOM and FRUIT FOR EVE, the lone similar word is FRUIT. WE
agree with the respondent court that by mere pronouncing the two marks, it could hardly be said that
it will provoke a confusion, as to mistake one for the other. Standing by itself, FRUIT OF THE LOOM
is wholly different from FRUIT FOR EVE. WE do not agree with petitioner that the dominant feature of
both trademarks is the word FRUIT for even in the printing of the trademark in both hang tags, the
word FRUIT is not at all made dominant over the other words.
As to the design and coloring scheme of the hang tags, We believe that while there are similarities in
the two marks like the red apple at the center of each mark, We also find differences or dissimilarities
which are glaring and striking to the eye such as:
1. The shape of petitioner's hang tag is round with a base that looks like a paper rolled a
few inches in both ends; while that of private respondent is plain rectangle without any
base.
2. The designs differ. Petitioner's trademark is written in almost semi-circle while that of
private respondent is written in straight line in bigger letters than petitioner's. Private
respondent's tag has only an apple in its center but that of petitioner has also clusters of
grapes that surround the apple in the center.
3. The colors of the hang tag are also very distinct from each other. Petitioner's hang
tag is fight brown while that of respondent is pink with a white colored center piece. The
apples which are the only similarities in the hang tag are differently colored. Petitioner's
apple is colored dark red, while that of private respondent is light red.
The similarities of the competing trademarks in this case are completely lost in the substantial
differences in the design and general appearance of their respective hang tags. WE have examined
the two trademarks as they appear in the hang tags submitted by the parties and We are impressed
more by the dissimilarities than by the similarities appearing therein. WE hold that the trademarks
FRUIT OF THE LOOM and FRUIT FOR EVE do not resemble each other as to confuse or deceive an
ordinary purchaser. The ordinary purchaser must be thought of as having, and credited with, at least
a modicum of intelligence (Carnation Co. vs. California Growers Wineries, 97 F. 2d 80; Hyram Walke
and Sons vs. Penn-Maryland Corp., 79 F. 2d 836) to be able to see the obvious differences between
the two trademarks in question. Furthermore, We believe that a person who buys petitioner's products
and starts to have a liking for it, will not get confused and reach out for private respondent's products
when she goes to a garment store.
These findings in effect render immaterial the other errors assigned by petitioner which are premised
on the assumption that private respondent's trademark FRUIT FOR EVE had infringed petitioner's
trademark FRUIT OF THE LOOM.
WHEREFORE, THE DECISION APPEALED FROM IS AFFIRMED. COSTS AGAINST PETITIONER.
SO ORDERED.











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.
D E C I S I O N
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 Decision
19[1]
of the Court of Appeals in CA-G.R. SP No. 64660
which dismissed the petition for certiorari filed by petitioner, as well as the Resolution
20[2]
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
21[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.
22[4]

On July 21, 2000, petitioner filed a motion for preliminary hearing on its affirmative defenses.
23[5]

Subsequently, on motion of petitioner, the trial court issued a subpoena ad testificandum requiring
Atty. Alonzo Ancheta to appear at the preliminary hearing.
24[6]
Respondents, in the meantime, filed a
Comment and Opposition
25[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 petitioners motion for preliminary hearing on affirmative defenses with motion to dismiss.
26[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









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
PETITIONERS 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 PETITIONERS RIGHT TO
SUBSTANTIVE DUE PROCESS WHEN IT ARBITRARILY AND CAPRICIOUSLY RULED
THAT WHAT WAS SPECIFICALLY DENIED IN THE ASSAILED OCTOBER 20, 2000
ORDER IS PETITIONERS MOTION FOR PRELIMINARY HEARING ON DEFENDANTS
AFFIRMATIVE DEFENSES AND NOT PETITIONERS 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
PETITIONERS 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 PETITIONERS MOTION TO
DISMISS PER SE AND NOT MERELY OF PETITIONERS 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 PETITIONERS
MOTION TO DISMISS PER SE. HENCE, THE SAID 20 OCTOBER 2000 ORDERS
DENIAL OF PETITIONERS MOTION IS NOT LIMITED TO THE MOTION FOR
PRELIMINARY HEARING BUT ALSO CONSTITUTES A DENIAL OF
PETITIONERS 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 PETITIONERS
SUBSTANTIVE DUE PROCESS RIGHTS, BUT ALSO THE DOCTRINE OF SEPARATE
CORPORATE PERSONALITY; CONSIDERING THAT THE RECORDS OF THIS CASE IS
(sic) COMPLETELY BEREFT AND DEVOID OF ANY DULY EXECUTED SPECIAL POWER
OF ATTORNEY, EMANATING FROM PRIVATE RESPONDENTS, WHICH EXPLICITLY
AND SPECIFICALLY AUTHORIZES ATTY. ALONZO ANCHETA TO REPRESENT
PRIVATE RESPONDENTS MONTRES ROLEX S.A. IN THE FILING OF THE COMPLAINT
A QUO. BY REASON THEREOF, PRIVATE RESPONDENTS COULD NOT BE DEEMED
TO HAVE VOLUNTARILY APPEARED BEFORE THE RESPONDENT JUDGE;
CONSEQUENTLY, THE TRIAL COURT COULD NOT HAVE VALIDLY ACQUIRED
JURISDICTION OVER THE PERSON OF PRIVATE RESPONDENTS.
V
IN ARBITRARILY AND CAPRICIOUSLY AFFIRMING RESPONDENT JUDGES QUASHAL
OF THE SUBPOENA DATED 14 AUGUST 2000 DIRECTED AGAINST ATTY. ALONZO
ANCHETA, THE HONORABLE COURT OF APPEALS VIOLATED NOT ONLY
PETITIONERS SUBSTANTIVE DUE PROCESS RIGHTS, BUT ALSO SECTION 9, RULE
132 AND SECTION 7 RULE 133 OF THE 1989 REVISED RULES ON EVIDENCE, AND
THE RULING OF THIS HONORABLE COURT IN THE CASE OF PEOPLE VS. RIVERA.
27[9]

Simply put, the issues are as follows (1) whether the trial court denied not only petitioners
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 petitioners 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 Defendants
Affirmative Defenses With Motion To dismiss The Instant Complaint Based On Said
Affirmative Defenses is denied.
28[10]
(Emphasis supplied)
In issuing the assailed order, the trial court ruled on the merits of petitioners Motion to Dismiss
vis--vis respondents Comment and Opposition which clearly traversed the affirmative defenses
raised by petitioner, to wit:
After carefully going over the pleadings, this Court finds, on the first motion that the
arguments raised in the said motion and the reply filed in connection thereto appear to be
meritorious; and on the second motion, that the arguments raised in the comments and
opposition and the rejoinder filed by the plaintiffs likewise appear to be meritorious.
29[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.
30[12]

In Municipality of Bian Laguna v. Court of Appeals,
31[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 def enses. 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.
32[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
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 courts denial of petitioners 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 Law
33[15]
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.
34[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:
x x x x x x x x x
(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,
35[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 registered
for or used on identical or similar goods or services and owned by persons other than
the person claiming that his mark is a well-known mark.
2. The use of the well-known mark on the entirely unrelated goods or services would




indicate a connection between such unrelated goods or services and those goods or services
specified in the certificate of registration in the well known mark. This requirement refers to
the likelihood of confusion of origin or business or some business connection or relationship
between the registrant and the user of the mark.
3. The interests of the owner of the well-known mark are likely to be damaged. For
instance, if the registrant will be precluded from expanding its business to those unrelated
good or services, or if the interests of the registrant of the well-known mark will be damaged
because of the inferior quality of the good or services of the user.
36[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, cl early require determination facts of which
need to be resolved at the trial court. The existence or absence of these requisites should be
addressed in a full blown hearing and not on a mere preliminary hearing. The respondent must be
given ample opportunity to prove its claim, and the petitioner to debunk the same.
The same is true with respect to the issue of whether Atty. Alonzo Ancheta was properly
authorized to sign the verification and certification against forum shopping in behalf of respondents.
This could be properly resolved during the trial together with the substantive issues raised by
petitioner.
Considering that the trial court correctly denied petitioners motion for preliminary hearing on its
affirmative defenses with motion to dismiss, there exists no reason to compel Atty. Ancheta to testify.
Hence, no abuse of discretion was committed by the trial court in quashing the subpoena ad
testificandum issued against Atty. Ancheta.
Grave abuse of discretion implies such capricious and whimsical exercise of judgment as
equivalent to lack of jurisdiction, or, in other words, where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to
amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all
in contemplation of law. None of these was committed by the trial court; hence, the Court of Appeals
correctly dismissed the petition.
WHEREFORE, in view of all the foregoing, the petition for review on certiorari filed by petitioner is
DENIED. The November 28, 2002 Decision and the February 13, 2003 Resolution of the Court of
Appeals in CA-G.R. SP No. 64660 which dismissed the petition for certiorari filed by petitioner are
AFFIRMED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Panganiban, Carpio and Azcuna, JJ., concur.















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
(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.
19
Well 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 usually purchased .
21
Among 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.
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 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.
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.
Narvasa Gancayco, Grio-Aquino and Medialdea, JJ., concur.























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 call ed 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 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 colori ng
scheme, even almost identical size and contour of the cans, the same lay-out of words on its label
when there is a myriad of other words, colors, phrases, symbols, and arrangements to choose from to
distinguish its product from Standard Brands, if petitioner was not motivated to simulate the label of
the latter for its own can of salted peanuts, and thereby deceive the public?
A similar question was asked by this Court in Clarke vs. Manila Candy Co., 36 Phil. 100, when it
resolved in favor of plaintiff a case of unfair competition based on an imitation of Clarke's packages
and wrappers of its candies the main feature of which was one rooster. The Court queried thus: "...
why, with all the birds in the air, and all the fishes in the sea, and all the animals on the face of the
earth to choose from, the defendant company (Manila Candy Co.) selected two roosters as its
trademark, although its directors and managers must have been well aware of the long-continued use
of a rooster by the plaintiff with the sale and advertisement of its goods? ... A cat, a dog, a carabao, a
shark or an eagle stamped upon the container in which candies are sold would serve as well as a
rooster for purposes of identification as the product of defendant's factory. Why did defendant select
two roosters as its trademark ?" (p.109, supra)
Petitioner contends, however, that there are differences between the two trademarks, such as, the
presence of the word "Philippine" above PLANTERS on its label, and other phrases, to wit: "For
Quality and Price, Its Your Outstanding Buy", the address of the manufacturer in Quezon City, etc.,
plus a pictorial representation of peanuts overflowing from a tin can, while in the label of Standard
Brands it is stated that the product is manufactured in San Francisco, California, and on top of the tin
can is printed "Mr. Peanut" and the representation of a "humanized peanut". (pp. 30-33, petitioner's
brief)
We have taken note of those alleged differences but We find them insignificant in the sense that they
are not sufficient to call the attention of the ordinary buyer that the labeled cans come from distinct
and separate sources. The word "Philippine" printed in small type in petitioner's label may simply give
to the purchaser the impression that that particular can of PLANTERS salted peanuts is locally
produced or canned but that what he is buying is still PLANTERS canned salted peanuts and nothing
else. As regards "Mr. Peanut" on Standard Brands' label, the same appears on the top cover and is
not visible when the cans are displayed on the shelves, aside from the fact that the figure of "Mr.
Peanut" is printed on the tin cover which is thrown away after opening the can, leaving no lasting
impression on the consumer. It is also for this reason that We do not agree with petitioner that it is
"Mr. Peanut and the Humanized Peanut" which is the trademark of Standard Brands salted peanuts,
it being a mere descriptive pictorial representation of a peanut not prominently displayed on the very
body of the label covering the can, unlike the term PLANTERS which dominates the label.
It is correctly observed by respondent Director that the merchandize or goods being sold by the
parties herein are very ordinary commodities purchased by the average person and many times by
the ignorant and unlettered 6 and these are the persons who will not as a rule examine the printed
small letterings on the container but will simply be guided by the presence of the striking mark
PLANTERS on the label. Differences there will always be, but whatever differences exist, these pale
into insignificance in the face of an evident similarity in the dominant feature and overall appearance
of the labels of the parties.
It is not necessary, to constitute trademark "infringement", that every word of a trade-
mark should be appropriated, but it is sufficient that enough be taken to deceive the
public in the purchase of a protected article. (Bunte Bros. v. Standard Chocolates, D.C.
Mass., 45 F. Supp. 478, 481)
A trade-name in order to be an `infringement' upon another need not be exactly like it in
form and sound, but it is enough if the one so resembles another as to deceive or
mislead persons of ordinary caution into the belief that they are dealing with the one
concern when in fact they are dealing with the other. (Foss v. Culbertson, 136 P. 2d
711, 718, 17 Wash. 2d 610)
Where a trade-mark contains a dominating or distinguishing word, and purchasing
public has come to know and designate the article by such dominating word, the use of
such word by another in marking similar goods may constitute Infringement though the
marks aside from such dominating word may be dissimilar. (Queen Mfg. Co. v. lsaac
Ginsberg & Bros., C.C.A. Mon., 25 F. 2d 284, 287)
(d) "Infringement" of trade-mark does not depend on the use of identical words, nor on
the question whether they are so similar that a person looking at one would be deceived
into the belief that it was the other; it being sufficient if one mark is so like another in
form, spelling, or sound that one with not a very definite or clear recollection as to the
real mark is likely to be confused or misled. (Northam Warren Corporation v. Universal
Cosmetic Co., C. C. A; III., 18 F. 2d 774, 775)
3. What is next submitted by petitioner is that it was error for respondent Director to have enjoined it
from using PLANTERS in the absence of evidence showing that the term has acquired secondary
meaning. Petitioner, invoking American jurisprudence, asserts that the first user of a tradename
composed of common words is given no special preference unless it is shown that such words have
acquired secondary meaning, and this, respondent Standard Brands failed to do when no evidence
was presented to establish that fact. (pp. 14-16, petitioner's brief)
The doctrine of secondary meaning is found in Sec. 4 (f), Chapter II-A of the Trade-Mark Law, viz:
Except as expressly excluded in paragraphs (a), (b), (c) and (d) of this section, nothing
herein shall prevent the registration of a mark or trade-name used by the applicant
which has become distinctive of the applicant's goods, business or services. The
Director may accept as prima facie evidence that the mark or trade-name has become
distinctive, as applied to or used in connection with the applicant's goods, business or
services, proof of substantially exclusive and continuous use thereof as a mark or trade-
name by the applicant in connection with the sale of goods, business or services for the
five years next preceding the date of the filing of the application for its registration. (As
amended by Sec. 3, Rep. Act No. 638.)
This Court held that the doctrine is to the effect that a word or phrase originally incapable of exclusive
appropriation with reference to an article on the market, because geographically or otherwise
descriptive, might nevertheless have been used so long and so exclusively by one producer with
reference to his article that, in that trade and to that branch of the purchasing public, the word or
phrase has come to mean that the article was his product.
7

By way of illustration, is the word "Selecta" which according to this Court is a common ordinary term
in the sense that it may be used or employed by any one in promoting his business or enterprise, but
which once adopted or coined in connection with one's business as an emblem, sign or device to
characterize its products, or as a badge of authenticity, may acquire a secondary meaning as to be
exclusively associated with its products and business, so that its use by another may lead to
confusion in trade and cause damage to its business.
8

The applicability of the doctrine of secondary meaning to the situation now before Us is appropriate
because there is oral and documentary evidence showing that the word PLANTERS has been used
by and closely associated with Standard Brands for its canned salted peanuts since 1938 in this
country. Not only is that fact admitted by petitioner in the amended stipulation of facts (see p. 2 of this
Decision), but the matter has been established by testimonial (tsn October 4, 1962, pp. 2-8) and
documentary evidence consisting of invoices covering the sale of "PLANTERS cocktail peanuts".
(Exhibits C to C-4; D to D-10; E to E-10; F to F-2) In other words, there is evidence to show that the
term PLANTERS has become a distinctive mark or symbol insofar as salted peanuts are concerned,
and by priority of use dating as far back as 1938, respondent Standard Brands has acquired a
preferential right to its adoption as its trademark warranting protection against its usurpation by
another. Ubi jus ibi remedium. Where there is a right there is a remedy. Standard Brands has shown
the existence of a property right(Arce Sons & Co. vs. Selecta Biscuit Co., Inc., supra, pp. 262-263)
and respondent Director, has afforded the remedy.
Still on this point, petitioner contends that Standard Brands' use of the trademark PLANTERS was
interrupted during the Japanese occupation and in fact was discontinued when the importation of
peanuts was prohibited by Central Bank regulations effective July 1, 1953, hence it cannot be
presumed that it has acquired a secondary meaning. We hold otherwise. Respondent Director
correctly applied the rule that non-use of a trademark on an article of merchandize due to legal
restrictions or circumstances beyond one's control is not to be considered as an abandonment.
In the case of Andres Romero vs. Maiden Form Brassiere Co., Inc., L-18289, March 31, 1964, 10
SCRA 556, the same question was raised by petitioner Romero when he filed with the Bureau of
Patents a petition to cancel the registration of the trademark "Adagio" for brassieres manufactured by
Maiden Form Brassiere Co., Inc. His petition having been dismissed by the Director of Patents,
Romero appealed to this Court and one of the issues posed by him was that when the Government
imposed restrictions on importations of brassieres bearing that particular trademark, there was
abandonment of the same by respondent company which entitled petitioner to adopt it for his own use
and which in fact he had been using for a number of years. That argument was met by the Court in
the words of Justice Jesus Barrera thus:
... 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).1wph1.t
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
secondary meaning in relation to salted peanuts; and (3) there has been no abandonment or non-use
of said trademark by Standard Brands which would justify its adoption by petitioner or any other
competitor for the sale of salted peanuts in the market.
PREMISES CONSIDERED, We AFFIRM the decision of respondent Director of Patents with costs
against petitioner.
So Ordered.