SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD.

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

At the core of the controversy are the Shangri-La mark and S logo.

Respondent DGCI filed on October 18, 1982 with the Bureau of Patents, Trademarks and
Technology Transfer (BPTTT), an application for registration covering the subject mark and
logo. On May 31, 1983, the BPTTT issued in favor of DGCI the corresponding certificate of
registration.

On the other hand, the Kuok family owns and operates a chain of hotels with interest in hotels
and hotel-related transactions since 1969. The Kuok Group has used the name Shangri-La in
all Shangri-La hotels and hotel-related establishments around the world which the Kuok Family
owned. EDSA Shangri-La Hotel and Resort, Inc., and Makati Shangri-La Hotel and Resort, Inc.
were incorporated in the Philippines beginning 1987 to own and operate the two (2) hotels put
up by the Kuok Group in Mandaluyong and Makati, Metro Manila.

Shangri-La Hotel Singapore commissioned a Singaporean design artist, a certain Mr. William
Lee, to conceptualize and design the logo of the Shangri-La hotels. During the launching of
the stylized S Logo in February 1975, Mr. Lee gave the following explanation for the logo, to
wit:
The logo which is shaped like a S represents the uniquely Asean architectural
structures as well as keep to the legendary Shangri-la theme with the
mountains on top being reflected on waters below and the connecting centre
line serving as the horizon. This logo, which is a bold, striking definitive design,
embodies both modernity and sophistication in balance and thought.

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

DGCI filed a complaint for Infringement and Damages with the RTC of Quezon City
against the herein petitioners. The complaint alleged that DGCI has, for the last eight (8)
years, been the prior exclusive user in the Philippines of the mark and logo in question
and the registered owner thereof for its restaurant and allied services.

Presented as DGCIs lone witness was Ramon Syhunliong, President and Chairman of
DGCIs Board of Directors.

The trial court ruled in favor of the respondent.

Therefrom, the petitioners went on appeal to the CA which affirmed that of the lower court
with the modification of deleting the award of attorneys fees.

Whether the CA erred in ruling that petitioners' use of the mark and logo
constitutes actionable infringement.

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

While the present law on trademarks has dispensed with the requirement of prior actual use at
the time of registration, the law in force at the time of registration must be applied, and
thereunder it was held that as a condition precedent to registration of trademark, trade name
or service mark, the same must have been in actual use in the Philippines before the filing of
the application for registration.

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

The CA itself, in its Decision of May 15, 2003, found that the respondents president and
chairman of the board, Ramon Syhunliong, had been a guest at the petitioners' hotel before he
caused the registration of the mark and logo, and surmised that he must have copied the idea
there. Yet, in the very next paragraph, despite the preceding admission that the mark and logo
must have been copied, the CA tries to make it appear that the adoption of the same mark and
logo could have been coincidental.

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

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

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.

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

With the double infirmity of lack of two-month prior use, as well as bad faith in the
respondent's registration of the mark, it is evident that the petitioners cannot be guilty
of infringement. It would be a great injustice to adjudge the petitioners guilty of
infringing a mark when they are actually the originator and creator thereof.
PROSOURCE INTERNATIONAL, INC.,
Petitioner,
- versus -
HORPHAG RESEARCH MANAGEMENT SA,
Respondent.

Respondent Horphag Research Management SA is a corporation duly organized and

existing under the laws of Switzerland and the owner 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. This prompted respondent to demand that
petitioner cease and desist from using the aforesaid mark.

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.

On August 22, 2000, respondent filed a Complaint 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.

In its Answer, 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.

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.

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.

Whether respondents trademark was infringed by petitioners PCO-GENOLS.

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 for the acts committed until December 31, 1997, and R.A. No. 8293 for
those committed from January 1, 1998 until June 19, 2000.

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.

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

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

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

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

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

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.

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 words 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. 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 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.

We find no cogent reason to depart from such conclusion.

Hence, petitioner is liable for trademark infringement.

COFFEE PARTNERS, INC.
Petitioner,
- versus -
SAN FRANCISCO COFFEE & Promulgated:
ROASTERY, INC.,
Respondent.

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 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.
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.

Mr. David Puyat, president of petitioner corporation, 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.
In its 14 August 2002 Decision, the BLA-IPO held that petitioners trademark infringed on
respondents trade name.

Both parties moved for partial reconsideration. 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).

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.
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. In its 1 September 2005
Resolution, the Court of Appeals denied petitioners motion for reconsideration and
respondents motion for partial reconsideration.

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).

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) dispensed with registration of a trade name with the IPO as a requirement for the
filing of an action for infringement. 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 Court necessarily upholds such findings of fact.

Coming now to the main issue, in Prosource International, Inc. v. Horphag Research
Management SA,[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;
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.

Section 22 of Republic Act No. 166, as amended, required registration of a trade name as a
condition for the institution of an infringement suit.

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.

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.

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.
GEMMA ONG a.k.a. MARIA TERESA GEMMA CATACUTAN,
Petitioner,
- versus -
PEOPLE OF THE PHILIPPINES,
Respondent.

On July 28, 2000, petitioner Gemma Ong a.k.a. Maria Teresa Gemma Catacutan (Gemma)
was charged before the RTC for Infringement under Section 155 in relation to Section
170 of Republic Act No. 8293 or the Intellectual Property Code. The accusatory portion of
the Information reads:

That sometime in September 25, 1998 and prior thereto at Sta. Cruz,
Manila and within the jurisdiction of this Honorable Court, the above-named
accused did then and there, knowingly, maliciously, unlawfully and
feloniously engage in the distribution, sale, [and] offering for sale of
counterfeit Marlboro cigarettes which had caused confusion, deceiving
the public that such cigarettes [were] Marlboro cigarettes and those of
the Telengtan Brothers and Sons, Inc., doing business under the style of
La Suerte Cigar and Cigarettes Factory, the exclusive manufacturer of
Marlboro Cigarette in the Philippines and that of Philip Morris Products,
Inc. (PMP7) the registered owner and proprietor of the MARLBORO
trademark together with the devices, including the famous-Root Device,
to their damage and prejudice, without the accused seeking their permit or
authority to manufacture and distribute the same.

Gemma pleaded not guilty to the charge upon arraignment on October 17, 2000.

Gemma, as the lone witness for the defense, then took the witness stand. She said that she is
married to Co Yok Piao, a Chinese national, but she still uses her maiden name
Catacutan. She denied that she is the Gemma Ong accused in this case. She testified
that she was arrested on August 4, 2000, without the arresting officers asking for her
name. She said that when she pleaded to be released, she was instructed to post a cash bond,
which she did in the amount of 12,000.00. Gemma averred that when she posted her bond
and signed her certificate of arraignment, she did so under her real name Maria Teresa
Gemma Catacutan, as opposed to the signatures in the Inventory and Certification in
the Conduct of Search (search documents), which she denied signing. She claimed that
she was not able to bring up her defense of mistaken identity early on as she did not
know when the proper time to raise it was. She alleged that she did not know Jackson
Ong.. Gemma further asseverated that while she could not remember where she was on
September 25, 1998, she was sure that she was not at the subject premises on that
date. Gemma presented her Identification Card issued by the Professional Regulation
Commission (PRC) to show that she is a dentist by profession, although she claimed that
she is a businessperson in practice. She said that she used to buy and sell gear fabrics,
t-shirts, truck materials, and real estate under the business name Fascinate Trading
based in Bulacan Street, Sta. Cruz, Manila, but that it had ceased operations in February
1998. Gemma denied ever having engaged in the manufacture and sale of any kind of
cigarettes and claimed that she could not even distinguish between a fake and a
genuine Marlboro cigarette.
On September 30, 2003, the RTC convicted Gemma of the crime as charged.

The Court of Appeals found Gemmas appeal to be unmeritorious.

Whether or not Gemmas guilt was proven beyond reasonable doubt in light of her
alleged mistaken identity.

Gemma is guilty of violating Section 155 in relation to Section 170 of Republic Act No.
8293.

Gemma was charged and convicted of violating Section 155 in relation to Section 170 of
Republic Act No. 8293, or the Intellectual Property Code of the Philippines.

Section 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 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. (Sec. 22, R.A. No 166a)

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 (50,000)
to Two hundred thousand pesos (200,000), shall be imposed on any person
who is found guilty of committing any of the acts mentioned in Section 155,
Section 168 and Subsection 169.1. (Arts. 188 and 189, Revised Penal Code.)
(Emphases supplied.)

In McDonalds Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger,
Inc., this Court held:

To establish trademark infringement, the following elements must be

shown: (1) the validity of plaintiffs mark; (2) the plaintiffs ownership of the
mark; and (3) the use of the mark or its colorable imitation by the alleged
infringer results in likelihood of confusion. Of these, it is the element of
likelihood of confusion that is the gravamen of trademark infringement.

A mark is valid if it is distinctive and not barred from registration. Once registered, not
only the marks validity, but also the registrants ownership of the mark is prima
facie presumed.

The prosecution was able to establish that the trademark Marlboro was not only valid
for being neither generic nor descriptive, it was also exclusively owned by PMPI, as
evidenced by the certificates of registration issued by the Intellectual Property Office of
the Department of Trade and Industry.

Anent the element of confusion, both the RTC and the Court of Appeals have correctly
held that the counterfeit cigarettes seized from Gemmas possession were intended to
confuse and deceive the public as to the origin of the cigarettes intended to be sold, as
they not only bore PMPIs mark, but they were also packaged almost exactly as PMPIs
products.

REPUBLIC GAS CORPORATION, ARNEL U. TY, MARI ANTONETTE N. TY, ORLANDO

REYES, FERRER SUAZO and ALVIN U. TV,
Petitioners,
-versus-
PETRON CORPORATION, PILIPINAS SHELL PETROLEUM CORPORATION, and SHELL
INTERNATIONAL PETROLEUM COMPANY LIMITED,
Respondents.

Petitioners Petron Corporation ("Petron" for brevity) and Pilipinas Shell Petroleum
Corporation ("Shell" for brevity) are two of the largest bulk suppliers and producers of
LPG in the Philippines. Petron is the registered owner in the Philippines of the
trademarks GASUL and GASUL cylinders used for its LGP products. It is the sole entity
in the Philippines authorized to allow refillers and distributors to refill, use, sell, and
distribute GASUL LPG containers, products and its trademarks.

Pilipinas Shell, on the other hand, is the authorized user in the Philippines of the
tradename, trademarks, symbols or designs of its principal, Shell International
Petroleum Company Limited, including the marks SHELLANE and SHELL device in
connection with the production, sale and distribution of SHELLANE LPGs. It is the only
corporation in the Philippines authorized to allow refillers and distributors to refill, use,
sell and distribute SHELLANE LGP containers and products. Private respondents, on the
other hand, are the directors and officers of Republic Gas Corporation ("REGASCO" for
brevity), an entity duly licensed to engage in, conduct and carry on, the business of
refilling, buying, selling, distributing and marketing at wholesale and retail of Liquefied
Petroleum Gas ("LPG").

LPG Dealers Associations, such as the Shellane Dealers Association, Inc., Petron Gasul
Dealers Association, Inc. and Totalgaz Dealers Association, received reports that certain
entities were engaged in the unauthorized refilling, sale and distribution of LPG
cylinders bearing the registered tradenames and trademarks of the petitioners. As a
consequence, on February 5, 2004, Genesis Adarlo (hereinafter referred to as Adarlo), on
behalf of the aforementioned dealers associations, filed a letter-complaint in the
National Bureau of Investigation ("NBI") regarding the alleged illegal trading of
petroleum products and/or underdelivery or underfilling in the sale of LPG products.

An investigation was thereafter conducted, particularly within the areas of Caloocan,

Malabon, Novaliches and Valenzuela, which showed that several persons and/or
establishments, including REGASCO, were suspected of having violated provisions of Batas
Pambansa Blg. 33 (B.P. 33). The surveillance revealed that REGASCO LPG Refilling Plant
in Malabon was engaged in the refilling and sale of LPG cylinders bearing the registered
marks of the petitioners without authority from the latter.

De Jemil, with other NBI operatives, then conducted a test-buy operation on February
19, 2004 with the former and a confidential asset going undercover. They brought with
them four (4) empty LPG cylinders bearing the trademarks of SHELLANE and GASUL
and included the same with the purchase of J&S, a REGASCOs regular customer.
Inside REGASCOs refilling plant, they witnessed that REGASCOs employees carried
the empty LPG cylinders to a refilling station and refilled the LPG empty cylinders.
Money was then given as payment for the refilling of the J&Ss empty cylinders which
included the four LPG cylinders brought in by De Jemil and his companion.
Upon the issuance of the said search warrants, Special Investigator Edgardo C. Kawada and
other NBI operatives immediately proceeded to the REGASCO LPG Refilling Station in
Malabon and served the search warrants on the private respondents. After searching the
premises of REGASCO, they were able to seize several empty and filled Shellane and
Gasul cylinders as well as other allied paraphernalia.

Subsequently, on January 28, 2005, the NBI lodged a complaint in the Department of
Justice against the private respondents for alleged violations of Sections 155 and 168
of Republic Act (RA) No. 8293, otherwise known as the Intellectual Property Code of the
Philippines.

On January 15, 2006, Assistant City Prosecutor Armando C. Velasco recommended the
dismissal of the complaint.

On appeal, the Secretary of the Department of Justice affirmed the prosecutors

dismissal of the complaint in a Resolution dated September 18, 2008, reasoning therein
that:

"x x x, the empty Shellane and Gasul LPG cylinders were brought by the NBI agent
specifically for refilling. Refilling the same empty cylinders is by no means an offense in
itself it being the legitimate business of Regasco to engage in the refilling and
marketing of liquefied petroleum gas. In other words, the empty cylinders were merely
filled by the employees of Regasco because they were brought precisely for that
purpose. They did not pass off the goods as those of complainants as no other act was
done other than to refill them in the normal course of its business.

"In some instances, the empty cylinders were merely swapped by customers for those which
are already filled. In this case, the end-users know fully well that the contents of their
cylinders are not those produced by complainants. And the reason is quite simple it is
an independent refilling station.

Respondents sought recourse to the CA through a petition for certiorari.

In a Decision dated July 2, 2010, the CA granted respondents certiorari petition. The fallo
states:

Petitioners then filed a motion for reconsideration. However, the same was denied by
the CA in a Resolution dated October 11, 2010.

Petitioners filed the instant Petition for Review on Certiorari.

Whether probable cause exists to hold petitioners liable for the crimes of trademark
infringement and unfair competition as defined and penalized under Sections 155 and
168, in relation to Section 170 of Republic Act (R.A.) No. 8293.

The Court in a very similar case, made it categorically clear that the mere unauthorized
use of a container bearing a registered trademark in connection with the sale,
distribution or advertising of goods or services which is likely to cause confusion,
mistake or deception among the buyers or consumers can be considered as trademark
infringement.

Here, petitioners have actually committed trademark infringement when they refilled,
without the respondents consent, the LPG containers bearing the registered marks of
the respondents. As noted by respondents, petitioners acts will inevitably confuse the
consuming public, since they have no way of knowing that the gas contained in the
LPG tanks bearing respondents marks is in reality not the latters LPG product after the
same had been illegally refilled. The public will then be led to believe that petitioners are
authorized refillers and distributors of respondents LPG products, considering that
they are accepting empty containers of respondents and refilling them for resale.

PILIPINAS SHELL PETROLEUM CORPORATION AND PETRON CORPORATION,

Petitioners,
-versus-
ROMARS INTERNATIONAL GASES CORPORATION,
Respondent.

Petitioners received information that respondent was selling, offering for sale, or
distributing liquefied petroleum gas (LPG) by illegally refilling the steel cylinders
manufactured by and bearing the duly registered trademark and device of respondent
Petron. Petron then obtained the services of a paralegal investigation team who sent
their people to investigate. The investigators went to respondent's premises located in
San Juan, Baao, Camarines Sur, bringing along four empty cylinders of Shellane, Gasul,
Total and Superkalan and asked that the same be refilled. Respondent's employees
then refilled said empty cylinders at respondent's refilling station. The refilled cylinders
were brought to the Marketing Coordinator of Petron Gasul who verified that
respondent was not authorized to distribute and/or sell, or otherwise deal with Petron
LPG products, and/or use or imitate any Petron trademarks. Petitioners then requested
the National Bureau of Investigation (NBI) to investigate said activities of respondent for the
purpose of apprehending and prosecuting establishments conducting illegal refilling,
distribution and/or sale of LPG products using the same containers of Petron and Shell, which
acts constitute a violation of Section 168,3 in relation to Section 1704 of Republic Act
(R.A.) No. 8293, otherwise known as the Intellectual Property Code of the
Philippines, and/or Section 25 of R.A. No. 623, otherwise known as An Act To Regulate the
Use of Duly Stamped or Marked Bottles, Boxes, Casks, Kegs, Barrels and Other Similar
Containers.

Thus, the NBI, in behalf of Petron and Shell, filed with the Regional Trial Court of Naga
City (RTC-Naga), two separate Applications for Search Warrant for Violation of Section
155.1,6 in relation to Section 1707 of R.A. No. 8293 against respondent and/or its occupants.
On October 23, 2002, the RTC-Naga City issued an Order granting said Applications and
Search Warrant Nos. 2002-27 and 2002-28 were issued. On the same day, the NBI served
the warrants at the respondent's premises in an orderly and peaceful manner, and
articles or items described in the warrants were seized.

However, on March 27, 2003, respondent's new counsel filed an Appearance with Motion
for Reconsideration. It was only in said motion where respondent raised for the first
time, the issue of the impropriety of filing the Application for Search Warrant at the
RTC-Naga City when the alleged crime was committed in a place within the territorial
jurisdiction of the RTC-Iriga City. Petitioner opposed the Motion for Reconsideration,
arguing that it was already too late for respondent to raise the issue regarding the
venue of the filing of the application for search warrant, as this would be in violation of
the Omnibus Motion Rule.

The RTC-Naga issued an Order granting respondent's Motion for Reconsideration,

thereby quashing Search Warrant Nos. 2002-27 and 2002-28.

Petitioner then appealed to the CA, but the appellate court, in its Decision dated March 13,
2009, affirmed the RTC Order quashing the search warrants. Petitioner's motion for
reconsideration of the CA Decision was denied per Resolution dated September 14, 2009.
Elevating the matter to this Court via a petition for review on certiorari.

Section 2, Rule 126 of the Revised Rules of Criminal Procedure provides thus: c

SEC. 2. Court where applications for search warrant shall be filed. - An

application for search warrant shall be filed with the following:

(a) Any court within whose territorial jurisdiction a crime was

committed.

(b) For compelling reasons stated in the application, any

court within the judicial region where the crime was
committed if the place of the commission of the crime is
known, or any court within the judicial region where the
warrant shall be enforced.

However, if the criminal action has already been filed, the application shall
only be made in the court where the criminal action is pending.

The above provision is clear enough. Under paragraph (b) thereof, the application for
search warrant in this case should have stated compelling reasons why the same was
being filed with the RTC-Naga instead of the RTC-Iriga City, considering that it is the
latter court that has territorial jurisdiction over the place where the alleged crime was
committed and also the place where the search warrant was enforced. The wordings of
the provision is of a mandatory nature, requiring a statement of compelling reasons if the
application is filed in a court which does not have territorial jurisdiction over the place of
commission of the crime. Since Section 2, Article III of the 1987 Constitution guarantees the
right of persons to be free from unreasonable searches and seizures, and search warrants
constitute a limitation on this right, then Section 2, Rule 126 of the Revised Rules of Criminal
Procedure should be construed strictly against state authorities who would be enforcing the
search warrants. On this point, then, petitioner's application for a search warrant was
indeed insufficient for failing to comply with the requirement to state therein the
compelling reasons why they had to file the application in a court that did not have
territorial jurisdiction over the place where the alleged crime was committed.

Notwithstanding said failure to state the compelling reasons in the application, the more
pressing question that would determine the outcome of the case is, did the RTC-Naga
act properly in taking into consideration the issue of said defect in resolving
respondent's motion for reconsideration where the issue was raised for the very first
time? The record bears out that, indeed, respondent failed to include said issue at the
first instance in its motion to quash. Does the omnibus motion rule cover a motion to quash
search warrants?

The omnibus motion rule embodied in Section 8, Rule 15, in relation to Section 1, Rule 9,
demands that all available objections be included in a party's motion, otherwise, said
objections shall be deemed waived; and, the only grounds the court could take cognizance
of, even if not pleaded in said motion are: (a) lack of jurisdiction over the subject matter; (b)
existence of another action pending between the same parties for the same cause; and (c) bar
by prior judgment or by statute of limitations. It should be stressed here that the Court has
ruled in a number of cases that the omnibus motion rule is applicable to motions to
quash search warrants.

In accordance with the omnibus motion rule, therefore, the trial court could only take
cognizance of an issue that was not raised in the motion to quash if, (1) said issue was not
available or existent when they filed the motion to quash the search warrant; or (2) the issue
was one involving jurisdiction over the subject matter. Obviously, the issue of the defect in the
application was available and existent at the time of filing of the motion to quash. What
remains to be answered then is, if the newly raised issue of the defect in the application is an
issue of jurisdiction.

Unfortunately, the foregoing reasoning of the CA, is inceptionally flawed.It gravely erred in
equating the proceedings for applications for search warrants with criminal actions themselves.
As elucidated by the Court, proceedings for said applications are not criminal in nature and,
thus, the rule that venue is jurisdictional does not apply thereto. Evidently, the issue of
whether the application should have been filed in RTC-Iriga City or RTC-Naga,
is not one involving jurisdiction because, as stated in the afore-quoted case, the power
to issue a special criminal process is inherent in all courts. It is quite clear that the
RTC-Naga had jurisdiction to issue criminal processes such as a search warrant.

WILLAWARE PRODUCTS CORPORATION,

Petitioner,
-versus-
JESICHRIS MANUFACTURING CORPORATION,
Respondent.

Respondent Jesichris Manufacturing Company filed this present complaint for

damages for unfair competition with prayer for permanent injunction to enjoin petitioner
Willaware Products Corporation from manufacturing and distributing plastic-made
automotive parts similar to those of respondent.

Respondent alleged that it is a duly registered partnership engaged in the manufacture

and distribution of plastic and metal products, with principal office at No. 100 Mithi Street,
Sampalukan, Caloocan City. Since its registration in 1992, respondent has been
manufacturing in its Caloocan plant and distributing throughout the Philippines
plastic-made automotive parts. Petitioner, on the other hand, which is engaged in the
manufacture and distribution of kitchenware items made of plastic and metal has its
office near that of respondent. Respondent further alleged that in view of the physical
proximity of petitioners office to respondents office, and in view of the fact that some
of the respondents employees had transferred to petitioner, petitioner had developed
familiarity with respondents products, especially its plastic-made automotive parts.

That sometime in November 2000, respondent discovered that petitioner had been
manufacturing and distributing the same automotive parts with exactly similar design,
same material and colors but was selling these products at a lower price as
respondents plastic-made automotive parts and to the same customers.

Respondent alleged that it had originated the use of plastic in place of rubber in the
manufacture of automotive underchassis parts such as spring eye bushing, stabilizer
bushing, shock absorber bushing, center bearing cushions, among others. Petitioners
manufacture of the same automotive parts with plastic material was taken from
respondents idea of using plastic for automotive parts. Also, petitioner deliberately
copied respondents products all of which acts constitute unfair competition, is and are
contrary to law, morals, good customs and public policy and have caused respondent
damages in terms of lost and unrealized profits in the amount of TWO MILLION PESOS as of
the date of respondents

Petitioner denies all the allegations of the respondent except for the following facts: that
it is engaged in the manufacture and distribution of kitchenware items made of plastic
and metal and that theres physical proximity of petitioners office to respondents
office, and that some of respondents employees had transferred to petitioner and that
over the years petitioner had developed familiarity with respondents products,
especially its plastic made automotive parts.
As its Affirmative Defenses, petitioner claims that there can be no unfair competition as
the plastic-made automotive parts are mere reproductions of original parts and their
construction and composition merely conforms to the specifications of the original
parts of motor vehicles they intend to replace. Thus, respondent cannot claim that it
"originated" the use of plastic for these automotive parts. Even assuming for the sake of
argument that respondent indeed originated the use of these plastic automotive parts, it
still has no exclusive right to use, manufacture and sell these as it has no patent over
these products. Furthermore, respondent is not the only exclusive manufacturer of
these plastic-made automotive parts as there are other establishments which were
already openly selling them to the public.3

The RTC ruled in favor of respondent.

Thus, petitioner appealed to the CA.

On appeal, petitioner asserts that if there is no intellectual property protecting a good

belonging to another, the copying thereof for production and selling does not add up to
unfair competition as competition is promoted by law to benefit consumers. Petitioner
further contends that it did not lure away respondents employees to get trade secrets. It
points out that the plastic spare parts sold by respondent are traded in the market and
the copying of these can be done by simply buying a sample for a mold to be made.

Conversely, respondent averred that copyright and patent registrations are immaterial
for an unfair competition case to prosper under Article 28 of the Civil Code. It stresses
that the characteristics of unfair competition are present in the instant case as the
parties are trade rivals and petitioners acts are contrary to good conscience for
deliberately copying its products and employing its former employees.

The CA affirmed with modification the ruling of the RTC.

Petitioner moved for reconsideration. However, the same was denied for lack of merit by
the CA.

Hence, the present Petition for Review wherein petitioner.

In essence, the issue for our resolution is: whether or not petitioner committed acts
amounting to unfair competition under Article 28 of the Civil Code.

Prefatorily, we would like to stress that the instant case falls under Article 28 of the Civil
Code on human relations, and not unfair competition under Republic Act No. 8293,7 as
the present suit is a damage suit and the products are not covered by patent
registration. A fortiori, the existence of patent registration is immaterial in the present
case.

The concept of "unfair competition" under Article 28 is very much broader than that
covered by intellectual property laws. Under the present article, which follows the extended
concept of "unfair competition" in American jurisdictions, the term covers even cases of
discovery of trade secrets of a competitor, bribery of his employees, misrepresentation
of all kinds, interference with the fulfillment of a competitors contracts, or any
malicious interference with the latters business.

With that settled, we now come to the issue of whether or not petitioner committed acts
amounting to unfair competition under Article 28 of the Civil Code.

We find the petition bereft of merit.

Article 28 of the Civil Code provides that "unfair competition in agricultural, commercial
or industrial enterprises or in labor through the use of force, intimidation, deceit,
machination or any other unjust, oppressive or high-handed method shall give rise to a
right of action by the person who thereby suffers damage."

From the foregoing, it is clear that what is being sought to be prevented is not competition
per se but the use of unjust, oppressive or high- handed methods which may deprive
others of a fair chance to engage in business or to earn a living. Plainly,what the law
prohibits is unfair competition and not competition where the means use dare fair and
legitimate.

In order to qualify the competition as "unfair," it must have two characteristics: (1) it
must involve an injury to a competitor or trade rival, and (2) it must involve acts which
are characterized as "contrary to good conscience," or "shocking to judicial
sensibilities," or otherwise unlawful; in the language of our law, these include force,
intimidation, deceit, machination or any other unjust, oppressive or high-handed
method. The public injury or interest is a minor factor; the essence of the matter
appears to be a private wrong perpetrated by unconscionable means.

Here, both characteristics are present.

First, both parties are competitors or trade rivals, both being engaged in the
manufacture of plastic-made automotive parts. Second, the acts of the petitioner were
clearly "contrary to good conscience" as petitioner admitted having employed
respondents former employees, deliberately copied respondents products and even
went to the extent of selling these products to respondents customers. 10

The CA correctly pointed out that petitioners hiring of the former employees of
respondent and petitioners act of copying the subject plastic parts of respondent were
tantamount to unfair competition.

Thus, it is evident that petitioner is engaged in unfair competition as shown by his act of
suddenly shifting his business from manufacturing kitchenware to plastic-made
automotive parts; his luring the employees of the respondent to transfer to his employ
and trying to discover the trade secrets of the respondent.

Moreover, when a person starts an opposing place of business, not for the sake of profit
to himself, but regardless of loss and for the sole purpose of driving his competitor out
of business so that later on he can take advantage of the effects of his malevolent
purpose, he is guilty of wanton wrong.

In sum, petitioner is guilty of unfair competition under Article 28 of the Civil Code.
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,
- versus -
PETRON CORPORATION and
CARMEN J. DOLOIRAS, doing
business under the name KRISTINA PATRICIA ENTERPRISES,
Respondents.

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.

Respondent Petron Corporation (Petron) sold and distributed liquefied

petroleum gas (LPG) in cylinder tanks that carried its trademark Gasul. Respondent
Carmen J. Doloiras owned and operated Kristina Patricia Enterprises (KPE), the
exclusive distributor of Gasul LPGs in the whole of Sorsogon. 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.
 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.

Because of the above incident, KPE filed a complaint 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).

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.

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. 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, 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 manufacturer 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 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.

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.

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.
LEVI STRAUSS (PHILS.), INC., G.R. No. 162311
Petitioner,
Present:
YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.

Promulgated:
TONY LIM,
Respondent.

Petitioner Levi Strauss (Phils.), Inc. is a duly-registered

domestic corporation. It is a wholly-owned subsidiary of Levi Strauss
& Co. (LS & Co.) a Delaware, USA company.

In 1972, LS & Co. granted petitioner a non-exclusive license to

use its registered trademarks and trade names[6] for the manufacture
and sale of various garment products, primarily pants, jackets, and
shirts, in the Philippines.[7] Presently, it is the only company that has
authority to manufacture, distribute, and sell products bearing the
LEVIS trademarks or to use such trademarks in
the Philippines. These trademarks are registered in over 130
countries, including the Philippines,[8] and were first used in
commerce in the Philippines in 1946.[9]
 Sometime in 1995, petitioner lodged a complaint[10] before the
Inter-Agency Committee on Intellectual Property Rights,
alleging that a certain establishment in Metro Manila was
manufacturing garments using colorable imitations of the LEVIS
trademarks.[11] Thus, surveillance was conducted on the premises of
respondent Tony Lim, doing business under the name Vogue Traders
Clothing Company.[12] The investigation revealed that respondent
was engaged in the manufacture, sale, and distribution of products
similar to those of petitioner and under the brand name LIVES.[13]

On December 13, 1995, operatives of the Philippine National

Police (PNP) Criminal Investigation Unit[14] served search
warrants[15] on respondents premises at 1042 and 1082 Carmen
Planas Street, Tondo, Manila. As a result, several items[16] were
seized from the premises.[17]

The PNP Criminal Investigation Command (PNP CIC) then

filed a complaint[18] against respondent before the DOJ for unfair
competition[19] under the old Article 189 of the Revised Penal Code,
prior to its repeal by Section 239 of Republic Act (RA) No.
8293.[20] The PNP CIC claimed that a confusing similarity could be
noted between petitioners LEVIs jeans and respondents LIVES
denim jeans and pants.

In his counter-affidavit,[21] respondent alleged, among others,

that (1) his products bearing the LIVES brand name are not fake
LEVIS garments; (2) LIVES is a registered trademark,[22] while the
patch pocket design for LIVES pants has copyright
registration,[23] thus conferring legal protection on his own
intellectual property rights, which stand on equal footing as LEVIS;
(3) confusing similarity, the central issue in the trademark
cancellation proceedings[24]lodged by petitioner, is a prejudicial
question that complainant, the police, and the court that issued the
search warrants cannot determine without denial of due process or
encroachment on the jurisdiction of the agencies concerned; and (4)
his goods are not clothed with an appearance which is likely to
deceive the ordinary purchaser exercising ordinary care.[25]
 In its reply-affidavit, petitioner maintained that there is
likelihood of confusion between the competing products because: (1)
a slavish imitation of petitioners arcuate trademark has been stitched
on the backpocket of LIVES jeans; (2) the appearance of the mark
105 on respondents product is obviously a play on petitioners 501
trademark; (3) the appearance of the word/phrase LIVES and
LIVES ORIGINAL JEANS is confusingly similar to petitioners
LEVIS trademark; (4) a red tab, made of fabric, attached at the left
seam of the right backpocket of petitioners standard five-pocket
jeans, also appears at the same place on LIVES jeans; (5) the patch
used on LIVES jeans (depicting three men on each side attempting to
pull apart a pair of jeans) obviously thrives on petitioners own patch
showing two horses being whipped by two men in an attempt to tear
apart a pair of jeans; and (6) LEVIS jeans are packaged and sold
with carton tickets, which are slavishly copied by respondent in his
own carton ticket bearing the marks LIVES, 105, the horse mark,
and basic features of petitioners ticket designs, such as two red
arrows curving and pointing outward, the arcuate stitching pattern,
and a rectangular portion with intricate border orientation.[26]

DOJ Rulings

On October 8, 1996, Prosecution Attorney Florencio D. Dela

Cruz recommended the dismissal[27] of the complaint. The prosecutor
agreed with respondent that his products are not clothed with an
appearance which is likely to deceive the ordinary purchaser
exercising ordinary care. The recommendation was approved by
Assistant Chief State Prosecutor Lualhati R. Buenafe.

On appeal, then DOJ Secretary Teofisto Guingona affirmed the

prosecutors dismissal of the complaint on January 9, 1998.[28]

On February 13, 1998, petitioner filed a motion for reconsideration of

Secretary Guingonas resolution, alleging, among others, that only a
likelihood of confusion is required to sustain a charge of unfair
competition. It also submitted the results of a consumer
survey[30] involving a comparison of petitioners and respondents products.
On June 5, 1998, Justice Secretary Silvestre Bello III, Guingonas
successor, granted petitioners motion and directed the filing of an
information against respondent.

Secretary Bello reasoned that under Article 189 of the Revised Penal
Code, as amended, exact similarity of the competing products is not
required.

Respondent then filed his own motion for reconsideration of

the Bello resolution. On May 7, 1999, new DOJ Secretary Serafin
Cuevas granted respondents motion and ordered the dismissal of the
charges against him.

Dissatisfied with the DOJ rulings, petitioner sought recourse with the
CA via a petition for review under Rule 43 of the 1997 Rules of Civil
Procedure. On October 17, 2003, the appellate court affirmed the
dismissal of the unfair competition complaint.

In essence, petitioner asks this Court to determine if probable cause exists

to charge respondent with the crime of unfair competition under Article
189(1) of the Revised Penal Code, prior to its repeal by Section 239 of
RA No. 8293.

However, that is a factual issue[40] the resolution of which is

improper in a Rule 45 petition.[41] The only legal issue left for the Court
to determine is whether the issue of confusion
should be determined only at the point of sale.

In finding that respondents goods were not clothed with an

appearance which is likely to deceive the ordinary purchaser exercising
ordinary care, the investigating prosecutor exercised the discretion lodged
in him by law. He found that:

First, the LIVES mark of the respondents goods is

spelled and pronounced differently from the LEVIS mark of
the complainant.
 Second, the backpocket design allegedly copied by the
respondent from the registered arcuate design of the
complainant, appears to be different in view of the longer
curved arms that stretch deep downward to a point of
convergence where the stitches form a rectangle. The arcuate
design for complainant LEVIs jeans form a diamond instead.
And assuming arguendo that there is similarity in the design of
backpockets between the respondents goods and that of the
complainant, this alone does not establish that respondents
jeans were intended to copy the complainants goods and pass
them off as the latters products as this design is simple and
may not be said to be strikingly distinct absent the other
LEVIS trademark such as the prints on the button, rivets, tags
and the like. x x x Further, the presence of accessories bearing
Levis trademark was not established as there were no such
accessories seized from the respondent and instead genuine
LIVES hangtags, button and patches were confiscated during
the search of latters premises.

Second, the design of the patches attached to the

backpockets of the respondents goods depicts three men on
either side of a pair of jeans attempting to pull apart said jeans,
while the goods manufactured by complainant with patches
also attached at the right backpockets depicts two horses being
whipped by two men in an attempt to tear apart a pair of
jeans. It is very clear therefore that the design of the
backpocket patches by the respondent is different from that of
the complainant, in the former the men were trying to pull
apart the pants while in the latter horses are the ones doing the
job. Obviously, there is a great difference between a man and a
horse and this will naturally not escape the eyes of an ordinary
purchaser.

Third, the manner by which Levis jeans are packed and

sold with carton tickets attached to the products cannot be
appropriated solely by complainant to the exclusion of all other
manufacturers of same class. It frequently happens that goods
of a particular class are labeled by all manufacturer[s] in a
common manner. In cases of that sort, no manufacturer may
appropriate for himself the method of labeling or packaging [of]
 his merchandise and then enjoin other merchants from using it.
x x x.

Fourth, evidence shows that there is a copyright

registration issued by the National Library over the backpocket
design of the respondent. And this copyright registration gives
the respondent the right to use the same in his goods x x x.[57]

The determination of probable cause is part of the discretion

granted to the investigating prosecutor and ultimately, the Secretary of
Justice. Courts are not empowered to substitute their own judgment for
that of the executive branch.[58]

The courts duty in an appropriate case is confined to a

determination of whether the assailed executive or judicial determination
of probable cause was done without or in excess of jurisdiction or with
grave abuse of discretion amounting to want of jurisdiction.[59] For grave
abuse of discretion to prosper as a ground for certiorari, it must be
demonstrated that the lower court or tribunal has exercised its power in an
arbitrary and despotic manner, by reason of passion or personal hostility,
and it must be patent and gross as would amount to an evasion or to a
unilateral refusal to perform the duty enjoined or to act in contemplation
of law.[60]

In the case at bar, no grave abuse of discretion on the part of the

DOJ was shown. Petitioner merely harps on the error committed by the
DOJ and the CA in arriving at their factual finding that there is no
confusing similarity between petitioners and respondents products. While
it is possible that the investigating prosecutor and Secretaries Guingona
and Cuevas erroneously exercised their discretion when they found that
unfair competition was not committed, this by itself does not render their
acts amenable to correction and annulment by the extraordinary remedy
of certiorari. There must be a showing of grave abuse of discretion
amounting to lack or excess of jurisdiction.[61]

We are disinclined to find that grave of abuse of discretion was

committed when records show that the finding of no probable cause
is supported by the evidence, law, and jurisprudence.
 Generally, unfair competition consists in employing deception or
any other means contrary to good faith by which any person 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 goodwill, or committing any acts
calculated to produce such result.[62]

The elements of unfair competition under Article 189(1)[63] of the

Revised Penal Code are:

(a) That the offender gives his goods the general appearance
of the goods of another manufacturer or dealer;
(b) That the general appearance is shown in the (1) goods
themselves, or in the (2) wrapping of their packages, or in
the (3) device or words therein, or in (4) any other feature
of their appearance;
(c) That the offender offers to sell or sells those goods or
gives other persons a chance or opportunity to do the same
with a like purpose; and
(d) That there is actual intent to deceive the public or defraud
a competitor.[64]

All these elements must be proven.[65] In finding that probable

cause for unfair competition does not exist, the investigating prosecutor
and Secretaries Guingona and Cuevas arrived at the same conclusion that
there is insufficient evidence to prove all the elements of the crime that
would allow them to secure a conviction.

Secretary Guingona discounted the element of actual intent to

deceive by taking into consideration the differences in spelling, meaning,
and phonetics between LIVES and LEVIS, as well as the fact that
respondent had registered his own mark.[66] While it is true that there may
be unfair competition even if the competing mark is registered in the
Intellectual Property Office, it is equally true that the same may
show prima facie good faith.[67] Indeed, registration does not negate
unfair competition where the goods are packed or offered for sale and
passed off as those of complainant.[68] However, the marks registration,
coupled with the stark differences between the competing marks, negate
the existence of actual intent to deceive, in this particular case.

For his part, Justice Cuevas failed to find the possibility of

confusion and of intent to deceive the public, relying on Emerald
Garment Manufacturing Corporation v. Court of Appeals.[69] In Emerald,
the Court explained that since maong pants or jeans are not inexpensive,
the casual buyer is more cautious and discerning and would prefer to mull
over his purchase, making confusion and deception less likely.

We cannot subscribe to petitioners stance that Emerald

Garment cannot apply because there was only one point of comparison,
i.e., LEE as it appears in Emerald Garments STYLISTIC
MR. LEE. Emerald Garment is instructive in explaining the attitude of
the buyer when it comes to products that are not inexpensive, such as
jeans. In fact, the Emerald Garment rationale is supported by Del Monte
Corporation v. Court of Appeals,[70] where the Court explained that the
attitude of the purchaser is determined by the cost of the goods. There is
no reason not to apply the rationale in those cases here even if only by
analogy.

The rule laid down in Emerald Garment and Del Monte is

consistent with Asia Brewery, Inc. v. Court of Appeals,[71] where the
Court held that in resolving cases of infringement and unfair competition,
the courts should take into consideration several factors which would
affect its conclusion, to wit: the age, training and education of the usual
purchaser, the nature and cost of the article, whether the article is bought
for immediate consumption and also the conditions under which it is
usually purchased.[72]

Petitioner argues that the element of intent to deceive may be

inferred from the similarity of the goods or their appearance. [73] The
argument is specious on two fronts. First, where the similarity in the
appearance of the goods as packed and offered for sale is
so striking, intent to deceive may be inferred.[74]However, as found by
the investigating prosecutor and the DOJ Secretaries, striking similarity
between the competing goods is not present.
 Second, the confusing similarity of the goods was precisely in issue
during the preliminary investigation. As such, the element of intent to
deceive could not arise without the investigating prosecutors or the DOJ
Secretarys finding that such confusing similarity exists. Since confusing
similarity was not found, the element of fraud or deception could not be
inferred.

We cannot sustain Secretary Bellos opinion that to establish

probable cause, it is enough that the respondent gave to his product the
general appearance of the product[75] of petitioner. It bears stressing that
that is only one element of unfair competition. All others must be shown
to exist. More importantly, the likelihood of confusion exists not only if
there is confusing similarity. It should also be likely to cause confusion or
mistake or deceive purchasers.[76] Thus, the CA correctly ruled that the
mere fact that some resemblance can be pointed out between the marks
used does not in itself prove unfair competition.[77] To reiterate, the
resemblance must be such as is likely to deceive the ordinary purchaser
exercising ordinary care.[78]
The consumer survey alone does not equate to actual
confusion. We note that the survey was made by showing the
interviewees actual samples of petitioners and respondents respective
products, approximately five feet away from them. From that distance,
they were asked to identify the jeans brand and state the reasons for
thinking so.[79] This method discounted the possibility that the ordinary
intelligent buyer would be able to closely scrutinize, and even fit, the
jeans to determine if they were LEVIS or not. It also ignored that a
consumer would consider the price of the competing goods when
choosing a brand of jeans. It is undisputed that LIVES jeans are priced
much lower than LEVIS.

The Courts observations in Emerald Garment are illuminating on

this score:

First, the products involved in the case at bar are, in the

main, various kinds of jeans. x x x 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.[80] (Emphasis
supplied)

We find no reason to go beyond the point of sale to determine if there is

probable cause for unfair competition. The CA observations along this
line are worth restating:

We also find no basis to give weight to petitioners

contention that the post sale confusion that might be triggered
by the perceived similarities between the two products must be
considered in the action for unfair competition against
respondent.

No inflexible rule can be laid down as to what will

constitute unfair competition. Each case is, in the measure, a
law unto itself. Unfair competition is always a question of
fact. The question to be determined in every case is whether or
not, as a matter of fact, the name or mark used by the
defendant has previously come to indicate and designate
plaintiffs goods, or, to state it in another way, whether
defendant, as a matter of fact, is, by his conduct, passing off
defendants goods as plaintiffs goods or his business as
 plaintiffs business. The universal test question is whether the
public is likely to be deceived.

In the case before us, we are of the view that the

probability of deception must be tested at the point of sale
since it is at this point that the ordinary purchaser mulls upon
the product and is likely to buy the same under the belief that
he is buying another. The test of fraudulent simulation is to be
found in the likelihood of deception, or the possibility of
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.[81]

In sum, absent a grave abuse of discretion on the part of the

executive branch tasked with the determination of probable cause during
preliminary investigation, We cannot nullify acts done in the exercise of
the executive officers discretion. Otherwise, We shall violate the
principle that the purpose of a preliminary investigation is to secure the
innocent against hasty, malicious and oppressive prosecution, and to
protect him from an open and public accusation of crime, from the
trouble, expense and anxiety of a public trial, and also to protect the State
from useless and expensive trials.[82]