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Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 100098 December 29, 1995

EMERALD GARMENT MANUFACTURING CORPORATION, petitioner,


vs.
HON. COURT OF APPEALS, BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY
TRANSFER and H.D. LEE COMPANY, INC., respondents.

KAPUNAN, J.:

In this petition for review on certiorari under Rule 45 of the Revised Rules of Court, Emerald
Garment Manufacturing Corporation seeks to annul the decision of the Court of Appeals
dated 29 November 1990 in CA-G.R. SP No. 15266 declaring petitioners trademark to be
confusingly similar to that of private respondent and the resolution dated 17 May 1991
denying petitioners motion for reconsideration.

The record reveals the following antecedent facts:

On 18 September 1981, private respondent H.D. Lee Co., Inc., a foreign corporation
organized under the laws of Delaware, U.S.A., filed with the Bureau of Patents, Trademarks
& Technology Transfer (BPTTT) a Petition for Cancellation of Registration No. SR 5054
(Supplemental Register) for the trademark STYLISTIC MR. LEE used on skirts, jeans,
blouses, socks, briefs, jackets, jogging suits, dresses, shorts, shirts and lingerie under Class
25, issued on 27 October 1980 in the name of petitioner Emerald Garment Manufacturing
Corporation, a domestic corporation organized and existing under Philippine laws. The
petition was docketed as Inter Partes Case No. 1558. 1

Private respondent, invoking Sec. 37 of R.A. No. 166 (Trademark Law) and Art. VIII of the
Paris Convention for the Protection of Industrial Property, averred that petitioners
trademark so closely resembled its own trademark, LEE as previously registered and used
in the Philippines, and not abandoned, as to be likely, when applied to or used in connection
with petitioners goods, to cause confusion, mistake and deception on the part of the
purchasing public as to the origin of the goods. 2

In its answer dated 23 March 1982, petitioner contended that its trademark was entirely
and unmistakably different from that of private respondent and that its certificate of
registration was legally and validly granted. 3

On 20 February 1984, petitioner caused the publication of its application for registration of
the trademark STYLISTIC MR. LEE in the Principal Register. 4

On 27 July 1984, private respondent filed a notice of opposition to petitioners application


for registration also on grounds that petitioners trademark was confusingly similar to its
LEE trademark. 5 The case was docketed as Inter Partes Case No. 1860.
On 21 June 1985, the Director of Patents, on motion filed by private respondent dated 15
May 1985, issued an order consolidating Inter Partes Cases Nos. 1558 and 1860 on grounds
that a common question of law was involved. 6

On 19 July 1988, the Director of Patents rendered a decision granting private respondents
petition for cancellation and opposition to registration.

The Director of Patents found private respondent to be the prior registrant of the trademark
LEE in the Philippines and that it had been using said mark in the Philippines. 7

Moreover, the Director of Patents, using the test of dominancy, declared that petitioners
trademark was confusingly similar to private respondents mark because it is the word Lee
which draws the attention of the buyer and leads him to conclude that the goods originated
from the same manufacturer. It is undeniably the dominant feature of the mark. 8

On 3 August 1988, petitioner appealed to the Court of Appeals and on 8 August 1988, it
filed with the BPTTT a Motion to Stay Execution of the 19 July 1988 decision of the Director
of Patents on grounds that the same would cause it great and irreparable damage and
injury. Private respondent submitted its opposition on 22 August 1988. 9

On 23 September 1988, the BPTTT issued Resolution No. 88-33 granting petitioners motion
to stay execution subject to the following terms and conditions:

1. That under this resolution, Respondent-Registrant is authorized only to dispose of its


current stock using the mark STYLISTIC MR. LEE;

2. That Respondent-Registrant is strictly prohibited from further production, regardless of


mode and source, of the mark in question (STYLISTIC MR. LEE) in addition to its current
stock;

3. That this relief Order shall automatically cease upon resolution of the Appeal by the Court
of Appeals and, if the Respondents appeal loses, all goods bearing the mark STYLISTIC
MR. LEE shall be removed from the market, otherwise such goods shall be seized in
accordance with the law.

SO ORDERED. 10

On 29 November 1990, the Court of Appeals promulgated its decision affirming the decision
of the Director of Patents dated 19 July 1988 in all respects. 11

In said decision the Court of Appeals expounded, thus:

xxx xxx xxx

Whether or not a trademark causes confusion and is likely to deceive the public is a
question of fact which is to be resolved by applying the test of dominancy, meaning, if the
competing trademark contains the main or essential or dominant features of another by
reason of which confusion and deception are likely to result, then infringement takes place;
that duplication or imitation is not necessary, a similarity in the dominant features of the
trademark would be sufficient.

The word LEE is the most prominent and distinctive feature of the appellants trademark
and all of the appellees LEE trademarks. It is the mark which draws the attention of the
buyer and leads him to conclude that the goods originated from the same manufacturer.
While it is true that there are other words such as STYLISTIC, printed in the appellants
label, such word is printed in such small letters over the word LEE that it is not
conspicuous enough to draw the attention of ordinary buyers whereas the word LEE is
printed across the label in big, bold letters and of the same color, style, type and size of
lettering as that of the trademark of the appellee. The alleged difference is too insubstantial
to be noticeable. Even granting arguendo that the word STYLISTIC is conspicuous enough
to draw attention, the goods may easily be mistaken for just another variation or line of
garments under the ap appelles LEE trademarks in view of the fact that the appellee has
registered trademarks which use other words in addition to the principal mark LEE such as
LEE RIDERS, LEESURES and LEE LEENS. The likelihood of confusion is further made
more probable by the fact that both parties are engaged in the same line of business. It is
well to reiterate that the determinative factor in ascertaining whether or not the marks are
confusingly similar to each other is not whether the challenged mark would actually cause
confusion or deception of the purchasers but whether the use of such mark would likely
cause confusion or mistake on the part of the buying public.

xxx xxx xxx

The appellee has sufficiently established its right to prior use and registration of the
trademark LEE in the Philippines and is thus entitled to protection from any infringement
upon the same. It is thus axiomatic that one who has identified a peculiar symbol or mark
with his goods thereby acquires a property right in such symbol or mark, and if another
infringes the trademark, he thereby invokes this property right.

The merchandise or goods being sold by the parties are not that expensive as alleged to be
by the appellant and are quite ordinary commodities purchased by the average person and
at times, by the ignorant and the unlettered. Ordinary purchasers will not as a rule examine
the small letterings printed on the label but will simply be guided by the presence of the
striking mark LEE. Whatever difference there may be will pale in insignificance in the face
of an evident similarity in the dominant features and overall appearance of the labels of the
parties. 12

xxx xxx xxx

On 19 December 1990, petitioner filed a motion for reconsideration of the above-mentioned


decision of the Court of Appeals.

Private respondent opposed said motion on 8 January 1991 on grounds that it involved an
impermissible change of theory on appeal. Petitioner allegedly raised entirely new and
unrelated arguments and defenses not previously raised in the proceedings below such as
laches and a claim that private respondent appropriated the style and appearance of
petitioners trademark when it registered its LEE mark under Registration No. 44220. 13

On 17 May 1991, the Court of Appeals issued a resolution rejecting petitioners motion for
reconsideration and ruled thus:

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A defense not raised in the trial court cannot be raised on appeal for the first time. An issue
raised for the first time on appeal and not raised timely in the proceedings in the lower
court is barred by estoppel.
The object of requiring the parties to present all questions and issues to the lower court
before they can be presented to this Court is to have the lower court rule upon them, so
that this Court on appeal may determine whether or not such ruling was erroneous. The
purpose is also in furtherance of justice to require the party to first present the question he
contends for in the lower court so that the other party may not be taken by surprise and
may present evidence to properly meet the issues raised.

Moreover, for a question to be raised on appeal, the same must also be within the issues
raised by the parties in their pleadings. Consequently, when a party deliberately adopts a
certain theory, and the case is tried and decided based upon such theory presented in the
court below, he will not be permitted to change his theory on appeal. To permit him to do so
would be unfair to the adverse party. A question raised for the first time on appeal, there
having opportunity to raise them in the court of origin constitutes a change of theory which
is not permissible on appeal.

In the instant case, appellants main defense pleaded in its answer dated March 23, 1982
was that there was no confusing similarity between the competing trademark involved. On
appeal, the appellant raised a single issue, to wit:

The only issue involved in this case is whether or not respondent-registrants trademark
STYLISTIC MR. LEE is confusingly similar with the petitioners trademarks LEE or
LEERIDERS, LEE-LEENS and LEE-SURES.

Appellants main argument in this motion for reconsideration on the other hand is that the
appellee is estopped by laches from asserting its right to its trademark. Appellant claims
although belatedly that appellee went to court with unclean hands by changing the
appearance of its trademark to make it identical to the appellants trademark.

Neither defenses were raised by the appellant in the proceedings before the Bureau of
Patents. Appellant cannot raise them now for the first time on appeal, let alone on a mere
motion for reconsideration of the decision of this Court dismissing the appellants appeal.

While there may be instances and situations justifying relaxation of this rule, the
circumstance of the instant case, equity would be better served by applying the settled rule
it appearing that appellant has not given any reason at all as to why the defenses raised in
its motion for reconsideration was not invoked earlier. 14

xxx xxx xxx

Twice rebuffed, petitioner presents its case before this Court on the following assignment of
errors:

I. THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE RESPONDENT CAUSED
THE ISSUANCE OF A FOURTH LEE TRADEMARK IMITATING THAT OF THE PETITIONERS
ON MAY 5, 1989 OR MORE THAN EIGHT MONTHS AFTER THE BUREAU OF PATENTS
DECISION DATED JULY 19, 1988.

II. THE COURT OF APPEALS ERRED IN RULING THAT THE DEFENSE OF ESTOPPEL BY
LACHES MUST BE RAISED IN THE PROCEEDINGS BEFORE THE BUREAU OF PATENTS,
TRADEMARKS AND TECHNOLOGY TRANSFER.

III. THE COURT OF APPEALS ERRED WHEN IT CONSIDERED PRIVATE RESPONDENTS PRIOR
REGISTRATION OF ITS TRADEMARK AND DISREGARDED THE FACT THAT PRIVATE
RESPONDENT HAD FAILED TO PROVE COMMERCIAL
USE THEREOF BEFORE FILING OF APPLICATION FOR REGISTRATION. 15

In addition, petitioner reiterates the issues it raised in the Court of Appeals:

I. THE ISSUE INVOLVED IN THIS CASE IS WHETHER OR NOT PETITIONERS TRADEMARK


SYTLISTIC MR. LEE, IS CONFUSINGLY SIMILAR WITH THE PRIVATE RESPONDENTS
TRADEMARK LEE OR LEE-RIDER, LEE-LEENS AND LEE-SURES.

II. PETITIONERS EVIDENCES ARE CLEAR AND SUFFICIENT TO SHOW THAT IT IS THE
PRIOR USER AND ITS TRADEMARK IS DIFFERENT FROM THAT OF THE PRIVATE
RESPONDENT.

III. PETITIONERS TRADEMARK IS ENTIRELY DIFFERENT FROM THE PRIVATE


RESPONDENTS AND THE REGISTRATION OF ITS TRADEMARK IS PRIMA FACIE EVIDENCE
OF GOOD FAITH.

IV. PETITIONERS STYLISTIC MR. LEE TRADEMARK CANNOT BE CONFUSED WITH PRIVATE
RESPONDENTS LEE TRADEMARK. 16

Petitioner contends that private respondent is estopped from instituting an action for
infringement before the BPTTT under the equitable principle of laches pursuant to Sec. 9-A
of R.A. No. 166, otherwise known as the Law on Trade-marks, Trade-names and Unfair
Competition:

Sec. 9-A. Equitable principles to govern proceedings. In opposition proceedings and in all
other inter partes proceedings in the patent office under this act, equitable principles of
laches, estoppel, and acquiescence, where applicable, may be considered and applied.

Petitioner alleges that it has been using its trademark STYLISTIC MR. LEE since 1 May
1975, yet, it was only on 18 September 1981 that private respondent filed a petition for
cancellation of petitioners certificate of registration for the said trademark. Similarly,
private respondents notice of opposition to petitioners application for registration in the
principal register was belatedly filed on 27 July 1984. 17

Private respondent counters by maintaining that petitioner was barred from raising new
issues on appeal, the only contention in the proceedings below being the presence or
absence of confusing similarity between the two trademarks in question. 18

We reject petitioners contention.

Petitioners trademark is registered in the supplemental register. The Trademark Law (R.A.
No. 166) provides that marks and tradenames for the supplemental register shall not be
published for or be subject to opposition, but shall be published on registration in the
Official Gazette. 19 The reckoning point, therefore, should not be 1 May 1975, the date of
alleged use by petitioner of its assailed trademark but 27 October 1980, 20 the date the
certificate of registration SR No. 5054 was published in the Official Gazette and issued to
petitioner.

It was only on the date of publication and issuance of the registration certificate that private
respondent may be considered officially put on notice that petitioner has appropriated or
is using said mark, which, after all, is the function and purpose of registration in the
supplemental register. 21 The record is bereft of evidence that private respondent was aware
of petitioners trademark before the date of said publication and issuance. Hence, when
private respondent instituted cancellation proceedings on 18 September 1981, less than a
year had passed.

Corollarily, private respondent could hardly be accused of inexcusable delay in filing its
notice of opposition to petitioners application for registration in the principal register since
said application was published only on 20 February 1984. 22 From the time of publication to
the time of filing the opposition on 27 July 1984 barely five (5) months had elapsed. To be
barred from bringing suit on grounds of estoppel and laches, the delay must be
lengthy. 23

More crucial is the issue of confusing similarity between the two trademarks. Petitioner
vehemently contends that its trademark STYLISTIC MR. LEE is entirely different from and
not confusingly similar to private respondents LEE trademark.

Private respondent maintains otherwise. It asserts that petitioners trademark tends to


mislead and confuse the public and thus constitutes an infringement of its own mark, since
the dominant feature therein is the word LEE.

The pertinent provision of R.A. No. 166 (Trademark Law) states thus:

Sec. 22. Infringement, what constitutes. Any person who shall use, without the consent
of the registrant, any reproduction, counterfeit, copy or colorable imitation of any registered
mark or trade-name in connection with the sale, offering for sale, or advertising of any
goods, business or services on or in connection with which such use is likely to cause
confusion or mistake or to deceive purchasers or others as to the source or origin of such
goods or services, or identity of such business; or reproduce, counterfeit, copy or colorably
imitable any such mark or trade-name and apply such reproduction, counterfeit, copy, or
colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods, business or
services; shall be liable to a civil action by the registrant for any or all of the remedies
herein provided.

Practical application, however, of the aforesaid provision is easier said than done. In the
history of trademark cases in the Philippines, particularly in ascertaining whether one
trademark is confusingly similar to or is a colorable imitation of another, no set rules can be
deduced. Each case must be decided on its own merits.

In Esso Standard Eastern, Inc. v. Court of Appeals, 24 we held:

. . . But likelihood of confusion is a relative concept; to be determined only according to the


particular, and sometimes peculiar, circumstances of each case. It is unquestionably true
that, as stated inCoburn vs. Puritan Mills, Inc.: In trademark cases, even more than in
other litigation, precedent must be studied in the light of the facts of the particular case.

xxx xxx xxx

Likewise, it has been observed that:

In determining whether a particular name or mark is a colorable imitation of another, no


all-embracing rule seems possible in view of the great number of factors which must
necessarily be considered in resolving this question of fact, such as the class of product or
business to which the article belongs; the products quality, quantity, or size, including its
wrapper or container; the dominant color, style, size, form, meaning of letters, words,
designs and emblems used; the nature of the package, wrapper or container; the character
of the products purchasers; location of the business; the likelihood of deception or the mark
or names tendency to confuse;
etc. 25

Proceeding to the task at hand, the essential element of infringement is colorable imitation.
This term has been defined as such a close or ingenious imitation as to be calculated to
deceive ordinary purchasers, or such resemblance of the infringing mark to the original as
to deceive an ordinary purchaser giving such attention as a purchaser usually gives, and to
cause him to purchase the one supposing it to be the other. 26

Colorable imitation does not mean such similitude as amounts to identity. Nor does it
require that all the details be literally copied. Colorable imitation refers to such similarity in
form, content, words, sound, meaning, special arrangement, or general appearance of the
trademark or tradename with that of the other mark or tradename in their over-all
presentation or in their essential, substantive and distinctive parts as would likely mislead or
confuse persons in the ordinary course of purchasing the genuine article. 27

In determining whether colorable imitation exists, jurisprudence has developed two kinds of
tests the Dominancy Test applied in Asia Brewery, Inc. v. Court of Appeals 28 and other
cases 29 and the Holistic Test developed in Del Monte Corporation v. Court of
Appeals 30 and its proponent cases. 31

As its title implies, the test of dominancy focuses on the similarity of the prevalent features
of the competing trademarks which might cause confusion or deception and thus constitutes
infringement.

xxx xxx xxx

. . . If the competing trademark contains the main or essential or dominant features of


another, and confusion and deception is likely to result, infringement takes place.
Duplication or imitation is not necessary; nor it is necessary that the infringing label should
suggest an effort to imitate. [C. Neilman Brewing Co. v. Independent Brewing Co., 191 F.,
489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180 Fed. 579]. The question at issue
in cases of infringement of trademarks is whether the use of the marks involved would be
likely to cause confusion or mistakes in the mind of the public or deceive purchasers.
(Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; . . .) 32

xxx xxx xxx

On the other side of the spectrum, the holistic test mandates that the entirety of the marks
in question must be considered in determining confusing similarity.

xxx xxx xxx

In determining whether the trademarks are confusingly similar, a comparison of the words
is not the only determinant factor. The trademarks in their entirety as they appear in their
respective labels or hang tags must also be considered in relation to the goods to which
they are attached. The discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing in both labels in order that he
may draw his conclusion whether one is confusingly similar to the other. 33
xxx xxx xxx

Applying the foregoing tenets to the present controversy and taking into account the factual
circumstances of this case, we considered the trademarks involved as a whole and rule that
petitioners STYLISTIC MR. LEE is not confusingly similar to private respondents LEE
trademark.

Petitioners trademark is the whole STYLISTIC MR. LEE. Although on its label the word
LEE is prominent, the trademark should be considered as a whole and not piecemeal. The
dissimilarities between the two marks become conspicuous, noticeable and substantial
enough to matter especially in the light of the following variables that must be factored in.

First, the products involved in the case at bar are, in the main, various kinds of jeans. These
are not your ordinary household items like catsup, soysauce or soap which are of minimal
cost. Maong pants or jeans are not inexpensive. Accordingly, the casual buyer is
predisposed to be more cautious and discriminating in and would prefer to mull over his
purchase. Confusion and deception, then, is less likely. In Del Monte Corporation v. Court of
Appeals, 34 we noted that:

. . . Among these, what essentially determines the attitudes of the purchaser, specifically
his inclination to be cautious, is the cost of the goods. To be sure, a person who buys a box
of candies will not exercise as much care as one who buys an expensive watch. As a general
rule, an ordinary buyer does not exercise as much prudence in buying an article for which
he pays a few centavos as he does in purchasing a more valuable thing. Expensive and
valuable items are normally bought only after deliberate, comparative and analytical
investigation. But mass products, low priced articles in wide use, and matters of everyday
purchase requiring frequent replacement are bought by the casual consumer without great
care. . . .

Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He
does not ask the sales clerk for generic jeans but for, say, a Levis, Guess, Wrangler or even
an Armani. He is, therefore, more or less knowledgeable and familiar with his preference
and will not easily be distracted.

Finally, in line with the foregoing discussions, more credit should be given to the ordinary
purchaser. Cast in this particular controversy, the ordinary purchaser is not the completely
unwary consumer but is the ordinarily intelligent buyer considering the type of product
involved.

The definition laid down in Dy Buncio v. Tan Tiao Bok 35 is better suited to the present case.
There, the ordinary purchaser was defined as one accustomed to buy, and therefore to
some extent familiar with, the goods in question. The test of fraudulent simulation is to be
found in the likelihood of the deception of some persons in some measure acquainted with
an established design and desirous of purchasing the commodity with which that design has
been associated. The test is not found in the deception, or the possibility of deception, of
the person who knows nothing about the design which has been counterfeited, and who
must be indifferent between that and the other. The simulation, in order to be
objectionable, must be such as appears likely to mislead the ordinary intelligent buyer who
has a need to supply and is familiar with the article that he seeks to purchase.

There is no cause for the Court of Appeals apprehension that petitioners products might be
mistaken as another variation or line of garments under private respondents LEE
trademark. 36 As one would readily observe, private respondents variation follows a
standard format LEERIDERS, LEESURES and LEELEENS. It is, therefore, improbable
that the public would immediately and naturally conclude that petitioners STYLISTIC MR.
LEE is but another variation under private respondents LEE mark.

As we have previously intimated the issue of confusing similarity between trademarks is


resolved by considering the distinct characteristics of each case. In the present controversy,
taking into account these unique factors, we conclude that the similarities in the trademarks
in question are not sufficient as to likely cause deception and confusion tantamount to
infringement.

Another way of resolving the conflict is to consider the marks involved from the point of
view of what marks are registrable pursuant to Sec. 4 of R.A. No. 166, particularly
paragraph 4 (e):

CHAPTER II-A. The Principal Register


(Inserted by Sec. 2, Rep. Act No. 638.)

Sec. 4. Registration of trade-marks, trade-names and service-marks on the principal


register. There is hereby established a register of trade-marks, trade-names and service-
marks which shall be known as the principal register. The owner of a trade-mark, trade-
name or service-mark used to distinguish his goods, business or services from the goods,
business or services of others shall have the right to register the same on the principal
register, unless it:

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(e) Consists of a mark or trade-name which, when applied to or used in connection with the
goods, business or services of the applicant is merely descriptive or deceptively
misdescriptive of them, or when applied to or used in connection with the goods, business
or services of the applicant is primarily geographically descriptive or deceptively
misdescriptive of them, or is primarily merely a surname; (Emphasis ours.)

xxx xxx xxx

LEE is primarily a surname. Private respondent cannot, therefore, acquire exclusive


ownership over and singular use of said term.

. . . It has been held that a personal name or surname may not be monopolized as a
trademark or tradename as against others of the same name or surname. For in the
absence of contract, fraud, or estoppel, any man may use his name or surname in all
legitimate ways. Thus, Wellington is a surname, and its first user has no cause of action
against the junior user of Wellington as it is incapable of exclusive appropriation. 37

In addition to the foregoing, we are constrained to agree with petitioners contention that
private respondent failed to prove prior actual commercial use of its LEE trademark in the
Philippines before filing its application for registration with the BPTTT and hence, has not
acquired ownership over said mark.

Actual use in commerce in the Philippines is an essential prerequisite for the acquisition of
ownership over a trademark pursuant to Sec. 2 and 2-A of the Philippine Trademark Law
(R.A. No. 166) which explicitly provides that:

CHAPTER II. Registration of Marks and Trade-names.


Sec. 2. What are registrable. Trade-marks, trade-names, and service marks owned by
persons, corporations, partnerships or associations domiciled in the Philippines and by
persons, corporations, partnerships, or associations domiciled in any foreign country may be
registered in accordance with the provisions of this act: Provided, That said trade-
marks, trade-names, or service marks are actually in use in commerce and services not less
than two months in the Philippines before the time the applications for registration are
filed: And Provided, further, That the country of which the applicant for registration is a
citizen grants by law substantially similar privileges to citizens of the Philippines, and such
fact is officially certified, with a certified true copy of the foreign law translated into the
English language, by the government of the foreign country to the Government of the
Republic of the Philippines. (As amended.) (Emphasis ours.)

Sec. 2-A. Ownership of trade-marks, trade-names and service-marks; how acquired.


Anyone who lawfully produces or deals in merchandise of any kind or who engages in lawful
business, or who renders any lawful service in commerce, by actual use hereof in
manufacture or trade, in business, and in the service rendered; may appropriate to his
exclusive use a trade-mark, a trade-name, or a service-mark not so appropriated by
another, to distinguish his merchandise, business or services from others. The ownership or
possession of trade-mark, trade-name, service-mark, heretofore or hereafter appropriated,
as in this section provided, shall be recognized and protected in the same manner and to
the same extent as are other property rights to the law. (As amended.) (Emphasis ours.)

The provisions of the 1965 Paris Convention for the Protection of Industrial
Property 38 relied upon by private respondent and Sec. 21-A of the Trademark Law (R.A.
No. 166) 39 were sufficiently expounded upon and qualified in the recent case of Philip
Morris, Inc. v. Court of Appeals: 40

xxx xxx xxx

Following universal acquiescence and comity, our municipal law on trademarks regarding
the requirement of actual use in the Philippines must subordinate an international
agreement inasmuch as the apparent clash is being decided by a municipal tribunal
(Mortisen vs. Peters, Great Britain, High Court of Judiciary of Scotland, 1906, 8 Sessions,
93; Paras, International Law and World Organization, 1971 Ed., p. 20). Withal, the fact that
international law has been made part of the law of the land does not by any means imply
the primacy of international law over national law in the municipal sphere. Under the
doctrine of incorporation as applied in most countries, rules of international law are given a
standing equal, not superior, to national legislative enactments.

xxx xxx xxx

In other words, (a foreign corporation) may have the capacity to sue for infringement
irrespective of lack of business activity in the Philippines on account of Section 21-A of the
Trademark Law but the question of whether they have an exclusive right over their symbol
as to justify issuance of the controversial writ will depend on actual use of their trademarks
in the Philippines in line with Sections 2 and 2-A of the same law. It is thus incongruous for
petitioners to claim that when a foreign corporation not licensed to do business in the
Philippines files a complaint for infringement, the entity need not be actually using its
trademark in commerce in the Philippines. Such a foreign corporation may have the
personality to file a suit for infringement but it may not necessarily be entitled to protection
due to absence of actual use of the emblem in the local market.

xxx xxx xxx


Undisputably, private respondent is the senior registrant, having obtained several
registration certificates for its various trademarks LEE, LEERIDERS, and LEESURES in
both the supplemental and principal registers, as early as 1969 to 1973. 41 However,
registration alone will not suffice. In Sterling Products International, Inc. v.Farbenfabriken
Bayer Aktiengesellschaft, 42 we declared:

xxx xxx xxx

A rule widely accepted and firmly entrenched because it has come down through the years
is that actual use in commerce or business is a prerequisite in the acquisition of the right of
ownership over a trademark.

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It would seem quite clear that adoption alone of a trademark would not give exclusive right
thereto. Such right grows out of their actual use. Adoption is not use. One may make
advertisements, issue circulars, give out price lists on certain goods; but these alone would
not give exclusive right of use. For trademark is a creation of use. The underlying reason for
all these is that purchasers have come to understand the mark as indicating the origin of
the wares. Flowing from this is the traders right to protection in the trade he has built up
and the goodwill he has accumulated from use of the trademark. Registration of a
trademark, of course, has value: it is an administrative act declaratory of a pre-existing
right. Registration does not, however, perfect a trademark right. (Emphasis ours.)

xxx xxx xxx

To augment its arguments that it was, not only the prior registrant, but also the prior user,
private respondent invokes Sec. 20 of the Trademark Law, thus:

Sec. 20. Certificate of registration prima facie evidence of validity. A certificate of


registration of a mark or tradename shall be a prima facie evidence of the validity of the
registration, the registrants ownership of the mark or trade-name, and of the registrants
exclusive right to use the same in connection with the goods, business or services specified
in the certificate, subject to any conditions and limitations stated therein.

The credibility placed on a certificate of registration of ones trademark, or its weight as


evidence of validity, ownership and exclusive use, is qualified. A registration certificate
serves merely as prima facie evidence. It is not conclusive but can and may be rebutted by
controverting evidence.

Moreover, the aforequoted provision applies only to registrations in the principal


register. 43 Registrations in the supplemental register do not enjoy a similar privilege. A
supplemental register was created precisely for the registration of marks which are not
registrable on the principal register due to some defects. 44

The determination as to who is the prior user of the trademark is a question of fact and it is
this Courts working principle not to disturb the findings of the Director of Patents on this
issue in the absence of any showing of grave abuse of discretion. The findings of facts of the
Director of Patents are conclusive upon the Supreme Court provided they are supported by
substantial evidence. 45

In the case at bench, however, we reverse the findings of the Director of Patents and the
Court of Appeals. After a meticulous study of the records, we observe that the Director of
Patents and the Court of Appeals relied mainly on the registration certificates as proof of
use by private respondent of the trademark LEE which, as we have previously discussed
are not sufficient. We cannot give credence to private respondents claim that its LEE mark
first reached the Philippines in the 1960s through local sales by the Post Exchanges of the
U.S. Military Bases in the Philippines 46 based as it was solely on the self-serving statements
of Mr. Edward Poste, General Manager of Lee (Phils.), Inc., a wholly owned subsidiary of the
H.D. Lee, Co., Inc., U.S.A., herein private respondent. 47Similarly, we give little weight to
the numerous vouchers representing various advertising expenses in the Philippines for
LEE products. 48 It is well to note that these expenses were incurred only in 1981 and
1982 by LEE (Phils.), Inc. after it entered into a licensing agreement with private
respondent on 11 May 1981. 49

On the other hand, petitioner has sufficiently shown that it has been in the business of
selling jeans and other garments adopting its STYLISTIC MR. LEE trademark since 1975 as
evidenced by appropriate sales invoices to various stores and retailers. 50

Our rulings in Pagasa Industrial Corp. v. Court of Appeals 51 and Converse Rubber
Corp. v. Universal Rubber Products, Inc., 52 respectively, are instructive:

The Trademark Law is very clear. It requires actual commercial use of the mark prior to its
registration. There is no dispute that respondent corporation was the first registrant, yet it
failed to fully substantiate its claim that it used in trade or business in the Philippines the
subject mark; it did not present proof to invest it with exclusive, continuous adoption of the
trademark which should consist among others, of considerable sales since its first use. The
invoices submitted by respondent which were dated way back in 1957 show that the zippers
sent to the Philippines were to be used as samples and of no commercial value. The
evidence for respondent must be clear, definite and free from inconsistencies. Samples
are not for sale and therefore, the fact of exporting them to the Philippines cannot be
considered to be equivalent to the use contemplated by law. Respondent did not expect
income from such samples. There were no receipts to establish sale, and no proof were
presented to show that they were subsequently sold in the Philippines.

xxx xxx xxx

The sales invoices provide the best proof that there were actual sales of petitioners product
in the country and that there was actual use for a protracted period of petitioners
trademark or part thereof through these sales.

For lack of adequate proof of actual use of its trademark in the Philippines prior to
petitioners use of its own mark and for failure to establish confusing similarity between said
trademarks, private respondents action for infringement must necessarily fail.

WHEREFORE, premises considered, the questioned decision and resolution are hereby
REVERSED and SET ASIDE.

SO ORDERED.

Bellosillo and Hermosisima, Jr., JJ., concur.


Separate Opinions

PADILLA, J., dissenting:

I dissent. I vote deny the petition; I agree with BPTTT and the CA that petitioners
trademark STYLISTIC MR. LEE is confusingly similar to private respondents earlier
registered trademarks LEE or LEE RIDER, LEE-LEENS and LEE-SURES such that the
trademark STYLISTIC MR. LEE is an infringement of the earlier registered trademarks.

Footnotes

1 Rollo, pp. 3, 27, 53.

2 Id., at 27, 55.

3 Id., at 27, 54.

4 Id., at 3, 27.

5 Id., at 54.

6 Ibid.

7 Id., at 39.

8 Id., at 38.

9 Id., at 4.

10 Id., at 42.

11 Id., at 33.

12 Id., at 31-33.

13 Id., at 175.

14 Id., at 23-25.

15 Id., at 7, 14-15.

16 Ibid.

17 Id., at 12, 158.

18 Id., at 193.

19 The whole paragraph reads as follows:

Chapter IV-A. The supplemental register.


Sec. 19-A.

xxx xxx xxx

Marks and trade-names for the supplemental register shall not be published for or be
subject to opposition, but shall be published on registration in the Official Gazette.
Whenever any person believes that he is or will be damaged by the registration of a mark or
trade-name on this register, he may at any time apply to the director to cancel such
registration. Upon receiving the application, the director shall give notice thereof to the
registrant. If it is found after a hearing that the registrant was not entitled to register the
mark at the time of his application for registration thereof, or that the mark was not used by
the registrant or has been abandoned, the registration shall be cancelled by the director.

20 Supra, see Note 1.

21 Sec. 19-A, R.A. No. 166; La Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 373 (1984).

22 Supra, see Note 4.

23 Ruben Agpalo, Trademark Law & Practice in the Philippines, 1990, p. 32, citing La Insular
v. Jao Oge, 47 Phil. 75, (1924); La Insular v. Yu So, 45 Phil. 398 (1923).

24 116 SCRA 336 (1982).

25 Jaime N. Salazar, Trademarks and Tradenames, 55 SCRA 422 (1974); See also Colorable
Imitation of Trademarks, Tradenames, Labels, Packages, Wrappers, etc., 16 SCRA 502
(1966).

26 Etepha v. Director of Patents, 16 SCRA 495 (1966).

27 Ruben Agpalo, Trademark Law & Practice in the Philippines, 1990, p. 41.

28 224 SCRA 437 (1993).

29 Co Tiong v. Director of Patents, 95 Phil. 1 (1954); Lim Hoa v. Director of Patents, 100
Phil. 214 (1956); American Wire & Cable Co. v. Director of Patents, 31 SCRA 544 (1970);
Phil. Nut Industry, Inc. v. Standard Brands, Inc., 65 SCRA 575 (1975); Converse Rubber
Corp. v. Universal Rubber Products, Inc., 147 SCRA 154 (1987).

30 181 SCRA 410 (1990).

31 Mead Johnson & Co. v. N.V.J. Van Dorp, Ltd., 7 SCRA 771 (1963); Bristol Myers Co. v.
Director of Patents, 17 SCRA 128 (1966); Fruit of the Loom, Inc. v. CA, 133 SCRA 405
(1984).

32 Supra, see note 28.

33 Fruit of the Loom, Inc. v. CA, supra, see note 31.

34 Supra, see note 30.

35 42 Phil. 190 (1921).


36 Supra, see note 12.

37 Ruben Agpalo, Trademark Law and Practice in the Philippines, 1990, p. 18, citing Ang Si
Heng v. Wellington Dept. Store, Inc., 92 Phil. 448 (1953).

38 The Philippines became a signatory thereto on 27 September 1965.

The Paris Convention is essentially a compact among the various member countries to
accord in their own countries to citizens of the other contracting parties trademark and
other rights comparable to those accorded their own citizens by their domestic laws. The
underlying principle is that foreign nationals should be given the same treatment in each of
the member countries as that country makes available to its own citizens. In addition the
Convention sought to create uniformity in certain respects by obligating each nation assure
to nationals of countries of the Union an effective protection against unfair competition.
(Ruben Agpalo, Trademark Law And Practice in the Philippines, 1990, pp. 200-201.)

39 Sec. 21-A. Any foreign corporation or juristic person to which a mark or trade-name has
been registered or assigned under this Act may bring an action hereinunder for
infringement, for unfair competition, or false designation of origin and false description,
whether or not it has been licensed to do business in the Philippines under Act Numbered
Fourteen hundred and fifty-nine, as amended, otherwise known as the Corporation Law, at
the time it brings complaint: Provided, That the country of which the said foreign or juristic
person is a citizen, or in which it is domiciled, by treaty, convention or law, grants a similar
privilege to corporate or juristic persons of the Philippines. (As amended.)

40 224 SCRA 576 (1993).

41 Rollo, p. 170; Exhibits A, B, C, & C-1.

42 27 SCRA 1214 (1969); Reiterated in Kabushi Kaisha Isetan v. Intermediate Appellate


Court, 203 SCRA 583 (1991).

43 La Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 373 (1984).

44 Ibid.

45 Unno Commercial Enterprises, Inc. v. General Milling Corp., 120 SCRA 804 (1983);
Kabushi Kaisha Isetan v. Intermediate Appellate Court, 203 SCRA 583 (1991).

46 Rollo, p. 177.

47 Original Records, p. 52.

48 Exhibits F-1 to F-59.

49 Exhibit E.

50 Exhibits 1-e to 1-o.


Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 75067 February 26, 1988

PUMA SPORTSCHUHFABRIKEN RUDOLF DASSLER, K.G., petitioner


vs.
THE INTERMEDIATE APPELLATE COURT and MIL-ORO MANUFACTURING
CORPORATION, respondents.

GUTIERREZ, JR., J.:

This is a petition for review by way of certiorari of the Court of Appeals' decision which
reversed the order of the Regional Trial Court and dismissed the civil case filed by the
petitioner on the grounds of litis pendentia and lack of legal capacity to sue.

On July 25, 1985, the petitioner, a foreign corporation duly organized and existing under
the laws of the Federal Republic of Germany and the manufacturer and producer of "PUMA
PRODUCTS," filed a complaint for infringement of patent or trademark with a prayer for the
issuance of a writ of preliminary injunction against the private respondent before the
Regional Trial Court of Makati.

Prior to the filing of the said civil suit, three cases were pending before the Philippine Patent
Office, namely:

Inter Partes Case No. 1259 entitled 'PUMA SPORTSCHUHFABRIKEN v. MIL-


ORO MANUFACTURING CORPORATION, respondent-applicant which is an
opposition to the registration of petitioner's trademark 'PUMA and DEVICE' in
the PRINCIPAL REGISTER;

Inter Partes Case No. 1675 similarly entitled, 'PUMA SPORTSCHUHFABRIKEN


RUDOLF DASSLER, K.G., petitioner, versus MIL-ORO MANUFACTURING
CORPORATION, respondent-registrant,' which is a case for the cancellation of
the trademark registration of the petitioner; and

Inter Partes Case No. 1945 also between the same parties this time the
petitioner praying for the cancellation of private respondent's Certificate of
Registration No. 26875 (pp. 40-41, 255, Rollo) (pp. 51 -52, Rollo)

On July 31, 1985, the trial court issued a temporary restraining order, restraining the
private respondent and the Director of Patents from using the trademark "PUMA' or any
reproduction, counterfeit copy or colorable imitation thereof, and to withdraw from the
market all products bearing the same trademark.
On August 9, 1985, the private respondent filed a motion to dismiss on the grounds that the
petitioners' complaint states no cause of action, petitioner has no legal personality to sue,
and litis pendentia.

On August 19, 1985, the trial court denied the motion to dismiss and at the same time
granted the petitioner's application for a writ of injunction. The private respondents
appealed to the Court of Appeals.

On June 23, 1986, the Court of Appeals reversed the order of the trial court and ordered the
respondent judge to dismiss the civil case filed by the petitioner.

In reversing the order of the trial court, the Court of Appeals ruled that the requisites of lis
pendens as ground for the motion to dismiss have been met. It said:

Obviously, the parties are Identical. They are the same protagonists. As to
the second requisite, which is Identity of rights and reliefs prayed for, both
sides maintain that they are the rightful owners of the trademark "PUMA" for
socks and belts such that both parties seek the cancellation of the trademark
of the other (see prayer in private respondent's complaint, pp, 54-55, Rollo,
Annex "A" to the Petition). Inevitably, in either the lower court or in the
Patent Office, there is a need to resolve the issue as to who is the rightful
owner of the TRADEMARK 'PUMA' for socks and belts.After all,the right to
register a trademark must be based on ownership thereof (Operators Inc. v.
Director of Patents, L-17910, Oct. 29,1965,15 SCRA 147). Ownership of the
trademark is an essential requisite to be proved by the applicant either in a
cancellation case or in a suit for infringement of trademark. The relief prayed
for by the parties in Inter Partes Cases Nos. 1259, 1675 and 1945 and Civil
Case No. 11189 before respondent court seek for the cancellation of usurper's
trademark, and the right of the legal owner to have exclusive use of said
trademark. From the totality of the obtaining circumstances, the rights of the
respective parties are dependent upon the resolution of a single issue, that is,
the rightful ownership of the trademark in question. The second requisite
needed to justify a motion to dismiss based on lis pendens is present.

As to the third requisite, the decisions and orders of administrative agencies


rendered pursuant to their quasi-judicial authority have upon their finality the
character of res judicata (Brilliantes v. Castro, 99 Phil. 497). The rule which
forbids the re-opening of a matter once judicially determined by competent
authority applies as well to judicial acts of public executive and administrative
officers and boards acting within their jurisdiction as to the judgments of
Courts having general judicial powers (Brilliantes vs. Castro, supra). It may
be recalled that the resolution and determination of the issue on ownership
are both within the jurisdiction of the Director of Patents and the Regional
Trial Court (Sec 25, RA 166). It would thus be confusing for two (2) different
forums to hear the same case and resolve a main and determinative issue
with both forums risking the possibility of arriving at different conclusions. In
the construction of laws and statutes regarding jurisdiction, one must
interpret them in a complementary manner for it is presumed that the
legislature does not intend any absurdity in the laws it makes (Statutory
Construction, Martin, p. 133). Ms is precisely the reason why both decisions of
the Director of Patents and Regional Trial Court are appealable to the
Intermediate Appellate Court (Sec. 9, BP 129), as both are co-equal in rank
regarding the cases that may fall within their jurisdiction.

The record reveals that on March 31, 1986, the Philippine Patent Office
rendered a decision in Inter Partes Cases Nos. 1259 and 1675 whereby it
concluded that petitioner is the prior and actual adaptor of the trademark
'PUMA and DEVICE used on sports socks and belts, and that MIL-ORO
CORPORATION is the rightful owner thereof. ... (pp. 6-7, CA decision, pp.
51-52, Rollo)

With regard to the petitioner's legal capacity to sue, the Court of Appeals likewise held that
it had no such capacity because it failed to allege reciprocity in its complaint:

As to private respondent's having no legal personality to sue, the record


discloses that private respondent was suing under Sec. 21-A of Republic Act
No. 166, as amended (p. 50, Annex "A", Petition). This is the exception to the
general rule that a foreign corporation doing business in the Philippines must
secure a license to do business before said foreign corporation could maintain
a court or administrative suit (Sec. 133, Corporation Code, in relation to Sec.
21-A, RA 638, as amended). However, there are some conditions which must
be met before that exception could be made to apply, namely: (a) the
trademark of the suing corporation must be registered in the Philippines, or
that it be the assignee thereof: and (b) that there exists a reciprocal
treatment to Philippine Corporations either by law or convention by the
country of origin of the foreign corporation (Sec. 21-A Trademark Law).
Petitioner recognizes that private respondent is the holder of several
certificates of registration, otherwise, the former would not have instituted
cancellation proceedings in the Patent's Office. Petitioner actually zeroes on
the second requisite provided by Section 21-A of the Trademark Law which is
the private respondent's failure to allege reciprocity in the complaint. ...

Citing the case of Leviton Industries v. Salvador (114 SCRA 420), it further ruled:

Failure to allege reciprocity, it being an essential fact under the trademark law
regarding its capacity to sue before the Philippine courts, is fatal to the
foreign corporations' cause. The Concurring Opinion of Chief Justice Aquino on
the same case is more emphatic when he said:

Respondent Leviton Manufacturing Co. Inc., alleged in par. 2 of


its complaint for unfair competition that its action 'is being filed
under the provisions of Section 21-A of Republic Act No. 166,
as amended.' Respondent is bound by the allegation in its
complaint. It cannot sue under Section 21-A because it has not
complied with the requirements hereof that (1) its trademark
Leviton has been registered with the Patent Office and (2) that
it should show that the State of New York grants to Philippine
Corporations the privilege to bring an action for unfair
competition in that state. Respondent 'Leviton has to comply
with those requirements before it can be allowed to maintain an
action for unfair competition. (p. 9, CA decision). (p. 55,
Rollo).
The Court of Appeals further ruled that in issuing the writ of preliminary injunction, the trial
court committed grave abuse of discretion because it deprived the private respondent of its
day in court as the latter was not given the chance to present its counter-evidence.

In this petition for review, the petitioner contends that the Court of appeals erred in holding
that: (1) it had no legal capacity to sue; (2) the doctrine of lis pendens is applicable as a
ground for dismissing the case and (3) the writ of injunction was improperly issued.

Petitioner maintains that it has substantially complied with the requirements of Section 21-A
of Republic Act R.A. No. 166, as amended. According to the petitioner, its complaint
specifically alleged that it is not doing business in the Philippines and is suing under the said
Repulbic Act; that Section 21-A thereof provides that "the country of which the said
corporation or juristic person is a citizen, or in which it is domiciled, by treaty, convention or
law, grants a similar privilege to corporate or juristic persons of the Philippines" but does
not mandatorily require that such reciprocity between the Federal Republic of Germany and
the Philippines be pleaded; that such reciprocity arrangement is embodied in and supplied
by the Union Convention for the Protection of Industrial Property Paris Convention) to which
both the Philippines and Federal Republic of Germany are signatories and that since the
Paris 'Convention is a treaty which, pursuant to our Constitution, forms part of the law of
the land, our courts are bound to take judicial notice of such treaty, and, consequently, this
fact need not be averred in the complaint.

We agree.

In the leading case of La Chemise Lacoste, S.A .v. Fernandez, (129 SCRA 373), we ruled:

But even assuming the truth of the private respondents allegation that the
petitioner failed to allege material facto in its petition relative to capacity to
sue, the petitioner may still maintain the present suit against respondent
Hernandes. As early as 1927, this Court was, and it still is, of the view that a
foreign corporation not doing business in the Philippines needs no license to
sue before Philippine courts for infringement of trademark and unfair
competition. Thus, in Western Equipment and Supply Co. v. Reyes (51 Phil.
11 5), this Court held that a foreign corporation which has never done any
business in the Philippines and which is unlicensed and unregistered to do
business here, but is widely and favorably known in the Philippines through
the use therein of its products bearing its corporate and tradename, has a
legal right to maintain an action in the Philippines to restrain the residents
and inhabitants thereof from organizing a corporation therein bearing the
same name as the foreign corporation, when it appears that they have
personal knowledge of the existence of such a foreign corporation, and it is
apparent that the purpose of the proposed domestic corporation is to deal and
trade in the same goods as those of the foreign corporation.

Quoting the Paris Convention and the case of Vanity Fair Mills, Inc. v. T. Eaton, Co. (234 F.
2d 633), this Court further said:

By the same token, the petitioner should be given the same treatment in the
Philippines as we make available to our own citizens. We are obligated to
assure to nationals of 'countries of the Union' an effective protection against
unfair competition in the same way that they are obligated to similarly protect
Filipino citizens and firms.
Pursuant to this obligation, the Ministry of Trade on November 20,1980 issued
a memorandum addressed to the Director of the Patents Office directing the
latter --

xxx xxx xxx

... [T]o reject all pending applications for Philippine registration of signature
and other world famous trademarks by applicants other than its original
owners or users.

The conflicting claims over internationally known trademarks involve such


name brands as Lacoste, Jordache, Gloria Vanderbilt, Sasson, Fila, Pierre
Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy, Ralph
Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.

It is further directed that, in cases where warranted, Philippine registrants of


such trademarks should be asked to surrender their certificates of
registration, if any, to avoid suits for damages and other legal action by the
trademarks' foreign or local owners or original users.

The memorandum is a clear manifestation of our avowed adherence to a


policy of cooperation and amity with an nations. It is not, as wrongly alleged
by the private respondent, a personal policy of Minister Luis Villafuerte which
expires once he leaves the Ministry of trade. For a treaty or convention is not
a mere moral obligation to be enforced or not at the whims of an incumbent
head of a Ministry. It creates a legally binding obligation on the parties
founded on the generally accepted principle of international law of pacta sunt
servanda which has been adopted as part of the law of our land.
(Constitution, Art. II, Sec. 3). The memorandum reminds the Director of
Patents of his legal duty to obey both law and treaty. It must also be obeyed.
(at pp. 389-390, La Chemise Lacoste, S.A. v. Fernandez, supra).

In the case of of Cerverse Rubber Corporation V. Universal Rubber Products, Inc. (174 SCRA
165), we likewise re-aafirmed our adherence to the Paris Convention:

The ruling in the aforecited case is in consonance with the Convention of


Converse Rubber Corporation v. Universal Rubber Products, Inc. (I 47 SCRA
165), we likewise re-affirmed our adherence to the Paris Convention: the
Union of Paris for the Protection of Industrial Property to which the Philippines
became a party on September 27, 1965. Article 8 thereof provides that 'a
trade name [corporation name] shall be protected in all the countries of the
Union without the obligation of filing or registration, whether or not it forms
part of the trademark.'

The object of the Convention is to accord a national of a member nation


extensive protection 'against infringement and other types of unfair
competition [Vanity Fair Mills, Inc. v. T. Eaton Co., 234 F. 2d 633]." (at p.
165)

The mandate of the aforementioned Convention finds implementation in


Section 37 of RA No. 166, otherwise known as the trademark Law:
Rights of Foreign Registrants. Persons who are nationals of, domiciled in,
or have a bona fide or effective business or commercial establishment in any
foreign country, which is a party to an international convention or treaty
relating to marks or tradenames on the represssion of unfair competition to
which the Philippines may be party, shall be entitled to the benefits and
subject to the provisions of this Act ...

Tradenames of persons described in the first paragraph of this section shall be


protected without the obligation of filing or registration whether or not they
form part of marks.

We, therefore, hold that the petitioner had the legal capacity to file the action below.

Anent the issue of lis pendens as a ground for a motion to dismiss, the petitioner submits
that the relief prayed for in its civil action is different from the relief sought in the Inter
Partes cases. More important, however, is the fact that for lis pendens to be a valid ground
for the dismissal of a case, the other case pending between the same parties and having the
same cause must be a court action. As we have held in Solancho v. Ramos (19 SCRA 848):

As noted above, the defendants contend that the pendency of an


administrative between themselves and the plaintiff before the Bureau of
Lands is a sufficient ground to dismiss the action. On the other hand, the
plaintiff, believing that this ground as interposed by the defendants is a
sufficient ground for the dismissal of his complaint, filed a motion to withdraw
his free patent application No. 16649.

This is not what is contemplated under the law because under section 1(d),
Rule 16 (formerly Rule 8) of the Rules of Court, one of the grounds for the
dismissal of an action is that "there is another action pending between the
same parties for the same cause." Note that the Rule uses the phrase another
action. This phrase should be construed in line with Section 1 of Rule 2, which
defines the word action, thus--

Action means an ordinary suit in a court of justice by which one


party prosecutes another for the enforcement or protection of
alright, or the prevention or redress of a wrong. Every other
remedy is a special proceeding.

It is,therefore,very clear that the Bureau of Land is not covered under the
aforementioned provisions of the Rules of Court. (at p. 851)

Thus, the Court of Appeals likewise erred in holding that the requisites of lis pendens were
present so as to justify the dismissal of the case below.

As regards the propriety of the issuance of the writ of preliminary injunuction, the records
show that herein private respondent was given the opportunity to present its counter-
evidence against the issuance thereof but it intentionally refused to do so to be consistent
with its theory that the civil case should be dismissed in the first place.
Considering the fact that "PUMA" is an internationally known brand name, it is pertinent to
reiterate the directive to lower courts, which equally applies to administrative agencies,
found in La Chemise Lacoste, S.A. v. Fernandez, supra):

One final point. It is essential that we stress our concern at the seeming
inability of law enforcement officials to stem the tide of fake and counterfeit
consumer items flooding the Philippine market or exported abroad from our
country. The greater victim is not so much the manufacturer whose product is
being faked but the Filipino consuming public and in the case of exportations,
our image abroad. No less than the President, in issuing Executive Order No.
913 dated October 7, 1983 to strengthen the powers of the Minister of Trade
and Industry for the protection of consumers, stated that, among other acts,
the dumping of substandard, imitated, hazardous, and cheap goods, the
infringement of internationally known tradenames and trademarks, and the
unfair trade Practices of business firms have reached such proportions as to
constitute economic sabotage. We buy a kitchen appliance, a household tool,
perfume, face powder, other toilet articles, watches, brandy or whisky, and
items of clothing like jeans, T-shirts, neckties, etc. the list is quite lengthy
pay good money relying on the brand name as guarantee of its quality and
genuine nature only to explode in bitter frustration and helpless anger
because the purchased item turns out to be a shoddy imitation, albeit a clever
looking counterfeit, of the quality product. Judges all over the country are
well advised to remember that court processes should not be used as
instruments to, unwittingly or otherwise, aid counterfeiters and intellectual
pirates, tie the hands of the law as it seeks to protect the Filipino consuming
public and frustrate executive and administrative implementation of solemn
commitments pursuant to international conventions and treaties. (at p. 403)

WHEREFORE, the appealed decision of the Court of Appeals dated June 23, 1986 is
REVERSED and SET ASIDE and the order of the Regional Trial Court of Makati is hereby
Reinstated.

SO ORDERED.

Fernan (Chairman), Feliciano, Bidin and Cortes, JJ., concur.