G.R. No.

L-14761 January 28, 1961 used by the Acre and Sons and Company, hereinafter
referred to as petitioner, in its milk and ice cream products
ARCE SONS AND COMPANY, petitioner,
so that its use by respondent will cause confusion as to the
vs.
origin of their respective goods. Consequently, he
SELECTA BISCUIT COMPANY, INC., ET
recommended that the application be refused. However,
AL., respondents.
upon reconsideration, the Patent Office ordered the
x---------------------------------------------------------x publication of the application for purposes of opposition.

G.R. No. L-17981 January 28, 1961
ARCE SONS AND COMPANY, plaintiff-appellee,
vs.
SELECTA BISCUIT COMPANY, INC., defendant-
appellant.
Manuel O. Chan and Ramon S. Ereñeta for plaintiff-
appellee.
E. Voltaire Garcia for defendant-appellant.
BAUTISTA ANGELO, J.:
On August 31, 1955, Selecta Biscuit Company, Inc.,
hereinafter referred to as respondent, filed with the
Philippine Patent Office a petition for the registration of the
word "SELECTA" as trade-mark to be use in its bakery
products alleging that it is in actual use thereof for not less
than two months before said date and that "no other
persons, partnership, corporation or association ... has the
right to use said trade-mark in the Philippines, either in the
identical form or in any such near resemblance thereto, as
might be calculated to deceive." Its petition was referred to
an examiner for study who found that the trade-mark
sought to be registered resembles the word "SELECTA"
In due time, petitioner filed its opposition thereto on several
grounds, among which are: (1) that the mark "SELECTA"
had been continuously used by petitioner in the
manufacture and sale of its products, including cakes,
bakery products, milk and ice cream from the time of its
organization and even prior thereto by its predecessor-in-
interest, Ramon Arce; (2) that the mark "SELECTA" has
already become identified with name of the petitioner and
its business; (3) that petitioner had warned respondent not
to use said mark because it was already being used by the
former, but that the latter ignored said warning; (4) that
respondent is using the word "SELECTA" as a trade-mark
as bakery products in unfair competition with the products
of petitioner thus resulting in confusion in trade; (5) that the
mark to which the application of respondent refers has
striking resemblance, both in appearance and meaning, to
petitioner's mark as to be mistaken therefor by the public
and cause respondent's goods to be sold as petitioner's;
and (6) that actually a complaint has been filed by the
petitioner against respondent for unfair competition in the
Court of First Instance of Manila asking for damages and
for the issuance of a writ of injunction against respondent
enjoining the latter for continuing with the use of said mark.
On September 28, 1958, the Court of First Instance of
Manila rendered decision in the unfair competition case
perpetually enjoining respondent from using the name
"SELECTA" as a trade-mark on the goods manufactured
and/or sold by it and ordering it to pay petitioner by way of
damages all the profits it may have realized by the use of
said name, plus the sum of P5,000.00 as attorney's fee
and costs of suit. From this decision, respondent brought
the matter on appeal to the Court of Appeals wherein the
case was docketed as CA-G.R. No. 24017-R.
Inasmuch as the issues of the facts in the case of unfair
competition are substantially identical with those raised
before the Patent Office, the parties at the hearing thereof,
agreed to submit the evidence they introduced before the
Court of First Instance of Manila to said office, and on the
strength thereof, the Director of Patents, on December 7,
1958, rendered decision dismissing petitioner's opposition
and stating that the registration of the trade-mark
"SELECTA" in favor of applicant Selecta Biscuits
Company, Inc. will not cause confusion or mistake nor will
deceive the purchasers as to the cause damage to
petitioner. Hence, petitioner interposed the present
petition for review.
On September 7, 1960, this Court issued a resolution of
the following tenor:
In G.R. No. L-14761 (Arce Sons and Company vs. Selecta
Biscuits Company, Inc., et al.), considering that the issue
raised and evidence presented in this appeal are the same
as those involved and presented in Civil Case No. 32907,
entitled Arce Sons and Company vs. Selecta Biscuit
Company, Inc. of the Court of First Instance of Manila,
presently pending appeal in the Court of Appeals,
docketed as CA-G.R. No. 24017-R, the Court resolved to
require the parties, or their counsel, to inform this Court
why the appeal pending before the Court of Appeals
should not be forwarded to this Court in order that the two
cases may be consolidated and jointly decided, to avoid
any conflicting decision, pursuant to the provisions of
section 17, paragraph 5, of the Judiciary Act of 1948
(Republic Act No. 296).
And having both petitioner and respondent manifested in
writing that they do not register any objection that the case
they submitted on appeal to the Court of Appeals be
certified to this Court so that it may be consolidated with
the present case, the two cases are now before us for
consolidated decision.
The case for petitioner is narrated in the decision of the
court a quo as follows: .
"In 1933, Ramon Arce, predecessor in interest of the
plaintiff, started a milk business in Novaliches, Rizal, using
the name 'SELECTA' as a trade-name as well as a trade-
mark. He begun selling and distributing his products to
different residences, restaurants and offices, in bottles on
the caps of which were inscribed the words 'SELECTA
FRESH MILK.' As his business prospered, he thought of
expanding and, in facts, he expanded his business by
establishing a store at Nos. 711-713 Lepanto Street. While
there, he began to cater, in addition to milk, ice cream,
sandwiches and other food products. As his catering and
ice cream business prospered in a big way, he placed a
sign signboard in his establishment with the name
'SELECTA' inscribed thereon. This signboard was place
right in front of the said store. For the sake of efficiency,
the Novaliches place was made the pasteurizing plant and
its products were distributed through the Lepanto store.
Special containers made of tin cans with the words
'SELECTA' written on their covers and 'embossed or
blown' on the bottles themselves were used. Similarly,
exclusive bottles for milk products were ordered from Getz
Brothers with the word 'SELECTA 'blown on them. The
sandwiches which were sold and distributed were
wrapped in carton boxes with covers bearing the name
'SELECTA.' To the ordinary cars being used for the
delivery of his products to serve outside orders were
added to a fleet of five (5) delivery trucks with the word
'SELECTA ' prominently painted on them. Sales were
made directly at the Lepanto store or by means of
deliveries to specified addresses, restaurants and offices
inside Manila and its suburbs and sometimes to customers
in the provinces. As time passed, new products were
produced for sale, which as cheese (cottage cheese) with
special containers especially ordered from the Philippine
Education Company with the 'SELECTA ' written on their
covers.
The war that broke out on December 8, 1941, did not stop
Ramon Arce from continuing with his business. After a
brief interruption of about a mouth, that is, during the end
of January, 1942, and early February, 1942, he resumed
his business using the same trade-name and trade-mark,
but this time, on a large scale. He entered the restaurant
business. Dairy products ice cream, milk, sandwiches
continued to be sold and distributed by him. However,
Ramon Arce was again forced to discontinue the business
on October, 1944, because time was beginning to be
precarious. American planes started to bomb Manila and
one of his sons, Eulalio Arce, who was managing the
business, was seized by the Japanese. Liberation came
and immediately thereafter. Ramon Arce once more
resumed his business, even more actively, by adding
another store located at the corner of Lepanto and
Azcarraga Streets. Continuing to use the name 'Selecta,'
he added bakery products to his line of business. With a
firewood type of oven, about one-half the size of the
courtroom, he made his own bread, cookies, pastries and
assorted bakery products. Incidentally, Arce's bakery was
transferred to Balintawak, Quezon City — another
expansion of his business — where the bakery products
are now being baked thru the use of firewood, electric and
gas oven. These bakery products, like his other products,
are being sold the store itself and /or delivered to people
ordering them in Manila and even Baguio. Like the other
products, special carton boxes in different sizes, according
to the bakery products, with the name 'Selecta' on top of
the covers are provided for these bakery products. For the
cakes, special boxes and labels reading 'Selecta Cakes for
all occasions' are made. For the milk products, special
bottle caps and bottles with the colored words 'Quality
Always Selecta Fresh Milk, One Pint' inscribed and blown
on the sides of the bottles - an innovation from the old
bottles and caps used formerly. Similar, special boxes with Pursuing the policy of expansion adopted by their
the name 'Selecta 'are provided for fried chicken sold to predecessor, Arce Sons & Company established another
customers. store the now famous 'Selecta Dewey Boulevard', with
seven (7) delivery trucks with the 'Selecta ' conspicuously
Business being already well established, Ramon Arce
painted on them, to serve, deliver, and cater to customers
decided to retire, so that his children can go on with the
in and outside of Manila." .
business. For this purpose, he transferred and leased to
them all his rights, interest and participations in the The case for respondent on the other hand, is expressed
business, including the use of the name of 'Selecta,' as follows:
sometime in the year 1950, at a monthly rental of
Defendant was organized and registered as a corporation
P10,000.00, later reduced to P6,500.00. He further wrote
under the name and style of Selecta Biscuit Company, Inc.
the Bureau of Commerce letter dated February 10, 1950,
on March 2, 1955 (Exhibit 2-A; p. 3, April 17, 1958) but
requesting cancellation of the business name 'Selecta
started operation as a biscuit factory on June 20 1955
Restaurant' to give way to the registration of the same
(t.s.n. p.3, id). The name 'Selecta' was chosen by the
'Selecta' and asked that the same be registered in the
organizers of defendant who are Chinese citizens as a
name of Arce Sons & Company, a co-partnership entered
translation of the Chinese word 'Ching Suan' which means
into by and among his children on February 10, 1950. Said
'mapili' in Tagalog, and Selected' in English (t.s.n. p, id.).
co-partnership was organized, so its articles of co-
Thereupon, the Articles of Incorporation of Selecta Biscuit
partnership state, 'conduct a first class restaurant
Company, Inc. were registered with the Securities and
business; to engage in the manufacture and sale of ice
Exchange Commission (t.s.n. P.5. id.), and at the same
cream, milk, cakes and other dairy and bakery products;
time registered as a business name with the Bureau of
and to carry on such other legitimate business as may
Commerce which issued certificate of registration No.
produce profit'; Arce Sons & Company has thus continued
55594 (Exhibit 3; Exhibit 3-A). The same name Selecta
the lucrative business of their predecessor in interest. It is
Biscuit Company, Inc. was also subsequently registered
now, and has always been, engaged in the restaurant
with the Bureau of Internal Revenue which issued
business, the sale of milk, and the production and sale of
Registration Certificate No. 35764 (Exhibit 4, t.s.n., p. id.).
cakes, dairy products and bakery products. Arce Sons &
Inquiries were also made with the Patent Office of
Company are now making bakery products like bread rolls,
'Selecta'; after an official of the Patent referred to index
pan de navaro, pan de sal, and other types, of cookies and
cards information was furnished to the effect that
biscuit of the round, hard and other types, providing
defendant could register the name 'Selecta' with the
thereof special boxes with the same "Selecta'.
Bureau of Patents (t.s.n. ,p.7, id). Accordingly, the
corresponding petition for registration of trade-mark was
filed (Exhs. 5,5-A, Exhibit 5-B). Defendant actually
operated its business factory on June 20, 1955, while the
petition for registration of trade-mark 'Selecta' was filed
with the Philippine Patent Office only on September 1,
1955, for the Philippine Patent Office informed the
defendant that the name should first be used before
registration (t.s.n. p.8 ,id.). The factory of defendant is
located at Tuazon Avenue, Northern Hills, Malabon, Rizal,
showing plainly on its wall facing the streets the name
'SELECTA BISCUIT COMPANY, INC.' (Exhs. 6, 6-a 6-B,
t.s.n., p. 9, id.). It is significant to note that Eulalio Arce,
Managing Partner of the plaintiff resided and resides near
the defendant's factory, only around 150 meters away ; in
fact, Arce use to pass in front of the factory of defendant
while still under construction and up to the present time
(t.s.n., pp. 9, 10, id.). Neither Eulalio Arce nor any other
person in representation of the plaintiff complained to the
defendant about the use of the name 'Selecta Biscuit' until
of the present complaint.
There are other factories using 'Selecta as trade-mark for
biscuit (t.s.n., p. 12; Exhs. 7, 7-A,7-B; Exhibit 8, 8-A, 8-B;
Exhibits Exhibit 9, 9-A, 9-B); defendant in fact uses
different kinds of trade-mark (Exhibit 10, 10-A, to 10-W,
t.s.n., p. 17).
The biscuits, cookies, and crackers manufactured and
sold by defendant are wrapped in cellophane pouches and
place inside tin can (Exh. 11; t.s.n. p. 19); the products of
defendant are sold through the length and breadth of the
Philippines through agents with more than one hundred
600 stores as customers buying on credit (t.s.n.) pp. 19,
20, Exh. 12; t.s.n., p. 10, June 20, 1958). Defendant
employs more than one hundred (100) laborers and
employees presently although it started with around
seventy (70) employees and laborers (t.s.n. p. 24); its
present capitalization fully paid is Two Hundred Thirty Four
Thousand Pesos (P234,000.00.)additional capitalization's
were duly authorized by the Securities and Exchange
Commission (Exhs. 13, 13-A) there was no complaint
whatsoever from plaintiff saw defendant's business
growing bigger and bigger and flourishing (t.s.n., p. 21);
when plaintiff filed its complaint.
Defendant advertises its products through radio broadcast
and spot announcement (Exhs. 14, 14-A to 14-L; inclusive
Exhs. 15, 15-A, 15-B, 15-C; Exh. 16, 16-A, 16-B to 16-E,
inclusive; Exhs. 17, 17-B to 17-L, inclusive); the
broadcasts scripts announced therein through the radio
clearly show, among others, that Selecta Biscuit are
manufactured by Selecta Company, Inc. at Tuazon
Avenue, Northern Hills, Malabon, Rizal, with Telephone
]No. 2-13-27 (Exhs. 23-A 23-B, 23-D, 23-E, 23-F).
Besides the signboard, 'Selecta Biscuit Company, Inc.' on
the building itself, defendant has installed signboard along
the highways to indicate the location of the factory of
defendant (Exhs. 18, 18-A); delivery trucks defendant are
plainly carrying signboards Selecta Biscuit Company, Inc.,
Tuazon Avenue, Northern Hills Malabon, Rizal, Telephone
No. 2-13-27 (Exhs. 19, 19-A, 19-B, 19-C 19-D,19-E,19-F).
Defendant is using modern machineries in its biscuit
factory (Exhs. 20, 20-A, 20-B, 19-C, 20-D, 20-E). The
defendant sells its products thoughout 20-C, 20-D,20-E).
The defendant sells its product throughout the Philippines,
including Luzon , Visayas, Mindanao; its customers count,
among others, 600 stores buying on credit; its stores
buying on cash number around 50 (t.s.n.), p. 10). Sales in
Manila and suburbs are minimal, (Exh. 12). Defendant is a
wholesaler and not a retailer of biscuits, cookies and
crackers. This is the nature of the operation of the
business of the defendant."
At the outset one cannot but note that in the two cases
appealed before us which involve the same parties and the
same issues of fact and law, the Court a quo and the
Director of Patents have rendered contradictory decisions.
While the former is of the opinion that the word 'SELECTA'
has been used by the petitioner, or its predecessor-in-
interest, as a trade-mark in the sale and distribution of its
dairy and bakery products as early as 1933 to the extent
that it has acquired a proprietary connotation so that to
allow respondent to use it now as a trade-mark in its
business would be an usurpation of petitioner's goodwill
and an infringement of its property right, the Director of
Patents entertained a contrary opinion. He believes that
the word as used by the petitioner functions only to point
to the place of business or location of its restaurant while
the same word as used by respondent points to the origin
of the products its manufactures and sells and he
predicates this distinction upon the fact that while the
goods of petitioner are only served within its restaurant or
sold only on special orders in the City of Manila,
respondent's goods are ready-made and are for sale
throughout the length and breadth of the country. He is of
the opinion that the use of said trade-mark by respondent
has not resulted in confusion in trade contrary to the
finding of the court a quo. Which of this opinions is correct
is the issue now for determination.
It appears that Ramon Arce, predecessor-in-interest of
petitioner, started his milk business as early as 1933. He
sold his milk products in bottles covered with caps on
which the words 'SELECTA FRESH MILK' were inscribed.
Expanding his business, he established a store at Lepanto
Street, City of Manila, where he sold, in addition to his
products, ice cream, sandwiches and other food products,
placing right in front of his establishment a signboard with
the name 'SELECTA' inscribed thereon. Special
containers made of tin cans with the word 'SELECTA'
written on their covers were used for his products. Bottle
with the same word embossed on their sides were used
for his milk products. The sandwiches he sold and
distributed were wrapped in carton boxes with covers
bearing the same name. He used several cars and trucks
for delivery purposes on the sides of which were written
the same word. As new products were produced for sale,
the same were placed in containers with the same name
written on their covers. After the war, he added to his
business such items as cakes, bread, cookies, pastries,
and assorted bakery products. Then his business was
acquired by petitioner, a co-partnership organized by his
sons, the purposes of which are "to conduct a first class
restaurant business; to engage in the manufacture and
sale of ice cream, milk, cakes and other products; and to
carry on such other legitimate business as may produce
profit."
The foregoing unmistakably show that petitioner, through
its predecessor-in-interest, had made use of the word
"SELECTA" not only as a trade-name indicative of the
location of the restaurant where it manufactures and sells
its products, but as trade-mark is used. This is not only in
accordance with its general acceptation but with our law
on the matter. "
Trade-mark' or trade-name', distinction being highly
technical, is sign, device, or mark by which articles
produced are dealt in by particular person or organization
are distinguished or distinguishable from those produced
or dealt in by other." (Church of God v. Tomlinson Church
of God, 247 SW 2d, 63,64)"
A 'trade-mark' is a distinctive mark of authenticity through
which the merchandise of a particular producer or
manufacturer may be distinguished from that of others,
and its sole function is to designate distinctively the origin
of the products to which it is attached." (Reynolds &
Reynolds Co. v. Nordic, et. al., 114F 2d, 278) "
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." (Section 38,
Republic Act No. 166).
Verily, the word 'SELECTA' has been chosen by petitioner
and has been inscribed on all its products to serve not only
as a sign or symbol that may indicate that they are
manufactured and sold by it but as a mark of authenticity
that may distinguish them from the products manufactured
and sold by other merchants or businessmen. The Director
of Patents, therefore, erred in holding that petitioner made
use of that word merely as a trade-name and not as a
trade-mark within the meaning of the law.1
The word 'SELECTA', it is true, may be an ordinary or
common word in the sense that may be used or employed
by any one in promoting his business or enterprise, but
once adopted or coined in connection with one's business
as an emblem, sign or device to characterize its products,
or as a badge of authenticity, it may acquire a secondary
meaning as to be exclusively associated with its products
and business.2 In this sense, its used by another may lead
to confusion in trade and cause damage to its business.
And this is the situation of petitioner when it used the word
'SELECTA' as a trade-mark. In this sense, the law gives
its protection and guarantees its used to the exclusion of
all others a (G. & C. Merriam Co. v. Saalfield, 198 F. 369,
373). And it is also in the sense that the law postulates that
"The ownership or possession of a trade-mark, . . . shall
be recognized and protected in the same manner and to
the same extent, as are other property rights known to the
law," thereby giving to any person entitled to the exclusive
use of such trade-mark the right to recover damages in a
civil action from any person who may have sold goods of
similar kind bearing such trade-mark (Sections 2-A and 23,
Republic Act No. 166, as amended).
The term 'SELECTA' may be placed at par with the words
"Ang Tibay" which this Court has considered not merely as
a descriptive term within the meaning of the Trade-mark
Law but as a fanciful or coined phrase, or a trade-mark. In
that case, this Court found that respondent has constantly
used the term "Ang Tibay" , both as a trade-mark and a
trade-name, in the manufacture and sale of slippers, shoes
and indoor baseballs for twenty-two years before petitioner
registered it as a trade-name for pants and shirts so that it
has performed during that period the function of a trade-
mark to point distinctively, or by its own meaning or by
association, to the origin or ownership of the wares to
which it applies. And holding that respondent was entitled
to protection in the use of that trade-mark, this Court made
the following comment:
The function of a trade-mark is to point distinctively, either
by its own meaning or by association, to the origin or
ownership of the wares to which it is applied. 'Ang Tibay'
as used by the respondent to designate his wares, had
exactly performed that function for twenty-two years
before the petitioner adopted it as a trade-mark in her own
business. 'Ang Tibay' shoes and slippers are, by
association, known throughout the Philippines as products
of the 'Ang Tibay" factory owned and operated by the
respondent. Even if 'AngTibay', therefore, were not
capable of exclusive appropriation as a trade-mark, the
application of the doctrine of secondary meaning could
nevertheless be fully sustained because, in any event, by
respondent's long and exclusive appropriation with
reference to an article on the market, because
geographically or otherwise descriptive, might
nevertheless have been used so long and exclusively by
one producer with reference to his article that, in that trade
and to that branch of the purchasing public, the word or
phrase has come to mean that article was his product."
(Ang v. Teodoro, supra.).
The rationale in the Ang Tibay case applies on all fours to
the case of petitioner.
But respondent claims that it adopted the trade-mark
'SELECTA' in good faith and not precisely to engage in
unfair competition with petitioner. It tried to establish that
respondent was organized as a corporation under the
name of Selecta Biscuit Company, Inc. on March 2, 1955
and started operations as a biscuit factory on June 20,
1955; that the name 'SELECTA' was chosen by the
organizers of respondent who are Chinese citizens as a
translation of the Chinese word "Ching Suan" which
means "mapili" in Tagalog, and "Selected" in English; that
, thereupon, it registered its articles of incorporation with
the Securities and Exchange Commission and the name
'SELECTA' as a business name with the Bureau of
Commerce which issued to it Certificate of Registration
No. 55594; and that it also registered the same trade-
name with the Bureau of Internal Revenue and took steps
to obtain a patent from the Patent Office by filing with it as
application for the registration of said trade-name.
The suggestion that the name 'SELECTA' was chosen by
the organizers of respondent merely as a translation from
a Chinese word "Ching Suan" meaning "mapili" in the
dialect is betrayed by the very manner of its selection, for
if the only purpose is to make an English translation of that
word and not to compete with the business of petitioner,
why chose the word 'SELECTA', a Spanish word, and not
"Selected", the English equivalent thereof, as was done by
other well-known enterprises? In the words of petitioner's
counsel, "Why with all the words in the English dictionary
and all the words in the Spanish dictionary and all the
phrases that could be coined, should defendant-appellant
(respondent) choose 'SELECTA' if its purpose was not and
is not to fool the people and to damage plaintiff-appellee?"
In this respect, we find appropriate the following comment
of the trial court:
Eventually, like the plaintiff, one is tempted to ask as to
why with the richness in words of the English language and
with the affluence of the Spanish vocabulary or, for that
matter, of our own dialects, should the defendant choose
the controverted word "Selecta", which has already
acquired a secondary meaning by virtue of plaintiff's prior
and continued use of the same as a trade-mark or trade-
name of its products? The explanation given by Sy Hap,
manager of the defendant, that the word 'Selecta' was
chosen for its bakery products by the organizers of said
company from the Chinese word 'Ching Suan' meaning
'mapili', which in English translation , is to say the least,
very weak and untenable. Sy Hap himself admitted that he
had known Eulalio Arce, the person managing plaintiff's
business, since 1954; that since he began to reside at 10th
Avenue, Grace Park, he had known the Selecta
Restaurant on Azcarraga Street and Dewey Blvd. and that
he even had occasion to eat in one of the restaurants of
the plaintiff. All of these circumstances tend to conspire in
inducing one to doubt defendant's motive for using the
same word "Selecta" for its bakery products. To allow the
defendant here to use the word "Selecta" in spite of the
fact that this word has already been adopted and exploited
by Ramon Arce and by his family thru the organization of
Arce Sons and Company, for the maintenance of its
goodwill, for which said plaintiff and its predecessor have
spent time, effort and fortune, is to permit business pirates
and buccaneers to appropriate for themselves and to their
profit and advantage the trade names and trade marks of
well established merchants with all their attendant good
will and commercial benefit. Certainly, this cannot be
allowed, and it becomes the duty of the court to protect the
legitimate owners of said trade-names and trade-marks,
for under the law, the same constitute one kind of property
right entitled to the necessary legal protection.
Other points raised by respondent to show that the trial
court erred in holding that the adoption by it of the word
'SELECTA' is tantamount to unfair competition are: (1) that
its products are biscuits, crackers, and cookies, wrapped
in cellophane packages, place in tin containers, and that
its products may last a year with out spoilage, while the ice
cream, milk, cakes and other bakery products which
petitioner manufactures last only for two or three days; (2)
that the sale and distribution of petitioner's products are on
retail basis, limited to the City of Manila and suburbs, and With regard to the claim that petitioner failed to present
its place of business is localized at Azcarraga, corner of sufficient evidence on the contract of lease of the business
Lepanto Street and at Dewey Blvd., Manila, while that of from its predecessor-in-interest, we find that under the
respondent is on a wholesale basis, extending throughout circumstances secondary evidence is admissible.
the length and breadth of the Philippines; (3) that
In view of the foregoing, we hold that the Director of
petitioner's signboard on its place of business reads
Patents committed an error in dismissing the opposition of
'SELECTA' and on its delivery trucks "Selecta, Quality
petitioner and in holding that the registration of the trade-
Always, Restaurant and Caterer, Azcarraga, Dewey Blvd.,
mark 'SELECTA' in favor of respondent will not cause
Balintawak and Telephone number," in contrast with
damage to petitioner, and consequently, we hereby
respondent's signboard on its factory which reads "Selecta
reverse his decision.
Biscuit Company, Inc.," and on its delivery trucks "Selecta
Biscuit Company, Inc., Tuason Avenue, Malabon, Rizal, Consistently with this finding, we hereby affirm the
Telephone No. 2-13-27; (4) that the business name of decision of the court a quo rendered in G.R. No. L-17981.
petitioner is different from the business name of No costs.
respondent; (5) that petitioner has only a capital
investment of P25,000.00 whereas respondent has a fully
paid-up stock in the amount of P234,000.00 out of the
P500,000.00 authorized capital, (6) that the use of the
name 'SELECTA' by respondent cannot lead to confusion
in the business operation of the parties.
We have read carefully the reasons advanced in support
of the points raised by counsel in an effort to make inroads
into the findings of the court a quo on unfair competition,
but we believe them to be substantial and untenable. They
appear to be well answered and refuted by counsel for
petitioner in his brief, which refutation we do not need to
repeat here. Suffice it to state that we agree with the
authorities and reasons advanced therein which
incidentally constitute the best support of the decision of
the court a quo.
G.R. No. L-26966 October 30, 1970
DE LA RAMA STEAMSHIP CO., plaintiff-appellee,
vs.
NATIONAL DEVELOPMENT CO., defendant-appellant.
E. del Rosario and Associates for plaintiff-appellee.
Gov't. Corporate Counsel L. M. Abellera and Special
Counsel Leonardo R. Reyes for defendant-appellant.
ZALDIVAR, J.:.
This case originated in the Court of First Instance of Manila
as Civil Case No. 5161, entitled "De la Rama Steamship
Co. Inc., plaintiff, versus National Development Company,
defendant." This is the third time that this case has come
up to this Court.
This case is the outcome of an agreement entered into on
October 26, 1949 between the De la Rama Steamship Co.
Inc. (hereinafter referred to as De la Rama) and the
National Development Company (hereinafter referred to
as NDC) whereby De la Rama undertook the management
of the three vessels known as "Doña Aurora," "Doña Nati"
and "Doña Alicia" which had been purchased by the
Philippine Government from Japan with the advise and
technical supervision of De la Rama. In the management
contract it was provided that De la Rama had the option to
buy the vessels at the fifth year following the purchase and
delivery of each of the vessels at a price which is to consist
of the cost price of each vessel, plus such expenses as De
la Rama may have incurred in connection with the
construction, outfitting, provisioning and operation thereof;
but should De la Rama fail to exercise the right of option it
should be reimbursed of the expenses it incurred in
manning, equipping, fueling, overhauling and repairing the
vessels, and the payment of loading commission
discharging commission, overriding commission sub-
agent's commission, etc.
The first time that this case came up to this Court was in
G.R. No. L-8784, decided on May 21, 1956, which involved
the principal question regarding the right granted by the
management contract to NDC to cancel upon one year's
notice the general agency granted Dela Rama. The NDC
decided to cancel the contract but was opposed by De la
Rama, which alleged that it had been granted the option to
purchase the vessels and that in 1952 it exercised that
right of option. In the decision in G.R. No. L-8784 this Court
upheld the right of NDC to cancel the management
contract, and the option of De la Rama to purchase the
vessels was declared ineffective.
The right of NDC to cancel the management contract
having been upheld by the Court and De la Rama's right
to exercise the option to purchase the vessels could not
thereby be exercised, De la Rama filed on August 21, 1956
a "Supplemental Pleading" in Civil Case No. 25161 then
pending in the Court of First Instance of Manila. This
supplemental pleading, in the nature of a supplemental
complaint gave rise to the proceeding which later brought
Civil Case No. 25161 to this Court for the second time in
G.R. No. L-25659.1 Under the first cause of action of the
"Supplemental Pleading," De la Rama demanded that
NDC refrain from using the names "Doña Aurora," "Doña
Nati" and "Doña Alicia" on the three vessels subject of the
original action, claiming that it had acquired exclusive
property right to the use of said names of the three vessels
as trade names; under the second cause of action, De la
Rama sought the payment to it by the NDC of
P1,505,603.82 as reimbursement for various advances
and expenses it had made in behalf of, and commissions
earned as agent of, NDC; and under the third cause of
action, De la Rama sought the payment of P1,000,000.00
as damages on account of NDC's continued use of the
names "Doña Aurora," "Doña Nati" and "Doña Alicia," on
the vessels that De la Rama had turned over to it (NDC),
and P100,000.00 as expenses and attorney's fees. 2
Over the opposition of NDC to the admission of the
"Supplemental Pleading," upon the grounds that De la
Rama could not file a supplemental pleading because it
had already been, held in G.R. No. L-8784 that it had no
right of action and a party may not file a supplemental
pleading if it had no valid and subsisting cause of action,
and that all the causes pleaded were only remotely
connected with, and not material to, the original action in
Civil Case No. 25161, the lower court, in an order dated
October 18, 1956, granted De la Rama's motion to file the
"Supplemental Pleading."3
In its answer to De la Rama's supplemental pleading, NDC
denied De la Rama's exclusive right to use the names
"Doña Aurora," "Doña Nati" and "Doña Alicia" on the
vessels upon the ground that said names (except Doña
Nati) represented names of wives of former Presidents of
the Philippines and could not be approriated by a private
individual; NDC averred that the alleged advances and
commissions claimed in the second cause of action were
never alleged and claimed in the original complaint and
should be deemed barred and dismissed together with the
original principal action; NDC also averred that the
demands in the third cause of action were unreasonable,
and that De la Rama had tried to retain all the benefits
arising from the operation of the vessels and shifted to
NDC the liabilities and obligations. NDC also set forth
special defenses and a counterclaim, alleging that De la
Rama was under obligation to submit a true and correct
accounting of the operation of the three vessels, and to
remit to NDC the amounts due to the latter from January
1, 1954 to the dates the vessels were separately returned;
and that plaintiff had charged excessive commissions of
17-½% when the reasonable rate should only be 9.45%
after the notice of cancellation, and should account for and
deliver to NDC the excess commissions actually received.4
In its reply to NDC's answer, and in its answer to NDC's
counterclaim, De la Rama alleged that the names "Doña
Aurora," "Doña Nati" and "Doña Alicia" were its property,
having used the name "Doña" on its vessels in its shipping
business even before the last war and had acquired a
vested right on that trade name, that the claim for
reimbursement and/or payment of advances and/or
expenses made, and commissions earned by virtue and
pursuant to the management contract matured after the
filing of the amended complaint;5 that true and correct
accounting of the operations of the vessels had always
been submitted to NDC. De la Rama denied, for lack of
knowledge or information sufficient to form a belief, the
allegations in defendant's counterclaim.6
On March 20, 1957, the trial court, in consonance with its
order given in open court on March 8, 1957, considering
that the case involved mainly accounting, issued an order
appointing a Board of Accountants to make an
examination of the accounts submitted by De la Rama to
determine what amount is due De la Rama, and what
amount is due NDC, and to make such recommendations
as, in its opinion, are proper. The Court appointed Mr.
Gregorio Licaros, then President of the Philippine Institute
of Accountants, to represent the court and to act as
chairman of the Board; Mr. Miguel Calingasan comptroller
of De la Rama, recommended by counsel for De la Rama,
to represent De la Rama; and Delfin Diangco, accountant
and manager of the shipping department of NDC,
recommended by counsel for NDC, represent the NDC.
The deputy clerk of court. The deputy clerk of court of the
branch of the Court of First Instance of Manila where the
case was pending was appointed secretary of the Board.
The order of the court provided for the compensation of
the members of the Board of Accountants and its
Secretary. The court gave the Board thirty days from the
date of qualification by its members within which to receive
the evidence and thereafter another thirty days within
which to submit its report.7
The Chairman of the Board of Accountants, on April 13,
1959, submitted his report and recommendations to the
court. Based on said report and recommendations the trial
court rendered its decision, dated April 29, 1959, the
dispositive portion of which reads as follows:.
IN VIEW OF ALL THE FOREGOING CONSIDERATION,
the Court hereby renders judgment:.
"(a) Approving the report and recommendations of Mr.
Gregorio S. Licaros, Chairman, Board of Governors,
Development Bank of the Philippines, dated April 13,
1959, and ordering defendant National Development
Company to pay to plaintiff the sum of P244,277.81,
representing the balance of the advances made by
plaintiff's operation of the Doña Nati, Doña Alicia and Doña
Aurora, with legal interest thereof from January 24, 1955.
"(b) Enjoining and restraining defendant perpetually from
using the 'Doña' name or title on any of its vessels; and
"(c) Ordering defendant to pay plaintiff, nominal or
temperate damages in the sum of P20,000.00, and
attorney's fees in the amount of P20,000.00.
With costs against the defendant. 8
From the above-mentioned decision NDC interposed an
appeal to this Court, docketed herein as G.R. No. L-15659.
This is the second time that Civil Case No. 25161 of the
Court of First Instance of Manila came up to this Court.
In its decision in G.R. No. L-15659 this Court upheld NDC's
contention that the causes of action in the "Supplemental
Pleading" were not in any way relevant and material to the
original action of De la Rama to compel the NDC to sell
the three "Doña" vessels to it, and that, therefore, the
"Supplemental Pleading" was improperly admitted. This
Court also sustained the contention of the NDC that the
lower court did not follow the suggestion of the Chairman
of the Board of Accountants to give opportunity to the NDC
to submit its objections to the amounts stated in the report
of the chairman of the board. This Court, therefore, set
aside the decision appealed from. However, in the interest
of a prompt termination of the suit, this Court ordered the
remand of the case to the court below "with instructions to
enroll the pleadings and papers starting with the
"supplemental pleading," registering the complaint,
collecting the corresponding fee based on the amount
demanded in the complaint and entering the complaint and
all the papers in the dockets of the court." This Court also
gave instructions "to give, the defendant NDC the
opportunity to submit its objections to the report of the
board of accountants and to have a hearing on this report
in accordance with the rules as above pointed out," and
"thereafter the action shall proceed or continue in
accordance with this decision." 9
So the case was before the trial court for the third
proceedings. The trial court complied with the instructions
of this Court, as stated in the decision in G.R. No. L-15659.
After the trial court had repeatedly given the NDC the
opportunity to file its objections, if any, to the report
submitted by the Chairman of the Board of Accountants,
and the NDC failed so to do, the trial court rendered its
decision dated February 23, 1966, the dispositive part of
which reads:.
WHEREFORE, judgment is hereby rendered approving
the conclusions and recommendations contained in the
aforesaid Report of April 13, 1959, and ordering defendant
National Development Company to pay to the plaintiff De
la Rama Steamship Co., Inc., the sum of P244,227.81 with
legal interest thereon from January 24, 1955 until fully
paid.
With costs against the defendant. 10
On February 24, 1966 De la Rama filed a motion for the
partial execution of the decision dated April 29, 1959
regarding the damages in the sum of P20,000.00 and
attorney's fees in the sum, of P20,000.00 on the ground
that those portions of the decision had not been appealed
from and had therefore become the "law of the case" as
far as the parties were concerned. 11 NDC filed its
opposition to the motion on the ground that the decision of
April 29, 1959 was "set aside" by the Supreme Court, and
consequently there was no legal basis for execution.
On March 18, 1966 the lower court issued an "order and/or
amendatory decision," the concluding portion of which
reads as follows:.
PREMISES CONSIDERED, plaintiff's motion of February
23, 1966 for partial execution is hereby denied. Instead, in
the interest of justice, and the decision of this Court of
February 7, 1966 not having yet become final, the same is
hereby amended by adding thereto the findings of fact and
conclusion of law made above, and by amending its
dispositive part to read as follows:
WHEREFORE, judgment is hereby rendered:.
"(a) Enjoining and restraining the defendant perpetually
from using the "Doña" name or title on any of its vessels;
"(b) Approving the conclusions and recommendations
contained in the aforesaid Report of April 13, 1959, and
ordering the defendant National Development Company to
pay to the plaintiff De la Rama Steamship Co., Inc., the
sum of P244,222.81 with legal interest thereon from
January 24, 1955 until fully paid; and
"(c) Ordering the defendant to pay to the plaintiff by way of
damages, as and/or attorney's fee, the amount of
P20,000.00. Said decision of February 7, 1966 is
maintained in all other respects.
With costs against the defendant.12
From both the decision dated February 7, 1966 and the
amendatory decision dated March 18, 1966 NDC
appealed directly to this Court, because of the amount
involved, stating that it would raise questions both of fact
and of law. 13 The present appeal is the third time that this
case 14 has come up to this Court.
NDC in its brief, assigns six errors which, it claims, were
committed by the lower court in deciding the case.
The first four errors refer to the lower court's having
adopted in toto the findings and recommendations of the
Board of Accountants, as contained in the Report
submitted to this court dated April 13, 1959, regarding:.
1. "the net results of the operational expenses of the
"Doña" vessels;"
2. "the inventory of equipment, supplies, materials,
provisions, fuel, etc. on board the vessels upon the
delivery thereof;"
3. "the commission on cargos booked and loaded after
delivery of the vessels;" and
4. "the additional charges to NDC;"
The fifth error assigned is that.
5. "The lower court erred in holding that the plaintiff is
entitled to the preferential right to the use of the "Doña"
names and enjoining and restraining the defendant-
appellant perpetually from using the "Doña" names or title
on any of its vessels."
The sixth error assigned is that.
6. "The lower court, finally, erred in condemning
defendant-appellant to pay to the plaintiff-appellee the
sum of P244,227.81 with legal interest thereon from Jan.
24, 1955 until fully paid and also the sum of P20,000.00 by
way of damages and attorney's fees."
In support of its first assignment of error, that the lower
court erred in adopting in toto the findings and
recommendations of the Board of Accountants regarding
the net results of the operational expenses of the "Doña"
vessels, as contained in the Board's Report submitted to respect to sub-agents' commissions, advertising,
the Court, dated April 13, 1959, NDC contends that De la entertaining, documentation of cargo office rent and
Rama had overcharged NDC as per NDC Report dated expenses, telephone costs and general travelling
April 10, 1959 in the amount of P53,393.94 before the expenses. Cable and telegram expenses, however, shall
cancellation of the contract and P12,705.59 after the be directly chargeable to the respective vessel's voyage
cancellation of the contract as 17-1/2% commissions on accounts.
"arbitraries" which cannot be included in the terms "cargo
but which De la Rama charged directly to the
freight" or "freight revenue" on the basis of which alone De
miscellaneous expense accounts of the respective voyage
la Rama should receive the agency commissions as per
account of the vessels; that De la Rama also overcharged
paragraph 4 of the management contract; that De la Rama
NDC, without specifying the amount, for expenses for
had also charged excess commissions in the amount of
entertainment, telephone costs, general traveling
P803,973.94, as shown in the NDC audit verification report
expenses, sub-agents' commission of cargo, all of which
dated April 10, 1959, on freight revenues and passage
NDC must assume pursuant to paragraph 4 of the
revenues after the cancellation of the management
management contract; that NDC was overcharged
contract effective July 11, 1955, because the 17-1/2%
P4,710.94 for subsistence, which amount was spent not
commission on "freight revenue" and the 10% commission
for the meals of the passengers, officers, and crew, but for
on "passage revenue" under the management contract
various parties, and, which, not having been previously
were applicable only while said contract was in force, such
authorized by NDC, should be chargeable to De la Rama;
that after the rescission of said contract, until the vessels,
that De la Rama overcharged operational expenses in the
were returned, De la Rama operated the vessels at its own
amount of P182,376.35 which were without supporting
risk and should be entitled only to 7-½% commission on
vouchers; that there was an understatement of the
freight revenues and 7-½% commission on, passage
operational income of NDC vessels in the amount of
revenues which rates were those agreed upon by NDC
P27,418.56; that the operational expenses of the NDC
and A. V. Rocha and Company; that De la Rama
vessels was overcharged for various expenses in the
overcharged NDC P46,627.83 as expenses for
amount of P5,462.09. 15
advertising, which should have been borne by De la Rama
pursuant to stipulation No. 4 of the management contract In support of its second assignment of error, that the lower
which in part reads:. court erred in adopting in toto the findings and
recommendations of the Board of Accountants regarding
... in consideration of said overriding commission, De la
the inventory of equipment, supplies, materials,
Rama shall assume all expenses of the service with
provisions, fuels, etc. on board the vessels upon the
delivery thereof to NDC as contained in the report dated
April 13, 1959, NDC contends that De la Rama's claim on
this matter was only P626,304.70, but Schedule B (Exh.
PP), purporting to be the final inventory, showed only a
total of P573,979.53 as against NDC audit report dated
March 31, 1958 in the amount of only P496,637.10. 16
In support of the third assignment of error, that the lower
court erred in adopting in toto the findings and
recommendations of the Board of Accountants regarding
the commission on cargoes booked and loaded after
delivery of the vessels as convinced in the Board's Report
dated April 13, 1959, NDC avers that when the "Doña
Alicia" was delivered to NDC the latter honored the De la
Rama commitments on cargo and passengers without
however stipulating the commissions to be earned by De
la Rama; that the claim of De la Rama for P16,927.72, or
9-½% of P178,186.56, freight revenues was 7% higher
than those charged for the same service and should be
reduced to 2-½% only; that De la Rama also overcharged
NDC in the amount of P113.75 passage commission,
because De la Rama should not be allowed to charge
more than 7-½% which NDC pays to its present agent. 17
In its fourth assignment of error, that the lower court erred
in adopting in toto the recommendations of the Board of
Accountants regarding the additional charges to NDC as
contained in the Board's Report dated April 13, 1959 NDC
avers that of the P21,998.11 claimed by De la Rama, the
bills for general averages in the amount of P20,478.52 for
"Doña Alicia" and "Doña Aurora" were for services that
were normal duties of the relationship between NDC and
De la Rama, and were therefore without basis, more so
because all of De la Rama's expenses including travel,
hotel and entertainment expenses of its officials incident
thereto in the amount of P51,583.33 had been included in
the casualty account claimed by De la Rama and the
designated adjuster, Funch, Edye, and Co., already
collected their fees of P6,000; so that said amount of
P20,478.52 should have been disallowed. 18
In refutation of the reasons adduced by NDC in support of
its four assignments of error, De la Rama contends that
the alleged errors involve principally factual matters which
had been twice resolved by the lower court — first in the
decision of April 29, 1959 and again in the decisions of
February 7 and March 18, 1966, and those alleged errors
relate to matters that NDC had been given many
opportunities to object to in the lower court, but which it did
not do; that for having failed to object, NDC is bound by
the findings embodied in the report. 19
We sustain the stand of De la Rama. NDC complains
against the adoption in toto by the trial court of the findings
and recommendations of the Board of Accountants. We
find the actuation of the trial court to be in accordance with
Rule 33, Section 11, of the Rules of Court — which
authorizes the trial court to render judgment, after the
report of the commissioner has been set for hearing, by
adopting, modifying, or rejecting the report in whole or in
part. The report of the Board of Accountants in the case at
bar is similar to the report of the commissioner, or referee,
as provided in Rule 33 of the Rules of Court. This Court,
in the case of Apurillo v. Graciano, 20 held that the trial
Judge's adoption in toto of the findings of the
Commissioner is allowed under Rule 33 of those Rules of
Court. In the case at bar, NDC's repeated failures to file its
objections, if any, to the report, left the trial court no other
choice but to render judgment base, on the report. Section,
11 of Rule 33 of the Rules of Court was taken from Section
140 of the former Code of Civil Procedure (Act
190).têñ.£îhqw⣠Interpreting Section 140 of the said
Code of Civil Procedure, this Court, in the case of Kreidt
vs. E. C. McCullough & Co., 21 held:.
... Section 140 of the Code of Civil Procedure must be
interpreted as placing upon the litigant parties the duty of
discovering and exhibiting to the court the reasons, if any
there be, why the report should not be confirmed; and it is
not ordinarily incumbent upon the court to discover the
errors that may lurk therein. The duty which the law
imposes upon the court is to render judgment in
accordance with the report, and this will ordinarily be done
unless the party aggrieved shall, in a manner conformable
with proper practice, demonstrate the existence of error in
the report. It is in elementary rule of procedure that the
exceptions to the referee's report should specifically point
out the error, or error relied upon by the party excepting,
when the report comes up for confirmation the court
cannot be expected to rehear the case upon the entire
record but will review only so much as may be drawn in
question by proper exceptions ...
When a referee is appointed he becomes for the time
being an accredited agent and an officer of the court, and
the reference is clearly a judicial proceeding. What the
referee does while acting within the scope of his authority
is, therefore, in the contemplation of law done by the court
itself. Hence his conclusions must be assumed to be
correct until error is properly shown ... It follows that when
the referee has examined the evidence and reached his
conclusions of fact and law, those conclusions have a
presumption in their favor both of law and of reason. It
would be impossible to administer justice on any other
theory than that as facts are found and determined in
accordance with the proper procedure of the court they
must be assumed to be true until the contrary is shown.
In the case at bar, NDC neglected to perform the duty of
pointing and demonstrating the alleged errors in the report
of the Board of Accountants, in spite of the fact that this
Court in G.R. No. L-15659 had ordered the case to be
remanded to the lower court precisely in order that NDC
might be given the opportunity, which it claimed it had
previously been derived of by the trial court, to submit its
objections to the report, and to have a hearing on the
report, not withstanding the repeated opportunities given
to it by the trial court for a period of three years to submit
its objections. On this matter, the following is what the trial
court said in its decision which is now appealed to this
Court:.
... and as directed by the Supreme Court, the defendant
was given repeated opportunities to submit its objections
to the Report of the Chairman of the Board. Unfortunately,
however, the defendant's, conduct for the last three years
amounts to waiver of its right to be heard on the subject
report, to paraphrase the language of the Supreme Court
in this regard in its decision quoted above. Thus defendant
NDC requested and was granted on October 10, 1963 a
first extension of time to submit its objections to the Report
(p. 1342, Records). As late as October 30, 1963 (p. 1390,
Records), that is, after several extensions of time totalling
more than one (1) year, this Court granted NDC a final and
last extension of three weeks within which to submit NDC's
objections, if any to said Report. This period expired
without the filing by defendant NDC of objections, if any, to
said Report; but this Court, notwithstanding the absence
of any objection to said report, and with a view to giving
the defendant a last chance to assail any part of said
Report, exercised its discretion to, as it did, set said Report
for bearing on May 3, 1965 (p. 1395, Records), and
thereafter on May 6, May 28, July 9, August 5, September
16, October 22 and November 12, 1965, which hearings
were cancelled at the instance and request of the
defendant. At the hearing on November 12, 1965 the
parties agreed that defendant be granted two weeks within
which to file its objections, if any, to said Report; that
plaintiff shall submit its reply to the objections within a
similar period and that if the defendant failed to file the
objections within said stipulated period it shall be deemed
to have waived its right to do so. The defendant again
failed to file its objections to said Report, and instead filed
an urgent motion, dated November 26, 1965, to extend the
period, but said urgent motion was filed after several days
after the expiration of the period granted for the purpose in
this Court's Order of November 12, 1965, and as the
defendant actually failed to file the intended objections
within the extension of time prayed for in said urgent
motion (see Order of this Court of December 7, 1965), on
motion of the plaintiff this Court found no other alternative
proper under the circumstances mentioned above than to
issue its Order of December 13, 1965 to the effect that said
Report was deemed submitted for decision and/or
approval as of the last mentioned date. 22
The appellant having failed to file its objections to the
report, it was the duty imposed by the law upon the court,
to quote against Kriedt vs. E. C. McCullough & Co., supra,
"to render judgement in accordance with the report," as
though the facts had been found by the judge himself.
If a party fails to file opportunely his objections to the report
of the commissioner or referee, such that the record does
not disclose the objections thereto, as in the instant case,
questions relating to the report cannot be reviewed and he
cannot dispute the finding in the report or escape the legal
consequences flowing therefrom. Thus, in the case
of Santos v. De Guzman and Martinez, 23 this Court
ruled:.
By way of emphasis, we now desire to add that if a party
desires to challenge the findings of a referee, he must do
so by timely and specific exceptions to the referee's report.
If he fails to make such exceptions and the report is
confirmed by the trial judge, he is bound by the findings
and cannot be heard to dispute their truthfulness or escape
the legal consequences flowing therefrom. Questions
relating to the report of a referee can be reviewed only
where the record discloses the exceptions taken thereto.
Another reason why NDC's first four assignments of errors
should no longer be considered is that, as appears in the
trial court's decision, NDC agreed that should it fail to file
its objections within two weeks from November 12, 1965,
"it shall be deemed to have waived its right to do so."
Furthermore, it has been repealed time and again by this
Court, that issues not raised in the lower court cannot be
raised for the first time on appeal. 24 In the recent case
of Kalalo v. Luz 25 this Court refused to consider on
appeal the correctness of the amount due from appellant
to appellee as found by the Commissioner, it being too
late to question on appeal its correctness, the same not
having been, submitted to the trial court for resolution.
It has also been held, in this connection, that when the
findings of the Commissioner are approved by the trial
court, they will not generally be disturbed by the reviewing
court, unless the findings are unsupported by the
evidence. 26The trial court adopted the findings and
recommendations embodied in the Report in the instant
case "after a careful consideration of said report and after
a careful evaluation of the pertinent data and figures taken
from authentic records as to which the members of the
Board of Accountants are in agreement." 27
In support of the fifth assignment of error, that the lower
court erred in holding that De la Rama is entitled to the
preferential right to the use of the "Doña" names and
enjoining and restraining NDC perpetually from using the
"Doña" names on any of its vessels, NDC argues that as
owner of the vessels it had registered the "Doña" names
in the Bureau of Customs with full knowledge and consent
of De la Rama which, therefore, is now estopped from
questioning the right, or from denying the ownership, of
NDC over the "Doña" names (Art. 1431, Civil
Code).têñ.£îhqw⣠28 De la Rama, on the other hand
maintains that the findings and conclusion of the lower
court on this matter, quoting the pertinent portion of the
lower court's decision, are well founded.
In the amendatory decision, dated March 18, 1966, the
lower court found that De la Rama had been in the
shipping business since 1933 and had adopted, prior to
the war in 1941, the word "Doña" in designating its
vessels; that the three ocean-going vessels that it
operated under the management contract were named
"Doña Nati" after the wife of the late Don Esteban de la
Rama, who was founder of the steamship company; "Doña
Alicia" after the late wife of former President Elpidio
Quirino; and "Doña Aurora" after the late widow of
President Manuel Quezon; that there is unrebutted
testimony that in the shipping business, goodwill and
reputation are inevitably acquired by the names given to a
vessel. 29
NDC's contention, in its answer, that De la Rama, a private
firm, could not appropriate said names ("except Doña
Nati") on the ground that those are names of wives of
former Presidents, does not have a legal basis. Under
Section 4(c) of Rep. Act No. 166 as amended, which
apparently is the basis of the contention of NDC, what is
prohibited from being appropriated and being registered
are trade-names consisting of, or comprising, a name
identifying a particular living individual, or the name of a
deceased President of the Philippines. The names of
deceased wives of Presidents are not included in the
prohibition. Moreover, Section 4(f) of said Act does not
prohibit the registration, and hence appropriation, of a
trade-name that has become distinctive and the
substantial and exclusive use of a trade-name for five
years accepted as prima facie proof that the trade-name
has become distinctive. And this Court has said, in Ang vs.
Teodoro, 30 that even a name or phrase not capable of
appropriation as a trade name may, by long and exclusive
use by a business with reference thereto of to its products,
acquire a proprietary connotation, such that, to the
purchasing public, the name or phrase becomes
associated with the service or the products of the
business, and so it is entitled to protection against unfair
competition.
Neither is the claim of estoppel, allegedly based on
acquiescence, in that NDC had registered with full
knowledge and/or consent of De la Rama the "Doña"
names in the Bureau of Customs, tenable. A reading of
Sections 1166 to 1176 of the Revised Administrative
Code, under which the "Doña" vessels were presumably
registered, would show that the principally purpose of the
registration is to determine the ownership of the vessel,
although for registration it is necessary that the vessel
should have a name as a prerequisite under the provision
of Section 1170. De la Rama certainly could not, and had
no right, to oppose the registration of the vessels by NDC
because the vessels were in fact owned by NDC. Neither
could De la Rama then oppose the registration of the
"Doña" names of the vessels for it was De la Rama itself
that gave those names when it operated the vessels, and
it had also expectant right to become owners of said
vessels. De la Rama's consent to the registration of the
vessels as owned by NDC did not necessarily imply that it
also consented to NDC's appropriation of the "Doña"
names, for almost immediately after the right of NDC to
cancel the management contract had been upheld by this
Court in G.R. No. L-8784, decided on May 21, 1956, De la
Rama formally notified, on August 10, 1956 NDC or its
agent to refrain from using, announcing or in any manner
referring to the three vessels here in question as the 'Doña
Aurora,' 'Doña Nati' or 'Doña Alicia'."31From these facts if
cannot reasonably be urged that De la Rama is estopped
from preventing NDC to use the "Doña" names on its
vessels. Anent this matter, it has been held that:.
... an estoppel will not ordinarily arise from a consent given
under an excusable misapprehension of facts... likewise,
the estoppel will not be given effect beyond the precise
thing consented to and matters which are necessarily, or
at least, reasonably, to be implied therefrom. (28 Am Jur
2d, pp. 662-663.)
And even if it be assumed, gratia argumenti, that De la
Rama acquiesced to the registration of the "Doña" names
of the vessels, as NDC contends, that acquiescence could
not necessarily estop De la Rama to claim its right to said
names, after the conditions had changed, that is when the
management contract had been cancelled by NDC.
Regarding this matter it has been held that:.
Acquiescence in the past does not necessarily estop a
party from changing his course of conduct as to the future,
especially where there has been a change in conditions.
(28 Am Jur 2d p. 675.)
NDC does not dispute the fact that the "Doña" names had
been originally used by De la Rama, 32 and according to
the lower court De la Rama had been using the "Doña"
names even before the war, and that said names have
acquired goodwill and reputation. Goodwill is protected by
the law on unfair competition. Goodwill is easily damaged,
and is easily vulnerable to assault, through the brand
which symbolizes it. When a person has established a
trade or business in which he has used a name or device
to designate his goods, he will be protected in the use of
the name or device. "Such person has a right to complain
when another adopts this symbol or manner of making of
his goods so as to mislead the public into purchasing the
same as and for the goods of the complainant." 33.
The goodwill in business is a valuable asset, and in
modern commercial life it is frequently built upon a trade-
name. Any trade-mark or name ... which has become of a
pecuniary value or a business advantage, becomes a
property right, and, as such, is entitled to the protection
afforded by the courts (American Agricultural Chemical
Co. v. Moore, 17 F (2d) 196, 199.)
In Ang v. Teodoro 34 this Court said:.
The owner of a trade-mark or trade-name has a property
right in which he is entitled to protection, since there is
damage to him from confusion of reputation or goodwill in
the mind of the public as well as confusion of goods. The
modern trend is to give emphasis to the unfairness of the
acts and to treat the issue as a fraud.
To permit NDC to continue using the "Doña" names would
be to countenance the unlawful appropriation of the benefit
of a goodwill which De la Rama has acquired as a result
of continued usage and large expense; it would be
tantamount to permitting NDC to grab the reputation or
goodwill of the business of another. 35 We find that the
decision of the trial court on this matter is in accordance
with the law on unfair competition.
Regarding NDC's sixth assignment of error, that the lower
court erred in condemning defendant-appellant to pay to
the plaintiff-appellee the sum of P244,227.81 with legal
interest thereon, from January 24, 1955 until fully paid and
also the sum of P20,000 by way of damages and attorney's
fees, We believe that no such error was committed by the
lower court. The view We have expressed regarding the
first four errors assigned by NDC fully supports the
correctness of the lower court's holding that NDC should
pay De la Rama the sum of P244,227.81 with legal
interest, as stated in the decision. The facts and
circumstances extant in the record, likewise, amply
warrant the award to De la Rama of the sum of P20,000.00
by way of damages and attorney's fee's.
WHEREFORE, the decision appealed from is affirmed,
with cost against the defendant-appellant National
Development Company. It is so ordered.
G.R. No. L-18289 March 31, 1964
ANDRES ROMERO, petitioner,
vs.
MAIDEN FORM BRASSIERE CO., INC., and THE
DIRECTOR OF PATENTS, respondents.
Alafriz Law Office for petitioner.
Ross, Selph & Carrascoso for respondent Maiden Form
Brassiere Co., Inc.
Office of the Solicitor General and Tiburcio S. Evalle for
respondent Director of Patents.
BARRERA, J.:
From the decision of the Director of Patents (of January
17, 1961) dismissing his petition for cancellation of the
registration of the trademark "Adagio" for brassieres
manufactured by respondent Maiden Form Brassiere Co.,
Inc., petitioner Andres Romero, interposed this appeal.
On February 12, 1957, respondent company, a foreign
corporation, filed with respondent Director of Patents an
application for registration (pursuant to Republic Act No.
166) of the trademark "Adagio" for the brassieres
manufactured by it. In its application, respondent company
alleged that said trademark was first used by it in the
United States on October 26, 1937, and in the Philippines
on August 31, 1946; that it had been continuously used by
it in trade in, or with the Philippines for over 10 years; that
said trademark "is on the date of this application, actually
used by respondent company on the following goods,
classified according to the official classification of goods
(Rule 82) - Brassieres, Class 40"; and that said trademark
is applied or affixed by respondent to the goods by placing
thereon a woven label on which the trademark is shown.
Acting on said application, respondent Director, on August
13, 1957, approved for publication in the Official Gazette
said trademark of respondent company, in accordance
with Section 7 of Republic Act No. 166 (Trademark Law),
having found, inter alia, that said trademark is "a fanciful
and arbitrary use of a foreign word adopted by applicant
as a trademark for its product; that it is neither a surname
nor a geographical term, nor any that comes within the
purview of Section 4 of Republic Act No. 166; and that the
mark as used by respondent company convincingly shows
that it identifies and distinguishes respondent company's
goods from others."
On October 17, 1957, respondent Director issued to
respondent company a certificate of registration of with,
trademark "Adagio".
On February 26, 1958, petitioner filed with respondent
Director a petition for cancellation of said trademark, on
the grounds that it is a common descriptive name of an
article or substance on which the patent has expired; that
its registration was obtained fraudulently or contrary to the
provisions of Section 4, Chapter II of Republic Act No. 166;
and that the application for its registration was not filed in
accordance with the provisions of Section 37, Chapter XI
of the same Act. Petitioner also alleged that said
trademark has not become distinctive of respondent
company's goods or business; that it has been used by
respondent company to classify the goods (the brassieres)
manufactured by it, in the same manner as petitioner uses
the same; that said trademark has been used by petitioner
for almost 6 years; that it has become a common
descriptive name; and that it is not registered in
accordance with the requirements of Section 37(a),
Chapter XI of Republic Act No. 166.
Issues having been joined, the case was heard and, after
hearing, respondent Director (on January 17, 1961)
rendered the decision above adverted to.
Petitioner filed a motion for reconsideration of said
decision, on the grounds that (1) it is contrary to the
evidence, and (2) it is contrary to law. Said motion was
denied by respondent Director by resolution of March 7,
1961.
Hence, this appeal.
Appellant claims that the trademark "Adagio" has become
a common descriptive name of a particular style of
brassiere and is, therefore, unregistrable. It is urged that
said trademark had been used by local brassiere
manufacturers since 1948, without objection on the part of
respondent company.
This claim is without basis in fact. The evidence shows that
the trademark "Adagio" is a musical term, which means
slowly or in an easy manner, and was used as a trademark
by the owners thereof (the Rosenthals of Maiden Form
Co., New York) because they are musically inclined. Being
a musical term, it is used in an arbitrary (fanciful) sense as
a trademark for brassieres manufactured by respondent
company. It also appears that respondent company has,
likewise, adopted other musical terms such as "Etude"
(Exh. W-2), "Chansonette" (Exh. W-3), "Prelude" (Exh. W-
4), "Over-ture" (Exh. W-6), and "Concerto" (Exh. V), to
identify, as a trademark, the different styles or types of its
brassieres. As respondent Director pointed out, "the fact
that said mark is used also to designate a particular style
of brassiere, does not affect its registrability as a
trademark" (Kiekhaefer Corp. v. Willys-Overland Motors,
Inc., 111 USPQ 105).1äwphï1.ñët
It is not true that respondent company did not object to the
use of said trademark by petitioner and other local
brassiere manufacturers. The records show that
respondent company's agent, Mr. Schwartz, warned the
Valleson Department Store to desist from the sale of the
"Adagio" Royal Form brassieres manufactured by
petitioner (t.s.n., pp. 27-28, Oct. 7, 1958), and even placed
an advertisement (Exhs. 3 & 4) in the local newspapers
(Manila Daily Bulletin, Manila Times, Fookien Times, and
others) warning the public against unlawful use of said
trademark (t.s.n., p. 15, Aug. 17, 1959). The advertisement
(Exh. U) in the Manila Times made by respondent
company on February 9, 1958, was brought to petitioner's
attention (t.s.n., p. 24, Oct. 7, 1958), which must have
prompted him to file this present petition for cancellation,
on February 26, 1958.
On the other hand, respondent company's long and
continuous use of the trademark "Adagio" has not
rendered it merely descriptive of the product. In Winthrop
Chemical Co. v. Blackman (268 NYS 653), it was held that
widespread dissemination does not justify the defendants
in the use of the trademark.
Veronal has been widely sold in this country by the plaintiff;
over 5,250,000 packages have been sold since 1919. This
is a consequence of the long and continued use by the
plaintiff of this trademark and is the result of its efforts to
inform the profession and the public of its product. This
widespread dissemination does not justify the defendants
in the use of this trademark. If this argument were sound,
then every time a plaintiff obtained the result of having the
public purchase its article, that fact of itself would destroy
a trademark. Arbitrary trademarks cannot become generic
in this way. Jacobs v. Beecham, 221 U.S. 263, 31 S. Ct.
555, 55 L. Ed. 729; Coca-Cola Co. v. Koke Co. of
American, 254 U.S. 143, 41 S. Ct. 113, 65 L. Ed. 189.
(emphasis supplied.)
Appellant next contends that the trademark "Adagio at the
time it was registered (in the Philippines) on October 17,
1957, had long been used by respondent company, only
"to designate a particular style or quality of brassiere and,
therefore, is unregistrable as a trademark. In support of the
contention, he alleges that the sentence "Maidenform bras
are packaged for your quick shopping convenience. For
other popular Maidenform styles writ for free style booklet
to: Maiden Form Brassiere Co., Inc 200 Madison Avenue,
New York 16, N.Y." printed on the package (Exh. W),
shows that the trademark "Adagio" is used to designate a
particular style or quality of brassiere. He also cites
portions of the testimonies of his witnesses Bautista and
Barro, to the effect that said trademark refers to the style
of brassieres sold in the stores of which they are
salesmen.
This contention is untenable. Said sentence appearing on
the package (Exh. W), standing alone, does not
conclusively indicate that the trademark "Adagio" is merely
a style of brassiere. The testimony of Mr. Schwartz,
witness of respondent company, belies petitioner's claim:
Q. There is a statement at the bottom of Exhibit W which
reads, 'There is a Maidenform for every type of figure'. As
you stated you are very familiar with these bras
manufacture by Maidenform Brassiere Company, what are
these types of figures this Exhibit W refer to?
A. This is a product sold primarily in the United States they
have cold climate there, and a style to suit the climate and
we have different here. This kind of bra very seldom comes
here. This type is very expensive and sold primarily in the
United States. We do not sell it here; it is very expensive
an import restrictions do not allow our dollar allocations for
such sort.
As to the testimonies of Bautista and Barro, they are me
conclusions of said witnesses. Note that when Bautista
was asked why he considered the trademark "Adagio" as
a style, he replied that the brand "Adagio" is attached
distinguish the style. He stated as follows:
Q. You said that those bras mentioned by you such as
Adagio, Prelude, Alloette, are styles, will you please tell us
the reason why you said that those are styles?
A. You know his brand like Adagio, Alloette are just
attached to the bras just to distinguish the style: It is not
the main brand.
Barro, on the other hand, said that "Adagio" is a mark. She
declared as follows:
Q. You state that you used to sell brassieres in the store
in which you work; when customers come to your store
and ask for brassieres, what do they usually ask from you?
A. Well, I tell you there are so many types and certain types
of people ask for certain brassiere. There are people who
ask for Royal Form Adagio and there are others who ask
for Duchess Ideal Form, and so many kinds of marks.
Brassieres are usually of different types or styles, and
appellee has used different trademarks for every type as
shown by its labels, Exhibits W-2 (Etude), W-3
(Chansonette), W-4 (Prelude), W-5 (Maidenette), and W-
6, (Overture). The mere fact that appellee uses "Adagio"
for one type or style, does not affect the validity of such
word as a trademark. In. the case of Kiekhaefer Corp. v.
Willys-Overland Motors, 111 USPQ 105, it was held that
the fact that the word "Hurricane" was used to designate
only one model of automobile, did not affect the validity of
that word as a trademark. In Minnesota Mining Co. V.
Motloid Co., 74 USPQ 235, the applicant sought to register
the letters "MM" in diagonal relationship within a circle.
Applicant admitted that this mark was used only for its
medium price and medium quality denture-base materials.
The Assistant Commissioner of Patents held:
It clearly appears, however, that the mark serves to
indicate origin of applicant's goods; and the fact that it is
used on only one of several types or grades does not affect
its registrability as a trade mark.
Appellant also claims that respondent Director erred in
registering the trademark in question, despite appellee's
non-compliance with Section 37, paragraphs 1 and 4 (a)
of Republic Act No. 166.
This contention flows from a misconception of the
application for registration of trademark of respondent. As
we see it, respondent's application was filed under the
provisions of Section 2 of Republic Act No. 166 as
amended by Section 1 of Republic Act 865 which reads as
follows:
"SEC. 2. What are registrable — Trademarks, ... own 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: ..."
Section 37 of Republic Act No. 166 can be availed of only
where the Philippines is a party to an international
convention or treaty relating to trademarks, in which the
trade-mark sought to be registered need not be use in the
Philippines. The applicability of Section 37 has been
commented on by the Director of Patents, in this wise:
Trademark rights in the Philippines, without actual use the
trademark in this country can, of course, be created
artificially by means of a treaty or convention with another
country or countries. Section 37 of the present Philippine
Trademark Law, Republic Act No. 166 (incorporated as
Rule 82 in the Rules of Practice for Registration of
Trademarks) envisions the eventual entrance of the
Philippines into such convention treaty. It is provided in
said section that applications filed thereunder need not
allege use in the Philippines of the trade mark sought to be
registered. The Philippines has, however not yet entered
into any such treaty or convention and, until she does,
actual use in the Philippines of the trademark sought to be
registered and allegation in the application of such fact, will
be required in all applications for original or renewal
registration submitted to the Philippine Patent Office.
(Circular Release No. 8.)
Appellant, likewise, contends that the registration the
trademark in question was fraudulent or contrary Section
4 of Republic Act No. 166. There is no evidence to show
that the registration of the trademark "Adagio" was
obtained fraudulently by appellee. The evidence record
shows, on the other hand, that the trademark "Adagio" was
first exclusively in the Philippines by a appellee in the year
1932. There being no evidence of use of the mark by
others before 1932, or that appellee abandoned use
thereof, the registration of the mark was made in
accordance with the Trademark Law. Granting that
appellant used the mark when appellee stopped using it
during the period of time that the Government imposed
restrictions on importation of respondent's brassiere
bearing the trademark, such temporary non-use did not
affect the rights of appellee because it was occasioned by
government restrictions and was not permanent,
intentional, and voluntary.
To work an abandonment, the disuse must be permanent
and not ephemeral; it must be intentional and voluntary,
and not involuntary or even compulsory. There must be a
thorough-going discontinuance of any trade-mark use of
the mark in question (Callman, Unfair Competition and
Trademark, 2nd Ed., p. 1341).
The use of the trademark by other manufacturers did not
indicate an intention on the part of appellee to abandon it.
"The instances of the use by others of the term 'Budweiser,
cited by the defendant, fail, even when liberally construed,
to indicate an intention upon the part of the complainant to
abandon its rights to that name. 'To establish the defense
of abandonment, it is necessary to show not only acts
indicating a practical abandonment, but an actual intention
to abandon. Saxlehner v. Eisener & Mendelson Co., 179
U.S. 19, 21 S. Ct. 7 (45 L. Ed. 60). (Anheuser-Busch, Inc.
v. Budweiser Malt Products Corp., 287 F. 245.)
Appellant next argues that respondent Director erred in
declaring illegal the appropriation in the Philippines of the
trademark in question by appellant and, therefore, said
appropriation did not affect appellee's right thereto and the
subsequent registration thereof. Appellant urges that its
appropriation of the trademark in question cannot be
considered illegal under Philippine laws, because of non-
compliance by appellee of Section 37 of Republic Act No.
166. But we have already shown that Section 37 is not the
provision invoked by respondent because the Philippines
is not as yet a party to any international convention or
treaty relating to trademarks. The case of United Drug Co.
v. Rectanus, 248 U.S. 90, 39 S. Ct. 48, 63 L. Ed. 141, cited
by appellant, is not applicable to the present case, as the
records show that appellee was the first user of the
trademark in the Philippines, whereas appellant was the
later user. Granting that appellant used the trade-mark at
the time appellee stopped using it due to government
restrictions on certain importations, such fact did not, as
heretofore stated, constitute abandonment of the
trademark as to entitle anyone to its free use.
Non-use because of legal restrictions is not evidence of an
intent to abandon. Non-use of their ancient trade-mark and
the adoption of new marks by the Carthusian Monks after
they had been compelled to leave France was consistent
with an intention to retain their right to use their old mark.
Abandonment will not be inferred from a disuse over a
period of years occasioned by statutory restrictions on the
name of liquor. (Nims Unfair Competition and Trade-Mark
p. 1269.)
IN VIEW OF ALL THE FOREGOING, we are of the opinion
and so hold, that respondent Director of Patents did not err
in dismissing the present petition for cancellation of the
registered trademark of appellee company, and the
decision appealed from is therefore hereby affirmed, with
costs against the appellant. So ordered.
G.R. No. 143993 August 18, 2004
MCDONALD'S CORPORATION and MCGEORGE
FOOD INDUSTRIES, INC., petitioners,
vs.
L.C. BIG MAK BURGER, INC., FRANCIS B. DY, EDNA
A. DY, RENE B. DY, WILLIAM B. DY, JESUS
AYCARDO, ARACELI AYCARDO, and GRACE
HUERTO, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the Decision dated 26
November 1999 of the Court of Appeals2 finding
respondent L.C. Big Mak Burger, Inc. not liable for
trademark infringement and unfair competition and
ordering petitioners to pay respondents P1,900,000 in
damages, and of its Resolution dated 11 July 2000
denying reconsideration. The Court of Appeals' Decision
reversed the 5 September 1994 Decision3 of the Regional
Trial Court of Makati, Branch 137, finding respondent L.C.
Big Mak Burger, Inc. liable for trademark infringement and
unfair competition.
The Facts
Petitioner McDonald's Corporation ("McDonald's") is a
corporation organized under the laws of Delaware, United
States. McDonald's operates, by itself or through its
franchisees, a global chain of fast-food restaurants.
McDonald's4 owns a family of marks5 including the "Big
Mac" mark for its "double-decker hamburger
sandwich."6McDonald's registered this trademark with the
United States Trademark Registry on 16 October
1979.7 Based on this Home Registration, McDonald's
applied for the registration of the same mark in
the Principal Register of the then Philippine Bureau of
Patents, Trademarks and Technology ("PBPTT"), now the
Intellectual Property Office ("IPO"). Pending approval of its
application, McDonald's introduced its "Big Mac"
hamburger sandwiches in the Philippine market in
September 1981. On 18 July 1985, the PBPTT allowed
registration of the "Big Mac" mark in the Principal Register
based on its Home Registration in the United States.
Like its other marks, McDonald's displays the "Big Mac"
mark in items8 and paraphernalia9 in its restaurants, and in
its outdoor and indoor signages. From 1982 to 1990,
McDonald's spent P10.5 million in advertisement for "Big
Mac" hamburger sandwiches alone.10
Petitioner McGeorge Food Industries ("petitioner
McGeorge"), a domestic corporation, is McDonald's
Philippine franchisee.11
Respondent L.C. Big Mak Burger, Inc. ("respondent
corporation") is a domestic corporation which operates
fast-food outlets and snack vans in Metro Manila and
nearby provinces.12 Respondent corporation's menu
includes hamburger sandwiches and other food
items.13 Respondents Francis B. Dy, Edna A. Dy, Rene B.
Dy, William B. Dy, Jesus Aycardo, Araceli Aycardo, and
Grace Huerto ("private respondents") are the
incorporators, stockholders and directors of respondent
corporation.14
On 21 October 1988, respondent corporation applied with
the PBPTT for the registration of the "Big Mak" mark for its
hamburger sandwiches. McDonald's opposed respondent
corporation's application on the ground that "Big Mak" was
a colorable imitation of its registered "Big Mac" mark for
the same food products. McDonald's also informed
respondent Francis Dy ("respondent Dy"), the chairman of
the Board of Directors of respondent corporation, of its
exclusive right to the "Big Mac" mark and requested him
to desist from using the "Big Mac" mark or any similar
mark.
Having received no reply from respondent Dy, petitioners
on 6 June 1990 sued respondents in the Regional Trial
Court of Makati, Branch 137 ("RTC"), for trademark
infringement and unfair competition. In its Order of 11 July
1990, the RTC issued a temporary restraining order
("TRO") against respondents enjoining them from using
the "Big Mak" mark in the operation of their business in the
National Capital Region.15 On 16 August 1990, the RTC
issued a writ of preliminary injunction replacing the TRO.16
In their Answer, respondents admitted that they have been
using the name "Big Mak Burger" for their fast-food
business. Respondents claimed, however, that
McDonald's does not have an exclusive right to the "Big
Mac" mark or to any other similar mark. Respondents
point out that the Isaiyas Group of Corporations ("Isaiyas
Group") registered the same mark for hamburger
sandwiches with the PBPTT on 31 March 1979. One
Rodolfo Topacio ("Topacio") similarly registered the same
mark on 24 June 1983, prior to McDonald's registration on
18 July 1985. Alternatively, respondents claimed that they
are not liable for trademark infringement or for unfair
competition, as the "Big Mak" mark they sought to register
does not constitute a colorable imitation of the "Big Mac"
mark. Respondents asserted that they did not fraudulently
pass off their hamburger sandwiches as those of
petitioners' Big Mac hamburgers.17 Respondents sought
damages in their counterclaim.
In their Reply, petitioners denied respondents' claim that
McDonald's is not the exclusive owner of the "Big Mac"
mark. Petitioners asserted that while the Isaiyas Group
and Topacio did register the "Big Mac" mark ahead of
McDonald's, the Isaiyas Group did so only in the
Supplemental Register of the PBPTT and such registration
does not provide any protection. McDonald's disclosed
that it had acquired Topacio's rights to his registration in a
Deed of Assignment dated 18 May 1981.18
The Trial Court's Ruling
On 5 September 1994, the RTC rendered judgment ("RTC
Decision") finding respondent corporation liable for
trademark infringement and unfair competition. However,
the RTC dismissed the complaint against private
respondents and the counterclaim against petitioners for
lack of merit and insufficiency of evidence. The RTC held:
Undeniably, the mark "B[ig] M[ac]" is a registered
trademark for plaintiff McDonald's, and as such, it is
entitled [to] protection against infringement.
xxxx
There exist some distinctions between the names "B[ig]
M[ac]" and "B[ig] M[ak]" as appearing in the respective
signages, wrappers and containers of the food products of
the parties. But infringement goes beyond the physical
features of the questioned name and the original name.
There are still other factors to be considered.
xxxx
Significantly, the contending parties are both in the
business of fast-food chains and restaurants. An average
person who is hungry and wants to eat a hamburger
sandwich may not be discriminating enough to look for a
McDonald's restaurant and buy a "B[ig] M[ac]" hamburger.
Once he sees a stall selling hamburger sandwich, in all
likelihood, he will dip into his pocket and order a "B[ig]
M[ak]" hamburger sandwich. Plaintiff McDonald's fast-food
chain has attained wide popularity and acceptance by the
consuming public so much so that its air-conditioned food
outlets and restaurants will perhaps not be mistaken by
many to be the same as defendant corporation's mobile
snack vans located along busy streets or highways. But
the thing is that what is being sold by both contending
parties is a food item – a hamburger sandwich which is for
immediate consumption, so that a buyer may easily be
confused or deceived into thinking that the "B[ig] M[ak]"
hamburger sandwich he bought is a food-product of
plaintiff McDonald's, or a subsidiary or allied outlet thereof.
Surely, defendant corporation has its own secret
ingredients to make its hamburger sandwiches as
palatable and as tasty as the other brands in the market,
considering the keen competition among mushrooming
hamburger stands and multinational fast-food chains and
restaurants. Hence, the trademark "B[ig] M[ac]" has been
infringed by defendant corporation when it used the name
"B[ig] M[ak]" in its signages, wrappers, and containers in
connection with its food business. xxxx
Did the same acts of defendants in using the name "B[ig]
M[ak]" as a trademark or tradename in their signages, or
in causing the name "B[ig] M[ak]" to be printed on the
wrappers and containers of their food products also
constitute an act of unfair competition under Section 29 of
the Trademark Law?
The answer is in the affirmative. xxxx
The xxx provision of the law concerning unfair competition
is broader and more inclusive than the law concerning the
infringement of trademark, which is of more limited range,
but within its narrower range recognizes a more exclusive
right derived by the adoption and registration of the
trademark by the person whose goods or services are first
associated therewith. xxx Notwithstanding the distinction
between an action for trademark infringement and an
action for unfair competition, however, the law extends
substantially the same relief to the injured party
for both cases. (See Sections 23 and 29 of Republic Act
No. 166)
Any conduct may be said to constitute unfair competition if
the effect is to pass off on the public the goods of one man
as the goods of another. The choice of "B[ig] M[ak]" as
tradename by defendant corporation is not merely for
sentimental reasons but was clearly made to take
advantage of the reputation, popularity and the
established goodwill of plaintiff McDonald's. For, as stated
in Section 29, a person is guilty of unfair competition who
in selling his goods shall give them the general
appearance, of goods of another manufacturer or dealer,
either as to the goods themselves or in the wrapping of the
packages in which they are contained, or the devices or
words thereon, or in any other feature of their appearance,
which would likely influence purchasers to believe that the
goods offered are those of a manufacturer or dealer other
than the actual manufacturer or dealer. Thus, plaintiffs
have established their valid cause of action against the
defendants for trademark infringement and unfair
competition and for damages.19
The dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is rendered in favor of plaintiffs
McDonald's Corporation and McGeorge Food Industries,
Inc. and against defendant L.C. Big Mak Burger, Inc., as
follows:
1. The writ of preliminary injunction issued in this case on
[16 August 1990] is made permanent;
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay
plaintiffs actual damages in the amount ofP400,000.00,
exemplary damages in the amount of P100,000.00, and
attorney's fees and expenses of litigation in the amount
of P100,000.00;
3. The complaint against defendants Francis B. Dy, Edna
A. Dy, Rene B. Dy, Wiliam B. Dy, Jesus Aycardo, Araceli
Aycardo and Grace Huerto, as well as all counter-claims,
are dismissed for lack of merit as well as for insufficiency
of evidence.20
Respondents appealed to the Court of Appeals.
The Ruling of the Court of Appeals
On 26 November 1999, the Court of Appeals rendered
judgment ("Court of Appeals' Decision") reversing the RTC
Decision and ordering McDonald's to pay respondents
P1,600,000 as actual and compensatory damages and
P300,000 as moral damages. The Court of Appeals held:
Plaintiffs-appellees in the instant case would like to
impress on this Court that the use of defendants-
appellants of its corporate name – the whole "L.C. B[ig]
M[ak] B[urger], I[nc]." which appears on their food
packages, signages and advertisements is an
infringement of their trademark "B[ig] M[ac]" which they
use to identify [their] double decker sandwich, sold in a
Styrofoam box packaging material with the McDonald's
logo of umbrella "M" stamped thereon, together with the
printed mark in red bl[o]ck capital letters, the words being
separated by a single space. Specifically, plaintiffs-
appellees argue that defendants-appellants' use of their
corporate name is a colorable imitation of their trademark
"Big Mac".
xxxx
To Our mind, however, this Court is fully convinced that no
colorable imitation exists. As the definition dictates, it is
not sufficient that a similarity exists in both names, but
that more importantly, the over-all presentation, or in their
essential, substantive and distinctive parts is such as
would likely MISLEAD or CONFUSE persons in the
ordinary course of purchasing the genuine article.
A careful comparison of the way the trademark "B[ig]
M[ac]" is being used by plaintiffs-appellees and corporate
name L.C. Big Mak Burger, Inc. by defendants-appellants,
would readily reveal that no confusion could take place, or
that the ordinary purchasers would be misled by it. As
pointed out by defendants-appellants, the plaintiffs-
appellees' trademark is used to designate only one
product, a double decker sandwich sold in a Styrofoam
box with the "McDonalds" logo. On the other hand, what
the defendants-appellants corporation is using is not a
trademark for its food product but a business or corporate
name. They use the business name "L.C. Big Mak Burger,
Inc." in their restaurant business which serves diversified
food items such as siopao, noodles, pizza, and
sandwiches such as hotdog, ham, fish burger and
hamburger. Secondly, defendants-appellants' corporate
or business name appearing in the food packages and
signages are written in silhouette red-orange letters with
the "b" and "m" in upper case letters. Above the words "Big
Mak" are the upper case letter "L.C.". Below the words "Big
Mak" are the words "Burger, Inc." spelled out in upper case
letters. Furthermore, said corporate or business name
appearing in such food packages and signages is always
accompanied by the company mascot, a young chubby
boy named Maky who wears a red T-shirt with the upper
case "m" appearing thereinand a blue lower
garment. Finally, the defendants-appellants' food
packages are made of plastic material.
xxxx
xxx [I]t is readily apparent to the naked eye that there
appears a vast difference in the appearance of the product
and the manner that the tradename "Big Mak" is being
used and presented to the public. As earlier noted, there
are glaring dissimilarities between plaintiffs-appellees'
trademark and defendants-appellants' corporate name.
Plaintiffs-appellees' product carrying the trademark "B[ig]
M[ac]" is a double decker sandwich (depicted in the tray
mat containing photographs of the various food products
xxx sold in a Styrofoam box with the "McDonald's" logo
and trademark in red, bl[o]ck capital letters printed thereon
xxx at a price which is more expensive than the
defendants-appellants' comparable food products. In
order to buy a "Big Mac", a customer needs to visit an air-
conditioned "McDonald's" restaurant usually located in a
nearby commercial center, advertised and identified by its
logo - the umbrella "M", and its mascot – "Ronald
McDonald". A typical McDonald's restaurant boasts of a
playground for kids, a second floor to
accommodate additional customers, a drive-thru to allow
customers with cars to make orders without alighting from
their vehicles, the interiors of the building are well-lighted,
distinctly decorated and painted with pastel colors xxx. In
buying a "B[ig] M[ac]", it is necessary to specify it by its
trademark. Thus, a customer needs to look for a
"McDonald's" and enter it first before he can find a
hamburger sandwich which carry the mark "Big Mac". On
the other hand,defendants-appellants sell their goods
through snack vans xxxx
Anent the allegation that defendants-appellants are guilty
of unfair competition, We likewise find the same
untenable.
Unfair competition is defined as "the employment of
deception or any other means contrary to good faith by
which a person shall pass off the goods manufactured by
him or in which he deals, or his business, or service, for
those of another who has already established good will for
his similar good, business or services, or any acts
calculated to produce the same result" (Sec. 29, Rep. Act
No. 166, as amended).
To constitute unfair competition therefore it
must necessarily follow that there was malice and that the
entity concerned was in bad faith.
In the case at bar, We find no sufficient evidence adduced
by plaintiffs-appellees that defendants-appellants
deliberately tried to pass off the goods manufactured by
them for those of plaintiffs-appellees. The mere suspected
similarity in the sound of the defendants-appellants'
corporate name with the plaintiffs-appellees' trademark is
not sufficient evidence to conclude unfair competition.
Defendants-appellants explained that the name "M[ak]" in
their corporate name was derived from both the first
names of the mother and father of defendant Francis Dy,
whose names are Maxima and Kimsoy. With this
explanation, it is up to the plaintiffs-appellees to prove bad
faith on the part of defendants-appellants. It is a settled
rule that the law always presumes good faith such
that any person who seeks to be awarded damages due
to acts of another has the burden of proving
that the latter acted in bad faith or with ill motive. 21
Petitioners sought reconsideration of the Court of Appeals'
Decision but the appellate court denied their motion in its
Resolution of 11 July 2000.
Hence, this petition for review.
Petitioners raise the following grounds for their petition:
I. THE COURT OF APPEALS ERRED IN FINDING THAT
RESPONDENTS' CORPORATE NAME "L.C. BIG MAK
BURGER, INC." IS NOT A COLORABLE IMITATION OF
THE MCDONALD'S TRADEMARK "BIG MAC", SUCH
COLORABLE IMITATION BEING AN ELEMENT
OF TRADEMARK INFRINGEMENT.
A. Respondents use the words "Big Mak" as trademark for
their products and not merely as their business or
corporate name.
B. As a trademark, respondents' "Big Mak" is undeniably
and unquestionably similar to petitioners' "Big Mac"
trademark based on the dominancy test and the idem
sonans test resulting inexorably in confusion on the part of
the consuming public.
II. THE COURT OF APPEALS ERRED IN REFUSING TO
CONSIDER THE INHERENT SIMILARITY BETWEEN
THE MARK "BIG MAK" AND THE WORD MARK "BIG
MAC" AS AN INDICATION OF RESPONDENTS' INTENT
TO DECEIVE OR DEFRAUD FOR PURPOSES OF
ESTABLISHING UNFAIR COMPETITION.22
Petitioners pray that we set aside the Court of Appeals'
Decision and reinstate the RTC Decision.
In their Comment to the petition, respondents question the
propriety of this petition as it allegedly raises only
questions of fact. On the merits, respondents contend that
the Court of Appeals committed no reversible error in
finding them not liable for trademark infringement and
unfair competition and in ordering petitioners to pay
damages.
The Issues
The issues are:
1. Procedurally, whether the questions raised in this
petition are proper for a petition for review under Rule 45.
2. On the merits, (a) whether respondents used the words
"Big Mak" not only as part of the corporate name "L.C. Big
Mak Burger, Inc." but also as a trademark for their
hamburger products, and (b) whether respondent
corporation is liable for trademark infringement and unfair
competition.23
The Court's Ruling
The petition has merit.
On Whether the Questions Raised in the Petition are
Proper for a Petition for Review
A party intending to appeal from a judgment of the Court
of Appeals may file with this Court a petition for review
under Section 1 of Rule 45 ("Section 1")24 raising only
questions of law. A question of law exists when the doubt
or difference arises on what the law is on a certain state of
facts. There is a question of fact when the doubt or
difference arises on the truth or falsity of
the alleged facts. 25
Here, petitioners raise questions of fact and law in
assailing the Court of Appeals' findings on respondent
corporation's non-liability for trademark infringement and
unfair competition. Ordinarily, the Court can deny due
course to such a petition. In view, however, of the
contradictory findings of fact of the RTC and Court of
Appeals, the Court opts to accept the petition, this being
one of the recognized exceptions to Section 1. 26 We took
a similar course of action in Asia Brewery, Inc. v. Court
of Appeals27 which also involved a suit for trademark
infringement and unfair competition in which the trial court
and the Court of Appeals arrived at conflicting findings.
On the Manner Respondents Used
"Big Mak" in their Business
Petitioners contend that the Court of Appeals erred in
ruling that the corporate name "L.C. Big Mak Burger, Inc."
appears in the packaging for respondents' hamburger
products and not the words "Big Mak" only.
The contention has merit.
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." 29It 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, anyreproduction, counterfeit, copy or colorable
imitation of any registered mark or trade-name in
connection withthe sale, offering for sale, or advertising
of any goods, business or services on or in connection
with which such use is likely to cause confusion or mistake
or to deceive purchasers or others as to the source or
origin of such goods or services, or identity of such
business; or [2] reproduce, counterfeit, copy, or colorably
imitate any such mark or trade-name and apply such
reproduction, counterfeit, copy, or colorable imitation to
labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection
with such goods, business or services, shall be liable to a
civil action by the registrant for any or all of the
remedies herein provided.33
Petitioners base their cause of action under the first part of
Section 22, i.e. respondents allegedly used, without
petitioners' consent, a colorable imitation of the "Big Mac"
mark in advertising and selling respondents' hamburger
sandwiches. This likely caused confusion in the mind of
the purchasing public on the source of the hamburgers or
the identity of the business.
To establish trademark infringement, the following
elements must be shown: (1) the validity of plaintiff's mark;
(2) the plaintiff's ownership of the mark; and (3) the use
of the mark or its colorable imitation by
the alleged infringer results in "likelihood of
confusion."34 Of these, it is the element of likelihood of
confusion that is the gravamen of trademark
infringement.35
On the Validity of the "Big Mac"Mark
and McDonald's Ownership of such Mark
A mark is valid if it is "distinctive" and thus not barred from
registration under Section 436 of RA 166 ("Section
4"). However, once registered, not only the mark's validity
but also the registrant's ownership of the mark is prima
facie presumed.37
Respondents contend that of the two words in the "Big
Mac" mark, it is only the word "Mac" that is valid because
the word "Big" is generic and descriptive (proscribed under
Section 4[e]), and thus "incapable of exclusive
appropriation."38
The contention has no merit. The "Big Mac" mark, which
should be treated in its entirety and not dissected word for
word,39 is neither generic nor descriptive. Generic marks
are commonly used as the name or description of
a kind ofgoods,40 such as "Lite" for beer41 or "Chocolate
Fudge" for chocolate soda drink.42 Descriptive marks, on
the other hand, convey the characteristics, functions,
qualities or ingredients of a product to one who has never
seen it or does not know it exists,43 such as "Arthriticare"
for arthritis medication.44 On the contrary, "Big Mac" falls
under theclass of fanciful or arbitrary marks as it bears no
logical relation to the actual characteristics of the product
it represents.45 As such, it is highly distinctive and thus
valid. Significantly, the trademark "Little Debbie" for snack
cakes was found arbitrary or fanciful.46
The Court also finds that petitioners have duly established
McDonald's exclusive ownership of the "Big Mac" mark.
Although Topacio and the Isaiyas Group registered the
"Big Mac" mark ahead of McDonald's, Topacio, as
petitioners disclosed, had already assigned his rights to
McDonald's. The Isaiyas Group, on the other hand,
registered its trademark only in the Supplemental
Register. A mark which is not registered in
the Principal Register, and thus not distinctive, has no real
protection.47 Indeed, we have held that registration in the
Supplemental Register is not even a prima facie evidence
of the validity of the registrant's exclusive right to use the
mark on the goods specified in the certificate.48
On Types of Confusion
Section 22 covers two types of confusion arising from the
use of similar or colorable imitation marks, namely,
confusion of goods (product confusion) and confusion of
business (source or origin confusion). In Sterling Products
International, Incorporated v. Farbenfabriken Bayer
Aktiengesellschaft, et al.,49 the Court distinguished these
two types of confusion, thus:
[Rudolf] Callman notes two types of confusion. The first is
the confusion of goods "in which event the ordinarily
prudent purchaser would be induced to purchase one
product in the belief that he was purchasing the other." xxx
The other is the confusion of business: "Here though the
goods of the parties are different, the defendant's product
is such as might reasonably be assumed to originate with
the plaintiff, and the public would then be deceived either
into that belief or into the belief that there is some
connection between the plaintiff and defendant which, in
fact, does not exist."
Under Act No. 666,50 the first trademark law, infringement
was limited to confusion of goods only, when the infringing
mark is used on "goods of a similar kind."51 Thus, no relief
was afforded to the party whose registered mark or its
colorable imitation is used on different although related
goods. To remedy this situation, Congress enacted RA
166 on 20 June 1947. In defining trademark infringement,
Section 22 of RA 166 deleted the requirement in question
and expanded its scope to include such use of the mark or
its colorable imitation that is likely to result in confusion on
"the source or origin of such goods or services, or identity
of such business."52 Thus, while there is confusion of
goods when the products are competing, confusion of
business exists when the products are non-competing but
related enough to produce confusion of affiliation.53
On Whether Confusion of Goods and
Confusion of Business are Applicable
Petitioners claim that respondents' use of the "Big Mak"
mark on respondents' hamburgers results in confusion of
goods, particularly with respect to petitioners' hamburgers
labeled "Big Mac." Thus, petitioners alleged in their
complaint:
1.15. Defendants have unduly prejudiced and clearly
infringed upon the property rights of plaintiffs in the
McDonald's Marks, particularly the mark "B[ig]
M[ac]". Defendants' unauthorized acts are likely, and
calculated, to confuse, mislead or deceive the public into
believing that the products and services offered by
defendant Big Mak Burger, and the business it is engaged
in, are approved and sponsored by, or affiliated with,
plaintiffs.54 (Emphasis supplied)
Since respondents used the "Big Mak" mark on the same
goods, i.e. hamburger sandwiches, that petitioners' "Big
Mac" mark is used, trademark infringement through
confusion of goods is a proper issue in this case.
Petitioners also claim that respondents' use of the "Big
Mak" mark in the sale of hamburgers, the same business
that petitioners are engaged in, results in confusion of
business. Petitioners alleged in their complaint:
1.10. For some period of time, and without the consent of
plaintiff McDonald's nor its licensee/franchisee, plaintiff
McGeorge, and in clear violation of plaintiffs' exclusive
right to use and/or appropriate the McDonald's marks,
defendant Big Mak Burger acting through individual infringement through confusion of business is also a
defendants, has been operating "Big Mak Burger", a fast proper issue in this case.
food restaurant business dealing in the sale of hamburger
Respondents assert that their "Big Mak" hamburgers
and cheeseburger sandwiches, french fries and other food
cater mainly to the low-income group while petitioners'
products, and has caused to be printed on the wrapper of
"Big Mac" hamburgers cater to the middle and upper
defendant's food products and incorporated in its signages
income groups. Even if this is true, the likelihood of
the name "Big Mak Burger", which is confusingly similar
confusion of business remains, since the low-income
to and/or is a colorable imitation of the plaintiff McDonald's
group might be led to believe that the "Big Mak"
mark "B[ig] M[ac]", xxx. Defendant Big Mak Burger has
hamburgers are the low-end hamburgers marketed by
thus unjustly created the impression that its business
petitioners. After all, petitioners have the exclusive right to
is approved and sponsored by, or affiliated with,
use the "Big Mac" mark. On the other hand, respondents
plaintiffs.xxxx
would benefit by associating their low-end hamburgers,
2.2 As a consequence of the acts committed by through the use of the "Big Mak" mark, with petitioners'
defendants, which unduly prejudice and infringe upon the high-end "Big Mac" hamburgers, leading to likelihood of
property rights of plaintiffs McDonald's and McGeorge as confusion in the identity of business.
the real owner and rightful proprietor, and the
Respondents further claim that petitioners use the "Big
licensee/franchisee, respectively, of the McDonald's
Mac" mark only on petitioners' double-decker hamburgers,
marks, and which are likely to have caused confusion or
while respondents use the "Big Mak" mark on hamburgers
deceived the public as to the true source,
and other products like siopao, noodles and pizza.
sponsorship or affiliation of defendants' food
Respondents also point out that petitioners sell their Big
products and restaurant business, plaintiffs have
Mac double-deckers in a styrofoam box with the
suffered and continue to suffer actual damages in the form
"McDonald's" logo and trademark in red, block letters at a
of injury to their business reputation and goodwill, and
price more expensive than the hamburgers of
of the dilution of the distinctive quality of the McDonald's
respondents. In contrast, respondents sell their Big Mak
marks, in particular, the mark "B[ig] M[ac]".55 (Emphasis
hamburgers in plastic wrappers and plastic bags.
supplied)
Respondents further point out that petitioners' restaurants
Respondents admit that their business includes selling are air-conditioned buildings with drive-thru service,
hamburger sandwiches, the same food product that compared to respondents' mobile vans.
petitioners sell using the "Big Mac" mark. Thus, trademark
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 sufficientthat a similarity exists in both name(s), but
that more importantly, the overall presentation, or in their
essential, substantive and distinctive parts is such as
would likely MISLEAD or CONFUSE persons in the
ordinary course of purchasing the genuine article." The
holistic test considers the two marks in their entirety, as
they appear on the goods with their labels and packaging.
It is not enough to consider their words and
compare the spelling and pronunciation of the words.58
Respondents now vigorously argue that the Court of
Appeals' application of the holistic test to this case is
correct and in accord with prevailing jurisprudence.
This Court, however, has relied on the dominancy test
rather than the holistic test. The dominancy test considers
the dominant features in the competing marks
in determining whether they are confusingly similar. Under
the dominancy test, courts give greater weight to the
similarity of the appearance of the product arising
from the adoption of the dominant features of the
registered mark, disregarding minor differences.59 Courts
will consider more the aural and visual impressions
created by the marks in the public mind, giving little weight
to factors like prices, quality, sales outlets and market
segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of
Patents,60 the Court ruled:
xxx It has been consistently held that the question of
infringement of a trademark is to be determined by the test
of dominancy. Similarity in size, form and color, while
relevant, is not conclusive. If the competing trademark
contains the main or essential or dominant features of
another, and confusion and deception is likely to
result, infringement takes place. Duplication or imitation
is not necessary; nor is it necessary that the infringing
label should suggest an effort to imitate. (G. Heilman
Brewing Co. vs. Independent Brewing Co., 191 F., 489,
495, citing Eagle White Lead Co. vs. Pflugh (CC) 180 Fed.
579). The question at issue in cases of infringement of
trademarks is whether the use of the marks involved
would be likely to cause confusion or mistakes in the mind
of the public or deceive purchasers. (Auburn Rubber
Corporation vs. Honover Rubber Co., 107 F. 2d 588; xxx)
(Emphasis supplied.)
The Court reiterated the dominancy test in Lim Hoa v.
Director of Patents,61 Phil. Nut Industry, Inc. v.
Standard Brands Inc.,62 Converse Rubber Corporation
v. Universal Rubber Products, Inc.,63 and Asia
Brewery, Inc. v. Court of Appeals.64 In the 2001 case
of Societe Des Produits Nestlé, S.A. v. Court of
Appeals,65 the Court explicitly rejected the holistic test in
this wise:
[T]he totality or holistic test is contrary to the
elementary postulate of the law on trademarks and
unfair competition that confusing similarity is to
be determined on the basis of visual, aural, connotative
comparisons and overall impressions engendered by the
marks in controversy as they are encountered in the
realities of the marketplace. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into
law in Section 155.1 of the Intellectual Property Code
which defines infringement as the "colorable imitation of a
registered mark xxx or a dominant feature thereof."
Applying the dominancy test, the Court finds that
respondents' use of the "Big Mak" mark results in
likelihood of confusion. First, "Big Mak" sounds exactly the
same as "Big Mac." Second, the first word in "Big Mak"
is exactly the same as the first word in "Big Mac." Third,
the first two letters in "Mak" are the same as the first two
letters in "Mac." Fourth, the last letter in "Mak" while a "k"
sounds the same as "c" when the word "Mak" is
pronounced. Fifth, in Filipino, the letter "k" replaces "c" in
spelling, thus "Caloocan" is spelled "Kalookan."
In short, aurally the two marks are the same, with the first
word of both marks phonetically the same, and the second
word of both marks also phonetically the same. Visually,
the two marks have both two words and six letters, with the
first word of both marks having the same letters and the
second word having the same first two letters. In spelling,
considering the Filipino language, even the last letters
of both marks are the same.
Clearly, respondents have adopted in "Big Mak" not
only the dominant but also almost all the features of
"Big Mac." Applied to the same food product of
hamburgers, the two marks will likely result in confusion in
the public mind.
The Court has taken into account the aural effects of the
words and letters contained in the marks in determining
the issue of confusing similarity. Thus, in Marvex
Commercial Co., Inc. v. Petra Hawpia & Co., et al.,66 the
Court held:
The following random list of confusingly similar sounds in
the matter of trademarks, culled from Nims, Unfair
Competition and Trade Marks, 1947, Vol. 1, will reinforce
our view that "SALONPAS" and "LIONPAS" are
confusingly similar in sound: "Gold Dust" and "Gold Drop";
"Jantzen" and "Jass-Sea"; "Silver Flash" and "Supper
Flash"; "Cascarete" and "Celborite"; "Celluloid" and
"Cellonite"; "Chartreuse" and "Charseurs"; "Cutex" and
"Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex";
"Zuso" and "Hoo Hoo". Leon Amdur, in his book "Trade-
Mark Law and Practice", pp. 419-421, cities, as
coming within the purview of the idem sonans rule,
"Yusea" and "U-C-A", "Steinway Pianos" and "Steinberg
Pianos", and "Seven-Up" and "Lemon-Up". In Co Tiong vs.
Director of Patents, this Court unequivocally said that
"Celdura" and "Cordura" are confusingly similar in sound;
this Court held in Sapolin Co. vs. Balmaceda, 67 Phil. 795
that the name "Lusolin" is an infringement of the trademark
"Sapolin", as the sound of the two names is almost the
same. (Emphasis supplied)
Certainly, "Big Mac" and "Big Mak" for hamburgers create
even greater confusion, not only aurally but also visually.
Indeed, a person cannot distinguish "Big Mac" from "Big
Mak" by their sound. When one hears a "Big Mac" or "Big
Mak" hamburger advertisement over the radio, one would
not know whether the "Mac" or "Mak" ends with a "c" or a
"k."
Petitioners' aggressive promotion of the "Big Mac" mark,
as borne by their advertisement expenses, has built
goodwill and reputation for such mark making it one of the
easily recognizable marks in the market today.
This increases the likelihood that consumers will
mistakenly associate petitioners' hamburgers and
business with those of respondents'.
Respondents' inability to explain sufficiently how and why
they came to choose "Big Mak" for their hamburger
sandwiches indicates their intent to imitate petitioners'
"Big Mac" mark. Contrary to the Court of Appeals' finding,
respondents' claim that their "Big Mak" mark was inspired
by the first names of respondent Dy's mother (Maxima)
and father (Kimsoy) is not credible. As petitioners well
noted:
[R]espondents, particularly Respondent Mr. Francis Dy,
could have arrived at a more creative choice for a
corporate name by using the names of his parents,
especially since he was allegedly driven by sentimental
reasons. For one, he could have put his father's name
ahead of his mother's, as is usually done in this patriarchal
society, and derived letters from said names in that order.
Or, he could have taken an equal number of letters (i.e.,
two) from each name, as is the more usual thing done.
Surely, the more plausible reason behind Respondents'
choice of the word "M[ak]", especially when taken in
conjunction with the word "B[ig]", was their intent to take
advantage of Petitioners' xxx "B[ig] M[ac]" trademark, with
their allegedsentiment-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 McDonald's to
identify its double decker hamburger sandwich. The
packaging material is a styrofoam box with the
McDonald's logo and trademark in red with block capital
letters printed on it. All letters of the "B[ig] M[ac]" mark are
also in red and block capital letters. On the other
hand,defendants' "B[ig] M[ak]" script print is in orange with
only the letter "B" and "M" being capitalized and the
packaging material is plastic wrapper. xxxx Further,
plaintiffs' logo and mascot are the umbrella "M" and
"Ronald McDonald's", respectively, compared to the
mascot of defendant Corporation which is a chubby boy
called "Macky" displayed or printed between the words
"Big" and "Mak."81 (Emphasis supplied)
Respondents point to these dissimilarities as proof that
they did not give their hamburgers the general appearance
of petitioners' "Big Mac" hamburgers.
The dissimilarities in the packaging are minor compared to
the stark similarities in the words that give respondents'
"Big Mak" hamburgers the general appearance of
petitioners' "Big Mac" hamburgers. Section 29(a)
expressly provides that the similarity in the general
appearance of the goods may be in the "devices or words"
used on the wrappings. Respondents have applied on their
plastic wrappers and bags almost the same words that
petitioners use on their styrofoam box. What attracts the
attention of the buying public are the words "Big Mak"
which are almost the same, aurally and visually, as the
words "Big Mac." The dissimilarities in the material and
other devices are insignificant compared to the glaring
similarity in the words used in the wrappings.
Section 29(a) also provides that the defendant gives "his
goods the general appearance of goods of another
manufacturer." Respondents' goods are hamburgers
which are also the goods of petitioners. If respondents sold
egg sandwiches only instead of hamburger sandwiches,
their use of the "Big Mak" mark would not give their goods
the general appearance of petitioners' "Big Mac"
hamburgers. In such case, there is only trademark
infringement but no unfair competition. However, since
respondents chose to apply the "Big Mak" mark on
hamburgers, just like petitioner's use of the "Big Mac" mark
on hamburgers, respondents have obviously clothed their
goods with the general appearance of petitioners' goods.
Moreover, there is no notice to the public that the "Big Mak"
hamburgers are products of "L.C. Big Mak Burger, Inc."
Respondents introduced during the trial plastic wrappers
and bags with the words "L.C. Big Mak Burger, Inc." to
inform the public of the name of the seller of the
hamburgers. However, petitioners introduced during the
injunctive hearings plastic wrappers and bags with the "Big
Mak" mark without the name "L.C. Big Mak Burger, Inc."
Respondents' belated presentation of plastic wrappers
and bags bearing the name of "L.C. Big Mak Burger, Inc."
as the seller of the hamburgers is an after-thought
designed to exculpate them from their unfair business
conduct. As earlier stated, we cannot consider
respondents' evidence since petitioners' complaint was of the six years (1984-1990) respondents have used the
based on facts existing before and during the injunctive "Big Mak" mark.84
hearings.
The RTC also did not err in awarding exemplary damages
Thus, there is actually no notice to the public that the "Big by way of correction for the public good85 in view of the
Mak" hamburgers are products of "L.C. Big Mak Burger, finding of unfair competition where intent to deceive the
Inc." and not those of petitioners who have the exclusive public is essential. The award of attorney's fees and
right to the "Big Mac" mark. This clearly shows expenses of litigation is also in order.86
respondents' intent to deceive the public. Had
WHEREFORE, we GRANT the instant petition. We SET
respondents' placed a notice on their plastic wrappers and
ASIDE the Decision dated 26 November 1999 of the Court
bags that the hamburgers are sold by "L.C. Big Mak
of Appeals and its Resolution dated 11 July 2000 and
Burger, Inc.", then they could validly claim that they did not
REINSTATE the Decision dated 5 September 1994 of the
intend to deceive the public. In such case, there is only
Regional Trial Court of Makati, Branch 137, finding
trademark infringement but no unfair
82 respondent L.C. Big Mak Burger, Inc. liable for trademark
competition. Respondents, however, did not give such
infringement and unfair competition.
notice. We hold that as found by the RTC, respondent
corporation is liable for unfair competition. SO ORDERED.
The Remedies Available to Petitioners
Under Section 2383 ("Section 23") in relation to Section 29
of RA 166, a plaintiff who successfully maintains
trademark infringement and unfair competition claims is
entitled to injunctive and monetary reliefs. Here, the RTC
did not err in issuing the injunctive writ of 16 August 1990
(made permanent in its Decision of 5 September 1994)
and in ordering the payment of P400,000 actual damages
in favor of petitioners. The injunctive writ is indispensable
to prevent further acts of infringement by respondent
corporation. Also, the amount of actual damages is a
reasonable percentage (11.9%) of respondent
corporation's gross sales for three (1988-1989 and 1991)
G.R. No. 166115 February 2, 2007
McDONALD’S CORPORATION, Petitioner,
vs.
MACJOY FASTFOOD CORPORATION, Respondent.
DECISION
GARCIA, J.:
In this petition for review on certiorari under Rule 45 of the
Rules of Court, herein petitioner McDonald’s Corporation
seeks the reversal and setting aside of the following
issuances of the Court of Appeals (CA) in CA-G.R. SP No.
57247, to wit:
1. Decision dated 29 July 20041 reversing an earlier
decision of the Intellectual Property Office (IPO) which
rejected herein respondent MacJoy FastFood
Corporation’s application for registration of the trademark
"MACJOY & DEVICE"; and
2. Resolution dated 12 November 20042 denying the
petitioner’s motion for reconsideration.
As culled from the record, the facts are as follows:
On 14 March 1991, respondent MacJoy Fastfood
Corporation, a domestic corporation engaged in the sale
of fast food products in Cebu City, filed with the then
Bureau of Patents, Trademarks and Technology Transfer
(BPTT), now the Intellectual Property Office (IPO), an
application, thereat identified as Application Serial No.
75274, for the registration of the trademark "MACJOY &
DEVICE" for fried chicken, chicken barbeque, burgers,
fries, spaghetti, palabok, tacos, sandwiches, halo-halo and
steaks under classes 29 and 30 of the International
Classification of Goods.
Petitioner McDonald’s Corporation, a corporation duly
organized and existing under the laws of the State of
Delaware, USA, filed a verified Notice of
Opposition against the respondent’s application claiming
3
that the trademark "MACJOY & DEVICE" so resembles its
corporate logo, otherwise known as the Golden Arches or
"M" design, and its marks "McDonalds," McChicken,"
"MacFries," "BigMac," "McDo," "McSpaghetti," "McSnack,"
and "Mc," (hereinafter collectively known as the
MCDONALD’S marks) such that when used on identical or
related goods, the trademark applied for would confuse or
deceive purchasers into believing that the goods originate
from the same source or origin. Likewise, the petitioner
alleged that the respondent’s use and adoption in bad faith
of the "MACJOY & DEVICE" mark would falsely tend to
suggest a connection or affiliation with petitioner’s
restaurant services and food products, thus, constituting a
fraud upon the general public and further cause the dilution
of the distinctiveness of petitioner’s registered and
internationally recognized MCDONALD’S marks to its
prejudice and irreparable damage. The application and the
opposition thereto was docketed as Inter Partes Case No.
3861.
Respondent denied the aforementioned allegations of the
petitioner and averred that it has used the mark "MACJOY"
for the past many years in good faith and has spent
considerable sums of money for said mark’s extensive
promotion in tri-media, especially in Cebu City where it has
been doing business long before the petitioner opened its
outlet thereat sometime in 1992; and that its use of said
mark would not confuse affiliation with the petitioner’s
restaurant services and food products because of the
differences in the design and detail of the two (2) marks.
In a decision4 dated December 28, 1998, the IPO,
ratiocinating that the predominance of the letter "M," and
the prefixes "Mac/Mc" in both the "MACJOY" and the
"MCDONALDS" marks lead to the conclusion that there is
confusing similarity between them especially since both
are used on almost the same products falling under
classes 29 and 30 of the International Classification of
Goods, i.e., food and ingredients of food, sustained the
petitioner’s opposition and rejected the respondent’s
application, viz:
WHEREFORE, the Opposition to the registration of the
mark MACJOY & DEVICE for use in fried chicken and
chicken barbecue, burgers, fries, spaghetti, palabok,
tacos, sandwiches, halo-halo, and steaks is, as it is
hereby, SUSTAINED. Accordingly, Application Serial No.
75274 of the herein Respondent-Applicant is REJECTED.
Let the filewrapper of MACJOY subject matter of this case
be sent to the Administrative, Financial and Human
Resources Development Bureau for appropriate action in
accordance with this Decision, with a copy to be furnished
the Bureau of Trademarks for information and to update its
record.
SO ORDERED.
In time, the respondent moved for a reconsideration but
the IPO denied the motion in its Order5 of January 14,
2000.
Therefrom, the respondent went to the CA via a Petition
for Review with prayer for Preliminary Injunction6 under
Rule 43 of the Rules of Court, whereat its appellate
recourse was docketed as CA-G.R. SP No. 57247.
Finding no confusing similarity between the marks
"MACJOY" and "MCDONALD’S," the CA, in its herein
assailed Decision7 dated July 29, 2004, reversed and set
aside the appealed IPO decision and order, thus:
WHEREFORE, in view of the foregoing, judgment is
hereby rendered by us REVERSING and SETTING ASIDE
the Decision of the IPO dated 28 December 1998 and its
Order dated 14 January 2000 and ORDERING the IPO to
give due course to petitioner’s 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 MCDONALD’S 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 MCDONALD’S. They
are, as averred by the petitioner [now respondent]:
1. The word "MacJoy" is written in round script while the
word "McDonald’s" is written in single stroke gothic;
2. The word "MacJoy" comes with the picture of a chicken
head with cap and bowtie and wings sprouting on both
sides, while the word "McDonald’s" comes with an arches
"M" in gold colors, and absolutely without any picture of a
chicken;
3. The word "MacJoy" is set in deep pink and white color
scheme while "McDonald’s" is written in red, yellow and
black color combination;
4. The façade of the respective stores of the parties are
entirely different. Exhibits 1 and 1-A, show that
[respondent’s] restaurant is set also in the same bold,
brilliant and noticeable color scheme as that of its
wrappers, containers, cups, etc., while [petitioner’s]
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 Resolution8 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] McDonald’s Corporation. The "Macjoy &
Device" mark is dissimilar in color, design, spelling, size,
concept and appearance to the McDonald’s marks.
(Words in brackets supplied.)
Hence, the petitioner’s present recourse on the following
grounds:
I.
THE COURT OF APPEALS ERRED IN RULING THAT
RESPONDENT’S "MACJOY & DEVICE" MARK IS NOT
CONFUSINGLY SIMILAR TO PETITIONER’S
"McDONALD’S 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 McDonald’s 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 Petitioner’s McDonald’s Marks and the Respondent’s
"Macjoy & Device" mark. As such, the marks are
confusingly similar under the Dominancy Test.
C. Petitioner’s McDonald’s 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 respondent’s claim, the petitioner’s Managing
Counsel, Sheila Lehr, was specifically authorized to sign
on behalf of the petitioner the Verification and
Certification10 attached to the petition. As can be gleaned
from the petitioner’s Board of Director’s 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 respondent’s 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 MCDONALD’S marks of the
petitioner and the respondent’s "MACJOY & DEVICE"
trademark when applied to Classes 29 and 30 of the
International Classification of Goods, i.e., food and
ingredients of food.
In determining similarity and likelihood of confusion,
jurisprudence has developed two tests, the dominancy test
and the holistic test.15 The dominancy test focuses on the
similarity of the prevalent features of the competing
trademarks that might cause confusion or deception.16 In
contrast, the holistic test requires the court to consider the
entirety of the marks as applied to the products, including
the labels and packaging, in determining confusing
similarity.17 Under the latter test, a comparison of the
words is not the only determinant factor.18 1awphi1.net
Here, the IPO used the dominancy test in concluding that
there was confusing similarity between the two (2)
trademarks in question as it took note of the appearance
of the predominant features "M", "Mc" and/or "Mac" in both
the marks. In reversing the conclusion reached by the IPO,
the CA, 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
[respondent’s] 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 CA’s 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. CA24 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 petitioner’s 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 petitioner’s "MCDONALD’S" and
respondent’s "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
MCDONALD’S 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
respondent’s 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 petitioner’s trademark registration for the
MCDONALD’S marks in the Philippines covers goods
which are similar if not identical to those covered by the
respondent’s application.
Thus, we concur with the IPO’s findings that:
In the case at bar, the predominant features such as the
"M," "Mc," and "Mac" appearing in both McDonald’s 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 McDonald’s 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
Donald’s 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 mark’s validity but also the
registrant’s ownership thereof is prima facie presumed.26
Pursuant to Section 3727 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 Convention28 under which the Philippines and
the petitioner’s domicile, the United States, are adherent-
members, the petitioner was able to register its
MCDONALD’S marks successively, i.e., "McDonald’s" in
04 October, 197129 ; the corporate logo which is the "M" or
the golden arches design and the "McDonald’s" 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 respondent’s
application for registration of its trademark "MACJOY &
DEVICE" was filed only on March 14, 1991 albeit the date
of first use in the Philippines was December 7, 1987.32
Hence, from the evidence on record, it is clear that the
petitioner has duly established its ownership of the mark/s.
Respondent’s 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 McDonald’s
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 Law33 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 respondent’s claim that the
petitioner cannot acquire ownership of the word "Mac"
because it is a personal name which may not be
monopolized as a trademark as against others of the same
name or surname. As stated earlier, once a trademark has
been registered, the validity of the mark is prima facie
presumed. In this case, the respondent failed to overcome petitioner’s restaurant business and food products, is
such presumption. We agree with the observations of the undoubtedly beyond question.
petitioner regarding the respondent’s explanation that the
Thus, the IPO was correct in rejecting and denying the
word "MACJOY" is based on the name of its president’s
respondent’s application for registration of the trademark
niece, Scarlett Yu Carcell. In the words of the petitioner:
"MACJOY & DEVICE." As this Court ruled in Faberge Inc.
First of all, Respondent failed to present evidence to v. IAC,35 citing Chuanchow Soy & Canning Co. v. Dir. of
support the foregoing claim which, at best, is a mere self- Patents and Villapanta:36
serving assertion. Secondly, it cannot be denied that there
When one applies for the registration of a trademark or
is absolutely no connection between the name "Scarlett Yu
label which is almost the same or very closely resembles
Carcel" and "MacJoy" to merit the coinage of the latter
one already used and registered by another, the
word. Even assuming that the word "MacJoy" was chosen
application should be rejected and dismissed outright,
as a term of endearment, fondness and affection for a
even without any opposition on the part of the owner and
certain Scarlett Yu Carcel, allegedly the niece of
user of a previously registered label or trademark, this not
Respondent’s president, as well as to supposedly bring
only to avoid confusion on the part of the public, but also
good luck to Respondent’s business, one cannot help but
to protect an already used and registered trademark and
wonder why out of all the possible letters or combinations
an established goodwill.
of letters available to Respondent, its president had to
choose and adopt a mark with the prefix "Mac" as the WHEREFORE, the instant petition is GRANTED.
dominant feature thereof. A more plausible explanation Accordingly, the assailed Decision and Resolution of the
perhaps is that the niece of Respondent’s president was Court of Appeals in CA-G.R. SP NO. 57247, are
fond of the food products and services of the Respondent, REVERSED and SET ASIDE and the Decision of the
but that is beside the point." 34 Intellectual Property Office in Inter Partes Case No. 3861
is REINSTATED.
By reason of the respondent’s implausible and insufficient
explanation as to how and why out of the many choices of No pronouncement as to costs.
words it could have used for its trade-name and/or
trademark, it chose the word "MACJOY," the only logical SO ORDERED.
conclusion deducible therefrom is that the respondent
would want to ride high on the established reputation and
goodwill of the MCDONALD’s marks, which, as applied to
G.R. No. L-20635 March 31, 1966
ETEPHA, A.G., petitioner,
vs.
DIRECTOR OF PATENTS and WESTMONT
PHARMACEUTICALS, INC., respondents.
McClure, Salas and Gonzalez, for petitioner.
Sycip, Salazar, Manalo, Luna and Associates, for
respondent.
SANCHEZ, J.:
To the question: May trademark ATUSSIN be registered,
given the fact that PERTUSSIN, another trademark, had
been previously registered in the Patent Office? — the
Director of Patents answered affirmatively. Hence this
appeal.
On April 23, 1959, respondent Westmont
Pharmaceuticals, Inc., a New York corporation, sought
registration of trademark "Atussin" placed on its "medicinal
preparation of expectorant antihistaminic, bronchodilator
sedative, ascorbic acid (Vitamin C) used in the treatment
of cough". The trademark is used exclusively in the
Philippines since January 21, 1959.1
Petitioner, Etepha, A. G., a Liechtenstin (principality)
corporation, objected. Petitioner claims that it will be
damaged because Atussin is so confusedly similar to its
Pertussin (Registration No. 6089, issued on September
25, 1957) used on a preparation for the treatment of
coughs, that the buying public will be misled into believing
that Westmont's product is that of petitioner's which
allegedly enjoys goodwill.
1. The objects of a trademark are "to point out distinctly the
origin or ownership of the articles to which it is affixed, to
secure to him who has been instrumental in bringing into
market a superior article or merchandise the fruit of his
industry and skill, and to prevent fraud and
imposition."2 Our over-all task then is to ascertain whether
or not Atussin so resembles Pertussin "as to be likely,
when applied to or used in connection with the goods ... of
the applicant, to cause confusion or mistake or to deceive
purchasers".3 And, we are to be guided by the rule that the
validity of a cause for infringement is predicated upon
colorable imitation. The phrase "colorable imitation"
denotes such a "close or ingenious imitation as to be
calculated to deceive ordinary persons, or such a
resemblance 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."4
2. That the word "tussin" figures as a component of both
trademarks is nothing to wonder at. The Director of
Patents aptly observes that it is "the common practice in
the drug and pharmaceutical industries to 'fabricate' marks
by using syllables or words suggestive of the ailments for
which they are intended and adding thereto distinctive
prefixes or suffixes".5 And appropriately to be considered
now is the fact that, concededly, the "tussin" (in Pertussin
and Atussin) was derived from the Latin root-word "tussis"
meaning cough.6
"Tussin" is merely descriptive; it is generic; it furnishes to
the buyer no indication of the origin of the goods; it is open
for appropriation by anyone. It is accordingly barred from
registration as trademark. With jurisprudence holding the
line, we feel safe in making the statement that any other
conclusion would result in "appellant having practically a
monopoly"7 of the word "tussin" in a trademark.8
While "tussin" by itself cannot thus be used exclusively to
identify one's goods, it may properly become the subject
of a trademark "by combination with another word or
phrase".9 And this union of words is reflected in
petitioner's Pertussin and respondent's Atussin, the first
with prefix "Per" and the second with Prefix
"A".1äwphï1.ñët
3. A practical approach to the problem of similarity or
dissimilarity is to go into the whole of the two trademarks
pictured in their manner of display. Inspection should be
undertaken from the viewpoint of a prospective buyer. The
trademark complained of should be compared and
contrasted with the purchaser's memory (not in
juxtaposition) of the trademark said to be
10
infringed. Some such factors as "sound; appearance;
form, style, shape, size or format; color; ideas connoted by
marks; the meaning, spelling, and pronunciation, of words
used; and the setting in which the words appear" may be
considered. 11 For, indeed, trademark infringement is a
form of unfair competition. 12
We take a casual look at the two labels — without spelling
out the details — bearing in mind the easy-to-remember
earmarks thereof. Respondent's label underscores the
trademark Atussin in bold, block letters horizontally
written. In petitioner's, on the other hand, Pertussin is
printed diagonally upwards and across in semiscript style
with flourishes and with only the first letter "P" capitalized.
Each label plainly shows the source of the medicine:
petitioner's at the foot bears "Etepha Ltd. Schaan Fl", and
on top, "Apothecary E. Taeschner's"; respondent's
projects "Westmont Pharmaceuticals, Inc. New York,
USA" at the bottoms, and on the lower left side the word
"Westmont" upon a white diamond shaped enclosure and
in red ink — a color different from that of the words above
and below it. Printed prominently along the left, bottom and
right edges of petitioner's label are indications of the use:
"for bronchial catarrh — whopping-cough — coughs and
asthma". Respondent's for its part briefly represents what
its produce actually is - a "cough syrup". The two labels
are entirely different in colors, contents, arrangement of
words thereon, sizes, shapes and general appearance.
The contrasts in pictorial effects and appeals to the eye is
so pronounced that the label of one cannot be mistaken
for that of the other, not even by persons unfamiliar with
the two trademarks. 13
On this point the following culled from a recent decision of
the United States Court of Customs and Patent Appeals
(June 15, 1956) is persuasive: 14
Confusion is likely between trademarks, however, only if
their over-all presentations in any of the particulars of
sound, appearance, or meaning are such as would lead
the purchasing public into believing that the products to
which the marks are applied emanated from the same
source. In testing this issue, fixed legal rules exist — if not
in harmony, certainly in abundance — but, in the final
analysis, the application of these rules in any given
situation necessarily reflects a matter of individual
judgment largely predicated on opinion. There is, however,
and can be no disagreement with the rule that the
purchaser is confused, if at all, by the marks as a whole.
4. We now consider exclusively the two words — Pertussin
and Atussin — as they appear on the respective labels. As
previously adverted to, these words are presented to the
public in different styles of writing and methods of design.
The horizontal plain, block letters of Atussin and the
diagonally and artistically upward writing of Pertussin
leave distinct visual impressions. One look is enough to
denude the mind of that illuminating similarity so essential
for a trademark infringement case to prosper.
5. As we take up Pertussin and Atussin once again, we
cannot escape notice of the fact that the two words do not
sound alike — when pronounced. There is not much
phonetic similarity between the two. The Solicitor General
well-observed that in Pertussin the pronunciation of the
prefix "Per", whether correct or incorrect, includes a
combination of three letters P, e and r; whereas, in Atussin
the whole starts with the single letter A added to suffix
"tussin". Appeals to the ear are disimilar. And this,
because in a word combination, the part that comes first is
the most pronounced. An expositor of the applicable rule
here is the decision in the Syrocol-Cheracol
controversy. 15 There, the ruling is that trademark Syrocol
(a cough medicine preparation) is not confusedly similar to
trademark Cheracol (also a cough medicine preparation).
Reason: the two words "do not look or sound enough alike
to justify a holding of trademark infringement", and the
"only similarity is in the last syllable, and that is not
uncommon in names given drug compounds".
6. In the solution of a trademark infringement problem,
regard too should be given to the class of persons who buy
the particular product and the circumstances ordinarily
attendant to its acquisition. 16 The medicinal preparation
clothed with the trademarks in question, are unlike articles
of everyday use such as candies, ice cream, milk, soft
drinks and the like which may be freely obtained by
anyone, anytime, anywhere. Petitioner's and respondent's
products are to be dispensed upon medical prescription.
The respective labels say so. An intending buyer must
have to go first to a licensed doctor of medicine; he
receives instructions as to what to purchase; he reads the
doctor's prescription; he knows what he is to buy. He is not
of the incautious, unwary, unobservant or unsuspecting
type; he examines the product sold to him; he checks to
find out whether it conforms to the medical prescription.
The common trade channel is the pharmacy or the
drugstore. Similarly, the pharmacist or druggist verifies the
medicine sold. The margin of error in the acquisition of one
for the other is quite remote.
We concede the possibility that buyers might be able to
obtain Pertussin or Attusin without prescription. When this
happens, then the buyer must be one throughly familiar
with what he intends to get, else he would not have the
temerity to ask for a medicine — specifically needed to
cure a given ailment. In which case, the more improbable
it will be to palm off one for the other. For a person who
purchases with open eyes is hardly the man to be
deceived.
For the reasons given, the appealed decision of the
respondent Director of Patents — giving due course to the
application for the registration of trademark ATTUSIN is
hereby affirmed. Costa against petitioner. So ordered.
ESSO STANDARD EASTERN, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS ** and
UNITED CIGARETTE CORPORATION, respondents.
& petitioner commenced a case for trademark infringement
TEEHANKEE, J.:1äwphï1.ñët
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.
Petitioner Esso Standard Eastern, Inc., 1 then a foreign
corporation duly licensed to do business in the Philippines,
is engaged in the sale of petroleum products which are
Identified with its trademark ESSO (which as successor of
the defunct Standard Vacuum Oil Co. it registered as a
business name with the Bureaus of Commerce and
Internal Revenue in April and May, 1962). Private
respondent in turn is a domestic corporation then engaged
in the manufacture and sale of cigarettes, after it acquired
in November, 1963 the business, factory and patent rights
of its predecessor La Oriental Tobacco Corporation, one
of the rights thus acquired having been the use of the
trademark ESSO on its cigarettes, for which a permit had
been duly granted by the Bureau of Internal Revenue.
Barely had respondent as such successor started
manufacturing cigarettes with the trademark ESSO, when
in the Court of First Instance of Manila. The complaint
alleged that the petitioner had been for many years
engaged in the sale of petroleum products and its
trademark ESSO had acquired a considerable goodwill to
such an extent that the buying public had always taken the
trademark ESSO as equivalent to high quality petroleum
products. Petitioner asserted that the continued use by
private respondent of the same trademark ESSO on its
cigarettes was being carried out for the purpose of
deceiving the public as to its quality and origin to the
detriment and disadvantage of its own products.
In its answer, respondent admitted that it used the
trademark ESSO on its own product of cigarettes, which
was not Identical to those produced and sold by petitioner
and therefore did not in any way infringe on or imitate
petitioner's trademark. Respondent contended that in
order that there may be trademark infringement, it is
indispensable that the mark must be used by one person
in connection or competition with goods of the same kind
as the complainant's.
The trial court, relying on the old cases of Ang vs.
Teodoro 2 and Arce & Sons, Inc. vs. Selecta Biscuit
Company, 3 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 limitation 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 colorably
imitate any such mark or tradename and apply such
reproduction, counterfeit, copy or colorable limitation to
labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection
with such goods, business or services." 4 Implicit in this
definition is the concept that the goods must be so related
that there is a likelihood either of confusion of goods or
business. 5 But likelihood of confusion is a relative
concept; to be determined only according to the particular,
and sometimes peculiar, circumstances of each case. 6 It
is unquestionably true that, as stated in Coburn vs. Puritan
Mills, Inc. 7 "In trademark cases, even more than in other
litigation, precedent must be studied in the light of the facts
of the particular case.
It is undisputed that the goods on which petitioner uses the
trademark ESSO, petroleum products, and the product of
respondent, cigarettes, are non-competing. But as to
whether trademark infringement exists depends for the
most part upon whether or not the goods are
so related that the public may be, or is actually, deceived
and misled that they came from the same maker or
manufacturer. For non-competing goods may be those
which, though they are not in actual competition, are so
related to each other that it might reasonably be assumed
that they originate from one manufacturer. Non-
competing goods may also be those which, being
entirely unrelated, could not reasonably be assumed to
have a common source. in the former case of related
goods, confusion of business could arise out of the use of
similar marks; in the latter case of non-related goods, it
could not. 8 The vast majority of courts today follow the
modern theory or concept of "related goods" 9 which the
Court has likewise adopted and uniformly recognized and
applied. 10
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.
They may also be related because they serve the same
purpose or are sold in grocery stores. 11 Thus, biscuits
were held related to milk because they are both food
products. 12 Soap and perfume, lipstick and nail polish are
similarly related because they are common household
items now a days. 13 The trademark "Ang Tibay" for shoes
and slippers was disallowed to be used for shirts and pants
because they belong to the same general class of
goods. 14 Soap and pomade although non- competitive,
were held to be similar or to belong to the same class,
since both are toilet articles. 15 But no confusion or
deception can possibly result or arise when the name
"Wellington" which is the trademark for shirts, pants,
drawers and other articles of wear for men, women and
children is used as a name of a department store. 16
Thus, in Acoje Mining Co., Inc. vs. Director of
Patents, 17 the Court, through now Chief Justice
Fernando, reversed the patent 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 trademark LOTUS" and
"when regard is had for the principle that the two
trademarks in their entirety 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. vs. Ng Sam and Director of
Patents, 18 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 materials 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 products
involved and not on 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 non-competitive 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" 19as
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's goods.ït¢@lFº 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. 20
Petitioner uses the trademark ESSO and holds certificate
of 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" 21When 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. 22
Another factor that shows that the goods involved are non-
competitive and non-related is the appellate court's finding
that they flow through different channels of trade, thus:
"The products of each party move along and are disposed
through different channels of distribution. The (petitioner's)
products are distributed principally through gasoline
service and lubrication stations, automotive shops and
hardware stores. On the other hand, the (respondent's)
cigarettes are sold in sari-sari stores, grocery stores, and
other small distributor outlets. (Respondent's) cigarettes
are even peddled in the streets while (petitioner's) '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." 23
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 trademarks 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 petroleum and petroleum-based chemical products, and
the three colors. It is to be pointed out that not even a no others, it is difficult to conceive of confusion in the
shade of these colors appears on the trademark of the minds of the buying public in the sense it can be thought
appellant's cigarette. The only color that the appellant uses that appellant (Shell) is the manufacturer of appellee's
in its trademark is green." 24 (Fortune's) cigarettes, or that appellee (Fortune) is the
manufacturer or processor of appellant's (Shell's)
Even the lower court, which ruled initially for petitioner,
petroleum and chemical products." 26
found that a "noticeable difference between the brand
ESSO being used by the defendants and the trademark ACCORDINGLY, the petition is dismissed and the
ESSO of the plaintiff is that the former has a rectangular decision of respondent Court of Appeals is hereby
background, while in that of the plaintiff the word ESSO is affirmed.
enclosed in an oval background."
In point of fact and time, the Court's dismissal of the
petition at bar was presaged by its Resolution of May 21,
1979 dismissing by minute resolution the petition for
review for lack of merit in the Identical case of Shell
Company of the Philippines, Ltd vs. Court of Appeals 25,
wherein the Court thereby affirmed the patent office's
registration of the trademark SHELL as used in the
cigarettes manufactured by therein respondent Fortune
Tobacco Corporation notwithstanding the therein
petitioner Shell Company's opposition thereto as the prior
registrant of the same trademark for its gasoline and other
petroleum trademarks, on the strength of the controlling
authority of Acoje Mining Co. vs. Director of Patents,
Supra, and the same rationale that "(I)n the Philippines,
where buyers of appellee's (Fortune Corp.'s) cigarettes,
which are low cost articles, can be more numerous
compared to buyers of the higher priced petroleum and
chemical products of appellant (Shell Co.) and where
appellant (Shell) is known to be in the business of selling
FRUIT OF THE LOOM, INC., petitioner,
vs.
COURT OF APPEALS and GENERAL GARMENTS
CORPORATION, respondents.
Lichauco, Picazo & Agcaoli Law Office for petitioner.
MAKASIAR, J.:
This is a petition for review on certiorari of the decision
dated October 8, 1970 of the former Court of Appeals
reversing the decision of the defunct Court of First
Instance of Manila, Branch XIV, ordering the cancellation
of private respondent's registration of the trademark
FRUIT FOR EVE, enjoining it permanently from using
trademark and ordering it to pay herein petitioner
P10,000.00 as attorney's fees.
Petitioner, a corporation duly organized and existing under
the laws of the State of Rhode Island, United States of
America, is the registrant of a trademark, FRUIT OF THE
LOOM, in the Philippines Patent Office and was issued two
Certificates of Registration Nos. 6227 and 6680, on
November 29, 1957 and July 26, 1958, respectively. The
classes of merchandise covered by Registration
Certificate No. 6227 are, among others, men's, women's
and children's underwear, which includes women's panties
and which fall under class 40 in the Philippine Patent
Office's classification of goods. Registration Certificate No.
6680 covers knitted, netted and textile fabrics.
Private respondent, a domestic corporation, is the
registrant of a trademark FRUIT FOR EVE in the Philippine
Patent Office and was issued a Certificate of Registration
No. 10160, on January 10, 1963 covering garments similar
to petitioner's products like women's panties and pajamas.
On March 31, 1965 petitioner filed before the lower court,
a complaint for infringement of trademark and unfair
competition against the herein private respondent.
Petitioner principally alleged in the complaint that private
respondent's trademark FRUIT FOR EVE is confusingly
similar to its trademark FRUIT OF THE LOOM used also
on women's panties and other textile products.
Furthermore, it was also alleged therein that the color get-
up and general appearance of private respondent's hang
tag consisting of a big red apple is a colorable imitation to
the hang tag of petitioner.
On April 19, 1965, private respondent filed an answer
invoking the special defense that its registered trademark
is not confusingly similar to that of petitioner as the latter
alleged. Likewise, private respondent stated that the
trademark FRUIT FOR EVE is being used on ladies'
panties and pajamas only whereas petitioner's trademark
is used even on men's underwear and pajamas.
At the pre-trial on May 5, 1965, the following admissions
were made: (1) That the trademark FRUIT OF THE LOOM
has been registered with the Bureau of Patents and it does
not bear the notice 'Reg. Phil. Patent Off.', and (2) That the
trademark FRUIT FOR EVE has been registered with the
Bureau of Patents and it bears the notice "Reg. Phil.
Patent Off." and (3) That at the time of its registration,
plaintiff filed no opposition thereto.
After trial, judgment was rendered by the lower court in
favor of herein petitioner, the dispositive portion of which
reads as follows:
Judgment is, therefore, rendered ordering the Bureau of
Patents to cancel the registration of the Trademark "Fruit
for Eve", permanently enjoining Defendant from using the
trademark "Fruit for Eve", ordering Defendant to pay
plaintiff the sum of P10,000.00 as attorney's fees and to
pay the costs.
Both parties appealed to the former Court of Appeals,
herein petitioner's appeal being centered on the failure of
the trial court to award damages in its favor. Private
respondent, on the other hand, sought the reversal of the
lower court's decision.
On October 8, 1970, the former Court of Appeals, as
already stated, rendered its questioned decision reversing
the judgment of the lower court and dismissing herein
petitioner's complaint.
Petitioner's motion for reconsideration having been
denied, the present petition was filed before this Court.
The first and second arguments advanced by petitioner
are that the respondent court committed an error in holding
that the word FRUIT, being a generic word, is not capable
of exclusive appropriation by petitioner and that the
registrant of a trademark is not entitled to the exclusive use
of every word of his mark. Otherwise stated, petitioner
argues that the respondent court committed an error in
ruling that petitioner cannot appropriate exclusively the
word FRUIT in its trademark FRUIT OF THE LOOM.
The third and fourth arguments submitted by petitioner
which We believe is the core of the present controversy,
are that the respondent court erred in holding that there is
no confusing similarity in sound and appearance between
the two trademarks in question. According to petitioner, the
prominent and dominant features in both of petitioner's
and private respondent's trademark are the word FRUIT
and the big red apple design; that ordinary or average
purchasers upon seeing the word FRUIT and the big red
apple in private respondent's label or hang tag would be
led to believe that the latter's products are those of the
petitioner, The resolution of these two assigned errors in
the negative will lay to rest the matter in litigation and there
is no need to touch on the other issues raised by petitioner.
Should the said questions be resolved in favor of
petitioner, then the other matters may be considered.
Petitioner, on its fifth assigned error, blames the former
Court of Appeals for not touching the question of the
fraudulent registration of private respondent's trademark
FRUIT FOR EVE. As may be gleaned from the questioned
decision, respondent court did not pass upon the argument
of petitioner that private respondent obtained the
registration of its trademark thru fraud or
misrepresentation because of the said court's findings that
there is no confusing similarity between the two
trademarks in question. Hence, said court has allegedly
nothing to determine as to who has the right to registration
because both parties have the right to have their
respective trademarks registered.
Lastly, petitioner asserts that respondent court should
have awarded damages in its favor because private
respondent had clearly profited from the infringement of
the former's trademark.
The main issue involved in this case is whether or not
private respondent's trademark FRUIT FOR EVE and its
hang tag are confusingly similar to petitioner's trademark
FRUIT OF THE LOOM and its hang tag so as to constitute
an infringement of the latter's trademark rights and justify
the cancellation of the former.
In cases involving infringement of trademark brought
before this Court it has been consistently held that there is
infringement of trademark when the use of the mark
involved would be likely to cause confusion or mistake in
the mind of the public or to deceive purchasers as to the
origin or source of the commodity (Co Tiong Sa vs.
Director of Patents, 95 Phil. 1; Alhambra Cigar & Cigarette
Co. vs. Mojica, 27 Phil. 266; Sapolin Co. vs. Balmaceda,
67 Phil. 705; La Insular vs. Jao Oge, 47 Phil. 75).
In cases of this nature, there can be no better evidence as
to whether there is a confusing similarity in the contesting
trademarks than the labels or hang tags themselves. A
visual presentation of the labels or hang tags is the best
argument for one or the other, hence, We are reproducing
hereunder pictures of the hang tags of the products of the
parties to the case. The pictures below are part of the
documentary evidence appearing on page 124 of the
original records.
Petitioner asseverates in the third and fourth assignment
of errors, which, as We have said, constitute the main
argument, that the dominant features of both trademarks
is the word FRUIT. In determining whether the trademarks
are confusingly similar, a comparison of the words is not
the only determinant factor. The trademarks in their
entirety as they appear in their respective labels or hang
tags must also be considered in relation to the goods to
which they are attached. The discerning eye of the
observer must focus not only on the predominant words
but also on the other features appearing in both labels in
order that he may draw his conclusion whether one is
confusingly similar to the other (Bristol Myers Co. vs.
Director of Patents, 17 SCRA 131).
In the trademarks FRUIT OF THE LOOM and FRUIT FOR
EVE, the lone similar word is FRUIT. WE agree with the
respondent court that by mere pronouncing the two marks,
it could hardly be said that it will provoke a confusion, as
to mistake one for the other. Standing by itself, FRUIT OF
THE LOOM is wholly different from FRUIT FOR EVE. WE
do not agree with petitioner that the dominant feature of
both trademarks is the word FRUIT for even in the printing
of the trademark in both hang tags, the word FRUIT is not
at all made dominant over the other words.
As to the design and coloring scheme of the hang tags,
We believe that while there are similarities in the two
marks like the red apple at the center of each mark, We
also find differences or dissimilarities which are glaring and intelligence (Carnation Co. vs. California Growers
striking to the eye such as: Wineries, 97 F. 2d 80; Hyram Walke and Sons vs. Penn-
Maryland Corp., 79 F. 2d 836) to be able to see the
1. The shape of petitioner's hang tag is round with a base
obvious differences between the two trademarks in
that looks like a paper rolled a few inches in both ends;
question. Furthermore, We believe that a person who buys
while that of private respondent is plain rectangle without
petitioner's products and starts to have a liking for it, will
any base.
not get confused and reach out for private respondent's
2. The designs differ. Petitioner's trademark is written in products when she goes to a garment store.
almost semi-circle while that of private respondent is
These findings in effect render immaterial the other errors
written in straight line in bigger letters than petitioner's.
assigned by petitioner which are premised on the
Private respondent's tag has only an apple in its center but
assumption that private respondent's trademark FRUIT
that of petitioner has also clusters of grapes that surround
FOR EVE had infringed petitioner's trademark FRUIT OF
the apple in the center.
THE LOOM.
3. The colors of the hang tag are also very distinct from
WHEREFORE, THE DECISION APPEALED FROM IS
each other. Petitioner's hang tag is fight brown while that
AFFIRMED. COSTS AGAINST PETITIONER.
of respondent is pink with a white colored center piece.
The apples which are the only similarities in the hang tag SO ORDERED.
are differently colored. Petitioner's apple is colored dark
EMERALD GARMENT MANUFACTURING
red, while that of private respondent is light red.
CORPORATION, petitioner,
The similarities of the competing trademarks in this case vs.
are completely lost in the substantial differences in the HON. COURT OF APPEALS, BUREAU OF PATENTS,
design and general appearance of their respective hang TRADEMARKS AND TECHNOLOGY TRANSFER and
tags. WE have examined the two trademarks as they H.D. LEE COMPANY, INC., respondents.
appear in the hang tags submitted by the parties and We
are impressed more by the dissimilarities than by the
similarities appearing therein. WE hold that the trademarks
FRUIT OF THE LOOM and FRUIT FOR EVE do not KAPUNAN, J.:
resemble each other as to confuse or deceive an ordinary
purchaser. The ordinary purchaser must be thought of as In this petition for review on certiorari under Rule 45 of the
having, and credited with, at least a modicum of 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 Petitioner contends that private respondent is estopped
TECHNOLOGY TRANSFER. from instituting an action for infringement before the
BPTTT under the equitable principle of laches pursuant to
III. THE COURT OF APPEALS ERRED WHEN IT
Sec. 9-A of R.A. No. 166, otherwise known as the Law on
CONSIDERED PRIVATE RESPONDENT'S PRIOR
Trade-marks, Trade-names and Unfair Competition:
REGISTRATION OF ITS TRADEMARK AND
DISREGARDED THE FACT THAT PRIVATE Sec. 9-A. Equitable principles to govern proceedings. — In
RESPONDENT HAD FAILED TO PROVE opposition proceedings and in all other inter partes
COMMERCIAL proceedings in the patent office under this act, equitable
USE THEREOF BEFORE FILING OF APPLICATION principles of laches, estoppel, and acquiescence, where
FOR REGISTRATION.15 applicable, may be considered and applied.
In addition, petitioner reiterates the issues it raised in the Petitioner alleges that it has been using its trademark
Court of Appeals: "STYLISTIC MR. LEE" since 1 May 1975, yet, it was only
on 18 September 1981 that private respondent filed a
I. THE ISSUE INVOLVED IN THIS CASE IS WHETHER
petition for cancellation of petitioner's certificate of
OR NOT PETITIONER'S TRADEMARK SYTLISTIC MR.
registration for the said trademark. Similarly, private
LEE, IS CONFUSINGLY SIMILAR WITH THE PRIVATE
respondent's notice of opposition to petitioner's application
RESPONDENT'S TRADEMARK LEE OR LEE-RIDER,
for registration in the principal register was belatedly filed
LEE-LEENS AND LEE-SURES.
on 27 July 1984.17
II. PETITIONER'S EVIDENCES ARE CLEAR AND
Private respondent counters by maintaining that petitioner
SUFFICIENT TO SHOW THAT IT IS THE PRIOR USER
was barred from raising new issues on appeal, the only
AND ITS TRADEMARK IS DIFFERENT FROM THAT OF
contention in the proceedings below being the presence or
THE PRIVATE RESPONDENT.
absence of confusing similarity between the two
III. PETITIONER'S TRADEMARK IS ENTIRELY trademarks in question.18
DIFFERENT FROM THE PRIVATE RESPONDENT'S
We reject petitioner's contention.
AND THE REGISTRATION OF ITS TRADEMARK
IS PRIMA FACIE EVIDENCE OF GOOD FAITH. Petitioner's trademark is registered in the supplemental
register. The Trademark Law (R.A. No. 166) provides that
IV. PETITIONER'S "STYLISTIC MR. LEE" TRADEMARK
"marks and tradenames for the supplemental register shall
CANNOT BE CONFUSED WITH PRIVATE
16
not be published for or be subject to opposition, but shall
RESPONDENT'S LEE TRADEMARK.
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
42
Aktiengesellschaft, 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 Philippines46 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.,52 respectively, are instructive:
The Trademark Law is very clear. It requires actual
commercial use of the mark prior to its registration. There
is no dispute that respondent corporation was the first
registrant, yet it failed to fully substantiate its claim that it
used in trade or business in the Philippines the subject
mark; it did not present proof to invest it with exclusive,
continuous adoption of the trademark which should consist
among others, of considerable sales since its first use. The
invoices submitted by respondent which were dated way
back in 1957 show that the zippers sent to the Philippines
were to be used as "samples" and "of no commercial
value." The evidence for respondent must be clear,
definite and free from inconsistencies. "Samples" are not
for sale and therefore, the fact of exporting them to the
Philippines cannot be considered to be equivalent to the
"use" contemplated by law. Respondent did not expect
income from such "samples." There were no receipts to
establish sale, and no proof were presented to show that
they were subsequently sold in the Philippines.
xxx xxx xxx
The sales invoices provide the best proof that there were
actual sales of petitioner's product in the country and that
there was actual use for a protracted period of petitioner's
trademark or part thereof through these sales.
For lack of adequate proof of actual use of its trademark in
the Philippines prior to petitioner's use of its own mark and
for failure to establish confusing similarity between said
trademarks, private respondent's action for infringement
must necessarily fail.
WHEREFORE, premises considered, the questioned
decision and resolution are hereby REVERSED and SET
ASIDE.
SO ORDERED.
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 tradenames, devices or words used by manufacturers,
Article 8 of the Paris Convention, the provision that industrialists, merchants, agriculturists, and others to
pertains to the protection of tradenames. Petitioner identify their business, vocations, or occupations; the
believes that the appropriate memorandum to consider is names or titles lawfully adopted and used by natural or
that issued by the then Minister of Trade and Industry, Luis juridical persons, unions, and any manufacturing,
Villafuerte, directing the Director of patents to: industrial, commercial, agricultural or other organizations
engaged in trade or commerce."[27] Simply put, a trade
"reject all pending applications for Philippine registration of
name refers to the business and its goodwill; a trademark
signature and other world famous trademarks by
refers to the goods.[28]
applicants other than the original owners or users."
The Convention of Paris for the Protection of Industrial
As far as petitioner is concerned, the fact that its
Property, otherwise known as the Paris Convention, of
tradename is at risk would call for the protection granted
which both the Philippines and Japan, the country of
by Article 8 of the Paris Convention. Petitioner calls
petitioner, are signatories[29], is a multilateral treaty that
attention to the fact that Article 8, even as embodied in par.
seeks to protect industrial property consisting of patents,
6, sec. 37 of RA 166, mentions no requirement of similarity
utility models, industrial designs, trademarks, service
of goods. Petitioner claims that the reason there is no
marks, trade names and indications of source or
mention of such a requirement, is "because there is a
appellations of origin, and at the same time aims to repress
difference between the referent of the name and that of the
unfair competition.[30] We agree with public respondents
mark"[24] and that "since Art. 8 protects the tradename in
that the controlling doctrine with respect to the applicability
the countries of the Union, such as Japan and the
of Article 8 of the Paris Convention is that established
Philippines, Petitioners tradename should be protected
in Kabushi Kaisha Isetan vs. Intermediate Appellate
here."[25]
Court.[31] As pointed out by the BPTTT:
We cannot uphold petitioners position.
"Regarding the applicability of Article 8 of the Paris
The term "trademark" is defined by RA 166, the Trademark Convention, this Office believes that there is no automatic
Law, as including "any word, name, symbol, emblem, sign protection afforded an entity whose tradename is alleged
or device or any combination thereof adopted and used by to have been infringed through the use of that name as a
a manufacturer or merchant to identify his goods and trademark by a local entity.
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,
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;
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 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.
SOCIETE DES PRODUITS NESTLE, S.A. and NESTLE
PHILIPPINES, INC., petitioners,
vs.
COURT OF APPEALS and CFC
CORPORATION., respondents.
YNARES-SANTIAGO, J.:
This is a petition for review assailing the Decision of the
Court of Appeals in CA-G.R. SP No. 24101,1 reversing and
setting aside the decision of the Bureau of Patents,
Trademarks and Technology Transfer (BPTTT),2 which
denied private respondent’s application for registration of
the trade-mark, FLAVOR MASTER.
On January 18, 1984, private respondent CFC
Corporation filed with the BPTTT an application for the
registration of the trademark "FLAVOR MASTER" for
instant coffee, under Serial No. 52994. The application, as
a matter of due course, was published in the July 18, 1988
issue of the BPTTT’s Official Gazette.
Petitioner Societe Des Produits Nestle, S.A., a Swiss
company registered under Swiss laws and domiciled in
Switzerland, filed an unverified Notice of
3
Opposition, claiming that the trademark of private
respondent’s product is "confusingly similar to its
trademarks for coffee and coffee extracts, to wit: MASTER
ROAST and MASTER BLEND."
Likewise, a verified Notice of Opposition was filed by
Nestle Philippines, Inc., a Philippine corporation and a
licensee of Societe Des Produits Nestle S.A., against
CFC’s application for registration of the trademark
FLAVOR MASTER.4Nestle claimed that the use, if any, by
CFC of the trademark FLAVOR MASTER and its
registration would likely cause confusion in the trade; or
deceive purchasers and would falsely suggest to the
purchasing public a connection in the business of Nestle,
as the dominant word present in the three (3) trademarks
is "MASTER"; or that the goods of CFC might be mistaken
as having originated from the latter.
In answer to the two oppositions, CFC argued that its
trademark, FLAVOR MASTER, is not confusingly similar
with the former’s trademarks, MASTER ROAST and
MASTER BLEND, alleging that, "except for the word
MASTER (which cannot be exclusively appropriated by
any person for being a descriptive or generic name), the
other words that are used respectively with said word in
the three trademarks are very different from each other –
in meaning, spelling, pronunciation, and sound". CFC
further argued that its trademark, FLAVOR MASTER, "is
clearly very different from any of Nestle’s alleged
trademarks MASTER ROAST and MASTER BLEND,
especially when the marks are viewed in their entirety, by
considering their pictorial representations, color schemes
and the letters of their respective labels."
In its Decision No. 90-47 dated December 27, 1990, the
BPTTT denied CFC’s application for registration.5 CFC
elevated the matter to the Court of Appeals, where it was
docketed as CA-G.R. SP No. 24101.
The Court of Appeals defined the issue thus: "Does
appellant CFC’s trade dress bear a striking resemblance
with appellee’s trademarks as to create in the purchasing
public’s mind the mistaken impression that both coffee
products come from one and the same source?"
As stated above, the Court of Appeals, in the assailed
decision dated September 23, 1993, reversed Decision
No. 90-47 of the BPTTT and ordered the Director of
Patents to approve CFC’s application. The Court of
Appeals ruled:
Were We to take even a lackadaisical glance at the overall
appearance of the contending marks, the physical
discrepancies between appellant CFC’s and appellee’s
respective logos are so ostensible that the casual
purchaser cannot likely mistake one for the other.
Appellant CFC’s label (Exhibit "4") is predominantly a
blend of dark and lighter shade of orange where the words
"FLAVOR MASTER", "FLAVOR" appearing on top of
"MASTER", shaded in mocha with thin white inner and
outer sidings per letter and identically lettered except for
the slightly protruding bottom curve of the letter "S"
adjoining the bottom tip of the letter "A" in the word
"MASTER", are printed across the top of a simmering red
coffee cup. Underneath "FLAVOR MASTER" appears
"Premium Instant Coffee" printed in white, slim and slanted
letters. Appellees’ "MASTER ROAST" label (Exhibit "7"),
however, is almost double the width of appellant CFC’s. At
the top is printed in brown color the word "NESCAFE"
against a white backdrop. Occupying the center is a
square-shaped configuration shaded with dark brown and
picturing a heap of coffee beans, where the word
"MASTER" is inscribed in the middle. "MASTER" in
appellees’ label is printed in taller capital letters, with the
letter "M" further capitalized. The letters are shaded with
red and bounded with thin gold-colored inner and outer
sidings. Just above the word "MASTER" is a red window
like portrait of what appears to be a coffee shrub clad in
gold. Below the "MASTER" appears the word "ROAST"
impressed in smaller, white print. And further below are the
inscriptions in white: "A selection of prime Arabica and
Robusta coffee." With regard to appellees’ "MASTER
BLEND" label (Exhibit "6") of which only a xeroxed copy is
submitted, the letters are bolder and taller as compared to
appellant CFC’s and the word "MASTER" appears on top
of the word "BLEND" and below it are the words "100%
pure instant coffee" printed in small letters.
From the foregoing description, while the contending
marks depict the same product, the glaring dissimilarities
in their presentation far outweigh and dispel any aspect of
similitude. To borrow the words of the Supreme Court in
American Cyanamid Co. v. Director of Patents (76 SCRA
568), appellant CFC’s and appellees’ labels are entirely
different in size, background, colors, contents and pictorial
arrangement; in short, the general appearances of the
labels bearing the respective trademarks are so distinct
from each other that appellees cannot assert that the
dominant features, if any, of its trademarks were used or
appropriated in appellant CFC’s own. The distinctions are
so well-defined so as to foreclose any probability or
likelihood of confusion or deception on the part of the
normally intelligent buyer when he or she encounters both
coffee products at the grocery shelf. The answer therefore
to the query is a clear-cut NO.6
Petitioners are now before this Court on the following
assignment of errors:
1. RESPONDENT COURT GRAVELY ERRED IN
REVERSING AND SETTING ASIDE THE DECISION
(NO. 90-47) OF THE DIRECTOR OF THE BUREAU OF
PATENTS, TRADEMARKS AND TECHNOLOGY
TRANSFER (BPTTT) DATED DECEMBER 27, 1990.
2. RESPONDENT COURT ERRED IN FINDING THAT
APPELLANT CFC’S TRADE DRESS IS BEYOND THE
SCOPE OF THE PROSCRIPTION LAID DOWN BY
JURISPRUDENCE AND THE TRADEMARK LAW.
3. RESPONDENT COURT ERRED IN HOLDING THAT
THE TOTALITY RULE, RATHER THAN THE TEST OF
DOMINANCY, APPLIES TO THE CASE.
4. RESPONDENT COURT ERRED IN INVOKING THE
TOTALITY RULE APPLIED IN THE CASES OF BRISTOL
MYERS V. DIRECTOR OF PATENTS, ET AL. (17 SCRA
128), MEAD JOHNSON & CO. V. NVJ VAN DORF LTD.,
(7 SCRA 768) AND AMERICAN CYANAMID CO. V.
DIRECTOR OF PATENTS (76 SCRA 568).
The petition is impressed with merit.
A trademark has been generally defined as "any word,
name, symbol or device adopted and used by a
manufacturer or merchant to identify his goods and
distinguish them from those manufactured and sold by
others."7
A manufacturer’s trademark is entitled to protection. As Mr.
Justice Frankfurter observed in the case of Mishawaka
Mfg. Co. v. Kresge Co.:8
The protection of trade-marks is the law’s 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 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.
Section 4 (d) of Republic Act No. 166 or the Trademark
Law, as amended, which was in force at the time, provides
thus:
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
(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
(Emphasis supplied)
The law prescribes a more stringent standard in that there
should not only be confusing similarity but that it should
not likely cause confusion or mistake or deceive
purchasers.
Hence, the question in this case is whether there is a
likelihood that the trademark FLAVOR MASTER may
cause confusion or mistake or may deceive purchasers
that said product is the same or is manufactured by the
same company. In other words, the issue is whether the
trademark FLAVOR MASTER is a colorable imitation of
the trademarks MASTER ROAST and MASTER BLEND.
Colorable imitation denotes such a close or ingenious
imitation as to be calculated to deceive ordinary persons,
or such a resemblance to the original as to deceive an
ordinary purchaser giving such attention as a purchaser
usually gives, as to cause him to purchase the one
supposing it to be the other.9 In determining if colorable
imitation exists, jurisprudence has developed two kinds of
tests - the Dominancy Test and the Holistic Test.10 The test
of dominancy focuses on the similarity of the prevalent
features of the competing trademarks which might cause
confusion or deception and thus constitute infringement.
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.11
In the case at bar, the Court of Appeals held that:
The determination of whether two trademarks are indeed
confusingly similar must be taken from the viewpoint of the
ordinary purchasers who are, in general, undiscerningly
rash in buying the more common and less expensive
household products like coffee, and are therefore less
inclined to closely examine specific details of similarities
and dissimilarities between competing products. The
Supreme Court in Del Monte Corporation v. CA, 181
SCRA 410, held that:
"The question is not whether the two articles are
distinguishable by their labels 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."
From this perspective, the test of similarity is to consider
the two marks in their entirety, as they appear in the
respective labels, in relation to the goods to which they are
attached (Bristol Myers Company v. Director of Patents, et
al., 17 SCRA 128, citing Mead Johnson & Co. v. NVJ Van
Dorp, Ltd., et al., 7 SCRA 768). The mark must be
considered 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 (Del Monte Corp. v. CA, supra), as
what appellees would want it to be when they essentially
argue that much of the confusion springs from appellant
CFC’s use of the word "MASTER" which appellees claim
to be the dominant feature of their own trademarks that
captivates the prospective consumers. Be it further
emphasized that 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 (Mead Johnson & Co. v. NVJ Van Dorp,
Ltd., supra).12
The Court of Appeals applied some judicial precedents
which are not on all fours with this case. It must be
emphasized that in infringement or 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.13 In Esso
Standard, Inc. v. Court of Appeals,14 we ruled that the
likelihood of confusion is a relative concept; to be
determined only according to the particular, and
sometimes peculiar, circumstances of each case. In
trademark cases, even more than in any other litigation,
precedent must be studied in light of the facts of the
particular case. The wisdom of the likelihood of confusion
test lies in its recognition that each trademark infringement
case presents its own unique set of facts. Indeed, the
complexities attendant to an accurate assessment of
likelihood of confusion require that the entire panoply of
elements constituting the relevant factual landscape be
comprehensively examined.15
The Court of Appeals’ application of the case of Del Monte
Corporation v. Court of Appeals16 is, therefore, misplaced.
In Del Monte, the issue was about the alleged similarity of
Del Monte’s logo with that of Sunshine Sauce
Manufacturing Industries. Both corporations market the
catsup product which is an inexpensive and common
household item.
Since Del Monte alleged that Sunshine’s logo was
confusingly similar to or was a colorable imitation of the
former’s logo, there was a need to go into the details of the
two logos as well as the shapes of the labels or marks, the
brands printed on the labels, the words or lettering on the
labels or marks and the shapes and colors of the labels or
marks. The same criteria, however, cannot be applied in
the instant petition as the facts and circumstances herein
are peculiarly different from those in the Del Monte case.
In the same manner, the Court of Appeals erred in
applying the totality rule as defined in the cases of Bristol
Myers v. Director of Patents;17 Mead Johnson & Co. v. NVJ
Van Dorf Ltd.;18 and American Cyanamid Co. v. Director of
Patents.19 The totality rule states that "the test is not simply
to take their words and compare the spelling and
pronunciation of said words. 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 predominant words but also on the other
features appearing on both labels."20
As this Court has often declared, each case must be
studied according to the peculiar circumstances of each
case. That is the reason why in trademark cases,
jurisprudential precedents should be applied only to a case
if they are specifically in point.
In the above cases cited by the Court of Appeals to justify
the application of the totality or holistic test to this instant
case, the factual circumstances are substantially different.
In the Bristol Myers case, this Court held that although
both BIOFERIN and BUFFERIN are primarily used for the
relief of pains such as headaches and colds, and their
names are practically the same in spelling and
pronunciation, both labels have strikingly different
backgrounds and surroundings. In addition, one is
dispensable only upon doctor’s prescription, while the
other may be purchased over-the-counter.
In the Mead Johnson case, the differences between
ALACTA and ALASKA are glaring and striking to the eye.
Also, ALACTA refers to "Pharmaceutical Preparations
which Supply Nutritional Needs," falling under Class 6 of
the official classification of Medicines and Pharmaceutical
Preparations to be used as prescribed by physicians. On
the other hand, ALASKA refers to "Foods and Ingredients
of Foods" falling under Class 47, and does not require
medical prescription.
In the American Cyanamid case, the word SULMET is
distinguishable from the word SULMETINE, as the former
is derived from a combination of the syllables "SUL" which
is derived from sulfa and "MET" from methyl, both of which
are chemical compounds present in the article
manufactured by the contending parties. This Court held
that the addition of the syllable "INE" in respondent’s label
is sufficient to distinguish respondent’s product or
trademark from that of petitioner. Also, both products are
for medicinal veterinary use and the buyer will be more
wary of the nature of the product he is buying. In any case,
both products are not identical as SULMET’s label
indicates that it is used in a drinking water solution while
that of SULMETINE indicates that they are tablets.
It cannot also be said that the products in the above cases
can be bought off the shelf except, perhaps, for ALASKA.
The said products are not the usual "common and
inexpensive" household items which an "undiscerningly
rash" buyer would unthinkingly buy.In the case at bar,
other than the fact that both Nestle’s and CFC’s products
are inexpensive and common household items, the
similarity ends there. What is being questioned here is the and does not inspect every product on the shelf as if he
use by CFC of the trademark MASTER. In view of the were browsing in a library.22
difficulty of applying jurisprudential precedents to
The Court of Appeals held that the test to be applied
trademark cases due to the peculiarity of each case,
should be the totality or holistic test reasoning, since what
judicial fora should not readily apply a certain test or
is of paramount consideration is the ordinary purchaser
standard just because of seeming similarities. As this
who is, in general, undiscerningly rash in buying the more
Court has pointed above, there could be more telling
common and less expensive household products like
differences than similarities as to make a jurisprudential
coffee, and is therefore less inclined to closely examine
precedent inapplicable.
specific details of similarities and dissimilarities between
Nestle points out that the dominancy test should have competing products.
been applied to determine whether there is a confusing
This Court cannot agree with the above reasoning. If the
similarity between CFC’s FLAVOR MASTER and Nestle’s
ordinary purchaser is "undiscerningly rash" in buying such
MASTER ROAST and MASTER BLEND.
common and inexpensive household products as instant
We agree. coffee, and would therefore be "less inclined to closely
examine specific details of similarities and dissimilarities"
As the Court of Appeals itself has stated, "[t]he
between the two competing products, then it would be less
determination of whether two trademarks are indeed
likely for the ordinary purchaser to notice that CFC’s
confusingly similar must be taken from the viewpoint of the
trademark FLAVOR MASTER carries the colors orange
ordinary purchasers who are, in general, undiscerningly
and mocha while that of Nestle’s uses red and brown. The
rash in buying the more common and less expensive
application of the totality or holistic test is improper since
household products like coffee, and are therefore less
the ordinary purchaser would not be inclined to notice the
inclined to closely examine specific details of similarities
specific features, similarities or dissimilarities, considering
and dissimilarities between competing products."21
that the product is an inexpensive and common household
The basis for the Court of Appeals’ application of the item.
totality or holistic test is the "ordinary purchaser" buying
It must be emphasized that the products bearing the
the product under "normally prevalent conditions in trade"
trademarks in question are "inexpensive and common"
and the attention such products normally elicit from said
household items bought off the shelf by "undiscerningly
ordinary purchaser. An ordinary purchaser or buyer does
rash" purchasers. As such, if the ordinary purchaser is
not usually make such scrutiny nor does he usually have
"undiscerningly rash", then he would not have the time nor
the time to do so. The average shopper is usually in a hurry
the inclination to make a keen and perceptive examination
of the physical discrepancies in the trademarks of the
products in order to exercise his choice.
While this Court agrees with the Court of Appeals’ detailed
enumeration of differences between the respective
trademarks of the two coffee products, this Court cannot
agree that totality test is the one applicable in this case.
Rather, this Court believes that the dominancy test is more
suitable to this case in light of its peculiar factual milieu.
Moreover, the totality or holistic test is contrary to the
elementary postulate of the law on trademarks and unfair
competition that confusing similarity is to be determined on
the basis of visual, aural, connotative comparisons and
overall impressions engendered by the marks in
controversy as they are encountered in the realities of the
marketplace.23 The totality or holistic test only relies on
visual comparison between two trademarks whereas the
dominancy test relies not only on the visual but also on the
aural and connotative comparisons and overall
impressions between the two trademarks.
For this reason, this Court agrees with the BPTTT when it
applied the test of dominancy and held that:
From the evidence at hand, it is sufficiently established
that the word MASTER is the dominant feature of
opposer’s mark. The word MASTER is printed across the
middle portion of the label in bold letters almost twice the
size of the printed word ROAST. Further, the word
MASTER has always been given emphasis in the TV and
radio commercials and other advertisements made in
promoting the product. This can be gleaned from the fact
that Robert Jaworski and Atty. Ric Puno Jr.., the
personalities engaged to promote the product, are given
the titles Master of the Game and Master of the Talk Show,
respectively. In due time, because of these advertising
schemes the mind of the buying public had come to learn
to associate the word MASTER with the opposer’s goods.
x x x. It is the observation of this Office that much of the
dominance which the word MASTER has acquired through
Opposer’s advertising schemes is carried over when the
same is incorporated into respondent-applicant’s
trademark FLAVOR MASTER. Thus, when one looks at
the label bearing the trademark FLAVOR MASTER (Exh.
4) one’s attention is easily attracted to the word MASTER,
rather than to the dissimilarities that exist. Therefore, the
possibility of confusion as to the goods which bear the
competing marks or as to the origins thereof is not
farfetched. x x x.24
In addition, the word "MASTER" is neither a generic nor a
descriptive term. As such, said term can not be invalidated
as a trademark and, therefore, may be legally protected.
Generic terms25 are those which constitute "the common
descriptive name of an article or substance," or comprise
the "genus of which the particular product is a species," or
are "commonly used as the name or description of a kind
of goods," or "imply reference to every member of a genus
and the exclusion of individuating characters," or "refer to
the basic nature of the wares or services provided rather
than to the more idiosyncratic characteristics of a particular
product," and are not legally protectable. On the other
hand, a term is descriptive26 and therefore invalid as a
trademark if, as understood in its normal and natural
sense, it "forthwith conveys the characteristics, functions,
qualities or ingredients of a product to one who has never
seen it and does not know what it is," or "if it forthwith
conveys an immediate idea of the ingredients, qualities or
characteristics of the goods," or if it clearly denotes what
goods or services are provided in such a way that the
consumer does not have to exercise powers of perception
or imagination.
Rather, the term "MASTER" is a suggestive term brought
about by the advertising scheme of Nestle. Suggestive
terms27 are those which, in the phraseology of one court,
require "imagination, thought and perception to reach a
conclusion as to the nature of the goods." Such terms,
"which subtly connote something about the product," are
eligible for protection in the absence of secondary
meaning. While suggestive marks are capable of shedding
"some light" upon certain characteristics of the goods or
services in dispute, they nevertheless involve "an element
of incongruity," "figurativeness," or " imaginative effort on
the part of the observer."
This is evident from the advertising scheme adopted by
Nestle in promoting its coffee products. In this case, Nestle
has, over time, promoted its products as "coffee perfection
worthy of masters like Robert Jaworski and Ric Puno Jr."
In associating its coffee products with the term "MASTER"
and thereby impressing them with the attributes of said
term, Nestle advertised its products thus:
Robert Jaworski. Living Legend. A true hard court hero.
Fast on his feet. Sure in every shot he makes. A master
strategist. In one word, unmatched.
MASTER ROAST. Equally unmatched. Rich and deeply
satisfying. Made from a unique combination of the best
coffee beans - Arabica for superior taste and aroma,
Robusta for strength and body. A masterpiece only
NESCAFE, the world’s coffee masters, can create.
MASTER ROAST. Coffee perfection worthy of masters like
Robert Jaworski.28
In the art of conversation, Ric Puno Jr. is master. Witty.
Well-informed. Confident.
In the art of coffee-making, nothing equals Master Roast,
the coffee masterpiece from Nescafe, the world’s coffee
masters. A unique combination of the best coffee beans -
Arabica for superior taste and aroma, Robusta for strength
and body. Truly distinctive and rich in flavor.
Master Roast. Coffee perfection worthy of masters like Ric
Puno Jr.29
The term "MASTER", therefore, has acquired a certain
connotation to mean the coffee products MASTER
ROAST and MASTER BLEND produced by Nestle. As
such, the use by CFC of the term "MASTER" in the
trademark for its coffee product FLAVOR MASTER is likely
to cause confusion or mistake or even to deceive the
ordinary purchasers.
In closing, it may not be amiss to quote the case
of American Chicle Co. v. Topps Chewing Gum, Inc.,30 to
wit:
Why it should have chosen a mark that had long been
employed by [plaintiff] and had become known to the trade
instead of adopting some other means of identifying its
goods is hard to see unless there was a deliberate purpose
to obtain some advantage from the trade that [plaintiff] had
built up. Indeed, it is generally true that, as soon as we see
that a second comer in a market has, for no reason that he
can assign, plagiarized the "make-up" of an earlier comer,
we need no more; . . . [W]e feel bound to compel him to
exercise his ingenuity in quarters further afield.
WHEREFORE, in view of the foregoing, the decision of the
Court of Appeals in CA-G.R. SP No. 24101 is REVERSED
and SET ASIDE and the decision of the Bureau of Patents,
Trademarks and Technology Transfer in Inter Partes
Cases Nos. 3200 and 3202 is REINSTATED.
SO ORDERED.
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-
8476.1âwphi1.nêt
SO ORDERED.
MIGHTY CORPORATION and LA CAMPANA FABRICA
DE TABACO, INC., petitioner,
vs.
E. & J. GALLO WINERY and THE ANDRESONS
GROUP, INC., respondents.
DECISION
CORONA, J.:
In this petition for review on certiorari under Rule 45,
petitioners Mighty Corporation and La Campana Fabrica
de Tabaco, Inc. (La Campana) seek to annul, reverse and
set aside: (a) the November 15, 2001 decision 1 of the
Court of Appeals (CA) in CA-G.R. CV No. 65175 affirming
the November 26, 1998 decision,2 as modified by the June
24, 1999 order,3 of the Regional Trial Court of Makati City,
Branch 57 (Makati RTC) in Civil Case No. 93-850, which
held petitioners liable for, and permanently enjoined them
from, committing trademark infringement and unfair
competition, and which ordered them to pay damages to
respondents E. & J. Gallo Winery (Gallo Winery) and The
Andresons Group, Inc. (Andresons); (b) the July 11, 2002
CA resolution denying their motion for reconsideration4and
(c) the aforesaid Makati RTC decision itself.
I.
The Factual Background
Respondent Gallo Winery is a foreign corporation not
doing business in the Philippines but organized and
existing under the laws of the State of California, United
States of America (U.S.), where all its wineries are located.
Gallo Winery produces different kinds of wines and brandy
products and sells them in many countries under different
registered trademarks, including the GALLO and ERNEST
& JULIO GALLO wine trademarks.
Respondent domestic corporation, Andresons, has been
Gallo Winery’s exclusive wine importer and distributor in
the Philippines since 1991, selling these products in its
own name and for its own account.5
Gallo Winery’s GALLO wine trademark was registered in
the principal register of the Philippine Patent Office (now
Intellectual Property Office) on November 16, 1971 under
Certificate of Registration No. 17021 which was renewed
on November 16, 1991 for another 20 years.6 Gallo Winery
also applied for registration of its ERNEST & JULIO
GALLO wine trademark on October 11, 1990 under
Application Serial No. 901011-00073599-PN but the
records do not disclose if it was ever approved by the
Director of Patents.7
On the other hand, petitioners Mighty Corporation and La
Campana and their sister company, Tobacco Industries of
the Philippines (Tobacco Industries), are engaged in the
cultivation, manufacture, distribution and sale of tobacco
products for which they have been using the GALLO
cigarette trademark since 1973. 8
The Bureau of Internal Revenue (BIR) approved Tobacco
Industries’ use of GALLO 100’s cigarette mark on
September 14, 1973 and GALLO filter cigarette mark on
March 26, 1976, both for the manufacture and sale of its
cigarette products. In 1976, Tobacco Industries filed its
manufacturer’s sworn statement as basis for BIR’s
collection of specific tax on GALLO cigarettes.9
On February 5, 1974, Tobacco Industries applied for, but
eventually did not pursue, the registration of the GALLO
cigarette trademark in the principal register of the then
Philippine Patent Office.10
In May 1984, Tobacco Industries assigned the GALLO
cigarette trademark to La Campana which, on July 16,
1985, applied for trademark registration in the Philippine
Patent Office.11 On July 17, 1985, the National Library
issued Certificate of Copyright Registration No. 5834 for
La Campana’s lifetime copyright claim over GALLO
cigarette labels.12
Subsequently, La Campana authorized
Mighty Corporation to manufacture and sell cigarettes
bearing the GALLO trademark.13 BIR approved Mighty
Corporation’s use of GALLO 100’s cigarette brand, under
licensing agreement with Tobacco Industries, on May 18,
1988, and GALLO SPECIAL MENTHOL 100’s cigarette
brand on April 3, 1989.14
Petitioners claim that GALLO cigarettes have been sold in
the Philippines since 1973, initially by Tobacco Industries,
then by La Campana and finally by Mighty Corporation.15
On the other hand, although the GALLO wine trademark
was registered in the Philippines in 1971, respondents
claim that they first introduced and sold the GALLO and
ERNEST & JULIO GALLO wines in the
Philippines circa1974 within the then U.S. military facilities
only. By 1979, they had expanded their Philippine market
through authorized distributors and independent outlets.16
Respondents claim that they first learned about the
existence of GALLO cigarettes in the latter part of 1992
when an Andresons employee saw such cigarettes on
display with GALLO wines in a Davao supermarket wine
cellar section.17 Forthwith, respondents sent a demand
letter to petitioners asking them to stop using the GALLO
trademark, to no avail.
II.
The Legal Dispute
On March 12, 1993, respondents sued petitioners in the
Makati RTC for trademark and tradename infringement
and unfair competition, with a prayer for damages and
preliminary injunction.
Respondents charged petitioners with violating Article
6bis of the Paris Convention for the Protection of Industrial
Property (Paris Convention)18 and RA 166 (Trademark
Law),19 specifically, Sections 22 and 23 (for trademark
infringement),20 29 and 3021 (for unfair competition and
false designation of origin) and 37 (for tradename
infringement).22 They claimed that petitioners adopted the
GALLO trademark to ride on Gallo Winery’s GALLO and
ERNEST & JULIO GALLO trademarks’ established GALLO; by their inaction and conduct, respondents were
reputation and popularity, thus causing confusion, guilty of laches and estoppel; and petitioners acted with
deception and mistake on the part of the purchasing public honesty, justice and good faith in the exercise of their right
who had always associated GALLO and ERNEST & to manufacture and sell GALLO cigarettes.
JULIO GALLO trademarks with Gallo Winery’s wines.
In an order dated April 21, 1993,24 the Makati RTC denied,
Respondents prayed for the issuance of a writ of
for lack of merit, respondent’s prayer for the issuance of a
preliminary injunction and ex parte restraining order,
writ of preliminary injunction,25 holding that respondent’s
plus P2 million as actual and compensatory damages, at
GALLO trademark registration certificate covered wines
least P500,000 as exemplary and moral damages, and at
only, that respondents’ wines and petitioners’ cigarettes
least P500,000 as attorney’s fees and litigation
were not related goods and respondents failed to prove
expenses.23
material damage or great irreparable injury as required by
In their answer, petitioners alleged, among other Section 5, Rule 58 of the Rules of Court.26
affirmative defenses, that: petitioner’s GALLO cigarettes
On August 19, 1993, the Makati RTC denied, for lack of
and Gallo Winery’s wines were totally unrelated products;
merit, respondents’ motion for reconsideration. The court
Gallo Winery’s GALLO trademark registration certificate
reiterated that respondents’ wines and petitioners’
covered wines only, not cigarettes; GALLO cigarettes and
cigarettes were not related goods since the likelihood of
GALLO wines were sold through different channels of
deception and confusion on the part of the consuming
trade; GALLO cigarettes, sold at P4.60 for GALLO filters
public was very remote. The trial court emphasized that it
and P3 for GALLO menthols, were low-cost items
could not rely on foreign rulings cited by respondents
compared to Gallo Winery’s high-priced luxury wines
"because the[se] cases were decided by foreign courts on
which cost between P98 to P242.50; the target market of
the basis of unknown facts peculiar to each case or upon
Gallo Winery’s wines was the middle or high-income
factual surroundings which may exist only within their
bracket with at least P10,000 monthly income while
jurisdiction. Moreover, there [was] no showing that [these
GALLO cigarette buyers were farmers, fishermen,
cases had] been tested or found applicable in our
laborers and other low-income workers; the dominant
jurisdiction."27
feature of the GALLO cigarette mark was the rooster
device with the manufacturer’s name clearly indicated as On February 20, 1995, the CA likewise dismissed
MIGHTY CORPORATION while, in the case of Gallo respondents’ petition for review on certiorari, docketed as
Winery’s wines, it was the full names of the founders- CA-G.R. No. 32626, thereby affirming the Makati RTC’s
owners ERNEST & JULIO GALLO or just their surname
denial of the application for issuance of a writ of
preliminary injunction against petitioners.28
After trial on the merits, however, the Makati RTC, on
November 26, 1998, held petitioners liable for, and
permanently enjoined them from, committing trademark
infringement and unfair competition with respect to the
GALLO trademark:
WHEREFORE, judgment is rendered in favor of the
plaintiff (sic) and against the defendant (sic), to wit:
a. permanently restraining and enjoining defendants, their
distributors, trade outlets, and all persons acting for them
or under their instructions, from (i) using E & J’s registered
trademark GALLO or any other reproduction, counterfeit,
copy or colorable imitation of said trademark, either singly
or in conjunction with other words, designs or emblems
and other acts of similar nature, and (ii) committing other
acts of unfair competition against plaintiffs by
manufacturing and selling their cigarettes in the domestic
or export markets under the GALLO trademark.
b. ordering defendants to pay plaintiffs –
(i) actual and compensatory damages for the injury and
prejudice and impairment of plaintiffs’ business and
goodwill as a result of the acts and conduct pleaded as
basis for this suit, in an amount equal to 10% of
FOURTEEN MILLION TWO HUNDRED THIRTY FIVE
THOUSAND PESOS (PHP14,235,000.00) from the filing
of the complaint until fully paid;
(ii) exemplary damages in the amount of PHP100,000.00;
(iii) attorney’s fees and expenses of litigation in the amount
of PHP1,130,068.91;
(iv) the cost of suit.
SO ORDERED."29
On June 24, 1999, the Makati RTC granted respondent’s
motion for partial reconsideration and increased the award
of actual and compensatory damages to 10%
of P199,290,000 or P19,929,000.30
On appeal, the CA affirmed the Makati RTC decision and
subsequently denied petitioner’s motion for
reconsideration.
III.
The Issues
Petitioners now seek relief from this Court contending that
the CA did not follow prevailing laws and jurisprudence
when it held that: [a] RA 8293 (Intellectual Property Code
of the Philippines [IP Code]) was applicable in this case;
[b] GALLO cigarettes and GALLO wines were identical,
similar or related goods for the reason alone that they were
purportedly forms of vice; [c] both goods passed through
the same channels of trade and [d] petitioners were liable
for trademark infringement, unfair competition and
damages.31
Respondents, on the other hand, assert that this petition
which invokes Rule 45 does not involve pure questions of
law, and hence, must be dismissed outright.
IV.
Discussion
THE EXCEPTIONAL CIRCUMSTANCES
IN THIS CASE OBLIGE THE COURT TO REVIEW
THE CA’S FACTUAL FINDINGS
As a general rule, a petition for review on certiorari under
Rule 45 must raise only "questions of law"32 (that is, the
doubt pertains to the application and interpretation of law
to a certain set of facts) and not "questions of fact" (where
the doubt concerns the truth or falsehood of alleged
facts),33 otherwise, the petition will be denied. We are not
a trier of facts and the Court of Appeals’ factual findings
are generally conclusive upon us.34
This case involves questions of fact which are directly
related and intertwined with questions of law. The
resolution of the factual issues concerning the goods’
similarity, identity, relation, channels of trade, and acts of
trademark infringement and unfair competition is greatly
dependent on the interpretation of applicable laws. The
controversy here is not simply the identity or similarity of
both parties’ trademarks but whether or not infringement
or unfair competition was committed, a conclusion based
on statutory interpretation. Furthermore, one or more of
the following exceptional circumstances oblige us to
review the evidence on record:35
(1) the conclusion is grounded entirely on speculation,
surmises, and conjectures;
(2) the inference of the Court of Appeals from its findings
of fact is manifestly mistaken, absurd and impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of facts;
(5) 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) the findings are without citation of specific evidence on
which they are based;
(7) 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
(8) the findings of fact of the Court of Appeals are premised
on the absence of evidence and are contradicted [by the
evidence] on record.36
In this light, after thoroughly examining the evidence on
record, weighing, analyzing and balancing all factors to
determine whether trademark infringement and/or unfair
competition has been committed, we conclude that both
the Court of Appeals and the trial court veered away from
the law and well-settled jurisprudence.
Thus, we give due course to the petition.
THE TRADEMARK LAW AND THE PARIS
CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE
We note that respondents sued petitioners on March 12,
1993 for trademark infringement and unfair competition
committed during the effectivity of the Paris Convention
and the Trademark Law.
Yet, in the Makati RTC decision of November 26, 1998,
petitioners were held liable not only under the aforesaid
governing laws but also under the IP Code which took
effect only on January 1, 1998,37 or about five years after
the filing of the complaint:
Defendants’ unauthorized use of the GALLO trademark
constitutes trademark infringement pursuant to Section 22
of Republic Act No. 166, Section 155 of the IP
Code, Article 6bis of the Paris Convention, and Article 16
(1) of the TRIPS Agreement as it causes confusion,
deception and mistake on the part of the purchasing
public.38 (Emphasis and underscoring supplied)
The CA apparently did not notice the error and affirmed
the Makati RTC decision:
In the light of its finding that appellants’ use of the GALLO
trademark on its cigarettes is likely to create confusion with
the GALLO trademark on wines previously registered and
used in the Philippines by appellee E & J Gallo Winery,
the trial court thus did not err in holding that
appellants’ acts not only violated the provisions of the
our trademark laws (R.A. No. 166 and R.A.
Nos. (sic) 8293) but also Article 6bis of the Paris
Convention.39 (Emphasis and underscoring supplied)
We therefore hold that the courts a quo erred in
retroactively applying the IP Code in this case.
It is a fundamental principle that the validity and obligatory
force of a law proceed from the fact that it has first been
promulgated. A law that is not yet effective cannot be
considered as conclusively known by the populace. To
make a law binding even before it takes effect may lead to
the arbitrary exercise of the legislative power.40 Nova
constitutio futuris formam imponere debet non
praeteritis. A new state of the law ought to affect the future,
not the past. Any doubt must generally be resolved against
the retroactive operation of laws, whether these are
original enactments, amendments or repeals.41 There are
only a few instances when laws may be given retroactive
effect,42 none of which is present in this case.
The IP Code, repealing the Trademark Law,43 was
approved on June 6, 1997. Section 241 thereof expressly
decreed that it was to take effect only on January 1, 1998,
without any provision for retroactive application. Thus, the
Makati RTC and the CA should have limited the
consideration of the present case within the parameters of
the Trademark Law and the Paris Convention, the laws in
force at the time of the filing of the complaint.
DISTINCTIONS BETWEEN
TRADEMARK INFRINGEMENT
AND UNFAIR COMPETITION
Although the laws on trademark infringement and unfair
competition have a common conception at their root, that
is, a person shall not be permitted to misrepresent his
goods or his business as the goods or business of another, Pertinent Provisions on Trademark
the law on unfair competition is broader and more inclusive Infringement under the Paris
than the law on trademark infringement. The latter is more Convention and the Trademark Law
limited but it recognizes a more exclusive right derived
Article 6bis of the Paris Convention,46 an international
from the trademark adoption and registration by the person
agreement binding on the Philippines and the United
whose goods or business is first associated with it. The law
States (Gallo Winery’s country of domicile and origin)
on trademarks is thus a specialized subject distinct from
prohibits "the [registration] or use of a trademark which
the law on unfair competition, although the two subjects
constitutes a reproduction, imitation or translation, liable to
are entwined with each other and are dealt with together
create confusion, of a mark considered by the competent
in the Trademark Law (now, both are covered by the IP
authority of the country of registration or use to be well-
Code). Hence, even if one fails to establish his exclusive
known in that country as being already the mark of a
property right to a trademark, he may still obtain relief on
person entitled to the benefits of the [Paris] Convention
the ground of his competitor’s unfairness or fraud. Conduct
and used for identical or similar goods. [This rule also
constitutes unfair competition if the effect is to pass off on
applies] when the essential part of the mark constitutes a
the public the goods of one man as the goods of another.
reproduction of any such well-known mark or an
It is not necessary that any particular means should be
imitation liable to createconfusion therewith." There is no
used to this end.44
time limit for seeking the prohibition of the use of marks
In Del Monte Corporation vs. Court of Appeals,45 we used in bad faith.47
distinguished trademark infringement from unfair
Thus, under Article 6bis of the Paris Convention, the
competition:
following are the elements of trademark infringement:
(1) Infringement of trademark is the unauthorized use of a
(a) registration or use by another person of a trademark
trademark, whereas unfair competition is the passing off of
which is a reproduction, imitation or translation liable to
one's goods as those of another.
create confusion,
(2) In infringement of trademark fraudulent intent is
(b) of a mark considered by the competent authority of the
unnecessary, whereas in unfair competition fraudulent
country of registration or use48 to be well-known in that
intent is essential.
country and is already the mark of a person entitled to the
(3) In infringement of trademark the prior registration of the benefits of the Paris Convention, and
trademark is a prerequisite to the action, whereas in unfair
(c) such trademark is used for identical or similar goods.
competition registration is not necessary.
On the other hand, Section 22 of the Trademark Law holds
a person liable for infringement when, among others, he
"uses 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 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 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."49 Trademark registration and actual use are
material to the complaining party’s cause of action.
Corollary to this, Section 20 of the Trademark
Law50 considers the trademark registration certificate
as prima facieevidence of the validity of the registration,
the registrant’s ownership and exclusive right to use the
trademark in connection with the goods, business or
services as classified by the Director of Patents51 and as
specified in the certificate, subject to the conditions and
limitations stated therein. Sections 2 and 2-A52 of the
Trademark Law emphasize the importance of the
trademark’s actual use in commerce in the Philippines
prior to its registration. In the adjudication of trademark
rights between contending parties, equitable principles of
laches, estoppel, and acquiescence may be considered
and applied.53
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark
Law therefore, the following constitute the elements of
trademark infringement:
(a) a trademark actually used in commerce in the
Philippines and registered in the principal register of the
Philippine Patent Office
(b) 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.
In summary, the Paris Convention protects well-known
trademarks only (to be determined by domestic
authorities), while the Trademark Law protects all
trademarks, whether well-known or not, provided that they
have been registered and are in actual commercial use in
the Philippines. Following universal acquiescence and
comity, in case of domestic legal disputes on any
conflicting provisions between the Paris Convention
(which is an international agreement) and the Trademark
law (which is a municipal law) the latter will prevail.54
Under both the Paris Convention and the Trademark Law,
the protection of a registered trademark is limited only to
goods identical or similar to those in respect of which such
trademark is registered and only when there is likelihood
of confusion. Under both laws, the time element in
commencing infringement cases is material in ascertaining
the registrant’s express or implied consent to another’s
use of its trademark or a colorable imitation thereof. This
is why acquiescence, estoppel or laches may defeat the
registrant’s otherwise valid cause of action.
Hence, proof of all the elements of trademark infringement
is a condition precedent to any finding of liability.
THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.
By respondents’ own judicial admission, the GALLO wine
trademark was registered in the Philippines in November
1971 but the wine itself was first marketed and sold in the
country only in 1974 and only within the former U.S.
military facilities, and outside thereof, only in 1979. To
prove commercial use of the GALLO wine trademark in the
Philippines, respondents presented sales invoice no.
29991 dated July 9, 1981 addressed to Conrad Company
Inc., Makati, Philippines and sales invoice no. 85926 dated
March 22, 1996 addressed to Andresons Global, Inc.,
Quezon City, Philippines. Both invoices were for the sale
and shipment of GALLO wines to the Philippines during
that period.55 Nothing at all, however, was presented to
evidence the alleged sales of GALLO wines in the
Philippines in 1974 or, for that matter, prior to July 9, 1981.
On the other hand, by testimonial evidence supported by
the BIR authorization letters, forms and manufacturer’s
sworn statement, it appears that petitioners and its
predecessor-in-interest, Tobacco Industries, have indeed
been using and selling GALLO cigarettes in the Philippines
since 1973 or before July 9, 1981.56
In Emerald Garment Manufacturing Corporation vs. Court
of Appeals,57 we reiterated our rulings in Pagasa Industrial
Corporation vs. Court of Appeals,58 Converse Rubber
Corporation vs. Universal Rubber Products, Inc.,59 Sterling
Products International, Inc. vs. Farbenfabriken Bayer
Aktiengesellschaft,60 Kabushi Kaisha Isetan vs.
61
Intermediate Appellate Court, and Philip Morris vs. Court
of Appeals,62 giving utmost importance to the actual
commercial useof a trademark in the Philippines prior to
its registration, notwithstanding the provisions of the Paris
Convention:
xxx xxx xxx
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 given a standing equal, not superior, to national legislative
application for registration with the BPTTT and hence, enactments.
has not acquired ownership over said mark.
xxx xxx xxx
Actual use in commerce in the Philippines is an
In other words, (a foreign corporation) may have the
essential prerequisite for the acquisition of ownership
capacity to sue for infringement irrespective of lack of
over a trademark pursuant to Sec. 2 and 2-A of the
business activity in the Philippines on account of
Philippine Trademark Law (R.A. No. 166) x x x
Section 21-A of the Trademark Law but the question of
xxx xxx xxx whether they have an exclusive right over their symbol
as to justify issuance of the controversial writ will
The provisions of the 1965 Paris Convention for the
depend on actual use of their trademarks in the
Protection of Industrial Property relied upon by private
Philippines in line with Sections 2 and 2-A of the same
respondent and Sec. 21-A of the Trademark Law (R.A. No.
law. It is thus incongruous for petitioners to claim that
166) were sufficiently expounded upon and qualified in
when a foreign corporation not licensed to do business in
the recent case of Philip Morris, Inc. v. Court of
the Philippines files a complaint for infringement, the entity
Appeals (224 SCRA 576 [1993]):
need not be actually using the trademark in commerce in
xxx xxx xxx the Philippines. Such a foreign corporation may have the
personality to file a suit for infringement but it may not
Following universal acquiescence and comity, our necessarily be entitled to protection due to absence of
municipal law on trademarks regarding the actual use of the emblem in the local market.
requirement of actual use in the Philippines must
subordinate an international agreement inasmuch as xxx xxx xxx
the apparent clash is being decided by a municipal
Undisputably, private respondent is the senior
tribunal (Mortisen vs. Peters, Great Britain, High Court of
registrant, having obtained several registration
Judiciary of Scotland, 1906, 8 Sessions, 93; Paras,
certificates for its various trademarks "LEE," "LEE
International Law and World Organization, 1971 Ed., p.
RIDERS," and "LEESURES" in both the supplemental and
20). Withal, the fact that international law has been made
principal registers, as early as 1969 to 1973. However,
part of the law of the land does not by any means imply
registration alone will not suffice. In Sterling Products
the primacy of international law over national law in the
International, Inc. v. Farbenfabriken Bayer
municipal sphere. Under the doctrine of incorporation as
Aktiengesellschaft (27 SCRA 1214 [1969]; Reiterated
applied in most countries, rules of international law are
inKabushi Isetan vs. Intermediate Appellate Court (203
SCRA 583 [1991]) 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
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 facieevidence. It is
not conclusive but can and may be rebutted by
controverting evidence.
xxx xxx xxx
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
(Rollo, p. 177) 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. (Original Records, p. 52) Similarly,
we give little weight to the numerous vouchers
representing various advertising expenses in the
Philippines for "LEE" products. 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. (Exhibit E)
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. (Exhibit 1-e to 1-o)
Our rulings in Pagasa Industrial Corp. v. Court of
Appeals (118 SCRA 526 [1982]) and Converse Rubber
Corp. v. Universal Rubber Products, Inc., (147 SCRA 154
[1987]), respectively, are instructive:
The Trademark Law is very clear. It requires actual
commercial use of the mark prior to its registration. There
is no dispute that respondent corporation was the first
registrant, yet it failed to fully substantiate its claim
that it used in trade or business in the Philippines the
subject mark; it did not present proof to invest it with
exclusive, continuous adoption of the trademark
which should consist among others, of considerable
sales since its first use. The invoices submitted by
respondent which were dated way back in 1957 show
that the zippers sent to the Philippines were to be used
as "samples" and "of no commercial value." The
evidence for respondent must be clear, definite and free
from inconsistencies. "Samples" are not for sale and
therefore, the fact of exporting them to the Philippines
cannot be considered to be equivalent to the "use"
contemplated by law. Respondent did not expect income
from such "samples." There were no receipts to establish
sale, and no proof were presented to show that they were
subsequently sold in the Philippines.
xxx xxx xxx
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. (Emphasis supplied.)
In view of the foregoing jurisprudence and respondents’
judicial admission that the actual commercial use of the
GALLO wine trademark was subsequent to its registration
in 1971 and to Tobacco Industries’ commercial use of the
GALLO cigarette trademark in 1973, we rule that, on this
account, respondents never enjoyed the exclusive right to
use the GALLO wine trademark to the prejudice of
Tobacco Industries and its successors-in-interest, herein
petitioners, either under the Trademark Law or the Paris
Convention.
Respondents’ GALLO trademark
registration is limited to wines only
We also note that the GALLO trademark registration
certificates in the Philippines and in other countries
expressly state that they cover wines only, without any
evidence or indication that registrant Gallo Winery
expanded or intended to expand its business to
cigarettes.63
Thus, by strict application of Section 20 of the Trademark
Law, Gallo Winery’s exclusive right to use the GALLO
trademark should be limited to wines, the only product
indicated in its registration certificates. This strict statutory
limitation on the exclusive right to use trademarks was
amply clarified in our ruling in Faberge, Inc. vs.
Intermediate Appellate Court:64
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. Inasmuch as petitioner has not ventured in the
production of briefs, an item which is not listed in its
certificate of registration, petitioner cannot 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 Sam (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 others for products which
are of a 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 Newspapers
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).
NO LIKELIHOOD OF CONFUSION, MISTAKE
OR DECEIT AS TO THE IDENTITY OR SOURCE
OF PETITIONERS’ AND RESPONDENTS’
GOODS OR BUSINESS
A crucial issue in any trademark infringement case is the
likelihood of confusion, mistake or deceit as to the identity,
source or origin of the goods or identity of the business as
a consequence of using a certain mark. Likelihood of
confusion is admittedly a relative term, to be determined
rigidly according to the particular (and sometimes peculiar)
circumstances of each case. Thus, in trademark cases,
more than in other kinds of litigation, precedents must be
studied in the light of each particular case. 65
There are two types of confusion in trademark
infringement. The first is "confusion of goods" when an
otherwise prudent purchaser is induced to purchase one
product in the belief that he is purchasing another, in which
case defendant’s goods are then bought as the plaintiff’s
and its poor quality reflects badly on the plaintiff’s
reputation. The other is "confusion of business" wherein
the goods of the parties are different but the defendant’s
product can reasonably (though mistakenly) be assumed
to originate from the plaintiff, thus deceiving the public into
believing that there is some connection between the
plaintiff and defendant which, in fact, does not exist.66
In determining the likelihood of confusion, the Court must
consider: [a] the resemblance between the trademarks; [b]
the similarity of the goods to which the trademarks are
attached; [c] the likely effect on the purchaser and [d] the
registrant’s express or implied consent and other fair and
equitable considerations.
Petitioners and respondents both use "GALLO" in the
labels of their respective cigarette and wine products. But,
as held in the following cases, the use of an identical mark
does not, by itself, lead to a legal conclusion that there is
trademark infringement:
(a) in Acoje Mining Co., Inc. vs. Director of Patent,67 we
ordered the approval of Acoje Mining’s application for
registration of the trademark LOTUS for its soy sauce even
though Philippine Refining Company had prior registration
and use of such identical mark for its edible oil which, like
soy sauce, also belonged to Class 47;
(b) in Philippine Refining Co., Inc. vs. Ng Sam and Director
of Patents,68 we upheld the Patent Director’s registration
of the same trademark CAMIA for Ng Sam’s ham under
Class 47, despite Philippine Refining Company’s prior
trademark registration and actual use of such mark on its
lard, butter, cooking oil (all of which belonged to Class 47),
abrasive detergents, polishing materials and soaps;
(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals
and Santos Lim Bun Liong,69 we dismissed Hickok’s
petition to cancel private respondent’s HICKOK trademark
registration for its Marikina shoes as against petitioner’s
earlier registration of the same trademark for
handkerchiefs, briefs, belts and wallets;
(d) in Shell Company of the Philippines vs. Court of
Appeals,70 in a minute resolution, we dismissed the
petition for review for lack of merit and affirmed the Patent
Office’s registration of the trademark SHELL used in the
cigarettes manufactured by respondent Fortune Tobacco
Corporation, notwithstanding Shell Company’s opposition
as the prior registrant of the same trademark for its
gasoline and other petroleum products;
(e) in Esso Standard Eastern, Inc. vs. Court of
Appeals,71 we dismissed ESSO’s complaint for trademark
infringement against United Cigarette Corporation and
allowed the latter to use the trademark ESSO for its
cigarettes, the same trademark used by ESSO for its
petroleum products, and
(f) in Canon Kabushiki Kaisha vs. Court of Appeals and
NSR Rubber Corporation,72 we affirmed the rulings of the
Patent Office and the CA that NSR Rubber Corporation
could use the trademark CANON for its sandals (Class 25)
despite Canon Kabushiki Kaisha’s prior registration and
use of the same trademark for its paints, chemical
products, toner and dyestuff (Class 2).
Whether a trademark causes confusion and is likely to
deceive the public hinges on "colorable imitation" 73 which
has been defined as "such similarity in form, content,
words, sound, meaning, special arrangement or general
appearance of the trademark or tradename in their overall
presentation or in their essential and substantive and
distinctive parts as would likely mislead or confuse
persons in the ordinary course of purchasing the genuine
article."74
Jurisprudence has developed two tests in determining
similarity and likelihood of confusion in trademark
resemblance:75
(a) the Dominancy Test applied in Asia Brewery, Inc. vs.
Court of Appeals76 and other cases,77 and
(b) the Holistic or Totality Test used in Del Monte
Corporation vs. Court of Appeals78 and its preceding
cases.79
The Dominancy Test focuses on the similarity of the
prevalent features of the competing trademarks which
might cause confusion or deception, and thus
infringement. If the competing trademark contains the
main, essential or dominant features of another, and
confusion or deception is likely to result, infringement
takes place. Duplication or imitation is not necessary; nor
is it necessary that the infringing label should suggest an
effort to imitate. The question is whether the use of the
marks involved is likely to cause confusion or mistake in
the mind of the public or deceive purchasers.80
On the other hand, the Holistic Test requires that the
entirety of the marks in question be considered in resolving
confusing similarity. Comparison of words is not the only
determining 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.81
In comparing the resemblance or colorable imitation of
marks, various factors have been considered, such as the
dominant color, style, size, form, meaning of letters, words,
designs and emblems used, the likelihood of deception of
the mark or name's tendency to confuse82 and the
commercial impression likely to be conveyed by the
trademarks if used in conjunction with the respective
goods of the parties.83
Applying the Dominancy and Holistic Tests, we find that
the dominant feature of the GALLO cigarette trademark is
the device of a large rooster facing left, outlined in black
against a gold background. The rooster’s color is either
green or red – green for GALLO menthols and red for
GALLO filters. Directly below the large rooster device is
the word GALLO. The rooster device is given prominence
in the GALLO cigarette packs in terms of size and location
on the labels.84
The GALLO mark appears to be a fanciful and arbitrary
mark for the cigarettes as it has no relation at all to the
product but was chosen merely as a trademark due to the
fondness for fighting cocks of the son of petitioners’
president. Furthermore, petitioners adopted GALLO, the
Spanish word for rooster, as a cigarette trademark to
appeal to one of their target markets,
the sabungeros (cockfight aficionados). 85
Also, as admitted by respondents themselves,86 on the
side of the GALLO cigarette packs are the words "MADE
BY MIGHTY CORPORATION," thus clearly informing the
public as to the identity of the manufacturer of the
cigarettes.
On the other hand, GALLO Winery’s wine and brandy
labels are diverse. In many of them, the labels are
embellished with sketches of buildings and trees,
vineyards or a bunch of grapes while in a few, one or two
small roosters facing right or facing each other (atop the
EJG crest, surrounded by leaves or ribbons), with
additional designs in green, red and yellow colors, appear
as minor features thereof.87 Directly below or above these
sketches is the entire printed name of the founder-owners,
"ERNEST & JULIO GALLO" or just their surname
"GALLO,"88which appears in different fonts, sizes, styles
and labels, unlike petitioners’ uniform casque-font bold-
lettered GALLO mark.
Moreover, on the labels of Gallo Winery’s wines are
printed the words "VINTED AND BOTTLED BY ERNEST
& JULIO GALLO, MODESTO, CALIFORNIA."89
The many different features like color schemes, art works
and other markings of both products drown out the
similarity between them – the use of the word “GALLO” ―
a family surname for the Gallo Winery’s wines and a
Spanish word for rooster for petitioners’ cigarettes.
WINES AND CIGARETTES ARE NOT
IDENTICAL, SIMILAR, COMPETING OR
RELATED GOODS
Confusion of goods is evident where the litigants are
actually in competition; but confusion of business may
arise between non-competing interests as well.90
Thus, apart from the strict application of Section 20 of the
Trademark Law and Article 6bis of the Paris Convention
which proscribe trademark infringement not only of goods
specified in the certificate of registration but also of
identical or similar goods, we have also uniformly
recognized and applied the modern concept of "related
goods."91Simply stated, when goods are so related that the
public may be, or is actually, deceived and misled that they
come from the same maker or manufacturer, trademark
infringement occurs.92
Non-competing goods may be those which, though they
are not in actual competition, are so related to each other
that it can reasonably be assumed that they originate from
one manufacturer, in which case, confusion of business
can arise out of the use of similar marks.93 They may also
be those which, being entirely unrelated, cannot be
assumed to have a common source; hence, there is no
confusion of business, even though similar marks are
used.94 Thus, there is no trademark infringement if the
public does not expect the plaintiff to make or sell the same
class of goods as those made or sold by the defendant.95
In resolving whether goods are related,96 several factors
come into play:
(a) the business (and its location) to which the goods
belong
(b) the class of product to which the goods belong
(c) the product's quality, quantity, or size, including the
nature of the package, wrapper or container 97
(d) the nature and cost of the articles98
(e) the descriptive properties, physical attributes or
essential characteristics with reference to their form,
composition, texture or quality
(f) the purpose of the goods99
(g) whether the article is bought for immediate
consumption,100 that is, day-to-day household items101
(h) the fields of manufacture102
(i) the conditions under which the article is usually
purchased103 and
(j) the channels of trade through which the goods
flow,104 how they are distributed, marketed, displayed and
sold.105
The wisdom of this approach is its recognition that each
trademark infringement case presents its own unique set
of facts. No single factor is preeminent, nor can the
presence or absence of one determine, without analysis of
the others, the outcome of an infringement suit. Rather,
the court is required to sift the evidence relevant to each
of the criteria. This requires that the entire panoply of
elements constituting the relevant factual landscape be
comprehensively examined.106 It is a weighing and
balancing process. With reference to this ultimate
question, and from a balancing of the determinations
reached on all of the factors, a conclusion is reached
whether the parties have a right to the relief sought.107
A very important circumstance though is whether there
exists a likelihood that an appreciable number of ordinarily
prudent purchasers will be misled, or simply confused, as
to the source of the goods in question.108 The "purchaser"
is not the "completely unwary consumer" but is the
"ordinarily intelligent buyer" considering the type of product
involved.109 He is "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."110
Hence, in the adjudication of trademark infringement, we
give due regard to the goods’ usual purchaser’s character,
attitude, habits, age, training and education. 111
Applying these legal precepts to the present case,
petitioner’s use of the GALLO cigarette trademark is not
likely to cause confusion or mistake, or to deceive the
"ordinarily intelligent buyer" of either wines or cigarettes or
both as to the identity of the goods, their source and origin,
or identity of the business of petitioners and respondents.
Obviously, wines and cigarettes are not identical or
competing products. Neither do they belong to the same
class of goods. Respondents’ GALLO wines belong to
Class 33 under Rule 84[a] Chapter III, Part II of the Rules
of Practice in Trademark Cases while petitioners’ GALLO
cigarettes fall under Class 34.
We are mindful that product classification alone cannot goods here involved, wines and cigarettes, have nothing
serve as the decisive factor in the resolution of whether or whatsoever in common with respect to their essential
not wines and cigarettes are related goods. Emphasis characteristics, quality, quantity, size, including the nature
should be on the similarity of the products involved and not of their packages, wrappers or containers.113
on the arbitrary classification or general description of their
Accordingly, the U.S. patent office and courts have
properties or characteristics. But the mere fact that one
consistently held that the mere fact that goods are sold in
person has adopted and used a particular trademark for
one store under the same roof does not automatically
his goods does not prevent the adoption and use of the
mean that buyers are likely to be confused as to the goods’
same trademark by others on articles of a different
respective sources, connections or sponsorships. The fact
description. 112
that different products are available in the same store is an
Both the Makati RTC and the CA held that wines and insufficient standard, in and of itself, to warrant a finding of
cigarettes are related products because: (1) "they are likelihood of confusion.114
related forms of vice, harmful when taken in excess, and
In this regard, we adopted the Director of Patents’ finding
used for pleasure and relaxation" and (2) "they are
in Philippine Refining Co., Inc. vs. Ng Sam and the
grouped or classified in the same section of supermarkets
Director of Patents:115
and groceries."
In his decision, the Director of Patents enumerated the
We find these premises patently insufficient and too
factors that set respondent’s products apart from the
arbitrary to support the legal conclusion that wines and
goods of petitioner. He opined and we quote:
cigarettes are related products within the contemplation of
the Trademark Law and the Paris Convention. "I have taken into account such factors as probable
purchaser attitude and habits, marketing activities, retail
First, anything –- not only wines and cigarettes ― can be
outlets, and commercial impression likely to be conveyed
used for pleasure and relaxation and can be harmful when
by the trademarks if used in conjunction with the
taken in excess. Indeed, it would be a grave abuse of
respective goods of the parties, I believe that ham on one
discretion to treat wines and cigarettes as similar or related
hand, and lard, butter, oil, and soap on the other are
products likely to cause confusion just because they are
products that would not move in the same manner
pleasure-giving, relaxing or potentially harmful. Such
through the same channels of trade. They pertain to
reasoning makes no sense.
unrelated fields of manufacture, might be distributed
Second, it is common knowledge that supermarkets sell and marketed under dissimilar conditions, and are
an infinite variety of wholly unrelated products and the displayed separately even though they frequently may
be sold through the same retail food
establishments. Opposer’s products are ordinary day-to-
day household items whereas ham is not necessarily so.
Thus, the goods of the parties are not of a character which
purchasers would likely attribute to a common origin.
The observations and conclusion of the Director of Patents
are correct. The particular goods of the parties are so
unrelated that consumers, would not, in any probability
mistake one as the source of origin of the product of the
other. (Emphasis supplied).
The same is true in the present case. Wines and cigarettes
are non-competing and are totally unrelated products not
likely to cause confusion vis-à-vis the goods or the
business of the petitioners and respondents.
Wines are bottled and consumed by drinking while
cigarettes are packed in cartons or packages and smoked.
There is a whale of a difference between their descriptive
properties, physical attributes or essential characteristics
like form, composition, texture and quality.
GALLO cigarettes are inexpensive items while GALLO
wines are not. GALLO wines are patronized by middle-to-
high-income earners while GALLO cigarettes appeal only
to simple folks like farmers, fishermen, laborers and other
low-income workers.116 Indeed, the big price difference of
these two products is an important factor in proving that
they are in fact unrelated and that they travel in different
channels of trade. There is a distinct price segmentation
based on vastly different social classes of purchasers.117
GALLO cigarettes and GALLO wines are not sold through
the same channels of trade. GALLO cigarettes are
Philippine-made and petitioners neither claim nor pass off
their goods as imported or emanating from Gallo Winery.
GALLO cigarettes are distributed, marketed and sold
through ambulant and sidewalk vendors, small local sari-
saristores and grocery stores in Philippine rural areas,
mainly in Misamis Oriental, Pangasinan, Bohol, and
Cebu.118 On the other hand, GALLO wines are imported,
distributed and sold in the Philippines through Gallo
Winery’s exclusive contracts with a domestic entity, which
is currently Andresons. By respondents’ own testimonial
evidence, GALLO wines are sold in hotels, expensive bars
and restaurants, and high-end grocery stores and
supermarkets, not through sari-sari stores or ambulant
vendors.119
Furthermore, the Makati RTC and the CA erred in relying
on Carling Brewing Company vs. Philip Morris, Inc.120 to
support its finding that GALLO wines and GALLO
cigarettes are related goods. The courts a quo should
have taken into consideration the subsequent case of IDV
North America, Inc. and R & A Bailey Co. Limited vs. S &
M Brands, Inc.:121
IDV correctly acknowledges, however, that there is no per
se rule that the use of the same mark on alcohol and
tobacco products always will result in a likelihood of
confusion. Nonetheless, IDV relies heavily on the decision
in John Walker & Sons, Ltd. vs. Tampa Cigar Co., 124 F.
Supp. 254, 256 (S.D. Fla. 1954), aff’d, 222 F. 2d 460
(5th Cir. 1955), wherein the court enjoined the use of the
mark "JOHNNIE WALKER" on cigars because the fame of
the plaintiff’s mark for scotch whiskey and because the
plaintiff advertised its scotch whiskey on, or in connection
with tobacco products. The court, in John Walker &
Sons, placed great significance on the finding that the
infringers use was a deliberate attempt to capitalize on
the senior marks’ fame. Id. At 256. IDV also relies
on Carling Brewing Co. v. Philip Morris, Inc., 297 F.
Supp. 1330, 1338 (N.D. Ga. 1968), in which the court
enjoined the defendant’s use of the mark "BLACK
LABEL" for cigarettes because it was likely to cause
confusion with the plaintiff’s well-known mark
"BLACK LABEL" for beer.
xxx xxx xxx
Those decisions, however, must be considered in
perspective of the principle that tobacco products and
alcohol products should be considered related only in
cases involving special circumstances.Schenley
Distillers, Inc. v. General Cigar Co., 57C.C.P.A. 1213,
427 F. 2d 783, 785 (1970). The presence of special
circumstances has been found to exist where there is
a finding of unfair competition or where a ‘famous’ or
‘well-known mark’ is involved and there is a
demonstrated intent to capitalize on that mark. For
example, in John Walker & Sons, the court was persuaded
to find a relationship between products, and hence a
likelihood of confusion, because of the plaintiff’s long use
and extensive advertising of its mark and placed great
emphasis on the fact that the defendant used the
trademark ‘Johnnie Walker with full knowledge of its fame
and reputation and with the intention of taking advantage
thereof.’ John Walker & Sons, 124 F. Supp. At 256; see
Mckesson & Robbins, Inc. v. P. Lorillard Co., 1959 WL
5894, 120 U.S.P.Q. 306, 307 (1959) (holding that the
decision in John Walker & Sons was ‘merely the law on the
particular case based upon its own peculiar facts’); see
also Alfred Dunhill, 350 F. Supp. At 1363 (defendant’s
adoption of ‘Dunhill’ mark was not innocent). However,
in Schenley, the court noted that the relation between
tobacco and whiskey products is significant where a widely
known arbitrary mark has long been used for diversified
products emanating from a single source and a newcomer
seeks to use the same mark on unrelated
goods. Schenley, 427 F.2d. at 785. Significantly,
in Schenley, the court looked at the industry practice and
the facts of the case in order to determine the nature and
extent of the relationship between the mark on the tobacco
product and the mark on the alcohol product.
The record here establishes conclusively that IDV has
never advertised BAILEYS liqueurs in conjunction with
tobacco or tobacco accessory products and that IDV has
no intent to do so. And, unlike the defendant in Dunhill, S
& M Brands does not market bar accessories, or liqueur
related products, with its cigarettes. The advertising and
promotional materials presented a trial in this action
demonstrate a complete lack of affiliation between the
tobacco and liqueur products bearing the marks here at
issue.
xxx xxx xxx
Of equal significance, it is undisputed that S & M Brands
had no intent, by adopting the family name ‘Bailey’s’ as the
mark for its cigarettes, to capitalize upon the fame of the
‘BAILEYS’ mark for liqueurs. See Schenley, 427 F. 2d at
785. Moreover, as will be discussed below, and as
found in Mckesson & Robbins, the survey evidence
refutes the contention that cigarettes and alcoholic
beverages are so intimately associated in the public
mind that they cannot under any circumstances be
sold under the same mark without causing
confusion. See Mckesson & Robbins, 120 U.S.P.Q. at
308.
Taken as a whole, the evidence here demonstrates the
absence of the ‘special circumstances’ in which courts
have found a relationship between tobacco and alcohol
products sufficient to tip the similarity of goods analysis in
favor of the protected mark and against the allegedly
infringing mark. It is true that BAILEYS liqueur, the
world’s best selling liqueur and the second best
selling in the United States, is a well-known product.
That fact alone, however, is insufficient to invoke the
special circumstances connection here where so
much other evidence and so many other factors
disprove a likelihood of confusion. The similarity of
products analysis, therefore, augers against finding
that there is a likelihood of confusion. (Emphasis
supplied).
In short, tobacco and alcohol products may be considered
related only in cases involving special
circumstanceswhich exist only if a famous mark is involved
and there is a demonstrated intent to capitalize on it. Both
of these are absent in the present case.
THE GALLO WINE TRADEMARK IS NOT A
WELL-KNOWN MARK IN THE CONTEXT
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT
IDENTICAL OR SIMILAR GOODS
First, the records bear out that most of the trademark
registrations took place in the late 1980s and the 1990s,
that is, after Tobacco Industries’ use of the GALLO
cigarette trademark in 1973 and petitioners’ use of the
same mark in 1984.
GALLO wines and GALLO cigarettes are neither the same,
identical, similar nor related goods, a requisite
elementunder both the Trademark Law and the Paris
Convention.
Second, the GALLO trademark cannot be considered a
strong and distinct mark in the Philippines. Respondents
do not dispute the documentary evidence that aside from
Gallo Winery’s GALLO trademark registration, the Bureau
of Patents, Trademarks and Technology Transfer also
issued on September 4, 1992 Certificate of Registration
No. 53356 under the Principal Register
approving Productos Alimenticios Gallo, S.A’s April 19,
1990 application for GALLO trademark registration and
use for its "noodles, prepared food or canned noodles,
ready or canned sauces for noodles, semolina, wheat flour
and bread crumbs, pastry, confectionery, ice cream,
honey, molasses syrup, yeast, baking powder, salt,
mustard, vinegar, species and ice."122
Third and most important, pursuant to our ruling in Canon
Kabushiki Kaisha vs. Court of Appeals and NSR Rubber
Corporation,123 "GALLO" cannot be considered a "well-
known" mark within the contemplation and protection of
the Paris Convention in this case since wines and
cigarettes are not identical or similar goods:
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 (203 SCRA 59
[1991]). 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 (sic) 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 of the
Treaty of Paris. These conditions are:
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 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. Moreover, there exists no evidence that petitioners
The Petitioner is using the mark "CANON" for employed malice, bad faith or fraud, or that they intended
products belonging to class 2 (paints, chemical to capitalize on respondents’ goodwill in adopting the
products) while the Respondent is using the same GALLO mark for their cigarettes which are totally unrelated
mark for sandals (class 25). to respondents’ GALLO wines. Thus, we rule out
trademark infringement on the part of petitioners.
Hence, Petitioner's contention that its mark is well-
known at the time the Respondent filed its application PETITIONERS ARE ALSO NOT LIABLE
for the same mark should fail." (Emphasis supplied.) FOR UNFAIR COMPETITION
Consent of the Registrant and Under Section 29 of the Trademark Law, any person who
Other air, Just and Equitable employs deception or any other means contrary to good
Considerations faith by which he passes off the goods manufactured by
him or in which he deals, or his business, or services for
Each trademark infringement case presents a unique
those of the one having established such goodwill, or who
problem which must be answered by weighing the
commits any acts calculated to produce said result, is
conflicting interests of the litigants.124
guilty of unfair competition. It includes the following acts:
Respondents claim that GALLO wines and GALLO
(a) Any person, who in selling his goods shall give them
cigarettes flow through the same channels of trade, that is,
the general appearance of goods of another manufacturer
retail trade. If respondents’ assertion is true, then both
or dealer, either as to the goods themselves or in the
goods co-existed peacefully for a considerable period of
wrapping of the packages in which they are contained, or
time. It took respondents almost 20 years to know about
the devices or words thereon, or in any other feature of
the existence of GALLO cigarettes and sue petitioners for
their appearance, which would be likely to influence
trademark infringement. Given, on one hand, the long
purchasers to believe that the goods offered are those of
period of time that petitioners were engaged in the
a manufacturer or dealer other than the actual
manufacture, marketing, distribution and sale of GALLO
manufacturer or dealer, or who otherwise clothes the
cigarettes and, on the other, respondents’ delay in
goods with such appearance as shall deceive the public
enforcing their rights (not to mention implied consent,
and defraud another of his legitimate trade, or any
acquiescence or negligence) we hold that equity, justice
subsequent vendor of such goods or any agent of any
and fairness require us to rule in favor of petitioners. The
vendor engaged in selling such goods with a like purpose;
scales of conscience and reason tip far more readily in
favor of petitioners than respondents.
(b) Any person who by any artifice, or device, or who Branch 57 in Civil Case No. 93-850 are hereby
employs any other means calculated to induce the false REVERSED and SET ASIDE and the complaint against
belief that such person is offering the services of another petitioners DISMISSED.
who has identified such services in the mind of the public;
Costs against respondents.
(c) Any person who shall make any false statement in the
SO ORDERED.
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.
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
constitutes unfair competition. Actual or probable
deception and confusion on the part of customers by
reason of defendant’s practices must always
appear.125 On this score, we find that petitioners never
attempted to pass off their cigarettes as those of
respondents. There is no evidence of bad faith or fraud
imputable to petitioners in using their GALLO cigarette
mark.
All told, after applying all the tests provided by the
governing laws as well as those recognized by
jurisprudence, we conclude that petitioners are not liable
for trademark infringement, unfair competition or
damages.
WHEREFORE, finding the petition for review meritorious,
the same is hereby GRANTED. The questioned decision
and resolution of the Court of Appeals in CA-G.R. CV No.
65175 and the November 26, 1998 decision and the June
24, 1999 order of the Regional Trial Court of Makati,
LEVI STRAUSS & CO., & LEVI STRAUSS (PHILS.),
INC., Petitioners,
vs.
CLINTON APPARELLE, INC., Respondent.
DECISION
Tinga, J.:
Before us is a petition for review on certiorari1 under Rule
45 of the 1997 Rules of Civil Procedure filed by Levi
Strauss & Co. (LS & Co.) and Levi Strauss (Philippines),
Inc. (LSPI) assailing the Court of
Appeals’ Decision and Resolution respectively dated 21
2 3
December 1998 and 10 May 1999. The
questioned Decision granted respondent’s prayer for a
writ of preliminary injunction in its Petition4 and set aside
the trial court’s orders dated 15 May 1998 5 and 4 June
19986 which respectively granted petitioners’ prayer for
the issuance of a temporary restraining order (TRO) and
application for the issuance of a writ of preliminary
injunction.
This case stemmed from the Complaint7 for Trademark
Infringement, Injunction and Damages filed by petitioners
LS & Co. and LSPI against respondent Clinton Apparelle,
Inc.* (Clinton Aparelle) together with an alternative
defendant, Olympian Garments, Inc. (Olympian
Garments), before the Regional Trial Court of Quezon
City, Branch 90.8 The Complaint was docketed as Civil
Case No. Q-98-34252, entitled "Levi Strauss & Co. and
Levi Strauss (Phils.), Inc. v. Clinton Aparelle, Inc. and/or
Olympian Garments, Inc."
The Complaint alleged that LS & Co., a foreign corporation
duly organized and existing under the laws of the State of
Delaware, U.S.A., and engaged in the apparel business,
is the owner by prior adoption and use since 1986 of the
internationally famous "Dockers and Design" trademark.
This ownership is evidenced by its valid and existing
registrations in various member countries of the Paris
Convention. In the Philippines, it has a Certificate of
Registration No. 46619 in the Principal Register for use of
said trademark on pants, shirts, blouses, skirts, shorts,
sweatshirts and jackets under Class 25.9
The "Dockers and Design" trademark was first used in the
Philippines in or about May 1988, by LSPI, a domestic
corporation engaged in the manufacture, sale and
distribution of various products bearing trademarks owned
by LS & Co. To date, LSPI continues to manufacture and
sell Dockers Pants with the "Dockers and Design"
trademark.10
LS & Co. and LSPI further alleged that they discovered the
presence in the local market of jeans under the brand
name "Paddocks" using a device which is substantially, if
not exactly, similar to the "Dockers and Design" trademark
owned by and registered in the name of LS & Co., without
its consent. Based on their information and belief, they
added, Clinton Apparelle manufactured and continues to
manufacture such "Paddocks" jeans and other apparel.
However, since LS & Co. and LSPI are unsure if both, or
just one of impleaded defendants are behind the
manufacture and sale of the "Paddocks" jeans complained
of, they brought this suit under Section 13, Rule 311 of the
1997 Rules of Civil Procedure.12
The Complaint contained a prayer that reads as follows:
1. That upon the filing of this complaint, a temporary
restraining order be immediately issued restraining
defendants, their officers, employees, agents,
representatives, dealers, retailers or assigns from
committing the acts herein complained of, and,
specifically, for the defendants, their officers, employees,
agents, representatives, dealers and retailers or assigns,
to cease and desist from manufacturing, distributing,
selling, offering for sale, advertising, or otherwise using
denims, jeans or pants with the design herein complained
of as substantially, if not exactly similar, to plaintiffs’
"Dockers and Design" trademark.
2. That after notice and hearing, and pending trial on the
merits, a writ of preliminary injunction be issued enjoining
defendants, their officers, employees, agents, dealers,
retailers, or assigns from manufacturing, distributing,
selling, offering for sale, advertising, jeans the design
herein complained of as substantially, if not exactly similar,
to plaintiffs’ "Dockers and Design" trademark.
3. That after trial on the merits, judgment be rendered as
follows:
a. Affirming and making permanent the writ of preliminary
injunction;
b. Ordering that all infringing jeans in the possession of
either or both defendants as the evidence may warrant,
their officers, employees, agents, retailers, dealers or
assigns, be delivered to the Honorable Court of plaintiffs,
and be accordingly destroyed;13
Acting on the prayer for the issuance of a TRO, the trial
court issued an Order14 setting it for hearing on 5 May
1998. On said date, as respondent failed to appear despite
notice and the other defendant, Olympian Garments, had
yet to be notified, the hearing was re-scheduled on 14 May
1998.15
On 14 May 1998, neither Clinton Apparelle nor Olympian
Garments appeared. Clinton Apparelle claimed that it was
not notified of such hearing. Only Olympian Garments
allegedly had been issued with summons. Despite the
absence of the defendants, the hearing on the application
for the issuance of a TRO continued.16
The following day, the trial court issued
17
an Order granting the TRO applied for, the pertinent
portions of which state:
…Considering the absence of counsel/s for the
defendant/s during the summary hearing scheduled on
May 5, 1998 and also during the re-scheduled summary
hearing held on May 14, 1998 set for the purpose of
determining whether or not a Temporary Restraining
Order shall be issued, this Court allowed the counsel for
the plaintiffs to present on May 14, 1998 their
arguments/evidences in support of their application. After
hearing the arguments presented by the counsel for the
plaintiffs during the summary hearing, this Court is of the
considered and humble view that grave injustice and
irreparable injury to the plaintiffs would arise before the
matter of whether or not the application for the issuance of
a Writ of Preliminary Injunction can be heard, and that, in
the interest of justice, and in the meantime, a Temporary
Restraining Order be issued.
WHEREFORE, let this Temporary Restraining Order be
issued restraining the defendants, their officers,
employees, agents, representatives, dealers, retailers or
assigns from committing the acts complained of in the
verified Complaint, and specifically, for the defendants,
their officers, employees, agents, representatives, dealers
and retailers or assigns, to cease and desist from
manufacturing, distributing, selling, offering for sale,
advertising or otherwise using denims, jeans or pants with
the design complained of in the verified Complaint as
substantially, if not exactly similar, to plaintiffs’ "Dockers
and Design" trademark; until after the application/prayer
for the issuance of a Writ of Preliminary Injunction is
heard/resolved, or until further orders from this Court.
The hearing on the application for the issuance of a Writ of
Preliminary Injunction as embodied in the verified
Complaint is set on May 26, 1998 (Tuesday) at 2:00 P.M.
which setting is intransferable in character considering that
the lifetime of this Temporary Restraining Order is twenty
(20) days from date hereof.18
On 4 June 1998, the trial court issued
19
another Order granting the writ of preliminary injunction,
to wit:
ORDER
This resolves the plaintiffs’ application or prayer for the
issuance of a writ of preliminary injunction as embodied in
the verified complaint in this case. Parenthetically, this
Court earlier issued a temporary restraining order.
(see Order dated May 15, 1998; see also Order dated
May 26, 1998)
After a careful perusal of the contents of the pleadings and
documents on record insofar as they are pertinent to the
issue under consideration, this Court finds that at this point
in time, the plaintiffs appear to be entitled to the relief
prayed for and this Court is of the considered belief and
humble view that, without necessarily delving on the
merits, the paramount interest of justice will be better
served if the status quo shall be maintained and that an
injunction bond of ₱2,500,000.00 appears to be in order.
(see Sections 3 and 4, Rule 58, 1997 Rules of Civil
Procedure)
IN VIEW OF THE FOREGOING, the plaintiffs’ prayer for
the issuance of a writ of preliminary injunction is
GRANTED. Accordingly, upon the plaintiffs’ filing, within
ten (10) days from their receipt hereof, an injunction bond
of ₱2,500,000.00 executed to the defendants to the effect
that the plaintiffs will pay all damages the defendants may
sustain by reason of this injunction in case the Court
should finally decide that the plaintiffs are not entitled
thereto, let a writ of preliminary injunction issue enjoining
or restraining the commission of the acts complained of in
the verified Complaint in this case, and specifically, for the
defendants, their officers, employees, agents,
representatives, dealers and retailers or assigns or
persons acting in their behalf to cease and desist from
manufacturing, distributing, selling, offering for sale,
advertising, or otherwise using, denims, jeans or pants
with the design complained of in the verified Complaint in
this case, which is substantially, if not exactly, similar to
plaintiffs’ "DOCKERS and DESIGN" trademark or logo as
covered by the Bureau of Patents, Trademarks and
Technology Transfer Certificate of Registration No. 46619,
until after this case shall have been decided on the merits
and/or until further orders from this Court.20
The evidence considered by the trial court in granting
injunctive relief were as follows: (1) a certified true copy of
the certificate of trademark registration for "Dockers and
Design"; (2) a pair of DOCKERS pants bearing the
"Dockers and Design" trademark; (3) a pair of "Paddocks"
pants bearing respondent’s assailed logo; (4) the Trends
MBL Survey Report purportedly proving that there was
confusing similarity between two marks; (5) the affidavit of
one Bernabe Alajar which recounted petitioners’ prior
adoption, use and registration of the "Dockers and Design"
trademark; and (6) the affidavit of one Mercedes Abad of
Trends MBL, Inc. which detailed the methodology and
procedure used in their survey and the results thereof.21
Clinton Apparelle thereafter filed a Motion to
Dismiss22 and a Motion for Reconsideration23 of
the Order granting the writ of preliminary injunction.
Meantime, the trial court issued an Order24 approving the
bond filed by petitioners.
On 22 June 1998, the trial court required25 the parties to
file their "respective citation of authorities/
jurisprudence/Supreme Court decisions" on whether or not
the trial court may issue the writ of preliminary injunction
pending the resolution of the Motion for
Reconsideration and the Motion to Dismiss filed by
respondent.
On 2 October 1998, the trial court denied Clinton
Apparelle’s Motion to Dismiss and Motion for
26
Reconsideration in an Omnibus Order, the pertinent
portions of which provide:
After carefully going over the contents of the pleadings in
relation to pertinent portions of the records, this Court is of
the considered and humble view that:
On the first motion, the arguments raised in the plaintiffs’
aforecited Consolidated Opposition appears to be
meritorious. Be that as it may, this Court would like to
emphasize, among other things, that the complaint states
a cause of action as provided under paragraphs 1 to 18
thereof.
On the second motion, the arguments raised in the
plaintiffs’ aforecited Consolidated Opposition likewise
appear to be impressed with merit. Besides, there appears
to be no strong and cogent reason to reconsider and set
aside this Court’s Order dated June 4, 1998 as it has been
shown so far that the trademark or logo of defendants is
substantially, if not exactly, similar to plaintiffs’ "DOCKERS
and DESIGN" trademark or logo as covered by BPTTT
Certificate of Registration No. 46619 even as the BPTTT
Certificate of Registration No. 49579 of Clinton Apparelle,
Inc. is only for the mark or word "PADDOCKS" (see
Records, p. 377) In any event, this Court had issued an
Order dated June 18, 1998 for the issuance of the writ of
preliminary injunction after the plaintiffs filed the required
bond of ₱2,500,000.00.
IN VIEW OF THE FOREGOING, the aforecited Motion To
Dismiss and Motion For Reconsideration are both DENIED
for lack of merit, and accordingly, this Court’s Order dated
June 18, 1998 for the issuance of the writ of preliminary
injunction is REITERATED so the writ of preliminary
injunction could be implemented unless the
implementation thereof is restrained by the Honorable
Court of Appeals or Supreme Court.
The writ of preliminary injunction was thereafter issued on
8 October 1998.27
Thus, Clinton Apparelle filed with the Court of Appeals
a Petition28 for certiorari, prohibition and mandamus with
prayer for the issuance of a temporary restraining order
and/or writ of preliminary injunction, assailing the orders of
the trial court dated 15 May 1998, 4 June 1998 and 2
October 1998.
On 20 October 1998, the Court of Appeals issued
a Resolution29 requiring herein petitioners to file their
comment on the Petition and at the same time issued the
prayed-for temporary restraining order.
The appellate court rendered on 21 December 1998 its
now assailed Decision granting Clinton Apparelle’s
petition. The Court of Appeals held that the trial court did
not follow the procedure required by law for the issuance
of a temporary restraining order as Clinton Apparelle was
not duly notified of the date of the summary hearing for its
issuance. Thus, the Court of Appeals ruled that the TRO
had been improperly issued.30
The Court of Appeals also held that the issuance of the
writ of preliminary injunction is questionable. In its opinion,
herein petitioners failed to sufficiently establish its material
and substantial right to have the writ issued. Secondly, the
Court of Appeals observed that the survey presented by
petitioners to support their contentions was commissioned
by petitioners. The Court of Appeals remarked that
affidavits taken ex-parte are generally considered to be
inferior to testimony given in open court. The appellate
court also considered that the injury petitioners have
suffered or are currently suffering may be compensated in
terms of monetary consideration, if after trial, a final
judgment shall be rendered in their favor.31
In addition, the Court of Appeals strongly believed that the
implementation of the questioned writ would effectively
shut down respondent’s business, which in its opinion
should not be sanctioned. The Court of Appeals thus set
aside the orders of the trial court dated 15 May 1998 and
4 June 1998, respectively issuing a temporary restraining
order and granting the issuance of a writ of preliminary
injunction.
With the denial of their Motion for
32
Reconsideration, petitioners are now before this Court
seeking a review of the appellate
court’s Decision and Resolution. LS & Co. and LSPI claim
that the Court of Appeals committed serious error in: (1)
disregarding the well-defined limits of the writ of certiorari
that questions on the sufficiency of evidence are not to be
resolved in such a petition; (2) in holding that there was no
confusion between the two marks; (3) in ruling that the
erosion of petitioners’ trademark is not protectable by
injunction; (4) in ignoring the procedure previously agreed
on by the parties and which was adopted by the trial court;
and (5) in declaring that the preliminary injunction issued
by the trial court will lead to the closure of respondent’s
business.
In its Comment,33 Clinton Apparelle maintains that only
questions of law may be raised in an appeal by certiorari
under Rule 45 of the Rules of Court. It asserts that the
question of whether the Court of Appeals erred in: (1)
disregarding the survey evidence; (2) ruling that there was
no confusion between the two marks; and (c) finding that
the erosion of petitioners’ trademark may not be protected
by injunction, are issues not within the ambit of a petition
for review on certiorari under Rule 45. Clinton Apparelle
also contends that the Court of Appeals acted correctly
when it overturned the writ of preliminary injunction issued
by the trial court. It believes that the issued writ in effect
disturbed the status quo and disposed of the main case
without trial.
There is no merit in the petition.
At issue is whether the issuance of the writ of preliminary
injunction by the trial court was proper and whether the
Court of Appeals erred in setting aside the orders of the
trial court.
Section 1, Rule 58 of the Rules of Court defines a
preliminary injunction as an order granted at any stage of
an action prior to the judgment or final order requiring a
party or a court, agency or a person to refrain from a
particular act or acts. Injunction is accepted as the strong
arm of equity or a transcendent remedy to be used
cautiously as it affects the respective rights of the parties,
and only upon full conviction on the part of the court of its
extreme necessity. An extraordinary remedy, injunction is
designed to preserve or maintain the status quo of things
and is generally availed of to prevent actual or threatened
acts until the merits of the case can be heard.34 It may be
resorted to only by a litigant for the preservation or
protection of his rights or interests and for no other
purpose during the pendency of the principal action.35 It is
resorted to only when there is a pressing necessity to
avoid injurious consequences, which cannot be remedied
under any standard compensation. The resolution of an
application for a writ of preliminary injunction rests upon
the existence of an emergency or of a special recourse
before the main case can be heard in due course of
proceedings.36
Section 3, Rule 58, of the Rules of Court enumerates the
grounds for the issuance of a preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. –
A preliminary injunction may be granted when it is
established:
(a) That the applicant is entitled to the relief demanded,
and the whole or part of such relief consists in restraining
the commission or continuance of the act or acts
complained of, or in requiring the performance of an act or
acts, either for a limited period or perpetually;
(b) That the commission, continuance, or non-
performance of the act or acts complained of during the
litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing,
threatening, or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in violation
of the rights of the applicant respecting the subject of the
action or proceeding, and tending to render the judgment
ineffectual.
Under the cited provision, a clear and positive right
especially calling for judicial protection must be shown.
Injunction is not a remedy to protect or enforce contingent,
abstract, or future rights; it will not issue to protect a right
not in esse and which may never arise, or to restrain an
act which does not give rise to a cause of action. There
must exist an actual right.37 There must be a patent
showing by the complaint that there exists a right to be
protected and that the acts against which the writ is to be
directed are violative of said right.38
There are generally two kinds of preliminary injunction: (1)
a prohibitory injunction which commands a party to refrain
from doing a particular act; and (2) a mandatory injunction
which commands the performance of some positive act to
correct a wrong in the past.39
The Court of Appeals did not err in reviewing proof
adduced by petitioners to support its application for the
issuance of the writ. While the matter of the issuance of a
writ of preliminary injunction is addressed to the sound
discretion of the trial court, this discretion must be
exercised based upon the grounds and in the manner
provided by law. The exercise of discretion by the trial
court in injunctive matters is generally not interfered with
save in cases of manifest abuse.40 And to determine
whether there was abuse of discretion, a scrutiny must be
made of the bases, if any, considered by the trial court in
granting injunctive relief. Be it stressed that injunction is
the strong arm of equity which must be issued with great
caution and deliberation, and only in cases of great injury
where there is no commensurate remedy in damages.41
In the present case, we find that there was scant
justification for the issuance of the writ of preliminary
injunction.
Petitioners anchor their legal right to "Dockers and Design"
trademark on the Certificate of Registration issued in their
favor by the Bureau of Patents, Trademarks and
Technology Transfer.* According to Section 138 of
Republic Act No. 8293,42 this Certificate of Registration
is prima facie evidence of the validity of the registration,
the registrant’s ownership of the mark and of the exclusive
right to use the same in connection with the goods or
services and those that are related thereto specified in the
certificate. Section 147.1 of said law likewise grants the
owner of the registered mark the exclusive right to prevent
all third parties not having the owner’s consent from using
in the course of trade identical or similar signs for goods or
services which are identical or similar to those in respect
of which the trademark is registered if such use results in
a likelihood of confusion.
However, attention should be given to the fact that
petitioners’ registered trademark consists of two elements:
(1) the word mark "Dockers" and (2) the wing-shaped
design or logo. Notably, there is only one registration for
both features of the trademark giving the impression that
the two should be considered as a single unit. Clinton
Apparelle’s trademark, on the other hand, uses the
"Paddocks" word mark on top of a logo which according to
petitioners is a slavish imitation of the "Dockers" design.
The two trademarks apparently differ in their word marks
("Dockers" and "Paddocks"), but again according to
petitioners, they employ similar or identical logos. It could
thus be said that respondent only "appropriates"
petitioners’ logo and not the word mark "Dockers"; it uses
only a portion of the registered trademark and not the
whole.
Given the single registration of the trademark "Dockers
and Design" and considering that respondent only uses
the assailed device but a different word mark, the right to
prevent the latter from using the challenged "Paddocks"
device is far from clear. Stated otherwise, it is not evident
whether the single registration of the trademark "Dockers
and Design" confers on the owner the right to prevent the
use of a fraction thereof in the course of trade. It is also
unclear whether the use without the owner’s consent of a
portion of a trademark registered in its entirety constitutes
material or substantial invasion of the owner’s right.
It is likewise not settled whether the wing-shaped logo, as
opposed to the word mark, is the dominant or central
feature of petitioners’ trademark—the feature that prevails
or is retained in the minds of the public—an imitation of
which creates the likelihood of deceiving the public and
constitutes trademark infringement.43 In sum, there are
vital matters which have yet and may only be established
through a full-blown trial.
From the above discussion, we find that petitioners’ right
to injunctive relief has not been clearly and unmistakably
demonstrated. The right has yet to be determined.
Petitioners also failed to show proof that there is material
and substantial invasion of their right to warrant the
issuance of an injunctive writ. Neither were petitioners able
to show any urgent and permanent necessity for the writ
to prevent serious damage.
Petitioners wish to impress upon the Court the urgent
necessity for injunctive relief, urging that the erosion or
dilution of their trademark is protectable. They assert that
a trademark owner does not have to wait until the mark
loses its distinctiveness to obtain injunctive relief, and that
the mere use by an infringer of a registered mark is already
actionable even if he has not yet profited thereby or has
damaged the trademark owner.
Trademark dilution is the lessening of the capacity of a
famous mark to identify and distinguish goods or services,
regardless of the presence or absence of: (1) competition
between the owner of the famous mark and other parties;
or (2) likelihood of confusion, mistake or deception.
Subject to the principles of equity, the owner of a famous
mark is entitled to an injunction "against another person’s
commercial use in commerce of a mark or trade name, if
such use begins after the mark has become famous and
causes dilution of the distinctive quality of the mark." This
is intended to protect famous marks from subsequent uses
that blur distinctiveness of the mark or tarnish or disparage
it.44
Based on the foregoing, to be eligible for protection from
dilution, there has to be a finding that: (1) the trademark
sought to be protected is famous and distinctive; (2) the
use by respondent of "Paddocks and Design" began after
the petitioners’ mark became famous; and (3) such
subsequent use defames petitioners’ mark. In the case at
bar, petitioners have yet to establish whether "Dockers
and Design" has acquired a strong degree of
distinctiveness and whether the other two elements are
present for their cause to fall within the ambit of the
invoked protection. The Trends MBL Survey Report which
petitioners presented in a bid to establish that there was
confusing similarity between two marks is not sufficient
proof of any dilution that the trial court must enjoin.
The Court also finds that the trial court’s order granting the
writ did not adequately detail the reasons for the grant,
contrary to our ruling in University of the Philippines v.
Hon. Catungal Jr., 45 wherein we held that:
The trial court must state its own findings of fact and cite
particular law to justify grant of preliminary injunction.
Utmost care in this regard is demanded.46
The trial court in granting the injunctive relief tersely
ratiocinated that "the plaintiffs appear to be entitled to the
relief prayed for and this Court is of the considered belief
and humble view that, without necessarily delving on the
merits, the paramount interest of justice will be better
served if the status quo shall be maintained." Clearly, this
statement falls short of the requirement laid down by the
above-quoted case. Similarly, in Developers Group of
Companies, Inc. v. Court of Appeals,47 we held that it was
"not enough" for the trial court, in its order granting the writ,
to simply say that it appeared "after hearing that plaintiff is
entitled to the relief prayed for."
In addition, we agree with the Court of Appeals in its
holding that the damages the petitioners had suffered or
continue to suffer may be compensated in terms of
monetary consideration. As held in Government Service
Insurance System v. Florendo:48
…a writ of injunction should never have been issued when
an action for damages would adequately compensate the
injuries caused. The very foundation of the jurisdiction to
issue the writ of injunction rests in the probability of
irreparable injury, inadequacy of pecuniary estimation and
the prevention of the multiplicity of suits, and where facts
are not shown to bring the case within these conditions,
the relief of injunction should be refused.49
We also believe that the issued injunctive writ, if allowed,
would dispose of the case on the merits as it would
effectively enjoin the use of the "Paddocks" device without
proof that there is basis for such action. The prevailing rule
is that courts should avoid issuing a writ of preliminary
injunction that would in effect dispose of the main case
without trial.50 There would be a prejudgment of the main
case and a reversal of the rule on the burden of proof since
it would assume the proposition which petitioners are
inceptively bound to prove.51
Parenthetically, we find no flaw in the Court of Appeals’
disquisition on the consequences of the issued injunction.
An exercise of caution, we believe that such reflection is
necessary to weigh the alleged entitlement to the writ vis-
à-vis its possible effects. The injunction issued in the
instant case is of a serious nature as it tends to do more
than to maintain the status quo. In fact, the assailed
injunction if sustained would bring about the result desired
by petitioners without a trial on the merits.
Then again, we believe the Court of Appeals overstepped
its authority when it declared that the "alleged similarity as
to the two logos is hardly confusing to the public." The only
issue brought before the Court of Appeals through
respondent’s Petition under Rule 65 of the Rules of Court
involved the grave abuse of discretion allegedly committed
by the trial court in granting the TRO and the writ of
preliminary injunction. The appellate court in making such
a statement went beyond that issue and touched on the
merits of the infringement case, which remains to be
decided by the trial court. In our view, it was premature for
the Court of Appeals to declare that there is no confusion
between the two devices or logos. That matter remains to
be decided on by the trial court.
Finally, we have no contention against the procedure
adopted by the trial court in resolving the application for an
injunctive writ and we believe that respondent was
accorded due process. Due process, in essence, is simply
an opportunity to be heard. And in applications for
preliminary injunction, the requirement of hearing and prior
notice before injunction may issue has been relaxed to the
point that not all petitions for preliminary injunction must
undergo a trial-type hearing, it being a hornbook doctrine
that a formal or trial-type hearing is not at all times and in
all instances essential to due process. Due process simply
means giving every contending party the opportunity to be
heard and the court to consider every piece of evidence
presented in their favor. Accordingly, this Court has in the
case of Co v. Calimag, Jr.,52 rejected a claim of denial of
due process where such claimant was given the
opportunity to be heard, having submitted his counter-
affidavit and memorandum in support of his position.53
After a careful consideration of the facts and arguments of
the parties, the Court finds that petitioners did not
adequately prove their entitlement to the injunctive writ. In
the absence of proof of a legal right and the injury
sustained by the applicant, an order of the trial court
granting the issuance of an injunctive writ will be set aside
for having been issued with grave abuse of
discretion.54 Conformably, the Court of Appeals was
correct in setting aside the assailed orders of the trial court.
WHEREFORE, the instant petition is DENIED.
The Decision of the Court of Appeals dated 21 December
1998 and its Resolution dated 10 May 1999 are
AFFIRMED. Costs against petitioners.
SO ORDERED.
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 [respondent’s] 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 [respondent’s] "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 [respondent’s] 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 court’s decision on the
underlying issue of respondent’s 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 CA’s 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 law’s 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 does not necessarily mean protection of their registered
the same law wherein it is explicitly provided that prior use marks in the absence of actual use in the Philippines.
in commerce need not be alleged.15
Thus clarified, what petitioners now harp about is their
Besides, petitioners argue that their not doing business in entitlement to protection on the strength of registration of
the Philippines, if that be the case, does not mean that their trademarks in the Philippines.
cigarettes bearing their trademarks are not available and
As we ruled in G.R. No. 91332,18 supra, so it must be here.
sold locally. Citing Converse Rubber Corporation v.
Universal Rubber Products, Inc.,16 petitioners state that Admittedly, the registration of a trademark gives the
such availability and sale may be effected through the acts registrant, such as petitioners, advantages denied non-
of importers and distributors. registrants or ordinary users, like respondent. But while
petitioners enjoy the statutory presumptions arising from
Finally, petitioners would press on their entitlement to
such registration,19 i.e., as to the validity of the registration,
protection even in the absence of actual use of trademarks
ownership and the exclusive right to use the registered
in the country in view of the Philippines’ adherence to the
marks, they may not successfully sue on the basis alone
Trade Related Aspects of Intellectual Property Rights or
of their respective certificates of registration of trademarks.
the TRIPS Agreement and the enactment of R.A. No.
For, petitioners are still foreign corporations. As such, they
8293, or the Intellectual Property Code (hereinafter the "IP
ought, as a condition to availment of the rights and
Code"), both of which provide that the fame of a trademark
privileges vis-à-vis their trademarks in this country, to
may be acquired through promotion or advertising with no
show proof that, on top of Philippine registration, their
explicit requirement of actual use in local trade or
country grants substantially similar rights and privileges to
commerce.
Filipino citizens pursuant to Section 21-A20 of R.A. No.
Before discussing petitioners’ claimed entitlement to 166.
enforce trademark rights in the Philippines, it must be
In Leviton Industries v. Salvador,21 the Court further held
emphasized that their standing to sue in Philippine courts
that the aforementioned reciprocity requirement is a
had been recognized, and rightly so, by the CA. It ought to
condition sine qua non to filing a suit by a foreign
be pointed out, however, that the appellate court qualified
corporation which, unless alleged in the complaint, would
its holding with a statement, following G.R. No. 91332,
justify dismissal thereof, a mere allegation that the suit is
entitled Philip Morris, Inc., et al. v. The Court of Appeals
being pursued under Section 21-A of R.A. No. 166 not
and Fortune Tobacco Corporation,17 that such right to sue
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.
32
Intermediate Appellate Court, 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 respondent’s 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 respondent’s 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
respondent’s 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 respondent’s 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 respondent’s "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 infringement on the part of respondent to be without basis.
belies any pretension to the contrary. As we said time and time again, factual determinations of
the trial court, concurred in by the CA, are final and binding
Likewise, we note that petitioners even failed to support
on this Court.57
their claim that their respective marks are well-known
and/or have acquired goodwill in the Philippines so as to For lack of convincing proof on the part of the petitioners
be entitled to protection even without actual use in this of actual use of their registered trademarks prior to
country in accordance with Article 6bis55 of the Paris respondent’s use of its mark and for petitioners’ failure to
Convention. As correctly found by the CA, affirming that of demonstrate confusing similarity between said
the trial court: trademarks, the dismissal of their basic complaint for
infringement and the concomitant plea for damages must
xxx the records are bereft of evidence to establish that the
be affirmed. The law, the surrounding circumstances and
appellants’ [petitioners’] products are indeed well-known in
the equities of the situation call for this disposition.
the Philippines, either through actual sale of the product or
through different forms of advertising. This finding is WHEREFORE, the petition is hereby DENIED.
supported by the fact that appellants admit in their Accordingly, the assailed decision and resolution of the
Complaint that they are not doing business in the Court of Appeals are AFFIRMED.
Philippines, hence, admitting that their products are not
Costs against the petitioners.
being sold in the local market. We likewise see no cogent
reason to disturb the trial court’s finding that the appellants SO ORDERED.
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
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.ñet
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 part of the law of the land does not by any means imply
well-known mark, whether or not registered, is the primacy of international law over national law in the
municipal sphere. Under the doctrine of incorporation as
identical with or confusingly similar to or constitutes a
applied in most countries, rules of international law are
translation of a mark that is sought to be registered or is
given a standing equal, not superior, to national legislative
actually registered.37
enactments (Salonga and Yap, Public International Law,
However, while the Philippines was already a signatory to Fourth ed., 1974, p. 16)."39 [Emphasis supplied]
the Paris Convention, the IPC only took effect on January
Consequently, the petitioners cannot claim protection
1, 1988, and in the absence of a retroactivity clause, R.A.
under the Paris Convention. Nevertheless, with the double
No. 166 still applies.38 Under the prevailing law and
infirmity of lack of two-month prior use, as well as bad faith
jurisprudence at the time, the CA had not erred in ruling
in the respondent's registration of the mark, it is evident
that:
that the petitioners cannot be guilty of infringement. It
The Paris Convention mandates that protection should be would be a great injustice to adjudge the petitioners guilty
afforded to internationally known marks as signatory to the of infringing a mark when they are actually the originator
Paris Convention, without regard as to whether the foreign and creator thereof.
corporation is registered, licensed or doing business in the
Nor can the petitioners' separate personalities from their
Philippines. It goes without saying that the same runs afoul
mother corporation be an obstacle in the enforcement of
to Republic Act No. 166, which requires the actual use in
their rights as part of the Kuok Group of Companies and
commerce in the Philippines of the subject mark or devise.
as official repository, manager and operator of the subject
The apparent conflict between the two (2) was settled by
mark and logo. Besides, R.A. No. 166 did not require the
the Supreme Court in this wise -
party seeking relief to be the owner of the mark but "any
"Following universal acquiescence and comity, our person who believes that he is or will be damaged by the
municipal law on trademarks regarding the registration of a mark or trade name."40
requirement of actual use in the Philippines must
WHEREFORE, the instant petition is GRANTED. The
subordinate an international agreement inasmuch as
assailed Decision and Resolution of the Court of Appeals
the apparent clash is being decided by a municipal tribunal
dated May 15, 2003 and September 15, 2003,
(Mortensen vs. Peters, Great Britain, High Court of
respectively, and the Decision of the Regional Trial Court
Judiciary of Scotland, 1906, 8 Sessions 93; Paras,
of Quezon City dated March 8, 1996 are hereby SET
International Law and World Organization, 1971 Ed., p.
20). Withal, the fact that international law has been made
ASIDE. Accordingly, the complaint for infringement in Civil
Case No. Q-91-8476 is ordered DISMISSED.
SO ORDERED.
SKECHERS, U.S.A., INC., Petitioner,
vs.
INTER PACIFIC INDUSTRIAL TRADING CORP., and/or
INTER PACIFIC TRADING CORP. and/or STRONG
SPORTS GEAR CO., LTD., and/or STRONGSHOES
WAREHOUSE and/or STRONG FASHION SHOES
TRADING and/or TAN TUAN HONG and/or VIOLETA T.
MAGAYAGA and/or JEFFREY R. MORALES and/or
any of its other proprietor/s, directors, officers,
employees and/or occupants of its premises located
at S-7, Ed & Joe's Commercial Arcade, No. 153 Quirino
Avenue, Parañaque City, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
TRENDWORKS INTERNATIONAL
CORPORATION, Petitioner-Intervenor,
vs.
INTER PACIFIC INDUSTRIAL TRADING CORP. and/or
INTER PACIFIC TRADING CORP. and/or STRONG
SPORTS GEAR CO., LTD., and/or STRONGSHOES
WAREHOUSE and/or STRONG FASHION SHOES
TRADING and/or TAN TUAN HONG and/or VIOLETA T.
MAGAYAGA and/or JEFFREY R. MORALES and/or
any of its other proprietor/s, directors, officers,
employees and/or occupants of its premises located
at S-7, Ed & Joe's Commercial Arcade, No. 153 Quirino
Avenue, Parañaque City, Respondents.
RESOLUTION
PERALTA, J.:
For resolution are the twin Motions for
1
Reconsideration filed by petitioner and petitioner-
intervenor from the Decision rendered in favor of
respondents, dated November 30, 2006.
At the outset, a brief narration of the factual and procedural
antecedents that transpired and led to the filing of the
motions is in order.
The present controversy arose when petitioner filed with
Branch 24 of the Regional Trial Court (RTC) of Manila an
application for the issuance of search warrants against an
outlet and warehouse operated by respondents for
infringement of trademark under Section 155, in relation to
Section 170 of Republic Act No. 8293, otherwise known as
the Intellectual Property Code of the Philippines.2 In the
course of its business, petitioner has registered the
trademark "SKECHERS"3 and the trademark "S" (within
an oval design)4 with the Intellectual Property Office (IPO).
Two search warrants5 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
petitioner’s "Skechers" rubber shoes and its "Strong"
rubber shoes.
On November 7, 2002, the RTC issued an
Order6 quashing the search warrants and directing the NBI
to return the seized goods. The RTC agreed with
respondent’s view that Skechers rubber shoes and Strong licensed distributor of Skechers products here in the
rubber shoes have glaring differences such that an Philippines.
ordinary prudent purchaser would not likely be misled or
On November 30, 2006, this Court rendered a
confused in purchasing the wrong article.
Decision12 dismissing the petition.
Aggrieved, petitioner filed a petition for certiorari7 with the
Both petitioner and petitioner-intervenor filed separate
Court of Appeals (CA) assailing the RTC Order. On
motions for reconsideration.
November 17, 2003, the CA issued a Decision8 affirming
the ruling of the RTC. In petitioner’s motion for reconsideration, petitioner moved
for a reconsideration of the earlier decision on the following
Subsequently, petitioner filed the present petition 9 before
grounds:
this Court which puts forth the following assignment of
errors: (a) THIS HONORABLE COURT MUST RE-EXAMINE
THE FACTS OF THIS CASE DUE TO THE
A. WHETHER THE COURT OF APPEALS COMMITTED
SIGNIFICANCE AND REPERCUSSIONS OF ITS
GRAVE ABUSE OF DISCRETION IN CONSIDERING
DECISION.
MATTERS OF DEFENSE IN A CRIMINAL TRIAL FOR
TRADEMARK INFRINGEMENT IN PASSING UPON THE (b) COMMERCIAL QUANTITIES OF THE SEIZED ITEMS
VALIDITY OF THE SEARCH WARRANT WHEN IT WITH THE UNAUTHORIZED REPRODUCTIONS OF
SHOULD HAVE LIMITED ITSELF TO A THE "S" TRADEMARK OWNED BY PETITIONER WERE
DETERMINATION OF WHETHER THE TRIAL COURT INTENDED FOR DISTRIBUTION IN THE PHILIPPINE
COMMITTED GRAVE ABUSE OF DISCRETION IN MARKET TO THE DETRIMENT OF PETITIONER –
QUASHING THE SEARCH WARRANTS. RETURNING THE GOODS TO RESPONDENTS WILL
ADVERSELY AFFECT THE GOODWILL AND
B. WHETHER THE COURT OF APPEALS COMMITTED
REPUTATION OF PETITIONER.
GRAVE ABUSE OF DISCRETION IN FINDING THAT
RESPONDENTS ARE NOT GUILTY OF TRADEMARK (c) THE SEARCH WARRANT COURT AND THE COURT
INFRINGEMENT IN THE CASE WHERE THE SOLE OF APPEALS BOTH ACTED WITH GRAVE ABUSE OF
TRIABLE ISSUE IS THE EXISTENCE OF PROBABLE DISCRETION.
CAUSE TO ISSUE A SEARCH WARRANT.10
(d) THE SEARCH WARRANT COURT DID NOT
In the meantime, petitioner-intervenor filed a Petition-in- PROPERLY RE-EVALUATE THE EVIDENCE
Intervention11 with this Court claiming to be the sole
PRESENTED DURING THE SEARCH WARRANT
APPLICATION PROCEEDINGS.
(e) THE SOLID TRIANGLE CASE IS NOT APPLICABLE
IN THIS CASE, AS IT IS BASED ON A DIFFERENT
FACTUAL MILIEU. PRELIMINARY FINDING OF GUILT
(OR ABSENCE THEREOF) MADE BY THE SEARCH
WARRANT COURT AND THE COURT OF APPEALS
WAS IMPROPER.
(f) THE SEARCH WARRANT COURT OVERSTEPPED
ITS DISCRETION. THE LAW IS CLEAR. THE
DOMINANCY TEST SHOULD BE USED.
(g) THE COURT OF APPEALS COMMITTED ERRORS
OF JURISDICTION.13
On the other hand, petitioner-intervenor’s motion for
reconsideration raises the following errors for this Court’s
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
COURT’S 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 petitioner’s stylized "S" is within an oval design, to this
Court’s 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
petitioner’s 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
petitioner’s 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 petitioner’s
trademark. Indubitably, the likelihood of confusion is
present as purchasers will associate the respondent’s use
of the stylized "S" as having been authorized by petitioner
or that respondent’s product is connected with petitioner’s
business.
Both the RTC and the CA applied the Holistic Test in ruling
that respondent had not infringed petitioner’s 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 Court’s mind such
dissimilarities do not outweigh the stark and blatant
similarities in their general features. As can be readily
observed by simply comparing petitioner’s Energy20 model
and respondent’s Strong21 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 respondent’s shoes are very
similar to petitioner’s 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
respondent’s shoes, near the upper part, appears the
stylized "S," placed in the exact location as that of the
stylized "S" on petitioner’s 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
petitioner’s shoes, near the heel counter, appears
"Skechers Sport Trail" written in white lettering. However,
on respondent’s shoes appears "Strong Sport Trail"
noticeably written in the same white lettering, font size,
direction and orientation as that of petitioner’s shoes. On
top of the heel collar of petitioner’s shoes are two grayish-
white semi-transparent circles. Not surprisingly,
respondent’s shoes also have two grayish-white semi-
transparent circles in the exact same location.lihpwa1
Based on the foregoing, this Court is at a loss as to how
the RTC and the CA, in applying the holistic test, ruled that
there was no colorable imitation, when it cannot be any
more clear and apparent to this Court that there is
colorable imitation. The dissimilarities between the shoes
are too trifling and frivolous that it is indubitable that
respondent’s products will cause confusion and mistake in
the eyes of the public. Respondent’s shoes may not be an
exact replica of petitioner’s shoes, but the features and
overall design are so similar and alike that confusion is
highly likely.1avvphi1
In Converse Rubber Corporation v. Jacinto Rubber &
Plastic Co., Inc.,22 this Court, in a case for unfair
competition, had opined that even if not all the details are
identical, as long as the general appearance of the two
products are such that any ordinary purchaser would be
deceived, the imitator should be liable, to wit:
From said examination, We find the shoes manufactured
by defendants to contain, as found by the trial court,
practically all the features of those of the plaintiff Converse
Rubber Corporation and manufactured, sold or marketed
by plaintiff Edwardson Manufacturing Corporation, except
for their respective brands, of course. We fully agree with
the trial court that "the respective designs, shapes, the
colors of the ankle patches, the bands, the toe patch and
the soles of the two products are exactly the same ... (such
that) at a distance of a few meters, it is impossible to
distinguish "Custombuilt" from "Chuck Taylor." These
elements are more than sufficient to serve as basis for a
charge of unfair competition. Even if not all the details just
mentioned were 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 x23
Neither can the difference in price be a complete defense
in trademark infringement. In McDonald’s 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 employ enough points of similarity to confuse the public,
business into the field (see 148 ALR 56 et seq; 53 Am. Jur. with enough points of difference to confuse the courts.29
576) or is in any way connected with the activities of the
WHEREFORE, premises considered, the Motion for
infringer; or when it forestalls the normal potential
Reconsideration is GRANTED. The Decision dated
expansion of his business (v. 148 ALR 77, 84; 52 Am. Jur.
November 30, 2006 is RECONSIDERED and SET ASIDE.
576, 577). x x x25
SO ORDERED.
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 petitioner’s 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 respondent’s shoes
contain some dissimilarities with petitioner’s shoes, this
Court cannot close its eye to the fact that for all intents and
purpose, respondent had deliberately attempted to copy
petitioner’s 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.28The most successful form of copying is to
FREDCO MANUFACTURING G.R. No. 185917 The Case
CORPORATION,
Petitioner, Present: Before the Court is a petition for review1 assailing the 24
October 2008 Decision2 and 8 January 2009
CARPIO, J., Chairperson,
Resolution3 of the Court of Appeals in CA-G.R. SP No.
NACHURA, 103394.

- versus - PERALTA,
ABAD, and
MENDOZA, JJ. The Antecedent Facts

PRESIDENT AND FELLOWS On 10 August 2005, petitioner Fredco Manufacturing

Corporation (Fredco), a corporation organized and
OF HARVARD COLLEGE Promulgated: existing under the laws of the Philippines, filed a Petition
(HARVARD UNIVERSITY), for Cancellation of Registration No. 56561 before the
Bureau of Legal Affairs of the Intellectual Property Office
Respondents. June 1, 2011 (IPO) against respondents President and Fellows of
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Harvard College (Harvard University), a corporation
----------x organized and existing under the laws of Massachusetts,
United States of America. The case was docketed as Inter
Partes Case No. 14-2005-00094.

DECISION Fredco alleged that Registration No. 56561 was issued to

Harvard University on 25 November 1993 for the mark
Harvard Veritas Shield Symbol for decals, tote bags,
CARPIO, J.: serving trays, sweatshirts, t-shirts, hats and flying discs
under Classes 16, 18, 21, 25 and 28 of the Nice
International Classification of Goods and Services. Fredco Harvard University, on the other hand, alleged that it is the
alleged that the mark Harvard for t-shirts, polo lawful owner of the name and mark Harvard in numerous
shirts, sandos, briefs, jackets and slacks was first used in countries worldwide, including the Philippines. Among the
the Philippines on 2 January 1982 by New York Garments countries where Harvard University has registered its
Manufacturing & Export Co., Inc. (New York Garments), a name and mark Harvard are:
domestic corporation and Fredcos predecessor-in-
interest. On 24 January 1985, New York Garments filed for
trademark registration of the mark Harvard for goods 1. Argentina 26. South Korea
under Class 25. The application matured into a registration
and a Certificate of Registration was issued on 12 2. Benelux4 27. Malaysia
December 1988, with a 20-year term subject to renewal at 3. Brazil 28. Mexico
the end of the term. The registration was later assigned to
Romeo Chuateco, a member of the family that owned New 4. Canada 29. New Zealand
York Garments. 5. Chile 30. Norway
6. China P.R. 31. Peru
Fredco alleged that it was formed and registered with the 7. Colombia 32. Philippines
Securities and Exchange Commission on 9 November
1995 and had since then handled the manufacture, 8. Costa Rica 33. Poland
promotion and marketing of Harvard clothing articles. 9. Cyprus 34. Portugal
Fredco alleged that at the time of issuance of Registration
No. 56561 to Harvard University, New York Garments had 10. Czech Republic 35. Russia
already registered the mark Harvard for goods under Class 11. Denmark 36. South Africa
25. Fredco alleged that the registration was cancelled on
30 July 1998 when New York Garments inadvertently 12. Ecuador 37. Switzerland
failed to file an affidavit of use/non-use on the fifth
13. Egypt 38. Singapore
anniversary of the registration but the right to the mark
Harvard remained with its predecessor New York 14. Finland 39. Slovak Republic
Garments and now with Fredco.
15. France 40. Spain
16. Great Britain 41. Sweden
17. Germany 42. Taiwan
18. Greece 43. Thailand
19. Hong Kong 44. Turkey
20. India 45. United Arab Emirates
21. Indonesia 46. Uruguay
22. Ireland 47. United States of America
23. Israel 48. Venezuela
24. Italy 49. Zimbabwe
25. Japan 50. European Community5
The name and mark Harvard was adopted in 1639 as the
name of Harvard College6 of Cambridge, Massachusetts,
U.S.A. The name and mark Harvard was allegedly used in
commerce as early as 1872. Harvard University is over
350 years old and is a highly regarded institution of higher
learning in the United States and throughout the world.
Harvard University promotes, uses, and advertises its
name Harvard through various publications, services, and
products in foreign countries, including the Philippines.
Harvard University further alleged that the name and the
mark have been rated as one of the most famous brands
in the world, valued between US $750,000,000 and US
$1,000,000,000.
Harvard University alleged that in March 2002, it
discovered, through its international trademark watch
program, Fredcos website www.harvard-usa.com. The
website advertises and promotes the brand name Harvard
Jeans USA without Harvard Universitys consent. The
websites main page shows an oblong logo bearing the
mark Harvard Jeans USA, Established 1936, and
Cambridge, Massachusetts. On 20 April 2004, Harvard
University filed an administrative complaint against Fredco
before the IPO for trademark infringement and/or unfair
competition with damages.
Harvard University alleged that its valid and existing
certificates of trademark registration in the Philippines are:
1. Trademark Registration No. 56561 issued on 25
November 1993 for Harvard Veritas Shield Design for
goods and services in Classes 16, 18, 21, 25 and 28
(decals, tote bags, serving trays, sweatshirts, t-shirts, hats
and flying discs) of the Nice International Classification of
Goods and Services;
2. Trademark Registration No. 57526 issued on 24
March 1994 for Harvard Veritas Shield Symbol for services
in Class 41; Trademark Registration No. 56539 issued on
25 November 1998 for Harvard for services in Class 41;
and
3. Trademark Registration No. 66677 issued on 8
December 1998 for Harvard Graphics for goods in Class
9. Harvard University further alleged that it filed the
requisite affidavits of use for the mark Harvard Veritas
Shield Symbol with the IPO.
Further, on 7 May 2003 Harvard University filed
Trademark Application No. 4-2003-04090 for Harvard
Medical International & Shield Design for services in
Classes 41 and 44. In 1989, Harvard University
established the Harvard Trademark Licensing Program,
operated by the Office for Technology and Trademark
Licensing, to oversee and manage the worldwide licensing
of the Harvard name and trademarks for various goods
and services. Harvard University stated that it never
authorized or licensed any person to use its name and
mark Harvard in connection with any goods or services in
the Philippines.
In a Decision7 dated 22 December 2006, Director Estrellita
Beltran-Abelardo of the Bureau of Legal Affairs, IPO
cancelled Harvard Universitys registration of the mark
Harvard under Class 25, as follows:
WHEREFORE, premises considered, the Petition for
Cancellation is hereby GRANTED. Consequently,
Trademark Registration Number 56561 for the trademark
HARVARD VE RI TAS SHIELD SYMBOL issued on
November 25, 1993 to PRESIDENT AND FELLOWS OF
HARVARD COLLEGE (HARVARD UNIVERSITY) should
be CANCELLED only with respect to goods falling under
Class 25. On the other hand, considering that the goods of
Respondent-Registrant falling under Classes 16, 18, 21
and 28 are not confusingly similar with the Petitioners
goods, the Respondent-Registrant has acquired vested
right over the same and therefore, should not be cancelled.
Let the filewrapper of the Trademark Registration No.
56561 issued on November 25, 1993 for the trademark
HARVARD VE RI TAS SHIELD SYMBOL, subject matter
of this case together with a copy of this Decision be
forwarded to the Bureau of Trademarks (BOT) for
appropriate action.
SO ORDERED.8
Harvard University filed an appeal before the Office of the
Director General of the IPO. In a Decision9 dated 21 April
2008, the Office of the Director General, IPO reversed the
decision of the Bureau of Legal Affairs, IPO.
The Director General ruled that more than the use of the
trademark in the Philippines, the applicant must be the
owner of the mark sought to be registered. The Director
General ruled that the right to register a trademark is
based on ownership and when the applicant is not the
owner, he has no right to register the mark. The Director
General noted that the mark covered by Harvard
Universitys Registration No. 56561 is not only the word
Harvard but also the logo, emblem or symbol of Harvard
University. The Director General ruled that Fredco failed to
explain how its predecessor New York Garments came up
with the mark Harvard. In addition, there was no evidence
that Fredco or New York Garments was licensed or
authorized by Harvard University to use its name in
commerce or for any other use.
The dispositive portion of the decision of the Office of the
Director General, IPO reads:
WHEREFORE, premises considered, the instant appeal is
GRANTED. The appealed decision is hereby REVERSED
and SET ASIDE. Let a copy of this Decision as well as the
trademark application and records be furnished and
returned to the Director of Bureau of Legal Affairs for
appropriate action. Further, let also the Directors of the
Bureau of Trademarks and the Administrative, Financial
and Human Resources Development Services Bureau,
and the library of the Documentation, Information and
Technology Transfer Bureau be furnished a copy of this
Decision for information, guidance, and records purposes.
SO ORDERED.10
Fredco filed a petition for review before the Court of
Appeals assailing the decision of the Director General.
The Decision of the Court of Appeals
In its assailed decision, the Court of Appeals affirmed the
decision of the Office of the Director General of the IPO.
The Court of Appeals adopted the findings of the Office of
the Director General and ruled that the latter correctly set
aside the cancellation by the Director of the Bureau of
Legal Affairs of Harvard Universitys trademark registration
under Class 25. The Court of Appeals ruled that Harvard
University was able to substantiate that it appropriated and
used the marks Harvard and Harvard Veritas Shield
Symbol in Class 25 way ahead of Fredco and its
predecessor New York Garments. The Court of Appeals
also ruled that the records failed to disclose any
explanation for Fredcos use of the name and mark
Harvard and the words USA, Established 1936, and
Cambridge, Massachusetts within an oblong device, US
Legend and Europes No. 1 Brand. Citing Shangri-La
International Hotel Management, Ltd. v. Developers Group
of Companies, Inc.,11 the Court of Appeals ruled:
One who has imitated the trademark of another cannot
bring an action for infringement, particularly against the
The Issue
true owner of the mark, because he would be coming to
court with unclean hands. Priority is of no avail to the bad
faith plaintiff. Good faith is required in order to ensure that
a second user may not merely take advantage of the The issue in this case is whether the Court of Appeals
goodwill established by the true owner.12 committed a reversible error in affirming the decision of the
Office of the Director General of the IPO.
The dispositive portion of the decision of the Court of
Appeals reads:

WHEREFORE, premises considered, the petition for The Ruling of this Court
review is DENIED. The Decision dated April 21, 2008 of
the Director General of the IPO in Appeal No. 14-07-09
Inter Partes Case No. 14-2005-00094 is hereby The petition has no merit.
AFFIRMED.

There is no dispute that the mark Harvard used by Fredco

SO ORDERED.13
Fredco filed a motion for reconsideration.
In its Resolution promulgated on 8 January 2009, the
Court of Appeals denied the motion for lack of merit.
Hence, this petition before the Court.
is the same as the mark Harvard in the Harvard Veritas
Shield Symbol of Harvard University. It is also not disputed
that Harvard University was named Harvard College in
1639 and that then, as now, Harvard University is located
in Cambridge, Massachusetts, U.S.A. It is also unrefuted
that Harvard University has been using the mark Harvard
in commerce since 1872. It is also established that
Harvard University has been using the marks Harvard and
Harvard Veritas Shield Symbol for Class 25 goods in the
United States since 1953. Further, there is no dispute that
Harvard University has registered the name and mark
Harvard in at least 50 countries.
 in the Philippines before the application for registration is
filed, where the trademark sought to be registered has
On the other hand, Fredcos predecessor-in-interest, New
already been registered in a foreign country that is a
York Garments, started using the mark Harvard in the
member of the Paris Convention, the requirement of proof
Philippines only in 1982. New York Garments filed an
of use in the commerce in the Philippines for the said
application with the Philippine Patent Office in 1985 to
period is not necessary. An applicant for registration based
register the mark Harvard, which application was
on home certificate of registration need not even have
approved in 1988. Fredco insists that the date of actual
used the mark or trade name in this country.16
use in the Philippines should prevail on the issue of who
has the better right to register the marks.
Indeed, in its Petition for Cancellation of Registration No.
56561, Fredco alleged that Harvard Universitys
Under Section 2 of Republic Act No. 166,14 as amended
registration is based on home registration for the mark
(R.A. No. 166), before a trademark can be registered, it
Harvard Veritas Shield for Class 25.17
must have been actually used in commerce for not less
than two months in the Philippines prior to the filing of an
application for its registration. While Harvard University
In any event, under Section 239.2 of Republic Act No.
had actual prior use of its marks abroad for a long time, it
8293 (R.A. No. 8293),18 [m]arks registered under Republic
did not have actual prior use in the Philippines of the mark
Act No. 166 shall remain in force but shall be deemed to
Harvard Veritas Shield Symbol before its application for
have been granted under this Act x x x, which does not
registration of the mark Harvard with the then Philippine
require actual prior use of the mark in the Philippines.
Patents Office. However, Harvard Universitys registration
Since the mark Harvard Veritas Shield Symbol is now
of the name Harvard is based on home registration which
deemed granted under R.A. No. 8293, any alleged defect
is allowed under Section 37 of R.A. No. 166.15 As pointed
arising from the absence of actual prior use in the
out by Harvard University in its Comment:
Philippines has been cured by Section 239.2.19 In addition,
Fredcos registration was already cancelled on 30 July
1998 when it failed to file the required affidavit of use/non-
Although Section 2 of the Trademark law (R.A. 166)
use for the fifth anniversary of the marks registration.
requires for the registration of trademark that the applicant
Hence, at the time of Fredcos filing of the Petition for
thereof must prove that the same has been actually in use
Cancellation before the Bureau of Legal Affairs of the IPO,
in commerce or services for not less than two (2) months
Fredco was no longer the registrant or presumptive owner
of the mark Harvard.
Fredcos registration of the mark Harvard should not have
been allowed because Section 4(a) of R.A. No. 166
prohibits the registration of a mark which may disparage
There are two compelling reasons why Fredcos petition
or falsely suggest a connection with persons, living or
must fail.
dead, institutions, beliefs x x x. Section 4(a) of R.A. No.
166 provides:

First, Fredcos registration of the mark Harvard and its

identification of origin as Cambridge, Massachusetts
Section 4. Registration of trade-marks, trade-names and
falsely suggest that Fredco or its goods are connected with
service- marks on the principal register. ‒ There is hereby
Harvard University, which uses the same mark Harvard
established a register of trade-mark, trade-names and
and is also located in Cambridge, Massachusetts. This can
service-marks which shall be known as the principal
easily be gleaned from the following oblong logo of Fredco
register. The owner of a trade-mark, a trade-name or
that it attaches to its clothing line:
service-mark used to distinguish his goods, business or
services from the goods, business or services of others
shall have the right to register the same on the principal
register, unless it:

(a) Consists of or comprises immoral, deceptive or

scandalous manner, or matter which may disparage
or falsely suggest a connection with persons, living or
dead, institutions, beliefs, or national symbols, or bring
them into contempt or disrepute;

(b) x x x (emphasis supplied)

Fredcos use of the mark Harvard, coupled with its claimed
origin in Cambridge, Massachusetts, obviously suggests a
false connection with Harvard University. On this ground
alone, Fredcos registration of the mark Harvard should
have been disallowed.
Indisputably, Fredco does not have any affiliation or
connection with Harvard University, or even with
Cambridge, Massachusetts. Fredco or its predecessor
New York Garments was not established in 1936, or in the
U.S.A. as indicated by Fredco in its oblong logo. Fredco
offered no explanation to the Court of Appeals or to the
IPO why it used the mark Harvard on its oblong logo with
the words Cambridge, Massachusetts, Established in
1936, and USA. Fredco now claims before this Court that
it used these words to evoke a lifestyle or suggest a
desirable aura of petitioners clothing lines. Fredcos
belated justification merely confirms that it sought to
connect or associate its products with Harvard University,
riding on the prestige and popularity of Harvard University,
and thus appropriating part of Harvard Universitys goodwill
without the latters consent.
Section 4(a) of R.A. No. 166 is identical to Section 2(a) of
the Lanham Act,20 the trademark law of the United States.
These provisions are intended to protect the right of
publicity of famous individuals and institutions from
commercial exploitation of their goodwill by others.21 What
Fredco has done in using the mark Harvard and the words
Cambridge, Massachusetts, USA to evoke a desirable
aura to its products is precisely to exploit commercially the
goodwill of Harvard University without the latters consent.
This is a clear violation of Section 4(a) of R.A. No. 166.
Under Section 17(c)22 of R.A. No. 166, such violation is a
ground for cancellation of Fredcos registration of the mark
Harvard because the registration was obtained in violation
of Section 4 of R.A. No. 166.
Second, the Philippines and the United States of America
are both signatories to the Paris Convention for the
Protection of Industrial Property (Paris Convention). The
Philippines became a signatory to the Paris Convention on
27 September 1965. Articles 6bis and 8 of the Paris
Convention state:
ARTICLE 6bis
(i) The countries of the Union undertake either
administratively if their legislation so permits, or at the
request of an interested party, to refuse or to cancel the
registration and to prohibit the use of a trademark which
constitutes a reproduction, imitation or translation, liable to
create confusion or a mark considered by the competent
authority of the country as being already the mark of a
person entitled to the benefits of the present
Convention and used for identical or similar
goods. These provisions shall also apply when the
essential part of the mark constitutes a reproduction
of any such well-known mark or an imitation liable to
create confusion therewith.
ARTICLE 8
A trade name shall be protected in all the countries of the
Union without the obligation of filing or registration,
whether or not it forms part of a trademark. (Emphasis
supplied)
Thus, this Court has ruled that the Philippines is obligated
to assure nationals of countries of the Paris Convention
that they are afforded an effective protection against
violation of their intellectual property rights in the
Philippines in the same way that their own countries are
obligated to accord similar protection to Philippine
nationals.23
Article 8 of the Paris Convention has been incorporated in
Section 37 of R.A. No. 166, as follows:
Section 37. Rights of foreign registrants. Persons who are
nationals of, domiciled in, or have a bona fide or effective
business or commercial establishment in any foreign
country, which is a party to any international convention or
treaty relating to marks or trade-names, or the repression
of unfair competition to which the Philippines may be a
party, shall be entitled to the benefits and subject to the
provisions of this Act to the extent and under the conditions
essential to give effect to any such convention and treaties
so long as the Philippines shall continue to be a party
thereto, except as provided in the following paragraphs of
this section.
xxxx
Trade-names of persons described in the first
paragraph of this section shall be protected without
the obligation of filing or registration whether or not
they form parts of marks.24
x x x x (Emphasis supplied)
Thus, under Philippine law, a trade name of a national of
a State that is a party to the Paris Convention, whether or
not the trade name forms part of a trademark, is protected
without the obligation of filing or registration.
Harvard is the trade name of the world famous Harvard
University, and it is also a trademark of Harvard University.
Under Article 8 of the Paris Convention, as well as Section
37 of R.A. No. 166, Harvard University is entitled to
protection in the Philippines of its trade name Harvard
even without registration of such trade name in the
Philippines. This means that no educational entity in the
Philippines can use the trade name Harvard without the
consent of Harvard University. Likewise, no entity in the
Philippines can claim, expressly or impliedly through the
use of the name and mark Harvard, that its products or
services are authorized, approved, or licensed by, or
sourced from, Harvard University without the latters
consent.
Article 6bis of the Paris Convention has been
administratively implemented in the Philippines through
two directives of the then Ministry (now Department) of
Trade, which directives were upheld by this Court in
several cases.25 On 20 November 1980, then Minister of
Trade Secretary Luis Villafuerte issued a Memorandum
directing the Director of Patents to reject, pursuant to the
Paris Convention, all pending applications for Philippine
registration of signature and other world-famous
trademarks by applicants other than their original
owners.26The Memorandum states:
Pursuant to the Paris Convention for the Protection of
Industrial Property to which the Philippines is a signatory,
you are hereby directed to reject all pending applications
for Philippine registration of signature and other world-
famous trademarks by applicants other than its original
owners or users.
The conflicting claims over internationally known
trademarks involve such name brands as Lacoste,
Jordache, Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci,
Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy,
Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.
It is further directed that, in cases where warranted,
Philippine registrants of such trademarks should be asked
to surrender their certificates of registration, if any, to avoid
suits for damages and other legal action by the trademarks
foreign or local owners or original users.
You are also required to submit to the undersigned a
progress report on the matter.
For immediate compliance.27
In a Memorandum dated 25 October 1983, then Minister
of Trade and Industry Roberto Ongpin affirmed the earlier
Memorandum of Minister Villafuerte. Minister Ongpin
directed the Director of Patents to implement measures
necessary to comply with the Philippines obligations under
the Paris Convention, thus:
1. Whether the trademark under consideration is well-
known in the Philippines or is a mark already belonging to
a person entitled to the benefits of the CONVENTION, this
should be established, pursuant to Philippine Patent Office
procedures in inter partes and ex parte cases, according
to any of the following criteria or any combination (e) that the trademark actually belongs to a party claiming
thereof: ownership and has the right to registration under the
provisions of the aforestated PARIS CONVENTION.

(a) a declaration by the Minister of Trade and Industry that

the trademark being considered is already well-known in 2. The word trademark, as used in this
the Philippines such that permission for its use by other MEMORANDUM, shall include tradenames, service
than its original owner will constitute a reproduction, marks, logos, signs, emblems, insignia or other
imitation, translation or other infringement; similar devices used for identification and recognition
by consumers.
3. The Philippine Patent Office shall refuse all
(b) that the trademark is used in commerce internationally,
applications for, or cancel the registration of, trademarks
supported by proof that goods bearing the trademark are
which constitute a reproduction, translation or imitation of
sold on an international scale, advertisements, the
a trademark owned by a person, natural or corporate, who
establishment of factories, sales offices, distributorships,
is a citizen of a country signatory to the PARIS
and the like, in different countries, including volume or
CONVENTION FOR THE PROTECTION OF
other measure of international trade and commerce;
INDUSTRIAL PROPERTY.

(c) that the trademark is duly registered in the

x x x x28 (Emphasis supplied)
industrial property office(s) of another country or
countries, taking into consideration the dates of such
registration;
In Mirpuri, the Court ruled that the essential requirement
under Article 6bis of the Paris Convention is that the
trademark to be protected must be well-known in the
(d) that the trademark has been long established and
country where protection is sought.29 The Court declared
obtained goodwill and general international consumer
that the power to determine whether a trademark is well-
recognition as belonging to one owner or source;
known lies in the competent authority of the country of
registration or use.30 The Court then stated that the
competent authority would either be the registering
authority if it has the power to decide this, or the courts of
the country in question if the issue comes before the
(i) that the mark has been used in, or that the mark has
courts.31
been registered or that an application for registration of the
mark has been filed in or in respect of, the Member State:
To be protected under the two directives of the Ministry of
Trade, an internationally well-known mark need not be
(ii) that the mark is well known in, or that the mark has been
registered or used in the Philippines.32 All that is required
registered or that an application for registration of the mark
is that the mark is well-known internationally and in the
has been filed in or in respect of, any jurisdiction other than
Philippines for identical or similar goods, whether or not
the Member State; or
the mark is registered or used in the Philippines. The Court
ruled in Sehwani, Incorporated v. In-N-Out Burger, Inc.:33

The fact that respondents marks are neither registered
nor used in the Philippines is of no moment. The scope
of protection initially afforded by Article 6bis of the Paris
Convention has been expanded in the 1999 Joint
Recommendation Concerning Provisions on the
Protection of Well-Known Marks, wherein the World
Intellectual Property Organization (WIPO) General
Assembly and the Paris Union agreed to a nonbinding
recommendation that a well-known mark should be
protected in a country even if the mark is neither
registered nor used in that country. Part I, Article 2(3)
thereof provides:
(3) [Factors Which Shall Not Be Required] (a) A Member
State shall not require, as a condition for determining
whether a mark is a well-known mark:
(iii) that the mark is well known by the public at large in the
Member State.34 (Italics in the original decision; boldface
supplied)
Indeed, Section 123.1(e) of R.A. No. 8293 now
categorically states that a mark which is considered by the
competent authority of the Philippines to be well-known
internationally and in the Philippines, whether or not it
is registered here, cannot be registered by another in the
Philippines. Section 123.1(e) does not require that the
well-known mark be used in commerce in the Philippines
but only that it be well-known in the Philippines. Moreover,
Rule 102 of the Rules and Regulations on Trademarks,
Service Marks, Trade Names and Marked or Stamped
Containers, which implement R.A. No. 8293, provides:
Rule 102. Criteria for determining whether a mark is well-
known. In determining whether a mark is well-known, the
(g) the extent to which the mark has been used in the
following criteria or any combination thereof may be
world;
taken into account:

(h) the exclusivity of use attained by the mark in the world;

(a) the duration, extent and geographical area of any use
of the mark, in particular, the duration, extent and
geographical area of any promotion of the mark, including
advertising or publicity and the presentation, at fairs or (i) the commercial value attributed to the mark in the world;
exhibitions, of the goods and/or services to which the mark
applies;
(j) the record of successful protection of the rights in the
mark;
(b) the market share, in the Philippines and in other
countries, of the goods and/or services to which the mark
applies; (k) the outcome of litigations dealing with the issue of
whether the mark is a well-known mark; and

(c) the degree of the inherent or acquired distinction of the

mark; (l) the presence or absence of identical or similar marks
validly registered for or used on identical or similar goods
(d) the quality-image or reputation acquired by the mark; or services and owned by persons other than the person
claiming that his mark is a well-known mark. (Emphasis
supplied)
(e) the extent to which the mark has been registered in the
world;

(f) the exclusivity of registration attained by the mark in the

world;
 Records also show that the first use of the name
HARVARD was in 1638 for educational services, policy
Since any combination of the foregoing criteria is
courses of instructions and training at the university level.
sufficient to determine that a mark is well-known, it is
It has a Charter. Its first commercial use of the name or
clearly not necessary that the mark be used in commerce
mark HARVARD for Class 25 was on 31 December 1953
in the Philippines. Thus, while under the territoriality
covered by UPTON Reg. No. 2,119,339 and 2,101,295.
principle a mark must be used in commerce in the
Assuming in arguendo, that the Appellate may have used
Philippines to be entitled to protection, internationally well-
the mark HARVARD in the Philippines ahead of the
known marks are the exceptions to this rule.
Appellant, it still cannot be denied that the Appellants use
thereof was decades, even centuries, ahead of the
Appellees. More importantly, the name HARVARD was
In the assailed Decision of the Office of the Director the name of a person whose deeds were considered to be
General dated 21 April 2008, the Director General found a cornerstone of the university. The Appellants logos,
that: emblems or symbols are owned by Harvard University.
The name HARVARD and the logos, emblems or symbols
are endemic and cannot be separated from the
Traced to its roots or origin, HARVARD is not an ordinary institution.35
word. It refers to no other than Harvard University, a
recognized and respected institution of higher learning
located in Cambridge, Massachusetts, U.S.A. Initially Finally, in its assailed Decision, the Court of Appeals ruled:
referred to simply as the new college, the institution was
named Harvard College on 13 March 1639, after its first
principal donor, a young clergyman named John Harvard.
Records show that Harvard University is the oldest and
A graduate of Emmanuel College, Cambridge in England,
one of the foremost educational institutions in the United
John Harvard bequeathed about four hundred books in his
States, it being established in 1636. It is located primarily
will to form the basis of the college library collection, along
in Cambridge, Massachusetts and was named after John
with half his personal wealth worth several hundred
Harvard, a puritan minister who left to the college his
pounds. The earliest known official reference to Harvard
books and half of his estate.
as a university rather than college occurred in the new
Massachusetts Constitution of 1780.
The mark Harvard College was first used in commerce in
the United States in 1638 for educational services,
specifically, providing courses of instruction and training at
the university level (Class 41). Its application for
registration with the United States Patent and Trademark
Office was filed on September 20, 2000 and it was
registered on October 16, 2001. The marks Harvard and
Harvard Ve ri tas Shield Symbol were first used in
commerce in the the United States on December 31, 1953
for athletic uniforms, boxer shorts, briefs, caps, coats,
leather coats, sports coats, gym shorts, infant jackets,
leather jackets, night shirts, shirts, socks, sweat pants,
sweatshirts, sweaters and underwear (Class 25). The
applications for registration with the USPTO were filed on
September 9, 1996, the mark Harvard was registered on
December 9, 1997 and the mark Harvard Ve ri tas Shield
Symbol was registered on September 30, 1997.36
We also note that in a Decision37 dated 18 December 2008
involving a separate case between Harvard University and
Streetward International, Inc.,38 the Bureau of Legal Affairs
of the IPO ruled that the mark Harvard is a well-known
mark. This Decision, which cites among others the
numerous trademark registrations of Harvard University in
various countries, has become final and executory.
There is no question then, and this Court so declares, that
Harvard is a well-known name and mark not only in the
United States but also internationally, including the
Philippines. The mark Harvard is rated as one of the most
famous marks in the world. It has been registered in at
least 50 countries. It has been used and promoted
extensively in numerous publications worldwide. It has
established a considerable goodwill worldwide since the
founding of Harvard University more than 350 years ago.
It is easily recognizable as the trade name and mark of
Harvard University of Cambridge, Massachusetts, U.S.A.,
internationally known as one of the leading educational
institutions in the world. As such, even before Harvard
University applied for registration of the mark Harvard in
the Philippines, the mark was already protected under
Article 6bis and Article 8 of the Paris Convention. Again,
even without applying the Paris Convention, Harvard
University can invoke Section 4(a) of R.A. No. 166 which
prohibits the registration of a mark which may disparage
or falsely suggest a connection withpersons, living or
dead, institutions, beliefs x x x.
WHEREFORE, we DENY the petition. We AFFIRM the 24
October 2008 Decision and 8 January 2009 Resolution of
the Court of Appeals in CA-G.R. SP No. 103394.
SO ORDERED.
SERI SOMBOONSAKDIKUL, Petitioner
vs.
ORLANE S.A., Respondent
DECISION
JARDELEZA, J.:
Assailed in this petition is the Decision1 of the Court of
Appeals (CA) in CA-G.R. SP No. 105229 dated July 14,
2009 which affirmed the decision of the Director General
of the Intellectual Property Office (IPO) denying the
application for the mark "LOLANE."
Facts
On September 23, 2003, petitioner Seri Somboonsakdikul
(petitioner) filed an application for registration2 of the mark
LOLANE with the IPO for goods3 classified under Class 3
(personal care products) of the International Classification
of Goods and Services for the Purposes of the Registration
of Marks (International Classification of Goods).4 Orlane
S.A. (respondent) filed an opposition to petitioner's
application, on the ground that the mark LOLANE was
similar to ORLANE in presentation, general appearance
and pronunciation, and thus would amount to an
infringement of its mark.5 Respondent alleged that: (1) it
was the rightful owner of the ORLANE mark which was first
used in 1948; (2) the mark was earlier registered in the
Philippines on July 26, 1967 under Registration No.
129961 for the following goods:6
x x x perfumes, toilet water, face powders, lotions,
essential oils, cosmetics, lotions for the hair, dentrifices,
eyebrow pencils, make-up creams, cosmetics & toilet
preparations under Registration No. 12996.7
and (3) on September 5, 2003, it filed another application
for use of the trademark on its additional products:
x x x toilet waters; revitalizing waters, perfumes,
deodorants and body deodorants, anti-perspiration
toiletries; men and women perfume products for face care
and body care; face, eye, lips, nail, hand make-up
products and make-up removal products, towels
impregnated with cosmetic lotions; tanning and instant
tanning sunproducts, sunprotection products, (not for
medical use), after-suncosmetic products; cosmetic
products; slimming cosmetic aids; toiletries; lotions,
shampoos and hair care products; shave and after shave
products, shaving and hair removing products; essential
oils; toothpastes; toiletry, cosmetic and shaving kits for
travel, filled or fitted vanity-cases[.]8
Respondent adds that by promotion, worldwide
registration, widespread and high standard use, the mark
had acquired distinction, goodwill, superior quality image
and reputation and was now well-known.9 Imputing bad
faith on the petitioner, respondent claimed that LOLANE' s
first usage was only on August 19, 2003.10
In his answer,11 petitioner denied that the LOLANE mark
was confusingly similar to the mark ORLANE. He averred
that he was the lawful owner of the mark LOLANE which
he has used for various personal care products sold
worldwide. He alleged that the first worldwide use of the
mark was in Vietnam on July 4, 1995. Petitioner also
alleged that he had continuously marketed and advertised
Class 3 products bearing LOLANE mark in the Philippines
and in different parts of the world and that as a result, the
public had come to associate the mark with him as
provider of quality personal care products.12
Petitioner maintained that the marks were distinct and not
confusingly similar either under the dominancy test or the
holistic test. The mark ORLANE was in plain block upper
case letters while the mark LOLANE was printed in stylized
word with the second letter L and the letter A co-joined.
Furthermore, the similarity in one syllable would not
automatically result in confusion even if used in the same
class of goods since his products always appear with Thai
characters while those of ORLANE always had the name
Paris on it. The two marks are also pronounced differently.
Also, even if the two marks contained the word LANE it
would not make them confusingly similar since the IPO
had previously allowed the co-existence of trademarks
containing the syllable "joy" or "book" and that he also had
existing registrations and pending applications for
registration in other countries.13
The Bureau of Legal Affairs (BLA) rejected petitioner's
application in a Decision14 dated February 27, 2007,
finding that respondent's application was filed, and its
mark registered, much earlier.15 The BLA ruled that there
was likelihood of confusion based on the following
observations: (1) ORLANE and LOLANE both consisted of
six letters with the same last four letters - LANE; (2) both
were used as label for similar products; (3) both marks
were in two syllables and that there was only a slight
difference in the first syllable; and (4) both marks had the
same last syllable so that if these marks were read aloud,
a sound of strong similarity would be produced and such
would likely deceive or cause confusion to the public as to
the two trademarks.16
Petitioner filed a motion for reconsideration but this was
denied by the Director of the BLA on May 7, 2007. 17 The
BLA ruled that the law did not require the marks to be so
identical as to produce actual error or mistake as the
likelihood of confusion was enough. The BLA also found
that the dominant feature in both marks was the word
LANE; and that the marks had a strong visual and aural
resemblance that could cause confusion to the buying
public. This resemblance was amplified by the relatedness
of the goods.18
On appeal, the Director General of the IPO affirmed the
Decision of the BLA Director. Despite the difference in the
first syllable, there was a strong visual and aural
resemblance since the marks had the same last four
letters, i.e., LANE, and such word is pronounced in this
jurisdiction as in "pedestrian lane."19 Also, the mark
ORLANE is a fanciful mark invented by the owner for the
sole purpose of functioning as a trademark and is highly
distinctive. Thus, the fact that two or more entities would
accidentally adopt an identical or similar fanciful mark was
too good to be true especially when they dealt with the
same goods or services.20 The Director General also
noted that foreign judgments invoked by petitioner for the
grant of its application are not judicial precedents.21
Thus, petitioner filed a petition for review22 before the CA
arguing that there is no confusing similarity between the
two marks. Petitioner maintained that LANE is not the
dominant feature of the mark and that the dominancy test
did not apply since the trademarks are only plain word
marks and the dominancy test presupposes that the marks
involved are composite marks.23 Petitioner pointed out that
the IPO had previously allowed the mark GIN LANE under
Registration No. 4-2004-006914 which also involved
products under Class 3.24 While petitioner admitted that
foreign judgments are not judicial precedents, he argued
that the IPO failed to recognize relevant foreign
judgments, i.e., the Australian Registrar of Trademarks
and the IPO of Singapore which ruled that there was no
confusing similarity between the marks LOLANE and
ORLANE.25 Lastly, the Director General should have
deferred to the findings of the Trademark Examiner who
made a substantive examination of the application for
trademark registration, and who is an expert in the field
and is in the best position to determine whether there
already exists a registered mark or mark for registration.
Since petitioner's application for registration of the mark
LOLANE proceeded to allowance and publication without
any adverse citation of a prior confusingly similar mark,
this meant that the Trademark Examiner was of the view
that LO LANE was not confusingly similar to ORLANE.26
The CA Ruling
The CA denied the petition and held that there exists
colorable imitation of respondent's mark by LOLANE.27
The CA accorded due respect to the Decision of the
Director General and ruled that there was substantial
evidence to support the IPO's findings of fact. Applying the
dominancy test, the CA ruled that LOLANE' s mark is
confusingly or deceptively similar to ORLANE. There are
predominantly striking similarities in the two marks
including LANE, with only a slight difference in the first
letters, thus the two marks would likely cause confusion to
the eyes of the public. The similarity is highlighted when
the two marks are pronounced considering that both are
one word consisting of two syllables. The CA ruled that
when pronounced, the two marks produce similar
sounds.28 The CA did not heed petitioner's contention that
since the mark ORLANE is of French origin, the same is
pronounced as "ORLAN." Filipinos would invariably
pronounce it as "OR-LEYN."29 The CA also noted that the
trademark ORLANE is a fanciful name and petitioner was
not able to explain why he chose the word LOLANE as
trademark for his personal care products. Thus, the only
logical conclusion is that he would want to benefit from the
established reputation and goodwill of the ORLANE
mark.30
The CA rejected petitioner's assertion that his products'
cheaper price and low-income market eliminates the
likelihood of confusion. Low-income groups, and even
those who usually purchased ORLANE products despite
the higher cost, may be led to believe that LOLANE
products are low-end personal care products also
marketed by respondent.31
The CA upheld the applicability of the dominancy test in
this case. According to the CA, the dominancy test is
already recognized and incorporated in Section 155.1 of
Republic Act No. 8293 (RA 8293), otherwise known as the
Intellectual Property Code of the
32
Philippines. Citing McDonald's Corporation v. MacJoy
Fastfood Corporation,33 the CA ruled that the dominancy
test is also preferred over the holistic test. This is because
the latter relies only on the visual comparison between two
trademarks, whereas the dominancy test relies not only on
the visual, but also on their aural and connotative
comparisons, and their overall impressions
34
created. Nonetheless, the CA stated that there is nothing
in this jurisdiction dictating that the dominancy test is
applicable for composite marks.35
The CA was not swayed by the alleged favorable judgment
by the IPO in the GIN LANE application, ruling that in
trademark cases, jurisprudential precedents should be
applied only to a case if they are specifically in point. 36 It
also did not consider the ruling of the IPOs in Australia,
South Africa, Thailand and Singapore which found no
confusing similarity between the marks LOLANE and
ORLANE, stating that foreign judgments do not constitute
judicial precedent in this jurisdiction.37
Finally, the CA did not give merit to petitioner's contention
that the Director General should have deferred to the
findings of the Trademark Examiner. According to the CA,
the proceedings before the Trademark Examiner are ex-
parte,38 and his findings are merely prima facie. Whatever
his decision may be is still subject to review and/or
appeal.39
The Petition40
Petitioner maintains that the CA erred in its interpretation
of the dominancy test, when it ruled that the dominant
feature of the contending marks is the suffix "LANE."41 The
CA failed to consider that in determining the dominant
portion of a mark, significant weight must be given to
whether the buyer would be more likely to remember and
use one part of a mark as indicating the origin of the
goods.42 Thus, that part which will likely make the most
impression on the ordinary viewer will be treated as the
dominant portion of conflicting marks and given greater
weight in the comparison.43
Petitioner argues that both LOLANE and ORLANE are
plain word marks which are devoid of features that will
likely make the most impression on the ordinary viewer. If
at all, the very word marks themselves, LOLANE and
ORLANE are each to be regarded as dominant
features.44 Moreover, the suffix LANE is a weak mark,
being "in common use by many other sellers in the market.
"45 Thus, LANE is also used in the marks SHELLANE and
GIN LANE, the latter covering goods under Class 3.
Moreover, the two marks are aurally different since
respondent's products originate from France and is read
as "OR-LAN" and not "OR-LEYN."46
Petitioner also claims that the CA completely disregarded
the holistic test, thus ignoring the dissimilarity of context
between LOLANE and ORLANE. Assuming that the two
marks produce similar sounds when pronounced, the the names of local outlets that products bearing the mark
differences in marks in their entirety as they appear in their ORLANE are being marketed or sold to the general
respective product labels should still be the controlling consuming public.55
factor in determining confusing similarity.47
Respondent's Comment56
Besides, there has been no explicit declaration
Respondent reiterates the decisions of the CA and the
abandoning the holistic test.48 Thus, petitioner urges us to
IPO.57 It maintains that ORLANE is entitled to protection
go beyond the similarities in spelling and instead consider
under RA 8293 since it is registered with the IPO with proof
how the marks appear in their respective labels, the
of actual use.58 Respondent posits that it has established
dissimilarities in the size and shape of the containers, their
in the world59 and in the Philippines an image and
color, words appearing thereon and the general
reputation for manufacturing and selling quality beauty
appearance,49 hence: (1) the commonality of the marks
products. Its products have been sold in the market for 61
ORLANE and LOLANE starts from and ends with the four-
years and have been used in the Philippines since
letter similarity-LANE and nothing else;50 (2) ORLANE
1972.60 Thus, to allow petitioner's application would
uses "safe" or conventional colors while LOLANE uses
unduly prejudice respondent's right over its registered
loud or psychedelic colors and designs with Thai
trademark.61 Lastly, respondent argues that decisions of
characters;51 and (3) ORLANE uses the term "Paris,"
administrative agencies such as the IPO shall not be
indicating the source of origin of its products.52
disturbed by the courts, absent any showing that the
Petitioner likewise claims that consumers will be more former have acted without or in excess of their jurisdiction,
careful in their choice because the goods in question are or with grave abuse of discretion.62
directly related to personal hygiene and have direct effects
Issue
on their well-being, health and safety.53 Moreover, with the
huge price difference between ORLANE and LOLANE We resolve the issue of whether there is confusing
products, relevant purchasers are less likely to be similarity between ORLANE and LOLANE which would bar
confused.54 the registration of LOLANE before the IPO.
Finally, petitioner notes that respondent has neither validly Our Ruling
proven nor presented sufficient evidence that the mark
ORLANE is in actual commercial use in the Philippines. We find that the CA erred when it affirmed the Decision of
Respondent failed to allege in any of its pleadings the IPO.
submitted to the IPO's BLA and the IPO Director General
While it is an established rule in administrative law that the
courts of justice should respect the findings of fact of
administrative agencies, the courts may not be bound by
such findings of fact when there is absolutely no evidence
in support thereof or such evidence is clearly, manifestly
and patently insubstantial; and when there is a clear
showing that the administrative agency acted arbitrarily or
with grave abuse of discretion or in a capricious and
whimsical manner, such that its action may amount to an
excess or lack of jurisdiction.63 Moreover, when there is a
showing that the findings or conclusions, drawn from the
same pieces of evidence, were arrived at arbitrarily or in
disregard of the evidence on record, they may be reviewed
by the courts.64 Such is the case here.
There is no colorable imitation between the marks
LOLANE and ORLANE which would lead to any likelihood
of confusion to the ordinary purchasers.
A trademark is defined under Section 121.1 of RA 8293 as
any visible sign capable of distinguishing the goods. It is
susceptible to registration if it is crafted fancifully or
arbitrarily and is capable of identifying and distinguishing
the goods of one manufacturer or seller from those of
another.65 Thus, the mark must be distinctive.66 The
registrability of a trademark is governed by Section 123 of
RA 8293. Section 123.1 provides:
Section 123. Registrability. -
123 .1. A mark cannot be registered if it:
xxx
d. Is identical with a registered mark belonging to a
different proprietor or a mark with an earlier filing or priority
date, in respect of:
i. The same goods or services, or
ii. Closely related goods or services, or
iii. If it nearly resembles such a mark as to be likely to
deceive or cause confusion;
e. Is identical with, or confusingly similar to, or constitutes
a translation of a mark which is considered by the
competent authority of the Philippines to be well-known
internationally and in the Philippines, whether or not it is
registered here, as being already the mark of a person
other than the applicant for registration, and used for
identical or similar goods or services: Provided, That in
determining whether a mark is well-known, account shall
be taken of the knowledge of the relevant sector of the
public, rather than of the public at large, including
knowledge in the Philippines which has been obtained as
a result of the promotion of the mark;
xxx
In Mighty Corporation v. E. & J Gallo Winery,67 we laid
down the
requirements for a finding of likelihood of confusion, thus:
There are two types of confusion in trademark
infringement. The first is "confusion of goods" when an
otherwise prudent purchaser is induced to purchase one
product in the belief that he is purchasing another, in which
case defendant's goods are then bought as the plaintiffs
and its poor quality reflects badly on the plaintiffs
reputation. The other is "confusion of business" wherein
the goods of the parties are different but the defendant's
product can reasonably (though mistakenly) be assumed
to originate from the plaintiff, thus deceiving the public into
believing that there is some connection between the
plaintiff and defendant which, in fact, does not exist.
In determining the likelihood of confusion, the Court
must consider: [a] the resemblance between the
trademarks; [b] the similarity of the goods to which the
trademarks are attached; [c] the likely effect on the
purchaser and [d] the registrant's express or implied
consent and other fair and equitable
considerations. (Citations omitted, emphasis supplied.)68
While Mighty Corporation enumerates four requirements,
the most essential requirement, to our mind, for the
determination of likelihood of confusion is the existence of
resemblance between the trademarks, i.e., colorable
imitation. Absent any finding of its existence, there can be
no likelihood of confusion. Thus we held:
Whether a trademark causes confusion and is likely to
deceive the public hinges on "colorable imitation" which
has been defined as "such similarity in form, content,
words, sound, meaning, special arrangement or general
appearance of the trademark or trade name in their overall
presentation or in their essential and substantive and
distinctive parts as would likely mislead or confuse
persons in the ordinary course of purchasing the genuine
article." (Citations omitted.)69
We had the same view in Emerald Garment Manufacturing
Corporation v. Court of Appeals,70 where we stated:
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."
Colorable imitation does not mean such similitude as
amounts to identity. Nor does it require that all the details
be literally copied. x x x (Citation omitted, emphasis
supplied.)71
In determining colorable imitation, we have used either the
dominancy test or the holistic or totality test. The
dominancy test considers 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. More consideration is given on the aural
and visual impressions created by the marks on the buyers
of goods, giving little weight to factors like process, quality,
sales outlets, and market segments.72 On the other hand,
the holistic test considers the entirety of the marks as
applied to the products, including the labels and
packaging, in determining confusing similarity. The focus
is not only on the predominant words but also on the other
features appearing on the labels.73
The CA's use of the dominancy test is in accord with our
more recent ruling in UFC Philippines, Inc. (now merged
with Nutria-Asia, Inc. as the surviving entity) v. Barrio
Fiesta Manufacturing Corporation.74 In UFC Philippines,
Inc., we relied on our declarations in McDonald's
Corporation v. L.C. Big Mak Burger, Inc.,75 Co Tiong Sa v.
Director of Patents,76 and Societe Des Produits Nestle,
S.A. v. Court of Appeals77 that the dominancy test is more
in line with the basic rule in trademarks that confusing
similarity is determined by the aural, visual and
connotative and overall impressions created by the marks.
Thus, based on the dominancy test, we ruled that there is
no confusing similarity between "PAPA BOY & DEVICE"
mark, and "PAPA KETSARAP" and "PAPA BANANA
CATSUP."
While there are no set rules as what constitutes a
dominant feature with respect to trademarks applied for
registration, usually, what are taken into account are signs,
color, design, peculiar shape or name, or some special,
easily remembered earmarks of the brand that readily
attracts and catches the attention of the ordinary
consumer.78In UFC Philippines, Inc., what we considered
as the dominant feature of the mark is the first word/figure
that catches the eyes or that part which appears
prominently to the eyes and ears.79
However, while we agree with the CA's use of the
dominancy test, we arrive at a different conclusion. Based
on the distinct visual and aural differences between
LOLANE and ORLANE, we find that there is no confusing
similarity between the two marks.
The suffix LANE is not the dominant feature of petitioner's
mark. Neither can it be considered as the dominant feature
of ORLANE which would make the two marks confusingly
similar.
First, an examination of the appearance of the marks
would show that there are noticeable differences in the
way they are written or printed as shown below:80
As correctly argued by petitioner in his answer before the
BLA, there are visual differences between LOLANE and
ORLANE since the mark ORLANE is in plain block upper
case letters while the mark LOLANE was rendered in
stylized word with the second letter L and the letter A co-
joined.81
Second, as to the aural aspect of the marks, LOLANE and
ORLANE do not sound alike. Etepha v. Director of
Patents, et al.82 finds application in this case.
In Etepha, we ruled that there is no confusing similarity
between PERTUSSIN and ATUSSIN. The Court also differ. We take exception to the generalizing
considered among other factors the aural differences statement of the Director General, which was affirmed by
between the two marks as follows: the CA, that Filipinos would invariably pronounce
ORLANE as "ORLEYN." This is another finding of fact
5. As we take up Pertussin and Atussin once again, we
which has no basis, and thus, justifies our reversal of the
cannot escape notice of the fact that the two words do not
decisions of the IPO Director General and the CA. While
sound alike-when pronounced. There is not much phonetic
there is possible aural similarity when certain sectors of the
similarity between the two. The Solicitor General well-
market would pronounce ORLANE as "ORLEYN," it is not
observed that in Pertussin the pronunciation of tbe prefix
also impossible that some would also be aware of the
"Per", whether correct or incorrect, includes a combination
proper pronunciation--especially since, as respondent
of three letters
claims, its trademark ORLANE has been sold in the market
P, e and r; whereas, in Atussin the whole starts with the for more than 60 years and in the Philippines, for more
single letter A added to suffix "tussin".1âwphi1 Appeals to than 40 years.84
the ear are dissimilar. And this, because in a word
Respondent failed to show proof that the suffix LANE has
combination, the part that comes first is the most
registered in the mind of consumers that such suffix is
pronounced. An expositor of the applicable rule here is the
exclusively or even predominantly associated with
decision in the Syrocol-Cheracol controversy. There, the
ORLANE products. Notably and as correctly argued by
ruling is that trademark Syrocol (a cough medicine
petitioner, the IPO previously allowed the registration of
preparation) is not confusedly similar to
the mark GIN LANE for goods also falling under Class
trademark Cheracol (also a cough medicine preparation).
3, i.e., perfume, cologne, skin care preparations, hair care
Reason: the two words "do not look or sound enough alike
preparations and toiletries.85
to justify a holding of trademark infringement", and the
"only similarity is in the last syllable, and that is not We are mindful that in the earlier cases of Mighty
uncommon in names given drug compounds". (Citation Corporation and Emerald, despite a finding that there is no
omitted, emphasis supplied.)83 colorable imitation, we still discussed the nature of the
goods using the trademark and whether the goods are
Similar to Etepha, appeals to the ear in pronouncing
identical, similar, competing or related. We need not
ORLANE and LOLANE are dissimilar. The first syllables of
belabor a similar discussion here considering that the
each mark, i.e., OR and LO do not sound alike, while the
essential element in determining likelihood of
proper pronunciation of the last syllable LANE-"LEYN" for
confusion, i.e., colorable imitation by LO LANE of the mark
LOLANE and "LAN" for ORLANE, being of French origin,
ORLANE, is absent in this case. Resemblance between
the marks is a separate requirement from, and must not be
confused with, the requirement of a similarity of the goods
to which the trademarks are attached. In Great White
Shark Enterprises, Inc v. Caralde, Jr.,86 after we ruled that
there was no confusing similarity between Great White
Shark's "GREG NORMAN LOGO" and Caralde's "SHARK
& LOGO" mark due to the visual and aural dissimilarities
between the two marks, we deemed it unnecessary to
resolve whether Great White Shark's mark has gained
recognition as a well-known mark.
Finding that LOLANE is not a colorable imitation of
ORLANE due to distinct visual and aural differences using
the dominancy test, we no longer find it necessary to
discuss the contentions of the petitioner as to the
appearance of the marks together with the packaging,
nature of the goods represented by the marks and the
price difference, as well as the applicability of foreign
judgments. We rule that the mark LOLANE is entitled to
registration.
WHEREFORE, the petition is GRANTED. The Decision of
the Court of Appeals dated July 14, 2009
is REVERSED and SET ASIDE. Petitioner's application of
the mark LOLANE for goods classified under Class 3 of
the International Classification of Goods is GRANTED.
SO ORDERED.
CATERPILLAR, INC., Petitioner
vs.
MANOLO P. SAMSON, Respondent
x-----------------------x
G.R. No. 164352
CATERPILLAR, INC., Petitioner,
vs.
MANOLO P. SAMSON, Respondent.
DECISION
BERSAMIN, J.:
The determination of probable cause to charge a person
in court for a criminal offense is exclusively lodged in the
Executive Branch of the Government, through the
Department of Justice. Initially, the determination is done
by the investigating public prosecutor, and on review by
the Secretary of Justice or his duly authorized subordinate.
The courts will respect the determination, unless the same
shall be shown to have been made in grave abuse of
discretion amounting to lack or excess of jurisdiction.
The Cases
Before us are the consolidated cases of G.R. No.
2059721 and G.R. No. 164352.2
G.R. No. 164352 involves the appeal by petition for review
on certiorari of Caterpillar, Inc. (Caterpillar) to reverse the
decision promulgated on January 21, 20043 by the Court
of Appeals (CA) in CA-G.R. SP No. 75526, and the
resolution promulgated on June 30, 2004 denying the
motion for reconsideration thereof.4
G.R. No. 205972 relates to the appeal brought by
Caterpillar to assail the decision and resolution
promulgated in CA-G.R. SP No. 102316 respectively on
May 8, 20125 and February 12, 2013,6 whereby the CA
affirmed the resolutions of the Department of Justice
(DOJ) finding that there was no probable cause to indict
Manolo P. Samson (Samson) for unfair competition.
Antecedents
Caterpillar is a foreign corporation engaged in the
manufacture and distribution of footwear, clothing and
related items, among others. Its products are known for six
core trademarks, namely, "CATERPILLAR", "CAT"
"CATERPILLAR & DESIGN" "CAT AND DESIGN",
"WALKING MACHINES" and "TRACK-TYPE TRACTOR &
DESIGN (Core Marks),7 all of which are alleged as
internationally known. On the other hand, Samson, doing
business under the names and styles of Itti Shoes
Corporation, Kolm's Manufacturing Corporation and
Caterpillar Boutique and General Merchandise, is the
proprietor of various retail outlets in the Philippines selling
footwear, bags, clothing, and related items under the
trademark "CATERPILLAR", registered in 1997 under
Trademark Registration No. 64705 issued by the
Intellectual Property Office (IPO).8
G.R. No. 164352
On July 26, 2000, upon application of the National Bureau
of Investigation (NBI), the Regional Trial Court (RTC),
Branch 56, in Makati City issued Search Warrants Nos. 00-
022 to 00-032, inclusive, all for unfair competition,9 to
search the establishments owned, controlled and operated
by Samson. The implementation of the search warrants on
July 27, 2000 led to the seizure of various products bearing
Caterpillar's Core Marks.
Caterpillar filed against Samson several criminal
complaints for unfair competition in the Department of
Justice (DOJ), docketed as LS. Nos. 2000-13 54 to 2000-
13 64, inclusive.
Additionally, on July 31, 2000, Caterpillar commenced a
civil action against Samson and his business entities, with
the IPO as a nominal party10 - for Unfair Competition,
Damages and Cancellation of Trademark with Application
for Temporary Restraining Order (TRO) and/or Writ of
Preliminary Injunction - docketed as Civil Case No. Q-00-
41446 of the RTC in Quezon City. In said civil action, the
RTC denied Caterpillar's application for the issuance of the
TRO on August 17, 2000.
The DOJ, through Senior State Prosecutor Jude R.
Romano, issued a joint resolution dated November 15,
200111recommending that Samson be criminally charged
with unfair competition under Section 168.3 (a),12 in
relation to Section 123.l(e),13 Section 131.114 and Section
170,15 all of Republic Act No. 8293, or the Intellectual
Property Code of the Philippines (IP Code).
However, because Samson and his affiliate companies
allegedly continued to sell and distribute products clothed
with the general appearance of its own products,
Caterpillar again applied for another set of search warrants
against Samson and his businesses. The RTC, Branch
172, in Valenzuela City issued Search Warrants Nos. 12-
V-00,16 13-V-00,17 20-V-0018 and 29-V-0019 upon
application of the NBI, by virtue of the implementation of
which several goods were seized and confiscated by the
NBI agents.
As a consequence, Caterpillar filed 26 criminal complaints
for unfair competition on January 31, 2001, docketed as
LS. Nos. 2001-42 to 2001-67, against Samson and/or the
occupants of his affiliate entities before the DOJ.20 In due
course, the DOJ, through State Prosecutor Zenaida M.
Lim, issued a joint resolution dated September 28,
200121recommending the filing of criminal complaints for
unfair competition under Section 168.3(a), in relation to
Section 123 .1, Section 131.1 and Section 170 of the IP
Code. Accordingly, six criminal complaints were filed in the
RTC, Branch 256, in Muntinlupa City, presided by Judge
Alberto L. Lerma, docketed as Criminal Cases Nos. 02-
238 to 02-243.
On January 17 and 22, 2002, Samson filed a petitions for
review with the Office of the Secretary of Justice to appeal
the joint resolutions in LS. Nos. 2000-1354 to 2000-
136422 and LS. Nos. 2001-042 to 2001-067.23
On May 30, 2002, Samson filed a Motion to Suspend
Arraignment in Criminal Cases Nos. 02-238 to
243,24 citing the following as grounds:25
I.
THERE EXISTS PREJUDICIAL QUESTIONS PENDING
LITIGATION BEFORE THE REGIONAL TRIAL COURT
OF QUEZON CITY, BRANCH 90, IN CIVIL CASE NO. Q-
00-41446 ENTITLED: "CATERPILLAR, INC., ET AL. VS.
ITTI SHOES CORPORATION, ET AL.," THE FINAL
RESOLUTIONS OF WHICH WILL DETERMINE THE
OUTCOME OF THE INSTANT CRIMINAL CASES.
II.
ACCUSED HAS FILED PETITIONS FOR REVIEW WITH
THE DEPARTMENT OF JUSTICE ASSAILING THE
RESOLUTIONS OF THE CHIEF STATE PROSECUTOR
WHO CAUSED THE FILING OF THE INSTANT CASES
AND ARE STILL PENDING THEREIN UP TO THE
PRESENT.
In the meanwhile, on July 10, 2002, the DOJ, through
Secretary Hernando B. Perez, issued a
26
resolution denying Samson's petition for review in I.S.
Nos. 2000-1354 to 2000-1364. Samson's motion for
reconsideration was likewise denied on May 26, 2003.
On September 23, 2002, Presiding Judge Lerma of the
RTC granted Samson's Motion to Suspend
Arraignment, and suspended the arraignment and all other
proceedings in Criminal Cases Nos. 02-240 to 02-243 until
Civil Case No. Q-00-41446 was finally resolved,27 holding:
After a careful scrutiny of the case, this Court finds that
private complainant, in Civil Case No. Q-00-41446, seeks
for the cancellation of the trademark "CATERPILLAR"
which is registered in the name of the accused and to
prevent the latter from using the said trademark
("CATERPILLAR"), while the issue in the instant case is
the alleged unlawful use by the accused of the trademark
"CATERPILLAR" which is claimed to be owned by the
private complainant. From the foregoing, this Court
believes that there exists a prejudicial question since the
determination of who is really the lawful or registered user
of the trademark "CATERPILLAR" will ultimately
determine whether or not the instant criminal action shall
proceed. Clearly, the issues raised in Civil Case No. Q-00-
41446 is similar or intimately related to the issue in the
case at bar for if the civil case will be resolved sustaining
the trademark registration of the accused for the trademark
CATERPILLAR, then the latter would have all the authority
to continue the use of the said trademark as a
consequence of a valid registration, and by reason of
which there may be no more basis to proceed with the
instant criminal action.28
After the RTC denied its motion for reconsideration29 on
December 5, 2002,30 Caterpillar elevated the matter to the
CA by petition for certiorari on February 14,
2003,31 docketed as C.A.-G.R. SP No. 75526
entitled Caterpillar, Inc. v. Hon. Alberto L. Lerma, in his
capacity as Presiding Judge of Branch 256 of the Regional
Trial Court, Muntinlupa City, and Manolo P.
Samson, alleging grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of the RTC in
suspending the arraignment and other proceedings in
Criminal Cases Nos. 02-238 to 02-243 on the ground of
the existence of an alleged prejudicial question in Civil
Case No. Q-00-41446 then pending in the RTC in Quezon
City whose resolution would determine the outcome of the
criminal cases.
Meanwhile, on January 13, 2003, Acting Justice Secretary
Ma. Merceditas N. Gutierrez reversed and set aside the
resolution issued by State Prosecutor Lim in I.S. No. 2001-
042 to 2001-067, and directed the Chief State Prosecutor
to cause the withdrawal of the criminal informations filed
against Samson in court,32 disposing as follows:
ACCORDINGLY, the assailed joint resolution is
hereby REVERSED and SET ASIDE. The Chief State
Prosecutor is directed to forthwith cause the withdrawal of
the informations filed in court against respondent Manolo
P. Samson and to report action taken hereon within ten
(10) days from receipts hereof.33
Acting Justice Secretary Gutierrez based her resolution on
the order dated June 26, 2001, whereby the RTC of
Valenzuela City, Branch 172, had quashed the 26 search
warrants upon motion of Samson.34 Consequently, the
goods seized and confiscated by virtue of the quashed
search warrants could no longer be admitted in evidence
Correspondingly, Presiding Judge Lerma of the RTC
ordered the withdrawal of Criminal Cases Nos. 02-240 to
02-243 on February 4, 2003.35
Aggrieved, Caterpillar assailed the order of Judge Lerma
for the withdrawal of Criminal Cases Nos. 02-240 to 02-
2432003 by petition for certiorari in the CA on October 16,
2003, docketed as CA-G.R. SP No. 79937,36 and the CA
ultimately granted the petition for certiorari,37 setting aside
the assailed January 13, 2003 resolution of the Acting
Justice Secretary and directing the re-filing of the
withdrawn informations against Samson. The Court
ultimately affirmed the CA's dec ision through the
resolution promulgated on October 17, 2005 in G.R. No.
169199, and ruling that probable cause existed for the re-
filing of the criminal charges for unfair competition under
the IP Code.38
In the assailed January 21, 2004 decision,39 the CA
dismissed Caterpillar's petition for certiorari in CA-G.R. SP
No. 75526, viz.:
Petition has no merit.
The mere fact that public respondent denied petitioner's
motion for reconsideration does not justify this petition on
the ground of abuse of discretion. Grave abuse of
discretion means such capricious and whimsical exercise
of judgment as is equivalent to lack of jurisdiction, or, in
other words where the power is exercised in an arbitrary
or despotic manner by reason of passion or personal
hostility and it must be so patent and gross as to amount
to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined or to act at all in contemplation
of law. (Benito vs. Comelec, 349 SCRA 705).
Petitioner in this case failed to overcome the burden of
showing how public respondent acted with grave abuse of
discretion in granting private respondent's motion and
denying his own motion for reconsideration. What is clear
is that public respondent court acted judiciously. A petition
for certiorariunder Rule 65 of the Rules of Court will
prosper only if there is showing of grave abuse of
discretion or an act without or in excess of jurisdiction on
the part of respondent tribunal (Garcia vs. HRET, 312
SCRA 353).
Granting arguendo that public respondent court erred in its
ruling, still a petition for certiorari under Rule 65 cannot be
justified. Where the court has jurisdiction over the subject
matter, the orders or decision upon all questions pertaining
to the cause are orders or decisions within its jurisdiction
and however erroneous they may be, they cannot be
corrected by certiorari (De Baron vs. Court of Appeals,
368 SCRA 407).
WHEREFORE, foregoing premises considered, the
Petition having no merit in fact and in law is hereby
DENIED DUE COURSE and ordered DISMISSED. With
costs to Petitioners.
SO ORDERED.40
Caterpillar sought the reconsideration of the dismissal, but
the CA denied the motion on June 30, 2004.41
Hence, Caterpillar appealed the CA's decision in C.A.-
G.R. SP No. 75526 (G.R. No. 164352).
G .R. No. 205972
In the meanwhile, in August 2002, upon receiving the
information that Samson and his affiliate entities
continuously sold and distributed products bearing
Caterpillar's Core Marks without Caterpillar's consent, the
latter requested the assistance of the Regional Intelligence
and Investigation Division of the National Region Public
Police (RIID-NCRPO) for the conduct of an investigation.
Subsequently, after the investigation, the RIID-NCRPO
applied for and was granted 16 search warrants against
various outlets owned or operated by Samson in
Mandaluyong, Quezon City, Manila, Caloocan, Makati,
Parañaque, Las Piñas, Pampanga and Cavite. The
warrants were served on August 27, 2002,42 and as the
result products bearing Caterpillar's Core Marks were
seized and confiscated. Consequently, on the basis of the
search warrants issued by the various courts, Caterpillar
again instituted criminal complaints in the DOJ for violation
of Section 168.3(a), in relation to Sections 131.3, 123.l(e)
and 170 of the IP Code against Samson, docketed as LS.
Nos. 2002-995 to 2002-997; 2002-999 to 2002-1010; and
2002-1036.
After the conduct of the preliminary investigation, the DOJ,
through State Prosecutor Melvin J.Abad, issued a joint
resolution dated August 21, 2003 dismissing the complaint
upon finding that there was no probable cause to charge
Samson with unfair competition.43
Caterpillar moved for the reconsideration of the dismissal,
but State Prosecutor Abad denied the motion on June 18,
2004.44
The Secretary of Justice affirmed the dismissal of the
complaint through the resolution issued on September 19,
2005,45 and denied Caterpillar's motion for reconsideration
on December 20, 2007.
Accordingly, Caterpillar appealed to the CA through a
petition for review under Rule 43, Rules of Court (C.A.-
G.R. SP No. 102316).46
On May 8, 2012,47 however, the CA denied due course to
Caterpillar's petition for review, viz.:
WHEREFORE, premises considered, the petition
is DENIED DUE COURSE, and accordingly, DISMISSED.
SO ORDERED.48
The CA opined that an appeal under Rule 43 to assail the
resolution by the Secretary of Justice determining the
existence or non-existence of probable cause was an
improper remedy; and that while it could treat an appeal
as a special civil action for certiorari under Rule 65, it could
not do so therein because the allegations of the petition
did not sufficiently show grave abuse of discretion on the
part of the Secretary of Justice in issuing the assailed
resolutions.
Caterpillar filed a motion for reconsideration, but the CA
denied the motion for its lack of merit on February 12,
2013.49
Hence, Caterpillar commenced G.R. No. 205972.
Issues
Caterpillar submits that the CA erred as follows:
G.R. No. 164352
A.
THE COURT OF APPEALS COMMITTED SERIOUS
REVERSIBLE ERROR IN DENYING DUE COURSE TO
CATERPILLAR INC.'S PETITION FOR CERTIORARI.
B.
THE COURT OF APPEALS COMMITTED SERIOUS
REVERSIBLE ERROR IN NOT HOLDING THAT THE
ORDER SUSPENDING PROCEEDINGS IN CRIMINAL
CASES NOS. 02-238 TO 02-243, ON THE BASIS OF AN
ALLEGED PREJUDICIAL QUESTION, WAS CONTRARY
TO LAW AND ESTABLISHED JURISPRUDENCE.
C.
THE HONORABLE COURT OF APPEALS COMMITTED
SERIOUS REVERSIBLE ERROR IN NOT HOLDING
THAT A CRIMINAL COMPLAINT FOR UNFAIR
COMPETITION CAN PROCEED INDEPENDENTLY OF,
AND SIMULTANEOUS WITH, THE CIVIL CASE FOR
THE SAME.50
Caterpillar posits that the suspension of proceedings in
Criminal Cases Nos. 02-238 to 02-243 was contrary to
Rule 111 of the Rules of Court, Article 33 of the Civil
Code on independent civil actions, and Section 170 of the
IP Code, which specifically provides that the criminal
penalties for unfair competition were independent of the
civil and administrative sanctions imposed by law; that the
determination of the lawful owner of the "CATERPILLAR"
trademark in Civil Case No. Q-00-41446 would not be
decisive of the guilt of Samson for unfair competition in
Criminal Cases Nos. 02-238 to 02-243 because
registration was not an element of the crime of unfair
competition; that the civil case sought to enforce Samson's
civil liability arising from the IP Code while the criminal
cases would enforce Samson's liability arising from the
crime of unfair competition; and that the Court already
ruled in Samson v. Daway51 that Civil Case No. Q-00-
41446 was an independent civil action under Article 33 of
the Civil Code and, as such, could proceed independently
of the criminal actions.
In his comment,52 Samson counters that the issues of the
lawful and registered owner of the trademark, the true
owner of the goodwill, and whether "CATERPILLAR" was
an internationally well-known mark are intimately related
to the issue of guilt in the criminal actions, the resolution of
which should determine whether or not the criminal actions
for unfair competition could proceed.
G.R. No. 205972
In this appeal, the petitioner interposes that:
THE HONORABLE COURT OF APPEALS ERRED IN
DISMISSING THE PETITIONER'S PETITION FOR
REVIEW SOLELY ON THE GROUND OF AN ALLEGED
WRONG REMEDY, DESPITE PETITIONERS HAVING
CLEARLY ESTABLISHED THAT THE SECRETARY OF
JUSTICE ACTED WITH GRAVE ABUSE OF
DISCRETION IN ISSUING THE RESOLUTIONS DATED
19 SEPTEMBER 2005 AND 20 DECEMBER 2007,
AFFIRMING THE FINDINGS OF THE INVESTIGATING
PROSECUTOR THAT NO PROBABLE CAUSE EXISTS
TO CHARGE THE RESPONDENT OF THE CRIME OF
UNFAIR COMPETITION.53
Caterpillar seeks the liberal interpretation of procedural
rules in order to serve the higher interest of substantial
justice following the denial by the CA of its petition for
being an incorrect remedy; and insists that it presented
substantial evidence to warrant a finding of probable cause
for unfair competition against Samson.
In sum, the issues to be resolved in these consolidated
cases are: firstly, whether or not the CA committed a
reversible error in ruling that the trial court a quo did not
commit grave abuse of discretion in suspending the
criminal proceedings on account of a prejudicial question;
and, secondly, whether or not the CA committed
reversible error in upholding the decision of the Secretary
of Justice finding that there was no probable cause to
charge Samson with unfair competition.
Rulings of the Court
G.R. No. 164352
The appeal in G.R. No. 164352 is meritorious.
We note, to begin with, that Civil Case No. Q-00-41446,
the civil case filed by Caterpillar in the RTC in Quezon City,
was for unfair competition, damages and cancellation of
trademark, while Criminal Cases Nos. Q-02-108043-44
were the criminal prosecution of Samson for unfair
competition. A common element of all such cases for
unfair competition - civil and criminal - was fraud. Under
Article 33 of the Civil Code, a civil action entirely separate
and distinct from the criminal action may be brought by the
injured party in cases of fraud, and such civil action shall
proceed independently of the criminal prosecution. In view
of its being an independent civil action, Civil Case No. Q-
00-41446 did not operate as a prejudicial question that
justified the suspension of the proceedings in Criminal
Cases Nos. Q-02-108043-44.
In fact, this issue has already been raised in relation to the
suspension of the arraignment of Samson in Criminal
Cases Nos. Q-02-108043-44 in Samson v. Daway,54 and
the Court resolved it against Samson and in favor of
Caterpillar thusly:
Anent the second issue, petitioner failed to substantiate his
claim that there was a prejudicial question. In his petition,
he prayed for the reversal of the March 26, 2003 order
which sustained the denial of his motion to suspend
arraignment and other proceedings in Criminal Case Nos.
Q-02-108043-44. For unknown reasons, however, he
made no discussion in support of said prayer in his petition
and reply to comment. Neither did he attach a copy of the
complaint in Civil Case No. Q-00-41446 nor quote the
pertinent portion thereof to prove the existence of a
prejudicial question.
At any rate, there is no prejudicial question if the civil and
the criminal action can, according to law, proceed
independently of each other. Under Rule 111, Section 3 of
the Revised Rules on Criminal Procedure, in the cases
provided in Articles 32, 33, 34 and 2176 of the Civil Code,
the independent civil action may be brought by the
offended party. It shall proceed independently of the
criminal action and shall require only a preponderance of
evidence.
In the case at bar, the common element in the acts
constituting unfair competition under Section 168 of R.A.
No. 8293 is fraud. Pursuant to Article 33 of the Civil Code,
in cases of defamation, fraud, and physical injuries, a civil
action for damages, entirely separate and distinct from the
criminal action, may be brought by the injured
party. Hence, Civil Case No. Q-00-41446, which as
admitted by private respondent also relate to unfair
competition, is an independent civil action under
Article 33 of the Civil Code. As such, it will not operate
as a prejudicial question that will justify the
suspension of the criminal cases at bar.55 (Bold
emphasis supplied)
Secondly, a civil action for damages and cancellation of
trademark cannot be considered a prejudicial question by
which to suspend the proceedings in the criminal cases for
unfair competition. A prejudicial question is that which
arises in a civil case the resolution of which is a logical
antecedent of the issues to be determined in the criminal
case. It must appear not only that the civil case involves
facts upon which the criminal action is based, but also that
the resolution of the issues raised in the civil action will
necessarily be determinative of the criminal case.56 As
stated in Librodo v. Judge Coscolluela, Jr.:57
A prejudicial question is one based on a fact distinct and
separate from the crime but so intimately connected with it
that it determines the guilt or innocence of the accused,
and for it to suspend the criminal action, it must appear not
only that said case involves facts intimately related to
those upon which the criminal prosecution would be based
but also that in the resolution of the issue or issues raised
in the civil case, the guilt or innocence of the accused
would necessarily be determined. It comes into play
generally in a situation where a civil action and a
criminal action are both pending and there exists in
the former an issue which must be preemptively
resolved before the criminal action may proceed,
because howsoever the issue raised in the civil action
is resolved would be determinative juris et de jure of
the guilt or innocence of the accused in the criminal
case.58 (Bold underscoring supplied for emphasis)
The elements of a prejudicial question are provided in
Section 7 of Rule 111, Rules of Court, to wit: (a) a
previously instituted civil action involves an issue similar to
or intimately related to the issue raised in the subsequent
criminal action, and (b) the resolution of such issue
determines whether or not the criminal action may
proceed.59
An examination of the nature of the two kinds of cases
involved is necessary to determine whether a prejudicial
question existed.
An action for the cancellation of trademark like Civil Case
No. Q-00-41446 is a remedy available to a person who
believes that he is or will be damaged by the registration
of a mark.60 On the other hand, the criminal actions for
unfair competition (Criminal Cases Nos. Q-02-108043-44)
involved the determination of whether or not Samson had
given his goods the general appearance of the goods of
Caterpillar, with the intent to deceive the public or defraud
Caterpillar as his competitor.61 In the suit for the
cancellation of trademark, the issue of lawful registration
should necessarily be determined, but registration was not
a consideration necessary in unfair competition.62 Indeed,
unfair competition is committed if the effect of the act is "to
pass off to the public the goods of one man as the goods
of another;"63 it is independent of registration. As fittingly
put in R.F. & Alexander & Co. v. Ang,64 "one may be
declared unfair competitor even if his competing trade-
mark is registered."
Clearly, the determination of the lawful ownership of the
trademark in the civil action was not determinative of
whether or not the criminal actions for unfair competition
shall proceed against Samson.
G.R. No. 205972
The petition for review on certiorari in G.R. No. 205972 is
denied for being bereft of merit.1âwphi1
Firstly, Caterpillar assailed the resolution of the Secretary
of Justice by filing a petition for review under Rule 43 of
the Rules of Court. Such resort to the petition for review
under Rule 43 was erroneous,65 and the egregious error
warranted the denial of the appeal. The petition for review
under Rule 43 applied to all appeals to the CA from quasi-
judicial agencies or bodies, particularly those listed in
Section 1 of Rule 43. However, the Secretary of Justice, in
the review of the findings of probable cause by the
investigating public prosecutor, was not exercising a
quasi-judicial function, but performing an executive
function.66
Moreover, the courts could intervene in the determination
of probable cause only through the special civil action
for certiorari under Rule 65 of the Rules of Court, not by
appeal through the petition for review under Rule 43. Thus,
the CA could not reverse or undo the findings and
conclusions on probable cause by the Secretary of Justice
except upon clear demonstration of grave abuse of
discretion amounting to lack or excess of jurisdiction
committed by the Secretary of Justice.67 Caterpillar did not
so demonstrate.
And, secondly, even discounting the technicalities as to
consider Caterpillar's petition for review as one brought
under Rule 65, the recourse must still fail.
Probable cause for the purpose of filing an information in
court consists in such facts and circumstances as would
engender a well-founded belief that a crime has been
committed and the accused may probably be guilty
thereof.68The determination of probable cause lies solely
within the sound discretion of the investigating public
prosecutor after the conduct of a preliminary investigation.
It is a sound judicial policy to refrain from interfering with
the determination of what constitutes sufficient and
convincing evidence to establish probable cause for the
prosecution of the accused.69 Thus, it is imperative that by
the nature of his office, the public prosecutor cannot be
compelled to file a criminal information in court if he is not
convinced of the sufficiency of the evidence adduced for a
finding of probable cause.70 Neither can he be precluded
from filing an information if he is convinced of the merits of
the case.
In not finding probable cause to indict Samson for unfair
competition, State Prosecutor Abad as the investigating
public prosecutor discharged the discretion given to him
by the law. Specifically, he resolved as follows:
It appears from the records that respondent started
marketing his (class 25) products bearing the trademark
Caterpillar as early as 1992. In 1994, respondent caused
the registration of the trademark "Caterpillar With A
Triangle Device Beneath The Letter [A]" with the
Intellectual Property Office. Sometime on June 16, 1997,
the IPO issued Certificate of Registration No. 64705 which
appears to be valid for twenty (20) years, or up to June 16,
2017. Upon the strength of this registration, respondent
continued with his business of marketing shoes, slippers,
sandals, boots and similar Class 25 items bearing his
registered trademark "Caterpillar". Under the law,
respondent's operative act of registering his Caterpillar
trademark and the concomitant approval/issuance by the
governmental entity concerned, conferred upon him the
exclusive right to use said trademark unless otherwise
declared illegal. There being no evidence to controvert the
fact that respondent's Certificate of Registration No. 64705
covering Caterpillar trademark was fraudulently or illegally
obtained, it necessarily follows that its subsequent use
and/or being passed on to the public militates malice or
fraudulent intent on the part of respondent. Otherwise
stated and from the facts obtaining, presumption of
regularity lies, both from the standpoint of registration and
use/passing on of the assailed Caterpillar products.
Complainant's argument that respondent may still be held
liable for unfair competition by reason of his having passed
on five (5) other Caterpillar products like "Cat",
"Caterpillar", "Cat and Design", "Walking Machines" and
"Track-Type Tractor Design" is equally difficult to sustain.
As may be gleaned from the records, respondent has been
engaged in the sale and distribution of Caterpillar products
since 1992 leading to the establishment of numerous
marketing outlets. As such, it would be difficult to assail the
presumption that respondent has already established
goodwill insofar as his registered Caterpillar products are
concerned. On the other hand, complainant's registration
of the other Caterpillar products appears to have been
caused only in 1995. In this premise, respondent may be
considered as prior user, while the latter, a subsequent
one. Jurisprudence dictates that prior user of the
trademark by one, will controvert the claim by a
subsequent one.71
We reiterate that the full discretionary authority to
determine the existence of probable cause is lodged in the
Executive Branch of the Government, through the public
prosecutor, in the first instance, and the Secretary of
Justice, on review. Such authority is exclusive, and the
courts are prohibited from encroaching on the executive
function, unless there is a clear showing of grave abuse of
discretion amounting to lack or excess of jurisdiction on the
part of the public prosecutor or the Secretary of Justice. As
declared in Callo-Claridad v. Esteban:72
A public prosecutor alone determines the sufficiency of
evidence that establishes the probable cause justifying the
filing of a criminal information against the respondent
because the determination of existence of a probable
cause is the function of the public prosecutor. Generally,
the public prosecutor is afforded a wide latitude of
discretion in the conduct of a preliminary investigation.
Consequently, it is a sound judicial policy to refrain from
interfering in the conduct of preliminary investigations, and
to just leave to the Department of Justice the ample
latitude of discretion in the determination of what
constitutes sufficient evidence to establish probable cause
for the prosecution of supposed offenders. Consistent with
this policy, courts do not reverse the Secretary of Justice's
findings and conclusions on the matter of probable cause
except in clear cases of grave abuse of discretion. By way
of exception, however, judicial review is permitted where
the respondent in the preliminary investigation clearly
establishes that the public prosecutor committed grave
abuse of discretion, that is, when the public prosecutor has
exercised his discretion in an arbitrary, capricious,
whimsical or despotic manner by reason of passion or
personal hostility, patent and gross enough as to amount
to an evasion of a positive duty or virtual refusal to perform
a duty enjoined by law. Moreover, the trial court may
ultimately resolve the existence or nonexistence of
probable cause by examining the records of the SO ORDERED.
preliminary investigation when necessary for the orderly
administration of justice. Although policy considerations
call for the widest latitude of deference to the public
prosecutor's findings, the courts should never shirk from
exercising their power, when the circumstances warrant,
to determine whether the public prosecutor's findings are
supported by the facts, and by the law.
Relevantly, grave abuse of discretion means such
capricious or whimsical exercise of judgment that is
equivalent to lack of jurisdiction. The abuse of discretion
must be grave, as when the power is exercised in an
arbitrary or despotic manner by reason of passion or
personal hostility, and it must be so patent and gross as to
amount to an evasion of a positive duty or to a virtual
refusal to perform the duty enjoined, or to act at all, in
contemplation of law, as to be equivalent to having acted
without jurisdiction.73 Herein, Caterpillar did not show the
grave abuse of discretion on the part of the Secretary of
Justice.
WHEREFORE, the Court GRANTS the petition for review
in G.R. No. 164352; SETS ASIDE the decision
promulgated on January 21, 2004 in CA-G.R. SP No.
75526; DIRECTS the Regional Trial Court in Muntinlupa
City to reinstate Criminal Cases Nos. Q-02-108043-44 and
forthwith try and decide them without undue
delay; DENIES the petition for review on certiorari in G.R.
No. 205972; and ORDERS respondent Manolo P.
Samson to pay the costs of suit.
UFC PHILIPPINES, INC. (now merged with NUTRI- application for opposition in the IP Phil. e-Gazette released
ASIA, INC., with NUTRI-ASIA, INC. as the surviving on September 8, 2006. The mark appears as follows:
entity),Petitioner,
vs.
BARRIO FIESTA MANUFACTURING
CORPORATION, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
For our disposition is a petition for review
on certiorari under Rule 45 seeking to annul and set aside
On December 11, 2006, petitioner filed with the IPO-BLA
the June 23, 2011 Decision1 and the October 4,
a Verified Notice of Opposition to the above-mentioned
2011 Resolution2 of the Court of Appeals in CA-G.R. SP
application and alleged that:
No. 107570, which reversed and set aside the March 26,
2008 Decision3 of the Bureau of Legal Affairs of the 1. The mark "PAPA" for use on banana catsup and other
Intellectual Property Office (IPO-BLA) and the January 29, similar goods was first used [in] 1954 by Neri Papa, and
2009 Decision4 of the Director General of the IPO. thus, was taken from his surname;
Petitioner Nutri-Asia, Inc. (petitioner) is a corporation duly 2. After using the mark "PAP A" for about twenty-seven
organized and existing under Philippine laws.5 It is the (27) years, Neri Papa subsequently assigned the mark
emergent entity in a merger with UFC Philippines, Inc. that "PAPA" to Heman D. Reyes who, on September 17, 1981,
was completed on February 11, 2009.6 Respondent Barrio filed an application to register said mark "PAP A" for use
Fiesta Manufacturing Corporation (respondent) is likewise on banana catsup, chili sauce, achara, banana chips, and
a corporation organized and existing under Philippine instant ube powder;
laws.
3. On August 14, 1983, Heman D. Reyes was issued
On April 4, 2002, respondent filed Application No. 4-2002- Certificate of Registration No. 32416;
002757 for the mark "PAPA BOY & DEVICE" for goods
4. [Certificate of] Registration No. 32416 was
under Class 30, specifically for "lechon sauce."7 The
subsequently assigned to the following in successive
Intellectual Property Office (IPO) published said
fashion: Acres & Acres Food, Inc., Southeast Asia Food,
Inc., Heinz-UFC Philippines, Inc., and Opposer UFC
Philippines, Inc.;
5. Last October 28, 2005, Heinz-UFC Philippines, Inc. filed
Application Serial No. 4-2005-010788 which, in effect, is a
re-registration of Registration No. 32416 which expired on
August 11, 2003;
6. Heman D. Reyes also filed on March 04, 1982 an
application to register in the Supplemental Register the
"PAPA BANANA CATSUP Label";
7. On August 11, 1983, Heman D. Reyes was issued
Certificate of Registration No. SR-6282 which was
subsequently assigned to Acres & Acres Food, Inc.,
Southeast Asia Food, Inc., Heinz-UFC Philippines, Inc.;
8. After its expiration, Opposer filed on November 15, 2006
Trademark Application Serial No. 4-2006-012346 for the
re-registration of the "PAP A Label Design";
9. The mark "PAP A KETSARAP" for use on banana sauce
falling under Class 30 was also registered in favor of Acres
& Acres Food, Inc. under Registration No. 34681 issued
on August 23, 1985 and renewed last August 23, 2005 by
Heinz-UFC Philippines, Inc. for ten (10) years;
10. On November 07, 2006, Registration No. 34681 was
assigned to Opposer;
11. Opposer has not abandoned the use of the mark "PAP
A" and the variations thereof as Opposer has continued
their use up to the present;
12. The mark "PAPA BOY & DEVICE" is identical to the
mark "PAPA" owned by Opposer and duly registered in its
favor, particularly the dominant feature thereof;
13. [With the] dominant feature of respondent-applicant's
mark "PAPA BOY & DEVICE", which is Opposer's "PAPA"
and the variations thereof, confusion and deception is
likely to result: The consuming public, particularly the
unwary customers, will be deceived, confused, and
mistaken into believing that respondent-applicant's goods
come from Opposer or are authorized by Opposer to
Opposer's prejudice, which is particularly true considering
that Opposer's sister company, Southeast Asia Food, Inc.,
and its predecessors-in-interest have been major
manufacturers and distributors of lechon sauce and other
table sauces since 1965 under its registered mark "Mang
Tomas";
14. Respondent-applicant's mark "PAPA BOY & DEVICE"
which nearly resembles Opposer's mark "PAPA" and the
variations thereof will impress upon the gullible or
unsuspecting public that it is the same or related to
Opposer as to source because its dominant part is the
same as Opposer's mark and, thus, will likely be mistaken
to be the mark, or related to, or a derivative or variation of,
Opposer's mark;
15. The goods covered by respondent-applicant's
application fall under Class 30, the same Class under
which Opposer's goods enumerated in its earlier issued
registrations;
16. The test of dominancy is now explicitly incorporated
into law in Section 155 .1 of the IP Code which defines
infringement as the colorable imitation of a registered mark
or a dominant feature thereof, and is provided for by
jurisprudence;
17. As a corporation also engaged in the food business,
Respondent-applicant knew and/or ought to know that
Opposer and its predecessors-in-interest have been using
the mark "PAPA" and the variations thereof for the last
fifty-two (52) years while its sister company is engaged in
the business of manufacturing and distributing "lechon
sauce" and other table sauces for the last forty-one (41)
years;
18. The approval of the subject application will violate
Opposer's right to the exclusive use of its registered mark
"PAPA" and the variations thereof per Section 138 of the
IP Code;
19. The approval of the subject application has caused and
will continue to cause great and irreparable damage and
injury to Opposer;
20. Respondent-applicant filed the subject application
fraudulently and in bad faith; and
21. Respondent-applicant is not entitled to register the
subject mark in its favor.8
In its verified opposition before the IPO, petitioner
contended that "PAPA BOY & DEVICE" is confusingly
similar with its "PAPA" marks inasmuch as the former
incorporates the term "PAP A," which is the dominant
feature of petitioner's "PAPA" marks. Petitioner averred
that respondent's use of "PAPA BOY & DEVICE" mark for
its lechon sauce product, if allowed, would likely lead the
consuming public to believe that said lechon sauce
product originates from or is authorized by petitioner, and
that the "PAPA BOY & DEVICE" mark is a variation or
derivative of petitioner's "PAPA" marks. Petitioner argued
that this was especially true considering that petitioner's
ketchup product and respondent's lechon sauce product
are related articles that fall under the same Class 30.9
Petitioner alleged that the registration of respondent's
challenged mark was also likely to damage the petitioner,
considering that its former sister company, Southeast Asia
Food, Inc., and the latter's predecessors-in-interest, had
been major manufacturers and distributors of lechon and
other table sauces since 1965, such as products
employing the registered "Mang Tomas" mark.
In its Verified Answer, respondent argued that there is no
likelihood of confusion between petitioner's family of
"PAPA" trademarks and respondent's "PAPA BOY &
DEVICE" trademark. Respondent raised affirmative
defenses and we quote the relevant ones below:
3. Opposer cites several of its following marks in support
of its opposition to the application but an examination of
said marks [reveals] that these have already expired
and/or that no confusing similarity exists x xx;
4. Assuming that the mark "PAPA KETSARAP" had been
timely renewed on August 23, 2005 for "banana sauce"
under Class 30, the same is not a hindrance to the
successful registration of the mark "PAPA BOY &
DEVICE": Jurisprudence provides that a 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;
5. As a result, Opposer's right to use the mark
"PAPAKETSARAP" is limited to the products covered by
its certificate of registration which is Class 30 for banana
sauce;
6. Contrary to Opposer's belief, the dominant features of
Respondent-applicant's mark "PAPA BOY & DEVICE" are
the words "PAPA BOY" and the representation of a smiling
hog-like character gesturing the thumbs-up sign and
wearing a traditional Filipino hat and scarf while the
dominant feature of Opposer's mark "PAPA KETSARAP"
are the words "Papa" and "Ketsarap", not the word "Papa";
and the word "Ketsarap " is more prominently printed and
displayed in the foreground than the word "Papa" for which
reasons opposer's reference to the Dominancy Test fails;
7. Opposer's allegation that the registration of
Respondent-applicant's mark "PAPA BOY & DEVICE" will
damage and prejudice the mark "MANG TOMAS" is
irrelevant considering that Opposer's basis for filing this
opposition is the alleged confusing similarity between
Respondent-applicant's mark and Opposer's mark "PAPA
KETSARAP", not the mark "MANG TOMAS";
8. Respondent-applicant's mark "PAPA BOY & DEVICE"
is neither identical nor confusingly similar to Opposer's
mark "PAPA KETSARAP": Respondent-applicant's mark
"PAPABOY & DEVICE" is an arbitrary mark which differs
in overall sound, spelling, meaning, style, configuration,
presentation, and appearance from Opposer's mark
"PAPA KETSARAP";
9. The dissimilarities between the marks are so distinct,
thus, confusion is very unlikely: While Opposer's mark is a
plain word mark, Respondent-applicant's mark "PAPA
BOY & DEVICE" is much more intricate and distinctive
such as Opposer's mark not having the words "Lechon
Sauce" printed inside a blue ribbon-like device which is
illustrated below the words "PAPA BOY", Opposer's mark
not having a prominent smiling hog-like character
gesturing a thumbs-up sign and wearing a Filipino hat and
scarf stands beside the words "PAPA BOY", and
Opposer's mark not having the words "Barrio Fiesta" albeit
conspicuously displayed above the mark, all which leave
no doubt in the consumer's mind on the product that he is
purchasing;
10. Aside from the fact that Respondent-applicant's mark
"PAPA BOY & DEVICE" is distinct and different in
appearance, spelling, sound, meaning, and style from
Opposer's mark "PAPA KETSARAP", the difference in the
goods covered by both marks is obvious: Since the goods
covered by Respondent-applicant's mark is unrelated and
non-competing to those covered by Opposer's mark, the
doctrine allowing the registrations of marks covering
unrelated and non-competing goods as enunciated by the
Supreme Court is therefore applicable in this case;
11. Respondent-applicant's mark cannot be confusingly
similar to Opposer's mark considering that the products
covered by these marks are different: While Respondent-
applicant's mark "PAPA BOY & DEVICE" covers lechon
sauce under Class 30, Opposer's mark "PAPA
KETSARAP" covers banana sauce;
12. If a consumer is in the market for banana sauce, he
will not buy lechon sauce and vice-versa and as a result,
the margin of error in the acquisition of one from the other
is simply remote;
13. Respondent-applicant is the exclusive owner of the
mark "PAPA BOY & DEVICE" for lechon sauce under
Class 30: The words "PAPA BOY" is a combination of the
nickname of Bonifacio Ongpauco who is one of
Respondent-applicant's incorporators and founders"
BOY"- and the word "PAPA" as Bonifacio Ongpauco's
mother, Sixta P. Evangelista, had been fondly known as
"Mama Chit", making Respondent-applicant the prior
adopter, user, and applicant of the mark "PAPA BOY &
DEVICE" in the Philippines;
14. To protect its ownership over the mark "PAPA BOY &
DEVICE" considering that it is the first to adopt and use
said mark, Respondent-applicant applied for its
registration under Application Serial No. 4-2002-002757
for Class 30, and said application was found registrable by
the Examiner as. a consequence of which the same was
recommended for allowance after undergoing a thorough
process of examination, which recommendation was then
approved by the Director of the Bureau of Trademarks
(BOT);
15. Respondent-applicant's mark "PAPA BOY & DEVICE"
has been commercially used in the Philippines;
16. Respondent-applicant's mark "PAPA BOY & DEVICE"
has been promoted and advertised for a considerable
duration of time and over wide geographical areas:
Respondent-applicant has invested tremendous amount
of resources in the promotion of its mark "PAPA BOY &
DEVICE" through various media including print
publications and promotional materials;
17. The widespread local commercial use of the subject
mark by Respondent-applicant to distinguish and identify
its various high-quality consumer products has earned
Respondent-applicant a well-deserved business
reputation and goodwill;
18. Respondent-applicant's mark is distinctive and
capable of identifying its goods and distinguishing them
from those offered for sale by others in the market
including Opposer's goods for which reason no confusion
will result because Respondent-applicant's mark is for
lechon sauce while Opposer's mark is for banana sauce;
and
19. The presence of a common prefix "PAPA" in the marks
of both parties does not render said marks identical or
confusingly similar: Opposer cannot exclusively
appropriate said prefix considering that other marks such
as "Papa Heinz Pizza", "Papa Heinz Sausage", "Papa
Beaver", "Papa Pop", "Pizza Papa John's & Design",
"Papadoods", and "Papa in Wine and Device" are valid
and active.10
Petitioner's mark and its variations appear as follows:
1. "PAPA" under Registration No. 32416 for Class 29
goods;11

3. "PAPA LABEL DESIGN" under Registration No. 4-2006-

012364·13 and

2. The mark "PAPA" as it appeared upon re-registration of

Certificate No. 32416, under Application No. 4-2005-
010788 for Classes 29 and 30 goods;12
4. "PAPA KETSARAP" under Certificate of Registration
No. 34681, for banana sauce (Class 30).14
PROCEEDINGS BEFORE THE INTELLECTUAL
PROPERTY OFFICE
The case was referred to mediation but the parties failed
to arrive at an amicable settlement. The case was thus set
for preliminary conference. Subsequently, the IPO-BLA
directed the parties to file their respective position papers
and draft decisions.
The IPO-BLA rendered a Decision on March 26, 2008
sustaining petitioner's Opposition and rejecting
respondent's application for "PAPA BOY & DEVICE."
The fallo of said decision reads as follows:
WHEREFORE, the VERIFIED NOTICE OF OPPOSITION
filed by UFC Philippines, Inc. is, as it is hereby,
SUSTAINED. Consequently, Application Serial No. 4-
2002-002757 for the mark "PAPA BOY & DEVICE" for
lechon sauce under Class 30 filed on April 04, 2002 by
Barrio Fiesta Manufacturing Corporation, is, as it is hereby,
REJECTED.
Let the file wrapper of PAPA BOY & Device subject matter
of this case be forwarded to the Bureau of Trademarks
(BOT) for appropriate action in accordance with this
Decision.15
Respondent filed an appeal before the IPO Director
General, who found it unmeritorious, and disposed of the
case in the following manner:
WHEREFORE, the instant appeal is hereby DISMISSED.
Let a copy of this Decision as well as the trademark
application and records be furnished and returned to the
Director of the Bureau of Legal Affairs for appropriate
action. Further, let also the Director of the Bureau of
Trademarks and the library of the Documentation,
Information and Technology Transfer Bureau be furnished
a copy of this Decision for information, guidance, and
records purposes."16
DECISION OF THE COURT OF APPEALS
Respondent then filed a petition with the Court of Appeals,
questioning the above decision of the IPO Director
General that affirmed the decision of the IPO Bureau of
Legal Affairs Director, which disallowed respondent's
application for trademark registration. Respondent's
arguments before the Court of Appeals are quoted below:
A.
REGISTRATION NOS. 32416 AND 42005010788
ISSUED FOR THE "PAPA" MARK AND REGISTRATION
NOS. SR-6282 AND 42006012364 ISSUED FOR THE
TRADEMARK "PAPA BANANA CATSUP LABEL/PAPA
LABEL DESIGN" SHOULD NOT BE USED AS BASIS IN
DETERMINING THE EXISTENCE OF CONFUSING
SIMILARITY.
B.
THERE IS NO CONFUSING SIMILARITY BETWEEN
PETITIONER-APPLICANT'S "PAPA BOY & DEVICE"
AND RESPONDENT'S "PAPA KETSARAP" MARK.
C.
PETITIONER-APPLICANT IS ENTITLED TO THE
REGISTRATION OF THE MARK "PAPA BOY & DEVICE."
D.
THE OPPOSITION STATES NO CAUSE OF ACTION,
AND HENCE, SHOULD BE DENIED OUTRIGHT.17
As regards the first ground, the Court of Appeals held:
Records show that respondent UFC has Certificates of
Registration for the trademarks PAPA, PAPA BANANA
CATSUP label and PAPA KETSARAP. A closer look at the
respective Certificate[ s] of Registration of the
aforementioned marks, however, reveals that at the time
the trademark application of petitioner was published in the
IPO e-Gazette on September 8, 2006, the duration of the
trademark registration of respondent over the marks PAPA
and PAPA BANANA CATSUP have already expired. On
the other hand, the mark PAPA KETSARAP was timely
renewed by respondent as shown by the Certificate of
Renewal of Registration issued on September 1, 2006
by the Director of the Bureau of Trademarks.
Under R.A. No. 8293, as amended by R.A. No. 9150, the
duration of a trademark registration is 10 years, renewable
for periods of 10 years each renewal. The request for
renewal must be made within 6 months before or after the
expiration of the registration. Respondent's PAPA mark
was not renewed within the period provided for under RA
No. 8293. Its registered term ended on August 11, 2003
but was reapplied for registration only on April 4, 2005.
Meanwhile, the mark PAPA BANANA CATSUP was
registered by respondent only in the Supplemental
Register, hence, was not provided any protection. x x x. It
is noted that the PAPA BANANA CATSUP label was
applied for registration on November 15, 2006, over three
years after the expiration of its registration in the
Supplemental Register of the Philippine Patent Office on
August 11, 2003. Thus, while petitioner has a point that
the marks PAPA and PAPA BANANA CATSUP have
already expired and the latter having been afforded no
protection at all and should not be juxtaposed with
petitioner's trademark, respondent can still use the
marks PAPA KETSARAP and PAPA BANANA
CATSUP, it appearing that the Intellectual Property
Office issued a Certificate of Registration No. 4-2006-
012364 for the latter on April 30, 2007, to bar the
registration of petitioner's "PAPA BOY & DEVICE"
mark.18 (Emphases supplied, citations omitted.)
Anent the second ground, the Court of Appeals ruled in the
following manner:
After taking into account the aforementioned
doctrines and the factual circumstances of the case at
bar, this Court, after considering the trademarks
involved as a whole, is of the view that petitioner's
trademark "PAP A BOY & DEVICE" is not confusingly
similar to respondent's "PAPA KETSARAP" and
"PAPA BANANA CATSUP" trademark. Petitioner's
trademark is "PAPA BOY" as a whole as opposed to
respondent's "PAPA". Although on its label the word
"PAPA" is prominent, the trademark should be taken as a
whole and not piecemeal. The difference between the two
marks are conspicuous and noticeable. While
respondent's products are both labeled as banana sauces,
that of petitioner Barrio Fiesta is labeled as lechon sauce.
Moreover, it appears on the label of petitioner's product
that the said lechon sauce is manufactured by Barrio
Fiesta thus, clearly informing the public [of] the identity of
_the manufacturer of the lechon sauce. As claimed by
respondent, its products have been in commercial use for
decades. It is safe to assume then that the consumers are
already aware that "PAPA KETSARAP" and "PAPA
BANANA CATSUP" are products of UFC and not of
petitioner or the other way around. In addition, as correctly
pointed out by petitioner, if a consumer is in the market for
banana sauce, he will not buy lechon sauce and vice-versa
because aside from the fact that the labels of both parties'
products contain the kind of sauce they are marketing, the
color of the products is visibly different. An ordinary
consumer is familiar with the fact that the color of a banana
sauce is red while a lechon sauce is dark brown. There
can be no deception as both products are marketed in
bottles making the distinction visible to the eye of the
consumer and the likelihood of acquiring a wrong sauce,
remote. Even if the products are placed side by side, the
dissimilarities between the two marks are conspicuous,
noticeable and substantial enough to matter especially in
the light of the following variables that must be factored in.
Lastly, respondent avers that the word "PAPA" was coined
after the surname of the person who first created and
made use of the mark. Admittedly, while "PAPA" is a
surname, it is more widely known as a term of endearment
for one's father. Respondent cannot, therefore, claim
exclusive ownership over and singular use of [the] term.
Petitioner was able to explain that it adopted the word
"PAPA" in parallel to the nickname of the founder of Barrio
fiesta which is "MAMA CHIT". "PAPA BOY" was derived
from the nickname of one of the incorporators of herein
petitioner, a certain Bonifacio Ongpauco, son of Mama
Chit.19 (Emphasis ours, citation omitted.)
THEORY OF PETITIONER
Thus, petitioner came to this Court, seeking the reversal of
the questioned decision and resolution of the Court of
Appeals, and the reinstatement of the decision of the IPO
Director General affirming the decision of the IPO-BLA.
Petitioner raises the following grounds:
I.
The court a quo erred in applying the "holistic test" to
determine whether there is confusing similarity between
the contending marks, and in reversing the IPO-BLA and
the Director General's application of the "dominancy test."
II.
The court a quo erred in holding that there is no likelihood
of confusion between the contending marks given that the
"PAPA BOY & DEVICE" mark is used on lechon sauce, as
opposed to ketchup products.
III.
The court a quo erred in holding that Petitioner cannot
claim exclusive ownership and use of the "PAP A" mark
for its sauce products because "PAPA" is supposedly a
common term of endearment for one's father.20
Under the first ground, petitioner submitted the following
arguments:
1. The findings of administrative agencies, if supported by
substantial evidence, are binding upon the courts.21
Petitioner alleges that the Court of Appeals should have
respected the ruling of the IPO Director General, which
was consistent with the ruling of the IPO-BLA and
supported by substantial evidence, instead of substituting
its findings of fact for those of the Director General and the
IPO-BLA.
2. The dominancy test should have been applied to
determine if there is confusing similarity between the
competing marks.22
Petitioner points out that the Director General and the IPO-
BLA found that the dominant feature of the competing
marks is the word "PAP A" and the minor additions to
respondent's "PAPA BOY & DEVICE" mark do not negate
likelihood of confusion caused by the latter's use of the
dominant word "PAPA." Petitioner claims that even
compared solely to petitioner's "PAPA KETSARAP" mark
(Registration No. 34681), which is conceded to have been
timely renewed and to have never expired, respondent's
"PAPA BOY & DEVICE" would still create the likelihood of
confusion.23
According to petitioner, the Court of Appeals based its
decision on Mead Johnson & Co. v. N.V.J. Van Dorp,
Ltd.,24 a case decided almost five decades ago, long
before Republic Act No. 8293 or the 1998 Intellectual
Property Code was enforced. Thus, the Court of Appeals
erroneously applied the holistic test since given the nature
of the products bearing the competing marks, the
dominancy test should have been applied.
Petitioner claims that "[k]etchup and lechon sauce are
common and inexpensive household products that are
sold in groceries and regularly encountered by the ordinary
or common purchaser who is not expected to examine,
scrutinize, and compare the details of the competing
marks."25
Petitioner distinguishes this case from Mead Johnson and
claims that the ordinary purchaser of ketchup or lechon
sauce is not likely to closely scrutinize each mark as a
whole, for the latter is "undiscemingly rash" and usually in
a hurry, and cannot be expected to take note of the smiling
hog-like character or the blue ribbon-like device with the
words "Lechon Sauce." Petitioner argues that under the
Intellectual Property Code, it is not necessary for one to
colorably imitate the competing trademark as a whole. It is
sufficient that one imitates a "dominant feature" of the
mark to constitute trademark infringement.
Petitioner asserts that as the IPO-BLA and the Director
General observed that the ordinary purchaser is most
likely to notice the words "PAPA BOY," which, in turn, may
lead him to believe that there is a connection between
respondent's lechon sauce and petitioner's ketchup
products.
Under the second ground, petitioner argues that the Court
of Appeals seemed to be unmindful that two kinds of
confusion may arise from the use of similar or colorable
imitation marks, i.e., confusion of goods (product
confusion) and confusion of business (source or origin
confusion). Petitioner claims that it is reasonable to
assume that it may expand its business to producing
lechon sauce, inasmuch as it already produces food sauce
products and its Articles of Incorporation authorizes it to do
so.
Petitioner alleges that the IPO-BLA recognized that
confusion of business may arise from respondent's use of
its "PAPA BOY & DEVICE" mark for lechon sauce
products, and that the Director-General agreed with the
IPO-BLA's findings on this issue.
Petitioner asserts that ketchup and lechon sauce are
undeniably related goods; that they belong to the same
class, i.e., Class 30 of the Nice Classifications; that they
serve practically the same purpose, i.e., to spice up
dishes; and that they are sold in similar bottles in the same
shelves in grocery stores. Petitioner argues that the Court
of Appeals had absolutely no basis for stating that a
person who is out to buy ketchup is not likely to buy lechon
sauce by mistake, as this analysis allegedly only applies
to "product confusion" and does not consider confusion of
business. Petitioner alleges that "[t]here equally is
actionable confusion when a buyer purchases
Respondent's 'PAPA BOY' lechon sauce believing that the
said product is related to or associated with the famous
'PAPA KETSUP' makers." Petitioner further alleges that "it
is reasonable and likely for a consumer to believe that
Respondent's 'PAPA BOY' lechon sauce originated from
or is otherwise connected with Petitioner's line of sauces"
and that this is "the precise evil that recognition of
confusion of business seeks to prevent."26
Petitioner avers that "PAPA" is a well-known mark and that
it has been in commercial use as early as 1954 on banana
ketchup and similar goods. The "PAPA" mark is also
registered as a trademark and in commercial use in other
parts of the world such as the United States of America
and the Middle East. Petitioner claims that "[b ]eing a
trademark that is registered and well-known both locally
and internationally, Petitioner's 'PAPA' marks cannot be
appropriated by another person or entity not only with
respect to goods similar to those with respect to which it is
registered, but also with respect to goods which are not
similar to those for which the 'PAPA' marks are
registered."27
Under the third ground, petitioner claims that the fact that
the word "PAPA" is a known term of endearment for
fathers does not preclude it from being used as a mark to
identify goods. Petitioner claims that their mark falls under
a type of mark known as "arbitrary or fanciful marks," which
are "marks that bear no logical relation to the actual
characteristics of the products they represent," are "highly
distinctive and valid," and "are entitled to the greatest
protection."28
Petitioner claims that the mark "PAPA" falls under this
class of arbitrary marks, even if "PAPA" is also a common
term of endearment for one's father. Petitioner states that
there is no logical connection between one's father and
food sauces, such as ketchup; thus, with respect to
ketchup, food sauces, and their related products, and for
the purpose of identifying its products, petitioner claims
exclusive ownership of the term "PAPA" as an arbitrary
mark.
Petitioner alleges that if respondent "has a good faith and
proud desire to unmistakably and distinctly identify its
lechon sauce product out in the market, it should have
coined a mark that departs from and is distinguished from
those of its competitors." Petitioner claims that
respondent, with full knowledge of the fame and the
decades-long commercial use of petitioner's "PAPA"
marks, opted for "PAPA BOY & DEVICE," which obviously
is just a "colorable imitation."29
THEORY OF RESPONDENT
In its Comment,30 respondent claims that petitioner's
marks have either expired and/or "that no confusing
similarity exists between them and respondent's "PAPA
BOY & DEVICE' mark." Respondent alleges that under
Section 15 of Republic Act No. 166, a renewal application
should be filed within six months before the expiration of
the period or within three months after such expiration.
Respondent avers that the expiration of the 20-year term
for the "PAPA" mark under Registration No. 32416 issued
on August 11, 1983 was August 11, 2003. The sixth month
before August 11, 2003 was February 11, 2003 and the
third month after August 11, 2003 was November 11,
2003. Respondent claims that the application that
petitioner filed on October 28, 2005 was almost two years
late. Thus, it was not a renewal application, but could only
be considered a new application under the new Trademark
Law, with the filing date reckoned on October 28, 2005.
The registrability of the mark under the new application
was examined again, and any certificate issued for the
registration of "PAPA" could not have been a renewal
certificate.
As for petitioner's other mark "PAPA BANANA CATSUP
LABEL," respondent claims that its 20-year term also
expired on August 11, 2003 and that petitioner only filed
its application for the new "PAPA LABEL DESIGN" on
November 15, 2006. Having been filed three years beyond
the renewal application deadline, petitioner was not able
to renew its application on time, and cannot claim a
"continuous existence of its rights over the 'PAPA
BANANA CATSUP LABEL."' Respondent claims that the
two marks are different from each other and that the
registration of one is independent of the other. Respondent
concludes that the certificate of registration issued for
"PAPA LABEL DESIGN" is "not and will never be a
renewal certificate."31
Respondent also avers as follows:
1.3. With regard to the two new registrations of petitioner
namely: "PAPA" (Reg. No. 4-2005-010788) and "PAPA
LABEL DESIGN" (Reg. No. 4-2006-012364), these were
filed on October 28, 2005 and November 15, 2006,
respectively, under the Intellectual Property Code (RA
8293), which follows the "first to file" rule, and were
obviously filed later than respondent's "PAPA BOY &
DEVICE" mark filed on April 4, 2002. These new marks
filed much later than the opposed "PAPA BOY & DEVICE"
mark cannot, therefore, be used as basis for the opposition
and should in fact, be denied outrightly.
xxxx
A search of the Online Trademark Database of Intellectual
Property Office (IPO) will show that only Registration No.
34681 issued for "PAPA KETSARAP" was properly
renewed on August 23, 2005. xx x Clearly, the
registrations of "PAPA" and "PAPA BANANA CATSUP
LABEL" marks under registration nos. 32416 and SR-6282
respectively, have already expired when Petitioner filed its
opposition proceeding against Respondent's trademark on
December 11, 2006. Having expired, and therefore, no
longer legally existing, the "PAPA" and "PAPA BANANA
CATSUP LABEL" marks CANNOT BAR the registration of
respondent's mark. To allow petitioner's expired marks to
prevent respondent's distinct "PAPA BOY & DEVICE"
mark from being registered would be the ultimate
absurdity.32
Respondent posits that the Court of Appeals did not err in
reversing the decisions of the administrative agencies,
alleging that "[while] it is true that the general rule is that
the factual findings of administrative bodies deserve
utmost respect when supported by evidence, the same is
subject to exceptions,"33 and that the Court of Appeals had
justifiable reasons to disregard the factual finding of the
IPO. Here, the Court of Appeals wisely identified certain
material facts that were overlooked by the IPO-BLA and
the IPO Director General which it opined, when correctly
appreciated, would alter the result of the case.
Respondent alleges that the IPO-BLA erroneously
considered petitioner's marks "PAPA" and "PAPA
BANANA CATSUP LABEL" when it applied the dominancy
test in determining whether petitioner's marks are
confusingly similar to those of respondent's mark "PAPA
BOY & DEVICE."
Respondent avers that the IPO-BLA absurdly took
emphasis on the mark "PAPA" to arrive at its decision and
did not take into consideration that petitioner's mark was
already expired when respondent applied for the
registration of its "PAPA BOY & DEVICE" mark.
Respondent compares its "PAPA BOY & DEVICE" with the
only mark that respondent allegedly has, "PAPA
KETSARAP," and found no confusing similarity between
the two.
We quote below respondent's discussion of its application
of the dominancy test to the marks in question:
Applying the Dominancy test, as correctly emphasized by
the Court of Appeals, the dominant feature in respondent's
mark is "PAPA BOY" and not "PAPA". It can be gleaned
from respondent's mark that the word "PAPA" was written
in the same font, style and color as the word "BOY". There
is also the presence of a "smiling hog-like character" which
is positioned very prominently, both in size and location in
said mark, at glance (sic) even more dominant than the
word "PAPA BOY".
xxxx
On the other hand, the dominant feature in petitioner's
mark is "KETSARAP", not "PAPA". Even an ordinary
examiner could observe that the word "KETSARAP" in
petitioner's mark is more prominently printed than the word
"PAPA".
xxxx
In a dominancy test, the prominent feature of the
competing trademarks must be similar to cause confusion
or deception. x x x.34
Verily, respondent's dominant feature "PAPA BOY" and
the smiling hog-like character and petitioner's dominant
feature "KETSARAP", being the word written in a larger
font, are neither confusing nor deceiving to the public. In
fact, the differences between their dominant marks are
very noticeable and conspicuous to every purchaser.
Furthermore, the Supreme Court in Societe des Produits
Nestle, SA. v. Dy [ 641 Phil. 345], applied the dominancy
test by taking into account the aural effects of the words
and letters contained in the marks in determining the issue
of confusing similarity. Obviously, petitioners' "PAPA
KETSARAP" mark does not in any way sounds (sic) like
respondent's "PAPA BOY" mark. The common prefix
"PAPA" does not render the marks aurally the same. As
discussed above, the dominant feature in petitioner's mark
is "KETSARAP" and the dominant feature in respondent's
mark is "PAPA BOY". Thus, the words "KETSARAP" and
"PAP A BOY" in petitioner's and respondent's respective
marks are obviously different in sound, making "PAPA
BOY & DEVICE" even more distinct from petitioner's
"PAPA KETSARAP" mark.35
Using the holistic test, respondent further discusses the
differences in the marks in this wise:
Even the use of the holistic test x x x takes into
consideration the entirety of the marks in question [to] be
considered in resolving confusing similarity. The
differences are again very obvious. Respondent's mark
has (1) the word "lechon sauce" printed inside a blue
ribbon-like device which is illustrated below the word
"PAPA BOY"; (2) a prominent smiling hog-like character
gesturing a thumbs-up sign and wearing a Filipino hat and
scarf stands beside the word "PAPA BOY"; and the word
"BARRIO FIESTA" conspicuously displayed above the
said trademark which leaves no doubt in the consumer's
mind on the product that he or she is purchasing. On the
other hand, petitioner's mark is the word "PAPA" enclosed
by a cloud on top of the word "KETSARAP' enclosed by a
geometrical figure.
xxxx
In the instant case, the respective marks are obviously
different in color scheme, logo, spelling, sound, meaning
and connotation. Thus, yet again, under the holistic test
there can be no confusion or deception between these
marks.
It also bears stressing that petitioner's "PAPA
KETSARAP" mark covers "banana catsup" while
respondent's "PAPA BOY & DEVICE" covers "lechon
sauce'', thereby obliterating any confusion of products of
both marks as they travel different channels of trade. If a
consumer is in the market for banana catsup, he or she
will not buy lechon sauce and vice-versa. As a result, the
margin of error in the acquisition of one for the other is
simply remote. Lechon sauce which is liver sauce is
distinct from catsup extracted/ made from banana fruit.
The flavor and taste of a lechon sauce are far from those
of a banana catsup. Lechon sauce is sauce for "lechon"
while banana catsup is apparently catsup made from
banana.36
Respondent also contends that "PAPA BOY & DEVICE"
mark is not confusingly similar to petitioner's trademark
"PAPA KETSARAP" in terms of appearance, sound,
spelling and meaning. The difference in nature, usage,
taste and appearance of products decreases the
possibility of deception among buyers.37
Respondent alleges that since petitioner merely included
banana catsup as its product in its certificate, it cannot
claim any further right to the mark "PAPA KETSARAP" on
products other than banana catsup. Respondent also
alleges that petitioner cannot raise "international notoriety
of the mark" for the first time on appeal and that there is
no proof that petitioner's mark is internationally well-
known.38
Furthermore, respondent argues that petitioner cannot
claim exclusive ownership over the use of the word
"PAPA," a term of endearment for one's father.
Respondent points out that there are several other valid
and active marks owned by third parties which use the
word "PAPA," even in classes of goods similar to those of
petitioner's. Respondent avers that petitioner's claim that
its "PAPA" mark is an arbitrary mark is belatedly raised in
the instant petition, and cannot be allowed because the
"PAPA KETSARAP" mark would immediately bring the
consuming public to thinking that the product involved is
catsup and the description of said catsup
is "masarap" (delicious) and due to the logical relation of
the petitioner's mark to the actual product, it being
descriptive or generic, it is far from being arbitrary or
fanciful.39
Lastly, respondent claims that the Court of Appeals
correctly ruled that respondent's product cannot be
confused as originating from the petitioner. Since it clearly
appears in the product label of the respondent that it is
manufactured by Barrio Fiesta, the public is dutifully
informed of the identity of the lechon sauce manufacturer.
The Court of Appeals further took into account the fact that
petitioner's products have been in commercial use for
decades.40
Petitioner, in its Reply41 to respondent's Comment,
contends that respondent cannot invoke a prior filing date
for the "PAPA BOY" mark as against Petitioner's "PAPA"
and "PAPA BANANA CATSUP LABEL" marks, because
the latter marks were still registered when respondent
applied for registration of its "PAPA BOY" mark. Thus, the
IPO-BLA and Director General correctly considered them
in deciding whether the "PAPA BOY" mark should be
registered, using the "first to file" rule under Section
123.l(d) of Republic Act No. 8293, or the Intellectual
Property Code (IP Code).
Petitioner reiterates its argument that the Court of Appeals
erred in applying the holistic test and that the proper test
under the circumstances is the dominancy test, which was
correctly applied by the IPO-BLA and the Director
General.42
THIS COURT'S RULING
The petition has merit.
We find that the Court of Appeals erred in applying the
holistic test and in reversing and setting aside the decision
of the IPO-BLA and that of the IPO Director General, both
of which rejected respondent's application for the mark
"PAPA BOY & DEVICE."
In Dermaline, Inc. v. Myra Pharmaceuticals, Inc.,43 we
defined 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 by others." We held that a
trademark is "an intellectual property deserving protection
by law."
The rights of the trademark owner are found in the
Intellectual Property Code, which provides:
Section 147. Rights Conferred. - 147.1. The owner of a
registered mark shall have the exclusive right to prevent
all third parties not having the owner's consent from using
in the course of trade identical or similar signs or
containers for goods or services which are identical or
similar to those in respect of which the trademark is
registered where such use would result in a likelihood of
confusion. In case of the use of an identical sign for
identical goods or services, a likelihood of confusion shall
be presumed.
Section 168. Unfair Competition, Rights, Regulation
and Remedies. - 168.1. 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 registered mark 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.
The guideline for courts in determining likelihood of
confusion is found in A.M. No. 10-3-10-SC, or the Rules of
Procedure for Intellectual Property Rights Cases, Rule 18,
which provides:
RULE 18
Evidence in Trademark Infringement and Unfair
Competition Cases
SECTION 1. Certificate of Registration. - A certificate of
registration of a mark shall be prima facie evidence of:
a) the validity of the registration;
b) the registrant's ownership of the mark; and
c) the registrant's exclusive right to use the same in
connection with the goods or services and those that are
related thereto specified in the certificate.
xxxx
SECTION 3. Presumption of Likelihood of Confusion. -
Likelihood of confusion shall be presumed in case an
identical sign or mark is used for identical goods or
services.
SECTION 4. Likelihood of Confusion in Other Cases. - In
determining whether one trademark is confusingly similar
to or is a colorable imitation of another, the court must
consider 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. Visual, aural, connotative
comparisons and overall impressions engendered by the
marks in controversy as they are encountered in the
realities of the marketplace must be taken into account.
Where there are both similarities and differences in the
marks, these must be weighed against one another to see
which predominates.
In determining likelihood of confusion between marks used
on non-identical goods or services, several factors may be
taken into account, such as, but not limited to:
a) the strength of plaintiffs mark;
b) the degree of similarity between the plaintiffs and the
defendant's marks;
c) the proximity of the products or services;
d) the likelihood that the plaintiff will bridge the gap;
e) evidence of actual confusion;
f) the defendant's good faith in adopting the mark;
g) the quality of defendant's product or service; and/or
h) the sophistication of the buyers.
"Colorable imitation" denotes such a close or ingenious
imitation as to be calculated to deceive ordinary persons,
or such a resemblance to the original as to deceive an
ordinary purchaser giving such attention as a purchaser
usually gives, as to cause him to purchase the one
supposing it to be the other.
SECTION 5. Determination of Similar and Dissimilar
Goods or Services. - Goods or services may not be
considered as being similar or dissimilar to each other on
the ground that, in any registration or publication by the
Office, they appear in different classes of the Nice
Classification.
In this case, the findings of fact of the highly technical
agency, the Intellectual Property Office, which has the
expertise in this field, should have been given great weight
by the Court of Appeals. As we held in Berris Agricultural
Co., Inc. v. Abyadang44:
R.A. No. 8293 defines a "mark" as any visible sign capable
of distinguishing the goods (trademark) or services
(service mark) of an enterprise and shall include a
stamped or marked container of goods. It also defines a
"collective mark" as any visible sign designated as such in
the application for registration and capable of
distinguishing the origin or any other common
characteristic, including the quality of goods or services of
different enterprises which use the sign under the control
of the registered owner of the collective mark.
On the other hand, R.A. No. 166 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
by another. A trademark, being a special property, is
afforded protection by law. But for one to enjoy this legal
protection, legal protection ownership of the trademark
should rightly be established.
The ownership of a trademark is acquired by its
registration and its actual use by the manufacturer. or
distributor of the goods made available to the purchasing
public. Section 122 of R.A.. No. 8293 provides that the
rights in a mark shall be acquired by means of its valid
registration with the IPO. A certificate of registration of a
mark, once issued, constitutes prima facie evidence of the
validity of the registration, of the registrant's ownership of
the mark, and of the registrant's exclusive right to use the
same in connection with the goods or services and those
that are related thereto specified in the certificate. R.A. No.
8293, however, requires the applicant for registration or
the registrant to file a declaration of actual use (DAU) of
the mark, with evidence to that effect, within three (3) years
from the filing of the application for registration; otherwise,
the application shall be refused or the mark shall be
removed from the register. In other words, the prima
facie presumption brought about by the registration of a
mark may be challenged and overcome, in an appropriate
action, by proof of the nullity of the registration or of non-
use of the mark, except when excused. Moreover, the
presumption may likewise be defeated by evidence of prior
use by another person, i.e., it will controvert a claim of
legal appropriation or of ownership based on registration
by a subsequent user. This is because a trademark is a
creation of use and belongs to one who first used it in trade
or commerce.
The determination of priority of use of a mark is a question
of fact. Adoption of the mark alone does not suffice. One
may make advertisements, issue circulars, distribute price
lists on certain goods, but these alone will not inure to the
claim of ownership of the mark until the goods bearing the
mark are sold to the public in the market. Accordingly,
receipts, sales invoices, and testimonies of witnesses as
customers, or orders of buyers, best prove the actual use
of a mark in trade and commerce during a certain period
of time.
xxxx
Verily, 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. On this matter of particular concern,
administrative agencies, such as the IPO, by reason of
their special knowledge and expertise over matters
falling under their jurisdiction, are in a better position
to pass judgment thereon. Thus, their findings of fact
in that regard are generally accorded great respect, if
not finality by the courts, as long as they are
supported by substantial evidence, even if such
evidence might not be overwhelming or even
preponderant. It is not the task of the appellate court
to weigh once more the evidence submitted before the
administrative body and to substitute its own
judgment for that of the administrative agency in
respect to sufficiency of evidence. (Emphasis added,
citations omitted.)
In trademark controversies, each case must be scrutinized
according to its peculiar circumstances, such that
jurisprudential precedents should only be made to apply if
they are specifically in point.45 The cases discussed below
are mentioned only for purposes of lifting the applicable
doctrines, laws, and concepts, but not for their factual
circumstances, because of the uniqueness of each case in
controversies such as this one.
There are two tests used in jurisprudence to determine
likelihood of confusion, namely the dominancy test used
by the IPO, and the holistic test adopted by the Court of
Appeals. In Skechers, U.S.A., Inc. v. Inter Pacific Industrial
Trading Corp.,46 we held:
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 petitioner's trademark, already constitutes infringement
consideration are the aural and visual impressions created under the Dominancy Test.
by the marks on the buyers of goods, giving little weight to
This Court cannot agree with the observation of the CA
factors like prices, quality, sales outlets, and market
that the use of the letter "S" could hardly be considered as
segments.
highly identifiable to the products of petitioner alone. The
xxxx CA even supported its conclusion by stating that the letter
"S" has been used in so many existing trademarks, the
Relative to the question on confusion of marks and trade
most popular of which is the trademark "S" enclosed by an
names, jurisprudence has noted two (2) types of
inverted triangle, which the CA says is identifiable to
confusion, viz.: (1) confusion of goods (product
Superman. Such reasoning, however, misses the entire
confusion), where the ordinarily prudent purchaser would
point, which is that respondent had used a stylized "S,"
be induced to purchase one product in the belief that he
which is the same stylized "S" which petitioner has a
was purchasing the other; and (2) confusion of business
registered trademark for. The letter "S" used in the
(source or origin confusion), where, although the goods of"
Superman logo, on the other hand, has a block-like tip on
the parties are different, the product, the mark of which
the upper portion and a round elongated tip on the lower
registration is applied for by one party, is such as might
portion. Accordingly, the comparison made by the CA of
reasonably be assumed to originate with the registrant of
the letter "S" used in the Superman trademark with
an earlier product, and the public would then be deceived
petitioner's stylized "S" is not appropriate to the case at
either into that belief or into the belief that there is some
bar.
connection between the two parties, though inexistent.
Furthermore, respondent did not simply use the letter "S,"
Applying the Dominancy Test to the case at bar, this Court
but it appears to this Court that based on the font and the
finds that the use of the stylized "S" by respondent in its
size of the lettering, the stylized "S" utilized by respondent
Strong rubber shoes infringes on the mark already
is the very same stylized "S" used by petitioner; a stylized
registered by petitioner with the IPO. While it is undisputed
"S" which is unique and distinguishes petitioner's
that petitioner's stylized "S" is within an oval design, to this
trademark. Indubitably, the likelihood of confusion is
Court's mind, the dominant feature of the trademark is the
present as purchasers will associate the respondent's use
stylized "S," as it is precisely the stylized "S" which catches
of the stylized "S" as having been authorized by petitioner
the eye of the purchaser. Thus, even if respondent did not
or that respondent's product is connected with petitioner's
use an oval design, the mere fact that it used the same
business.
stylized "S", the same being the dominant feature of
xxxx
While there may be dissimilarities between the
appearances of the shoes, to this Court's mind such
dissimilarities do not outweigh the stark and blatant
similarities in their general features.xx x.
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
respondent's products will cause confusion and mistake in
the eyes of the public. Respondent's shoes may not be an
exact replica of petitioner's shoes, but the features and
overall design are so similar and alike that confusion is
highly likely.
xxxx
Neither can the difference in price be a complete defense
in trademark infringement. In McDonald's Corporation v.
L.C Big Mak Burger, Inc., this Court held:
Modem 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). xx x.
Indeed, the registered trademark owner may use its mark
on the same or similar products, in different segments of
the market, and at different price levels depending on
variations of the products for specific segments of the
market. The 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 petitioner's 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. While respondent's shoes
contain some dissimilarities with petitioner's shoes, this
Court cannot close its eye to the fact that for all intents and
purpose, respondent had deliberately attempted to copy
petitioner's 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. 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.
(Citations omitted.)
The Court discussed the concept of confusion of business
in the case of Societe Des Produits Nestle, S.A. v. Dy,
Jr.,47 as quoted below:
Among the elements, the element of likelihood of
confusion is the gravamen of trademark infringement.
There are two types of confusion in trademark
infringement: confusion of goods and confusion of
business. In Sterling Products International, Inc. v.
Farbenfabriken Bayer Aktiengesellschaft, the Court
distinguished the two types of confusion:
Callman notes two types of confusion. The first is
the confusion of goods "in which event the ordinarily
prudent purchaser would be induced to purchase one
product in the belief that he was purchasing the other." In
which case, "defendant's goods are then bought as the
plaintiff's, and the poorer quality of the former reflects
adversely on the plaintiff's reputation." The other is
the confusion of business: "Here though the goods of the
parties are different, the defendant's product is such as
might reasonably be assumed to originate with the plaintiff,
and the public would then be deceived either into that
belief or into the belief that there is some connection
between the plaintiff and defendant which, in fact, does not
exist."
There are two tests to determine likelihood of confusion:
the dominancy test and holistic test. The dominancy test
focuses on the similarity of the main, prevalent or essential
features of the competing trademarks that might cause
confusion. Infringement takes place when the competing
trademark contains the essential features of another.
Imitation or an effort to imitate is unnecessary. The
question is whether the use of the marks is likely to cause
confusion or deceive purchasers.
xxxx
In cases involving trademark infringement, no set of rules
can be deduced. Each case must be decided on its own
merits. Jurisprudential precedents must be studied in the
light of the facts of each particular case. In McDonald's
Corporation v. MacJoy Fastfood Corporation, the Court
held:
In trademark cases, particularly in ascertaining whether
one trademark is confusingly similar to another, no set
rules can be deduced because each case must be decided
on its merits. In such cases, even more than in any other
litigation, precedent must be studied in the light of the facts
of the particular case. That is the reason why in trademark
cases, jurisprudential precedents should be applied only
to a case if they are specifically in point.
In the light of the facts of the present case, the Court holds
that the dominancy test is applicable. In recent cases with
similar factual milieus, the Court has consistently applied
the dominancy test. x x x.
xxxx
In McDonald's Corporation v. MacJoy Fastfood
Corporation, the Court applied the dominancy test in
holding that "MACJOY" is confusingly similar
"MCDONALD'S." The Court held:
While we agree with the CA's 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.
xxxx
Applying the dominancy test to the instant case, the Court
finds that herein petitioner's "MCDONALD'S" and
respondent's "MACJOY" marks are confusingly similar
with each other that an ordinary purchaser can conclude
an association or relation between the marks.
To begin with, both marks use the corporate "M" design
logo and the prefixes "Mc" and/or "Mac" as dominant
features. x x x.
For sure, it is the prefix "Mc," and abbreviation of "Mac,"
which visually and aurally catches the attention of the
consuming public. Verily, the word "MACJOY" attracts
attention the same way as did "McDonalds," "Mac Fries,"
"Mc Spaghetti," "McDo," "Big Mac" and the rest of the
MCDONALD'S marks which all use the prefixes Mc and/or
Mac.
to Besides and most importantly, both trademarks are used
in the sale of fastfood products. Indisputably, the
respondent's 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 petitioner's trademark registration for the
MCDONALD'S marks in the Philippines covers goods
which are similar if not identical to those covered by the
respondent's application.
In McDonald's Corporation v. L. C. Big Mak Burger,
Inc., the Court applied the dominancy test in holding that
"BIG MAK" is confusingly similar to "BIG MAC." The Court
held:
This Court x x x has relied on the dominancy test rather
than the holistic test. The dominancy test considers the
dominant features in the competing marks in determining
whether they are confusingly similar. Under the dominancy
test, courts give greater weight to the similarity of the
appearance of the product arising from the adoption of the
dominant features of the registered mark, disregarding
minor differences. Courts will consider more the aural and
visual impressions created by the marks in the public mind,
giving little weight to factors like prices, quality, sales
outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of
Patents, the Court ruled:
x x x It has been consistently held that the question of
infringement of a trademark is to be determined by the test
of dominancy. Similarity in size, form and color, while
relevant, is not conclusive. If the competing trademark
contains the main or essential or dominant features of
another, and confusion and deception is likely to result,
infringement takes place. Duplication or imitation is not
necessary; nor is it necessary that the infringing label
should suggest an effort to imitate. (G. Heilman Brewing
Co. vs. Independent Brewing Co., 191 F., 489, 495,
citing Eagle White Lead Co. vs. Pflugh (CC) 180 Fed.
579). The question at issue in cases of infringement of
trademarks is whether the use of the marks involved would
be likely to cause confusion or mistakes in the mind of the
public or deceive purchasers. (Auburn Rubber
Corporation vs. Hanover Rubber Co., 107 F. 2d 588; xx x)
xxxx
The test of dominancy is now explicitly incorporated into
law in Section 155.l of the Intellectual Property Code which
defines infringement as the "colorable imitation of a
registered mark x x x or a dominant feature thereof."
Applying the dominancy test, the Court finds that
respondents' use of the "Big Mak" mark results in
likelihood of confusion. First, "Big Mak" sounds exactly the
same as "Big Mac." Second, the first word in "Big Mak" is
exactly the same as the first word in "Big Mac." Third, the
first two letters in "Mak" are the same as the first two letters
in "Mac." Fourth, the last letter "Mak" while a "k" sounds
the same as "c" when the word "Mak" is pronounced. Fifth,
in Filipino, the letter "k" replaces "c" in spelling, thus
"Caloocan" is spelled "Kalookan."
In Societe Des Produits Nestle, SA. v. Court of
Appeals, the Court applied the dominancy test in holding
that "FLAVOR MASTER" is confusingly similar to
"MASTER ROAST" and "MASTER BLEND." The Court
held:
While this Court agrees with the Court of Appeals' detailed
enumeration of differences between the respective
trademarks of the two coffee products, this Court cannot
agree that totality test is the one applicable in this case.
Rather, this Court believes that the dominancy test is more
suitable to this case in light of its peculiar factual milieu.
Moreover, the totality or holistic test is contrary to the
elementary postulate of the law on trademarks and unfair
competition that confusing similarity is to be determined on
the basis of visual, aural, connotative comparisons and
overall impressions engendered by the marks in
controversy as they are encountered in the realities of the
marketplace. The totality or holistic test only relies on
visual comparison between two trademarks whereas the
dominancy test relies not only on the visual but also on the
aural and connotative comparisons and overall
impressions between the two trademarks.
For this reason, this Court agrees with the BPTTT when it
applied the test of dominancy and held that:
xxxx
The scope of protection afforded to registered
trademark owners is not limited to protection from.
infringers with identical goods.1âwphi1 The scope of
protection extends to protection from infringers with
related goods, and to market areas that are the normal
expansion of business of the registered trademark
owners. Section 138 of R.A. No. 8293 states:
Certificates of Registration. - A certificate of registration of
a mark shall be prima facie evidence of validity of the
registration, the registrant's ownership of the mark, and of
the registrant's exclusive right to use the same in
connection with the goods or services and those that are
related thereto specified in the certificate. x x x.
In Mighty Corporation v. E. & J Gallo Winery, the Court
held that, "Non-competing goods may be those which,
though they are not in actual competition, are so related to
each other that it can reasonably be assumed that they
originate from one manufacturer, in which case, confusion
of business can arise out of the use of similar marks." In
that case, the Court enumerated factors in determining
whether goods are related: (1) classification of the goods;
(2) nature of the goods; (3) descriptive properties, physical
attributes or essential characteristics of the goods, with
reference to their form, composition, texture or quality; and
(4) style of distribution and marketing of the goods,
including how the goods are displayed and sold.
xxxx
x x x. However, as the registered owner of the "NAN"
mark, Nestle should be free to use its mark on similar
products, in different segments of the market, and at
different price levels. In McDonald's Corporation v. L.C.
Big Mak Burger, Inc., the Court held that the scope of
protection afforded to registered trademark owners
extends to market areas that are the normal expansion of
business:
xxxx
Even respondent's use of the "Big Mak" mark on non-
hamburger food products cannot excuse their infringement
of petitioners' registered mark, otherwise registered marks
will lose their protection under the law.
The registered trademark owner may use his mark on
the same or similar products, in different segments of
the market, and at different price levels depending on
variations of the products for specific segments of the
market. The Court has recognized that the registered
trademark owner enjoys protection in product and
market areas that are the normal potential expansion
of his business. Thus, the Court has declared:
Modern law recognizes that the protection to which the
owner of a trademark is entitled is not limited to guarding
his goods or business from actual market competition with
identical or similar products of the parties, but extends to
all cases in which the use by a junior appropriator of a
trade-mark or trade-name is likely to lead to a confusion of
source, as where prospective purchasers would be misled
into thinking that the complaining party has extended his
business into the field (see 148 ALR 56 et sq; 53 Am. Jur.
576) or is in any way connected with the activities of the
infringer; or when it forestalls the normal potential
expansion of his business (v. 148 ALR, 77, 84; 52 Arn. Jur.
576, 577). (Emphases supplied, citations omitted.)
Again, this Court discussed the dominancy test and
confusion of business in Dermaline, Inc. v. Myra
Pharmaceuticals, Inc.,48 and we quote:
The Dominancy Test focuses on the similarity of the
prevalent features of the competing trademarks that might
cause confusion or deception. It is applied when the
trademark sought to be registered contains the main,
essential and dominant features of the earlier registered
trademark, and confusion or deception is likely to result.
Duplication or imitation is not even required; neither is it
necessary that the label of the applied mark for registration
should suggest an effort to imitate. The important issue is
whether the use of the marks involved would likely cause
confusion or mistake in the mind of or deceive the ordinary
purchaser, or one who is accustomed to buy, and therefore
to some extent familiar with, the goods in question. Given
greater consideration are the aural and visual impressions
created by the marks in the public mind, giving little weight
to factors like prices, quality, sales outlets, and market
segments. The test of dominancy is now explicitly
incorporated into law in Section 155.l of R.A. No. 8293
which provides-
155.1. Use in commerce any reproduction, counterfeit,
copy, or colorable imitation of a registered mark or the
same container or a dominant feature thereof in
connection with the sale, offering for sale, distribution,
advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any
goods or services on or in connection with which such use
is likely to cause confusion, or to cause mistake, or to
deceive xx x.
xxxx
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.
xxxx
We agree with the findings of the IPO. As correctly applied
by the IPO in this case, while there are no set rules that
can be deduced as what constitutes a dominant feature
with respect to trademarks applied for registration; usually,
what are taken into account are signs, color, design,
peculiar shape or name, or some special, easily
remembered earmarks of the brand that readily attracts
and catches the attention of the ordinary consumer.
xxxx
Further, Dermaline's stance that its product belongs to a
separate and different classification from Myra's products
with the registered trademark does not eradicate the
possibility of mistake on the part of the purchasing public
to associate the former with the latter, especially
considering that both classifications pertain to treatments
for the skin.
Indeed, the registered trademark owner may use its mark
on the same or similar products, in different segments of
the market, and at different price levels depending on
variations of the products for specific segments of the
market. The Court is cognizant that the registered
trademark owner enjoys protection in product and market
areas that are the normal potential expansion of his
business. Thus, we have held-
Modern law recognizes that the protection to which the
owner of a trademark is entitled is not limited to guarding
his goods or business from actual market competition with
identical or similar products of the parties, but extends to
all cases in which the use by a junior appropriator of a
trade-mark or trade-name is likely to lead to a confusion
of source, as where prospective purchasers would be
misled into thinking that the complaining party has
extended his business into the field (see 148 ALR 56 et
seq; 53 Am Jur. 576) or is in any way connected with the
activities of the infringer; or when it forestalls the normal
potential expansion of his business (v. 148 ALR 77, 84;
52 Am. Jur. 576, 577).
Thus, the public may mistakenly think that Dermaline is
connected to or associated with Myra, such that,
considering the current proliferation of health and beauty
products in the market, the purchasers would likely be
misled that Myra has already expanded its business
through Dermaline from merely carrying pharmaceutical
topical applications for the skin to health and beauty
services.
Verily, when one applies for the registration of a trademark
or label which is almost the same or that very closely
resembles one already used and registered by another,
the application should be rejected and dismissed outright,
even without any opposition on the part of the owner and
user of a previously registered label or trademark. This is
intended not only to avoid confusion on the part of the
public, but also to protect an already used and registered
trademark and an established goodwill. (Citations
omitted.)
Section 123.l(d) of the IP Code provides:
A mark cannot be registered if it:
xxxx
(d) Is identical with a registered mark belonging to a
different proprietor or a mark with an earlier filing or priority
date, in respect of:
i. The same goods or services, or
ii. Closely related goods or services, or
iii. If it nearly resembles such a mark as to be likely to
deceive or cause confusion[.]
A scrutiny of petitioner's and respondent's respective
marks would show that the IPO-BLA and the IPO Director
General correctly found the word "PAPA" as the dominant
feature of petitioner's mark "PAPA KETSARAP." Contrary
to respondent's contention, "KETSARAP" cannot be the
dominant feature of the mark as it is merely descriptive of
the product. Furthermore, it is the "PAPA" mark that has
been in commercial use for decades and has established
awareness and goodwill among consumers.
We likewise agree with the IPO-BLA that the word "PAPA"
is also the dominant feature of respondent's "PAPA BOY
& DEVICE" mark subject of the application, such that "the
word 'PAPA' is written on top of and before the other words
such that it is the first word/figure that catches the
eyes."49 Furthermore, as the IPO Director General put it,
the part of respondent's mark which appears prominently
to the eyes and ears is the phrase "PAPA BOY" and that
is what a purchaser of respondent's product would
immediately recall, not the smiling hog.
We quote the relevant portion of the IPO-BLA decision on
this point below:
A careful examination of Opposer's and Respondent-
applicant's respective marks shows that the word "PAPA"
is the dominant feature: In Opposer's marks, the word
"PAPA" is either the mark by itself or the predominant word
considering its stylized font and the conspicuous
placement of the word "PAPA" before the other words. In
Respondent-applicant's mark, the word "PAPA" is written
on top of and before the other words such that it is the first
word figure that catches the eyes. The visual and aural
impressions created by such dominant word "PAPA" at the
least is that the respective goods of the parties originated
from the other, or that one party has permitted or has been
given license to the other to use the word "PAPA" for the
other party's product, or that there is a relation/connection
between the two parties when, in fact, there is none. This
is especially true considering that the products of both
parties belong to the same class and are closely related:
Catsup and lechon sauce or liver sauce are both gravy-like
condiments used to spice up dishes. Thus, confusion of
goods and of business may likely result.
Under the Dominancy Test, the dominant features of the
competing marks are considered in determining whether
these competing marks are confusingly similar. Greater
weight is given to the similarity of the appearance of the
products arising from the adoption of the dominant
features of the registered mark, disregarding minor
differences. The visual, aural, connotative, and overall
comparisons and impressions engendered by the marks in
controversy as they are encountered in the realities of the
marketplace are the main considerations (McDonald's
Corporation, et al., v. L. C. Big Mak Burger, Inc., et al., G.
R. No.143993, August 18, 2004; Societe Des Produits
Nestle, S. A." et al. v. Court of Appeals, et al., G. R. No.
112012, April 4, 2001). 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. (Lim Hoa v. Director of Patents,
100 Phil. 214 [1956]); Co Tiong Sa v. Director of Patents,
et al., G. R. No. L-5378, May 24, 1954). Duplication or
imitation is not necessary; nor is it necessary that the
infringing label should suggest an effort to imitate (Lim Hoa
v. Director of Patents, supra, and Co Liang Sa v. Director
of Patents, supra). Actual confusion is not required: Only
likelihood of confusion on the part of the buying public is
necessary so as to render two marks confusingly similar
so as to deny the registration of the junior mark (Sterling
Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft, 137 Phil. 838 [1969]).
As to the first issue of whether PAPA BOY is confusingly
similar to Opposer's PAPA mark, this Bureau rules in the
affirmative.
The records bear the following:
1. Registration No. 32416 issued for the mark "PAPA"
under Class 29 goods was deemed expired as of February
11, 2004 (Exhibit "A" attached to the VERIFIED NOTICE
OF OPPOSITION). Application Serial No. 4-2005-010788
was filed on October 28, 2005 for the same mark "PAPA"
for Class 30 goods and Registration No. 42005010788
was issued on March 19, 2007;
2. Opposer was issued for the mark "PAPA BANANA
CATSUP LABEL" on August 11, 1983 Registration No.
SR-6282 for Class 30 goods in the Supplemental Register,
which registration expired in 2003. Application Serial No.
4-2006-012364 was filed for the mark "PAPA LABEL
DESIGN" for Class 30 goods on November 15, 2006, and
Registration No. 42006012364 was issued on April 30,
2007; and
3. Lastly, Registration No. 34681 for the mark "PAPA
KETSARAP" for Class 30 goods was issued on August 23,
1985 and was renewed on August 23, 2005.
Though Respondent-applicant was first to file the subject
application on April 04, 2002 vis-a-vis the mark "PAP A"
the filing date of which is reckoned on October 28, 2005,
and the mark "PAPA LABEL DESIGN" the filing date of
which is reckoned on November 15, 2006, Opposer was
able to secure a registration for the mark "PAPA
KETSARAP" on August 23, 1985 considering that
Opposer was the prior registrant and that its renewal
application timely filed on August 23, 2005.
xxxx
Pursuant to [Section 123 .1 (d) of the IP Code], the
application for registration of the subject mark cannot be
allowed considering that Opposer was earlier registrant of
the marks PAPA and PAPA KETSARAP which
registrations were timely renewed upon its expiration.
Respondent-applicant's mark "PAPA BOY & DEVICE" is
confusingly similar to Opposer's mark "PAPA KETSARAP"
and is applied to goods that are related to Opposer's
goods, but Opposer's mark "PAPA KETSARAP" was
registered on August 23, 1985 per Certificate of
Registration No. 34681, which registration was renewed
for a period of 10 years counted from August 23, 2005 per
Certificate of Renewal of Registration No. 34681 issued on
August 23, 2005. To repeat, Opposer has already
registered a mark which Respondent-applicant's mark
nearly resembles as to likely deceive or cause confusion
as to origin and which is applied to goods to which
respondent-applicant's goods under Class 30 are closely
related.1âwphi1
Section 138 of the IP Code provides that a certificate of
registration of a mark is prima facie evidence of the validity
of the registration, the registrant's ownership of the mark,
and of the registrant's exclusive right to use the same in
connection with the goods and those that are related
thereto specified in the certificate.50
We agree that respondent's mark cannot be registered.
Respondent's mark is related to a product, lechon sauce,
an everyday all-purpose condiment and sauce, that is not
subjected to great scrutiny and care by the casual
purchaser, who knows from regular visits to the grocery
store under what aisle to find it, in which bottle it is
contained, and approximately how much it costs. Since
petitioner's product, catsup, is also a household product
found on the same grocery aisle, in similar packaging, the
public could think that petitioner had expanded its product
mix to include lechon sauce, and that the "PAPA BOY"
lechon sauce is now part of the "PAPA" family of sauces,
which is not unlikely considering the nature of business
that petitioner is in. Thus, if allowed. registration, confusion
of business may set in, and petitioner's hard-earned
goodwill may be associated to the newer product
introduced by respondent, all because of the use of the
dominant feature of petitioner's mark on respondent's
mark, which is the word "PAPA." The words "Barrio Fiesta"
are not included in the mark, and although printed on the
label of respondent's lechon sauce packaging, still do not
remove the impression that "PAPA BOY" is a product
owned by the manufacturer of "PAPA" catsup, by virtue of
the use of the dominant feature. It is possible that
petitioner could expand its business to include lechon
sauce, and that would be well within petitioner's rights, but
the existence of a "PAPA BOY" lechon sauce would
already eliminate this possibility and deprive petitioner of
its rights as an owner of a valid mark included in the
Intellectual Property Code.
The Court of Appeals likewise erred in finding that "PAPA,"
being a common term of endearment for one's father, is a
word over which petitioner could not claim exclusive use
and ownership. The Merriam-Webster dictionary defines
"Papa" simply as "a person's father." True, a person's
father has no logical connection with catsup products, and
that precisely makes "PAPA" as an arbitrary mark capable
of being registered, as it is distinctive, coming from a family
name that started the brand several decades ago. What
was registered was not the word "Papa" as defined in the
dictionary, but the word "Papa" as the last name of the
original owner of the brand. In fact, being part of several of
petitioner's marks, there is no question that the IPO has
found "PAPA" to be a registrable mark.
Respondent had an infinite field of words and
combinations of words to choose from to coin a mark for
its lechon sauce. While its claim as to the origin of the term
"PAPA BOY" is plausible, it is not a strong enough claim
to overrule the rights of the owner of an existing and valid
mark. Furthermore, this Court cannot equitably allow
respondent to profit by the name and reputation carefully
built by petitioner without running afoul of the basic
demands of fair play.51
WHEREFORE, we hereby GRANT the petition. We SET
ASIDE the June 23, 2011 Decision and the October 4,
2011 Resolution of the Court of Appeals in CA-G.R. SP
No. 107570, and REINSTATE the March 26,
2008 Decision of the Bureau of Legal Affairs of the
Intellectual Property Office (IPO-BLA) and the January 29,
2009 Decision of the Director General of the IPO.
SO ORDERED.
WILTON DY and/or PHILITES ELECTRONIC &
LIGHTING PRODUCTS, Petitioner
vs
KONINKLIJKE PHILIPS ELECTRONICS, N.V.,
Respondent
DECISION
SERENO, CJ.:
This Petition for Review on Certiorari1 filed by petitioner
Wilton Dy and/or Philites Electronic & Lighting Products
("PHILITES") assails the Decision2 and Resolution3 of the
Court of Appeals (CA) in CA-G.R. SP No. 103350. The
appellate court reversed and set aside the Decision4 of the
IPP Office of the Director General (IPP-DG), which
affirmed the Decision5 of the Intellectual Property
Philippines Bureau of Legal Affairs (IPP-BLA) upholding
petitioner's trademark application.
THE ANTECEDENT FACTS
On 12 April 2000, petitioner PHILITES filed a trademark
application (Application Serial Number 4-2000-002937)
covering its fluorescent bulb, incandescent light, starter
and ballast. After publication, respondent Koninklijke
Philips Electronics, N .V. ("PHILIPS") filed a Verified
Notice of Opposition on 17 March 2006, alleging the
following:
(a) The approval of Application Serial No. 4-2000-002937
is contrary to the following provisions of Republic Act No.
[RAJ 8293 or the Intellectual Property Code of the
Philippines (IP Code): Sections 123.l(d), (i) and (iii),
123.l(e), 147, and 168.
(b) The approval of Application Serial No. 4-2000-002937
will cause grave and irreparable damage and injury to
oppose.
(c) The use and registration of the applied for mark by
[petitioner] will mislead the public as to the origin, nature,
quality, and characteristic of the goods on which it is
affixed;
(d) [Petitioner's] application for registration is tantamount
to fraud as it seeks to register and obtain legal protection
for an identical or confusingly similar mark that clearly
infringes upon the established rights of the [respondent]
over its registered and internationally well-known mark.
(e) The registration of the trademark PHILITES & LETTER
P DEVICE in the name of the [petitioner] will violate the
proprietary rights and interests, business reputation and
goodwill of the [respondent] over its trademark,
considering that the distinctiveness of the trademark
PHILIPS will be diluted.
(t) The registration of the applied for mark will not only
prejudice the Opposer, but will also cause [petitioner] to
unfairly profit commercially from the goodwill, fame and
notoriety of Opposer's trademark and reputation.
(g) [Petitioner's] registration and use of the applied for
mark in connection with goods under Class 11 will weaken
the unique and distinctive significance of mark PHILIPS
and will tarnish, degrade or dilute the distinctive quality of
Opposer's trademark and will result in the gradual
attenuation or whittling away of the value of Opposer's
trademark, in violation of Opposer's proprietary rights.6
On 8 August 2006, petitioner filed a Verified Answer,
stating that its PHILITES & LETTER P DEVICE trademark
and respondent's PHILIPS have vast dissimilarities in
terms of spelling, sound and meaning.7
At the conclusion of the hearing, on 9 November 2006,
IPP-BLA Director Estrellita Beltran-Abelardo rendered a
Decision8 denying the Opposition filed by respondent
PHILIPS. The dispositive portion of the Decision reads:
WHEREFORE, premises considered
the OPPOSITION filed by Koninklijke Philips Electronics,
N.V. is hereby DENIED. Accordingly, Application Serial
no. 4-2000-002937 filed by Respondent-Applicant, Wilton
Dy and/or Philites Electronic & Lighting Products on 12
April 2000 for the mark "PHILITES & LETTER P DEVICE"
used on fluorescent bulb, incandescent light starter,
ballast under class 11, is as it is, hereby GRANTED.
Let the filewrapper of "PHILITES & LETTER P DEVICE,"
subject matter of this case together with this Decision be
forwarded to the Bureau of Trademarks (BOT) for
appropriate action.
SO ORDERED.
In upholding petitioner's trademark application, the IPP-
BLA stated that assuming respondent's mark was well-
known in the Philippines, there should have been prior
determination of whether or not the mark under application
for registration was "identical with, or confusingly similar
to, or constitutes a translation of such well-known mark in
order that the owner of the well-known mark can prevent
its registration."9 From the evidence presented, the IPP-
BLA concluded that the PHILIPS and PHILITES marks
were so unlike, both visually and aurally. It held that no
confusion was likely to occur, despite their
contemporaneous use, based on the following
observations:
The Philips shield mark has four stars in different sizes
located at the north east and south west portions inside a
circle within the shield. There are three wavy lines
dissecting the middle of the circle. None of these appear
in the respondent's mark.
[Respondent] declares that the word Philips is the
surname of the brothers who founded the Philips company
engaged in manufacturing and selling lighting products.
[Petitioner] on the other hand has testified that the word
Philites is coined from the word 'Philippines' and 'lights,'
hence 'Philites.' This Bureau finds that there is no
dictionary meaning to the [petitioner's] mark. It is a coined
and arbitrary word capable of appropriation as a
trademark. x x x
Moreover, by mere pronouncing the two marks, the
phonetic sounds produced when each mark is uttered are
not the same. The last syllable of respondent's mark is
uttered in a long vowel sound, while the last vowel of the
opposer's mark is not.
x x x. This Bureau believes that opposer has no monopoly
over the color or diameter or shape of a light bulb or
packaging shape unless registrations were secured to
protect the same. The images of the packages are
reproduced below for reference.
x x x. For one, respondent adopts a yellow to light yellow
dominant color while the oppose uses an orange yellow
hue. The mark "Philites" is printed in yellow with light blue
background as compared to the "Philips" mark typed in
white against a black background.
It is fundamental in trademark jurisprudence that color
alone, unless displayed in an arbitrary design docs not
function as a trademark.
Secondly, there appears to be other advertising slogans
that appear in respondent's package such as the words,
"new", "prolong lite life", "E-coat finished" and "with
additional 35% more than ordinary". These phrases are
absent in opposer's package. These phrases can be
considered in the nature of descriptive terms that can be
appropriated by anyone.10
Upon appeal, the IPP-DG rendered a Decision11 on 16
April 2008, affirming the ruling of the IPP-BLA as follows:
WHEREFORE, premises considered, that instant appeal
is hereby DISMISSED for lack of merit. Accordingly,
Decision No. 2006-125 of the Director of the Bureau of
Legal Affairs dated 09 November 2006, is hereby
AFFIRMED.
Let a copy of this Decision as well as the trademark
application and records be furnished and returned to the
Director of Bureau of Legal Affairs for appropriate action.
Further, let also the Directors of the Bureau of
Trademarks, the Administrative, Pinancial and Human
Resources Development Services Bureau, and the library
of the Documentation, Information and Technology
Transfer Bureau be furnished a copy of this Decision for
information, guidance and records purposes.
SO ORDERED.
In so ruling, the IPP-DG noted that "[t]he dominant feature
of the [respondent's] trademark is 'PHILIPS' while that of
the [petitioner's] trademark is 'PHILITES.' While the first
syllables of the marks are identical - 'PHI' - the second
syllables are not. The differences in the last syllable
accounted for the variance of the trademarks visually and
aurally."12 Moreover, there were "glaring differences and
dissimilarities in the design and general appearance of the
Philips shield emblem mark and the letter 'P' of Philites
mark."13 Thus, "even if the [petitioner's] products bearing
the trademark PHILIPS are placed side by side with other
brands, the purchaser would not be confused to pick up
the [petitioner's] product if this is his choice or preference,
unless the resemblance in the appearance of the
trademarks is so glaring which [it] is not in this case."14
As regards the issue of petitioner submitting a trademark
drawing different from that used in the packaging, the IPP-
DG noted that this case involved an opposition to the
registration of a mark, while labels and packaging were
technically not a part thereof.15 At best, respondent
supposedly had the remedy of filing a case for trademark
infringement and/or unfair competition.16
Upon intermediate appellate review, the CA rendered a
Decision 17 on 7 October 2008. The dispositive portion
herein reads:
WHEREFORE, premises considered, the Petition for
Review is GRANTED. The Decision dated 16 April 2008 of
the Director General of the Intellectual Property Office
in Appeal No. 14-06-28; IPC No. 14-2006- 00034 is
REVERSED and SET ASIDE. The application for
trademark registration (Application Serial Number 4-2000-
002937) of respondent Wilton Dy and/or Philites Electronic
& Lighting Products is DISMISSED. Costs against
respondent.
SO ORDERED.
In so ruling, the CA reasoned that the "drawing of the
trademark submitted by [petitioner] has a different
appearance from that of [petitioner's] actual wrapper or
packaging that contain the light bulbs, which We find
confusingly similar with that of [respondent's] registered
trademark and packaging."18 Moreover, it found to be
"self-serving [petitioner's] asseveration that the mark
'PHILITES' is a coined or arbitrary mark from the words
'Philippines' and 'lights.' Of all the marks that [petitioner]
could possibly think of for his light bulbs, it is odd that
[petitioner] chose a mark with the letters 'PHILI,' which are
the same prevalent or dominant five letters found in
[respondent's] trademark 'PHILIPS' for the same products,
light bulbs."19 Hence, the appellate court concluded that
petitioner had intended to ride on the long-established
reputation and goodwill of respondent's trademark.20
On 25 October 2008, petitioner filed a Motion for
Reconsideration, which was denied in a
Resolution21 issued by the CA on 18 December 2008.
Hence, this petition.
Respondent filed its Comment22 on 23 June 2009, and
petitioner filed its Reply23 on 10 November 2009.
THE ISSUES
From the foregoing, we reduce the issues to the following:
1. Whether or not respondent's mark is a registered and
well-known mark in the Philippines; and
2. Whether or not the mark applied for by petitioner is
identical or confusingly similar with that of respondent.
OUR RULING
The Petition is bereft of merit.
A trademark is "any distinctive word, name, symbol,
emblem, sign, or device, or any combination thereof,
adopted and used by a manufacturer or merchant on his
goods to identify and distinguish them from those
manufactured, sold, or dealt by othcrs."24 It is "intellectual
property deserving protection by law,"25 and "susceptible
to registration if it is crafted fancifully or arbitrarily and is
capable of identifying and distinguishing the goods of one
manufacturer or seller from those of another."26
Section 122 of the Intellectual Property Code of the
Philippines (IPC) provides that rights to a mark shall be
acquired through registration validly done in accordance
with the provisions of this law.27 Corollary to that rule,
Section 123 provides which marks cannot be registered.
Respondent opposes petitioner's application on the
ground that PHILITES' registration will mislead the public
over an identical or confusingly similar mark of PHILIPS,
which is registered and internationally well-known mark.
Specifically, respondent invokes the following provisions
of Section 123:
Section 123. Registrability. - 123 .1. A mark cannot be
registered if it:
xxx
(d) Is identical with a registered mark belonging to a
different proprietor or a mark with an earlier filing or priority
date, in respect of:
(i) The same goods or services, or
(ii) Closely related goods or services, or
(iii) If it nearly resembles such a mark as to be likely to
deceive or cause confusion;
(e) Is identical with, or confusingly similar to, or constitutes
a translation of a mark whid1 is considered by the
competent authority of the Philippines to be well-known
internationally and in the Philippines, whether or not it is
registered here, as being already the mark of a person
other than the applicant for registration, and used for
identical or similar goods or services: Provided, That in
determining whether a mark is well-known, account shall
be taken of the knowledge of the relevant sector of the
public, rather than of the public at large, including
knowledge in the Philipines which has been obtained as a
result of the promotion of the mark.28
Respondent's mark is a registered and well-known mark in
the
Philippines
There is no question that respondent's mark PHILIPS is
already a registered and well-known mark in the
Philippines.
As we have said in Fredco Manufacturing Corporation v.
Harvard University,29 "[i]ndeed, Section 123.l(e) of R.A.
No. 8293 now categorically states that 'a mark which is
considered by the competent authority of the Philippines
to be well-known internationally and in the Philippines,
whether or not it is registered here,' cannot be registered
by another in the Ph iii ppines. "30
Rule l00(a) of the Rules and Regulations on Trademarks,
Service Marks, Tradenames and Marked or Stamped
Containers defines "competent authority" in the following
manner:
(c) "Competent authority" for purposes of determining
whether a mark is well-known, means the Court, the
Director General, the Director of the Bureau of Legal
Affairs, or any administrative agency or office vested with
quasi-judicial or judicial jurisdiction to hear and adjudicate
any action to enforce the rights to a mark.
We thus affirm the following findings of the CA, inasmuch
as the trademark of PHILIPS is a registered and well-
known mark, as held in the Supreme Court Decision
in Philips Export B. V, v. CA:31
Petitioner (PHILIPS) is the registered owner in the
Philippines of the "PHILIPS" and "PHILIPS SHIELD
EMBLEM" trademarks, as shown by Certificates of
Registration Nos. 42271 and 42270. The Philippine
trademark registrations of petitioner's "PHILIPS" and
"PHILIPS SHIELD EMBLEM" are also evidenced by
Certificates of Registration Nos. R- 1651, R-29134, R-
1674, and R-28981. The said registered trademarks
"PHILIPS" and "PHILIPS SHIELD EMBLEM" cover
classes 7, 8, 9, 10, 11, 14, and 16. The assailed Decision
itself states that "(T)he Appellant's trademark is already
registered and in use in the Philippines". It also appears
that worldwide, petitioner has thousands of trademark
registrations x x x in various countries. As found by the
High Court in Philips Export B.V. vs Court of
Appeals, PHILIPS is a trademark or trade name which was
registered as far back as 1922, and has acquired the
status of a well-known mark in the Philippines and
internationally as well.32
Petitioner seeks to register a mark
nearly resembling that of respondent,
which may likely to deceive or cause
confusion among consumers.
Despite respondent's diversification to numerous and
varied industries,33 the records show that both parties are
engaged in the same line of business: selling identical or
similar goods such as fluorescent bulbs, incandescent
lights, starters and ballasts.
In determining similarity and likelihood of confusion,
jurisprudence has developed two tests: the dominancy
test, and the holistic or totality test.34
On one hand, 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. "35
On the other hand, 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."361âwphi1
Applying the dominancy test to this case requires us to
look only at the mark submitted by petitioner in its
application, while we give importance to the aural and
visual impressions the mark is likely to create in the minds
of the buyers. We agree with the findings of the CA that
the mark "PHILITES" bears an uncanny resemblance or
confusing similarity with respondent's mark "PHILIPS," to
wit:
Applying the dominancy test in the instant case, it shows
the uncanny resemblance or confusing similarity between
the trademark applied for by respondent with that of
petitioner's registered trademark. An examination of the
trademarks shows that their dominant or prevalent feature
is the five-letter "PHILI", "PHILIPS" for petitioner, and
"PHILITES" for respondent. The marks are confusingly
similar with each other such that an ordinary purchaser
can conclude an association or relation between the
marks. The consuming public does not have the luxury of
time to ruminate the phonetic sounds of the trademarks, to
find out which one has a short or long vowel sound. At
bottom, the letters "PHILI'' visually catch the attention of
the consuming public and the use of respondent's
trademark will likely deceive or cause confusion. Most
importantly, both trademarks are used in the sale of the
same goods, which are light bulbs.37
The confusing similarity becomes even more prominent
when we examine the entirety of the marks used by
petitioner and respondent, including the way the products
are packaged. In using the holistic test, we find that there
is a confusing similarity between the registered marks
PHILIPS and PHILITES, and note that the mark petitioner
seeks to register is vastly different from that which it
actually uses in the packaging of its products. We quote
with approval the findings of the CA as follows:
Applying the holistic test, entails a consideration of the
entirety of the marks as applied to the products, including
the labels and packaging, in determining confusing
similarity. A comparison between petitioner's registered
trademark "PHILIPS'' as used in the wrapper or packaging
of its light bulbs and that of respondent's applied for
trademark "PHILITES" as depicted in the container or
actual wrapper/packaging of the latter's light bulbs will
readily show that there is a strong similitude and likeness
between the two trademarks that will likely cause
deception or confusion to the purchasing public. The fact
that the parties' wrapper or packaging reflects negligible
differences considering the use of a slightly different font
and hue of the yellow is of no moment because taken in
their entirety, respondent's trademark "PHILITES" will
likely cause confusion or deception to the ordinary
purchaser with a modicum of intelligence.38
WHEREFORE, in view of the foregoing, the Petition for
Review on Certiorari is hereby DENIED. The 7 October
2008 Decision and 18 December 2008 Resolution of the
Court of Appeals in CA-G.R. SP No. 103350 are
hereby AFFIRMED.
SO ORDERED.

JARDELEZA, J.:
Petitioner De La Salle Montessori International of Malolos,
Inc. filed this petition for review on certiorari[1] under Rule
45 of the Rules of Court to challenge the Decision[2] of the
Court of Appeals (CA) dated September 27, 2012 in CA-
G.R. SP No. 116439 and its Resolution[3]dated January
21, 2013 which denied petitioner's motion for
reconsideration. The CA affirmed the Decision[4] of the
Securities and Exchange Commission (SEC) En
Banc dated September 30, 2010, which in turn affirmed
the Order[5] of the. SEC Office of the General Counsel
(OGC) dated May 12, 2010 directing petitioner to change
or modify its corporate name.
Petitioner reserved with the SEC its corporate name De La
Salle Montessori International Malolos, Inc. from June 4 to
August 3, 2007,[6]after which the SEC indorsed petitioner's
articles of incorporation and by-laws to the Department of
Education (DepEd) for comments and
recommendation.[7] The DepEd returned the indorsement
without objections.[8] Consequently, the SEC issued a
certificate of incorporation to petitioner.[9]
Afterwards, DepEd Region III, City of San Fernando,
Pampanga granted petitioner government recognition for
its pre-elementary and elementary courses on June 30,
2008,[10] and for its secondary courses on February 15,
2010.[11]
On January 29, 2010, respondents De La Salle Brothers,
Inc., De La Salle University, Inc., La Salle Academy, Inc.,
De La Salle-Santiago Zobel School, Inc. (formerly De La
Salle-South, Inc.), and De La Salle Canlubang, Inc.
(formerly De La Salle University-Canlubang, Inc.) filed a
petition with the SEC seeking to compel petitioner to
change its corporate name. Respondents claim that
petitioner's corporate name is misleading or confusingly
similar to that which respondents have acquired a prior
right to use, and that respondents' consent to use such
name was not obtained. According to respondents,
petitioner's use of the dominant phrases "La Salle" and
"De La Salle" gives an erroneous impression that De La
Salle Montessori International of Malolos, Inc. is part of the
"La Salle" group, which violates Section 18 of the
Corporation Code of the Philippines. Moreover, being the
prior registrant, respondents have acquired the use of said
phrases as part of their corporate names and have
freedom from infringement of the same.[12]
On May 12, 2010, the SEC OGC issued an
Order[13] directing petitioner to change or modify its
corporate name. It held, among others, that respondents
have acquired the right to the exclusive use of the name
"La Salle" with freedom from infringement by priority of
adoption, as they have all been incorporated using the
name ahead of petitioner. Furthermore, the name "La
Salle" is not generic in that it does not particularly refer to
the basic or inherent nature of the services provided by
respondents. Neither is it descriptive in the sense that it
does not forthwith and clearly convey an immediate idea
of what respondents' services are. In fact, it merely gives
a hint, and requires imagination, thought and perception to
reach a conclusion as to the nature of such services.
Hence, the SEC OGC concluded that respondents' use of
the phrase "De La Salle" or "La Salle" is arbitrary, fanciful,
whimsical and distinctive, and thus legally protectable. As
regards petitioner's argument that its use of the name does
not result to confusion, the SEC OGC held otherwise,
noting that confusion is probably or likely to occur
considering not only the similarity in the parties' names but
also the business or industry they are engaged in, which
is providing courses of study in pre-elementary,
elementary and secondary education.[14] The SEC OGC
disagreed with petitioner's argument that the case
of Lyceum of the Philippines, Inc. v. Court of
Appeals[15] (Lyceum of the Philippines) applies since the
word "lyceum" is clearly descriptive of the very being and
defining purpose of an educational corporation, unlike the
term "De La Salle" or "La Salle."[16] Hence, the Court held
in that case that the Lyceum of the Philippines, Inc. cannot
claim exclusive use of the name "lyceum."
Petitioner filed an appeal before the SEC En Banc, which
rendered a Decision[17] on September 30, 2010 affirming
the Order of the SEC OGC. It held, among others, that
the Lyceum of the Philippines case does not apply since
the word "lyceum" is a generic word that pertains to a
category of educational institutions and is widely used
around the world. Further, the Lyceum of the Philippines
failed to prove that "lyceum" acquired secondary meaning
capable of exclusive appropriation. Petitioner also failed to
establish that the term "De La Salle" is generic for the
principle enunciated in Lyceum of the Philippines to
apply.[18]
Petitioner consequently filed a petition for review with the
CA. On September 27, 2012, the CA rendered its
Decision[19] affirming the Order of the SEC OGC and the
Decision of the SEC En Banc in toto.
Hence, this petition, which raises the lone issue of
"[w]hether or not the [CA] acted with grave abuse of
discretion amounting to lack or in excess of jurisdiction
when it erred in not applying the doctrine laid down in the
case of [Lyceum of the Philippines], that LYCEUM is not
attended with exclusivity."[20]
The Court cannot at the outset fail to note the erroneous
wording of the issue. Petitioner alleged grave abuse of
discretion while also attributing error of judgment on the
part of the CA in not applying a certain doctrine. Certainly,
these grounds do not coincide in the same remedy. A
petition for review on certiorari under Rule 45 of the Rules
of Court is a separate remedy from a petition
for certiorari under Rule 65. A petition for review
on certiorari under Rule 45 brings up for review errors of
judgment, while a petition for certiorari under Rule 65
covers errors of jurisdiction or grave abuse of discretion
amounting to excess or lack of jurisdiction. Grave abuse of
discretion is not an allowable ground under Rule
45.[21] Nonetheless, as the petition argues on the basis of
errors of judgment allegedly committed by the CA, the
Court will excuse the error in terminology.
The main thrust of the petition is that the CA erred in not
applying the ruling in the Lyceum of the Philippines case
which petitioner argues have "the same facts and
events"[22] as in this case.
We DENY the petition and uphold the Decision of the CA.
As early as Western Equipment and Supply Co. v.
Reyes,[23] 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.[24] 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.[25] Furthermore, in Philips
Export B.V. v. Court of Appeals,[26] we held:
A name is peculiarly important as necessary to the very
existence of a corporation x x x. Its name is one of its
attributes, an element of its existence, and essential to its
identity x x x. 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 x x x; and the right to use its corporate name is
as much a part of the corporate franchise as any other
privilege granted x x x.
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 x x x. A corporation can no more
use a corporate name in violation of the rights of others
than an individual can use his nan1e legally acquired so
as to mislead the public and injure another x x x.[27]
Recognizing the intrinsic importance of corporate names,
our Corporation Code established a restrictive rule insofar
as corporate names are concerned.[28] Thus, Section 18
thereof provides:
Sec. 18. Corporate name. - 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 laws. When a change in
the corporate name is approved, the Commission shall
issue an amended certificate of incorporation under the
amended name.
The policy underlying the prohibition in Section 18 against
the registration of a corporate name which is "identical or
deceptively or confusingly similar" to that of any existing
corporation or which is "patently deceptive" or "patently
confusing" or "contrary to existing laws," is the avoidance
of fraud upon the public which would have occasion to deal
with the entity concerned, the evasion of legal obligations
and duties, and the reduction of difficulties of
administration and supervision over corporations.[29]
Indeed, 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
non-profit organization, if misleading or likely to injure in
the exercise of its corporate functions, regardless of intent,
may be prevented by the corporation having a prior right,
by a suit for injunction against the new corporation to
prevent the use of the name.[30]
In Philips Export B.V. v. Court of Appeals,[31] the Court
held that to fall within the prohibition of Section 18, two
requisites must be proven, to wit: (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.[32]
With respect to the first requisite, the Court has held that
the right to the exclusive use of a corporate name with
freedom from infringement by similarity is determined by
priority of adoption.[33]
In this case, respondents' corporate names were
registered on the following dates: (1) De La Salle Brothers,
Inc. on October 9, 1961 under SEC Registration No.
19569; (2) De La Salle University, Inc. on December 19,
1975 under SEC Registration No. 65138; (3) La Salle
Academy, Inc. on January 26, 1960 under SEC
Registration No. 16293; (4) De La SalleSantiago Zobel
School, Inc. on October 7, 1976 under SEC Registration
No. 69997; and (5) De La Salle Canlubang, Inc. on August
5, 1998 under SEC Registration No. Al998-01021.[34]
On the other hand, petitioner was issued a Certificate of
Registration only on July 5, 2007 under Company
Registration No. CN200710647.[35] It being clear that
respondents are the prior registrants, they certainly have
acquired the right to use the words "De La Salle" or "La
Salle" as part of their corporate names.
The second requisite is also satisfied since there is a
confusing similarity between petitioner's and respondents'
corporate names. While these corporate names are not
identical, it is evident that the phrase "De La Salle" is the
dominant phrase used.
Petitioner asserts that it has the right to use the phrase "De
La Salle" in its corporate name as respondents did not
obtain the right to its exclusive use, nor did the words
acquire secondary meaning. It endeavoured to
demonstrate that no confusion will arise from its use of the
said phrase by stating that its complete name, "De La Salle
Montessori International of Malolos, Inc.," contains four
other distinctive words that are not found in respondents' causing confusion.[39]
corporate names. Moreover, it obtained the words "De La
Salle" from the French word meaning "classroom," while Petitioner's argument that it obtained the words "De La
respondents obtained it from the French priest named Salle" from the French word meaning "classroom," while
Saint Jean Baptiste de La Salle. Petitioner also compared respondents obtained it from the French priest named
its logo to that of respondent De La Salle University and Saint Jean Baptiste de La Salle,[40] similarly does not hold
argued that they are different. Further, petitioner argued water. We quote with approval the ruling of the SEC En
that it does not charge as much fees as respondents, that Banc on this matter. Thus:
its clients knew that it is not part of respondents' schools,
and that it never misrepresented nor claimed to be an
Generic terms are those which constitute "the common
affiliate of respondents. Additionally, it has gained goodwill
descriptive name of an article or substance," or comprise
and a name worthy of trust in its own right.[36]
the "genus of which the particular product is a species," or
are "commonly used as the name or description of a kind
We are not persuaded.
of goods," or "characters," or "refer to the basic nature of
the wares or services provided rather than to the more
In determining the existence of confusing similarity in
idiosyncratic characteristics of a particular product," and
corporate names, the test is whether the similarity is such
are not legally protectable. It has been held that if a mark
as to mislead a person using ordinary care and
is so commonplace that it cannot be readily distinguished
discrimination. In so doing, the Court must look to the
from others, then it is apparent that it cannot identify a
record as well as the names themselves.[37]
particular business; and he who first adopted it cannot be
injured by any subsequent appropriation or imitation by
Petitioner's assertion that the words "Montessori
others, and the public will not be deceived.
International of Malolos, Inc." are four distinctive words
that are not found in respondents' corporate names so that
Contrary to [petitioner's] claim, the word salle only means
their corporate name is not identical, confusingly similar,
"room" in French. The word la, on the other hand, is a
patently deceptive or contrary to existing laws,[38] does not
definite article ("the") used to modify salle. Thus,
avail. As correctly held by the SEC OGC, all these words,
since salle is nothing more than a room, [respondents']
when used with the name "De La Salle," can reasonably
use of the term is actually suggestive.
mislead a person using ordinary care and discretion into
thinking that petitioner is an affiliate or a branch of, or is
A suggestive mark is therefore a word, picture, or other
likewise founded by, any or all of the respondents, thereby
symbol that suggests, but does not directly describe
something about the goods or services in connection with
which it is used as a mark and gives a hint as to the quality
or nature of the product. Suggestive trademarks therefore
can be distinctive and are registrable.
The appropriation of the term "la salle" to associate the
words with the lofty ideals of education and learning is in
fact suggestive because roughly translated, the words only
mean "the room." Thus, the room could be anything - a
room in a house, a room in a building, or a room in an
office.
xxx
In fact, the appropriation by [respondents] is fanciful,
whimsical and arbitrary because there is no inherent
connection between the words la salle and education, and
it is through [respondents'] painstaking efforts that the term
has become associated with one of the top educational
institutions in the country. Even
assuming arguendo that la salle means "classroom" in
French, imagination is required in order to associate the
term with an educational institution and its particular brand
of service.[41]
We affirm that the phrase "De La Salle" is not merely a
generic term. Respondents' use of the phrase being
suggestive and may properly be regarded as fanciful,
arbitrary and whimsical, it is entitled to legal
protection.[42] Petitioner's use of the phrase "De La Salle"
in its corporate name is patently similar to that of
respondents that even with reasonable care and
observation, confusion might arise. The Court notes not
only the similarity in the parties' names, but also the
business they are engaged in. They are all private
educational institutions offering pre-elementary,
[43]
elementary and secondary courses. As aptly observed
by the SEC En Banc, petitioner's name gives the
impression that it is a branch or affiliate of
respondents.[44] It is settled that proof of actual confusion
need not be shown. It suffices that confusion is probable
or likely to occur.[45]
Finally, the Court's ruling in Lyceum of the
Philippines[46] does not apply.
In that case, the Lyceum of the Philippines, Inc., an
educational institution registered with the SEC,
commenced proceedings before the SEC to compel
therein private respondents who were all educational
institutions, to delete the word "Lyceum" from their
corporate names and permanently enjoin them from using
the word as part of their respective names.
The Court there held that the word "Lyceum" today
generally refers to a school or institution of learning. It is
as generic in character as the word "university." Since
"Lyceum" denotes a school or institution of learning, it is
not unnatural to use this word to designate an entity which
is organized and operating as an educational institution.
Moreover, the Lyceum of the Philippines, Inc.'s use of the
word "Lyceum" for a long period of time did not amount to
mean that the word had acquired secondary meaning in its
favor because it failed to prove that it had been using the
word all by itself to the exclusion of others. More so, there
was no evidence presented to prove that the word has
been so identified with the Lyceum of the Philippines, Inc.
as an educational institution that confusion will surely arise
if the same word were to be used by other educational
institutions.[47]
Here, the phrase "De La Salle" is not generic in relation to
respondents. It is not descriptive of respondent's business
as institutes of learning, unlike the meaning ascribed to
"Lyceum." Moreover, respondent De La Salle Brothers,
Inc. was registered in 1961 and the De La Salle group had
been using the name decades before petitioner's
corporate registration. In contrast, there was no evidence
of the Lyceum of the Philippines, Inc.'s exclusive use of the
word "Lyceum," as in fact another educational institution
had used the word 17 years before the former registered
its corporate name with the SEC. Also, at least nine other
educational institutions included the word in their
corporate names. There is thus no similarity between
the Lyceum of the Philippines case and this case that
would call for a similar ruling.
The enforcement of the protection accorded by Section 18
of the Corporation Code to corporate names is lodged
exclusively in the SEC. By express mandate, the SEC has
absolute jurisdiction, supervision and control over all
corporations. It is the SEC's duty to prevent confusion in
the use of corporate names not only for the protection of
the corporations involved, but more so for the protection of
the public. It has authority to de-register at all times, and
under all circumstances, corporate names which in its
estimation are likely to generate confusion.[48]
Clearly, the only determination relevant to this case is that
one made by the SEC in the exercise of its express
mandate under the law.[49]
Time and again, we have held that findings of fact of quasi-
judicial agencies, like the SEC, are generally accorded
respect and even finality by this Court, if supported by
substantial evidence, in recognition of their expertise on
the specific matters under their consideration, more so if
the same has been upheld by the appellate court, as in this
case.[50]
WHEREFORE, the Petition is DENIED. The assailed
Decision of the CA dated September 27, 2012
is AFFIRMED.
SO ORDERED.