2/15/2017 G.R.No.

169504

SECONDDIVISION


COFFEEPARTNERS,INC.,G.R.No.169504
Petitioner,
Present:
CARPIO,J.,Chairperson,
VELASCO,JR.,*
DELCASTILLO,
versusABAD,and
PEREZ,JJ.


SANFRANCISCOCOFFEE&Promulgated:
ROASTERY,INC.,
Respondent.March3,2010
xx


DECISION


CARPIO,J.:


TheCase

[1] [2]
This is a petition for review of the 15 June 2005 Decision and the 1 September 2005
[3]
Resolution of the Court of Appeals in CAG.R. SP No. 80396. In its 15 June 2005
[4]
Decision,theCourtofAppealssetasidethe22October2003Decision oftheOfficeofthe
[5]
DirectorGeneralIntellectualPropertyOfficeandreinstatedthe14August2002Decision
of the Bureau of Legal AffairsIntellectual Property Office. In its 1 September 2005
Resolution, the Court of Appeals denied petitioners motion for reconsideration and
respondentsmotionforpartialreconsideration.

TheFacts
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PetitionerCoffeePartners,Inc.isalocalcorporationengagedinthebusinessofestablishing
andmaintainingcoffeeshopsinthecountry.ItregisteredwiththeSecuritiesandExchange
[6]
Commission(SEC)inJanuary2001.Ithasafranchiseagreement withCoffeePartnersLtd.
(CPL),abusinessentityorganizedandexistingunderthelawsofBritishVirginIslands,fora
nonexclusiverighttooperatecoffeeshopsinthePhilippinesusingtrademarksdesignedby
CPLsuchasSANFRANCISCOCOFFEE.

Respondentisalocalcorporationengagedinthewholesaleandretailsaleofcoffee.It
registeredwiththeSECinMay1995.ItregisteredthebusinessnameSANFRANCISCO
COFFEE&ROASTERY,INC.withtheDepartmentofTradeandIndustry(DTI)inJune
1995.RespondenthadsincebuiltacustomerbasethatincludedFigaroCompany,Tagaytay
Highlands,FatWillys,andothercoffeecompanies.

In1998,respondentformedajointventurecompanywithBoydCoffeeUSAunderthe
companynameBoydCoffeeCompanyPhilippines,Inc.(BCCPI).BCCPIengagedinthe
processing,roasting,andwholesalesellingofcoffee.Respondentlaterembarkedonaproject
studyofsettingupcoffeecartsinmallsandothercommercialestablishmentsinMetro
Manila.

InJune2001,respondentdiscoveredthatpetitionerwasabouttoopenacoffeeshopunderthe
nameSANFRANCISCOCOFFEEinLibis,QuezonCity.Accordingtorespondent,
petitionersshopcausedconfusioninthemindsofthepublicasitboreasimilarnameandit
alsoengagedinthebusinessofsellingcoffee.Respondentsentalettertopetitioner
demandingthatthelatterstopusingthenameSANFRANCISCOCOFFEE.Respondentalso
filedacomplaintwiththeBureauofLegalAffairsIntellectualPropertyOffice(BLAIPO)
forinfringementand/orunfaircompetitionwithclaimsfordamages.

Initsanswer,petitionerdeniedtheallegationsinthecomplaint.Petitionerallegeditfiledwith
theIntellectualPropertyOffice(IPO)applicationsforregistrationofthemarkSAN
FRANCISCOCOFFEE&DEVICEforclass42in1999andforclass35in2000.Petitioner
maintaineditsmarkcouldnotbeconfusedwithrespondentstradenamebecauseofthe
notabledistinctionsintheirappearances.Petitionerarguedrespondentstoppedoperating
underthetradenameSANFRANCISCOCOFFEEwhenitformedajointventurewithBoyd
CoffeeUSA.Petitionercontendedrespondentdidnotciteanyspecificactsthatwouldlead
onetobelievepetitionerhad,throughfraudulentmeans,passedoffitsmarkasthatof
respondent,orthatithaddivertedbusinessawayfromrespondent.

Mr.DavidPuyat,presidentofpetitionercorporation,testifiedthatthecoffeeshopinLibis,
QuezonCityopenedsometimeinJune2001andthatanothercoffeeshopwouldbeopenedin
GloriettaMall,MakatiCity.Hestatedthatthecoffeeshopwassetuppursuanttoafranchise
agreementexecutedinJanuary2001withCPL,aBritishVirginIslandCompanyownedby
RobertBoxwell.Mr.PuyatsaidhebecameinvolvedinthebusinesswhenoneArthur
GindanginvitedhimtoinvestinacoffeeshopandintroducedhimtoMr.Boxwell.Forhis
part,Mr.BoxwellattestedthatthecoffeeshopSANFRANCISCOCOFFEEhasbranchesin
MalaysiaandSingapore.HeaddedthatheformedCPLin1997alongwithtwoother
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colleagues,ShirleyMillerJohnandLeahWarren,whowereformermanagersofStarbucks
CoffeeShopintheUnitedStates.Hesaidtheydecidedtoinvestinasimilarventureand
adoptedthenameSANFRANCISCOCOFFEEfromthefamouscityinCaliforniawherehe
andhisformercolleaguesoncelivedandwherespecialcoffeeroastscamefrom.

TheRulingoftheBureauofLegalAffairsIntellectualPropertyOffice

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

TheBLAIPOalsoheldthatrespondentdidnotabandontheuseofitstradenameas
substantialevidenceindicatedrespondentcontinuouslyuseditstradenameinconnection
withthepurposeforwhichitwasorganized.Itfoundthatalthoughrespondentwasnolonger
involvedinblending,roasting,anddistributionofcoffeebecauseofthecreationofBCCPI,it
continuedmakingplansanddoingresearchontheretailingofcoffeeandthesettingupof
coffeecarts.TheBLAIPOruledthatforabandonmenttoexist,thedisusemustbe
permanent,intentional,andvoluntary.

TheBLAIPOheldthatpetitionersuseofthetrademarkSANFRANCISCOCOFFEEwill
likelycauseconfusionbecauseoftheexactsimilarityinsound,spelling,pronunciation,and
commercialimpressionofthewordsSANFRANCISCOwhichisthedominantportionof
respondentstradenameandpetitionerstrademark.Itheldthatnosignificantdifference
resultedevenwithadiamondshapedfigurewithacupinthecenterinpetitioner'strademark
becausegreaterweightisgiventowordsthemediumconsumersuseinorderingcoffee
products.

Ontheissueofunfaircompetition,theBLAIPOabsolvedpetitionerfromliability.Itfound
thatpetitioneradoptedthetrademarkSANFRANCISCOCOFFEEbecauseoftheauthority
grantedtoitbyitsfranchisor.TheBLAIPOheldtherewasnoevidenceofintenttodefraud
onthepartofpetitioner.

TheBLAIPOalsodismissedrespondentsclaimofactualdamagesbecauseitsclaimsof
profitlosswerebasedonmereassumptionsasrespondenthadnotevenstartedtheoperation
ofitscoffeecarts.TheBLAIPOlikewisedismissedrespondentsclaimofmoraldamages,
butgranteditsclaimofattorneysfees.

Bothpartiesmovedforpartialreconsideration.Petitionerprotestedthefindingof
infringement,whilerespondentquestionedthedenialofactualdamages.TheBLAIPO
deniedthepartiespartialmotionforreconsideration.ThepartiesappealedtotheOfficeofthe
DirectorGeneralIntellectualPropertyOffice(ODGIPO).

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TheRulingoftheOfficeoftheDirectorGeneral
IntellectualPropertyOffice

In its 22 October 2003 Decision, the ODGIPO reversed the BLAIPO. It ruled that
petitioners use of the trademark SAN FRANCISCO COFFEE did not infringe on
respondent's trade name. The ODGIPO found that respondent had stopped using its trade
name after it entered into a joint venture with Boyd Coffee USA in 1998 while petitioner
continuouslyusedthetrademarksinceJune2001whenitopeneditsfirstcoffeeshopinLibis,
QuezonCity.Itruledthatbetweenasubsequentuserofatradenameingoodfaithandaprior
userwhohadstoppedusingsuchtradename,itwouldbeinequitabletoruleinfavorofthe
latter.

TheRulingoftheCourtofAppeals

Inits15June2005Decision,theCourtofAppealssetasidethe22October2003decisionof
theODGIPOinsofarasitruledthattherewasnoinfringement.Itreinstatedthe14August
2002decisionoftheBLAIPOfindinginfringement.Theappellatecourtdeniedrespondents
claimforactualdamagesandretainedtheawardofattorneysfees.Inits1September2005
Resolution, the Court of Appeals denied petitioners motion for reconsideration and
respondentsmotionforpartialreconsideration.

TheIssue
The sole issue is whether petitioners use of the trademark SAN FRANCISCO COFFEE
constitutes infringement of respondents trade name SAN FRANCISCO COFFEE &
ROASTERY,INC.,evenifthetradenameisnotregisteredwiththeIntellectualProperty
Office(IPO).

TheCourtsRuling

Thepetitionhasnomerit.

Petitioner contends that when a trade name is not registered, a suit for infringement is not
available. Petitioner alleges respondent has abandoned its trade name. Petitioner points out
thatrespondentsregistrationofitsbusinessnamewiththeDTIexpiredon16June2000and
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it was only in 2001 when petitioner opened a coffee shop in Libis, Quezon City that
respondent made a belated effort to seek the renewal of its business name registration.
Petitioner stresses respondents failure to continue the use of its trade name to designate its
goods negates any allegation of infringement. Petitioner claims no confusion is likely to
occurbetweenitstrademarkandrespondentstradenamebecauseofawidedivergenceinthe
channels of trade, petitioner serving readymade coffee while respondent is in wholesale
blending, roasting, and distribution of coffee. Lastly, petitioner avers the proper noun San
Franciscoandthegenericwordcoffeearenotcapableofexclusiveappropriation.

Respondentmaintainsthelawprotectstradenamesfrominfringementeveniftheyarenot
[7]
registeredwiththeIPO.RespondentclaimsRepublicActNo.8293(RA8293) dispensed
withregistrationofatradenamewiththeIPOasarequirementforthefilingofanactionfor
infringement.Allthatisrequiredisthatthetradenameispreviouslyusedintradeor
commerceinthePhilippines.Respondentinsistsitneverabandonedtheuseofitstradename
asevidencedbyitslettertopetitionerdemandingimmediatediscontinuationoftheuseofits
trademarkandbythefilingoftheinfringementcase.Respondentallegespetitioners
trademarkisconfusinglysimilartorespondentstradename.Respondentstressesordinarily
prudentconsumersarelikelytobemisledaboutthesource,affiliation,orsponsorshipof
petitionerscoffee.

As to the issue of alleged abandonment of trade name by respondent, the BLAIPO found
that respondent continued to make plans and do research on the retailing of coffee and the
establishment of coffee carts, which negates abandonment. This finding was upheld by the
CourtofAppeals,whichfurtherfoundthatwhilerespondentstoppedusingitstradenamein
its business of selling coffee, it continued to import and sell coffee machines, one of the
servicesforwhichtheuseofthebusinessnamehasbeenregistered.Thebindingeffectofthe
factualfindingsoftheCourtofAppealsonthisCourtapplieswithgreaterforcewhenboth
the quasijudicial body or tribunal like the BLAIPO and the Court of Appeals are in
completeagreementontheirfactualfindings.Itisalsosettledthatabsentanycircumstance
requiring the overturning of the factual conclusions made by the quasijudicial body or
tribunal,particularlyifaffirmedbytheCourtofAppeals,theCourtnecessarilyupholdssuch
[8]
findingsoffact.

Comingnowtothemainissue,inProsourceInternational,Inc.v.HorphagResearch
[9]
ManagementSA, thisCourtlaiddownwhatconstitutesinfringementofanunregistered
tradename,thus:

(1)ThetrademarkbeinginfringedisregisteredintheIntellectualPropertyOfficehowever,
ininfringementoftradename,thesameneednotberegistered
(2)Thetrademarkortradenameisreproduced,counterfeited,copied,orcolorablyimitated
bytheinfringer
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(3)Theinfringingmarkortradenameisusedinconnectionwiththesale,offeringforsale,
or advertising of any goods, business or services or the infringing mark or trade name is
appliedtolabels,signs,prints,packages,wrappers,receptacles,oradvertisementsintendedto
beuseduponorinconnectionwithsuchgoods,business,orservices
(4)Theuseorapplicationoftheinfringingmarkortradenameislikelytocauseconfusionormistakeorto
deceivepurchasersorothersastothegoodsorservicesthemselvesorastothesourceororiginofsuch
goodsorservicesortheidentityofsuchbusinessand
[10]
(5)Itiswithouttheconsentofthetrademarkortradenameownerortheassigneethereof. (Emphasis
supplied)

Clearly,atradenameneednotberegisteredwiththeIPObeforeaninfringementsuitmaybe
filedbyitsowneragainsttheownerofaninfringingtrademark.Allthatisrequiredisthatthe
[11]
tradenameispreviouslyusedintradeorcommerceinthePhilippines.

[12]
Section22ofRepublicActNo.166, asamended,requiredregistrationofatradenameas
aconditionfortheinstitutionofaninfringementsuit,towit:

Sec.22.Infringement,whatconstitutes.Anypersonwhoshalluse,withouttheconsentof
the registrant, any reproduction, counterfeit, copy, or colorable imitation of any registered
markortradenameinconnectionwiththesale,offeringforsale,oradvertisingofanygoods,
businessorservicesonorinconnectionwithwhichsuchuseislikelytocauseconfusionor
mistakeortodeceivepurchasersorothersastothesourceororiginofsuchgoodsorservices,
or identity of such business or reproduce, counterfeit, copy, or colorably imitate any such
markortradenameandapplysuchreproduction,counterfeit,copy,orcolorableimitationto
labels, signs, prints, packages, wrappers, receptacles, or advertisements intended to be used
uponorinconnectionwithsuchgoods,business,orservices,shallbeliabletoacivilaction
bytheregistrantforanyoralloftheremedieshereinprovided.(Emphasissupplied)

HOWEVER, RA 8293, WHICH TOOK EFFECT ON 1 JANUARY 1998, HAS
DISPENSED WITH THE REGISTRATION REQUIREMENT. SECTION 165.2 OF RA
8293 CATEGORICALLY STATES THAT TRADE NAMES SHALL BE PROTECTED,
EVEN PRIOR TO OR WITHOUT REGISTRATION WITH THE IPO, AGAINST ANY
UNLAWFULACTINCLUDINGANYSUBSEQUENTUSEOFTHETRADENAMEBY
ATHIRDPARTY,WHETHERASATRADENAMEORATRADEMARKLIKELYTO
MISLEADTHEPUBLIC.THUS:

SEC.165.2(A)NOTWITHSTANDINGANYLAWSORREGULATIONSPROVIDING
FOR ANY OBLIGATION TO REGISTER TRADE NAMES, SUCH NAMES SHALL
BE PROTECTED, EVEN PRIOR TO OR WITHOUT REGISTRATION, AGAINST
ANYUNLAWFULACTCOMMITTEDBYTHIRDPARTIES.
(B)INPARTICULAR,ANYSUBSEQUENTUSEOFATRADENAMEBYATHIRDPARTY,
WHETHERASATRADENAMEORAMARKORCOLLECTIVEMARK,ORANYSUCHUSEOFA
SIMILARTRADENAMEORMARK,LIKELYTOMISLEADTHEPUBLIC,SHALLBEDEEMED
UNLAWFUL.(EMPHASISSUPPLIED)

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IT IS THE LIKELIHOOD OF CONFUSION THAT IS THE GRAVAMEN OF

INFRINGEMENT.BUTTHEREISNOABSOLUTESTANDARDFORLIKELIHOODOF
CONFUSION. ONLY THE PARTICULAR, AND SOMETIMES PECULIAR,
CIRCUMSTANCES OF EACH CASE CAN DETERMINE ITS EXISTENCE. THUS, IN
INFRINGEMENT CASES, PRECEDENTS MUST BE EVALUATED IN THE LIGHT OF
[13]
EACHPARTICULARCASE.

IN DETERMINING SIMILARITY AND LIKELIHOOD OF CONFUSION, OUR
JURISPRUDENCE HAS DEVELOPED TWO TESTS: THE DOMINANCY TEST AND
THEHOLISTICTEST.THEDOMINANCYTESTFOCUSESONTHESIMILARITYOF
THE PREVALENT FEATURES OF THE COMPETING TRADEMARKS THAT MIGHT
CAUSECONFUSIONANDDECEPTION,THUSCONSTITUTINGINFRINGEMENT.IF
THE COMPETING TRADEMARK CONTAINS THE MAIN, ESSENTIAL, AND
DOMINANT FEATURES OF ANOTHER, AND CONFUSION OR DECEPTION IS
LIKELY TO RESULT, INFRINGEMENT OCCURS. EXACT DUPLICATION OR
IMITATION IS NOT REQUIRED. THE QUESTION IS WHETHER THE USE OF THE
MARKSINVOLVEDISLIKELYTOCAUSECONFUSIONORMISTAKEINTHEMIND
[14]
OFTHEPUBLICORTODECEIVECONSUMERS.

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

APPLYINGEITHERTHEDOMINANCYTESTORTHEHOLISTICTEST,
PETITIONERSSANFRANCISCOCOFFEETRADEMARKISACLEAR
INFRINGEMENTOFRESPONDENTSSANFRANCISCOCOFFEE&ROASTERY,INC.
TRADENAME.THEDESCRIPTIVEWORDSSANFRANCISCOCOFFEEARE
PRECISELYTHEDOMINANTFEATURESOFRESPONDENTSTRADENAME.
PETITIONERANDRESPONDENTAREENGAGEDINTHESAMEBUSINESSOF
SELLINGCOFFEE,WHETHERWHOLESALEORRETAIL.THELIKELIHOODOF
CONFUSIONISHIGHERINCASESWHERETHEBUSINESSOFONE
CORPORATIONISTHESAMEORSUBSTANTIALLYTHESAMEASTHATOF
ANOTHERCORPORATION.INTHISCASE,THECONSUMINGPUBLICWILL
LIKELYBECONFUSEDASTOTHESOURCEOFTHECOFFEEBEINGSOLDAT
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PETITIONERSCOFFEESHOPS.PETITIONERSARGUMENTTHATSANFRANCISCO
ISJUSTAPROPERNAMEREFERRINGTOTHEFAMOUSCITYINCALIFORNIA
ANDTHATCOFFEEISSIMPLYAGENERICTERM,ISUNTENABLE.RESPONDENT
HASACQUIREDANEXCLUSIVERIGHTTOTHEUSEOFTHETRADENAMESAN
FRANCISCOCOFFEE&ROASTERY,INC.SINCETHEREGISTRATIONOFTHE
BUSINESSNAMEWITHTHEDTIIN1995.THUS,RESPONDENTSUSEOFITS
TRADENAMEFROMTHENONMUSTBEFREEFROMANYINFRINGEMENTBY
SIMILARITY.OFCOURSE,THISDOESNOTMEANTHATRESPONDENTHAS
EXCLUSIVEUSEOFTHEGEOGRAPHICWORDSANFRANCISCOORTHE
GENERICWORDCOFFEE.GEOGRAPHICORGENERICWORDSARENOT,PERSE,
SUBJECTTOEXCLUSIVEAPPROPRIATION.ITISONLYTHECOMBINATIONOF
THEWORDSSANFRANCISCOCOFFEE,WHICHISRESPONDENTSTRADENAME
INITSCOFFEEBUSINESS,THATISPROTECTEDAGAINSTINFRINGEMENTON
MATTERSRELATEDTOTHECOFFEEBUSINESSTOAVOIDCONFUSINGOR
DECEIVINGTHEPUBLIC.

[17]
INPHILIPSEXPORTB.V.V.COURTOFAPPEALS, THISCOURTHELDTHATA
CORPORATIONHASANEXCLUSIVERIGHTTOTHEUSEOFITSNAME.THE
RIGHTPROCEEDSFROMTHETHEORYTHATITISAFRAUDONTHE
CORPORATIONWHICHHASACQUIREDARIGHTTOTHATNAMEANDPERHAPS
CARRIEDONITSBUSINESSTHEREUNDER,THATANOTHERSHOULDATTEMPT
TOUSETHESAMENAME,ORTHESAMENAMEWITHASLIGHTVARIATIONIN
SUCHAWAYASTOINDUCEPERSONSTODEALWITHITINTHEBELIEFTHAT
THEYAREDEALINGWITHTHECORPORATIONWHICHHASGIVENA
[18]
REPUTATIONTOTHENAME.

THISCOURTISNOTJUSTACOURTOFLAW,BUTALSOOFEQUITY.WECANNOT
ALLOWPETITIONERTOPROFITBYTHENAMEANDREPUTATIONSOFARBUILT
BYRESPONDENTWITHOUTRUNNINGAFOULOFTHEBASICDEMANDSOF
FAIRPLAY.NOTONLYTHELAWBUTEQUITYCONSIDERATIONSHOLD
PETITIONERLIABLEFORINFRINGEMENTOFRESPONDENTSTRADENAME.

THECOURTOFAPPEALSWASCORRECTINSETTINGASIDETHE22OCTOBER
2003DECISIONOFTHEOFFICEOFTHEDIRECTORGENERALINTELLECTUAL
PROPERTYOFFICEANDINREINSTATINGTHE14AUGUST2002DECISIONOF
THEBUREAUOFLEGALAFFAIRSINTELLECTUALPROPERTYOFFICE.

WHEREFORE,WEDENYTHEPETITIONFORREVIEW.WEAFFIRMTHE15JUNE
2005 DECISION AND 1 SEPTEMBER 2005 RESOLUTION OF THE COURT OF
APPEALSINCAG.R.SPNO.80396.

COSTSAGAINSTPETITIONER.

SOORDERED.

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