G.R. No. 202423 January 28, 2013
Lo claimed that
CHESTER UYCO, WINSTON UYCHIYONG, and CHERRY C. UYCO-
ONG, Petitioners,
vs.
VICENTE LO, Respondent.
RESOLUTION
BRION, J.:
We resolve the motion for reconsideration 1 dated October 22, 2012 filed by
petitioners Chester Uyco, Winston Uychiyong and Cherry C. Uyco-Ong to
set aside the Resolution2 dated September 12, 2012 of this Court, which
affirmed the decision3 dated March 9, 2012 and the resolution4 dated June
21, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 111964. The CA
affirmed the resolution5 dated September 1, 2008 of the Department of
Justice (DOJ). Both the CA and the DOJ found probable cause to charge the
petitioners with false designation of origin, in violation of Section 169.1, in
relation with Section 170, of Republic Act No. (RA) 8293, otherwise known
as the "Intellectual Property Code of the Philippines."6
The disputed marks in this case are the "HIPOLITO & SEA HORSE &
TRIANGULAR DEVICE," "FAMA," and other related marks, service marks
and trade names of Casa Hipolito S.A. Portugal appearing in kerosene
burners. Respondent Vicente Lo and Philippine Burners Manufacturing
Corporation (PBMC) filed a complaint against the officers of Wintrade
Industrial SalesCorporation (Wintrade), including petitioners Chester Uyco,
Winston Uychiyong and Cherry Uyco-Ong, and of National Hardware,
including Mario Sy Chua, for violation of Section 169.1, in relation to Section
170, of RA 8293.
Lo claimed in his complaint that Gasirel-Industria de Comercio e
Componentes para Gass, Lda. (Gasirel), the owner of the disputed marks,
executed a deed of assignment transferring these marks in his favor, to be
used in all countries except for those in Europe and America.7 In a test buy,
Lo purchased from National Hardware kerosene burners with the subject
marks and the designations "Made in Portugal" and "Original Portugal" in the
wrappers. These products were manufactured by Wintrade.
as the assignee for the trademarks, he had not authorized Wintrade to use
these marks, nor had Casa Hipolito S.A. Portugal. While a prior authority
was given to Wintrade’s predecessor-in-interest, Wonder Project &
Development Corporation (Wonder), Casa Hipolito S.A. Portugal had already
revoked this authority through a letter of cancellation dated May 31,
1993.8 The kerosene burners manufactured by Wintrade have caused
confusion, mistake and deception on the part of the buying public. Lo stated
that the real and genuine burners are those manufactured by its agent,
PBMC.
In their Answer, the petitioners stated that they are the officers of Wintrade
which owns the subject trademarks and their variants. To prove this
assertion, they submitted as evidence the certificates of registration with the
Intellectual Property Office. They alleged that Gasirel, not Lo, was the real
party-in-interest. They allegedly derived their authority to use the marks from
Casa Hipolito S.A. Portugal through Wonder, their predecessor-in-interest.
Moreover, PBMC had already ceased to be a corporation and, thus, the
licensing agreement between PBMC and Lo could not be given effect,
particularly because the agreement was not notarized and did not contain
the provisions required by Section 87 of RA 8293. The petitioners pointed
out that Lo failed to sufficiently prove that the burners bought from National
Hardware were those that they manufactured. But at the same time, they
also argued that the marks "Made in Portugal" and "Original Portugal" are
merely descriptive and refer to the source of the design and the history of
manufacture.
In a separate Answer, Chua admitted that he had dealt with Wintrade for
several years and had sold its products. He had not been aware that
Wintrade had lost the authority to manufacture, distribute, and deal with
products containing the subject marks, and he was never informed of
Wintrade’s loss of authority. Thus, he could have not been part of any
conspiracy.
After the preliminary investigation, the Chief State Prosecutor found probable
cause to indict the petitioners for violation of Section 169.1, in relation with
Section 170, of RA 8293. This law punishes any person who uses in
commerce any false designation of origin which is likely to cause confusion
or mistake as to the origin of the product. The law seeks to protect the
1
public; thus, even if Lo does not have the legal capacity to sue, the State can
still prosecute the petitioners to prevent damage and prejudice to the public.
On appeal, the DOJ issued a resolution affirming the finding of probable
case. It gave credence to Lo’s assertion that he is the proper assignee of the
subject marks. More importantly, it took note of the petitioners’ admission
that they used the words "Made in Portugal" when in fact, these products
were made in the Philippines. Had they intended to refer to the source of the
design or the history of the manufacture, they should have explicitly said so
in their packaging. It then concluded that the petitioners’ defenses would be
better ventilated during the trial and that the admissions of the petitioners
make up a sufficient basis for probable cause.
The CA found no grave abuse of discretion on the part of the DOJ and
affirmed the DOJ’s ruling.
When the petitioners filed their petition before us, we denied the petition for
failure to sufficiently show any reversible error in the assailed judgment to
warrant the exercise of the Court’s discretionary power.
We find no reversible error on the part of the CA and the DOJ to merit
reconsideration. The petitioners reiterate their argument that the products
bought during the test buy bearing the trademarks in question were not
manufactured by, or in any way connected with, the petitioners and/or
Wintrade. They also allege that the words "Made in Portugal" and "Original
Portugal" refer to the origin of the design and not to the origin of the goods.
The petitioners again try to convince the Court that they have not
manufactured the products bearing the marks "Made in Portugal" and
"Original Portugal" that were bought during the test buy. However, their own
admission and the statement given by Chua bear considerable weight.
The admission in the petitioners’ Joint Affidavit is not in any way hypothetical,
as they would have us believe. They narrate incidents that have happened.
They refer to Wintrade’s former association with Casa Hipolito S.A. Portugal;
to their decision to produce the burners in the Philippines; to their use of the
disputed marks; and to their justification for their use. It reads as follows:
24. As earlier mentioned, the predecessor-in-interest of Wintrade was the
former exclusive licensee of Casa Hipolito SA of Portugal since the 1970’s,
and that Wintrade purchased all the rights on the said trademarks prior to the
closure of said company. Indeed, the burners sold by Wintrade used to be
imported from Portugal, but Wintrade later on discovered the possibility of
obtaining these burners from other sources or of manufacturing the same in
the Philippines.
Wintrade’s decision to procure these burners from sources other than
Portugal is certainly its management prerogative. The presence of the words
"made in Portugal" and "original Portugal" on the wrappings of the burners
and on the burners themselves which are manufactured by Wintrade is an
allusion to the fact that the origin of the design of said burners can be traced
back to Casa Hipolito SA of Portugal, and that the history of the manufacture
of said burners are rooted in Portugal. These words were not intended to
deceive or cause mistake and confusion in the minds of the buying public.9
Chua, the owner of National Hardware — the place where the test buy was
conducted — admits that Wintrade has been furnishing it with kerosene
burners with the markings "Made in Portugal" for the past 20 years, to wit:
5. I hereby manifests (sic) that I had been dealing with Wintrade Industrial
Sales Corporation (WINTRADE for brevity) for around 20 years now by
buying products from it. I am not however aware that WINTRADE was no
longer authorized to deal, distribute or sell kerosene burner bearing the mark
HIPOLITO and SEA HORSE Device, with markings "Made in Portugal" on
the wrapper as I was never informed of such by WINTRADE nor was ever
made aware of any notices posted in the newspapers informing me of such
fact. Had I been informed, I would have surely stopped dealing with
WINTRADE.101âwphi1
Thus, the evidence shows that petitioners, who are officers of Wintrade,
placed the words "Made in Portugal" and "Original Portugal" with the
disputed marks knowing fully well — because of their previous dealings with
the Portuguese company — that these were the marks used in the products
of Casa Hipolito S.A. Portugal. More importantly, the products that Wintrade
sold were admittedly produced in the Philippines, with no authority from
Casa Hipolito S.A. Portugal. The law on trademarks and trade names
precisely precludes a person from profiting from the business reputation built
by another and from deceiving the public as to the origins of products. These
2
facts support the consistent findings of the State Prosecutor, the DOJ and September 20, 2005
the CA that probable cause exists to charge the petitioners with false
designation of origin. The fact that the evidence did not come from Lo, but x----------------------------------------------------------------------x
had been given by the petitioners, is of no significance.

The argument that the words "Made in Portugal" and "Original Portugal"
refer to the origin of the design and not to the origin of the goods does not
negate the finding of probable cause; at the same time, it is an argument that
the petitioners are not barred by this Resolution from raising as a defense DECISION
during the hearing of the case.

WHEREFORE, premises considered, we hereby DENY the motion for TINGA, J.:
reconsideration for lack of merit.

SO ORDERED.
Before us is a petition for review on certiorari[1] under Rule 45 of the 1997
LEVI STRAUSS & CO., G.R. No. 138900 Rules of Civil Procedure filed by Levi Strauss & Co. (LS & Co.) and Levi
Strauss (Philippines), Inc. (LSPI) assailing the Court of Appeals Decision[2]
& LEVI STRAUSS (PHILS.), and Resolution[3] respectively dated 21 December 1998 and 10 May 1999.
The questioned Decision granted respondents prayer for a writ of preliminary
INC., Present: injunction in its Petition[4] and set aside the trial courts orders dated 15 May
1998[5] and 4 June 1998[6] which respectively granted petitioners prayer for
Petitioners, the issuance of a temporary restraining order (TRO) and application for the
issuance of a writ of preliminary injunction.
PUNO,

Chairman,
This case stemmed from the Complaint[7] for Trademark Infringement,
- versus - AUSTRIA-MARTINEZ, Injunction and Damages filed by petitioners LS & Co. and LSPI against
respondent Clinton Apparelle, Inc.* (Clinton Aparelle) together with an
CALLEJO, alternative defendant, Olympian Garments, Inc. (Olympian Garments),
before the Regional Trial Court of Quezon City, Branch 90.[8] The Complaint
TINGA, and was docketed as Civil Case No. Q-98-34252, entitled Levi Strauss & Co. and
Levi Strauss (Phils.), Inc. v. Clinton Aparelle, Inc. and/or Olympian
CLINTON APPARELLE, INC., NAZARIO, JJ. Garments, Inc.

Respondent.

Promulgated:

3
The Complaint alleged that LS & Co., a foreign corporation duly organized
and existing under the laws of the State of Delaware, U.S.A., and engaged in
the apparel business, is the owner by prior adoption and use since 1986 of
the internationally famous Dockers and Design trademark. This ownership is
evidenced by its valid and existing registrations in various member countries
of the Paris Convention. In the Philippines, it has a Certificate of Registration
No. 46619 in the Principal Register for use of said trademark on pants,
shirts, blouses, skirts, shorts, sweatshirts and jackets under Class 25.[9]
The Dockers and Design trademark was first used in the Philippines in or
about May 1988, by LSPI, a domestic corporation engaged in the
manufacture, sale and distribution of various products bearing trademarks
owned by LS & Co. To date, LSPI continues to manufacture and sell Dockers
Pants with the Dockers and Design trademark.[10]
LS & Co. and LSPI further alleged that they discovered the presence in the
local market of jeans under the brand name Paddocks using a device which
is substantially, if not exactly, similar to the Dockers and Design trademark
owned by and registered in the name of LS & Co., without its consent. Based
on their information and belief, they added, Clinton Apparelle manufactured
and continues to manufacture such Paddocks jeans and other apparel.
However, since LS & Co. and LSPI are unsure if both, or just one of
impleaded defendants are behind the manufacture and sale of the Paddocks
jeans complained of, they brought this suit under Section 13, Rule 3[11] of
the 1997 Rules of Civil Procedure.[12]
The Complaint contained a prayer that reads as follows:
1. That upon the filing of this complaint, a temporary restraining order be
immediately issued restraining defendants, their officers, employees, agents,
representatives, dealers, retailers or assigns from committing the acts herein
complained of, and, specifically, for the defendants, their officers,
employees, agents, representatives, dealers and retailers or assigns, to
cease and desist from manufacturing, distributing, selling, offering for sale,
advertising, or otherwise using denims, jeans or pants with the design herein
complained of as substantially, if not exactly similar, to plaintiffs Dockers and
Design trademark.
2. That after notice and hearing, and pending trial on the merits, a writ of
preliminary injunction be issued enjoining defendants, their officers,
employees, agents, dealers, retailers, or assigns from manufacturing,
distributing, selling, offering for sale, advertising, jeans the design herein
complained of as substantially, if not exactly similar, to plaintiffs Dockers and
Design trademark.
3. That after trial on the merits, judgment be rendered as follows:
a. Affirming and making permanent the writ of preliminary injunction;
b. Ordering that all infringing jeans in the possession of either or both
defendants as the evidence may warrant, their officers, employees, agents,
retailers, dealers or assigns, be delivered to the Honorable Court of plaintiffs,
and be accordingly destroyed;[13]
Acting on the prayer for the issuance of a TRO, the trial court issued an
Order[14] setting it for hearing on 5 May 1998. On said date, as respondent
failed to appear despite notice and the other defendant, Olympian Garments,
had yet to be notified, the hearing was re-scheduled on 14 May 1998.[15]
4

On 14 May 1998, neither Clinton Apparelle nor Olympian Garments
appeared. Clinton Apparelle claimed that it was not notified of such hearing.
Only Olympian Garments allegedly had been issued with summons. Despite
the absence of the defendants, the hearing on the application for the
issuance of a TRO continued.[16]
The following day, the trial court issued an Order[17] granting the TRO
applied for, the pertinent portions of which state:
Considering the absence of counsel/s for the defendant/s during the
summary hearing scheduled on May 5, 1998 and also during the re-
scheduled summary hearing held on May 14, 1998 set for the purpose of
determining whether or not a Temporary Restraining Order shall be issued,
this Court allowed the counsel for the plaintiffs to present on May 14, 1998
their arguments/evidences in support of their application. After hearing the
arguments presented by the counsel for the plaintiffs during the summary
hearing, this Court is of the considered and humble view that grave injustice
and irreparable injury to the plaintiffs would arise before the matter of
whether or not the application for the issuance of a Writ of Preliminary
Injunction can be heard, and that, in the interest of justice, and in the
meantime, a Temporary Restraining Order be issued.
WHEREFORE, let this Temporary Restraining Order be issued restraining
the defendants, their officers, employees, agents, representatives, dealers,
retailers or assigns from committing the acts complained of in the verified
Complaint, and specifically, for the defendants, their officers, employees,
agents, representatives, dealers and retailers or assigns, to cease and desist
from manufacturing, distributing, selling, offering for sale, advertising or
otherwise using denims, jeans or pants with the design complained of in the
verified Complaint as substantially, if not exactly similar, to plaintiffs Dockers
and Design trademark; until after the application/prayer for the issuance of a
Writ of Preliminary Injunction is heard/resolved, or until further orders from
this Court.
The hearing on the application for the issuance of a Writ of Preliminary
Injunction as embodied in the verified Complaint is set on May 26, 1998
(Tuesday) at 2:00 P.M. which setting is intransferable in character
considering that the lifetime of this Temporary Restraining Order is twenty
(20) days from date hereof.[18]
On 4 June 1998, the trial court issued another Order[19] granting the writ of
preliminary injunction, to wit:
ORDER
This resolves the plaintiffs application or prayer for the issuance of a writ of
preliminary injunction as embodied in the verified complaint in this case.
Parenthetically, this Court earlier issued a temporary restraining order. (see
Order dated May 15, 1998; see also Order dated May 26, 1998)
After a careful perusal of the contents of the pleadings and documents on
record insofar as they are pertinent to the issue under consideration, this
Court finds that at this point in time, the plaintiffs appear to be entitled to the
relief prayed for and this Court is of the considered belief and humble view
that, without necessarily delving on the merits, the paramount interest of
justice will be better served if the status quo shall be maintained and that an
injunction bond of P2,500,000.00 appears to be in order. (see Sections 3
and 4, Rule 58, 1997 Rules of Civil Procedure)
5
IN VIEW OF THE FOREGOING, the plaintiffs prayer for the issuance of a pending the resolution of the Motion for Reconsideration and the Motion to
writ of preliminary injunction is GRANTED. Accordingly, upon the plaintiffs Dismiss filed by respondent.
filing, within ten (10) days from their receipt hereof, an injunction bond of
P2,500,000.00 executed to the defendants to the effect that the plaintiffs will
pay all damages the defendants may sustain by reason of this injunction in
case the Court should finally decide that the plaintiffs are not entitled thereto, On 2 October 1998, the trial court denied Clinton Apparelles Motion to
let a writ of preliminary injunction issue enjoining or restraining the Dismiss and Motion for Reconsideration in an Omnibus Order,[26] the
commission of the acts complained of in the verified Complaint in this case, pertinent portions of which provide:
and specifically, for the defendants, their officers, employees, agents,
representatives, dealers and retailers or assigns or persons acting in their
behalf to cease and desist from manufacturing, distributing, selling, offering
for sale, advertising, or otherwise using, denims, jeans or pants with the
design complained of in the verified Complaint in this case, which is After carefully going over the contents of the pleadings in relation to pertinent
substantially, if not exactly, similar to plaintiffs DOCKERS and DESIGN portions of the records, this Court is of the considered and humble view that:
trademark or logo as covered by the Bureau of Patents, Trademarks and
Technology Transfer Certificate of Registration No. 46619, until after this
case shall have been decided on the merits and/or until further orders from
this Court.[20]

The evidence considered by the trial court in granting injunctive relief were
On the first motion, the arguments raised in the plaintiffs aforecited
as follows: (1) a certified true copy of the certificate of trademark registration
Consolidated Opposition appears to be meritorious. Be that as it may, this
for Dockers and Design; (2) a pair of DOCKERS pants bearing the Dockers
Court would like to emphasize, among other things, that the complaint states
and Design trademark; (3) a pair of Paddocks pants bearing respondents
a cause of action as provided under paragraphs 1 to 18 thereof.
assailed logo; (4) the Trends MBL Survey Report purportedly proving that
there was confusing similarity between two marks; (5) the affidavit of one
Bernabe Alajar which recounted petitioners prior adoption, use and
registration of the Dockers and Design trademark; and (6) the affidavit of one
Mercedes Abad of Trends MBL, Inc. which detailed the methodology and On the second motion, the arguments raised in the plaintiffs aforecited
procedure used in their survey and the results thereof.[21] Consolidated Opposition likewise appear to be impressed with merit.
Besides, there appears to be no strong and cogent reason to reconsider and
set aside this Courts Order dated June 4, 1998 as it has been shown so far
that the trademark or logo of defendants is substantially, if not exactly, similar
Clinton Apparelle thereafter filed a Motion to Dismiss[22] and a Motion for
to plaintiffs DOCKERS and DESIGN trademark or logo as covered by
Reconsideration[23] of the Order granting the writ of preliminary injunction.
BPTTT Certificate of Registration No. 46619 even as the BPTTT Certificate
Meantime, the trial court issued an Order[24] approving the bond filed by
of Registration No. 49579 of Clinton Apparelle, Inc. is only for the mark or
petitioners.
word PADDOCKS (see Records, p. 377) In any event, this Court had issued
an Order dated June 18, 1998 for the issuance of the writ of preliminary
On 22 June 1998, the trial court required[25] the parties to file their
injunction after the plaintiffs filed the required bond of P2,500,000.00.
respective citation of authorities/ jurisprudence/Supreme Court decisions on
whether or not the trial court may issue the writ of preliminary injunction

6

IN VIEW OF THE FOREGOING, the aforecited Motion To Dismiss and
Motion For Reconsideration are both DENIED for lack of merit, and
accordingly, this Courts Order dated June 18, 1998 for the issuance of the
writ of preliminary injunction is REITERATED so the writ of preliminary
injunction could be implemented unless the implementation thereof is
restrained by the Honorable Court of Appeals or Supreme Court.
The writ of preliminary injunction was thereafter issued on 8 October 1998.
[27]
Thus, Clinton Apparelle filed with the Court of Appeals a Petition[28] for
certiorari, prohibition and mandamus with prayer for the issuance of a
temporary restraining order and/or writ of preliminary injunction, assailing the
orders of the trial court dated 15 May 1998, 4 June 1998 and 2 October
1998.
On 20 October 1998, the Court of Appeals issued a Resolution[29] requiring
herein petitioners to file their comment on the Petition and at the same time
issued the prayed-for temporary restraining order.
The appellate court rendered on 21 December 1998 its now assailed
Decision granting Clinton Apparelles petition. The Court of Appeals held that
the trial court did not follow the procedure required by law for the issuance of
a temporary restraining order as Clinton Apparelle was not duly notified of
the date of the summary hearing for its issuance. Thus, the Court of Appeals
ruled that the TRO had been improperly issued.[30]
The Court of Appeals also held that the issuance of the writ of preliminary
injunction is questionable. In its opinion, herein petitioners failed to
sufficiently establish its material and substantial right to have the writ issued.
Secondly, the Court of Appeals observed that the survey presented by
petitioners to support their contentions was commissioned by petitioners.
The Court of Appeals remarked that affidavits taken ex-parte are generally
considered to be inferior to testimony given in open court. The appellate
court also considered that the injury petitioners have suffered or are currently
suffering may be compensated in terms of monetary consideration, if after
trial, a final judgment shall be rendered in their favor.[31]
In addition, the Court of Appeals strongly believed that the implementation of
the questioned writ would effectively shut down respondents business, which
in its opinion should not be sanctioned. The Court of Appeals thus set aside
the orders of the trial court dated 15 May 1998 and 4 June 1998,
respectively issuing a temporary restraining order and granting the issuance
of a writ of preliminary injunction.
With the denial of their Motion for Reconsideration,[32] petitioners are now
before this Court seeking a review of the appellate courts Decision and
Resolution. LS & Co. and LSPI claim that the Court of Appeals committed
serious error in: (1) disregarding the well-defined limits of the writ of certiorari
that questions on the sufficiency of evidence are not to be resolved in such a
petition; (2) in holding that there was no confusion between the two marks;
(3) in ruling that the erosion of petitioners trademark is not protectable by
injunction; (4) in ignoring the procedure previously agreed on by the parties
and which was adopted by the trial court; and (5) in declaring that the
preliminary injunction issued by the trial court will lead to the closure of
respondents business.
7
In its Comment,[33] Clinton Apparelle maintains that only questions of law
may be raised in an appeal by certiorari under Rule 45 of the Rules of Court.
It asserts that the question of whether the Court of Appeals erred in: (1)
disregarding the survey evidence; (2) ruling that there was no confusion
between the two marks; and (c) finding that the erosion of petitioners
trademark may not be protected by injunction, are issues not within the ambit
of a petition for review on certiorari under Rule 45. Clinton Apparelle also
contends that the Court of Appeals acted correctly when it overturned the
writ of preliminary injunction issued by the trial court. It believes that the
issued writ in effect disturbed the status quo and disposed of the main case
without trial.
There is no merit in the petition.
At issue is whether the issuance of the writ of preliminary injunction by the
trial court was proper and whether the Court of Appeals erred in setting aside
the orders of the trial court.
Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as
an order granted at any stage of an action prior to the judgment or final order
requiring a party or a court, agency or a person to refrain from a particular
act or acts. Injunction is accepted as the strong arm of equity or a
transcendent remedy to be used cautiously as it affects the respective rights
of the parties, and only upon full conviction on the part of the court of its
extreme necessity. An extraordinary remedy, injunction is designed to
preserve or maintain the status quo of things and is generally availed of to
prevent actual or threatened acts until the merits of the case can be heard.
[34] It may be resorted to only by a litigant for the preservation or protection
of his rights or interests and for no other purpose during the pendency of the
principal action.[35] It is resorted to only when there is a pressing necessity
to avoid injurious consequences, which cannot be remedied under any
standard compensation. The resolution of an application for a writ of
preliminary injunction rests upon the existence of an emergency or of a
special recourse before the main case can be heard in due course of
proceedings.[36]
Section 3, Rule 58, of the Rules of Court enumerates the grounds for the
issuance of a preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. A preliminary
injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or
part of such relief consists in restraining the commission or continuance of
the act or acts complained of, or in requiring the performance of an act or
acts, either for a limited period or perpetually;
(b) That the commission, continuance, or non-performance of the act or acts
complained of during the litigation would probably work injustice to the
applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is
attempting to do, or is procuring or suffering to be done, some act or acts
probably in violation of the rights of the applicant respecting the subject of
the action or proceeding, and tending to render the judgment ineffectual.
Under the cited provision, a clear and positive right especially calling for
judicial protection must be shown. Injunction is not a remedy to protect or
enforce contingent, abstract, or future rights; it will not issue to protect a right
not in esse and which may never arise, or to restrain an act which does not
give rise to a cause of action. There must exist an actual right.[37] There
must be a patent showing by the complaint that there exists a right to be
protected and that the acts against which the writ is to be directed are
violative of said right.[38]
There are generally two kinds of preliminary injunction: (1) a prohibitory
injunction which commands a party to refrain from doing a particular act; and
(2) a mandatory injunction which commands the performance of some
positive act to correct a wrong in the past.[39]
The Court of Appeals did not err in reviewing proof adduced by petitioners to
support its application for the issuance of the writ. While the matter of the
8
issuance of a writ of preliminary injunction is addressed to the sound
discretion of the trial court, this discretion must be exercised based upon the
grounds and in the manner provided by law. The exercise of discretion by
the trial court in injunctive matters is generally not interfered with save in
cases of manifest abuse.[40] And to determine whether there was abuse of
discretion, a scrutiny must be made of the bases, if any, considered by the
trial court in granting injunctive relief. Be it stressed that injunction is the
strong arm of equity which must be issued with great caution and
deliberation, and only in cases of great injury where there is no
commensurate remedy in damages.[41]
In the present case, we find that there was scant justification for the issuance
of the writ of preliminary injunction.
Petitioners anchor their legal right to Dockers and Design trademark on the
Certificate of Registration issued in their favor by the Bureau of Patents,
Trademarks and Technology Transfer.* According to Section 138 of Republic
Act No. 8293,[42] this Certificate of Registration is prima facie evidence of
the validity of the registration, the registrants ownership of the mark and of
the exclusive right to use the same in connection with the goods or services
and those that are related thereto specified in the certificate. Section 147.1
of said law likewise grants the owner of the registered mark the exclusive
right to prevent all third parties not having the owners consent from using in
the course of trade identical or similar signs for goods or services which are
identical or similar to those in respect of which the trademark is registered if
such use results in a likelihood of confusion.
However, attention should be given to the fact that petitioners registered
trademark consists of two elements: (1) the word mark Dockers and (2) the
wing-shaped design or logo. Notably, there is only one registration for both
features of the trademark giving the impression that the two should be
considered as a single unit. Clinton Apparelles trademark, on the other hand,
uses the Paddocks word mark on top of a logo which according to petitioners
is a slavish imitation of the Dockers design. The two trademarks apparently
differ in their word marks (Dockers and Paddocks), but again according to
petitioners, they employ similar or identical logos. It could thus be said that
respondent only appropriates petitioners logo and not the word mark
Dockers; it uses only a portion of the registered trademark and not the
whole.
Given the single registration of the trademark Dockers and Design and
considering that respondent only uses the assailed device but a different
word mark, the right to prevent the latter from using the challenged
Paddocks device is far from clear. Stated otherwise, it is not evident whether
the single registration of the trademark Dockers and Design confers on the
owner the right to prevent the use of a fraction thereof in the course of trade.
It is also unclear whether the use without the owners consent of a portion of
a trademark registered in its entirety constitutes material or substantial
invasion of the owners right.
It is likewise not settled whether the wing-shaped logo, as opposed to the
word mark, is the dominant or central feature of petitioners trademarkthe
feature that prevails or is retained in the minds of the publican imitation of
which creates the likelihood of deceiving the public and constitutes
trademark infringement.[43] In sum, there are vital matters which have yet
and may only be established through a full-blown trial.
From the above discussion, we find that petitioners right to injunctive relief
has not been clearly and unmistakably demonstrated. The right has yet to be
determined. Petitioners also failed to show proof that there is material and
substantial invasion of their right to warrant the issuance of an injunctive writ.
Neither were petitioners able to show any urgent and permanent necessity
for the writ to prevent serious damage.
Petitioners wish to impress upon the Court the urgent necessity for injunctive
relief, urging that the erosion or dilution of their trademark is protectable.
They assert that a trademark owner does not have to wait until the mark
loses its distinctiveness to obtain injunctive relief, and that the mere use by
an infringer of a registered mark is already actionable even if he has not yet
profited thereby or has damaged the trademark owner.
Trademark dilution is the lessening of the capacity of a famous mark to
identify and distinguish goods or services, regardless of the presence or
absence of: (1) competition between the owner of the famous mark and
other parties; or (2) likelihood of confusion, mistake or deception. Subject to
the principles of equity, the owner of a famous mark is entitled to an
injunction against another persons commercial use in commerce of a mark
or trade name, if such use begins after the mark has become famous and
causes dilution of the distinctive quality of the mark. This is intended to
protect famous marks from subsequent uses that blur distinctiveness of the
mark or tarnish or disparage it.[44]
9

Based on the foregoing, to be eligible for protection from dilution, there has
to be a finding that: (1) the trademark sought to be protected is famous and
distinctive; (2) the use by respondent of Paddocks and Design began after
the petitioners mark became famous; and (3) such subsequent use defames
petitioners mark. In the case at bar, petitioners have yet to establish whether
Dockers and Design has acquired a strong degree of distinctiveness and
whether the other two elements are present for their cause to fall within the
ambit of the invoked protection. The Trends MBL Survey Report which
petitioners presented in a bid to establish that there was confusing similarity
between two marks is not sufficient proof of any dilution that the trial court
must enjoin.
The Court also finds that the trial courts order granting the writ did not
adequately detail the reasons for the grant, contrary to our ruling in
University of the Philippines v. Hon. Catungal Jr., [45] wherein we held that:
The trial court must state its own findings of fact and cite particular law to
justify grant of preliminary injunction. Utmost care in this regard is
demanded.[46]
The trial court in granting the injunctive relief tersely ratiocinated that the
plaintiffs appear to be entitled to the relief prayed for and this Court is of the
considered belief and humble view that, without necessarily delving on the
merits, the paramount interest of justice will be better served if the status quo
shall be maintained. Clearly, this statement falls short of the requirement laid
down by the above-quoted case. Similarly, in Developers Group of
Companies, Inc. v. Court of Appeals,[47] we held that it was not enough for
the trial court, in its order granting the writ, to simply say that it appeared
after hearing that plaintiff is entitled to the relief prayed for.
In addition, we agree with the Court of Appeals in its holding that the
damages the petitioners had suffered or continue to suffer may be
compensated in terms of monetary consideration. As held in Government
Service Insurance System v. Florendo:[48]
a writ of injunction should never have been issued when an action for
damages would adequately compensate the injuries caused. The very
foundation of the jurisdiction to issue the writ of injunction rests in the
probability of irreparable injury, inadequacy of pecuniary estimation and the
prevention of the multiplicity of suits, and where facts are not shown to bring
the case within these conditions, the relief of injunction should be refused.
[49]
We also believe that the issued injunctive writ, if allowed, would dispose of
the case on the merits as it would effectively enjoin the use of the Paddocks
device without proof that there is basis for such action. The prevailing rule is
that courts should avoid issuing a writ of preliminary injunction that would in
effect dispose of the main case without trial.[50] There would be a
prejudgment of the main case and a reversal of the rule on the burden of
proof since it would assume the proposition which petitioners are inceptively
bound to prove.[51]
Parenthetically, we find no flaw in the Court of Appeals disquisition on the
consequences of the issued injunction. An exercise of caution, we believe
that such reflection is necessary to weigh the alleged entitlement to the writ
vis--vis its possible effects. The injunction issued in the instant case is of a
serious nature as it tends to do more than to maintain the status quo. In fact,
the assailed injunction if sustained would bring about the result desired by
petitioners without a trial on the merits.
Then again, we believe the Court of Appeals overstepped its authority when
it declared that the alleged similarity as to the two logos is hardly confusing
to the public. The only issue brought before the Court of Appeals through
respondents Petition under Rule 65 of the Rules of Court involved the grave
abuse of discretion allegedly committed by the trial court in granting the TRO
and the writ of preliminary injunction. The appellate court in making such a
statement went beyond that issue and touched on the merits of the
infringement case, which remains to be decided by the trial court. In our
view, it was premature for the Court of Appeals to declare that there is no
confusion between the two devices or logos. That matter remains to be
decided on by the trial court.
Finally, we have no contention against the procedure adopted by the trial
court in resolving the application for an injunctive writ and we believe that
respondent was accorded due process. Due process, in essence, is simply
an opportunity to be heard. And in applications for preliminary injunction, the
requirement of hearing and prior notice before injunction may issue has
been relaxed to the point that not all petitions for preliminary injunction must
undergo a trial-type hearing, it being a hornbook doctrine that a formal or
10
trial-type hearing is not at all times and in all instances essential to due
process. Due process simply means giving every contending party the
opportunity to be heard and the court to consider every piece of evidence
presented in their favor. Accordingly, this Court has in the case of Co v.
Calimag, Jr.,[52] rejected a claim of denial of due process where such
claimant was given the opportunity to be heard, having submitted his
counter-affidavit and memorandum in support of his position.[53]
After a careful consideration of the facts and arguments of the parties, the
Court finds that petitioners did not adequately prove their entitlement to the
injunctive writ. In the absence of proof of a legal right and the injury
sustained by the applicant, an order of the trial court granting the issuance of
an injunctive writ will be set aside for having been issued with grave abuse of
discretion.[54] Conformably, the Court of Appeals was correct in setting
aside the assailed orders of the trial court.
WHEREFORE, the instant petition is DENIED. The Decision of the Court of
Appeals dated 21 December 1998 and its Resolution dated 10 May 1999 are
AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 190706 July 21, 2014
SHANG PROPERTIES REALTY CORPORATION (formerly THE SHANG
GRAND TOWER CORPORATION) and SHANG PROPERTIES, INC.
(formerly EDSA PROPERTIES HOLDINGS, INC.), Petitioners,
vs.
ST. FRANCIS DEVELOPMENT CORPORATION, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 is the Decision2 dated
December 18, 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 105425
which affirmed with modification the Decision3 dated September 3, 2008 of
the Intellectual Property Office (IPO) Director-General. The CA: (a) affirmed
the denial of the application for registration of the mark "ST. FRANCIS
TOWERS" filed by petitioners Shang Properties Realty Corporation and
Shang Properties, Inc. (petitioners); ( b) found petitioners to have committed
unfair competition for using the marks "THE ST. FRANCIS TOWERS" and
"THE ST. FRANCIS SHANGRI-LA PLACE"; (c) ordered petitioners to cease
and desist from using "ST. FRANCIS" singly or as part of a composite mark;
and (d) ordered petitioners to jointly and severally pay respondent St.
Francis Square Development Corporation (respondent) a fine in the amount
of ₱200,000.00.
The Facts
Respondent – a domestic corporation engaged in the real estate business
and the developer of the St. Francis Square Commercial Center, built
sometime in 1992, located at Ortigas Center, Mandaluyong City, Metro
Manila (Ortigas Center)4 – filed separate complaints against petitioners
before the IPO - Bureau of Legal Affairs (BLA), namely: (a) an intellectual
property violation case for unfair competition, false or fraudulent declaration,
and damages arising from petitioners’ use and filing of applications for the
registration of the marks "THE ST. FRANCIS TOWERS" and "THE ST.
FRANCIS SHANGRI-LA PLACE," docketed as IPV Case No. 10-2005-00030
(IPV Case); and (b) an inter partes case opposing the petitioners’ application
for registration of the mark "THE ST. FRANCIS TOWERS" for use relative to
the latter’s business, particularly the construction of permanent buildings or
structures for residential and office purposes, docketed as Inter PartesCase
No. 14-2006-00098 (St. Francis Towers IP Case); and (c) an inter partes
case opposing the petitioners’ application for registration of the mark "THE
ST. FRANCIS SHANGRI-LA PLACE," docketed as IPC No. 14-2007-00218
(St. Francis Shangri-La IP Case).5
In its complaints, respondent alleged that it has used the mark "ST.
FRANCIS" to identify its numerous property development projects located at
Ortigas Center, such as the aforementioned St. Francis Square Commercial
Center, a shopping mall called the "St. Francis Square," and a mixed-use
realty project plan thatincludes the St. Francis Towers. Respondent added
that as a result of its continuous use of the mark "ST. FRANCIS" in its real
estate business,it has gained substantial goodwill with the public that
consumers and traders closely identify the said mark with its property
development projects. Accordingly, respondent claimed that petitioners could
not have the mark "THE ST. FRANCIS TOWERS" registered in their names,
and that petitioners’ use of the marks "THE ST. FRANCIS TOWERS" and
"THE ST. FRANCIS SHANGRI-LA PLACE" in their own real estate
development projects constitutes unfair competition as well as false or
fraudulent declaration.6
11
Petitioners denied committing unfair competition and false or fraudulent
declaration, maintaining that they could register the mark "THE ST.
FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE" under
their names. They contended that respondent is barred from claiming
ownership and exclusive use ofthe mark "ST. FRANCIS" because the same
is geographically descriptive ofthe goods or services for which it is intended
to be used.7 This is because respondent’s as well as petitioners’ real estate
development projects are locatedalong the streets bearing the name "St.
Francis," particularly, St. FrancisAvenue and St. Francis Street (now known
as Bank Drive),8 both within the vicinity of the Ortigas Center.
The BLA Rulings
On December 19, 2006, the BLA rendered a Decision9 in the IPV Case, and
found that petitioners committed acts of unfair competition against
respondent by its use of the mark "THE ST. FRANCIS TOWERS" but not
with its use of the mark "THE ST. FRANCIS SHANGRI-LA PLACE." It,
however, refused to award damages in the latter’s favor, considering that
there was no evidence presented to substantiate the amount of damages it
suffered due to the former’s acts. The BLA found that "ST. FRANCIS," being
a name of a Catholic saint, may be considered as an arbitrary mark capable
of registration when used in real estate development projects as the name
has no direct connection or significance when used in association with real
estate. The BLA neither deemed "ST. FRANCIS" as a geographically
descriptive mark, opiningthat there is no specific lifestyle, aura, quality or
characteristic that the real estate projects possess except for the fact that
they are located along St. Francis Avenueand St. Francis Street (now known
as Bank Drive), Ortigas Center. In this light, the BLA found that while
respondent’s use of the mark "ST. FRANCIS" has not attained exclusivity
considering that there are other real estate development projects bearing the
name "St. Francis" in other areas,10 it must nevertheless be pointed out that
respondent has been known to be the only real estate firm to transact
business using such name within the Ortigas Center vicinity. Accordingly, the
BLA considered respondent to have gained goodwill and reputation for its
mark, which therefore entitles it to protection against the use by other
persons, at least, to those doing business within the Ortigas Center.11
Meanwhile, on March 28, 2007, the BLA rendered a Decision12 in the St.
Francis Towers IP Case, denying petitioners’ application for registration of
the mark "THE ST. FRANCIS TOWERS." Excluding the word "TOWERS" in
view of petitioners’ disclaimer thereof, the BLA ruled that petitioners cannot
register the mark "THE ST. FRANCIS" since it is confusingly similar to
respondent’s"ST. FRANCIS" marks which are registered with the
Department of Trade and Industry(DTI). It held that respondent had a better
right over the use of the mark "ST. FRANCIS" because of the latter’s
appropriation and continuous usage thereof for a long period of time.13 A
little over a year after, or on March 31, 2008, the BLA then rendered a
Decision14 in the St. Francis Shangri-La IP Case, allowing petitioners’
application for registration of the mark "THE ST. FRANCIS SHANGRI-LA
PLACE." It found that respondent cannot preclude petitioners from using the
mark "ST. FRANCIS" as the records show that the former’s use thereof had
not been attended with exclusivity. More importantly, it found that petitioners
had adequately appended the word "Shangri-La" to its composite mark to
distinguish it from that of respondent, in which case, the former had removed
any likelihood of confusion that may arise from the contemporaneous use by
both parties of the mark "ST. FRANCIS."
Both parties appealed the decision in the IPV Case, while petitioners
appealed the decision in the St. Francis Towers IP Case. Due to the identity
of the parties and issues involved, the IPO Director-General ordered the
consolidation of the separate appeals.15 Records are, however, bereft of
any showing that the decision in the St. Francis Shangri-La IP Casewas
appealed by either party and, thus, is deemed to have lapsed into finality.
The IPO Director-General Ruling
In a Decision16 dated September 3, 2008, then IPO Director-General Adrian
S. Cristobal, Jr. affirmedthe rulings of the BLA that: (a) petitioners cannot
register the mark "THEST. FRANCIS TOWERS"; and (b) petitioners are not
guilty of unfair competition in its use of the mark "THE ST. FRANCIS
SHANGRI-LA PLACE." However, the IPO DirectorGeneral reversed the
BLA’s findingthat petitioners committed unfair competition through their use
of the mark "THE ST. FRANCIS TOWERS," thus dismissing such charge. He
foundthat respondent could not be entitled to the exclusive use of the mark
"ST. FRANCIS," even at least to the locality where it conducts its business,
because it is a geographically descriptive mark, considering that it was
petitioners’ as well as respondent’s intention to use the mark "ST.
FRANCIS"in order to identify, or at least associate, their real estate
development projects/businesses with the place or location where they are
situated/conducted, particularly, St. Francis Avenue and St. Francis Street
(now known as Bank Drive), Ortigas Center. He further opined that
respondent’s registration of the name "ST. FRANCIS" with the DTI is
12
irrelevant since what should be controlling are the trademark registrations
with the IPO itself.17 Also, the IPO Director-General held that since the
parties are both engaged in the real estate business, it would be "hard to
imagine that a prospective buyer will be enticed to buy, rent or purchase
[petitioners’] goods or servicesbelieving that this is owned by [respondent]
simply because of the name ‘ST. FRANCIS.’ The prospective buyer would
necessarily discuss things with the representatives of [petitioners] and would
readily know that this does not belong to [respondent]."18
Disagreeing solely with the IPO Director-General’s ruling on the issue of
unfair competition (the bone of contention in the IPV Case), respondent
elevated the sameto the CA.
In contrast, records do not show that either party appealed the IPO Director-
General’s ruling on the issue ofthe registrability of the mark "THE ST.
FRANCIS TOWERS" (the bone of contention in the St. Francis Towers IP
Case). As such, said pronouncement isalso deemed to have lapsed into
finality.
The CA Ruling
In a Decision19 dated December 18, 2009, the CA found petitioners guilty of
unfair competition not only withrespect to their use of the mark "THE ST.
FRANCIS TOWERS" but alsoof the mark "THE ST. FRANCIS SHANGRI-LA
PLACE." Accordingly, itordered petitioners to cease and desist from using
"ST. FRANCIS" singly or as part of a composite mark, as well as to jointly
and severally pay respondent a fine in the amount of ₱200,000.00.
The CA did not adhere to the IPO Director-General’s finding that the mark
"ST. FRANCIS" is geographically descriptive, and ruled that respondent –
which has exclusively and continuously used the mark "ST. FRANCIS" for
more than a decade, and,hence, gained substantial goodwill and reputation
thereby – is very muchentitled to be protected against the indiscriminate
usage by other companies of the trademark/name it has so painstakingly
tried to establish and maintain. Further, the CA stated that even on the
assumption that "ST. FRANCIS" was indeed a geographically descriptive
mark, adequateprotection must still begiven to respondent pursuant to the
Doctrine of Secondary Meaning.20
Dissatisfied, petitioners filed the present petition.
The Issue Before the Court
With the decisions in both Inter PartesCases having lapsed into finality, the
sole issue thus left for the Court’s resolution is whether or not petitioners are
guilty of unfair competition in using the marks "THE ST. FRANCIS TOWERS"
and "THE ST. FRANCIS SHANGRI-LA PLACE."
The Court’s Ruling
The petition is meritorious.
Section 168 of Republic Act No. 8293,21 otherwise known as the
"Intellectual Property Code of the Philippines" (IP Code), provides for the
rules and regulations on unfair competition.
To begin, Section 168.1 qualifies who is entitled to protection against unfair
competition. It states that "[a]person who has identified in the mind of the
public the goods he manufacturesor deals in, his business or services from
those of others, whether or not a registered mark is employed, has a
property right in the goodwill of the said goods, business or services so
identified, which will be protected inthe same manner as other property
rights."
Section 168.2proceeds to the core of the provision, describing forthwith who
may be found guilty of and subject to an action of unfair competition – that is,
"[a]ny 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 x x x."
Without limiting its generality, Section 168.3goes on to specify examples of
acts which are considered as constitutive of unfair competition, viz.:
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
13
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 ofsuch 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
service 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.
Finally, Section 168.4 dwells on a matter of procedure by stating that the
"[t]he remedies provided by Sections 156,22 157,23 and 16124 shall apply
mutatis mutandis."
The statutory attribution of the unfair competition concept is
wellsupplemented by jurisprudential pronouncements. In the recent case of
Republic Gas Corporation v. Petron Corporation,25 the Court has echoed
the classic definition of the term which is "‘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.’ 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. [In other words], the
defendant gives his goods the general appearance of the goods of his
competitor with the intention of deceiving the publicthat the goods are those
of his competitor."26 The "true test" of unfair competition has thus been
"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 theparticular trade to which the controversy relates."
Based on the foregoing, it is therefore essential to prove the existence of
fraud, or the intent to deceive, actual or probable,27 determined through a
judicious scrutiny of the factual circumstances attendant to a particular
case.28
Here, the Court finds the element of fraud to be wanting; hence, there can be
no unfair competition. The CA’scontrary conclusion was faultily premised on
its impression that respondenthad the right to the exclusive use of the mark
"ST. FRANCIS," for which the latter had purportedly established
considerable goodwill. What the CA appears to have disregarded or been
mistaken in its disquisition, however, is the geographicallydescriptive nature
of the mark "ST. FRANCIS" which thus bars its exclusive appropriability,
unless a secondary meaning is acquired. As deftly explained in the U.S.
case of Great Southern Bank v. First Southern Bank:29 "[d]escriptive
geographical terms are inthe ‘public domain’ in the sense that every seller
should have the right to inform customers of the geographical origin of his
goods. A ‘geographically descriptive term’ is any noun or adjective that
designates geographical location and would tend to be regarded by buyers
as descriptive of the geographic location of origin of the goods or services. A
geographically descriptive term can indicate any geographic location on
earth, such as continents, nations, regions, states, cities, streets and
addresses, areas of cities, rivers, and any other location referred to by a
recognized name. In order to determine whether or not the geographic term
in question is descriptively used, the following question is relevant: (1) Is the
mark the name of the place or region from which the goods actually come? If
the answer is yes, then the geographic term is probably used in a descriptive
sense, and secondary meaning is required for protection."30
In Burke-Parsons-Bowlby Corporation v. Appalachian Log Homes, Inc.,31 it
was held that secondary meaningis established when a descriptive mark no
longer causes the public to associate the goods with a particular place, but
to associate the goods with a particular source.In other words, it is not
enough that a geographically-descriptive mark partakes of the name of a
place known generally to the public to be denied registration as it is also
necessary to show that the public would make a goods/place association –
that is, to believe that the goods for which the mark is sought to be
registered originatein that place.1âwphi1 To hold sucha belief, it is
necessary, of course, that the purchasers perceive the mark as a place
name, from which the question of obscurity or remoteness then comes to the
fore.32 The more a geographical area is obscure and remote, it becomes
less likely that the public shall have a goods/place association with such
area and thus, the mark may not be deemed as geographically descriptive.
However, where there is no genuine issue that the geographical significance
of a term is its primary significanceand where the geographical place is
neither obscure nor remote, a public association of the goods with the place
14
may ordinarily be presumed from the fact that the applicant’s own goods
come from the geographical place named in the mark.33
Under Section 123.234 of the IP Code, specific requirements have to be met
in order to conclude that a geographically-descriptive mark has acquired
secondary meaning, to wit: (a) the secondary meaning must have arisen as
a result of substantial commercial use of a mark in the Philippines; (b) such
use must result in the distinctiveness of the mark insofar as the goods or
theproducts are concerned; and (c) proof of substantially exclusive and
continuous commercial use in the Philippines for five (5) years beforethe
date on which the claim of distinctiveness is made. Unless secondary
meaning has been established, a geographically-descriptive mark, dueto its
general public domain classification, is perceptibly disqualified from
trademark registration. Section 123.1(j) of the IP Code states this rule as
follows:
SEC. 123. Registrability. –
123.1 A mark cannot be registered if it:
xxxx
(j) Consists exclusively of signs orof indications that may serve in trade to
designate the kind, quality, quantity, intended purpose, value, geographical
origin, time or production of the goods or rendering of the services, or other
characteristics of the goods or services; (Emphasis supplied) x x x x
Cognizant of the foregoing, the Court disagrees with the CA that petitioners
committed unfair competition due to the mistaken notion that petitioner had
established goodwill for the mark "ST. FRANCIS" precisely because said
circumstance, by and of itself, does not equateto fraud under the parameters
of Section 168 of the IP Code as above-cited. In fact, the records are bereft
of any showing thatpetitioners gave their goods/services the general
appearance that it was respondent which was offering the same to the
public. Neither did petitioners employ any means to induce the public
towards a false belief that it was offering respondent’s goods/services. Nor
did petitioners make any false statement or commit acts tending to discredit
the goods/services offered by respondent. Accordingly, the element of fraud
which is the core of unfair competition had not been established.
Besides, respondent was not able toprove its compliance with the
requirements stated in Section 123.2 of the IP Code to be able to conclude
that it acquired a secondary meaning – and, thereby, an exclusive right – to
the "ST. FRANCIS" mark, which is, as the IPO Director-General correctly
pointed out, geographically-descriptive of the location in which its realty
developments have been built, i.e., St. Francis Avenue and St. Francis
Street (now known as "Bank Drive"). Verily, records would reveal that while it
is true that respondent had been using the mark "ST. FRANCIS" since 1992,
its use thereof has been merely confined to its realty projects within the
Ortigas Center, as specifically mentioned.As its use of the mark is clearly
limited to a certain locality, it cannot be said thatthere was substantial
commercial use of the same recognizedall throughout the country. Neither is
there any showing of a mental recognition in buyers’ and potential buyers’
minds that products connected with the mark "ST. FRANCIS" are associated
with the same source35 – that is, the enterprise of respondent. Thus, absent
any showing that there exists a clear goods/service-association between the
realty projects located in the aforesaid area and herein respondent as the
developer thereof, the latter cannot besaid to have acquired a secondary
meaning as to its use of the "ST. FRANCIS" mark.
In fact, even on the assumption that secondary meaning had been acquired,
said finding only accords respondents protectional qualification under
Section 168.1 of the IP Code as above quoted. Again, this does not
automatically trigger the concurrence of the fraud element required under
Section 168.2 of the IP Code, as exemplified by the acts mentioned in
Section 168.3 of the same. Ultimately, as earlier stated, there can be no
unfair competition without this element. In this respect, considering too the
notoriety of the Shangri-La brand in the real estate industry which dilutes
petitioners' propensity to merely ride on respondent's goodwill, the more
reasonable conclusion is that the former's use of the marks "THE ST.
FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE" was
meant only to identify, or at least associate, their real estate project/s with its
geographical location. As aptly observed by the IPO DirectorGeneral:36
In the case at hand, the parties are business competitors engaged in real
estate or property development, providing goods and services directly
connected thereto. The "goods" or "products" or "services" are real estate
and the goods and the services attached to it or directly related to it, like sale
or lease of condominium units, offices, and commercial spaces, such as
restaurants, and other businesses. For these kinds of goods or services
there can be no description of its geographical origin as precise and
15
accurate as that of the name of the place where they are situated.
(Emphasis and underscoring supplied)
Hence, for all the reasons above-discussed, the Court hereby grants the
instant petition, and, thus, exonerates petitioners from the charge of unfair
competition in the IPV Case. As the decisions in the Inter Partes Cases were
not appealed, the registrability issues resolved therein are hereby deemed to
have attained finality and, therefore, are now executory.
WHEREFORE, the petition is GRANTED. The Decision dated December 18,
2009 of the Court of Appeals in CA-G.R. SP No. 105425 is hereby
REVERSED and SET ASIDE. Accordingly, the Decision dated September 3,
2008 of the Intellectual Property Office-Director General is REINSTATED.
SO ORDERED.
G.R. No. 103543 July 5, 1993
ASIA BREWERY, INC., petitioner,
vs.
THE HON. COURT OF APPEALS and SAN MIGUEL CORPORATION,
respondents.
Abad Santos & Associates and Sycip, Salazar, Hernandez & Gatmaitan for
petitioner.
Roco, Bunag, Kapunan Law Office for private respondent.
GRIÑO-AQUINO, J.:
On September 15, 1988, San Miguel Corporation (SMC) filed a complaint
against Asia Brewery Inc. (ABI) for infringement of trademark and unfair
competition on account of the latter's BEER PALE PILSEN or BEER NA
BEER product which has been competing with SMC's SAN MIGUEL PALE
PILSEN for a share of the local beer market. (San Miguel Corporation vs.
Asia Brewery Inc., Civ. Case. No. 56390, RTC Branch 166, Pasig, Metro
Manila.).
On August 27, 1990, a decision was rendered by the trial Court, presided
over by Judge Jesus O. Bersamira, dismissing SMC's complaint because
ABI "has not committed trademark infringement or unfair competition
against" SMC (p. 189, Rollo).
SMC appealed to the Court of Appeals (C.A.-G.R. CV No. 28104). On
September 30, 1991, the Court of Appeals (Sixth Division composed of
Justice Jose C. Campos, Jr., chairman and ponente, and Justices Venancio
D. Aldecoa Jr. and Filemon H. Mendoza, as members) reversed the trial
court. The dispositive part of the decision reads as follows:
In the light of the foregoing analysis and under the plain language of the
applicable rule and principle on the matter, We find the defendant Asia
Brewery Incorporated GUILTY of infringement of trademark and unfair
competition. The decision of the trial court is hereby REVERSED, and a new
judgment entered in favor of the plaintiff and against the defendant as
follows:
(1) The defendant Asia Brewery Inc. its officers, agents, servants and
employees are hereby permanently enjoined and restrained from
manufacturing, putting up, selling, advertising, offering or announcing for
sale, or supplying Beer Pale Pilsen, or any similar preparation, manufacture
or beer in bottles and under labels substantially identical with or like the said
bottles and labels of plaintiff San Miguel Corporation employed for that
purpose, or substantially identical with or like the bottles and labels now
employed by the defendant for that purpose, or in bottles or under labels
which are calculated to deceive purchasers and consumers into the belief
that the beer is the product of the plaintiff or which will enable others to
substitute, sell or palm off the said beer of the defendant as and for the beer
of the plaintiff-complainant.
(2) The defendant Asia Brewery Inc. is hereby ordered to render an
accounting and pay the San Miguel Corporation double any and all the
payments derived by defendant from operations of its business and the sale
of goods bearing the mark "Beer Pale Pilsen" estimated at approximately
Five Million Pesos (P5,000,000.00); to recall all its products bearing the mark
"Beer Pale Pilsen" from its retailers and deliver these as well as all labels,
signs, prints, packages, wrappers, receptacles and advertisements bearing
the infringing mark and all plates, molds, materials and other means of
making the same to the Court authorized to execute this judgment for
destruction.
16
(3) The defendant is hereby ordered to pay plaintiff the sum of Two
Million Pesos (P2,000,000.00) as moral damages and Half a Million Pesos
(P5,000,000.00) by way of exemplary damages.
(4) The defendant is further ordered to pay the plaintiff attorney's fees
in the amount of P250,000.00 plus costs to this suit. (p. 90, Rollo.)
Upon a motion for reconsideration filed by ABI, the above dispositive part of
the decision, was modified by the separate opinions of the Special Sixth
Division 1 so that it should read thus:
In the light of the foregoing analysis and under the plain language of the
applicable rule and principle on the matter, We find the defendant Asia
Brewery Incorporated GUILTY of infringement of trademark and unfair
competition. The decision of the trial court is hereby REVERSED, and a new
judgment entered in favor of the plaintiff and against the defendant as
follows:
(1) The defendant Asia Brewery Inc., its officers, agents, servants and
employees are hereby permanently enjoined and restrained from
manufacturing, putting up, selling, advertising, offering or announcing for
sale, or supplying Beer Pale Pilsen, or any similar preparation, manufacture
or beer in bottles and under labels substantially identical with or like the said
bottles and labels of plaintiff San Miguel Corporation employed for that
purpose, or substantially identical with or like the bottles and labels now
employed by the defendant for that purpose, or in bottles or under labels
which are calculated to deceive purchasers and consumers into the belief
that the beer if the product of the plaintiff or which will enable others to
substitute, sell or palm off the said beer of the defendant as and for the beer
of the plaintiff-complainant.
(2) The defendant Asia Brewery Inc. is hereby ordered 2 to recall all its
products bearing the mark Beer Pale Pilsen from its retailers and deliver
these as well as all labels, signs, prints, packages, wrappers, receptacles
and advertisements bearing the infringing mark and all plates, molds,
materials and other means of making the same to the Court authorized to
execute this judgment for destruction.
(3) The defendant is hereby ordered to pay plaintiff the sum of Two
Million Pesos (P2,000,000.00) as moral damages and Half a Million Pesos
(P500,000.00) by way of exemplary damages.
(4) The defendant is further ordered to pay the plaintiff attorney's fees
in the amount of P250,000.00 plus costs of this suit.
In due time, ABI appealed to this Court by a petition for certiorari under Rule
45 of the Rules of Court. The lone issue in this appeal is whether ABI
infringes SMC's trademark: San Miguel Pale Pilsen with Rectangular Hops
and Malt Design, and thereby commits unfair competition against the latter. It
is a factual issue (Phil. Nut Industry Inc. v. Standard Brands Inc., 65 SCRA
575) and as a general rule, the findings of the Court of Appeals upon factual
questions are conclusive and ought not to be disturbed by us. However,
there are exceptions to this general rule, and they are:
(1) When the conclusion is grounded entirely on speculation, surmises
and conjectures;
(2) When the inference of the Court of Appeals from its findings of fact
is manifestly mistaken, absurd and impossible;
(3) Where there is grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the appellate court, in making its findings, went beyond the
issues of the case, and the same are contrary to the admissions of both the
appellant and the appellee;
(6) When the findings of said court are contrary to those of the trial
court;
(7) When the findings are without citation of specific evidence on which
they are based;
(8) When the facts set forth in the petition as well as in the petitioner's
main and reply briefs are not disputed by the respondents; and
(9) When the findings of facts of the Court of Appeals are premised on
the absence of evidence and are contradicted on record. (Reynolds
Philippine Corporation vs. Court of Appeals, 169 SCRA 220, 223 citing,
Mendoza vs. Court of Appeals, 156 SCRA 597; Manlapaz vs. Court of
Appeals, 147 SCRA 238; Sacay vs. Sandiganbayan, 142 SCRA 593, 609;
17
Guita vs. CA, 139 SCRA 576; Casanayan vs. Court of Appeals, 198 SCRA
333, 336; also Apex Investment and Financing Corp. vs. IAC, 166 SCRA 458
[citing Tolentino vs. De Jesus, 56 SCRA 167; Carolina Industries, Inc. vs.
CMS Stock Brokerage, Inc., 97 SCRA 734; Manero vs. CA, 102 SCRA 817;
and Moran, Jr. vs. CA, 133 SCRA 88].)
Under any of these exceptions, the Court has to review the evidence in order
to arrive at the correct findings based on the record (Roman Catholic Bishop
of Malolos, Inc. vs. IAC, 191 SCRA 411, 420.) Where findings of the Court of
Appeals and trial court are contrary to each other, the Supreme Court may
scrutinize the evidence on record. (Cruz vs. CA, 129 SCRA 222, 227.)
The present case is one of the exceptions because there is no concurrence
between the trial court and the Court of Appeals on the lone factual issue of
whether ABI, by manufacturing and selling its BEER PALE PILSEN in amber
colored steinie bottles of 320 ml. capacity with a white painted rectangular
label has committed trademark infringement and unfair competition against
SMC.
Infringement of trademark is a form of unfair competition (Clarke vs. Manila
Candy Co., 36 Phil. 100, 106). Sec. 22 of Republic Act No. 166, otherwise
known as the Trademark Law, defines what constitutes infringement:
Sec. 22. Infringement, what constitutes. — Any person who shall use,
without the consent of the registrant, any reproduction, counterfeit, copy or
colorable imitation of any registered mark or trade-name in connection with
the sale, offering for sale, or advertising of any goods, business or services
on or in connection with which such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or origin of such
goods or services, or identity of such business; or reproduce, counterfeit,
copy or colorably imitate any such mark or trade-name and apply such
reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used
upon or in connection with such goods, business or services, shall be liable
to a civil action by the registrant for any or all of the remedies herein
provided. (Emphasis supplied.)
This definition implies that only registered trade marks, trade names and
service marks are protected against infringement or unauthorized use by
another or others. The use of someone else's registered trademark, trade
name or service mark is unauthorized, hence, actionable, if it is done
"without the consent of the registrant." (Ibid.)
The registered trademark of SMC for its pale pilsen beer is:
San Miguel Pale Pilsen With Rectangular Hops and Malt Design. (Philippine
Bureau of Patents, Trademarks and Technology Transfer Trademark
Certificate of Registration No. 36103, dated 23 Oct. 1986,
(p. 174, Rollo.)
As described by the trial court in its decision (Page 177, Rollo):
. . . . a rectangular design [is] bordered by what appears to be minute grains
arranged in rows of three in which there appear in each corner hop designs.
At the top is a phrase written in small print "Reg. Phil. Pat. Off." and at the
bottom "Net Contents: 320 Ml." The dominant feature is the phrase "San
Miguel" written horizontally at the upper portion. Below are the words "Pale
Pilsen" written diagonally across the middle of the rectangular design. In
between is a coat of arms and the phrase "Expertly Brewed." The "S" in
"San" and the "M" of "Miguel," "P" of "Pale" and "Pilsen" are written in Gothic
letters with fine strokes of serifs, the kind that first appeared in the 1780s in
England and used for printing German as distinguished from Roman and
Italic. Below "Pale Pilsen" is the statement "And Bottled by" (first line, "San
Miguel Brewery" (second line), and "Philippines" (third line). (p. 177, Rollo;
Emphasis supplied.)
On the other hand, ABI's trademark, as described by the trial court, consists
of:
. . . a rectangular design bordered by what appear to be buds of flowers with
leaves. The dominant feature is "Beer" written across the upper portion of
the rectangular design. The phrase "Pale Pilsen" appears immediately below
in smaller block letters. To the left is a hop design and to the right, written in
small prints, is the phrase "Net Contents 320 ml." Immediately below "Pale
Pilsen" is the statement written in three lines "Especially brewed and bottled
by" (first line), "Asia Brewery Incorporated" (second line), and "Philippines"
(third line), (p. 177, Rollo; Emphasis supplied.)
Does ABI's BEER PALE PILSEN label or "design" infringe upon SMC's SAN
MIGUEL PALE PILSEN WITH RECTANGULAR MALT AND HOPS DESIGN?
The answer is "No."
18
Infringement is determined by the "test of dominancy" rather than by
differences or variations in the details of one trademark and of another. The
rule was formulated in Co Tiong Sa vs. Director of Patents, 95 Phil. 1, 4
(1954); reiterated in Lim Hoa vs. Director of Patents, 100 Phil. 214, 216-217
(1956), thus:
It has been consistently held that the question of infringement of a trademark
is to be determined by the test of dominancy. Similarity in size, form and
color, while relevant, is not conclusive. If the competing trademark contains
the main or essential or dominant features of another, and confusion and
deception is likely to result, infringement takes place. Duplication or imitation
is not necessary; nor it is necessary that the infringing label should suggest
an effort to imitate. [C. Neilman Brewing Co. vs. Independent Brewing Co.,
191 F., 489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180 Fed.
579]. The question at issue in cases of infringement of trademarks is
whether the use of the marks involved would be likely to cause confusion or
mistakes in the mind of the public or deceive purchasers. (Auburn Rubber
Corporation vs. Honover Rubber Co., 107 F. 2d 588; . . . .) (Emphasis
supplied.)
In Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272, 275, the test was
similarity or "resemblance between the two (trademarks) such as would be
likely to cause the one mark to be mistaken for the other. . . . [But] this is not
such similitude as amounts to identity."
In Phil. Nut Industry Inc. vs. Standard Brands Inc., 65 SCRA 575, the court
was more specific: the test is "similarity in the dominant features of the
trademarks."
What are the dominant features of the competing trademarks before us?
There is hardly any dispute that the dominant feature of SMC's trademark is
the name of the product: SAN MIGUEL PALE PILSEN, written in white
Gothic letters with elaborate serifs at the beginning and end of the letters "S"
and "M" on an amber background across the upper portion of the rectangular
design.
On the other hand, the dominant feature of ABI's trademark is the name:
BEER PALE PILSEN, with the word "Beer" written in large amber letters,
larger than any of the letters found in the SMC label.
The trial court perceptively observed that the word "BEER" does not appear
in SMC's trademark, just as the words "SAN MIGUEL" do not appear in ABI's
trademark. Hence, there is absolutely no similarity in the dominant features
of both trademarks.
Neither in sound, spelling or appearance can BEER PALE PILSEN be said
to be confusingly similar to SAN MIGUEL PALE PILSEN. No one who
purchases BEER PALE PILSEN can possibly be deceived that it is SAN
MIGUEL PALE PILSEN. No evidence whatsoever was presented by SMC
proving otherwise.
Besides the dissimilarity in their names, the following other dissimilarities in
the trade dress or appearance of the competing products abound:
(1) The SAN MIGUEL PALE PILSEN bottle has a slender tapered
neck.
The BEER PALE PILSEN bottle has a fat, bulging neck.
(2) The words "pale pilsen" on SMC's label are printed in bold and
laced letters along a diagonal band, whereas the words "pale pilsen" on
ABI's bottle are half the size and printed in slender block letters on a straight
horizontal band. (See Exhibit "8-a".).
(3) The names of the manufacturers are prominently printed on their
respective bottles.
SAN MIGUEL PALE PILSEN is "Bottled by the San Miguel Brewery,
Philippines," whereas BEER PALE PILSEN is "Especially brewed and
bottled by Asia Brewery Incorporated, Philippines."
(4) On the back of ABI's bottle is printed in big, bold letters, under a
row of flower buds and leaves, its copyrighted slogan:
"BEER NA BEER!"
Whereas SMC's bottle carries no slogan.
(5) The back of the SAN MIGUEL PALE PILSEN bottle carries the
SMC logo, whereas the BEER PALE PILSEN bottle has no logo.
19

(6) The SAN MIGUEL PALE PILSEN bottle cap is stamped with a coat
of arms and the words "San Miguel Brewery Philippines" encircling the
same.
The BEER PALE PILSEN bottle cap is stamped with the name "BEER" in the
center, surrounded by the words "Asia Brewery Incorporated Philippines."
(7) Finally, there is a substantial price difference between BEER PALE
PILSEN (currently at P4.25 per bottle) and SAN MIGUEL PALE PILSEN
(currently at P7.00 per bottle). One who pays only P4.25 for a bottle of beer
cannot expect to receive San Miguel Pale Pilsen from the storekeeper or
bartender.
The fact that the words pale pilsen are part of ABI's trademark does not
constitute an infringement of SMC's trademark: SAN MIGUEL PALE
PILSEN, for "pale pilsen" are generic words descriptive of the color ("pale"),
of a type of beer ("pilsen"), which is a light bohemian beer with a strong hops
flavor that originated in the City of Pilsen in Czechoslovakia and became
famous in the Middle Ages. (Webster's Third New International Dictionary of
the English Language, Unabridged. Edited by Philip Babcock Gove.
Springfield, Mass.: G & C Merriam Co., [c] 1976, page 1716.) "Pilsen" is a
"primarily geographically descriptive word," (Sec. 4, subpar. [e] Republic Act
No. 166, as inserted by Sec. 2 of R.A. No. 638) hence, non-registerable and
not appropriable by any beer manufacturer. The Trademark Law provides:
Sec. 4. . . .. The owner of trade-mark, trade-name or service-mark used to
distinguish his goods, business or services from the goods, business or
services of others shall have the right to register the same [on the principal
register], unless it:
xxx xxx xxx
(e) Consists of a mark or trade-name which, when applied to or used in
connection with the goods, business or services of the applicant is merely
descriptive or deceptively misdescriptive of them, or when applied to or used
in connection with the goods, business or services of the applicant is
primarily geographically descriptive or deceptively misdescriptive of them, or
is primarily merely a surname." (Emphasis supplied.)
The words "pale pilsen" may not be appropriated by SMC for its exclusive
use even if they are part of its registered trademark: SAN MIGUEL PALE
PILSEN, any more than such descriptive words as "evaporated milk,"
"tomato ketchup," "cheddar cheese," "corn flakes" and "cooking oil" may be
appropriated by any single manufacturer of these food products, for no other
reason than that he was the first to use them in his registered trademark. In
Masso Hermanos, S.A. vs. Director of Patents, 94 Phil. 136, 139 (1953), it
was held that a dealer in shoes cannot register "Leather Shoes" as his
trademark because that would be merely descriptive and it would be unjust
to deprive other dealers in leather shoes of the right to use the same words
with reference to their merchandise. No one may appropriate generic or
descriptive words. They belong to the public domain (Ong Ai Gui vs. Director
of Patents, 96 Phil. 673, 676 [1955]):
A word or a combination of words which is merely descriptive of an article of
trade, or of its composition, characteristics, or qualities, cannot be
appropriated and protected as a trademark to the exclusion of its use by
others. . . . inasmuch as all persons have an equal right to produce and vend
similar articles, they also have the right to describe them properly and to use
any appropriate language or words for that purpose, and no person can
appropriate to himself exclusively any word or expression, properly
descriptive of the article, its qualities, ingredients or characteristics, and thus
limit other persons in the use of language appropriate to the description of
their manufactures, the right to the use of such language being common to
all. This rule excluding descriptive terms has also been held to apply to
trade-names. As to whether words employed fall within this prohibition, it is
said that the true test is not whether they are exhaustively descriptive of the
article designated, but whether in themselves, and as they are commonly
used by those who understand their meaning, they are reasonably indicative
and descriptive of the thing intended. If they are thus descriptive, and not
arbitrary, they cannot be appropriated from general use and become the
exclusive property of anyone. (52 Am. Jur. 542-543.)
. . . . Others may use the same or similar descriptive word in connection with
their own wares, provided they take proper steps to prevent the public being
deceived. (Richmond Remedies Co. vs. Dr. Miles Medical Co., 16 E. [2d]
598.)
. . . . A descriptive word may be admittedly distinctive, especially if the user is
the first creator of the article. It will, however, be denied protection, not
because it lacks distinctiveness, but rather because others are equally
20
entitled to its use. (2 Callman. Unfair Competition and Trademarks, pp. 869-
870.)" (Emphasis supplied.)
The circumstance that the manufacturer of BEER PALE PILSEN, Asia
Brewery Incorporated, has printed its name all over the bottle of its beer
product: on the label, on the back of the bottle, as well as on the bottle cap,
disproves SMC's charge that ABI dishonestly and fraudulently intends to
palm off its BEER PALE PILSEN as SMC's product. In view of the visible
differences between the two products, the Court believes it is quite unlikely
that a customer of average intelligence would mistake a bottle of BEER
PALE PILSEN for SAN MIGUEL PALE PILSEN.
The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN is
bottled in amber-colored steinie bottles of 320 ml. capacity and is also
advertised in print, broadcast, and television media, does not necessarily
constitute unfair competition.
Unfair competition is the employment of deception or any other means
contrary to good faith by which a person shall pass off the goods
manufactured by him or in which he deals, or his business, or services, for
those of another who has already established goodwill for his similar goods,
business or services, or any acts calculated to produce the same result.
(Sec. 29, Republic Act No. 166, as amended.) The law further enumerates
the more common ways of committing unfair competition, thus:
Sec. 29. . . .
In particular, and without in any way limiting the scope of unfair competition,
the following shall be deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as to the
goods themselves or in the wrapping of the packages in which they are
contained, or the devices or words thereon, or in any other feature of their
appearance, which would be likely to influence purchasers to believe that the
goods offered are those of a manufacturer or dealer other than the actual
manufacturer or dealer, or who otherwise clothes the goods with such
appearance as shall deceive the public and defraud another of his legitimate
trade, or any subsequent vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose.
(b) Any person who by any artifice, or device, or who employs any
other means calculated to induce the false belief that such person is offering
the services of another who has identified such services in the mind of the
public; or
(c) Any person who shall make any false statement in the course of
trade or who shall commit any other act contrary to good faith of a nature
calculated to discredit the goods, business or services of another.
In this case, the question to be determined is whether ABI is using a name or
mark for its beer that has previously come to designate SMC's beer, or
whether ABI is passing off its BEER PALE PILSEN as SMC's SAN MIGUEL
PALE PILSEN.
. . ..The universal test question is whether the public is likely to be deceived.
Nothing less than conduct tending to pass off one man's goods or business
as that of another will constitute unfair competition. Actual or probable
deception and confusion on the part of the customers by reason of
defendant's practices must always appear. (Shell Co., of the Philippines, Ltd.
vs. Insular Petroleum Refining Co. Ltd. et al., 120 Phil. 434, 439.)
The use of ABI of the steinie bottle, similar but not identical to the SAN
MIGUEL PALE PILSEN bottle, is not unlawful. As pointed out by ABI's
counsel, SMC did not invent but merely borrowed the steinie bottle from
abroad and it claims neither patent nor trademark protection for that bottle
shape and design. (See rollo, page 55.) The Cerveza Especial and the Efes
Pale Pilsen use the "steinie" bottle. (See Exhibits 57-D, 57-E.) The trial court
found no infringement of SMC's bottle —
The court agrees with defendant that there is no infringement of plaintiff's
bottle, firstly, because according to plaintiff's witness Deogracias Villadolid, it
is a standard type of bottle called steinie, and to witness Jose Antonio
Garcia, it is not a San Miguel Corporation design but a design originally
developed in the United States by the Glass Container Manufacturer's
Institute and therefore lacks exclusivity. Secondly, the shape was never
registered as a trademark. Exhibit "C" is not a registration of a beer bottle
design required under Rep. Act 165 but the registration of the name and
other marks of ownership stamped on containers as required by Rep. Act
623. Thirdly, the neck of defendant's bottle is much larger and has a distinct
bulge in its uppermost part. (p. 186, Rollo.)
21
The petitioner's contention that bottle size, shape and color may not be the
exclusive property of any one beer manufacturer is well taken. SMC's being
the first to use the steinie bottle does not give SMC a vested right to use it to
the exclusion of everyone else. Being of functional or common use, and not
the exclusive invention of any one, it is available to all who might need to use
it within the industry. Nobody can acquire any exclusive right to market
articles supplying simple human needs in containers or wrappers of the
general form, size and character commonly and immediately used in
marketing such articles (Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190, 194-195.)
. . . protection against imitation should be properly confined to nonfunctional
features. Even if purely functional elements are slavishly copied, the
resemblance will not support an action for unfair competition, and the first
user cannot claim secondary meaning protection. Nor can the first user
predicate his claim to protection on the argument that his business was
established in reliance on any such unpatented nonfunctional feature, even
"at large expenditure of money." (Callman Unfair Competition, Trademarks
and Monopolies, Sec. 19.33 [4th Ed.].) (Petition for Review, p. 28.)
ABI does not use SMC's steinie bottle. Neither did ABI copy it. ABI makes its
own steinie bottle which has a fat bulging neck to differentiate it from SMC's
bottle. The amber color is a functional feature of the beer bottle. As pointed
out by ABI, all bottled beer produced in the Philippines is contained and sold
in amber-colored bottles because amber is the most effective color in
preventing transmission of light and provides the maximum protection to
beer. As was ruled in California Crushed Fruit Corporation vs. Taylor B. and
Candy Co., 38 F2d 885, a merchant cannot be enjoined from using a type or
color of bottle where the same has the useful purpose of protecting the
contents from the deleterious effects of light rays. Moreover, no one may
have a monopoly of any color. Not only beer, but most medicines, whether in
liquid or tablet form, are sold in amber-colored bottles.
That the ABI bottle has a 320 ml. capacity is not due to a desire to imitate
SMC's bottle because that bottle capacity is the standard prescribed under
Metrication Circular No. 778, dated 4 December 1979, of the Department of
Trade, Metric System Board.
With regard to the white label of both beer bottles, ABI explained that it used
the color white for its label because white presents the strongest contrast to
the amber color of ABI's bottle; it is also the most economical to use on
labels, and the easiest to "bake" in the furnace (p. 16, TSN of September 20,
1988). No one can have a monopoly of the color amber for bottles, nor of
white for labels, nor of the rectangular shape which is the usual configuration
of labels. Needless to say, the shape of the bottle and of the label is
unimportant. What is all important is the name of the product written on the
label of the bottle for that is how one beer may be distinguished form the
others.
In Dy Buncio v. Tan Tiao Bok, 42 Phil. 190, 196-197, where two competing
tea products were both labelled as Formosan tea, both sold in 5-ounce
packages made of ordinary wrapping paper of conventional color, both with
labels containing designs drawn in green ink and Chinese characters written
in red ink, one label showing a double-decked jar in the center, the other, a
flower pot, this court found that the resemblances between the designs were
not sufficient to mislead the ordinary intelligent buyer, hence, there was no
unfair competition. The Court held:
. . . . In order that there may be deception of the buying public in the sense
necessary to constitute unfair competition, it is necessary to suppose a
public accustomed to buy, and therefore to some extent familiar with, the
goods in question. The test of fraudulent simulation is to be found in the
likelihood of the deception of persons in some measure acquainted with an
established design and desirous of purchasing the commodity with which
that design has been associated. The test is not found in the deception, or
possibility of the deception, of the person who knows nothing about the
design which has been counterfeited, and who must be indifferent as
between that and the other. The simulation, in order to be objectionable,
must be such as appears likely to mislead the ordinarily intelligent buyer who
has a need to supply and is familiar with the article that he seeks to
purchase.
The main thrust of SMC's complaint if not infringement of its trademark, but
unfair competition arising form the allegedly "confusing similarity" in the
general appearance or trade dress of ABI's BEER PALE PILSEN beside
SMC's SAN MIGUEL PALE PILSEN (p. 209, Rollo)
SMC claims that the "trade dress" of BEER PALE PILSEN is "confusingly
similar" to its SAN MIGUEL PALE PILSEN because both are bottled in 320
ml. steinie type, amber-colored bottles with white rectangular labels.
However, when as in this case, the names of the competing products are
clearly different and their respective sources are prominently printed on the
22
label and on other parts of the bottle, mere similarity in the shape and size of
the container and label, does not constitute unfair competition. The steinie
bottle is a standard bottle for beer and is universally used. SMC did not
invent it nor patent it. The fact that SMC's bottle is registered under R.A. No.
623 (as amended by RA 5700, An Act to Regulate the Use of Duly Stamped
or Marked Bottles, Boxes, Casks, Kegs, Barrels and Other Similar
Containers) simply prohibits manufacturers of other foodstuffs from the
unauthorized use of SMC's bottles by refilling these with their products. It
was not uncommon then for products such as patis (fish sauce) and toyo
(soy sauce) to be sold in recycled SAN MIGUEL PALE PILSEN bottles.
Registration of SMC's beer bottles did not give SMC a patent on the steinie
or on bottles of similar size, shape or color.
Most containers are standardized because they are usually made by the
same manufacturer. Milk, whether in powdered or liquid form, is sold in
uniform tin cans. The same can be said of the standard ketchup or vinegar
bottle with its familiar elongated neck. Many other grocery items such as
coffee, mayonnaise, pickles and peanut butter are sold in standard glass
jars. The manufacturers of these foodstuffs have equal right to use these
standards tins, bottles and jars for their products. Only their respective labels
distinguish them from each other. Just as no milk producer may sue the
others for unfair competition because they sell their milk in the same size
and shape of milk can which he uses, neither may SMC claim unfair
competition arising from the fact that ABI's BEER PALE PILSEN is sold, like
SMC's SAN MIGUEL PALE PILSEN in amber steinie bottles.
The record does not bear out SMC's apprehension that BEER PALE PILSEN
is being passed off as SAN MIGUEL PALE PILSEN. This is unlikely to
happen for consumers or buyers of beer generally order their beer by brand.
As pointed out by ABI's counsel, in supermarkets and tiendas, beer is
ordered by brand, and the customer surrenders his empty replacement
bottles or pays a deposit to guarantee the return of the empties. If his
empties are SAN MIGUEL PALE PILSEN, he will get SAN MIGUEL PALE
PILSEN as replacement. In sari-sari stores, beer is also ordered from the
tindera by brand. The same is true in restaurants, pubs and beer gardens —
beer is ordered from the waiters by brand. (Op. cit. page 50.)
Considering further that SAN MIGUEL PALE PILSEN has virtually
monopolized the domestic beer market for the past hundred years, those
who have been drinking no other beer but SAN MIGUEL PALE PILSEN
these many years certainly know their beer too well to be deceived by a
newcomer in the market. If they gravitate to ABI's cheaper beer, it will not be
because they are confused or deceived, but because they find the
competing product to their taste.
Our decision in this case will not diminish our ruling in "Del Monte
Corporation vs. Court of Appeals and Sunshine Sauce Manufacturing
Industries," 181 SCRA 410, 419, 3 that:
. . . to determine whether a trademark has been infringed, we must consider
the mark as a whole and not as dissected. If the buyer is deceived, it is
attributable to the marks as a totality, not usually to any part of it.
That ruling may not apply to all kinds of products. The Court itself cautioned
that in resolving cases of infringement and unfair competition, the courts
should "take into consideration several factors which would affect its
conclusion, to wit: the age, training and education of the usual purchaser, the
nature and cost of the article, whether the article is bought for immediate
consumption and also the conditions under which it is usually purchased"
(181 SCRA 410, 418-419).
The Del Monte case involved catsup, a common household item which is
bought off the store shelves by housewives and house help who, if they are
illiterate and cannot identify the product by name or brand, would very likely
identify it by mere recollection of its appearance. Since the competitor,
Sunshine Sauce Mfg. Industries, not only used recycled Del Monte bottles
for its catsup (despite the warning embossed on the bottles: "Del Monte
Corporation. Not to be refilled.") but also used labels which were "a colorable
imitation" of Del Monte's label, we held that there was infringement of Del
Monte's trademark and unfair competition by Sunshine.
Our ruling in Del Monte would not apply to beer which is not usually picked
from a store shelf but ordered by brand by the beer drinker himself from the
storekeeper or waiter in a pub or restaurant.
Moreover, SMC's brand or trademark: "SAN MIGUEL PALE PILSEN" is not
infringed by ABI's mark: "BEER NA BEER" or "BEER PALE PILSEN." ABI
makes its own bottle with a bulging neck to differentiate it from SMC's bottle,
and prints ABI's name in three (3) places on said bottle (front, back and
bottle cap) to prove that it has no intention to pass of its "BEER" as "SAN
MIGUEL."
23
There is no confusing similarity between the competing beers for the name
of one is "SAN MIGUEL" while the competitor is plain "BEER" and the points
of dissimilarity between the two outnumber their points of similarity.
Petitioner ABI has neither infringed SMC's trademark nor committed unfair
competition with the latter's SAN MIGUEL PALE PILSEN product. While its
BEER PALE PILSEN admittedly competes with the latter in the open market,
that competition is neither unfair nor fraudulent. Hence, we must deny SMC's
prayer to suppress it.
WHEREFORE, finding the petition for review meritorious, the same is hereby
granted. The decision and resolution of the Court of Appeals in CA-G.R. CV
No. 28104 are hereby set aside and that of the trial court is REINSTATED
and AFFIRMED. Costs against the private respondent.
SO ORDERED.
Narvasa, C.J., Bidin, Regalado, Romero, Nocon, Bellosillo and Melo, JJ.,
concur.
Feliciano, J., took no part.
Separate Opinions
CRUZ, J., dissenting:
The present ponencia stresses the specific similarities and differences of the
two products to support the conclusion that there is no infringement of trade
marks or unfair competition. That test was rejected in my own ponencia in
Del Monte Corporation vs. Court of Appeals, 181 SCRA 410, concurred in by
Justices Narvasa, Gancayco, Griño-Aquino and Medialdea, where we
declared:
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 preoccupied 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. 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
labels when set aside 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.
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. The buyer having in mind the mark/label of the respondent must
rely upon his memory of the petitioner's mark. 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. The court therefore should be guided by its first impression,
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.
24

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. 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. 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.
For the above reasons, and the other arguments stated in Del Monte, I
dissent.
# Separate Opinions
CRUZ, J., dissenting:
The present ponencia stresses the specific similarities and differences of the
two products to support the conclusion that there is no infringement of trade
marks or unfair competition. That test was rejected in my own ponencia in
Del Monte Corporation vs. Court of Appeals, 181 SCRA 410, concurred in by
Justices Narvasa, Gancayco, Griño-Aquino and Medialdea, where we
declared:
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 preoccupied 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. 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
labels when set aside 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.
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. The buyer having in mind the mark/label of the respondent must
rely upon his memory of the petitioner's mark. 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. The court therefore should be guided by its first impression,
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.
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. 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. 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.
For the above reasons, and the other arguments stated in Del Monte, I
dissent.
G.R. No. 101897. March 5, 1993.
25
LYCEUM OF THE PHILIPPINES, INC., petitioner, vs. COURT OF
APPEALS, LYCEUM OF APARRI, LYCEUM OF CABAGAN, LYCEUM OF
CAMALANIUGAN, INC., LYCEUM OF LALLO, INC., LYCEUM OF TUAO,
INC., BUHI LYCEUM, CENTRAL LYCEUM OF CATANDUANES, LYCEUM
OF SOUTHERN PHILIPPINES, LYCEUM OF EASTERN MINDANAO, INC.
and WESTERN PANGASINAN LYCEUM, INC., respondents.
Quisumbing, Torres & Evangelista Law Offices and Ambrosio Padilla for
petitioner.
Antonio M. Nuyles and Purungan, Chato, Chato, Tarriela & Tan Law Offices
for respondents.
Froilan Siobal for Western Pangasinan Lyceum.
SYLLABUS
1. CORPORATION LAW; CORPORATE NAMES; REGISTRATION
OF PROPOSED NAME WHICH IS IDENTICAL OR CONFUSINGLY
SIMILAR TO THAT OF ANY EXISTING CORPORATION, PROHIBITED;
CONFUSION AND DECEPTION EFFECTIVELY PRECLUDED BY THE
APPENDING OF GEOGRAPHIC NAMES TO THE WORD "LYCEUM". —
The Articles of Incorporation of a corporation must, among other things, set
out the name of the corporation. Section 18 of the Corporation Code
establishes a restrictive rule insofar as corporate names are concerned:
"Section 18. Corporate name. — No corporate name may be allowed by the
Securities an Exchange Commission if the proposed name is identical or
deceptively or confusingly similar to that of any existing corporation or to any
other name already protected by law or is patently deceptive, confusing or
contrary to existing laws. When a change in the corporate name is approved,
the Commission shall issue an amended certificate of incorporation under
the amended name." The policy underlying the prohibition in Section 18
against the registration of a corporate name which is "identical or deceptively
or confusingly similar" to that of any existing corporation or which is "patently
deceptive" or "patently confusing" or "contrary to existing laws," is the
avoidance of fraud upon the public which would have occasion to deal with
the entity concerned, the evasion of legal obligations and duties, and the
reduction of difficulties of administration and supervision over corporations.
We do not consider that the corporate names of private respondent
institutions are "identical with, or deceptively or confusingly similar" to that of
the petitioner institution. True enough, the corporate names of private
respondent entities all carry the word "Lyceum" but confusion and deception
are effectively precluded by the appending of geographic names to the word
"Lyceum." Thus, we do not believe that the "Lyceum of Aparri" can be
mistaken by the general public for the Lyceum of the Philippines, or that the
"Lyceum of Camalaniugan" would be confused with the Lyceum of the
Philippines.
2. ID.; ID.; DOCTRINE OF SECONDARY MEANING; USE OF WORD
"LYCEUM," NOT ATTENDED WITH EXCLUSIVITY. — It is claimed,
however, by petitioner that the word "Lyceum" has acquired a secondary
meaning in relation to petitioner with the result that word, although originally
a generic, has become appropriable by petitioner to the exclusion of other
institutions like private respondents herein. The doctrine of secondary
meaning originated in the field of trademark law. Its application has,
however, been extended to corporate names sine the right to use a
corporate name to the exclusion of others is based upon the same principle
which underlies the right to use a particular trademark or tradename. In
Philippine Nut Industry, Inc. v. Standard Brands, Inc., the doctrine of
secondary meaning was elaborated in the following terms: " . . . a word or
phrase originally incapable of exclusive appropriation with reference to an
article on the market, because geographically or otherwise descriptive, might
nevertheless have been used so long and so exclusively by one producer
with reference to his article that, in that trade and to that branch of the
purchasing public, the word or phrase has come to mean that the article was
his product." The question which arises, therefore, is whether or not the use
by petitioner of "Lyceum" in its corporate name has been for such length of
time and with such exclusivity as to have become associated or identified
with the petitioner institution in the mind of the general public (or at least that
portion of the general public which has to do with schools). The Court of
Appeals recognized this issue and answered it in the negative: "Under the
doctrine of secondary meaning, a word or phrase originally incapable of
exclusive appropriation with reference to an article in the market, because
geographical or otherwise descriptive might nevertheless have been used so
long and so exclusively by one producer with reference to this article that, in
that trade and to that group of the purchasing public, the word or phrase has
come to mean that the article was his produce (Ana Ang vs. Toribio Teodoro,
74 Phil. 56). This circumstance has been referred to as the distinctiveness
into which the name or phrase has evolved through the substantial and
exclusive use of the same for a considerable period of time. . . . No evidence
was ever presented in the hearing before the Commission which sufficiently
proved that the word 'Lyceum' has indeed acquired secondary meaning in
26
favor of the appellant. If there was any of this kind, the same tend to prove September 1950, it used the corporate name Lyceum of the Philippines, Inc.
only that the appellant had been using the disputed word for a long period of and has used that name ever since.
time. . . . In other words, while the appellant may have proved that it had
been using the word 'Lyceum' for a long period of time, this fact alone did not On 24 February 1984, petitioner instituted proceedings before the SEC to
amount to mean that the said word had acquired secondary meaning in its compel the private respondents, which are also educational institutions, to
favor because the appellant failed to prove that it had been using the same delete the word "Lyceum" from their corporate names and permanently to
word all by itself to the exclusion of others. More so, there was no evidence enjoin them from using "Lyceum" as part of their respective names.
presented to prove that confusion will surely arise if the same word were to
be used by other educational institutions. Consequently, the allegations of Some of the private respondents actively participated in the proceedings
the appellant in its first two assigned errors must necessarily fail." We agree before the SEC. These are the following, the dates of their original SEC
with the Court of Appeals. The number alone of the private respondents in registration being set out below opposite their respective names:
the case at bar suggests strongly that petitioner's use of the word "Lyceum"
has not been attended with the exclusivity essential for applicability of the Western Pangasinan Lyceum — 27 October 1950
doctrine of secondary meaning. Petitioner's use of the word "Lyceum" was
not exclusive but was in truth shared with the Western Pangasinan Lyceum Lyceum of Cabagan — 31 October 1962
and a little later with other private respondent institutions which registered
with the SEC using "Lyceum" as part of their corporation names. There may Lyceum of Lallo, Inc. — 26 March 1972
well be other schools using Lyceum or Liceo in their names, but not
registered with the SEC because they have not adopted the corporate form Lyceum of Aparri — 28 March 1972
of organization.
Lyceum of Tuao, Inc. — 28 March 1972
3. ID.; ID.; MUST BE EVALUATED IN THEIR ENTIRETY TO
DETERMINE WHETHER THEY ARE CONFUSINGLY OR DECEPTIVELY Lyceum of Camalaniugan — 28 March 1972
SIMILAR TO ANOTHER CORPORATE ENTITY'S NAME. — petitioner
institution is not entitled to a legally enforceable exclusive right to use the The following private respondents were declared in default for failure to file
word "Lyceum" in its corporate name and that other institutions may use an answer despite service of summons:
"Lyceum" as part of their corporate names. To determine whether a given
corporate name is "identical" or "confusingly or deceptively similar" with Buhi Lyceum;
another entity's corporate name, it is not enough to ascertain the presence of
"Lyceum" or "Liceo" in both names. One must evaluate corporate names in Central Lyceum of Catanduanes;
their entirety and when the name of petitioner is juxtaposed with the names
of private respondents, they are not reasonably regarded as "identical" or Lyceum of Eastern Mindanao, Inc.; and
"confusingly or deceptively similar" with each other.
Lyceum of Southern Philippines
DECISION
Petitioner's original complaint before the SEC had included three (3) other
FELICIANO, J p: entities:

Petitioner is an educational institution duly registered with the Securities and 1. The Lyceum of Malacanay;
Exchange Commission ("SEC"). When it first registered with the SEC on 21
2. The Lyceum of Marbel; and

27

3. The Lyceum of Araullo
The complaint was later withdrawn insofar as concerned the Lyceum of
Malacanay and the Lyceum of Marbel, for failure to serve summons upon
these two (2) entities. The case against the Liceum of Araullo was dismissed
when that school motu proprio change its corporate name to "Pamantasan
ng Araullo."
The background of the case at bar needs some recounting. Petitioner had
sometime before commenced in the SEC a proceeding (SEC-Case No.
1241) against the Lyceum of Baguio, Inc. to require it to change its corporate
name and to adopt another name not "similar [to] or identical" with that of
petitioner. In an Order dated 20 April 1977, Associate Commissioner Julio
Sulit held that the corporate name of petitioner and that of the Lyceum of
Baguio, Inc. were substantially identical because of the presence of a
"dominant" word, i.e., "Lyceum," the name of the geographical location of the
campus being the only word which distinguished one from the other
corporate name. The SEC also noted that petitioner had registered as a
corporation ahead of the Lyceum of Baguio, Inc. in point of time, 1 and
ordered the latter to change its name to another name "not similar or
identical [with]" the names of previously registered entities.
The Lyceum of Baguio, Inc. assailed the Order of the SEC before the
Supreme Court in a case docketed as G.R. No. L-46595. In a Minute
Resolution dated 14 September 1977, the Court denied the Petition for
Review for lack of merit. Entry of judgment in that case was made on 21
October 1977. 2
Armed with the Resolution of this Court in G.R. No. L-46595, petitioner then
wrote all the educational institutions it could find using the word "Lyceum" as
part of their corporate name, and advised them to discontinue such use of
"Lyceum." When, with the passage of time, it became clear that this recourse
had failed, petitioner instituted before the SEC SEC-Case No. 2579 to
enforce what petitioner claims as its proprietary right to the word "Lyceum."
The SEC hearing officer rendered a decision sustaining petitioner's claim to
an exclusive right to use the word "Lyceum." The hearing officer relied upon
the SEC ruling in the Lyceum of Baguio, Inc. case (SEC-Case No. 1241) and
held that the word "Lyceum" was capable of appropriation and that petitioner
had acquired an enforceable exclusive right to the use of that word.
On appeal, however, by private respondents to the SEC En Banc, the
decision of the hearing officer was reversed and set aside. The SEC En
Banc did not consider the word "Lyceum" to have become so identified with
petitioner as to render use thereof by other institutions as productive of
confusion about the identity of the schools concerned in the mind of the
general public. Unlike its hearing officer, the SEC En Banc held that the
attaching of geographical names to the word "Lyceum" served sufficiently to
distinguish the schools from one another, especially in view of the fact that
the campuses of petitioner and those of the private respondents were
physically quite remote from each other. 3
Petitioner then went on appeal to the Court of Appeals. In its Decision dated
28 June 1991, however, the Court of Appeals affirmed the questioned Orders
of the SEC En Banc. 4 Petitioner filed a motion for reconsideration, without
success.
Before this Court, petitioner asserts that the Court of Appeals committed the
following errors:
1. The Court of Appeals erred in holding that the Resolution of the
Supreme Court in G.R. No. L-46595 did not constitute stare decisis as to
apply to this case and in not holding that said Resolution bound subsequent
determinations on the right to exclusive use of the word Lyceum.
2. The Court of Appeals erred in holding that respondent Western
Pangasinan Lyceum, Inc. was incorporated earlier than petitioner.
3. The Court of Appeals erred in holding that the word Lyceum has not
acquired a secondary meaning in favor of petitioner.
4. The Court of Appeals erred in holding that Lyceum as a generic
word cannot be appropriated by the petitioner to the exclusion of others. 5
We will consider all the foregoing ascribed errors, though not necessarily
seriatim. We begin by noting that the Resolution of the Court in G.R. No. L-
46595 does not, of course, constitute res adjudicata in respect of the case at
bar, since there is no identity of parties. Neither is stare decisis pertinent, if
only because the SEC En Banc itself has re-examined Associate
Commissioner Sulit's ruling in the Lyceum of Baguio case. The Minute
Resolution of the Court in G.R. No. L-46595 was not a reasoned adoption of
the Sulit ruling.
28

The Articles of Incorporation of a corporation must, among other things, set
out the name of the corporation. 6 Section 18 of the Corporation Code
establishes a restrictive rule insofar as corporate names are concerned:
"SECTION 18. Corporate name. — No corporate name may be allowed
by the Securities an Exchange Commission if the proposed name is identical
or deceptively or confusingly similar to that of any existing corporation or to
any other name already protected by law or is patently deceptive, confusing
or contrary to existing laws. When a change in the corporate name is
approved, the Commission shall issue an amended certificate of
incorporation under the amended name." (Emphasis supplied)
The policy underlying the prohibition in Section 18 against the registration of
a corporate name which is "identical or deceptively or confusingly similar" to
that of any existing corporation or which is "patently deceptive" or "patently
confusing" or "contrary to existing laws," is the avoidance of fraud upon the
public which would have occasion to deal with the entity concerned, the
evasion of legal obligations and duties, and the reduction of difficulties of
administration and supervision over corporations. 7
We do not consider that the corporate names of private respondent
institutions are "identical with, or deceptively or confusingly similar" to that of
the petitioner institution. True enough, the corporate names of private
respondent entities all carry the word "Lyceum" but confusion and deception
are effectively precluded by the appending of geographic names to the word
"Lyceum." Thus, we do not believe that the "Lyceum of Aparri" can be
mistaken by the general public for the Lyceum of the Philippines, or that the
"Lyceum of Camalaniugan" would be confused with the Lyceum of the
Philippines.
Etymologically, the word "Lyceum" is the Latin word for the Greek lykeion
which in turn referred to a locality on the river Ilissius in ancient Athens
"comprising an enclosure dedicated to Apollo and adorned with fountains
and buildings erected by Pisistratus, Pericles and Lycurgus frequented by
the youth for exercise and by the philosopher Aristotle and his followers for
teaching." 8 In time, the word "Lyceum" became associated with schools and
other institutions providing public lectures and concerts and public
discussions. Thus today, the word "Lyceum" generally refers to a school or
an institution of learning. While the Latin word "lyceum" has been
incorporated into the English language, the word is also found in Spanish
(liceo) and in French (lycee). As the Court of Appeals noted in its Decision,
Roman Catholic schools frequently use the term; e.g., "Liceo de Manila,"
"Liceo de Baleno" (in Baleno, Masbate), "Liceo de Masbate," "Liceo de
Albay." 9 "Lyceum" is in fact as generic in character as the word "university."
In the name of the petitioner, "Lyceum" appears to be a substitute for
"university;" in other places, however, "Lyceum," or "Liceo" or "Lycee"
frequently denotes a secondary school or a college. It may be (though this is
a question of fact which we need not resolve) that the use of the word
"Lyceum" may not yet be as widespread as the use of "university," but it is
clear that a not inconsiderable number of educational institutions have
adopted "Lyceum" or "Liceo" as part of their corporate names. Since
"Lyceum" or "Liceo" denotes a school or institution of learning, it is not
unnatural to use this word to designate an entity which is organized and
operating as an educational institution.
It is claimed, however, by petitioner that the word "Lyceum" has acquired a
secondary meaning in relation to petitioner with the result that that word,
although originally a generic, has become appropriable by petitioner to the
exclusion of other institutions like private respondents herein.
The doctrine of secondary meaning originated in the field of trademark law.
Its application has, however, been extended to corporate names sine the
right to use a corporate name to the exclusion of others is based upon the
same principle which underlies the right to use a particular trademark or
tradename. 10 In Philippine Nut Industry, Inc. v. Standard Brands, Inc., 11
the doctrine of secondary meaning was elaborated in the following terms:
" . . . a word or phrase originally incapable of exclusive appropriation with
reference to an article on the market, because geographically or otherwise
descriptive, might nevertheless have been used so long and so exclusively
by one producer with reference to his article that, in that trade and to that
branch of the purchasing public, the word or phrase has come to mean that
the article was his product." 12
The question which arises, therefore, is whether or not the use by petitioner
of "Lyceum" in its corporate name has been for such length of time and with
such exclusivity as to have become associated or identified with the
petitioner institution in the mind of the general public (or at least that portion
of the general public which has to do with schools). The Court of Appeals
recognized this issue and answered it in the negative:
29
"Under the doctrine of secondary meaning, a word or phrase originally
incapable of exclusive appropriation with reference to an article in the
market, because geographical or otherwise descriptive might nevertheless
have been used so long and so exclusively by one producer with reference
to this article that, in that trade and to that group of the purchasing public, the
word or phrase has come to mean that the article was his produce (Ana Ang
vs. Toribio Teodoro, 74 Phil. 56). This circumstance has been referred to as
the distinctiveness into which the name or phrase has evolved through the
substantial and exclusive use of the same for a considerable period of time.
Consequently, the same doctrine or principle cannot be made to apply where
the evidence did not prove that the business (of the plaintiff) has continued
for so long a time that it has become of consequence and acquired a good
will of considerable value such that its articles and produce have acquired a
well-known reputation, and confusion will result by the use of the disputed
name (by the defendant) (Ang Si Heng vs. Wellington Department Store,
Inc., 92 Phil. 448).
With the foregoing as a yardstick, [we] believe the appellant failed to satisfy
the aforementioned requisites. No evidence was ever presented in the
hearing before the Commission which sufficiently proved that the word
'Lyceum' has indeed acquired secondary meaning in favor of the appellant. If
there was any of this kind, the same tend to prove only that the appellant
had been using the disputed word for a long period of time. Nevertheless, its
(appellant) exclusive use of the word (Lyceum) was never established or
proven as in fact the evidence tend to convey that the cross-claimant was
already using the word 'Lyceum' seventeen (17) years prior to the date the
appellant started using the same word in its corporate name. Furthermore,
educational institutions of the Roman Catholic Church had been using the
same or similar word like 'Liceo de Manila,' 'Liceo de Baleno' (in Baleno,
Masbate), 'Liceo de Masbate,' 'Liceo de Albay' long before appellant started
using the word 'Lyceum'. The appellant also failed to prove that the word
'Lyceum' has become so identified with its educational institution that
confusion will surely arise in the minds of the public if the same word were to
be used by other educational institutions.
In other words, while the appellant may have proved that it had been using
the word 'Lyceum' for a long period of time, this fact alone did not amount to
mean that the said word had acquired secondary meaning in its favor
because the appellant failed to prove that it had been using the same word
all by itself to the exclusion of others. More so, there was no evidence
presented to prove that confusion will surely arise if the same word were to
be used by other educational institutions. Consequently, the allegations of
the appellant in its first two assigned errors must necessarily fail." 13
(Underscoring partly in the original and partly supplied)
We agree with the Court of Appeals. The number alone of the private
respondents in the case at bar suggests strongly that petitioner's use of the
word "Lyceum" has not been attended with the exclusivity essential for
applicability of the doctrine of secondary meaning. It may be noted also that
at least one of the private respondents, i.e., the Western Pangasinan
Lyceum, Inc., used the term "Lyceum" seventeen (17) years before the
petitioner registered its own corporate name with the SEC and began using
the word "Lyceum." It follows that if any institution had acquired an exclusive
right to the word "Lyceum," that institution would have been the Western
Pangasinan Lyceum, Inc. rather than the petitioner institution.
In this connection, petitioner argues that because the Western Pangasinan
Lyceum, Inc. failed to reconstruct its records before the SEC in accordance
with the provisions of R.A. No. 62, which records had been destroyed during
World War II, Western Pangasinan Lyceum should be deemed to have lost
all rights it may have acquired by virtue of its past registration. It might be
noted that the Western Pangasinan Lyceum, Inc. registered with the SEC
soon after petitioner had filed its own registration on 21 September 1950.
Whether or not Western Pangasinan Lyceum, Inc. must be deemed to have
lost its rights under its original 1933 registration, appears to us to be quite
secondary in importance; we refer to this earlier registration simply to
underscore the fact that petitioner's use of the word "Lyceum" was neither
the first use of that term in the Philippines nor an exclusive use thereof.
Petitioner's use of the word "Lyceum" was not exclusive but was in truth
shared with the Western Pangasinan Lyceum and a little later with other
private respondent institutions which registered with the SEC using "Lyceum"
as part of their corporation names. There may well be other schools using
Lyceum or Liceo in their names, but not registered with the SEC because
they have not adopted the corporate form of organization.
We conclude and so hold that petitioner institution is not entitled to a legally
enforceable exclusive right to use the word "Lyceum" in its corporate name
and that other institutions may use "Lyceum" as part of their corporate
names. To determine whether a given corporate name is "identical" or
"confusingly or deceptively similar" with another entity's corporate name, it is
not enough to ascertain the presence of "Lyceum" or "Liceo" in both names.
One must evaluate corporate names in their entirety and when the name of
30
petitioner is juxtaposed with the names of private respondents, they are not
reasonably regarded as "identical" or "confusingly or deceptively similar" with
each other.
WHEREFORE, the petitioner having failed to show any reversible error on
the part of the public respondent Court of Appeals, the Petition for Review is
DENIED for lack of merit, and the Decision of the Court of Appeals dated 28
June 1991 is hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.
G.R. No. L-48226 December 14, 1942
ANA L. ANG, petitioner,
vs.
TORIBIO TEODORO, respondent.
Cirilo Lim for petitioner.
Marcial P. Lichauco and Manuel M. Mejia for respondent.
OZAETA, J.:
Petitioner has appealed to this Court by certiorari to reverse the judgment of
the Court of Appeals reversing that of the Court of First Instance of Manila
and directing the Director of Commerce to cancel the registration of the
trade-mark "Ang Tibay" in favor of said petitioner, and perpetually enjoining
the latter from using said trade-mark on goods manufactured and sold by
her.
Respondent Toribio Teodoro, at first in partnership with Juan Katindig and
later as sole proprietor, has continuously used "Ang Tibay," both as a trade-
mark and as a trade-name, in the manufacture and sale of slippers, shoes,
and indoor baseballs since 1910. He formally registered it as trade-mark on
September 29, 1915, and as trade-name on January 3, 1933. The growth of
his business is a thrilling epic of Filipino industry and business capacity.
Starting in an obscure shop in 1910 with a modest capital of P210 but with
tireless industry and unlimited perseverance, Toribio Teodoro, then an
unknown young man making slippers with his own hands but now a
prominent business magnate and manufacturer with a large factory operated
with modern machinery by a great number of employees, has steadily grown
with his business to which he has dedicated the best years of his life and
which he has expanded to such proportions that his gross sales from 1918 to
1938 aggregated P8,787,025.65. His sales in 1937 amounted to
P1,299,343.10 and in 1938, P1,133,165.77. His expenses for advertisement
from 1919 to 1938 aggregated P210,641.56.
Petitioner (defendant below) registered the same trade-mark "Ang Tibay" for
pants and shirts on April 11, 1932, and established a factory for the
manufacture of said articles in the year 1937. In the following year (1938) her
gross sales amounted to P422,682.09. Neither the decision of the trial court
nor that of the Court of Appeals shows how much petitioner has spent or
advertisement. But respondent in his brief says that petitioner "was unable to
prove that she had spent a single centavo advertising "Ang Tibay" shirts and
pants prior to 1938. In that year she advertised the factory which she had
just built and it was when this was brought to the attention of the appellee
that he consulted his attorneys and eventually brought the present suit."
The trial court (Judge Quirico Abeto) presiding absolved the defendant from
the complaint, with costs against the plaintiff, on the grounds that the two
trademarks are dissimilar and are used on different and non-competing
goods; that there had been no exclusive use of the trade-mark by the
plaintiff; and that there had been no fraud in the use of the said trade-mark
by the defendant because the goods on which it is used are essentially
different from those of the plaintiff. The second division of the Court of
Appeals, composed of Justices Bengson, Padilla, Lopez Vito, Tuason, and
Alex Reyes, with Justice Padilla as ponente, reversed that judgment, holding
that by uninterrupted an exclusive use since 191 in the manufacture of
slippers and shoes, respondent's trade-mark has acquired a secondary
meaning; that the goods or articles on which the two trade-marks are used
are similar or belong to the same class; and that the use by petitioner of said
trade-mark constitutes a violation of sections 3 and 7 of Act No. 666. The
defendant Director of Commerce did not appeal from the decision of the
Court of Appeals.
First. Counsel for the petitioner, in a well-written brief, makes a frontal
sledge-hammer attack on the validity of respondent's trade-mark "Ang
Tibay." He contends that the phrase "Ang Tibay" as employed by the
respondent on the articles manufactured by him is a descriptive term
because, "freely translate in English," it means "strong, durable, lasting." He
invokes section 2 of Act No. 666, which provides that words or devices which
related only to the name, quality, or description of the merchandise cannot
be the subject of a trade-mark. He cites among others the case of Baxter vs.
31
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.
32
The question raised by petitioner involve the scope and application of
sections 3,7, 11, 13, and 20 of the Trade-Mark Law (Act No. 666.) Section 3
provides that "any person entitled to the exclusive use of a trade-mark to
designate the origin or ownership of goods he has made or deals in, may
recover damages in a civil actions from any person who has sold goods of a
similar kind, bearing such trade-mark . . . The complaining party . . . may
have a preliminary injunction, . . . and such injunction upon final hearing, if
the complainant's property in the trade-mark and the defendant's violation
thereof shall be fully established, shall be made perpetual, and this
injunction shall be part of the judgment for damages to be rendered in the
same cause." Section 7 provides that any person who, in selling his goods,
shall give them the general appearance of the goods of another either in the
wrapping of the packages, or in the devices or words thereon, or in any other
feature of their appearance, which would be likely to influence purchasers to
believe that the goods offered are those of the complainant, shall be guilty of
unfair competition, and shall be liable to an action for damages and to an
injunction, as in the cases of trade-mark infringement under section 3.
Section 11 requires the applicant for registration of a trade-mark to state,
among others, "the general class of merchandise to which the trade-mark
claimed has been appropriated." Section 13 provides that no alleged trade-
mark or trade name shall be registered which is identical with a registered or
known trade-mark owned by another and appropriate to the same class of
merchandise, or which to nearly resembles another person's lawful trade-
mark or trade-name as to be likely to cause confusion or mistake in the mind
of the public, or to deceive purchasers. And section 2 authorizes the Director
of Commerce to establish classes of merchandise for the purpose of the
registration of trade-marks and to determine the particular description of
articles included in each class; it also provides that "an application for
registration of a trade-mark shall be registered only for one class of articles
and only for the particular description of articles mentioned in said
application."
We have underlined the key words used in the statute: "goods of a similar
kin," "general class of merchandise," "same class of merchandise," "classes
of merchandise," and "class of articles," because it is upon their implications
that the result of the case hinges. These phrases, which refer to the same
thing, have the same meaning as the phrase "merchandise of the same
descriptive properties" used in the statutes and jurisprudence of other
jurisdictions.
The burden of petitioner's argument is that under sections 11 and 20 the
registration by respondent of the trade-mark "Ang Tibay" for shoes and
slippers is no safe-guard against its being used by petitioner for pants and
shirts because the latter do not belong to the same class of merchandise or
articles as the former; that she cannot be held guilty of infringement of trade-
mark under section 3 because respondent's mark is not a valid trade-mark,
nor has it acquired a secondary meaning; that pants and shirts do not
possess the same descriptive properties as shoes and slippers; that neither
can she be held guilty of unfair competition under section 7 because the use
by her of the trade-mark "Ang Tibay" upon pants and shirts is not likely to
mislead the general public as to their origin or ownership; and that there is
now showing that she in unfairly or fraudulently using that mark "Ang Tibay"
against the respondent. If we were interpreting the statute for the first time
and in the first decade of the twentieth century, when it was enacted, and
were to construe it strictly and literally, we might uphold petitioner's
contentions. But law and jurisprudence must keep abreast with the progress
of mankind, and the courts must breathe life into the statutes if they are to
serve their 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
33
Patent Office because they are deemed not to possess the same descriptive
properties, they would, nevertheless, be held by the courts to belong to the
same class if the simultaneous use on them of identical or closely similar
trade-marks would be likely to cause confusion as to the origin, or personal
source, of the second user's goods. They would be considered as not falling
under the same class only if they are so dissimilar or so foreign to each other
as to make it unlikely that the purchaser would think the first user made the
second user's goods.
Such construction of the law is induced by cogent reasons of equity and fair
dealing. The courts have come to realize that there can be unfair competition
or unfair trading even if the goods are non-competing, and that such unfair
trading can cause injury or damage to the first user of a given trade-mark,
first, by prevention of the natural expansion of his business and, second, by
having his business reputation confused with and put at the mercy of the
second user. Then noncompetitive products are sold under the same mark,
the gradual whittling away or dispersion of the identity and hold upon the
public mind of the mark created by its first user, inevitably results. The
original owner is entitled to the preservation of the valuable link between him
and the public that has been created by his ingenuity and the merit of his
wares or services. Experience has demonstrated that when a well-known
trade-mark is adopted by another even for a totally different class of goods, it
is done to get the benefit of the reputation and advertisements of the
originator of said mark, to convey to the public a false impression of some
supposed connection between the manufacturer of the article sold under the
original mark and the new articles being tendered to the public under the
same or similar mark. As trade has developed and commercial changes
have come about, the law of unfair competition has expanded to keep pace
with the times and the element of strict competition in itself has ceased to be
the determining factor. The owner of a trade-mark or trade-name has a
property right in which he is entitled to protection, since there is damage to
him from confusion of reputation or goodwill in the mind of the public as well
as from confusion of goods. The modern trend is to give emphasis to the
unfairness of the acts and to classify and treat the issue as a fraud.
A few of the numerous cases in which the foregoing doctrines have been laid
down in one form or another will now be cited: (1) In Teodoro Kalaw Ng Khe
vs. Level Brothers Company (G.R. No. 46817), decided by this Court on April
18, 1941, the respondent company (plaintiff below) was granted injunctive
relief against the use by the petitioner of the trade-mark "Lux" and "Lifebuoy"
for hair pomade, they having been originally used by the respondent for
soap; The Court held in effect that although said articles are noncompetitive,
they are similar or belong to the same class. (2) In Lincoln Motor Co. vs.
Lincoln Automobile Co. (44 F. [2d], 812), the manufacturer of the well-known
Lincoln automobile was granted injunctive relief against the use of the word
"Lincoln" by another company as part of its firm name. (3) The case of Aunt
Jemima Mills Co. vs. Rigney & Co. (247 F., 407), involved the trade-mark
"Aunt Jemima," originally used on flour, which the defendant attempted to
use on syrup, and there the court held that the goods, though different, are
so related as to fall within the mischief which equity should prevent. (4) In
Tiffany & Co., vs. Tiffany Productions, Inc. (264 N.Y.S., 459; 23 Trade-mark
Reporter, 183), the plaintiff, a jewelry concern, was granted injunctive relief
against the defendant, a manufacturer of motion pictures, from using the
name "Tiffany." Other famous cases cited on the margin, wherein the courts
granted injunctive relief, involved the following trade-marks or trade-names:
"Kodak," for cameras and photographic supplies, against its use for bicycles.
4 "Penslar," for medicines and toilet articles, against its use for cigars; 5
"Rolls-Royce," for automobiles. against its use for radio tubes; 6 "Vogue," as
the name of a magazine, against its use for hats; 7 "Kotex," for sanitary
napkins, against the use of "Rotex" for vaginal syringes; 8 "Sun-Maid," for
raisins, against its use for flour; 9 "Yale," for locks and keys, against its use
for electric flashlights; 10 and "Waterman," for fountain pens, against its use
for razor blades. 11lawphil.net
Against this array of famous cases, the industry of counsel for the petitioner
has enabled him to cite on this point only the following cases: (1) Mohawk
Milk Products vs. General Distilleries Corporation (95 F. [2d], 334), wherein
the court held that gin and canned milk and cream do not belong to the
same class; (2) Fawcett Publications, Inc. vs. Popular Mechanics Co. (80 F.
[2d], 194), wherein the court held that the words "Popular Mechanics" used
as the title of a magazine and duly registered as a trade-mark were not
infringed by defendant's use of the words "Modern Mechanics and
Inventions" on a competitive magazine, because the word "mechanics" is
merely a descriptive name; and (3) Oxford Book Co. vs. College Entrance
Book Co. (98 F. [2d], 688), wherein the plaintiff unsuccessfully attempted to
enjoin the defendant from using the word "Visualized" in connection with
history books, the court holding that said word is merely descriptive. These
cases cites and relied upon by petitioner are obviously of no decisive
application to the case at bar.
We think reasonable men may not disagree that shoes and shirts are not as
unrelated as fountain pens and razor blades, for instance. The mere relation
34
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. 143993 August 18, 2004
MCDONALD'S CORPORATION and MCGEORGE FOOD INDUSTRIES,
INC., petitioners,
vs.
L.C. BIG MAK BURGER, INC., FRANCIS B. DY, EDNA A. DY, RENE B.
DY, WILLIAM B. DY, JESUS AYCARDO, ARACELI AYCARDO, and
GRACE HUERTO, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the Decision dated 26 November 1999 of the
Court of Appeals2 finding respondent L.C. Big Mak Burger, Inc. not liable for
trademark infringement and unfair competition and ordering petitioners to
pay respondents P1,900,000 in damages, and of its Resolution dated 11 July
2000 denying reconsideration. The Court of Appeals' Decision reversed the
5 September 1994 Decision3 of the Regional Trial Court of Makati, Branch
137, finding respondent L.C. Big Mak Burger, Inc. liable for trademark
infringement and unfair competition.
The Facts
Petitioner McDonald's Corporation ("McDonald's") is a corporation organized
under the laws of Delaware, United States. McDonald's operates, by itself or
through its franchisees, a global chain of fast-food restaurants. McDonald's4
owns a family of marks5 including the "Big Mac" mark for its "double-decker
hamburger sandwich."6 McDonald's registered this trademark with the
United States Trademark Registry on 16 October 1979.7 Based on this
Home Registration, McDonald's applied for the registration of the same mark
in the Principal Register of the then Philippine Bureau of Patents,
Trademarks and Technology ("PBPTT"), now the Intellectual Property Office
("IPO"). Pending approval of its application, McDonald's introduced its "Big
Mac" hamburger sandwiches in the Philippine market in September 1981.
On 18 July 1985, the PBPTT allowed registration of the "Big Mac" mark in
the Principal Register based on its Home Registration in the United States.
Like its other marks, McDonald's displays the "Big Mac" mark in items8 and
paraphernalia9 in its restaurants, and in its outdoor and indoor signages.
From 1982 to 1990, McDonald's spent P10.5 million in advertisement for
"Big Mac" hamburger sandwiches alone.10
Petitioner McGeorge Food Industries ("petitioner McGeorge"), a domestic
corporation, is McDonald's Philippine franchisee.11
35
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
36
confused or deceived into thinking that the "B[ig] M[ak]" hamburger sandwich
he bought is a food-product of plaintiff McDonald's, or a subsidiary or allied
outlet thereof. Surely, defendant corporation has its own secret ingredients to
make its hamburger sandwiches as palatable and as tasty as the other
brands in the market, considering the keen competition among mushrooming
hamburger stands and multinational fast-food chains and restaurants.
Hence, the trademark "B[ig] M[ac]" has been infringed by defendant
corporation when it used the name "B[ig] M[ak]" in its signages, wrappers,
and containers in connection with its food business. xxxx
Did the same acts of defendants in using the name "B[ig] M[ak]" as a
trademark or tradename in their signages, or in causing the name "B[ig]
M[ak]" to be printed on the wrappers and containers of their food products
also constitute an act of unfair competition under Section 29 of the
Trademark Law?
The answer is in the affirmative. xxxx
The xxx provision of the law concerning unfair competition is broader and
more inclusive than the law concerning the infringement of trademark, which
is of more limited range, but within its narrower range recognizes a more
exclusive right derived by the adoption and registration of the trademark by
the person whose goods or services are first associated therewith. xxx
Notwithstanding the distinction between an action for trademark infringement
and an action for unfair competition, however, the law extends substantially
the same relief to the injured party for both cases. (See Sections 23 and 29
of Republic Act No. 166)
Any conduct may be said to constitute unfair competition if the effect is to
pass off on the public the goods of one man as the goods of another. The
choice of "B[ig] M[ak]" as tradename by defendant corporation is not merely
for sentimental reasons but was clearly made to take advantage of the
reputation, popularity and the established goodwill of plaintiff McDonald's.
For, as stated in Section 29, a person is guilty of unfair competition who in
selling his goods shall give them the general appearance, of goods of
another manufacturer or dealer, either as to the goods themselves or in the
wrapping of the packages in which they are contained, or the devices or
words thereon, or in any other feature of their appearance, which would
likely influence purchasers to believe that the goods offered are those of a
manufacturer or dealer other than the actual manufacturer or dealer. Thus,
plaintiffs have established their valid cause of action against the defendants
for trademark infringement and unfair competition and for damages.19
The dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is rendered in favor of plaintiffs McDonald's
Corporation and McGeorge Food Industries, Inc. and against defendant L.C.
Big Mak Burger, Inc., as follows:
1. The writ of preliminary injunction issued in this case on [16 August 1990]
is made permanent;
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay plaintiffs actual
damages in the amount 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".
37

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
38
Petitioners sought reconsideration of the Court of Appeals' Decision but the
appellate court denied their motion in its Resolution of 11 July 2000.
Hence, this petition for review.
Petitioners raise the following grounds for their petition:
I. THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENTS'
CORPORATE NAME "L.C. BIG MAK BURGER, INC." IS NOT A
COLORABLE IMITATION OF THE MCDONALD'S TRADEMARK "BIG
MAC", SUCH COLORABLE IMITATION BEING AN ELEMENT OF
TRADEMARK INFRINGEMENT.
A. Respondents use the words "Big Mak" as trademark for their products
and not merely as their business or corporate name.
B. As a trademark, respondents' "Big Mak" is undeniably and unquestionably
similar to petitioners' "Big Mac" trademark based on the dominancy test and
the idem sonans test resulting inexorably in confusion on the part of the
consuming public.
II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER THE
INHERENT SIMILARITY BETWEEN THE MARK "BIG MAK" AND THE
WORD MARK "BIG MAC" AS AN INDICATION OF RESPONDENTS'
INTENT TO DECEIVE OR DEFRAUD FOR PURPOSES OF
ESTABLISHING UNFAIR COMPETITION.22
Petitioners pray that we set aside the Court of Appeals' Decision and
reinstate the RTC Decision.
In their Comment to the petition, respondents question the propriety of this
petition as it allegedly raises only questions of fact. On the merits,
respondents contend that the Court of Appeals committed no reversible error
in finding them not liable for trademark infringement and unfair competition
and in ordering petitioners to pay damages.
The Issues
The issues are:
1. Procedurally, whether the questions raised in this petition are proper for a
petition for review under Rule 45.
2. On the merits, (a) whether respondents used the words "Big Mak" not only
as part of the corporate name "L.C. Big Mak Burger, Inc." but also as a
trademark for their hamburger products, and (b) whether respondent
corporation is liable for trademark infringement and unfair competition.23
The Court's Ruling
The petition has merit.
On Whether the Questions Raised in the Petition are Proper for a Petition for
Review
A party intending to appeal from a judgment of the Court of Appeals may file
with this Court a petition for review under Section 1 of Rule 45 ("Section
1")24 raising only questions of law. A question of law exists when the doubt
or difference arises on what the law is on a certain state of facts. There is a
question of fact when the doubt or difference arises on the truth or falsity of
the alleged facts. 25
Here, petitioners raise questions of fact and law in assailing the Court of
Appeals' findings on respondent corporation's non-liability for trademark
infringement and unfair competition. Ordinarily, the Court can deny due
course to such a petition. In view, however, of the contradictory findings of
fact of the RTC and Court of Appeals, the Court opts to accept the petition,
this being one of the recognized exceptions to Section 1.26 We took a
similar course of action in Asia Brewery, Inc. v. Court of Appeals27 which
also involved a suit for trademark infringement and unfair competition in
which the trial court and the Court of Appeals arrived at conflicting findings.
On the Manner Respondents Used
"Big Mak" in their Business
Petitioners contend that the Court of Appeals erred in ruling that the
corporate name "L.C. Big Mak Burger, Inc." appears in the packaging for
respondents' hamburger products and not the words "Big Mak" only.
The contention has merit.
39
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 436 of RA 166 ("Section 4"). However, once registered, not only the
mark's validity but also the registrant's ownership of the mark is prima facie
presumed.37
Respondents contend that of the two words in the "Big Mac" mark, it is only
the word "Mac" that is valid because the word "Big" is generic and
descriptive (proscribed under Section 4[e]), and thus "incapable of exclusive
appropriation."38
The contention has no merit. The "Big Mac" mark, which should be treated in
its entirety and not dissected word for word,39 is neither generic nor
descriptive. Generic marks are commonly used as the name or description of
a kind of goods,40 such as "Lite" for beer41 or "Chocolate Fudge" for
chocolate soda drink.42 Descriptive marks, on the other hand, convey the
characteristics, functions, qualities or ingredients of a product to one who
has never seen it or does not know it exists,43 such as "Arthriticare" for
arthritis medication.44 On the contrary, "Big Mac" falls under 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
40
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
41
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.
42
This Court, however, has relied on the dominancy test rather than the holistic
test. The dominancy test considers the dominant features in the competing
marks in determining whether they are confusingly similar. Under the
dominancy test, courts give greater weight to the similarity of the appearance
of the product arising from the adoption of the dominant features of the
registered mark, disregarding minor differences.59 Courts will consider more
the aural and visual impressions created by the marks in the public mind,
giving little weight to factors like prices, quality, sales outlets and market
segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,60 the Court
ruled:
xxx It has been consistently held that the question of infringement of a
trademark is to be determined by the test of dominancy. Similarity in size,
form and color, while relevant, is not conclusive. If the competing trademark
contains the main or essential or dominant features of another, and
confusion and deception is likely to result, infringement takes place.
Duplication or imitation is not necessary; nor is it necessary that the
infringing label should suggest an effort to imitate. (G. Heilman Brewing Co.
vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co.
vs. Pflugh (CC) 180 Fed. 579). The question at issue in cases of
infringement of trademarks is whether the use of the marks involved would
be likely to cause confusion or mistakes in the mind of the public or deceive
purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d
588; xxx) (Emphasis supplied.)
The Court reiterated the dominancy test in Lim Hoa v. Director of Patents,61
Phil. Nut Industry, Inc. v. Standard Brands Inc.,62 Converse Rubber
Corporation v. Universal Rubber Products, Inc.,63 and Asia Brewery, Inc. v.
Court of Appeals.64 In the 2001 case of Societe Des Produits Nestlé, S.A. v.
Court of Appeals,65 the Court explicitly rejected the holistic test in this wise:
[T]he totality or holistic test is contrary to the elementary postulate of the law
on trademarks and unfair competition that confusing similarity is to be
determined on the basis of visual, aural, connotative comparisons and
overall impressions engendered by the marks in controversy as they are
encountered in the realities of the marketplace. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into law in Section 155.1
of the Intellectual Property Code which defines infringement as the
"colorable imitation of a registered mark xxx or a dominant feature thereof."
Applying the dominancy test, the Court finds that respondents' use of the
"Big Mak" mark results in likelihood of confusion. First, "Big Mak" sounds
exactly the same as "Big Mac." Second, the first word in "Big Mak" is exactly
the same as the first word in "Big Mac." Third, the first two letters in "Mak"
are the same as the first two letters in "Mac." Fourth, the last letter in "Mak"
while a "k" sounds the same as "c" when the word "Mak" is pronounced.
Fifth, in Filipino, the letter "k" replaces "c" in spelling, thus "Caloocan" is
spelled "Kalookan."
In short, aurally the two marks are the same, with the first word of both
marks phonetically the same, and the second word of both marks also
phonetically the same. Visually, the two marks have both two words and six
letters, with the first word of both marks having the same letters and the
second word having the same first two letters. In spelling, considering the
Filipino language, even the last letters of both marks are the same.
Clearly, respondents have adopted in "Big Mak" not only the dominant but
also almost all the features of "Big Mac." Applied to the same food product of
hamburgers, the two marks will likely result in confusion in the public mind.
The Court has taken into account the aural effects of the words and letters
contained in the marks in determining the issue of confusing similarity. Thus,
in Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al.,66 the Court
held:
The following random list of confusingly similar sounds in the matter of
trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947,
Vol. 1, will reinforce our view that "SALONPAS" and "LIONPAS" are
confusingly similar in sound: "Gold Dust" and "Gold Drop"; "Jantzen" and
"Jass-Sea"; "Silver Flash" and "Supper Flash"; "Cascarete" and "Celborite";
"Celluloid" and "Cellonite"; "Chartreuse" and "Charseurs"; "Cutex" and
"Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and "Hoo
Hoo". Leon Amdur, in his book "Trade-Mark Law and Practice", pp. 419-421,
cities, as coming within the purview of the idem sonans rule, "Yusea" and "U-
C-A", "Steinway Pianos" and "Steinberg Pianos", and "Seven-Up" and
"Lemon-Up". In Co Tiong vs. Director of Patents, this Court unequivocally
said that "Celdura" and "Cordura" are confusingly similar in sound; this Court
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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
44
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
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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.
(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 good85 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.

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 2383 ("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

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