01 ABS-CBN PUBLISHING, INC., v.
DIRECTOR OF THE BUREAU OF TRADEMARKS, confusingly similar, so much so that there may not only be a confusion as to the
(G.R. No. 217916, June 20, 2018 )
DECISION
REYES, JR., J.:
The Case
Challenged before the Court via this Petition for Review on Certiorari under Rule 45
of the Rules of Court is the Resolution1 of the Court of Appeals promulgated on
May 20, 2014, which denied ABS-CBN Publishing, Inc.'s (petitioner) "Motion for
Extension of Time [To File Petition for Review]." Likewise challenged is the
subsequent Resolution2 of the Court of Appeals promulgated on April 15, 2015,
which upheld the earlier Resolution.
The Antecedent Facts
In 2004,3 the petitioner filed with the Intellectual Property Office of the Philippines
(IPO) its application for the registration of its trademark "METRO" (applicant mark)
under class 16 of the Nice classification, with specific reference to "magazines."4
The case was assigned to Examiner Arlene M. Icban (Examiner Icban), who, after a
judicious examination of the application, refused the applicant mark's registration.
According to Examiner Icban, the applicant mark is identical with three other cited
marks, and is therefore unregistrable according to Section 123.1(d) of the
Intellectual Property Code of the Philippines (IPC).5 The cited marks were identified
as (1) "Metro" (word) by applicant Metro International S.A. with Application No.
42000002584,6 (2) "Metro" (logo) also by applicant Metro International S.A. with
Application No. 42000002585,7 and (3) "Inquirer Metro" by applicant Philippine
Daily Inquirer, Inc. with Application No. 42000003811.8
On August 16, 2005, the petitioner wrote a letter9 in response to Examiner Icban's
assessment, and the latter, through Official Action Paper No. 04, subsequently
reiterated her earlier finding which denied the registration of the applicant mark.
Eventually, in the "Final Rejection"10 of the petitioner's application, Examiner Icban
"determined that the mark subject of the application cannot be registered because
it is identical with the cited marks METRO with Regn. No. 42000002584 ['Metro'
(word)] and Regn. No. 42000003811 ['Inquirer Metro']."11
The petitioner appealed the assessment of Examiner Icban before the Director of
the Bureau of Trademarks of the IPO, who eventually affirmed Examiner Icban's
findings. The decision averred that the applicant and cited marks were indeed
goods but also a confusion as to the source or origin of the goods. The fallo of the
Bureau Director's decision reads:
WHEREFORE, premises considered, the instant appeal is hereby DENIED and the
Final Rejection contained in Official Action Paper No. 04, SUSTAINED. Serve copies
of this Decision to [petitioner] and herein Examiner Arlene M. Icban.
SO ORDERED.
Upon the denial of the petitioner's motion for reconsideration, the petitioner
appealed to the Office of the Director General (ODG) of the IPO. After the
submission of the memoranda from the parties, the ODG, on September 19, 2013,
rendered a Decision which upheld Examiner Icban's assessment and the Bureau
Director's decision.
According to the ODG; there is no merit in the petitioner's appeal because (1) the
applicant and cited marks are identical and confusingly similar,13 (2) the
petitioner's mark was deemed abandoned under the old Trademark Law, and thus,
petitioner's prior use of the same did not create a vested right14 under the IPC,15
and (3) the applicant mark has not acquired secondary meaning.16 The fallo of the
ODG decision reads:
Wherefore, premises considered, the appeal is hereby DENIED and the Decision
dated 29 March 2010 and the Order denying the Appellant's Motion for
Reconsideration, of the Director of the Bureau of Trademarks, are hereby
SUSTAINED. The Appellant's Trademark Application No. 4-2004-004507 for METRO
is likewise DENIED.
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 Trademarks. Let a copy of
this Decision be furnished also the library of the Documentation, Information and
Technology Transfer Bureau for its information and records purposes.
SO ORDERED.
The petitioner received a copy of the ODG decision only on October 9, 2013. On the
same day, the petitioner filed before the Court of Appeals its "Motion for Extension
of Time (To File Petition for Review)" which requested for an extension of fifteen
(15) days from October 24, 2013, or until November 8, 2013, to file its petition for
review.18 On October 25, 2013, the petitioner once more filed a motion for
extension of time. In the second motion, the petitioner asked the appellate court
for another extension of the deadline from November 8, 2013 to November 23,
2013.19
Meanwhile, on October 25, 2013, the Court of Appeals issued a Resolution which
granted the petitioner's first motion praying for an extension of time to file its
petition for review, subject to the "warning against further extension." Thus, the
Court of Appeals extended the deadline only until November 8, 2013.20
Relying on the appellate court's favorable response to its second motion for
extension (which was not acted upon by the Court of Appeals), the petitioner failed
to file its petition for review on the deadline set in the Resolution dated October 25,
2013. Instead, the petitioner filed its petition for review only on November 11,
2013-three (3) days after the deadline.21
To justify this delay in filing, the petitioner stated that: (1) it received a copy of the
October 25, 2013 Resolution only on November 8, 2013 at 11:30 in the morning; (2)
on that same day, this Court, through its Public Information Office, suspended
offices in the National Capital Judicial Region in view of Typhoon Yolanda; and (3)
November 9 and 10, 2013 fell on a Saturday and Sunday, respectively.22
On May 20, 2014, the Court of Appeals rendered the assailed Resolution. It ruled
that the petitioner violated its October 25, 2013 Resolution, as well as Section 4,
Rule 43 of the Rules of Court, which provides for the period of appeal.23
On the basis of the foregoing, and the prevailing jurisprudence, the Court of
Appeals consequently denied the petitioner's second motion for extension of time,
and dismissed the petition for the petitioner's failure to file its petition for review
within the deadline.24
On April 15, 2015, the appellate court denied the petitioner's motion for
reconsideration.25
Hence, this petition.
The Issues
The ground upon which the petitioner prays for the reversal of the ruling of the
Court of Appeals is two-fold: first is on procedural law--whether or not the Court of
Appeals erred in dismissing the petition outright for the petitioner's failure to file its
petition for review within the time prescribed by the Court of Appeals; and second
is on substantive law--whether or not the ODG was correct in refusing to register
the applicant mark for being identical and confusingly similar with the cited marks
already registered with the IPO.
The Court's Ruling
After a careful perusal of the arguments presented and the evidence submitted, the
Court finds no merit in the petition.
First, on the procedural issue:
In Bañez vs. Social Security System,26 the Court had occasion to reiterate that
appeal is not a constitutional right, but a mere statutory privilege. Hence, parties
who seek to avail themselves of it must comply with the statutes or rules allowing
it.27 The rule is that failure to file or perfect an appeal within the reglementary
period will make the judgment final and executory by operation of law. Perfection
of an appeal within the statutory or reglementary period is not only mandatory but
also jurisdictional; failure to do so renders the questioned decision/resolution final
and executory, and deprives the appellate court of jurisdiction to alter the
decision/resolution, much less to entertain the appeal.28
In connection herewith, Section 4, Rule 43 of the Rules of Court is clear. The appeal
shall be taken within fifteen (15) days from the notice of the award, judgment, final
order or resolution, or from the date of its last publication, if publication is required
by law for its effectivity, or of the denial of petitioner's motion for new trial or
reconsideration duly filed in accordance with the governing law of the court or
agency a quo.29
More, a litigant is allowed to file only one (1) motion for reconsideration, subject to
the payment of the full amount of the docket fee prior to the expiration of the
reglementary period. Beyond this, another motion for extension of time may be
granted but only for the most compelling reasons.30
Again, in Bañez, the Court ruled that filing of an appeal beyond the reglementary
period may, under meritorious cases, be excused if the barring of the appeal would
be inequitable and unjust in light of certain circumstances therein.31 While there
are instances when the Court has relaxed the governing periods of appeal in order
to serve substantial justice, this was done only in exceptional cases.32
In this case, no exceptional circumstance exists.
In asking the Court of Appeals for a second extension to file its petition for review,
the petitioner merely cited as its excuse the following: (1) heavy pressure of other
professional work; and (2) attendance of the lawyers in charge in an international
lawyers' conference. It said:
However, due to the heavy pressure of other equally important professional work
coupled with intervening delays and the fact of the necessary attendance of the
lawyers in charge of the case in an international lawyer's (sic) conference, the
undersigned counsel will need more time to review and finalize petitioner ABS-CBN
Publishing, Inc.'s Petition for Review.33
As the Court has ruled upon in a number of cases, a lawyer has the responsibility of
monitoring and keeping track of the period of time left to file pleadings, and to see
to it that said pleadings are filed before the lapse of the period.34 Personal
obligations and heavy workload do not excuse a lawyer from complying with his
obligations particularly in timely filing the pleadings required by the Court.35
Indeed, if the failure of the petitioner's counsel to cope with his heavy workload
should be considered a valid justification to sidestep the reglementary period, there
would be no end to litigations so long as counsel had not been sufficiently diligent
or experienced.36
Further, the petitioner should not assume that its motion for extension of time
would be granted by the appellate court. Otherwise, the Court will be setting a
dangerous precedent where all litigants will assume a favorable outcome of a
motion which is addressed to the discretion of the courts based on the prevailing
circumstances of the case.
To be sure, there is a dearth of jurisprudence that upholds the Court of Appeals'
power of discretion in disallowing a second extension of fifteen (15) days. As
correctly cited by the appellate court, Spouses Dycoco vs. Court of Appeals37
explains that the Court of Appeals could not be faulted for merely applying the rules,
and that a dismissal of a petition in accordance therewith is discretion duly
exercised, and not misused or abused.38
Based on the foregoing, and for the guidance of both the bench and the bar, the
rule as it currently stands is that, in the absence of, or in the event of a party's
failure to receive, any resolution from the courts which specifically grants a motion
for extension of time to file the necessary pleading, the parties are required to
abide by the reglementary period provided for in the Rules of Court. Failure to
comply thereto would result to a dismissal or denial of the pleadings for being filed
beyond the reglementary period.
In the case at hand, the Court of Appeals was correct in dismissing the petition. The
petitioner could not assume that its motion would be granted, especially in light of
its flimsy excuse for asking the second extension of time to file its petition for
review.
On this ground alone, the dismissal of the current petition for review is justifiable.
The Court reiterates its warning in the case of Hernandez vs. Agoncillo:39
Time and again, this Court has cautioned lawyers to handle only as many cases as
they can efficiently handle. The zeal and fidelity demanded of a lawyer to his client's
cause require that not only should he be qualified to handle a legal matter, he must
also prepare adequately and give appropriate attention to his legal work. Since a
client is, as a rule, bound by the acts of his counsel, a lawyer, once he agrees to take
a case, should undertake the task with dedication and care. This Court frowns upon
a lawyer's practice of repeatedly seeking extensions of time to file pleadings and
thereafter simply letting the period lapse without submitting any pleading or even
any explanation or manifestation for his omission. Failure of a lawyer to seasonably
file a pleading constitutes inexcusable negligence on his part.40 (Emphasis and
underscoring supplied)
That said, however, even on the merits, the petition still fails to convince.
Second, on the substantive issue:
According to Section 123.1(d) of the Intellectual Property Code of the Philippines
(IPC),41 a mark cannot be registered if it is "identical with a registered mark
belonging to a different proprietor or a mark with an earlier filing or priority date,"
in respect of the following: (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.42
To determine whether a mark is to be considered as "identical" or that which is
confusingly similar with that of another, the Court has developed two (2) tests: the
dominancy and holistic tests. While the Court has time and again ruled that the
application of the tests is on a case to case basis, upon the passage of the IPC, the
trend has been to veer away from the usage of the holistic test and to focus more
on the usage of the dominancy test. As stated by the Court in the case of
McDonald's Corporation vs. L.C. Big Mak Burger, Inc.,43 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 x x
x or a dominant feature thereof.'"44 This is rightly so because Sec. 155.1 provides
that:
SECTION 155. Remedies; Infringement. - Any person who shall, without the consent
of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation
of a registered mark or the same container or a dominant feature thereof in
connection with the sale, offering for sale, distribution, advertising of any goods or
services including other preparatory steps necessary to carry out the sale of any
goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive; or x x x. (Emphasis and underscoring
supplied)
In using this test, focus is to be given to the dominant features of the marks in
question. In the 1954 case of Co Tiong Sa vs. Director of Patents,45 the Court, in
using the dominancy test, taught that:
But differences of variations in the details of one trademark and of another are not
the legal!y accepted tests of similarity in trademarks. 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.46
(Emphasis and underscoring supplied)
The Court, in Skechers, U.S.A., Inc. vs. Inter Pacific Industrial Trading Corp.,47 and in
once again using the dominancy test, reiterated Del Monte Corporation vs. Court of
Appeals48 in saying that "the defendants in cases of infringement do not normally
copy but only make colorable changes."49 The Court emphasized that "the most
successful form of copying is to employ enough points of similarity to confuse the
public, with enough points of difference to confuse the courts."50
In other words, in committing the infringing act, the infringer merely introduces
negligible changes in an already registered mark, and then banks on these slight
differences to state that there was no identity or confusing similarity, which would
result in no infringement. This kind of act, which leads to confusion in the eyes of
the public, is exactly the evil that the dominancy test refuses to accept. The small
deviations from a registered mark are insufficient to remove the applicant mark
from the ambit of infringement.
In the present case, the dominant feature of the applicant mark is the word
"METRO" which is identical, both visually and aurally, to the cited marks already
registered with the IPO. As held by the ODG-and correctly at that -
x x x there is no dispute that the subject and cited marks share the same dominant
word, "Metro". (sic) Even if, as the Appellant (petitioner herein) points out, the
second cited mark owned by Metro International contains an accompanying device,
and the third cited mark contains the terms "Philippine Daily Inquirer", (sic) the
dominant feature of the subject and cited marks is still clearly the word "Metro",
(sic) spelled and pronounced in exactly the same way. The identity between the
marks would indubitably result in confusion of origin as well as goods.51 (Emphasis
and underscoring supplied, citations omitted)
Also, greater relevance is to be accorded to the finding of Examiner Icban on the
confusing similarity between, if not the total identity of, the applicant and cited
marks. Examiner Icban, in reiterating with finality her earlier findings, said that the
applicant and cited marks are "the same in sound, spelling, meaning, overall
commercial impression, covers substantially the same goods and flows through the
same channel of trade," which leads to no other conclusion than that "confusion as
to the source of origin is likely to occur."52 This is also the tenor of Examiner Icban's
"Final Rejection" of the application, which stated that:
After an examination of the application, the undersigned IPRS has determined that
the mark subject of the application cannot be registered because it is identical with
the cited marks METRO with Regn. No. 42000002584 and Regn. No. 42000003811.
METRO being dominant word (sic) among the marks causes remarkable similarity in
sound, spelling, meaning, connotation, overall commercial impression, covers
identical goods and flows through the same channel of trade. The concurrent use by
the parties of the word METRO is likely to cause confusion among purchasers as
well as confusion of business or origin hence, registration of this subject application
is proscribed under R.A. 8293, Sec. 123.1(d).53 (Emphasis and underscoring
supplied)
The findings of Examiner Icban, reviewed first by the Director of the Bureau of
Trademarks, and again by the Director General of the IPO, are the result of a
judicious study of the case by no less than the government agency duly empowered
to examine applications for the registration of marks.54 These findings deserve
great respect from the Court. Absent any strong justification for the reversal
thereof-as in this case-the Court shall not reverse and set aside the same. As such,
the prior findings remain: the applicant mark, "METRO," is identical to and
confusingly similar with the other cited marks already registered. By authority of
the Sec. 123.l(d) of the IPC, the applicant mark cannot be registered. The ODG is
correct in upholding the Decision of both the Director of the Bureau of Trademarks
and Examiner Icban.
This ruling stands despite the specious arguments presented by the petitioner in
the current petition.
The petitioner asserts that it has a vested right over the applicant mark because
Metro Media Publishers, Inc. (Metro Media), the corporation from which the
petitioner acquired the applicant mark, first applied for the registration of the same
under the old Trademark Law,55 and since then, actually used the applicant mark in
commerce. The petitioner belabors the point that under the old Trademark law,
actual use in commerce is a pre-requisite to the acquisition of ownership over a
trademark and a trade name.56 The petitioner even went on further in asserting
that its actual use of the applicant mark enabled it to automatically acquire
trademark rights, which should have extended even upon the promulgation of the
IPC in 1998.
Two things must be said of this argument.
First, there is no question that the petitioner's predecessor already applied for the
registration of the applicant mark "METRO" on November 3, 1994 under Class 16 of
the Nice classification. It was docketed as Application No. 4-1994-096162.57 There
is likewise no question that as early as 1989, Metro Media has already used the
applicant mark "METRO" in its magazine publication. At that point, Metro Media
exercised all the rights conferred by law to a trademark applicant.
Second, however, the petitioner itself admitted in its petition that its
application/registration with the IPO under Application No. 4-1994-096162 was
already "deemed abandoned."58
While it is quite noticeable that the petitioner failed to discuss the implications of
this abandonment, it remains a fact that once a trademark is considered abandoned,
the protection accorded by the IPC, or in this case the old Trademark Law, is also
withdrawn. The petitioner, in allowing this abandonment, cannot now come before
the Court to cry foul if another entity has, in the time that it has abandoned its
trademark and in full cognizance of the IPC and the IPO rules, registered its own.
In fact, in Birkenstock Orthopaedie GMBH and Co. KG. vs. Philippine Shoe Expo
Marketing Corporation,59 the Court accorded no right at all to a trademark owner
whose trademark was abandoned for failure to file the declaration of actual use as
required by Sec. 12 of the old Trademark Law.60 In Mattel, Inc. vs. Francisco,61 the
Court rendered a petition as moot and academic because the cited mark has
effectively been abandoned for the non-filing of a declaration of actual use, and
thus presents no hindrance to the registration of the applicant mark.
Also, as correctly pointed out by the ODG, this abandonment is the very reason why
the petitioner lost its rights over its trademark, and that it is also the reason why,
after twenty years (20) from the initial application and after actual use of the
applicant mark, the petitioner once again came before the IPO to apply for
registration. The ODG said:
Records show that this is the very situation the [petitioner] finds itself in. It has
acquired no right under the old trademark law since its original application way
back 1994 has been deemed abandoned, which is the reason why it filed the
current application in 2004 under the new law. Clearly, then, if [petitioner] has
acquired no right under R.A. 166, it possesses no existing right that ought to be
preserved by virtue of Section 236 of the IP Code.62 (Emphasis and underscoring
supplied)
Anent the petitioner's argument that "confusion between the marks is highly
unlikely,"63 the petitioner asserts that the applicant mark "METRO" (word) is
covered by class 16 of the Nice classification under "magazines," the copies of
which are sold in "numerous retail outlets in the Philippines,"64 whereas the cited
mark "METRO" (word) is used in the Philippines only in the internet through its
website and does not have any printed circulation.65
But like the petitioner's earlier argument, this does not hold water. Section 3, Rule
18 of the Rules of Procedure for Intellectual Property Cases66 provides for the legal
presumption that there is likelihood of confusion if an identical mark is used for
identical goods. The provision states:
SEC. 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.
In the present case, the applicant mark is classified under "magazines," which is
found in class 16 of the Nice classification. A perusal of the records would reveal,
however, that the cited marks "METRO" (word) and "METRO" (logo) are also both
classified under magazines. In fact, Examiner Icban found that the cited marks were
used on the following classification of goods:
Paper, cardboard and goods made from these materials, not included in other
classes; newspapers, magazines, printed matter and other printed publications;
bookbinding material; photographs; stationery; adhesives for stationery or
household purposes; artists materials; paint brushes; typewriters and office
requisites (except furniture); instructional and teaching material (except apparatus);
plastics materials for packaging (not included in other classes); playing cards;
printers types; printing blocks.67 (Emphasis and underscoring supplied)
Thus, the presumption arises.
Even then, it must be emphasized that absolute certainty of confusion or even
actual confusion is not required to refuse registration. Indeed, it is the mere
likelihood of confusion that provides the impetus to accord protection to
trademarks already registered with the IPO. The Court cannot emphasize enough
that the cited marks "METRO" (word) and "METRO" (logo) are identical with the
registrant mark "METRO" both in spelling and in sound. In fact, it is the same exact
word. Considering that both marks are used in goods which are classified as
magazines, it requires no stretch of imagination that a likelihood of confusion may
occur. Again, the Court points to the finding of Examiner Icban which was reviewed
and upheld twice: one by the Director of the Bureau of Trademarks and another by
the Director General of the IPO.
As a final point, the petitioner, in the pleadings submitted, manifested that the
cited marks are no longer valid. It said that: (1) the cited mark "METRO" (logo) was
removed from the IPO register for non-use, citing the IPO online database,68 (2) the
cited mark "INQUIRER METRO," while valid according to the IPO online database,
was cancelled according to a certain certification from the Bureau of Trademarks of
the IPO; and (3) the cited mark "METRO" (word) already expired on June 26, 2016
according to yet another certification from the IPO.
A perusal of the records, however, would reveal that these alleged de--registration
and cancellation all allegedly occurred after the ODG has already ruled on the
instant case. Considering that the Court is not a trier of facts, the Court could
therefore not make a determination of the validity and accuracy of the statements
made in the petitioner's manifestation. As such, the Court, through the limited facts
extant in the records, could not give weight and credence thereto.
Nonetheless, not all is lost for the petitioner. Should it be true that the cited marks,
which were the basis of the IPO in refusing to register the applicant mark, were
already de-registered and cancelled, nothing prevents the petitioner from once
again applying for the registration of the applicant mark before the IPO.
WHEREFORE, premises considered, the Resolutions of the Court of Appeals dated
May 20, 2014 and April 15, 2015, are hereby AFFIRMED without prejudice to the
petitioner's refiling of its application for the registration of the trademark "METRO"
before the Intellectual Property Office.
SO ORDERED.
02 G.R. No. 217781, June 20, 2018 SAN MIGUEL PURE FOODS COMPANY, INC.,
Petitioner, v. FOODSPHERE, INC., Respondent.
G.R. No. 217788, June 20, 2018 FOODSPHERE, INC., Petitioner, v. SAN MIGUEL
PURE FOODS COMPANY, INC., Respondent.
DECISION
PERALTA, J.:
Before the Court are the consolidated cases of G.R. No. 217781 and G.R. No.
217788. On the one hand, San Miguel Pure Foods Company, Inc. (SMPFCI), in G.R.
No. 217781, filed a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, questioning the Resolution1 dated April 8, 2015 of the Court of Appeals (CA),
Former Fourteenth Division, in CA--G.R. SP No. 131945, but only insofar as the same
resolved to delete from the body of its Decision2 dated September 24, 2014 the
award of exemplary damages. On the other hand, in G.R. No. 217788, Foodsphere,
Inc., via a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
seeks to reverse and set aside the same September 24, 2014 Decision and April 8,
2015 Resolution of the CA declaring it guilty of unfair competition and holding it
liable for damages.
The antecedent facts are as follows:
The parties herein are both engaged in the business of the manufacture, sale, and
distribution of food products, with SMPFCI owning the trademark "PUREFOODS
FIESTA HAM" while Foodsphere, Inc. products (Foodsphere) bear the "CDO" brand.
On November 4, 2010, SMPFCI filed a Complaint3 for trademark infringement and
unfair competition with prayer for preliminary injunction and temporary restraining
order against Foodsphere before the Bureau of Legal Affairs (BLA) of the Intellectual
Property Office (IPO) pursuant to Sections 155 and 168 of Republic Act (R.A.) No.
8293, otherwise known as the Intellectual Property Code (IP Code), for using, in
commerce, a colorable imitation of its registered trademark in connection with the
sale, offering for sale, and advertising of goods that are confusingly similar to that
of its registered trademark.4
In its complaint, SMPFCI alleged that its "FIESTA" ham, first introduced in 1980, has
been sold in countless supermarkets in the country with an average annual sales of
P10,791,537.25 and is, therefore, a popular fixture in dining tables during the
Christmas season. Its registered "FIESTA" mark has acquired goodwill to mean
sumptuous ham of great taste, superior quality, and food safety, and its trade dress
"FIESTA", combined with a figure of a partly sliced ham served on a plate with fruits
on the side had likewise earned goodwill. Notwithstanding such tremendous
goodwill already earned by its mark, SMPFCI continues to invest considerable
resources to promote the FIESTA ham, amounting to no less than P3,678,407.95.5
Sometime in 2006, however, Foodsphere introduced its "PISTA" ham and
aggressively promoted it in 2007, claiming the same to be the real premium ham. In
2008, SMPFCI launched its "Dapat ganito ka-espesyal" campaign, utilizing the
promotional material showing a picture of a whole meat ham served on a plate with
fresh fruits on the side. The ham is being sliced with a knife and the other portion,
held in place by a serving fork. But in the same year, Foodsphere launched its
"Christmas Ham with Taste" campaign featuring a similar picture. Moreover, in
2009, Foodsphere launched its "Make Christmas even more special" campaign,
directly copying SMPFCI's "Dapat ganito ka-espesyal" campaign. Also in 2009,
Foodsphere introduced its paper ham bag which looked significantly similar to
SMPFCI's own paper ham bag and its trade dress and its use of the word "PISTA" in
its packages were confusingly similar to SMPFCI's "FIESTA" mark.6
Thus, according to SMPFCI, the striking similarities between the marks and products
of Foodsphere with those of SMPFCI warrant its claim of trademark infringement on
the ground of likelihood of confusion as to origin, and being the owner of "FIESTA,"
it has the right to prevent Foodsphere from the unauthorized use of a deceptively
similar mark. The word "PISTA" in Foodsphere's mark means "fiesta," "feast," or
"festival" and connotes the same meaning or commercial impression to the buying
public of SMPFCI's "FIESTA" trademark. Moreover, "FIESTA" and "PISTA" are
similarly pronounced, have the same number of syllables, share common
consonants and vowels, and have the same general appearance in their respective
product packages. In addition, the "FIESTA" and "PISTA" marks are used in the same
product which are distributed and marketed in the same channels of trade under
similar conditions, and even placed in the same freezer and/or displayed in the
same section of supermarkets. Foodsphere's use, therefore, of the "PISTA" mark
will mislead the public into believing that its goods originated from, or are licensed
or sponsored by SMPFCI, or that Foodsphere is associated with SMPFCI, or its
affiliate. The use of the "PISTA" trademark would not only result in likelihood of
confusion, but in actual confusion.7
Apart from trademark infringement, SMPFCI further alleged that Foodsphere is
likewise guilty of unfair competition. This is because there is confusing similarity in
the general appearance of the goods of the parties and intent on the part of
Foodsphere, to deceive the public and defraud SMPFCL According to SMPFCI, there
is confusing similarity because the display panel of both products have a picture of a
partly sliced ham served on a plate of fruits, while the back panel features other
ham varieties offered, both "FIESTA" and "PISTA" are printed in white bold stylized
font, and the product packaging for both "FIESTA" and "PISTA" consists of box-
typed paper bags made of cardboard materials with cut-out holes on the middle top
portion for use as handles and predominantly red in color with a background design
of Christmas balls, stars, snowflakes, and ornate scroll. Moreover, Foodsphere's
intent to deceive the public is seen from its continued use of the word "PISTA" for
its ham products and its adoption of packaging with a strong resemblance of
SMPFCI's "FIESTA" ham packaging. For SMPFCI, this is deliberately carried out for
the purpose of capitalizing on the valuable goodwill of its trademark and causing
not only confusion of goods but also confusion as to the source of the ham product.
Consequently, SMPFCI claimed to have failed to realize income of at least
P27,668,538.38 and P899,294.77 per month in estimated actual damages
representing foregone income in sales. Thus, it is entitled to actual damages and
attorney's fees.8
For its part, Foodsphere denied the charges of trademark infringement and
countered that the marks "PISTA" and "PUREFOODS FIESTA HAM" are not
confusingly similar and are, in fact, visually and aurally distinct from each other. This
is because PISTA is always used in conjunction with its house mark "CDO" and that
"PUREFOODS FIESTA HAM" bears the housemark "PUREFOODS," rendering
confusion impossible. Moreover, Foodsphere maintained that SMPFCI does not
have a monopoly on the mark "FIESTA" for the IPO database shows that there are
two (2) other registrations for "FIESTA," namely "FIESTA TROPICALE" and "HAPPY
FIESTA." Also, there are other products in supermarkets that bear the mark
"FIESTA" such as "ARO FIESTA HAM," "ROYAL FIESTA," and "PUREGOLD FIESTA
HAM," but SMPFCI has done nothing against those manufacturers, making it guilty
of estoppel in pais, and is, therefore, estopped from claiming that the use of other
manufacturers of the mark "FIESTA" will result in confusion and/or damage to itself.
Even assuming that the marks are confusingly similar, Foodsphere asserted that it is
SMPFCI who is guilty of infringement vis-a-vis its registered trademark "HOLIDAY," a
translation and word bearing the same meaning as "FIESTA." Foodsphere has been
using its "HOLIDAY" trademark since 1970 and had registered the same in 1986,
while SMPFCI registered its "FIESTA" trademark only in 2007. In fact, Foodsphere
noted that it has been using "PISTA" since 2006 which is earlier than SMPFCI's filing
for registration of "FIESTA" in 2007. In addition, Foodsphere asseverated that
SMPFCI cannot appropriate for itself images of traditional utensils and garnishing of
ham in its advertisements. Confusion between the marks, moreover, is rendered
impossible because the products are sold in booths manned by different
"promodisers." Also, hams are expensive products and their purchasers are well-
informed not only as to their features but also as to the manufacturers thereof.9
Furthermore, Foodsphere similarly denied the allegation that it is guilty of unfair
competition or passing off its product as that of SMPFCI. As mentioned, the "PISTA"
and "FIESTA" labels are substantially different in the manner of presentation,
carrying their respective house marks. Moreover, its paper ham bags are labeled
with their respective house marks and are given to consumers only after purchase,
hence, they do not factor in when the choice of ham is being made. Also,
Foodsphere claims to have been using the red color for its boxes and it was SMPFCI,
by its own admission, that switched colors from green to red in 2009 for its own
ham bags.10
On July 17, 2012, the BLA, through its Director, rendered its Decision11 dismissing
SMPFCI's complaint for lack of merit. First, the BLA held that there could be no
trademark infringement because Foodsphere began using the "PISTA" mark in 2006
and even filed a trademark application therefor in the same year, while SMPFCI's
application for trademark registration for "FIESTA" was filed and approved only in
2007. SMPFCI, thus, had no cause of action. Second, SMPFCI's complaint was filed
beyond the four (4)-year prescriptive period prescribed under the Rules and
Regulation on Administrative Complaints for Violation of Law Involving Intellectual
Property Rights. Third, the BLA found the testimonies and surveys adduced in
evidence by SMPFCI to be self-serving. Fourth, comparing the competing marks
would not lead to confusion, much less deception of the public. Finally, the BLA
ruled that SMPFCI failed to convincingly prove the presence of the elements of
unfair competition.12
On September 10, 2013, however, the Office of the Director General partially
granted SMPFCI's appeal, affirming the BLA's ruling on the absence of trademark
infringement but finding Foodsphere liable for unfair competition.13 The Director
General held that one can see the obvious differences in the marks of the parties.
SMPFCI's mark is a composite mark where its house mark, namely "PURE FOODS," is
clearly indicated and is followed by the phrase "FIESTA HAM" written in stylized
font whereas Foodsphere's mark is the word "PISTA" written also in stylized font.
Applying the 'Dominancy Test' and the 'Holistic Test' show that Foodsphere cannot
be held liable for trademark infringement due to the fact that the marks are not
visually or aurally similar and that the glaring differences in the presentation of
these marks will prevent any likely confusion, mistake, or deception to the
purchasing public. Moreover, "PISTA" was duly registered in the IPO, strengthening
the position that "PISTA" is not an infringement of "PURE FOODS FIESTA HAM" for 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.14 On the other hand, the Director General found Foodsphere
to be guilty of unfair competition for it gave its "PISTA" ham the general appearance
that would likely influence purchasers to believe that it is similar with SMPFCI's
"FIESTA" ham. Moreover, its intention to deceive is inferred from the similarity of
the goods as packed and offered for sale. Thus, the Director General ordered
Foodsphere to pay nominal damages in the amount of P100,000.00 and attorney's
fees in the amount of P300,000.00 and to cease and desist from using the labels,
signs, prints, packages, wrappers, receptacles, and materials used in committing
unfair competition, as well as the seizure and disposal thereof.15
Both SMPFCI and Foodsphere filed their appeals before the CA via Petitions for
Review dated October 8, 201316 and October 29, 2013,17 respectively. SMPFCI
sought a reconsideration of the Director General's finding that Foodsphere is not
guilty of trademark infringement while Foodsphere faulted said Director General for
declaring it guilty of unfair competition.
On March 6, 2014, the CA, Eleventh Division, denied SMPFCI's petition and affirmed
the ruling of the Director General on the absence of trademark infringement.
According to the appellate court, Foodsphere was merely exercising, in good faith,
its right to use its duly registered trademark "PISTA" in the lawful pursuit of its
business.18 Thereafter, in a Decision dated September 24, 2014, the CA Fourteenth
Division likewise denied Foodsphere's petition, affirming the Director General's
finding that Foodsphere was guilty of unfair competition. The CA held that the
elements thereof are present herein. Consequently, it ordered Foodsphere to pay
SMPFCI nominal and exemplary damages as well as attorney' fees.19 In a
Resolution dated April 8, 2015, however, the CA clarified its September 24, 2014
Decision and resolved to delete the award of exemplary damages for SMPFCI never
prayed for the same.20
In a Resolution21 dated June 13, 2016, the Court, in G.R. No. 215475, denied
SMPFCI's Petition for Review on Certiorari for failure to sufficiently show that the
CA, in its Decision and Resolution, dated March 6, 2014 and November 13, 2014,
respectively, finding that Foodsphere is not liable for trademark infringement, and
committed any reversible error in the challenged decision and resolution as to
warrant the exercise of the Court's discretionary appellate jurisdiction. The Court
also found that the issues raised by SMPFCI are factual in nature.
Meanwhile, on June 8, 2015, both SMPFCI and Foodsphere filed the instant
Petitions for Review on Certiorari docketed as G.R. No. 217781 and 217788,
respectively. In G.R. No. 217781, SMPFCI invoked the following argument:
I.
THE HONORABLE COURT OF APPEALS ERRED IN RESOLVING THAT THE AWARD OF
EXEMPLARY DAMAGES BE DELETED FROM THE BODY OF ITS DECISION DATED 24
SEPTEMBER 2014 WHEN SMPFCI'S ENTITLEMENT THERETO IS CLEARLY SUPPORTED
NOT ONLY BY PLEADINGS AND EVIDENCE ON RECORD, BUT ALSO BY THE
HONORABLE COURT OF APPEALS' OWN RATIOCINATIONS FOUND IN THE BODY OF
ITS DECISION.
Conversely, G.R. No. 217788, Foodsphere raised the following argument:
I.
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN EXCESS OF
OR AMOUNTING TO LACK OF JURISDICTION WHEN IT ISSUED THE ASSAILED
DECISION AND RESOLUTION BEING NOT IN ACCORDANCE WITH LAW OR WITH
APPLICABLE DECISIONS OF THE HONORABLE COURT WHEN IT DECLARED THAT
FOODSPHERE WAS GUILTY OF UNFAIR COMPETITION.
In G.R. No. 217781, SMPFCI clarifies that it assails the April 8, 2015 Resolution of the
CA, not on its finding that Foodsphere was guilty of unfair competition, but only
insofar as it deleted its award of exemplary damages in its September 24, 2014
Decision. According to SMPFCI, it was a mere mistake that the said Decision failed
to state the amount of exemplary damages and that its dispositive portion failed to
award said exemplary damages, merely stating that "the petition is DENIED, and the
Decision x x x of the Director General is AFFIRMED."22 SMPFCI asserts that where
there is a conflict between the dispositive portion and the body of the decision, the
dispositive portion controls. But where the inevitable conclusion from the body of
the decision is so clear as to show that there was a mistake in the dispositive
portion, the body of the decision will prevail.23 Here, when the CA held that "as for
exemplary damages, the award thereof was warranted," it is beyond cavil that
SMPFCI is entitled thereto.
Moreover, SMPFCI maintains that the CA ruling that it never prayed for exemplary
damages in the proceedings, its prayer for damages being limited only to actual
damages and attorney's fees, is utterly false for it specifically prayed for the same in
several pleadings it filed before the BLA and the Office of the Director General. Even
assuming that it indeed failed to pray for exemplary damages, SMPFCI alleges that it
was still erroneous for the CA to delete the award of the same. It is well settled that
a court may grant relief to a party, even if said party did not pray for it in his
pleadings for a prayer for "other remedies just and equitable under the premises" is
broad enough to justify the extension of a remedy different from that requested.
Thus, in view of the foregoing, coupled with the factual circumstances of the case
leading to the conclusion that Foodsphere is guilty of unfair competition, SMPFCI
essentially prays that the Court: (1) issue a permanent injunction against
Foodsphere to prevent it from infringing the rights of SMPFCI by seizing all products
violative of SMPFCI's IP rights and by forfeiting all properties used in the infringing
acts; (2) order Foodsphere to pay SMPFCI the amount of P27,668,538.38,
representing lost income of SMPFCI, P899,294.77 per month in estimated actual
damages, or moderate or temperate damages; (3) order Foodsphere to pay
attorney's fees in the amount of P300,000.00; and (4) order Foodsphere to pay
exemplary damages in the amount of P300,000.00.24
In G.R. No. 217788, Foodsphere denied the allegations of unfair competition,
denying SMPFCI's claim that the confusing similarity between the respective
packaging of the parties' products began in 2009 when Foodsphere changed its
packaging from a paper box to a paper ham bag, significantly similar to SMPFCI's
paper ham bag. According to Foodsphere, while the packages were both in the form
of bags, their respective trademarks were boldly printed thereon. Moreover, even
prior to SMPFCI's use of the questioned ham bags in 2009, Foodsphere had already
been adopting the image of partly-sliced hams laced with fruits and red color on its
packages.25 In addition, Foodsphere alleged that any similarity in the general
appearance of the packaging does not, by itself, constitute unfair competition. This
is because first, packaging is not the exclusive ownership of SMPFCI which does not
have a patent or trademark protection therefor. Second, the mere fact of being the
first user does not bestow vested right to use the packaging to the exclusion of
everyone else. Third, the circumstance that the manufacturer has printed its name
all over the packaging negates fraudulent intent to palm off its goods as another's
product. Fourth, SMPFCI cannot claim that it has exclusive right or monopoly to use
the colors red and green in its packaging or the image of partly sliced hams. Fifth,
similarity in the packaging does not necessarily constitute "confusing" similarity.
Sixth, the circumstances under which the competing products are sold negates the
likelihood of confusion for consumers are more discerning on the Christmas ham
they will purchase, which is not any ordinary, low priced product. Seventh, SMPFCI
failed to prove likelihood of confusion or intent to deceive on the part of
Foodsphere. Finally, Foodsphere maintained that there was no basis for the CA to
award nominal damages and attorney's fees in view of the absence of any violation
of SMPFCI's right.26
The petitions are devoid of merit.
With respect to G.R. No. 217781, the. Court finds no reason to reverse the April 8,
2015 Resolution of the CA insofar as it resolved to delete from the body of its
September 24, 2014 Decision the award of exemplary damages. SMPFCI said so
itself, when there is a conflict between the dispositive portion or fallo of a decision
and the opinion of the court contained in the text or body of the judgment, the
former prevails over the latter. This rule rests on the theory that the fallo is the final
order, while the opinion in the body is merely a statement ordering nothing. Thus,
an order of execution is based on the disposition, not on the body, of the
Decision.27 Contrary to SMPFCI's assertion, moreover, the Court finds inapplicable
the exception to the foregoing rule which states that the body of the decision will
prevail in instances where the inevitable conclusion from the body of the decision is
so clear as to show that there was a mistake in the dispositive portion.
A cursory perusal of the challenged September 24, 2014 Decision reveals that the
mistake lies not in the fallo or dispositive portion but in the body thereof, the
pertinent portions of which provide:
Having been found guilty of unfair competition, Foodsphere was correctly ordered
to pay nominal damages of P100,000.00. Under Article 2221 of the Civil Code,
nominal damages are recoverable in order to vindicate or recognize the rights of
the plaintiff which have been violated or invaded by the defendant. x x x
As for SMPFCI's claim for lost profit or unrealized income of more than P27 Million,
its failure to properly substantiate. the same left the Office of the Director General
without any basis to award it.
As for exemplary damages, the award thereof was warranted on the strength of In-
N-Out Burger, Inc. v. Sehwani, for correction or example for public good, such as the
enhancement of the protection accorded to intellectual property and the
prevention of similar acts of unfair competition. The award of attorney's fees must
likewise be upheld as SMPFCI was compelled to engage the services of counsel to
protect its rights.28
As can be gleaned from above, the intention of the CA was merely to affirm the
findings of the Director General insofar as the award of damage was concerned.
This was shown in its statements such as "Foodsphere was correctly ordered to pay
nominal damages," "its failure to properly substantiate the same left the Office of
the Director General without any basis to award it," "as for exemplary damages, the
award thereof was warranted," and "the award of attorney's fees must likewise be
upheld." This was also shown when the CA clearly disposed as follows:
"ACCORDINGLY, the petition is DENIED, and the Decision dated September 10, 2013
of the Office of the Director General, AFFIRMED."29 It can, therefore, be derived,
from the wording of the CA Decision, that it merely intended to adopt the
resolution of the Director General on the award of damages. Consequently, since
nowhere in the affirmed Decision did the Director General award exemplary
damages to SMPFCI, for what was awarded was only nominal damages and
attorney's fees, it follows then that the CA likewise did not intend on awarding the
same to SMPFCI. Thus, what controls herein is the fallo.
Besides, it bears stressing that SMPFCI failed to prove its entitlement to exemplary
damages. Article 2233 of the Civil Code provides that exemplary damages cannot be
recovered as a matter of right; the court will decide whether or not they should be
adjudicated while Article 2234 thereof provides that while the amount of the
exemplary damages need not be proven, the plaintiff must show that he is entitled
to moral, temperate or compensatory damages before the court may consider the
question of whether or not exemplary damages should be awarded.

Thus, the Court has held, time and again, that exemplary damages may be awarded
for as long as the following requisites are present: (1) they may be imposed, by way
of example, only in addition, among others, to compensatory damages, only after
the claimant's right to them has been established, and cannot be recovered as a
matter of right, their determination depending upon the amount of compensatory
damages that may be awarded to the claimant; (2) the claimant must first establish
his right to moral, temperate, liquidated or compensatory damages; and (3) the act
must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or
malevolent manner.30
Here, SMPFCI particularly failed to prove its right to moral, temperate, liquidated or
compensatory damages. In its complaint, SMPFCI prayed that Foodsphere be
ordered to pay P27,668,538.38 representing income it would have made if not for
the infringement and P899,294.77 per month in estimated actual damages,
representing foregone income in sales for the continuous use of the "PISTA" mark in
connection with the selling, offering for sale and distribution of its ham product
during the pendency of the case.31 But as the Director General aptly found, SMPFCI
neither adduced sufficient evidence to prove its claim of foregone income or sales
nor presented evidence to show the profit or sales. Thus,.in view of such failure to
prove its right to compensatory damages, as well as to moral and temperate
damages, the CA correctly resolved to delete from the body of its September 24,
2014 Decision the award of exemplary damages.
As regards G.R. No. 217788, the Court likewise affirms the ruling of the CA, which in
turn, affirmed the findings of the Director General.
Section 168 of the IP Code provides that:
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.
168.2. Any person who shall employ deception or any other means contrary to good
faith by which he shall pass off the goods manufactured by him or in which he deals,
or his business, or services for those of the one having established such goodwill, or
who shall commit any acts calculated to produce said result, shall be guilty of unfair
competition, and shall be subject to an action therefor.
168.3. In particular, and without in any way limiting the scope of protection against
unfair competition, the following shall. be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance of
goods of another manufacturer or dealer, either as to the goods themselves or in
the wrapping of the packages in which they are contained, or the devices or words
thereon, or in any other feature of their appearance, which would be likely to
influence purchasers to believe that the goods offered are those of a manufacturer
or dealer, other than the actual manufacturer or dealer, or who otherwise clothes
the goods with such appearance as shall deceive the public and defraud another of
his legitimate trade, or any subsequent vendor of such goods or any agent of any
vendor engaged in selling such goods with a like purpose;
(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.
168.4. The remedies provided by Sections 156, 157 and 161 shall apply mutatis
mutandis. (Sec. 29, R.A. No. 166a)
Time and again, the Court has held that unfair competition consists of the passing
off (or palming off) or attempting to pass off upon the public of the goods or
business of one person as the goods or business of another with the end and
probable effect of deceiving the public. Passing off (or palming off) takes place
where the defendant, by imitative devices on the general appearance of the goods,
misleads prospective purchasers into buying his merchandise under the impression
that they are buying that of his competitors. In other words, the defendant gives his
goods the general appearance of the goods of his competitor with the intention of
deceiving the public that the goods are those of his competitor.32 The "true test,"
therefore, of unfair competition has thus been "whether the acts of the defendant
have the intent of deceiving or are calculated to deceive the ordinary buyer making
his purchases under the ordinary conditions of the particular trade to which the
controversy relates."33
Thus, 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. 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. Actual fraudulent intent need not be shown.34
In the instant case, the Court finds no error with the findings of the CA and Director
General insofar as the presence of the foregoing elements is concerned. First of all,
there exists a substantial and confusing similarity in the packaging of Foodsphere's
product with that of SMPFCI, which, as the records reveal, was changed by
Foodsphere from a paper box to a paper ham bag that is significantly similar to
SMPFCI's paper ham bag. As duly noted by the Director General and the CA, both
packages use paper ham bags as the container for the hams, both paper ham bags
use the red color as the main colors, and both have the layout design appearing on
the bags consisting of a partly sliced ham and fruits on the front and other ham
varieties offered at the back. Thus, Foodsphere's packaging in its entirety, and not
merely its "PISTA" mark thereon, renders the general appearance thereof
confusingly similar with the packaging of SMPFCI's ham, that would likely influence
purchasers to believe that these products are similar, if not the same, as those of
SMPFCI.
Second of all, Foodsphere's intent to deceive the public, to defraud its competitor,
and to ride on the goodwill of SMPFCI's products is evidenced by the fact that not
only did Foodsphere switch from its old box packaging to the same paper ham bag
packaging as that used by SMPFCI, it also used the same layout design printed on
the same. As the Director General observed, why, of the millions of terms and
combinations of letters, designs, and packaging available, Foodsphere had to
choose those so closely similar to SMPFCI's if there was no intent to pass off upon
the public the ham of SMPFCI as its own with the end and probable effect of
deceiving the public.
At this juncture, it is worthy to note that unfair competition is always a question of
fact. There is no inflexible rule that can be laid down as to what will constitute the
same, each case being, in the measure, a law unto itself. Thus, the question to be
determined is whether or not, as a matter of fact, the name or mark used by the
defendant has previously come to indicate and designate plaintiffs goods, or, to
state it in another way, whether defendant, as a matter of fact, is, by his conduct,
passing off defendant's goods as plaintiffs goods or his business as plaintiffs
business.35 As such, the Court is of the opinion that the case records readily
supports the findings of fact made by the Director General as to Foodsphere's
commission of unfair competition. Settled is the rule that factual findings of
administrative agencies are generally accorded respect and even finality by this
Court, if such findings are supported by substantial evidence, as it is presumed that
these agencies have the knowledge and expertise over matters under their
jurisdiction,36 more so when these findings are affirmed by the Court of Appeals.37
WHEREFORE, premises considered, the instant petitions in G.R. Nos. 217781 and
217788 are DENIED. The assailed Decision dated September 24, 2014 and
Resolution dated April 8, 2015 of the Court of Appeals in CA-G.R. SP No. 131945 are
hereby AFFIRMED.
SO ORDERED.
03 ASIA PACIFIC RESOURCES INTERNATIONAL HOLDINGS, LTD., PETITIONER, VS.
PAPERONE, INC., RESPONDENT. [ G.R. Nos. 213365-66, December 10, 2018 ]
DECISION
GESMUNDO, J.:
Before the Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules
of Court, assailing the November 28, 2013 Decision[2] and the July 9, 2014
Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP Nos. 122288 and 122535.
The CA reversed and set aside the November 10, 2011 Decision[4] of the
Intellectual Property Office (IPO) Director General, finding Paperone, Inc.
(respondent) liable for unfair competition.
The Facts
The dispute in this case arose from a complaint for unfair competition, trademark
infringement, and damages filed against respondent by Asia Pacific Resources
International Holdings, Ltd. (petitioner).
Petitioner is engaged in the production, marketing, and sale of pulp and premium
wood free paper.[5] It alleged that it is the owner of a well--known trademark,
PAPER ONE, with Certificate of Registration No. 4-1999-01957 issued on September
5, 2003.[6] The said trademark enjoyed legal protection in different countries
worldwide and enjoyed goodwill and high reputation because of aggressive
marketing and promotion. Petitioner claimed that the use of PAPERONE in
respondent's corporate name without its prior consent and authority was done in
bad faith and designed to unfairly ride on its good name and to take advantage of
its goodwill. It was calculated to mislead the public into believing that respondent's
business and/or products were manufactured, licensed or sponsored by petitioner.
It was also alleged that respondent had presumptive, if not actual knowledge, of
petitioner's rights to the trademark PAPER ONE, even prior to respondent's
application for registration of its corporate name before the Securities and
Exchange Commission (SEC).[7]
Respondent, on its part, averred that it had no obligation to secure prior consent or
authority from petitioner to adopt and use its corporate name. The Department of
Trade and Industry (DTI) and the SEC had allowed it to use Paperone, Inc., thereby
negating any violation on petitioner's alleged prior rights. Respondent was
registered with the SEC, having been organized and existing since March 30, 2001.
Its business name was likewise registered with the DTI. Respondent also denied any
awareness of the existence of petitioner and/or the registration of PAPER ONE, as
the latter is a foreign corporation not doing business in the Philippines. While the
business of respondent dealt with paper conversion such as manufacture of table
napkins, notebooks and intermediate/collegiate writing pads, it did not use its
corporate name PAPERONE on any of its products. Further, its products had been
widely sold in the Philippines even before petitioner could claim any business
transaction in the country. The public could not have possibly been deceived into
believing that any relation or sponsorship existed between the parties, considering
these circumstances.[8]
In its decision,[9] the Bureau of Legal Affairs (BLA) Director, Intellectual Property
Office, found respondent liable £or unfair competition. It ordered respondent to
cease and desist from using PAPERONE in its corporate name, and to pay petitioner
P300,000.00, as temperate damages; P200,000.00, as exemplary damages; and
P100,000.00, as attorney's fees. It ruled that petitioner was the first to use PAPER
ONE in 1999 which had become a symbol of goodwill of its paper business.
Respondent's use of PAPERONE in its corporate name was to benefit from the
established goodwill of petitioner. There was, however, no trademark infringement
since PAPER ONE was registered in the Philippines only in 2003.[10]
On appeal to the IPO Director General, the BLA decision was affirmed with
modification insofar as the increase in the award of attorney's fees to
P300,000.00.[11]
The CA Ruling
Both parties appealed to the CA. Petitioner maintained that it was entitled to actual
damages amounting to P46,032,569.72 due to unfair competition employed by
respondent. Respondent claimed that it was not liable for unfair competition.
In its decision, the CA reversed and set aside the IPO Director General's decision. It
held that there was no confusing similarity in the general appearance of the goods
of both parties. Petitioner failed to establish through substantial evidence that
respondent intended to deceive the public or to defraud petitioner. Thus, the
essential elements of unfair competition were not present.[12]
ISSUES
In the petition before us, petitioner raises various issues for our resolution.
However, given the facts of this case, we find that the only issues to be resolved are:
I.
WHETHER RESPONDENT IS LIABLE FOR UNFAIR COMPETITION, and
II.
WHETHER PETITIONER IS ENTITLED TO ACTUAL DAMAGES.
OUR RULING
The core of the controversy is the adoption of "PAPERONE" in the trade name of
respondent, which petitioner claims it has prior right to, since it was the first to use
it as its trademark for its paper products. Petitioner claims that respondent
committed unfair competition by adopting PAPERONE in its trade name. It is
noteworthy that the issue of trademark infringement is not the subject of the
appeal before us.
The relevant provisions of the Intellectual Property Code[13] provide:
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.
168.2. Any person who shall employ deception or any other means contrary to good
faith by which he shall pass off the goods manufactured by him or in which he deals,
or his business, or services for those of the one having established such goodwill, or
who shall commit any acts calculated to produce said result, shall be guilty of unfair
competition, and shall be subject to an action therefor.
168.3. In particular, and without in any way limiting the scope of protection against
unfair competition, the following shall be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance of
goods of another manufacturer or dealer, either as to the goods themselves or in
the wrapping of the packages in which they are contained, or the devices or words
thereon, or in any other feature of their appearance, which would be likely to
influence purchasers to believe that the goods offered are those of a manufacturer
or dealer, other than the actual manufacturer or dealer, or who, otherwise, clothes
the goods with such appearance as shall deceive the public and defraud another of
his legitimate trade, or any subsequent vendor of such goods or any agent of any
vendor engaged in selling such goods with a like purpose.
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.[14] Unfair competition is always a question of
fact.[15] At this point, it bears to stress that findings of fact of the highly technical
agency - the IPO - which has the expertise in this field, should have been given great
weight by the Court of Appeals.[16]
a) Confusing similarity
As to the first element, 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.[17] Likelihood of confusion of goods or business is a
relative concept, to be determined only according to peculiar circumstances of each
case.[18]
The marks under scrutiny in this case are hereby reproduced for easy reference:
Petitioner's:
(See image p. 6)
Respondent's:
(See image p. 6)
It can easily be observed that both have the same spelling and are pronounced the
same. Although respondent has a different logo, it was always used together with
its trade name. It bears to emphasize that, initially, respondent's trade name had
separate words that read "Paper One, Inc." under its original Articles of
Incorporation. This was later on revised to make it one word, and now reads
"Paperone, Inc."[19]
At first glance, respondent may be correct that there would be no confusion as to
the presentation or packaging of its products since it is not using its corporate name
as a trademark of its goods/products. There is an apparent dissimilarity of
presentation of the trademark PAPER ONE and the trade name and logo of
Paperone, Inc. Nevertheless, a careful scrutiny of the mark shows that the use of
PAPERONE by respondent would likely cause confusion or deceive the ordinary
purchaser, exercising ordinary care, into believing that the goods bearing the mark
are products of one and the same enterprise.
Relative to the issue on confusion of marks and trade names, jurisprudence has
noted two 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.[20] 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.[21]
This case falls under the second type of confusion. Although we see a noticeable
difference on how the trade name of respondent is being used in its products as
compared to the trademark of petitioner, there could likely be confusion as to the
origin of the products. Thus, a consumer might conclude that PAPER ONE products
are manufactured by or are products of Paperone, Inc. Additionally, although
respondent claims that its products are not the same as petitioner's, the goods of
the parties are obviously related as they are both kinds of paper products.

The BLA Director aptly ruled that "[t]o permit respondent to continue using the
same or identical Paperone in its corporate name although not [used] as label for its
paper products, but the same line of business, that of manufacturing goods such as
PAPER PRODUCTS, therefore their co-existence would result in confusion as to
source of goods and diversion of sales to [r]espondent knowing that purchasers are
getting products from [petitioner] APRIL with the use of the corporate name Paper
One, Inc. or Paperone, Inc. by herein [r]espondent."[22]
The matter of prior right over PAPERONE, again, is a matter of factual
determination; therefore, we give credence to the findings of the IPO, who has the
expertise in this matter, being supported by substantial evidence. The Court has
consistently recognized the specialized functions of the administrative agencies - in
this case, the IPO. Berris Agricultural Co., Inc. v. Abyadang[23] states, thus:
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 p1reponderant. It is not th1e 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.[24] (Emphasis supplied)
The BLA Director found, as affirmed by the IPO Director General, that it was
petitioner who has priority rights over PAPER ONE, thus:
One essential factor that has led this Office to tilt the scales of justice in favor of
Complainant is the latter's establishment of prior use of the word PaperOne for
paper products in the Philippines. Records will show that there was prior use and
adoption by Complainant of the word "PaperOne." PaperOne was filed for
trademark registration on 22 March 1999 (Exhibit "D", Complainant) in the name of
Complainant Asia Pacific Resources International Holdings, Ltd. and matured into
registration on 10 February 2003. Respondent's corporate or trade name is Paper
One, Inc. which existed and was duly registered with the Securities and Exchange
Commission on 31 March 2001 (Exhibit "11", Respondent). If anyone files a suit and
can prove priority of adoption, he can assert his right to the exclusive use of a
corporate name with freedom from infringement by similarity (Philips Export B.V. et
al. vs. CA, G.R. No. 96161). Respondent was incorporated in March 2001 by virtue of
SEC registration No. A200104788 (Exhibit "11", Complainant) and was registered
two (2) years thereafter as business name with the Department of Trade and
Industry under DTI Business Name Registration No. 00068456 (Exhibit "13",
Respondent). Complainant Asia Pacific Resources International Holdings, Ltd., APRIL
for brevity, presented evidence of its use of the label PaperOne on paper products
in the Philippines earlier than the date of its trademark application in 1999 when its
marketing and promotion agent JND International Corporation ("JND" for brevity)
licensed one of its clients, National Paper Products & Printing Corporation
("NAPPCO" for brevity) to import, sell and distribute Complainant's APRIL paper
products in 1998 (par. 3, Exhibit "AA", Complainant). To support this declaration are
documents evidencing transactions of NAPPCO with Complainant APRIL with the
earliest documented transaction on 22 January 1999 (Exhibit "G", Complainant)
bearing [I]nvoice [N]o. LCA9812133.
[The] fact of earlier use was not disputed by the Respondent. In point of fact,
Respondent already knew of Complainant's APRIL existence prior to Respondent's
incorporation as Paper One, Inc. in 2001. Most of the incorporators of National
Paper Products & Printing Corporation or NAPPCO for brevity (Exhibits "H" and "H--
A" to "H-H", Complainant) which in late 1990s transacted with Complainant APRIL
through Invoice No. LCA9812133 dated 22 January 1999, the earliest invoice noted
(Exhibit "G", Complainant) are likewise incorporators of Paper One, Inc. (Exhibit
"11", Respondent) namely Tan Tian Siong, Chong Ping Tat, Thelma J. Uy, Conchita
Francisco, Sy Siong Sun, to name a few. Also, NAPPCO, through Complainant's
marketing and promotion agent JND International Corporation, or JND for brevity
(Exhibit "AA", Complainant) expressed interest in a letter dated 19 January 2000 to
work with JND and APRIL, as its exclusive distributor and we quote "to become your
exclusive distributor of 'Paper One' Multi Purpose Copy Paper" (Exhibit "AA-1-d",
Complainant). Worth mentioning at this point is the jurisprudence pronounced in
the case of Converse Rubber Corporation vs. Universal Rubber Products, Inc. and
Tiburcio S. Evalle (G.R. No. L-27906, Jan. 18, 1987) where the court said:
Knowing therefore that the word "CONVERSE" belongs to and is being used by
petitioner, and is in fact the dominant word in petitioner's corporate name,
respondent has no right to appropriate the same for use on its products which are
similar to those being produced by petitioner.[25] (Emphasis supplied)
b) intent to deceive the public and defraud a competitor
The element of intent to deceive and to defraud may be inferred from the similarity
of the appearance of the goods[26] as offered for sale to the public.[27] Contrary to
the ruling of the CA, actual fraudulent intent need not be shown.[28] Factual
circumstances were established showing that respondent adopted PAPERONE in its
trade name even with the prior knowledge of the existence of PAPER ONE as a
trademark of petitioner. As in all other cases of colorable imitations, the
unanswered riddle is why, of the millions of terms and combinations of letters
available, respondent had to choose those so closely similar to another's trademark
if there was no intent to take advantage of the goodwill generated by the other
mark.[29]
With regard to the issue on damages, we likewise agree with the IPO that the actual
damages prayed for cannot be granted because petitioner has not presented
sufficient evidence to prove the amount claimed and the basis to measure actual
damages.
WHEREFORE, the petition is GRANTED. The November 28, 2013 Decision and the
July 9, 2014 Resolution of the: Court of Appeals in CA G.R. SP Nos. 122288 and
122535 are REVERSED and SET ASIDE. Accordingly, the November 10, 2011 Decision
of the Intellectual Property Office Director General finding respondent liable for
unfair competition is hereby REINSTATED.
SO ORDERED.
04 G.R. No. 205409, June 13, 2018 CITIGROUP, INC., Petitioner, v. CITYSTATE
SAVINGS BANK, INC. Respondent.
DECISION
LEONEN, J.:
This resolves a Petition for Review on Certiorari1 assailing the August 29, 2012
Decision2 and the January 15, 2013 Resolution3 of the Court of Appeals in CA-G.R.
SP No. 109679.
The facts which led to the controversy before this Court, as summarized by the
Court of Appeals, are as follows:
Petitioner Citigroup, Inc. is a corporation duly organized under the laws of the State
of Delaware engaged in banking and financial services.
In the late 1970s, Citibank N.A., a wholly-owned subsidiary of petitioner, installed
its first automated teller machines in over a hundred New York City branches. In
1984, Citibank N.A., Philippine Branch, began the development of its domestic
Automated Teller Machine (ATM) network, and started operating ATMs and issuing
ATM cards in the Philippines. Citibank N.A., Philippine Branch then joined Bancnet
Inc. ("Bancnet") in 1990, the first year Bancnet commenced operations. To date,
Citibank N.A., Philippine Branch has six branches and 22 ATMs in the Philippines.
In 2005, Citibank Savings, Inc. became an indirect wholly-owned subsidiary of
Citibank, N.A. As a pre-existing thrift bank, it offered ATM services in the Philippines
in 1995 and joined Bancnet in 2005. Citibank Savings, Inc. now has 36 branches and
27 ATMs in the Philippines.
Combining the branches and ATMs of Citibank N.A., Philippine Branch and Citibank
Savings, Inc., there are a total of 42 branches and 29 ATMs in the Philippines
marketed and identified to the public under the CITI family of marks.
The ATM cards issued by Citibank N.A., Philippine Branch and Citibank Savings, Inc.
are labelled "CITICARD". The trademark CITICARD is owned by Citibank N.A. and is
registered in the [Intellectual Property Office] of the Philippines on 27 September
1995 under Registration Number 34731.
In addition, petitioner or Citibank N.A., a wholly-owned subsidiary of petitioner,
owns the following other trademarks currently registered with the Philippine
[Intellectual Property Office], to wit: "CITI and arc design", "CITIBANK", "CITIBANK
PAYLINK", "CITIBANK SPEEDCOLLECT", "CITIBANKING", "CITICARD", "CITICORP",
"CITIFINANCIAL", "CITIGOLD", "CITIGROUP", "CITIPHONE BANKING'', and
"CITISERVICE".
On the other hand, sometime in the mid-nineties, a group of Filipinos and
Singaporean companies formed a consortium to establish respondent Citystate
Savings Bank, Inc. The consortium included established Singaporean companies,
specifically Citystate Insurance Group and Citystate Management Group Holdings
Pte, Ltd.
Respondent's registered mark has in its name affixed a lion's head, which is likened
to the national symbol of Singapore, the Merlion. On 08 August 1997, respondent
opened its initial branch in Makati City. From then on, it endeavored to expand its
branch network. At present it has 19 branches in key cities and municipalities
including 3 branches in the province of Bulacan and 1 in Cebu City. Respondent had
also established off site ATMs in key locations in the Philippines as one of its
banking products and services.
In line with this, respondent filed an application for registration with the
[Intellectual Property Office] on 21 June 2005 of the trademark "CITY CASH WITH
GOLDEN LION'S HEAD" for its ATM service, under Application Serial No.
42005005673.4
After respondent Citystate Savings Bank, Inc. (Citystate) applied for registration of
its trademark "CITY CASH WITH GOLDEN LION'S HEAD" with the Intellectual
Property Office, Citigroup, Inc. (Citigroup) filed an opposition to Citystate's
application. Citigroup claimed that the "CITY CASH WITH GOLDEN LION'S HEAD"
mark is confusingly similar to its own "CITI" marks.5 After an exchange of pleadings,
the Director of the Bureau of Legal Affairs of the Intellectual Property Office
rendered a Decision6 dated November 20, 2008. The Intellectual Property Office
concluded that the dominant features of the marks were the words "CITI" and
"CITY," which were almost the same in all aspects. It further ratiocinated that
Citigroup had the better right over the mark, considering that 'its "CITI" and "CITI"-
related marks have been registered with the Intellectual Property Office, as well as
with the United States Patent and Trademark Office, covering "financial services"
under Class 36 of the International Classification of Goods.7 Thus, applying the
dominancy test and considering that Citystate's dominant feature of the applicant's
mark was identical or confusingly similar to a registered trademark, the Intellectual
Property Office ruled that approving it would be contrary to Section 138 of the
Intellectual Property Code and Citigroup's exclusive right to use its marks.
This was appealed to the Office of the Director General of the Intellectual Property
Office. In a Decision8 dated July 3, 2009, Director General Adrian S. Cristobal, Jr.
(Director General Cristobal) reversed the November 20, 2008 Decision of the
Director of the Bureau of Legal Affairs and gave due course to Citystate's trademark
application. He made a visual comparison of the parties' respective marks and
considered the golden lion head device to be the prominent or dominant feature of
Citystate's mark, and not the word "CITY." Thus, Citystate's mark did not resemble
Citigroup's mark such that deception or confusion was likely. Director General
Cristobal found plausible Citystate's explanation for choosing "CITYSTATE," i.e., that
its name was based on the country of Singapore, which was referred to as "city-
state," and that the golden lion head device was similar to the national symbol of
Singapore, the merlion.9 He appreciated that availing of the products and services
related to the parties' marks would entail very detailed procedures, like sales
representatives explaining the products and clients filling up and submitting
application forms, such that customers would necessarily be well informed and not
confused.10
Thus, Citigroup filed a Petition for Review11 before the Court of Appeals, which
dismissed the petition. The Court of Appeals found that Director General Cristobal
did not act with grave abuse of discretion in ruling that the parties' trademarks
were not confusingly similar, and in giving due course to Citystate's trademark
application.12 It found that Citystate's mark was not confusingly or deceptively
similar to Citigroup's marks:
[Citystate's] trademark is the entire "CITY CASH WITH GOLDEN LION'S HEAD".
Although the words "CITY CASH" are prominent, the entirety of the trademark must
be considered, and focus should not be made solely on the phonetic similarity of
the words "CITY" and "CITI".
The dissimilarities between the two marks are noticeable and substantial.
[Citystate's] mark, "CITY CASH WITH GOLDEN LION'S HEAD", has an insignia of a
golden lion's head at the left side of the words "CITY CASH", while [Citigroup's]
"CITI" mark usually has an arc between the two I's. A further scrutiny of the other
"CITI" marks of [Citigroup] would show that their font type, font size, and color
schemes of the said "CITI" marks vary for each product or service. Most of the time,
[Citigroup's] "CITI" mark is joined with another term to form a single word, with
each product or service having different font types and color schemes. On the
contrary, the trademark of [Citystate] consists of the words "CITY CASH", with a
golden lion's head emblem on the left side. It is, therefore, improbable that the
public would immediately and naturally conclude that [Citystate's] "CITY CASH
WITH GOLDEN LION'S HEAD" is but another variation under [Citigroup's] "CITI"
marks.
Verily, the variations in the appearance of the "CITI" marks by [Citigroup], when
conjoined with other words, would dissolve the alleged similarity between them
and the trademark of [Citystate]. These dissimilarities, and the insignia of a golden
lion's head before the words "CITY CASH" in the mark of [Citystate] would
sufficiently acquaint and apprise the public that [Citystate's] trademark "CITY CASH
WITH GOLDEN LION'S HEAD" is not connected with the "CITI" marks of [Citigroup].
Moreover, 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. It bears to emphasize that the mark "CITY CASH WITH GOLDEN LION'S
HEAD" is a mark of [Citystate] for its ATM services which it offers to the public. It
cannot be gainsaid that an ATM service is not an ordinary product which could be
obtained at any store without the public noticing its association with the banking
institution that provides said service. Naturally, the customer must first open an
account with a bank before it could avail of its ATM service. Moreover, the name of
the banking institution is written and posted either inside or outside the ATM booth,
not to mention the fact that the name of the bank that operates the ATM is
constantly flashed at the screen of the ATM itself. With this, the public would
accordingly be apprised that [Citystate's] "CITY CASH" is an ATM service of
[Citystate], and not that of [Citigroup's].13 (Citation omitted)
Thus, the Court of Appeals quoted Director General Cristobal:
In evaluating the relevance of the prefix "CITI", due attention should be given not
only to the other features of the competing marks but also to the attendant
circumstances of the case. Otherwise, a blind adherence to [Citigroup's] claim over
the prefix CITI is tantamount to handing it a monopoly of all marks with such prefix
or with a prefix that sounds alike but with a different spelling like the word "city".
Accordingly, the kind of products and services involved should likewise be
scrutinized.
....
Thus, this Court finds no cogent reason to believe [Citigroup's] contention that
consumers may confuse the products and services covered by the competing
trademarks as coming from the same source of origin. The fear that the consumer
may mistake the products as to the source or origin, or that the consumers seeking
its products and services will be redirected or diverted to [Citystate], is unfounded.
The products or services involved are not the ordinary everyday products that one
can just pick up in a supermarket or grocery stores (sic). These products generally
require sales representatives explaining to their prospective customers the features
of and entitlements thereto. Availing the products and services involved follows
certain procedures that ordinarily and routinely gives the prospective customers or
clients opportunity to know exactly with whom they are dealing with (sic). The
procedures usually include the clients filling-up and submitting a pro-forma
application form and other documentary requirements, which means that the
person is wel[l]-informed and thus, cannot be misled into believing that the product
or service is that of [Citystate] when in fact it is different from [Citigroup's].
The likelihood of confusion between two marks should be taken from the viewpoint
of the prospective buyer. In Emerald Garment Manufacturing Corp. vs. Court of
Appeals, et al., the Supreme Court ruled that:
"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 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."14
Citigroup filed a Motion for Reconsideration,15 which the Court of Appeals denied
in its January 15, 2013 Resolution.16
Thus, Citigroup filed a Petition for Review17 against Citystate before this Court.
After respondent filed its Comment/Opposition18 and petitioner filed its Reply,19
respondent filed its Memorandum.20

Petitioner claims that the Court of Appeals erred in finding that there was no
confusing similarity between the trademark that respondent applied for and
petitioner's own trademarks.21 It avers that Emerald Manufacturing Company v.
Court of Appeals22 is not applicable to this case.23 Contrary to the Court of
Appeals' finding, the arc design is not an integral part of petitioner's "CITI" family of
marks.24
Petitioner asserts that when the dominancy test is applied to the Court of Appeals'
findings of fact, the necessary result is a finding of confusing similarity.25 It points
out that the Court of Appeals found that "CITY CASH" is the dominant feature of
respondent's applied trademark. However, because the word "CASH" was
disclaimed in respondent's trademark application, only "CITY" may be considered
the dominant part of the mark. "'CITY' ... appears nearly identical to 'CITI'."26
Further, petitioner argues that the Court of Appeals did not understand the services
offered in relation to respondent's mark when it said that the mark is to be applied
only in relation to respondent's ATMs and within the bank premises. It insists that in
actuality, the mark could be used outside the bank premises, such as in radio,
newspapers, and the internet, where there would not necessarily be a "GOLDEN
LION'S HEAD" symbol to disambiguate the mark from any of petitioner's marks. It
argues that the Court of Appeals should have appreciated the difference between
basic financial services on one hand, which include ATM services, and sophisticated
financial services on the other hand. It avers that customers do not select ATM
services after cautious evaluation, and that ATM services are marketed to ordinary
consumers. Thus, petitioner claims that the Court of Appeals erred when it
concluded that customers are intelligent purchasers, and failed to consider ordinary
purchasers who have not yet used the financial services of petitioner and
respondent.27
It further holds that it is not claiming a monopoly of all marks prefixed by words
sounding like "city." It stresses that it opposes only marks which are registered
under class 36 used in products directly related and in competition with its "CITI"
family of marks, sold under the same business channels, and sold to the same group
of consumers.28
Respondent argues that its mark is not confusingly similar to petitioner's29 and that
petitioner's fears are purely speculative.30 It claims that the phonetic similarity
between "CITY" and "CITI" is not sufficient to deny its registration, asserting that
this Court has ruled that idem sonans alone is insufficient basis for a determination
of the existence of confusing similarity. As for petitioner's arguments on possible
confusion due to advertising, respondent states that advertisement aims to inform
the public of a certain entity's product and that not mentioning a supplier's trade
name in its advertisement defeats the purpose of advertisement. It disputes
petitioner's claims on ATM services and the kind of caution exercised prior to
obtaining an ATM card, asserting that before customers may avail of ATM services,
they have to open an account with the bank offering them.31
This Court denies the Petition.
The sole issue for this Court's resolution is whether or not the Court of Appeals
committed an error of law in finding that there exists no confusing similarity
between petitioner Citigroup, Inc.'s and respondent Citystate Savings Bank, Inc.'s
marks.
In La Chemise Lacoste, S.A. v. Fernandez,32 this Court explained why trademarks
are protected in the market:
The purpose of the law protecting a trademark cannot be overemphasized. They
are to point out distinctly the origin or ownership of the article to which it is affixed,
to secure to him, who has been instrumental in bringing into market a superior
article of merchandise, the fruit of his industry and skill, and to prevent fraud and
imposition (Etepha v. Director of Patents, 16 SCRA 495).
The legislature has enacted laws to regulate the use of trademarks and provide for
the protection thereof. Modem trade and commerce demands that depredations
on legitimate trade marks of non-nationals including those who have not shown
prior registration thereof should not be countenanced. The law against such
depredations is not only for the protection of the owner of the trademark but also,
and more importantly, for the protection of purchasers from confusion, mistake, or
deception as to the goods they are buying. (Asari Yoko Co., Ltd. v. Kee Boc, 1 SCRA 1;
General Garments Corporation v. Director of Patents, 41 SCRA 50).
The law on trademarks and tradenames is based on the principle of business
integrity and common justice. This law, both in letter and spirit, is laid upon the
premise that, while it encourages fair trade in every way and aims to foster, and not
to hamper, competition, no one, especially a trader, is justified in damaging or
jeopardizing another's business by fraud, deceit, trickery or unfair methods of any
sort. This necessarily precludes the trading by one dealer upon the good name and
reputation built up by another (Baltimore v. Moses, 182 Md 229, 34 A (2d) 338).33
In Mirpuri v. Court of Appeals,34 this Court traced the historical development of
trademark law:
A "trademark" is defined under R.A. 166, the Trademark Law, as including "any
word, name, symbol, emblem, sign or device or any combination thereof adopted
and used by a manufacturer or merchant to identify his goods and distinguish them
from those manufactured, sold or dealt in by others." This definition has been
simplified in R.A. No. 8293, the Intellectual Property Code of the Philippines, which
defines a "trademark" as "any visible sign capable of distinguishing goods." In
Philippine jurisprudence, the function of a trademark is to point out distinctly the
origin or ownership of the goods to which it is affixed; to secure to him, who has
been instrumental in bringing into the market a superior article of merchandise, the
fruit of his industry and skill; to assure the public that they are procuring the
genuine article; to prevent fraud and imposition; and to protect the manufacturer
against substitution and sale of an inferior and different article as his product.
Modern authorities on trademark law view trademarks as performing three distinct
functions: ( 1) they indicate origin or ownership of the articles to which they are
attached; (2) they guarantee that those articles come up to a certain standard of
quality; and (3) they advertise the articles they symbolize.
Symbols have been used to identify the ownership or origin of articles for several
centuries. As early as 5,000 B.C., markings on pottery have been found by
archaeologists. Cave drawings in southwestern Europe show bison with symbols on
their flanks. Archaeological discoveries of ancient Greek and Roman inscriptions on
sculptural works, paintings, vases, precious stones, glassworks, bricks, etc. reveal
some features which are thought to be marks or symbols. These marks were affixed
by the creator or maker of the article, or by public authorities as indicators for the
payment of tax, for disclosing state monopoly, or devices for the settlement of
accounts between an entrepreneur and his workmen.
In the Middle Ages, the use of many kinds of marks on a variety of goods was
commonplace. Fifteenth century England saw the compulsory use of identifying
marks in certain trades. There were the baker's mark on bread, bottlemaker's marks,
smith's marks, tanner's marks, watermarks on paper, etc. Every guild had its own
mark and every master belonging to it had a special mark of his own. The marks
were not trademarks but police marks compulsorily imposed by the sovereign to let
the public know that the goods were not "foreign" goods smuggled into an area
where the guild had a monopoly, as well as to aid in tracing defective work or poor
craftsmanship to the artisan. For a similar reason, merchants also used merchants'
marks. Merchants dealt in goods acquired from many sources and the marks
enabled them to identify and reclaim their goods upon recovery after shipwreck or
piracy.
With constant use, the mark acquired popularity and became voluntarily adopted. It
was not intended to create or continue monopoly but to give the customer an index
or guarantee of quality. It was in the late 18th century when the industrial
revolution gave rise to mass production and distribution of consumer goods that
the mark became an important instrumentality of trade and commerce. By this time,
trademarks did not merely identify the goods; they also indicated the goods to be
of satisfactory quality, and thereby stimulated further purchases by the consuming
public. Eventually, they came to symbolize the goodwill and business reputation of
the owner of the product and became a property right protected by law. The
common law developed the doctrine of trademarks and tradenames "to prevent a
person from palming off his goods as another's, from getting another's business or
injuring his reputation by unfair means, and, from defrauding the public."
Subsequently, England and the United States enacted national legislation on
trademarks as part of the law regulating unfair trade. It became the right of the
trademark owner to exclude others from the use of his mark, or of a confusingly
similar mark where confusion resulted in diversion of trade or financial injury. At
the same time, the trademark served as a warning against the imitation or faking of
products to prevent the imposition of fraud upon the public.
Today, the trademark is not merely a symbol of origin and goodwill; it is often the
most effective agent for the actual creation and protection of goodwill. It imprints
upon the public mind an anonymous and impersonal guaranty of satisfaction,
creating a desire for further satisfaction. In other words, the mark actually sells the
goods. The mark has become the "silent salesman," the conduit through which
direct contact between the trademark owner and the consumer is assured. It has
invaded popular culture in ways never anticipated that it has become a more
convincing selling point than even the quality of the article to which it refers. In the
last half century, the unparalleled growth of industry and the rapid development of
communications technology have enabled trademarks, tradenames and other
distinctive signs of a product to penetrate regions where the owner does not
actually manufacture or sell the product itself. Goodwill is no longer confined to the
territory of actual market penetration; it extends to zones where the marked article
has been fixed in the public mind through advertising. Whether in the print,
broadcast or electronic communications medium, particularly on the Internet,
advertising has paved the way for growth and expansion of the product by creating
and earning a reputation that crosses over borders, virtually turning the whole
world into one vast marketplace.35 (Citations omitted)
There is also an underlying economic justification for the protection of trademarks:
an effective trademark system helps bridge the information gap between producers
and consumers, and thus, lowers the costs incurred by consumers in searching for
and deciding what products to purchase. As summarized in a report of the World
Intellectual Property Organization:
Economic research has shown that brands play an important role in bridging so-
called asymmetries of information between producers and consumers. In many
modem markets, product offerings differ across a wide range of quality
characteristics. Consumers, in turn, cannot always discern these characteristics at
the moment of purchase; they spend time and money researching different
offerings before deciding which product to buy. Brand reputation helps consumers
to reduce these search costs. It enables them to draw on their past experience and
other information about products - such as advertisements and third party
consumer reviews. However, the reputation mechanism only works if consumers
are confident that they will purchase what they intend to purchase. The trademark
system provides the legal framework underpinning this confidence. It does so by
granting exclusive rights to names, signs and other identifiers in commerce. In
addition, by employing trademarks, producers and sellers create concise identifiers
for specific goods and services, thereby improving communication about those
goods and services.36
Recognizing the significance, and to further the effectivity of our trademark
system,37 our legislators proscribed the registration of marks under certain
circumstances:
Section 123. Registrability. - 123.1. A mark cannot be registered if it:
(a) Consists of immoral, deceptive or scandalous matter, 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) Consists of the flag or coat of arms or other insignia of the Philippines or any of
its political subdivisions, or of any foreign nation, or any simulation thereof;
(c) Consists of a name, portrait or signature identifying a particular living individual
except by his written consent, or the name, signature, or portrait of a deceased
President of the Philippines, during the life of his widow, if any, except by written
consent of the widow;
(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;
(f) Is identical with, or confusingly similar to, or constitutes a translation of a mark
considered well-known in accordance with the preceding paragraph, which is
registered in the Philippines with respect to goods or services which are not similar
to those with respect to which registration is applied for: Provided, That use of the
mark in relation to those goods or services would indicate a connection between
those goods or services, and the owner of the registered mark: Provided, further,
That the interests of the owner of the registered mark are likely to be damaged by
such use;
(g) Is likely to mislead the public, particularly as to the nature, quality,
characteristics or geographical origin of the goods or services;
(h) Consists exclusively of signs that are generic for the goods or services that they
seek to identify;
(i) Consists exclusively of signs or of indications that have become customary or
usual to designate the goods or services in everyday language or in bona fide and
established trade practice;
(j) Consists exclusively of signs or of indications that may serve in trade to designate
the kind, quality, quantity, intended purpose, value, geographical origin, time or
production of the goods or rendering of the services, or other characteristics of the
goods or services;
(k) Consists of shapes that may be necessitated by technical factors or by the nature
of the goods themselves or factors that affect their intrinsic value;
(l) Consists of color alone, unless defined by a given form; or
(m) Is contrary to public order or morality.
Based on this proscription, petitioner insists that respondent's mark cannot be
registered because it is confusingly similar to its own set of marks. Thus, granting
the petition rests solely on the question of likelihood of confusion between
petitioner's and respondent's respective marks.
There is no objective test for determining whether the confusion is likely. Likelihood
of confusion must be determined according to the particular circumstances of each
case.38 To aid in determining the similarity and likelihood of confusion between
marks, our jurisprudence has developed two (2) tests: the dominancy test and the
holistic test. This Court explained these tests in Coffee Partners, Inc. v. San
Francisco Coffee & Roastery, Inc.39:
The dominancy test focuses on the similarity of the prevalent features of the
competing trademarks that might cause confusion and deception, thus constituting
infringement. If the competing trademark contains the main, essential, and
dominant features of another, and confusion or deception is likely to result,
infringement occurs. Exact duplication or imitation is not required. The question is
whether the use of the marks involved is likely to cause confusion or mistake in the
mind of the public or to deceive consumers.
In contrast, 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. The discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing on both marks in
order that the observer may draw his conclusion whether one is confusingly similar
to the other.40 (Citations omitted)
With these guidelines in mind, this Court considered "the main, essential, and
dominant features" of the marks in this case, as well as the contexts in which the
marks are to be used. This Court finds that the use of the "CITY CASH WITH GOLDEN
LION'S HEAD" mark will not result in the likelihood of confusion in the minds of
customers.
A visual comparison of the marks reveals no likelihood of confusion.
Respondent's mark is:
(See image)
This Court agrees with the observation of Director General Cristobal that the most
noticeable part of this mark is the golden lion's head device,41 and finds that after
noticing the image of the lion's head, the words "CITY" and "CASH" are equally
prominent.
On the other hand, petitioner's marks, as noted by the Court of Appeals, often
include the red arc device:
(See image)
Petitioner's other registered marks which do not contain the red arc device include
the following:
(See image)
Examining these marks, this Court finds that petitioner's marks can best be
described as consisting of the prefix "CITI" added to other words.
Applying the dominancy test, this Court sees that the prevalent feature of
respondent's mark, the golden lion's head device, is not present at all in any of
petitioner's marks. The only similar feature between respondent's mark and
petitioner's collection of marks is the word "CITY" in the former, and the "CITI"
prefix found in the latter. This Court agrees with the findings of the Court of
Appeals that this similarity alone is not enough to create a likelihood of confusion.
The dis[s]imilarities between the two marks are noticeable and substantial.
Respondent's mark, "CITY CASH WITH GOLDEN LION'S HEAD", has an insignia of a
golden lion's head at the left side of the words "CITY CASH", while petitioner's "CITI"
mark usually has an arc between the two I's. A further scrutiny of the other "CITI"
marks of petitioner would show that their font type, font size, and color schemes of
the said "CITI" marks vary for each product or service. Most of the time, petitioner's
"CITI" mark is joined with another term to form a single word, with each product or
service having different font types and color schemes. On the contrary, the
trademark of respondent consists of the words "CITY CASH", with a golden lion's
head emblem on the left side. It is, therefore, improbable that the public would
immediately and naturally conclude that respondent's "CITY CASH WITH GOLDEN
LION'S HEAD" is but another variation under petitioner's "CITI" marks.
Verily, the variations in the appearance of the "CITI" marks by petitioner, when
conjoined with other words, would dissolve the alleged similarity between them
and the trademark of respondent. These dissimilarities, and the insignia of a golden
lion's head before the words "CITY CASH" in the mark of the respondent would
sufficiently acquaint and apprise the public that respondent's trademark "CITY CASH
WITH GOLDEN LION'S HEAD" is not connected with the "CITI" marks of petitioner.42
This Court also agrees with the Court of Appeals that the context where
respondent's mark is to be used, namely, for its ATM services, which could only be
secured at respondent's premises and not in an open market of ATM services,
further diminishes the possibility of confusion on the part of prospective customers.
Thus, this Court quotes with approval the Court of Appeals, which made reference
to Emerald Manufacturing:
Moreover, 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. It bears to emphasize that the mark "CITY CASH WITH GOLDEN LION'S
HEAD" is a mark of respondent for its ATM services which it offers to the public. It
cannot be gainsaid that an ATM service is not an ordinary product which could be
obtained at any store without the public noticing its association with the banking
institution that provides said service. Naturally, the customer must first open an
account with a bank before it could avail of its ATM service. Moreover, the name of
the banking institution is written and posted either inside or outside the ATM booth,
not to mention the fact that the name of the bank that operates the ATM is
constantly flashed at the screen of the ATM itself. With this, the public would
accordingly be apprised that respondent's "CITY CASH" is an ATM service of the
respondent bank, and not of the petitioner's.43
Petitioner argues that Emerald Manufacturing is distinguishable from this case,
insisting that ATM services are more akin to ordinary household items than they are
akin to brand name jeans, in terms of how their customers choose their providers:
73. The Emerald Manufacturing case involved the marks "Lee" and "Stylistic Mr.
Lee", and the Supreme Court focused on the nature of the products as "not the
ordinary household items", pointing to the fact that, "the average Filipino consumer
generally buys his jeans by brand. He does not ask the sales clerk for his generic
jeans but for, say a Levis, Guess, Wrangler or even an Armani."
74. In contrast, when an ordinary consumer of ATM services wishes to withdraw
cash, more often than not he will simply locate the nearest ATM, without reference
to brand as long as the ATM accepts his card. When dealing with banks that belong
to an ATM network such as Bancnet, which both parties do, the cards are almost
universally and interchangeably accepted.44
This scenario is unclear, and thus, unconvincing and insufficient to support a finding
of error on the part of the Court of Appeals. Petitioner hypothesizes that there
could be some confusion because ATM users "simply locate the nearest ATM,
without reference to brand as long as the ATM accepts [their] card."45 This Court is
at a loss to see how this supports petitioner's claims that ATM users locate the
nearest ATMs and use them without reference to brand as long as the ATM accepts
their cards. If petitioner's speculation is true, then bank branding is wholly
irrelevant after the ATM service has been secured. This Court is hard pressed to
accept this assumption. In any case, this Court simply cannot agree that a bank or
ATM service is more akin to ordinary household items than it is to brand name
Jeans.
More relevant than the scenario discussed by petitioner is the stage when a bank is
trying to attract customers to avail of its services. Petitioner points out that in
advertisements, such as in radio, newspapers, and the internet, which are shown
beyond the bank premises, there may be no golden lion's head device to
disambiguate "CITY CASH" from any of petitioner's own marks and services.46 This
Court finds this unconvincing. ATM services, like other bank services, are generally
not marketed as independent products. Indeed, as pointed out by petitioner itself,
ATM cards accompany the basic deposit product in most banks.47 They are
generally adjunct to the main deposit service provided by a bank. Since ATM
services must be secured and contracted for at the offering bank's premises, any
marketing campaign for an ATM service must focus first and foremost on the
offering bank. Hence, any effective internet and newspaper advertisement for
respondent would include and emphasize the golden lion's head device. Indeed, a
radio advertisement would not have it. It should not be forgotten, however, that a
mark is a question of visuals, by statutory definition.48 Thus, the similarity between
the sounds of "CITI" and "CITY" in a radio advertisement alone neither is sufficient
for this Court to conclude that there is a likelihood that a customer would be
confused nor can operate to bar respondent from registering its mark. This Court
notes that any confusion that may arise from using "CITY CASH" in a radio
advertisement would be the same confusion that might arise from using
respondent's own trade name. Aurally, respondent's very trade name, which is not
questioned, could be mistaken as "CITISTATE SAVINGS BANK," and all of petitioner's
fears of possible confusion would be just as likely.
This Court agrees with Director General Cristobal's recognition of respondent's
history and of "Citystate" as part of its name.49 Upon consideration, it notes that it
may have been more aligned with the purpose of trademark protection for
respondent to have chosen the trademark "CITYSTATE CASH" instead of "CITY
CASH" to create a stronger association between its trade name and the service
provided. Nonetheless, there is no law requiring that trademarks match the
offeror's trade name precisely to be registrable. The only relevant issue is the
likelihood of confusion.

This Court also recognizes that there could be other situations involving a
combination of the word "city" and another word that could result in confusion
among customers. However, it is not convinced that this is one of those situations.

Thus, having examined the particularities of this case, this Court affirms the Court of
Appeals' finding that Director General Cristobal of the Intellectual Property Office
did not commit any grave abuse of discretion in allowing the registration of
respondent's trademark.

WHEREFORE, the petition is DENIED. The Court of Appeals August 29, 2012 Decision
and January 15, 2013 Resolution in CA-G.R. SP No. 109679 are AFFIRMED.
SO ORDERED.