G.R. No.
76193 November 9, 1989
UNITED FEATURE SYNDICATE, INC., petitioner,
vs.
MUNSINGWEAR CREATION MANUFACTURING COMPANY, respondent.
Quasha, Asperilla, Ancheta, Pena and Nolasco for petitioner.
Jaime G. Manzano for private respondent.
PARAS, J.:
This is a petition for review on certiorari filed by United Feature Syndicate Inc.,
seeking to set aside the Resolution of the Seventh Division of the Court of
Appeals * dated September 16, 1986 dismissing the appeal of petitioner-
appellant for having been filed out of time and denying its Motion for
Reconsideration for lack of merit in its Resolution dated October 14, 1986.
The Resolution dismissing the appeal, reads as follows:
We agree with the Philippine Patent Office and respondent appellee
that the decision of the aforementioned office dated October 2, 1984
had already become final and executory at the time the Notice of
Appeal was filed.
Our reasons for this conclusions are borne out by the following facts:
a) On October 2, 1984, the decision sought to be appealed was
rendered by the Philippine Patent Office and a copy thereof was
received by counsel for petitioner-appellant on October 3, 1984 not
October 9, 1984 as stated in the Notice of Appeal. There can be no
doubt about the decision having been received by petitioner-appellant's
counsel on October 3, 1984 for this is clearly written in the Notice of
Decision (p. 61, Original Record), and in point of fact the date of
receipt cannot be October 9, 1984, as declared in the Notice of Appeal
(p. 1, Rollo), because in the motion for reconsideration subsequently
filed by petitioner-appellant it was stated that a copy of the decision
was received on October 4, 1984 (p. 80, Original Record).
b) On October 18, 1984 as shown in the stamp mark of the
Philippine Patent Office (p. 80, Original Record) or on the 15th and last
day either for appealing or for moving for reconsideration, petitioner-
appellant filed a motion for reconsideration.
Sadly and unexplainably for a veteran law office, said motion did not
contain or incorporate a notice of hearing.
c) Possibly realizing the fatal defect in its motion for reconsideration,
petitioner-appellant subsequently filed a motion to set for hearing its
motion for reconsideration. This was done, however, only on October
31, 1984 (p. 162, Original Record).
The motion for reconsideration filed on the last day, fatally failing as it
did to contain a notice of hearing, said pleading did not interrupt the
period for appealing, for the motion was nothing but a piece of scrap
paper (Agricultural and Industrial Marketing, Inc. v. Court of
Appeals, 118 SCRA [1982] 492; Republic Planters Bank v.
Intermediate Appellate Court, 13 SCRA [1984] 631).
This deadly and moral deficiency in the motion for reconsideration,
therefore, resulted in the decision of the Philippine Patent Office being
final and executory on October 19, 1984, the day after the motion for
reconsideration was filed, said motion having been filed on the 15th
and last day for appealing.
WHEREFORE, the motion of respondent appellee is hereby granted
and the appeal dismissed.
SO ORDERED. (Rollo 42-43)
This case arose from petition filed by petitioner for the cancellation of the
registration of trademark CHARLIE BROWN (Registration No. SR. 4224) in
the name of respondent MUNSINGWEAR in Inter Partes Case No. 1350
entitled "United Feature Syndicate, Inc. v. Munsingwear Creation Mfg. Co.",
with the Philippine Patent Office alleging that petitioner is damaged by the
registration of the trademark CHARLIE BROWN of T-Shirts under Class 25
with the Registration No. SR-4224 dated September 12, 1979 in the name of
Munsingwear Creation Manufacturing Co., Inc., on the following grounds: (1)
that respondent was not entitled to the registration of the mark CHARLIE
BROWN, & DEVICE at the time of application for registration; (2) that
CHARLIE BROWN is a character creation or a pictorial illustration, the
copyright to which is exclusively owned worldwide by the petitioner; (3) that as
the owner of the pictorial illustration CHARLIE BROWN, petitioner has since
1950 and continuously up to the present, used and reproduced the same to
the exclusion of others; (4) that the respondent-registrant has no bona fide
use of the trademark in commerce in the Philippines prior to its application for
registration. (Petition, p. 2, Rollo, p. 8)
On October 2, 1984 the Director of the Philippine Patent Office rendered a
decision in this case holding that a copyright registration like that of the name
and likeness of CHARLIE BROWN may not provide a cause of action for the
cancellation of a trademark registration, (Petition, p. 4; Rollo, p. 10 )
Petitioner filed a motion for reconsideration of the decision rendered by the
Philippine Patent Office which was denied by the Director of said office on the
ground that the Decision No. 84-83 was already final and executory (Petition,
Rollo, pp. 11-12).
From this decision, petitioner-appellant appealed to the Court of Appeals and
respondent court in its resolution dated September 16, 1986 denied the
appeal. While the Motion for Reconsideration was filed on time, that is, on the
last day within which to appeal, still it is a mere scrap of paper because there
was no, date, of hearing stated therein.
Subsequently, petitioner-appellant filed a motion for reconsideration which
public respondent denied for lack of merit( Annex "B", Rollo p. 45)..
Hence this petition for review on certiorari.
In the resolution of April 6, 1987, the petition was given due course.
In its petition (Rollo, p. 10) and in its memorandum (Rollo, p. 97), petitioner-
appellant raised the following legal issues:
I deemed sufficient to deprive it of a chance to secure a review by this court in
WHETHER THE RESPONDENT COURT OF APPEALS ACTED IN
EXCESS OF JURISDICTION AND/OR COMMITTED GRAVE ABUSE
OF DISCRETION WHEN IT BASED ITS RESOLUTION IN
DISMISSING ITS APPEAL ON STRICT TECHNICAL RULES OF
PROCEDURE AS ENUNCIATED IN RULE 15 OF THE RULES OF
COURT INSTEAD OF RELYING ON THE POLICY OF THE
PHILIPPINE PATENT OFFICE AS STRESSED IN RULE 169, AS
AMENDED, OF THE RULES OF PRACTICE IN TRADEMARK
CASES.
II
WHETHER THE RESPONDENT COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OF
JURISDICTION WHEN BY DISMISSING THE APPEAL TO IT FROM
THE DECISION OF THE DIRECTOR OF PATENTS, IT KNOWINGLY
DISREGARDED ITS OWN DECISION IN AC-GR. SP. NO. 0342,
WHICH WAS AFFIRMED BY THIS HONORABLE SUPREME COURT
TO THE EFFECT THAT A COPYRIGHTED CHARACTER MAY NOT
BE APPROPRIATED AS A TRADEMARK BY ANOTHER UNDER
PRESIDENTIAL DECREE NO. 49.
III
WHETHER, ASSUMING ARGUENDO, BUT ONLY ASSUMING, THAT
THE DECISION OF THE DIRECTOR OF PATENTS IN THE CASE AT
BAR HAD ALREADY BECOME FINAL WHEN IT WAS APPEALED TO
THE COURT OF APPEALS, THE LATTER, BY REASON OF THE
SUPERVENING FACTS AFTER THE DECISION APPEALED FROM
WAS RENDERED, SHOULD HAVE HARMONIZED THE DECISION
WITH LAW, THE DEMANDS OF JUSTICE AND EQUITY.
The petitioner is impressed with merit.
Petitioner's contention that the purpose of a notice of hearing to the adverse
party is to afford him an opportunity to resist the motion, more particularly the
motion for reconsideration filed by its company is well taken. Said purpose
was served when Munsingwear filed its opposition thereto on November 20,
1984 and cured the technical defect of lack of notice of hearing complained of
(Rollo, p. 52). Otherwise stated such shortcomings of petitioner as to
compliance with procedural requirements in taking its appeal cannot be
order to obtain substantial justice; more so where liverality accorded to the
petitioner becomes compelling because of the ostensible merit of petitioner's
case (Olango v. Court of First Instance of Misamis Oriental, 121 SCRA 338
[1983]).
Moreover, in Siguenza v. Court of Appeals, (137 SCRA 570 [1985]) the Court
stressed that the right to appeal should not be lightly disregarded by a
stringent application of rules of procedure especially where the appeal is on its
face meritorious and the interest of substantial justice would be served by
permitting the appeal.
As enunciated in the case of Castro v. Court of Appeals (123 SCRA 782,
[1983]) the importance and real purpose of the remedy of appeal was
stressed as follows:
An appeal is an essential part of oar judicial system. We have
advised the courts to proceed with caution so as not to deprive a
party of the right to appeal. (National Waterworks and Sewerage
Authority v. Municipality of Libmanan, 97 SCRA 138) and instructed
that every party-litigant should beafforded the amplest opportunity for
the proper and just disposition of his cause, freed from the
constraints of technicalities. (A-One Feeds, Inc. v. Court of Appeals,
100 SCRA 590).
The rules of procedure are not to be applied in a very rigid and
technical sense. The rules of procedure are used only to help secure
not override substantial justice. (Gregorio v. Court of Appeals, 72
SCRA 120), therefore, we ruled in Republic v. Court of Appeals (83
SCRA 453) that a six day delay in the perfection of the appeal does
not warrant its dismissal. And again in Ramos v. Bagaso, 96 SCRA
395, this Court held that the delay of four (4) days in filing a notice of
appeal and a motion for extension of time to file a record on appeal
can be excused on the basis of equity.
It was further emphasized that we allowed the filing of an appeal in some
cases where a stringent application of the rules would have denied it, or when
to do so would serve the demands of substantial justice and in the exercise of
our equity jurisdiction (Serrano v. Court of Appeals, 139 SCRA 179 [1085].)
In the case at bar, the petitioner's delay in filing their record on appeal should
not be strictly construed as to deprive them of the right to appeal especially
since on its face the appeal appears to be impressed with merit. (Emphasis
supplied). All aforementioned cases are cited in G.R. No. 76595, Pacific Asia
Overseas Shipping Corporation v. NLRC, et al., May 6, 1988.
Procedural technicality should not prevail over substantive rights of a party to
appeal (NEA v. CA, 126 SCRA 394).
Moreover, a judgment of the Court of Appeals that become final by reason of
the mistake of the herein petitioner's lawyer may still be reviewed on appeal
by the Supreme Court particularly where the Supreme Court already gave due
course to the petition for review (Ernesto v. Court of Appeals, 116 SCRA 755
[1982]).
Where strong considerations of substantial justice are manifest in the petition,
this Court may relax the stringent application of technical rules in the exercise
of equity jurisdiction. In addition to the basic merits of the main case, such
petition usually embodies justifying circumstances which warrant our heeding
the petitioner's cry for justice, inspite of the earlier negligence of counsel
(Serrano v. Court of Appeals et al., 139 SCRA 179 [1985]).
In a number of cases, this Court in the exercise of equity jurisdiction decided
to disregard technicalities in order to resolve the case on its merits based on
the evidence (St. Peter Memorial Park, Inc. et al. v. Cleofas, 121 SCRA 287,
[1983]; Helmuth, Jr. v. People of the Philippines, 112 SCRA 573 [1983]).
This case was brought before this Court for the resolution of the dismissal of
the appeal filed by petitioner-appellant from the decision of the Director of the
Philippines Patent Office for being filed out of time. The normal action to take
thereafter, would be to remand this case to the Court of Appeals for further
proceedings. However, in line with jurisprudence, such time consuming
procedure may be properly dispensed with to resolve the issue (Quisumbing
v. Court of Appeals, 122 SCRA 709 [1983]) where there is enough basis to
end the basic controversy between the parties here and now. In the case at
bar dispensing with such procedural steps would not anyway affect
substantially the merits of their respective claims as held in Velasco v. Court
of Appeals, (95 SCRA 621 [1980] cited in Ortigas & Co. Ltd. v. Ruiz, 148
SCRA [1987] hence the need for this Court to broaden its inquiry in this case
land decide the same on the merits rather than merely resolve the procedural
question raised (Dorado v. Court of Appeals, 153 SCRA 420 [1987]; De Lima
v. Laguna Tayabas Co., 160 SCRA 70 [1988]).
Petitioner contends that it will be damaged by the registration of the trademark
CHARLIE BROWN & DEVICE in favor of private respondent and that it has a
better right to CHARLIE BROWN & DEVICE since the likeness of CHARLIE
BROWN appeared in periodicals having worldwide distribution and covered by
copyright registration in its name which antedates the certificate of registration
of respondent issued only on September 12, 1979. (Petition, Rollo, p. 21).
Petitioner further stresses that Decision No. 84-83 (TM) promulgated by the
Philippine Patent Office on October 2, 1984 which held that "the name
likeness of CHARLIE BROWN may not provide a cause of action for the
cancellation of a trademark registration," was based in the conclusion made in
the case of "Children's Television Workshop v. touch of Class" earlier decided
by the Director of Patent Office on May 10, 1984. However, when the latter
case was appealed to the then Intermediate Appellate Court, docketed as
A.C. G.R. SP No. 03432, the appellate court reversed the decision of the
Director holding said appealed decision as illegal and contrary to law. this
reversal was affirmed by this Court on August 7, 1985 in G.R. No. 71210 by
denying the petition of respondent Touch of Class.
The Court of Appeals in reversing the Director of Patent's decision in Touch of
Class, Inc. succintly said:
The Patents Office ruled that a trademark, unlike a label,
cannot be copyrighted. The "Cookie Monster" is not, however,
a trademark. It is a character in a TV series entitled "Sesame
Street." It was respondent which appropriated the "Cookie
Monster" as a trademark, after it has been copyrighted. We
hold that the exclusive right secured by PD 49 to the
petitioner precludes the appropriation of the "Cookie Monster"
by the respondent.
Pertinently, Section 2 of Presidential Decree No. 49, otherwise known as the
"Decree on Intellectual Property", provides:
Section 2. The rights granted by this Decree shall, from the moment
of creation, subsist with respect to any of the following classes of
works:
xxx xxx xxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags and
box wraps. ...
Therefore, since the name "CHARLIE BROWN" and its pictorial
representation were covered by a copyright registration way back in 1950 the
same are entitled to protection under PD No. 49.
Aside from its copyright registration, petitioner is also the owner of several
trademark registrations and application for the name and likeness of
"CHARLIE BROWN" which is the duly registered trademark and copyright of
petitioner United Feature Syndicate Inc. as early as 1957 and additionally also
as TV SPECIALS featuring the "PEANUTS" characters "CHARLIE BROWN"
(Memorandum, Rollo p. 97 [211]).
An examination of the records show that the only appreciable defense of
respondent-registrant is embodied in its answer, which reads:
It uses, the trademark "CHARLIE BROWN" & "DEVICE" on
children's wear such as T-shirts, undershirts, sweaters, brief
and sandos, in class 25; whereas "CHARLIE BROWN" is
used only by petitioner as character, in a pictorial illustration
used in a comic strip appearing in newspapers and
magazines. It has no trademark significance and therefore
respondent-registrant's use of "CHARLIE BROWN" &
"DEVICE" is not in conflict with the petitioner's use of
"CHARLIE BROWN" (Rollo, p. 97 [21]).
It is undeniable from the records that petitioner is the actual owner of said
trademark due to its prior registration with the Patent's Office.
Finally, in La Chemise Lacoste S.A. v. Hon. Oscar Fernandez &
Gobindram Hemandas Sujanani v. Hon. Roberto V. Ongpin, et al. 129 SCRA
373 [1984]), the Court declared.
In upholding the right of the petitioner to maintain the present
suit before our courts for unfair competition or infringement of
trademarks of a foreign corporation, we are moreover
recognizing our duties and the rights of foregoing states
under the Paris Convention for the Protection of Industrial
Property to which the Philippines and (France) U.S. are
parties. We are simply interpreting a solemn international
commitment of the Philippines embodied in a multilateral
treaty to which we are a party and which we entered into
because it is in our national interest to do so.
PREMISES CONSIDERED, the Resolutions of the Court of Appeals dated
September 16, 1985 and October 14, 1986 dismissing petitioner's appeal are
hereby SET ASIDE and Certificate of Registration no. SR-424 issued to
private respondent dated September 12, 1979 is hereby CANCELLED.
SO ORDERED.
G.R. No. L-78325 January 25, 1990
DEL MONTE CORPORATION and PHILIPPINE PACKING
CORPORATION, petitioners,
vs.
COURT OF APPEALS and SUNSHINE SAUCE MANUFACTURING
INDUSTRIES, respondents.
Bito, Misa & Lozada for petitioners.
Reynaldo F. Singson for private respondent.
CRUZ, J.:
The petitioners are questioning the decision of the respondent court upholding
the dismissal by the trial court of their complaint against the private
respondent for infringement of trademark and unfair competition.
Petitioner Del Monte Corporation is a foreign company organized under the
laws of the United States and not engaged in business in the Philippines. Both
the Philippines and the United States are signatories to the Convention of
Paris of September 27, 1965, which grants to the nationals of the parties
rights and advantages which their own nationals enjoy for the repression of
acts of infringement and unfair competition.
Petitioner Philippine Packing Corporation (Philpack) is a domestic corporation
duly organized under the laws of the Philippines. On April 11, 1969, Del Monte
granted Philpack the right to manufacture, distribute and sell in the Philippines
various agricultural products, including catsup, under the Del Monte trademark
and logo.
On October 27,1965, Del Monte authorized Philpack to register with the
Philippine Patent Office the Del Monte catsup bottle configuration, for which it
was granted Certificate of Trademark Registration No. SR-913 by the
Philippine Patent Office under the Supplemental Register. 1 On November 20,
1972, Del Monte also obtained two registration certificates for its trademark
"DEL MONTE" and its logo. 2
Respondent Sunshine Sauce Manufacturing Industries was issued a
Certificate of Registration by the Bureau of Domestic Trade on April 17,1980,
to engage in the manufacture, packing, distribution and sale of various kinds
of sauce, identified by the logo Sunshine Fruit Catsup.3
This logo was registered in the Supplemental Register on September 20,
1983. 4
The product itself was contained in various kinds of bottles, including the Del
Monte bottle, which the private respondent bought from the junk shops for
recycling.
Having received reports that the private respondent was using its exclusively
designed bottles and a logo confusingly similar to Del Monte's, Philpack
warned it to desist from doing so on pain of legal action. Thereafter, claiming
that the demand had been ignored, Philpack and Del Monte filed a complaint
against the private respondent for infringement of trademark and unfair
competition, with a prayer for damages and the issuance of a writ of
preliminary injunction. 5
In its answer, Sunshine alleged that it had long ceased to use the Del Monte
bottle and that its logo was substantially different from the Del Monte logo and
would not confuse the buying public to the detriment of the petitioners. 6
After trial, the Regional Trial Court of Makati dismissed the complaint. It held
that there were substantial differences between the logos or trademarks of the
parties; that the defendant had ceased using the petitioners' bottles; and that
in any case the defendant became the owner of the said bottles upon its
purchase thereof from the junk yards. Furthermore, the complainants had
failed to establish the defendant's malice or bad faith, which was an essential
element of infringement of trademark or unfair competition. 7
This decision was affirmed in toto by the respondent court, which is now
faulted in this petition for certiorari under Rule 45 of the Rules of Court.
Section 22 of R.A. No. 166, otherwise known as the Trademark Law, provides
in part as follows:
Sec. 22. Infringement, what constitutes. Any person who shall use,
without the consent of the registrant, any reproduction, counterfeit,
copy or colorable imitation of any registered mark or trade-name in
connection with the sale, offering for sale, or advertising of any goods,
business or services on or in connection with which such use is likely
to cause confusion or mistake or to deceive purchasers or others as
 to the source or origin of such goods or services or identity of such
business; or reproduce, counterfeit copy or colorably imitate any such
mark or trade name and apply such reproduction, counterfeit copy or
colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in
connection with such goods, business or services, shall be liable to a
civil action by the registrant for any or all of the remedies herein
provided.
Sec. 29 of the same law states as follows:
Sec. 29. Unfair competition, rights and remedies. A person who
has identified in the mind of the public the goods he manufactures or
deals in, his business or services from those of others, whether or not
a mark or tradename is employed, has a property right in the goodwill
of the said goods, business or services so identified, which will be
protected in the same manner as other property rights. Such a person
shall have the remedies provided in section twenty- three, Chapter V
hereof.
Any person who shall employ deception or any other means contrary
to good faith by which he shall pass off the goods manufactured by
him or in which he deals, or his business, or services for those of the
one having established such goodwill, or who shall commit any acts
calculated to produce said result, shall be guilty of unfair competition,
and shall be subject to an action therefor.
In particular, and without in any way limiting the scope of unfair
competition, the following shall be deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the
general appearance of goods of another manufacturer or
dealer, either as to the goods themselves or in the wrapping
of the packages in which they are contained, or the devices or
words thereon, or in any other feature of their appearance,
which would likely influence purchasers to believe that the
goods offered are those of a manufacturer or dealer other
than the actual manufacturer or dealer, or who otherwise
clothes the goods with such appearance as shall deceive the
public and defraud another of his legitimate trade, or any
subsequent vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs
ally other means calculated to induce the false belief that
such person is offering the services of another who has
identified such services in the mind of the public; or
(c) Any person who shall make any false statement in the
course of trade or who shall commit any other act contrary to
good faith of a nature calculated to discredit the goods,
business or services of another.
To arrive at a proper resolution of this case, it is important to bear in
mind the following distinctions between infringement of trademark and
unfair competition.
(1) Infringement of trademark is the unauthorized use of a
trademark, whereas unfair competition is the passing off of
one's goods as those of another.
(2) In infringement of trademark fraudulent intent is
unnecessary whereas in unfair competition fraudulent intent is
essential.
(3) In infringement of trademark the prior registration of the
trademark is a prerequisite to the action, whereas in unfair
competition registration is not necessary. 8
In the challenged decision, the respondent court cited the following
test laid down by this Court in a number of cases:
In determining whether two trademarks are confusingly
similar, the two marks in their entirety as they appear in the
respective labels must be considered in relation to the goods
to which they are attached; the discerning eye of the observer
must focus not only on the predorninant words but also on the
other features appearing on both labels. 9
and applying the same, held that there was no colorable imitation of
the petitioners' trademark and logo by the private respondent. The
respondent court agreed with the findings of the trial court that:
In order to resolve the said issue, the Court now attempts to make a
comparison of the two products, to wit:
1. As to the shape of label or make:
Del Monte: Semi-rectangular with a crown or tomato shape
design on top of the rectangle.
Sunshine: Regular rectangle.
2. As to brand printed on label:
Del Monte: Tomato catsup mark.
Sunshine: Fruit catsup.
3. As to the words or lettering on label or mark:
Del Monte: Clearly indicated words packed by Sysu
International, Inc., Q.C., Philippines.
Sunshine: Sunshine fruit catsup is clearly indicated "made in
the Philippines by Sunshine Sauce Manufacturing Industries"
No. 1 Del Monte Avenue, Malabon, Metro Manila.
4. As to color of logo:
Del Monte: Combination of yellow and dark red, with words
"Del Monte Quality" in white.
Sunshine: White, light green and light red, with words
"Sunshine Brand" in yellow.
5. As to shape of logo:
Del Monte: In the shape of a tomato.
Sunshine: Entirely different in shape.
6. As to label below the cap:
Del Monte: Seal covering the cap down to the neck of the
bottle, with picture of tomatoes with words "made from real
tomatoes."
Sunshine: There is a label below the cap which says
"Sunshine Brand."
7. As to the color of the products:
Del Monte: Darker red.
Sunshine: Lighter than Del Monte.
While the Court does recognize these distinctions, it does not agree with the
conclusion that there was no infringement or unfair competition. It seems to us
that the lower courts have been so pre-occupied with the details that they
have not seen the total picture.
It has been correctly held that side-by-side comparison is not the final test of
similarity. 10 Such comparison requires a careful scrutiny to determine in what
points the labels of the products differ, as was done by the trial judge. The
ordinary buyer does not usually make such scrutiny nor does he usually have
the time to do so. The average shopper is usually in a hurry and does not
inspect every product on the shelf as if he were browsing in a library. Where
the housewife has to return home as soon as possible to her baby or the
working woman has to make quick purchases during her off hours, she is apt
to be confused by similar labels even if they do have minute differences. The
male shopper is worse as he usually does not bother about such distinctions.
The question is not whether the two articles are distinguishable by their label
when set side by side but whether the general confusion made by the article
upon the eye of the casual purchaser who is unsuspicious and off his guard, is
such as to likely result in his confounding it with the original. 11 As observed in
several cases, the general impression of the ordinary purchaser, buying under
the normally prevalent conditions in trade and giving the attention such
purchasers usually give in buying that class of goods is the touchstone. 12
It has been held that in making purchases, the consumer must depend upon
his recollection of the appearance of the product which he intends to
purchase. 13 The buyer having in mind the mark/label of the respondent must
rely upon his memory of the petitioner's mark. 14 Unlike the judge who has
ample time to minutely examine the labels in question in the comfort of his
sala, the ordinary shopper does not enjoy the same opportunity.
A number of courts have held that to determine whether a trademark has
been infringed, we must consider the mark as a whole and not as dissected. If
the buyer is deceived, it is attributable to the marks as a totality, not usually to
any part of it. 15 The court therefore should be guided by its first
impression, 16 for a buyer acts quickly and is governed by a casual glance, the
value of which may be dissipated as soon as the court assumes to analyze
carefully the respective features of the mark. 17
It has also been held that it is not the function of the court in cases of
infringement and unfair competition to educate purchasers but rather to take
their carelessness for granted, and to be ever conscious of the fact that marks
need not be identical. A confusing similarity will justify the intervention of
equity. 18 The judge must also be aware of the fact that usually a defendant in
cases of infringement does not normally copy but makes only colorable
changes. 19Well has it been said that the most successful form of copying is to
employ enough points of similarity to confuse the public with enough points of
difference to confuse the courts. 20
We also note that the respondent court failed to take into consideration
several factors which should have affected its conclusion, to wit: age, training
and education of the usual purchaser, the nature and cost of the article,
whether the article is bought for immediate consumption and also the
conditions under which it is usually purchased . 21Among these, what
essentially determines the attitude of the purchaser, specifically his inclination
to be cautious, is the cost of the goods. To be sure, a person who buys a box
of candies will not exercise as much care as one who buys an expensive
watch. As a general rule, an ordinary buyer does not exercise as much
prudence in buying an article for which he pays a few centavos as he does in
purchasing a more valuable thing. 22 Expensive and valuable items are
normally bought only after deliberate, comparative and analytical
investigation. But mass products, low priced articles in wide use, and matters
of everyday purchase requiring frequent replacement are bought by the
casual consumer without great care. 23 In this latter category is catsup.
At that, even if the labels were analyzed together it is not difficult to see that
the Sunshine label is a colorable imitation of the Del Monte trademark. The
predominant colors used in the Del Monte label are green and red-orange, the
same with Sunshine. The word "catsup" in both bottles is printed in white and
the style of the print/letter is the same. Although the logo of Sunshine is not a
tomato, the figure nevertheless approximates that of a tomato.
As previously stated, the person who infringes a trade mark does not normally
copy out but only makes colorable changes, employing enough points of
similarity to confuse the public with enough points of differences to confuse
the courts. What is undeniable is the fact that when a manufacturer prepares
to package his product, he has before him a boundless choice of words,
phrases, colors and symbols sufficient to distinguish his product from the
others. When as in this case, Sunshine chose, without a reasonable
explanation, to use the same colors and letters as those used by Del Monte
though the field of its selection was so broad, the inevitable conclusion is that
it was done deliberately to deceive .24
It has been aptly observed that the ultimate ratio in cases of grave doubt is the
rule that as between a newcomer who by the confusion has nothing to lose
and everything to gain and one who by honest dealing has already achieved
favor with the public, any doubt should be resolved against the newcomer
inasmuch as the field from which he can select a desirable trademark to
indicate the origin of his product is obviously a large one. 25
Coming now to the second issue, we find that the private respondent is not
guilty of infringement for having used the Del Monte bottle. The reason is that
the configuration of the said bottle was merely registered in the Supplemental
Register. In the case of Lorenzana v. Macagba, 26 we declared that:
(1) Registration in the Principal Register gives rise to a presumption of
the validity of the registration, the registrant's ownership of the mark
and his right to the exclusive use thereof. There is no such
presumption in the registration in the Supplemental Register.
(2) Registration in the Principal Register is limited to the actual owner
of the trademark and proceedings therein on the issue of ownership
which may be contested through opposition or interference
proceedings or, after registration, in a petition for cancellation.
Registration in the Principal Register is constructive notice of the
registrant's claim of ownership, while registration in the Supplemental
Register is merely proof of actual use of the trademark and notice that
the registrant has used or appropriated it. It is not subject to
opposition although it may be cancelled after the issuance. Corollarily,
registration in the Principal Register is a basis for an action for
infringement while registration in the Supplemental Register is not.
(3) In applications for registration in the Principal Register, publication
of the application is necessary. This is not so in applications for
registrations in the Supplemental Register.
It can be inferred from the foregoing that although Del Monte has actual use of
the bottle's configuration, the petitioners cannot claim exclusive use thereof
because it has not been registered in the Principal Register. However, we find
that Sunshine, despite the many choices available to it and notwithstanding
that the caution "Del Monte Corporation, Not to be Refilled" was embossed on
the bottle, still opted to use the petitioners' bottle to market a product which
Philpack also produces. This clearly shows the private respondent's bad faith
and its intention to capitalize on the latter's reputation and goodwill and pass
off its own product as that of Del Monte.
The Court observes that the reasons given by the respondent court in
resolving the case in favor of Sunshine are untenable. First, it declared that
the registration of the Sunshine label belied the company's malicious intent to
imitate petitioner's product. Second, it held that the Sunshine label was not
improper because the Bureau of Patent presumably considered other
trademarks before approving it. Third, it cited the case of Shell Co. v. Insular
Petroleum, 27 where this Court declared that selling oil in containers of another
with markings erased, without intent to deceive, was not unfair competition.
Regarding the fact of registration, it is to be noted that the Sunshine label was
registered not in the Principal Register but only in the Supplemental Register
where the presumption of the validity of the trademark, the registrant's
ownership of the mark and his right to its exclusive use are all absent.
Anent the assumption that the Bureau of Patent had considered other existing
patents, it is reiterated that since registration was only in the Supplemental
Register, this did not vest the registrant with the exclusive right to use the
label nor did it give rise to the presumption of the validity of the registration.
On the argument that no unfair competition was committed, the Shell Case is
not on all fours with the case at bar because:
(1) In Shell, the absence of intent to deceive was supported by the
fact that the respondent therein, before marketing its product, totally
obliterated and erased the brands/mark of the different companies
stenciled on the containers thereof, except for a single isolated
transaction. The respondent in the present case made no similar
effort.
(2) In Shell, what was involved was a single isolated transaction. Of
the many drums used, there was only one container where the Shell
label was not erased, while in the case at hand, the respondent
admitted that it made use of several Del Monte bottles and without
obliterating the embossed warning.
(3) In Shell, the product of respondent was sold to dealers, not to
ultimate consumers. As a general rule, dealers are well acquainted
with the manufacturer from whom they make their purchases and
since they are more experienced, they cannot be so easily deceived
like the inexperienced public. There may well be similarities and
imitations which deceive all, but generally the interests of the dealers
are not regarded with the same solicitude as are the interests of the
ordinary consumer. For it is the form in which the wares come to the
final buyer that is of significance. 28
As Sunshine's label is an infringement of the Del Monte's trademark, law and
equity call for the cancellation of the private respondent's registration and
withdrawal of all its products bearing the questioned label from the market.
With regard to the use of Del Monte's bottle, the same constitutes unfair
competition; hence, the respondent should be permanently enjoined from the
use of such bottles.
The court must rule, however, that the damage prayed for cannot be granted
because the petitioner has not presented evidence to prove the amount
thereof. Section 23 of R.A. No. 166 provides:
Sec. 23. Actions and damages and injunction for infringement. Any
person entitled to the exclusive use of a registered mark or trade
name may recover damages in a civil action from any person who
infringes his rights, and the measure of the damages suffered shall be
either the reasonable profit which the complaining party would have
made, had the defendant not infringed his said rights or the profit
which the defendant actually made out of the infringement, or in the
event such measure of damages cannot be readily ascertained with
reasonable certainty the court may award as damages reasonable
percentage based upon the amount of gross sales of the defendant or
the value of the services in connection with which the mark or trade
name was used in the infringement of the rights of the complaining
party. In cases where actual intent to mislead the public or to defraud
the complaining party shall be shown, in the discretion of the court,
the damages may be doubled.
The complaining party, upon proper showing may also be granted
injunction.1wphi1
Fortunately for the petitioners, they may still find some small comfort in Art.
2222 of the Civil Code, which provides:
 Art. 2222. The court may award nominal damages in every obligation
arising from any source enumerated in Art. 1157, or in every case
where any property right has been invaded.

Accordingly, the Court can only award to the petitioners, as it hereby does
award, nominal damages in the amount of Pl,000.00.

WHEREFORE, the petition is GRANTED. The decision of the Court of

Appeals dated December 24, 1986 and the Resolution dated April 27,1987,
are REVERSED and SET ASIDE and a new judgment is hereby rendered:

(1) Canceling the private respondent's Certificate of Register No. SR-

6310 and permanently enjoining the private respondent from using a
label similar to that of the petitioners.

(2) Prohibiting the private respondent from using the empty bottles of
the petitioners as containers for its own products.

(3) Ordering the private respondent to pay the petitioners nominal

damages in the amount of Pl,000.00, and the costs of the suit.

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

The conclusions of the Director of Patents are likewise based on applicable

b) the subject of the right must be a trademark, not a patent or
law and jurisprudence:
copyright or anything else;

What is to be secured from unfair competition in a given territory is the

c) the mark must be for use in the same or similar kinds of goods; and
trade which one has in that particular territory. There is where his
business is carried on where the goodwill symbolized by the
trademark has immediate value; where the infringer may profit by d) the person claiming must be the owner of the mark (The Parties
infringement. Convention Commentary on the Paris Convention. Article by Dr.
Bogach, Director General of the World Intellectual Property
Organization, Geneva, Switzerland, 1985)
There is nothing new in what we now say. Plaintiff itself concedes
(Brief for Plaintiff-Appellant, p. 88) that the principle of territoriality of
the Trademark Law has been recognized in the Philippines, citing The respondent registered its trademark in 1979. It has continuously used that
Ingenohl v. Walter E. Olsen, 71 L. ed. 762. As Callmann puts it, the name in commerce. It has established a goodwill through extensive
law of trademarks "rests upon the doctrine of nationality or advertising. The people who buy at Isetann Store do so because of Isetann's
territoriality." (2 Callmann, Unfair Competition and Trademarks, 1945 efforts. There is no showing that the Japanese firm's registration in Japan or
ed., p. 1006) (Sterling Products International, Inc. v. Farbenfabriken Hongkong has any influence whatsoever on the Filipino buying public.
Bayer Aktiengesellachaft, 27 SCRA 1214 [1969]; Emphasis supplied)
WHEREFORE, premises considered, the petition is hereby DISMISSED.
The mere origination or adoption of a particular tradename without actual use
thereof in the market is insufficient to give any exclusive right to its use SO ORDERED.
(Johnson Mfg. Co. v. Leader Filling Stations Corp. 196 N.E. 852, 291 Mass.
394), even though such adoption is publicly declared, such as by use of the
name in advertisements, circulars, price lists, and on signs and stationery.
(Consumers Petrolum Co. v. Consumers Co. of ILL. 169 F 2d 153)

The Paris Convention for the Protection of Industrial Property does not
automatically exclude all countries of the world which have signed it from
using a tradename which happens to be used in one country. To illustrate - If
G.R. No. 96161 February 21, 1992
PHILIPS EXPORT B.V., PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS
INDUSTRIAL DEVELOPMENT, INC., petitioners,
vs.
COURT OF APPEALS, SECURITIES & EXCHANGE COMMISSION and
STANDARD PHILIPS CORPORATION, respondents.
Emeterio V. Soliven & Associates for petitioners.
Narciso A. Manantan for private respondent.
MELENCIO-HERRERA, J.:
Petitioners challenge the Decision of the Court of Appeals, dated 31 July
1990, in CA-GR Sp. No. 20067, upholding the Order of the Securities and
Exchange Commission, dated 2 January 1990, in SEC-AC No. 202,
dismissing petitioners' prayer for the cancellation or removal of the word
"PHILIPS" from private respondent's corporate name.
Petitioner Philips Export B.V. (PEBV), a foreign corporation organized under
the laws of the Netherlands, although not engaged in business here, is
the registered owner of the trademarks PHILIPS and PHILIPS SHIELD
EMBLEM under Certificates of Registration Nos. R-1641 and R-1674,
respectively issued by the Philippine Patents Office (presently known as the
Bureau of Patents, Trademarks and Technology Transfer). Petitioners Philips
Electrical Lamps, Inc. (Philips Electrical, for brevity) and Philips Industrial
Developments, Inc. (Philips Industrial, for short), authorized users of the
trademarks PHILIPS and PHILIPS SHIELD EMBLEM, were incorporated on
29 August 1956 and 25 May 1956, respectively. All petitioner corporations
belong to the PHILIPS Group of Companies.
Respondent Standard Philips Corporation (Standard Philips), on the other
hand, was issued a Certificate of Registration by respondent Commission on
19 May 1982.
On 24 September 1984, Petitioners filed a letter complaint with the Securities
& Exchange Commission (SEC) asking for the cancellation of the word
"PHILIPS" from Private Respondent's corporate name in view of the prior
registration with the Bureau of Patents of the trademark "PHILIPS" and the
logo "PHILIPS SHIELD EMBLEM" in the name of Petitioner, PEBV, and the
previous registration of Petitioners Philips Electrical and Philips Industrial with
the SEC.
As a result of Private Respondent's refusal to amend its Articles of
Incorporation, Petitioners filed with the SEC, on 6 February 1985, a Petition
(SEC Case No. 2743) praying for the issuance of a Writ of Preliminary
Injunction, alleging, among others, that Private Respondent's use of the word
PHILIPS amounts to an infringement and clear violation of Petitioners'
exclusive right to use the same considering that both parties engage in the
same business.
In its Answer, dated 7 March 1985, Private Respondent countered that
Petitioner PEBV has no legal capacity to sue; that its use of its corporate
name is not at all similar to Petitioners' trademark PHILIPS when considered
in its entirety; and that its products consisting of chain rollers, belts, bearings
and cutting saw are grossly different from Petitioners' electrical products.
After conducting hearings with respect to the prayer for Injunction; the SEC
Hearing Officer, on 27 September 1985, ruled against the issuance of such
Writ.
On 30 January 1987, the same Hearing Officer dismissed the Petition for lack
of merit. In so ruling, the latter declared that inasmuch as the SEC found no
sufficient ground for the granting of injunctive relief on the basis of the
testimonial and documentary evidence presented, it cannot order the removal
or cancellation of the word "PHILIPS" from Private Respondent's corporate
name on the basis of the same evidence adopted in toto during trial on the
merits. Besides, Section 18 of the Corporation Code (infra) is applicable only
when the corporate names in question are identical. Here, there is no
confusing similarity between Petitioners' and Private Respondent's corporate
names as those of the Petitioners contain at least two words different from
that of the Respondent. Petitioners' Motion for Reconsideration was likewise
denied on 17 June 1987.
On appeal, the SEC en banc affirmed the dismissal declaring that the
corporate names of Petitioners and Private Respondent hardly breed
confusion inasmuch as each contains at least two different words and,
therefore, rules out any possibility of confusing one for the other.
On 30 January 1990, Petitioners sought an extension of time to file a Petition
for Review on Certiorari before this Court, which Petition was later referred to
the Court of Appeals in a Resolution dated 12 February 1990.
In deciding to dismiss the petition on 31 July 1990, the Court of
Appeals1 swept aside Petitioners' claim that following the ruling in Converse
Rubber Corporation v. Universal Converse Rubber Products, Inc., et al, (G. R.
No. L-27906, January 8, 1987, 147 SCRA 154), the word PHILIPS cannot be
used as part of Private Respondent's corporate name as the same constitutes
a dominant part of Petitioners' corporate names. In so holding, the Appellate
Court observed that the Converse case is not four-square with the present
case inasmuch as the contending parties in Converse are engaged in a
similar business, that is, the manufacture of rubber shoes. Upholding the
SEC, the Appellate Court concluded that "private respondents' products
consisting of chain rollers, belts, bearings and cutting saw are unrelated and
non-competing with petitioners' products i.e. electrical lamps such that
consumers would not in any probability mistake one as the source or origin of
the product of the other."
The Appellate Court denied Petitioners' Motion for Reconsideration on 20
November 1990, hence, this Petition which was given due course on 22 April
1991, after which the parties were required to submit their memoranda, the
latest of which was received on 2 July 1991. In December 1991, the SEC was
also required to elevate its records for the perusal of this Court, the same not
having been apparently before respondent Court of Appeals.
We find basis for petitioners' plea.
As early as Western Equipment and Supply Co. v. Reyes, 51 Phil. 115 (1927),
the Court declared that a corporation's right to use its corporate and trade
name is a property right, a right in rem, which it may assert and protect
against the world in the same manner as it may protect its tangible property,
real or personal, against trespass or conversion. It is regarded, to a certain
extent, as a property right and one which cannot be impaired or defeated by
subsequent appropriation by another corporation in the same field (Red Line
Transportation Co. vs. Rural Transit Co., September 8, 1934, 20 Phil 549).
A name is peculiarly important as necessary to the very existence of a
corporation (American Steel Foundries vs. Robertson, 269 US 372, 70 L ed
317, 46 S Ct 160; Lauman vs. Lebanon Valley R. Co., 30 Pa 42; First National
Bank vs. Huntington Distilling Co. 40 W Va 530, 23 SE 792). Its name is one
of its attributes, an element of its existence, and essential to its identity (6
Fletcher [Perm Ed], pp. 3-4). The general rule as to corporations is that each
corporation must have a name by which it is to sue and be sued and do all
legal acts. The name of a corporation in this respect designates the
corporation in the same manner as the name of an individual designates the
person (Cincinnati Cooperage Co. vs. Bate. 96 Ky 356, 26 SW 538; Newport
Mechanics Mfg. Co. vs. Starbird. 10 NH 123); and the right to use its
corporate name is as much a part of the corporate franchise as any other
privilege granted (Federal Secur. Co. vs. Federal Secur. Corp., 129 Or 375,
276 P 1100, 66 ALR 934; Paulino vs. Portuguese Beneficial Association, 18
RI 165, 26 A 36).
A corporation acquires its name by choice and need not select a name
identical with or similar to one already appropriated by a senior corporation
while an individual's name is thrust upon him (See Standard Oil Co. of New
Mexico, Inc. v. Standard Oil Co. of California, 56 F 2d 973, 977). A corporation
can no more use a corporate name in violation of the rights of others than an
individual can use his name legally acquired so as to mislead the public and
injure another (Armington vs. Palmer, 21 RI 109. 42 A 308).
Our own Corporation Code, in its Section 18, expressly provides that:
No corporate name may be allowed by the Securities and
Exchange Commission if the proposed name is identical or
deceptively or confusingly similar to that of any existing
corporation or to any other name already protected by law or
is patently deceptive, confusing or contrary to existing
law. Where a change in a corporate name is approved, the
commission shall issue an amended certificate of
incorporation under the amended name. (Emphasis supplied)
The statutory prohibition cannot be any clearer. To come within its scope, two
requisites must be proven, namely:
(1) that the complainant corporation acquired a prior right over the use of such
corporate name; and
(2) the proposed name is either:
(a) identical; or
(b) deceptively or confusingly
similar
to that of any existing corporation or to any other name already
protected by law; or
(c) patently deceptive, confusing or contrary to existing law.
The right to the exclusive use of a corporate name with freedom from
infringement by similarity is determined by priority of adoption (1 Thompson,
p. 80 citing Munn v. Americana Co., 82 N. Eq. 63, 88 Atl. 30; San Francisco
Oyster House v. Mihich, 75 Wash. 274, 134 Pac. 921). In this regard, there is
no doubt with respect to Petitioners' prior adoption of' the name ''PHILIPS" as
part of its corporate name. Petitioners Philips Electrical and Philips Industrial
were incorporated on 29 August 1956 and 25 May 1956, respectively, while
Respondent Standard Philips was issued a Certificate of Registration on 12
April 1982, twenty-six (26) years later (Rollo, p. 16). Petitioner PEBV has also
used the trademark "PHILIPS" on electrical lamps of all types and their
accessories since 30 September 1922, as evidenced by Certificate of
Registration No. 1651.
The second requisite no less exists in this case. In determining the existence
of confusing similarity in corporate names, the test is whether the similarity is
such as to mislead a person, using ordinary care and discrimination. In so
doing, the Court must look to the record as well as the names themselves
(Ohio Nat. Life Ins. Co. v. Ohio Life Ins. Co., 210 NE 2d 298). While the
corporate names of Petitioners and Private Respondent are not identical, a
reading of Petitioner's corporate names, to wit: PHILIPS EXPORT B.V.,
PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS INDUSTRIAL
DEVELOPMENT, INC., inevitably leads one to conclude that "PHILIPS" is,
indeed, the dominant word in that all the companies affiliated or associated
with the principal corporation, PEBV, are known in the Philippines and abroad
as the PHILIPS Group of Companies.
Respondents maintain, however, that Petitioners did not present an iota of
proof of actual confusion or deception of the public much less a single
purchaser of their product who has been deceived or confused or showed any
likelihood of confusion. It is settled, however, that proof of actual confusion
need not be shown. It suffices that confusion is probably or likely to occur (6
Fletcher [Perm Ed], pp. 107-108, enumerating a long line of cases).
It may be that Private Respondent's products also consist of chain rollers,
belts, bearing and the like, while petitioners deal principally with electrical
products. It is significant to note, however, that even the Director of Patents
had denied Private Respondent's application for registration of the trademarks
"Standard Philips & Device" for chain, rollers, belts, bearings and cutting saw.
That office held that PEBV, "had shipped to its subsidiaries in the Philippines
equipment, machines and their parts which fall under international class
where "chains, rollers, belts, bearings and cutting saw," the goods in
connection with which Respondent is seeking to register 'STANDARD
PHILIPS' . . . also belong" ( Inter Partes Case No. 2010, June 17, 1988,
SEC Rollo).
Furthermore, the records show that among Private Respondent's primary
purposes in its Articles of Incorporation (Annex D, Petition p. 37, Rollo) are the
following:
To buy, sell, barter, trade, manufacture, import, export, or
otherwise acquire, dispose of, and deal in and deal with any
kind of goods, wares, and merchandise such as but not
limited to plastics, carbon products, office stationery and
supplies, hardware parts, electrical wiring devices, electrical
component parts, and/or complement of industrial, agricultural
or commercial machineries, constructive supplies, electrical
supplies and other merchandise which are or may become
articles of commerce except food, drugs and cosmetics and
to carry on such business as manufacturer, distributor, dealer,
indentor, factor, manufacturer's representative capacity for
domestic or foreign companies. (emphasis ours)
For its part, Philips Electrical also includes, among its primary purposes, the
following:
To develop manufacture and deal in electrical products,
including electronic, mechanical and other similar products . .
. (p. 30, Record of SEC Case No. 2743)
Given Private Respondent's aforesaid underlined primary purpose, nothing
could prevent it from dealing in the same line of business of electrical devices,
products or supplies which fall under its primary purposes. Besides, there is
showing that Private Respondent not only manufactured and sold ballasts for
fluorescent lamps with their corporate name printed thereon but also
advertised the same as, among others, Standard Philips (TSN, before the
SEC, pp. 14, 17, 25, 26, 37-42, June 14, 1985; pp. 16-19, July 25, 1985). As
aptly pointed out by Petitioners, [p]rivate respondent's choice of "PHILIPS" as
part of its corporate name [STANDARD PHILIPS CORPORATION] . . . tends
to show said respondent's intention to ride on the popularity and established
goodwill of said petitioner's business throughout the world" (Rollo, p. 137).
The subsequent appropriator of the name or one confusingly similar thereto
usually seeks an unfair advantage, a free ride of another's goodwill (American
Gold Star Mothers, Inc. v. National Gold Star Mothers, Inc., et al, 89 App DC
269, 191 F 2d 488).
In allowing Private Respondent the continued use of its corporate name, the
SEC maintains that the corporate names of Petitioners PHILIPS
ELECTRICAL LAMPS. INC. and PHILIPS INDUSTRIAL DEVELOPMENT,
INC. contain at least two words different from that of the corporate name of
respondent STANDARD PHILIPS CORPORATION, which words will readily
identify Private Respondent from Petitioners and vice-versa.
True, under the Guidelines in the Approval of Corporate and Partnership
Names formulated by the SEC, the proposed name "should not be similar to
one already used by another corporation or partnership. If the proposed name
contains a word already used as part of the firm name or style of a registered
company; the proposed name must contain two other words different from the
company already registered" (Emphasis ours). It is then pointed out that
Petitioners Philips Electrical and Philips Industrial have two words different
from that of Private Respondent's name.
What is lost sight of, however, is that PHILIPS is a trademark or trade name
which was registered as far back as 1922. Petitioners, therefore, have the
exclusive right to its use which must be free from any infringement by
similarity. A corporation has an exclusive right to the use of its name, which
may be protected by injunction upon a principle similar to that upon which
persons are protected in the use of trademarks and tradenames (18 C.J.S.
574). Such principle proceeds upon the theory that it is a fraud on the
corporation which has acquired a right to that name and perhaps carried on its
business thereunder, that another should attempt to use the same name, or
the same name with a slight variation in such a way as to induce persons to
deal with it in the belief that they are dealing with the corporation which has
given a reputation to the name (6 Fletcher [Perm Ed], pp. 39-40, citing Borden
Ice Cream Co. v. Borden's Condensed Milk Co., 210 F 510). Notably, too,
Private Respondent's name actually contains only a single word, that is,
"STANDARD", different from that of Petitioners inasmuch as the inclusion of
the term "Corporation" or "Corp." merely serves the Purpose of distinguishing
the corporation from partnerships and other business organizations.
The fact that there are other companies engaged in other lines of business
using the word "PHILIPS" as part of their corporate names is no defense and
does not warrant the use by Private Respondent of such word which
constitutes an essential feature of Petitioners' corporate name previously
adopted and registered and-having acquired the status of a well-known mark
in the Philippines and internationally as well (Bureau of Patents Decision No.
88-35 [TM], June 17, 1988, SEC Records).
In support of its application for the registration of its Articles of Incorporation
with the SEC, Private Respondent had submitted an undertaking "manifesting
its willingness to change its corporate name in the event another person, firm
or entity has acquired a prior right to the use of the said firm name or one
deceptively or confusingly similar to it." Private respondent must now be held
to its undertaking.
As a general rule, parties organizing a corporation must
choose a name at their peril; and the use of a name similar to
one adopted by another corporation, whether a business or a
nonbusiness or non-profit organization if misleading and likely
to injure it in the exercise in its corporate functions, regardless
of intent, may be prevented by the corporation having the
prior right, by a suit for injunction against the new corporation
to prevent the use of the name (American Gold Star Mothers,
Inc. v. National Gold Star Mothers, Inc., 89 App DC 269, 191
F 2d 488, 27 ALR 2d 948).
WHEREFORE, the Decision of the Court of Appeals dated 31 July 1990, and
its Resolution dated 20 November 1990, are SET ASIDE and a new one
entered ENJOINING private respondent from using "PHILIPS" as a feature of
its corporate name, and ORDERING the Securities and Exchange
Commission to amend private respondent's Articles of Incorporation by
deleting the word PHILIPS from the corporate name of private respondent.
No costs.
SO ORDERED.
G.R. No. 71189 November 4, 1992
FABERGE, INCORPORATED, petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT and CO BENG
KAY, respondents.
MELO, J.:
The Director of Patents authorized herein private respondent Co Beng Kay to
register the trademark "BRUTE" for the briefs manufactured and sold by his
Corporation in the domestic market vis-a-vis petitioner's opposition grounded
on similarity of said trademark with petitioner's own symbol "BRUT" which it
previously registered for after shave lotion, shaving cream, deodorant, talcum
powder, and toilet soap. Thereafter, respondent court, through Justice
Gopengco with Justices Patajo and Racela, Jr. concurring, was initially
persuaded by petitioner's plea for reversal directed against the permission
granted by the Director of Patents, but the decision of the Second Special
Cases Division handed down on April 29, 1983 was later reconsidered in favor
of herein private respondent (pp. 46-54; pp. 34-36, Rollo).
Hence, the petition at bar assailing the action of respondent court in affirming
the ruling of the Director of Patents (Page 7, Petition; Page 16, Rollo).
In essence, it appears that in the course of marketing petitioner's "BRUT"
products and during the pendency of its application for registration of the
trademark "BRUT 33 and DEVICE" for antiperspirant, personal deodorant,
cream shave, after shave/shower lotion, hair spray, and hair shampoo (page
236, Rollo), respondent Co Beng Kay of Webengton Garments Manufacturing
applied for registration of the disputed emblem "BRUTE" for briefs. Opposition
raised by petitioner anchored on similarity with its own symbol and irreparable
injury to the business reputation of the first user was to no avail. When the
legal tussle was elevated to respondent court, Justice Gopengco remarked
that:
Indeed, a look at the marks "BRUT," "BRUT 33" and
"BRUTE" shows that such marks are not only similar in
appearance but they are even similar in sound and in the
style of presentation. It is reasonable to believe that this
similarity is sufficient to cause confusion and even mistake
and deception in the buying public as to the origin for source
of the goods bearing such trademarks. It should be
considered that, although the mark "BRUTE" was applied for,
only for briefs, yet such product has the same outlet such
as department stores and haberdashery stores in the
Philippines as the goods covered by the trademarks
"BRUT" and "BRUTE 33" so that such confusion, mistake or
deception is not unlikely to occur. The argument of appellee,
that in modern marketing, goods of similar use are grouped in
one section of the supermarket and thus it is unlikely that
cosmetics be mixed with textile or wearing apparel, is hardly
convincing enough, for a look at the modern department
stores shows that merchandise intended for the use of men
are now placed in a section which is then labelled "Men's
Accessories." It is not unlikely, therefore, that in said section,
appellant's products, which are cosmetics for men's use, be
placed beside appellee's product, and cause such confusion
or mistake as to the source of the goods displayed in the
section. To avoid this, the Director of Patents held:
The marks KEYSTON (on shirts) and
KEYSTONE (on shoes and slippers), the
latter having been previously registered are
clearly similar in sound and appearance that
confusion or mistake, or deception among
purchasers as to origin and source of goods
is likely to occur. Shirts and shoes are both
wearing apparel and there is no gainsaying
the truth that these items are ordinarily
displayed in the same manner and sold
through the same retail outlets such as
department and haberdashery stores in the
Philippines. (Ex-Parte Keystone Garment
Manufacturing Co., Decision No. 245 of the
Director of Patents, January 25, 1963.)
It is also not disputed that on account of the considerable
length of time that appellant has marketed its products
bearing the trademarks "BRUT" and "BRUT 33," and its
maintenance of high quality of its products through the years,
appellant has earned and established immense goodwill
among its customers. We agree with appellant that should
appellee be allowed to use the trademark "BRUTE" on the
briefs manufactured by him, appellee would be cashing in on
the goodwill already established by appellant, because, as
already stated above, appellant's cosmetics and appellee's
 briefs are not entirely unrelated since both are directed to the
fashion trade and in the marketing process, they may find
themselves side by side in the "Men's Accessories Section" of
the market, thus easily leading the buying public to believe
that such briefs come from the same source as appellant's
cosmetics, and be induced to buy said briefs, to the undue
advantage of appellee. Again, if after purchasing such briefs,
the public finds them to be of non-competitive quality, or not
of the high quality expected of appellant's products, then
appellant's reputation and goodwill will be ruined, to its
damage and prejudice. Thus, for the protection of the goodwill
already established by a party, the Supreme Court held:
When one applies for the registration of a
trademark or label which is almost the same
or very closely resembles one already used
and registered by another, the application
should be rejected and dismissed outright,
even without any opposition on the part of the
owner and user of a previously registered
label or trademark, this not only to avoid
confusion on the part of the public, but also to
protect an already used and registered
trademark and an established goodwill.
(Chuanchow Soy & Canning Co. vs. Dir. of
Patents and Villapanta, 108 Phil. 833, 836.)
The test of confusing similarity which would preclude the
registration of a trademark is not whether the challenged
mark would actually cause confusion or deception of the
purchasers but whether the use of such mark would likely
cause confusion or mistake on the part of the buying public.
In short, the law does not require that the competing marks
must be so identical as to produce actual error or mistakes. It
would be sufficient, for purposes of the law, that the similarity
between the two labels be such that there is a possibility or
likelihood of the purchaser of the older brand mistaking the
newer brand for it. (Gopengco, Mercantile Law Compendium,
1983 ed., p. 684; Acoje Mining Co., Inc. vs. Director of
Patents, 38 SCRA 480). (pp. 3-6, Decision; pp. 48-51, Rollo).
On June 5, 1984, respondent's Motion for Reconsideration merited the nod of
approval of the appellate court brought about by private respondent's
suggestion that the controlling ruling is that laid down in Philippine Refining
Co., Inc. vs. Ng Sam (115 SCRA 472 [1982]), ESSO Standard Eastern,
Inc. vs. Court of Appeals (116 SCRA 336 [1982]); Hickok Manufacturing Co.,
Inc. vs. CA (116 SCRA 378 [1982]), and Acoje Mining Co., Inc. vs. Director of
Patents (38 SCRA 480 [1971], to the effect that the identical trademark can be
used by different manufacturers for products that are non-competing and
unrelated. (pp. 34-36, Rollo)
Petitioner is of the impression that respondent court could not have relied on
the rulings of this Court in the ESSOand the PRC cases when the original
decision was reconsidered since respondent court already expressed the
opinion in the text of the previous discourse that the facts in said cases "are
not found in the case at bar" (Page 12, Brief for the Petitioner, Page
202, Rollo). Petitioner likewise emphasis American jurisprudential doctrines to
the effect that sale of cosmetics and wearing apparel under similar marks is
likely to cause confusion. Instead of applying
the ESSO, PRC and Hickok cases, petitioner continues to asseverate, the rule
as announced in Ang vs.Teodoro (74 Phil. 50 [1942]) as reiterated in Sta. Ana
vs. Maliwat and Evalle (24 SCRA (1968) 101) should be applied.
In additional, it seems that petitioner would want this Court to appreciate
petitioner's alleged application for registration of the trademark "BRUT 33
DEVICE" for briefs as an explicit proof that petitioner intended to expand its
mark "BRUT" to other goods, following the sentiment expressed by Justice
J.B.L. Reyes in the Sta. Ana case (supra, at page 1025) that relief is available
where the junior user's goods are not remote from any product that the senior
user would be likely to make or sell (Pages 26-27, Brief for the Petitioner).
Besides, petitioner insists that in view of the repeal of Republic Act No. 166
(which advocated the related goods theory) by Republic Act No. 666 which
deleted the phrase found in the old law that the merchandise must be
substantially the same descriptive properties, respondent Court should have
heeded the pronouncement in the Ang case that there can be unfair
competition even if the goods are noncompeting (supra, at page 54).
On the other hand, private respondent echoes the glaring difference in
physical appearance of its products with petitioner's own goods by stressing
the observations of the Director of Patents on May 3, 1978:
Considered in their entireties as depicted in the parties'
sample box and can containers, the involved trademarks
are grossly different in their overall appearance that even at a
distance a would-be purchaser could easily distinguish what
is BRUTE brief and what is BRUT after shave lotion, lotion
and the like. Opposer's mark BRUT or BRUT 33, as shown in
Exhibit "6", is predominantly colored green with a blue and
white band at the middle portion of the container. Also
appearing therein in bold letters is opposer's name
"FABERGE" and a notation "Creme Shave". On the other
hand, respondent's mark as shown in Exh. "4-A" prominently
displays the representation of a muscular man, underneath of
which appears the trademark BRUTE with a notation "Bikini
Brief" . . . Equally visible at the other portions of respondent's
labels are the pictorial representation of "briefs" which
unmistakably suggest that the product contained in the box
container is that of a man's brief. The fact therefore is obvious
that the goods upon which the conflicting trademarks are
used are clearly different and the intended purpose of such
goods are likewise not the same. Accordingly, a purchaser
who is out in the market for the purpose of buying
respondent's BRUTE brief would definitely be not mistaken or
misled into buying instead opposer's BRUT after shave lotion
or deodorant.
Additional, the meaning or connotation of the bare word
marks of opposer, BRUT, and BRUTE of respondent, are
clearly different and not likely to be confused with each other.
BRUT simply means "dry", and also, "to browse"; while
BRUTE means "ferocious, sensual", and in Latin, it signifies
"heavy". Gleaned from the respective meanings of the two
marks in question, they both suggest the resultant effects of
the application of the products, upon which the said
trademarks are employed, which fact all the more renders
confusion or deception of purchasers a remote possibility.
The products covered by petitioner's trademarks "BRUT" and
"BRUT 33 & Device" enjoying its so-called "goodwill" are
after-shave lotion, shaving cream, deodorant, talcum powder,
toilet soap, anti-perspirant, personal deodorant, cream shave,
after shave/shower lotion, hair spray and hair shampoo.
Petitioner has never applied for, registered nor used its
trademarks for briefs in commerce or trade in the Philippines.
Private respondent seeks to register his trademark "BRUTE"
only for briefs which is a product non-competitive to and
entirely unrelated with petitioner's aforementioned products.
(pp. 3-4, Brief for the Respondent)
in order to impress upon Us that the controlling norm is the comparison of the
trademarks in their entirely as they appear in their labels to determine whether
there is confusing similarity.
Moreover, private respondent asserts that briefs and cosmetics do not belong
to the same class nor do they have the same descriptive properties such that
the use of a trademark on one's goods does not prevent the adoption and use
of the same trademark by others on unrelated articles of a different nature in
line with the ruling of this Court in Hickok Manufacturing Co., Inc. vs. Court of
Appeals (116 SCRA 387 [1982]). Furthermore, respondent belies petitioner's
claim that the latter had applied for registration of the trademark "BRUT 33
DEVICE" for briefs since the documents on file with the Director of Patents
attached to respondent's legal Brief does not include the so-called application
by petitioner of the alleged trademark for briefs.
To the legal query of whether private respondent may appropriate the
trademark "BRUTE" for the briefs it manufactures and sells to the public albeit
petitioner had previously registered the symbol "BRUT" and "BRUT 33" for its
own line of times, it is but apropos to shift Our attention to the pertinent
provisions of the new Civil Code vis-a-vis Republic Act No. 166, as amended,
the special law patterned after the United States Trademark Act of 1946
(Director of Patents, Circular Release No. 36, 45 O.G.
3704; Martin, Commentaries and Jurisprudence on the Philippine Commercial
Laws, 1986 Revised Edition, Volume 2, page 489), thus:
Art. 520. A trade-mark or trade-name duly registered in the
proper government bureau or office is owned by and pertains
to the person, corporation, or firm registering the same,
subject to the provisions of special laws.
Art. 521. The goodwill of a business is property, and may be
transferred together with the right to use the name under
which the business is conducted.
Art. 522. Trade-marks and trade-names are governed by
special laws.
xxx xxx xxx
Sec. 2. What are registrable. Trade-marks, trade-names,
and service-marks owned by persons, corporations,
partnerships or associations domiciled in the Philippines and
by persons, corporations, partnerships or associations
domiciled in any foreign country may be registered in
accordance with the provisions of this Act; Provided, That
said trade-marks, trade-names, or service-marks, are actually
in use in commerce and services not less than two months in
the Philippines before the time the applications for registration
are filed: And provided, further, That the country of which the
applicant for registration is a citizen grants by law
substantially similar privileges to citizens of the Philippines,
and such fact is officially certified, with a certified true copy of
the foreign law translated into the English language, by the
government of the Republic of the Philippines. (As amended
by Rep. Act No. 865).
Sec. 2-A. Ownership of trade-marks, trade-names and
service-marks; how acquired. Anyone who lawfully
produces or deals in merchandise of any kind or who
engages in any lawful business or who renders any lawful
service in commerce, by actual use thereof in manufacture or
trade, in business, and in the service rendered, may
appropriate to his exclusive use a trade-mark, a trade-name,
or a service-mark not so appropriated by another, to
distinguish his merchandise, business or service from the
merchandise, business or services of others. The ownership
or possession of a trade-mark, trade-name, service-mark,
heretofore or hereafter appropriated, as in this section
provided, shall be recognized and protected in the same
manner and to the same extent as are other property rights
known to the law. (As inserted by Sec. 1 of Rep. Act 638).
xxx xxx xxx
Sec. 4. Registration of trade-marks, trade-names and service-
marks on the principal register.
. . . The owner of trademark, trade-name or service-mark
used to distinguish his goods, business or services from the
goods, business or services of others shall have right to
register the same on the principal register, unless it:
xxx xxx xxx
4(d) Consists of or comprises a mark or trade-name which so
resembles a mark or trade-name registered in the Philippines
or a mark or trade-name previously used in the Philippines by
another and not abandoned, as to be likely, when applied to
or used in connection with the goods, business or services of
the applicant, to cause confusion or mistake or to deceive
purchasers.
xxx xxx xxx
Sec. 11. Issuance and contents of the certificate.
Certificates of registration shall be issued in the name of the
Republic of the Philippines under the seal of the Patent
Office, and shall be signed by the Director, and a record
thereof together with a copy of the specimen or facsimile and
the statement of the applicant, shall be kept in books for that
purpose. The certificate shall reproduce the specimen or
facsimile of the mark or trade-name, contain the statement of
the applicant and state that the mark or trade-name is
registered under this Act, the date of the first use in
commerce or business, the particular goods or services for
which it is registered, the number and date of the registration,
the term thereof, the date on which the application for
registration was received in the Patent Office, a statement of
the requirement that in order to maintain the registration,
periodical affidavits of use within the specified times
hereinafter in section twelve provided, shall be filed, and such
other data as the rules and regulations may from time to time
prescribe.
xxx xxx xxx
Sec. 20. Certificate of registration prima facie evidence of
validity. A certificate of registration of a mark or trade-
name shall be prima facie evidence of the validity of the
registration, the registrant's ownership of the mark or trade-
name, and of the registrant's exclusive right to use the same
in connection with the goods, business or services specified
in the certificate, subject to any conditions and limitations
stated therein.
Having thus reviewed the laws applicable to the case before Us, it is not
difficult to discern from the foregoing statutory enactments that private
respondent may be permitted to register the trademark "BRUTE" for briefs
produced by it notwithstanding petitioner's vehement protestations of unfair
dealings in marketing its own set of items which are limited to: after-shave
lotion, shaving cream, deodorant, talcum powder and toilet soap. In as much
as petitioner has not ventured in the production of briefs, an item which is not
listed in its certificate of registration, petitioner can not and should not be
allowed to feign that private respondent had invaded petitioner's exclusive
domain. To be sure, it is significant that petitioner failed to annex in its Brief
the so-called "eloquent proof that petitioner indeed intended to expand its
mark "BRUT" to other goods" (Page 27, Brief for the Petitioner; Page
202, Rollo). Even then, a mere application by petitioner in this aspect does not
suffice and may not vest an exclusive right in its favor that can ordinarily be
protected by the Trademark Law. In short, paraphrasing Section 20 of the
Trademark Law as applied to the documentary evidence adduced by
petitioner, the certificate of registration issued by the Director of Patents can
confer upon petitioner the exclusive right to use its own symbol only to those
goods specified in the certificate, subject to any conditions and limitations
stated therein. This basic point is perhaps the unwritten rationale of Justice
Escolin in Philippine Refining Co., Inc. vs. Ng Lam (115 SCRA 472 [1982]),
when he stressed the principle enunciated by the United States Supreme
Court in American Foundries vs. Robertson (269 U.S. 372, 381, 70 L ed 317,
46 Sct. 160) that one who has adopted and used a trademark on his goods
does not prevent the adoption and use of the same trademark by other for
products which are of different description. Verily, this Court had the occasion
to observe in the 1966 case of George W. Luft Co., Inc. vs. Ngo Guan (18
SCRA 944 [1966]) that no serious objection was posed by the petitioner
therein since the applicant utilized the emblem "Tango" for no other product
than hair pomade in which petitioner does not deal.
This brings Us back to the incidental issue raised by petitioner which private
respondent sought to belie as regards petitioner's alleged expansion of its
business. It may be recalled that petitioner claimed that it has a pending
application for registration of the emblem "BRUT 33" for briefs (page 25, Brief
for the Petitioner; page 202, Rollo) to impress upon Us the Solomonic wisdom
imparted by Justice JBL Reyes in Sta. Ana vs. Maliwat (24 SCRA 1018
[1968]), to the effect that dissimilarity of goods will not preclude relief if the
junior user's goods are not remote from any other product which the first user
would be likely to make or sell (vide, at page 1025). Commenting on the
former provision of the Trademark Law now embodied substantially under
Section 4(d) of Republic Act No. 166, as amended, the erudite jurist opined
that the law in point "does not require that the articles of manufacture of the
previous user and late user of the mark should possess the same descriptive
properties or should fall into the same categories as to bar the latter from
registering his mark in the principal register." (supra at page 1026).
Yet, it is equally true that as aforesaid, the protective mantle of the Trademark
Law extends only to the goods used by the first user as specified in the
certificate of registration following the clear message conveyed by section 20.
How do We now reconcile the apparent conflict between Section 4(d) which
was relied upon by Justice JBL Reyes in the Sta. Ana case and Section 20? It
would seem that Section 4(d) does not require that the goods manufactured
by the second user be related to the goods produced by the senior user while
Section 20 limits the exclusive right of the senior user only to those goods
specified in the certificate of registration. But the rule has been laid down that
the clause which comes later shall be given paramount significance over an
anterior proviso upon the presumption that it expresses the latest and
dominant purpose. (Graham Paper Co. vs. National Newspaper Asso. (Mo.
App.) 193 S.W. 1003; Barnett vs. Merchant's L. Ins. Co., 87 Okl. 42; State ex
nel Atty. Gen. vs. Toledo, 26 N.E., p. 1061; cited by Martin, Statutory
Construction Sixth ed., 1980 Reprinted, p. 144). It ineluctably follows that
Section 20 is controlling and, therefore, private respondent can appropriate its
symbol for the briefs it manufactures because as aptly remarked by Justice
Sanchez in Sterling Products International Inc. vs. Farbenfabriken Bayer (27
SCRA 1214 [1969]):
Really, if the certificate of registration were to be deemed as
including goods not specified therein, then a situation may
arise whereby an applicant may be tempted to register a
trademark on any and all goods which his mind may conceive
even if he had never intended to use the trademark for the
said goods. We believe that such omnibus registration is not
contemplated by our Trademark Law. (1226)
Withal, judging from the physical attributes of petitioner's and private
respondent's products, there can be no doubt that confusion or the likelihood
of deception to the average purchaser is unlikely since the goods are non-
competing and unrelated. In upholding registration of the brand "ESSO for
cigarettes inspite previous appropriation of the same mark "ESSO" for
petroleum products, then Justice, later Chief Justices Teehankee in Esso
Standard Eastern, Inc.vs. Court of Appeals (116 SCRA 336 [1982] said:
The Court affirms on the basis of controlling doctrine the
appealed decision of the Court of Appeals reversing that of
the Court of First Instance of Manila and dismissing the
complaint filed by herein petitioner against private respondent
for trade infringement for using petitioner's trademark ESSO,
since it clearly appears that the goods on which the
trademark ESSO is used by respondent is non-competing
and entirely unrelated to the products of petitioner so that
there is no likelihood of confusion or deception on the part of
the purchasing public as to the origin or source of the goods.
xxx xxx xxx
The trial court, relying on the old cases of Ang
vs. Teodoro and Arce & Sons, Inc. vs. Selecta Biscuit
Company, referring to related products, decided in favor of
petitioner and ruled that respondent was guilty of infringement
of trademark.
On appeal, respondent Court of Appeals found that there was
no trademark infringement and dismissed the complaint.
Reconsideration of the decision having been denied,
petitioner appealed to this court by way of certiorari to reverse
the decision of the Court of Appeals and to reinstate the
decision of the Court of First Instance of Manila. The Court
finds no ground for granting the petition.
The law defines infringement as the use without consent of
the trademark owner of any "reproduction, counterfeit, copy or
colorable imitation of any registered mark or tradename in
connection with the sale, offering for sale, or advertising of
any goods, business or services on or in connection with
which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of
such goods or services, or identity of such business; or
reproduce, counterfeit, copy or colorable imitate any director's
decision on the question of "May petitioner Acoje Mining
Company register for the purpose of advertising its product,
soy sauce, the trademark LOTUS, there being already in
existence one such registered in favor of the Philippine
Refining Company for its product, edible oil, it being further
shown that the trademark applied for is in smaller type,
colored differently, set on a background which is dissimilar as
to yield a distinct appearance?" and ordered the granting of
petitioner's application for registration ruling that "there is
quite a difference between soy sauce and edible oil. If one is
in the market for the former, he is not likely to purchase the
latter just because of the trademarks LOTUS" and "when
regard is had for the principle that the two trademark in their
entirely as they appear in their respective labels should be
considered in relation to the goods advertised before
registration could be denied, the conclusion is inescapable
that respondent Director ought to have reached a different
conclusion."
By the same token, in the recent case of Philippine Refining
Co., Inc. v. Ng Sam and Director of Patents, the Court upheld
the patent director's registration of the same trademark
CAMIA for therein respondent's product of ham
notwithstanding its already being used by therein petitioner
for a wide range of products: lard; butter, cooking oil, abrasive
detergents, polishing material and soap of all kinds. The
Court, after noting that the same CAMIA trademark had been
registered by two other companies, Everbright Development
Company and F.E. Zuellig, Inc. for their respective products
of thread and yarn (for the former) and textiles, embroideries
and laces (for the latter) ruled that "while ham and some of
the products of petitioner are classified under Class 47
(Foods and Ingredients of Food), this alone cannot serve as
the decisive factor in the resolution of whether or not they are
related goods. Emphasis should be on the similarity of the
arbitrary classification or general description of their
properties or characteristics. The Court, therefore, concluded
that "In fine, We hold that the businesses of the parties are
noncompetitive and their products so unrelated that the use of
identical trademarks is not likely to give rise to confusion,
much less cause damage to petitioner.
In the situation before us, the goods are obviously different
from each other with "absolutely no iota of similitude" as
stressed in respondent court's judgment. They are so foreign
to each other as to make it unlikely that purchasers would
think that petitioner is the manufacturer of respondent' goods.
The mere fact that one person has adopted and used a
trademark on his goods does not prevent the adoption and
use of the same trademark by others on unrelated articles of
a different kind.
Petitioner uses the trademark ESSO and holds certificate
registration of the trademark for petroleum products, including
aviation gasoline, grease, cigarette lighter fluid and other
various products such as plastics, chemicals, synthetics,
 gasoline solvents, kerosene, automotive and industrial fuel,
bunker fuel, lubricating oil, fertilizers, gas alcohol, insecticides
and the "ESSO Gasul" burner, while respondent's business is
solely for the manufacture and sale of the unrelated product
of cigarettes. The public knows too well that petitioner deals
solely with petroleum products that there is no possibility that
cigarettes with ESSO brand will be associated with whatever
good name petitioner's ESSO trademark may have
generated. Although petitioner's products are numerous, they
are of the same class or line of merchandise which are non-
competing with respondent's product of cigarettes, which as
pointed out in the appealed judgment is beyond petitioner's
"zone of potential or natural and logical expansion." When a
trademark is used by a party for a product in which the other
party does not deal, the use of the same trademark on the
latter's product cannot be validly objected to.
xxx xxx xxx
Respondent court correctly ruled that considering the general
appearances of each mark as a whole, the possibility of any
confusion is unlikely. A comparison of the labels of the
samples of the goods submitted by the parties shows a great
many differences on the trademark used. As pointed out by
respondent court in its appealed decision, "(A) witness for the
plaintiff, Mr. Buhay, admitted that the color of the "ESSO"
used by the plaintiff for the oval design where the blue word
ESSO is contained is the distinct and unique kind of blue. In
his answer to the trial court's question, Mr. Buhay informed
the court that the plaintiff never used its trademark on any
product where the combination of colors is similar to the label
of the Esso cigarettes," and "Another witness for the plaintiff,
Mr. Tengco, testified that generally, the plaintiff's trademark
comes all in either red, white, blue or any combination of the
three colors. It is to be pointed out that not even a shade of
these colors appears on the trademark of the appellant's
cigarette. The only color that the appellant uses in its
trademark is green. (339; 341-346)
The glaring discrepancies between the two products had been amply
portrayed to such an extent that indeed, "a purchaser who is out in the market
for the purpose of buying respondent's BRUTE brief would definitely be not
mistaken or misled into buying BRUT after shave lotion or deodorant" as
categorically opined in the decision of the Director of Patents relative to the
inter-partes case. (supra, at page 7).
Petitioner's bid to persuade Us into accepting the doctrines announced in the
aforementioned cases of Sta. Ana vs.Maliwat and Ang vs. Teodoro hardly
inspire belief. In Sta Ana, it was admitted that the marks were confusingly
similar which is not so in the case at bar. In the 1942 case of Ang
vs. Teodoro, Justice Ozaeta noted that pants and shirts are similar to shoes
and slippers within the meaning of Sections 3, 7, 11, 13 and 20 of Act No. 666
which was the old Trademark Law enacted on March 6, 1903 prior to the
present law. Obviously, the conclusion reached by theponente in
the Ang case may not now be utilized by analogy to the case at bar due to
variance in the factual and legal milieu. Neither can we agree with petitioner
that the ruling in La Chemise Lacoste, S.A. vs. Fernandez (129 SCRA 373
[1984]) is applicable to the controversy at hand. The case adverted to by
petitioner involved the same mark for the same class of shirts manufactured
by the parties therein.
It would appear that as a consequence of this discourse, there still remains
hanging in mid-air the unanswered puzzle as to why an aspiring commercial
enterprise, given the infinite choices available to it of names for the intend
product, would select a trademark or tradename which somewhat resembles
an existing emblem that had established goodwill. Our opinion hereinbefore
expressed could even open the floodgates to similar incursions in the future
when we interpreted Section 20 of the Trademark Law as an implicit
permission to a manufacturer to venture into the production of goods and
allow that producer to appropriate the brand name of the senior registrant on
goods other than those stated in the certificate of registration.
But these nagging and disturbing points cannot win the day for petitioner,
although We must hasten to add that in the final denouement, Our
apprehensions in this regard are not entirely irreversible since Section 4(d)
and 20 of the law in question may still be subjected to legislative modification
in order to protect the original user of the symbol.
WHEREFORE, the petition is hereby DISMISSED without pronouncement as
to costs.
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.
GRIO-AQUINO, J.:
On September 15, 1988, San Miguel Corporation (SMC) filed a complaint
against Asia Brewery Inc. (ABI) for infringement of trademark and unfair
competition on account of the latter's BEER PALE PILSEN or BEER NA
BEER product which has been competing with SMC's SAN MIGUEL PALE
PILSEN for a share of the local beer market. (San Miguel Corporation vs. Asia
Brewery Inc., Civ. Case. No. 56390, RTC Branch 166, Pasig, Metro Manila.).
On August 27, 1990, a decision was rendered by the trial Court, presided over
by Judge Jesus O. Bersamira, dismissing SMC's complaint because ABI "has
not committed trademark infringement or unfair competition against" SMC (p.
189, Rollo).
SMC appealed to the Court of Appeals (C.A.-G.R. CV No. 28104). On
September 30, 1991, the Court of Appeals (Sixth Division composed of
Justice Jose C. Campos, Jr., chairman and ponente, and Justices Venancio
D. Aldecoa Jr. and Filemon H. Mendoza, as members) reversed the trial court.
The dispositive part of the decision reads as follows:
In the light of the foregoing analysis and under the plain
language of the applicable rule and principle on the matter,
We find the defendant Asia Brewery Incorporated GUILTY of
infringement of trademark and unfair competition. The
decision of the trial court is hereby REVERSED, and a new
judgment entered in favor of the plaintiff and against the
defendant as follows:
(1) The defendant Asia Brewery Inc. its officers, agents,
servants and employees are hereby permanently enjoined
and restrained from manufacturing, putting up, selling,
advertising, offering or announcing for sale, or supplying Beer
Pale Pilsen, or any similar preparation, manufacture or beer
in bottles and under labels substantially identical with or like
the said bottles and labels of plaintiff San Miguel Corporation
employed for that purpose, or substantially identical with or
like the bottles and labels now employed by the defendant for
that purpose, or in bottles or under labels which are
calculated to deceive purchasers and consumers into the
belief that the beer is the product of the plaintiff or which will
enable others to substitute, sell or palm off the said beer of
the defendant as and for the beer of the plaintiff-complainant.
(2) The defendant Asia Brewery Inc. is hereby ordered to
render an accounting and pay the San Miguel Corporation
double any and all the payments derived by defendant from
operations of its business and the sale of goods bearing the
mark "Beer Pale Pilsen" estimated at approximately Five
Million Pesos (P5,000,000.00); to recall all its products
bearing the mark "Beer Pale Pilsen" from its retailers and
deliver these as well as all labels, signs, prints, packages,
wrappers, receptacles and advertisements bearing the
infringing mark and all plates, molds, materials and other
means of making the same to the Court authorized to execute
this judgment for destruction.
(3) The defendant is hereby ordered to pay plaintiff the sum of
Two Million Pesos (P2,000,000.00) as moral damages and
Half a Million Pesos (P5,000,000.00) by way of exemplary
damages.
(4) The defendant is further ordered to pay the plaintiff
attorney's fees in the amount of P250,000.00 plus costs to
this suit. (p. 90, Rollo.)
Upon a motion for reconsideration filed by ABI, the above dispositive part of
the decision, was modified by the separate opinions of the Special Sixth
Division 1 so that it should read thus:
In the light of the foregoing analysis and under the plain
language of the applicable rule and principle on the matter,
 We find the defendant Asia Brewery Incorporated GUILTY of
infringement of trademark and unfair competition. The
decision of the trial court is hereby REVERSED, and a new
judgment entered in favor of the plaintiff and against the
defendant as follows:
(1) The defendant Asia Brewery Inc., its officers, agents,
servants and employees are hereby permanently enjoined
and restrained from manufacturing, putting up, selling,
advertising, offering or announcing for sale, or supplying Beer
Pale Pilsen, or any similar preparation, manufacture or beer
in bottles and under labels substantially identical with or like
the said bottles and labels of plaintiff San Miguel Corporation
employed for that purpose, or substantially identical with or
like the bottles and labels now employed by the defendant for
that purpose, or in bottles or under labels which are
calculated to deceive purchasers and consumers into the
belief that the beer if the product of the plaintiff or which will
enable others to substitute, sell or palm off the said beer of
the defendant as and for the beer of the plaintiff-complainant.
(2) The defendant Asia Brewery Inc. is hereby ordered 2 to
recall all its products bearing the mark Beer Pale Pilsen from
its retailers and deliver these as well as all labels, signs,
prints, packages, wrappers, receptacles and advertisements
bearing the infringing mark and all plates, molds, materials
and other means of making the same to the Court authorized
to execute this judgment for destruction.
(3) The defendant is hereby ordered to pay plaintiff the sum of
Two Million Pesos (P2,000,000.00) as moral damages and
Half a Million Pesos (P500,000.00) by way of exemplary
damages.
(4) The defendant is further ordered to pay the plaintiff
attorney's fees in the amount of P250,000.00 plus costs of
this suit.
In due time, ABI appealed to this Court by a petition for certiorari under Rule
45 of the Rules of Court. The lone issue in this appeal is whether ABI infringes
SMC's trademark: San Miguel Pale Pilsen with Rectangular Hops and Malt
Design, and thereby commits unfair competition against the latter. It is a
factual issue (Phil. Nut Industry Inc. v. Standard Brands Inc., 65 SCRA 575)
and as a general rule, the findings of the Court of Appeals upon factual
questions are conclusive and ought not to be disturbed by us. However, there
are exceptions to this general rule, and they are:
(1) When the conclusion is grounded entirely on speculation,
surmises and conjectures;
(2) When the inference of the Court of Appeals from its
findings of fact is manifestly mistaken, absurd and impossible;
(3) Where there is grave abuse of discretion;
(4) When the judgment is based on a misapprehension of
facts;
(5) When the appellate court, in making its findings, went
beyond the issues of the case, and the same are contrary to
the admissions of both the appellant and the appellee;
(6) When the findings of said court are contrary to those of
the trial court;
(7) When the findings are without citation of specific evidence
on which they are based;
(8) When the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the
respondents; and
(9) When the findings of facts of the Court of Appeals are
premised on the absence of evidence and are contradicted on
record. (Reynolds Philippine Corporation vs. Court of
Appeals, 169 SCRA 220, 223 citing, Mendoza vs. Court of
Appeals, 156 SCRA 597; Manlapaz vs. Court of Appeals, 147
SCRA 238; Sacay vs. Sandiganbayan, 142 SCRA 593, 609;
Guita vs. CA, 139 SCRA 576; Casanayan vs. Court of
Appeals, 198 SCRA 333, 336; also Apex Investment and
Financing Corp. vs. IAC, 166 SCRA 458 [citing Tolentino vs.
De Jesus, 56 SCRA 167; Carolina Industries, Inc. vs. CMS
Stock Brokerage, Inc., 97 SCRA 734; Manero vs. CA, 102
SCRA 817; and Moran, Jr. vs. CA, 133 SCRA 88].)
Under any of these exceptions, the Court has to review the evidence in order
to arrive at the correct findings based on the record (Roman Catholic Bishop
of Malolos, Inc. vs. IAC, 191 SCRA 411, 420.) Where findings of the Court of
Appeals and trial court are contrary to each other, the Supreme Court may
scrutinize the evidence on record. (Cruz vs. CA, 129 SCRA 222, 227.)
The present case is one of the exceptions because there is no concurrence
between the trial court and the Court of Appeals on the lone factual issue of
whether ABI, by manufacturing and selling its BEER PALE PILSEN in amber
colored steinie bottles of 320 ml. capacity with a white painted rectangular
label has committed trademark infringement and unfair competition against
SMC.
Infringement of trademark is a form of unfair competition (Clarke vs. Manila
Candy Co., 36 Phil. 100, 106). Sec. 22 of Republic Act No. 166, otherwise
known as the Trademark Law, defines what constitutes infringement:
Sec. 22. Infringement, what constitutes. Any person who
shall use, without the consent of the registrant, any
reproduction, counterfeit, copy or colorable imitation of
any registered mark or trade-name in connection with the
sale, offering for sale, or advertising of any goods, business
or services on or in connection with which such use is likely to
cause confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or services, or
identity of such business; or reproduce, counterfeit, copy or
colorably imitate any such mark or trade-name and apply
such reproduction, counterfeit, copy, or colorable imitation to
labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection
with such goods, business or services, shall be liable to a civil
action by the registrant for any or all of the remedies herein
provided. (Emphasis supplied.)
This definition implies that only registered trade marks, trade names and
service marks are protected against infringement or unauthorized use by
another or others. The use of someone else's registered trademark, trade
name or service mark is unauthorized, hence, actionable, if it is done "without
the consent of the registrant." (Ibid.)
The registered trademark of SMC for its pale pilsen beer is:
San Miguel Pale Pilsen With Rectangular Hops and Malt
Design. (Philippine Bureau of Patents, Trademarks and
Technology Transfer Trademark Certificate of Registration
No. 36103, dated 23 Oct. 1986,
(p. 174, Rollo.)
As described by the trial court in its decision (Page 177, Rollo):
. . . . a rectangular design [is] bordered by what appears to
be minute grains arranged in rows of three in which there
appear in each corner hop designs. At the top is a phrase
written in small print "Reg. Phil. Pat. Off." and at the bottom
"Net Contents: 320 Ml." The dominant feature is the phrase
"San Miguel" written horizontally at the upper portion. Below
are the words "Pale Pilsen" written diagonally across the
middle of the rectangular design. In between is a coat of arms
and the phrase "Expertly Brewed." The "S" in "San" and the
"M" of "Miguel," "P" of "Pale" and "Pilsen" are written in
Gothic letters with fine strokes of serifs, the kind that first
appeared in the 1780s in England and used for printing
German as distinguished from Roman and Italic. Below "Pale
Pilsen" is the statement "And Bottled by" (first line, "San
Miguel Brewery" (second line), and "Philippines" (third line).
(p. 177, Rollo; Emphasis supplied.)
On the other hand, ABI's trademark, as described by the trial court, consists
of:
. . . a rectangular design bordered by what appear to
be buds of flowers with leaves. The dominant feature is
"Beer" written across the upper portion of the rectangular
design. The phrase "Pale Pilsen" appears immediately below
in smaller block letters. To the left is a hop design and to the
right, written in small prints, is the phrase "Net Contents 320
ml." Immediately below "Pale Pilsen" is the statement written
in three lines "Especially brewed and bottled by" (first line),
"Asia Brewery Incorporated" (second line), and "Philippines"
(third line), (p. 177, Rollo; Emphasis supplied.)
Does ABI's BEER PALE PILSEN label or "design" infringe upon SMC's SAN
MIGUEL PALE PILSEN WITH RECTANGULAR MALT AND HOPS DESIGN?
The answer is "No."
Infringement is determined by the "test of dominancy" rather than by
differences or variations in the details of one trademark and of another. The
rule was formulated in Co Tiong Sa vs. Director of Patents, 95 Phil. 1, 4
(1954); reiterated in Lim Hoa vs. Director of Patents, 100 Phil. 214, 216-217
(1956), thus:
It has been consistently held that the question of infringement
of a trademark is to be determined by the test of dominancy.
Similarity in size, form and color, while relevant, is not
conclusive. If the competing trademark contains the main or
essential or dominant features of another, and confusion and
deception is likely to result, infringement takes place.
Duplication or imitation is not necessary; nor it is necessary
that the infringing label should suggest an effort to imitate. [C.
Neilman Brewing Co. vs. Independent Brewing Co., 191 F.,
489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180
Fed. 579]. The question at issue in cases of infringement of
trademarks is whether the use of the marks involved would be
likely to cause confusion or mistakes in the mind of the public
or deceive purchasers. (Auburn Rubber Corporation vs.
Honover Rubber Co., 107 F. 2d 588; . . . .) (Emphasis
supplied.)
In Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272, 275, the test was
similarity or "resemblance between the two (trademarks) such as would be
likely to cause the one mark to be mistaken for the other. . . . [But] this is not
such similitude as amounts to identity."
In Phil. Nut Industry Inc. vs. Standard Brands Inc., 65 SCRA 575, the court
was more specific: the test is "similarity in the dominant features of the
trademarks."
What are the dominant features of the competing trademarks before us?
There is hardly any dispute that the dominant feature of SMC's trademark is
the name of the product: SAN MIGUEL PALE PILSEN, written in white Gothic
letters with elaborate serifs at the beginning and end of the letters "S" and "M"
on an amber background across the upper portion of the rectangular design.
On the other hand, the dominant feature of ABI's trademark is the name:
BEER PALE PILSEN, with the word "Beer" written in large amber letters,
larger than any of the letters found in the SMC label.
The trial court perceptively observed that the word "BEER" does not appear in
SMC's trademark, just as the words "SAN MIGUEL" do not appear in ABI's
trademark. Hence, there is absolutely no similarity in the dominant features of
both trademarks.
Neither in sound, spelling or appearance can BEER PALE PILSEN be said to
be confusingly similar to SAN MIGUEL PALE PILSEN. No one who purchases
BEER PALE PILSEN can possibly be deceived that it is SAN MIGUEL PALE
PILSEN. No evidence whatsoever was presented by SMC proving otherwise.
Besides the dissimilarity in their names, the following other dissimilarities in
the trade dress or appearance of the competing products abound:
(1) The SAN MIGUEL PALE PILSEN bottle has a slender tapered neck.
The BEER PALE PILSEN bottle has a fat, bulging neck.
(2) The words "pale pilsen" on SMC's label are printed in bold and laced
letters along a diagonal band, whereas the words "pale pilsen" on ABI's bottle
are half the size and printed in slender block letters on a
straight horizontal band. (See Exhibit "8-a".).
(3) The names of the manufacturers are prominently printed on their
respective bottles.
SAN MIGUEL PALE PILSEN is "Bottled by the San Miguel Brewery,
Philippines," whereas BEER PALE PILSEN is "Especially brewed and bottled
by Asia Brewery Incorporated, Philippines."
(4) On the back of ABI's bottle is printed in big, bold letters, under a row of
flower buds and leaves, its copyrighted slogan:
"BEER NA BEER!"
Whereas SMC's bottle carries no slogan.
(5) The back of the SAN MIGUEL PALE PILSEN bottle carries the SMC logo,
whereas the BEER PALE PILSEN bottle has no logo.
(6) The SAN MIGUEL PALE PILSEN bottle cap is stamped with a coat of
arms and the words "San Miguel Brewery Philippines" encircling the same.
The BEER PALE PILSEN bottle cap is stamped with the name "BEER" in the
center, surrounded by the words "Asia Brewery Incorporated Philippines."
(7) Finally, there is a substantial price difference between BEER PALE
PILSEN (currently at P4.25 per bottle) and SAN MIGUEL PALE PILSEN
(currently at P7.00 per bottle). One who pays only P4.25 for a bottle of beer
cannot expect to receive San Miguel Pale Pilsen from the storekeeper or
bartender.
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 entitled
to its use. (2 Callman. Unfair Competition and Trademarks,
pp. 869-870.)" (Emphasis supplied.)
The circumstance that the manufacturer of BEER PALE PILSEN, Asia
Brewery Incorporated, has printed its name all over the bottle of its beer
product: on the label, on the back of the bottle, as well as on the bottle cap,
disproves SMC's charge that ABI dishonestly and fraudulently intends to palm
off its BEER PALE PILSEN as SMC's product. In view of the visible
differences between the two products, the Court believes it is quite unlikely
that a customer of average intelligence would mistake a bottle of BEER PALE
PILSEN for SAN MIGUEL PALE PILSEN.
The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN is bottled
in amber-colored steinie bottles of 320 ml. capacity and is also advertised in
print, broadcast, and television media, does not necessarily constitute unfair
competition.
Unfair competition is the employment of deception or any other means
contrary to good faith by which a person shall pass off the goods
manufactured by him or in which he deals, or his business, or services, for
those of another who has already established goodwill for his similar goods,
business or services, or any acts calculated to produce the same result. (Sec.
29, Republic Act No. 166, as amended.) The law further enumerates the more
common ways of committing unfair competition, thus:
Sec. 29. . . .
In particular, and without in any way limiting the scope of
unfair competition, the following shall be deemed guilty of
unfair competition:
(a) Any person, who in selling his goods shall give them the
general appearance of goods of another manufacturer or
dealer, either as to the goods themselves or in the wrapping
of the packages in which they are contained, or the devices or
words thereon, or in any other feature of their appearance,
which would be likely to influence purchasers to believe that
the goods offered are those of a manufacturer or dealer other
than the actual manufacturer or dealer, or who otherwise
clothes the goods with such appearance as shall deceive the
public and defraud another of his legitimate trade, or any
subsequent vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose.
(b) Any person who by any artifice, or device, or who employs
any other means calculated to induce the false belief that
such person is offering the services of another who has
identified such services in the mind of the public; or
(c) Any person who shall make any false statement in the
course of trade or who shall commit any other act contrary to
good faith of a nature calculated to discredit the goods,
business or services of another.
In this case, the question to be determined is whether ABI is using a name or
mark for its beer that has previously come to designate SMC's beer, or
whether ABI is passing off its BEER PALE PILSEN as SMC's SAN MIGUEL
PALE PILSEN.
. . ..The universal test question is whether the public is likely
to be deceived. Nothing less than conduct tending to pass off
one man's goods or business as that of another will constitute
unfair competition. Actual or probable deception and
confusion on the part of the customers by reason of
defendant's practices must always appear. (Shell Co., of the
Philippines, Ltd. vs. Insular Petroleum Refining Co. Ltd. et al.,
120 Phil. 434, 439.)
The use of ABI of the steinie bottle, similar but not identical to the SAN
MIGUEL PALE PILSEN bottle, is not unlawful. As pointed out by ABI's
counsel, SMC did not invent but merely borrowed the steinie bottle from
abroad and it claims neither patent nor trademark protection for that bottle
shape and design. (See rollo, page 55.) The Cerveza Especial and the Efes
Pale Pilsen use the "steinie" bottle. (See Exhibits 57-D, 57-E.) The trial court
found no infringement of SMC's bottle
The court agrees with defendant that there is no infringement
of plaintiff's bottle, firstly, because according to plaintiff's
witness Deogracias Villadolid, it is a standard type of bottle
called steinie, and to witness Jose Antonio Garcia, it is not a
San Miguel Corporation design but a design originally
developed in the United States by the Glass Container
Manufacturer's Institute and therefore lacks exclusivity.
Secondly, the shape was never registered as a trademark.
Exhibit "C" is not a registration of a beer bottle design
required under Rep. Act 165 but the registration of the name
and other marks of ownership stamped on containers as
required by Rep. Act 623. Thirdly, the neck of defendant's
 bottle is much larger and has a distinct bulge in its uppermost
part. (p. 186, Rollo.)
The petitioner's contention that bottle size, shape and color may not be the
exclusive property of any one beer manufacturer is well taken. SMC's being
the first to use the steinie bottle does not give SMC a vested right to use it to
the exclusion of everyone else. Being of functional or common use, and not
the exclusive invention of any one, it is available to all who might need to use
it within the industry. Nobody can acquire any exclusive right to market articles
supplying simple human needs in containers or wrappers of the general form,
size and character commonly and immediately used in marketing such articles
(Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190, 194-195.)
. . . protection against imitation should be properly confined to
nonfunctional features. Even if purely functional elements are
slavishly copied, the resemblance will not support an action
for unfair competition, and the first user cannot claim
secondary meaning protection. Nor can the first user
predicate his claim to protection on the argument that his
business was established in reliance on any such unpatented
nonfunctional feature, even "at large expenditure of money."
(Callman Unfair Competition, Trademarks and Monopolies,
Sec. 19.33 [4th Ed.].) (Petition for Review, p. 28.)
ABI does not use SMC's steinie bottle. Neither did ABI copy it. ABI makes its
own steinie bottle which has a fat bulging neck to differentiate it from SMC's
bottle. The amber color is a functional feature of the beer bottle. As pointed
out by ABI, all bottled beer produced in the Philippines is contained and sold
in amber-colored bottles because amber is the most effective color in
preventing transmission of light and provides the maximum protection to beer.
As was ruled in California Crushed Fruit Corporation vs. Taylor B. and Candy
Co., 38 F2d 885, a merchant cannot be enjoined from using a type or color of
bottle where the same has the useful purpose of protecting the contents from
the deleterious effects of light rays. Moreover, no one may have a monopoly
of any color. Not only beer, but most medicines, whether in liquid or tablet
form, are sold in amber-colored bottles.
That the ABI bottle has a 320 ml. capacity is not due to a desire to imitate
SMC's bottle because that bottle capacity is the standard prescribed under
Metrication Circular No. 778, dated 4 December 1979, of the Department of
Trade, Metric System Board.
With regard to the white label of both beer bottles, ABI explained that it used
the color white for its label because white presents the strongest contrast to
the amber color of ABI's bottle; it is also the most economical to use on labels,
and the easiest to "bake" in the furnace (p. 16, TSN of September 20, 1988).
No one can have a monopoly of the color amber for bottles, nor of white for
labels, nor of the rectangular shape which is the usual configuration of labels.
Needless to say, the shape of the bottle and of the label is unimportant. What
is all important is the name of the product written on the label of the bottle for
that is how one beer may be distinguished form the others.
In Dy Buncio v. Tan Tiao Bok, 42 Phil. 190, 196-197, where two competing
tea products were both labelled as Formosan tea, both sold in 5-ounce
packages made of ordinary wrapping paper of conventional color, both with
labels containing designs drawn in green ink and Chinese characters written
in red ink, one label showing a double-decked jar in the center, the other, a
flower pot, this court found that the resemblances between the designs were
not sufficient to mislead the ordinary intelligent buyer, hence, there was no
unfair competition. The Court held:
. . . . In order that there may be deception of the buying public
in the sense necessary to constitute unfair competition, it is
necessary to suppose a public accustomed to buy, and
therefore to some extent familiar with, the goods in question.
The test of fraudulent simulation is to be found in the
likelihood of the deception of persons in some measure
acquainted with an established design and desirous of
purchasing the commodity with which that design has been
associated. The test is not found in the deception, or
possibility of the deception, of the person who knows nothing
about the design which has been counterfeited, and who
must be indifferent as between that and the other. The
simulation, in order to be objectionable, must be such as
appears likely to mislead the ordinarily intelligent buyer who
has a need to supply and is familiar with the article that he
seeks to purchase.
The main thrust of SMC's complaint if not infringement of its trademark, but
unfair competition arising form the allegedly "confusing similarity" in the
general appearance or trade dress of ABI's BEER PALE PILSEN beside
SMC's SAN MIGUEL PALE PILSEN (p. 209, Rollo)
SMC claims that the "trade dress" of BEER PALE PILSEN is "confusingly
similar" to its SAN MIGUEL PALE PILSEN because both are bottled in 320 ml.
steinie type, amber-colored bottles with white rectangular labels.
However, when as in this case, the names of the competing products are
clearly different and their respective sources are prominently printed on the
label and on other parts of the bottle, mere similarity in the shape and size of
the container and label, does not constitute unfair competition. The steinie
bottle is a standard bottle for beer and is universally used. SMC did not invent
it nor patent it. The fact that SMC's bottle is registered under R.A. No. 623 (as
amended by RA 5700, An Act to Regulate the Use of Duly Stamped or
Marked Bottles, Boxes, Casks, Kegs, Barrels and Other Similar Containers)
simply prohibits manufacturers of other foodstuffs from the unauthorized use
of SMC's bottles by refilling these with their products. It was not uncommon
then for products such as patis (fish sauce) and toyo (soy sauce) to be sold in
recycled SAN MIGUEL PALE PILSEN bottles. Registration of SMC's beer
bottles did not give SMC a patent on the steinie or on bottles of similar size,
shape or color.
Most containers are standardized because they are usually made by the same
manufacturer. Milk, whether in powdered or liquid form, is sold in uniform tin
cans. The same can be said of the standard ketchup or vinegar bottle with its
familiar elongated neck. Many other grocery items such as coffee,
mayonnaise, pickles and peanut butter are sold in standard glass jars. The
manufacturers of these foodstuffs have equal right to use these standards
tins, bottles and jars for their products. Only their respective labels distinguish
them from each other. Just as no milk producer may sue the others for unfair
competition because they sell their milk in the same size and shape of milk
can which he uses, neither may SMC claim unfair competition arising from the
fact that ABI's BEER PALE PILSEN is sold, like SMC's SAN MIGUEL PALE
PILSEN in amber steinie bottles.
The record does not bear out SMC's apprehension that BEER PALE PILSEN
is being passed off as SAN MIGUEL PALE PILSEN. This is unlikely to happen
for consumers or buyers of beer generally order their beer by brand. As
pointed out by ABI's counsel, in supermarkets and tiendas, beer is ordered by
brand, and the customer surrenders his empty replacement bottles or pays a
deposit to guarantee the return of the empties. If his empties are SAN
MIGUEL PALE PILSEN, he will get SAN MIGUEL PALE PILSEN as
replacement. In sari-sari stores, beer is also ordered from the tindera by
brand. The same is true in restaurants, pubs and beer gardens beer is
ordered from the waiters by brand. (Op. cit. page 50.)
Considering further that SAN MIGUEL PALE PILSEN has virtually
monopolized the domestic beer market for the past hundred years, those who
have been drinking no other beer but SAN MIGUEL PALE PILSEN these
many years certainly know their beer too well to be deceived by a newcomer
in the market. If they gravitate to ABI's cheaper beer, it will not be because
they are confused or deceived, but because they find the competing product
to their taste.
Our decision in this case will not diminish our ruling in "Del Monte Corporation
vs. Court of Appeals and Sunshine Sauce Manufacturing Industries," 181
SCRA 410, 419, 3 that:
. . . to determine whether a trademark has been infringed, we
must consider the mark as a whole and not as dissected. If
the buyer is deceived, it is attributable to the marks as a
totality, not usually to any part of it.
That ruling may not apply to all kinds of products. The Court itself cautioned
that in resolving cases of infringement and unfair competition, the courts
should "take into consideration several factors which would affect its
conclusion, to wit: the age, training and education of the usual purchaser, the
nature and cost of the article, whether the article is bought for immediate
consumption and also the conditions under which it is usually purchased" (181
SCRA 410, 418-419).
The Del Monte case involved catsup, a common household item which is
bought off the store shelves by housewives and house help who, if they are
illiterate and cannot identify the product by name or brand, would very likely
identify it by mere recollection of its appearance. Since the competitor,
Sunshine Sauce Mfg. Industries, not only used recycled Del Monte bottles for
its catsup (despite the warning embossed on the bottles: "Del Monte
Corporation. Not to be refilled.") but also used labels which were "a colorable
imitation" of Del Monte's label, we held that there was infringement of Del
Monte's trademark and unfair competition by Sunshine.
Our ruling in Del Monte would not apply to beer which is not usually picked
from a store shelf but ordered by brand by the beer drinker himself from the
storekeeper or waiter in a pub or restaurant.
Moreover, SMC's brand or trademark: "SAN MIGUEL PALE PILSEN" is not
infringed by ABI's mark: "BEER NA BEER" or "BEER PALE PILSEN." ABI
makes its own bottle with a bulging neck to differentiate it from SMC's bottle,
and prints ABI's name in three (3) places on said bottle (front, back and bottle
cap) to prove that it has no intention to pass of its "BEER" as "SAN MIGUEL."

There is no confusing similarity between the competing beers for the name of
one is "SAN MIGUEL" while the competitor is plain "BEER" and the points of
dissimilarity between the two outnumber their points of similarity.

Petitioner ABI has neither infringed SMC's trademark nor committed unfair
competition with the latter's SAN MIGUEL PALE PILSEN product. While its
BEER PALE PILSEN admittedly competes with the latter in the open market,
that competition is neither unfair nor fraudulent. Hence, we must deny SMC's
prayer to suppress it.

WHEREFORE, finding the petition for review meritorious, the same is hereby
granted. The decision and resolution of the Court of Appeals in CA-G.R. CV
No. 28104 are hereby set aside and that of the trial court is REINSTATED and
AFFIRMED. Costs against the private respondent.

SO ORDERED.
G.R. No. 100098 December 29, 1995
EMERALD GARMENT MANUFACTURING CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS, BUREAU OF PATENTS, TRADEMARKS AND
TECHNOLOGY TRANSFER and H.D. LEE COMPANY, INC., respondents.
KAPUNAN, J.:
In this petition for review on certiorari under Rule 45 of the Revised Rules of
Court, Emerald Garment Manufacturing Corporation seeks to annul the
decision of the Court of Appeals dated 29 November 1990 in CA-G.R. SP No.
15266 declaring petitioner's trademark to be confusingly similar to that of
private respondent and the resolution dated 17 May 1991 denying petitioner's
motion for reconsideration.
The record reveals the following antecedent facts:
On 18 September 1981, private respondent H.D. Lee Co., Inc., a foreign
corporation organized under the laws of Delaware, U.S.A., filed with the
Bureau of Patents, Trademarks & Technology Transfer (BPTTT) a Petition for
Cancellation of Registration No. SR 5054 (Supplemental Register) for the
trademark "STYLISTIC MR. LEE" used on skirts, jeans, blouses, socks, briefs,
jackets, jogging suits, dresses, shorts, shirts and lingerie under Class 25,
issued on 27 October 1980 in the name of petitioner Emerald Garment
Manufacturing Corporation, a domestic corporation organized and existing
under Philippine laws. The petition was docketed as Inter Partes Case No.
1558.1
Private respondent, invoking Sec. 37 of R.A. No. 166 (Trademark Law) and
Art. VIII of the Paris Convention for the Protection of Industrial Property,
averred that petitioner's trademark "so closely resembled its own trademark,
'LEE' as previously registered and used in the Philippines, and not
abandoned, as to be likely, when applied to or used in connection with
petitioner's goods, to cause confusion, mistake and deception on the part of
the purchasing public as to the origin of the goods."2
In its answer dated 23 March 1982, petitioner contended that its trademark
was entirely and unmistakably different from that of private respondent and
that its certificate of registration was legally and validly granted. 3
On 20 February 1984, petitioner caused the publication of its application for
registration of the trademark "STYLISTIC MR. LEE" in the Principal
Register."4
On 27 July 1984, private respondent filed a notice of opposition to petitioner's
application for registration also on grounds that petitioner's trademark was
confusingly similar to its "LEE" trademark.5 The case was docketed as Inter
Partes Case No. 1860.
On 21 June 1985, the Director of Patents, on motion filed by private
respondent dated 15 May 1985, issued an order consolidating Inter Partes
Cases Nos. 1558 and 1860 on grounds that a common question of law was
involved.6
On 19 July 1988, the Director of Patents rendered a decision granting private
respondent's petition for cancellation and opposition to registration.
The Director of Patents found private respondent to be the prior registrant of
the trademark "LEE" in the Philippines and that it had been using said mark in
the Philippines.7
Moreover, the Director of Patents, using the test of dominancy, declared that
petitioner's trademark was confusingly similar to private respondent's mark
because "it is the word 'Lee' which draws the attention of the buyer and leads
him to conclude that the goods originated from the same manufacturer. It is
undeniably the dominant feature of the mark."8
On 3 August 1988, petitioner appealed to the Court of Appeals and on 8
August 1988, it filed with the BPTTT a Motion to Stay Execution of the 19 July
1988 decision of the Director of Patents on grounds that the same would
cause it great and irreparable damage and injury. Private respondent
submitted its opposition on 22 August 1988.9
On 23 September 1988, the BPTTT issued Resolution No. 88-33 granting
petitioner's motion to stay execution subject to the following terms and
conditions:
1. That under this resolution, Respondent-Registrant is authorized
only to dispose of its current stock using the mark "STYLISTIC MR.
LEE";
 2. That Respondent-Registrant is strictly prohibited from further
production, regardless of mode and source, of the mark in question
(STYLISTIC MR. LEE) in addition to its current stock;
3. That this relief Order shall automatically cease upon resolution of
the Appeal by the Court of Appeals and, if the Respondent's appeal
loses, all goods bearing the mark "STYLISTIC MR. LEE" shall be
removed from the market, otherwise such goods shall be seized in
accordance with the law.
SO ORDERED.10
On 29 November 1990, the Court of Appeals promulgated its decision
affirming the decision of the Director of Patents dated 19 July 1988 in all
respects.11
In said decision the Court of Appeals expounded, thus:
xxx xxx xxx
Whether or not a trademark causes confusion and is likely to deceive the
public is a question of fact which is to be resolved by applying the "test of
dominancy", meaning, if the competing trademark contains the main or
essential or dominant features of another by reason of which confusion
and deception are likely to result, then infringement takes place; that
duplication or imitation is not necessary, a similarity in the dominant
features of the trademark would be sufficient.
The word "LEE" is the most prominent and distinctive feature of the
appellant's trademark and all of the appellee's "LEE" trademarks. It is the
mark which draws the attention of the buyer and leads him to conclude
that the goods originated from the same manufacturer. While it is true
that there are other words such as "STYLISTIC", printed in the
appellant's label, such word is printed in such small letters over the word
"LEE" that it is not conspicuous enough to draw the attention of ordinary
buyers whereas the word "LEE" is printed across the label in big, bold
letters and of the same color, style, type and size of lettering as that of
the trademark of the appellee. The alleged difference is too insubstantial
to be noticeable. Even granting arguendo that the word "STYLISTIC" is
conspicuous enough to draw attention, the goods may easily be
mistaken for just another variation or line of garments under the ap
appelle's "LEE" trademarks in view of the fact that the appellee has
registered trademarks which use other words in addition to the principal
mark "LEE" such as "LEE RIDERS", "LEESURES" and "LEE LEENS".
The likelihood of confusion is further made more probable by the fact that
both parties are engaged in the same line of business. It is well to
reiterate that the determinative factor in ascertaining whether or not the
marks are confusingly similar to each other is not whether the challenged
mark would actually cause confusion or deception of the purchasers but
whether the use of such mark would likely cause confusion or mistake on
the part of the buying public.
xxx xxx xxx
The appellee has sufficiently established its right to prior use and
registration of the trademark "LEE" in the Philippines and is thus entitled
to protection from any infringement upon the same. It is thus axiomatic
that one who has identified a peculiar symbol or mark with his goods
thereby acquires a property right in such symbol or mark, and if another
infringes the trademark, he thereby invokes this property right.
The merchandise or goods being sold by the parties are not that
expensive as alleged to be by the appellant and are quite ordinary
commodities purchased by the average person and at times, by the
ignorant and the unlettered. Ordinary purchasers will not as a rule
examine the small letterings printed on the label but will simply be guided
by the presence of the striking mark "LEE". Whatever difference there
may be will pale in insignificance in the face of an evident similarity in the
dominant features and overall appearance of the labels of the parties.12
xxx xxx xxx
On 19 December 1990, petitioner filed a motion for reconsideration of the
above-mentioned decision of the Court of Appeals.
Private respondent opposed said motion on 8 January 1991 on grounds that it
involved an impermissible change of theory on appeal. Petitioner allegedly
raised entirely new and unrelated arguments and defenses not previously
raised in the proceedings below such as laches and a claim that private
respondent appropriated the style and appearance of petitioner's trademark
when it registered its "LEE" mark under Registration No. 44220.13
On 17 May 1991, the Court of Appeals issued a resolution rejecting
petitioner's motion for reconsideration and ruled thus:
 xxx xxx xxx
A defense not raised in the trial court cannot be raised on appeal for
the first time. An issue raised for the first time on appeal and not raised
timely in the proceedings in the lower court is barred by estoppel.
The object of requiring the parties to present all questions and issues
to the lower court before they can be presented to this Court is to have
the lower court rule upon them, so that this Court on appeal may
determine whether or not such ruling was erroneous. The purpose is
also in furtherance of justice to require the party to first present the
question he contends for in the lower court so that the other party may
not be taken by surprise and may present evidence to properly meet
the issues raised.
Moreover, for a question to be raised on appeal, the same must also
be within the issues raised by the parties in their pleadings.
Consequently, when a party deliberately adopts a certain theory, and
the case is tried and decided based upon such theory presented in the
court below, he will not be permitted to change his theory on appeal.
To permit him to do so would be unfair to the adverse party. A question
raised for the first time on appeal, there having opportunity to raise
them in the court of origin constitutes a change of theory which is not
permissible on appeal.
In the instant case, appellant's main defense pleaded in its answer
dated March 23, 1982 was that there was "no confusing similarity
between the competing trademark involved. On appeal, the appellant
raised a single issue, to wit:
The only issue involved in this case is whether or not respondent-
registrant's trademark "STYLISTIC MR. LEE" is confusingly similar with
the petitioner's trademarks "LEE or LEERIDERS, LEE-LEENS and
LEE-SURES."
Appellant's main argument in this motion for reconsideration on the
other hand is that the appellee is estopped by laches from asserting its
right to its trademark. Appellant claims although belatedly that appellee
went to court with "unclean hands" by changing the appearance of its
trademark to make it identical to the appellant's trademark.
Neither defenses were raised by the appellant in the proceedings
before the Bureau of Patents. Appellant cannot raise them now for the
first time on appeal, let alone on a mere motion for reconsideration of
the decision of this Court dismissing the appellant's appeal.
While there may be instances and situations justifying relaxation of this
rule, the circumstance of the instant case, equity would be better
served by applying the settled rule it appearing that appellant has not
given any reason at all as to why the defenses raised in its motion for
reconsideration was not invoked earlier.14
xxx xxx xxx
Twice rebuffed, petitioner presents its case before this Court on the following
assignment of errors:
I. THE COURT OF APPEALS ERRED IN NOT FINDING THAT
PRIVATE RESPONDENT CAUSED THE ISSUANCE OF A FOURTH
"LEE" TRADEMARK IMITATING THAT OF THE PETITIONER'S
ON MAY 5, 1989 OR MORE THAN EIGHT MONTHS AFTER THE
BUREAU OF PATENT'S DECISION DATED JULY 19, 1988.
II. THE COURT OF APPEALS ERRED IN RULING THAT THE
DEFENSE OF ESTOPPEL BY LACHES MUST BE RAISED IN THE
PROCEEDINGS BEFORE THE BUREAU OF PATENTS,
TRADEMARKS AND TECHNOLOGY TRANSFER.
III. THE COURT OF APPEALS ERRED WHEN IT CONSIDERED
PRIVATE RESPONDENT'S PRIOR REGISTRATION OF ITS
TRADEMARK AND DISREGARDED THE FACT THAT PRIVATE
RESPONDENT HAD FAILED TO PROVE COMMERCIAL
USE THEREOF BEFORE FILING OF APPLICATION FOR
REGISTRATION.15
In addition, petitioner reiterates the issues it raised in the Court of Appeals:
I. THE ISSUE INVOLVED IN THIS CASE IS WHETHER OR
NOT PETITIONER'S TRADEMARK SYTLISTIC MR. LEE, IS
CONFUSINGLY SIMILAR WITH THE PRIVATE
RESPONDENT'S TRADEMARK LEE OR LEE-RIDER, LEE-
LEENS AND LEE-SURES.
II. PETITIONER'S EVIDENCES ARE CLEAR AND
SUFFICIENT TO SHOW THAT IT IS THE PRIOR USER AND
 ITS TRADEMARK IS DIFFERENT FROM THAT OF THE
PRIVATE RESPONDENT.
III. PETITIONER'S TRADEMARK IS ENTIRELY DIFFERENT
FROM THE PRIVATE RESPONDENT'S AND THE
REGISTRATION OF ITS TRADEMARK IS PRIMA
FACIE EVIDENCE OF GOOD FAITH.
IV. PETITIONER'S "STYLISTIC MR. LEE" TRADEMARK
CANNOT BE CONFUSED WITH PRIVATE RESPONDENT'S
LEE TRADEMARK.16
Petitioner contends that private respondent is estopped from instituting an
action for infringement before the BPTTT under the equitable principle of
laches pursuant to Sec. 9-A of R.A. No. 166, otherwise known as the Law on
Trade-marks, Trade-names and Unfair Competition:
Sec. 9-A. Equitable principles to govern proceedings. In
opposition proceedings and in all other inter partes
proceedings in the patent office under this act, equitable
principles of laches, estoppel, and acquiescence, where
applicable, may be considered and applied.
Petitioner alleges that it has been using its trademark "STYLISTIC MR. LEE"
since 1 May 1975, yet, it was only on 18 September 1981 that private
respondent filed a petition for cancellation of petitioner's certificate of
registration for the said trademark. Similarly, private respondent's notice of
opposition to petitioner's application for registration in the principal register
was belatedly filed on 27 July 1984.17
Private respondent counters by maintaining that petitioner was barred from
raising new issues on appeal, the only contention in the proceedings below
being the presence or absence of confusing similarity between the two
trademarks in question.18
We reject petitioner's contention.
Petitioner's trademark is registered in the supplemental register. The
Trademark Law (R.A. No. 166) provides that "marks and tradenames for the
supplemental register shall not be published for or be subject to opposition,
but shall be published on registration in the Official Gazette."19 The reckoning
point, therefore, should not be 1 May 1975, the date of alleged use by
petitioner of its assailed trademark but 27 October 1980,20 the date the
certificate of registration SR No. 5054 was published in the Official Gazette
and issued to petitioner.
It was only on the date of publication and issuance of the registration
certificate that private respondent may be considered "officially" put on notice
that petitioner has appropriated or is using said mark, which, after all, is the
function and purpose of registration in the supplemental register. 21 The record
is bereft of evidence that private respondent was aware of petitioner's
trademark before the date of said publication and issuance. Hence, when
private respondent instituted cancellation proceedings on 18 September 1981,
less than a year had passed.
Corollarily, private respondent could hardly be accused of inexcusable delay
in filing its notice of opposition to petitioner's application for registration in the
principal register since said application was published only on 20 February
1984.22 From the time of publication to the time of filing the opposition on 27
July 1984 barely five (5) months had elapsed. To be barred from bringing suit
on grounds of estoppel and laches, the delay must be
lengthy.23
More crucial is the issue of confusing similarity between the two trademarks.
Petitioner vehemently contends that its trademark "STYLISTIC MR. LEE" is
entirely different from and not confusingly similar to private respondent's
"LEE" trademark.
Private respondent maintains otherwise. It asserts that petitioner's trademark
tends to mislead and confuse the public and thus constitutes an infringement
of its own mark, since the dominant feature therein is the word "LEE."
The pertinent provision of R.A. No. 166 (Trademark Law) states thus:
Sec. 22. Infringement, what constitutes. Any person who shall
use, without the consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation of any registered mark or
trade-name in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection
with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such
goods or services, or identity of such business; or reproduce,
counterfeit, copy or colorably imitable any such mark or trade-name
and apply such reproduction, counterfeit, copy, or colorable imitation
to labels, signs, prints, packages, wrappers, receptacles or
 advertisements intended to be used upon or in connection with such
goods, business or services; shall be liable to a civil action by the
registrant for any or all of the remedies herein provided.
Practical application, however, of the aforesaid provision is easier said than
done. In the history of trademark cases in the Philippines, particularly in
ascertaining whether one trademark is confusingly similar to or is a colorable
imitation of another, no set rules can be deduced. Each case must be decided
on its own merits.
In Esso Standard Eastern, Inc. v. Court of Appeals,24 we held:
. . . But likelihood of confusion is a relative concept; to be
determined only according to the particular, and sometimes
peculiar, circumstances of each case. It is unquestionably
true that, as stated in Coburn vs. Puritan Mills, Inc.: "In
trademark cases, even more than in other litigation,
precedent must be studied in the light of the facts of the
particular case."
xxx xxx xxx
Likewise, it has been observed that:
In determining whether a particular name or mark is a
"colorable imitation" of another, no all-embracing rule seems
possible in view of the great number of factors which must
necessarily be considered in resolving this question of fact,
such as the class of product or business to which the article
belongs; the product's quality, quantity, or size, including its
wrapper or container; the dominant color, style, size, form,
meaning of letters, words, designs and emblems used; the
nature of the package, wrapper or container; the character of
the product's purchasers; location of the business; the
likelihood of deception or the mark or name's tendency to
confuse;
etc.25
Proceeding to the task at hand, the essential element of infringement is
colorable imitation. This term has been defined as "such a close or ingenious
imitation as to be calculated to deceive ordinary purchasers, or such
resemblance of the infringing mark to the original as to deceive an ordinary
purchaser giving such attention as a purchaser usually gives, and to cause
him to purchase the one supposing it to be the other."26
Colorable imitation does not mean such similitude as
amounts to identity. Nor does it require that all the details be
literally copied. Colorable imitation refers to such similarity in
form, content, words, sound, meaning, special arrangement,
or general appearance of the trademark or tradename with
that of the other mark or tradename in their over-all
presentation or in their essential, substantive and distinctive
parts as would likely mislead or confuse persons in the
ordinary course of purchasing the genuine article.27
In determining whether colorable imitation exists, jurisprudence has
developed two kinds of tests the Dominancy Test applied in Asia Brewery,
Inc. v. Court of Appeals 28 and other cases 29 and the Holistic Test developed
in Del Monte Corporation v. Court of Appeals 30 and its proponent cases.31
As its title implies, the test of dominancy focuses on the similarity of the
prevalent features of the competing trademarks which might cause confusion
or deception and thus constitutes infringement.
xxx xxx xxx
. . . If the competing trademark contains the main or essential
or dominant features of another, and confusion and deception
is likely to result, infringement takes place. Duplication or
imitation is not necessary; nor it is necessary that the
infringing label should suggest an effort to imitate. [C.
Neilman Brewing Co. v. Independent Brewing Co., 191 F.,
489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180
Fed. 579]. The question at issue in cases of infringement of
trademarks is whether the use of the marks involved would be
likely to cause confusion or mistakes in the mind of the public
or deceive purchasers. (Auburn Rubber Corporation vs.
Honover Rubber Co., 107 F. 2d 588; . . .)32
xxx xxx xxx
On the other side of the spectrum, the holistic test mandates that the entirety
of the marks in question must be considered in determining confusing
similarity.
 xxx xxx xxx
In determining whether the trademarks are confusingly
similar, a comparison of the words is not the only determinant
factor. The trademarks in their entirety as they appear in their
respective labels or hang tags must also be considered in
relation to the goods to which they are attached. The
discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing
in both labels in order that he may draw his conclusion
whether one is confusingly similar to the other.33
xxx xxx xxx
Applying the foregoing tenets to the present controversy and taking into
account the factual circumstances of this case, we considered the trademarks
involved as a whole and rule that petitioner's "STYLISTIC MR. LEE" is not
confusingly similar to private respondent's "LEE" trademark.
Petitioner's trademark is the whole "STYLISTIC MR. LEE." Although on its
label the word "LEE" is prominent, the trademark should be considered as a
whole and not piecemeal. The dissimilarities between the two marks become
conspicuous, noticeable and substantial enough to matter especially in the
light of the following variables that must be factored in.
First, the products involved in the case at bar are, in the main, various kinds of
jeans. These are not your ordinary household items like catsup, soysauce or
soap which are of minimal cost. Maong pants or jeans are not inexpensive.
Accordingly, the casual buyer is predisposed to be more cautious and
discriminating in and would prefer to mull over his purchase. Confusion and
deception, then, is less likely. In Del Monte Corporation v. Court of
Appeals, 34 we noted that:
. . . Among these, what essentially determines the attitudes of
the purchaser, specifically his inclination to be cautious, is the
cost of the goods. To be sure, a person who buys a box of
candies will not exercise as much care as one who buys an
expensive watch. As a general rule, an ordinary buyer does
not exercise as much prudence in buying an article for which
he pays a few centavos as he does in purchasing a more
valuable thing. Expensive and valuable items are normally
bought only after deliberate, comparative and analytical
investigation. But mass products, low priced articles in wide
use, and matters of everyday purchase requiring frequent
replacement are bought by the casual consumer without
great
care. . . .
Second, like his beer, the average Filipino consumer generally buys his jeans
by brand. He does not ask the sales clerk for generic jeans but for, say, a
Levis, Guess, Wrangler or even an Armani. He is, therefore, more or less
knowledgeable and familiar with his preference and will not easily be
distracted.
Finally, in line with the foregoing discussions, more credit should be given to
the "ordinary purchaser." Cast in this particular controversy, the ordinary
purchaser is not the "completely unwary consumer" but is the "ordinarily
intelligent buyer" considering the type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok 35 is better suited to the
present case. There, the "ordinary purchaser" was defined as one
"accustomed to buy, and therefore to some extent familiar with, the goods in
question. The test of fraudulent simulation is to be found in the likelihood of
the deception of some persons in some measure acquainted with an
established design and desirous of purchasing the commodity with which that
design has been associated. The test is not found in the deception, or the
possibility of deception, of the person who knows nothing about the design
which has been counterfeited, and who must be indifferent between that and
the other. The simulation, in order to be objectionable, must be such as
appears likely to mislead the ordinary intelligent buyer who has a need to
supply and is familiar with the article that he seeks to purchase."
There is no cause for the Court of Appeal's apprehension that petitioner's
products might be mistaken as "another variation or line of garments under
private respondent's 'LEE' trademark".36 As one would readily observe, private
respondent's variation follows a standard format "LEERIDERS," "LEESURES"
and "LEELEENS." It is, therefore, improbable that the public would
immediately and naturally conclude that petitioner's "STYLISTIC MR. LEE" is
but another variation under private respondent's "LEE" mark.
As we have previously intimated the issue of confusing similarity between
trademarks is resolved by considering the distinct characteristics of each
case. In the present controversy, taking into account these unique factors, we
conclude that the similarities in the trademarks in question are not sufficient as
to likely cause deception and confusion tantamount to infringement.
Another way of resolving the conflict is to consider the marks involved from
the point of view of what marks are registrable pursuant to Sec. 4 of R.A. No.
166, particularly paragraph 4 (e):
CHAPTER II-A. The Principal Register
(Inserted by Sec. 2, Rep. Act No. 638.)
Sec. 4. Registration of trade-marks, trade-names and service-
marks on the principal register. There is hereby
established a register of trade-marks, trade-names and
service-marks which shall be known as the principal register.
The owner of a trade-mark, trade-name or service-mark used
to distinguish his goods, business or services from the goods,
business or services of others shall have the right to register
the same on the principal register, unless it:
xxx xxx xxx
(e) Consists of a mark or trade-name which, when applied to
or used in connection with the goods, business or services of
the applicant is merely descriptive or deceptively
misdescriptive of them, or when applied to or used in
connection with the goods, business or services of the
applicant is primarily geographically descriptive or deceptively
misdescriptive of them, or is primarily merely a surname;
(Emphasis ours.)
xxx xxx xxx
"LEE" is primarily a surname. Private respondent cannot, therefore, acquire
exclusive ownership over and singular use of said term.
. . . It has been held that a personal name or surname may
not be monopolized as a trademark or tradename as against
others of the same name or surname. For in the absence of
contract, fraud, or estoppel, any man may use his name or
surname in all legitimate ways. Thus, "Wellington" is a
surname, and its first user has no cause of action against the
junior user of "Wellington" as it is incapable of exclusive
appropriation.37
In addition to the foregoing, we are constrained to agree with petitioner's
contention that private respondent failed to prove prior actual commercial use
of its "LEE" trademark in the Philippines before filing its application for
registration with the BPTTT and hence, has not acquired ownership over said
mark.
Actual use in commerce in the Philippines is an essential prerequisite for the
acquisition of ownership over a trademark pursuant to Sec. 2 and 2-A of the
Philippine Trademark Law (R.A. No. 166) which explicitly provides that:
CHAPTER II. Registration of Marks and Trade-names.
Sec. 2. What are registrable. Trade-marks, trade-names, and service
marks owned by persons, corporations, partnerships or associations
domiciled in the Philippines and by persons, corporations, partnerships,
or associations domiciled in any foreign country may be registered in
accordance with the provisions of this act: Provided, That said trade-
marks, trade-names, or service marks are actually in use in commerce
and services not less than two months in the Philippines before the time
the applications for registration are filed: And Provided, further, That the
country of which the applicant for registration is a citizen grants by law
substantially similar privileges to citizens of the Philippines, and such
fact is officially certified, with a certified true copy of the foreign law
translated into the English language, by the government of the foreign
country to the Government of the Republic of the Philippines. (As
amended.) (Emphasis ours.)
Sec. 2-A. Ownership of trade-marks, trade-names and service-
marks; how acquired. Anyone who lawfully produces or deals in
merchandise of any kind or who engages in lawful business, or who
renders any lawful service in commerce, by actual use hereof in
manufacture or trade, in business, and in the service rendered; may
appropriate to his exclusive use a trade-mark, a trade-name, or a
service-mark not so appropriated by another, to distinguish his
merchandise, business or services from others. The ownership or
possession of trade-mark, trade-name, service-mark, heretofore or
hereafter appropriated, as in this section provided, shall be recognized
and protected in the same manner and to the same extent as are other
property rights to the law. (As amended.) (Emphasis ours.)
The provisions of the 1965 Paris Convention for the Protection of Industrial
Property 38 relied upon by private respondent and Sec. 21-A of the Trademark
Law (R.A. No. 166)39 were sufficiently expounded upon and qualified in the
recent case of Philip Morris, Inc. v. Court of Appeals:40
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirement of actual use in the Philippines
must subordinate an international agreement inasmuch as the
apparent clash is being decided by a municipal tribunal (Mortisen vs.
Peters, Great Britain, High Court of Judiciary of Scotland, 1906, 8
Sessions, 93; Paras, International Law and World Organization, 1971
Ed., p. 20). Withal, the fact that international law has been made part
of the law of the land does not by any means imply the primacy of
international law over national law in the municipal sphere. Under the
doctrine of incorporation as applied in most countries, rules of
international law are given a standing equal, not superior, to national
legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue
for infringement irrespective of lack of business activity in the
Philippines on account of Section 21-A of the Trademark Law but the
question of whether they have an exclusive right over their symbol as
to justify issuance of the controversial writ will depend on actual use
of their trademarks in the Philippines in line with Sections 2 and 2-A of
the same law. It is thus incongruous for petitioners to claim that when
a foreign corporation not licensed to do business in the Philippines
files a complaint for infringement, the entity need not be actually using
its trademark in commerce in the Philippines. Such a foreign
corporation may have the personality to file a suit for infringement but
it may not necessarily be entitled to protection due to absence of
actual use of the emblem in the local market.
xxx xxx xxx
Undisputably, private respondent is the senior registrant, having obtained
several registration certificates for its various trademarks "LEE,"
"LEERIDERS," and "LEESURES" in both the supplemental and principal
registers, as early as 1969 to 1973.41 However, registration alone will not
suffice. In Sterling Products International, Inc. v.Farbenfabriken Bayer
Aktiengesellschaft,42 we declared:
xxx xxx xxx
A rule widely accepted and firmly entrenched because it has come
down through the years is that actual use in commerce or business is a
prerequisite in the acquisition of the right of ownership over a
trademark.
xxx xxx xxx
It would seem quite clear that adoption alone of a trademark would not
give exclusive right thereto. Such right "grows out of their actual use."
Adoption is not use. One may make advertisements, issue circulars,
give out price lists on certain goods; but these alone would not give
exclusive right of use. For trademark is a creation of use. The
underlying reason for all these is that purchasers have come to
understand the mark as indicating the origin of the wares. Flowing from
this is the trader's right to protection in the trade he has built up and the
goodwill he has accumulated from use of the trademark. Registration
of a trademark, of course, has value: it is an administrative act
declaratory of a pre-existing right. Registration does not, however,
perfect a trademark right. (Emphasis ours.)
xxx xxx xxx
To augment its arguments that it was, not only the prior registrant, but also the
prior user, private respondent invokes Sec. 20 of the Trademark Law, thus:
Sec. 20. Certificate of registration prima facie evidence of
validity. A certificate of registration of a mark or tradename
shall be a prima facie evidence of the validity of the
registration, the registrant's ownership of the mark or trade-
name, and of the registrant's exclusive right to use the same
in connection with the goods, business or services specified
in the certificate, subject to any conditions and limitations
stated therein.
The credibility placed on a certificate of registration of one's trademark, or its
weight as evidence of validity, ownership and exclusive use, is qualified. A
registration certificate serves merely as prima facie evidence. It is not
conclusive but can and may be rebutted by controverting evidence.
Moreover, the aforequoted provision applies only to registrations in the
principal register.43 Registrations in the supplemental register do not enjoy a
similar privilege. A supplemental register was created precisely for the
registration of marks which are not registrable on the principal register due to
some defects.44
The determination as to who is the prior user of the trademark is a question of
fact and it is this Court's working principle not to disturb the findings of the
Director of Patents on this issue in the absence of any showing of grave
abuse of discretion. The findings of facts of the Director of Patents are
conclusive upon the Supreme Court provided they are supported by
substantial evidence.45
In the case at bench, however, we reverse the findings of the Director of
Patents and the Court of Appeals. After a meticulous study of the records, we
observe that the Director of Patents and the Court of Appeals relied mainly on
the registration certificates as proof of use by private respondent of the
trademark "LEE" which, as we have previously discussed are not sufficient.
We cannot give credence to private respondent's claim that its "LEE" mark
first reached the Philippines in the 1960's through local sales by the Post
Exchanges of the U.S. Military Bases in the Philippines 46 based as it was
solely on the self-serving statements of Mr. Edward Poste, General Manager
of Lee (Phils.), Inc., a wholly owned subsidiary of the H.D. Lee, Co., Inc.,
U.S.A., herein private respondent. 47Similarly, we give little weight to the
numerous
vouchers representing various advertising expenses in the Philippines for
"LEE" products. 48 It is well to note that these expenses were incurred only in
1981 and 1982 by LEE (Phils.), Inc. after it entered into a licensing agreement
with private respondent on 11 May 1981.49
On the other hand, petitioner has sufficiently shown that it has been in the
business of selling jeans and other garments adopting its "STYLISTIC MR.
LEE" trademark since 1975 as evidenced by appropriate sales invoices to
various stores and retailers.50
Our rulings in Pagasa Industrial Corp. v. Court of Appeals 51 and Converse
Rubber Corp. v. Universal Rubber Products, Inc.,52respectively, are
instructive:
The Trademark Law is very clear. It requires actual
commercial use of the mark prior to its registration. There is
no dispute that respondent corporation was the first
registrant, yet it failed to fully substantiate its claim that it used
in trade or business in the Philippines the subject mark; it did
not present proof to invest it with exclusive, continuous
adoption of the trademark which should consist among
others, of considerable sales since its first use. The invoices
submitted by respondent which were dated way back in 1957
show that the zippers sent to the Philippines were to be used
as "samples" and "of no commercial value." The evidence for
respondent must be clear, definite and free from
inconsistencies. "Samples" are not for sale and therefore, the
fact of exporting them to the Philippines cannot be considered
to be equivalent to the "use" contemplated by law.
Respondent did not expect income from such "samples."
There were no receipts to establish sale, and no proof were
presented to show that they were subsequently sold in the
Philippines.
xxx xxx xxx
The sales invoices provide the best proof that there were
actual sales of petitioner's product in the country and that
there was actual use for a protracted period of petitioner's
trademark or part thereof through these sales.
For lack of adequate proof of actual use of its trademark in the Philippines
prior to petitioner's use of its own mark and for failure to establish confusing
similarity between said trademarks, private respondent's action for
infringement must necessarily fail.
WHEREFORE, premises considered, the questioned decision and resolution
are hereby REVERSED and SET ASIDE.
SO ORDERED.
PRO LINE SPORTS CENTER, INC., and QUESTOR
CORPORATION, petitioners, vs. COURT OF APPEALS,
UNIVERSAL ATHLETICS INDUSTRIAL PRODUCTS, INC., and
MONICO SEHWANI, respondents.
DECISION
BELLOSILLO, J.:
This case calls for a revisit of the demesne of malicious prosecution and
its implications.
This petition stemmed from a criminal case for unfair competition filed by
Pro Line Sports Center, Inc. (PRO LINE) and Questor Corporation (QUESTOR)
against Monico Sehwani, president of Universal Athletics and Industrial
Products, Inc. (UNIVERSAL). In that case Sehwani was exonerated. As a
retaliatory move, Sehwani and UNIVERSAL filed a civil case for damages
against PRO LINE and QUESTOR for what they perceived as the wrongful and
malicious filing of the criminal action for unfair competition against them.
But first, the dramatis personae. By virtue of its merger with A.G. Spalding
Bros., Inc., on 31 December 1971,[1] petitioner QUESTOR, a US-based
corporation, became the owner of the trademark "Spalding" appearing in
sporting goods, implements and apparatuses. Co-petitioner PRO LINE, a
domestic corporation, is the exclusive distributor of "Spalding" sports products
in the Philippines.[2] Respondent UNIVERSAL, on the other hand, is a domestic
corporation engaged in the sale and manufacture of sporting goods while co-
respondent Monico Sehwani is impleaded in his capacity as president of the
corporation.
On 11 February 1981, or sixteen years ago, Edwin Dy Buncio, General
Manager of PRO LINE, sent a letter-complaint to the National Bureau of
Investigation (NBI) regarding the alleged manufacture of fake "Spalding" balls
by UNIVERSAL. On 23 February 1981 the NBI applied for a search warrant
with the then Court of First Instance, Br. 23, Pasig, Rizal, then presided over by
Judge Rizalina Bonifacio Vera. On that same day Judge Vera issued Search
Warrant No. 2-81 authorizing the search of the premises of UNIVERSAL in
Pasig. In the course of the search, some 1,200 basketballs and volleyballs
marked "Spalding" were seized and confiscated by the NBI. Three (3) days
later, on motion of the NBI, Judge Vera issued another order, this time to seal
and padlock the molds, rubber mixer, boiler and other instruments at
UNIVERSAL's factory. All these were used to manufacture the fake "Spalding"
products, but were simply too heavy to be removed from the premises and
brought under the actual physical custody of the court. However, on 28 April
1981, on motion of UNIVERSAL, Judge Vera ordered the lifting of the seal and
padlock on the machineries, prompting the People of the Philippines, the NBI,
together with PRO LINE and QUESTOR, to file with the Court of Appeals a joint
petition for certiorari and prohibition with preliminary injunction (CA G.R. No.
12413) seeking the annulment of the order of 28 April 1981. On 18 May 1981,
the appellate court issued a temporary restraining order enjoining Judge Vera
from implementing her latest order.
Meanwhile, on 26 February 1981, PRO LINE and QUESTOR filed a
criminal complaint for unfair competition against respondent Monico Sehwani
together with Robert, Kisnu, Arjan and Sawtri, all surnamed Sehwani, and
Arcadio del los Reyes before the Provincial Fiscal of Rizal (I. S. No. 81-
2040). The complaint was dropped on 24 June 1981 for the reason that it was
doubtful whether QUESTOR had indeed acquired the registration rights over
the mark "Spalding" from A. G. Spalding Bros., Inc., and complainants failed to
adduce an actual receipt for the sale of "Spalding" balls by UNIVERSAL.[3]
On 9 July 1981 a petition for review seeking reversal of the dismissal of
the complaint was filed with the Ministry of Justice. While this was pending, the
Court of Appeals rendered judgment on 4 August 1981 in CA G.R. No. 12413
affirming the order of Judge Vera which lifted the seal and padlock on the
machineries of UNIVERSAL. The People, NBI, PRO LINE and QUESTOR
challenged the decision of the appellate court before this Court in G.R. No.
57814. On 31 August 1981 we issued a temporary restraining order against the
Court of Appeals vis-a-vis the aforesaid decision.
In connection with the criminal complaint for unfair competition, the
Minister of Justice issued on 10 September 1981 a Resolution overturning the
earlier dismissal of the complaint and ordered the Provincial Fiscal of Rizal to
file an Information for unfair competition against Monico Sehwani. The
Information was accordingly filed on 29 December 1981 with then Court of First
Instance of Rizal, docketed as Crim. Case No. 45284, and raffled to Br. 21
presided over by Judge Gregorio Pineda.
Sehwani pleaded not guilty to the charge. But, while he admitted to having
manufactured "Spalding" basketballs and volleyballs, he nevertheless stressed
that this was only for the purpose of complying with the requirement of
trademark registration with the Philippine Patent Office. He cited Chapter 1,
Rule 43, of the Rules of Practice on Trademark Cases, which requires that the
mark applied for be used on applicant's goods for at least sixty (60) days prior
to the filing of the trademark application and that the applicant must show
substantial investment in the use of the mark. He also disclosed that
UNIVERSAL applied for registration with the Patent Office on 20 February
1981.
After the prosecution rested its case, Sehwani filed a demurrer to evidence
arguing that the act of selling the manufactured goods was an essential and
constitutive element of the crime of unfair competition under Art. 189 of the
Revised Penal Code, and the prosecution was not able to prove that he sold
the products. In its Order of 12 January 1981 the trial court granted the
demurrer and dismissed the charge against Sehwani.
PRO LINE and QUESTOR impugned before us in G.R. No. 63055 the
dismissal of the criminal case. In our Resolution of 2 March 1983 we
consolidated G.R. No. 63055 with G.R. No. 57814 earlier filed. On 20 April 1983
we dismissed the petition in G.R. No. 63055 finding that the dismissal by the
trial court of Crim. Case No. 45284 was based on the merits of the case which
amounted to an acquittal of Sehwani. Considering that the issue raised in G.R.
No. 58714 had already been rendered moot and academic by the dismissal of
Crim. Case No. 45284 and the fact that the petition in G.R. No. 63055 seeking
a review of such dismissal had also been denied, the Court likewise dismissed
the petition in G.R. No. 58714. The dismissal became final and executory with
the entry of judgment made on 10 August 1983.
Thereafter, UNIVERSAL and Sehwani filed a civil case for damages with
the Regional Trial Court of Pasig[4] charging that PRO LINE and QUESTOR
maliciously and without legal basis committed the following acts to their damage
and prejudice: (a) procuring the issuance by the Pasig trial court of Search
Warrant No. 2-81 authorizing the NBI to raid the premises of UNIVERSAL; (b)
procuring an order from the same court authorizing the sealing and padlocking
of UNIVERSAL's machineries and equipment resulting in the paralyzation and
virtual closure of its operations; (c) securing a temporary restraining order from
the Court of Appeals to prevent the implementation of the trial court's order of
28 April 1981 which authorized the lifting of the seal and padlock on the subject
machineries and equipment to allow UNIVERSAL to resume operations; (d)
securing a temporary restraining order from the High Tribunal against the Court
of Appeals and charging the latter with grave abuse of discretion for holding
that the order of 28 April 1981 was judiciously issued, thus prolonging the
continued closure of UNIVERSAL's business; (e) initiating the criminal
prosecution of Monico Sehwani for unfair competition under Art. 189 of the
Penal Code; and, (g) appealing the order of acquittal in Crim. Case No. 45284
directly to the Supreme Court with no other purpose than to delay the
proceedings of the case and prolong the wrongful invasion of UNIVERSAL's
rights and interests.
Defendants PRO LINE and QUESTOR denied all the allegations in the
complaint and filed a counterclaim for damages based mainly on the
unauthorized and illegal manufacture by UNIVERSAL of athletic balls bearing
the trademark "Spalding."
The trial court granted the claim of UNIVERSAL declaring that the series
of acts complained of were "instituted with improper, malicious, capricious
motives and without sufficient justification." It ordered PRO LINE and
QUESTOR jointly and severally to pay UNIVERSAL and Sehwani P676,000.00
as actual and compensatory damages, P250,000.00 as moral
damages, P250,000.00 as exemplary damages.[5] and P50,000.00 as
attorney's fees. The trial court at the same time dismissed the counterclaim of
PRO LINE and QUESTOR.
The Court of Appeals affirmed the decision of the lower court but reduced
the amount of moral damages to P150,000.00 and exemplary damages
to P100,000.00.
Two (2) issues are raised before us: (a) whether private respondents
Sehwani and UNIVERSAL are entitled to recover damages for the alleged
wrongful recourse to court proceedings by petitioners PRO LINE and
QUESTOR; and, (b) whether petitioners' counterclaim should be sustained.
PRO LINE and QUESTOR cannot be adjudged liable for damages for the
alleged unfounded suit. The complainants were unable to prove two (2)
essential elements of the crime of malicious prosecution, namely, absence of
probable cause and legal malice on the part of petitioners.
UNIVERSAL failed to show that the filing of Crim. Case No. 45284 was
bereft of probable cause. Probable cause is the existence of such facts and
circumstances as would excite the belief in a reasonable mind, acting on the
facts within the knowledge of the prosecutor, that the person charged was guilty
of the crime for which he was prosecuted.[6] In the case before us, then Minister
of Justice Ricardo C. Puno found probable cause when he reversed the
Provincial Fiscal who initially dismissed the complaint and directed him instead
to file the corresponding Information for unfair competition against private
respondents herein.[7] The relevant portions of the directive are quoted
hereunder:
The intent on the part of Universal Sports to deceive the public and to defraud
a competitor by the use of the trademark "Spalding" on basketballs and
volleyballs seems apparent. As President of Universal and as Vice President
of the Association of Sporting Goods Manufacturers, Monico Sehwani should
have known of the prior registration of the trademark "Spalding" on
basketballs and volleyballs when he filed the application for registration of the
same trademark on February 20, 1981, in behalf of Universal, with the
Philippine Patent Office. He was even notified by the Patent Office through
counsel on March 9, 1981, that "Spalding" was duly registered with said office
in connection with sporting goods, implements and apparatus by A.G.
Spalding & Bros., Inc. of the U.S.A.
That Universal has been selling these allegedly misbranded "Spalding" balls
has been controverted by the firms allegedly selling the goods. However,
there is sufficient proof that Universal manufactured balls with the trademark
"Spalding" as admitted by Monico himself and as shown by the goods
confiscated by virtue of the search warrant.
Jurisprudence abounds to the effect that either a seller or a manufacturer of
imitation goods may be liable for violation of Section 29 of Rep. Act No. 166
(Alexander v. Sy Bok, 97 Phil. 57). This is substantially the same rule
obtaining in statutes and judicial construction since 1903 when Act No. 666
was approved (Finlay Fleming vs. Ong Tan Chuan, 26 Phil. 579) x x x x[8]
The existence of probable cause for unfair competition by UNIVERSAL is
derivable from the facts and circumstances of the case. The affidavit of
Graciano Lacanaria, a former employee of UNIVERSAL, attesting to the illegal
sale and manufacture of "Spalding" balls and seized "Spalding" products and
instruments from UNIVERSAL's factory was sufficient prima facie evidence to
warrant the prosecution of private respondents. That a corporation other than
the certified owner of the trademark is engaged in the unauthorized
manufacture of products bearing the same trademark engenders a reasonable
belief that a criminal offense for unfair competition is being committed.
Petitioners PRO LINE and QUESTOR could not have been moved by legal
malice in instituting the criminal complaint for unfair competition which led to the
filing of the Information against Sehwani. Malice is an inexcusable intent to
injure, oppress, vex, annoy or humiliate. We cannot conclude that petitioners
were impelled solely by a desire to inflict needless and unjustified vexation and
injury on UNIVERSAL's business interests. A resort to judicial processes is
not per se evidence of ill will upon which a claim for damages may be based. A
contrary rule would discourage peaceful recourse to the courts of justice and
induce resort to methods less than legal, and perhaps even violent.[9]
We are more disposed, under the circumstances, to hold that PRO LINE
as the authorized agent of QUESTOR exercised sound judgment in taking the
necessary legal steps to safeguard the interest of its principal with respect to
the trademark in question. If the process resulted in the closure and padlocking
of UNIVERSAL's factory and the cessation of its business operations, these
were unavoidable consequences of petitioners' valid and lawful exercise of their
right. One who makes use of his own legal right does no injury. Qui jure suo
utitur nullum damnum facit. If damage results from a person's exercising his
legal rights, it is damnum absque injuria.[10]
Admittedly, UNIVERSAL incurred expenses and other costs in defending
itself from the accusation. But, as Chief Justice Fernando would put it, "the
expenses and annoyance of litigation form part of the social burden of living in
a society which seeks to attain social control through law."[11] Thus we see no
cogent reason for the award of damages, exorbitant as it may seem, in favor of
UNIVERSAL. To do so would be to arbitrarily impose a penalty on petitioners'
right to litigate.
The criminal complaint for unfair competition, including all other legal
remedies incidental thereto, was initiated by petitioners in their honest belief
that the charge was meritorious. For indeed it was. The law brands business
practices which are unfair, unjust or deceitful not only as contrary to public
policy but also as inimical to private interests. In the instant case, we find quite
aberrant Sehwani's reason for the manufacture of 1,200 "Spalding" balls, i.e.,
the pending application for trademark registration of UNIVERSAL with the
Patent Office, when viewed in the light of his admission that the application for
registration with the Patent Office was filed on 20 February 1981, a good nine
(9) days after the goods were confiscated by the NBI. This apparently was an
afterthought but nonetheless too late a remedy. Be that as it may, what is
essential for registrability is proof of actual use in commerce for at least sixty
(60) days and not the capability to manufacture and distribute samples of the
product to clients.
Arguably, respondents' act may constitute unfair competition even if the
element of selling has not been proved. To hold that the act of selling is an
indispensable element of the crime of unfair competition is illogical because if
the law punishes the seller of imitation goods, then with more reason should
the law penalize the manufacturer. In U. S. v. Manuel,[12] the Court ruled that
the test of unfair competition is whether certain goods have been intentionally
clothed with an appearance which is likely to deceive the ordinary purchasers
exercising ordinary care. In this case, it was observed by the Minister of Justice
that the manufacture of the "Spalding" balls was obviously done to deceive
would-be buyers. The projected sale would have pushed through were it not for
the timely seizure of the goods made by the NBI. That there was intent to sell
or distribute the product to the public cannot also be disputed given the number
of goods manufactured and the nature of the machinery and other equipment
installed in the factory.
We nonetheless affirm the dismissal of petitioners' counterclaim for
damages. A counterclaim partakes of the nature of a complaint and/or a cause
of action against the plaintiffs.[13] It is in itself a distinct and independent cause
of action, so that when properly stated as such, the defendant becomes, in
respect to the matter stated by him, an actor, and there are two simultaneous
actions pending between the same parties, where each is at the same time both
a plaintiff and defendant.[14] A counterclaim stands on the same footing and is
to be tested by the same rules, as if it were an independent action.[15]
Petitioners' counterclaim for damages based on the illegal and
unauthorized manufacture of "Spalding" balls certainly constitutes an
independent cause of action which can be the subject of a separate complaint
for damages against UNIVERSAL. However, this separate civil action cannot
anymore be pursued as it is already barred by res judicata, the judgment in the
criminal case (against Sehwani) involving both the criminal and civil aspects of
the case for unfair competition.[16] To recall, petitioners PRO LINE and
QUESTOR, upon whose initiative the criminal action for unfair competition
against respondent UNIVERSAL was filed, did not institute a separate civil
action for damages nor reserve their right to do so. Thus the civil aspect for
damages was deemed instituted in the criminal case. No better manifestation
of the intent of petitioners to recover damages in the criminal case can be
expressed than their active participation in the prosecution of the civil aspect of
the criminal case through the intervention of their private prosecutor. Obviously,
such intervention could only be for the purpose of recovering damages or
indemnity because the offended party is not entitled to represent the People of
the Philippines in the prosecution of a public offense. [17] Section 16, Rule 110,
of the Rules of Court requires that the intervention of the offended party in the
criminal action can be made only if he has not waived the civil action nor
expressly reserved his right to institute it separately. [18] In an acquittal on the
ground that an essential element of the crime was not proved, it is fundamental
that the accused cannot be held criminally nor civilly liable for the
offense. Although Art. 28 of the New Civil Code[19] authorizes the filing of a civil
action separate and distinct from the criminal proceedings, the right of
petitioners to institute the same is not unfettered. Civil liability arising from the
crime is deemed instituted and determined in the criminal proceedings where
the offended party did not waive nor reserve his right to institute it
separately.[20] This is why we now hold that the final judgment rendered therein
constitutes a bar to the present counterclaim for damages based upon the same
cause.[21]
WHEREFORE, the petition is partly GRANTED. The decision of
respondent Court of Appeals is MODIFIED by deleting the award in favor of
private respondents UNIVERSAL and Monico Sehwani of actual, moral and
exemplary damages as well as attorney's fees.
The dismissal of petitioners' counterclaim is AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
CANON KABUSHIKI KAISHA, petitioner, vs. COURT OF APPEALS and
NSR RUBBER CORPORATION, respondents.
DECISION
GONZAGA-REYES, J.:
Before us is a petition for review that seeks to set aside the Decision [1] dated
February 21, 1995 of the Court of Appeals in CA-GR SP No. 30203, entitled
"Canon Kabushiki Kaisha vs. NSR Rubber Corporation" and its Resolution
dated June 27, 1995 denying the motion for reconsideration of herein
petitioner Canon Kabushiki Kaisha (petitioner).
On January 15, 1985, private respondent NSR Rubber Corporation (private
respondent) filed an application for registration of the mark CANON for
sandals in the Bureau of Patents, Trademarks, and Technology Transfer
(BPTTT). A Verified Notice of Opposition was filed by petitioner, a foreign
corporation duly organized and existing under the laws of Japan, alleging that
it will be damaged by the registration of the trademark CANON in the name of
private respondent. The case was docketed as Inter Partes Case No. 3043.
Petitioner moved to declare private respondent in default for its failure to file
its answer within the prescribed period. The BPTTT then declared private
respondent in default and allowed petitioner to present its evidence ex-parte.
Based on the records, the evidence presented by petitioner consisted of its
certificates of registration for the mark CANON in various countries covering
goods belonging to class 2 (paints, chemical products, toner, and dye stuff).
Petitioner also submitted in evidence its Philippine Trademark Registration
No. 39398, showing its ownership over the trademark CANON also under
class 2.
On November 10, 1992, the BPTTT issued its decision dismissing the
opposition of petitioner and giving due course to private respondents
application for the registration of the trademark CANON. On February 16,
1993, petitioner appealed the decision of the BPTTT with public respondent
Court of Appeals that eventually affirmed the decision of BPTTT. Hence, this
petition for review.
Petitioner anchors this instant petition on these grounds:
A) PETITIONER IS ENTITLED TO EXCLUSIVE USE OF THE
MARK CANON BECAUSE IT IS ITS TRADEMARK AND IS
USED ALSO FOR FOOTWEAR.
B) TO ALLOW PRIVATE RESPONDENT TO REGISTER
CANON FOR FOOTWEAR IS TO PREVENT PETITIONER
FROM USING CANON FOR VARIOUS KINDS OF
FOOTWEAR, WHEN IN FACT, PETITIONER HAS EARLIER
USED SAID MARK FOR SAID GOODS.
C) PETITIONER IS ALSO ENTITLED TO THE RIGHT TO
EXCLUSIVELY USE CANON TO PREVENT CONFUSION
OF BUSINESS.
D) PETITIONER IS ALSO ENTITLED TO THE EXCLUSIVE
USE OF CANON BECAUSE IT FORMS PART OF ITS
CORPORATE NAME, PROTECTED BY THE PARIS
CONVENTION.[2]
The BPTTT and the Court of Appeals share the opinion that the trademark
"CANON" as used by petitioner for its paints, chemical products, toner, and
dyestuff, can be used by private respondent for its sandals because the
products of these two parties are dissimilar. Petitioner protests the
appropriation of the mark CANON by private respondent on the ground that
petitioner has used and continues to use the trademark CANON on its wide
range of goods worldwide. Allegedly, the corporate name or tradename of
petitioner is also used as its trademark on diverse goods including footwear
and other related products like shoe polisher and polishing agents. To lend
credence to its claim, petitioner points out that it has branched out in its
business based on the various goods carrying its trademark CANON[3],
including footwear which petitioner contends covers sandals, the goods for
which private respondent sought to register the mark CANON. For petitioner,
the fact alone that its trademark CANON is carried by its other products like
footwear, shoe polisher and polishing agents should have precluded the
BPTTT from giving due course to the application of private respondent.
We find the arguments of petitioner to be unmeritorious. Ordinarily, the
ownership of a trademark or tradename is a property right that the owner is
entitled to protect[4] as mandated by the Trademark Law.[5] However, when a
trademark is used by a party for a product in which the other party does not
deal, the use of the same trademark on the latters product cannot be validly
objected to.[6]
A review of the records shows that with the order of the BPTTT declaring
private respondent in default for failure to file its answer, petitioner had every
opportunity to present ex-parte all of its evidence to prove that its certificates
of registration for the trademark CANON cover footwear. The certificates of
registration for the trademark CANON in other countries and in the Philippines
as presented by petitioner, clearly showed that said certificates of registration
cover goods belonging to class 2 (paints, chemical products, toner, dyestuff).
On this basis, the BPTTT correctly ruled that since the certificate of
registration of petitioner for the trademark CANON covers class 2 (paints,
chemical products, toner, dyestuff), private respondent can use the trademark
CANON for its goods classified as class 25 (sandals). Clearly, there is a world
of difference between the paints, chemical products, toner, and dyestuff of
petitioner and the sandals of private respondent.
Petitioner counters that notwithstanding the dissimilarity of the products of the
parties, the trademark owner is entitled to protection when the use of by the
junior user "forestalls the normal expansion of his business".[7] Petitioners
opposition to the registration of its trademark CANON by private respondent
rests upon petitioners insistence that it would be precluded from using the
mark CANON for various kinds of footwear, when in fact it has earlier used
said mark for said goods. Stretching this argument, petitioner claims that it is
possible that the public could presume that petitioner would also produce a
wide variety of footwear considering the diversity of its products marketed
worldwide.
We do not agree. Even in this instant petition, except for its bare assertions,
petitioner failed to attach evidence that would convince this Court that
petitioner has also embarked in the production of footwear products. We
quote with approval the observation of the Court of Appeals that:
"The herein petitioner has not made known that it intends to
venture into the business of producing sandals. This is clearly
shown in its Trademark Principal Register (Exhibit "U") where
the products of the said petitioner had been clearly and
specifically described as "Chemical products, dyestuffs,
pigments, toner developing preparation, shoe polisher,
polishing agent". It would be taxing ones credibility to aver at
this point that the production of sandals could be considered
as a possible "natural or normal expansion" of its business
operation".[8]
In Faberge, Incorporated vs. Intermediate Appellate Court,[9] the Director of
patents allowed the junior user to use the trademark of the senior user on the
ground that the briefs manufactured by the junior user, the product for which
the trademark BRUTE was sought to be registered, was unrelated and non-
competing with the products of the senior user consisting of after shave lotion,
shaving cream, deodorant, talcum powder, and toilet soap. The senior user
vehemently objected and claimed that it was expanding its trademark to briefs
and argued that permitting the junior user to register the same trademark
would allow the latter to invade the senior users exclusive domain. In
sustaining the Director of Patents, this Court said that since "(the senior user)
has not ventured in the production of briefs, an item which is not listed in its
certificate of registration, (the senior user), cannot and should not be allowed
to feign that (the junior user) had invaded (the senior users) exclusive
domain."[10] We reiterated the principle that the certificate of registration
confers upon the trademark owner the exclusive right to use its own
symbol only to those goods specified in the certificate, subject to the
conditions and limitations stated therein.[11] Thus, the exclusive right of
petitioner in this case to use the trademark CANON is limited to the products
covered by its certificate of registration.
Petitioner further argues that the alleged diversity of its products all over the
world makes it plausible that the public might be misled into thinking that there
is some supposed connection between private respondents goods and
petitioner. Petitioner is apprehensive that there could be confusion as to the
origin of the goods, as well as confusion of business, if private respondent is
allowed to register the mark CANON. In such a case, petitioner would
allegedly be immensely prejudiced if private respondent would be permitted to
take "a free ride on, and reap the advantages of, the goodwill and reputation
of petitioner Canon".[12] In support of the foregoing arguments, petitioner
invokes the rulings in Sta. Ana vs. Maliwat[13], Ang vs. Teodoro[14] and
Converse Rubber Corporation vs. Universal Rubber Products, Inc.[15].
The likelihood of confusion of goods or business is a relative concept, to be
determined only according to the particular, and sometimes peculiar,
circumstances of each case.[16]Indeed, in trademark law cases, even more
than in other litigation, precedent must be studied in the light of the facts of the
particular case.[17] Contrary to petitioners supposition, the facts of this case
will show that the cases of Sta. Ana vs. Maliwat,, Ang vs. Teodoro and
Converse Rubber Corporation vs. Universal Rubber Products, Inc. are hardly
in point. The just cited cases involved goods that were confusingly similar, if
not identical, as in the case of Converse Rubber Corporation vs. Universal
Rubber Products, Inc. Here, the products involved are so unrelated that the
public will not be misled that there is the slightest nexus between petitioner
and the goods of private respondent.
In cases of confusion of business or origin, the question that usually arises is
whether the respective goods or services of the senior user and the junior
user are so related as to likely cause confusion of business or origin, and
thereby render the trademark or tradenames confusingly similar.[18] Goods are
related when they belong to the same class or have the same descriptive
properties; when they possess the same physical attributes or essential
characteristics with reference to their form, composition, texture or
quality.[19] They may also be related because they serve the same purpose or
are sold in grocery stores.[20]
Thus, in Esso Standard Eastern, Inc. vs. Court of Appeals, this Court ruled
that the petroleum products on which the petitioner therein used the
trademark ESSO, and the product of respondent, cigarettes are "so foreign to
each other as to make it unlikely that purchasers would think that petitioner is
the manufacturer of respondents goods"[21]. Moreover, the fact that the goods
involved therein flow through different channels of trade highlighted their
dissimilarity, a factor explained in this wise:
"The products of each party move along and are disposed
through different channels of distribution. The (petitioners)
products are distributed principally through gasoline service
and lubrication stations, automotive shops and hardware
stores. On the other hand, the (respondents) cigarettes are
sold in sari-sari stores, grocery store, and other small
distributor outlets. (Respondents) cigarettes are even peddled
in the streets while (petitioners) gasul burners are not. Finally,
there is a marked distinction between oil and tobacco, as well
as between petroleum and cigarettes. Evidently, in kind and
nature the products of (respondent) and of (petitioner) are
poles apart."[22]
Undoubtedly, the paints, chemical products, toner and dyestuff of petitioner
that carry the trademark CANON are unrelated to sandals, the product of
private respondent. We agree with the BPTTT, following the Esso doctrine,
when it noted that the two classes of products in this case flow through
different trade channels. The products of petitioner are sold through special
chemical stores or distributors while the products of private respondent are
sold in grocery stores, sari-sari stores and department stores.[23] Thus, the
evident disparity of the products of the parties in the case at bar renders
unfounded the apprehension of petitioner that confusion of business or origin
might occur if private respondent is allowed to use the mark CANON.
In its bid to bar the registration of private respondent of the mark CANON,
petitioner invokes the protective mantle of the Paris Convention. Petitioner
asserts that it has the exclusive right to the mark CANON because it forms
part of its corporate name or tradename, protected by Article 8 of the Paris
Convention, to wit:
"A tradename shall be protected in all the countries of the
Union without the obligation of filing or registration, whether or
not it forms part of a trademark."
Public respondents BPTTT and the Court of Appeals allegedly committed an
oversight when they required petitioner to prove that its mark is a well-known
mark at the time the application of private respondent was filed. Petitioner
questions the applicability of the guidelines embodied in the Memorandum of
then Minister of Trade and Industry Roberto Ongpin (Ongpin) dated October
25, 1983 which according to petitioner implements Article 6bis of the Paris
Convention, the provision referring to the protection of trademarks. The
memorandum reads:
"a) the mark must be internationally known;
b) the subject of the right must be a trademark, not a patent
or copyright or anything else;
c) the mark must be for use in the same or similar class of
goods;
d) the person claiming must be the owner of the mark."
According to petitioner, it should not be required to prove that its trademark is
well-known and that the products are not similar as required by the quoted
memorandum. Petitioner emphasizes that the guidelines in the memorandum
of Ongpin implement Article 6bis of the Paris Convention, the provision for the
protection of trademarks, not tradenames. Article 6bis of the Paris Convention
states:
(1)....The countries of the Union undertake, either
administratively if their legislation so permits, or at the request
of an interested party, to refuse or to cancel the registration
and to prohibit the use of a trademark which constitutes a
reproduction, imitation or translation, liable to create
confusion, of a mark considered by the competent authority of
 the country of registration or use to be well-known in that
country as being already the mark of a person entitled to the
benefits of the present Convention and used for identical or
similar goods. These provisions shall also apply when the
essential part of the mark constitutes a reproduction of any
such well-known mark or an imitation liable to create
confusion therewith.
(2)....A period of at least five years from the date of
registration shall be allowed for seeking the cancellation of
such a mark. The countries of the Union may provide for a
period within which the prohibition of use must be sought.
(3)....No time limit shall be fixed for seeking the cancellation
or the prohibition of the use of marks or used in bad faith."
Petitioner insists that what it seeks is the protection of Article 8 of the Paris
Convention, the provision that pertains to the protection of tradenames.
Petitioner believes that the appropriate memorandum to consider is that
issued by the then Minister of Trade and Industry, Luis Villafuerte, directing
the Director of patents to:
"reject all pending applications for Philippine registration of
signature and other world famous trademarks by applicants
other than the original owners or users."
As far as petitioner is concerned, the fact that its tradename is at risk would
call for the protection granted by Article 8 of the Paris Convention. Petitioner
calls attention to the fact that Article 8, even as embodied in par. 6, sec. 37 of
RA 166, mentions no requirement of similarity of goods. Petitioner claims that
the reason there is no mention of such a requirement, is "because there is a
difference between the referent of the name and that of the mark"[24] and that
"since Art. 8 protects the tradename in the countries of the Union, such as
Japan and the Philippines, Petitioners tradename should be protected
here."[25]
We cannot uphold petitioners position.
The term "trademark" is defined by RA 166, the Trademark Law, as including
"any word, name, symbol, emblem, sign or device or any combination thereof
adopted and used by a manufacturer or merchant to identify his goods and
distinguish them for those manufactured, sold or dealt in by
others."[26] Tradename is defined by the same law as including "individual
names and surnames, firm names, tradenames, devices or words used by
manufacturers, industrialists, merchants, agriculturists, and others to identify
their business, vocations, or occupations; the names or titles lawfully adopted
and used by natural or juridical persons, unions, and any manufacturing,
industrial, commercial, agricultural or other organizations engaged in trade or
commerce."[27] Simply put, a trade name refers to the business and its
goodwill; a trademark refers to the goods.[28]
The Convention of Paris for the Protection of Industrial Property, otherwise
known as the Paris Convention, of which both the Philippines and Japan, the
country of petitioner, are signatories[29], is a multilateral treaty that seeks to
protect industrial property consisting of patents, utility models, industrial
designs, trademarks, service marks, trade names and indications of source or
appellations of origin, and at the same time aims to repress unfair
competition.[30] We agree with public respondents that the controlling doctrine
with respect to the applicability of Article 8 of the Paris Convention is that
established in Kabushi Kaisha Isetan vs. Intermediate Appellate Court.[31] As
pointed out by the BPTTT:
"Regarding the applicability of Article 8 of the Paris
Convention, this Office believes that there is no automatic
protection afforded an entity whose tradename is alleged to
have been infringed through the use of that name as a
trademark by a local entity.
In Kabushiki Kaisha Isetan vs. The Intermediate Appellate
Court, et. al., G.R. No. 75420, 15 November 1991, the
Honorable Supreme Court held that:
The Paris Convention for the Protection of
Industrial Property does not automatically
exclude all countries of the world which have
signed it from using a tradename which
happens to be used in one country. To
illustrate if a taxicab or bus company in a
town in the United Kingdom or India happens
to use the tradename "Rapid Transportation",
it does not necessarily follow that "Rapid" can
no longer be registered in Uganda, Fiji, or the
Philippines.
This office is not unmindful that in the Treaty of Paris for the
Protection of Intellectual Property regarding well-known
 marks and possible application thereof in this case. Petitioner,
as this office sees it, is trying to seek refuge under its
protective mantle, claiming that the subject mark is well
known in this country at the time the then application of NSR
Rubber was filed.
However, the then Minister of Trade and Industry, the Hon.
Roberto V. Ongpin, issued a memorandum dated 25 October
1983 to the Director of Patents, a set of guidelines in the
implementation of Article 6bis (sic) of the Treaty of Paris.
These conditions are:
a) the mark must be internationally known;
Kaisha Isetan vs. Intermediate Appellate Court that Article 8 of the Paris
Convention does not automatically extend protection to a tradename that is in
danger of being infringed in a country that is also a signatory to said
treaty. This contention deserves scant consideration. Suffice it to say that the
just quoted pronouncement in the case of Kabushi Kaisha Isetan vs.
Intermediate Appellate Court, was made independent of the factual finding
that petitioner in said case had not conducted its business in this country.
WHEREFORE, in view of the foregoing, the instant petition for review on
certiorari is DENIED for lack of merit.
SO ORDERED.

b) the subject of the right must be a trademark, not a patent

or copyright or anything else;

c ) the mark must be for use in the same or similar kinds of

goods; and

d) the person claiming must be the owner of the mark (The

Parties Convention Commentary on the Paris Convention.
Article by Dr. Bogsch, Director General of the World
Intellectual Property Organization, Geneva, Switzerland,
1985)

From the set of facts found in the records, it is ruled that the
Petitioner failed to comply with the third requirement of the
said memorandum that is the mark must be for use in the
same or similar kinds of goods. The Petitioner is using the
mark "CANON" for products belonging to class 2 (paints,
chemical products) while the Respondent is using the same
mark for sandals (class 25). Hence, Petitioners contention
that its mark is well-known at the time the Respondent filed its
application for the same mark should fail. "[32]

Petitioner assails the application of the case of Kabushi Kaisha Isetan vs.
Intermediate Appellate Court to this case. Petitioner points out that in the case
of Kabushi Kaisha Isetan vs. Intermediate Appellate Court, petitioner therein
was found to have never at all conducted its business in the Philippines unlike
herein petitioner who has extensively conducted its business here and also
had its trademark registered in this country. Hence, petitioner submits that this
factual difference renders inapplicable our ruling in the case of Kabushi
G.R. No. 111580 June 21, 2001
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT LTD., SHANGRI-LA
PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL AND RESORT, INC. and
KUOK PHILIPPINE PROPERTIES, INC., petitioners,
vs.
THE COURT OF APPEALS, HON. FELIX M. DE GUZMAN, as Judge, RTC
of Quezon City, Branch 99 and DEVELOPERS GROUP OF COMPANIES,
INC., respondents.
----------------------------------------
G.R. No. 114802 June 21, 2001
DEVELOPERS GROUP OF COMPANIES, INC., petitioner,
vs.
THE COURT OF APPEALS, HON. IGNACIO S. SAPALO, in his capacity as
Director, Bureau of Patents, Trademarks and Technology Transfer, and
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT,
LTD.,respondents.
YNARES-SANTIAGO, J.:
On June 21, 1988, the Shangri-La International Hotel Management, Ltd.,
Shangri-La Properties, Inc., Makati Shangri-La Hotel and Resort, Inc. and
Kuok Philippine Properties, Inc. (hereinafter collectively referred as the
"Shangri-La Group"), filed with the Bureau of Patents, Trademarks and
Technology Transfer (BPTTT) a petition, docketed as Inter Partes Case No.
3145, praying for the cancellation of the registration of the "Shangri-La" mark
and "S" device/logo issued to the Developers Group of Companies, Inc., on
the ground that the same was illegally and fraudulently obtained and
appropriated for the latter's restaurant business. The Shangri-La Group
alleged that it is the legal and beneficial owners of the subject mark and logo;
that it has been using the said mark and logo for its corporate affairs and
business since March 1962 and caused the same to be specially designed for
their international hotels in 1975, much earlier than the alleged first use
thereof by the Developers Group in 1982.
Likewise, the Shangri-La Group filed with the BPTTT its own application for
registration of the subject mark and logo. The Developers Group filed an
opposition to the application, which was docketed as Inter Partes Case No.
3529.
Almost three (3) years later, or on April 15, 1991, the Developers Group
instituted with the Regional Trial Court of Quezon City, Branch 99, a complaint
for infringement and damages with prayer for injunction, docketed as Civil
Case No. Q-91-8476, against the Shangri-La Group.
On January 8, 1992, the Shangri-La Group moved for the suspension of the
proceedings in the infringement case on account of the pendency of the
administrative proceedings before the BPTTT.1 This was denied by the trial
court in a Resolution issued on January 16, 1992.2 The Shangri-La Group
filed a Motion for Reconsideration.3 Soon thereafter, it also filed a Motion to
Inhibit against Presiding Judge Felix M. de Guzman.4 On July 1, 1992, the trial
court denied both motions.5
The Shangri-La Group filed a petition for certiorari before the Court of
Appeals, docketed as CA-G.R. SP No. 29006.6 On February 15, 1993, the
Court of Appeals rendered its decision dismissing the petition for
certiorari.7 The Shangri-La Group filed a Motion for Reconsideration, which
was denied on the ground that the same presented no new matter that
warranted consideration.8
Hence, the instant petition, docketed as G.R. No. 111580, based on the
following grounds:
THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS
DISCRETION AND COMMITTED A REVERSIBLE ERROR IN NOT
FINDING THAT:
I. THE INFRINGEMENT CASE SHOULD BE DISMISSED OR AT
LEAST SUSPENDED; AND
II. THE HONORABLE PRESIDING JUDGE SHOULD INHIBIT
HIMSELF FROM TRYING THE INFRINGEMENT CASE.9
Meanwhile, on October 28, 1991, the Developers Group filed in Inter Partes
Case No. 3145 an Urgent Motion to Suspend Proceedings, invoking the
pendency of the infringement case it filed before the Regional Trial Court of
Quezon City.10 On January 10, 1992, the BPTTT, through Director Ignacio S.
Sapalo, issued an Order denying the Motion.11 A Motion for Reconsideration
was filed which was, however, denied in a Resolution dated February 11,
1992.12
From the denial by the BPTTT of its Urgent Motion to Suspend Proceedings
and Motion for Reconsideration, the Developers Group filed with the Court of
Appeals a petition for certiorari, mandamus and prohibition, docketed as CA-
G.R. SP No. 27742.13 On March 29, 1994, the Court of Appeals dismissed the
petition for lack of merit.14
A petition for review was thereafter filed, docketed as G.R. No. 114802,
raising the issue of:
WHETHER OR NOT, GIVEN THE ESTABLISHED FACTS AND
CIRCUMSTANCES ON RECORD AND THE LAW AND
JURISPRUDENCE APPLICABLE TO THE MATTER, THE
RESPONDENT COURT ERRED IN HOLDING THAT, INASMUCH
AS BOTH THE CIVIL ACTION AND THE ADMINISTRATIVE
PROCEEDINGS HERE INVOLVED MAY CO-EXIST AND THE LAW
DOES NOT PROVIDE FOR ANY PREFERENCE BY ONE OVER
THE OTHER, THE RESPONDENT DIRECTOR HAD JURISDICTION
TO RULE AS HE DID AND HAD NOT INCURRED ANY GRAVE
ABUSE OF DISCRETION CORRECTIBLE BY THE
EXTRAORDINARY REMEDIES OF CERTIORARI, PROHIBITION
AND MANDAMUS.15
On February 2, 1998, G.R. Nos. 111580 and 114802 were ordered
consolidated.
The core issue is simply whether, despite the institution of an Inter Partes
case for cancellation of a mark with the BPTTT (now the Bureau of Legal
Affairs, Intellectual Property Office) by one party, the adverse party can file a
subsequent action for infringement with the regular courts of justice in
connection with the same registered mark.
We rule in the affirmative.
Section 151.2 of Republic Act No. 8293, otherwise known as the Intellectual
Property Code, provides, as follows
Section 151.2. Notwithstanding the foregoing provisions, the court or
the administrative agency vested with jurisdiction to hear and
adjudicate any action to enforce the rights to a registered mark shall
likewise exercise jurisdiction to determine whether the registration of
said mark may be cancelled in accordance with this Act. The filing of
a suit to enforce the registered mark with the proper court or agency
shall exclude any other court or agency from assuming jurisdiction
over a subsequently filed petition to cancel the same mark. On the
other hand, the earlier filing of petition to cancel the mark with
the Bureau of Legal Affairs shall not constitute a prejudicial
question that must be resolved before an action to enforce the
rights to same registered mark may be decided. (Emphasis
provided)
Similarly, Rule 8, Section 7, of the Regulations on Inter Partes Proceedings,
provides to wit
Section 7. Effect of filing of a suit before the Bureau or with the proper
court. - The filing of a suit to enforce the registered mark with the
proper court or Bureau shall exclude any other court or agency from
assuming jurisdiction over a subsequently filed petition to cancel the
same mark. On the other hand, the earlier filing of petition to
cancel the mark with the Bureau shall not constitute a prejudicial
question that must be resolved before an action to enforce the
rights to same registered mark may be decided. (Emphasis
provided)
Hence, as applied in the case at bar, the earlier institution of an Inter Partes
case by the Shangri-La Group for the cancellation of the "Shangri-La" mark
and "S" device/logo with the BPTTT cannot effectively bar the subsequent
filing of an infringement case by registrant Developers Group. The law and the
rules are explicit.
The rationale is plain: Certificate of Registration No. 31904, upon which the
infringement case is based, remains valid and subsisting for as long as it has
not been cancelled by the Bureau or by an infringement court. As such,
Developers Group's Certificate of Registration in the principal register
continues as "prima facie evidence of the validity of the registration, the
registrant's ownership of the mark or trade-name, and of the registrant's
exclusive right to use the same in connection with the goods, business or
services specified in the certificate."16 Since the certificate still subsists,
Developers Group may thus file a corresponding infringement suit and recover
damages from any person who infringes upon the former's rights. 17
Furthermore, the issue raised before the BPTTT is quite different from that
raised in the trial court. The issue raised before the BPTTT was whether the
mark registered by Developers Group is subject to cancellation, as the
Shangri-La Group claims prior ownership of the disputed mark. On the other
hand, the issue raised before the trial court was whether the Shangri-La
Group infringed upon the rights of Developers Group within the contemplation
of Section 22 of Republic Act 166.
The case of Conrad and Company, Inc. v. Court of Appeals18 is in point.
We held:
We cannot see any error in the above disquisition. It might be
mentioned that while an application for the
administrative cancellation of a registered trademark on any of the
grounds enumerated in Section 17 of Republic Act No. 166, as
amended, otherwise known as the Trade-Mark Law, falls under the
exclusive cognizance of BPTTT (Sec. 19, Trade-Mark Law), an
action, however, for infringement or unfair competition, as well as the
remedy of injunction and relief for damages, is explicitly and
unquestionably within the competence and jurisdiction of ordinary
courts.
xxx xxx xxx
Surely, an application with BPTTT for an administrative cancellation of
a registered trade mark cannot per se have the effect of restraining or
preventing the courts from the exercise of their lawfully conferred
jurisdiction. A contrary rule would unduly expand the doctrine of
primary jurisdiction which, simply expressed, would merely behoove
regular courts, in controversies involving specialized disputes, to defer
to the findings or resolutions of administrative tribunals on certain
technical matters. This rule, evidently, did not escape the appellate
court for it likewise decreed that for "good cause shown, the lower
court, in its sound discretion, may suspend the action pending
outcome of the cancellation proceedings" before the BPTTT.
However, while the instant Petitions have been pending with this Court, the
infringement court rendered a Decision, dated March 8, 1996, in Civil Case
No. Q-91-8476,19 the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff
Developers Group of Companies, Inc. and against defendants
Shangri-La International Hotel Management, Ltd., Shangri-La
Properties, Inc., Makati Shangri-La Hotel and Resort, Inc., and Kuok
Philippine Properties, Inc.
a) Upholding the validity of the registration of the service mark
"Shangri-La" and "S-Logo" in the name of plaintiff;
b) Declaring defendants' use of said mark and logo as an infringement
of plaintiff's right thereto;
c) Ordering defendants, their representatives, agents, licensees,
assignees and other persons acting under their authority and with
their permission, to permanently cease and desist from using and/or
continuing to use said mark and logo, or any copy, reproduction or
colorable imitation thereof, in the promotion, advertisement, rendition
of their hotel and allied projects and services or in any other manner
whatsoever;
d) Ordering defendants to remove said mark and logo from any
premises, objects, materials and paraphernalia used by them and/or
destroy any and all prints, signs, advertisements or other materials
bearing said mark and logo in their possession and/or under their
control; and
e) Ordering defendants, jointly and severally, to indemnify plaintiff in
the amounts of P2,000,000.00 as actual and compensatory damages,
P500,000.00 as attorney's fees and expenses of litigation.
Let a copy of this Decision be certified to the Director, Bureau of
Patents, Trademarks and Technology Transfer, for his information
and appropriate action in accordance with the provisions of Section
25, Republic Act No. 166.
Costs against defendants.
SO ORDERED.20
The said Decision is now on appeal with respondent Court of Appeals. 21
Following both law and the jurisprudence enunciated in Conrad and
Company, Inc. v. Court of Appeals,22 the infringement case can and should
proceed independently from the cancellation case with the Bureau so as to
afford the owner of certificates of registration redress and injunctive writs. In
the same light, so must the cancellation case with the BPTTT (now the
Bureau of Legal Affairs, Intellectual Property Office) continue independently
from the infringement case so as to determine whether a registered mark may
ultimately be cancelled. However, the Regional Trial Court, in granting redress
in favor of Developers Group, went further and upheld the validity and
preference of the latter's registration over that of the Shangri-La Group.
There can be no denying that the infringement court may validly pass upon
the right of registration. Section 161 of Republic Act No. 8293 provides to wit

SEC. 161. Authority to Determine Right to Registration In any

action involving a registered mark the court may determine the
right to registration, order the cancellation of the registration, in
whole or in part, and otherwise rectify the register with respect
to the registration of any party to the action in the exercise of
this. Judgement and orders shall be certified by the court to the
Director, who shall make appropriate entry upon the records of the
Bureau, and shall be controlled thereby. (Sec. 25, R.A. No. 166a).
(Emphasis provided)

With the decision of the Regional Trial Court upholding the validity of the
registration of the service mark "Shangri-La" and "S" logo in the name of
Developers Group, the cancellation case filed with the Bureau hence
becomes moot. To allow the Bureau to proceed with the cancellation case
would lead to a possible result contradictory to that which the Regional Trial
Court has rendered, albeit the same is still on appeal. Such a situation is
certainly not in accord with the orderly administration of justice. In any event,
the Court of Appeals has the competence and jurisdiction to resolve the merits
of the said RTC decision.

We are not unmindful of the fact that in G.R. No. 114802, the only issue
submitted for resolution is the correctness of the Court of Appeals' decision
sustaining the BPTTT's denial of the motion to suspend the proceedings
before it. Yet, to provide a judicious resolution of the issues at hand, we find
it apropos to order the suspension of the proceedings before the Bureau
pending final determination of the infringement case, where the issue of the
validity of the registration of the subject trademark and logo in the name of
Developers Group was passed upon.

WHEREFORE, in view of the foregoing, judgment is hereby rendered

dismissing G.R. No. 111580 for being moot and academic, and ordering the
Bureau of Legal Affairs, Intellectual Property Office, to suspend further
proceedings in Inter Partes Case No. 3145, to await the final outcome of the
appeal in Civil Case No. Q-91-8476.1wphi1.nt

SO ORDERED.
 Petitioner McDonalds Corporation (McDonalds) is a corporation
MCDONALDS CORPORATION and G.R. No. 143993 organized under the laws of Delaware, United States. McDonalds operates, by
MCGEORGE FOOD INDUSTRIES, INC., itself or through its franchisees, a global chain of fast-food restaurants.
Petitioners, McDonalds[4] owns a family of marks[5] including the Big Mac mark for its
Present: double-decker hamburger sandwich.[6]McDonalds registered this trademark
Davide, Jr., C.J., with the United States Trademark Registry on 16 October 1979.[7] Based on this
Chairman, Home Registration, McDonalds applied for theregistration of the same mark in
- versus - Quisumbing, the Principal Register of the then Philippine Bureau of Patents, Trademarks and
Ynares-Santiago, Technology (PBPTT), now the Intellectual Property Office
Carpio, and (IPO). Pending approval of its application, McDonalds introduced its Big Mac
Azcuna, JJ. hamburger sandwiches in the Philippine market in September 1981. On 18 July
1985, the PBPTT allowed registration of the Big Mac mark in
L.C. BIG MAK BURGER, INC., the Principal Register based on its Home Registration in the United States.
FRANCIS B. DY, EDNA A. DY,
RENE B. DY, WILLIAM B. DY, Like its other marks, McDonalds displays the Big Mac mark in
JESUS AYCARDO, ARACELI Promulgated: items[8] and paraphernalia[9] in its restaurants, and in its outdoor and indoor
AYCARDO, and GRACE HUERTO, signages. From 1982 to 1990, McDonalds spent P10.5 million in advertisement
Respondents. August 18, 2004 for Big Mac hamburger sandwiches alone.[10]

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x Petitioner McGeorge Food Industries (petitioner McGeorge), a

domestic corporation, is McDonalds Philippine franchisee.[11]

DECISION 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 corporations menu includes
CARPIO, J.: 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
The Case directors of respondent corporation.[14]

On 21 October 1988, respondent corporation applied with the PBPTT

This is a petition for review[1] of the Decision dated 26 November 1999 of the
Court of Appeals[2] finding respondent L.C. Big Mak Burger, Inc. not liable for
trademark infringement and unfair competition and ordering petitioners to pay
respondents P1,900,000 in damages, and of its Resolution dated 11 July 2000
denying reconsideration. The Court of Appeals Decision reversed the 5
September 1994 Decision[3] of the Regional Trial Court of Makati, Branch 137,
finding respondent L.C. Big Mak Burger, Inc. liable for trademark infringement
and unfair competition.
The Facts
for the registration of the Big Mak mark for its hamburger sandwiches.
McDonalds opposed respondent corporations application on the ground that
Big Mak was a colorable imitation of its registered Big Mac mark for the same
food products. McDonalds 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
McDonalds 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 McDonalds 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 McDonalds 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 McDonalds, the
Isaiyas Group did so only in the Supplemental Register of the PBPTT and such
registration does not provide any protection. McDonalds disclosed that it
had acquired Topacios rights to his registration in a Deed of Assignment dated
18 May 1981.[18]
The Trial Courts 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 McDonalds, 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 McDonalds 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
McDonalds 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 corporations
mobile snack vans located along busy streets or highways.But
the thing is that what is being sold by both contending parties
is a food item a hamburger sandwich which is for immediate
consumption, so that a buyer may easily be confused
ordeceived into thinking that the B[ig] M[ak] hamburger
sandwich he bought is a food-product of plaintiff McDonalds,
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
McDonalds. 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 McDonalds 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
attorneys 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 McDonalds 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
McDonalds logo of umbrella M stamped thereon, together
with the printed mark in red bl[o]ck capital letters, the words
being separated by a single space. Specifically, plaintiffs-
appellees argue that defendants-appellants use of their
corporate name is a colorable imitation of their trademark Big
Mac.
xxxx
To Our mind, however, this Court is fully convinced that no
colorable imitation exists. As the definition dictates, it is
not sufficient that a similarity exists in both names, but
that more importantly, the over-all presentation, or in their
essential, substantive and distinctive parts is such as would
likely MISLEAD or CONFUSE persons in the ordinary course
of purchasing the genuine article. A careful comparison of the
way the trademark B[ig] M[ac] is being used by plaintiffs-
appellees and corporate name L.C. Big Mak Burger, Inc. by
defendants-appellants, would readily reveal that no confusion
could take place, or that the ordinary purchasers would be
misled by it. As pointed out by defendants-appellants, the
plaintiffs-appellees trademark is used to designate only one
product, a double decker sandwich sold in a Styrofoam box
with the McDonalds logo. On the other hand, what the
defendants-appellants corporation is using is not a trademark
for its food product but a business or corporate name. They
use the business name L.C. Big Mak Burger, Inc. in their
restaurant business which serves diversified food items such
as siopao, noodles, pizza, and sandwiches such as hotdog,
ham, fish burger and hamburger. Secondly, defendants-
appellants corporate or business name appearing in the food
packages and signages are written in silhouette red-orange
letters with the b and m in upper case letters. Above the words
Big Mak are the upper case letter L.C.. Below the words Big
Mak are the words Burger, Inc. spelled out in upper case
letters. Furthermore, said corporate or business name
appearing in such food packages and signages is always
accompanied by the company mascot, a young chubby boy
named Maky who wears a red T-shirt with the upper case m
appearing therein and a blue lower garment. Finally, the
defendants-appellants food packages are made of plastic
material.
xxxx
xxx [I]t is readily apparent to the naked eye that there appears
a vast difference in the appearance of the product and
the manner that the tradename Big Mak is being used and
presented to the public. As earlier noted, there are glaring
dissimilarities between plaintiffs-appellees trademark and
defendants-appellants corporate name. Plaintiffs-appellees
product carrying the trademark B[ig] M[ac] is a double decker
sandwich (depicted in the tray mat containing photographs of
the various food products xxx sold in a Styrofoam box with the
McDonalds 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
McDonalds restaurant usually located in a nearby commercial
center, advertised and identified by its logo - the umbrella M,
and its mascot Ronald McDonald. A typical
McDonalds 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 McDonalds
and enter it first before he can find a hamburger sandwich
which carry the mark Big Mac. On the other hand, defendants-
appellants sell their goods through snack vans xxxx
Anent the allegation that defendants-appellants are guilty of
unfair competition, We likewise find the same untenable.
Unfair competition is defined as the employment of deception
or any other means contrary to good faith by which a
person shall pass off the goods manufactured by him or in
which he deals, or his business, or service, for those of another
who has already established good will for his similar good,
business or services, or any acts calculated to produce the
same result (Sec. 29, Rep. Act No. 166, as amended).
To constitute unfair competition therefore it
must necessarily follow that there was malice and that the
entity concerned was in bad faith.
In the case at bar, We find no sufficient evidence
adduced by plaintiffs-appellees that defendants-appellants
deliberately tried to pass off the goods manufactured by them
for those of plaintiffs-appellees. The mere suspected similarity
in the sound of the defendants-appellants corporate name with
the plaintiffs-appellees trademark is not sufficient evidence to
conclude unfair competition. Defendants-appellants explained
that the name M[ak] in their corporate name was derived
from both the first names of the mother and father of defendant
Francis Dy, whose names are Maxima and Kimsoy. With this
explanation, it is up to the plaintiffs-appellees to prove bad
faith on the part of defendants-appellants. It is a settled rule
that the law always presumes good faith such that any person
who seeks to be awarded damages due to acts of another has
the burden of proving that the latter acted in bad faith or with ill
motive. [21]
Petitioners sought reconsideration of the Court of Appeals Decision but
the appellate court denied their motion in its Resolution of 11 July 2000.
Hence, this petition for review.
 Petitioners raise the following grounds for their petition:
I. THE COURT OF APPEALS ERRED IN FINDING THAT
RESPONDENTS CORPORATE NAME L.C. BIG MAK
BURGER, INC. IS NOT A COLORABLE IMITATION OF
THE MCDONALDS 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 Courts 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 corporations non-liability for trademark
infringement and unfair competition. Ordinarily, the Court can deny due course
to such a petition. In view, however, of the contradictory findings of fact of the
RTC and Court of Appeals, the Court opts to accept the petition, this being one
of the recognized exceptions to Section 1.[26] We took a similar course of action
in Asia Brewery, Inc. v. Court of Appeals[27] which also involved a suit for
trademark infringement and unfair competition in which the trial court and the
Court of Appeals arrived at conflicting findings.
On the Manner Respondents Used
Big Mak in their Business
Petitioners contend that the Court of Appeals erred in ruling that the corporate
name L.C. Big Mak Burger, Inc. appears in the packaging for respondents
hamburger products and not the words Big Mak only.
The contention has merit.
The evidence presented during the hearings on petitioners motion for the
issuance of a writ of preliminary injunction shows that the plastic wrappings and
plastic bags used by respondents for their hamburger sandwiches bore the
words Big Mak. The other descriptive words burger and 100% pure beef were
set in smaller type, along with the locations of branches. [28] Respondents cash
invoices simply refer to their hamburger sandwiches as Big Mak. [29] It
is respondents snack vans that carry the words L.C. Big Mak Burger, Inc. [30]
It was only during the trial that respondents presented in evidence the plastic
wrappers and bags for their hamburger sandwiches relied on by the Court of
Appeals.[31]Respondents plastic wrappers and bags were identical with those
petitioners presented during the hearings for the injunctive writ except that the
letters L.C. and the words Burger, Inc. in respondents evidence were added
above and below the words Big Mak, respectively. Since petitioners complaint
was based on facts existing before and during the hearings on the injunctive
writ, the facts established during those hearings are the proper factual bases
for the disposition of the issues raised in this petition.
On the Issue of Trademark Infringement
Section 22 (Section 22) of Republic Act No. 166, as amended (RA 166), the law
applicable to this case,[32] defines trademark infringement as follows:
Infringement, what constitutes. Any person who [1] shall use,
without the consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation of any registered mark
or trade-name in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in
connection with which such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or
origin of such goods or services, or identity of such business;
or [2] reproduce, counterfeit, copy, or colorably imitate anysuch
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 plaintiffs mark; (2) the plaintiffs ownership of the mark;
and (3) the use of the mark or its colorable imitation by the alleged infringer
results in likelihood of confusion.[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 MacMark
and McDonalds Ownership of such Mark
A mark is valid if it is distinctive and thus not barred from
registration under Section 4[36] of RA 166 (Section 4). However, once
registered, not only the marks validity but also the registrants ownership of the
mark is prima facie presumed.[37]
Respondents contend that of the two words in the Big Mac mark, it is
only the word Mac that is valid because the word Big is generic and descriptive
(proscribed under Section 4[e]), and thus incapable of exclusive
appropriation.[38]
The contention has no merit. The Big Mac mark, which should be treated in its
entirety and not dissected word for word,[39] is neither generic nor descriptive.
Generic marks are commonly used as the name or description of
a kind of goods,[40] such as Lite for beer[41] or Chocolate Fudge for chocolate
soda drink.[42] Descriptive marks, on the other hand, convey the
characteristics, functions, qualities or ingredients of a product to one who has
never seen it or does not know it exists,[43] such as Arthriticare for arthritis
medication.[44] On the contrary, Big Mac falls under the class of fanciful or
arbitrary marks as it bears no logical relation to the actualcharacteristics 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 McDonalds
exclusive ownership of the Big Mac mark. Although Topacio and the Isaiyas
Group registered the Big Mac mark ahead of McDonalds, Topacio, as
petitioners disclosed, had already assigned his rights to McDonalds. The
Isaiyas Group, on the other hand, registered its trademark only in the
Supplemental Register. A mark which is not registered in the Principal Register,
and thus not distinctive, has no real protection.[47]Indeed, we have held that
registration in the Supplemental Register is not even a prima facie evidence of
the validity of the registrants 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 defendants product is such as might
reasonably be assumed to originate with the plaintiff, and the
public would then be deceived either into that belief or into the
belief that there is some connection between the 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
McDonalds 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 McDonalds nor its licensee/franchisee, plaintiff
McGeorge, and in clear violation of plaintiffs exclusive right to
use and/or appropriate the McDonalds 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 defendants 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 McDonalds 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 McDonalds and McGeorge as the
 real owner and rightful proprietor, and the
licensee/franchisee, respectively, of the McDonalds
marks, and which are likely to have caused confusion or
deceived the public as to the true source, sponsorship or
affiliation of defendants food products and restaurant
business, plaintiffs have suffered and continue to
suffer actual damages in the form of injury to their business
reputation and goodwill, and of the dilution of the distinctive
quality of the McDonalds 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 McDonalds logo and trademark in red, block letters at
a price more expensive than the hamburgers of respondents. In contrast,
respondents sell their Big Mak hamburgers in plastic wrappers and plastic bags.
Respondents further point out that petitioners restaurants are air-conditioned
buildings with drive-thru service, compared to respondents mobile vans.
These and other factors respondents cite cannot negate the undisputed
fact that respondents use their Big Mak mark on hamburgers, the same food
product that petitioners sell with the use of their registered mark Big
Mac. Whether a hamburger is single, double or triple-decker, and whether
wrapped in plastic or styrofoam, it remains the same hamburger food
product. Even respondents use of the Big Mak mark on non-hamburger food
products cannot excuse their infringement of petitioners registered mark,
otherwise registered marks will lose their protection under the law.
The registered trademark owner may use his mark on the same or
similar products, in different segments of the market, and at different price levels
depending on variations of the products for specific segments of the
market. The Court has recognized that the registered trademark owner enjoys
protection in product and market areas that are the normal potential
expansion of his business. Thus, the Court has declared:
Modern law recognizes that the protection to which the
owner of a trademark is entitled is not limited to guarding his
goods or business from actual market competition with
identical or similar products of the parties, but extends to all
cases in which the use by a junior appropriator of a trade-mark
or trade-name is likely to lead to a confusion of source, as
where prospective purchasers would be misled into
thinking that the complaining party has extended his
business into the field (see 148 ALR 56 et seq; 53 Am Jur.
576) or is in any way connected with the activities of the
infringer; or when it forestalls the normal potential
expansion of his business (v. 148 ALR, 77, 84; 52 Am. Jur.
576, 577).[56](Emphasis supplied)
On Whether Respondents Use of the Big Mak
Mark Results in Likelihood of Confusion
In determining likelihood of confusion, jurisprudence has developed two tests,
the dominancy test and the holistic test.[57] The dominancy test focuses on the
similarity of the prevalent features of the competing trademarks that might
cause confusion. In contrast, the holistic test requires the court to consider the
entirety of the marks as applied to the products, including the labels and
packaging, in determining confusing similarity.
The Court of Appeals, in finding that there is no likelihood of confusion
that could arise in the use of respondents Big Mak mark on hamburgers, relied
on the holistic test. Thus, the Court of Appeals ruled that it is not sufficient that
a similarity exists in both name(s), but that more importantly,
the overall presentation, or in their essential, substantive and distinctive parts
is such as would likely MISLEAD or CONFUSE persons in the ordinary course
of purchasing the genuine article. The holistic test considers the two marks in
their entirety, as they appear on the goods with their labels and packaging. It is
not enough to consider their words and compare the spelling and pronunciation
of the words.[58]

Respondents now vigorously argue that the Court of Appeals
application of the holistic test to this case is correct and in accord with prevailing
jurisprudence.
This Court, however, has relied on the dominancy test rather than the holistic
test. The dominancy test considers the dominant features in the competing
marks in determining whether they are confusingly similar. Under the
dominancy test, courts give greater weight to the similarity of the appearance
of the product arising from theadoption of the dominant features of the
registered mark, disregarding minor differences.[59] Courts will consider more
the aural and visual impressions created by the marks in the public mind, giving
little weight to factors like prices, quality, sales outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,[60] the
Court ruled:
xxx It has been consistently held that the question of
infringement of a trademark is to be determined by the test of
dominancy. Similarity in size, form and color, while relevant, is
not conclusive. If the competing trademark contains the
main or essential or dominant features of another, and
confusion and deception is likely to result, infringement
takes place. Duplication or imitation is not necessary; nor is
it necessary that the infringing label should suggest an effort to
imitate. (G. Heilman Brewing Co. vs. Independent Brewing Co.,
191 F., 489, 495, citing Eagle White Lead Co. vs. Pflugh (CC)
180 Fed. 579). The question at issue in cases of infringement
of trademarks is whether the use of the marks involved would
be likely to cause confusion or mistakes in the mind of the
public or deceive purchasers. (Auburn Rubber Corporation vs.
Honover Rubber Co., 107 F. 2d 588; xxx) (Emphasis supplied.)
The Court reiterated the dominancy test in Lim Hoa v. Director of
Patents,[61] Phil. Nut Industry, Inc. v. Standard Brands Inc.,[62] Converse
Rubber Corporation v. Universal Rubber Products, Inc.,[63] and Asia
Brewery, Inc. v. Court of Appeals.[64] In the 2001 case of Societe Des
Produits Nestl, S.A. v. Court of Appeals,[65] the Court explicitly rejected the
holistic test in this wise:
[T]he totality or holistic test is contrary to the elementary
postulate of the law on trademarks and unfair
competition that confusing similarity is to be determined on
the basis of visual, aural, connotative comparisons
and overall impressions engendered by the marks in
controversy as they are encountered in the realities of the
marketplace. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into law in Section
155.1 of the Intellectual Property Code which defines infringement
as the colorable imitation of a registered mark xxx or a dominant
feature thereof.
Applying the dominancy test, the Court finds that respondents use of
the Big Mak mark results in likelihood of confusion. First, Big Mak
sounds exactly the same as Big Mac. Second, the first word in Big Mak
is exactly the same as the first word in Big Mac. Third, the first two letters in
Mak are the same as the first two letters in Mac. Fourth, the last letter in Mak
while a k sounds the same as c when the word Mak is pronounced. Fifth, in
Filipino, the letter k replaces c in spelling, thus Caloocan is spelled Kalookan.
In short, aurally the two marks are the same, with the first word
of both marks phonetically the same, and the second word of both marks also
phonetically the same. Visually, the two marks have both two words and six
letters, with the first word of both marks having the same letters and the second
word having the same first two letters. In spelling, considering the Filipino
language, even the last letters of both marks are the same.
Clearly, respondents have adopted in Big Mak not only the
dominant but also almost all the features of Big Mac. Applied to the same
food product of hamburgers, the two marks will likely result in confusion in the
public mind.
The Court has taken into account the aural effects of the words and
letters contained in the marks in determining the issue of confusing
similarity. Thus, in Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et
al.,[66] the Court held:
The following random list of confusingly similar
sounds in the matter of trademarks, culled from Nims, Unfair
Competition and Trade Marks, 1947, Vol. 1, will reinforce our
view that SALONPAS and LIONPAS are confusingly similar in
sound: Gold Dust and Gold Drop; Jantzen and Jass-Sea; Silver
Flash and Supper Flash; Cascarete and Celborite; Celluloid
and Cellonite; Chartreuse and Charseurs; Cutex and
Cuticlean; Hebe and Meje; Kotex and Femetex; Zuso and Hoo
 Hoo. Leon Amdur, in his book Trade-Mark Law and Practice,
pp. 419-421, cities, as coming within the purview of the idem
sonans rule, Yusea and U-C-A, Steinway Pianos and
Steinberg Pianos, and Seven-Up and Lemon-Up. In Co Tiong
vs. Director of Patents, this Court unequivocally said that
Celdura and Cordura are confusingly similar in sound; this
Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the
name Lusolin is an infringement of the trademark Sapolin, as
the sound of the two names is almost the same. (Emphasis
supplied)
Certainly, Big Mac and Big Mak for hamburgers create even greater confusion,
not only aurally but also visually.
Indeed, a person cannot distinguish Big Mac from Big Mak by their
sound. When one hears a Big Mac or Big Mak hamburger advertisement over
the radio, one would not know whether the Mac or Mak ends with a c or a k.
Petitioners aggressive promotion of the Big Mac mark, as borne by their
advertisement expenses, has built goodwill and reputation for such mark
making it one of the easily recognizable marks in the market today.
This increases the likelihood that consumers will mistakenly associate
petitioners hamburgers and business with those of respondents.
Respondents inability to explain sufficiently how and why they came to choose
Big Mak for their hamburger sandwiches indicates their intent to imitate
petitioners Big Mac mark. Contrary to the Court of Appeals finding, respondents
claim that their Big Mak mark was inspired by the first names of respondent Dys
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 fathers name ahead of his mothers, 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 shalldeceive the public and defraud another of his legitimate
trade, or any subsequent vendor of such goods or any agent
of any vendor engaged in selling such goods with a like
purpose;
(b) Any person who by any artifice, or device, or
who employs any other means calculated to induce the false
belief that such person is offering the services of another who
has identified such services in the mind of the public; or
(c) Any person who shall make any false statement in the
course of trade or who shall commit any other act contrary to
good faith of a nature calculated to discredit the goods,
business or services of another. (Emphasis supplied)
The essential elements of an action for unfair competition are (1)
confusing similarity in the general appearance of the goods, and (2) intent to
deceive the public and defraud a competitor.[74] The confusing similarity may or
may not result from similarity in the marks, but may result from other external
factors in the packaging or presentation of the goods. The intent to deceive and
defraud may be inferred from the similarity of the appearance of the goods as
offered for sale to the public.[75]Actual fraudulent intent need not be shown.[76]
Unfair competition is broader than trademark infringement and includes
passing off goods with or without trademark infringement. Trademark
infringement is a form of unfair competition.[77] Trademark infringement
constitutes unfair competition when there is not merely likelihood of confusion,
but also actual or probable deception on the public because of the general
appearance of the goods. There can be trademark infringement without unfair
competition as when the infringer discloses on the labels containing the mark
that he manufactures the goods, thus preventing the public from being deceived
that the goods originate from the trademark owner.[78]
To support their claim of unfair competition, petitioners allege that
respondents fraudulently passed off their hamburgers as Big Mac hamburgers.
Petitioners add that respondents fraudulent intent can be inferred from the
similarity of the marks in question.[79]
Passing off (or palming off) takes place where the defendant, by
imitative devices on the general appearance of the goods, misleads prospective
purchasers into buying his merchandise under the impression that they are
buying that of his competitors.[80] Thus, the defendant gives his goods the
general appearance of the goods of his competitor with the intention of
deceiving the public that the goods are those of his competitor.
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 McDonalds to
identify its double decker hamburger sandwich. The packaging
material is a styrofoam box with the McDonalds 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
McDonalds, respectively, compared to the mascot of
defendant Corporation which is a chubby boy called Macky
displayed or printed between the words Big and
Mak.[81](Emphasis supplied)
Respondents point to these dissimilarities as proof that they did not give their
hamburgers the general appearance of petitioners Big Mac hamburgers.
The dissimilarities in the packaging are minor compared to the stark
similarities in the words that give respondents Big Mak hamburgers the
general appearance of petitioners Big Mac hamburgers. Section
29(a) expressly provides that the similarity in the general appearance of the
goods may be in the devices or words used on the wrappings. Respondents
have applied on their plastic wrappers and bags almost the same words that
petitioners use on their styrofoam box. What attracts the attention of the buying
public are the words Big Mak which are almost the same, aurally and visually,
as the words Big Mac. The dissimilarities in the material and other devices are
insignificant compared to the glaring similarity in the words used in the
wrappings.
Section 29(a) also provides that the defendant gives his goods the
general appearance of goods of another manufacturer. Respondents goods are
hamburgers which are also the goods of petitioners. If respondents sold egg
sandwiches only instead of hamburger sandwiches, their use of the Big Mak
mark would not give their goods the general appearance of petitioners Big Mac
hamburgers. In such case, there is only trademark infringement but no unfair
competition. However, since respondents chose to apply the Big Mak mark on
hamburgers, just like petitioners 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 the Regional Trial Court of Makati, Branch 137, finding respondent L.C. Big Mak
are products of L.C. Big Mak Burger, Inc. Respondents introduced during the Burger, Inc. liable for trademark infringement and unfair competition.
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, SO ORDERED.
petitioners introduced during the injunctive hearings plastic wrappers and bags
with the Big Mak mark without the name L.C. Big Mak Burger,
Inc. Respondents belated presentation of plastic wrappers and bags bearing
the name of L.C. Big Mak Burger, Inc. as the seller of the hamburgers is an
after-thought designed to exculpate them from their unfair business conduct.As
earlier stated, we cannot consider respondents evidence since petitioners
complaint was based on facts existing before and during the injunctive hearings.

Thus, there is actually no notice to the public that the Big Mak
hamburgers are products of L.C. Big Mak Burger, Inc. and not those of
petitioners who have the exclusive right to the Big Mac mark. This clearly shows
respondents intent to deceive the public. Had respondents placed a notice on
their plastic wrappers and bags that the hamburgers are sold by L.C. Big Mak
Burger, Inc., then they could validly claim that they did not intend to deceive the
public. In such case, there is only trademark infringement but no unfair
competition.[82] Respondents, however, did not give such notice. We hold that
as found by the RTC, respondent corporation is liable for unfair competition.

The Remedies Available to Petitioners

Under Section 23[83] (Section 23) in relation to Section 29 of RA 166, a plaintiff

who successfully maintains trademark infringement and unfair competition
claims is entitled to injunctive and monetary reliefs. Here, the RTC did not err
in issuing the injunctive writ of 16 August 1990 (made permanent in its Decision
of 5 September 1994) and in ordering the payment
of P400,000 actual damages in favor of petitioners. The injunctive writ is
indispensable to prevent further acts of infringement by respondent
corporation. Also, the amount of actual damages is a reasonable percentage
(11.9%) of respondent corporations gross sales for three (1988-1989 and 1991)
of the six years (1984-1990) respondents have used the Big Mak mark.[84]

The RTC also did not err in awarding exemplary damages by way of
correction for the public good[85] in view of the finding of unfair competition
where intent to deceive the public is essential. The award of attorneys 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
G.R. No. 159938 March 31, 2006
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., SHANGRI-
LA PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL & RESORT, INC.,
AND KUOK PHILIPPINES PROPERTIES, INC., Petitioners,
vs.
DEVELOPERS GROUP OF COMPANIES, INC., Respondent.
DECISION
GARCIA, J.:
In this petition for review under Rule 45 of the Rules of Court, petitioners
Shangri-La International Hotel Management, Ltd. (SLIHM), et al. assail and
seek to set aside the Decision dated May 15, 20031 of the Court of Appeals
(CA) in CA-G.R. CV No. 53351 and its Resolution2 of September 15, 2003
which effectively affirmed with modification an earlier decision of the Regional
Trial Court (RTC) of Quezon City in Civil Case No. Q-91-8476, an action for
infringement and damages, thereat commenced by respondent Developers
Group of Companies, Inc. (DGCI) against the herein petitioners.
The facts:
At the core of the controversy are the "Shangri-La" mark and "S" logo.
Respondent DGCI claims ownership of said mark and logo in the Philippines
on the strength of its prior use thereof within the country. As DGCI stresses at
every turn, it filed on October 18, 1982 with the Bureau of Patents,
Trademarks and Technology Transfer (BPTTT) pursuant to Sections 2 and 4
of Republic Act (RA) No. 166,3 as amended, an application for registration
covering the subject mark and logo. On May 31, 1983, the BPTTT issued in
favor of DGCI the corresponding certificate of registration therefor, i.e.,
Registration No. 31904. Since then, DGCI started using the "Shangri-La" mark
and "S" logo in its restaurant business.
On the other hand, the Kuok family owns and operates a chain of hotels with
interest in hotels and hotel-related transactions since 1969. As far back as
1962, it adopted the name "Shangri-La" as part of the corporate names of all
companies organized under the aegis of the Kuok Group of Companies (the
Kuok Group). The Kuok Group has used the name "Shangri-La" in all Shangri-
La hotels and hotel-related establishments around the world which the Kuok
Family owned.
To centralize the operations of all Shangri-la hotels and the ownership of the
"Shangri-La" mark and "S" logo, the Kuok Group had incorporated in Hong
Kong and Singapore, among other places, several companies that form part
of the Shangri-La International Hotel Management Ltd. Group of Companies.
EDSA Shangri-La Hotel and Resort, Inc., and Makati Shangri-La Hotel and
Resort, Inc. were incorporated in the Philippines beginning 1987 to own and
operate the two (2) hotels put up by the Kuok Group in Mandaluyong and
Makati, Metro Manila.
All hotels owned, operated and managed by the aforesaid SLIHM Group of
Companies adopted and used the distinctive lettering of the name "Shangri-
La" as part of their trade names.
From the records, it appears that Shangri-La Hotel Singapore commissioned a
Singaporean design artist, a certain Mr. William Lee, to conceptualize and
design the logo of the Shangri-La hotels.
During the launching of the stylized "S" Logo in February 1975, Mr. Lee gave
the following explanation for the logo, to wit:
The logo which is shaped like a "S" represents the uniquely Asean
architectural structures as well as keep to the legendary Shangri-la theme with
the mountains on top being reflected on waters below and the connecting
centre [sic] line serving as the horizon. This logo, which is a bold, striking
definitive design, embodies both modernity and sophistication in balance and
thought.
Since 1975 and up to the present, the "Shangri-La" mark and "S" logo have
been used consistently and continuously by all Shangri-La hotels and
companies in their paraphernalia, such as stationeries, envelopes, business
forms, menus, displays and receipts.
The Kuok Group and/or petitioner SLIHM caused the registration of, and in
fact registered, the "Shangri-La" mark and "S" logo in the patent offices in
different countries around the world.
On June 21, 1988, the petitioners filed with the BPTTT a petition, docketed as
Inter Partes Case No. 3145, praying for the cancellation of the registration of
the "Shangri-La" mark and "S" logo issued to respondent DGCI on the ground
that the same were illegally and fraudulently obtained and appropriated for the
latter's restaurant business. They also filed in the same office Inter Partes
Case No. 3529, praying for the registration of the same mark and logo in their
own names.
Until 1987 or 1988, the petitioners did not operate any establishment in the
Philippines, albeit they advertised their hotels abroad since 1972 in numerous
business, news, and/or travel magazines widely circulated around the world,
all readily available in Philippine magazines and newsstands. They, too,
maintained reservations and booking agents in airline companies, hotel
organizations, tour operators, tour promotion organizations, and in other allied
fields in the Philippines.
It is principally upon the foregoing factual backdrop that respondent DGCI filed
a complaint for Infringement and Damages with the RTC of Quezon City
against the herein petitioners SLIHM, Shangri-La Properties, Inc., Makati
Shangri-La Hotel & Resort, Inc., and Kuok Philippine Properties, Inc.,
docketed as Civil Case No. Q-91-8476 and eventually raffled to Branch 99 of
said court. The complaint with prayer for injunctive relief and damages alleged
that DGCI has, for the last eight (8) years, been the prior exclusive user in the
Philippines of the mark and logo in question and the registered owner thereof
for its restaurant and allied services. As DGCI alleged in its complaint, SLIHM,
et al., in promoting and advertising their hotel and other allied projects then
under construction in the country, had been using a mark and logo confusingly
similar, if not identical, with its mark and "S" logo. Accordingly, DGCI sought to
prohibit the petitioners, as defendants a quo, from using the "Shangri-La"
mark and "S" logo in their hotels in the Philippines.
In their Answer with Counterclaim, the petitioners accused DGCI of
appropriating and illegally using the "Shangri-La" mark and "S" logo, adding
that the legal and beneficial ownership thereof pertained to SLIHM and that
the Kuok Group and its related companies had been using this mark and logo
since March 1962 for all their corporate names and affairs. In this regard, they
point to the Paris Convention for the Protection of Industrial Property as
affording security and protection to SLIHM's exclusive right to said mark and
logo. They further claimed having used, since late 1975, the internationally-
known and specially-designed "Shangri-La" mark and "S" logo for all the
hotels in their hotel chain.
Pending trial on the merits of Civil Case No. Q-91-8476, the trial court issued
a Writ of Preliminary Injunction enjoining the petitioners from using the subject
mark and logo. The preliminary injunction issue ultimately reached the Court
in G.R. No. 104583 entitled Developers Group of Companies, Inc. vs. Court of
Appeals, et al. In a decision4 dated March 8, 1993, the Court nullified the writ
of preliminary injunction issued by the trial court and directed it to proceed
with the main case and decide it with deliberate dispatch.
While trial was in progress, the petitioners filed with the court a motion to
suspend proceedings on account of the pendency before the BPTTT of Inter
Partes Case No. 3145 for the cancellation of DGCI's certificate of registration.
For its part, respondent DGCI filed a similar motion in that case, invoking in
this respect the pendency of its infringement case before the trial court. The
parties' respective motions to suspend proceedings also reached the Court
via their respective petitions in G.R. No. 114802, entitled Developers Group of
Companies, Inc. vs. Court of Appeals, et al. and G.R. No. 111580, entitled
Shangri-La International Hotel Management LTD., et al. vs. Court of Appeals,
et al., which were accordingly consolidated.
In a consolidated decision5 dated June 21, 2001, the Court, limiting itself to
the core issue of whether, despite the petitioners' institution of Inter Partes
Case No. 3145 before the BPTTT, herein respondent DGCI "can file a
subsequent action for infringement with the regular courts of justice in
connection with the same registered mark," ruled in the affirmative, but
nonetheless ordered the BPTTT to suspend further proceedings in said inter
partes case and to await the final outcome of the main case.
Meanwhile, trial on the merits of the infringement case proceeded. Presented
as DGCI's lone witness was Ramon Syhunliong, President and Chairman of
DGCI's Board of Directors. Among other things, this witness testified that:
1. He is a businessman, with interest in lumber, hotel, hospital, trading
and restaurant businesses but only the restaurant business bears the
name "Shangri-La" and uses the same and the "S-logo" as service
marks. The restaurant now known as "Shangri-La Finest Chinese
Cuisine" was formerly known as the "Carvajal Restaurant" until
December 1982, when respondent took over said restaurant
business.
2. He had traveled widely around Asia prior to 1982, and admitted
knowing the Shangri-La Hotel in Hong Kong as early as August 1982.
3. The "S-logo" was one of two (2) designs given to him in December
1982, scribbled on a piece of paper by a jeepney signboard artist with
an office somewhere in Balintawak. The unnamed artist supposedly
produced the two designs after about two or three days from the time
he (Syhunliong) gave the idea of the design he had in mind.
4. On October 15, 1982, or before the unknown signboard artist
supposedly created the "Shangri-La" and "S" designs, DGCI was
 incorporated with the primary purpose of "owning or operating, or
both, of hotels and restaurants".
5. On October 18, 1982, again prior to the alleged creation date of the
mark and logo, DGCI filed an application for trademark registration of
the mark "SHANGRI-LA FINEST CHINESE CUISINE & S. Logo" with
the BPTTT. On said date, respondent DGCI amended its Articles of
Incorporation to reflect the name of its restaurant, known and
operating under the style and name of "SHANGRI-LA FINEST
CHINESE CUISINE." Respondent DGCI obtained Certificate of
Registration No. 31904 for the "Shangri-La" mark and "S" logo.
Eventually, the trial court, on the postulate that petitioners', more particularly
petitioner SLIHM's, use of the mark and logo in dispute constitutes an
infringement of DGCI's right thereto, came out with its decision6 on March 8,
1996 rendering judgment for DGCI, as follows:
WHEREFORE, judgment is hereby rendered in favor of [respondent DGCI]
and against [SLIHM, et al.] -
a) Upholding the validity of the registration of the service mark
"Shangri-la" and "S-Logo" in the name of [respondent];
b) Declaring [petitioners'] use of said mark and logo as infringement of
[respondent's] right thereto;
c) Ordering [petitioners], their representatives, agents, licensees,
assignees and other persons acting under their authority and with
their permission, to permanently cease and desist from using and/or
continuing to use said mark and logo, or any copy, reproduction or
colorable imitation
thereof, in the promotion, advertisement, rendition of their hotel and
allied projects and services or in any other manner whatsoever;
d) Ordering [petitioners] to remove said mark and logo from any
premises, objects, materials and paraphernalia used by them and/or
destroy any and all prints, signs, advertisements or other materials
bearing said mark and logo in their possession and/or under their
control; and
e) Ordering [petitioners], jointly and severally, to indemnify
[respondent] in the amounts of P2,000,000.00 as actual and
compensatory damages, P500,000.00 as attorney's fee and expenses
of litigation.
Let a copy of this Decision be certified to the Director, Bureau of Patents,
Trademarks and Technology Transfer for his information and appropriate
action in accordance with the provisions of Section 25, Republic Act No. 166
Costs against [petitioners].
SO ORDERED. [Words in brackets added.]
Therefrom, the petitioners went on appeal to the CA whereat their recourse
was docketed as CA G.R. SP No. 53351.
As stated at the threshold hereof, the CA, in its assailed Decision of May 15,
2003,7 affirmed that of the lower court with the modification of deleting the
award of attorney's fees. The appellate court predicated its affirmatory action
on the strength or interplay of the following premises:
1. Albeit the Kuok Group used the mark and logo since 1962, the
evidence presented shows that the bulk use of the tradename was
abroad and not in the Philippines (until 1987). Since the Kuok Group
does not have proof of actual use in commerce in the Philippines (in
accordance with Section 2 of R.A. No. 166), it cannot claim ownership
of the mark and logo in accordance with the holding in Kabushi
Kaisha Isetan v. IAC8, as reiterated in Philip Morris, Inc. v. Court of
Appeals.9
2. On the other hand, respondent has a right to the mark and logo by
virtue of its prior use in the Philippines and the issuance of Certificate
of Registration No. 31904.
3. The use of the mark or logo in commerce through the bookings
made by travel agencies is unavailing since the Kuok Group did not
establish any branch or regional office in the Philippines. As it were,
the Kuok Group was not engaged in commerce in the Philippines
inasmuch as the bookings were made through travel agents not
owned, controlled or managed by the Kuok Group.
 4. While the Paris Convention protects internationally known marks,
R.A. No. 166 still requires use in commerce in the Philippines.
Accordingly, and on the premise that international agreements, such
as Paris Convention, must yield to a municipal law, the question on
the exclusive right over the mark and logo would still depend on
actual use in commerce in the Philippines.
Petitioners then moved for a reconsideration, which motion was denied by the
CA in its equally assailed Resolution of September 15, 2003.10
As formulated by the petitioners, the issues upon which this case hinges are:
1. Whether the CA erred in finding that respondent had the right to file
an application for registration of the "Shangri-La" mark and "S" logo
although respondent never had any prior actual commercial use
thereof;
2. Whether the CA erred in finding that respondent's supposed use of
the identical "Shangri-La" mark and "S" logo of the petitioners was not
evident bad faith and can actually ripen into ownership, much less
registration;
3. Whether the CA erred in overlooking petitioners' widespread prior
use of the "Shangri-La" mark and "S" logo in their operations;
4. Whether the CA erred in refusing to consider that petitioners are
entitled to protection under both R.A. No. 166, the old trademark law,
and the Paris Convention for the Protection of Industrial Property;
5. Whether the CA erred in holding that SLIHM did not have the right
to legally own the "Shangri-La" mark and "S" logo by virtue of and
despite their ownership by the Kuok Group;
6. Whether the CA erred in ruling that petitioners' use of the mark and
logo constitutes actionable infringement;
7. Whether the CA erred in awarding damages in favor of respondent
despite the absence of any evidence to support the same, and in
failing to award relief in favor of the petitioners; and
8. Whether petitioners should be prohibited from continuing their use
of the mark and logo in question.
There are two preliminary issues, however, that respondent DGCI calls our
attention to, namely:
1. Whether the certification against forum-shopping submitted on
behalf of the petitioners is sufficient;
2. Whether the issues posed by petitioners are purely factual in nature
hence improper for resolution in the instant petition for review on
certiorari.
DGCI claims that the present petition for review should be dismissed outright
for certain procedural defects, to wit: an insufficient certification against forum
shopping and raising pure questions of fact. On both counts, we find the
instant petition formally and substantially sound.
In its Comment, respondent alleged that the certification against forum
shopping signed by Atty. Lee Benjamin Z. Lerma on behalf and as counsel of
the petitioners was insufficient, and that he was not duly authorized to execute
such document. Respondent further alleged that since petitioner SLIHM is a
foreign entity based in Hong Kong, the Director's Certificate executed by Mr.
Madhu Rama Chandra Rao, embodying the board resolution which authorizes
Atty. Lerma to act for SLIHM and execute the certification against forum
shopping, should contain the authentication by a consular officer of the
Philippines in Hong Kong.
In National Steel Corporation v. CA,11 the Court has ruled that the certification
on non-forum shopping may be signed, for and in behalf of a corporation, by a
specifically authorized lawyer who has personal knowledge of the facts
required to be disclosed in such document. The reason for this is that a
corporation can only exercise its powers through its board of directors and/or
its duly authorized officers and agents. Physical acts, like the signing of
documents, can be performed only by natural persons duly authorized for the
purpose.12
Moreover, Rule 7, Section 5 of the Rules of Court concerning the certification
against forum shopping does not require any consular certification if the
petitioner is a foreign entity. Nonetheless, to banish any lingering doubt,
petitioner SLIHM furnished this Court with a consular certification dated
October 29, 2003 authenticating the Director's Certificate authorizing Atty.
Lerma to execute the certification against forum shopping, together with
petitioners' manifestation of February 9, 2004.
Respondent also attacks the present petition as one that raises pure
questions of fact. It points out that in a petition for review under Rule 45 of the
Rules of Court, the questions that may properly be inquired into are strictly
circumscribed by the express limitation that "the petition shall raise only
questions of law which must be distinctly set forth."13 We do not, however, find
that the issues involved in this petition consist purely of questions of fact.
These issues will be dealt with as we go through the questions raised by the
petitioners one by one.
Petitioners' first argument is that the respondent had no right to file an
application for registration of the "Shangri-La" mark and "S" logo because it
did not have prior actual commercial use thereof. To respondent, such an
argument raises a question of fact that was already resolved by the RTC and
concurred in by the CA.
First off, all that the RTC found was that respondent was the prior user and
registrant of the subject mark and logo in the Philippines. Taken in proper
context, the trial court's finding on "prior use" can only be interpreted to mean
that respondent used the subject mark and logo in the country before the
petitioners did. It cannot be construed as being a factual finding that there was
prior use of the mark and logo before registration.
Secondly, the question raised is not purely factual in nature. In the context of
this case, it involves resolving whether a certificate of registration of a mark,
and the presumption of regularity in the performance of official functions in the
issuance thereof, are sufficient to establish prior actual use by the registrant. It
further entails answering the question of whether prior actual use is required
before there may be a valid registration of a mark.
Under the provisions of the former trademark law, R.A. No. 166, as amended,
which was in effect up to December 31, 1997, hence, the law in force at the
time of respondent's application for registration of trademark, the root of
ownership of a trademark is actual use in commerce. Section 2 of said law
requires that before a trademark can be registered, it must have been actually
used in commerce and service for not less than two months in the Philippines
prior to the filing of an application for its registration.
Registration, without more, does not confer upon the registrant an absolute
right to the registered mark. The certificate of registration is merely a prima
facie proof that the registrant is the owner of the registered mark or trade
name. Evidence of prior and continuous use of the mark or trade name by
another can overcome the presumptive ownership of the registrant and may
very well entitle the former to be declared owner in an appropriate case.14
Among the effects of registration of a mark, as catalogued by the Court in
Lorenzana v. Macagba,15 are:
1. Registration in the Principal Register gives rise to
a presumption of the validity of the registration, the registrant's
ownership of the mark, and his right to the exclusive use thereof. x x x
2. Registration in the Principal Register is limited to the actual
owner of the trademark and proceedings therein pass on the issue of
ownership, which may be contested through opposition or
interference proceedings, or, after registration, in a petition for
cancellation. xxx
[Emphasis supplied]1avvphil.et
Ownership of a mark or trade name may be acquired not necessarily by
registration but by adoption and use in trade or commerce. As between actual
use of a mark without registration, and registration of the mark without actual
use thereof, the former prevails over the latter. For a rule widely accepted and
firmly entrenched, because it has come down through the years, is that actual
use in commerce or business is a pre-requisite to the acquisition of the right of
ownership.16
While the present law on trademarks17 has dispensed with the requirement of
prior actual use at the time of registration, the law in force at the time of
registration must be applied, and thereunder it was held that as a condition
precedent to registration of trademark, trade name or service mark, the same
must have been in actual use in the Philippines before the filing of the
application for registration.18 Trademark is a creation of use and therefore
actual use is a pre-requisite to exclusive ownership and its registration with
the Philippine Patent Office is a mere administrative confirmation of the
existence of such right.19
By itself, registration is not a mode of acquiring ownership. When the
applicant is not the owner of the trademark being applied for, he has no right
to apply for registration of the same. Registration merely creates a prima
facie presumption of the validity of the registration, of the registrant's
ownership of the trademark and of the exclusive right to the use
thereof.20 Such presumption, just like the presumptive regularity in the
performance of official functions, is rebuttable and must give way to evidence
to the contrary.
Here, respondent's own witness, Ramon Syhunliong, testified that a jeepney
signboard artist allegedly commissioned to create the mark and logo
submitted his designs only in December 1982.21 This was two-and-a-half
months after the filing of the respondent's trademark application on October
18, 1982 with the BPTTT. It was also only in December 1982 when the
respondent's restaurant was opened for business.22 Respondent cannot now
claim before the Court that the certificate of registration itself is proof that the
two-month prior use requirement was complied with, what with the fact that its
very own witness testified otherwise in the trial court. And because at the time
(October 18, 1982) the respondent filed its application for trademark
registration of the "Shangri-La" mark and "S" logo, respondent was not using
these in the Philippines commercially, the registration is void.
Petitioners also argue that the respondent's use of the "Shangri-La" mark and
"S" logo was in evident bad faith and cannot therefore ripen into ownership,
much less registration. While the respondent is correct in saying that a finding
of bad faith is factual, not legal,23 hence beyond the scope of a petition for
review, there are, however, noted exceptions thereto. Among these
exceptions are:
1. When the inference made is manifestly mistaken, absurd or
impossible;24
2. When there is grave abuse of discretion;25
3. When the judgment is based on a misapprehension of facts;26
4. When the findings of fact are conflicting;27 and
5. When the facts set forth in the petition as well as in the petitioner's
main and reply briefs are not disputed by the respondent.28
And these are naming but a few of the recognized exceptions to the rule.
The CA itself, in its Decision of May 15, 2003, found that the respondent's
president and chairman of the board, Ramon Syhunliong, had been a guest at
the petitioners' hotel before he caused the registration of the mark and logo,
and surmised that he must have copied the idea there:
Did Mr. Ramon Syhunliong, [respondent's] President copy the mark and
devise from one of [petitioners'] hotel (Kowloon Shangri-la) abroad? The mere
fact that he was a visitor of [petitioners'] hotel abroad at one time (September
27, 1982) establishes [petitioners'] allegation that he got the idea there.29
Yet, in the very next paragraph, despite the preceding admission that the
mark and logo must have been copied, the CA tries to make it appear that the
adoption of the same mark and logo could have been coincidental:
The word or name "Shangri-la" and the S-logo, are not uncommon. The word
"Shangri-la" refers to a (a) remote beautiful imaginary place where life
approaches perfection or (b) imaginary mountain land depicted as a utopia in
the novel Lost Horizon by James Hilton. The Lost Horizon was a well-read
and popular novel written in 1976. It is not impossible that the parties, inspired
by the novel, both adopted the mark for their business to conjure [a] place of
beauty and pleasure.
The S-logo is, likewise, not unusual. The devise looks like a modified Old
English print.30
To jump from a recognition of the fact that the mark and logo must have been
copied to a rationalization for the possibility that both the petitioners and the
respondent coincidentally chose the same name and logo is not only
contradictory, but also manifestly mistaken or absurd. Furthermore, the "S"
logo appears nothing like the "Old English" print that the CA makes it out to
be, but is obviously a symbol with oriental or Asian overtones. At any rate, it is
ludicrous to believe that the parties would come up with the exact same
lettering for the word "Shangri-La" and the exact same logo to boot. As
correctly observed by the petitioners, to which we are in full accord:
x x x When a trademark copycat adopts the word portion of another's
trademark as his own, there may still be some doubt that the adoption is
intentional. But if he copies not only the word but also the word's exact font
and lettering style and in addition, he copies also the logo portion of the
trademark, the slightest doubt vanishes. It is then replaced by the certainty
that the adoption was deliberate, malicious and in bad faith.31
It is truly difficult to understand why, of the millions of terms and combination
of letters and designs available, the respondent had to choose exactly the
same mark and logo as that of the petitioners, if there was no intent to take
advantage of the goodwill of petitioners' mark and logo. 32
One who has imitated the trademark of another cannot bring an action for
infringement, particularly against the true owner of the mark, because he
would be coming to court with unclean hands.33 Priority is of no avail to the
bad faith plaintiff. Good faith is required in order to ensure that a second user
may not merely take advantage of the goodwill established by the true owner.
This point is further bolstered by the fact that under either Section 17 of R.A.
No. 166, or Section 151 of R.A. No. 8293, or Article 6bis(3) of the Paris
Convention, no time limit is fixed for the cancellation of marks registered or
used in bad faith.34 This is precisely why petitioners had filed an inter partes
case before the BPTTT for the cancellation of respondent's registration, the
proceedings on which were suspended pending resolution of the instant case.
Respondent DGCI also rebukes the next issue raised by the petitioners as
being purely factual in nature, namely, whether the CA erred in overlooking
petitioners' widespread prior use of the "Shangri-La" mark and "S" logo in their
operations. The question, however, is not whether there had been widespread
prior use, which would have been factual, but whether that prior use entitles
the petitioners to use the mark and logo in the Philippines. This is clearly a
question which is legal in nature.
It has already been established in the two courts below, and admitted by the
respondent's president himself, that petitioners had prior widespread use of
the mark and logo abroad:
There is, to be sure, an impressive mass of proof that petitioner SLIHM and
its related companies abroad used the name and logo for one purpose or
another x x x.35 [Emphasis supplied]
In respondent's own words, "[T]he Court of Appeals did note petitioners' use
of the mark and logo but held that such use did not confer to them ownership
or exclusive right to use them in the Philippines."36 To petitioners' mind, it was
error for the CA to rule that their worldwide use of the mark and logo in
dispute could not have conferred upon them any right thereto. Again, this is a
legal question which is well worth delving into.
R.A. No. 166, as amended, under which this case was heard and decided
provides:
Section 2. What are registrable. - Trademarks, trade names and service
marks owned by persons, corporations, partnerships or associations
domiciled in the Philippines and by persons, corporations, partnerships or
associations domiciled in any foreign country may be registered in accordance
with the provisions of this Act: Provided, That said trademarks trade names, or
service marks are actually in use in commerce and services not less than
two months in the Philippines before the time the applications for
registration are filed: And provided, further, That the country of which the
applicant for registration is a citizen grants by law substantially similar
privileges to citizens of the Philippines, and such fact is officially certified, with
a certified true copy of the foreign law translated into the English language, by
the government of the foreign country to the Government of the Republic of
the Philippines.
Section 2-A. Ownership of trademarks, trade names and service marks; how
acquired. - Anyone who lawfully produces or deals in merchandise of any kind
or who engages in any lawful business, or who renders any lawful service in
commerce, by actual use thereof in manufacture or trade, in business, and in
the service rendered, may appropriate to his exclusive use a trademark, a
trade name, or a servicemark not so appropriated by another, to distinguish
his merchandise, business or service from the merchandise, business or
services of others. The ownership or possession of a trademark, trade name,
service mark, heretofore or hereafter appropriated, as in this section provided,
shall be recognized and protected in the same manner and to the same extent
as are other property rights known to this law. [Emphasis supplied]
Admittedly, the CA was not amiss in saying that the law requires the actual
use in commerce of the said trade name and "S" logo in the
Philippines. Hence, consistent with its finding that the bulk of the petitioners'
evidence shows that the alleged use of the Shangri-La trade name was done
abroad and not in the Philippines, it is understandable for that court to rule in
respondent's favor. Unfortunately, however, what the CA failed to perceive is
that there is a crucial difference between the aforequoted Section 2 and
Section 2-A of R.A. No. 166. For, while Section 2 provides for what
is registrable, Section 2-A, on the other hand, sets out how ownership is
acquired. These are two distinct concepts.
Under Section 2, in order to register a trademark, one must be the owner
thereof and must have actually used the mark in commerce in the Philippines
for 2 months prior to the application for registration. Since "ownership" of the
trademark is required for registration, Section 2-A of the same law sets out to
define how one goes about acquiring ownership thereof. Under Section 2-A, it
is clear that actual use in commerce is also the test of ownership but the
provision went further by saying that the mark must not have been so
appropriated by another. Additionally, it is significant to note that Section 2-A
does not require that the actual use of a trademark must be within the
Philippines. Hence, under R.A. No. 166, as amended, one may be an owner
of a mark due to actual use thereof but not yet have the right to register such
ownership here due to failure to use it within the Philippines for two months.
While the petitioners may not have qualified under Section 2 of R.A. No. 166
as a registrant, neither did respondent DGCI, since the latter also failed to
fulfill the 2-month actual use requirement. What is worse, DGCI was not even
the owner of the mark. For it to have been the owner, the mark must not have
been already appropriated (i.e., used) by someone else. At the time of
respondent DGCI's registration of the mark, the same was already being used
by the petitioners, albeit abroad, of which DGCI's president was fully aware.
It is respondent's contention that since the petitioners adopted the "Shangri-
La" mark and "S" logo as a mere corporate name or as the name of their
hotels, instead of using them as a trademark or service mark, then such name
and logo are not trademarks. The two concepts of corporate name or
business name and trademark or service mark, are not mutually exclusive. It
is common, indeed likely, that the name of a corporation or business is also a
trade name, trademark or service mark. Section 38 of R.A. No. 166 defines
the terms as follows:
Sec. 38. Words and terms defined and construed - In the construction of this
Act, unless the contrary is plainly apparent from the context - The term "trade
name" includes individual names and surnames, firm names, trade names,
devices or words used by manufacturers, industrialists, merchants,
agriculturists, and others to identify their business, vocations or occupations;
the names or titles lawfully adopted and used by natural or juridical
persons, unions, and any manufacturing, industrial, commercial, agricultural
or other organizations engaged in trade or commerce.
The term "trade mark" includes any word, name, symbol, emblem, sign or
device or any combination thereof adopted and used by a manufacturer or
merchant to identify his goods and distinguish them from those manufactured,
sold or dealt in by others.
The term "service mark" means a mark used in the sale or advertising of
services to identify the services of one person and distinguish them from
the services of others and includes without limitation the marks, names,
symbols, titles, designations, slogans, character names, and distinctive
features of radio or other advertising. [Emphasis supplied]
Clearly, from the broad definitions quoted above, the petitioners can be
considered as having used the "Shangri-La" name and "S" logo as a
tradename and service mark.
The new Intellectual Property Code (IPC), Republic Act No. 8293,
undoubtedly shows the firm resolve of the Philippines to observe and follow
the Paris Convention by incorporating the relevant portions of the Convention
such that persons who may question a mark (that is, oppose registration,
petition for the cancellation thereof, sue for unfair competition) include
persons whose internationally well-known mark, whether or not registered, is
identical with or confusingly similar to or constitutes a translation of a mark
that is sought to be registered or is actually registered. 37
However, while the Philippines was already a signatory to the Paris
Convention, the IPC only took effect on January 1, 1988, and in the absence
of a retroactivity clause, R.A. No. 166 still applies.38 Under the prevailing law
and jurisprudence at the time, the CA had not erred in ruling that:
The Paris Convention mandates that protection should be afforded to
internationally known marks as signatory to the Paris Convention, without
regard as to whether the foreign corporation is registered, licensed or doing
business in the Philippines. It goes without saying that the same runs afoul to
Republic Act No. 166, which requires the actual use in commerce in the
Philippines of the subject mark or devise. The apparent conflict between the
two (2) was settled by the Supreme Court in this wise -
"Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirement of actual use in the Philippines
must subordinate an international agreement inasmuch as the apparent
clash is being decided by a municipal tribunal (Mortensen vs. Peters, Great
Britain, High Court of Judiciary of Scotland, 1906, 8 Sessions 93; Paras,
International Law and World Organization, 1971 Ed., p. 20). Withal, the fact
that international law has been made part of the law of the land does not by
any means imply the primacy of international law over national law in the
municipal sphere. Under the doctrine of incorporation as applied in most
countries, rules of international law are given a standing equal, not superior, to
national legislative enactments (Salonga and Yap, Public International Law,
Fourth ed., 1974, p. 16)."39 [Emphasis supplied]
Consequently, the petitioners cannot claim protection under the Paris
Convention. Nevertheless, with the double infirmity of lack of two-month prior
use, as well as bad faith in the respondent's registration of the mark, it is
evident that the petitioners cannot be guilty of infringement. It would be a
great injustice to adjudge the petitioners guilty of infringing a mark when they
are actually the originator and creator thereof. Nor can the petitioners'
separate personalities from their mother corporation be an obstacle in the
enforcement of their rights as part of the Kuok Group of Companies and as
official repository, manager and operator of the subject mark and logo.
Besides, R.A. No. 166 did not require the party seeking relief to be the owner
of the mark but "any person who believes that he is or will be damaged by the
registration of a mark or trade name."40 WHEREFORE, the instant petition is
GRANTED. The assailed Decision and Resolution of the Court of Appeals
dated May 15, 2003 and September 15, 2003, respectively, and the Decision
of the Regional Trial Court of Quezon City dated March 8, 1996 are hereby
SET ASIDE. Accordingly, the complaint for infringement in Civil Case No. Q-
91-8476 is ordered DISMISSED. SO ORDERED.
G.R. No. 158589 June 27, 2006
PHILIP MORRIS, INC., BENSON & HEDGES (CANADA), INC., and
FABRIQUES DE TABAC REUNIES, S.A., (now known as PHILIP MORRIS
PRODUCTS S.A.), Petitioners,
vs.
FORTUNE TOBACCO CORPORATION, Respondent.
DECISION
GARCIA, J.:
Via this petition for review under Rule 45 of the Rules of Court, herein
petitioners Philip Morris, Inc., Benson & Hedges (Canada) Inc., and Fabriques
de Tabac Reunies, S.A. (now Philip Morris Products S.A.) seek the reversal
and setting aside of the following issuances of the Court of Appeals (CA) in
CA-G.R. CV No. 66619, to wit:
1. Decision dated January 21, 20031 affirming an earlier decision of
the Regional Trial Court of Pasig City, Branch 166, in its Civil Case
No. 47374, which dismissed the complaint for trademark infringement
and damages thereat commenced by the petitioners against
respondent Fortune Tobacco Corporation; and
2. Resolution dated May 30, 20032 denying petitioners motion for
reconsideration.
Petitioner Philip Morris, Inc., a corporation organized under the laws of the
State of Virginia, United States of America, is, per Certificate of Registration
No. 18723 issued on April 26, 1973 by the Philippine Patents Office (PPO),
the registered owner of the trademark "MARK VII" for cigarettes. Similarly,
petitioner Benson & Hedges (Canada), Inc., a subsidiary of Philip Morris, Inc.,
is the registered owner of the trademark "MARK TEN" for cigarettes as
evidenced by PPO Certificate of Registration No. 11147. And as can be seen
in Trademark Certificate of Registration No. 19053, another subsidiary of
Philip Morris, Inc., the Swiss company Fabriques de Tabac Reunies, S.A., is
the assignee of the trademark "LARK," which was originally registered in 1964
by Ligget and Myers Tobacco Company. On the other hand, respondent
Fortune Tobacco Corporation, a company organized in the Philippines,
manufactures and sells cigarettes using the trademark "MARK."
The legal dispute between the parties started when the herein petitioners, on
the claim that an infringement of their respective trademarks had been
committed, filed, on August 18, 1982, a Complaint for Infringement of
Trademark and Damages against respondent Fortune Tobacco Corporation,
docketed as Civil Case No. 47374 of the Regional Trial Court of Pasig, Branch
166.
The decision under review summarized what happened next, as follows:
In the Complaint xxx with prayer for the issuance of a preliminary injunction,
[petitioners] alleged that they are foreign corporations not doing business in
the Philippines and are suing on an isolated transaction. xxx they averred that
the countries in which they are domiciled grant xxx to corporate or juristic
persons of the Philippines the privilege to bring action for infringement, xxx
without need of a license to do business in those countries. [Petitioners]
likewise manifested [being registered owners of the trademark "MARK VII"
and "MARK TEN" for cigarettes as evidenced by the corresponding
certificates of registration and an applicant for the registration of the trademark
"LARK MILDS"]. xxx. [Petitioners] claimed that they have registered the
aforementioned trademarks in their respective countries of origin and that, by
virtue of the long and extensive usage of the same, these trademarks have
already gained international fame and acceptance. Imputing bad faith on the
part of the [respondent], petitioners claimed that the [respondent], without any
previous consent from any of the [petitioners], manufactured and sold
cigarettes bearing the identical and/or confusingly similar trademark "MARK"
xxx Accordingly, they argued that [respondents] use of the trademark "MARK"
in its cigarette products have caused and is likely to cause confusion or
mistake, or would deceive purchasers and the public in general into buying
these products under the impression and mistaken belief that they are buying
[petitioners] products.
Invoking the provisions of the Paris Convention for the Protection of Industrial
and Intellectual Property (Paris Convention, for brevity), to which the
Philippines is a signatory xxx, [petitioners] pointed out that upon the request of
an interested party, a country of the Union may prohibit the use of a trademark
which constitutes a reproduction, imitation, or translation of a mark already
belonging to a person entitled to the benefits of the said Convention. They
likewise argued that, in accordance with Section 21-A in relation to Section 23
of Republic Act 166, as amended, they are entitled to relief in the form of
damages xxx [and] the issuance of a writ of preliminary injunction which
should be made permanent to enjoin perpetually the [respondent] from
violating [petitioners] right to the exclusive use of their aforementioned
trademarks.
[Respondent] filed its Answer xxx denying [petitioners] material allegations
and xxx averred [among other things] xxx that "MARK" is a common word,
which cannot particularly identify a product to be the product of the
[petitioners] xxx
xxx xxx xxx.
lawphil.net
Meanwhile, after the [respondent] filed its Opposition (Records, Vo. I, p. 26),
the matter of the [petitioners] prayer for the issuance of a writ of preliminary
injunction was negatively resolved by the court in an Order xxx dated March
28, 1973. [The incidental issue of the propriety of an injunction would
eventually be elevated to the CA and would finally be resolved by the
Supreme Court in its Decision dated July 16, 1993 in G.R. No. 91332]. xxx.
xxx xxx xxx
After the termination of the trial on the merits xxx trial court rendered its
Decision xxx dated November 3, 1999 dismissing the complaint and
counterclaim after making a finding that the [respondent] did not commit
trademark infringement against the [petitioners]. Resolving first the issue of
whether or not [petitioners] have capacity to institute the instant action, the
trial court opined that [petitioners] failure to present evidence to support their
allegation that their respective countries indeed grant Philippine corporations
reciprocal or similar privileges by law xxx justifies the dismissal of the
complaint xxx. It added that the testimonies of [petitioners] witnesses xxx
essentially declared that [petitioners] are in fact doing business in the
Philippines, but [petitioners] failed to establish that they are doing so in
accordance with the legal requirement of first securing a license. Hence, the
court declared that [petitioners] are barred from maintaining any action in
Philippine courts pursuant to Section 133 of the Corporation Code.
The issue of whether or not there was infringement of the [petitioners]
trademarks by the [respondent] was likewise answered xxx in the negative. It
expounded that "in order for a name, symbol or device to constitute a
trademark, it must, either by itself or by association, point distinctly to the
origin or ownership of the article to which it is applied and be of such nature
as to permit an exclusive appropriation by one person". Applying such
principle to the instant case, the trial court was of the opinion that the words
"MARK", "TEN", "LARK" and the Roman Numerals "VII", either alone or in
combination of each other do not by themselves or by association point
distinctly to the origin or ownership of the cigarettes to which they refer, such
that the buying public could not be deceived into believing that [respondents]
"MARK" cigarettes originated either from the USA, Canada, or Switzerland.
Emphasizing that the test in an infringement case is the likelihood of confusion
or deception, the trial court stated that the general rule is that an infringement
exists if the resemblance is so close that it deceives or is likely to deceive a
customer exercising ordinary caution in his dealings and induces him to
purchase the goods of one manufacturer in the belief that they are those of
another. xxx. The trial court ruled that the [petitioners] failed to pass these
tests as it neither presented witnesses or purchasers attesting that they have
bought [respondents] product believing that they bought [petitioners] "MARK
VII", "MARK TEN" or "LARK", and have also failed to introduce in evidence a
specific magazine or periodical circulated locally, which promotes and
popularizes their products in the Philippines. It, moreover, elucidated that the
words consisting of the trademarks allegedly infringed by [respondent] failed
to show that they have acquired a secondary meaning as to identify them as
[petitioners] products. Hence, the court ruled that the [petitioners] cannot avail
themselves of the doctrine of secondary meaning.
As to the issue of damages, the trial court deemed it just not to award any to
either party stating that, since the [petitioners] filed the action in the belief that
they were aggrieved by what they perceived to be an infringement of their
trademark, no wrongful act or omission can be attributed to them.
xxx.3 (Words in brackets supplied)
Maintaining to have the standing to sue in the local forum and that respondent
has committed trademark infringement, petitioners went on appeal to the CA
whereat their appellate recourse was docketed as CA-G.R. CV No. 66619.
Eventually, the CA, in its Decision dated January 21, 2003, while ruling for
petitioners on the matter of their legal capacity to sue in this country for
trademark infringement, nevertheless affirmed the trial courts decision on the
underlying issue of respondents liability for infringement as it found that:
xxx the appellants [petitioners] trademarks, i.e., "MARK VII", "MARK TEN"
and "LARK", do not qualify as well-known marks entitled to protection even
without the benefit of actual use in the local market and that the similarities in
the trademarks in question are insufficient as to cause deception or confusion
tantamount to infringement. Consequently, as regards the third issue, there is
likewise no basis for the award of damages prayed for by the appellants
herein.4 (Word in bracket supplied)
With their motion for reconsideration having been denied by the CA in its
equally challenged Resolution of May 30, 2003, petitioners are now with this
Court via this petition for review essentially raising the following issues: (1)
whether or not petitioners, as Philippine registrants of trademarks, are entitled
to enforce trademark rights in this country; and (2) whether or not respondent
has committed trademark infringement against petitioners by its use of the
mark "MARK" for its cigarettes, hence liable for damages.
In its Comment,5 respondent, aside from asserting the correctness of the CAs
finding on its liability for trademark infringement and damages, also puts in
issue the propriety of the petition as it allegedly raises questions of fact.
The petition is bereft of merit.
Dealing first with the procedural matter interposed by respondent, we find that
the petition raises both questions of fact and law contrary to the prescription
against raising factual questions in a petition for review on certiorari filed
before the Court. A question of law exists when the doubt or difference arises
as to what the law is on a certain state of facts; there is a question of fact
when the doubt or difference arises as to the truth or falsity of alleged facts. 6
Indeed, the Court is not the proper venue to consider factual issues as it is not
a trier of facts.7 Unless the factual findings of the appellate court are mistaken,
absurd, speculative, conflicting, tainted with grave abuse of discretion, or
contrary to the findings culled by the court of origin,8 we will not disturb them.
It is petitioners posture, however, that their contentions should
be treated as purely legal since they are assailing erroneous conclusions
deduced from a set of undisputed facts.
Concededly, when the facts are undisputed, the question of whether or not the
conclusion drawn therefrom by the CA is correct is one of law. 9 But, even if we
consider and accept as pure questions of law the issues raised in this petition,
still, the Court is not inclined to disturb the conclusions reached by the
appellate court, the established rule being that all doubts shall be resolved in
favor of the correctness of such conclusions.10
Be that as it may, we shall deal with the issues tendered and determine
whether the CA ruled in accordance with law and established jurisprudence in
arriving at its assailed decision.
A "trademark" is any distinctive word, name, symbol, emblem, sign, or device,
or any combination thereof adopted and used by a manufacturer or merchant
on his goods to identify and distinguish them from those manufactured, sold,
or dealt in by others.11 Inarguably, a trademark deserves protection. For, as
Mr. Justice Frankfurter observed in Mishawaka Mfg. Co. v. Kresge Co.:12
The protection of trademarks is the laws recognition of the psychological
function of symbols. If it is true that we live by symbols, it is no less true that
we purchase goods by them. A trade-mark is a merchandising short-cut which
induces a purchaser to select what he wants, or what he has been led to
believe what he wants. The owner of a mark exploits this human propensity by
making every effort to impregnate the atmosphere of the market with the
drawing power of a congenial symbol. Whatever the means employed, the
aim is the same - to convey through the mark, in the minds of potential
customers, the desirability of the commodity upon which it appears. Once this
is attained, the trade-mark owner has something of value. If another poaches
upon the commercial magnetism of the symbol he has created, the owner can
obtain legal redress.
It is thus understandable for petitioners to invoke in this recourse their
entitlement to enforce trademark rights in this country, specifically, the right to
sue for trademark infringement in Philippine courts and be accorded
protection against unauthorized use of their Philippine-registered trademarks.
In support of their contention respecting their right of action, petitioners assert
that, as corporate nationals of member-countries of the Paris Union, they can
sue before Philippine courts for infringement of trademarks, or for unfair
competition, without need of obtaining registration or a license to do business
in the Philippines, and without necessity of actually doing business in the
Philippines. To petitioners, these grievance right and mechanism are
accorded not only by Section 21-A of Republic Act (R.A.) No. 166, as
amended, or the Trademark Law, but also by Article 2 of the Paris Convention
for the Protection of Industrial Property, otherwise known as the Paris
Convention.
In any event, petitioners point out that there is actual use of their trademarks
in the Philippines as evidenced by the certificates of registration of their
trademarks. The marks "MARK TEN" and "LARK" were registered on the
basis of actual use in accordance with Sections 2-A13 and 5(a)14 of R.A. No.
166, as amended, providing for a 2-month pre-registration use in local
commerce and trade while the registration of "MARK VII" was on the basis of
registration in the foreign country of origin pursuant to Section 37 of the same
law wherein it is explicitly provided that prior use in commerce need not be
alleged.15
Besides, petitioners argue that their not doing business in the Philippines, if
that be the case, does not mean that cigarettes bearing their trademarks are
not available and sold locally. Citing Converse Rubber Corporation v.
Universal Rubber Products, Inc.,16 petitioners state that such availability and
sale may be effected through the acts of importers and distributors.
Finally, petitioners would press on their entitlement to protection even in the
absence of actual use of trademarks in the country in view of the Philippines
adherence to the Trade Related Aspects of Intellectual Property Rights or the
TRIPS Agreement and the enactment of R.A. No. 8293, or the Intellectual
Property Code (hereinafter the "IP Code"), both of which provide that the fame
of a trademark may be acquired through promotion or advertising with no
explicit requirement of actual use in local trade or commerce.
Before discussing petitioners claimed entitlement to enforce trademark rights
in the Philippines, it must be emphasized that their standing to sue in
Philippine courts had been recognized, and rightly so, by the CA. It ought to
be pointed out, however, that the appellate court qualified its holding with a
statement, following G.R. No. 91332, entitled Philip Morris, Inc., et al. v. The
Court of Appeals and Fortune Tobacco Corporation,17 that such right to sue
does not necessarily mean protection of their registered marks in the absence
of actual use in the Philippines.
Thus clarified, what petitioners now harp about is their entitlement to
protection on the strength of registration of their trademarks in the Philippines.
As we ruled in G.R. No. 91332,18 supra, so it must be here.
Admittedly, the registration of a trademark gives the registrant, such as
petitioners, advantages denied non-registrants or ordinary users, like
respondent. But while petitioners enjoy the statutory presumptions arising
from such registration,19 i.e., as to the validity of the registration, ownership
and the exclusive right to use the registered marks, they may not successfully
sue on the basis alone of their respective certificates of registration of
trademarks. For, petitioners are still foreign corporations. As such, they ought,
as a condition to availment of the rights and privileges vis--vis their
trademarks in this country, to show proof that, on top of Philippine registration,
their country grants substantially similar rights and privileges to Filipino
citizens pursuant to Section 21-A20 of R.A. No. 166.
In Leviton Industries v. Salvador,21 the Court further held that the
aforementioned reciprocity requirement is a condition sine qua non to filing a
suit by a foreign corporation which, unless alleged in the complaint, would
justify dismissal thereof, a mere allegation that the suit is being pursued under
Section 21-A of R.A. No. 166 not being sufficient. In a subsequent
case,22 however, the Court held that where the complainant is a national of a
Paris Convention- adhering country, its allegation that it is suing under said
Section 21-A would suffice, because the reciprocal agreement between the
two countries is embodied and supplied by the Paris Convention which, being
considered part of Philippine municipal laws, can be taken judicial notice of in
infringement suits.23
As well, the fact that their respective home countries, namely, the United
States, Switzerland and Canada, are, together with the Philippines, members
of the Paris Union does not automatically entitle petitioners to the protection of
their trademarks in this country absent actual use of the marks in local
commerce and trade.
True, the Philippines adherence to the Paris Convention24 effectively
obligates the country to honor and enforce its provisions25 as regards the
protection of industrial property of foreign nationals in this country. However,
any protection accorded has to be made subject to the limitations of Philippine
laws.26 Hence, despite Article 2 of the Paris Convention which substantially
provides that (1) nationals of member-countries shall have in this country
rights specially provided by the Convention as are consistent with Philippine
laws, and enjoy the privileges that Philippine laws now grant or may hereafter
grant to its nationals, and (2) while no domicile requirement in the country
where protection is claimed shall be required of persons entitled to the
benefits of the Union for the enjoyment of any industrial property
rights,27 foreign nationals must still observe and comply with the conditions
imposed by Philippine law on its nationals.
Considering that R.A. No. 166, as amended, specifically Sections 228 and 2-
A29 thereof, mandates actual use of the marks and/or emblems in local
commerce and trade before they may be registered and ownership thereof
acquired, the petitioners cannot, therefore, dispense with the element of
actual use. Their being nationals of member-countries of the Paris Union does
not alter the legal situation.
In Emerald Garment Mfg. Corporation v. Court of Appeals,30 the Court
reiterated its rulings in Sterling Products International, Inc. v. Farbenfabriken
Bayer Aktiengesellschaft,31 Kabushi Kaisha Isetan v. Intermediate Appellate
Court,32 and Philip Morris v. Court of Appeals and Fortune Tobacco
Corporation33 on the importance of actual commercial use of a trademark in
the Philippines notwithstanding the Paris Convention:
The provisions of the 1965 Paris Convention relied upon by private
respondent and Sec. 21-A of the Trademark Law were sufficiently expounded
upon and qualified in the recent case of Philip Morris, Inc., et. al. vs. Court of
Appeals:
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirements of actual use in the Philippines must
subordinate an international agreement inasmuch as the apparent clash is
being decided by a municipal tribunal. Xxx. Withal, the fact that international
law has been made part of the law of the land does not by any means imply
the primacy of international law over national law in the municipal sphere.
Under the doctrine of incorporation as applied in most countries, rules of
International Law are given a standing equal, not superior, to national
legislative enactments.
xxx xxx xxx
In other words, (a foreign corporation) may have the capacity to sue for
infringement but the question of whether they have an exclusive right over
their symbol as to justify issuance of the controversial writ will depend on
actual use of their trademarks in the Philippines in line with Sections 2 and 2-
A of the same law. It is thus incongruous for petitioners to claim that when a
foreign corporation not licensed to do business in the Philippines files a
complaint for infringement, the entity need not be actually using its trademark
in commerce in the Philippines. Such a foreign corporation may have the
personality to file a suit for infringement but it may not necessarily be entitled
to protection due to absence of actual use of the emblem in the local market.
Contrary to what petitioners suggest, the registration of trademark cannot be
deemed conclusive as to the actual use of such trademark in local commerce.
As it were, registration does not confer upon the registrant an absolute right to
the registered mark. The certificate of registration merely constitutes prima
facie evidence that the registrant is the owner of the registered mark.
Evidence of non-usage of the mark rebuts the presumption of trademark
ownership,34 as what happened here when petitioners no less admitted not
doing business in this country.35
Most importantly, we stress that registration in the Philippines of trademarks
does not ipso facto convey an absolute right or exclusive ownership thereof.
To borrow from Shangri-La International Hotel Management, Ltd. v.
Development Group of Companies, Inc.36 trademark is a creation of use and,
therefore, actual use is a pre-requisite to exclusive ownership; registration is
only an administrative confirmation of the existence of the right of ownership
of the mark, but does not perfect such right; actual use thereof is the
perfecting ingredient.37
Petitioners reliance on Converse Rubber Corporation38 is quite misplaced,
that case being cast in a different factual milieu. There, we ruled that a foreign
owner of a Philippine trademark, albeit not licensed to do, and not so engaged
in, business in the Philippines, may actually earn reputation or goodwill for its
goods in the country. But unlike in the instant case, evidence of actual sales of
Converse rubber shoes, such as sales invoices, receipts and the testimony of
a legitimate trader, was presented in Converse.
This Court also finds the IP Code and the TRIPS Agreement to be
inapplicable, the infringement complaint herein having been filed in August
1982 and tried under the aegis of R.A. No. 166, as amended. The IP Code,
however, took effect only on January 1, 1998 without a provision as to its
retroactivity.39 In the same vein, the TRIPS Agreement was inexistent when
the suit for infringement was filed, the Philippines having adhered thereto only
on December 16, 1994.
With the foregoing perspective, it may be stated right off that the registration
of a trademark unaccompanied by actual use thereof in the country accords
the registrant only the standing to sue for infringement in Philippine courts.
Entitlement to protection of such trademark in the country is entirely a different
matter.
This brings us to the principal issue of infringement.
Section 22 of R.A. No. 166, as amended, defines what constitutes trademark
infringement, as follows:
Sec. 22. Infringement, what constitutes. Any person who shall use, without
the consent of the registrant, any reproduction, counterfeit, copy or colorable
imitation of any registered mark or tradename in connection with the sale,
offering for sale, or advertising of any goods, business or services on or in
connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business; or reproduce, counterfeit, copy of color
ably imitate any such mark or tradename and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in
connection with such goods, business, or services, shall be liable to a civil
action by the registrant for any or all of the remedies herein provided.
Petitioners would insist on their thesis of infringement since respondents
mark "MARK" for cigarettes is confusingly or deceptively similar with their duly
registered "MARK VII," "MARK TEN" and "LARK" marks likewise for
cigarettes. To them, the word "MARK" would likely cause confusion in the
trade, or deceive purchasers, particularly as to the source or origin of
respondents cigarettes.
The "likelihood of confusion" is the gravamen of trademark infringement.40 But
likelihood of confusion is a relative concept, the particular, and sometimes
peculiar, circumstances of each case being determinative of its existence.
Thus, in trademark infringement cases, more than in other kinds of litigation,
precedents must be evaluated in the light of each particular case.41
In determining similarity and likelihood of confusion, jurisprudence has
developed two tests: the dominancy test and the holistic test. 42 The
dominancy test43 sets sight on the similarity of the prevalent features of the
competing trademarks that might cause confusion and deception, thus
constitutes infringement. Under this norm, the question at issue turns on
whether the use of the marks involved would be likely to cause confusion or
mistake in the mind of the public or deceive purchasers.44
In contrast, the holistic test45 entails a consideration of the entirety of the
marks as applied to the products, including the labels and packaging, in
determining confusing similarity.
Upon consideration of the foregoing in the light of the peculiarity of this case,
we rule against the likelihood of confusion resulting in infringement arising
from the respondents use of the trademark "MARK" for its particular cigarette
product.
For one, as rightly concluded by the CA after comparing the trademarks
involved in their entirety as they appear on the products,46 the striking
dissimilarities are significant enough to warn any purchaser that one is
different from the other. Indeed, although the perceived offending word
"MARK" is itself prominent in petitioners trademarks "MARK VII" and "MARK
TEN," the entire marking system should be considered as a whole and not
dissected, because a discerning eye would focus not only on the predominant
word but also on the other features appearing in the labels. Only then would
such discerning observer draw his conclusion whether one mark would be
confusingly similar to the other and whether or not sufficient differences
existed between the marks.47
This said, the CA then, in finding that respondents goods cannot be mistaken
as any of the three cigarette brands of the petitioners, correctly relied on the
holistic test.
But, even if the dominancy test were to be used, as urged by the petitioners,
but bearing in mind that a trademark serves as a tool to point out distinctly the
origin or ownership of the goods to which it is affixed,48 the likelihood of
confusion tantamount to infringement appears to be farfetched. The reason for
the origin and/or ownership angle is that unless the words or devices do so
point out the origin or ownership, the person who first adopted them cannot be
injured by any appropriation or imitation of them by others, nor can the public
be deceived.49
Since the word "MARK," be it alone or in combination with the word "TEN"
and the Roman numeral "VII," does not point to the origin or ownership of the
cigarettes to which they apply, the local buying public could not possibly be
confused or deceived that respondents "MARK" is the product of petitioners
and/or originated from the U.S.A., Canada or Switzerland. And lest it be
overlooked, no actual commercial use of petitioners marks in local commerce
was proven. There can thus be no occasion for the public in this country,
unfamiliar in the first place with petitioners marks, to be confused.
For another, a comparison of the trademarks as they appear on the goods is
just one of the appreciable circumstances in determining likelihood of
confusion. Del Monte Corp. v. CA50 dealt with another, where we instructed to
give due regard to the "ordinary purchaser," thus:
The question is not whether the two articles are distinguishable by their label
when set side by side but whether the general confusion made by the article
upon the eye of the casual purchaser who is unsuspicious and off his guard, is
such as to likely result in his confounding it with the original. As observed in
several cases, the general impression of the ordinary purchaser, buying under
the normally prevalent conditions in trade and giving the attention such
purchasers usually give in buying that class of goods is the touchstone.
When we spoke of an "ordinary purchaser," the reference was not to the
"completely unwary customer" but to the "ordinarily intelligent buyer"
considering the type of product involved.51
It cannot be over-emphasized that the products involved are addicting
cigarettes purchased mainly by those who are already predisposed to a
certain brand. Accordingly, the ordinary buyer thereof would be all too familiar
with his brand and discriminating as well. We, thus, concur with the CA when
it held, citing a definition found in Dy Buncio v. Tan Tiao Bok,52 that the
"ordinary purchaser" in this case means "one accustomed to buy, and
therefore to some extent familiar with, the goods in question."
Pressing on with their contention respecting the commission of trademark
infringement, petitioners finally point to Section 22 of R.A. No. 166, as
amended. As argued, actual use of trademarks in local commerce is, under
said section, not a requisite before an aggrieved trademark owner can restrain
the use of his trademark upon goods manufactured or dealt in by another, it
being sufficient that he had registered the trademark or trade-name with the IP
Office. In fine, petitioners submit that respondent is liable for infringement,
having manufactured and sold cigarettes with the trademark "MARK" which,
as it were, are identical and/or confusingly similar with their duly registered
trademarks "MARK VII," "MARK TEN" and "LARK".
This Court is not persuaded.
In Mighty Corporation v. E & J Gallo Winery,53 the Court held that the following
constitute the elements of trademark infringement in accordance not only with
Section 22 of R.A. No. 166, as amended, but also Sections 2, 2-A, 9-A54and
20 thereof:
(a) a trademark actually used in commerce in the Philippines and
registered in the principal register of the Philippine Patent Office,
(b) is used by another person in connection with the sale, offering for
sale, or advertising of any goods, business or services or in
connection with which such use is likely to cause confusion or mistake
or to deceive purchasers or others as to the source or origin of such
goods or services, or identity of such business; or such trademark is
reproduced, counterfeited, copied or colorably imitated by another
person and such reproduction, counterfeit, copy or colorable imitation
is applied to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such
goods, business or services as to likely cause confusion or mistake or
to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or
assignee.lawphil.net
As already found herein, while petitioners have registered the trademarks
"MARK VII," "MARK TEN" and "LARK" for cigarettes in the Philippines, prior
actual commercial use thereof had not been proven. In fact, petitioners
judicial admission of not doing business in this country effectively belies any
pretension to the contrary.
Likewise, we note that petitioners even failed to support their claim that their
respective marks are well-known and/or have acquired goodwill in the
Philippines so as to be entitled to protection even without actual use in this
country in accordance with Article 6bis55 of the Paris Convention. As correctly
found by the CA, affirming that of the trial court:
xxx the records are bereft of evidence to establish that the appellants
[petitioners] products are indeed well-known in the Philippines, either through
actual sale of the product or through different forms of advertising. This finding
is supported by the fact that appellants admit in their Complaint that they are
not doing business in the Philippines, hence, admitting that their products are
not being sold in the local market. We likewise see no cogent reason to
disturb the trial courts finding that the appellants failed to establish that their
products are widely known by local purchasers as "(n)o specific magazine or
periodical published in the Philippines, or in other countries but circulated
locally" have been presented by the appellants during trial. The appellants
also were not able to show the length of time or the extent of the promotion or
advertisement made to popularize their products in the Philippines.56
Last, but not least, we must reiterate that the issue of trademark infringement
is factual, with both the trial and appellate courts having peremptorily found
allegations of infringement on the part of respondent to be without basis. As
we said time and time again, factual determinations of the trial court,
concurred in by the CA, are final and binding on this Court.57
For lack of convincing proof on the part of the petitioners of actual use of their
registered trademarks prior to respondents use of its mark and for petitioners
failure to demonstrate confusing similarity between said trademarks, the
dismissal of their basic complaint for infringement and the concomitant plea
for damages must be affirmed. The law, the surrounding circumstances and
the equities of the situation call for this disposition.
WHEREFORE, the petition is hereby DENIED. Accordingly, the assailed
decision and resolution of the Court of Appeals are AFFIRMED.
Costs against the petitioners. SO ORDERED.
 Petitioner McDonalds Corporation, a corporation duly organized and existing
McDONALDS CORPORATION, G.R. No. 166115 under the laws of the State of Delaware, USA, filed a verified Notice of
Petitioner, Present: Opposition[3]against the respondents application claiming that the trademark
MACJOY & DEVICE so resembles its corporate logo, otherwise known as the
PUNO, C.J., Chairperson, Golden Arches or M design, and its marks McDonalds, McChicken, MacFries,
SANDOVAL-GUTIERREZ, BigMac, McDo, McSpaghetti, McSnack, and Mc, (hereinafter collectively known
CORONA, as the MCDONALDS marks) such that when used on identical or related goods,
AZCUNA, the trademark applied for would confuse or deceive purchasers into believing
- versus - GARCIA, JJ. that the goods originate from the same source or origin. Likewise, the petitioner
Promulgated: alleged that the respondents use and adoption in bad faith of the MACJOY &
DEVICE mark would falsely tend to suggest a connection or affiliation with
petitioners restaurant services and food products, thus, constituting a fraud
February 2, 2007 upon the general public and further cause the dilution of the distinctiveness of
petitioners registered and internationally recognized MCDONALDS marks to its
MACJOY FASTFOOD CORPORATION, prejudice and irreparable damage. The application and the opposition
Respondent. thereto was docketed as Inter Partes Case No. 3861.
x----------------------------------------------------------------------------------------x
DECISION Respondent denied the aforementioned allegations of the petitioner and
GARCIA, J.: averred that it has used the mark MACJOY for the past many years in good
In this petition for review on certiorari under Rule 45 of the Rules of Court, herein faith and has spent considerable sums of money for said marks extensive
petitioner McDonalds Corporation seeks the reversal and setting aside of the promotion in tri-media, especially in Cebu City where it has been doing business
following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 57247, to long before the petitioner opened its outlet thereat sometime in 1992; and that
wit: its use of said mark would not confuse affiliation with the petitioners restaurant
services and food products because of the differences in the design and detail
1. Decision dated 29 July 2004[1] reversing an earlier of the two (2) marks.
decision of the Intellectual Property Office (IPO)
which rejected herein respondent MacJoy FastFood In a decision[4] dated December 28, 1998, the IPO, ratiocinating that the
Corporations application for registration of the predominance of the letter M, and the prefixes Mac/Mc in both the MACJOY
trademark MACJOY & DEVICE; and and the MCDONALDS marks lead to the conclusion that there is confusing
similarity between them especially since both are used on almost the same
2. Resolution dated 12 November 2004[2] denying the products falling under classes 29 and 30 of the International Classification of
petitioners motion for reconsideration. Goods, i.e., food and ingredients of food, sustained the petitioners opposition
and rejected the respondents application, viz:
As culled from the record, the facts are as follows: WHEREFORE, the Opposition to the registration of the
mark MACJOY & DEVICE for use in fried chicken and chicken
On 14 March 1991, respondent MacJoy Fastfood Corporation, a domestic barbecue, burgers, fries, spaghetti, palabok, tacos,
corporation engaged in the sale of fast food products in Cebu City, filed with the sandwiches, halo-halo, and steaks is, as it is
then Bureau of Patents, Trademarks and Technology Transfer (BPTT), now hereby, SUSTAINED. Accordingly, Application Serial No.
the Intellectual Property Office (IPO), an application, thereat identified as 75274 of the herein Respondent-Applicant is REJECTED.
Application Serial No. 75274, for the registration of the trademark MACJOY &
DEVICE for fried chicken, chicken barbeque, burgers, fries, spaghetti, palabok, Let the filewrapper of MACJOY subject matter of this
tacos, sandwiches, halo-halo and steaks under classes 29 and 30 of the case be sent to the Administrative, Financial and Human
International Classification of Goods. Resources Development Bureau for appropriate action in
 accordance with this Decision, with a copy to be furnished the 1. The word MacJoy is written in round script
Bureau of Trademarks for information and to update its record. while the word McDonalds is written in
single stroke gothic;
SO ORDERED.
2. The word MacJoy comes with the picture of
a chicken head with cap and bowtie
In time, the respondent moved for a reconsideration but the IPO denied the and wings sprouting on both sides,
motion in its Order[5] of January 14, 2000. while the word McDonalds comes with
an arches M in gold colors, and
Therefrom, the respondent went to the CA via a Petition for Review with absolutely without any picture of a
prayer for Preliminary Injunction[6] under Rule 43 of the Rules of Court, whereat chicken;
its appellate recourse was docketed as CA-G.R. SP No. 57247.
3. The word MacJoy is set in deep pink and
Finding no confusing similarity between the marks MACJOY and white color scheme while McDonalds
MCDONALDS, the CA, in its herein assailed Decision[7] dated July 29, 2004, is written in red, yellow and black color
reversed and set aside the appealed IPO decision and order, thus: combination;

WHEREFORE, in view of the foregoing, judgment is hereby
rendered by us REVERSING and SETTING ASIDE the
Decision of the IPO dated 28 December 1998 and its Order
dated 14 January 2000 and ORDERING the IPO to give due
course to petitioners Application Serial No. 75274.
SO ORDERED.
Explains the CA in its decision:
xxx, it is clear that the IPO brushed aside and rendered useless
the glaring and drastic differences and variations in style of the
two trademarks and even decreed that these pronounced
differences are miniscule and considered them to have been
overshadowed by the appearance of the predominant features
such as M, Mc, and Mac appearing in both MCDONALDS and
MACJOY marks. Instead of taking into account these
differences, the IPO unreasonably shrugged off these
differences in the device, letters and marks in the trademark
sought to be registered. The IPO brushed aside and ignored
the following irrefutable facts and circumstances showing
differences between the marks of MACJOY and
MCDONALDS. They are, as averred by the petitioner [now
respondent]:
4. The faade of the respective stores of the
parties are entirely different. Exhibits
1 and 1-A, show that [respondents]
restaurant is set also in the same bold,
brilliant and noticeable color scheme
as that of its wrappers, containers,
cups, etc., while [petitioners]
restaurant is in yellow and red colors,
and with the mascot of Ronald
McDonald being prominently
displayed therein. (Words in brackets
supplied.)
Petitioner promptly filed a motion for reconsideration. However, in its
similarly challenged Resolution[8] of November 12, 2004, the CA denied the
motion, as it further held:
Whether a mark or label of a competitor resembles
another is to be determined by an inspection of the points of
difference and resemblance as a whole, and not merely the
points of resemblance. The articles and trademarks employed
and used by the [respondent] Macjoy Fastfood Corporation
are so different and distinct as to preclude any probability or
likelihood of confusion or deception on the part of the public to
the injury of the trade or business of the [petitioner] McDonalds
Corporation. The Macjoy & Device mark is dissimilar in color,
design, spelling, size, concept and appearance to the
McDonalds marks. (Words in brackets supplied.)
Hence, the petitioners present recourse on the following grounds:
I.
THE COURT OF APPEALS ERRED IN RULING THAT
RESPONDENTS MACJOY & DEVICE MARK IS NOT
CONFUSINGLY SIMILAR TO PETITIONERS McDONALDS
MARKS. IT FAILED TO CORRECTLY APPLY THE
DOMINANCY TEST WHICH HAS BEEN CONSISTENTLY
APPLIED BY THIS HONORABLE COURT IN DETERMINING
THE EXISTENCE OF CONFUSING SIMILARITY BETWEEN
COMPETING MARKS.
A. The McDonalds Marks belong to a well-
known and established family of
marks distinguished by the use of the
prefix Mc and/or Mac and the
corporate M logo design.
B. The prefix Mc and/or Mac is the dominant
portion of both Petitioners McDonalds
Marks and the Respondents Macjoy &
Device mark. As such, the marks are
confusingly similar under the
Dominancy Test.
C. Petitioners McDonalds Marks are well-
known and world-famous marks
which must be protected under the
Paris Convention.
II.
THE COURT OF APPEALS ERRED IN RULING THAT THE
DECISION OF THE IPO DATED 28 DECEMBER 1998 AND
ITS ORDER DATED 14 JANUARY 2000 WERE NOT BASED
ON SUBSTANTIAL EVIDENCE.
In its Comment,[9] the respondent asserts that the petition should be
dismissed outright for being procedurally defective: first, because the person
who signed the certification against forum shopping in behalf of the petitioner
was not specifically authorized to do so, and second, because the petition does
not present a reviewable issue as what it challenges are the factual findings of
the CA. In any event, the respondent insists that the CA committed no
reversible error in finding no confusing similarity between the trademarks in
question.
The petition is impressed with merit.
Contrary to respondents claim, the petitioners Managing Counsel,
Sheila Lehr, was specifically authorized to sign on behalf of
the petitioner the Verification and Certification[10] attached to the petition. As
can be gleaned from the petitioners Board of Directors Resolution
dated December 5, 2002, as embodied in the Certificate of the Assistant
Secretary dated December 21, 2004,[11] Sheila Lehr was one of those
authorized and empowered to execute and deliver for and on behalf of [the
petitioner] all documents as may be required in connection with x x x the
protection and maintenance of any foreign patents, trademarks, trade-names,
and copyrights owned now or hereafter by [the petitioner], including, but not
limited to, x x x documents required to institute opposition or cancellation
proceedings against conflicting trademarks, and to do such other acts and
things and to execute such other documents as may be necessary and
appropriate to effect and carry out the intent of this resolution. Indeed, the afore-
stated authority given to Lehr necessarily includes the authority to execute and
sign the mandatorily required certification of non-forum shopping to support the
instant petition for review which stemmed from the opposition
proceedings lodged by the petitioner before the IPO. Considering that the
person who executed and signed the certification against forum shopping has
the authority to do so, the petition, therefore, is not procedurally defective.
As regards the respondents argument that the petition raises only
questions of fact which are not proper in a petition for review, suffice it to say
that the contradictory findings of the IPO and the CA constrain us to give due
course to the petition, this being one of the recognized exceptions to Section 1,
Rule 45 of the Rules of Court. True, this Court is not the proper venue to
consider factual issues as it is not a trier of facts. [12] Nevertheless, when the
factual findings of the appellate court are mistaken, absurd, speculative,
conjectural, conflicting, tainted with grave abuse of discretion, or contrary to the
findings culled by the court of origin,[13] as here, this Court will review them.
The old Trademark Law, Republic Act (R.A.) No. 166, as amended,
defines a trademark as any distinctive word, name, symbol, emblem, sign, or
device, or any combination thereof adopted and used by a manufacturer or
merchant on his goods to identify and distinguish them from those
manufactured, sold, or dealt in by others.[14]
Under the same law, the registration of a trademark is subject to the
provisions of Section 4 thereof, paragraph (d) of which is pertinent to this
case. The provision reads:
Section 4. Registration of trademarks, trade-names
and service-marks on the principal register. There is hereby
established a register of trademarks, tradenames and service-
marks which shall be known as the principal register. The
owner of the trade-mark, trade-name or service-mark used to
distinguish his goods, business or services of others shall have
the right to register the same on the principal register, unless
it:
xxx xxx xxx
(d) Consists of or comprises a mark or
trade-name which so resembles a mark or
trade-name registered in the Philippines or a
mark or trade-name previously used in the
Philippines by another and not abandoned, as
to be likely, when applied to or used in
connection with the goods, business or
services of the applicant, to cause confusion
or mistake or to deceive purchasers;
xxx xxx xxx
Essentially, the issue here is whether there is a confusing similarity
between the MCDONALDS marks of the petitioner and the respondents
MACJOY & DEVICE trademark when applied to Classes 29 and 30 of the
International Classification of Goods, i.e., food and ingredients of food.
In determining similarity and likelihood of confusion, jurisprudence has
developed two tests, the dominancy test and the holistic test.[15] The dominancy
test focuses on the similarity of the prevalent features of the competing
trademarks that might cause confusion or deception.[16] In contrast, the holistic
test requires the court to consider the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing
similarity.[17] Under the latter test, a comparison of the words is not the only
determinant factor.[18]
Here, the IPO used the dominancy test in concluding that there was
confusing similarity between the two (2) trademarks in question as it took note
of the appearance of the predominant features M, Mc and/or Mac in both the
marks. In reversing the conclusion reached by the IPO, the CA, while seemingly
applying the dominancy test, in fact actually applied the holistic test. The
appellate court ruled in this wise:
Applying the Dominancy test to the present case, the IPO
should have taken into consideration the entirety of the two
marks instead of simply fixing its gaze on the single letter M or
on the combinations Mc or Mac. A mere cursory look of the
subject marks will reveal that, save for the letters M and c, no
other similarity exists in the subject marks.
We agree with the [respondent] that it is entirely unwarranted
for the IPO to consider the prefix Mac as the predominant
feature and the rest of the designs in [respondents] mark as
details. Taking into account such paramount factors as color,
designs, spelling, sound, concept, sizes and audio and visual
effects, the prefix Mc will appear to be the only similarity in the
two completely different marks; and it is the prefix Mc that
would thus appear as the miniscule detail. When pitted against
each other, the two marks reflect a distinct and disparate visual
impression that negates any possible confusing similarity in the
mind of the buying public. (Words in brackets supplied.)
Petitioner now vigorously points out that the dominancy test should be
the one applied in this case.
We agree.
In trademark cases, particularly in ascertaining whether one trademark
is confusingly similar to another, no set rules can be deduced because each
case must be decided on its merits.[19] In such cases, even more than in any
other litigation, precedent must be studied in the light of the facts of the
particular case.[20] That is the reason why in trademark cases, jurisprudential
precedents should be applied only to a case if they are specifically in point. [21]
While we agree with the CAs detailed enumeration of differences
between the two (2) competing trademarks herein involved, we believe that the
holistic test is not the one applicable in this case, the dominancy test being the
one more suitable. In recent cases with a similar factual milieu as here, the
Court has consistently used and applied the dominancy test in determining
confusing similarity or likelihood of confusion between competing
trademarks.[22]
Notably, in McDonalds Corp. v. LC Big Mak Burger, Inc.,[23] a case
where the trademark Big Mak was found to be confusingly similar with the Big
Mac mark of the herein the petitioner, the Court explicitly held:
This Court, xxx, has relied on the dominancy test
rather than the holistic test. The dominancy test considers the
dominant features in the competing marks in determining
whether they are confusingly similar. Under the dominancy
test, courts give greater weight to the similarity of the
appearance of the product arising from the adoption of the
dominant features of the registered mark, disregarding minor
differences. Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving
little weight to factors like prices, quality, sales outlets and
market segments.
Moreover, in Societe Des Produits Nestle, S.A. v. CA[24] the Court,
applying the dominancy test, concluded that the use by the respondent therein
of the word MASTER for its coffee product FLAVOR MASTER was likely to
cause confusion with therein petitioners coffee products MASTER ROAST and
MASTER BLEND and further ruled:
xxx, the totality or holistic test is contrary to the
elementary postulate of the law on trademarks and unfair
competition that confusing similarity is to be determined on the
basis of visual, aural, connotative comparisons and
overall impressions engendered by the marks in controversy
as they are encountered in the marketplace. The totality or
holistic test only relies on visual comparisons between two
trademarks whereas the dominancy test relies not only on the
visual but also on the aural and connotative comparisons and
overall impressions between the two trademarks.
Applying the dominancy test to the instant case, the Court finds that
herein petitioners MCDONALDS and respondents MACJOY marks are
confusingly similar with each other such that an ordinary purchaser can
conclude an association or relation between the marks.
To begin with, both marks use the corporate M design logo and the
prefixes Mc and/or Mac as dominant features. The first letter M in both marks
puts emphasis on the prefixes Mc and/or Mac by the similar way in which they
are depicted i.e. in an arch-like, capitalized and stylized manner.[25]
For sure, it is the prefix Mc, an abbreviation of Mac, which visually and
aurally catches the attention of the consuming public. Verily, the word MACJOY
attracts attention the same way as did McDonalds, MacFries, McSpaghetti,
McDo, Big Mac and the rest of the MCDONALDS marks which all use the
prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale of
fastfood products. Indisputably, the respondents trademark application for the
MACJOY & DEVICE trademark covers goods under Classes 29 and 30 of the
International Classification of Goods, namely, fried chicken, chicken barbeque,
burgers, fries, spaghetti, etc. Likewise, the petitioners trademark registration for
the MCDONALDS marks in the Philippines covers goods which are similar if
not identical to those covered by the respondents application.
Thus, we concur with the IPOs findings that:
In the case at bar, the predominant features such as the M, Mc,
and Mac appearing in both McDonalds marks and the
MACJOY & DEVICE easily attract the attention of would-be
customers. Even non-regular customers of their fastfood
restaurants would readily notice the predominance of the M
design, Mc/Mac prefixes shown in both marks. Such that the
common awareness or perception of customers that the
trademarks McDonalds mark and MACJOY & DEVICE are one
and the same, or an affiliate, or under the sponsorship of the
other is not far-fetched.
The differences and variations in styles as the device depicting
a head of chicken with cap and bowtie and wings sprouting on
both sides of the chicken head, the heart-shaped M, and the
stylistic letters in MACJOY & DEVICE; in contrast to the arch-
like M and the one-styled gothic letters in McDonalds marks
are of no moment. These minuscule variations are
overshadowed by the appearance of the predominant features
mentioned hereinabove.
Thus, with the predominance of the letter M, and prefixes
Mac/Mc found in both marks, the inevitable conclusion is there
is confusing similarity between the trademarks Mc Donalds
marks and MACJOY AND DEVICE especially considering the
fact that both marks are being used on almost the same
 products falling under Classes 29 and 30 of the International
Classification of Goods i.e. Food and ingredients of food.
With the existence of confusing similarity between the subject trademarks, the
resulting issue to be resolved is who, as between the parties, has the rightful
claim of ownership over the said marks.
We rule for the petitioner.
A mark is valid if it is distinctive and hence not barred from registration
under the Trademark Law. However, once registered, not only the marks
validity but also the registrants ownership thereof is prima facie presumed.[26]
Pursuant to Section 37[27] of R.A. No. 166, as amended, as well as the
provision regarding the protection of industrial property of foreign nationals in
this country as embodied in the Paris Convention[28] under which the Philippines
and the petitioners domicile, the United States, are adherent-members, the
petitioner was able to register its MCDONALDS marks successively, i.e.,
McDonalds in 04 October, 1971[29]; the corporate logo which is the M or the
golden arches design and the McDonalds with the M or golden arches design
both in 30 June 1977[30]; and so on and so forth.[31]
On the other hand, it is not disputed that the respondents application
for registration of its trademark MACJOY & DEVICE was filed
only on March 14, 1991albeit the date of first use in
the Philippines was December 7, 1987.[32]
Hence, from the evidence on record, it is clear that the petitioner has
duly established its ownership of the mark/s.
Respondents contention that it was the first user of the mark in
the Philippines having used MACJOY & DEVICE on its restaurant business
and food products since December, 1987 at Cebu City while the first
McDonalds outlet of the petitioner thereat was opened only in 1992, is
downright unmeritorious. For the requirement of actual use in commerce
x x x in the Philippines before one may register a trademark, trade-name and
service mark under the Trademark Law[33] pertains to the territorial jurisdiction
of the Philippines and is not only confined to a certain region, province, city or
barangay. Likewise wanting in merit is the respondents claim that the petitioner
cannot acquire ownership of the word Mac because it is a personal name which
may not be monopolized as a trademark as against others of the same name
or surname. As stated earlier, once a trademark has been registered, the
validity of the mark is prima faciepresumed. In this case, the respondent failed
to overcome such presumption. We agree with the observations of the
petitioner regarding the respondents explanation that the word MACJOY is
based on the name of its presidents niece, Scarlett Yu Carcell. In the words of
the petitioner:
First of all, Respondent failed to present evidence to
support the foregoing claim which, at best, is a mere self-
serving assertion. Secondly, it cannot be denied that there is
absolutely no connection between the name Scarlett Yu Carcel
and MacJoy to merit the coinage of the latter word. Even
assuming that the word MacJoy was chosen as a term of
endearment, fondness and affection for a certain Scarlett Yu
Carcel, allegedly the niece of Respondents president, as well
as to supposedly bring good luck to Respondents business,
one cannot help but wonder why out of all the possible letters
or combinations of letters available to Respondent, its
president had to choose and adopt a mark with the prefix Mac
as the dominant feature thereof. A more plausible explanation
perhaps is that the niece of Respondents president was fond
of the food products and services of the Respondent, but that
is beside the point. [34]
By reason of the respondents implausible and insufficient explanation
as to how and why out of the many choices of words it could have used for its
trade-name and/or trademark, it chose the word MACJOY, the only logical
conclusion deducible therefrom is that the respondent would want to ride high
on the established reputation and goodwill of the MCDONALDs marks, which,
as applied to petitioners restaurant business and food products, is undoubtedly
beyond question. Thus, the IPO was correct in rejecting and denying the
respondents application for registration of the trademark MACJOY &
DEVICE. As this Court ruled in Faberge Inc. v. IAC,[35] citing Chuanchow Soy
& Canning Co. v. Dir. of Patents and Villapanta:[36]
When one applies for the registration of a trademark or label which is
almost the same or very closely resembles one already used and registered by
another, the application should be rejected and dismissed outright, even without
any opposition on the part of the owner and user of a previously registered label
or trademark, this not only to avoid confusion on the part of the public, but also
to protect an already used and registered trademark and an established
goodwill.
WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed
Decision and Resolution of the Court of Appeals in CA-G.R. SP
NO. 57247, are REVERSED and SET ASIDE and the Decision of the
Intellectual Property Office in Inter Partes Case No. 3861 is REINSTATED.
No pronouncement as to costs. SO ORDERED.
 SKECHERS, U.S.A., INC., Petitioner,
- versus -
INTER PACIFIC INDUSTRIAL TRADING CORP.,
and/or INTER PACIFIC TRADING CORP. and/or
STRONG SPORTS GEAR CO., LTD., and/or
STRONGSHOES WAREHOUSE and/or STRONG
FASHION SHOES TRADING and/or TAN TUAN
HONG and/or VIOLETA T. MAGAYAGA and/or
JEFFREY R. MORALES and/or any of its other
proprietor/s, directors, officers, employees
and/or occupants of its premises located at S-7,
Ed & Joes Commercial Arcade, No. 153 Quirino
Avenue, Paraaque City,
Respondents.
x----------------------------------------------x
TRENDWORKS INTERNATIONAL
CORPORATION,
Petitioner-Intervenor,
- versus
INTER PACIFIC INDUSTRIAL TRADING CORP.
and/or INTER PACIFIC TRADING CORP. and/or
STRONG SPORTS GEAR CO., LTD., and/or
STRONGSHOES WAREHOUSE and/or STRONG
FASHION SHOES TRADING and/or
TAN TUAN HONG and/or
VIOLETA T. MAGAYAGA and/or JEFFREY R.
MORALES and/or any of its other proprietor/s,
directors, officers, employees and/or occupants
of its premises located at S-7, Ed & Joes Promulgated:
Commercial Arcade, No. 153 Quirino Avenue, March 23, 2011
Paraaque City,
Respondents.
x--------------------------------------------------x
RESOLUTION
G.R. No. 164321
PERALTA, J.:
Present:
For resolution are the twin Motions for Reconsideration[1] filed by petitioner and
petitioner-intervenor from the Decision rendered in favor of respondents,
CARPIO, J., Chairperson, dated November 30, 2006.
NACHURA,
PERALTA, At the outset, a brief narration of the factual and procedural antecedents that
ABAD, and transpired and led to the filing of the motions is in order.
MENDOZA, JJ.
The present controversy arose when petitioner filed with Branch 24 of the
Regional Trial Court (RTC) of Manila an application for the issuance of search
warrants against an outlet and warehouse operated by respondents for
infringement of trademark under Section 155, in relation to Section 170 of
Republic Act No. 8293, otherwise known as the Intellectual Property Code of
the Philippines.[2] In the course of its business, petitioner has registered the
trademark SKECHERS[3] and the trademark S (within an oval design)[4] with the
Intellectual Property Office (IPO).
Two search warrants[5] were issued by the RTC and were served on the
premises of respondents. As a result of the raid, more than 6,000 pairs of shoes
bearing the S logo were seized.
Later, respondents moved to quash the search warrants, arguing that there was
no confusing similarity between petitioners Skechers rubber shoes and its
Strong rubber shoes.
On November 7, 2002, the RTC issued an Order [6] quashing the search
warrants and directing the NBI to return the seized goods. The RTC agreed with
respondents view that Skechers rubber shoes and Strong rubber shoes have
glaring differences such that an ordinary prudent purchaser would not likely be
misled or confused in purchasing the wrong article.
Aggrieved, petitioner filed a petition for certiorari[7] with the Court of Appeals
(CA) assailing the RTC Order. On November 17, 2003, the CA issued a
Decision[8]affirming the ruling of the RTC.
Subsequently, petitioner filed the present petition[9] before this Court which puts
forth the following assignment of errors:
A. WHETHER THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN CONSIDERING
MATTERS OF DEFENSE IN A CRIMINAL TRIAL FOR
 TRADEMARK INFRINGEMENT IN PASSING UPON THE
VALIDITY OF THE SEARCH WARRANT WHEN IT
SHOULD HAVE LIMITED ITSELF TO A (e)
DETERMINATION OF WHETHER THE TRIAL COURT
COMMITTED GRAVE ABUSE OF DISCRETION IN
QUASHING THE SEARCH WARRANTS.
B. WHETHER THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN FINDING THAT
RESPONDENTS ARE NOT GUILTY OF TRADEMARK
INFRINGEMENT IN THE CASE WHERE THE SOLE
TRIABLE ISSUE IS THE EXISTENCE OF PROBABLE
CAUSE TO ISSUE A SEARCH WARRANT.[10]
In the meantime, petitioner-intervenor filed a Petition-in-
Intervention[11] with this Court claiming to be the sole licensed distributor of
Skechers products here in the Philippines.
On November 30, 2006, this Court rendered a Decision[12] dismissing
the petition.
Both petitioner and petitioner-intervenor filed separate motions for
reconsideration.
In petitioners motion for reconsideration, petitioner moved for a
reconsideration of the earlier decision on the following grounds:
(a) THIS HONORABLE COURT MUST RE-EXAMINE
THE FACTS OF THIS CASE DUE TO THE
SIGNIFICANCE AND REPERCUSSIONS OF ITS
DECISION.
(b) COMMERCIAL QUANTITIES OF THE SEIZED ITEMS
WITH THE UNAUTHORIZED REPRODUCTIONS OF
THE S TRADEMARK OWNED BY PETITIONER WERE
INTENDED FOR DISTRIBUTION IN THE PHILIPPINE
MARKET TO THE DETRIMENT OF PETITIONER
RETURNING THE GOODS TO RESPONDENTS WILL
ADVERSELY AFFECT THE GOODWILL AND
REPUTATION OF PETITIONER.
(c) THE SEARCH WARRANT COURT AND THE COURT
OF APPEALS BOTH ACTED WITH GRAVE ABUSE OF
DISCRETION.
(d) THE SEARCH WARRANT COURT DID NOT
PROPERLY RE-EVALUATE THE EVIDENCE
PRESENTED DURING THE SEARCH WARRANT
APPLICATION PROCEEDINGS.
THE SOLID TRIANGLE CASE IS NOT APPLICABLE
IN THIS CASE, AS IT IS BASED ON A DIFFERENT
FACTUAL MILIEU. PRELIMINARY FINDING OF GUILT
(OR ABSENCE THEREOF) MADE BY THE SEARCH
WARRANT COURT AND THE COURT OF APPEALS
WAS IMPROPER.
(f) THE SEARCH WARRANT COURT OVERSTEPPED
ITS DISCRETION. THE LAW IS CLEAR. THE
DOMINANCY TEST SHOULD BE USED.
(g) THE COURT OF APPEALS COMMITTED ERRORS
OF JURISDICTION.[13]
On the other hand, petitioner-intervenors motion for reconsideration
raises the following errors for this Courts consideration, to wit:
(a) THE COURT OF APPEALS AND THE SEARCH
WARRANT COURT ACTED CONTRARY TO LAW
AND JURISPRUDENCE IN ADOPTING THE
ALREADY-REJECTED HOLISTIC TEST IN
DETERMINING THE ISSUE OF CONFUSING
SIMILARITY;
(b) THE COURT OF APPEALS AND THE SEARCH
WARRANT COURT ACTED CONTRARY TO LAW IN
HOLDING THAT THERE IS NO PROBABLE CAUSE
FOR TRADEMARK INFRINGEMENT; AND
(c) THE COURT OF APPEALS SANCTIONED THE
TRIAL COURTS DEPARTURE FROM THE USUAL
AND ACCEPTED COURSE OF JUDICIAL
PROCEEDINGS WHEN IT UPHELD THE QUASHAL
OF THE SEARCH WARRANT ON THE BASIS
SOLELY OF A FINDING THAT THERE IS NO
CONFUSING SIMILARITY.[14]
A perusal of the motions submitted by petitioner and petitioner-
intervenor would show that the primary issue posed by them dwells on the issue
of whether or not respondent is guilty of trademark infringement.
After a thorough review of the arguments raised herein, this Court
reconsiders its earlier decision.
 The basic law on trademark, infringement, and unfair competition is
Republic Act (R.A.) No. 8293. Specifically, Section 155 of R.A. No. 8293 states:
Remedies; Infringement. Any person who shall,
without the consent of the owner of the registered mark:
155.1. Use in commerce any
reproduction, counterfeit, copy, or colorable
imitation of a registered mark or the same
container or a dominant feature thereof in
connection with the sale, offering for sale,
distribution, advertising of any goods or
services including other preparatory steps
necessary to carry out the sale of any goods
or services on or in connection with which
such use is likely to cause confusion, or to
cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy
or colorably imitate a registered mark or
a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable
imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements
intended to be used in commerce upon or in
connection with the sale, offering for sale,
distribution, or advertising of goods or services
on or in connection with which such use is
likely to cause confusion, or to cause
mistake, or to deceive, shall be liable in a
civil action for infringement by the registrant for
the remedies hereinafter set forth: Provided,
That the infringement takes place at the
moment any of the acts stated in Subsection
155.1 or this subsection are committed
regardless of whether there is actual sale of
goods or services using the infringing
material.[15]
The essential element of infringement under R.A. No. 8293 is that the infringing
mark is likely to cause confusion. In determining similarity and likelihood of
confusion, jurisprudence has developed tests the Dominancy Test and the
Holistic or Totality Test. The Dominancy Test focuses on the similarity of the
prevalent or dominant features of the competing trademarks that might cause
confusion, mistake, and deception in the mind of the purchasing public.
Duplication or imitation is not necessary; neither is it required that the mark
sought to be registered suggests an effort to imitate. Given more consideration
are the aural and visual impressions created by the marks on the buyers of
goods, giving little weight to factors like prices, quality, sales outlets, and market
segments.[16]
In contrast, the Holistic or Totality Test necessitates a consideration of
the entirety of the marks as applied to the products, including the labels and
packaging, in determining confusing similarity. The discerning eye of the
observer must focus not only on the predominant words, but also on the other
features appearing on both labels so that the observer may draw conclusion on
whether one is confusingly similar to the other.[17]
Relative to the question on confusion of marks and trade names,
jurisprudence has noted two (2) types of confusion, viz.: (1) confusion of goods
(product confusion), where the ordinarily prudent purchaser would be induced
to purchase one product in the belief that he was purchasing the other; and (2)
confusion of business (source or origin confusion), where, although the goods
of the parties are different, the product, the mark of which registration is applied
for by one party, is such as might reasonably be assumed to originate with the
registrant of an earlier product, and the public would then be deceived either
into that belief or into the belief that there is some connection between the two
parties, though inexistent.[18]
Applying the Dominancy Test to the case at bar, this Court finds that
the use of the stylized S by respondent in its Strong rubber shoes infringes on
the mark already registered by petitioner with the IPO. While it is undisputed
that petitioners stylized S is within an oval design, to this Courts mind, the
dominant feature of the trademark is the stylized S, as it is precisely the stylized
S which catches the eye of the purchaser. Thus, even if respondent did not use
an oval design, the mere fact that it used the same stylized S, the same being
the dominant feature of petitioners trademark, already constitutes infringement
under the Dominancy Test.
This Court cannot agree with the observation of the CA that the use of
the letter S could hardly be considered as highly identifiable to the products of
petitioner alone. The CA even supported its conclusion by stating that the letter
S has been used in so many existing trademarks, the most popular of which is
the trademark S enclosed by an inverted triangle, which the CA says is
identifiable to Superman. Such reasoning, however, misses the entire point,
which is that respondent had used a stylized S, which is the same stylized S
which petitioner has a registered trademark for. The letter S used in the
Superman logo, on the other hand, has a block-like tip on the upper portion and
a round elongated tip on the lower portion. Accordingly, the comparison made
by the CA of the letter S used in the Superman trademark with petitioners
stylized S is not appropriate to the case at bar.
Furthermore, respondent did not simply use the letter S, but it appears
to this Court that based on the font and the size of the lettering, the stylized S
utilized by respondent is the very same stylized S used by petitioner; a stylized
S which is unique and distinguishes petitioners trademark. Indubitably, the
likelihood of confusion is present as purchasers will associate the respondents
use of the stylized S as having been authorized by petitioner or that
respondents product is connected with petitioners business.
Both the RTC and the CA applied the Holistic Test in ruling that
respondent had not infringed petitioners trademark. For its part, the RTC noted
the following supposed dissimilarities between the shoes, to wit:
1. The mark S found in Strong Shoes is not enclosed in an
oval design.
2. The word Strong is conspicuously placed at the backside
and insoles.
3. The hang tags and labels attached to the shoes bears the
word Strong for respondent and Skechers U.S.A. for
private complainant;
4. Strong shoes are modestly priced compared to the costs
of Skechers Shoes.[19]
While there may be dissimilarities between the appearances of the
shoes, to this Courts mind such dissimilarities do not outweigh the stark and
blatant similarities in their general features. As can be readily observed by
simply comparing petitioners Energy[20] model and respondents
[21]
Strong rubber shoes, respondent also used the color scheme of blue, white
and gray utilized by petitioner. Even the design and wavelike pattern of the
midsole and outer sole of respondents shoes are very similar to petitioners
shoes, if not exact patterns thereof. At the side of the midsole near the heel of
both shoes are two elongated designs in practically the same location. Even
the outer soles of both shoes have the same number of ridges, five at the back
and six in front. On the side of respondents shoes, near the upper part, appears
the stylized S, placed in the exact location as that of the stylized S on petitioners
shoes. On top of the "tongue" of both shoes appears the stylized S in practically
the same location and size. Moreover, at the back of petitioners shoes, near
the heel counter, appears Skechers Sport Trail written in white lettering.
However, on respondents shoes appears Strong Sport Trail noticeably written
in the same white lettering, font size, direction and orientation as that of
petitioners shoes. On top of the heel collar of petitioners shoes are two grayish-
white semi-transparent circles. Not surprisingly, respondents shoes also have
two grayish-white semi-transparent circles in the exact same location.
Based on the foregoing, this Court is at a loss as to how the RTC and
the CA, in applying the holistic test, ruled that there was no colorable imitation,
when it cannot be any more clear and apparent to this Court that there is
colorable imitation. The dissimilarities between the shoes are too trifling and
frivolous that it is indubitable that respondents products will cause confusion
and mistake in the eyes of the public. Respondents shoes may not be an exact
replica of petitioners shoes, but the features and overall design are so similar
and alike that confusion is highly likely.
In Converse Rubber Corporation v. Jacinto Rubber & Plastic Co.,
Inc.,[22] this Court, in a case for unfair competition, had opined that even if not
all the details are identical, as long as the general appearance of the two
products are such that any ordinary purchaser would be deceived, the imitator
should be liable, to wit:
From said examination, We find the shoes
manufactured by defendants to contain, as found by the trial
court, practically all the features of those of the plaintiff
Converse Rubber Corporation and manufactured, sold or
marketed by plaintiff Edwardson Manufacturing Corporation,
except for their respective brands, of course. We fully agree
with the trial court that "the respective designs, shapes, the
colors of the ankle patches, the bands, the toe patch and the
soles of the two products are exactly the same ... (such that) at
a distance of a few meters, it is impossible to distinguish
"Custombuilt" from "Chuck Taylor." These elements are more
than sufficient to serve as basis for a charge of unfair
competition. Even if not all the details just mentioned were
identical, with the general appearances alone of the two
products, any ordinary, or even perhaps even a not too
perceptive and discriminating customer could be deceived,
and, therefore, Custombuilt could easily be passed off for
Chuck Taylor. Jurisprudence supports the view that under such
circumstances, the imitator must be held liable. x x x[23]
Neither can the difference in price be a complete defense in trademark
infringement. In McDonalds Corporation v. L.C. Big Mak Burger. Inc.,[24] this
Court held:
 Modern law recognizes that the protection to which
the owner of a trademark is entitled is not limited to guarding
his goods or business from actual market competition with
identical or similar products of the parties, but extends to all
cases in which the use by a junior appropriator of a trade-
mark or trade-name is likely to lead to a confusion of source,
as where prospective purchasers would be misled into
thinking that the complaining party has extended his business
into the field (see 148 ALR 56 et seq; 53 Am. Jur. 576) or is
in any way connected with the activities of the infringer; or
when it forestalls the normal potential expansion of his
business (v. 148 ALR 77, 84; 52 Am. Jur. 576, 577). x x x [25]

Indeed, the registered trademark owner may use its mark on the same
or similar products, in different segments of the market, and at different price
levels depending on variations of the products for specific segments of the
market.[26] The purchasing public might be mistaken in thinking that petitioner
had ventured into a lower market segment such that it is not inconceivable for
the public to think that Strong or Strong Sport Trail might be associated or
connected with petitioners brand, which scenario is plausible especially since
both petitioner and respondent manufacture rubber shoes.

Withal, the protection of trademarks as intellectual property is intended

not only to preserve the goodwill and reputation of the business established on
the goods bearing the mark through actual use over a period of time, but also
to safeguard the public as consumers against confusion on these
goods.[27] While respondents shoes contain some dissimilarities with petitioners
shoes, this Court cannot close its eye to the fact that for all intents and purpose,
respondent had deliberately attempted to copy petitioners mark and overall
design and features of the shoes. Let it be remembered, that defendants in
cases of infringement do not normally copy but only make colorable
changes.[28] The most successful form of copying is to employ enough points of
similarity to confuse the public, with enough points of difference to confuse the
courts.[29]

WHEREFORE, premises considered, the Motion for Reconsideration

is GRANTED. The Decision dated November 30,
2006 is RECONSIDERED and SET ASIDE.

SO ORDERED.
LEVI STRAUSS (PHILS.), INC., G.R. No. 162311
Petitioner,
Present:
YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
Promulgated:
TONY LIM,
Respondent. December 4, 2008
x--------------------------------------------------x
DECISION
REYES, R.T., J.:
THE remedy of a party desiring to elevate to the appellate court an
adverse resolution of the Secretary of Justice is a petition for certiorari under
Rule 65. A Rule 43 petition for review is a wrong mode of appeal.[1]
During preliminary investigation, the prosecutor is vested with authority
and discretion to determine if there is sufficient evidence to justify the filing of
an information. If he finds probable cause to indict the respondent for a criminal
offense, it is his duty to file the corresponding information in court. However, it
is equally his duty not to prosecute when after an investigation, the evidence
adduced is not sufficient to establish a prima facie case.[2]
Before the Court is a petition for review on certiorari[3] of the Decision[4] and
Resolution[5] of the Court of Appeals (CA), affirming the resolutions of the
Department of Justice (DOJ) finding that there is no probable cause to indict
respondent Tony Lim, a.k.a. Antonio Guevarra, for unfair competition.
The Facts
Petitioner Levi Strauss (Phils.), Inc. is a duly-registered domestic
corporation. It is a wholly-owned subsidiary of Levi Strauss & Co. (LS & Co.)
a Delaware, USAcompany.
In 1972, LS & Co. granted petitioner a non-exclusive license to use its
registered trademarks and trade names[6] for the manufacture and sale of
various garment products, primarily pants, jackets, and shirts, in the
Philippines.[7] Presently, it is the only company that has authority to
manufacture, distribute, and sell products bearing the LEVIS trademarks or to
use such trademarks in the Philippines. These trademarks are registered
in over 130 countries, including the Philippines,[8] and were first used in
commerce in the Philippines in 1946.[9]
Sometime in 1995, petitioner lodged a complaint[10] before the Inter-
Agency Committee on Intellectual Property Rights, alleging that a certain
establishment in Metro Manila was manufacturing garments using colorable
imitations of the LEVIS trademarks.[11] Thus, surveillance was conducted on the
premises of respondent Tony Lim, doing business under the name Vogue
Traders Clothing Company.[12] The investigation revealed that respondent was
engaged in the manufacture, sale, and distribution of products similar to those
of petitioner and under the brand name LIVES.[13]
On December 13, 1995, operatives of the Philippine National Police
(PNP) Criminal Investigation Unit[14] served search warrants[15] on respondents
premises at 1042 and 1082 Carmen Planas Street, Tondo, Manila. As a result,
several items[16] were seized from the premises.[17]
The PNP Criminal Investigation Command (PNP CIC) then filed a
complaint[18] against respondent before the DOJ for unfair competition[19] under
the old Article 189 of the Revised Penal Code, prior to its repeal by Section 239
of Republic Act (RA) No. 8293.[20] The PNP CIC claimed that a confusing
similarity could be noted between petitioners LEVIs jeans and respondents
LIVES denim jeans and pants.
In his counter-affidavit,[21] respondent alleged, among others, that (1)
his products bearing the LIVES brand name are not fake LEVIS garments; (2)
LIVES is a registered trademark,[22] while the patch pocket design for LIVES
pants has copyright registration,[23] thus conferring legal protection on his own
intellectual property rights, which stand on equal footing as LEVIS; (3) confusing
similarity, the central issue in the trademark cancellation proceedings [24] lodged
by petitioner, is a prejudicial question that complainant, the police, and the court
that issued the search warrants cannot determine without denial of due process
or encroachment on the jurisdiction of the agencies concerned; and (4) his
goods are not clothed with an appearance which is likely to deceive the ordinary
purchaser exercising ordinary care.[25]
 In its reply-affidavit, petitioner maintained that there is likelihood of
confusion between the competing products because: (1) a slavish imitation of
petitioners arcuate trademark has been stitched on the backpocket of LIVES
jeans; (2) the appearance of the mark 105 on respondents product is obviously
a play on petitioners 501 trademark; (3) the appearance of the word/phrase
LIVES and LIVES ORIGINAL JEANS is confusingly similar to petitioners LEVIS
trademark; (4) a red tab, made of fabric, attached at the left seam of the right
backpocket of petitioners standard five-pocket jeans, also appears at the same
place on LIVES jeans; (5) the patch used on LIVES jeans (depicting three men
on each side attempting to pull apart a pair of jeans) obviously thrives on
petitioners own patch showing two horses being whipped by two men in an
attempt to tear apart a pair of jeans; and (6) LEVIS jeans are packaged and
sold with carton tickets, which are slavishly copied by respondent in his own
carton ticket bearing the marks LIVES, 105, the horse mark, and basic features
of petitioners ticket designs, such as two red arrows curving and pointing
outward, the arcuate stitching pattern, and a rectangular portion with intricate
border orientation.[26]
DOJ Rulings
On October 8, 1996, Prosecution Attorney Florencio D. Dela Cruz
recommended the dismissal[27] of the complaint. The prosecutor agreed with
respondent that his products are not clothed with an appearance which is likely
to deceive the ordinary purchaser exercising ordinary care. The
recommendation was approved by Assistant Chief State Prosecutor Lualhati R.
Buenafe.
On appeal, then DOJ Secretary Teofisto Guingona affirmed the
prosecutors dismissal of the complaint on January 9, 1998.[28] Prescinding from
the basic rule that to be found guilty of unfair competition, a person shall, by
imitation or any unfair device, induce the public to believe that his goods are
those of another, Secretary Guingona stated:
In the case at bar, complainant has not shown that anyone was
actually deceived by respondent. Respondents product, which
bears the trademark LIVEs, has an entirely different spelling
and meaning with the trademark owned by complainant which
is LEVIs. Complainants trademark comes from a Jewish name
while that of respondent is merely an adjective word. Both,
when read and pronounced, would resonate different sounds.
While respondents LIVEs trademark may appear similar, such
could not have been intended by the respondent to deceive
since he had the same registered with the appropriate
government agencies. Granting arguendo, that respondents
trademark or products possessed similar characteristics with
the trademark and products of complainant, on that score
alone, without evidence or proof that such was a device of
respondent to deceive the public to the damage of complainant
no unfair competition is committed.[29]
On February 13, 1998, petitioner filed a motion for reconsideration of Secretary
Guingonas resolution, alleging, among others, that only a likelihood of
confusion is required to sustain a charge of unfair competition. It also submitted
the results of a consumer survey[30] involving a comparison of petitioners and
respondents products.
On June 5, 1998, Justice Secretary Silvestre Bello III, Guingonas
successor, granted petitioners motion and directed the filing of an information
against respondent.[31]
WHEREFORE, our resolution dated 9 January 1998 is
hereby reversed and set aside. You are directed to file an
information for unfair competition under Article 189 of the
Revised Penal Code, as amended, against respondent Tony
Lim. Report the action taken thereon within ten (10) days from
receipt hereof.[32]
Secretary Bello reasoned that under Article 189 of the Revised Penal
Code, as amended, exact similarity of the competing products is not
required. However, Justice Guingonas resolution incorrectly dwelt on the
specific differences in the details of the products.[33] Secretary Bellos own
factual findings revealed:
x x x [I]t is not difficult to discern that respondent gave
his products the general appearance as that of the product of
the complainant. This was established by the respondents use
of the complainants arcuate backpocket design trademark; the
105 mark which apparently is a spin-off of the 501 mark of the
complainant; the patch which was clearly patterned after that
of the complainants two horse patch design trademark; the red
tab on the right backpocket; the wordings which were crafted
to look similar with the Levis trademark of the complainant; and
even the packaging. In appropriating himself the general
appearance of the product of the complainant, the respondent
clearly intended to deceive the buying public. Verily, any
 person who shall employ deception or any other means
contrary to good faith by which he shall pass of the goods Issues
manufactured by him or in which he deals, or his business, or
services for those of the one having established good will shall Petitioner submits that the CA committed the following errors:
guilty of unfair competition.
I.
Respondents registration of his trademark can not THE COURT OF APPEALS GRAVELY ERRED IN RULING
afford him any remedy. Unfair competition may still be THAT ACTUAL CONFUSION IS NECESSARY TO SUSTAIN
prosecuted despite such registration.[34] (Citation omitted) A CHARGE OF UNFAIR COMPETITION, ANDTHAT THERE
MUST BE DIRECT EVIDENCE OR PROOF OF INTENT TO
Respondent then filed his own motion for reconsideration of DECEIVE THE PUBLIC.
the Bello resolution. On May 7, 1999, new DOJ Secretary Serafin Cuevas
granted respondents motion and ordered the dismissal of the charges against II.
him.[35] THE COURT OF APPEALS GRAVELY ERRED IN RULING
THAT RESPONDENTS LIVES JEANS DO NOT UNFAIRLY
CA Disposition COMPETE WITH LEVIS JEANS AND/OR THAT THERE IS
NO POSSIBILITY THAT THE FORMER WILL BE CONFUSED
Dissatisfied with the DOJ rulings, petitioner sought recourse with the CA via a FOR THE LATTER, CONSIDERING THAT RESPONDENTS
petition for review under Rule 43 of the 1997 Rules of Civil LIVES JEANS BLATANTLY COPYOR COLORABLY IMITATE
Procedure. On October 17, 2003, the appellate court affirmed the dismissal of NO LESS THAN SIX (6) TRADEMARKS OF LEVIS JEANS.
the unfair competition complaint.
III.
WHEREFORE, premises considered, the petition for THE COURT OF APPEALS GRAVELY ERRED IN
review is DENIED and is accordingly DISMISSED for lack of DISREGARDING THE EVIDENCE ON RECORD,
merit. CONSISTING OF THE SCIENTIFICALLY CONDUCTED
MARKET SURVEY AND THE AFFIDAVIT OF THE EXPERT
SO ORDERED.[36] WITNESS ON THE RESULTS THEREOF,
WHICH SHOW THAT RESPONDENTS LIVES JEANS ARE,
The CA pointed out that to determine the likelihood of confusion, IN FACT, BEING CONFUSED FOR LEVIS JEANS.
mistake or deception, all relevant factors and circumstances should be taken
into consideration, such as the circumstances under which the goods are IV.
sold, the class of purchasers, and the actual occurrence or absence of THE COURT OF APPEALS GRAVELY ERRED IN RULING
confusion.[37] THAT THE ISSUE OF CONFUSION SHOULD ONLY BE
DETERMINED AT THE POINT OF SALE.
Thus, the existence of some similarities between LIVES jeans and
LEVIS garments would not ipso facto equate to fraudulent intent on the part of V.
respondent. The CA noted that respondent used affirmative and precautionary THE COURT OF APPEALS GRAVELY ERRED IN FAILING
distinguishing features in his products for differentiation. The appellate court TO DIRECT THE SECRETARY OF JUSTICE TO CAUSE THE
considered the spelling and pronunciation of the marks; the difference in the FILING OF THE APPROPRIATE INFORMATION IN COURT
designs of the back pockets; the dissimilarity between the carton tickets; and AGAINST THE RESPONDENT.[39] (Underscoring supplied)
the pricing and sale of petitioners products in upscale exclusive specialty
shops. The CA also disregarded the theory of post-sale confusion propounded Our Ruling
by petitioner, relying instead on the view that the probability of deception must
be determined at the point of sale.[38]
In essence, petitioner asks this Court to determine if probable cause exists to
charge respondent with the crime of unfair competition under Article 189(1) of
the Revised Penal Code, prior to its repeal by Section 239 of RA No. 8293.
However, that is a factual issue[40] the resolution of which is improper
in a Rule 45 petition.[41] The only legal issue left for the Court to determine is
whether the issue of confusion should be determined only at the point of sale.
Nonetheless, there is sufficient reason for this Court to dismiss this
petition merely by looking at the procedural avenue petitioner used to have the
DOJ resolutions reviewed by the CA.
Petitioner filed with the CA a petition for review under Rule 43 of the
1997 Rules of Civil Procedure.[42] Rule 43 governs all appeals from [the Court
of Tax Appeals and] quasi-judicial bodies to the CA. Its Section 1 provides:
Section 1. Scope. This Rule shall apply to appeals
from [judgments or final orders of the Court of Tax Appeals and
from] awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the exercise of its
quasi-judicial functions. Among these agencies are the Civil
Service Commission, Central Board of Assessment Appeals,
Securities and Exchange Commission, Office of the President,
Land Registration Authority, Social Security Commission, Civil
Aeronautics Board, Bureau of Patents, Trademarks and
Technology Transfer, National Electrification Administration,
Energy Regulatory Board, National Telecommunications
Commission, Department of Agrarian Reform under Republic
Act No. 6657, Government Service Insurance System,
Employees Compensation Commission, Agricultural
Inventions Board, Insurance Commission, Philippine Atomic
Energy Commission, Board of Investments, Construction
Industry Arbitration Commission, and voluntary arbitrators
authorized by law.[43]
Clearly, the DOJ is not one of the agencies enumerated in Section 1 of Rule 43
whose awards, judgments, final orders, or resolutions may be appealed to the
CA.
The Court has consistently ruled that the filing with the CA of a
petition for review under Rule 43 to question the Justice Secretarys
resolution regarding the determination of probable cause is an improper
remedy.[44]
Under the 1993 Revised Rules on Appeals from Resolutions in
Preliminary Investigations or Reinvestigations,[45] the resolution of the
investigating prosecutor is subject to appeal to the Justice Secretary[46] who,
under the Revised Administrative Code, exercises the power of control and
supervision over said Investigating Prosecutor; and who may affirm, nullify,
reverse, or modify the ruling of such prosecutor.[47] If the appeal is dismissed,
and after the subsequent motion for reconsideration is resolved, a party has no
more appeal or other remedy available in the ordinary course of law.[48] Thus,
the Resolution of the Justice Secretary affirming, modifying or reversing the
resolution of the Investigating Prosecutor is final.[49]
There being no more appeal or other remedy available in the ordinary
course of law, the remedy of the aggrieved party is to file a petition
for certiorari under Rule 65. Thus, while the CA may review the resolution of
the Justice Secretary, it may do so only in a petition for certiorari under Rule 65
of the 1997 Rules of Civil Procedure, solely on the ground that the Secretary
of Justice committed grave abuse of discretion amounting to excess or lack of
jurisdiction.[50]
Verily, when respondent filed a petition for review under Rule 43
instead of a petition for certiorari under Rule 65, the CA should have
dismissed it outright. However, the appellate court chose to determine if DOJ
Secretaries Guingona and Cuevas correctly determined the absence of
probable cause.
Now, even if We brush aside technicalities and consider the petition for
review filed with the CA as one under Rule 65, the petition must fail just the
same.
While the resolution of the Justice Secretary may be reviewed by
the Court, it is not empowered to substitute its judgment for that of the
executive branch when there is no grave abuse of discretion.[51]
Courts are without power to directly decide matters over which full
discretionary authority has been delegated to the legislative or executive branch
of the government.[52] The determination of probable cause is one
such matter because that authority has been given to the executive branch,
through the DOJ.[53]
It bears stressing that the main function of a government prosecutor is
to determine the existence of probable cause and to file the corresponding
information should he find it to be so. [54] Thus, the decision whether or not to
dismiss the criminal complaint against respondent is necessarily dependent on
the sound discretion of the investigating prosecutor and ultimately, that of the
Secretary of Justice.[55]
A prosecutor, by the nature of his office, is under no compulsion to file
a particular criminal information where he is not convinced that he has evidence
to prop up its averments, or that the evidence at hand points to a different
conclusion. This is not to discount the possibility of the commission of abuses
on the part of the prosecutor. But this Court must recognize that a prosecutor
should not be unduly compelled to work against his conviction. Although the
power and prerogative of the prosecutor to determine whether or not the
evidence at hand is sufficient to form a reasonable belief that a person
committed an offense is not absolute but subject to judicial review, it would be
embarrassing for him to be compelled to prosecute a case when he is in no
position to do so, because in his opinion he does not have the necessary
evidence to secure a conviction, or he is not convinced of the merits of the
case.[56]
In finding that respondents goods were not clothed with an appearance
which is likely to deceive the ordinary purchaser exercising ordinary care, the
investigating prosecutor exercised the discretion lodged in him by law. He found
that:
First, the LIVES mark of the respondents goods is
spelled and pronounced differently from the LEVIS mark of the
complainant.
Second, the backpocket design allegedly copied by
the respondent from the registered arcuate design of the
complainant, appears to be different in view of the longer
curved arms that stretch deep downward to a point of
convergence where the stitches form a rectangle. The arcuate
design for complainant LEVIs jeans form a diamond instead.
And assuming arguendo that there is similarity in the design of
backpockets between the respondents goods and that of the
complainant, this alone does not establish that respondents
jeans were intended to copy the complainants goods and pass
them off as the latters products as this design is simple and
may not be said to be strikingly distinct absent the other LEVIS
trademark such as the prints on the button, rivets, tags and the
like. x x x Further, the presence of accessories bearing Levis
trademark was not established as there were no such
accessories seized from the respondent and instead genuine
LIVES hangtags, button and patches were confiscated during
the search of latters premises.
Second, the design of the patches attached to the
backpockets of the respondents goods depicts three men on
either side of a pair of jeans attempting to pull apart said jeans,
while the goods manufactured by complainant with patches
also attached at the right backpockets depicts two horses being
whipped by two men in an attempt to tear apart a pair of
jeans. It is very clear therefore that the design of the
backpocket patches by the respondent is different from that of
the complainant, in the former the men were trying to pull apart
the pants while in the latter horses are the ones doing the
job. Obviously, there is a great difference between a man and
a horse and this will naturally not escape the eyes of an
ordinary purchaser.
Third, the manner by which Levis jeans are packed
and sold with carton tickets attached to the products cannot be
appropriated solely by complainant to the exclusion of all other
manufacturers of same class. It frequently happens that goods
of a particular class are labeled by all manufacturer[s] in a
common manner. In cases of that sort, no manufacturer may
appropriate for himself the method of labeling or packaging [of]
his merchandise and then enjoin other merchants from using
it. x x x.
Fourth, evidence shows that there is a copyright
registration issued by the National Library over the backpocket
design of the respondent. And this copyright registration gives
the respondent the right to use the same in his goods x x x.[57]
The determination of probable cause is part of the discretion granted to
the investigating prosecutor and ultimately, the Secretary of Justice. Courts are
not empowered to substitute their own judgment for that of the executive
branch.[58]
The courts duty in an appropriate case is confined to a determination
of whether the assailed executive or judicial determination of probable cause
was done without or in excess of jurisdiction or with grave abuse of discretion
amounting to want of jurisdiction.[59] For grave abuse of discretion to prosper as
a ground for certiorari, it must be demonstrated that the lower court or tribunal
has exercised its power in an arbitrary and despotic manner, by reason of
passion or personal hostility, and it must be patent and gross as would amount
to an evasion or to a unilateral refusal to perform the duty enjoined or to act in
contemplation of law.[60]
In the case at bar, no grave abuse of discretion on the part of the DOJ
was shown. Petitioner merely harps on the error committed by the DOJ and the
CA in arriving at their factual finding that there is no confusing similarity between
petitioners and respondents products. While it is possible that the investigating
prosecutor and Secretaries Guingona and Cuevas erroneously exercised their
discretion when they found that unfair competition was not committed, this by
itself does not render their acts amenable to correction and annulment by the
extraordinary remedy of certiorari. There must be a showing of grave abuse of
discretion amounting to lack or excess of jurisdiction.[61]
We are disinclined to find that grave of abuse of discretion was
committed when records show that the finding of no probable cause is
supported by the evidence, law, and jurisprudence.
Generally, unfair competition consists in employing deception or any
other means contrary to good faith by which any person shall pass off the goods
manufactured by him or in which he deals, or his business, or services
for those of the one having established goodwill, or committing any acts
calculated to produce such result.[62]
The elements of unfair competition under Article 189(1) [63] of the
Revised Penal Code are:
(a) That the offender gives his goods the general
appearance of the goods of another manufacturer or
dealer;
(b) That the general appearance is shown in the (1) goods
themselves, or in the (2) wrapping of their packages, or in
the (3) device or words therein, or in (4) any other feature
of their appearance;
(c) That the offender offers to sell or sells those goods or
gives other persons a chance or opportunity to do the
same with a like purpose; and
(d) That there is actual intent to deceive the public or
defraud a competitor.[64]
All these elements must be proven.[65] In finding that probable cause for
unfair competition does not exist, the investigating prosecutor and Secretaries
Guingona and Cuevas arrived at the same conclusion that there is insufficient
evidence to prove all the elements of the crime that would allow them to secure
a conviction.
Secretary Guingona discounted the element of actual intent to deceive
by taking into consideration the differences in spelling, meaning, and phonetics
between LIVES and LEVIS, as well as the fact that respondent had registered
his own mark.[66] While it is true that there may be unfair competition even if the
competing mark is registered in the Intellectual Property Office, it is equally true
that the same may show prima facie good
faith.[67] Indeed, registration does not negate unfair competition where the
goods are packed or offered for sale and passed off as those of
complainant.[68] However, the marks registration, coupled with the stark
differences between the competing marks, negate the existence of actual intent
to deceive, in this particular case.
For his part, Justice Cuevas failed to find the possibility of confusion
and of intent to deceive the public, relying on Emerald Garment Manufacturing
Corporation v. Court of Appeals.[69] In Emerald, the Court explained that
since maong pants or jeans are not inexpensive, the casual buyer is more
cautious and discerning and would prefer to mull over his purchase, making
confusion and deception less likely.
We cannot subscribe to petitioners stance that Emerald
Garment cannot apply because there was only one point of comparison,
i.e., LEE as it appears in Emerald Garments STYLISTIC MR. LEE. Emerald
Garment is instructive in explaining the attitude of the buyer when it comes to
products that are not inexpensive, such as jeans. In fact, the Emerald
Garment rationale is supported by Del Monte Corporation v. Court of
Appeals,[70] where the Court explained that the attitude of the purchaser is
determined by the cost of the goods. There is no reason not to apply the
rationale in those cases here even if only by analogy.
The rule laid down in Emerald Garment and Del Monte is consistent
with Asia Brewery, Inc. v. Court of Appeals,[71] where the Court held that in
resolving cases of infringement and unfair competition, the courts should take
into consideration several factors which would affect its conclusion, to wit: the
age, training and education of the usual purchaser, the nature and cost of the
article, whether the article is bought for immediate consumption and also the
conditions under which it is usually purchased.[72]
Petitioner argues that the element of intent to deceive may be inferred
from the similarity of the goods or their appearance. [73] The argument is
specious on two fronts. First, where the similarity in the appearance of the
goods as packed and offered for sale is so striking, intent to deceive may be
inferred.[74] However, as found by the investigating prosecutor and the DOJ
Secretaries, striking similarity between the competing goods is not present.
Second, the confusing similarity of the goods was precisely in issue
during the preliminary investigation. As such, the element of intent to
deceive could not arisewithout the investigating prosecutors or the DOJ
Secretarys finding that such confusing similarity exists. Since confusing
similarity was not found, the element of fraud or deception could not be inferred.
We cannot sustain Secretary Bellos opinion that to establish probable
cause, it is enough that the respondent gave to his product the general
appearance of the product[75] of petitioner. It bears stressing that that is only
one element of unfair competition. All others must be shown to exist. More
importantly, the likelihood of confusion exists not only if there is confusing
similarity. It should also be likely to cause confusion or mistake or deceive
purchasers.[76] Thus, the CA correctly ruled that the mere fact that some
resemblance can be pointed out between the marks used does not in itself
prove unfair competition.[77] To reiterate, the resemblance must be such as is
likely to deceive the ordinary purchaser exercising ordinary care. [78]
The consumer survey alone does not equate to actual confusion. We
note that the survey was made by showing the interviewees actual samples of
petitioners and respondents respective products, approximately five feet
away from them. From that distance, they were asked to identify the jeans
brand and state the reasons for thinking so.[79] This method discounted the
possibility that the ordinary intelligent buyer would be able to closely scrutinize,
and even fit, the jeans to determine if they were LEVIS or not. It also ignored
that a consumer would consider the price of the competing goods when
choosing a brand of jeans. It is undisputed that LIVES jeans are priced much
lower than LEVIS.
The Courts observations in Emerald Garment are illuminating on this
score:
First, the products involved in the case at bar are, in
the main, various kinds of jeans. x x x Maong pants or jeans
are not inexpensive. Accordingly, the casual buyer is
predisposed to be more cautious and discriminating in and
would prefer to mull over his purchase. Confusion and
deception, then, is less likely. In Del Monte Corporation v.
Court of Appeals, we noted that:
Among these, what essentially
determines the attitudes of the purchaser,
specifically his inclination to be cautious, is the
cost of the goods. To be sure, a person who
buys a box of candies will not exercise as
much care as one who buys an expensive
watch. As a general rule, an ordinary buyer
does not exercise as much prudence in buying
an article for which he pays a few centavos as
he does in purchasing a more valuable
thing. Expensive and valuable items are
normally bought only after deliberate,
comparative and analytical
investigation. But mass products, low priced
articles in wide use, and matters of everyday
purchase requiring frequent replacement are
bought by the casual consumer without great
care.[80] (Emphasis supplied)
We find no reason to go beyond the point of sale to determine if there is
probable cause for unfair competition. The CA observations along this line are
worth restating:
We also find no basis to give weight to petitioners
contention that the post sale confusion that might be triggered
by the perceived similarities between the two products must be
considered in the action for unfair competition against
respondent.
No inflexible rule can be laid down as to what will
constitute unfair competition. Each case is, in the measure, a
law unto itself. Unfair competition is always a question of
fact. The question to be determined in every case is whether
or not, as a matter of fact, the name or mark used by the
defendant has previously come to indicate and designate
plaintiffs goods, or, to state it in another way, whether
defendant, as a matter of fact, is, by his conduct, passing off
defendants goods as plaintiffs goods or his business as
plaintiffs business. The universal test question is whether the
public is likely to be deceived.
In the case before us, we are of the view that the
probability of deception must be tested at the point of sale since
it is at this point that the ordinary purchaser mulls upon the
product and is likely to buy the same under the belief that he is
buying another. The test of fraudulent simulation is to be found
in the likelihood of deception, or the possibility of deception of
 some persons in some measure acquainted with an
established design and desirous of purchasing the commodity
with which that design has been associated.[81]

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

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

WHEREFORE, the petition is DENIED and the appealed Decision of

the Court of Appeals AFFIRMED.

SO ORDERED.