PATENT CASES invention related to the treatment of hypertension and 2.

treatment of hypertension and
G.R. No. 174379
2. It was noted that it took thirteen (13) long years for the
congestive heart failure.7 The product was produced and
marketed by Merck, Sharpe, and Dohme Corporation (Merck),
E.I. Dupont Nemours' licensee, under the brand names Cozaar
and Hyzaar.8
applicant to request for such Office Action. This is not expected
of the applicant since it is an acceptable fact that almost all
inventors/ applicants wish for the early disposition for their
applications.14

E.I DUPONT DE NEMOURS AND CO., (assignee of inventors
Carino, Duncia and Wong), Petitioner
vs.
DIRECTOR EMMA C. FRANCISCO (in ger capacity as DIRECTOR
GENERAL OF THE INTELLECTUAL PROPERTY OFFICE), DIRECTOR
EPIFANIO M. VELASCO (in his capacity as the DIRECTOR OF
THE BUREAU OF PATENTS, and THERAPHARMA, INC.,
Respondents
DECISION
LEONEN, J.:
A patent is granted to provide rights and protection to the
inventor after an invention is disclosed to the public. It also
seeks to restrain and prevent unauthorized persons from
unjustly profiting from a protected invention. However, ideas
not covered by a patent are free for the public to use and
exploit. Thus, there are procedural rules on the application and
grant of patents established to protect against any
infringement. To balance the public interests involved, failure
to comply with strict procedural rules will result in the failure to
obtain a patent.
This resolves a Petition for Review on Certiorari 1 assailing the
Court of Appeals Amended Decision2 dated August 30, 2006,
which denied the revival of Philippine Patent Application No.
35526, and the Court of Appeals Resolution3dated January 31,
2006, which granted the intervention of Therapharma, Inc. in
the revival proceedings.
E.I. Dupont Nemours and Company (E.I. Dupont Nemours) is an
American corporation organized under the laws of the State of
Delaware. 4 It is the assignee of inv~ntors David John Carini,
John Jonas Vytautas Duncia, and Pancras Chor Bun Wong, all
citizens of the United States of America.5
On July 10, 1987, E.I. Dupont Nemours filed Philippine Patent
Application No. 35526 before the Bureau of Patents,
Trademarks, and Technology Transfer.6 The application was for
Angiotensin II Receptor Blocking Imidazole (losartan), an
The patent application was handled by Atty. Nicanor D. Mapili
(Atty. Mapili), a local resident agent who handled a majority of
E.I. Dupont Nemours' patent applications in the Philippines
from 1972 to 1996.9
On December 19, 2000, E.I. Dupont Nemours' new counsel,
Ortega, Del Castillo, Bacorro, Odulio, Calma, and
Carbonell,10 sent the Intellectual Property Office11 a letter
requesting that an office action be issued on Philippine Patent
Application No. 35526. 12
In response, Patent Examiner Precila O. Bulihan of Intellectual
Property Office sent an office action marked Paper No. 2 on
January 30, 2002,13 which stated:
The appointed attorney on record was the late Atty. Nicanor D.
Mapili. The reconstituted documents provided no documents
that will show that the authority to prosecute the instant
application is now transferred to the present counsel. No
official revocation on record is available.
Therefore, an official revocation of the Power of Attorney of
the former counsel and the appointment of the present by the
applicant is therefore required before further action can be
undertaken.
....
1. Contrary to what was alleged, the Chemical Examining
Division's (CED) record will show that as far as the said division
is concern[ ed], it did not fail to issue the proper and timely
action on the instant application. CED record shows that the
subject application was assigned to the examiner on June 7,
1988. A month after that was July 19, 1988, the first Office
Action was mailed but was declared abandoned as of
September 20, 1988 for applicant's failure to respond within
the period as prescribed under Rule 112. Since then, no other
official transactions were recorded. Tlris record is
complemented by the Examiner-in-charge's own record ....
....
On May 29, 2002, E.I. Dupont Nemours replied to the office
action by submitting a Power of Attorney executed by Miriam
Meconnahey, authorizing Ortega, Castillo, Del Castillo, Bacorro,
Odulio, Calma, and Carbonell to prosecute and handle its
patent applications. 15 On the same day, it also filed a Petition
for Revival with Cost of Philippine Patent Application No.
35526. 16
In its Petition for Revival, E.I. Dupont Nemours argued that its
former counsel, Atty. Mapili, did not inform it about the
abandonment of the application, and it was not aware that
Atty. Mapili had already died. 17 It argued that it discovered
Atty. Mapili's death when its senior-level patent attorney
visited the Philippines in 1996. 18 It argued that it only had
actual notice of the abandonment on January 30, 2002, the
date of Paper No. 2. 19 Thus, it argued that its Petition for
Revival was properly filed under Section 113 of the 1962
Revised Rules of Practice before the Philippines Patent Office in
Patent Cases (1962 Revised Rules of Practice).20
On April 18, 2002, the Director of Patents denied the Petition
for Revival for having been filed out of time.21 The
Resolution22 stated:
Propriety dictates that the well-settled rule on agency should
be applied to this case to maintain the objectivity and discipline
of the Office. Therefore, for cases such as the instant case, let
the Office maintain its position that mistakes of the counsel
bind the client,' regardless of the degree of negligence
committed by the former counsel. Although it appears that the
former counsel, Atty. Nicanor Mapili was remiss in his
obligations as counsel for the applicants, the Office cannot
revive the abandoned application because of the limitations
provided in Rule 115. Clearly, the Petition for Revival was filed
beyond the reglementary period. Since the law and rules do not
give the Director of Patents the discretion to stretch the period
for revival, the Office is constrained to apply Rule 115 to the
instant case.
In view of the foregoing considerations, applicants' petition to
revive the subject application is hereby denied.
SO ORDERED.23
E.I. Dupont Nemours appealed the denial to the Director-
General of the Intellectual Property Office on August 26,
2002.24 In the Decision25 dated October 22, 2003, Director-
General Emma C. Francisco denied the appeal and affirmed the
Resolution of the Director of Patents.
On November 21, 2003, petitioner filed before the Court of
Appeals a Petition for Review seeking to set aside the
Intellectual Property Office's Decision dated October 22,
2003. 26
On August 31, 2004, the Court of Appeals granted the Petition
for Review. 27 In allowing the Petition for Revival, the Court of
Appeals stated:
After an exhaustive examination of the records of this case, this
Court believes that there is sufficient justification to relax the
application of the above-cited doctrine in this case, and to
afford petitioner some relief from the gross negligence
committed by its former lawyer, Atty. Nicanor D. Mapili[.]28
The Office of the Solicitor General, on behalf of the Intellectual
Property Office, moved for reconsideration of this Decision on
September 22, 2004. 29
In the interim, Therapharma, Inc. moved for leave to intervene
and admit the Attached Motion for Reconsideration dated
October 11, 200430 and argued that the Court of Appeals'
August 31, 2004 Decision directly affects its "vested" rights to
sell its own product. 31
Therapharma, Inc. alleged that on January 4, 2003, it filed
before the Bureau of Food and Drugs its own application for a
losartan product "Lifezar," a medication for hypertension,
which the Bureau granted.32 It argued that it made a search of
existing patent applications for similar products before its
application, and that no existing patent registration was found
since E.I. Dupont Nemours' application for its losartan product
was considered abandoned by the Bureau of Patents,
Trademarks, and Technology Transfer.33 It alleged that
sometime in 2003 to 2004, there was an exchange of
correspondence between Therapharma, Inc. and Merck. In this
exchange, Merck informed Therapharma, Inc. that it was
pursuing a patent on the losartan products in the Philippines
and that it would pursue any legal action necessary to protect
its product.34
On January 31, 2006, the Court of Appeals issued the Comments,50 petitioner was directed to file its Consolidated
Resolution35 granting the Motion· for Leave to Intervene. Reply. 51 Thereafter, the parties were directed to file their
According to the Court of Appeals, Therapharma, Inc. had an respective memoranda. 52
interest in the revival of E.I. Dupont Nemours' patent
application since it was the local competitor for the losartan The arguments of the parties present several issues for this
product. 36 It stated hat even if the Petition for Review was Court's resolution, as follows:
premised on the revival of the patent application,
Therapharma, Inc.' s intervention was not premature since E.I.
First, whether the Petition for Review on Certiorari complied
Dupont Nemours, through Merck, already threatened
with Rule 45, Section 4 of the Rules of Court when petitioner
Therapharma, Inc. with legal action if it continued to market its
failed to attach certain documents to support the allegations in
losartan product.37
the complaint;
E.I. Dupont Nemours moved for reconsideration on February
Second, whether petitioner should have filed a petition
22, 2006, assailing the Court of Appeals' January 31, 2006
for certiorari under Rule 65 of the Rules of Court;
Resolution.38
Third, whether the Petition for Review on Certiorari raises
On August 30,. 2006, the Court of Appeals resolved both
questions of fact;
Motions for Reconsideration and rendered the Amended
Decision39 reversing its August 31, 2004 Decision.
Fourth, whether the Court of Appeals erred in allowing the
intervention of respondent Therapharma, Inc. in petitioner's
The Court of Appeals ruled that the public interest would be
appeal;
prejudiced by the revival of E.I. Dupont Nemours'
application.40 It found that losartan was used to treat
hypertension, "a chronic ailment afflicting an estimated 12.6 Fifth, whether the Court of Appeals erred in denying
petitioner's appeal for the revival of its patent application on
million Filipinos,"41 and noted that the presence of competition
the grounds that (a) petitioner committed inexcusable
lowered the price for losartan products. 42 It also found that the
negligence in the prosecution of its patent application; and (b)
revival of the application prejudiced Therapharma, Inc.' s
interest, in that it had already invested more than third-party rights and the public interest would be prejudiced
P20,000,000.00 to develop its own losartan product and that it by the appeal;
acted in good faith when it marketed its product.43
Sixth, whether Schuartz applies to this case in that the
negligence of a patent applicant's counsel binds the applicant;
The Court of Appeals likewise found that it erroneously based
and
its August 31, 2004 Decision on E.I Dupont Nemours' allegation
that it took seven (7) to 13 years for the Intellectual Property
Office to act on a patent application. 44 It stated that while it Lastly, whether the invention has already become part of public
might have taken that long to issue the patent, it did not take domain.
that long for the Intellectual Property Office to act on
application.45 Citing Schuartz v. Court of Appeals,46 it found that I
both E.I. Dupont Nemours and Atty. Mapili were inexcusably
negligent in
The question of whether the Court of Appeals may resolve a
motion for intervention is a question that assails an
prosecuting the patent application.47 interlocutory order and requests a review of a lower court's
exercise of discretion. Generally, a petition for certiorariunder
On October 19, 2006, petitioner E.I. Dupont Nemours filed Rule 65 of the Rules of Court will lie to raise this issue in a
before this Court this Petition for Review on Certiorari.48Both limited manner. There must be a clear showing of grave abuse
respondents Intellectual Property Office and Therapharma, Inc. of discretion for writ of certiorari to be issued.
were directed to comment on the comment on the
Petition.49 Upon submission of their respective
However, when the Court of Appeals has already resolved the
question of intervention and the merits of the case, an appeal
through a petition for review on certiorari under Rule 45 of the
Rules of Court is the proper remedy.
Respondent Therapharma, Inc. argues that the Petition should
be dismissed outright for being the wrong mode of appeal.53 It
argues that petitioner should have filed a petition
for certiorari under Rule 65 since petitioner was assailing an act
done by the Court of Appeals in the exercise of its
discretion. 54 It argues that petitions under Rule 45 are limited
to questions of law, and petitioner raised findings of fact that
have already been affirmed by the Court of
Appeals. 55 Petitioner, on the other hand, argues that Rule 65 is
only available when there is no appeal or any plain, speedy
remedy in the ordinary course of law. Since a petition for
review under Rule 45 was still available to it, it argues that it
correctly availed itself of this remedy. 56 Petitioner also argues
that there are exceptions to the general rule on the
conclusiveness of the Court of Appeals' findings of fact. 57 It
argues that it was necessary for it to discuss relevant facts in
order for it to show that the Court of Appeals made a
misapprehension of facts. 58
The special civil action of certiorari under Rule 65 is intended to
correct errors of jurisdiction. 59 Courts lose competence in
relation to an order if it acts in grave abuse of discretion
amounting to lack or excess of jurisdiction.60A petition for
review under Rule 45, on the other hand, is a mode of appeal
intended to correct errors of judgment.61Errors of judgment are
errors committed by a court within its jurisdiction.62 This
includes a review of the conclusions of law63 of the lower court
and, in appropriate cases, evaluation of the admissibility,
weight, and inference from the evidence presented.
Intervention results in an interlocutory order ancillary to a
principal action.64 Its grant or denial is subject to the sound
discretion of the court.65 Interlocutory orders, or orders that do
not make a final disposition of the merits of the main
controversy or cause of action,66 are generally not
reviewable.67 The only exception is a limited one, in that when
there is no plain, speedy, and adequate remedy, and where it
can be shown that the court acted without, in excess, or with
such grave abuse of discretion that such action ousts it of
jurisdiction.
Judicial economy, or the goal to have cases prosecuted with the
least cost to the parties,68 requires that unnecessary or
frivolous reviews of orders by the trial court, which facilitate
the resolution of the main merits of the case, be reviewed
together with the main merits of the case. After all, it would be
more efficient for an appellate court to review a case in its
entire context when the case is finally disposed.
The question of whether intervention is proper is a question of
law. Settled is the distinction between a question of law and a
question of fact. A question of fact arises when there is doubt
as to the truth or falsity of certain facts.69 A question of law, on
the other hand, arises when "the appeal raises doubt as to the
applicable law on a certain set of facts." 70 The test often used
by this Court to determine whether there is a question of fact
or a question of law "is not the appellation given to such
question by the party raising the same; rather, it is whether the
appellate court can determine the issue raised without
reviewing or evaluating the evidence, in which case, it is a
question of law; otherwise it is a question of fact."71
Petitioner raises the question of whether Republic Act No. 165
allows the Court of Appeals to grant a motion for intervention.
This necessarily requires a determination of whether Rule 19 of
the Rules of Court 72 applies in appeals of cases filed under
Republic Act No. 165. The determination of this question does
not require a review of re-evaluation of the evidence. It
requires a determination of the applicable law.
II
If a petition fails to attach material portions of the record, it
may still be given due course if it falls under certain exceptions.
Although Rule 45, Section 4 of the Rules of Court requires that
the petition "be accompanied by ... such material portions of
the record as would support the petition," the failure to do so
will not necessarily warrant the outright dismissal of the
complaint. 73
Respondent Therapharma, Inc. argues that the Petition should
have been outright dismissed since it failed to attach certain
documents to support its factual allegations and legal
arguments, particularly: the annexes of the Petition for Review
it had filed before the Court of Appeals and the annexes in the
Motion for Leave to Intervene it had filed. 74 It argues that
petitioner's failure to attach the documents violates Rule 45,
Section 4, which requires the submission of material portions of
the record. 75
On the other hand, petitioner argues that it was able to attach
the Court of Appeals Decision dated August 31, 2004, the
Resolution dated January 31, 2006, and the Amended Decision
dated August 30, 2006, all of which were sufficient for this
Court to give due course to its Petition. 76
In Magsino v. De Ocampo, 77 this Court applied the procedural
guideposts in Galvez v. Court of Appeals 78 in determining
whether the Court of Appeals correctly dismissed a petition for
review under Rule 42 for failure to attach relevant portions of
the record. Thus:
In Galvez v. Court of Appeals, a case that involved the dismissal
of a petition for certiorari to assail an unfavorable ruling
brought about by the failure to attach copies of all pleadings
submitted and other material portions of the record in the trial
court (like the complaint, answer and position paper) as would
support the allegations of the petition, the Court recognized
three guideposts for the CA to consider in determining whether
or not the rules of procedures should be relaxed, as follows:
First, not all pleadings and parts of case records are required to
be attached to the petition. Only those which are relevant and
pertinent must accompany it. The test of relevancy is whether
the document in question will support the material allegations
in the petition, whether said document will make out a prima
facie case of grave abuse of discretion as to convince the court
to give due course to the petition.
Second, even if a document is relevant and pertinent to the
petition, it need not be appended if it is shown that the
contents thereof can also [sic] found in another document
already attached to the petition. Thus, if the material
allegations in a position paper are summarized in a questioned
judgment, it will suffice that only a certified true copy of the
judgment is attached.
Third, a petition lacking an essential pleading or part of the case
record may still be given due course or reinstated (if earlier
dismissed) upon showing that petitioner later submitted the
documents required, or that it will serve the higher interest of
justice that the case be decided on the merits.79
Although Magsino referred to a petition for review under Rule
42 before the Court of Appeals, the procedural guideposts cited
in Mafilsino may apply to this case since the contents of a
pleading under Rule 4280 are substantially the same as the
contents of a pleading under Rule 45,81 in that both procedural
rules require the submission of "material portions of the record
as would support the allegations of the petition."82
In support of its Petition for Review on Certiorari, petitioner
attached the Court of Appeals Decision dated August 31,
2004, 83 the Resolution dated January 31, 2006,84 and the
Amended Decision dated August 30, 2006.85 The Court of
Appeals Resolution and Amended Decision quoted extensive
portions of its rollo in support of its rulings. 86 These conclusions
were sufficient to convince this Court not to outright dismiss
the Petition but to require respondents to first comment on the
Petition, in satisfaction of the first and second procedural
guideposts in Magsino.
Upon filing of its Consolidated Reply,87
petitioner was able to
attach the following additional documents:
(1) Petition for Review filed before the Court of
Appeals;88
(2) Letters dated July 18, 1995, December 12, 1995,
and December 29, 1995;89
(3) Declaration of Ms. Miriam Meconnahey dated
June 25, 2002;90
(4) Spreadsheet of petitioner's patent applications
handled by Atty. Mapili;91
(5) Power of Attorney and Appointment of Resident
Agent dated September 26, 1996;92
(6) Letter dated December 19, 2000 requesting an
Office Action on Patent Application No. 35526;93
(7) Paper No. 2 dated January 30, 2002;94
(8) Petition for Revival dated January 30, 2002 with
attached Power of Attorney and Appointment of
Resident Agent;95
(9) Resolution dated July 24, 2002 by Director of the
Bureau of Patents;96 and
(10) Notice of and Memorandum on Appeal before
the DirectorGeneral of the Intellectual Property
Office.97
The third procedural guidepost in Magsino was complied with
upon the submission of these documents. Petitioner, therefore,
has substantially complied with Rule 45, Section 4 of the Rules
of Court.
III
Appeal is not a right but a mere privilege granted by
statute.98 It may only be exercised in accordance with the law
that grants it.
Accordingly, the Court of Appeals is not bound by the rules of
procedure in administrative agencies. The procedural rules of
an administrative agency only govern proceedings within the
agency. Once the Court of Appeals has given due course to an
appeal from a ruling of an administrative agency, the
proceedings before it are governed by the Rules of Court.
However, petitioner argues that intervention should not have
been allowed on appeal99 since the revival of a patent
application is ex parte and is "strictly a contest between the
examiner and the applicant"100 under Sections 78101 and
79102 of the 1962 Revised Rules of Practice. 103 It argues that the
disallowance of any intervention is to ensure the confidentiality
of the proceedings under Sections 13 and 14 of the 1962
Revised Rules of Practice. 104
Respondents argue that the 1962 Revised Rules of Practice is
only applicable before the Intellectual Property Office. 105 In
particular, respondent Therapharma, Inc. argues that the issue
before the Court of Appeals was beyond the realm of patent
examination proceedings since it did not involve the
patentability of petitioner's invention. 106 It further argues that
its intervention did not violate the confidentiality of the patent
application proceedings since petitioner was not required to
divulge confidential information regarding its patent
application. 107
In the 1962 Revised Rules of Practice, final decisions of the
Director of Patents are appealed to this Court and governed by
Republic Act No. 165. In particular:
PARTX
PETITION AND APPEALS
....
CHAPTER IV
APPEALS TO THE SUPREME COURT FROM FINAL ORDERS OR
DECISIONS OF THE DIRECTOR OF PATENTS IN EX PARTE AND
INTER PARTES PROCEEDINGS
265. Appeals to the Supreme Court in ex parte and inter partes
proceedings.-Any person who is dissatisfied with the final
decision of the Director of Patents, (affirming that of a Principal
Examiner) denying him a patent for an invention, industrial
design or utility model; any person who is dissatisfied with any
final decision of the Director of Patents (affirming that of the
Executive Examiner) in any proceeding; and any party who is
dissatisfied with any final decision of the Director of Patents in
an inter partes proceeding, may appeal such final decision to
the Supreme Court within thirty days from the date he receives
a copy of such decision. (Republic Act No. 165, section 16, as
amended by section 3, Republic Act No. 864.)
266. Procedure on appeal to the Supreme Court.-For the
procedure on appeal to the Supreme Court, from the final
decisions of the Director of Patents, see sections 63 to 73,
inclusive, of Republic Act No. 165 (patent law).
Particularly instructive is Section 73 of Republic Act No. 165,
which provides:
Section 73. Rules of Court applicable. - In all other matters not
herein provided, the applicable provisions of the Rules of Court
shall govern.
Republic Act No. 165 has since been amended by Republic Act
No. 8293, otherwise known as the Intellectual Property Code of
the Philippines (Intellectual Property Code), in 1997. This is the
applicable law with regard to the revival of petitioner's patent
application. Section 7 (7.1 )(a) of the Intellectual Property Code
states:
SECTION 7. The Director General and Deputies Director
General. -
7 .1. Functions. - The Director General shall exercise the
following powers and functions:
....
b. Exercise exclusive appellate jurisdiction over all decisions
rendered by the Director of Legal Affairs, the Director of
Patents, the Director of Trademarks, and the Director of the
Documentation, Information and Technology Transfer Bureau.
The decisions of the Director General in the exercise of his
appellate jurisdiction in respect of the decisions of the Director
of Patents, and the Director of Trademarks shall be appealable
to the Court of Appeals in accordance with the Rules of Court;
and those in respect of the decisions of the Director of
Documentation, Information and Technology Transfer Bureau
shall be appealable to the Secretary of Trade and Industry[.]
(Emphasis supplied)
Thus, it is the Rules of Court, not the 1962 Revised Rules of
Practice, which governs the Court of Appeals' proceedings in
appeals from the decisions of the Director-General of the
Intellectual Property Office regarding the revival of patent
applications.
Rule 19 of the Rules of Court provides that a court has the
discretion to determine whether to give due course to an
intervention. Rule 19, Section 1 states:
RULE 19
INTERVENTION
SECTION 1. Who may intervene. -A person who has a legal
interest in the matter in litigation, or in the success of either of
the parties, or an interest against both, or is so situated as to be
adversely affected by a distribution or other disposition of
property in the custody of the court or of an officer thereof
may, with leave of court, be allowed to intervene in the action.
The court shall consider whether or not the intervention will
unduly delay or prejudice the adjudication of the rights of the
original parties, and whether or not the intervenor's rights may
be fully protected in a separate proceeding.
The only questions the court need to consider in a motion to
intervene are whether the intervenor has standing to
intervene, whether the motion will / unduly delay the
proceedings or prejudice rights already established, and
whether the intervenor's rights may be protected in a separate
action.108
If an administrative agency's procedural rules expressly prohibit
an intervention by third parties, the prohibition is limited only
to the proceedings before the administrative agency. Once the
matter is brought before the Court of Appeals in a petition for
review, any prior prohibition on intervention does not apply
since the only question to be determined is whether the
intervenor has established a right to intervene under the Rules
of Court.
In this case, respondent Therapharma, Inc. filed its Motion for
Leave to Intervene 109 before the Court of Appeals, not before
the Intellectual Property Office. In assessing whether to grant
the intervention, the Court of Appeals considered respondent
Therapharma, Inc.' s legal interest in the case and its other
options for the protection of its interests. 110 This was within
the discretion of the Court of Appeals under the Rules of Court.
Respondent Therapharma, Inc. was able to show that it had
legal interest to intervene in the appeal of petitioner's revival of
its patent application. While its intervention may have been
premature as no patent has been granted yet, petitioner's own
actions gave rise to respondent Therapharma, Inc.' s right to
protect its losartan product.
Respondent Therapharma, Inc. filed an application for product
registration before the Bureau of Food and Drugs on June 4,
2003 and was granted a Certificate of Product Registration on
January 27, 2004. 111 It conducted patent searches from
October 15, 1995 and found that no patent application for
losartan had been filed either before the Bureau of Patents,
Trademarks, and Technology Transfer or before the Intellectual
Property Office.112
As early as December 11, 2003, petitioner through Merck was
already sending communications threatening legal action if
respondent Therapharma, Inc. continued to develop and
market losartan in the Philippines. The letter stated:
Merck is strongly committed to the protection of its valuable
intellectual property rights, including the subject losartan
patents. While fair competition by sale of pharmaceutical
products which are domestically produced legally is always
welcomed by Merck and MSD Philippines, Merck will vigorously
pursue all available legal remedies against any unauthorized
manufacturer, distributor or supplier of losartan in countries
where its patents are in force and where such activity is
prohibited by law. Thus, Merck is committed to preventing the
distribution of losartan in the Philippines if it originates from, or
travels through, a country in which Merck holds patent
rights. 113 (Emphasis supplied)
This letter was presented before the Court of Appeals, which
eventually granted the revival of the patent application in its
August 31, 2004 Decision. Petitioner had no pending patent
application for its losartan product when it threatened
respondent Therapharma, Inc. with legal action.114
Respondent Therapharma, Inc. expressed its willingness to
enter into a Non-Use and Confidentiality Contract if there was a
pending patent application. 115 After several negotiations on
the clauses of the contract, 116 the parties were unable to come
to an agreement. In its letter dated May 24,
2004, 117 respondent Therapharma, Inc. expressed its
frustration on petitioner's refusal to give a clear answer on
whether it had a pending patent application:
For easy reference, we have reproduced below paragraph 5 of
the Confidentiality and Non-Use Agreement ("Confidentiality
Agreement"), underscoring your proposed amendment:
"THERAPHARMA agrees that upon receipt of Specifications and
Claims of Application No. 35526 or at any time thereafter,
before it becomes part of the public domain, through no fault
of THERAPHARMA, it will not, either directly or indirectly,
alone, or through, on behalf of, or in conjunction with any
other person or entity, make use of any information contained
therein, particularly the product covered by its claims and the
equivalents thereof, in any manner whatsoever."
We find your proposed insertion odd. What may be
confidential, and which we agree you have every right to
protect by way of the Confidentiality Agreement, are the
Specifications and Claims in the patent application, not the
product per se. The product has been in the market for years.
Hence, how can it be confidential? Or is the ambiguity intended
to create a legal handle because you have no cause of action
against us should we launch our own version of the losartan
product?
....
Finally, the questions we posed in our previous letters are plain
and simple - Is the Philippine Patent Application No. 35526 still
pending before the IPO, i.e., it has neither been withdrawn by
your licensor nor denied registration by the IPO for any reason
whatsoever? When did your licensor file said application with
the IPO? These questions are easy to answer, unless there is an
intention to mislead. You are also
aware that the IPO is the only government agency that can
grant letters patent. This is why we find disturbing your
statement that the pendency of the patent application before
the IPO is "not relevant". Hence, unless we receive unequivocal
answers to the questions above, we regret that we cannot
agree to execute the Confidentiality Agreement; otherwise, we
may be acknowledging by contract a right that you do not have,
and never will have, by law. 118 (Emphasis and underscoring in
the original)
The threat of legal action against respondent Therapharma, Inc.
was real and imminent. If respondent Therapharma, Inc. waited
until petitioner was granted a patent application so it could file
a petition for compulsory licensing and petition for cancellation
of patent under Section 240119 and Section 247 120 of the 1962
Revised Rules of Practice, 121 its continued marketing of Lifezar
would be considered as an infringement of petitioner's patent.
Even assuming that the Intellectual Property Office granted the
revival of Philippine Patent Application No. 35526 back in 2000,
petitioner's claim of absolute confidentiality in patent
proceedings is inaccurate.
In the 1962 Revised Rules of Practice, the Bureau of Patents,
Trademarks, and Technology Transfer previously required
secrecy in pending patent applications. Section 13 states:
13. Pending applications are preserved in secrecy.-No
information will be given to anyone respecting the filing by any
particular person of any application for a patent, the pendency
of any particular case before the Office, or the subject matter
of any particular application, unless the same is authorized by
the applicant in writing, and unless it shall be necessary, in the
opinion of the Director of Patents for the proper conduct of
business before the Office.
The Intellectual Property Code, however, changed numerous
aspects of the old patent law. The Intellectual Property Code
was enacted not only to amend certain provisions of existing
laws on trademark, patent, and copyright, but also to honor the
country's commitments under the World Trade Organization -
Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS Agreement), a treaty that entered force in the
Philippines on January 1, 1995.122
The mandatory disclosure requirement in the TRIPS
Agreement123 precipitated the shift from a first-to-invent
system to a first-to-file system. The first-to-file system required
citizens of foreign countries to register their patents in the
Philippines before they can sue for infringement. 124
Lawmakers, however, expressed their concern over the
extension of the period of protection for registered
patents. 125 Under Section 21 126 of Republic Act No. 165, a
patent had a term of 17 years. The Intellectual Property Code
extended the period to 20 years. 127
During the interpellations before the House of Representatives,
then Representative Neptali Gonzales II (Gonzales) explained
that under the Intellectual Property Code, the period of
protection would have been shortened because of the
publication requirement:
MR. TANADA. Under the proposed measure, Your Honor, what
is the period of protection that is given to the holder of the
patent registered?
MR. GONZALES. Seventeen years from grant of patent, Mr.
Speaker. Unlike before ...
MR. TANADA. Under the present law, Mr. Speaker.
MR. GONZALES. I mean 17 years from filing, Mr. Speaker, unlike
before which is 20 years from grant. Okay.
I am sorry, Mr. Speaker. Seventeen years from filing under the
existing law, 20 years from grant under the proposed measure.
It would appear, Mr. Speaker, that the proposed measure seeks
to extend the grant of the patent.
MR. TA.NADA. But you have made the period of protection
longer, Mr. Speaker.
MR. GONZALES. On the contrary, Mr. Speaker, when a similar
question was previously propounded before, actually Mr.
Speaker, it may decrease in fact the period of protection, Mr.
Speaker. Because unlike before 17 years from grant, Mr.
Speaker, now 20 years from application or from filing but
actually, Mr. Speaker, it normally takes three to four years
before a patent is actually granted even under the proposed
measure. Because as you can see[,] publication in the BPTTT
Gazette would even taken place after 18 months from filing. In
other words, the procedure itself is such a manner that
normally takes a period of about three years to finally grant the
patent. So even if 20 years is given from the time of filing
actually in essence it will be the same, Mr. Speaker, because
under the existing law 17 years from grant. But even under our
existing law from the time that a patent application is filed it
also takes about three to four years, Mr. Speaker, to grant the
same.
Now, why from filing, Mr. Speaker? Because the patent holder
applicant is now required to publish in a manner easily
understood by a person trained or with the same skill as that of
a patent holder. And from that time this is published, this
process covered by the patent is already made available. In
fact, from the time that it is published, any interested person
may even examine and go over the records as filed with the
BPTTT and, therefore, this new technology or new invention is
now made available to persons equipped or possessed with the
same skills as that of the patent holder. And that is the reason
why the patent is - the time of the patent is now tacked from
the time it is filed because as a compromise it is now
mandatory to publish the said patent together with its
description - the description of the process and even would, at
times demand the deposit of sample of the industrial design,
Mr. Speaker. 128
Gonzales further clarified that the publication requirements of
the Intellectual Property Code would necessarily shorten the
period for confidentiality of patent applications:
MR. MONFORT. Now, another question is, (another is) you
know, the time from the filing of the date up to publication
which is the period of pendency or confidentiality, may I know
how many years will it take, that confidentiality period,
variability.
MR. GONZALES. Eighteen months, Mr. Speaker.
MR. MONFORT. How many?
MR. GONZALES. Eighteen months.
MR. MONFORT. I do not think it is 18 months.
MR. GONZALES. It is provided for in the law, Mr. Speaker,
because prior to the publication, naturally, the records become
confidential because the essence of a patent, trademark, or
copyright is to give the author or the inventor exclusive right to
work on his own invention. And that is his invention, and
naturally, it is but right that he should have the exclusive right
over his invention.
On the other hand, the law requires that after 18 months, it
should now be published. When it is now published, naturally,
it ceases to be confidential in character because it is now ready
for examination. It is now ready for possible copying of any
interested person because the application, as we have
repeatedly said on the floor, would require the filing of a
description of the invention that can be carried out by a Eerson
similarly trained in the arts and sciences as that of the patent
holder.129
Thus, the absolute secrecy required by the 1962 Revised Rules
of Practice would not be applicable to a patent application
before the Intellectual Property Office. Section 13 of the 1962
Revised Rules of Practice does not appear in the Intellectual
Property Code, 130 in the Rules and Regulations on
Inventions, 131 or in the Revised Implementing Rules and
Regulations for Patents, Utility Models and Industrial
Design. 132 The Intellectual Property Code now states that all
patent applications must be published in the Intellectual
Property Office Gazette and that any interested party may
inspect all documents submitted to the Intellectual Property
Office. The patent application is only confidential before its
publication. Sections 44 and 45 of the Intellectual Property
Code provide:
SECTION 44. Publication of Patent Application. -
44.1. The patent application shall be published in the IPO
Gazette together with a search document established by or on
behalf of the Office citing any documents that reflect prior art,
after the expiration of eighteen (18) months from the filing
date or priority date.
44.2. After publication of a patent application, any interested
party may inspect the application documents filed with the
Office.
44.3. The Director General, subject to the approval of the
Secretary of Trade and Industry, may prohibit or restrict the
publication of an application, if in his opinion, to do so would
be prejudicial to the national security and interests of the
Republic of the Philippines. (n)
SECTION 45. Confidentiality Before Publication. -A patent
application, which has not yet been published, and all related
documents, shall not be made available for inspection without
the consent of the applicant.
It was inaccurate, therefore, for petitioner to argue that secrecy
in patent applications prevents any intervention from
interested parties. The confidentiality in patent applications
under the Intellectual Property Code is not absolute since a
party may already intervene after the publication of
application.
IV
An abandoned patent application may only be revived within
four (4) months from the date of abandonment. No extension
of this period is provided by the 1962 Revised Rules of Practice.
Section 113 states:
113. Revival of abandoned application.-An application
abandoned for failure to prosecute may be revived as a
pending application if it is shown to the satisfaction of the
Director that the delay was unavoidable. An abandoned
application may be revived as a pending application within four
months from the date of abandonment upon good cause
shown and upon the payment of the required fee of ₱25. An
application not revived within the specified period shall be
deemed forfeited.
Petitioner argues that it was not negligent in the prosecution of
its patent application133 since it was Atty. Mapili or his heirs
who failed to inform it of crucial developments with regard to
its patent application. 134 It argues that as a client in a foreign
country, it does not have immediate supervision over its local
counsel so it should not be bound by its counsel's
negligence. 135 In any case, it complied with all the
requirements for the revival of an abandoned application under
Rule 113 of the 1962 Revised Rules of Practice. 136
Respondents, on the other hand, argue that petitioner was
inexcusably and grossly negligent in the prosecution of its
patent application since it allowed eight (8) years to pass before
asking for a status update on its application. 137Respondent
Intellectual Property Office argues that petitioner's inaction for
eight (8) years constitutes actual abandonment. 138 It also
points out that from the time petitioner submitted its new
Special Power of Attorney on September 29, 1996, it took them
another four (4) years to request a status update on its
application. 139
Under Chapter VII, Section 1 ll(a) of the 1962 Revised Rules of
Practice, a patent application is deemed abandoned if the
applicant fails to prosecute the application within four months
from the date of the mailing of J the notice of the last action by
the Bureau of Patents, Trademarks, and Technology Transfer,
and not from applicant's actual notice. Section 11 l(a)
states:
Chapter VII
TIME FOR RESPONSE BY APPLICANT; ABANDONMENT OF
APPLICATION
111. Abandonment for failure to respond within the time limit.-
(a) If an applicant fails to prosecute his application within four
months after the date when the last official notice of action by
the Office was mailed to him, or within such time as may be
fixed (rule 112), the application will become abandoned.
According to the records of the Bureau of Patents, Trademarks,
and Technology Transfer Chemical Examining Division,
petitioner filed Philippine Patent Application No. 35526 on July
10, 1987. It was assigned to an examiner on June 7, 1988. An
Office Action was mailed to petitioner's agent, Atty. Mapili, on
July 19, 1988. Because petitioner failed to respond within the
allowable period, the application was deemed abandoned on
September 20, 1988.140Under Section 113, petitioner had until
January 20, 1989 to file for a revival of the patent application.
Its Petition for Revival, however, was filed on May 30,
2002, 141 13 years after the date of abandonment.
Section 113 has since been superseded by Section 133.4 of the
Intellectual Property Code, Rule 930 of the Rules and
Regulations on Inventions, and Rule 929 of the Revised
Implementing Rules and Regulations for Patents, Utility Models
and Industrial Design. The period of four (4) months from the
date of abandonment, however, remains unchanged. The
Intellectual Property Code even provides for a shorter period of
three (3) months within which to file for revival:
SECTION 133. Examination and Publication. –
....
133.4. An abandoned application may be revived as a pending
application within three (3) months from the date of
abandonment, upon good cause shown and the payment of the
required fee.
Rule 930 of the Rules and Regulations on Inventions provides:
Rule 930. Revival of application. - An application deemed
withdrawn for failure to prosecute may be revived as a pending
application within a
period of four (4) months from the mailing date of the notice of
withdrawal if it is shown to the satisfaction of the Director that
the failure was due to fraud, accident, mistake or excusable
negligence.
A petition to revive an application deemed withdrawn must be
accompanied by (1) a showing of the cause of the failure to
prosecute, (2) a complete proposed response, and (3) the
required fee.
An application not revived in accordance with this rule shall be
deemed forfeited.
Rule 929 of the Revised Implementing Rules and Regulations
for Patents, Utility Models and Industrial Design provides:
Rule 929. Revival of Application. - An application deemed
withdrawn for failure to prosecute may be revived as a pending
application within a period of four (4) months from the mailing
date of the notice of withdrawal if it is shown to the satisfaction
of the Director that the failure was due to fraud, accident,
mistake, or excusable negligence. A petition to revive an
application deemed withdrawn shall be accompanied by:
(a) A showing of a justifiable reason for the failure to prosecute;
(b) A complete proposed response; and
(c) Full payment of the required fee.
No revival shall be granted to an application that has been
previously revived with cost.
An application not revived in accordance with this Rule shall be
deemed forfeited.
Even if the delay was unavoidable, or the failure to prosecute
was due to fraud, accident, mistake, or excusable negligence, or
the Petition was accompanied by a complete proposed
response, or all fees were paid, the Petition would still be
denied since these regulations only provide a four (4 )- month
period within which to file for the revival of the application. The
rules do not provide any exception that could extend this four
(4)-month period to 13 years.
Petitioner’s patent application, therefore, should not be revived
since it was filed beyond the allowable period.
V of Attorney and Appointment of Resident Agent in favor of Bito,
Even assuming that the four (4)-month period could be
extended, petitioner was inexcussably negligent in the
prosecution of its patent application.
Negligence is inexcusable if its commission could have been
avoided through ordinary diligence and prudence. 142 It is also
settled that negligence of counsel binds the client as this
"ensures against the resulting uncertainty and tentativeness of
proceedings if clients were allowed to merely disown. 143 their
counsels' conduct."
Petitioner's resident agent, Atty. Mapili, was undoubtedly
negligent in failing to respond to the Office Action sent by the
Bureau of Patents, Trademarks, and Technology Transfer on
June 19, 1988. Because of his negligence, petitioner's patent
application was declared abandoned. He was again negligent
when he failed to revive the abandoned application within four
(4) months from the date of abandonment.
Petitioner tries to disown Atty. Mapili 's conduct by arguing that
it was not informed of the abandonment of its patent
application or of Atty. Mapili's death. By its own evidence,
however, petitioner requested a status update from Atty. Mapili
only on July 18, 1995, eight (8) years after the filing of its
application. 144 It alleged that it only found out about Atty.
Mapili 's death sometime in March 1996, as a result of its senior
patent attorney's visit to the Philippines. 145Although it was in
petitioner's discretion as a foreign client to put its complete
trust and confidence on its local resident agent, there was a
correlative duty on its part to be diligent in keeping itself
updated on the progress of its patent applications. Its failure to
be informed of the abandonment of its patent application was
caused by its own lack of prudence.
In Bernardo v. Court of Appeals, 146 "[n]o prudent party will
leave the fate of his case entirely to his lawyer .... It is the duty
of a party-litigant to be in contact with his counsel from time to
time in order to be informed of the progress of his case." 147
Even if Atty. Mapili's death prevented petitioner from
submitting a petition for revival on time, it was clearly negligent
when it subsequently failed to immediately apprise itself of the
status of its patent application.
Upon learning of Atty. Mapili’s death, petitioner issued a Power
Lozada, Ortega & Castillo on March 25, 1996. 148 Despite the
immediate action in the substitution of its resident agent, it
only requested a status update of Philippine Patent Application
No. 35526 from the Intellectual Property Office on December
14, 2000, 149 or four (4) years after it learned of Atty. Mapili' s
death.
Petitioner attempts to explain that it took them four (4) years
to request a status update because the Bureau of Patents,
Trademarks, and Technology Transfer failed to take any action
when it submitted its Power of Attorney and Appointment of
Resident Agent in favor of Bito, Lozada, Ortega &
Castillo.150 The Power of Attorney, however, shows that it was
only to inform the Bureau that all notices relating to its pending
patent applications should be sent to it. Philippine Patent
Application No. 35526 was declared abandoned on September
20, 1988. As far as the Bureau was concerned, it was a forfeited
application that had already been archived. It was not the
Bureau's duty to resurrect previous notices of forfeited and
abandoned applications to be sent to new resident agents
unless a specific status update was requested. Considering that
petitioner only requested a status update on December 14,
2000, it was only then that the Intellectual Property Office
would start sending notices to it.
Contrary to the posturing of petitioner, Schuartz is applicable.
In Schuartz, several foreign inventors seeking to file patent
applications in the Philippines hired the law firm Siguion Reyna,
Montecillo and Ongsiako to process their applications. 151 The
Bureau of Patents, Trademarks, and Technology Transfer
mailed the law firm several notices of abandonment on its
patent applications from June 1987 to September 1987. The
law firm only found out about this in December 1987, after it
dismissed two (2) of its employees in charge of handling
correspondences from the Bureau. 152 The law firm filed
petitions for revival of its patent applications from March 1988,
all of which were denied by the Director of the Bureau of
Patents for being filed out of time. 153 An appeal was
subsequently filed before the Court of Appeals but was
dismissed for being filed beyond the reglementary period. 154
This Court found that although the Court of Appeals may have
erred in counting the period for appeal, it could not grant the
Petition. This Court stated:
[P]etitioners lost sight of the fact that the petition could not be
granted because of laches. Prior to the filing of the petition for
revival of the patent application with the Bureau of Patents, an
unreasonable period of time had lapsed due to the negligence
of petitioners' counsel. By such inaction, petitioners were
deemed to have forfeited their right to revive their applications
for patent.
Facts show that the patent attorneys appointed to follow up
the applications for patent registration had been negligent in
complying with the rules of practice prescribed by the Bureau
of Patents.1âwphi1 The firm had been notified about the
abandonment as early as June 1987, but it was only after
December 7, 1987, when their employees Bangkas and Rosas
had been dismissed, that they came to know about it. This
clearly showed that petitioners' counsel had been remiss in the
handling of their clients' applications.
"A lawyer's fidelity to the cause of his client requires him to be
ever mindful of the responsibilities that should be expected of
him. A lawyer shall not neglect a legal matter entrusted to
him." In the instant case, petitioners' patent attorneys not only
failed to take notice of the notices of abandonment, but they
failed to revive the application within the four-month period, as
provided in the rules of practice in patent cases. These
applications are deemed forfeited upon the lapse of such
period. 155 (Emphasis supplied)
Petitioner attempts to distinguish itself from Schuartz by
arguing that the petitioners in Schuartz had actual notice of
abandonment while petitioner here was only able to have
actual notice when it received Paper No. 2.
The four (4 )-month period in Section 111 156of the 1962
Revised Rules of Practice, however, is not counted from actual
notice of abandonment but from mailing of the notice. Since it
appears from the Intellectual Property Office's records that a
notice of abandonment was mailed to petitioner's resident
agent on July 19, 1988,157 the time for taking action is counted
from this period. Petitioner's patent application cannot be
revived simply because the period for revival has already lapsed
and no extension of this period is provided for by the 1962
Revised Rules of Practice.
VI
The right of priority given to a patent applicant is only relevant
when there are two or more conflicting patent applications on
the same invention. Because a right of priority does not
automatically grant letters patent to an applicant, possession of
a right of priority does not confer any property rights on the
applicant in the absence of an actual patent.
Petitioner argues that its patent application was filed on July
10, 1987, within 12 months from the prior filing of a U.S. patent
application on July 11, 1986.158 It argues that it is protected
from becoming part of the public domain because of
convention priority under the Paris Convention for the
Protection of Industrial Property and Section 9 of Republic Act
No. 165. 159
Respondent Therapharma, Inc., on the other hand, argues that
a mere patent application does not vest any right in the
applicant before the issuance of the patent.160 It argues that
the "priority date" argued by petitioner is only relevant in
determining who has a better right to the patent among the
other applicants who subsequently apply for the same
invention. 161
Under Section 31 of the Intellectual Property Code, a right of
priority is given to any patent applicant who has previously
applied for a patent in a country that grants the same privilege
to Filipinos. Section 31 states:
SECTION 31. Right of Priority. - An application for patent filed
by any person who has previously applied for the same
invention in another country which by treaty, convention, or
law affords similar privileges to Filipino citizens, shall be
considered as filed as of the date of filing the foreign
application: Provided, That:
a. the local application expressly claims priority;
b. it is filed within twelve (12) months from the date the
earliest foreign application was filed; and
c. a certified copy of the foreign application together with an
English translation is filed within six (6) months from the date of
filing in the Philippines.
A patent applicant with the right of priority is given preference
in the grant of a patent when there are two or more applicants
for the same invention. Section 29 of the Intellectual Property
Code provides:
SECTION 29. First to File Rule. - If two (2) or more persons have
made the invention separately and independently of each
other, the right to the patent shall belong to the person who
filed an application for such invention, or where two or more
applications are filed for the same invention, to the applicant
who has the earliest filing date or, the earliest priority date.
Since both the United States162 and the Philippines163 are
signatories to the Paris Convention for the Protection of
Industrial Property, an applicant who has filed a patent
application in the United States may have a right of priority
over the same invention in a patent application in the
Philippines.164 However, this right of priority does not
immediately entitle a patent applicant the grant of a patent. A
right of priority is not equivalent to a patent. Otherwise, a
patent holder of any member-state of the Paris Convention
need not apply for patents in other countries where it wishes to
exercise its patent.
It was, therefore, inaccurate for petitioner to argue that its
prior patent application in the United States removed the
invention from the public domain in the Philippines. This
argument is only relevant if respondent Therapharma, Inc. had
a conflicting patent application with the Intellectual Property
Office. A right of priority has no bearing in a case for revival of
an abandoned patent application.
VII
The grant of a patent is to provide protection to any inventor
from any patent infringement. 165 Once an invention is
disclosed to the public, only the patent holder has the exclusive
right to manufacture, utilize, and market the
invention.166 In Creser Precision Systems v. Court of Appeals:167
Under American jurisprudence, an inventor has no common-
law right to a monopoly of his invention. He has the right to
make, use and vend his own invention, but if he voluntarily
discloses it, such as by offering it for sale, the world is free to
copy and use it with impunity. A patent, however, gives the
inventor the right to exclude all others. As a patentee, he has
the exclusive right of making, using or selling the invention. 168
Under the Intellectual Property Code, a patent holder has the
right to "to restrain, prohibit and prevent" 169 any unauthorized
person or entity from manufacturing, selling, or importing any
product derived from the patent. However, after a patent is
granted and published in the Intellectual Property Office
Gazette, 170 any interested third party "may inspect the
complete description, claims, and drawings of the patent." 171
The grant of a patent provides protection to the patent holder
from the indiscriminate use of the invention. However, its
mandatory publication also has the correlative effect of
bringing new ideas into the public consciousness. After the
publication of the patent, any person may examine the
invention and develop it into something further than what the
original patent holder may have envisioned. After the lapse of
20 years, 172 the invention becomes part of the public domain
and is free for the public to use. In Pearl and Dean v. Shoemart,
Inc.: 173
To be able to effectively and legally preclude others from
copying and profiting from the invention, a patent is a
primordial requirement. No patent, no protection. The ultimate
goal of a patent system is to bring new designs and
technologies into the public domain through disclosure. Ideas,
once disclosed to the public without the protection of a valid
patent, are subject to appropriation without significant
restraint.
On one side of the coin is the public which will benefit from
new ideas; on the other are the inventors who must be
protected. As held in Bauer & Cie vs. O'Donnell, "The act
secured to the inventor the exclusive right to make use, and
vend the thing patented, and consequently to prevent others
from exercising like privileges without the consent of the
patentee. It was passed for the purpose of encouraging useful
invention and promoting new and useful inventions by the
protection and stimulation new and useful inventions by the
protection and stimulation given to inventive genius, and was
intended to secure to the public, after the lapse of the exclusive
privileges granted the benefit of such inventions and
improvements."
The law attempts to strike an ideal balance between the
interests:
"(The p)atent system thus embodies a carefully varafted
bargain for encouraging the creation and disclosure of new
useful and non-obvious advances in technology and design, in
return for the exclusive right to practice the invention for a
number of years. The inventor may keep his invention secret
and reap its fruits indefinitely. In consideration of its disclosure
and the consequent benefit to the community, the patent is
granted. An exclusive enjoyment is guaranteed him for 17
years, but upon the expiration of that period, the knowledge of
the invention inures to the people, who are thus enabled to
practice it and profit by its use."
The patent law has a three-fold purpose: "first, patent law seeks
to foster and reward invention; second, it promotes disclosures
of inventions to stimulate further innovation and to permit the
public to practice the invention once the patent expires; third,
the stringent requirements for patent protection. seek to ensure
that ideas in the public domain remain there for the free use of
the public."
It is only after an exhaustive examination by the patent office
that a patent is issued. Such an in-depth investigation is
required because "in rewarding a useful invention, the rights
and welfare of the community must be fairly dealt with and
effectively guarded. To that end, the prerequisites to obtaining
a patent are strictly observed and when a patent is issued, the
limitations on its exercise are equally strictly enforced. To begin
with, a genuine invention or discovery must be demonstrated
lest in the constant demand for new appliances, the heavy
hand of tribute be laid on each slight technological advance in
art."174 (Emphasis supplied)
In addition, a patent holder of inventions relating to food or
medicine does not enjoy absolute monopoly over the patent.
Both Republic Act No. 165 and the Intellectual Property Code
provide for compulsory licensing. Compulsory licensing is
defined in the Intellectual Property Code as the "grant a license
to exploit a patented invention, even without the agreement of
the patent owner." 175
Under Republic Act No. 165, a compulsory license may be
granted to any applicant three (3) years after the grant of a
patent if the invention relates to food or medicine necessary
for public health or safety. 176 In Smith Kline & French
Laboratories, Ltd. vs. Court of Appeals: 177
Section 34 of R.A. No. 165, even if the Act was enacted prior to
the Philippines' adhesion to the [Paris] Convention, fits well
within the aforequoted provisions of Article 5 of the Paris
Convention. In the explanatory note of Bill No. 1156 which
eventually became R.A. No. 165, the legislative intent in the
grant of a compulsory license was not only to afford others an
opportunity to provide the public with the quantity of the
patented product, but also to prevent the growth of
monopolies. Certainly, the growth of monopolies was among
the abuses which Section A, Article 5 of the Convention
foresaw, and which our Congress likewise wished to prevent in
enacting R.A. No. 165. 178
The patent holder’s proprietary right over the patent only lasts
for three (3) years from the grant of the patent, after which any
person may be allowed to manufacture, use or sell the
invention subject to the payment of royalties:
The right to exclude others from the manufacturing, using or
vending an invention relating to food or medicine should be
conditioned to allowing any person to manufacture, use or
vend the same after a period of three years from the date of
the grant of the letters patent. After all, the patentee is not
entirely deprived of any proprietary right. In fact, he has been
given the period of three years of complete monopoly over the
patent. Compulsory licensing of a patent on food or medicine
without regard to the other conditions imposed in Section 34 is
not an undue deprivation of proprietary interests over a patent
right because the law sees to it that even after three years of
complete monopoly something is awarded to the inventor in
the form of a bilateral and workable licensing agreement and a
reasonable royalty to be agreed upon by the parties and in
default of such agreement, the Director of Patent may fix the
terms and conditions of the license.179
A patent is a monopoly granted only for specific purposes and
objectives. Thus, its procedures must be complied with to
attain its social objective. Any request for leniency in its
procedures should be taken in this context. Petitioner,
however, has failed to convince this court that the revival of its
patent application would have a significant impact on the
pharmaceutical industry.
Hypertension, or high blood pressure, is considered a "major
risk factor for cardiovascular disease" 180 such as "heart disease,
stroke, kidney failure and blindness." 181 In a study conducted
by the World Health Organization, 25% of adults aged 21 years
and older in the Philippines suffer from high blood
pressure. 182 According to the Department of Health, heart
disease remains the leading cause of mortality in the
Philippines. 183 Angiotensin II Receptor Blocking Imidazole or
"losartan" is one of the medications used for the treatment
ofhypertension. 184
In a study conducted by the Philippine Institute for
Development Studies, "affordability of drugs remains a serious
problem" 185 in the Philippines. It found that because of the
cost of drugs, accessibility to drugs become prohibitive for the
lowest-earning households and are "even more prohibitive for
the u:nemployed and indigent." 186 Several measures have been
enacted by the government to address the high costs of
medicine, among them, parallel drug importation187 and the
passage of Republic Act No. 9502, otherwise known as the
Universally Accessible Cheaper and Quality Medicines Act of
2008. 188 Figures submitted by respondent Therapharma, Inc.,
however, also show that the presence of competition in the
local pharmaceutical market may ensure the public access to
cheaper medicines.
Public interest will be prejudiced if, despite petitioner's
inexcusable negligence, its Petition for Revival is
granted.1awp++i1Even without a pending patent application
and the absence of any exception to extend the period for
revival, petitioner was already threatening to pursue legal
action against respondent Therapharma, Inc. if it continued to
develop and market its losartan product, Lifezar. 192 Once
petitioner is granted a patent for its losartan products, Cozaar
and Hyzaar, the loss of competition in the market for losartan
products may result in higher prices. For the protection of
public interest, Philippine Patent Application No. 35526 should
be considered a forfeited patent application.
6. Pfizer is the registered owner of Philippine Letters
Patent No. 21116 (the "Patent") which was issued by
this Honorable Office on July 16, 1987. The patent is
valid until July 16, 2004. The claims of this Patent are
directed to "a method of increasing the effectiveness
of a beta-lactam antibiotic in a mammalian subject,
which comprises co-administering to said subject a
beta-lactam antibiotic effectiveness increasing
amount of a compound of the formula IA." The scope
of the claims of the Patent extends to a combination
of penicillin such as ampicillin sodium and beta-
lactam antibiotic like sulbactam sodium.

According to respondent Therapharma, Inc., the retail price of
petitioner's losartan product, Cozaar, decreased within one (1)
month of respondent Therapharma, Inc.' s entry into the
market: 189
WHEREFORE, the Petition is DENIED. The Resolution dated
January 31, 2006 and the Amended Decision dated August 30,
2006 of the Court of Appeals are AFFIRMED.
SO ORDERED.
7. Patent No. 21116 thus covers ampicillin
sodium/sulbactam sodium (hereafter "Sulbactam
Ampicillin"). Ampicillin sodium is a specific example of
the broad beta-lactam antibiotic disclosed and
claimed in the Patent. It is the compound which
efficacy is being enhanced by co-administering the
same with sulbactam sodium. Sulbactam sodium, on
the other hand, is a specific compound of the formula
IA disclosed and claimed in the Patent.

8. Pfizer is marketing Sulbactam Ampicillin under the

G.R. No. 167715 November 17, 2010 brand name "Unasyn." Pfizer's "Unasyn" products,
BRAND TRADER RETAIL PRICE RETAIL PRICE which come in oral and IV formulas, are covered by
As of Lifezar's Within one month PHIL PHARMAWEALTH, INC., Petitioner, Certificates of Product Registration ("CPR") issued by
first entry into from Lifezar's vs. the Bureau of Food and Drugs ("BFAD") under the
the market on entry or by July 4, PFIZER, INC. and PFIZER (PHIL.) INC., Respondents. name of complainants. The sole and exclusive
June 4, 2004 2004 distributor of "Unasyn" products in the Philippines is
Zuellig Pharma Corporation, pursuant to a
DECISION Distribution Services Agreement it executed with
LIFEZAR Therapharma 50 mg - P20.20 50 mg - P20.20
Pfizer Phils. on January 23, 2001.
COZAAR Merck 50 mg - P39.50 50 mg - P39.50 PERALTA, J.:
100 mg - 100 -P44.00 9. Sometime in January and February 2003,
P55.00 Before the Court is a petition for review on certiorari seeking to complainants came to know that respondent [herein
annul and set aside the Resolutions dated January 18, petitioner] submitted bids for the supply of
20051 and April 11, 20052 by the Court of Appeals (CA) in CA- Sulbactam Ampicillin to several hospitals without the
Respondent Therapharma, Inc. also presented figures showing
G.R. SP No. 82734. consent of complainants and in violation of the
that there was a 44% increase in the number of losartan units
complainants' intellectual property rights. x x x
sold within five (5) months of its entry into the market. 190 More
Filipinos are able to purchase losartan products when there are The instant case arose from a Complaint3 for patent
two (2) different players providing competitive prices in the infringement filed against petitioner Phil Pharmawealth, Inc. by xxxx
market. respondent companies, Pfizer, Inc. and Pfizer (Phil.), Inc., with
the Bureau of Legal Affairs of the Intellectual Property Office 10. Complainants thus wrote the above hospitals and
(BLA-IPO). The Complaint alleged as follows: demanded that the latter immediately cease and
Lifezar, and another of respondent Therapharma, Inc.'s
products, Combizar, have also been recommended as cheaper desist from accepting bids for the supply [of]
alternative losartan medication, since they were priced "50 xxxx Sulbactam Ampicillin or awarding the same to entities
percent less than foreign brands." 191 other than complainants. Complainants, in the same
letters sent through undersigned counsel, also
 demanded that respondent immediately withdraw its
bids to supply Sulbactam Ampicillin.
11. In gross and evident bad faith, respondent and
the hospitals named in paragraph 9 hereof, willfully
ignored complainants' just, plain and valid demands,
refused to comply therewith and continued to
infringe the Patent, all to the damage and prejudice
of complainants. As registered owner of the Patent,
Pfizer is entitled to protection under Section 76 of the
IP Code.
x x x x4
Respondents prayed for permanent injunction, damages and
the forfeiture and impounding of the alleged infringing
products. They also asked for the issuance of a temporary
restraining order and a preliminary injunction that would
prevent herein petitioner, its agents, representatives and
assigns, from importing, distributing, selling or offering the
subject product for sale to any entity in the Philippines.
In an Order5 dated July 15, 2003 the BLA-IPO issued a
preliminary injunction which was effective for ninety days from
petitioner's receipt of the said Order.
Prior to the expiration of the ninety-day period, respondents
filed a Motion for Extension of Writ of Preliminary
Injunction6 which, however, was denied by the BLA-IPO in an
Order7 dated October 15, 2003.
Respondents filed a Motion for Reconsideration but the same
was also denied by the BLA-IPO in a Resolution8dated January
23, 2004.
Respondents then filed a special civil action for certiorari with
the CA assailing the October 15, 2003 and January 23, 2004
Resolutions of the BLA-IPO. Respondents also prayed for the
issuance of a preliminary mandatory injunction for the
reinstatement and extension of the writ of preliminary
injunction issued by the BLA-IPO.
While the case was pending before the CA, respondents filed a
Complaint9 with the Regional Trial Court (RTC) of Makati City
for infringement and unfair competition with damages against
herein petitioner. In said case, respondents prayed for the
issuance of a temporary restraining order and preliminary
injunction to prevent herein petitioner from importing,
distributing, selling or offering for sale sulbactam ampicillin
products to any entity in the Philippines. Respondents asked
the trial court that, after trial, judgment be rendered awarding
damages in their favor and making the injunction permanent.
On August 24, 2004, the RTC of Makati City issued an
Order10 directing the issuance of a temporary restraining order
conditioned upon respondents' filing of a bond.
In a subsequent Order11 dated April 6, 2005, the same RTC
directed the issuance of a writ of preliminary injunction
"prohibiting and restraining [petitioner], its agents,
representatives and assigns from importing, distributing or
selling Sulbactam Ampicillin products to any entity in the
Philippines."
Meanwhile, on November 16, 2004, petitioner filed a Motion to
Dismiss12 the petition filed with the CA on the ground of forum
shopping, contending that the case filed with the RTC has the
same objective as the petition filed with the CA, which is to
obtain an injunction prohibiting petitioner from importing,
distributing and selling Sulbactam Ampicillin products.
On January 18, 2005, the CA issued its questioned
Resolution13 approving the bond posted by respondents
pursuant to the Resolution issued by the appellate court on
March 23, 2004 which directed the issuance of a temporary
restraining order conditioned upon the filing of a bond. On
even date, the CA issued a temporary restraining order14 which
prohibited petitioner "from importing, distributing, selling or
offering for sale Sulbactam Ampicillin products to any hospital
or to any other entity in the Philippines, or from infringing
Pfizer Inc.'s Philippine Patent No. 21116 and impounding all the
sales invoices and other documents evidencing sales by
[petitioner] of Sulbactam Ampicillin products."
On February 7, 2005, petitioner again filed a Motion to
Dismiss15 the case for being moot and academic, contending
that respondents' patent had already lapsed. In the same
manner, petitioner also moved for the reconsideration of the
temporary restraining order issued by the CA on the same basis
that the patent right sought to be protected has been
extinguished due to the lapse of the patent license and on the
ground that the CA has no jurisdiction to review the order of
the BLA-IPO as said jurisdiction is vested by law in the Office of
the Director General of the IPO.
On April 11, 2005, the CA rendered its presently assailed
Resolution denying the Motion to Dismiss, dated November 16,
2004, and the motion for reconsideration, as well as Motion to
Dismiss, both dated February 7, 2005.
Hence, the present petition raising the following issues:
a) Can an injunctive relief be issued based on an
action of patent infringement when the patent
allegedly infringed has already lapsed?
b) What tribunal has jurisdiction to review the
decisions of the Director of Legal Affairs of the
Intellectual Property Office?
c) Is there forum shopping when a party files two
actions with two seemingly different causes of action
and yet pray for the same relief?16
In the first issue raised, petitioner argues that respondents'
exclusive right to monopolize the subject matter of the patent
exists only within the term of the patent. Petitioner claims that
since respondents' patent expired on July 16, 2004, the latter
no longer possess any right of monopoly and, as such, there is
no more basis for the issuance of a restraining order or
injunction against petitioner insofar as the disputed patent is
concerned.
The Court agrees.
Section 37 of Republic Act No. (RA) 165,17 which was the
governing law at the time of the issuance of respondents'
patent, provides:
Section 37. Rights of patentees. A patentee shall have the
exclusive right to make, use and sell the patented machine,
article or product, and to use the patented process for the
purpose of industry or commerce, throughout the territory of
the Philippines for the term of the patent; and such making,
using, or selling by any person without the authorization of the
patentee constitutes infringement of the patent.18
It is clear from the above-quoted provision of law that the
exclusive right of a patentee to make, use and sell a patented
product, article or process exists only during the term of the
patent. In the instant case, Philippine Letters Patent No. 21116,
which was the basis of respondents in filing their complaint
with the BLA-IPO, was issued on July 16, 1987. This fact was
admitted by respondents themselves in their complaint. They
also admitted that the validity of the said patent is until July 16,
2004, which is in conformity with Section 21 of RA 165,
providing that the term of a patent shall be seventeen (17)
years from the date of issuance thereof. Section 4, Rule 129 of
the Rules of Court provides that an admission, verbal or
written, made by a party in the course of the proceedings in the
same case, does not require proof and that the admission may
be contradicted only by showing that it was made through
palpable mistake or that no such admission was made. In the
present case, there is no dispute as to respondents' admission
that the term of their patent expired on July 16, 2004. Neither
is there evidence to show that their admission was made
through palpable mistake. Hence, contrary to the
pronouncement of the CA, there is no longer any need to
present evidence on the issue of expiration of respondents'
patent.
On the basis of the foregoing, the Court agrees with petitioner
that after July 16, 2004, respondents no longer possess the
exclusive right to make, use and sell the articles or products
covered by Philippine Letters Patent No. 21116.
Section 3, Rule 58, of the Rules of Court lays down the
requirements for the issuance of a writ of preliminary
injunction, viz:
(a) That the applicant is entitled to the relief
demanded, and the whole or part of such relief
consists in restraining the commission or continuance
of the acts complained of, or in requiring the
performance of an act or acts, either for a limited
period or perpetually;
(b) That the commission, continuance or non-
performance of the act or acts complained of during
the litigation would probably work injustice to the
applicant; or
(c) That a party, court, or agency or a person is doing,
threatening, or attempting to do, or is procuring or
suffering to be done, some act or acts probably in
violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to
render the judgment ineffectual.
In this connection, pertinent portions of Section 5, Rule 58 of
the same Rules provide that if the matter is of extreme urgency
and the applicant will suffer grave injustice and irreparable
injury, a temporary restraining order may be issued ex parte.
From the foregoing, it can be inferred that two requisites must
exist to warrant the issuance of an injunctive relief, namely: (1)
the existence of a clear and unmistakable right that must be
protected; and (2) an urgent and paramount necessity for the
writ to prevent serious damage.19
In the instant case, it is clear that when the CA issued its
January 18, 2005 Resolution approving the bond filed by
respondents, the latter no longer had a right that must be
protected, considering that Philippine Letters Patent No. 21116
which was issued to them already expired on July 16, 2004.
Hence, the issuance by the CA of a temporary restraining order
in favor of the respondents is not proper.
In fact, the CA should have granted petitioner's motion to
dismiss the petition for certiorari filed before it as the only
issue raised therein is the propriety of extending the writ of
preliminary injunction issued by the BLA-IPO. Since the patent
which was the basis for issuing the injunction, was no longer
valid, any issue as to the propriety of extending the life of the
injunction was already rendered moot and academic.
As to the second issue raised, the Court, is not persuaded by
petitioner's argument that, pursuant to the doctrine of primary
jurisdiction, the Director General of the IPO and not the CA has
jurisdiction to review the questioned Orders of the Director of
the BLA-IPO.
It is true that under Section 7(b) of RA 8293, otherwise known
as the Intellectual Property Code of the Philippines, which is the
presently prevailing law, the Director General of the IPO
exercises exclusive appellate jurisdiction over all decisions
rendered by the Director of the BLA-IPO. However, what is
being questioned before the CA is not a decision, but an
interlocutory order of the BLA-IPO denying respondents'
motion to extend the life of the preliminary injunction issued in
their favor.
RA 8293 is silent with respect to any remedy available to
litigants who intend to question an interlocutory order issued
by the BLA-IPO. Moreover, Section 1(c), Rule 14 of the Rules
and Regulations on Administrative Complaints for Violation of
Laws Involving Intellectual Property Rights simply provides that
interlocutory orders shall not be appealable. The said Rules and
Regulations do not prescribe a procedure within the
administrative machinery to be followed in assailing orders
issued by the BLA-IPO pending final resolution of a case filed
with them. Hence, in the absence of such a remedy, the
provisions of the Rules of Court shall apply in a suppletory
manner, as provided under Section 3, Rule 1 of the same Rules
and Regulations. Hence, in the present case, respondents
correctly resorted to the filing of a special civil action for
certiorari with the CA to question the assailed Orders of the
BLA-IPO, as they cannot appeal therefrom and they have no
other plain, speedy and adequate remedy in the ordinary
course of law. This is consistent with Sections 120 and 4,21 Rule
65 of the Rules of Court, as amended.
In the first place, respondents' act of filing their complaint
originally with the BLA-IPO is already in consonance with the
doctrine of primary jurisdiction.
This Court has held that:
[i]n cases involving specialized disputes, the practice has been
to refer the same to an administrative agency of special
competence in observance of the doctrine of primary
jurisdiction. The Court has ratiocinated that it cannot or will not
determine a controversy involving a question which is within
the jurisdiction of the administrative tribunal prior to the
resolution of that question by the administrative tribunal,
where the question demands the exercise of sound
administrative discretion requiring the special knowledge,
experience and services of the administrative tribunal to
determine technical and intricate matters of fact, and a
uniformity of ruling is essential to comply with the premises of
the regulatory statute administered. The objective of the
doctrine of primary jurisdiction is to guide a court in
determining whether it should refrain from exercising its
jurisdiction until after an administrative agency has determined
some question or some aspect of some question arising in the
proceeding before the court. It applies where the claim is
originally cognizable in the courts and comes into play
whenever enforcement of the claim requires the resolution of
issues which, under a regulatory scheme, has been placed
within the special competence of an administrative body; in
such case, the judicial process is suspended pending referral of
such issues to the administrative body for its view.22
Based on the foregoing, the Court finds that respondents' initial
filing of their complaint with the BLA-IPO, instead of the regular
courts, is in keeping with the doctrine of primary jurisdiction
owing to the fact that the determination of the basic issue of
whether petitioner violated respondents' patent rights requires
the exercise by the IPO of sound administrative discretion
which is based on the agency's special competence, knowledge
and experience.
However, the propriety of extending the life of the writ of
preliminary injunction issued by the BLA-IPO in the exercise of
its quasi-judicial power is no longer a matter that falls within
the jurisdiction of the said administrative agency, particularly
that of its Director General. The resolution of this issue which
was raised before the CA does not demand the exercise by the
IPO of sound administrative discretion requiring special
knowledge, experience and services in determining technical
and intricate matters of fact. It is settled that one of the
exceptions to the doctrine of primary jurisdiction is where the
question involved is purely legal and will ultimately have to be
decided by the courts of justice.23 This is the case with respect
to the issue raised in the petition filed with the CA.
Moreover, as discussed earlier, RA 8293 and its implementing
rules and regulations do not provide for a procedural remedy to
question interlocutory orders issued by the BLA-IPO. In this
regard, it bears to reiterate that the judicial power of the
courts, as provided for under the Constitution, includes the
authority of the courts to determine in an appropriate action
the validity of the acts of the political departments.24 Judicial
power also includes the duty of the courts of justice to settle
actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not
there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or
instrumentality of the Government.25 Hence, the CA, and not
the IPO Director General, has jurisdiction to determine whether
the BLA-IPO committed grave abuse of discretion in denying
respondents' motion to extend the effectivity of the writ of
preliminary injunction which the said office earlier issued.
Lastly, petitioner avers that respondents are guilty of forum
shopping for having filed separate actions before the IPO and
the RTC praying for the same relief.
The Court agrees.
Forum shopping is defined as the act of a party against whom
an adverse judgment has been rendered in one forum, of
seeking another (and possibly favorable) opinion in another
forum (other than by appeal or the special civil action
of certiorari), or the institution of two (2) or more actions or
proceedings grounded on the same cause on the supposition
that one or the other court would make a favorable
disposition.26
The elements of forum shopping are: (a) identity of parties, or
at least such parties that represent the same interests in both
actions; (b) identity of rights asserted and reliefs prayed for, the
reliefs being founded on the same facts; (c) identity of the two
preceding particulars, such that any judgment rendered in the
other action will, regardless of which party is successful,
amount to res judicata in the action under consideration.27
There is no question as to the identity of parties in the
complaints filed with the IPO and the RTC.
Respondents argue that they cannot be held guilty of forum
shopping because their complaints are based on different
causes of action as shown by the fact that the said complaints
are founded on violations of different patents.
The Court is not persuaded.
Section 2, Rule 2 of the Rules of Court defines a cause of action
as the act or omission by which a party violates a right of
another. In the instant case, respondents' cause of action in
their complaint filed with the IPO is the alleged act of petitioner
in importing, distributing, selling or offering for sale Sulbactam
Ampicillin products, acts that are supposedly violative of
respondents' right to the exclusive sale of the said products
which are covered by the latter's patent. However, a careful
reading of the complaint filed with the RTC of Makati City
would show that respondents have the same cause of action as
in their complaint filed with the IPO. They claim that they have
the exclusive right to make, use and sell Sulbactam Ampicillin
products and that petitioner violated this right. Thus, it does
not matter that the patents upon which the complaints were
based are different. The fact remains that in both complaints
the rights violated and the acts violative of such rights are
identical.
In fact, respondents seek substantially the same reliefs in their
separate complaints with the IPO and the RTC for the purpose
of accomplishing the same objective.
It is settled by this Court in several cases that the filing by a
party of two apparently different actions but with the same
objective constitutes forum shopping.28 The Court discussed
this species of forum shopping as follows:
Very simply stated, the original complaint in the court a quo
which gave rise to the instant petition was filed by the buyer
(herein private respondent and his predecessors-in-interest)
against the seller (herein petitioners) to enforce the alleged
perfected sale of real estate. On the other hand, the complaint
in the Second Case seeks to declare such purported sale
involving the same real property "as unenforceable as against
the Bank," which is the petitioner herein. In other words, in the
Second Case, the majority stockholders, in representation of
the Bank, are seeking to accomplish what the Bank itself failed
to do in the original case in the trial court. In brief, the objective
or the relief being sought, though worded differently, is the
same, namely, to enable the petitioner Bank to escape from the
obligation to sell the property to respondent.29
In Danville Maritime, Inc. v. Commission on Audit,30 the Court
ruled as follows:
In the attempt to make the two actions appear to be different,
petitioner impleaded different respondents therein – PNOC in
the case before the lower court and the COA in the case before
this Court and sought what seems to be different reliefs.
Petitioner asks this Court to set aside the questioned letter-
directive of the COA dated October 10, 1988 and to direct said
body to approve the Memorandum of Agreement entered into
by and between the PNOC and petitioner, while in the
complaint before the lower court petitioner seeks to enjoin the
PNOC from conducting a rebidding and from selling to other
parties the vessel "T/T Andres Bonifacio," and for an extension
of time for it to comply with the paragraph 1 of the
memorandum of agreement and damages. One can see that
although the relief prayed for in the two (2) actions are
ostensibly different, the ultimate objective in both actions is
the same, that is, the approval of the sale of vessel in favor of
petitioner, and to overturn the letter directive of the COA of
October 10, 1988 disapproving the sale.31
In the instant case, the prayer of respondents in their complaint
filed with the IPO is as follows:
A. Immediately upon the filing of this action, issue an
ex parte order (a) temporarily restraining respondent,
its agents, representatives and assigns from
importing, distributing, selling or offering for sale
Sulbactam Ampicillin products to the hospitals named
in paragraph 9 of this Complaint or to any other
entity in the Philippines, or from otherwise infringing
Pfizer Inc.'s Philippine Patent No. 21116; and (b)
impounding all the sales invoices and other
 documents evidencing sales by respondent of
Sulbactam Ampicillin products.
B. After hearing, issue a writ of preliminary injunction
enjoining respondent, its agents, representatives and
assigns from importing, distributing, selling or
offering for sale Sulbactam Ampicillin products to the
hospitals named in paragraph 9 of the Complaint or
to any other entity in the Philippines, or from
otherwise infringing Pfizer Inc.'s Philippine Patent No.
21116; and
C. After trial, render judgment:
(i) declaring that respondent has infringed
Pfizer Inc.'s Philippine Patent No. 21116 and
that respondent has no right whatsoever
over complainant's patent;
(ii) ordering respondent to pay
complainants the following amounts:
(a) at least ₱1,000,000.00 as
actual damages;
(b) ₱700,000.00 as attorney's fees
and litigation expenses;
(d) ₱1,000,000.00 as exemplary
damages; and
(d) costs of this suit.
(iii) ordering the condemnation, seizure or
forfeiture of respondent's infringing goods
or products, wherever they may be found,
including the materials and implements
used in the commission of infringement, to
be disposed of in such manner as may be
deemed appropriate by this Honorable
Office; and
(iv) making the injunction permanent.32
In an almost identical manner, respondents prayed for the
following in their complaint filed with the RTC:
(a) Immediately upon the filing of this action, issue an
ex parte order:
(1) temporarily restraining Pharmawealth,
its agents, representatives and assigns from
importing, distributing, selling or offering
for sale infringing sulbactam ampicillin
products to various government and private
hospitals or to any other entity in the
Philippines, or from otherwise infringing
Pfizer Inc.'s Philippine Patent No. 26810.
(2) impounding all the sales invoices and
other documents evidencing sales by
pharmawealth of sulbactam ampicillin
products; and
(3) disposing of the infringing goods outside
the channels of commerce.
(b) After hearing, issue a writ of preliminary
injunction:
(1) enjoining Pharmawealth, its agents,
representatives and assigns from importing,
distributing, selling or offering for sale
infringing sulbactam ampicillin products to
various government hospitals or to any
other entity in the Philippines, or from
otherwise infringing Patent No. 26810;
(2) impounding all the sales invoices and
other documents evidencing sales by
Pharmawealth of sulbactam ampicillin
products; and
(3) disposing of the infringing goods outside
the channels of commerce.
(c) After trial, render judgment:
(1) finding Pharmawealth to have infringed
Patent No. 26810 and declaring
Pharmawealth to have no right whatsoever
over plaintiff's patent;
(2) ordering Pharmawealth to pay plaintiffs
the following amounts:
(i) at least ₱3,000,000.00 as actual
damages;
(ii) ₱500,000.00 as attorney's fees
and ₱1,000,000.00 as litigation
expenses;
(iii) ₱3,000,000.00 as exemplary
damages; and
(iv) costs of this suit.
(3) ordering the condemnation, seizure or
forfeiture of Pharmawealth's infringing
goods or products, wherever they may be
found, including the materials and
implements used in the commission of
infringement, to be disposed of in such
manner as may be deemed appropriate by
this Honorable Court; and
(4) making the injunction permanent.33
It is clear from the foregoing that the ultimate objective which
respondents seek to achieve in their separate complaints filed
with the RTC and the IPO, is to ask for damages for the alleged
violation of their right to exclusively sell Sulbactam Ampicillin
products and to permanently prevent or prohibit petitioner
from selling said products to any entity. Owing to the
substantial identity of parties, reliefs and issues in the IPO and
RTC cases, a decision in one case will necessarily amount to res
judicata in the other action.
It bears to reiterate that what is truly important to consider in
determining whether forum shopping exists or not is the
vexation caused the courts and parties-litigant by a party who
asks different courts and/or administrative agencies to rule on
the same or related causes and/or to grant the same or
substantially the same reliefs, in the process creating the
possibility of conflicting decisions being rendered by the
different fora upon the same issue.341avvphi1
Thus, the Court agrees with petitioner that respondents are
indeed guilty of forum shopping.
Jurisprudence holds that if the forum shopping is not
considered willful and deliberate, the subsequent case shall be
dismissed without prejudice, on the ground of either litis
pendentia or res judicata.35 However, if the forum shopping is
willful and deliberate, both (or all, if there are more than two)
actions shall be dismissed with prejudice.36 In the present case,
the Court finds that respondents did not deliberately violate
the rule on non-forum shopping. Respondents may not be
totally blamed for erroneously believing that they can file TRADEMARKS CASES
separate actions simply on the basis of different patents.
Moreover, in the suit filed with the RTC of Makati City,
respondents were candid enough to inform the trial court of G.R. No. 114508 November 19, 1999
the pendency of the complaint filed with the BLA-IPO as well as
the petition for certiorari filed with the CA. On these bases, PRIBHDAS J. MIRPURI, petitioner,
only Civil Case No. 04-754 should be dismissed on the ground vs.
of litis pendentia. COURT OF APPEALS, DIRECTOR OF PATENTS and the
BARBIZON CORPORATION, respondents.
WHEREFORE, the petition is PARTLY GRANTED. The assailed
Resolutions of the Court of Appeals, dated January 18, 2005
and April 11, 2005, in CA-G.R. No. 82734,
are REVERSED and SET ASIDE. The petition for certiorari filed PUNO, J.:
with the Court of Appeals is DISMISSED for being moot and
academic.
The Convention of Paris for the Protection of Industrial
Property is a multi-lateral treaty which the Philippines bound
Civil Case No. 04-754, filed with the Regional Trial Court of itself to honor and enforce in this country. As to whether or not
Makati City, Branch 138, is likewise DISMISSED on the ground the treaty affords protection to a foreign corporation against a
of litis pendentia. Philippine applicant for the registration of a similar trademark is
the principal issue in this case.
SO ORDERED.
On June 15, 1970, one Lolita Escobar, the predecessor-in-
interest of petitioner Pribhdas J. Mirpuri, filed an application
with the Bureau of Patents for the registration of the trademark
"Barbizon" for use in brassieres and ladies undergarments.
Escobar alleged that she had been manufacturing and selling
these products under the firm name "L & BM Commercial"
since March 3, 1970.

Private respondent Barbizon Corporation, a corporation

organized and doing business under the laws of New York,
U.S.A., opposed the application. It claimed that:

The mark BARBIZON of respondent-

applicant is confusingly similar to the
trademark BARBIZON which opposer owns
and has not abandoned.

That opposer will be damaged by the

registration of the mark BARBIZON and its
 business reputation and goodwill will suffer
great and irreparable injury.
That the respondent-applicant's use of the
said mark BARBIZON which resembles the
trademark used and owned by opposer,
constitutes an unlawful appropriation of a
mark previously used in the Philippines and
not abandoned and therefore a statutory
violation of Section 4 (d) of Republic Act No.
166, as amended. 1
This was docketed as Inter Partes Case No. 686 (IPC
No. 686). After filing of the pleadings, the parties
submitted the case for decision.
On June 18, 1974, the Director of Patents rendered judgment
dismissing the opposition and giving due course to Escobar's
application, thus:
WHEREFORE, the opposition should be, as it
is hereby, DISMISSED. Accordingly,
Application Serial No. 19010 for the
registration of the trademark BARBIZON, of
respondent Lolita R. Escobar, is given due
course.
IT IS SO ORDERED. 2
This decision became final and on September 11,
1974, Lolita Escobar was issued a certificate of
registration for the trademark "Barbizon." The
trademark was "for use in "brassieres and lady's
underwear garments like panties." 3
Escobar later assigned all her rights and interest over the
trademark to petitioner Pribhdas J. Mirpuri who, under his firm
name then, the "Bonito Enterprises," was the sole and exclusive
distributor of Escobar's "Barbizon" products.
In 1979, however, Escobar failed to file with the Bureau of
Patents the Affidavit of Use of the trademark required under
Section 12 of Republic Act (R.A.) No. 166, the Philippine
Trademark Law. Due to this failure, the Bureau of Patents
cancelled Escobar's certificate of registration.
On May 27, 1981, Escobar reapplied for registration of the
cancelled trademark. Mirpuri filed his own application for
registration of Escobar's trademark. Escobar later assigned her
application to herein petitioner and this application was
opposed by private respondent. The case was docketed as Inter
Partes Case No. 2049 (IPC No. 2049).
In its opposition, private respondent alleged that:
(a) The Opposer has adopted the trademark
BARBIZON (word), sometime in June 1933
and has then used it on various kinds of
wearing apparel. On August 14, 1934,
Opposer obtained from the United States
Patent Office a more recent registration of
the said mark under Certificate of
Registration No. 316,161. On March 1,
1949, Opposer obtained from the United
States Patent Office a more recent
registration for the said trademark under
Certificate of Registration No. 507,214, a
copy of which is herewith attached as
Annex "A." Said Certificate of Registration
covers the following goods — wearing
apparel: robes, pajamas, lingerie,
nightgowns and slips;
(b) Sometime in March 1976, Opposer
further adopted the trademark BARBIZON
and Bee design and used the said mark in
various kinds of wearing apparel. On March
15, 1977, Opposer secured from the United
States Patent Office a registration of the
said mark under Certificate of Registration
No. 1,061,277, a copy of which is herein
enclosed as Annex "B." The said Certificate
of Registration covers the following goods:
robes, pajamas, lingerie, nightgowns and
slips;
(c) Still further, sometime in 1961, Opposer
adopted the trademark BARBIZON and a
Representation of a Woman and thereafter
used the said trademark on various kinds of
wearing apparel. Opposer obtained from
the United States Patent Office registration
of the said mark on April 5, 1983 under
Certificate of Registration No. 1,233,666 for
the following goods: wearing apparel:
robes, pajamas, nightgowns and lingerie. A
copy of the said certificate of registration is
herewith enclosed as Annex "C."
(d) All the above registrations are subsisting
and in force and Opposer has not
abandoned the use of the said trademarks.
In fact, Opposer, through a wholly-owned
Philippine subsidiary, the Philippine Lingerie
Corporation, has been manufacturing the
goods covered by said registrations and
selling them to various countries, thereby
earning valuable foreign exchange for the
country. As a result of respondent-
applicant's misappropriation of Opposer's
BARBIZON trademark, Philippine Lingerie
Corporation is prevented from selling its
goods in the local market, to the damage
and prejudice of Opposer and its wholly-
owned subsidiary.
(e) The Opposer's goods bearing the
trademark BARBIZON have been used in
many countries, including the Philippines,
for at least 40 years and has enjoyed
international reputation and good will for
their quality. To protect its registrations in
countries where the goods covered by the
registrations are being sold, Opposer has
procured the registration of the trademark
BARBIZON in the following countries:
Australia, Austria, Abu Dhabi, Argentina,
Belgium, Bolivia, Bahrain, Canada, Chile,
Colombia, Denmark, Ecuador, France, West
Germany, Greece, Guatemala, Hongkong,
Honduras, Italy, Japan, Jordan, Lebanon,
Mexico, Morocco, Panama, New Zealand,
Norway, Sweden, Switzerland, Syria, El
Salvador, South Africa, Zambia, Egypt, and
Iran, among others;
(f) To enhance its international reputation
for quality goods and to further promote
goodwill over its name, marks and products,
Opposer has extensively advertised its
products, trademarks and name in various
publications which are circulated in the
United States and many countries around
the world, including the Philippines;
(g) The trademark BARBIZON was
fraudulently registered in the Philippines by
one Lolita R. Escobar under Registration No.
21920, issued on September 11, 1974, in
violation of Article 189 (3) of the Revised
Penal Code and Section 4 (d) of the
Trademark Law. Herein respondent
applicant acquired by assignment the
"rights" to the said mark previously
registered by Lolita Escobar, hence
respondent-applicant's title is vitiated by
the same fraud and criminal act. Besides,
Certificate of Registration No. 21920 has
been cancelled for failure of either Lolita
Escobar or herein respondent-applicant, to
seasonably file the statutory affidavit of
use. By applying for a re-registration of the
mark BARBIZON subject of this opposition,
respondent-applicant seeks to perpetuate
the fraud and criminal act committed by
Lolita Escobar.
(h) Opposer's BARBIZON as well as its
BARBIZON and Bee Design and BARBIZON
and Representation of a Woman
trademarks qualify as well-known
trademarks entitled to protection under
Article 6bis of the Convention of Paris for
the Protection of Industrial Property and
further amplified by the Memorandum of
the Minister of Trade to the Honorable
Director of Patents dated October 25, 1983
[sic], 4 Executive Order No. 913 dated
October 7, 1963 and the Memorandum of
the Minister of Trade and Industry to the
Honorable Director of Patents dated
October 25, 1983.
(i) The trademark applied for by respondent
applicant is identical to Opposer's
BARBIZON trademark and constitutes the
dominant part of Opposer's two other
marks namely, BARBIZON and Bee design
and BARBIZON and a Representation of a
Woman. The continued use by respondent-
applicant of Opposer's trademark
BARBIZON on goods belonging to Class 25
constitutes a clear case of commercial and
criminal piracy and if allowed registration
will violate not only the Trademark Law but
also Article 189 of the Revised Penal Code
and the commitment of the Philippines to
an international treaty. 5
Replying to private respondent's opposition,
petitioner raised the defense of res judicata.
On March 2, 1982, Escobar assigned to petitioner the use of the
business name "Barbizon International." Petitioner registered
the name with the Department of Trade and Industry (DTI) for
which a certificate of registration was issued in 1987.
Forthwith, private respondent filed before the Office of Legal
Affairs of the DTI a petition for cancellation of petitioner's
business name.
On November 26, 1991, the DTI, Office of Legal Affairs,
cancelled petitioner's certificate of registration, and declared
private respondent the owner and prior user of the business
name "Barbizon International." Thus:
WHEREFORE, the petition is hereby
GRANTED and petitioner is declared the
owner and prior user of the business name
"BARBIZON INTERNATIONAL" under
Certificate of Registration No. 87-09000
dated March 10, 1987 and issued in the
name of respondent, is [sic] hereby ordered
revoked and cancelled. . . . . 6
Meanwhile, in IPC No. 2049, the evidence of both parties were
received by the Director of Patents. On June 18, 1992, the
Director rendered a decision declaring private respondent's
opposition barred by res judicata and giving due course to
petitioner's application for registration, to wit:
WHEREFORE, the present Opposition in
Inter Partes Case No. 2049 is hereby
DECLARED BARRED by res judicata and is
hereby DISMISSED. Accordingly, Application
Serial No. 45011 for trademark BARBIZON
filed by Pribhdas J. Mirpuri is GIVEN DUE
COURSE.
SO ORDERED. 7
Private respondent questioned this decision before the Court of
Appeals in CA-G.R. SP No. 28415. On April 30, 1993, the Court
of Appeals reversed the Director of Patents finding that IPC No.
686 was not barred by judgment in IPC No. 2049 and ordered
that the case be remanded to the Bureau of Patents for further
proceedings, viz:
WHEREFORE, the appealed Decision No. 92-
13 dated June 18, 1992 of the Director of
Patents in Inter Partes Case No. 2049 is
hereby SET ASIDE; and the case is hereby
remanded to the Bureau of Patents for
further proceedings, in accordance with this
pronouncement. No costs. 8
In a Resolution dated March 16, 1994, the Court of
Appeals denied reconsideration of its
decision. 9 Hence, this recourse.
Before us, petitioner raises the following issues:
1. WHETHER OR NOT THE DECISION OF THE
DIRECTOR OF PATENTS IN INTER PARTES
CASE NO. 686 RENDERED ON JUNE 18,
1974, ANNEX C HEREOF, CONSTITUTED RES
JUDICATA IN SO FAR AS THE CASE BEFORE
THE DIRECTOR OF PATENTS IS CONCERNED;
2. WHETHER OR NOT THE DIRECTOR OF
PATENTS CORRECTLY APPLIED THE
PRINCIPLE OF RES JUDICATA IN DISMISSING
PRIVATE RESPONDENT BARBIZON'S
OPPOSITION TO PETITIONER'S APPLICATION
FOR REGISTRATION FOR THE TRADEMARK
BARBIZON, WHICH HAS SINCE RIPENED TO
CERTIFICATE OF REGISTRATION NO. 53920
ON NOVEMBER 16, 1992;
3. WHETHER OR NOT THE REQUISITE THAT
A "JUDGMENT ON THE MERITS" REQUIRED
A "HEARING WHERE BOTH PARTIES ARE
SUPPOSED TO ADDUCE EVIDENCE" AND
WHETHER THE JOINT SUBMISSION OF THE
PARTIES TO A CASE ON THE BASIS OF THEIR
RESPECTIVE PLEADINGS WITHOUT
PRESENTING TESTIMONIAL OR
DOCUMENTARY EVIDENCE FALLS WITHIN
THE MEANING OF "JUDGMENT ON THE
 MERITS" AS ONE OF THE REQUISITES TO
CONSTITUTE RES JUDICATA;
4. WHETHER A DECISION OF THE
DEPARTMENT OF TRADE AND INDUSTRY
CANCELLING PETITIONER'S FIRM NAME
"BARBIZON INTERNATIONAL" AND WHICH
DECISION IS STILL PENDING
RECONSIDERATION NEVER OFFERED IN
EVIDENCE BEFORE THE DIRECTOR OF
PATENTS IN INTER PARTES CASE NO. 2049
HAS THE RIGHT TO DECIDE SUCH
CANCELLATION NOT ON THE BASIS OF THE
BUSINESS NAME LAW (AS IMPLEMENTED
BY THE BUREAU OF DOMESTIC TRADE) BUT
ON THE BASIS OF THE PARIS CONVENTION
AND THE TRADEMARK LAW (R.A. 166)
WHICH IS WITHIN THE ORIGINAL AND
EXCLUSIVE JURISDICTION OF THE DIRECTOR
OF PATENTS. 10
Before ruling on the issues of the case, there is need for a brief
background on the function and historical development of
trademarks and 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. 11 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." 12 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. 13
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. 14
Symbols have been used to identify the ownership or origin of
articles for several centuries. 15 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. 16 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. 17
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. 18 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. 19 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. 20
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. 21 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. 22 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. 23 Eventually, they came to symbolize the goodwill and
business reputation of the owner of the product and became a
property right protected by law. 24 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." 25 Subsequently, England and
the United States enacted national legislation on trademarks as
part of the law regulating unfair trade. 26 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. 27
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. 28 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. 29 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. 30 Whether in the print,
broadcast or electronic communications medium, particularly
on the Internet, 31 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.
This is the mise-en-scene of the present controversy. Petitioner
brings this action claiming that "Barbizon" products have been
sold in the Philippines since 1970. Petitioner developed this
market by working long hours and spending considerable sums
of money on advertisements and promotion of the trademark
and its products. Now, almost thirty years later, private
respondent, a foreign corporation, "swaggers into the country
like a conquering hero," usurps the trademark and invades
petitioner's market. 32 Justice and fairness dictate that private
respondent be prevented from appropriating what is not its
own. Legally, at the same time, private respondent is barred
from questioning petitioner's ownership of the trademark
because of res judicata. 33
Literally, res judicata means a matter adjudged, a thing
judicially acted upon or decided; a thing or matter settled by
judgment. 34 In res judicata, the judgment in the first action is
considered conclusive as to every matter offered and received
therein, as to any other admissible matter which might have
been offered for that purpose, and all other matters that could
have been adjudged therein. 35 Res judicata is an absolute bar
to a subsequent action for the same cause; and its requisites
are: (a) the former judgment or order must be final; (b) the
judgment or order must be one on the merits; (c) it must have
been rendered by a court having jurisdiction over the subject
matter and parties; (d) there must be between the first and
second actions, identity of parties, of subject matter and of
causes of action. 36
The Solicitor General, on behalf of respondent Director of
Patents, has joined cause with petitioner. Both claim that all
the four elements of res judicata have been complied with: that
the judgment in IPC No. 686 was final and was rendered by the
Director of Patents who had jurisdiction over the subject
matter and parties; that the judgment in IPC No. 686 was on
the merits; and that the lack of a hearing was immaterial
because substantial issues were raised by the parties and
passed upon by the Director of Patents. 37
The decision in IPC No. 686 reads as follows:
xxx xxx xxx.
Neither party took testimony nor adduced
documentary evidence. They submitted the
case for decision based on the pleadings
which, together with the pertinent records,
have all been carefully considered.
Accordingly, the only issue for my
disposition is whether or not the herein
opposer would probably be damaged by the
registration of the trademark BARBIZON
sought by the respondent-applicant on the
ground that it so resembles the trademark
BARBIZON allegedly used and owned by the
former to be "likely to cause confusion,
mistake or to deceive purchasers."
On record, there can be no doubt that
respondent-applicant's sought-to-be-
registered trademark BARBIZON is similar,
in fact obviously identical, to opposer's
alleged trademark BARBIZON, in spelling
and pronunciation. The only appreciable
but very negligible difference lies in their
respective appearances or manner of
presentation. Respondent-applicant's
trademark is in bold letters (set against a
black background), while that of the
opposer is offered in stylish script letters.
It is opposer's assertion that its trademark
BARBIZON has been used in trade or
commerce in the Philippines prior to the
date of application for the registration of
the identical mark BARBIZON by the
respondent-applicant. However, the
allegation of facts in opposer's verified
notice of opposition is devoid of such
material information. In fact, a reading of
the text of said verified opposition reveals
an apparent, if not deliberate, omission of
the date (or year) when opposer's alleged
trademark BARBIZON was first used in trade
in the Philippines (see par. No. 1, p. 2,
Verified Notice of Opposition, Rec.). Thus, it
cannot here and now be ascertained
whether opposer's alleged use of the
trademark BARBIZON could be prior to the
use of the identical mark by the herein
respondent-applicant, since the opposer
attempted neither to substantiate its claim
of use in local commerce with any proof or
evidence. Instead, the opposer submitted
the case for decision based merely on the
pleadings.
On the other hand, respondent-applicant
asserted in her amended application for
registration that she first used the
trademark BARBIZON for brassiere (or
"brasseire") and ladies underwear garments
and panties as early as March 3, 1970. Be
that as it may, there being no testimony
taken as to said date of first use,
respondent-applicant will be limited to the
filing date, June 15, 1970, of her application
as the date of first use (Rule 173, Rules of
Practice in Trademark Cases).
From the foregoing, I conclude that the
opposer has not made out a case of
probable damage by the registration of the
respondent-applicant's mark BARBIZON.
WHEREFORE, the opposition should be, as it
is hereby, DISMISSED. Accordingly,
Application Serial No. 19010, for the
registration of the trademark BARBIZON of
respondent Lolita R. Escobar, is given due
course.38
The decision in IPC No. 686 was a judgment on the merits and it
was error for the Court of Appeals to rule that it was not. A
judgment is on the merits when it determines the rights and
liabilities of the parties based on the disclosed facts,
irrespective of formal, technical or dilatory objections. 39 It is
not necessary that a trial should have been conducted. If the
court's judgment is general, and not based on any technical
defect or objection, and the parties had a full legal opportunity
to be heard on their respective claims and contentions, it is on
the merits although there was no actual hearing or arguments
on the facts of the case. 40 In the case at bar, the Director of
Patents did not dismiss private respondent's opposition on a
sheer technicality. Although no hearing was conducted, both
parties filed their respective pleadings and were given
opportunity to present evidence. They, however, waived their
right to do so and submitted the case for decision based on
their pleadings. The lack of evidence did not deter the Director
of Patents from ruling on the case, particularly on the issue of
prior use, which goes into the very substance of the relief
sought by the parties. Since private respondent failed to prove
prior use of its trademark, Escobar's claim of first use was
upheld.
The judgment in IPC No. 686 being on the merits, petitioner
and the Solicitor General allege that IPC No. 686 and IPC No.
2049 also comply with the fourth requisite of res judicata, i.e.,
they involve the same parties and the same subject matter, and
have identical causes of action.
Undisputedly, IPC No. 686 and IPC No. 2049 involve the same
parties and the same subject matter. Petitioner herein is the
assignee of Escobar while private respondent is the same
American corporation in the first case. The subject matter of
both cases is the trademark "Barbizon." Private respondent
counter-argues, however, that the two cases do not have
identical causes of action. New causes of action were allegedly
introduced in IPC No. 2049, such as the prior use and
registration of the trademark in the United States and other
countries worldwide, prior use in the Philippines, and the
fraudulent registration of the mark in violation of Article 189 of
the Revised Penal Code. Private respondent also cited
protection of the trademark under the Convention of Paris for
the Protection of Industrial Property, specifically Article
6bis thereof, and the implementation of Article 6bis by two
Memoranda dated November 20, 1980 and October 25, 1983 of
the Minister of Trade and Industry to the Director of Patents, as
well as Executive Order (E.O.) No. 913.
The Convention of Paris for the Protection of Industrial
Property, otherwise known as the Paris Convention, is a
multilateral treaty that seeks to protect industrial property
consisting of patents, utility models, industrial designs,
trademarks, service marks, trade names and indications of
source or appellations of origin, and at the same time aims to
repress unfair competition. 41 The Convention is essentially a
compact among various countries which, as members of the
Union, have pledged to accord to citizens of the other member
countries trademark and other rights comparable to those
accorded their own citizens by their domestic laws for an
effective protection against unfair competition. 42 In short,
foreign nationals are to be given the same treatment in each of
the member countries as that country makes available to its
own citizens. 43 Nationals of the various member nations are
thus assured of a certain minimum of international protection
of their industrial property. 44
The Convention was first signed by eleven countries in Paris on
March 20, 1883. 45 It underwent several revisions — at Brussels
in 1900, at Washington in 1911, at The Hague in 1925, at
London in 1934, at Lisbon in 1958, 46 and at Stockholm in 1967.
Both the Philippines and the United States of America, herein
private respondent's country, are signatories to the
Convention. The United States acceded on May 30, 1887 while
the Philippines, through its Senate, concurred on May 10,
1965. 47 The Philippines' adhesion became effective on
September 27, 1965, 48 and from this date, the country
obligated itself to honor and enforce the provisions of the
Convention. 49
In the case at bar, private respondent anchors its cause of
action on the first paragraph of Article 6bis of the Paris
Convention which reads as follows:
Article 6bis
(1) The countries of the Union undertake,
either administratively if their legislation so
permits, or at the request of an interested
party, to refuse or to cancel the registration
and to prohibit the use, of a trademark
which constitutes a reproduction, an
imitation, or a translation, liable to create
confusion, of a mark considered by the
competent authority of the country of
registration or use to be well-known in that
country as being already the mark of a
person entitled to the benefits of this
Convention and used for identical or similar
goods. These provisions shall also apply
when the essential part of the mark
constitutes a reproduction of any such well-
known mark or an imitation liable to create
confusion therewith.
(2) A period of at least five years from the
date of registration shall be allowed for
seeking the cancellation of such a mark. The
countries of the Union may provide for a
period within which the prohibition of use
must be sought.
(3) No time limit shall be fixed for seeking
the cancellation or the prohibition of the
use of marks registered or used in bad
faith. 50
This Article governs protection of well-known
trademarks. Under the first paragraph, each country
of the Union bound itself to undertake to refuse or
cancel the registration, and prohibit the use of a
trademark which is a reproduction, imitation or
translation, or any essential part of which trademark
constitutes a reproduction, liable to create confusion,
of a mark considered by the competent authority of
the country where protection is sought, to be well-
known in the country as being already the mark of a
person entitled to the benefits of the Convention, and
used for identical or similar goods.
Art. 6bis was first introduced at The Hague in 1925 and
amended in Lisbon in 1952. 51 It is a self-executing provision
and does not require legislative enactment to give it effect in
the member country. 52 It may be applied directly by the
tribunals and officials of each member country by the mere
publication or proclamation of the Convention, after its
ratification according to the public law of each state and the
order for its execution. 53
The essential requirement under Article 6bis is that the
trademark to be protected must be "well-known" in the
country where protection is sought. The power to determine
whether a trademark is well-known lies in the "competent
authority of the country of registration or use." This competent
authority would be either the registering authority if it has the
power to decide this, or the courts of the country in question if
the issue comes before a court. 54
Pursuant to Article 6bis, on November 20, 1980, then Minister
Luis Villafuerte of the Ministry of Trade issued a Memorandum
to the Director of Patents. The Minister ordered the Director
that:
Pursuant to the Paris Convention for the
Protection of Industrial Property to which
the Philippines is a signatory, you are
hereby directed to reject all pending
applications for Philippine registration of
signature and other world-famous
trademarks by applicants other than its
original owners or users.
The conflicting claims over internationally
known trademarks involve such name
brands as Lacoste, Jordache, Vanderbilt,
Sasson, Fila, Pierre Cardin, Gucci, Christian
Dior, Oscar de la Renta, Calvin Klein,
Givenchy, Ralph Lauren, Geoffrey Beene,
Lanvin and Ted Lapidus.
It is further directed that, in cases where
warranted, Philippine registrants of such
trademarks should be asked to surrender
their certificates of registration, if any, to
avoid suits for damages and other legal
action by the trademarks' foreign or local
owners or original users.
You are also required to submit to the
undersigned a progress report on the
matter.
For immediate compliance. 55
Three years later, on October 25, 1983, then Minister Roberto
Ongpin issued another Memorandum to the Director of
Patents, viz:
Pursuant to Executive Order No. 913 dated arati cons
7 October 1983 which strengthens the rule- on titut
making and adjudicatory powers of the by ea
Minister of Trade and Industry and the repr
provides inter alia, that "such rule-making Mini odu
and adjudicatory powers should be ster ctio
revitalized in order that the Minister of of n,
Trade and Industry can . . . apply more swift Trad imit
and effective solutions and remedies to old e atio
and new problems . . . such as infringement and n,
of internationally-known tradenames and Indu tran
trademarks . . ." and in view of the decision stry slati
of the Intermediate Appellate Court in the that on
case of LA CHEMISE LACOSTE, S.A., versus the or
RAM SADWHANI [AC-G.R. SP NO. 13359 trad othe
(17) June 1983] 56 which affirms the validity ema r
of the MEMORANDUM of then Minister Luis rk infri
R. Villafuerte dated 20 November 1980 bein nge
confirming our obligations under the PARIS g men
CONVENTION FOR THE PROTECTION OF cons t;
INDUSTRIAL PROPERTY to which the ider
Republic of the Philippines is a signatory, ed is (b)
you are hereby directed to implement alre that
measures necessary to effect compliance ady the
with our obligations under said Convention well- trad
in general, and, more specifically, to honor kno ema
our commitment under wn rk is
Section 6bis 57 thereof, as follows: in used
the in
1. Whether the Phili com
trademark under ppin mer
consideration is well- es ce
known in the Philippines such inter
or is a mark already that nati
belonging to a person per onall
entitled to the benefits miss y,
of the CONVENTION, ion supp
this should be for orte
established, pursuant to its d by
Philippine Patent Office use proo
procedures in inter by f
partes and ex othe that
partecases, according to r goo
any of the following than ds
criteria or any its bear
combination thereof: origi ing
nal the
own trad
(a) a
er ema
decl
will rk
are trad (d)
sold e that
on and the
an com trad
inter mer ema
nati ce; rk
onal has
scal (c) long
e, that bee
adve the n
rtise trad esta
men ema blish
ts, rk is ed
the duly and
esta regis obta
blish tere ined
men d in goo
t of the dwill
fact indu and
ories stria inter
, l nati
sales prop onal
offic erty cons
es, offic ume
distr e(s) r
ibut of reco
orsh anot gniti
ips, her on
and cou as
the ntry belo
like, or ngin
in cou g to
diffe ntrie one
rent s, own
cou taki er or
ntrie ng sour
s, into ce;
inclu cons
ding ider (e)
volu atio that
me n the
or the trad
othe date ema
r of rk
mea such actu
sure regis ally
of trati belo
inter on; ngs
nati to a
onal part
 y reproduction, Registration to the
clai translation or imitation Philippine Patent Office
min of a trademark owned for immediate
g by a person, natural or cancellation
own corporate, who is a proceedings.
ershi citizen of a country
p signatory to the PARIS xxx xxx xxx. 58
and CONVENTION FOR THE
has PROTECTION OF
In the Villafuerte Memorandum, the Minister of Trade
the INDUSTRIAL PROPERTY.
instructed the Director of Patents to reject all pending
right
applications for Philippine registration of signature and other
to 4. The Philippine Patent world-famous trademarks by applicants other than their
regis Office shall give due original owners or users. The Minister enumerated several
trati course to the internationally-known trademarks and ordered the Director of
on Opposition in cases Patents to require Philippine registrants of such marks to
und already or hereafter surrender their certificates of registration.
er filed against the
the registration of
prov In the Ongpin Memorandum, the Minister of Trade and
trademarks entitled to
ision Industry did not enumerate well-known trademarks but laid
protection of Section
s of down guidelines for the Director of Patents to observe in
6bisof said PARIS
the determining whether a trademark is entitled to protection as a
CONVENTION as
afor well-known mark in the Philippines under Article 6bis of the
outlined above, by
esta Paris Convention. This was to be established through Philippine
remanding applications
ted Patent Office procedures in inter partes and ex parte cases
filed by one not entitled
PARI pursuant to the criteria enumerated therein. The Philippine
to such protection for
S Patent Office was ordered to refuse applications for, or cancel
final disallowance by
CON the registration of, trademarks which constitute a
the Examination
VEN reproduction, translation or imitation of a trademark owned by
Division.
TIO a person who is a citizen of a member of the Union. All pending
N. applications for registration of world-famous trademarks by
5. All pending persons other than their original owners were to be rejected
applications for forthwith. The Ongpin Memorandum was issued pursuant to
2. The word trademark, Philippine registration Executive Order No. 913 dated October 7, 1983 of then
as used in this of signature and other President Marcos which strengthened the rule-making and
MEMORANDUM, shall world-famous adjudicatory powers of the Minister of Trade and Industry for
include tradenames, trademarks filed by the effective protection of consumers and the application of
service marks, logos, applicants other than swift solutions to problems in trade and industry. 59
signs, emblems, insignia their original owners or
or other similar devices users shall be rejected
used for identification Both the Villafuerte and Ongpin Memoranda were sustained by
forthwith. Where such
and recognition by the Supreme Court in the 1984 landmark case of La Chemise
applicants have already
consumers. Lacoste, S.A. v. Fernandez. 60 This court ruled therein that under
obtained registration
the provisions of Article 6bis of the Paris Convention, the
contrary to the
Minister of Trade and Industry was the "competent authority"
3. The Philippine Patent abovementioned PARIS
to determine whether a trademark is well-known in this
Office shall refuse all CONVENTION and/or
country. 61
applications for, or Philippine Law, they
cancel the registration shall be directed to
of, trademarks which surrender their The Villafuerte Memorandum was issued in 1980, i.e., fifteen
constitute a Certificates of (15) years after the adoption of the Paris Convention in 1965. In
the case at bar, the first inter partes case, IPC No. 686, was filed
in 1970, before the Villafuerte Memorandum but five (5)
years after the effectivity of the Paris Convention. Article
6bis was already in effect five years before the first case was
instituted. Private respondent, however, did not cite the
protection of Article 6bis, neither did it mention the Paris
Convention at all. It was only in 1981 when IPC No. 2049 was
instituted that the Paris Convention and the Villafuerte
Memorandum, and, during the pendency of the case, the 1983
Ongpin Memorandum were invoked by private respondent.
The Solicitor General argues that the issue of whether the
protection of Article 6bis of the Convention and the two
Memoranda is barred by res judicata has already been
answered in Wolverine Worldwide, Inc. v. Court of
Appeals. 62 In this case, petitioner Wolverine, a foreign
corporation, filed with the Philippine Patent Office a petition
for cancellation of the registration certificate of private
respondent, a Filipino citizen, for the trademark "Hush Puppies"
and "Dog Device." Petitioner alleged that it was the registrant
of the internationally-known trademark in the United States
and other countries, and cited protection under the Paris
Convention and the Ongpin Memorandum. The petition was
dismissed by the Patent Office on the ground of res judicata. It
was found that in 1973 petitioner's predecessor-in-interest filed
two petitions for cancellation of the same trademark against
respondent's predecessor-in-interest. The Patent Office
dismissed the petitions, ordered the cancellation of registration
of petitioner's trademark, and gave due course to respondent's
application for registration. This decision was sustained by the
Court of Appeals, which decision was not elevated to us and
became final and
executory. 63
Wolverine claimed that while its previous petitions were filed
under R.A. No. 166, the Trademark Law, its subsequent petition
was based on a new cause of action, i.e., the Ongpin
Memorandum and E.O. No. 913 issued in 1983, after finality of
the previous decision. We held that the said Memorandum and
E.O. did not grant a new cause of action because it did "not
amend the Trademark Law," . . . "nor did it indicate a new
policy with respect to the registration in the Philippines of
world-famous trademarks." 64 This conclusion was based on the
finding that Wolverine's two previous petitions and subsequent
petition dealt with the same issue of ownership of the
trademark. 65 In other words, since the first and second cases
involved the same issue of ownership, then the first case was a
bar to the second case.
In the instant case, the issue of ownership of the trademark
"Barbizon" was not raised in IPC No. 686. Private respondent's
opposition therein was merely anchored on:
(a) "confusing similarity" of its trademark
with that of Escobar's;
(b) that the registration of Escobar's similar
trademark will cause damage to private
respondent's business reputation and
goodwill; and
(c) that Escobar's use of the trademark
amounts to an unlawful appropriation of a
mark previously used in the Philippines
which act is penalized under Section 4 (d) of
the Trademark Law.
In IPC No. 2049, private respondent's opposition set
forth several issues summarized as follows:
(a) as early as 1933, it adopted the word
"BARBIZON" as trademark on its products
such as robes, pajamas, lingerie,
nightgowns and slips;
(b) that the trademark "BARBIZON" was
registered with the United States Patent
Office in 1934 and 1949; and that variations
of the same trademark, i.e., "BARBIZON"
with Bee design and "BARBIZON" with the
representation of a woman were also
registered with the U.S. Patent Office in
1961 and 1976;
(c) that these marks have been in use in the
Philippines and in many countries all over
the world for over forty years. "Barbizon"
products have been advertised in
international publications and the marks
registered in 36 countries worldwide;
(d) Escobar's registration of the similar
trademark "BARBIZON" in 1974 was based
on fraud; and this fraudulent registration
was cancelled in 1979, stripping Escobar of
whatsoever right she had to the said mark;
(e) Private respondent's trademark is
entitled to protection as a well-known mark
under Article 6bis of the Paris Convention,
Executive Order No. 913, and the two
Memoranda dated November 20, 1980 and
October 25, 1983 of the Minister of Trade
and Industry to the Director of Patents;
(f) Escobar's trademark is identical to
private respondent's and its use on the
same class of goods as the latter's amounts
to a violation of the Trademark Law and
Article 189 of the Revised Penal Code.
IPC No. 2049 raised the issue of ownership of the
trademark, the first registration and use of the
trademark in the United States and other countries,
and the international recognition and reputation of
the trademark established by extensive use and
advertisement of private respondent's products for
over forty years here and abroad. These are different
from the issues of confusing similarity and damage in
IPC No. 686. The issue of prior use may have been
raised in IPC No. 686 but this claim was limited to
prior use in the Philippines only. Prior use in IPC No.
2049 stems from private respondent's claim
as originator of the word and symbol "Barbizon," 66 as
the first and registered user of the mark attached to
its products which have been sold and advertised
worldwide for a considerable number of years prior
to petitioner's first application for registration of her
trademark in the Philippines. Indeed, these are
substantial allegations that raised new issues and
necessarily gave private respondent a new cause of
action. Res judicata does not apply to rights, claims or
demands, although growing out of the same subject
matter, which constitute separate or distinct causes
of action and were not put in issue in the former
action. 67
Respondent corporation also introduced in the second case a
fact that did not exist at the time the first case was filed and
terminated. The cancellation of petitioner's certificate of
registration for failure to file the affidavit of use arose only
after IPC No. 686. It did not and could not have occurred in the
first case, and this gave respondent another cause to oppose
the second application. Res judicata extends only to facts and
conditions as they existed at the time judgment was rendered
and to the legal rights and relations of the parties fixed by the
facts so determined. 68 When new facts or conditions intervene
before the second suit, furnishing a new basis for the claims
and defenses of the parties, the issues are no longer the same,
and the former judgment cannot be pleaded as a bar to the
subsequent action. 69
It is also noted that the oppositions in the first and second
cases are based on different laws. The opposition in IPC No. 686
was based on specific provisions of the Trademark Law, i.e.,
Section 4 (d) 70 on confusing similarity of trademarks and
Section 8 71 on the requisite damage to file an opposition to a
petition for registration. The opposition in IPC No. 2049 invoked
the Paris Convention, particularly Article 6bis thereof, E.O. No.
913 and the two Memoranda of the Minister of Trade and
Industry. This opposition also invoked Article 189 of the Revised
Penal Code which is a statute totally different from the
Trademark Law. 72 Causes of action which are distinct and
independent from each other, although arising out of the same
contract, transaction, or state of facts, may be sued on
separately, recovery on one being no bar to subsequent actions
on others. 73 The mere fact that the same relief is sought in the
subsequent action will not render the judgment in the prior
action operative as res judicata, such as where the two actions
are based on different statutes. 74 Res judicata therefore does
not apply to the instant case and respondent Court of Appeals
did not err in so ruling.
Intellectual and industrial property rights cases are not simple
property cases. Trademarks deal with the psychological
function of symbols and the effect of these symbols on the
public at large. 75 Trademarks play a significant role in
communication, commerce and trade, and serve valuable and
interrelated business functions, both nationally and
internationally. For this reason, all agreements concerning
industrial property, like those on trademarks and tradenames,
are intimately connected with economic
development. 76 Industrial property encourages investments in
new ideas and inventions and stimulates creative efforts for the
satisfaction of human needs. They speed up transfer of
technology and industrialization, and thereby bring about social
and economic progress. 77 These advantages have been
acknowledged by the Philippine government itself. The
Intellectual Property Code of the Philippines declares that "an
effective intellectual and industrial property system is vital to
the development of domestic and creative activity, facilitates
transfer of technology, it attracts foreign investments, and
ensures market access for our products." 78 The Intellectual
Property Code took effect on January 1, 1998 and by its express
provision, 79 repealed the Trademark Law, 80 the Patent
Law, 81 Articles 188 and 189 of the Revised Penal Code, the system. There is now "a new era of global economic
Decree on Intellectual Property, 82 and the Decree on cooperation, reflecting the widespread desire to operate in a
Compulsory Reprinting of Foreign Textbooks. 83 The Code was fairer and more open multilateral trading
enacted to strengthen the intellectual and industrial property system." 93 Conformably, the State must reaffirm its
system in the Philippines as mandated by the country's commitment to the global community and take part in evolving
accession to the Agreement Establishing the World Trade a new international economic order at the dawn of the new
Organization (WTO). 84 millenium.
The WTO is a common institutional framework for the conduct IN VIEW WHEREOF, the petition is denied and the Decision and
of trade relations among its members in matters related to the Resolution of the Court of Appeals in CA-G.R. SP No. 28415 are
multilateral and plurilateral trade agreements annexed to the affirmed.
WTO Agreement. 85 The WTO framework ensures a "single
undertaking approach" to the administration and operation of SO ORDERED.
all agreements and arrangements attached to the WTO
Agreement. Among those annexed is the Agreement on Trade-
Related Aspects of Intellectual Property Rights or
TRIPs. 86 Members to this Agreement "desire to reduce
distortions and impediments to international trade, taking into G.R. No. 183404 October 13, 2010
account the need to promote effective and adequate
protection of intellectual property rights, and to ensure that BERRIS AGRICULTURAL CO., INC., Petitioner,
measures and procedures to enforce intellectual property vs.
rights do not themselves become barriers to legitimate trade." NORVY ABYADANG, Respondent.
To fulfill these objectives, the members have agreed to adhere
to minimum standards of protection set by several
Conventions. 87 These Conventions are: the Berne Convention DECISION
for the Protection of Literary and Artistic Works (1971), the
Rome Convention or the International Convention for the NACHURA, J.:
Protection of Performers, Producers of Phonograms and
Broadcasting Organisations, the Treaty on Intellectual Property This petition for review1 on certiorari under Rule 45 of the
in Respect of Integrated Circuits, and the Paris Convention Rules of Court seeks the reversal of the Decision dated April 14,
(1967), as revised in Stockholm on July 14, 1967. 88 20082 and the Resolution dated June 18, 20083 of the Court of
Appeals (CA) in CA-G.R. SP No. 99928.
A major proportion of international trade depends on the
protection of intellectual property rights. 89 Since the late The antecedents—
1970's, the unauthorized counterfeiting of industrial property
and trademarked products has had a considerable adverse
On January 16, 2004, respondent Norvy A. Abyadang
impact on domestic and international trade revenues. 90 The
(Abyadang), proprietor of NS Northern Organic Fertilizer, with
TRIPs Agreement seeks to grant adequate protection of
address at No. 43 Lower QM, Baguio City, filed with the
intellectual property rights by creating a favorable economic
Intellectual Property Office (IPO) a trademark application for
environment to encourage the inflow of foreign investments,
the mark "NS D-10 PLUS" for use in connection with Fungicide
and strengthening the multi-lateral trading system to bring
(Class 5) with active ingredient 80% Mancozeb. The application,
about economic, cultural and technological independence. 91
under Application Serial No. 4-2004-00450, was given due
course and was published in the IPO e-Gazette for opposition
The Philippines and the United States of America have acceded on July 28, 2005.
to the WTO Agreement. This Agreement has revolutionized
international business and economic relations among states,
On August 17, 2005, petitioner Berris Agricultural Co., Inc.
and has propelled the world towards trade liberalization and
(Berris), with business address in Barangay Masiit, Calauan,
economic globalization. 92 Protectionism and isolationism
Laguna, filed with the IPO Bureau of Legal Affairs (IPO-BLA) a
belong to the past. Trade is no longer confined to a bilateral
Verified Notice of Opposition4 against the mark under
application allegedly because "NS D-10 PLUS" is similar and/or
confusingly similar to its registered trademark "D-10 80 WP,"
also used for Fungicide (Class 5) with active ingredient 80%
Mancozeb. The opposition was docketed as IPC No. 14-2005-
00099.
After an exchange of pleadings, on April 28, 2006, Director
Estrellita Beltran-Abelardo (Director Abelardo) of the IPO-BLA
issued Decision No. 2006-245 (BLA decision), the dispositive
portion of which reads—
WHEREFORE, viewed in the light of all the foregoing, this
Bureau finds and so holds that Respondent-Applicant’s mark
"NS D-10 PLUS" is confusingly similar to the Opposer’s mark
and as such, the opposition is hereby SUSTAINED.
Consequently, trademark application bearing Serial No. 4-2004-
00450 for the mark "NS D-10 PLUS" filed on January 16, 2004 by
Norvy A. Ab[yada]ng covering the goods fungicide under Class 5
of the International Classification of goods is, as it is hereby,
REJECTED.
Let the filewrapper of the trademark "NS D-10 PLUS" subject
matter under consideration be forwarded to the
Administrative, Financial and Human Resources Development
Services Bureau (AFHRDSB) for appropriate action in
accordance with this Order with a copy to be furnished the
Bureau of Trademark (BOT) for information and to update its
records.
SO ORDERED.6
Abyadang filed a motion for reconsideration, and Berris, in turn,
filed its opposition to the motion.
On August 2, 2006, Director Abelardo issued Resolution No.
2006-09(D)7 (BLA resolution), denying the motion for
reconsideration and disposing as follows —
IN VIEW OF THE FOREGOING, the Motion for Reconsideration
filed by the Respondent-Applicant is hereby DENIED FOR LACK
OF MERIT. Consequently, Decision No. 2006-24 dated April 28,
2006 STANDS.
Let the filewrapper of the trademark "NS D-10 PLUS" subject
matter under consideration be forwarded to the Bureau of
Trademarks for appropriate action in accordance with this
Resolution.
SO ORDERED.8
Aggrieved, Abyadang filed an appeal on August 22, 2006 with
the Office of the Director General, Intellectual Property
Philippines (IPPDG), docketed as Appeal No. 14-06-13.
With the filing of the parties’ respective memoranda, Director
General Adrian S. Cristobal, Jr. of the IPPDG rendered a decision
dated July 20, 2007,9 ruling as follows—
Wherefore, premises considered[,] the appeal is hereby
DENIED. Accordingly, the appealed Decision of the Director is
hereby AFFIRMED.
Let a copy of this Decision as well as the trademark application
and records be furnished and returned to the Director of
Bureau of Legal Affairs for appropriate action. Further, let also
the Directors of the Bureau of Trademarks, the Administrative,
Financial and Human Resources Development Services Bureau,
and the library of the Documentation, Information and
Technology Transfer Bureau be furnished a copy of this
Decision for information, guidance, and records purposes.
SO ORDERED.10
Undeterred, Abyadang filed a petition for review11 before the
CA.
In its Decision dated April 14, 2008, the CA reversed the IPPDG
decision. It held—
In sum, the petition should be granted due to the following
reasons: 1) petitioner’s mark "NS D-10 PLUS" is not confusingly
similar with respondent’s trademark "D-10 80 WP"; 2)
respondent failed to establish its ownership of the mark "D-10
80 WP" and 3) respondent’s trademark registration for "D-10
80 WP" may be cancelled in the present case to avoid
multiplicity of suits.
WHEREFORE, the petition is GRANTED. The decision dated July
20, 2007 of the IPO Director General in Appeal No. 14-06-13
(IPC No. 14-2005-00099) is REVERSED and SET ASIDE, and a new
one is entered giving due course to petitioner’s application for
registration of the mark "NS D-10 PLUS," and canceling
respondent’s trademark registration for "D-10 80 WP."
SO ORDERED.12
Berris filed a Motion for Reconsideration, but in its June 18,
2008 Resolution, the CA denied the motion for lack of merit.
Hence, this petition anchored on the following arguments—
I. The Honorable Court of Appeals’ finding that there exists no
confusing similarity between Petitioner’s and respondent’s
marks is based on misapprehension of facts, surmise and
conjecture and not in accord with the Intellectual Property
Code and applicable Decisions of this Honorable Court
[Supreme Court].
II. The Honorable Court of Appeals’ Decision reversing and
setting aside the technical findings of the Intellectual Property
Office even without a finding or, at the very least, an allegation
of grave abuse of discretion on the part of said agency is not in
accord with law and earlier pronouncements of this Honorable
Court [Supreme Court].
III. The Honorable Court of Appeals’ Decision ordering the
cancellation of herein Petitioner’s duly registered and validly
existing trademark in the absence of a properly filed Petition
for Cancellation before the Intellectual Property Office is not in
accord with the Intellectual Property Code and applicable
Decisions of this Honorable Court [Supreme Court].13
The basic law on trademark, infringement, and unfair
competition is Republic Act (R.A.) No. 829314 (Intellectual
Property Code of the Philippines), specifically Sections 121 to
170 thereof. It took effect on January 1, 1998. Prior to its
effectivity, the applicable law was R.A. No. 166,15 as amended.
Interestingly, R.A. No. 8293 did not expressly repeal in its
entirety R.A. No. 166, but merely provided in Section
239.116 that Acts and parts of Acts inconsistent with it were
repealed. In other words, only in the instances where a
substantial and irreconcilable conflict is found between the
provisions of R.A. No. 8293 and of R.A. No. 166 would the
provisions of the latter be deemed repealed.
R.A. No. 8293 defines a "mark" as any visible sign capable of
distinguishing the goods (trademark) or services (service mark)
of an enterprise and shall include a stamped or marked
container of goods.17 It also defines a "collective mark" as any
visible sign designated as such in the application for registration
and capable of distinguishing the origin or any other common
characteristic, including the quality of goods or services of
different enterprises which use the sign under the control of
the registered owner of the collective mark.18
On the other hand, R.A. No. 166 defines a "trademark" as any
distinctive word, name, symbol, emblem, sign, or device, or any
combination thereof, adopted and used by a manufacturer or
merchant on his goods to identify and distinguish them from
those manufactured, sold, or dealt by another.19 A trademark,
being a special property, is afforded protection by law. But for
one to enjoy this legal protection, legal protection ownership of
the trademark should rightly be established.
The ownership of a trademark is acquired by its registration and
its actual use by the manufacturer or distributor of the goods
made available to the purchasing public. Section 12220 of R.A.
No. 8293 provides that the rights in a mark shall be acquired by
means of its valid registration with the IPO. A certificate of
registration of a mark, once issued, constitutes prima facie
evidence of the validity of the registration, of the registrant’s
ownership of the mark, and of the registrant’s exclusive right to
use the same in connection with the goods or services and
those that are related thereto specified in the certificate.21 R.A.
No. 8293, however, requires the applicant for registration or
the registrant to file a declaration of actual use (DAU) of the
mark, with evidence to that effect, within three (3) years from
the filing of the application for registration; otherwise, the
application shall be refused or the mark shall be removed from
the register.22 In other words, the prima facie presumption
brought about by the registration of a mark may be challenged
and overcome, in an appropriate action, by proof of the nullity
of the registration or of non-use of the mark, except when
excused.23 Moreover, the presumption may likewise be
defeated by evidence of prior use by another person, i.e., it will
controvert a claim of legal appropriation or of ownership based
on registration by a subsequent user. This is because a
trademark is a creation of use and belongs to one who first
used it in trade or commerce.24
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.25
In the instant case, both parties have submitted proof to
support their claim of ownership of their respective
trademarks.
Culled from the records, Berris, as oppositor to Abyadang’s
application for registration of his trademark, presented the
following evidence: (1) its trademark application dated
November 29, 200226 with Application No. 4-2002-0010272; (2)
its IPO certificate of registration dated October 25, 2004,27 with
Registration No. 4-2002-010272 and July 8, 2004 as the date of
registration; (3) a photocopy of its packaging28 bearing the
mark "D-10 80 WP"; (4) photocopies of its sales invoices and
official receipts;29 and (5) its notarized DAU dated April 23,
2003,30 stating that the mark was first used on June 20, 2002,
and indicating that, as proof of actual use, copies of official
receipts or sales invoices of goods using the mark were
attached as Annex "B."
On the other hand, Abyadang’s proofs consisted of the
following: (1) a photocopy of the packaging31 for his marketed
fungicide bearing mark "NS D-10 PLUS"; (2) Abyadang’s
Affidavit dated February 14, 2006,32 stating among others that
the mark "NS D-10 PLUS" was his own creation derived from: N
– for Norvy, his name; S – for Soledad, his wife’s name; D – the
first letter for December, his birth month; 10 – for October, the
10th month of the year, the month of his business name
registration; and PLUS – to connote superior quality; that when
he applied for registration, there was nobody applying for a
mark similar to "NS D-10 PLUS"; that he did not know of the
existence of Berris or any of its products; that "D-10" could not
have been associated with Berris because the latter never
engaged in any commercial activity to sell "D-10 80 WP"
fungicide in the local market; and that he could not have copied
Berris’ mark because he registered his packaging with the
Fertilizer and Pesticide Authority (FPA) ahead of Berris; (3)
Certification dated December 19, 200533 issued by the FPA,
stating that "NS D-10 PLUS" is owned and distributed by NS
Northern Organic Fertilizer, registered with the FPA since May
26, 2003, and had been in the market since July 30, 2003; (4)
Certification dated October 11, 200534 issued by the FPA,
stating that, per monitoring among dealers in Region I and in
the Cordillera Administrative Region registered with its office,
the Regional Officer neither encountered the fungicide with
mark "D-10 80 WP" nor did the FPA provincial officers from the
same area receive any report as to the presence or sale of
Berris’ product; (5) Certification dated March 14, 200635 issued
by the FPA, certifying that all pesticides must be registered with
the said office pursuant to Section 936 of Presidential Decree
(P.D.) No. 114437 and Section 1, Article II of FPA Rules and
Regulations No. 1, Series of 1977; (6) Certification dated March
16, 200638 issued by the FPA, certifying that the pesticide "D-10
80 WP" was registered by Berris on November 12, 2004; and (7)
receipts from Sunrise Farm Supply39 in La Trinidad, Benguet of
the sale of Abyadang’s goods referred to as "D-10" and "D-
10+."
Based on their proffered pieces of evidence, both Berris and
Abyadang claim to be the prior user of their respective marks.
We rule in favor of Berris.
Berris was able to establish that it was using its mark "D-10 80
WP" since June 20, 2002, even before it filed for its registration
with the IPO on November 29, 2002, as shown by its DAU which
was under oath and notarized, bearing the stamp of the Bureau
of Trademarks of the IPO on April 25, 2003,40 and which stated
that it had an attachment as Annex "B" sales invoices and
official receipts of goods bearing the mark. Indeed, the DAU,
being a notarized document, especially when received in due
course by the IPO, is evidence of the facts it stated and has the
presumption of regularity, entitled to full faith and credit upon
its face. Thus, the burden of proof to overcome the
presumption of authenticity and due execution lies on the party
contesting it, and the rebutting evidence should be clear,
strong, and convincing as to preclude all controversy as to the
falsity of the certificate.41 What is more, the DAU is buttressed
by the Certification dated April 21, 200642 issued by the Bureau
of Trademarks that Berris’ mark is still valid and existing.
Hence, we cannot subscribe to the contention of Abyadang that
Berris’ DAU is fraudulent based only on his assumption that
Berris could not have legally used the mark in the sale of its
goods way back in June 2002 because it registered the product
with the FPA only on November 12, 2004. As correctly held by
the IPPDG in its decision on Abyadang’s appeal, the question of
whether or not Berris violated P.D. No. 1144, because it sold its
product without prior registration with the FPA, is a distinct and
separate matter from the jurisdiction and concern of the IPO.
Thus, even a determination of violation by Berris of P.D. No.
1144 would not controvert the fact that it did submit evidence
that it had used the mark "D-10 80 WP" earlier than its FPA
registration in 2004.
Furthermore, even the FPA Certification dated October 11,
2005, stating that the office had neither encountered nor
received reports about the sale of the fungicide "D-10 80 WP"
within Region I and the Cordillera Administrative Region, could
not negate the fact that Berris was selling its product using that
mark in 2002, especially considering that it first traded its goods
in Calauan, Laguna, where its business office is located, as
stated in the DAU.
Therefore, Berris, as prior user and prior registrant, is the
owner of the mark "D-10 80 WP." As such, Berris has in its favor
the rights conferred by Section 147 of R.A. No. 8293, which
provides—
Sec. 147. Rights Conferred.—
147.1. The owner of a registered mark shall have the exclusive
right to prevent all third parties not having the owner’s consent
from using in the course of trade identical or similar signs or
containers for goods or services which are identical or similar to
those in respect of which the trademark is registered where
such use would result in a likelihood of confusion. In case of the
use of an identical sign for identical goods or services, a
likelihood of confusion shall be presumed.
147.2. The exclusive right of the owner of a well-known mark
defined in Subsection 123.1(e) which is registered in the
Philippines, shall extend to goods and services which are not
similar to those in respect of which the mark is registered:
Provided, That use of that 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.
Now, we confront the question, "Is Abyadang’s mark ‘NS D-10
PLUS’ confusingly similar to that of Berris’ ‘D-10 80 WP’ such
that the latter can rightfully prevent the IPO registration of the
former?"
We answer in the affirmative.
According to Section 123.1(d) of R.A. No. 8293, a mark cannot
be registered if it is identical with a registered mark belonging
to a different proprietor with an earlier filing or priority date,
with respect to: (1) the same goods or services; (2) closely
related goods or services; or (3) near resemblance of such mark
as to likely deceive or cause confusion.
In determining similarity and likelihood of confusion,
jurisprudence has developed tests—the Dominancy Test and
the Holistic or Totality Test. The Dominancy Test focuses on the
similarity of the prevalent or dominant features of the
competing trademarks that might cause confusion, mistake,
and deception in the mind of the purchasing public. Duplication
or imitation is not necessary; neither is it required that the
mark sought to be registered suggests an effort to imitate.
Given more consideration are the aural and visual impressions
created by the marks on the buyers of goods, giving little
weight to factors like prices, quality, sales outlets, and market
segments.43
In contrast, the Holistic or Totality Test necessitates a
consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining
confusing similarity. The discerning eye of the observer must
focus not only on the predominant words but also on the other
features appearing on both labels so that the observer may
draw conclusion on whether one is confusingly similar to the
other.44
Comparing Berris’ mark "D-10 80 WP" with Abyadang’s mark
"NS D-10 PLUS," as appearing on their respective packages, one
cannot but notice that both have a common component which
is "D-10." On Berris’ package, the "D-10" is written with a bigger
font than the "80 WP." Admittedly, the "D-10" is the dominant
feature of the mark. The "D-10," being at the beginning of the
mark, is what is most remembered of it. Although, it appears in
Berris’ certificate of registration in the same font size as the "80
WP," its dominancy in the "D-10 80 WP" mark stands since the
difference in the form does not alter its distinctive character.45
Applying the Dominancy Test, it cannot be gainsaid that
Abyadang’s "NS D-10 PLUS" is similar to Berris’ "D-10 80 WP,"
that confusion or mistake is more likely to occur. Undeniably,
both marks pertain to the same type of goods – fungicide with
80% Mancozeb as an active ingredient and used for the same
group of fruits, crops, vegetables, and ornamental plants, using
the same dosage and manner of application. They also belong
to the same classification of goods under R.A. No. 8293. Both
depictions of "D-10," as found in both marks, are similar in size,
such that this portion is what catches the eye of the purchaser.
Undeniably, the likelihood of confusion is present.
This likelihood of confusion and mistake is made more manifest
when the Holistic Test is applied, taking into consideration the
packaging, for both use the same type of material (foil type)
and have identical color schemes (red, green, and white); and
the marks are both predominantly red in color, with the same
phrase "BROAD SPECTRUM FUNGICIDE" written
underneath.1awphi1
Considering these striking similarities, predominantly the "D-
10," the buyers of both products, mainly farmers, may be
misled into thinking that "NS D-10 PLUS" could be an upgraded
formulation of the "D-10 80 WP."
Moreover, notwithstanding the finding of the IPPDG that the
"D-10" is a fanciful component of the trademark, created for
the sole purpose of functioning as a trademark, and does not
give the name, quality, or description of the product for which
it is used, nor does it describe the place of origin, such that the
degree of exclusiveness given to the mark is closely
restricted,46 and considering its challenge by Abyadang with
respect to the meaning he has given to it, what remains is the
fact that Berris is the owner of the mark "D-10 80 WP,"
inclusive of its dominant feature "D-10," as established by its
prior use, and prior registration with the IPO. Therefore, Berris
properly opposed and the IPO correctly rejected Abyadang’s
application for registration of the mark "NS D-10 PLUS."
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. 47 On
this matter of particular concern, administrative agencies, such
as the IPO, by reason of their special knowledge and expertise
over matters falling under their jurisdiction, are in a better
position to pass judgment thereon. Thus, their findings of fact
in that regard are generally accorded great respect, if not
finality by the courts, as long as they are supported by
substantial evidence, even if such evidence might not be
overwhelming or even preponderant. It is not the task of the
appellate court to weigh once more the evidence submitted
before the administrative body and to substitute its own
judgment for that of the administrative agency in respect to
sufficiency of evidence.48
Inasmuch as the ownership of the mark "D-10 80 WP" fittingly
belongs to Berris, and because the same should not have been
cancelled by the CA, we consider it proper not to belabor
anymore the issue of whether cancellation of a registered mark
may be done absent a petition for cancellation.
WHEREFORE, the petition is GRANTED. The assailed Decision
dated April 14, 2008 and Resolution dated June 18, 2008 of the
Court of Appeals in CA-G.R. SP No. 99928 are REVERSED and
SET ASIDE. Accordingly, the Decision No. 2006-24 dated April
28, 2006 and the Resolution No. 2006-09(D) dated August 2,
2006 in IPC No. 14-2005-00099, and the Decision dated July 20,
2007 in Appeal No. 14-06-13 are REINSTATED. Costs against
respondent.
SO ORDERED.

G.R. No. 194307 November 20, 2013
BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly
BIRKENSTOCK ORTHOPAEDIE GMBH),Petitioner,
vs.
PHILIPPINE SHOE EXPO MARKETING
CORPORATION, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this Petition for Review on Certiorari1 are the Court
of Appeals (CA) Decision2 dated June 25, 2010 and
Resolution3 dated October 27, 2010 in CA-G.R. SP No. 112278
which reversed and set aside the Intellectual Property Office
(IPO) Director General’s Decision4 dated December 22, 2009
that allowed the registration of various trademarks in favor of
petitioner Birkenstock Orthopaedie GmbH & Co. KG.
The Facts
Petitioner, a corporation duly organized and existing under the
laws of Germany, applied for various trademark registrations
before the IPO, namely: (a) "BIRKENSTOCK" under Trademark
Application Serial No. (TASN) 4-1994-091508 for goods falling
under Class 25 of the International Classification of Goods and
Services (Nice Classification) with filing date of March 11, 1994;
(b) "BIRKENSTOCK BAD HONNEF -RHEIN & DEVICE COMPRISING
OF ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT,
CROSS AND SUNBEA M" under TASN 4-1994-091509 for goods
falling under Class 25 of the Nice Classification with filing date
of March 11, 1994; and (c) "BIRKENSTOCK BAD HONNEF-RHEIN
& DEVICE COMPRISING OF ROUND COMPANY SEAL AND
REPRESENTATION OF A FOOT, CROSS AND SUNBEAM" under
TASN 4-1994-095043 for goods falling under Class 10 of the
Nice Classification with filing date of September 5, 1994
(subject applications).5
However, registration proceedings of the subject applications
were suspended in view of an existing registration of the mark
"BIRKENSTOCK AND DEVICE" under Registration No. 56334
dated October 21, 1993 (Registration No. 56334) in the name of
Shoe Town International and Industrial Corporation, the
predecessor-in-interest of respondent Philippine Shoe Expo
Marketing Corporation.6 In this regard, on May 27, 1997
petitioner filed a petition for cancellation of Registration No.
56334 on the ground that it is the lawful and rightful owner of
the Birkenstock marks (Cancellation Case).7 During its
pendency, however, respondent and/or its predecessor-in-
interest failed to file the required 10th Year Declaration of
Actual Use (10th Year DAU) for Registration No. 56334 on or
before October 21, 2004,8 thereby resulting in the cancellation
of such mark.9 Accordingly, the cancellation case was dismissed
for being moot and academic.10
The aforesaid cancellation of Registration No. 56334 paved the
way for the publication of the subject applications in the IPO e-
Gazette on February 2, 2007.11 In response, respondent filed
three (3) separate verified notices of oppositions to the subject
applications docketed as Inter Partes Case Nos. 14-2007-00108,
14-2007-00115, and 14-2007-00116,12 claiming, inter alia, that:
(a) it, together with its predecessor-in-interest, has been using
Birkenstock marks in the Philippines for more than 16 years
through the mark "BIRKENSTOCK AND DEVICE"; (b) the marks
covered by the subject applications are identical to the one
covered by Registration No. 56334 and thus, petitioner has no
right to the registration of such marks; (c) on November 15,
1991, respondent’s predecessor-in-interest likewise obtained a
Certificate of Copyright Registration No. 0-11193 for the word
"BIRKENSTOCK" ; (d) while respondent and its predecessor-in-
interest failed to file the 10th Yea r DAU, it continued the use of
"BIRKENSTOCK AND DEVICE" in lawful commerce; and (e) to
record its continued ownership and exclusive right to use the
"BIRKENSTOCK" marks, it has filed TASN 4-2006-010273 as a "
re-application " of its old registration, Registration No.
56334.13 On November 13, 2007, the Bureau of Legal Affairs
(BLA) of the IPO issued Order No. 2007-2051 consolidating the
aforesaid inter partes cases (Consolidated Opposition Cases).14
The Ruling of the BLA
In its Decision15 dated May 28, 2008, the BLA of the IPO
sustained respondent’s opposition, thus, ordering the rejection
of the subject applications. It ruled that the competing marks of
the parties are confusingly similar since they contained the
word "BIRKENSTOCK" and are used on the same and related
goods. It found respondent and its predecessor-in-interest as
the prior user and adopter of "BIRKENSTOCK" in the Philippines,
while on the other hand, petitioner failed to present evidence
of actual use in the trade and business in this country. It opined
that while Registration No. 56334 was cancelled, it does not
follow that prior right over the mark was lost, as proof of
continuous and uninterrupted use in trade and business in the
Philippines was presented. The BLA likewise opined that
petitioner’s marks are not well -known in the Philippines and
internationally and that the various certificates of registration
submitted by petitioners were all photocopies and, therefore,
not admissible as evidence.16
Aggrieved, petitioner appealed to the IPO Director General.
The Ruling of the IPO Director General
In his Decision17 dated December 22, 2009, the IPO Director
General reversed and set aside the ruling of the BLA, thus
allowing the registration of the subject applications. He held
that with the cancellation of Registration No. 56334 for
respondent’s failure to file the 10th Year DAU, there is no more
reason to reject the subject applications on the ground of prior
registration by another proprietor.18 More importantly, he
found that the evidence presented proved that petitioner is the
true and lawful owner and prior user of "BIRKENSTOCK" marks
and thus, entitled to the registration of the marks covered by
the subject applications.19 The IPO Director General further
held that respondent’s copyright for the word "BIRKENSTOCK"
is of no moment since copyright and trademark are different
forms of intellectual property that cannot be interchanged.20
Finding the IPO Director General’s reversal of the BLA
unacceptable, respondent filed a petition for review with the
CA.
Ruling of the CA
In its Decision21 dated June 25, 2010, the CA reversed and set
aside the ruling of the IPO Director General and reinstated that
of the BLA. It disallowed the registration of the subject
applications on the ground that the marks covered by such
applications "are confusingly similar, if not outright identical"
with respondent’s mark.22 It equally held that respondent’s
failure to file the 10th Year DAU for Registration No. 56334 "did
not deprive petitioner of its ownership of the ‘BIRKENSTOCK’
mark since it has submitted substantial evidence showing its
continued use, promotion and advertisement thereof up to the
present."23 It opined that when respondent’s predecessor-in-
interest adopted and started its actual use of "BIRKENSTOCK,"
there is neither an existing registration nor a pending
application for the same and thus, it cannot be said that it
acted in bad faith in adopting and starting the use of such
mark.24 Finally, the CA agreed with respondent that petitioner’s
documentary evidence, being mere photocopies, were
submitted in violation of Section 8.1 of Office Order No. 79,
Series of 2005 (Rules on Inter Partes Proceedings).
Dissatisfied, petitioner filed a Motion for
Reconsideration25 dated July 20, 2010, which was, however,
denied in a Resolution26 dated October 27, 2010. Hence, this
petition.27
Issues Before the Court
The primordial issue raised for the Court’s resolution is whether
or not the subject marks should be allowed registration in the
name of petitioner.
The Court’s Ruling
The petition is meritorious.
A. Admissibility of Petitioner’s Documentary Evidence.
In its Comment28 dated April 29, 2011, respondent asserts that
the documentary evidence submitted by petitioner in the
Consolidated Opposition Cases, which are mere photocopies,
are violative of Section 8.1 of the Rules on Inter Partes
Proceedings, which requires certified true copies of documents
and evidence presented by parties in lieu of originals.29 As such,
they should be deemed inadmissible.
The Court is not convinced.
It is well-settled that "the rules of procedure are mere tools
aimed at facilitating the attainment of justice, rather than its
frustration. A strict and rigid application of the rules must
always be eschewed when it would subvert the primary
objective of the rules, that is, to enhance fair trials and expedite
justice. Technicalities should never be used to defeat the
substantive rights of the other party. Every party-litigant must
be afforded the amplest opportunity for the proper and just
determination of his cause, free from the constraints of
technicalities."30 "Indeed, the primordial policy is a faithful
observance of [procedural rules], and their relaxation or
suspension should only be for persuasive reasons and only in
meritorious cases, to relieve a litigant of an injustice not
commensurate with the degree of his thoughtlessness in not
complying with the procedure prescribed."31 This is especially
true with quasi-judicial and administrative bodies, such as the
IPO, which are not bound by technical rules of procedure.32 On
this score, Section 5 of the Rules on Inter Partes Proceedings
provides:
Sec. 5. Rules of Procedure to be followed in the conduct of
hearing of Inter Partes cases. – The rules of procedure herein
contained primarily apply in the conduct of hearing of Inter
Partes cases. The Rules of Court may be applied suppletorily.
The Bureau shall not be bound by strict technical rules of
procedure and evidence but may adopt, in the absence of any
applicable rule herein, such mode of proceedings which is
consistent with the requirements of fair play and conducive to
the just, speedy and inexpensive disposition of cases, and
which will give the Bureau the greatest possibility to focus on
the contentious issues before it. (Emphasis and underscoring
supplied)
In the case at bar, while petitioner submitted mere photocopies
as documentary evidence in the Consolidated Opposition Cases,
it should be noted that the IPO had already obtained the
originals of such documentary evidence in the related
Cancellation Case earlier filed before it. Under this
circumstance and the merits of the instant case as will be
subsequently discussed, the Court holds that the IPO Director
General’s relaxation of procedure was a valid exercise of his
discretion in the interest of substantial justice.33
Having settled the foregoing procedural matter, the Court now
proceeds to resolve the substantive issues.
B. Registration and ownership of "BIRKENSTOCK."
Republic Act No. (RA) 166,34 the governing law for Registration
No. 56334, requires the filing of a DAU on specified
periods,35 to wit:
Section 12. Duration. – Each certificate of registration shall
remain in force for twenty years: Provided, That registrations
under the provisions of this Act shall be cancelled by the
Director, unless within one year following the fifth, tenth and
fifteenth anniversaries of the date of issue of the certificate of
registration, the registrant shall file in the Patent Office an
affidavit showing that the mark or trade-name is still in use or
showing that its non-use is due to special circumstance which
excuse such non-use and is not due to any intention to
abandon the same, and pay the required fee.
The Director shall notify the registrant who files the above-
prescribed affidavits of his acceptance or refusal thereof and, if
a refusal, the reasons therefor. (Emphasis and underscoring
supplied)
The aforementioned provision clearly reveals that failure to file
the DAU within the requisite period results in the automatic
cancellation of registration of a trademark. In turn, such failure
is tantamount to the abandonment or withdrawal of any right
or interest the registrant has over his trademark.36
In this case, respondent admitted that it failed to file the 10th
Year DAU for Registration No. 56334 within the requisite
period, or on or before October 21, 2004. As a consequence, it
was deemed to have abandoned or withdrawn any right or
interest over the mark "BIRKENSTOCK." Neither can it invoke
Section 23637 of the IP Code which pertains to intellectual
property rights obtained under previous intellectual property
laws, e.g., RA 166, precisely because it already lost any right or
interest over the said mark.
Besides, petitioner has duly established its true and lawful
ownership of the mark "BIRKENSTOCK."
Under Section 238 of RA 166, which is also the law governing
the subject applications, in order to register a trademark, one
must be the owner thereof and must have actually used the
mark in commerce in the Philippines for two (2) months prior to
the application for registration. Section 2-A39 of the same law
sets out to define how one goes about acquiring ownership
thereof. Under the same section, it is clear that actual use in
commerce is also the test of ownership but the provision went
further by saying that the mark must not have been so
appropriated by another. Significantly, to be an owner, Section
2-A does not require that the actual use of a trademark must be
within the Philippines. Thus, under RA 166, one may be an
owner of a mark due to its actual use but may not yet have the
right to register such ownership here due to the owner’s failure
to use the same in the Philippines for two (2) months prior to
registration.40
It must be emphasized that registration of a trademark, by
itself, is not a mode of acquiring ownership.1âwphi1 If the
applicant is not the owner of the trademark, he has no right to
apply for its registration. Registration merely creates a prima
facie presumption of the validity of the registration, of the
registrant’s ownership of the trademark, and of the exclusive
right to the use thereof. Such presumption, just like the
presumptive regularity in the performance of official functions,
is rebuttable and must give way to evidence to the contrary.41
Clearly, it is not the application or registration of a trademark
that vests ownership thereof, but it is the ownership of a
trademark that confers the right to register the same. A
trademark is an industrial property over which its owner is
entitled to property rights which cannot be appropriated by
unscrupulous entities that, in one way or another, happen to
register such trademark ahead of its true and lawful owner. The
presumption of ownership accorded to a registrant must then
necessarily yield to superior evidence of actual and real
ownership of a trademark.
The Court’s pronouncement in Berris Agricultural Co., Inc. v.
Abyadang42 is instructive on this point:
The ownership of a trademark is acquired by its registration and
its actual use by the manufacturer or distributor of the goods
made available to the purchasing public. x x x A certificate of
registration of a mark, once issued, constitutes prima facie
evidence of the validity of the registration, of the registrant’s
ownership of the mark, and of the registrant’s exclusive right to
use the same in connection with the goods or services and
those that are related thereto specified in the certificate. x x x
In other words, the prima facie presumption brought about by
the registration of a mark may be challenged and overcome in
an appropriate action, x x x by evidence of prior use by another
person, i.e. , it will controvert a claim of legal appropriation or
of ownership based on registration by a subsequent user. This
is because a trademark is a creation of use and belongs to one
who first used it in trade or commerce.43(Emphasis and
underscoring supplied)
In the instant case, petitioner was able to establish that it is the
owner of the mark "BIRKENSTOCK." It submitted evidence
relating to the origin and history of "BIRKENSTOCK" and its use
in commerce long before respondent was able to register the
same here in the Philippines. It has sufficiently proven that
"BIRKENSTOCK" was first adopted in Europe in 1774 by its
inventor, Johann Birkenstock, a shoemaker, on his line of
quality footwear and thereafter, numerous generations of his
kin continuously engaged in the manufacture and sale of shoes
and sandals bearing the mark "BIRKENSTOCK" until it became
the entity now known as the petitioner. Petitioner also
submitted various certificates of registration of the mark
"BIRKENSTOCK" in various countries and that it has used such
mark in different countries worldwide, including the
Philippines.44
On the other hand, aside from Registration No. 56334 which
had been cancelled, respondent only presented copies of sales
invoices and advertisements, which are not conclusive evidence
of its claim of ownership of the mark "BIRKENSTOCK" as these
merely show the transactions made by respondent involving
the same.45
In view of the foregoing circumstances, the Court finds the
petitioner to be the true and lawful owner of the mark
"BIRKENSTOCK" and entitled to its registration, and that
respondent was in bad faith in having it registered in its name.
In this regard, the Court quotes with approval the words of the
IPO Director General, viz.:
The facts and evidence fail to show that [respondent] was in
good faith in using and in registering the mark BIRKENSTOCK.
BIRKENSTOCK, obviously of German origin, is a highly distinct
and arbitrary mark. It is very remote that two persons did coin
the same or identical marks. To come up with a highly distinct
and uncommon mark previously appropriated by another, for
use in the same line of business, and without any plausible
explanation, is incredible. The field from which a person may
select a trademark is practically unlimited. As in all other cases
of colorable imitations, the unanswered riddle is why, of the
millions of terms and combinations of letters and designs
available, [respondent] had to come up with a mark identical or
so closely similar to the [petitioner’s] if there was no intent to
take advantage of the goodwill generated by the [petitioner’s]
mark. Being on the same line of business, it is highly probable
that the [respondent] knew of the existence of BIRKENSTOCK
and its use by the [petitioner], before [respondent]
appropriated the same mark and had it registered in its name.46
WHEREFORE, the petition is GRANTED. The Decision dated June
25, 2010 and Resolution dated October 27, 2010 of the Court of
Appeals in CA-G.R. SP No. 112278 are REVERSED and SET ASIDE.
Accordingly, the Decision dated December 22, 2009 of the IPO
Director General is hereby REINSTATED.
SO ORDERED.
G.R. No. 169504 March 3, 2010
COFFEE PARTNERS, INC., Petitioner,
vs.
SAN FRANCISCO COFFEE & ROASTERY, INC., Respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the 15 June 2005 Decision2 and
the 1 September 2005 Resolution3 of the Court of Appeals in
CA-G.R. SP No. 80396. In its 15 June 2005 Decision, the Court of
Appeals set aside the 22 October 2003 Decision4 of the Office of
the Director General-Intellectual Property Office and reinstated
the 14 August 2002 Decision5 of the Bureau of Legal Affairs-
Intellectual Property Office. In its 1 September 2005 Resolution,
the Court of Appeals denied petitioner’s motion for
reconsideration and respondent’s motion for partial
reconsideration.
The Facts
Petitioner Coffee Partners, Inc. is a local corporation engaged in
the business of establishing and maintaining coffee shops in the
country. It registered with the Securities and Exchange
Commission (SEC) in January 2001. It has a franchise
agreement6 with Coffee Partners Ltd. (CPL), a business entity
organized and existing under the laws of British Virgin Islands,
for a non-exclusive right to operate coffee shops in the
Philippines using trademarks designed by CPL such as "SAN
FRANCISCO COFFEE."
Respondent is a local corporation engaged in the wholesale and
retail sale of coffee. It registered with the SEC in May 1995. It
registered the business name "SAN FRANCISCO COFFEE &
ROASTERY, INC." with the Department of Trade and Industry
(DTI) in June 1995. Respondent had since built a customer base
that included Figaro Company, Tagaytay Highlands, Fat Willy’s,
and other coffee companies.
In 1998, respondent formed a joint venture company with Boyd
Coffee USA under the company name Boyd Coffee Company
Philippines, Inc. (BCCPI). BCCPI engaged in the processing,
roasting, and wholesale selling of coffee. Respondent later
embarked on a project study of setting up coffee carts in malls
and other commercial establishments in Metro Manila.
In June 2001, respondent discovered that petitioner was about
to open a coffee shop under the name "SAN FRANCISCO
COFFEE" in Libis, Quezon City. According to respondent,
petitioner’s shop caused confusion in the minds of the public as
it bore a similar name and it also engaged in the business of
selling coffee. Respondent sent a letter to petitioner
demanding that the latter stop using the name "SAN
FRANCISCO COFFEE." Respondent also filed a complaint with
the Bureau of Legal Affairs-Intellectual Property Office (BLA-
IPO) for infringement and/or unfair competition with claims for
damages.
In its answer, petitioner denied the allegations in the
complaint. Petitioner alleged it filed with the Intellectual
Property Office (IPO) applications for registration of the mark
"SAN FRANCISCO COFFEE & DEVICE" for class 42 in 1999 and for
class 35 in 2000. Petitioner maintained its mark could not be
confused with respondent’s trade name because of the notable
distinctions in their appearances. Petitioner argued respondent
stopped operating under the trade name "SAN FRANCISCO
COFFEE" when it formed a joint venture with Boyd Coffee USA.
Petitioner contended respondent did not cite any specific acts
that would lead one to believe petitioner had, through
fraudulent means, passed off its mark as that of respondent, or
that it had diverted business away from respondent.
Mr. David Puyat, president of petitioner corporation, testified
that the coffee shop in Libis, Quezon City opened sometime in
June 2001 and that another coffee shop would be opened in
Glorietta Mall, Makati City. He stated that the coffee shop was
set up pursuant to a franchise agreement executed in January
2001 with CPL, a British Virgin Island Company owned by
Robert Boxwell. Mr. Puyat said he became involved in the
business when one Arthur Gindang invited him to invest in a
coffee shop and introduced him to Mr. Boxwell. For his part,
Mr. Boxwell attested that the coffee shop "SAN FRANCISCO
COFFEE" has branches in Malaysia and Singapore. He added
that he formed CPL in 1997 along with two other colleagues,
Shirley Miller John and Leah Warren, who were former
managers of Starbucks Coffee Shop in the United States. He
said they decided to invest in a similar venture and adopted the
name "SAN FRANCISCO COFFEE" from the famous city in
California where he and his former colleagues once lived and
where special coffee roasts came from.
The Ruling of the Bureau of Legal Affairs-Intellectual Property
Office
In its 14 August 2002 Decision, the BLA-IPO held that
petitioner’s trademark infringed on respondent’s trade name. It
ruled that the right to the exclusive use of a trade name with
freedom from infringement by similarity is determined from
priority of adoption. Since respondent registered its business
name with the DTI in 1995 and petitioner registered its
trademark with the IPO in 2001 in the Philippines and in 1997 in
other countries, then respondent must be protected from
infringement of its trade name.
The BLA-IPO also held that respondent did not abandon the use
of its trade name as substantial evidence indicated respondent
continuously used its trade name in connection with the
purpose for which it was organized. It found that although
respondent was no longer involved in blending, roasting, and
distribution of coffee because of the creation of BCCPI, it
continued making plans and doing research on the retailing of
coffee and the setting up of coffee carts. The BLA-IPO ruled that
for abandonment to exist, the disuse must be permanent,
intentional, and voluntary.
The BLA-IPO held that petitioner’s use of the trademark "SAN
FRANCISCO COFFEE" will likely cause confusion because of the
exact similarity in sound, spelling, pronunciation, and
commercial impression of the words "SAN FRANCISCO" which is
the dominant portion of respondent’s trade name and
petitioner’s trademark. It held that no significant difference
resulted even with a diamond-shaped figure with a cup in the
center in petitioner's trademark because greater weight is
given to words – the medium consumers use in ordering coffee
products.
On the issue of unfair competition, the BLA-IPO absolved
petitioner from liability. It found that petitioner adopted the
trademark "SAN FRANCISCO COFFEE" because of the authority
granted to it by its franchisor. The BLA-IPO held there was no
evidence of intent to defraud on the part of petitioner.
The BLA-IPO also dismissed respondent’s claim of actual
damages because its claims of profit loss were based on mere
assumptions as respondent had not even started the operation
of its coffee carts. The BLA-IPO likewise dismissed respondent’s
claim of moral damages, but granted its claim of attorney’s
fees.
Both parties moved for partial reconsideration. Petitioner
protested the finding of infringement, while respondent
questioned the denial of actual damages. The BLA-IPO denied
the parties’ partial motion for reconsideration. The parties
appealed to the Office of the Director General-Intellectual
Property Office (ODG-IPO).
The Ruling of the Office of the Director General-
Intellectual Property Office
In its 22 October 2003 Decision, the ODG-IPO reversed the BLA-
IPO. It ruled that petitioner’s use of the trademark "SAN
FRANCISCO COFFEE" did not infringe on respondent's trade
name. The ODG-IPO found that respondent had stopped using
its trade name after it entered into a joint venture with Boyd
Coffee USA in 1998 while petitioner continuously used the
trademark since June 2001 when it opened its first coffee shop
in Libis, Quezon City. It ruled that between a subsequent user
of a trade name in good faith and a prior user who had stopped
using such trade name, it would be inequitable to rule in favor
of the latter.
The Ruling of the Court of Appeals
In its 15 June 2005 Decision, the Court of Appeals set aside the
22 October 2003 decision of the ODG-IPO in so far as it ruled
that there was no infringement. It reinstated the 14 August
2002 decision of the BLA-IPO finding infringement. The
appellate court denied respondent’s claim for actual damages
and retained the award of attorney’s fees. In its 1 September
2005 Resolution, the Court of Appeals denied petitioner’s
motion for reconsideration and respondent’s motion for partial
reconsideration.
The Issue
The sole issue is whether petitioner’s use of the trademark
"SAN FRANCISCO COFFEE" constitutes infringement of
respondent’s trade name "SAN FRANCISCO COFFEE &
ROASTERY, INC.," even if the trade name is not registered with
the Intellectual Property Office (IPO).
The Court’s Ruling
The petition has no merit.
Petitioner contends that when a trade name is not registered, a
suit for infringement is not available. Petitioner alleges
respondent has abandoned its trade name. Petitioner points
out that respondent’s registration of its business name with the
DTI expired on 16 June 2000 and it was only in 2001 when
petitioner opened a coffee shop in Libis, Quezon City that
respondent made a belated effort to seek the renewal of its
business name registration. Petitioner stresses respondent’s
failure to continue the use of its trade name to designate its
goods negates any allegation of infringement. Petitioner claims
no confusion is likely to occur between its trademark and
respondent’s trade name because of a wide divergence in the
channels of trade, petitioner serving ready-made coffee while
respondent is in wholesale blending, roasting, and distribution
of coffee. Lastly, petitioner avers the proper noun "San
Francisco" and the generic word "coffee" are not capable of
exclusive appropriation.
Respondent maintains the law protects trade names from
infringement even if they are not registered with the IPO.
Respondent claims Republic Act No. 8293 (RA 8293)7 dispensed
with registration of a trade name with the IPO as a requirement
for the filing of an action for infringement. All that is required is
that the trade name is previously used in trade or commerce in
the Philippines. Respondent insists it never abandoned the use
of its trade name as evidenced by its letter to petitioner
demanding immediate discontinuation of the use of its
trademark and by the filing of the infringement case.
Respondent alleges petitioner’s trademark is confusingly similar
to respondent’s trade name. Respondent stresses ordinarily
prudent consumers are likely to be misled about the source,
affiliation, or sponsorship of petitioner’s coffee.
As to the issue of alleged abandonment of trade name by
respondent, the BLA-IPO found that respondent continued to
make plans and do research on the retailing of coffee and the
establishment of coffee carts, which negates abandonment.
This finding was upheld by the Court of Appeals, which further
found that while respondent stopped using its trade name in its
business of selling coffee, it continued to import and sell coffee
machines, one of the services for which the use of the business
name has been registered. The binding effect of the factual
findings of the Court of Appeals on this Court applies with
greater force when both the quasi-judicial body or tribunal like
the BLA-IPO and the Court of Appeals are in complete
agreement on their factual findings. It is also settled that
absent any circumstance requiring the overturning of the
factual conclusions made by the quasi-judicial body or tribunal,
particularly if affirmed by the Court of Appeals, the Court
necessarily upholds such findings of fact.8
Coming now to the main issue, in Prosource International, Inc.
v. Horphag Research Management SA,9 this Court laid down
what constitutes infringement of an unregistered trade name,
thus:
(1) The trademark being infringed is registered in the
Intellectual Property Office; however, in infringement
of trade name, the same need not be registered;
(2) The trademark or trade name is reproduced,
counterfeited, copied, or colorably imitated by the
infringer;
(3) The infringing mark or trade name is used in
connection with the sale, offering for sale, or
advertising of any goods, business or services; or the
infringing mark or trade name is applied to labels,
signs, prints, packages, wrappers, receptacles, or
advertisements intended to be used upon or in
connection with such goods, business, or services;
(4) The use or application of the infringing mark or
trade name is likely to cause confusion or mistake or
to deceive purchasers or others as to the goods or
services themselves or as to the source or origin of
such goods or services or the identity of such
business; and
(5) It is without the consent of the trademark or trade
name owner or the assignee thereof.10 (Emphasis
supplied)
Clearly, a trade name need not be registered with the IPO
before an infringement suit may be filed by its owner against
the owner of an infringing trademark. All that is required is that
the trade name is previously used in trade or commerce in the
Philippines.11
Section 22 of Republic Act No. 166,12 as amended, required
registration of a trade name as a condition for the institution of
an infringement suit, to wit:
Sec. 22. Infringement, what constitutes. – Any person who shall
use, without the consent of the registrant, any reproduction,
counterfeit, copy, or colorable imitation of any registered mark
or trade name in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in
connection with which such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or
origin of such goods or services, or identity of such business; or
reproduce, counterfeit, copy, or colorably imitate any such
mark or trade name and apply such reproduction, counterfeit,
copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles, or advertisements intended to be used
upon or in connection with such goods, business, or services,
shall be liable to a civil action by the registrant for any or all of
the remedies herein provided. (Emphasis supplied)
However, RA 8293, which took effect on 1 January 1998, has
dispensed with the registration requirement. Section 165.2 of
RA 8293 categorically states that trade names shall be
protected, even prior to or without registration with the IPO,
against any unlawful act including any subsequent use of the
trade name by a third party, whether as a trade name or a
trademark likely to mislead the public.1avvph!1 Thus:
SEC. 165.2 (a) Notwithstanding any laws or regulations
providing for any obligation to register trade names, such
names shall be protected, even prior to or without
registration, against any unlawful act committed by third
parties.
(b) In particular, any subsequent use of a trade name by a third
party, whether as a trade name or a mark or collective mark, or
any such use of a similar trade name or mark, likely to mislead
the public, shall be deemed unlawful. (Emphasis supplied)
It is the likelihood of confusion that is the gravamen of
infringement. But there is no absolute standard for likelihood of
confusion. Only the particular, and sometimes peculiar,
circumstances of each case can determine its existence. Thus,
in infringement cases, precedents must be evaluated in the
light of each particular case.13
In determining similarity and likelihood of confusion, our
jurisprudence has developed two tests: the dominancy test and
the holistic test. 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.14
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.15 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.16
Applying either the dominancy test or the holistic test,
petitioner’s "SAN FRANCISCO COFFEE" trademark is a clear
infringement of respondent’s "SAN FRANCISCO COFFEE &
ROASTERY, INC." trade name. The descriptive words "SAN
FRANCISCO COFFEE" are precisely the dominant features of
respondent’s trade name. Petitioner and respondent are
engaged in the same business of selling coffee, whether
wholesale or retail. The likelihood of confusion is higher in
cases where the business of one corporation is the same or
substantially the same as that of another corporation. In this
case, the consuming public will likely be confused as to the
source of the coffee being sold at petitioner’s coffee shops.
Petitioner’s argument that "San Francisco" is just a proper
name referring to the famous city in California and that
"coffee" is simply a generic term, is untenable. Respondent has
acquired an exclusive right to the use of the trade name "SAN
FRANCISCO COFFEE & ROASTERY, INC." since the registration of
the business name with the DTI in 1995. Thus, respondent’s use
of its trade name from then on must be free from any
infringement by similarity. Of course, this does not mean that
respondent has exclusive use of the geographic word "San
Francisco" or the generic word "coffee." Geographic or generic
words are not, per se, subject to exclusive appropriation. It is
only the combination of the words "SAN FRANCISCO COFFEE,"
which is respondent’s trade name in its coffee business, that is
protected against infringement on matters related to the coffee
business to avoid confusing or deceiving the public.
In Philips Export B.V. v. Court of Appeals,17 this Court held that
a corporation has an exclusive right to the use of its name. The
right proceeds from the theory that it is a fraud on the
corporation which has acquired a right to that name and
perhaps carried on its business thereunder, that another should
attempt to use the same name, or the same name with a slight
variation in such a way as to induce persons to deal with it in
the belief that they are dealing with the corporation which has
given a reputation to the name.18
This Court is not just a court of law, but also of equity. We
cannot allow petitioner to profit by the name and reputation so
far built by respondent without running afoul of the basic
demands of fair play. Not only the law but equity
considerations hold petitioner liable for infringement of
respondent’s trade name.
The Court of Appeals was correct in setting aside the 22
October 2003 Decision of the Office of the Director General-
Intellectual Property Office and in reinstating the 14 August
2002 Decision of the Bureau of Legal Affairs-Intellectual
Property Office.
WHEREFORE, we DENY the petition for review. We AFFIRM the
15 June 2005 Decision and 1 September 2005 Resolution of the
Court of Appeals in CA-G.R. SP No. 80396.
Costs against petitioner.
SO ORDERED.
G.R. NO. 175278
GSIS FAMILY BANK - THRIFT BANK [Formerly Inc.], Petitioner,
vs.
BPI FAMILY BANK, Respondent.
DECISION
JARDELEZA, J.:
This is a Petition for Review on Certiorari filed by GSIS Family
Bank - Thrift Bank1 assailing the Court of Appeals
Decision2 dated March 29, 2006 (Decision) and
Resolution3 dated October 23, 2006 which denied petitioner's
petition for review of the Securities and Ex.change Commission
Decision dated February 22, 2005 (SEC En Banc Decision). The
SEC En Banc Decision4 prohibited petitioner from using the
word "Family" as part of its corporate name and ordered
petitioner to delete the word from its name.5
Facts
Petitioner was originally organized as Royal Savings Bank and
started operations in 1971. Beginning 1983 and 1984,
petitioner encountered liquidity problems. On July 9, 1984, it
was placed under receivership and later temporarily closed by
the Central Bank of the Philippines. Two (2) months after its
closure, petitioner reopened and was renamed Comsavings
Bank, Inc. under the management of the Commercial Bank of
Manila.6
In 1987, the Government Service Insurance System (GSIS)
acquired petitioner from the Commercial Bank of Manila.
Petitioner's management and control was thus transferred to
GSIS.7 To improve its marketability to the public, especially to
the members of the GSIS, petitioner sought Securities and
Exchange Commission (SEC) approval to change its corporate
name to "GSIS Family Bank, a Thrift Bank."8 Petitioner likewise
applied with the Department of Trade and Industry (DTI) and
Bangko Sentral ng Pilpinas (BSP) for authority to use "GSIS
Family Bank, a Thrift Bank" as its business name. The DTI and
the BSP approved the applications.9 Thus, petitioner operates
under the corporate name "GSIS Family Bank – a Thrift Bank,"
pursuant to the DTI Certificate of Registration No. 741375 and
the Monetary Board Circular approval.10
Respondent BPI Family Bank was a product of the merger
between the Family Bank and Trust Company (FBTC) and the
Bank of the Philippine Islands (BPI).11 On June 27, 1969, the
Gotianum family registered with the SEC the corporate name
"Family First Savings Bank," which was amended to "Family
Savings Bank," and then later to "Family Bank and Trust
Company."12 Since its incorporation, the bank has been
commonly known as "Family Bank." In 1985, Family Bank
merged with BPI, and the latter acquired all the rights,
privileges, properties, and interests of Family Bank, including
the right to use names, such as "Family First Savings Bank,"
"Family Bank," and "Family Bank and Trust Company." BPI
Family Savings Bank was registered with the SEC as a wholly-
owned subsidiary of BPI. BPI Family Savings Bank then
registered with the Bureau of Domestic Trade the trade or
business name "BPI Family Bank," and acquired a reputation
and goodwill under the name.13
Proceedings before the SEC
Eventually, it reached respondent’s attention that petitioner is
using or attempting to use the name "Family Bank." Thus, on
March 8, 2002, respondent petitioned the SEC Company
Registration and Monitoring Department (SEC CRMD) to
disallow or prevent the registration of the name "GSIS Family
Bank" or any other corporate name with the words "Family
Bank" in it. Respondent claimed exclusive ownership to the
name "Family Bank," having acquired the name since its
purchase and merger with Family Bank and Trust Company way
back 1985.14 Respondent also alleged that through the years, it
has been known as "BPI Family Bank" or simply "Family Bank"
both locally and internationally. As such, it has acquired a
reputation and goodwill under the name, not only with clients
here and abroad, but also with correspondent and competitor
banks, and the public in general.15
Respondent prayed the SEC CRMD to disallow or prevent the
registration of the name "GSIS Family Bank" or any other
corporate name with the words "Family Bank" should the same
be presented for registration.
Respondent likewise prayed the SEC CRMD to issue an order
directing petitioner or any other corporation to change its
corporate name if the names have already been registered with
the SEC.16
The SEC CRMD was thus confronted with the issue of whether
the names BPI Family Bank and GSIS Family Bank are
confusingly similar as to require the amendment of the name of
the latter corporation.
The SEC CRMD declared that upon the merger of FBTC with the
BPI in 1985, the latter acquired the right to the use of the name
of the absorbed corporation. Thus, BPI Family Bank has a prior
right to the use of the name
Family Bank in the banking industry, arising from its long and
extensive nationwide use, coupled with its registration with the
Intellectual Property Office (IPO) of the name "Family Bank" as
its trade name. Applying the rule of "priority in registration"
based on the legal maxim first in time, first in right, the SEC
CRMD concluded that BPI has the preferential right to the use
of the name "Family Bank." More, GSIS and Comsavings Bank
were then fully aware of the existence and use of the name
"Family Bank" by FBTC prior to the latter's merger with BPI.17
The SEC CRMD also held that there exists a confusing similarity
between the corporate names BPI Family Bank and GSIS Family
Bank. It explained that although not identical, the corporate
names are indisputably similar, as to cause confusion in the
public mind, even with the exercise of reasonable care and
observation, especially so since both corporations are engaged
in the banking business.18
In a decision19 dated May 19, 2003, the SEC CRMD said,
PREMISES CONSIDERED respondent GSIS FAMILY BANK is
hereby directed to refrain from using the word "Family" as part
of its name and make good its commitment to change its name
by deleting or dropping the subject word from its corporate
name within [thirty (30) days] from the date of actual receipt
hereof.20
Petitioner appealed21 the decision to the SEC En Banc, which
denied the appeal, and upheld the SEC CRMD in the SEC En
Banc Decision.22 Petitioner elevated the SEC En Banc Decision
to the Court of Appeals, raising the following issues:
1. Whether the use by GSIS Family Bank of the words
"Family Bank" is deceptively and confusingly similar
to the name BPI Family Bank;
2. Whether the use by Comsavings Bank of "GSIS
Family Bank" as its business constitutes unfair
competition;
3. Whether BPI Family Bank is guilty of forum
shopping;
4. Whether the approval of the DTI and the BSP of
petitioner's application to use the name GSIS Family
Bank constitutes its authority to the lawful and valid
use of such trade name or trade mark;
5. Whether the application of respondent BPI Family
Bank for the exclusive use of the name "Family Bank,"
a generic name, though not yet approved by IPO of
the Bureau of Patents, has barred the GSIS Family
Bank from using such trade mark or name.23
Court of Appeals Ruling
The Court of Appeals ruled that the approvals by the BSP and
by the DTI of petitioner’s application to use the name "GSIS
Family Bank" do not constitute authority for its lawful and valid
use. It said that the SEC has absolute jurisdiction, supervision
and control over all corporations.24 The Court of Appeals held
that respondent was entitled to the exclusive use of the
corporate name because of its prior adoption of the name
"Family Bank" since 1969.25There is confusing similarity in the
corporate names because "[c]onfusion as to the possible
association with GSIS might arise if we were to allow
Comsavings Bank to add its parent company’s acronym, ‘GSIS’
to ‘Family Bank.’ This is true especially considering both
companies belong to the banking industry. Proof of actual
confusion need not be shown. It suffices that confusion is
probably or likely to occur."26The Court of Appeals also ruled
out forum shopping because not all the requirements of litis
pendentia are present.27
The dispositive portion of the decision read,
WHEREFORE, the instant petition for review is hereby
DISMISSED for lack of merit.28
After its Motion for Reconsideration was denied,29 petitioner
brought the decision to this Court via a Petition for Review on
Certiorari.30
Issues in the Petition
Petitioner raised the following issues in its petition:
I. The Court of Appeals gravely erred in affirming the
SEC Resolution finding the word "Family" not generic
despite its unregistered status with the IPO of the
Bureau of Patents and the use by GSIS-Family Bank in
its corporate name of the words "[F]amily [B]ank" as
deceptive and [confusingly similar] to the name BPI
Family Bank;31
II. The Court of Appeals gravely erred when it ruled
that the respondent is not guilty of forum shopping
despite the filing of three (3) similar complaints
before the DTI and BSP and with the SEC without the
requisite certification of non-forum shopping
attached thereto;32
III. The Court of Appeals gravely erred when it
completely disregarded the opinion of the Banko
Sentral ng Pilipinas that the use by the herein
petitioner of the trade name GSIS Family Bank – Thrift
Bank is not similar or does not deceive or likely cause
any deception to the public.33
Court's Ruling
We uphold the decision of the Court of Appeals.
Section 18 of the Corporation Code provides,
Section 18. Corporate name. – No corporate name may be
allowed by the Securities and Exchange Commission if the
proposed name is identical or deceptively or confusingly similar
to that of any existing corporation or to any other name already
protected by law or is patently deceptive, confusing or contrary
to existing laws. When a change in the corporate name is
approved, the Commission shall issue an amended certificate of
incorporation under the amended name.
In Philips Export B.V. v. Court of Appeals,34 this Court ruled that
to fall within the prohibition of the law on the right to the
exclusive use of a corporate name, two requisites must be
proven, namely:
(1) that the complainant corporation acquired a prior
right over the use of such corporate name; and
(2) the proposed name is either
(a) identical or
(b) deceptive or confusingly similar to that
of any existing corporation or to any other
name already protected by law; or
(c) patently deceptive, confusing or
contrary to existing law.35
These two requisites are present in this case. On the first
requisite of a prior right, Industrial Refractories Corporation of
the Philippines v. Court of Appeals (IRCP case)36 is instructive. In
that case, Refractories Corporation of the Philippines (RCP) filed
before the SEC a petition to compel Industrial Refractories
Corporation of the Philippines (IRCP) to change its corporate
name on the ground that its corporate name is confusingly
similar with that of RCP’s such that the public may be confused
into believing that they are one and the same corporation. The
SEC and the Court of Appeals found for petitioner, and ordered
IRCP to delete or drop from its corporate name the word
"Refractories." Upon appeal of IRCP, this Court upheld the
decision of the CA.
Applying the priority of adoption rule to determine prior right,
this Court said that RCP has acquired the right to use the word
"Refractories" as part of its corporate name, being its prior
registrant. In arriving at this conclusion, the Court considered
that RCP was incorporated on October 13, 1976 and since then
continuously used the corporate name "Refractories Corp. of
the Philippines." Meanwhile, IRCP only started using its
corporate name "Industrial Refractories Corp. of the
Philippines" when it amended its Articles of Incorporation on
August 23, 1985.37
In this case, respondent was incorporated in 1969 as Family
Savings Bank and in 1985 as BPI Family Bank. Petitioner, on the
other hand, was incorporated as GSIS Family – Thrift Bank only
in 2002,38 or at least seventeen (17) years after respondent
started using its name. Following the precedent in the IRCP
case, we rule that respondent has the prior right over the use
of the corporate name.
The second requisite in the Philips Export case likewise obtains
on two points: the proposed name is (a) identical or (b)
deceptive or confusingly similar to that of any existing
corporation or to any other name already protected by law.
On the first point (a), the words "Family Bank" present in both
petitioner and respondent's corporate name satisfy the
requirement that there be identical names in the existing
corporate name and the proposed one.
Respondent cannot justify its claim under Section 3 of the
Revised Guidelines in the Approval of Corporate and
Partnership Names,39 to wit:
3. The name shall not be identical, misleading or confusingly
similar to one already registered by another corporation or
partnership with the Commission or a sole proprietorship
registered with the Department of Trade and Industry.
If the proposed name is similar to the name of a registered
firm, the proposed name must contain at least one distinctive
word different from the name of the company already
registered.
Section 3 states that if there be identical, misleading or
confusingly similar name to one already registered by another
corporation or partnership with the SEC, the proposed name
must contain at least one distinctive word different from the
name of the company already registered. To show contrast
with respondent's corporate name, petitioner used the words
"GSIS" and "thrift." But these are not sufficiently distinct words
that differentiate petitioner's corporate name from
respondent's. While "GSIS" is merely an acronym of the proper
name by which petitioner is identified, the word "thrift" is
simply a classification of the type of bank that petitioner is.
Even if the classification of the bank as "thrift" is appended to
petitioner's proposed corporate name, it will not make the said
corporate name distinct from respondent's because the latter is
likewise engaged in the banking business.
This Court used the same analysis in Ang mga Kaanib sa Iglesia
ng Dios Kay Kristo Hesus, H.S.K. sa Bansang Pilipinas, Inc. v.
Iglesia ng Dios Kay Cristo Jesus, Haligi at Suhay ng
Katotohanan.40 In that case, Iglesia ng Dios Kay Cristo Jesus filed
a case before the SEC to compel Ang mga Kaanib sa Iglesia ng
Dios Kay Kristo Hesus to change its corporate name, and to
prevent it from using the same or similar name on the ground
that the same causes confusion among their members as well
as the public. Ang mga Kaanib sa Iglesia ng Dios Kay Kristo
Hesus claimed that it complied with SEC Memorandum Circular
No. 14-2000 by adding not only two, but eight words to their
registered name, to wit: "Ang Mga Kaanib" and "Sa Bansang
Pilipinas, Inc.," which effectively distinguished it from Iglesia ng
Dios Kay Cristo Jesus. This Court rejected the argument, thus:
The additional words "Ang Mga Kaanib" and "Sa
Bansang Pilipinas, Inc." in petitioner's name are, as
correctly observed by the SEC, merely descriptive of
and also referring to the members, or kaanib, of
respondent who are likewise residing in the
Philippines. These words can hardly serve as an
effective differentiating medium necessary to avoid
confusion or difficulty in distinguishing petitioner
from respondent. This is especially so, since both
petitioner and respondent corporations are using the
same acronym – H.S.K.; not to mention the fact that
both are espousing religious beliefs and operating in
the same place. Xxx41
On the second point (b), there is a deceptive and confusing
similarity between petitioner's proposed name and
respondent's corporate name, as found by the SEC.42 In
determining the existence of confusing similarity in corporate
names, the test is whether the similarity is such as to mislead a
person using ordinary care and discrimination.43 And even
without such proof of actual confusion between the two
corporate names, it suffices that confusion is probable or likely
to occur.44
Petitioner's corporate name is "GSIS Family Bank—A Thrift
Bank" and respondent's corporate name is "BPI Family Bank."
The only words that distinguish the two are "BPI," "GSIS," and
"Thrift." The first two words are merely the acronyms of the
proper names by which the two corporations identify
themselves; and the third word simply describes the
classification of the bank. The overriding consideration in
determining whether a person, using ordinary care and
discrimination, might be misled is the circumstance that both
petitioner and respondent are engaged in the same business of
banking. "The likelihood of confusion is accentuated in cases
where the goods or business of one corporation are the same
or substantially the same to that of another corporation."45
Respondent alleged that upon seeing a Comsavings Bank
branch with the signage "GSIS Family Bank" displayed at its
premises, some of the respondent’s officers and their clients
began asking questions. These include whether GSIS has
acquired Family Bank; whether there is a joint arrangement
between GSIS and Family Bank; whether there is a joint
arrangement between BPI and GSIS regarding Family Bank;
whether Comsavings Bank has acquired Family Bank; and
whether there is there an arrangement among Comsavings
Bank, GSIS, BPI, and Family Bank regarding BPI Family Bank and
GSIS Family Bank.46 The SEC made a finding that "[i]t is not a
remote possibility that the public may entertain the idea that a
relationship or arrangement indeed exists between BPI and
GSIS due to the use of the term ‘Family Bank’ in their corporate
names."47
Findings of fact of quasi-judicial agencies, like the SEC, are
generally accorded respect and even finality by this Court, if
supported by substantial evidence, in recognition of their
expertise on the specific matters under their consideration,
more so if the same has been upheld by the appellate court, as
in this case.48
Petitioner cannot argue that the word "family" is a generic or
descriptive name, which cannot be appropriated exclusively by
respondent. "Family," as used in respondent's corporate name,
is not generic. Generic marks are commonly used as the name
or description of a kind of goods, such as "Lite" for beer or
"Chocolate Fudge" for chocolate soda drink. Descriptive marks,
on the other hand, convey the characteristics, function,
qualities or ingredients of a product to one who has never seen
it or does not know it exists, such as "Arthriticare" for arthritis
medication.49
Under the facts of this case, the word "family" cannot be
separated from the word "bank."50 In asserting their claims
before the SEC up to the Court of Appeals, both petitioner and
respondent refer to the phrase "Family Bank" in their
submissions. This coined phrase, neither being generic nor
descriptive, is merely suggestive and may properly be regarded
as arbitrary. Arbitrary marks are "words or phrases used as a
mark that appear to be random in the context of its use. They
are generally considered to be easily remembered because of
their arbitrariness. They are original and unexpected in relation
to the products they endorse, thus, becoming themselves
distinctive."51 Suggestive marks, on the other hand, "are marks
which merely suggest some quality or ingredient of goods. xxx
The strength of the suggestive marks lies on how the public
perceives the word in relation to the product or service."52
In Ang v. Teodoro,53 this Court ruled that the words "Ang Tibay"
is not a descriptive term within the meaning of the Trademark
Law but rather a fanciful or coined phrase.54 In so ruling, this
Court considered the etymology and meaning of the Tagalog
words, "Ang Tibay" to determine whether they relate to the
quality or description of the merchandise to which respondent
therein applied them as trademark, thus:
We find it necessary to go into the etymology and meaning of
the Tagalog words "Ang Tibay" to determine whether they are a
descriptive term, i.e., whether they relate to the quality or
description of the merchandise to which respondent has
applied them as a trade-mark. The word "ang" is a definite
article meaning "the" in English. It is also used as an adverb, a
contraction of the word "anong" (what or how). For instance,
instead of saying, "Anong ganda!" ("How beautiful!"), we
ordinarily say, "Ang ganda!" Tibay is a root word from which are
derived the verb magpatibay (to strengthen); the nouns
pagkamatibay (strength, durability), katibayan (proof, support,
strength), katibaytibayan (superior strength); and the adjectives
matibay (strong, durable, lasting), napakatibay (very strong),
kasintibay or magkasintibay (as strong as, or of equal strength).
The phrase "Ang Tibay" is an exclamation denoting admiration
of strength or durability. For instance, one who tries hard but
fails to break an object exclaims, "Ang tibay!" ("How strong!") It
may also be used in a sentence thus, "Ang tibay ng sapatos
mo!" ("How durable your shoes are!") The phrase "ang tibay" is
never used adjectively to define or describe an object. One
does not say, "ang tibay sapatos" or "sapatos ang tibay" to
mean "durable shoes," but "matibay na sapatos" or "sapatos na
matibay."
From all of this we deduce that "Ang Tibay" is not a descriptive
term within the meaning of the Trade-Mark Law but rather a
fanciful or coined phrase which may properly and legally be
appropriated as a trade-mark or trade-name.
xxx55 (Underscoring supplied).
The word "family" is defined as "a group consisting of parents
and children living together in a household" or "a group of
people related to one another by blood or marriage."56 Bank,
on the other hand, is defined as "a financial establishment that
invests money deposited by customers, pays it out when
requested, makes loans at interest, and exchanges
currency."57 By definition, there can be no expected relation
between the word "family" and the banking business of
respondent. Rather, the words suggest that respondent’s bank
is where family savings should be deposited. More, as in the
Ang case, the phrase "family bank" cannot be used to define an
object.
Petitioner’s argument that the opinion of the BSP and the
certificate of registration granted to it by the DTI constitute
authority for it to use "GSIS Family Bank" as corporate name is
also untenable.
The enforcement of the protection accorded by Section 18 of
the Corporation Code to corporate names is lodged exclusively
in the SEC. The jurisdiction of the SEC is not merely confined to
the adjudicative functions provided in Section 5 of the SEC
Reorganization Act,58 as amended.59 By express mandate, the
SEC has absolute jurisdiction, supervision and control over all
corporations.60 It is the SEC’s duty to prevent confusion in the
use of corporate names not only for the protection of the
corporations involved, but more so for the protection of the
public. It has authority to de-register at all times, and under all
circumstances corporate names which in its estimation are
likely to generate confusion.61
The SEC62 correctly applied Section 18 of the Corporation Code,
and Section 15 of SEC Memorandum Circular No. 14-2000,
pertinent portions of which provide:
In implementing Section 18 of the Corporation Code of the
Philippines (BP 69), the following revised guidelines in the
approval of corporate and partnership names are hereby
adopted for the information and guidance of all concerned:
xxx
15. Registrant corporations or partnership shall submit a letter
undertaking to change their corporate or partnership name in
case another person or firm has acquired a prior right to the
use of the said firm name or the same is deceptively or
confusingly similar to one already registered unless this
undertaking is already included as one of the provisions of the
articles of incorporation or partnership of the registrant.
The SEC, after finding merit in respondent's claims, can compel
petitioner to abide by its commitment "to change its corporate
name in the event that another person, firm or entity has
acquired a prior right to use of said name or one similar to it."63
Clearly, the only determination relevant to this case is that one
made by the SEC in the exercise of its express mandate under
the law. The BSP opinion invoked by petitioner even
acknowledges that "the issue on whether a proposed name is
identical or deceptively similar to that of any of existing
corporation is matter within the official jurisdiction and
competence of the SEC."64
Judicial notice65 may also be taken of the action of the IPO in
approving respondent’s registration of the trademark "BPI
Family Bank" and its logo on October 17, 2008. The certificate
of registration of a mark shall be prima facie evidence of the
validity of the registration, the registrant’s ownership of the
mark, and of the registrant’s exclusive right to use the same in
connection with the goods or services and those that are
related thereto specified in the certificate.66
Finally, we uphold the Court of Appeals' finding that the issue
of forum shopping was belatedly raised by petitioner and, thus,
cannot anymore be considered at the appellate stage of the
proceedings. Petitioner raised the issue of forum shopping for
the first time only on appeal.67 Petitioner argued that the
complaints filed by respondent did not contain certifications
against non-forum shopping, in violation of Section 5, Rule 7 of
the Rules of Court.68
In S.C. Megaworld Construction and Development Corporation
vs. Parada,69 this Court said that objections relating to non-
compliance with the verification and certification of non-forum
shopping should be raised in the proceedings below, and not
for the first time on appeal. In that case, S.C. Megaworld
argued that the complaint for collection of sum of money
should have been dismissed outright by the trial court on
account of an invalid nonforum shopping certification. It
alleged that the Special Power of Attorney granted to Parada
did not specifically include an authority for the latter to sign the
verification and certification of non-forum shopping, thus
rendering the complaint defective for violation of Sections 4
and 5 of Rule 7 of the Rules of Court. On motion for
reconsideration of the decision of the Court of Appeals,
petitioner raised for the first time, the issue of forum shopping.
The Court ruled against S.C. Megaworld, thus:
It is well-settled that no question will be entertained on appeal
unless it has been raised in the proceedings below. Points of
law, theories, issues and arguments not brought to the
attention of the lower court, administrative agency or quasi-
judicial body, need not be considered by a reviewing court, as
they cannot be raised for the first time at that late stage. Basic
considerations of fairness and due process impel this rule. Any
issue raised for the first time on appeal is barred by estoppel.70
In this case, the fact that respondent filed a case before the DTI
was made known to petitioner71 long before the SEC rendered
its decision. Yet, despite its knowledge, petitioner failed to
question the alleged forum shopping before the SEC. The
exceptions to the general rule that forum shopping should be
raised in the earliest opportunity, as explained in the cited case
of Young v. Keng Seng,72 do not obtain in this case.
WHEREFORE, the petition is DENIED. The decision of the Court
of Appeals dated March 29, 2006 is hereby AFFIRMED.
SO ORDERED.
G.R. No. 185917 June 1, 2011
FREDCO MANUFACTURING CORPORATION Petitioner,
vs.
PRESIDENT AND FELLOWS OF HARVARD COLLEGE (HARVARD
UNIVERSITY), Respondents.
DECISION
CARPIO, J.:
The Case
Before the Court is a petition forreview1
assailing the 24
October 2008 Decision2 and 8 January 2009 Resolution3of the
Court of Appeals in CA-G.R. SP No. 103394.
The Antecedent Facts
On 10 August 2005, petitioner Fredco Manufacturing
Corporation (Fredco), a corporation organized and existing
under the laws of the Philippines, filed a Petition for
Cancellation of Registration No. 56561 before the Bureau of
Legal Affairs of the Intellectual Property Office (IPO) against
respondents President and Fellows of Harvard College (Harvard
University), a corporation organized and existing under the laws
of Massachusetts, United States of America. The case was
docketed as Inter Partes Case No. 14-2005-00094.
Fredco alleged that Registration No. 56561 was issued to
Harvard University on 25 November 1993 for the mark
"Harvard Veritas Shield Symbol" for decals, tote bags, serving
trays, sweatshirts, t-shirts, hats and flying discs under Classes
16, 18, 21, 25 and 28 of the Nice International Classification of
Goods and Services. Fredco alleged that the mark "Harvard" for
t-shirts, polo shirts, sandos, briefs, jackets and slacks was first
used in the Philippines on 2 January 1982 by New York
Garments Manufacturing & Export Co., Inc. (New York
Garments), a domestic corporation and Fredco’s predecessor-
in-interest. On 24 January 1985, New York Garments filed for
trademark registration of the mark "Harvard" for goods under
Class 25. The application matured into a registration and a
Certificate of Registration was issued on 12 December 1988,
with a 20-year term subject to renewal at the end of the term.
The registration was later assigned to Romeo Chuateco, a
member of the family that owned New York Garments.
Fredco alleged that it was formed and registered with the
Securities and Exchange Commission on 9 November 1995 and
had since then handled the manufacture, promotion and
marketing of "Harvard" clothing articles. Fredco alleged that at
the time of issuance of Registration No. 56561 to Harvard
University, New York Garments had already registered the mark
"Harvard" for goods under Class 25. Fredco alleged that the
registration was cancelled on 30 July 1998 when New York
Garments inadvertently failed to file an affidavit of use/non-use
on the fifth anniversary of the registration but the right to the
mark "Harvard" remained with its predecessor New York
Garments and now with Fredco.
Harvard University, on the other hand, alleged that it is the
lawful owner of the name and mark "Harvard" in numerous
countries worldwide, including the Philippines. Among the
countries where Harvard University has registered its name and
mark "Harvard" are:
 as early as 1872. Harvard University is over 350 years old and is Trademark Licensing, to oversee and manage the worldwide
1. Argentina 26. South Korea
a highly regarded institution of higher learning in the United licensing of the "Harvard" name and trademarks for various
2. Benelux4 27. Malaysia States and throughout the world. Harvard University promotes, goods and services. Harvard University stated that it never
uses, and advertises its name "Harvard" through various authorized or licensed any person to use its name and mark
3. Brazil 28. Mexico publications, services, and products in foreign countries, "Harvard" in connection with any goods or services in the
including the Philippines. Harvard University further alleged Philippines.
4. Canada 29. New Zealand that the name and the mark have been rated as one of the
most famous brands in the world, valued between US In a Decision7 dated 22 December 2006, Director Estrellita
5. Chile 30. Norway $750,000,000 and US $1,000,000,000. Beltran-Abelardo of the Bureau of Legal Affairs, IPO cancelled
6. China P.R. 31. Peru Harvard University’s registration of the mark "Harvard" under
Harvard University alleged that in March 2002, it discovered, Class 25, as follows:
7. Colombia 32. Philippines through its international trademark watch program, Fredco’s
website www.harvard-usa.com. The website advertises and WHEREFORE, premises considered, the Petition for Cancellation
8. Costa Rica 33. Poland promotes the brand name "Harvard Jeans USA" without is hereby GRANTED. Consequently, Trademark Registration
Harvard University’s consent. The website’s main page shows Number 56561 for the trademark "HARVARD VE RI TAS ‘SHIELD’
9. Cyprus 34. Portugal an oblong logo bearing the mark "Harvard Jeans USA®," SYMBOL" issued on November 25, 1993 to PRESIDENT AND
"Established 1936," and "Cambridge, Massachusetts." On 20 FELLOWS OF HARVARD COLLEGE (HARVARD UNIVERSITY)
10. Czech Republic 35. Russia
April 2004, Harvard University filed an administrative complaint should be CANCELLED only with respect to goods falling under
11. Denmark 36. South Africa against Fredco before the IPO for trademark infringement Class 25. On the other hand, considering that the goods of
and/or unfair competition with damages.lawphi1 Respondent-Registrant falling under Classes 16, 18, 21 and 28
12. Ecuador 37. Switzerland are not confusingly similar with the Petitioner’s goods, the
Harvard University alleged that its valid and existing certificates Respondent-Registrant has acquired vested right over the same
13. Egypt 38. Singapore of trademark registration in the Philippines are: and therefore, should not be cancelled.
14. Finland 39. Slovak Republic
1. Trademark Registration No. 56561 issued on 25 Let the filewrapper of the Trademark Registration No. 56561
15. France 40. Spain November 1993 for "Harvard Veritas Shield Design" issued on November 25, 1993 for the trademark "HARVARD VE
for goods and services in Classes 16, 18, 21, 25 and 28 RI TAS ‘SHIELD’ SYMBOL", subject matter of this case together
16. Great Britain 41. Sweden (decals, tote bags, serving trays, sweatshirts, t-shirts, with a copy of this Decision be forwarded to the Bureau of
hats and flying discs) of the Nice International Trademarks (BOT) for appropriate action.
17. Germany 42. Taiwan Classification of Goods and Services;
18. Greece 43. Thailand SO ORDERED.8
2. Trademark Registration No. 57526 issued on 24
19. Hong Kong 44. Turkey March 1994 for "Harvard Veritas Shield Symbol" for Harvard University filed an appeal before the Office of the
services in Class 41; Trademark Registration No. Director General of the IPO. In a Decision9 dated 21 April 2008,
20. India 45. United Arab Emirates 56539 issued on 25 November 1998 for "Harvard" for the Office of the Director General, IPO reversed the decision of
services in Class 41; and the Bureau of Legal Affairs, IPO.
21. Indonesia 46. Uruguay

22. Ireland 47. United States of America 3. Trademark Registration No. 66677 issued on 8 The Director General ruled that more than the use of the
December 1998 for "Harvard Graphics" for goods in trademark in the Philippines, the applicant must be the owner
23. Israel 48. Venezuela Class 9. Harvard University further alleged that it filed of the mark sought to be registered. The Director General ruled
the requisite affidavits of use for the mark "Harvard that the right to register a trademark is based on ownership
24. Italy 49. Zimbabwe Veritas Shield Symbol" with the IPO. and when the applicant is not the owner, he has no right to
register the mark. The Director General noted that the mark
25. Japan 50. European Community5
Further, on 7 May 2003 Harvard University filed Trademark covered by Harvard University’s Registration No. 56561 is not
Application No. 4-2003-04090 for "Harvard Medical only the word "Harvard" but also the logo, emblem or symbol
The name and mark "Harvard" was adopted in 1639 as the International & Shield Design" for services in Classes 41 and 44. of Harvard University. The Director General ruled that Fredco
name of Harvard College6 of Cambridge, Massachusetts, U.S.A. In 1989, Harvard University established the Harvard Trademark failed to explain how its predecessor New York Garments came
The name and mark "Harvard" was allegedly used in commerce Licensing Program, operated by the Office for Technology and up with the mark "Harvard." In addition, there was no evidence
that Fredco or New York Garments was licensed or authorized
by Harvard University to use its name in commerce or for any
other use.
The dispositive portion of the decision of the Office of the
Director General, IPO reads:
WHEREFORE, premises considered, the instant appeal is
GRANTED. The appealed decision is hereby REVERSED and SET
ASIDE. Let a copy of this Decision as well as the trademark
application and records be furnished and returned to the
Director of Bureau of Legal Affairs for appropriate action.
Further, let also the Directors of the Bureau of Trademarks and
the Administrative, Financial and Human Resources
Development Services Bureau, and the library of the
Documentation, Information and Technology Transfer Bureau
be furnished a copy of this Decision for information, guidance,
and records purposes.
SO ORDERED.10
Fredco filed a petition for review before the Court of Appeals
assailing the decision of the Director General.
The Decision of the Court of Appeals
In its assailed decision, the Court of Appeals affirmed the
decision of the Office of the Director General of the IPO.
The Court of Appeals adopted the findings of the Office of the
Director General and ruled that the latter correctly set aside the
cancellation by the Director of the Bureau of Legal Affairs of
Harvard University’s trademark registration under Class 25. The
Court of Appeals ruled that Harvard University was able to
substantiate that it appropriated and used the marks "Harvard"
and "Harvard Veritas Shield Symbol" in Class 25 way ahead of
Fredco and its predecessor New York Garments. The Court of
Appeals also ruled that the records failed to disclose any
explanation for Fredco’s use of the name and mark "Harvard"
and the words "USA," "Established 1936," and "Cambridge,
Massachusetts" within an oblong device, "US Legend" and
"Europe’s No. 1 Brand." Citing Shangri-La International Hotel
Management, Ltd. v. Developers Group of Companies,
Inc.,11 the Court of Appeals ruled:
One who has imitated the trademark of another cannot bring
an action for infringement, particularly against the true owner
of the mark, because he would be coming to court with unclean
hands. Priority is of no avail to the bad faith plaintiff. Good faith
is required in order to ensure that a second user may not
merely take advantage of the goodwill established by the true
owner.12
The dispositive portion of the decision of the Court of Appeals
reads:
WHEREFORE, premises considered, the petition for review is
DENIED. The Decision dated April 21, 2008 of the Director
General of the IPO in Appeal No. 14-07-09 Inter Partes Case No.
14-2005-00094 is hereby AFFIRMED.
SO ORDERED.13
Fredco filed a motion for reconsideration.
In its Resolution promulgated on 8 January 2009, the Court of
Appeals denied the motion for lack of merit.
Hence, this petition before the Court.
The Issue
The issue in this case is whether the Court of Appeals
committed a reversible error in affirming the decision of the
Office of the Director General of the IPO.
The Ruling of this Court
The petition has no merit.
There is no dispute that the mark "Harvard" used by Fredco is
the same as the mark "Harvard" in the "Harvard Veritas Shield
Symbol" of Harvard University. It is also not disputed that
Harvard University was named Harvard College in 1639 and
that then, as now, Harvard University is located in Cambridge,
Massachusetts, U.S.A. It is also unrefuted that Harvard
University has been using the mark "Harvard" in commerce
since 1872. It is also established that Harvard University has
been using the marks "Harvard" and "Harvard Veritas Shield
Symbol" for Class 25 goods in the United States since 1953.
Further, there is no dispute that Harvard University has
registered the name and mark "Harvard" in at least 50
countries.
On the other hand, Fredco’s predecessor-in-interest, New York
Garments, started using the mark "Harvard" in the Philippines
only in 1982. New York Garments filed an application with the
Philippine Patent Office in 1985 to register the mark "Harvard,"
which application was approved in 1988. Fredco insists that the
date of actual use in the Philippines should prevail on the issue
of who has the better right to register the marks.
Under Section 2 of Republic Act No. 166,14 as amended (R.A.
No. 166), before a trademark can be registered, it must have
been actually used in commerce for not less than two months
in the Philippines prior to the filing of an application for its
registration. While Harvard University had actual prior use of its
marks abroad for a long time, it did not have actual prior use in
the Philippines of the mark "Harvard Veritas Shield Symbol"
before its application for registration of the mark "Harvard"
with the then Philippine Patents Office. However, Harvard
University’s registration of the name "Harvard" is based on
home registration which is allowed under Section 37 of R.A. No.
166.15 As pointed out by Harvard University in its Comment:
Although Section 2 of the Trademark law (R.A. 166) requires for
the registration of trademark that the applicant thereof must
prove that the same has been actually in use in commerce or
services for not less than two (2) months in the Philippines
before the application for registration is filed, where the
trademark sought to be registered has already been registered
in a foreign country that is a member of the Paris Convention,
the requirement of proof of use in the commerce in the
Philippines for the said period is not necessary. An applicant for
registration based on home certificate of registration need not
even have used the mark or trade name in this country.16
Indeed, in its Petition for Cancellation of Registration No.
56561, Fredco alleged that Harvard University’s registration "is
based on ‘home registration’ for the mark ‘Harvard Veritas
Shield’ for Class 25."17
In any event, under Section 239.2 of Republic Act No. 8293
(R.A. No. 8293),18 "[m]arks registered under Republic Act No.
166 shall remain in force but shall be deemed to have been
granted under this Act x x x," which does not require actual
prior use of the mark in the Philippines. Since the mark
"Harvard Veritas Shield Symbol" is now deemed granted under
R.A. No. 8293, any alleged defect arising from the absence of
actual prior use in the Philippines has been cured by Section
239.2.19 In addition, Fredco’s registration was already cancelled
on 30 July 1998 when it failed to file the required affidavit of
use/non-use for the fifth anniversary of the mark’s registration.
Hence, at the time of Fredco’s filing of the Petition for
Cancellation before the Bureau of Legal Affairs of the IPO,
Fredco was no longer the registrant or presumptive owner of
the mark "Harvard."
There are two compelling reasons why Fredco’s petition must
fail.
First, Fredco’s registration of the mark "Harvard" and its
identification of origin as "Cambridge, Massachusetts" falsely
suggest that Fredco or its goods are connected with Harvard
University, which uses the same mark "Harvard" and is also
located in Cambridge, Massachusetts. This can easily be
gleaned from the following oblong logo of Fredco that it
attaches to its clothing line:
Fredco’s registration of the mark "Harvard" should not have
been allowed because Section 4(a) of R.A. No. 166 prohibits the
registration of a mark "which may disparage or falsely suggest
a connection with persons, living or dead, institutions, beliefs x
x x." Section 4(a) of R.A. No. 166 provides:
Section 4. Registration of trade-marks, trade-names and
service- marks on the principal register. ‒ There is hereby
established a register of trade-mark, trade-names and service-
marks which shall be known as the principal register. The
owner of a trade-mark, a 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:
(a) Consists of or comprises immoral, deceptive or scandalous
manner, or matter which may disparage or falsely suggest a
connection with persons, living or dead, institutions, beliefs, or
national symbols, or bring them into contempt or disrepute;
(b) x x x (emphasis supplied)
Fredco’s use of the mark "Harvard," coupled with its claimed
origin in Cambridge, Massachusetts, obviously suggests a false
connection with Harvard University. On this ground alone,
Fredco’s registration of the mark "Harvard" should have been
disallowed.
Indisputably, Fredco does not have any affiliation or connection
with Harvard University, or even with Cambridge,
Massachusetts. Fredco or its predecessor New York Garments
was not established in 1936, or in the U.S.A. as indicated by
Fredco in its oblong logo. Fredco offered no explanation to the
Court of Appeals or to the IPO why it used the mark "Harvard"
on its oblong logo with the words "Cambridge, Massachusetts,"
"Established in 1936," and "USA." Fredco now claims before
this Court that it used these words "to evoke a ‘lifestyle’ or
suggest a ‘desirable aura’ of petitioner’s clothing lines."
Fredco’s belated justification merely confirms that it sought to
connect or associate its products with Harvard University, riding
on the prestige and popularity of Harvard University, and thus
appropriating part of Harvard University’s goodwill without the
latter’s consent.
Section 4(a) of R.A. No. 166 is identical to Section 2(a) of the
Lanham Act,20 the trademark law of the United States. These
provisions are intended to protect the right of publicity of
famous individuals and institutions from commercial
exploitation of their goodwill by others.21 What Fredco has
done in using the mark "Harvard" and the words "Cambridge,
Massachusetts," "USA" to evoke a "desirable aura" to its
products is precisely to exploit commercially the goodwill of
Harvard University without the latter’s consent. This is a clear
violation of Section 4(a) of R.A. No. 166. Under Section
17(c)22 of R.A. No. 166, such violation is a ground for
cancellation of Fredco’s registration of the mark "Harvard"
because the registration was obtained in violation of Section 4
of R.A. No. 166.
Second, the Philippines and the United States of America are
both signatories to the Paris Convention for the Protection of
Industrial Property (Paris Convention). The Philippines became
a signatory to the Paris Convention on 27 September 1965.
Articles 6bis and 8 of the Paris Convention state:
ARTICLE 6bis
(i) The countries of the Union undertake either administratively
if their legislation so permits, or at the request of an interested
party, to refuse or to cancel the registration and to prohibit the
use of a trademark which constitutes a reproduction, imitation
or translation, liable to create confusion or a mark considered
by the competent authority of the country as being already the
mark of a person entitled to the benefits of the present
Convention and used for identical or similar goods. These
provisions shall also apply when the essential part of the mark
constitutes a reproduction of any such well-known mark or an
imitation liable to create confusion therewith.
ARTICLE 8
A trade name shall be protected in all the countries of the
Union without the obligation of filing or registration, whether
or not it forms part of a trademark. (Emphasis supplied)
Thus, this Court has ruled that the Philippines is obligated to
assure nationals of countries of the Paris Convention that they
are afforded an effective protection against violation of their
intellectual property rights in the Philippines in the same way
that their own countries are obligated to accord similar
protection to Philippine nationals.23
Article 8 of the Paris Convention has been incorporated in
Section 37 of R.A. No. 166, as follows:
Section 37. Rights of foreign registrants. — Persons who are
nationals of, domiciled in, or have a bona fide or effective
business or commercial establishment in any foreign country,
which is a party to any international convention or treaty
relating to marks or trade-names, or the repression of unfair
competition to which the Philippines may be a party, shall be
entitled to the benefits and subject to the provisions of this Act
to the extent and under the conditions essential to give effect
to any such convention and treaties so long as the Philippines
shall continue to be a party thereto, except as provided in the
following paragraphs of this section.
xxxx
Trade-names of persons described in the first paragraph of
this section shall be protected without the obligation of filing
or registration whether or not they form parts of marks.24
x x x x (Emphasis supplied)
Thus, under Philippine law, a trade name of a national of a
State that is a party to the Paris Convention, whether or not the
trade name forms part of a trademark, is protected "without
the obligation of filing or registration."
"Harvard" is the trade name of the world famous Harvard
University, and it is also a trademark of Harvard University.
Under Article 8 of the Paris Convention, as well as Section 37 of
R.A. No. 166, Harvard University is entitled to protection in the
Philippines of its trade name "Harvard" even without
registration of such trade name in the Philippines. This means
that no educational entity in the Philippines can use the trade
name "Harvard" without the consent of Harvard University.
Likewise, no entity in the Philippines can claim, expressly or
impliedly through the use of the name and mark "Harvard,"
that its products or services are authorized, approved, or
licensed by, or sourced from, Harvard University without the
latter’s consent.
Article 6bis of the Paris Convention has been administratively
implemented in the Philippines through two directives of the
then Ministry (now Department) of Trade, which directives
were upheld by this Court in several cases.25 On 20 November
1980, then Minister of Trade Secretary Luis Villafuerte issued a
Memorandum directing the Director of Patents to reject,
pursuant to the Paris Convention, all pending applications for
Philippine registration of signature and other world-famous
trademarks by applicants other than their original
owners.26 The Memorandum states:
Pursuant to the Paris Convention for the Protection of
Industrial Property to which the Philippines is a signatory, you
are hereby directed to reject all pending applications for
Philippine registration of signature and other world-famous
trademarks by applicants other than its original owners or
users.
The conflicting claims over internationally known trademarks
involve such name brands as Lacoste, Jordache, Vanderbilt,
Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar de la
Renta, Calvin Klein, Givenchy, Ralph Lauren, Geoffrey Beene,
Lanvin and Ted Lapidus.
It is further directed that, in cases where warranted, Philippine
registrants of such trademarks should be asked to surrender
their certificates of registration, if any, to avoid suits for
damages and other legal action by the trademarks’ foreign or
local owners or original users.
You are also required to submit to the undersigned a progress
report on the matter.
For immediate compliance.27
In a Memorandum dated 25 October 1983, then Minister of
Trade and Industry Roberto Ongpin affirmed the earlier
Memorandum of Minister Villafuerte. Minister Ongpin directed
the Director of Patents to implement measures necessary to
comply with the Philippines’ obligations under the Paris
Convention, thus:
1. Whether the trademark under consideration is
well-known in the Philippines or is a mark already
belonging to a person entitled to the benefits of the
CONVENTION, this should be established, pursuant to
Philippine Patent Office procedures in inter partes
and ex parte cases, according to any of the following
criteria or any combination thereof:
(a) a declaration by the Minister of Trade
and Industry that the trademark being
considered is already well-known in the
Philippines such that permission for its use
by other than its original owner will
constitute a reproduction, imitation,
translation or other infringement;
(b) that the trademark is used in commerce
internationally, supported by proof that
goods bearing the trademark are sold on an
international scale, advertisements, the
establishment of factories, sales offices,
distributorships, and the like, in different
countries, including volume or other
measure of international trade and
commerce;
(c) that the trademark is duly registered in
the industrial property office(s) of another
country or countries, taking into
consideration the dates of such
registration;
(d) that the trademark has been long
established and obtained goodwill and
general international consumer recognition
as belonging to one owner or source;
(e) that the trademark actually belongs to a
party claiming ownership and has the right
to registration under the provisions of the
aforestated PARIS CONVENTION.
2. The word trademark, as used in this
MEMORANDUM, shall include tradenames, service
marks, logos, signs, emblems, insignia or other
similar devices used for identification and
recognition by consumers.
3. The Philippine Patent Office shall refuse all
applications for, or cancel the registration of,
trademarks which constitute a reproduction,
translation or imitation of a trademark owned by a
person, natural or corporate, who is a citizen of a
country signatory to the PARIS CONVENTION FOR THE
PROTECTION OF INDUSTRIAL PROPERTY.
x x x x28 (Emphasis supplied)
In Mirpuri, the Court ruled that the essential requirement
under Article 6bis of the Paris Convention is that the trademark
to be protected must be "well-known" in the country where
protection is sought.29 The Court declared that the power to
determine whether a trademark is well-known lies in the
competent authority of the country of registration or use.30 The
Court then stated that the competent authority would either be
the registering authority if it has the power to decide this, or
the courts of the country in question if the issue comes before
the courts.31
To be protected under the two directives of the Ministry of
Trade, an internationally well-known mark need not be
registered or used in the Philippines.32 All that is required is
that the mark is well-known internationally and in the
Philippines for identical or similar goods, whether or not the
mark is registered or used in the Philippines. The Court ruled
in Sehwani, Incorporated v. In-N-Out Burger, Inc.:33
The fact that respondent’s marks are neither registered nor
used in the Philippines is of no moment. The scope of
protection initially afforded by Article 6bis of the Paris
Convention has been expanded in the 1999 Joint
Recommendation Concerning Provisions on the Protection of
Well-Known Marks, wherein the World Intellectual Property
Organization (WIPO) General Assembly and the Paris Union
agreed to a nonbinding recommendation that a well-known
mark should be protected in a country even if the mark is
neither registered nor used in that country. Part I, Article 2(3)
thereof provides:
(3) [Factors Which Shall Not Be Required] (a) A Member State
shall not require, as a condition for determining whether a
mark is a well-known mark:
(i) that the mark has been used in, or that the mark
has been registered or that an application for
 registration of the mark has been filed in or in respect
of, the Member State:
(ii) that the mark is well known in, or that the mark
has been registered or that an application for
registration of the mark has been filed in or in respect
of, any jurisdiction other than the Member State; or
(iii) that the mark is well known by the public at large
in the Member State.34 (Italics in the original decision;
boldface supplied)
Indeed, Section 123.1(e) of R.A. No. 8293 now categorically
states that "a mark which is considered by the competent
authority of the Philippines to be well-known internationally
and in the Philippines, whether or not it is registered here,"
cannot be registered by another in the Philippines. Section
123.1(e) does not require that the well-known mark be used in
commerce in the Philippines but only that it be well-known in
the Philippines. Moreover, Rule 102 of the Rules and
Regulations on Trademarks, Service Marks, Trade Names and
Marked or Stamped Containers, which implement R.A. No.
8293, provides:
Rule 102. Criteria for determining whether a mark is well-
known. In determining whether a mark is well-known, the
following criteria or any combination thereof may be taken
into account:
(a) the duration, extent and geographical area of any
use of the mark, in particular, the duration, extent
and geographical area of any promotion of the mark,
including advertising or publicity and the
presentation, at fairs or exhibitions, of the goods
and/or services to which the mark applies;
(b) the market share, in the Philippines and in other
countries, of the goods and/or services to which the
mark applies;
(c) the degree of the inherent or acquired distinction
of the mark;
(d) the quality-image or reputation acquired by the
mark;
(e) the extent to which the mark has been registered
in the world;
(f) the exclusivity of registration attained by the mark
in the world;
(g) the extent to which the mark has been used in the
world;
(h) the exclusivity of use attained by the mark in the
world;
(i) the commercial value attributed to the mark in the
world;
(j) the record of successful protection of the rights in
the mark;
(k) the outcome of litigations dealing with the issue of
whether the mark is a well-known mark; and
(l) the presence or absence of identical or similar
marks validly registered for or used on identical or
similar goods or services and owned by persons other
than the person claiming that his mark is a well-
known mark. (Emphasis supplied)
Since "any combination" of the foregoing criteria is sufficient to
determine that a mark is well-known, it is clearly not necessary
that the mark be used in commerce in the Philippines. Thus,
while under the territoriality principle a mark must be used in
commerce in the Philippines to be entitled to protection,
internationally well-known marks are the exceptions to this
rule.
In the assailed Decision of the Office of the Director General
dated 21 April 2008, the Director General found that:
Traced to its roots or origin, HARVARD is not an ordinary word.
It refers to no other than Harvard University, a recognized and
respected institution of higher learning located in Cambridge,
Massachusetts, U.S.A. Initially referred to simply as "the new
college," the institution was named "Harvard College" on 13
March 1639, after its first principal donor, a young clergyman
named John Harvard. A graduate of Emmanuel College,
Cambridge in England, John Harvard bequeathed about four
hundred books in his will to form the basis of the college library
collection, along with half his personal wealth worth several
hundred pounds. The earliest known official reference to
Harvard as a "university" rather than "college" occurred in the
new Massachusetts Constitution of 1780.
Records also show that the first use of the name HARVARD was
in 1638 for educational services, policy courses of instructions
and training at the university level. It has a Charter. Its first
commercial use of the name or mark HARVARD for Class 25 was
on 31 December 1953 covered by UPTON Reg. No. 2,119,339
and 2,101,295. Assuming in arguendo, that the Appellate may
have used the mark HARVARD in the Philippines ahead of the
Appellant, it still cannot be denied that the Appellant’s use
thereof was decades, even centuries, ahead of the Appellee’s.
More importantly, the name HARVARD was the name of a
person whose deeds were considered to be a cornerstone of
the university. The Appellant’s logos, emblems or symbols are
owned by Harvard University. The name HARVARD and the
logos, emblems or symbols are endemic and cannot be
separated from the institution.35
Finally, in its assailed Decision, the Court of Appeals ruled:
Records show that Harvard University is the oldest and one of
the foremost educational institutions in the United States, it
being established in 1636. It is located primarily in Cambridge,
Massachusetts and was named after John Harvard, a puritan
minister who left to the college his books and half of his estate.
The mark "Harvard College" was first used in commerce in the
United States in 1638 for educational services, specifically,
providing courses of instruction and training at the university
level (Class 41). Its application for registration with the United
States Patent and Trademark Office was filed on September 20,
2000 and it was registered on October 16, 2001. The marks
"Harvard" and "Harvard Ve ri tas ‘Shield’ Symbol" were first
used in commerce in the the United States on December 31,
1953 for athletic uniforms, boxer shorts, briefs, caps, coats,
leather coats, sports coats, gym shorts, infant jackets, leather
jackets, night shirts, shirts, socks, sweat pants, sweatshirts,
sweaters and underwear (Class 25). The applications for
registration with the USPTO were filed on September 9, 1996,
the mark "Harvard" was registered on December 9, 1997 and
the mark "Harvard Ve ri tas ‘Shield’ Symbol" was registered on
September 30, 1997.36
We also note that in a Decision37 dated 18 December 2008
involving a separate case between Harvard University and
Streetward International, Inc.,38 the Bureau of Legal Affairs of
the IPO ruled that the mark "Harvard" is a "well-known mark."
This Decision, which cites among others the numerous
trademark registrations of Harvard University in various
countries, has become final and executory.
There is no question then, and this Court so declares, that
"Harvard" is a well-known name and mark not only in the
United States but also internationally, including the Philippines.
The mark "Harvard" is rated as one of the most famous marks
in the world. It has been registered in at least 50 countries. It
has been used and promoted extensively in numerous
publications worldwide. It has established a considerable
goodwill worldwide since the founding of Harvard University
more than 350 years ago. It is easily recognizable as the trade
name and mark of Harvard University of Cambridge,
Massachusetts, U.S.A., internationally known as one of the
leading educational institutions in the world. As such, even
before Harvard University applied for registration of the mark
"Harvard" in the Philippines, the mark was already protected
under Article 6bis and Article 8 of the Paris Convention. Again,
even without applying the Paris Convention, Harvard University
can invoke Section 4(a) of R.A. No. 166 which prohibits the
registration of a mark "which may disparage or falsely suggest
a connection with persons, living or dead, institutions, beliefs x
x x."
WHEREFORE, we DENY the petition. We AFFIRM the 24
October 2008 Decision and 8 January 2009 Resolution of the
Court of Appeals in CA-G.R. SP No. 103394.
SO ORDERED.
G.R. No. L-48226 December 14, 1942
ANA L. ANG, petitioner,
vs.
TORIBIO TEODORO, respondent.
Cirilo Lim for petitioner.
Marcial P. Lichauco and Manuel M. Mejia for respondent.
OZAETA, J.:
Petitioner has appealed to this Court by certiorari to reverse
the judgment of the Court of Appeals reversing that of the
Court of First Instance of Manila and directing the Director of
Commerce to cancel the registration of the trade-mark "Ang
Tibay" in favor of said petitioner, and perpetually enjoining the
latter from using said trade-mark on goods manufactured and
sold by her.
Respondent Toribio Teodoro, at first in partnership with Juan
Katindig and later as sole proprietor, has continuously used
"Ang Tibay," both as a trade-mark and as a trade-name, in the
manufacture and sale of slippers, shoes, and indoor baseballs
since 1910. He formally registered it as trade-mark on
September 29, 1915, and as trade-name on January 3, 1933.
The growth of his business is a thrilling epic of Filipino industry
and business capacity. Starting in an obscure shop in 1910 with
a modest capital of P210 but with tireless industry and
unlimited perseverance, Toribio Teodoro, then an unknown
young man making slippers with his own hands but now a
prominent business magnate and manufacturer with a large
factory operated with modern machinery by a great number of
employees, has steadily grown with his business to which he
has dedicated the best years of his life and which he has
expanded to such proportions that his gross sales from 1918 to
1938 aggregated P8,787,025.65. His sales in 1937 amounted to
P1,299,343.10 and in 1938, P1,133,165.77. His expenses for
advertisement from 1919 to 1938 aggregated P210,641.56.
Petitioner (defendant below) registered the same trade-mark
"Ang Tibay" for pants and shirts on April 11, 1932, and
established a factory for the manufacture of said articles in the
year 1937. In the following year (1938) her gross sales
amounted to P422,682.09. Neither the decision of the trial
court nor that of the Court of Appeals shows how much
petitioner has spent or advertisement. But respondent in his
brief says that petitioner "was unable to prove that she had
spent a single centavo advertising "Ang Tibay" shirts and pants
prior to 1938. In that year she advertised the factory which she
had just built and it was when this was brought to the attention
of the appellee that he consulted his attorneys and eventually
brought the present suit."
The trial court (Judge Quirico Abeto) presiding absolved the
defendant from the complaint, with costs against the plaintiff,
on the grounds that the two trademarks are dissimilar and are
used on different and non-competing goods; that there had
been no exclusive use of the trade-mark by the plaintiff; and
that there had been no fraud in the use of the said trade-mark
by the defendant because the goods on which it is used are
essentially different from those of the plaintiff. The second
division of the Court of Appeals, composed of Justices Bengson,
Padilla, Lopez Vito, Tuason, and Alex Reyes, with Justice Padilla
as ponente, reversed that judgment, holding that by
uninterrupted an exclusive use since 191 in the manufacture of
slippers and shoes, respondent's trade-mark has acquired a
secondary meaning; that the goods or articles on which the two
trade-marks are used are similar or belong to the same class;
and that the use by petitioner of said trade-mark constitutes a
violation of sections 3 and 7 of Act No. 666. The defendant
Director of Commerce did not appeal from the decision of the
Court of Appeals.
First. Counsel for the petitioner, in a well-written brief, makes a
frontal sledge-hammer attack on the validity of respondent's
trade-mark "Ang Tibay." He contends that the phrase "Ang
Tibay" as employed by the respondent on the articles
manufactured by him is a descriptive term because, "freely
translate in English," it means "strong, durable, lasting." He
invokes section 2 of Act No. 666, which provides that words or
devices which related only to the name, quality, or description
of the merchandise cannot be the subject of a trade-mark. He
cites among others the case of Baxter vs. Zuazua (5 Phil., 16),
which involved the trade-mark "Agua de Kananga" used on
toilet water, and in which this Court held that the word
"Kananga," which is the name of a well-known Philippine tree
or its flower, could not be appropriated as a trade-mark any
more than could the words "sugar," "tobacco," or "coffee." On
the other hand, counsel for the respondent, in an equally well-
prepared and exhaustive brief, contend that the words "Ang
Tibay" are not descriptive but merely suggestive and may
properly be regarded as fanciful or arbitrary in the legal sense.
The cite several cases in which similar words have been
sustained as valid trade-marks, such as "Holeproof" for
hosiery, 1 "ideal for tooth brushes, 2 and "Fashionknit" for
neckties and sweaters. 3
We find it necessary to go into the etymology and meaning of
the Tagalog words "Ang Tibay" to determine whether they are a
descriptive term, i.e., whether they relate to the quality or
description of the merchandise to which respondent has
applied them as a trade-mark. The word "ang" is a definite
article meaning "the" in English. It is also used as an adverb, a
contraction of the word "anong" (what or how). For instance,
instead of saying, "Anong ganda!" ("How beautiful!"), we
ordinarily say, "Ang ganda!" Tibay is a root word from which
are derived the verb magpatibay (to strenghten; the
nouns pagkamatibay (strength, durability), katibayan (proof,
support, strength), katibay-tibayan (superior strength); and the
adjectives matibay (strong, durable, lasting), napakatibay (very
strong), kasintibay or magkasintibay (as strong as, or of equal
strength). The phrase "Ang Tibay" is an exclamation denoting
administration of strength or durability. For instance, one who
tries hard but fails to break an object exclaims, "Ang tibay!"
(How strong!") It may also be used in a sentence thus, "Ang
tibay ng sapatos mo!" (How durable your shoes are!") The
phrase "ang tibay" is never used adjectively to define or
describe an object. One does not say, "ang tibay sapatos" or
"sapatos ang tibay" is never used adjectively to define or
describe an object. One does not say, "ang tibay sapatos" or
"sapatos ang tibay" to mean "durable shoes," but "matibay na
sapatos" or "sapatos na matibay."
From all of this we deduce that "Ang Tibay" is not a descriptive
term within the meaning of the Trade-Mark Law but rather a
fanciful or coined phrase which may properly and legally be
appropriated as a trade-mark or trade-name. In this connection
we do not fail to note that when the petitioner herself took the
trouble and expense of securing the registration of these same
words as a trademark of her products she or her attorney as
well as the Director of Commerce was undoubtedly convinced
that said words (Ang Tibay) were not a descriptive term and
hence could be legally used and validly registered as a trade-
mark. It seems stultifying and puerile for her now to contend
otherwise, suggestive of the story of sour grapes. Counsel for
the petitioner says that the function of a trade-mark is to point
distinctively, either by its own meaning or by association, to the
origin or ownership of the wares to which it is applied. That is
correct, and we find that "Ang Tibay," as used by the
respondent to designate his wares, had exactly performed that
function for twenty-two years before the petitioner adopted it
as a trade-mark in her own business. Ang Tibay shoes and
slippers are, by association, known throughout the Philippines
as products of the Ang Tibay factory owned and operated by
the respondent Toribio Teodoro.
Second. In her second assignment of error petitioner contends
that the Court of Appeals erred in holding that the words "Ang
Tibay" had acquired a secondary meaning. In view of the
conclusion we have reached upon the first assignment of error,
it is unnecessary to apply here the doctrine of "secondary
meaning" in trade-mark parlance. This doctrine is to the effect
that a word or phrase originally incapable of exclusive
appropriation with reference to an article of the market,
because geographically or otherwise descriptive, might
nevertheless have been used so long and so exclusively by one
producer with reference to his article that, in that trade and to
that branch of the purchasing public, the word or phrase has
come to mean that the article was his product. (G. & C.
Merriam Co. vs. Salfield, 198 F., 369, 373.) We have said that
the phrase "Ang Tibay," being neither geographic nor
descriptive, was originally capable of exclusive appropriation as
a trade-mark. But were it not so, the application of the doctrine
of secondary meaning made by the Court of Appeals could
nevertheless be fully sustained because, in any event, by
respondent's long and exclusive use of said phrase with
reference to his products and his business, it has acquired a
proprietary connotation. (Landers, Frary, and Clark vs. Universal
Cooler Corporation, 85 F. [2d], 46.)
Third. Petitioner's third assignment of error is, that the Court of
Appeals erred in holding that pants and shirts are goods similar
to shoes and slippers within the meaning of sections 3 and 7 of
Act No. 666. She also contends under her fourth assignment of
error (which we deem convenient to pass upon together with
the third) that there can neither be infringement of trade-mark
under section 3 nor unfair competition under section 7 through
her use of the words "Ang Tibay" in connection with pants and
shirts, because those articles do not belong to the same class of
merchandise as shoes and slippers.
The question raised by petitioner involve the scope and
application of sections 3,7, 11, 13, and 20 of the Trade-Mark
Law (Act No. 666.) Section 3 provides that "any person entitled
to the exclusive use of a trade-mark to designate the origin or
ownership of goods he has made or deals in, may recover
damages in a civil actions from any person who has sold goods
of a similar kind, bearing such trade-mark . . . The complaining
party . . . may have a preliminary injunction, . . . and such
injunction upon final hearing, if the complainant's property in
the trade-mark and the defendant's violation thereof shall be
fully established, shall be made perpetual, and this injunction
shall be part of the judgment for damages to be rendered in the
same cause." Section 7 provides that any person who, in selling
his goods, shall give them the general appearance of the goods
of another either in the wrapping of the packages, or in 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 the complainant,
shall be guilty of unfair competition, and shall be liable to an
action for damages and to an injunction, as in the cases of
trade-mark infringement under section 3. Section 11 requires
the applicant for registration of a trade-mark to state, among
others, "the general class of merchandise to which the trade-
mark claimed has been appropriated." Section 13 provides that
no alleged trade-mark or trade name shall be registered which
is identical with a registered or known trade-mark owned by
another and appropriate to the same class of merchandise, or
which to nearly resembles another person's lawful trade-mark
or trade-name as to be likely to cause confusion or mistake in
the mind of the public, or to deceive purchasers. And section 2
authorizes the Director of Commerce to establish classes of
merchandise for the purpose of the registration of trade-marks
and to determine the particular description of articles included
in each class; it also provides that "an application for
registration of a trade-mark shall be registered only for
one class of articles and only for the particular description of
articles mentioned in said application."
We have underlined the key words used in the statute: "goods
of a similar kin," "general class of merchandise," "same class of
merchandise," "classes of merchandise," and "class of articles,"
because it is upon their implications that the result of the case
hinges. These phrases, which refer to the same thing, have the
same meaning as the phrase "merchandise of the same
descriptive properties" used in the statutes and jurisprudence
of other jurisdictions.
The burden of petitioner's argument is that under sections 11
and 20 the registration by respondent of the trade-mark "Ang
Tibay" for shoes and slippers is no safe-guard against its being
used by petitioner for pants and shirts because the latter do
not belong to the same class of merchandise or articles as the
former; that she cannot be held guilty of infringement of trade-
mark under section 3 because respondent's mark is not a valid
trade-mark, nor has it acquired a secondary meaning; that
pants and shirts do not possess the same descriptive properties
as shoes and slippers; that neither can she be held guilty of
unfair competition under section 7 because the use by her of
the trade-mark "Ang Tibay" upon pants and shirts is not likely
to mislead the general public as to their origin or ownership;
and that there is now showing that she in unfairly or
fraudulently using that mark "Ang Tibay" against the
respondent. If we were interpreting the statute for the first
time and in the first decade of the twentieth century, when it
was enacted, and were to construe it strictly and literally, we
might uphold petitioner's contentions. But law and
jurisprudence must keep abreast with the progress of mankind,
and the courts must breathe life into the statutes if they are to
serve their purpose. Our Trade-mark Law, enacted nearly forty
years ago, has grown in its implications and practical
application, like a constitution, in virtue of the life continually
breathed into it. It is not of merely local application; it has its
counterpart in other jurisdictions of the civilized world from
whose jurisprudence it has also received vitalizing nourishment.
We have to apply this law as it has grown and not as it was
born. Its growth or development abreast with that of sister
statutes and jurisprudence in other jurisdictions is reflected in
the following observation of a well-known author:
This fundamental change in attitude first manifested
itself in the year 1915-1917. Until about then, the
courts had proceeded on the theory that the same
trade-mark, used on un-like goods, could not cause
confusion in trade and that, therefore, there could be
no objection to the use and registration of a well-
known mark by a third party for a different class of
goods. Since 1916 however, a growing sentiment
began to arise that in the selection of a famous mark
by a third party, there was generally the hidden
intention to "have a free ride" on the trade-mark
owner's reputation and good will. (Derenberg, Trade-
Mark Protection & Unfair Trading, 1936 edition, p.
409.)
In the present state of development of the law on Trade-Marks,
Unfair Competition, and Unfair Trading, the test employed by
the courts to determine whether noncompeting goods are or
are not of the same class is confusion as to the origin of the
goods of the second user. Although two noncompeting articles
may be classified under two different classes by the Patent
Office because they are deemed not to possess the same
descriptive properties, they would, nevertheless, be held by the
courts to belong to the same class if the simultaneous use on
them of identical or closely similar trade-marks would be likely
to cause confusion as to the origin, or personal source, of the
second user's goods. They would be considered as not falling
under the same class only if they are so dissimilar or so foreign
to each other as to make it unlikely that the purchaser would
think the first user made the second user's goods.
Such construction of the law is induced by cogent reasons of
equity and fair dealing. The courts have come to realize that
there can be unfair competition or unfair trading even if the
goods are non-competing, and that such unfair trading can
cause injury or damage to the first user of a given trade-mark,
first, by prevention of the natural expansion of his business
and, second, by having his business reputation confused with
and put at the mercy of the second user. Then noncompetitive
products are sold under the same mark, the gradual whittling
away or dispersion of the identity and hold upon the public
mind of the mark created by its first user, inevitably results. The
original owner is entitled to the preservation of the valuable
link between him and the public that has been created by his
ingenuity and the merit of his wares or services. Experience has
demonstrated that when a well-known trade-mark is adopted
by another even for a totally different class of goods, it is done
to get the benefit of the reputation and advertisements of the
originator of said mark, to convey to the public a false
impression of some supposed connection between the
manufacturer of the article sold under the original mark and
the new articles being tendered to the public under the same
or similar mark. As trade has developed and commercial
changes have come about, the law of unfair competition has
expanded to keep pace with the times and the element of strict
competition in itself has ceased to be the determining factor.
The owner of a trade-mark or trade-name has a property right
in which he is entitled to protection, since there is damage to
him from confusion of reputation or goodwill in the mind of the
public as well as from confusion of goods. The modern trend is
to give emphasis to the unfairness of the acts and to classify
and treat the issue as a fraud.
A few of the numerous cases in which the foregoing doctrines
have been laid down in one form or another will now be cited:
(1) In Teodoro Kalaw Ng Khe vs. Level Brothers Company (G.R.
No. 46817), decided by this Court on April 18, 1941, the
respondent company (plaintiff below) was granted injunctive
relief against the use by the petitioner of the trade-mark "Lux"
and "Lifebuoy" for hair pomade, they having been originally
used by the respondent for soap; The Court held in effect that
although said articles are noncompetitive, they are similar or
belong to the same class. (2) In Lincoln Motor Co. vs. Lincoln
Automobile Co. (44 F. [2d], 812), the manufacturer of the well-
known Lincoln automobile was granted injunctive relief against
the use of the word "Lincoln" by another company as part of its
firm name. (3) The case of Aunt Jemima Mills Co. vs. Rigney &
Co. (247 F., 407), involved the trade-mark "Aunt Jemima,"
originally used on flour, which the defendant attempted to use
on syrup, and there the court held that the goods, though
different, are so related as to fall within the mischief which
equity should prevent. (4) In Tiffany & Co., vs. Tiffany
Productions, Inc. (264 N.Y.S., 459; 23 Trade-mark Reporter,
183), the plaintiff, a jewelry concern, was granted injunctive
relief against the defendant, a manufacturer of motion
pictures, from using the name "Tiffany." Other famous cases
cited on the margin, wherein the courts granted injunctive
relief, involved the following trade-marks or trade-names:
"Kodak," for cameras and photographic supplies, against its use
for bicycles. 4 "Penslar," for medicines and toilet articles, against
its use for cigars; 5 "Rolls-Royce," for automobiles. against its
use for radio tubes; 6 "Vogue," as the name of a magazine,
against its use for hats; 7 "Kotex," for sanitary napkins, against
the use of "Rotex" for vaginal syringes; 8 "Sun-Maid," for raisins,
against its use for flour; 9 "Yale," for locks and keys, against its
use for electric flashlights; 10 and "Waterman," for fountain
pens, against its use for razor blades. 11lawphil.net
Against this array of famous cases, the industry of counsel for
the petitioner has enabled him to cite on this point only the
following cases: (1) Mohawk Milk Products vs. General
Distilleries Corporation (95 F. [2d], 334), wherein the court held
that gin and canned milk and cream do not belong to the same
class; (2) Fawcett Publications, Inc. vs. Popular Mechanics
Co. (80 F. [2d], 194), wherein the court held that the words
"Popular Mechanics" used as the title of a magazine and duly
registered as a trade-mark were not infringed by defendant's
use of the words "Modern Mechanics and Inventions" on a
competitive magazine, because the word "mechanics" is merely
a descriptive name; and (3) Oxford Book Co. vs. College
Entrance Book Co. (98 F. [2d], 688), wherein the plaintiff
unsuccessfully attempted to enjoin the defendant from using
the word "Visualized" in connection with history books, the
court holding that said word is merely descriptive. These cases
cites and relied upon by petitioner are obviously of no decisive
application to the case at bar.
We think reasonable men may not disagree that shoes and
shirts are not as unrelated as fountain pens and razor blades,
for instance. The mere relation or association of the articles is
not controlling. As may readily be noted from what we have
heretofore said, the proprietary connotation that a trade-mark
or trade-name has acquired is of more paramount
consideration. The Court of Appeals found in this case that by
uninterrupted and exclusive use since 1910 of respondent's
registered trade-mark on slippers and shoes manufactured by
him, it has come to indicate the origin and ownership of said
goods. It is certainly not farfetched to surmise that the
selection by petitioner of the same trade-mark for pants and
shirts was motivated by a desire to get a free ride on the
reputation and selling power it has acquired at the hands of the
respondent. As observed in another case, 12 the field from
which a person may select a trade-mark is practically unlimited,
and hence there is no excuse for impinging upon or even
closely approaching the mark of a business rival. In the
unlimited field of choice, what could have been petitioner's
purpose in selecting "Ang Tibay" if not for its fame?
Lastly, in her fifth assignment of error petitioner seems to make
a frantic effort to retain the use of the mark "Ang Tibay." Her
counsel suggests that instead of enjoining her from using it, she
may be required to state in her labels affixed to her products
the inscription: "Not manufactured by Toribio Teodoro." We
think such practice would be unethical and unworthy of a
reputable businessman. To the suggestion of petitioner,
respondent may say, not without justice though with a tinge of
bitterness: "Why offer a perpetual apology or explanation as to
the origin of your products in order to use my trade-mark
instead of creating one of your own?" On our part may we add,
without meaning to be harsh, that a self-respecting person
does not remain in the shelter of another but builds one of his
own.
The judgment of the Court of Appeals is affirmed, with costs
against the petitioner in the three instances. So ordered.
G.R. No. 143993 August 18, 2004
MCDONALD'S CORPORATION and MCGEORGE FOOD
INDUSTRIES, INC., petitioners,
vs.
L.C. BIG MAK BURGER, INC., FRANCIS B. DY, EDNA A. DY, RENE
B. DY, WILLIAM B. DY, JESUS AYCARDO, ARACELI AYCARDO,
and GRACE HUERTO, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the Decision dated 26 November
1999 of the Court of Appeals2 finding respondent L.C. Big Mak
Burger, Inc. not liable for trademark infringement and unfair
competition and ordering petitioners to pay
respondents P1,900,000 in damages, and of its Resolution
dated 11 July 2000 denying reconsideration. The Court of
Appeals' Decision reversed the 5 September 1994 Decision3 of
the Regional Trial Court of Makati, Branch 137, finding
respondent L.C. Big Mak Burger, Inc. liable for trademark
infringement and unfair competition.
The Facts
Petitioner McDonald's Corporation ("McDonald's") is a
corporation organized under the laws of Delaware, United
States. McDonald's operates, by itself or through its
franchisees, a global chain of fast-food restaurants.
McDonald's4 owns a family of marks5 including the "Big Mac"
mark for its "double-decker hamburger sandwich."6McDonald's
registered this trademark with the United States Trademark
Registry on 16 October 1979.7 Based on this Home Registration,
McDonald's applied for the registration of the same mark in
the Principal Register of the then Philippine Bureau of Patents,
Trademarks and Technology ("PBPTT"), now the Intellectual
Property Office ("IPO"). Pending approval of its application,
McDonald's introduced its "Big Mac" hamburger sandwiches in
the Philippine market in September 1981. On 18 July
1985, the PBPTT allowed registration of the "Big Mac" mark in
the Principal Register based on its Home Registration in the
United States.
Like its other marks, McDonald's displays the "Big Mac" mark in
items8 and paraphernalia9 in its restaurants, and in its outdoor
and indoor signages. From 1982 to 1990, McDonald's
spent P10.5 million in advertisement for "Big Mac" hamburger
sandwiches alone.10
Petitioner McGeorge Food Industries ("petitioner McGeorge"),
a domestic corporation, is McDonald's Philippine franchisee.11
Respondent L.C. Big Mak Burger, Inc. ("respondent
corporation") is a domestic corporation which operates fast-
food outlets and snack vans in Metro Manila and nearby
provinces.12 Respondent corporation's menu includes
hamburger sandwiches and other food items.13 Respondents
Francis B. Dy, Edna A. Dy, Rene B. Dy, William B. Dy, Jesus
Aycardo, Araceli Aycardo, and Grace Huerto ("private
respondents") are the incorporators, stockholders and directors
of respondent corporation.14
On 21 October 1988, respondent corporation applied with the
PBPTT for the registration of the "Big Mak" mark for its
hamburger sandwiches. McDonald's opposed respondent
corporation's application on the ground that "Big Mak" was a
colorable imitation of its registered "Big Mac" mark for the
same food products. McDonald's also informed respondent
Francis Dy ("respondent Dy"), the chairman of the Board of
Directors of respondent corporation, of its exclusive right to the
"Big Mac" mark and requested him to desist from using the "Big
Mac" mark or any similar mark.
Having received no reply from respondent Dy, petitioners on 6
June 1990 sued respondents in the Regional Trial Court of
Makati, Branch 137 ("RTC"), for trademark infringement and
unfair competition. In its Order of 11 July 1990, the RTC issued
a temporary restraining order ("TRO") against respondents
enjoining them from using the "Big Mak" mark in the operation
of their business in the National Capital Region.15 On 16 August
1990, the RTC issued a writ of preliminary injunction replacing
the TRO.16
In their Answer, respondents admitted that they have been
using the name "Big Mak Burger" for their fast-food business.
Respondents claimed, however, that McDonald's does not have
an exclusive right to the "Big Mac" mark or to any other similar
mark. Respondents point out that the Isaiyas Group of
Corporations ("Isaiyas Group") registered the same mark for
hamburger sandwiches with the PBPTT on 31 March 1979. One
Rodolfo Topacio ("Topacio") similarly registered the same mark
on 24 June 1983, prior to McDonald's registration on 18 July
1985. Alternatively, respondents claimed that they are not
liable for trademark infringement or for unfair competition, as
the "Big Mak" mark they sought to register does not constitute
a colorable imitation of the "Big Mac" mark. Respondents
asserted that they did not fraudulently pass off their
hamburger sandwiches as those of petitioners' Big Mac
hamburgers.17 Respondents sought damages in their
counterclaim.
In their Reply, petitioners denied respondents' claim that
McDonald's is not the exclusive owner of the "Big Mac" mark.
Petitioners asserted that while the Isaiyas Group and Topacio
did register the "Big Mac" mark ahead of McDonald's, the
Isaiyas Group did so only in the Supplemental Register of the
PBPTT and such registration does not provide any protection.
McDonald's disclosed that it had acquired Topacio's rights to his
registration in a Deed of Assignment dated 18 May 1981.18
The Trial Court's Ruling
On 5 September 1994, the RTC rendered judgment ("RTC
Decision") finding respondent corporation liable for trademark
infringement and unfair competition. However, the RTC
dismissed the complaint against private respondents and the
counterclaim against petitioners for lack of merit and
insufficiency of evidence. The RTC held:
Undeniably, the mark "B[ig] M[ac]" is a registered
trademark for plaintiff McDonald's, and as such, it is
entitled [to] protection against infringement.
xxxx
There exist some distinctions between the names
"B[ig] M[ac]" and "B[ig] M[ak]" as appearing in the
respective signages, wrappers and containers of the
food products of the parties. But infringement goes
beyond the physical features of the questioned name
and the original name. There are still other factors to
be considered.
xxxx
Significantly, the contending parties are both in the
business of fast-food chains and restaurants. An
average person who is hungry and wants to eat a
hamburger sandwich may not be discriminating
enough to look for a McDonald's restaurant and buy a
"B[ig] M[ac]" hamburger. Once he sees a stall selling
hamburger sandwich, in all likelihood, he will dip into
his pocket and order a "B[ig] M[ak]" hamburger
sandwich. Plaintiff McDonald's fast-food chain
has attained wide popularity and acceptance by the
consuming public so much so that its air-conditioned
food outlets and restaurants will perhaps not be
mistaken by many to be the same as defendant
corporation's mobile snack vans located along busy
streets or highways. But the thing is that what is
being sold by both contending parties is a food item –
a hamburger sandwich which is for immediate
consumption, so that a buyer may easily be confused
or deceived into thinking that the "B[ig] M[ak]"
hamburger sandwich he bought is a food-product of
plaintiff McDonald's, or a subsidiary or allied
outlet thereof. Surely, defendant corporation has its
own secret ingredients to make its hamburger
sandwiches as palatable and as tasty as the other
brands in the market, considering the keen
competition among mushrooming hamburger stands
and multinational fast-food chains and
restaurants. Hence, the trademark "B[ig] M[ac]" has
been infringed by defendant corporation when it
used the name "B[ig] M[ak]" in its signages, wrappers,
and containers in connection with its food business.
xxxx
Did the same acts of defendants in using the name
"B[ig] M[ak]" as a trademark or tradename in their
signages, or in causing the name "B[ig] M[ak]" to be
printed on the wrappers and containers of their food
products also constitute an act of unfair competition
under Section 29 of the Trademark Law?
The answer is in the affirmative. xxxx
The xxx provision of the law concerning unfair
competition is broader and more inclusive than the
law concerning the infringement of trademark, which
is of more limited range, but within its narrower
range recognizes a more exclusive right derived
by the adoption and registration of the trademark by
the person whose goods or services are first
associated therewith. xxx Notwithstanding the
distinction between an action for trademark
infringement and an action for unfair competition,
however, the law extends substantially the same
relief to the injured party for both cases. (See
Sections 23 and 29 of Republic Act No. 166)
Any conduct may be said to constitute unfair
competition if the effect is to pass off on the public
the goods of one man as the goods of another. The
choice of "B[ig] M[ak]" as tradename by defendant
corporation is not merely for sentimental reasons but
was clearly made to take advantage of the reputation,
popularity and the established goodwill of plaintiff
McDonald's. For, as stated in Section 29, a person is
guilty of unfair competition who in selling his
goods shall give them the general appearance, of
goods of another manufacturer or dealer, either as
to the goods themselves or in the wrapping of the
packages in which they are contained, or the devices
or words thereon, or in any other feature of their
appearance, which would likely influence purchasers
to believe that the goods offered are those of a
manufacturer or dealer other
than the actual manufacturer or dealer. Thus,
plaintiffs have established their valid cause of action
against the defendants for trademark infringement
and unfair competition and for damages.19
The dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is rendered in favor of
plaintiffs McDonald's Corporation and McGeorge
Food Industries, Inc. and against defendant L.C. Big
Mak Burger, Inc., as follows:
1. The writ of preliminary injunction issued in this
case on [16 August 1990] is made permanent;
2. Defendant L.C. Big Mak Burger, Inc. is ordered to
pay plaintiffs actual damages in the amount
ofP400,000.00, exemplary damages in the amount
of P100,000.00, and attorney's fees and expenses of
litigation in the amount of P100,000.00;
3. The complaint against defendants Francis B. Dy,
Edna A. Dy, Rene B. Dy, Wiliam B. Dy, Jesus Aycardo,
Araceli Aycardo and Grace Huerto, as well as all
counter-claims, are dismissed for lack of merit as well
as for insufficiency of evidence.20
Respondents appealed to the Court of Appeals.
The Ruling of the Court of Appeals
On 26 November 1999, the Court of Appeals rendered
judgment ("Court of Appeals' Decision") reversing the RTC
Decision and ordering McDonald's to pay respondents
P1,600,000 as actual and compensatory damages and P300,000
as moral damages. The Court of Appeals held:
Plaintiffs-appellees in the instant case would like to
impress on this Court that the use of defendants-
appellants of its corporate name – the whole "L.C.
B[ig] M[ak] B[urger], I[nc]." which appears on their
food packages, signages and advertisements is an
infringement of their trademark "B[ig] M[ac]" which
they use to identify [their] double decker sandwich,
sold in a Styrofoam box packaging material with the
McDonald's logo of umbrella "M" stamped
thereon, together with the printed mark in red bl[o]ck
capital letters, the words being separated by a
single space. Specifically, plaintiffs-appellees argue
that defendants-appellants' use of their corporate
name is a colorable imitation of their trademark "Big
Mac".
xxxx
To Our mind, however, this Court is fully convinced
that no colorable imitation exists. As the definition
dictates, it is not sufficient that a similarity exists
in both names, but that more importantly, the over-
all presentation, or in their essential, substantive and
distinctive parts is such as would likely MISLEAD or
CONFUSE persons in the ordinary course of
purchasing the genuine article. A careful comparison
of the way the trademark "B[ig] M[ac]" is being used
by plaintiffs-appellees and corporate name L.C. Big
Mak Burger, Inc. by defendants-appellants, would
readily reveal that no confusion could take place, or
that the ordinary purchasers would be misled by it. As
pointed out by defendants-appellants, the plaintiffs-
appellees' trademark is used to designate only one
product, a double decker sandwich sold in a
Styrofoam box with the "McDonalds" logo. On the
other hand, what the defendants-appellants
corporation is using is not a trademark for its food
product but a business or corporate name. They use
the business name "L.C. Big Mak Burger, Inc." in their
restaurant business which serves diversified food
items such as siopao, noodles, pizza, and sandwiches
such as hotdog, ham, fish burger and
hamburger. Secondly, defendants-appellants'
corporate or business name appearing in the food
packages and signages are written in silhouette red-
orange letters with the "b" and "m" in upper case
letters. Above the words "Big Mak" are the upper
case letter "L.C.". Below the words "Big Mak" are the
words "Burger, Inc." spelled out in upper case
letters. Furthermore, said corporate or business name
appearing in such food packages and signages is
always accompanied by the company mascot, a
young chubby boy named Maky who wears a red T-
shirt with the upper case "m" appearing thereinand a
blue lower garment. Finally, the defendants-
appellants' food packages are made of plastic
material.
xxxx
xxx [I]t is readily apparent to the naked eye that there
appears a vast difference in the appearance of the
product and the manner that the tradename "Big
Mak" is being used and presented to the public. As
earlier noted, there are glaring dissimilarities
between plaintiffs-appellees' trademark and
defendants-appellants' corporate name. Plaintiffs-
appellees' product carrying the trademark "B[ig]
M[ac]" is a double decker sandwich (depicted in the
tray mat containing photographs of the various food
products xxx sold in a Styrofoam box with the
"McDonald's" logo and trademark in red, bl[o]ck
capital letters printed thereon xxx at a price which is
more expensive than the defendants-appellants'
comparable food products. In order to buy a "Big
Mac", a customer needs to visit an air-conditioned
"McDonald's" restaurant usually located in a nearby
commercial center, advertised and identified by its
logo - the umbrella "M", and its mascot – "Ronald
McDonald". A typical McDonald's restaurant boasts of
a playground for kids, a second floor to
accommodate additional customers, a drive-thru to
allow customers with cars to make orders without
alighting from their vehicles, the interiors of the
building are well-lighted, distinctly decorated and
painted with pastel colors xxx. In buying a "B[ig]
M[ac]", it is necessary to specify it by its
trademark. Thus, a customer needs to look for a
"McDonald's" and enter it first before he can find a
hamburger sandwich which carry the mark "Big
Mac". On the other hand,defendants-appellants sell
their goods through snack vans xxxx
Anent the allegation that defendants-appellants are
guilty of unfair competition, We likewise find the
same untenable.
Unfair competition is defined as "the employment of
deception or any other means contrary to good faith
by which a person shall pass off the goods
manufactured by him or in which he deals, or his
business, or service, for those of another who has
already established good will for his similar good,
business or services, or any acts calculated to
produce the same result" (Sec. 29, Rep. Act No. 166,
as amended).
To constitute unfair competition therefore it
must necessarily follow that there was malice and
that the entity concerned was in bad faith.
In the case at bar, We find no sufficient evidence
adduced by plaintiffs-appellees that defendants-
appellants deliberately tried to pass off the goods
manufactured by them for those of plaintiffs-
appellees. The mere suspected similarity in the sound
of the defendants-appellants' corporate name with
the plaintiffs-appellees' trademark is
not sufficient evidence to conclude unfair
competition. Defendants-appellants explained that
the name "M[ak]" in their corporate name was
derived from both the first names of the mother and
father of defendant Francis Dy, whose names are
Maxima and Kimsoy. With this explanation, it is up to
the plaintiffs-appellees to prove bad faith on the part
of defendants-appellants. It is a settled rule that the
law always presumes good faith such that any person
who seeks to be awarded damages due to acts of
another has the burden of proving
that the latter acted in bad faith or with ill motive. 21
Petitioners sought reconsideration of the Court of Appeals'
Decision but the appellate court denied their motion in its
Resolution of 11 July 2000.
Hence, this petition for review.
Petitioners raise the following grounds for their petition:
I. THE COURT OF APPEALS ERRED IN FINDING THAT
RESPONDENTS' CORPORATE NAME "L.C. BIG MAK
BURGER, INC." IS NOT A COLORABLE IMITATION OF
THE MCDONALD'S TRADEMARK "BIG MAC", SUCH
COLORABLE IMITATION BEING AN ELEMENT
OF TRADEMARK INFRINGEMENT.
A. Respondents use the words "Big Mak" as
trademark for their products and not
merely as their business or corporate name.
B. As a trademark, respondents' "Big Mak"
is undeniably and unquestionably similar to
petitioners' "Big Mac" trademark based on
the dominancy test and the idem sonans
test resulting inexorably in confusion on the
part of the consuming public.
II. THE COURT OF APPEALS ERRED IN REFUSING TO
CONSIDER THE INHERENT SIMILARITY BETWEEN THE
MARK "BIG MAK" AND THE WORD MARK "BIG MAC"
AS AN INDICATION OF RESPONDENTS' INTENT TO
DECEIVE OR DEFRAUD FOR PURPOSES OF
ESTABLISHING UNFAIR COMPETITION.22
Petitioners pray that we set aside the Court of Appeals'
Decision and reinstate the RTC Decision.
In their Comment to the petition, respondents question the
propriety of this petition as it allegedly raises only questions of
fact. On the merits, respondents contend that the Court of
Appeals committed no reversible error in finding them not
liable for trademark infringement and unfair competition and in
ordering petitioners to pay damages.
The Issues
The issues are:
1. Procedurally, whether the questions raised in this petition
are proper for a petition for review under Rule 45.
2. On the merits, (a) whether respondents used the words "Big
Mak" not only as part of the corporate name "L.C. Big Mak
Burger, Inc." but also as a trademark for their hamburger
products, and (b) whether respondent corporation is liable for
trademark infringement and unfair competition.23
The Court's Ruling
The petition has merit.
On Whether the Questions Raised in the Petition are Proper
for a Petition for Review
A party intending to appeal from a judgment of the Court of
Appeals may file with this Court a petition for review under
Section 1 of Rule 45 ("Section 1")24 raising only questions of
law. A question of law exists when the doubt or difference
arises on what the law is on a certain state of facts. There is a
question of fact when the doubt or difference arises on the
truth or falsity of the alleged facts. 25
Here, petitioners raise questions of fact and law in assailing the
Court of Appeals' findings on respondent corporation's non-
liability for trademark infringement and unfair competition.
Ordinarily, the Court can deny due course to such a petition. In
view, however, of the contradictory findings of fact of the RTC
and Court of Appeals, the Court opts to accept the petition, this
being one of the recognized exceptions to Section 1. 26 We took
a similar course of action in Asia Brewery, Inc. v. Court of
Appeals27 which also involved a suit for trademark infringement
and unfair competition in which the trial court and the Court of
Appeals arrived at conflicting findings.
On the Manner Respondents Used
"Big Mak" in their Business
Petitioners contend that the Court of Appeals erred in ruling
that the corporate name "L.C. Big Mak Burger, Inc." appears in
the packaging for respondents' hamburger products and not
the words "Big Mak" only.
The contention has merit.
The evidence presented during the hearings on petitioners'
motion for the issuance of a writ of preliminary injunction
shows that the plastic wrappings and plastic bags used by
respondents for their hamburger sandwiches bore the words
"Big Mak." The other descriptive words "burger" and "100%
pure beef" were set in smaller type, along with the locations of
branches.28 Respondents' cash invoices simply refer to their
hamburger sandwiches as "Big Mak."29It is respondents' snack
vans that carry the words "L.C. Big Mak Burger, Inc."30
It was only during the trial that respondents presented in
evidence the plastic wrappers and bags for their hamburger
sandwiches relied on by the Court of Appeals.31 Respondents'
plastic wrappers and bags were identical with those petitioners
presented during the hearings for the injunctive writ except
that the letters "L.C." and the words "Burger, Inc." in
respondents' evidence were added above and below the words
"Big Mak," respectively. Since petitioners' complaint was based
on facts existing before and during the hearings on the
injunctive writ, the facts established during those hearings are
the proper factual bases for the disposition of the issues raised
in this petition.
On the Issue of Trademark Infringement
Section 22 ("Section 22) of Republic Act No. 166, as amended
("RA 166"), the law applicable to this case,32 defines trademark
infringement as follows:
Infringement, what constitutes. — Any person who
[1] shall use, without the consent of the
registrant, anyreproduction, counterfeit, copy or
colorable imitation of any registered mark or trade-
name in connection withthe sale, offering for sale, or
advertising of any goods, business or services on or in
connection with which such use is likely to cause
confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or
services, or identity of such business; or [2]
reproduce, counterfeit, copy, or colorably
imitate any such mark or trade-name and apply such
reproduction, counterfeit, copy, or colorable
imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be
used upon or in connection with such goods, business
or services, shall be liable to a civil action by the
registrant for any or all of the
remedies herein provided.33
Petitioners base their cause of action under the first part of
Section 22, i.e. respondents allegedly used, without petitioners'
consent, a colorable imitation of the "Big Mac" mark in
advertising and selling respondents' hamburger sandwiches.
This likely caused confusion in the mind of the purchasing
public on the source of the hamburgers or the identity of the
business.
To establish trademark infringement, the following elements
must be shown: (1) the validity of plaintiff's mark; (2) the
plaintiff's ownership of the mark; and (3) the use of the mark or
its colorable imitation by the alleged infringer results in
"likelihood of confusion."34 Of these, it is the element
of likelihood of confusion that is the gravamen of trademark
infringement.35
On the Validity of the "Big Mac"Mark
and McDonald's Ownership of such Mark
A mark is valid if it is "distinctive" and thus not barred from
registration under Section 436 of RA 166 ("Section 4"). However,
once registered, not only the mark's validity but also the
registrant's ownership of the mark is prima facie presumed.37
Respondents contend that of the two words in the "Big Mac"
mark, it is only the word "Mac" that is valid because the word
"Big" is generic and descriptive (proscribed under Section 4[e]),
and thus "incapable of exclusive appropriation."38
The contention has no merit. The "Big Mac" mark, which should
be treated in its entirety and not dissected word for word,39 is
neither generic nor descriptive. Generic marks are commonly
used as the name or description of a kind ofgoods,40 such as
"Lite" for beer41 or "Chocolate Fudge" for chocolate soda
drink.42 Descriptive marks, on the other hand, convey the
characteristics, functions, qualities or ingredients of a product
to one who has never seen it or does not know it exists,43 such
as "Arthriticare" for arthritis medication.44 On the contrary, "Big
Mac" falls under theclass of fanciful or arbitrary marks as it
bears no logical relation to the actual characteristics of the
product it represents.45 As such, it is highly distinctive and thus
valid. Significantly, the trademark "Little Debbie" for snack
cakes was found arbitrary or fanciful.46
The Court also finds that petitioners have duly established
McDonald's exclusive ownership of the "Big Mac" mark.
Although Topacio and the Isaiyas Group registered the "Big
Mac" mark ahead of McDonald's, Topacio, as petitioners
disclosed, had already assigned his rights to McDonald's. The
Isaiyas Group, on the other hand, registered its trademark only
in the Supplemental Register. A mark which is not registered in
the Principal Register, and thus not distinctive, has no real
protection.47 Indeed, we have held that registration in the
Supplemental Register is not even a prima facie evidence of the
validity of the registrant's exclusive right to use the mark on the
goods specified in the certificate.48
On Types of Confusion
Section 22 covers two types of confusion arising from the use
of similar or colorable imitation marks, namely, confusion of
goods (product confusion) and confusion of business (source or
origin confusion). In Sterling Products International,
Incorporated v. Farbenfabriken Bayer Aktiengesellschaft, et
al.,49 the Court distinguished these two types of confusion,
thus:
[Rudolf] Callman notes two types of confusion. The
first is the confusion of goods "in which event the
ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was
purchasing the other." xxx The other is the confusion
of business: "Here though the goods of the parties
are different, the defendant's product is such as
might reasonably be assumed to originate with the
plaintiff, and the public would then be deceived
either into that belief or into the belief that there is
some connection between the plaintiff and defendant
which, in fact, does not exist."
Under Act No. 666,50 the first trademark law, infringement was
limited to confusion of goods only, when the infringing mark is
used on "goods of a similar kind."51 Thus, no relief was afforded
to the party whose registered mark or its colorable imitation is
used on different although related goods. To remedy this
situation, Congress enacted RA 166 on 20 June 1947. In defining
trademark infringement, Section 22 of RA 166 deleted the
requirement in question and expanded its scope to include
such use of the mark or its colorable imitation that is likely to
result in confusion on "the source or origin of such goods or
services, or identity of such business."52 Thus, while there is
confusion of goods when the products are competing,
confusion of business exists when the products are non-
competing but related enough to produce confusion of
affiliation.53
On Whether Confusion of Goods and
Confusion of Business are Applicable
Petitioners claim that respondents' use of the "Big Mak" mark
on respondents' hamburgers results in confusion of goods,
particularly with respect to petitioners' hamburgers labeled "Big
Mac." Thus, petitioners alleged in their complaint:
1.15. Defendants have unduly prejudiced and clearly
infringed upon the property rights of plaintiffs in the
McDonald's Marks, particularly the mark "B[ig]
M[ac]". Defendants' unauthorized acts are likely, and
calculated, to confuse, mislead or deceive the public
into believing that the products and services offered
by defendant Big Mak Burger, and the business it is
engaged in, are approved and sponsored by, or
affiliated with, plaintiffs.54 (Emphasis supplied)
Since respondents used the "Big Mak" mark on the same
goods, i.e. hamburger sandwiches, that petitioners' "Big Mac"
mark is used, trademark infringement through confusion of
goods is a proper issue in this case.
Petitioners also claim that respondents' use of the "Big Mak"
mark in the sale of hamburgers, the same business that
petitioners are engaged in, results in confusion of
business. Petitioners alleged in their complaint:
1.10. For some period of time, and without the
consent of plaintiff McDonald's nor its
licensee/franchisee, plaintiff McGeorge, and in clear
violation of plaintiffs' exclusive right to use and/or
appropriate the McDonald's marks, defendant Big
Mak Burger acting through individual defendants, has
been operating "Big Mak Burger", a fast food
restaurant business dealing in the sale of hamburger
and cheeseburger sandwiches, french fries and other
food products, and has caused to be printed on the
wrapper of defendant's food products and
incorporated in its signages the name "Big Mak
Burger", which is confusingly similar to and/or is a
colorable imitation of the plaintiff McDonald's mark
"B[ig] M[ac]", xxx. Defendant Big Mak Burger has
thus unjustly created the impression that its
business is approved and sponsored by, or affiliated
with, plaintiffs.xxxx
2.2 As a consequence of the acts committed by
defendants, which unduly prejudice and
infringe upon the property rights of plaintiffs
McDonald's and McGeorge as the real owner and
rightful proprietor, and the
licensee/franchisee, respectively, of the McDonald's
marks, and which are likely to have caused confusion
or deceived the public as to the true source,
sponsorship or affiliation of defendants' food
products and restaurant business, plaintiffs have
suffered and continue to suffer actual damages in the
form of injury to their business reputation and
goodwill, and of the dilution of the distinctive quality
of the McDonald's marks, in particular, the mark
"B[ig] M[ac]".55 (Emphasis supplied)
Respondents admit that their business includes selling
hamburger sandwiches, the same food product that petitioners
sell using the "Big Mac" mark. Thus, trademark infringement
through confusion of business is also a proper issue in this case.
Respondents assert that their "Big Mak" hamburgers
cater mainly to the low-income group while petitioners' "Big
Mac" hamburgers cater to the middle and upper income
groups. Even if this is true, the likelihood of confusion of
business remains, since the low-income group might be led to
believe that the "Big Mak" hamburgers are the low-end
hamburgers marketed by petitioners. After all, petitioners have
the exclusive right to use the "Big Mac" mark. On the other
hand, respondents would benefit by associating their low-end
hamburgers, through the use of the "Big Mak" mark, with
petitioners' high-end "Big Mac" hamburgers, leading to
likelihood of confusion in the identity of business.
Respondents further claim that petitioners use the "Big Mac"
mark only on petitioners' double-decker hamburgers, while
respondents use the "Big Mak" mark on hamburgers and other
products like siopao, noodles and pizza. Respondents also point
out that petitioners sell their Big Mac double-deckers in a
styrofoam box with the "McDonald's" logo and trademark in
red, block letters at a price more expensive than the
hamburgers of respondents. In contrast, respondents sell their
Big Mak hamburgers in plastic wrappers and plastic bags.
Respondents further point out that petitioners' restaurants are
air-conditioned buildings with drive-thru service, compared to
respondents' mobile vans.
These and other factors respondents cite cannot negate the
undisputed fact that respondents use their "Big Mak" mark on
hamburgers, the same food product that petitioners' sell
with the use of their registered mark "Big Mac." Whether a
hamburger is single, double or triple-decker, and whether
wrapped in plastic or styrofoam, it remains the same
hamburger food product. Even respondents' use of the "Big
Mak" mark on non-hamburger food products cannot excuse
their infringement of petitioners' registered mark, otherwise
registered marks will lose their protection under the law.
The registered trademark owner may use his mark on the same
or similar products, in different segments of the market, and at
different price levels depending on variations of the products
for specific segments of the market. The Court has recognized
that the registered trademark owner enjoys protection in
product and market areas that are the normal potential
expansion of his business. Thus, the Court has declared:
Modern law recognizes that the protection to which
the owner of a trademark is entitled is not limited to
guarding his goods or business from actual market
competition with identical or similar products of the
parties, but extends to all cases in which the use by a
junior appropriator of a trade-mark or trade-name is
likely to lead to a confusion of source, as where
prospective purchasers would be misled into thinking
that the complaining party has extended his business
into the field (see 148 ALR 56 et seq; 53 Am Jur. 576)
or is in any way connected with the activities of the
infringer; or when it forestalls the normal potential
expansion of his business (v. 148 ALR, 77, 84; 52 Am.
Jur. 576, 577).56 (Emphasis supplied)
On Whether Respondents' Use of the "Big Mak"
Mark Results in Likelihood of Confusion
In determining likelihood of confusion, jurisprudence has
developed two tests, the dominancy test and the holistic
test.57 The dominancy test focuses on the similarity of
the prevalent features of the competing trademarks that might
cause confusion. In contrast, the holistic test requires the court
to consider the entirety of the marks as applied to the
products, including the labels and packaging,
in determining confusing similarity.
The Court of Appeals, in finding that there is no likelihood of
confusion that could arise in the use of respondents' "Big Mak"
mark on hamburgers, relied on the holistic test. Thus, the Court
of Appeals ruled that "it is not sufficientthat a similarity exists
in both name(s), but that more importantly,
the overall presentation, or in their essential, substantive and
distinctive parts is such as would likely MISLEAD or CONFUSE
persons in the ordinary course of purchasing the genuine
article." The holistic test considers the two marks in their
entirety, as they appear on the goods with their labels and
packaging. It is not enough to consider their words and
compare the spelling and pronunciation of the words.58
Respondents now vigorously argue that the Court of Appeals'
application of the holistic test to this case is correct and
in accord with prevailing jurisprudence.
This Court, however, has relied on the dominancy test rather
than the holistic test. The dominancy test considers the
dominant features in the competing marks
in determining whether they are confusingly similar. Under the
dominancy test, courts give greater weight to the similarity of
the appearance of the product arising from the adoption of the
dominant features of the registered mark,
disregarding minor differences.59 Courts will consider more the
aural and visual impressions created by the marks in the public
mind, giving little weight to factors like prices, quality, sales
outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of
Patents,60 the Court ruled:
xxx It has been consistently held that the question of
infringement of a trademark is to be determined by
the test of dominancy. Similarity in size, form and
color, while relevant, is not conclusive. If the
competing trademark contains the main or essential
or dominant features of another, and confusion and
deception is likely to result, infringement takes
place. Duplication or imitation is not necessary; nor is
it necessary that the infringing label should suggest
an effort to imitate. (G. Heilman Brewing Co. vs.
Independent Brewing Co., 191 F., 489, 495, citing
Eagle White Lead Co. vs. Pflugh (CC) 180 Fed. 579).
The question at issue in cases of infringement of
trademarks is whether the use of the marks involved
would be likely to cause confusion or mistakes in the
mind of the public or deceive purchasers. (Auburn
Rubber Corporation vs. Honover Rubber Co., 107 F.
2d 588; xxx) (Emphasis supplied.)
The Court reiterated the dominancy test in Lim Hoa v. Director
of Patents,61 Phil. Nut Industry, Inc. v. Standard Brands
Inc.,62 Converse Rubber Corporation v. Universal Rubber
Products, Inc.,63 and Asia Brewery, Inc. v. Court of Appeals.64 In
the 2001 case of Societe Des Produits Nestlé, S.A. v. Court of
Appeals,65 the Court explicitly rejected the holistic test in this
wise:
[T]he totality or holistic test is contrary to the
elementary postulate of the law on trademarks and
unfair competition that confusing similarity is to
be determined on the basis of visual, aural,
connotative comparisons
and overall impressions engendered by the marks in
controversy as they are encountered in the realities
of the marketplace. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into law in
Section 155.1 of the Intellectual Property Code which defines
infringement as the "colorable imitation of a registered mark
xxx or a dominant feature thereof."
Applying the dominancy test, the Court finds that respondents'
use of the "Big Mak" mark results in likelihood of confusion.
First, "Big Mak" sounds exactly the same as "Big Mac." Second,
the first word in "Big Mak" is exactly the same as the first word
in "Big Mac." Third, the first two letters in "Mak" are the same
as the first two letters in "Mac." Fourth, the last letter in "Mak"
while a "k" sounds the same as "c" when the word "Mak" is
pronounced. Fifth, in Filipino, the letter "k" replaces "c" in
spelling, thus "Caloocan" is spelled "Kalookan."
In short, aurally the two marks are the same, with the first
word of both marks phonetically the same, and the second
word of both marks also phonetically the same. Visually, the
two marks have both two words and six letters, with the first
word of both marks having the same letters and the second
word having the same first two letters. In spelling, considering
the Filipino language, even the last letters of both marks are the
same.
Clearly, respondents have adopted in "Big Mak" not only the
dominant but also almost all the features of "Big
Mac." Applied to the same food product of hamburgers, the
two marks will likely result in confusion in the public mind.
The Court has taken into account the aural effects of the words
and letters contained in the marks in determining the issue
of confusing similarity. Thus, in Marvex Commercial Co., Inc. v.
Petra Hawpia & Co., et al.,66 the Court held:
The following random list of confusingly similar
sounds in the matter of trademarks, culled from
Nims, Unfair Competition and Trade Marks, 1947, Vol.
1, will reinforce our view that "SALONPAS" and
"LIONPAS" are confusingly similar in sound: "Gold
Dust" and "Gold Drop"; "Jantzen" and "Jass-Sea";
"Silver Flash" and "Supper Flash"; "Cascarete" and
"Celborite"; "Celluloid" and "Cellonite"; "Chartreuse"
and "Charseurs"; "Cutex" and "Cuticlean"; "Hebe" and
"Meje"; "Kotex" and "Femetex"; "Zuso" and "Hoo
Hoo". Leon Amdur, in his book "Trade-Mark Law and
Practice", pp. 419-421, cities, as coming within the
purview of the idem sonans rule, "Yusea" and "U-C-
A", "Steinway Pianos" and "Steinberg Pianos", and
"Seven-Up" and "Lemon-Up". In Co Tiong vs. Director
of Patents, this Court unequivocally said that
"Celdura" and "Cordura" are confusingly similar in
sound; this Court held in Sapolin Co. vs. Balmaceda,
67 Phil. 795 that the name "Lusolin" is an
infringement of the trademark "Sapolin", as the
sound of the two names is almost the same.
(Emphasis supplied)
Certainly, "Big Mac" and "Big Mak" for hamburgers create even
greater confusion, not only aurally but also visually.
Indeed, a person cannot distinguish "Big Mac" from "Big Mak"
by their sound. When one hears a "Big Mac" or "Big Mak"
hamburger advertisement over the radio, one would not know
whether the "Mac" or "Mak" ends with a "c" or a "k."
Petitioners' aggressive promotion of the "Big Mac" mark, as
borne by their advertisement expenses, has built goodwill and
reputation for such mark making it one of the easily
recognizable marks in the market today. This increases the
likelihood that consumers will mistakenly associate petitioners'
hamburgers and business with those of respondents'.
Respondents' inability to explain sufficiently how and why they
came to choose "Big Mak" for their hamburger
sandwiches indicates their intent to imitate petitioners' "Big
Mac" mark. Contrary to the Court of Appeals' finding,
respondents' claim that their "Big Mak" mark was inspired by
the first names of respondent Dy's mother (Maxima) and father
(Kimsoy) is not credible. As petitioners well noted:
[R]espondents, particularly Respondent Mr. Francis
Dy, could have arrived at a more creative choice for a
corporate name by using the names of his parents,
especially since he was allegedly driven by
sentimental reasons. For one, he could have put his
father's name ahead of his mother's, as is usually
done in this patriarchal society, and derived letters
from said names in that order. Or, he could have
taken an equal number of letters (i.e., two) from each
name, as is the more usual thing done. Surely, the
more plausible reason behind Respondents' choice of
the word "M[ak]", especially when taken in
conjunction with the word "B[ig]", was their intent to
take advantage of Petitioners' xxx "B[ig] M[ac]"
trademark, with their allegedsentiment-focused
"explanation" merely thought of as a
convenient, albeit unavailing, excuse or defense for
such an unfair choice of name.67
Absent proof that respondents' adoption of the "Big Mak" mark
was due to honest mistake or was fortuitous,68 the inescapable
conclusion is that respondents adopted the "Big Mak" mark to
"ride on the coattails" of the more established "Big Mac"
mark.69 This saves respondents much of the expense in
advertising to create market recognition of their mark and
hamburgers.70
Thus, we hold that confusion is likely to result in the public
mind. We sustain petitioners' claim of trademark infringement.
On the Lack of Proof of
Actual Confusion
Petitioners' failure to present proof of actual confusion does
not negate their claim of trademark infringement. As noted
in American Wire & Cable Co. v. Director of Patents,71 Section
22 requires the less stringent standard of "likelihood of
confusion" only. While proof of actual confusion is the best
evidence of infringement, its absence is inconsequential.72
On the Issue of Unfair Competition
Section 29 ("Section 29")73 of RA 166 defines unfair
competition, thus:
xxxx
Any person who will employ deception or any other
means contrary to good faith by which he shall pass
off the goods manufactured by him or in which he
deals, or his business, or services for those of the one
having established such goodwill, or
who shall commit any acts calculated to produce said
result, shall be guilty of unfair competition,
and shall be subject to an action therefor.
In particular, and without in any way limiting the
scope of unfair competition, the following shall be
deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give
them the general appearance of goods of another
manufacturer or dealer, either as to the goods
themselves or in the wrapping of the packages in
which they are contained, or the devices or words
thereon, or in any feature of their appearance, which
would be likely to influence purchasers to believe that
the goods offered are those of a manufacturer or
dealer, other than the actual manufacturer or dealer,
or who otherwise clothes the goods with such
appearance as shalldeceive the public and defraud
another of his legitimate trade, or any subsequent
vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or
who employs any other means calculated to induce
the false belief that such person is offering the
services of another who has identified such services
in the mind of the public; or
(c) Any person who shall make any false statement in
the course of trade or who shall commit any other act
contrary to good faith of a nature calculated to
discredit the goods, business or services of another.
(Emphasis supplied)
The essential elements of an action for unfair competition are
(1) confusing similarity in the general appearance of the goods,
and (2) intent to deceive the public and defraud a
competitor.74 The confusing similarity may or may not result
from similarity in the marks, but may result from other external
factors in the packaging or presentation of the goods. The
intent to deceive and defraud may be inferred from the
similarity of the appearance of the goods as offered for sale to
the public.75 Actual fraudulent intent need not be shown.76
Unfair competition is broader than trademark infringement and
includes passing off goods with or without trademark
infringement. Trademark infringement is a form of unfair
competition.77 Trademark infringement constitutes unfair
competition when there is not merely likelihood of confusion,
but also actual or probable deception on the public because of
the general appearance of the goods. There can be trademark
infringement without unfair competition as when the infringer
discloses on the labels containing the mark that he
manufactures the goods, thus preventing the public from being
deceived that the goods originate from the trademark owner.78
To support their claim of unfair competition, petitioners allege
that respondents fraudulently passed off their hamburgers as
"Big Mac" hamburgers. Petitioners add that respondents'
fraudulent intent can be inferred from the similarity of the
marks in question.79
Passing off (or palming off) takes place where the defendant, by
imitative devices on the general appearance of the goods,
misleads prospective purchasers into buying his merchandise
under the impression that they are buying that of his
competitors.80 Thus, the defendant gives his goods the general
appearance of the goods of his competitor with the intention of
deceiving the public that the goods are those of his competitor.
The RTC described the respective marks and the goods of
petitioners and respondents in this wise:
The mark "B[ig] M[ac]" is used by plaintiff McDonald's
to identify its double decker hamburger sandwich.
The packaging material is a styrofoam box with the
McDonald's logo and trademark in red with block
capital letters printed on it. All letters of the "B[ig]
M[ac]" mark are also in red and block capital
letters. On the other hand,defendants' "B[ig] M[ak]"
script print is in orange with only the letter "B" and
"M" being capitalized and the packaging material
is plastic wrapper. xxxx Further, plaintiffs' logo and
mascot are the umbrella "M" and "Ronald
McDonald's", respectively, compared to the mascot of
defendant Corporation which is a chubby boy called
"Macky" displayed or printed between the words
"Big" and "Mak."81 (Emphasis supplied)
Respondents point to these dissimilarities as proof that they did
not give their hamburgers the general appearance of
petitioners' "Big Mac" hamburgers.
The dissimilarities in the packaging are minor compared to
the stark similarities in the words that give respondents' "Big
Mak" hamburgers the general appearance of petitioners' "Big
Mac" hamburgers. Section 29(a) expressly provides that the
similarity in the general appearance of the goods may be in the
"devices or words" used on the wrappings. Respondents have
applied on their plastic wrappers and bags almost the same
words that petitioners use on their styrofoam box. What
attracts the attention of the buying public are the words "Big
Mak" which are almost the same, aurally and visually, as the
words "Big Mac." The dissimilarities in the material and other
devices are insignificant compared to the glaring similarity in
the words used in the wrappings.
Section 29(a) also provides that the defendant gives "his goods
the general appearance of goods of another manufacturer."
Respondents' goods are hamburgers which are also the goods
of petitioners. If respondents sold egg sandwiches only instead
of hamburger sandwiches, their use of the "Big Mak" mark
would not give their goods the general appearance of
petitioners' "Big Mac" hamburgers. In such case, there is only
trademark infringement but no unfair competition. However,
since respondents chose to apply the "Big Mak" mark on
hamburgers, just like petitioner's use of the "Big Mac" mark on
hamburgers, respondents have obviously clothed their goods
with the general appearance of petitioners' goods.
Moreover, there is no notice to the public that the "Big Mak"
hamburgers are products of "L.C. Big Mak Burger, Inc."
Respondents introduced during the trial plastic wrappers and
bags with the words "L.C. Big Mak Burger, Inc." to inform the
public of the name of the seller of the hamburgers. However,
petitioners introduced during the injunctive hearings plastic
wrappers and bags with the "Big Mak" mark without the name
"L.C. Big Mak Burger, Inc." Respondents' belated presentation
of plastic wrappers and bags bearing the name of "L.C. Big Mak
Burger, Inc." as the seller of the hamburgers is an after-thought
designed to exculpate them from their unfair business conduct.
As earlier stated, we cannot consider respondents' evidence
since petitioners' complaint was based on facts existing before
and during the injunctive hearings.
Thus, there is actually no notice to the public that the "Big
Mak" hamburgers are products of "L.C. Big Mak Burger, Inc."
and not those of petitioners who have the exclusive right to the
"Big Mac" mark. This clearly shows respondents' intent to
deceive the public. Had respondents' placed a notice on their
plastic wrappers and bags that the hamburgers are sold by "L.C.
Big Mak Burger, Inc.", then they could validly claim that they
did not intend to deceive the public. In such case, there is only
trademark infringement but no unfair
competition.82 Respondents, however, did not give such notice.
We hold that as found by the RTC, respondent corporation is
liable for unfair competition.
The Remedies Available to Petitioners
Under Section 2383 ("Section 23") in relation to Section 29 of RA
166, a plaintiff who successfully maintains trademark
infringement and unfair competition claims is entitled to
injunctive and monetary reliefs. Here, the RTC did not err in
issuing the injunctive writ of 16 August 1990 (made permanent
in its Decision of 5 September 1994) and in ordering the
payment of P400,000 actual damages in favor of petitioners.
The injunctive writ is indispensable to prevent further acts of
infringement by respondent corporation. Also, the amount of
actual damages is a reasonable percentage (11.9%) of
respondent corporation's gross sales for three (1988-1989 and
1991) of the six years (1984-1990) respondents have used the
"Big Mak" mark.84
The RTC also did not err in awarding exemplary damages by
way of correction for the public good85 in view of the finding of
unfair competition where intent to deceive the public is
essential. The award of attorney's fees and expenses of
litigation is also in order.86
WHEREFORE, we GRANT the instant petition. We SET ASIDE the
Decision dated 26 November 1999 of the Court of Appeals and
its Resolution dated 11 July 2000 and REINSTATE the Decision
dated 5 September 1994 of the Regional Trial Court of Makati,
Branch 137, finding respondent L.C. Big Mak Burger, Inc. liable
for trademark infringement and unfair competition.
SO ORDERED.

G.R. No. 166115 February 2, 2007
McDONALD’S CORPORATION, Petitioner,
vs.
MACJOY FASTFOOD CORPORATION, Respondent.
DECISION
GARCIA, J.:
In this petition for review on certiorari under Rule 45 of the
Rules of Court, herein petitioner McDonald’s Corporation seeks
the reversal and setting aside of the following issuances of the
Court of Appeals (CA) in CA-G.R. SP No. 57247, to wit:
1. Decision dated 29 July 20041 reversing an earlier
decision of the Intellectual Property Office (IPO)
which rejected herein respondent MacJoy FastFood
Corporation’s application for registration of the
trademark "MACJOY & DEVICE"; and
2. Resolution dated 12 November 20042 denying the
petitioner’s motion for reconsideration.
As culled from the record, the facts are as follows:
On 14 March 1991, respondent MacJoy Fastfood Corporation, a
domestic corporation engaged in the sale of fast food products
in Cebu City, filed with the then Bureau of Patents, Trademarks
and Technology Transfer (BPTT), now the Intellectual Property
Office (IPO), an application, thereat identified as Application
Serial No. 75274, for the registration of the trademark
"MACJOY & DEVICE" for fried chicken, chicken barbeque,
burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo
and steaks under classes 29 and 30 of the International
Classification of Goods.
Petitioner McDonald’s Corporation, a corporation duly
organized and existing under the laws of the State of Delaware,
USA, filed a verified Notice of Opposition3 against the
respondent’s application claiming that the trademark "MACJOY
& DEVICE" so resembles its corporate logo, otherwise known as
the Golden Arches or "M" design, and its marks "McDonalds,"
McChicken," "MacFries," "BigMac," "McDo," "McSpaghetti,"
"McSnack," and "Mc," (hereinafter collectively known as the
MCDONALD’S marks) such that when used on identical or
related goods, the trademark applied for would confuse or
deceive purchasers into believing that the goods originate from
the same source or origin. Likewise, the petitioner alleged that
the respondent’s use and adoption in bad faith of the "MACJOY
& DEVICE" mark would falsely tend to suggest a connection or
affiliation with petitioner’s restaurant services and food
products, thus, constituting a fraud upon the general public and
further cause the dilution of the distinctiveness of petitioner’s
registered and internationally recognized MCDONALD’S marks
to its prejudice and irreparable damage. The application and
the opposition thereto was docketed as Inter Partes Case No.
3861.
Respondent denied the aforementioned allegations of the
petitioner and averred that it has used the mark "MACJOY" for
the past many years in good faith and has spent considerable
sums of money for said mark’s extensive promotion in tri-
media, especially in Cebu City where it has been doing business
long before the petitioner opened its outlet thereat sometime
in 1992; and that its use of said mark would not confuse
affiliation with the petitioner’s restaurant services and food
products because of the differences in the design and detail of
the two (2) marks.
In a decision4 dated December 28, 1998, the IPO, ratiocinating
that the predominance of the letter "M," and the prefixes
"Mac/Mc" in both the "MACJOY" and the "MCDONALDS" marks
lead to the conclusion that there is confusing similarity
between them especially since both are used on almost the
same products falling under classes 29 and 30 of the
International Classification of Goods, i.e., food and ingredients
of food, sustained the petitioner’s opposition and rejected the
respondent’s application, viz:
WHEREFORE, the Opposition to the registration of the mark
MACJOY & DEVICE for use in fried chicken and chicken
barbecue, burgers, fries, spaghetti, palabok, tacos, sandwiches,
halo-halo, and steaks is, as it is hereby, SUSTAINED.
Accordingly, Application Serial No. 75274 of the herein
Respondent-Applicant is REJECTED.
Let the filewrapper of MACJOY subject matter of this case be
sent to the Administrative, Financial and Human Resources
Development Bureau for appropriate action in accordance with
this Decision, with a copy to be furnished the Bureau of
Trademarks for information and to update its record.
SO ORDERED.
In time, the respondent moved for a reconsideration but the
IPO denied the motion in its Order5 of January 14, 2000.
Therefrom, the respondent went to the CA via a Petition for
Review with prayer for Preliminary Injunction6 under Rule 43 of
the Rules of Court, whereat its appellate recourse was
docketed as CA-G.R. SP No. 57247.
Finding no confusing similarity between the marks "MACJOY"
and "MCDONALD’S," the CA, in its herein assailed
Decision7 dated July 29, 2004, reversed and set aside the
appealed IPO decision and order, thus:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered by us REVERSING and SETTING ASIDE the Decision of
the IPO dated 28 December 1998 and its Order dated 14
January 2000 and ORDERING the IPO to give due course to
petitioner’s Application Serial No. 75274.
SO ORDERED.
Explains the CA in its decision:
xxx, it is clear that the IPO brushed aside and rendered useless
the glaring and drastic differences and variations in style of the
two trademarks and even decreed that these pronounced
differences are "miniscule" and considered them to have been
"overshadowed by the appearance of the predominant
features" such as "M," "Mc," and "Mac" appearing in both
MCDONALD’S and MACJOY marks. Instead of taking into
account these differences, the IPO unreasonably shrugged off
these differences in the device, letters and marks in the
trademark sought to be registered. The IPO brushed aside and
ignored the following irrefutable facts and circumstances
showing differences between the marks of MACJOY and
MCDONALD’S. They are, as averred by the petitioner [now
respondent]:
1. The word "MacJoy" is written in round script while
the word "McDonald’s" is written in single stroke
gothic;
2. The word "MacJoy" comes with the picture of a
chicken head with cap and bowtie and wings
sprouting on both sides, while the word
"McDonald’s" comes with an arches "M" in gold
colors, and absolutely without any picture of a
chicken;
 3. The word "MacJoy" is set in deep pink and white
color scheme while "McDonald’s" is written in red,
yellow and black color combination;
4. The façade of the respective stores of the parties
are entirely different. Exhibits 1 and 1-A, show that
[respondent’s] restaurant is set also in the same bold,
brilliant and noticeable color scheme as that of its
wrappers, containers, cups, etc., while [petitioner’s]
restaurant is in yellow and red colors, and with the
mascot of "Ronald McDonald" being prominently
displayed therein." (Words in brackets supplied.)
Petitioner promptly filed a motion for reconsideration.
However, in its similarly challenged Resolution8 of November
12, 2004, the CA denied the motion, as it further held:
Whether a mark or label of a competitor resembles another is
to be determined by an inspection of the points of difference
and resemblance as a whole, and not merely the points of
resemblance. The articles and trademarks employed and used
by the [respondent] Macjoy Fastfood Corporation are so
different and distinct as to preclude any probability or
likelihood of confusion or deception on the part of the public to
the injury of the trade or business of the [petitioner]
McDonald’s Corporation. The "Macjoy & Device" mark is
dissimilar in color, design, spelling, size, concept and
appearance to the McDonald’s marks. (Words in brackets
supplied.)
Hence, the petitioner’s present recourse on the following
grounds:
I.
THE COURT OF APPEALS ERRED IN RULING THAT
RESPONDENT’S "MACJOY & DEVICE" MARK IS NOT
CONFUSINGLY SIMILAR TO PETITIONER’S "McDONALD’S
MARKS." IT FAILED TO CORRECTLY APPLY THE DOMINANCY
TEST WHICH HAS BEEN CONSISTENTLY APPLIED BY THIS
HONORABLE COURT IN DETERMINING THE EXISTENCE OF
CONFUSING SIMILARITY BETWEEN COMPETING MARKS.
A. The McDonald’s Marks belong to a well-known and
established "family of marks" distinguished by the use
of the prefix "Mc" and/or "Mac" and the corporate
"M" logo design.
B. The prefix "Mc" and/or "Mac" is the dominant
portion of both Petitioner’s McDonald’s Marks and
the Respondent’s "Macjoy & Device" mark. As such,
the marks are confusingly similar under the
Dominancy Test.
C. Petitioner’s McDonald’s Marks are well-known and
world-famous marks which must be protected under
the Paris Convention.
II.
THE COURT OF APPEALS ERRED IN RULING THAT THE DECISION
OF THE IPO DATED 28 DECEMBER 1998 AND ITS ORDER DATED
14 JANUARY 2000 WERE NOT BASED ON SUBSTANTIAL
EVIDENCE.
In its Comment,9 the respondent asserts that the petition
should be dismissed outright for being procedurally defective:
first, because the person who signed the certification against
forum shopping in behalf of the petitioner was not specifically
authorized to do so, and second, because the petition does not
present a reviewable issue as what it challenges are the factual
findings of the CA. In any event, the respondent insists that the
CA committed no reversible error in finding no confusing
similarity between the trademarks in question.
The petition is impressed with merit.
Contrary to respondent’s claim, the petitioner’s Managing
Counsel, Sheila Lehr, was specifically authorized to sign on
behalf of the petitioner the Verification and
Certification10 attached to the petition. As can be gleaned from
the petitioner’s Board of Director’s Resolution dated December
5, 2002, as embodied in the Certificate of the Assistant
Secretary dated December 21, 2004,11 Sheila Lehr was one of
those authorized and empowered "to execute and deliver for
and on behalf of [the petitioner] all documents as may be
required in connection with x x x the protection and
maintenance of any foreign patents, trademarks, trade-names,
and copyrights owned now or hereafter by [the petitioner],
including, but not limited to, x x x documents required to
institute opposition or cancellation proceedings against
conflicting trademarks, and to do such other acts and things
and to execute such other documents as may be necessary and
appropriate to effect and carry out the intent of this
resolution." Indeed, the afore-stated authority given to Lehr
necessarily includes the authority to execute and sign the
mandatorily required certification of non-forum shopping to
support the instant petition for review which stemmed from
the "opposition proceedings" lodged by the petitioner before
the IPO. Considering that the person who executed and signed
the certification against forum shopping has the authority to do
so, the petition, therefore, is not procedurally defective.
As regards the respondent’s argument that the petition raises
only questions of fact which are not proper in a petition for
review, suffice it to say that the contradictory findings of the
IPO and the CA constrain us to give due course to the petition,
this being one of the recognized exceptions to Section 1, Rule
45 of the Rules of Court. True, this Court is not the proper
venue to consider factual issues as it is not a trier of
facts.12 Nevertheless, when the factual findings of the appellate
court are mistaken, absurd, speculative, conjectural, conflicting,
tainted with grave abuse of discretion, or contrary to the
findings culled by the court of origin,13 as here, this Court will
review them.
The old Trademark Law, Republic Act (R.A.) No. 166, as
amended, defines a "trademark" as any distinctive word, name,
symbol, emblem, sign, or device, or any combination thereof
adopted and used by a manufacturer or merchant on his goods
to identify and distinguish them from those manufactured,
sold, or dealt in by others.14
Under the same law, the registration of a trademark is subject
to the provisions of Section 4 thereof, paragraph (d) of which is
pertinent to this case. The provision reads:
Section 4. Registration of trademarks, trade-names and service-
marks on the principal register. – There is hereby established a
register of trademarks, tradenames and service-marks which
shall be known as the principal register. The owner of the
trade-mark, trade-name or service-mark used to distinguish his
goods, business or services of others shall have the right to
register the same on the principal register, unless it:
xxx xxx xxx
(d) Consists of or comprises a mark or trade-name which so
resembles a mark or trade-name registered in the Philippines or
a mark or trade-name previously used in the Philippines by
another and not abandoned, as to be likely, when applied to or
used in connection with the goods, business or services of the
applicant, to cause confusion or mistake or to deceive
purchasers;
 xxx xxx xxx
Essentially, the issue here is whether there is a confusing
similarity between the MCDONALD’S marks of the petitioner
and the respondent’s "MACJOY & DEVICE" trademark when
applied to Classes 29 and 30 of the International Classification
of Goods, i.e., food and ingredients of food.
In determining similarity and likelihood of confusion,
jurisprudence has developed two tests, the dominancy test and
the holistic test.15 The dominancy test focuses on the similarity
of the prevalent features of the competing trademarks that
might cause confusion or deception.16 In contrast, the holistic
test requires the court to consider the entirety of the marks as
applied to the products, including the labels and packaging, in
determining confusing similarity.17 Under the latter test, a
comparison of the words is not the only determinant
factor.18 1awphi1.net
Here, the IPO used the dominancy test in concluding that there
was confusing similarity between the two (2) trademarks in
question as it took note of the appearance of the predominant
features "M", "Mc" and/or "Mac" in both the marks. In
reversing the conclusion reached by the IPO, the CA, while
seemingly applying the dominancy test, in fact actually applied
the holistic test. The appellate court ruled in this wise:
Applying the Dominancy test to the present case, the IPO
should have taken into consideration the entirety of the two
marks instead of simply fixing its gaze on the single letter "M"
or on the combinations "Mc" or "Mac". A mere cursory look of
the subject marks will reveal that, save for the letters "M" and
"c", no other similarity exists in the subject marks.
We agree with the [respondent] that it is entirely unwarranted
for the IPO to consider the prefix "Mac" as the predominant
feature and the rest of the designs in [respondent’s] mark as
details. Taking into account such paramount factors as color,
designs, spelling, sound, concept, sizes and audio and visual
effects, the prefix "Mc" will appear to be the only similarity in
the two completely different marks; and it is the prefix "Mc"
that would thus appear as the miniscule detail. When pitted
against each other, the two marks reflect a distinct and
disparate visual impression that negates any possible confusing
similarity in the mind of the buying public. (Words in brackets
supplied.)
Petitioner now vigorously points out that the dominancy test
should be the one applied in this case.
We agree.
In trademark cases, particularly in ascertaining whether one
trademark is confusingly similar to another, no set rules can be
deduced because each case must be decided on its merits.19 In
such cases, even more than in any other litigation, precedent
must be studied in the light of the facts of the particular
case.20 That is the reason why in trademark cases,
jurisprudential precedents should be applied only to a case if
they are specifically in point.21
While we agree with the CA’s detailed enumeration of
differences between the two (2) competing trademarks herein
involved, we believe that the holistic test is not the one
applicable in this case, the dominancy test being the one more
suitable. In recent cases with a similar factual milieu as here,
the Court has consistently used and applied the dominancy test
in determining confusing similarity or likelihood of confusion
between competing trademarks.22
Notably, in McDonalds Corp. v. LC Big Mak Burger, Inc.,23 a case
where the trademark "Big Mak" was found to be confusingly
similar with the "Big Mac" mark of the herein the petitioner,
the Court explicitly held:
This Court, xxx, has relied on the dominancy test rather than
the holistic test. The dominancy test considers the dominant
features in the competing marks in determining whether they
are confusingly similar. Under the dominancy test, courts give
greater weight to the similarity of the appearance of the
product arising from the adoption of the dominant features of
the registered mark, disregarding minor differences. Courts will
consider more the aural and visual impressions created by the
marks in the public mind, giving little weight to factors like
prices, quality, sales outlets and market segments.
Moreover, in Societe Des Produits Nestle, S.A. v. CA24 the Court,
applying the dominancy test, concluded that the use by the
respondent therein of the word "MASTER" for its coffee
product "FLAVOR MASTER" was likely to cause confusion with
therein petitioner’s coffee products’ "MASTER ROAST" and
"MASTER BLEND" and further ruled:
xxx, the totality or holistic test is contrary to the elementary
postulate of the law on trademarks and unfair competition that
confusing similarity is to be determined on the basis of visual,
aural, connotative comparisons and overall impressions
engendered by the marks in controversy as they are
encountered in the marketplace. The totality or holistic test
only relies on visual comparisons between two trademarks
whereas the dominancy test relies not only on the visual but
also on the aural and connotative comparisons and overall
impressions between the two trademarks.
Applying the dominancy test to the instant case, the Court finds
that herein petitioner’s "MCDONALD’S" and respondent’s
"MACJOY" marks are confusingly similar with each other such
that an ordinary purchaser can conclude an association or
relation between the marks.
To begin with, both marks use the corporate "M" design logo
and the prefixes "Mc" and/or "Mac" as dominant features. The
first letter "M" in both marks puts emphasis on the prefixes
"Mc" and/or "Mac" by the similar way in which they are
depicted i.e. in an arch-like, capitalized and stylized manner.25
For sure, it is the prefix "Mc," an abbreviation of "Mac," which
visually and aurally catches the attention of the consuming
public. Verily, the word "MACJOY" attracts attention the same
way as did "McDonalds," "MacFries," "McSpaghetti," "McDo,"
"Big Mac" and the rest of the MCDONALD’S marks which all use
the prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the
sale of fastfood products. Indisputably, the respondent’s
trademark application for the "MACJOY & DEVICE" trademark
covers goods under Classes 29 and 30 of the International
Classification of Goods, namely, fried chicken, chicken
barbeque, burgers, fries, spaghetti, etc. Likewise, the
petitioner’s trademark registration for the MCDONALD’S marks
in the Philippines covers goods which are similar if not identical
to those covered by the respondent’s application.
Thus, we concur with the IPO’s findings that:
In the case at bar, the predominant features such as the "M,"
"Mc," and "Mac" appearing in both McDonald’s marks and the
MACJOY & DEVICE" easily attract the attention of would-be
customers. Even non-regular customers of their fastfood
restaurants would readily notice the predominance of the "M"
design, "Mc/Mac" prefixes shown in both marks. Such that the
common awareness or perception of customers that the
trademarks McDonalds mark and MACJOY & DEVICE are one
and the same, or an affiliate, or under the sponsorship of the
other is not far-fetched.
The differences and variations in styles as the device depicting a
head of chicken with cap and bowtie and wings sprouting on
both sides of the chicken head, the heart-shaped "M," and the
stylistic letters in "MACJOY & DEVICE;" in contrast to the arch-
like "M" and the one-styled gothic letters in McDonald’s marks
are of no moment. These minuscule variations are
overshadowed by the appearance of the predominant features
mentioned hereinabove.
Thus, with the predominance of the letter "M," and prefixes
"Mac/Mc" found in both marks, the inevitable conclusion is
there is confusing similarity between the trademarks Mc
Donald’s marks and "MACJOY AND DEVICE" especially
considering the fact that both marks are being used on almost
the same products falling under Classes 29 and 30 of the
International Classification of Goods i.e. Food and ingredients
of food.
With the existence of confusing similarity between the subject
trademarks, the resulting issue to be resolved is who, as
between the parties, has the rightful claim of ownership over
the said marks.
We rule for the petitioner.
A mark is valid if it is distinctive and hence not barred from
registration under the Trademark Law. However, once
registered, not only the mark’s validity but also the registrant’s
ownership thereof is prima facie presumed.26
Pursuant to Section 3727 of R.A. No. 166, as amended, as well as
the provision regarding the protection of industrial property of
foreign nationals in this country as embodied in the Paris
Convention28 under which the Philippines and the petitioner’s
domicile, the United States, are adherent-members, the
petitioner was able to register its MCDONALD’S marks
successively, i.e., "McDonald’s" in 04 October, 197129 ; the
corporate logo which is the "M" or the golden arches design
and the "McDonald’s" with the "M" or golden arches design
both in 30 June 197730 ; and so on and so forth.31
On the other hand, it is not disputed that the respondent’s
application for registration of its trademark "MACJOY &
DEVICE" was filed only on March 14, 1991 albeit the date of
first use in the Philippines was December 7, 1987.32
Hence, from the evidence on record, it is clear that the
petitioner has duly established its ownership of the mark/s.
Respondent’s contention that it was the first user of the mark
in the Philippines having used "MACJOY & DEVICE" on its
restaurant business and food products since December, 1987 at
Cebu City while the first McDonald’s outlet of the petitioner
thereat was opened only in 1992, is downright unmeritorious.
For the requirement of "actual use in commerce x x x in the
Philippines" before one may register a trademark, trade-name
and service mark under the Trademark Law33 pertains to the
territorial jurisdiction of the Philippines and is not only confined
to a certain region, province, city or barangay.
Likewise wanting in merit is the respondent’s claim that the
petitioner cannot acquire ownership of the word "Mac"
because it is a personal name which may not be monopolized
as a trademark as against others of the same name or surname.
As stated earlier, once a trademark has been registered, the
validity of the mark is prima facie presumed. In this case, the
respondent failed to overcome such presumption. We agree
with the observations of the petitioner regarding the
respondent’s explanation that the word "MACJOY" is based on
the name of its president’s niece, Scarlett Yu Carcell. In the
words of the petitioner:
First of all, Respondent failed to present evidence to support
the foregoing claim which, at best, is a mere self-serving
assertion. Secondly, it cannot be denied that there is absolutely
no connection between the name "Scarlett Yu Carcel" and
"MacJoy" to merit the coinage of the latter word. Even
assuming that the word "MacJoy" was chosen as a term of
endearment, fondness and affection for a certain Scarlett Yu
Carcel, allegedly the niece of Respondent’s president, as well as
to supposedly bring good luck to Respondent’s business, one
cannot help but wonder why out of all the possible letters or
combinations of letters available to Respondent, its president
had to choose and adopt a mark with the prefix "Mac" as the
dominant feature thereof. A more plausible explanation
perhaps is that the niece of Respondent’s president was fond of
the food products and services of the Respondent, but that is
beside the point." 34
By reason of the respondent’s implausible and insufficient
explanation as to how and why out of the many choices of
words it could have used for its trade-name and/or trademark,
it chose the word "MACJOY," the only logical conclusion
deducible therefrom is that the respondent would want to ride
high on the established reputation and goodwill of the
MCDONALD’s marks, which, as applied to petitioner’s
restaurant business and food products, is undoubtedly beyond
question.
Thus, the IPO was correct in rejecting and denying the
respondent’s application for registration of the trademark
"MACJOY & DEVICE." As this Court ruled in Faberge Inc. v.
IAC,35 citing Chuanchow Soy & Canning Co. v. Dir. of Patents
and Villapanta:36
When one applies for the registration of a trademark or label
which is almost the same or very closely resembles one already
used and registered by another, the application should be
rejected and dismissed outright, even without any opposition
on the part of the owner and user of a previously registered
label or trademark, this not only to avoid confusion on the part
of the public, but also to protect an already used and registered
trademark and an established goodwill.
WHEREFORE, the instant petition is GRANTED. Accordingly, the
assailed Decision and Resolution of the Court of Appeals in CA-
G.R. SP NO. 57247, are REVERSED and SET ASIDE and the
Decision of the Intellectual Property Office in Inter Partes Case
No. 3861 is REINSTATED.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 188996
SERI SOMBOONSAKDIKUL, Petitioner
vs.
ORLANE S.A., Respondent
DECISION
JARDELEZA, J.:
Assailed in this petition is the Decision1 of the Court of Appeals
(CA) in CA-G.R. SP No. 105229 dated July 14, 2009 which
affirmed the decision of the Director General of the Intellectual
Property Office (IPO) denying the application for the mark
"LOLANE."
Facts
On September 23, 2003, petitioner Seri Somboonsakdikul
(petitioner) filed an application for registration2 of the mark
LOLANE with the IPO for goods3 classified under Class 3
(personal care products) of the International Classification of
Goods and Services for the Purposes of the Registration of
Marks (International Classification of Goods).4 Orlane S.A.
(respondent) filed an opposition to petitioner's application, on
the ground that the mark LOLANE was similar to ORLANE in
presentation, general appearance and pronunciation, and thus
would amount to an infringement of its mark.5 Respondent
alleged that: (1) it was the rightful owner of the ORLANE mark
which was first used in 1948; (2) the mark was earlier registered
in the Philippines on July 26, 1967 under Registration No.
129961 for the following goods:6
x x x perfumes, toilet water, face powders, lotions, essential
oils, cosmetics, lotions for the hair, dentrifices, eyebrow
pencils, make-up creams, cosmetics & toilet preparations under
Registration No. 12996.7
and (3) on September 5, 2003, it filed another application for
use of the trademark on its additional products:
x x x toilet waters; revitalizing waters, perfumes, deodorants
and body deodorants, anti-perspiration toiletries; men and
women perfume products for face care and body care; face,
eye, lips, nail, hand make-up products and make-up removal
products, towels impregnated with cosmetic lotions; tanning
and instant tanning sunproducts, sunprotection products, (not
for medical use), after-suncosmetic products; cosmetic
products; slimming cosmetic aids; toiletries; lotions, shampoos
and hair care products; shave and after shave products, shaving
and hair removing products; essential oils; toothpastes; toiletry,
cosmetic and shaving kits for travel, filled or fitted vanity-
cases[.]8
Respondent adds that by promotion, worldwide registration,
widespread and high standard use, the mark had acquired
distinction, goodwill, superior quality image and reputation and
was now well-known.9 Imputing bad faith on the petitioner,
respondent claimed that LOLANE' s first usage was only on
August 19, 2003.10
In his answer,11 petitioner denied that the LOLANE mark was
confusingly similar to the mark ORLANE. He averred that he
was the lawful owner of the mark LOLANE which he has used
for various personal care products sold worldwide. He alleged
that the first worldwide use of the mark was in Vietnam on July
4, 1995. Petitioner also alleged that he had continuously
marketed and advertised Class 3 products bearing LOLANE
mark in the Philippines and in different parts of the world and
that as a result, the public had come to associate the mark with
him as provider of quality personal care products.12
Petitioner maintained that the marks were distinct and not
confusingly similar either under the dominancy test or the
holistic test. The mark ORLANE was in plain block upper case
letters while the mark LOLANE was printed in stylized word
with the second letter L and the letter A co-joined.
Furthermore, the similarity in one syllable would not
automatically result in confusion even if used in the same class
of goods since his products always appear with Thai characters
while those of ORLANE always had the name Paris on it. The
two marks are also pronounced differently. Also, even if the
two marks contained the word LANE it would not make them
confusingly similar since the IPO had previously allowed the co-
existence of trademarks containing the syllable "joy" or "book"
and that he also had existing registrations and pending
applications for registration in other countries.13
The Bureau of Legal Affairs (BLA) rejected petitioner's
application in a Decision14 dated February 27, 2007, finding that
respondent's application was filed, and its mark registered,
much earlier.15 The BLA ruled that there was likelihood of
confusion based on the following observations: (1) ORLANE and
LOLANE both consisted of six letters with the same last four
letters - LANE; (2) both were used as label for similar products;
(3) both marks were in two syllables and that there was only a
slight difference in the first syllable; and (4) both marks had the
same last syllable so that if these marks were read aloud, a
sound of strong similarity would be produced and such would
likely deceive or cause confusion to the public as to the two
trademarks.16
Petitioner filed a motion for reconsideration but this was
denied by the Director of the BLA on May 7, 2007.17 The BLA
ruled that the law did not require the marks to be so identical
as to produce actual error or mistake as the likelihood of
confusion was enough. The BLA also found that the dominant
feature in both marks was the word LANE; and that the marks
had a strong visual and aural resemblance that could cause
confusion to the buying public. This resemblance was amplified
by the relatedness of the goods.18
On appeal, the Director General of the IPO affirmed the
Decision of the BLA Director. Despite the difference in the first
syllable, there was a strong visual and aural resemblance since
the marks had the same last four letters, i.e., LANE, and such
word is pronounced in this jurisdiction as in "pedestrian
lane."19 Also, the mark ORLANE is a fanciful mark invented by
the owner for the sole purpose of functioning as a trademark
and is highly distinctive. Thus, the fact that two or more entities
would accidentally adopt an identical or similar fanciful mark
was too good to be true especially when they dealt with the
same goods or services.20 The Director General also noted that
foreign judgments invoked by petitioner for the grant of its
application are not judicial precedents.21
Thus, petitioner filed a petition for review22 before the CA
arguing that there is no confusing similarity between the two
marks. Petitioner maintained that LANE is not the dominant
feature of the mark and that the dominancy test did not apply
since the trademarks are only plain word marks and the
dominancy test presupposes that the marks involved are
composite marks.23 Petitioner pointed out that the IPO had
previously allowed the mark GIN LANE under Registration No.
4-2004-006914 which also involved products under Class
3.24 While petitioner admitted that foreign judgments are not
judicial precedents, he argued that the IPO failed to recognize
relevant foreign judgments, i.e., the Australian Registrar of
Trademarks and the IPO of Singapore which ruled that there
was no confusing similarity between the marks LOLANE and
ORLANE.25 Lastly, the Director General should have deferred to
the findings of the Trademark Examiner who made a
substantive examination of the application for trademark
registration, and who is an expert in the field and is in the best
position to determine whether there already exists a registered
mark or mark for registration. Since petitioner's application for
registration of the mark LOLANE proceeded to allowance and
publication without any adverse citation of a prior confusingly
similar mark, this meant that the Trademark Examiner was of
the view that LO LANE was not confusingly similar to ORLANE.26
The CA Ruling
The CA denied the petition and held that there exists colorable
imitation of respondent's mark by LOLANE.27
The CA accorded due respect to the Decision of the Director
General and ruled that there was substantial evidence to
support the IPO's findings of fact. Applying the dominancy test,
the CA ruled that LOLANE' s mark is confusingly or deceptively
similar to ORLANE. There are predominantly striking similarities
in the two marks including LANE, with only a slight difference in
the first letters, thus the two marks would likely cause
confusion to the eyes of the public. The similarity is highlighted
when the two marks are pronounced considering that both are
one word consisting of two syllables. The CA ruled that when
pronounced, the two marks produce similar sounds.28 The CA
did not heed petitioner's contention that since the mark
ORLANE is of French origin, the same is pronounced as
"ORLAN." Filipinos would invariably pronounce it as "OR-
LEYN."29 The CA also noted that the trademark ORLANE is a
fanciful name and petitioner was not able to explain why he
chose the word LOLANE as trademark for his personal care
products. Thus, the only logical conclusion is that he would
want to benefit from the established reputation and goodwill of
the ORLANE mark.30
The CA rejected petitioner's assertion that his products'
cheaper price and low-income market eliminates the likelihood
of confusion. Low-income groups, and even those who usually
purchased ORLANE products despite the higher cost, may be
led to believe that LOLANE products are low-end personal care
products also marketed by respondent.31
The CA upheld the applicability of the dominancy test in this
case. According to the CA, the dominancy test is already
recognized and incorporated in Section 155.1 of Republic Act
No. 8293 (RA 8293), otherwise known as the Intellectual
Property Code of the Philippines.32 Citing McDonald's
Corporation v. MacJoy Fastfood Corporation,33 the CA ruled
that the dominancy test is also preferred over the holistic test.
This is because the latter relies only on the visual comparison
between two trademarks, whereas the dominancy test relies
not only on the visual, but also on their aural and connotative
comparisons, and their overall impressions
created.34 Nonetheless, the CA stated that there is nothing in
this jurisdiction dictating that the dominancy test is applicable
for composite marks.35
The CA was not swayed by the alleged favorable judgment by
the IPO in the GIN LANE application, ruling that in trademark
cases, jurisprudential precedents should be applied only to a
case if they are specifically in point.36 It also did not consider
the ruling of the IPOs in Australia, South Africa, Thailand and
Singapore which found no confusing similarity between the
marks LOLANE and ORLANE, stating that foreign judgments do
not constitute judicial precedent in this jurisdiction.37
Finally, the CA did not give merit to petitioner's contention that
the Director General should have deferred to the findings of the
Trademark Examiner. According to the CA, the proceedings
before the Trademark Examiner are ex-parte,38 and his findings
are merely prima facie. Whatever his decision may be is still
subject to review and/or appeal.39
The Petition40
Petitioner maintains that the CA erred in its interpretation of
the dominancy test, when it ruled that the dominant feature of
the contending marks is the suffix "LANE."41 The CA failed to
consider that in determining the dominant portion of a mark,
significant weight must be given to whether the buyer would be
more likely to remember and use one part of a mark as
indicating the origin of the goods.42 Thus, that part which will
likely make the most impression on the ordinary viewer will be
treated as the dominant portion of conflicting marks and given
greater weight in the comparison.43
Petitioner argues that both LOLANE and ORLANE are plain word
marks which are devoid of features that will likely make the
most impression on the ordinary viewer. If at all, the very word
marks themselves, LOLANE and ORLANE are each to be
regarded as dominant features.44 Moreover, the suffix LANE is a
weak mark, being "in common use by many other sellers in the
market. "45 Thus, LANE is also used in the marks SHELLANE and
GIN LANE, the latter covering goods under Class 3. Moreover,
the two marks are aurally different since respondent's products
originate from France and is read as "OR-LAN" and not "OR-
LEYN."46
Petitioner also claims that the CA completely disregarded the
holistic test, thus ignoring the dissimilarity of context between
LOLANE and ORLANE. Assuming that the two marks produce
similar sounds when pronounced, the differences in marks in
their entirety as they appear in their respective product labels
should still be the controlling factor in determining confusing
similarity.47
Besides, there has been no explicit declaration abandoning the
holistic test.48 Thus, petitioner urges us to go beyond the
similarities in spelling and instead consider how the marks
appear in their respective labels, the dissimilarities in the size
and shape of the containers, their color, words appearing
thereon and the general appearance,49 hence: (1) the
commonality of the marks ORLANE and LOLANE starts from and
ends with the four-letter similarity-LANE and nothing else;50 (2)
ORLANE uses "safe" or conventional colors while LOLANE uses
loud or psychedelic colors and designs with Thai
characters;51 and (3) ORLANE uses the term "Paris," indicating
the source of origin of its products.52
Petitioner likewise claims that consumers will be more careful
in their choice because the goods in question are directly
related to personal hygiene and have direct effects on their
well-being, health and safety.53 Moreover, with the huge price
difference between ORLANE and LOLANE products, relevant
purchasers are less likely to be confused.54
Finally, petitioner notes that respondent has neither validly
proven nor presented sufficient evidence that the mark
ORLANE is in actual commercial use in the Philippines.
Respondent failed to allege in any of its pleadings submitted to
the IPO's BLA and the IPO Director General the names of local
outlets that products bearing the mark ORLANE are being
marketed or sold to the general consuming public.55
Respondent's Comment56
Respondent reiterates the decisions of the CA and the IPO.57 It
maintains that ORLANE is entitled to protection under RA 8293
since it is registered with the IPO with proof of actual
use.58 Respondent posits that it has established in the
world59 and in the Philippines an image and reputation for
manufacturing and selling quality beauty products. Its products
have been sold in the market for 61 years and have been used
in the Philippines since 1972.60 Thus, to allow petitioner's
application would unduly prejudice respondent's right over its
registered trademark.61 Lastly, respondent argues that
decisions of administrative agencies such as the IPO shall not be
disturbed by the courts, absent any showing that the former
have acted without or in excess of their jurisdiction, or with
grave abuse of discretion.62
Issue
We resolve the issue of whether there is confusing similarity
between ORLANE and LOLANE which would bar the registration
of LOLANE before the IPO.
Our Ruling
We find that the CA erred when it affirmed the Decision of the
IPO.
While it is an established rule in administrative law that the
courts of justice should respect the findings of fact of
administrative agencies, the courts may not be bound by such
findings of fact when there is absolutely no evidence in support
thereof or such evidence is clearly, manifestly and patently
insubstantial; and when there is a clear showing that the
administrative agency acted arbitrarily or with grave abuse of
discretion or in a capricious and whimsical manner, such that its
action may amount to an excess or lack of
jurisdiction.63 Moreover, when there is a showing that the
findings or conclusions, drawn from the same pieces of
evidence, were arrived at arbitrarily or in disregard of the
evidence on record, they may be reviewed by the courts.64 Such
is the case here.
There is no colorable imitation between the marks LOLANE and
ORLANE which would lead to any likelihood of confusion to the
ordinary purchasers.
A trademark is defined under Section 121.1 of RA 8293 as any
visible sign capable of distinguishing the goods. It is susceptible
to registration if it is crafted fancifully or arbitrarily and is
capable of identifying and distinguishing the goods of one
manufacturer or seller from those of another.65 Thus, the mark
must be distinctive.66 The registrability of a trademark is
governed by Section 123 of RA 8293. Section 123.1 provides:
Section 123. Registrability. -
123 .1. A mark cannot be registered if it:
xxx
d. Is identical with a registered mark belonging to a different
proprietor or a mark with an earlier filing or priority date, in
respect of:
i. The same goods or services, or
ii. Closely related goods or services, or
iii. If it nearly resembles such a mark as to be likely to deceive
or cause confusion;
e. Is identical with, or confusingly similar to, or constitutes a
translation of a mark which is considered by the competent
authority of the Philippines to be well-known internationally
and in the Philippines, whether or not it is registered here, as
being already the mark of a person other than the applicant for
registration, and used for identical or similar goods or services:
Provided, That in determining whether a mark is well-known,
account shall be taken of the knowledge of the relevant sector
of the public, rather than of the public at large, including
knowledge in the Philippines which has been obtained as a
result of the promotion of the mark;
xxx
In Mighty Corporation v. E. & J Gallo Winery,67 we laid down the
requirements for a finding of likelihood of confusion, thus:
There are two types of confusion in trademark infringement.
The first is "confusion of goods" when an otherwise prudent
purchaser is induced to purchase one product in the belief that
he is purchasing another, in which case defendant's goods are
then bought as the plaintiffs and its poor quality reflects badly
on the plaintiffs reputation. The other is "confusion of
business" wherein the goods of the parties are different but the
defendant's product can reasonably (though mistakenly) be
assumed to originate from the plaintiff, thus deceiving the
public into believing that there is some connection between the
plaintiff and defendant which, in fact, does not exist.
In determining the likelihood of confusion, the Court must
consider: [a] the resemblance between the trademarks; [b]
the similarity of the goods to which the trademarks are
attached; [c] the likely effect on the purchaser and [d] the
registrant's express or implied consent and other fair and
equitable considerations. (Citations omitted, emphasis
supplied.)68
While Mighty Corporation enumerates four requirements, the
most essential requirement, to our mind, for the determination
of likelihood of confusion is the existence of resemblance
between the trademarks, i.e., colorable imitation. Absent any
finding of its existence, there can be no likelihood of confusion.
Thus we held:
Whether a trademark causes confusion and is likely to deceive
the public hinges on "colorable imitation" which has been
defined as "such similarity in form, content, words, sound,
meaning, special arrangement or general appearance of the
trademark or trade name in their overall presentation or in
their essential and substantive and distinctive parts as would
likely mislead or confuse persons in the ordinary course of
purchasing the genuine article." (Citations omitted.)69
We had the same view in Emerald Garment Manufacturing
Corporation v. Court of Appeals,70 where we stated:
Proceeding to the task at hand, the essential element of
infringement is colorable imitation. This term has been defined
as "such a close or ingenious imitation as to be calculated to
deceive ordinary purchasers, or such resemblance of the
infringing mark to the original as to deceive an ordinary
purchaser giving such attention as a purchaser usually gives,
and to cause him to purchase the one supposing it to be the
other."
Colorable imitation does not mean such similitude as amounts
to identity. Nor does it require that all the details be literally
copied. x x x (Citation omitted, emphasis supplied.)71
In determining colorable imitation, we have used either the
dominancy test or the holistic or totality test. The dominancy
test considers the similarity of the prevalent or dominant
features of the competing trademarks that might cause
confusion, mistake, and deception in the mind of the
purchasing public. More consideration is given on the aural and
visual impressions created by the marks on the buyers of
goods, giving little weight to factors like process, quality, sales
outlets, and market segments.72 On the other hand, the holistic
test considers the entirety of the marks as applied to the
products, including the labels and packaging, in determining
confusing similarity. The focus is not only on the predominant
words but also on the other features appearing on the labels.73
The CA's use of the dominancy test is in accord with our more
recent ruling in UFC Philippines, Inc. (now merged with Nutria-
Asia, Inc. as the surviving entity) v. Barrio Fiesta Manufacturing
Corporation.74 In UFC Philippines, Inc., we relied on our
declarations in McDonald's Corporation v. L.C. Big Mak Burger,
Inc.,75 Co Tiong Sa v. Director of Patents,76 and Societe Des
Produits Nestle, S.A. v. Court of Appeals77 that the dominancy
test is more in line with the basic rule in trademarks that
confusing similarity is determined by the aural, visual and
connotative and overall impressions created by the marks.
Thus, based on the dominancy test, we ruled that there is no
confusing similarity between "PAPA BOY & DEVICE" mark, and
"PAPA KETSARAP" and "PAPA BANANA CATSUP."
While there are no set rules as what constitutes a dominant
feature with respect to trademarks applied for registration,
usually, what are taken into account are signs, color, design,
peculiar shape or name, or some special, easily remembered
earmarks of the brand that readily attracts and catches the
attention of the ordinary consumer.78In UFC Philippines,
Inc., what we considered as the dominant feature of the mark is
the first word/figure that catches the eyes or that part which
appears prominently to the eyes and ears.79
However, while we agree with the CA's use of the dominancy
test, we arrive at a different conclusion. Based on the distinct
visual and aural differences between LOLANE and ORLANE, we
find that there is no confusing similarity between the two
marks.
The suffix LANE is not the dominant feature of petitioner's
mark. Neither can it be considered as the dominant feature of
ORLANE which would make the two marks confusingly similar.
First, an examination of the appearance of the marks would
show that there are noticeable differences in the way they are
written or printed as shown below:80
As correctly argued by petitioner in his answer before the BLA,
there are visual differences between LOLANE and ORLANE since
the mark ORLANE is in plain block upper case letters while the
mark LOLANE was rendered in stylized word with the second
letter L and the letter A co-joined.81
Second, as to the aural aspect of the marks, LOLANE and
ORLANE do not sound alike. Etepha v. Director of Patents, et
al.82 finds application in this case. In Etepha, we ruled that
there is no confusing similarity between PERTUSSIN and
ATUSSIN. The Court considered among other factors the aural
differences between the two marks as follows:
5. As we take up Pertussin and Atussin once again, we cannot
escape notice of the fact that the two words do not sound
alike-when pronounced. There is not much phonetic similarity
between the two. The Solicitor General well-observed that in
Pertussin the pronunciation of tbe prefix "Per", whether correct
or incorrect, includes a combination of three letters
P, e and r; whereas, in Atussin the whole starts with the single
letter A added to suffix "tussin".1âwphi1 Appeals to the ear are
dissimilar. And this, because in a word combination, the part
that comes first is the most pronounced. An expositor of the
applicable rule here is the decision in the Syrocol-Cheracol
controversy. There, the ruling is that trademark Syrocol (a
cough medicine preparation) is not confusedly similar to
trademark Cheracol (also a cough medicine preparation).
Reason: the two words "do not look or sound enough alike to
justify a holding of trademark infringement", and the "only
similarity is in the last syllable, and that is not uncommon in
names given drug compounds". (Citation omitted, emphasis
supplied.)83
Similar to Etepha, appeals to the ear in pronouncing ORLANE
and LOLANE are dissimilar. The first syllables of each
mark, i.e., OR and LO do not sound alike, while the proper
pronunciation of the last syllable LANE-"LEYN" for LOLANE and
"LAN" for ORLANE, being of French origin, also differ. We take
exception to the generalizing statement of the Director
General, which was affirmed by the CA, that Filipinos would
invariably pronounce ORLANE as "ORLEYN." This is another
finding of fact which has no basis, and thus, justifies our
reversal of the decisions of the IPO Director General and the
CA. While there is possible aural similarity when certain sectors
of the market would pronounce ORLANE as "ORLEYN," it is not
also impossible that some would also be aware of the proper
pronunciation--especially since, as respondent claims, its
trademark ORLANE has been sold in the market for more than
60 years and in the Philippines, for more than 40 years.84
Respondent failed to show proof that the suffix LANE has
registered in the mind of consumers that such suffix is
exclusively or even predominantly associated with ORLANE
products. Notably and as correctly argued by petitioner, the IPO
previously allowed the registration of the mark GIN LANE for
goods also falling under Class 3, i.e., perfume, cologne, skin
care preparations, hair care preparations and toiletries.85
We are mindful that in the earlier cases of Mighty
Corporation and Emerald, despite a finding that there is no
colorable imitation, we still discussed the nature of the goods
using the trademark and whether the goods are identical,
similar, competing or related. We need not belabor a similar
discussion here considering that the essential element in
determining likelihood of confusion, i.e., colorable imitation by
LO LANE of the mark ORLANE, is absent in this case.
Resemblance between the marks is a separate requirement
from, and must not be confused with, the requirement of a
similarity of the goods to which the trademarks are attached.
In Great White Shark Enterprises, Inc v. Caralde, Jr.,86 after we
ruled that there was no confusing similarity between Great
White Shark's "GREG NORMAN LOGO" and Caralde's "SHARK &
LOGO" mark due to the visual and aural dissimilarities between
the two marks, we deemed it unnecessary to resolve whether
Great White Shark's mark has gained recognition as a well-
known mark.
Finding that LOLANE is not a colorable imitation of ORLANE due
to distinct visual and aural differences using the dominancy
test, we no longer find it necessary to discuss the contentions
of the petitioner as to the appearance of the marks together
with the packaging, nature of the goods represented by the
marks and the price difference, as well as the applicability of
foreign judgments. We rule that the mark LOLANE is entitled to
registration.
WHEREFORE, the petition is GRANTED. The Decision of the
Court of Appeals dated July 14, 2009 is REVERSED and SET
ASIDE. Petitioner's application of the mark LOLANE for goods
classified under Class 3 of the International Classification of
Goods is GRANTED.
SO ORDERED.
G.R. No. 101897. March 5, 1993.
LYCEUM OF THE PHILIPPINES, INC., petitioner, vs. COURT OF
APPEALS, LYCEUM OF APARRI, LYCEUM OF CABAGAN, LYCEUM
OF CAMALANIUGAN, INC., LYCEUM OF LALLO, INC., LYCEUM OF
TUAO, INC., BUHI LYCEUM, CENTRAL LYCEUM OF
CATANDUANES, LYCEUM OF SOUTHERN PHILIPPINES, LYCEUM
OF EASTERN MINDANAO, INC. and WESTERN PANGASINAN
LYCEUM, INC., respondents.
Quisumbing, Torres & Evangelista Law Offices and Ambrosio
Padilla for petitioner.
Antonio M. Nuyles and Purungan, Chato, Chato, Tarriela & Tan
Law Offices for respondents.
Froilan Siobal for Western Pangasinan Lyceum.
SYLLABUS
1. CORPORATION LAW; CORPORATE NAMES; REGISTRATION OF
PROPOSED NAME WHICH IS IDENTICAL OR CONFUSINGLY
SIMILAR TO THAT OF ANY EXISTING CORPORATION,
PROHIBITED; CONFUSION AND DECEPTION EFFECTIVELY
PRECLUDED BY THE APPENDING OF GEOGRAPHIC NAMES TO
THE WORD "LYCEUM". — The Articles of Incorporation of a
corporation must, among other things, set out the name of the
corporation. Section 18 of the Corporation Code establishes a
restrictive rule insofar as corporate names are concerned:
"Section 18. Corporate name. — No corporate name may be
allowed by the Securities an Exchange Commission if the
proposed name is identical or deceptively or confusingly similar
to that of any existing corporation or to any other name already
protected by law or is patently deceptive, confusing or contrary
to existing laws. When a change in the corporate name is
approved, the Commission shall issue an amended certificate of
incorporation under the amended name." The policy underlying
the prohibition in Section 18 against the registration of a
corporate name which is "identical or deceptively or
confusingly similar" to that of any existing corporation or which
is "patently deceptive" or "patently confusing" or "contrary to
existing laws," is the avoidance of fraud upon the public which
would have occasion to deal with the entity concerned, the
evasion of legal obligations and duties, and the reduction of
difficulties of administration and supervision over corporations.
We do not consider that the corporate names of private
respondent institutions are "identical with, or deceptively or
confusingly similar" to that of the petitioner institution. True
enough, the corporate names of private respondent entities all
carry the word "Lyceum" but confusion and deception are
effectively precluded by the appending of geographic names to
the word "Lyceum." Thus, we do not believe that the "Lyceum
of Aparri" can be mistaken by the general public for the Lyceum
of the Philippines, or that the "Lyceum of Camalaniugan" would
be confused with the Lyceum of the Philippines.
2. ID.; ID.; DOCTRINE OF SECONDARY MEANING; USE OF WORD
"LYCEUM," NOT ATTENDED WITH EXCLUSIVITY. — It is claimed,
however, by petitioner that the word "Lyceum" has acquired a
secondary meaning in relation to petitioner with the result that
word, although originally a generic, has become appropriable
by petitioner to the exclusion of other institutions like private
respondents herein. The doctrine of secondary meaning
originated in the field of trademark law. Its application has,
however, been extended to corporate names sine the right to
use a corporate name to the exclusion of others is based upon
the same principle which underlies the right to use a particular
trademark or tradename. In Philippine Nut Industry, Inc. v.
Standard Brands, Inc., the doctrine of secondary meaning was
elaborated in the following terms: " . . . a word or phrase
originally incapable of exclusive appropriation with reference to
an article on the market, because geographically or otherwise
descriptive, might nevertheless have been used so long and so
exclusively by one producer with reference to his article that, in
that trade and to that branch of the purchasing public, the
word or phrase has come to mean that the article was his
product." The question which arises, therefore, is whether or
not the use by petitioner of "Lyceum" in its corporate name has
been for such length of time and with such exclusivity as to
have become associated or identified with the petitioner
institution in the mind of the general public (or at least that
portion of the general public which has to do with schools). The
Court of Appeals recognized this issue and answered it in the
negative: "Under the doctrine of secondary meaning, a word or
phrase originally incapable of exclusive appropriation with
reference to an article in the market, because geographical or
otherwise descriptive might nevertheless have been used so
long and so exclusively by one producer with reference to this
article that, in that trade and to that group of the purchasing
public, the word or phrase has come to mean that the article
was his produce (Ana Ang vs. Toribio Teodoro, 74 Phil. 56). This
circumstance has been referred to as the distinctiveness into
which the name or phrase has evolved through the substantial
and exclusive use of the same for a considerable period of time.
. . . No evidence was ever presented in the hearing before the
Commission which sufficiently proved that the word 'Lyceum'
has indeed acquired secondary meaning in favor of the
appellant. If there was any of this kind, the same tend to prove
only that the appellant had been using the disputed word for a
long period of time. . . . In other words, while the appellant may
have proved that it had been using the word 'Lyceum' for a long
period of time, this fact alone did not amount to mean that the
said word had acquired secondary meaning in its favor because
the appellant failed to prove that it had been using the same
word all by itself to the exclusion of others. More so, there was
no evidence presented to prove that confusion will surely arise
if the same word were to be used by other educational
institutions. Consequently, the allegations of the appellant in its
first two assigned errors must necessarily fail." We agree with
the Court of Appeals. The number alone of the private
respondents in the case at bar suggests strongly that
petitioner's use of the word "Lyceum" has not been attended
with the exclusivity essential for applicability of the doctrine of
secondary meaning. Petitioner's use of the word "Lyceum" was
not exclusive but was in truth shared with the Western
Pangasinan Lyceum and a little later with other private
respondent institutions which registered with the SEC using
"Lyceum" as part of their corporation names. There may well
be other schools using Lyceum or Liceo in their names, but not
registered with the SEC because they have not adopted the
corporate form of organization.
3. ID.; ID.; MUST BE EVALUATED IN THEIR ENTIRETY TO
DETERMINE WHETHER THEY ARE CONFUSINGLY OR
DECEPTIVELY SIMILAR TO ANOTHER CORPORATE ENTITY'S
NAME. — petitioner institution is not entitled to a legally
enforceable exclusive right to use the word "Lyceum" in its
corporate name and that other institutions may use "Lyceum"
as part of their corporate names. To determine whether a given
corporate name is "identical" or "confusingly or deceptively
similar" with another entity's corporate name, it is not enough
to ascertain the presence of "Lyceum" or "Liceo" in both
names. One must evaluate corporate names in their entirety
and when the name of petitioner is juxtaposed with the names
of private respondents, they are not reasonably regarded as
"identical" or "confusingly or deceptively similar" with each
other.
DECISION
FELICIANO, J p:
Petitioner is an educational institution duly registered with the
Securities and Exchange Commission ("SEC"). When it first
registered with the SEC on 21 September 1950, it used the
corporate name Lyceum of the Philippines, Inc. and has used
that name ever since.
On 24 February 1984, petitioner instituted proceedings before
the SEC to compel the private respondents, which are also
educational institutions, to delete the word "Lyceum" from
their corporate names and permanently to enjoin them from
using "Lyceum" as part of their respective names.
Some of the private respondents actively participated in the
proceedings before the SEC. These are the following, the dates
of their original SEC registration being set out below opposite
their respective names:
Western Pangasinan Lyceum — 27 October 1950
Lyceum of Cabagan — 31 October 1962
Lyceum of Lallo, Inc. — 26 March 1972
Lyceum of Aparri — 28 March 1972
Lyceum of Tuao, Inc. — 28 March 1972
Lyceum of Camalaniugan — 28 March 1972
The following private respondents were declared in default for
failure to file an answer despite service of summons:
Buhi Lyceum;
Central Lyceum of Catanduanes;
Lyceum of Eastern Mindanao, Inc.; and
Lyceum of Southern Philippines
Petitioner's original complaint before the SEC had included
three (3) other entities:
1. The Lyceum of Malacanay;
2. The Lyceum of Marbel; and
3. The Lyceum of Araullo
The complaint was later withdrawn insofar as concerned the
Lyceum of Malacanay and the Lyceum of Marbel, for failure to
serve summons upon these two (2) entities. The case against
the Liceum of Araullo was dismissed when that school motu
proprio change its corporate name to "Pamantasan ng Araullo."
The background of the case at bar needs some recounting.
Petitioner had sometime before commenced in the SEC a
proceeding (SEC-Case No. 1241) against the Lyceum of Baguio,
Inc. to require it to change its corporate name and to adopt
another name not "similar [to] or identical" with that of
petitioner. In an Order dated 20 April 1977, Associate
Commissioner Julio Sulit held that the corporate name of
petitioner and that of the Lyceum of Baguio, Inc. were
substantially identical because of the presence of a "dominant"
word, i.e., "Lyceum," the name of the geographical location of
the campus being the only word which distinguished one from
the other corporate name. The SEC also noted that petitioner
had registered as a corporation ahead of the Lyceum of Baguio,
Inc. in point of time, 1 and ordered the latter to change its
name to another name "not similar or identical [with]" the
names of previously registered entities.
The Lyceum of Baguio, Inc. assailed the Order of the SEC before
the Supreme Court in a case docketed as G.R. No. L-46595. In a
Minute Resolution dated 14 September 1977, the Court denied
the Petition for Review for lack of merit. Entry of judgment in
that case was made on 21 October 1977. 2
Armed with the Resolution of this Court in G.R. No. L-46595,
petitioner then wrote all the educational institutions it could
find using the word "Lyceum" as part of their corporate name,
and advised them to discontinue such use of "Lyceum." When,
with the passage of time, it became clear that this recourse had
failed, petitioner instituted before the SEC SEC-Case No. 2579
to enforce what petitioner claims as its proprietary right to the
word "Lyceum." The SEC hearing officer rendered a decision
sustaining petitioner's claim to an exclusive right to use the
word "Lyceum." The hearing officer relied upon the SEC ruling
in the Lyceum of Baguio, Inc. case (SEC-Case No. 1241) and held
that the word "Lyceum" was capable of appropriation and that
petitioner had acquired an enforceable exclusive right to the
use of that word.
On appeal, however, by private respondents to the SEC En
Banc, the decision of the hearing officer was reversed and set
aside. The SEC En Banc did not consider the word "Lyceum" to
have become so identified with petitioner as to render use
thereof by other institutions as productive of confusion about
the identity of the schools concerned in the mind of the general
public. Unlike its hearing officer, the SEC En Banc held that the
attaching of geographical names to the word "Lyceum" served
sufficiently to distinguish the schools from one another,
especially in view of the fact that the campuses of petitioner
and those of the private respondents were physically quite
remote from each other. 3
Petitioner then went on appeal to the Court of Appeals. In its
Decision dated 28 June 1991, however, the Court of Appeals
affirmed the questioned Orders of the SEC En Banc. 4 Petitioner
filed a motion for reconsideration, without success.
Before this Court, petitioner asserts that the Court of Appeals
committed the following errors:
1. The Court of Appeals erred in holding that the Resolution of
the Supreme Court in G.R. No. L-46595 did not constitute stare
decisis as to apply to this case and in not holding that said
Resolution bound subsequent determinations on the right to
exclusive use of the word Lyceum.
2. The Court of Appeals erred in holding that respondent
Western Pangasinan Lyceum, Inc. was incorporated earlier than
petitioner.
3. The Court of Appeals erred in holding that the word Lyceum
has not acquired a secondary meaning in favor of petitioner.
4. The Court of Appeals erred in holding that Lyceum as a
generic word cannot be appropriated by the petitioner to the
exclusion of others. 5
We will consider all the foregoing ascribed errors, though not
necessarily seriatim. We begin by noting that the Resolution of
the Court in G.R. No. L-46595 does not, of course, constitute res
adjudicata in respect of the case at bar, since there is no
identity of parties. Neither is stare decisis pertinent, if only
because the SEC En Banc itself has re-examined Associate
Commissioner Sulit's ruling in the Lyceum of Baguio case. The
Minute Resolution of the Court in G.R. No. L-46595 was not a
reasoned adoption of the Sulit ruling.
The Articles of Incorporation of a corporation must, among
other things, set out the name of the corporation. 6 Section 18
of the Corporation Code establishes a restrictive rule insofar as
corporate names are concerned:
"SECTION 18. Corporate name. — No corporate name may be
allowed by the Securities an Exchange Commission if the
proposed name is identical or deceptively or confusingly similar
to that of any existing corporation or to any other name already
protected by law or is patently deceptive, confusing or contrary
to existing laws. When a change in the corporate name is
approved, the Commission shall issue an amended certificate of
incorporation under the amended name." (Emphasis supplied)
The policy underlying the prohibition in Section 18 against the
registration of a corporate name which is "identical or
deceptively or confusingly similar" to that of any existing
corporation or which is "patently deceptive" or "patently
confusing" or "contrary to existing laws," is the avoidance of
fraud upon the public which would have occasion to deal with
the entity concerned, the evasion of legal obligations and
duties, and the reduction of difficulties of administration and
supervision over corporations. 7
We do not consider that the corporate names of private
respondent institutions are "identical with, or deceptively or
confusingly similar" to that of the petitioner institution. True
enough, the corporate names of private respondent entities all
carry the word "Lyceum" but confusion and deception are
effectively precluded by the appending of geographic names to
the word "Lyceum." Thus, we do not believe that the "Lyceum
of Aparri" can be mistaken by the general public for the Lyceum
of the Philippines, or that the "Lyceum of Camalaniugan" would
be confused with the Lyceum of the Philippines.
Etymologically, the word "Lyceum" is the Latin word for the
Greek lykeion which in turn referred to a locality on the river
Ilissius in ancient Athens "comprising an enclosure dedicated to
Apollo and adorned with fountains and buildings erected by
Pisistratus, Pericles and Lycurgus frequented by the youth for
exercise and by the philosopher Aristotle and his followers for
teaching." 8 In time, the word "Lyceum" became associated
with schools and other institutions providing public lectures
and concerts and public discussions. Thus today, the word
"Lyceum" generally refers to a school or an institution of
learning. While the Latin word "lyceum" has been incorporated
into the English language, the word is also found in Spanish
(liceo) and in French (lycee). As the Court of Appeals noted in
its Decision, Roman Catholic schools frequently use the term;
e.g., "Liceo de Manila," "Liceo de Baleno" (in Baleno, Masbate),
"Liceo de Masbate," "Liceo de Albay." 9 "Lyceum" is in fact as
generic in character as the word "university." In the name of
the petitioner, "Lyceum" appears to be a substitute for
"university;" in other places, however, "Lyceum," or "Liceo" or
"Lycee" frequently denotes a secondary school or a college. It
may be (though this is a question of fact which we need not
resolve) that the use of the word "Lyceum" may not yet be as
widespread as the use of "university," but it is clear that a not
inconsiderable number of educational institutions have
adopted "Lyceum" or "Liceo" as part of their corporate names.
Since "Lyceum" or "Liceo" denotes a school or institution of
learning, it is not unnatural to use this word to designate an
entity which is organized and operating as an educational
institution.
It is claimed, however, by petitioner that the word "Lyceum"
has acquired a secondary meaning in relation to petitioner with
the result that that word, although originally a generic, has
become appropriable by petitioner to the exclusion of other
institutions like private respondents herein.
The doctrine of secondary meaning originated in the field of
trademark law. Its application has, however, been extended to
corporate names sine the right to use a corporate name to the
exclusion of others is based upon the same principle which
underlies the right to use a particular trademark or tradename.
10 In Philippine Nut Industry, Inc. v. Standard Brands, Inc., 11
the doctrine of secondary meaning was elaborated in the
following terms:
" . . . a word or phrase originally incapable of exclusive
appropriation with reference to an article on the market,
because geographically or otherwise descriptive, might
nevertheless have been used so long and so exclusively by one
producer with reference to his article that, in that trade and to
that branch of the purchasing public, the word or phrase has
come to mean that the article was his product." 12
The question which arises, therefore, is whether or not the use
by petitioner of "Lyceum" in its corporate name has been for
such length of time and with such exclusivity as to have become
associated or identified with the petitioner institution in the
mind of the general public (or at least that portion of the
general public which has to do with schools). The Court of
Appeals recognized this issue and answered it in the negative:
"Under the doctrine of secondary meaning, a word or phrase
originally incapable of exclusive appropriation with reference to
an article in the market, because geographical or otherwise
descriptive might nevertheless have been used so long and so
exclusively by one producer with reference to this article that,
in that trade and to that group of the purchasing public, the
word or phrase has come to mean that the article was his
produce (Ana Ang vs. Toribio Teodoro, 74 Phil. 56). This
circumstance has been referred to as the distinctiveness into
which the name or phrase has evolved through the substantial
and exclusive use of the same for a considerable period of time.
Consequently, the same doctrine or principle cannot be made
to apply where the evidence did not prove that the business (of
the plaintiff) has continued for so long a time that it has
become of consequence and acquired a good will of
considerable value such that its articles and produce have
acquired a well-known reputation, and confusion will result by
the use of the disputed name (by the defendant) (Ang Si Heng
vs. Wellington Department Store, Inc., 92 Phil. 448).
With the foregoing as a yardstick, [we] believe the appellant
failed to satisfy the aforementioned requisites. No evidence
was ever presented in the hearing before the Commission
which sufficiently proved that the word 'Lyceum' has indeed
acquired secondary meaning in favor of the appellant. If there
was any of this kind, the same tend to prove only that the
appellant had been using the disputed word for a long period of
time. Nevertheless, its (appellant) exclusive use of the word
(Lyceum) was never established or proven as in fact the
evidence tend to convey that the cross-claimant was already
using the word 'Lyceum' seventeen (17) years prior to the date
the appellant started using the same word in its corporate
name. Furthermore, educational institutions of the Roman
Catholic Church had been using the same or similar word like
'Liceo de Manila,' 'Liceo de Baleno' (in Baleno, Masbate), 'Liceo
de Masbate,' 'Liceo de Albay' long before appellant started
using the word 'Lyceum'. The appellant also failed to prove that
the word 'Lyceum' has become so identified with its
educational institution that confusion will surely arise in the
minds of the public if the same word were to be used by other
educational institutions.
In other words, while the appellant may have proved that it had
been using the word 'Lyceum' for a long period of time, this fact
alone did not amount to mean that the said word had acquired
secondary meaning in its favor because the appellant failed to
prove that it had been using the same word all by itself to the
exclusion of others. More so, there was no evidence presented
to prove that confusion will surely arise if the same word were
to be used by other educational institutions. Consequently, the
allegations of the appellant in its first two assigned errors must
necessarily fail." 13 (Underscoring partly in the original and
partly supplied)
We agree with the Court of Appeals. The number alone of the
private respondents in the case at bar suggests strongly that
petitioner's use of the word "Lyceum" has not been attended
with the exclusivity essential for applicability of the doctrine of
secondary meaning. It may be noted also that at least one of
the private respondents, i.e., the Western Pangasinan Lyceum,
Inc., used the term "Lyceum" seventeen (17) years before the
petitioner registered its own corporate name with the SEC and
began using the word "Lyceum." It follows that if any institution
had acquired an exclusive right to the word "Lyceum," that
institution would have been the Western Pangasinan Lyceum,
Inc. rather than the petitioner institution.
In this connection, petitioner argues that because the Western
Pangasinan Lyceum, Inc. failed to reconstruct its records before
the SEC in accordance with the provisions of R.A. No. 62, which
records had been destroyed during World War II, Western
Pangasinan Lyceum should be deemed to have lost all rights it
may have acquired by virtue of its past registration. It might be
noted that the Western Pangasinan Lyceum, Inc. registered
with the SEC soon after petitioner had filed its own registration
on 21 September 1950. Whether or not Western Pangasinan
Lyceum, Inc. must be deemed to have lost its rights under its
original 1933 registration, appears to us to be quite secondary
in importance; we refer to this earlier registration simply to
underscore the fact that petitioner's use of the word "Lyceum"
was neither the first use of that term in the Philippines nor an
exclusive use thereof. Petitioner's use of the word "Lyceum"
was not exclusive but was in truth shared with the Western
Pangasinan Lyceum and a little later with other private
respondent institutions which registered with the SEC using
"Lyceum" as part of their corporation names. There may well
be other schools using Lyceum or Liceo in their names, but not
registered with the SEC because they have not adopted the
corporate form of organization.
We conclude and so hold that petitioner institution is not
entitled to a legally enforceable exclusive right to use the word
"Lyceum" in its corporate name and that other institutions may
use "Lyceum" as part of their corporate names. To determine
whether a given corporate name is "identical" or "confusingly
or deceptively similar" with another entity's corporate name, it
is not enough to ascertain the presence of "Lyceum" or "Liceo"
in both names. One must evaluate corporate names in their
entirety and when the name of petitioner is juxtaposed with
the names of private respondents, they are not reasonably
regarded as "identical" or "confusingly or deceptively similar"
with each other.
WHEREFORE, the petitioner having failed to show any
reversible error on the part of the public respondent Court of
Appeals, the Petition for Review is DENIED for lack of merit, and
the Decision of the Court of Appeals dated 28 June 1991 is
hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.
G.R. No. 198889
UFC PHILIPPINES, INC. (now merged with NUTRI-ASIA, INC.,
with NUTRI-ASIA, INC. as the surviving entity),Petitioner,
vs.
BARRIO FIESTA MANUFACTURING
CORPORATION, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
For our disposition is a petition for review on certiorari under
Rule 45 seeking to annul and set aside the June 23,
2011 Decision1 and the October 4, 2011 Resolution2 of the
Court of Appeals in CA-G.R. SP No. 107570, which reversed and
set aside the March 26, 2008 Decision3 of the Bureau of Legal
Affairs of the Intellectual Property Office (IPO-BLA) and the
January 29, 2009 Decision4 of the Director General of the IPO.
Petitioner Nutri-Asia, Inc. (petitioner) is a corporation duly
organized and existing under Philippine laws.5 It is the
emergent entity in a merger with UFC Philippines, Inc. that was
completed on February 11, 2009.6 Respondent Barrio Fiesta
Manufacturing Corporation (respondent) is likewise a
corporation organized and existing under Philippine laws.
On April 4, 2002, respondent filed Application No. 4-2002-
002757 for the mark "PAPA BOY & DEVICE" for goods under
Class 30, specifically for "lechon sauce."7 The Intellectual
Property Office (IPO) published said application for opposition
in the IP Phil. e-Gazette released on September 8, 2006. The
mark appears as follows:
On December 11, 2006, petitioner filed with the IPO-BLA a
Verified Notice of Opposition to the above-mentioned
application and alleged that:
1. The mark "PAPA" for use on banana catsup and other similar
goods was first used [in] 1954 by Neri Papa, and thus, was
taken from his surname;
2. After using the mark "PAP A" for about twenty-seven (27)
years, Neri Papa subsequently assigned the mark "PAPA" to
Heman D. Reyes who, on September 17, 1981, filed an
application to register said mark "PAP A" for use on banana
catsup, chili sauce, achara, banana chips, and instant ube
powder;
3. On August 14, 1983, Heman D. Reyes was issued Certificate
of Registration No. 32416;
4. [Certificate of] Registration No. 32416 was subsequently
assigned to the following in successive fashion: Acres & Acres
Food, Inc., Southeast Asia Food, Inc., Heinz-UFC Philippines,
Inc., and Opposer UFC Philippines, Inc.;
5. Last October 28, 2005, Heinz-UFC Philippines, Inc. filed
Application Serial No. 4-2005-010788 which, in effect, is a re-
registration of Registration No. 32416 which expired on August
11, 2003;
6. Heman D. Reyes also filed on March 04, 1982 an application
to register in the Supplemental Register the "PAPA BANANA
CATSUP Label";
7. On August 11, 1983, Heman D. Reyes was issued Certificate
of Registration No. SR-6282 which was subsequently assigned
to Acres & Acres Food, Inc., Southeast Asia Food, Inc., Heinz-
UFC Philippines, Inc.;
8. After its expiration, Opposer filed on November 15, 2006
Trademark Application Serial No. 4-2006-012346 for the re-
registration of the "PAP A Label Design";
9. The mark "PAP A KETSARAP" for use on banana sauce falling
under Class 30 was also registered in favor of Acres & Acres
Food, Inc. under Registration No. 34681 issued on August 23,
1985 and renewed last August 23, 2005 by Heinz-UFC
Philippines, Inc. for ten (10) years;
10. On November 07, 2006, Registration No. 34681 was
assigned to Opposer;
11. Opposer has not abandoned the use of the mark "PAP A"
and the variations thereof as Opposer has continued their use
up to the present;
12. The mark "PAPA BOY & DEVICE" is identical to the mark
"PAPA" owned by Opposer and duly registered in its favor,
particularly the dominant feature thereof;
13. [With the] dominant feature of respondent-applicant's
mark "PAPA BOY & DEVICE", which is Opposer's "PAPA" and the
variations thereof, confusion and deception is likely to result:
The consuming public, particularly the unwary customers, will
be deceived, confused, and mistaken into believing that
respondent-applicant's goods come from Opposer or are
authorized by Opposer to Opposer's prejudice, which is
particularly true considering that Opposer's sister company,
Southeast Asia Food, Inc., and its predecessors-in-interest have
been major manufacturers and distributors of lechon sauce and
other table sauces since 1965 under its registered mark "Mang
Tomas";
14. Respondent-applicant's mark "PAPA BOY & DEVICE" which
nearly resembles Opposer's mark "PAPA" and the variations
thereof will impress upon the gullible or unsuspecting public
that it is the same or related to Opposer as to source because
its dominant part is the same as Opposer's mark and, thus, will
likely be mistaken to be the mark, or related to, or a derivative
or variation of, Opposer's mark;
15. The goods covered by respondent-applicant's application
fall under Class 30, the same Class under which Opposer's
goods enumerated in its earlier issued registrations;
16. The test of dominancy is now explicitly incorporated into
law in Section 155 .1 of the IP Code which defines infringement
as the colorable imitation of a registered mark or a dominant
feature thereof, and is provided for by jurisprudence;
17. As a corporation also engaged in the food business,
Respondent-applicant knew and/or ought to know that
Opposer and its predecessors-in-interest have been using the
mark "PAPA" and the variations thereof for the last fifty-two
(52) years while its sister company is engaged in the business of
manufacturing and distributing "lechon sauce" and other table
sauces for the last forty-one (41) years;
18. The approval of the subject application will violate
Opposer's right to the exclusive use of its registered mark
"PAPA" and the variations thereof per Section 138 of the IP
Code;
19. The approval of the subject application has caused and will
continue to cause great and irreparable damage and injury to
Opposer;
20. Respondent-applicant filed the subject application
fraudulently and in bad faith; and
21. Respondent-applicant is not entitled to register the subject
mark in its favor.8
In its verified opposition before the IPO, petitioner contended
that "PAPA BOY & DEVICE" is confusingly similar with its "PAPA"
marks inasmuch as the former incorporates the term "PAP A,"
which is the dominant feature of petitioner's "PAPA" marks.
Petitioner averred that respondent's use of "PAPA BOY &
DEVICE" mark for its lechon sauce product, if allowed, would
likely lead the consuming public to believe that said lechon
sauce product originates from or is authorized by petitioner,
and that the "PAPA BOY & DEVICE" mark is a variation or
derivative of petitioner's "PAPA" marks. Petitioner argued that
this was especially true considering that petitioner's ketchup
product and respondent's lechon sauce product are related
articles that fall under the same Class 30.9
Petitioner alleged that the registration of respondent's
challenged mark was also likely to damage the petitioner,
considering that its former sister company, Southeast Asia
Food, Inc., and the latter's predecessors-in-interest, had been
major manufacturers and distributors of lechon and other table
sauces since 1965, such as products employing the registered
"Mang Tomas" mark.
In its Verified Answer, respondent argued that there is no
likelihood of confusion between petitioner's family of "PAPA"
trademarks and respondent's "PAPA BOY & DEVICE" trademark.
Respondent raised affirmative defenses and we quote the
relevant ones below:
3. Opposer cites several of its following marks in support of its
opposition to the application but an examination of said marks
[reveals] that these have already expired and/or that no
confusing similarity exists x xx;
4. Assuming that the mark "PAPA KETSARAP" had been timely
renewed on August 23, 2005 for "banana sauce" under Class
30, the same is not a hindrance to the successful registration of
the mark "PAPA BOY & DEVICE": Jurisprudence provides that a
certificate of registration confers upon the trademark owner
the exclusive right to use its own symbol only to those goods
specified in the certificate subject to the conditions and
limitations stated therein;
5. As a result, Opposer's right to use the mark "PAPAKETSARAP"
is limited to the products covered by its certificate of
registration which is Class 30 for banana sauce;
6. Contrary to Opposer's belief, the dominant features of
Respondent-applicant's mark "PAPA BOY & DEVICE" are the
words "PAPA BOY" and the representation of a smiling hog-like
character gesturing the thumbs-up sign and wearing a
traditional Filipino hat and scarf while the dominant feature of
Opposer's mark "PAPA KETSARAP" are the words "Papa" and
"Ketsarap", not the word "Papa"; and the word "Ketsarap " is
more prominently printed and displayed in the foreground than
the word "Papa" for which reasons opposer's reference to the
Dominancy Test fails;
7. Opposer's allegation that the registration of Respondent-
applicant's mark "PAPA BOY & DEVICE" will damage and
prejudice the mark "MANG TOMAS" is irrelevant considering
that Opposer's basis for filing this opposition is the alleged
confusing similarity between Respondent-applicant's mark and
Opposer's mark "PAPA KETSARAP", not the mark "MANG
TOMAS";
8. Respondent-applicant's mark "PAPA BOY & DEVICE" is
neither identical nor confusingly similar to Opposer's mark
"PAPA KETSARAP": Respondent-applicant's mark "PAPABOY &
DEVICE" is an arbitrary mark which differs in overall sound,
spelling, meaning, style, configuration, presentation, and
appearance from Opposer's mark "PAPA KETSARAP";
9. The dissimilarities between the marks are so distinct, thus,
confusion is very unlikely: While Opposer's mark is a plain word
mark, Respondent-applicant's mark "PAPA BOY & DEVICE" is
much more intricate and distinctive such as Opposer's mark not
having the words "Lechon Sauce" printed inside a blue ribbon-
like device which is illustrated below the words "PAPA BOY",
Opposer's mark not having a prominent smiling hog-like
character gesturing a thumbs-up sign and wearing a Filipino hat
and scarf stands beside the words "PAPA BOY", and Opposer's
mark not having the words "Barrio Fiesta" albeit conspicuously
displayed above the mark, all which leave no doubt in the
consumer's mind on the product that he is purchasing;
10. Aside from the fact that Respondent-applicant's mark
"PAPA BOY & DEVICE" is distinct and different in appearance,
spelling, sound, meaning, and style from Opposer's mark "PAPA
KETSARAP", the difference in the goods covered by both marks
is obvious: Since the goods covered by Respondent-applicant's
mark is unrelated and non-competing to those covered by
Opposer's mark, the doctrine allowing the registrations of
marks covering unrelated and non-competing goods as
enunciated by the Supreme Court is therefore applicable in this
case;
11. Respondent-applicant's mark cannot be confusingly similar
to Opposer's mark considering that the products covered by
these marks are different: While Respondent-applicant's mark
"PAPA BOY & DEVICE" covers lechon sauce under Class 30,
Opposer's mark "PAPA KETSARAP" covers banana sauce;
12. If a consumer is in the market for banana sauce, he will not
buy lechon sauce and vice-versa and as a result, the margin of
error in the acquisition of one from the other is simply remote;
13. Respondent-applicant is the exclusive owner of the mark
"PAPA BOY & DEVICE" for lechon sauce under Class 30: The
words "PAPA BOY" is a combination of the nickname of
Bonifacio Ongpauco who is one of Respondent-applicant's
incorporators and founders" BOY"- and the word "PAPA" as
Bonifacio Ongpauco's mother, Sixta P. Evangelista, had been
fondly known as "Mama Chit", making Respondent-applicant
the prior adopter, user, and applicant of the mark "PAPA BOY &
DEVICE" in the Philippines;
14. To protect its ownership over the mark "PAPA BOY &
DEVICE" considering that it is the first to adopt and use said
mark, Respondent-applicant applied for its registration under
Application Serial No. 4-2002-002757 for Class 30, and said
application was found registrable by the Examiner as. a
consequence of which the same was recommended for
allowance after undergoing a thorough process of examination,
which recommendation was then approved by the Director of
the Bureau of Trademarks (BOT);
15. Respondent-applicant's mark "PAPA BOY & DEVICE" has
been commercially used in the Philippines;
16. Respondent-applicant's mark "PAPA BOY & DEVICE" has
been promoted and advertised for a considerable duration of
time and over wide geographical areas: Respondent-applicant
has invested tremendous amount of resources in the
promotion of its mark "PAPA BOY & DEVICE" through various
media including print publications and promotional materials;
17. The widespread local commercial use of the subject mark
by Respondent-applicant to distinguish and identify its various
high-quality consumer products has earned Respondent-
applicant a well-deserved business reputation and goodwill;
18. Respondent-applicant's mark is distinctive and capable of
identifying its goods and distinguishing them from those
offered for sale by others in the market including Opposer's
goods for which reason no confusion will result because
Respondent-applicant's mark is for lechon sauce while
Opposer's mark is for banana sauce; and
19. The presence of a common prefix "PAPA" in the marks of
2. The mark "PAPA" as it appeared upon re-registration of
both parties does not render said marks identical or confusingly
Certificate No. 32416, under Application No. 4-2005-010788 for
similar: Opposer cannot exclusively appropriate said prefix
Classes 29 and 30 goods;12
considering that other marks such as "Papa Heinz Pizza", "Papa
Heinz Sausage", "Papa Beaver", "Papa Pop", "Pizza Papa John's
& Design", "Papadoods", and "Papa in Wine and Device" are
valid and active.10
Petitioner's mark and its variations appear as follows:
1. "PAPA" under Registration No. 32416 for Class 29 goods;11
3. "PAPA LABEL DESIGN" under Registration No. 4-2006-
012364·13 and

4. "PAPA KETSARAP" under Certificate of Registration No.
34681, for banana sauce (Class 30).14
PROCEEDINGS BEFORE THE INTELLECTUAL PROPERTY OFFICE
The case was referred to mediation but the parties failed to
arrive at an amicable settlement. The case was thus set for
preliminary conference. Subsequently, the IPO-BLA directed the
parties to file their respective position papers and draft
decisions.
The IPO-BLA rendered a Decision on March 26, 2008 sustaining
petitioner's Opposition and rejecting respondent's application
for "PAPA BOY & DEVICE." The fallo of said decision reads as
follows:
WHEREFORE, the VERIFIED NOTICE OF OPPOSITION filed by UFC
Philippines, Inc. is, as it is hereby, SUSTAINED. Consequently,
Application Serial No. 4-2002-002757 for the mark "PAPA BOY
& DEVICE" for lechon sauce under Class 30 filed on April 04,
2002 by Barrio Fiesta Manufacturing Corporation, is, as it is
hereby, REJECTED.
Let the file wrapper of PAPA BOY & Device subject matter of
this case be forwarded to the Bureau of Trademarks (BOT) for
appropriate action in accordance with this Decision.15
Respondent filed an appeal before the IPO Director General,
who found it unmeritorious, and disposed of the case in the
following manner:
WHEREFORE, the instant appeal is hereby DISMISSED. Let a
copy of this Decision as well as the trademark application and
records be furnished and returned to the Director of the
Bureau of Legal Affairs for appropriate action. Further, let also
the Director of the Bureau of Trademarks and the library of the
Documentation, Information and Technology Transfer Bureau
be furnished a copy of this Decision for information, guidance,
and records purposes."16
DECISION OF THE COURT OF APPEALS
Respondent then filed a petition with the Court of Appeals,
questioning the above decision of the IPO Director General that
affirmed the decision of the IPO Bureau of Legal Affairs
Director, which disallowed respondent's application for
trademark registration. Respondent's arguments before the
Court of Appeals are quoted below:
A.
REGISTRATION NOS. 32416 AND 42005010788 ISSUED FOR THE
"PAPA" MARK AND REGISTRATION NOS. SR-6282 AND
42006012364 ISSUED FOR THE TRADEMARK "PAPA BANANA
CATSUP LABEL/PAPA LABEL DESIGN" SHOULD NOT BE USED AS
BASIS IN DETERMINING THE EXISTENCE OF CONFUSING
SIMILARITY.
B.
THERE IS NO CONFUSING SIMILARITY BETWEEN PETITIONER-
APPLICANT'S "PAPA BOY & DEVICE" AND RESPONDENT'S "PAPA
KETSARAP" MARK.
C.
PETITIONER-APPLICANT IS ENTITLED TO THE REGISTRATION OF
THE MARK "PAPA BOY & DEVICE."
D.
THE OPPOSITION STATES NO CAUSE OF ACTION, AND HENCE,
SHOULD BE DENIED OUTRIGHT.17
As regards the first ground, the Court of Appeals held:
Records show that respondent UFC has Certificates of
Registration for the trademarks PAPA, PAPA BANANA CATSUP
label and PAPA KETSARAP. A closer look at the respective
Certificate[ s] of Registration of the aforementioned marks,
however, reveals that at the time the trademark application of
petitioner was published in the IPO e-Gazette on September 8,
2006, the duration of the trademark registration of respondent
over the marks PAPA and PAPA BANANA CATSUP have already
expired. On the other hand, the mark PAPA KETSARAP was
timely renewed by respondent as shown by the Certificate of
Renewal of Registration issued on September 1, 2006 by the
Director of the Bureau of Trademarks.
Under R.A. No. 8293, as amended by R.A. No. 9150, the
duration of a trademark registration is 10 years, renewable for
periods of 10 years each renewal. The request for renewal must
be made within 6 months before or after the expiration of the
registration. Respondent's PAPA mark was not renewed within
the period provided for under RA No. 8293. Its registered term
ended on August 11, 2003 but was reapplied for registration
only on April 4, 2005. Meanwhile, the mark PAPA BANANA
CATSUP was registered by respondent only in the Supplemental
Register, hence, was not provided any protection. x x x. It is
noted that the PAPA BANANA CATSUP label was applied for
registration on November 15, 2006, over three years after the
expiration of its registration in the Supplemental Register of the
Philippine Patent Office on August 11, 2003. Thus, while
petitioner has a point that the marks PAPA and PAPA
BANANA CATSUP have already expired and the latter having
been afforded no protection at all and should not be
juxtaposed with petitioner's trademark, respondent can still
use the marks PAPA KETSARAP and PAPA BANANA CATSUP, it
appearing that the Intellectual Property Office issued a
Certificate of Registration No. 4-2006-012364 for the latter on
April 30, 2007, to bar the registration of petitioner's "PAPA
BOY & DEVICE" mark.18 (Emphases supplied, citations omitted.)
Anent the second ground, the Court of Appeals ruled in the
following manner:
After taking into account the aforementioned doctrines and
the factual circumstances of the case at bar, this Court, after
considering the trademarks involved as a whole, is of the view
that petitioner's trademark "PAP A BOY & DEVICE" is not
confusingly similar to respondent's "PAPA KETSARAP" and
"PAPA BANANA CATSUP" trademark. Petitioner's trademark is
"PAPA BOY" as a whole as opposed to respondent's "PAPA".
Although on its label the word "PAPA" is prominent, the
trademark should be taken as a whole and not piecemeal. The
difference between the two marks are conspicuous and
noticeable. While respondent's products are both labeled as
banana sauces, that of petitioner Barrio Fiesta is labeled as
lechon sauce.
Moreover, it appears on the label of petitioner's product that
the said lechon sauce is manufactured by Barrio Fiesta thus,
clearly informing the public [of] the identity of _the
manufacturer of the lechon sauce. As claimed by respondent,
its products have been in commercial use for decades. It is safe
to assume then that the consumers are already aware that
"PAPA KETSARAP" and "PAPA BANANA CATSUP" are products
of UFC and not of petitioner or the other way around. In
addition, as correctly pointed out by petitioner, if a consumer is
in the market for banana sauce, he will not buy lechon sauce
and vice-versa because aside from the fact that the labels of
both parties' products contain the kind of sauce they are
marketing, the color of the products is visibly different. An
ordinary consumer is familiar with the fact that the color of a
banana sauce is red while a lechon sauce is dark brown. There
can be no deception as both products are marketed in bottles
making the distinction visible to the eye of the consumer and
the likelihood of acquiring a wrong sauce, remote. Even if the
products are placed side by side, the dissimilarities between the
two marks are conspicuous, noticeable and substantial enough
to matter especially in the light of the following variables that
must be factored in.
Lastly, respondent avers that the word "PAPA" was coined after
the surname of the person who first created and made use of
the mark. Admittedly, while "PAPA" is a surname, it is more
widely known as a term of endearment for one's father.
Respondent cannot, therefore, claim exclusive ownership over
and singular use of [the] term. Petitioner was able to explain
that it adopted the word "PAPA" in parallel to the nickname of
the founder of Barrio fiesta which is "MAMA CHIT". "PAPA BOY"
was derived from the nickname of one of the incorporators of
herein petitioner, a certain Bonifacio Ongpauco, son of Mama
Chit.19 (Emphasis ours, citation omitted.)
THEORY OF PETITIONER
Thus, petitioner came to this Court, seeking the reversal of the
questioned decision and resolution of the Court of Appeals, and
the reinstatement of the decision of the IPO Director General
affirming the decision of the IPO-BLA. Petitioner raises the
following grounds:
I.
The court a quo erred in applying the "holistic test" to
determine whether there is confusing similarity between the
contending marks, and in reversing the IPO-BLA and the
Director General's application of the "dominancy test."
II.
The court a quo erred in holding that there is no likelihood of
confusion between the contending marks given that the "PAPA
BOY & DEVICE" mark is used on lechon sauce, as opposed to
ketchup products.
III.
The court a quo erred in holding that Petitioner cannot claim
exclusive ownership and use of the "PAP A" mark for its sauce
products because "PAPA" is supposedly a common term of
endearment for one's father.20
Under the first ground, petitioner submitted the following
arguments:
1. The findings of administrative agencies, if supported by
substantial evidence, are binding upon the courts.21
Petitioner alleges that the Court of Appeals should have
respected the ruling of the IPO Director General, which was
consistent with the ruling of the IPO-BLA and supported by
substantial evidence, instead of substituting its findings of fact
for those of the Director General and the IPO-BLA.
2. The dominancy test should have been applied to determine if
there is confusing similarity between the competing marks.22
Petitioner points out that the Director General and the IPO-BLA
found that the dominant feature of the competing marks is the
word "PAP A" and the minor additions to respondent's "PAPA
BOY & DEVICE" mark do not negate likelihood of confusion
caused by the latter's use of the dominant word "PAPA."
Petitioner claims that even compared solely to petitioner's
"PAPA KETSARAP" mark (Registration No. 34681), which is
conceded to have been timely renewed and to have never
expired, respondent's "PAPA BOY & DEVICE" would still create
the likelihood of confusion.23
According to petitioner, the Court of Appeals based its decision
on Mead Johnson & Co. v. N.V.J. Van Dorp, Ltd.,24 a case
decided almost five decades ago, long before Republic Act No.
8293 or the 1998 Intellectual Property Code was enforced.
Thus, the Court of Appeals erroneously applied the holistic test
since given the nature of the products bearing the competing
marks, the dominancy test should have been applied.
Petitioner claims that "[k]etchup and lechon sauce are common
and inexpensive household products that are sold in groceries
and regularly encountered by the ordinary or common
purchaser who is not expected to examine, scrutinize, and
compare the details of the competing marks."25
Petitioner distinguishes this case from Mead Johnson and
claims that the ordinary purchaser of ketchup or lechon sauce
is not likely to closely scrutinize each mark as a whole, for the
latter is "undiscemingly rash" and usually in a hurry, and cannot
be expected to take note of the smiling hog-like character or
the blue ribbon-like device with the words "Lechon Sauce."
Petitioner argues that under the Intellectual Property Code, it is
not necessary for one to colorably imitate the competing
trademark as a whole. It is sufficient that one imitates a
"dominant feature" of the mark to constitute trademark
infringement.
Petitioner asserts that as the IPO-BLA and the Director General
observed that the ordinary purchaser is most likely to notice
the words "PAPA BOY," which, in turn, may lead him to believe
that there is a connection between respondent's lechon sauce
and petitioner's ketchup products.
Under the second ground, petitioner argues that the Court of
Appeals seemed to be unmindful that two kinds of confusion
may arise from the use of similar or colorable imitation
marks, i.e., confusion of goods (product confusion) and
confusion of business (source or origin confusion). Petitioner
claims that it is reasonable to assume that it may expand its
business to producing lechon sauce, inasmuch as it already
produces food sauce products and its Articles of Incorporation
authorizes it to do so.
Petitioner alleges that the IPO-BLA recognized that confusion of
business may arise from respondent's use of its "PAPA BOY &
DEVICE" mark for lechon sauce products, and that the Director-
General agreed with the IPO-BLA's findings on this issue.
Petitioner asserts that ketchup and lechon sauce are
undeniably related goods; that they belong to the same
class, i.e., Class 30 of the Nice Classifications; that they serve
practically the same purpose, i.e., to spice up dishes; and that
they are sold in similar bottles in the same shelves in grocery
stores. Petitioner argues that the Court of Appeals had
absolutely no basis for stating that a person who is out to buy
ketchup is not likely to buy lechon sauce by mistake, as this
analysis allegedly only applies to "product confusion" and does
not consider confusion of business. Petitioner alleges that
"[t]here equally is actionable confusion when a buyer
purchases Respondent's 'PAPA BOY' lechon sauce believing that
the said product is related to or associated with the famous
'PAPA KETSUP' makers." Petitioner further alleges that "it is
reasonable and likely for a consumer to believe that
Respondent's 'PAPA BOY' lechon sauce originated from or is
otherwise connected with Petitioner's line of sauces" and that
this is "the precise evil that recognition of confusion of business
seeks to prevent."26
Petitioner avers that "PAPA" is a well-known mark and that it
has been in commercial use as early as 1954 on banana ketchup
and similar goods. The "PAPA" mark is also registered as a
trademark and in commercial use in other parts of the world
such as the United States of America and the Middle East.
Petitioner claims that "[b ]eing a trademark that is registered
and well-known both locally and internationally, Petitioner's
'PAPA' marks cannot be appropriated by another person or
entity not only with respect to goods similar to those with
respect to which it is registered, but also with respect to goods
which are not similar to those for which the 'PAPA' marks are
registered."27
Under the third ground, petitioner claims that the fact that the
word "PAPA" is a known term of endearment for fathers does
not preclude it from being used as a mark to identify goods.
Petitioner claims that their mark falls under a type of mark
known as "arbitrary or fanciful marks," which are "marks that
bear no logical relation to the actual characteristics of the
products they represent," are "highly distinctive and valid," and
"are entitled to the greatest protection."28
Petitioner claims that the mark "PAPA" falls under this class of
arbitrary marks, even if "PAPA" is also a common term of
endearment for one's father. Petitioner states that there is no
logical connection between one's father and food sauces, such
as ketchup; thus, with respect to ketchup, food sauces, and
their related products, and for the purpose of identifying its
products, petitioner claims exclusive ownership of the term
"PAPA" as an arbitrary mark.
Petitioner alleges that if respondent "has a good faith and
proud desire to unmistakably and distinctly identify its lechon
sauce product out in the market, it should have coined a mark
that departs from and is distinguished from those of its
competitors." Petitioner claims that respondent, with full
knowledge of the fame and the decades-long commercial use
of petitioner's "PAPA" marks, opted for "PAPA BOY & DEVICE,"
which obviously is just a "colorable imitation."29
THEORY OF RESPONDENT
In its Comment,30 respondent claims that petitioner's marks
have either expired and/or "that no confusing similarity exists
between them and respondent's "PAPA BOY & DEVICE' mark."
Respondent alleges that under Section 15 of Republic Act No.
166, a renewal application should be filed within six months
before the expiration of the period or within three months
after such expiration. Respondent avers that the expiration of
the 20-year term for the "PAPA" mark under Registration No.
32416 issued on August 11, 1983 was August 11, 2003. The
sixth month before August 11, 2003 was February 11, 2003 and
the third month after August 11, 2003 was November 11, 2003.
Respondent claims that the application that petitioner filed on
October 28, 2005 was almost two years late. Thus, it was not a
renewal application, but could only be considered a new
application under the new Trademark Law, with the filing date
reckoned on October 28, 2005. The registrability of the mark
under the new application was examined again, and any
certificate issued for the registration of "PAPA" could not have
been a renewal certificate.
As for petitioner's other mark "PAPA BANANA CATSUP LABEL,"
respondent claims that its 20-year term also expired on August
11, 2003 and that petitioner only filed its application for the
new "PAPA LABEL DESIGN" on November 15, 2006. Having
been filed three years beyond the renewal application deadline,
petitioner was not able to renew its application on time, and
cannot claim a "continuous existence of its rights over the
'PAPA BANANA CATSUP LABEL."' Respondent claims that the
two marks are different from each other and that the
registration of one is independent of the other. Respondent
concludes that the certificate of registration issued for "PAPA
LABEL DESIGN" is "not and will never be a renewal
certificate."31
Respondent also avers as follows:
1.3. With regard to the two new registrations of petitioner
namely: "PAPA" (Reg. No. 4-2005-010788) and "PAPA LABEL
DESIGN" (Reg. No. 4-2006-012364), these were filed on October
28, 2005 and November 15, 2006, respectively, under the
Intellectual Property Code (RA 8293), which follows the "first to
file" rule, and were obviously filed later than respondent's
"PAPA BOY & DEVICE" mark filed on April 4, 2002. These new
marks filed much later than the opposed "PAPA BOY & DEVICE"
mark cannot, therefore, be used as basis for the opposition and
should in fact, be denied outrightly.
xxxx
A search of the Online Trademark Database of Intellectual
Property Office (IPO) will show that only Registration No. 34681
issued for "PAPA KETSARAP" was properly renewed on August
23, 2005. xx x Clearly, the registrations of "PAPA" and "PAPA
BANANA CATSUP LABEL" marks under registration nos. 32416
and SR-6282 respectively, have already expired when Petitioner
filed its opposition proceeding against Respondent's trademark
on December 11, 2006. Having expired, and therefore, no
longer legally existing, the "PAPA" and "PAPA BANANA CATSUP
LABEL" marks CANNOT BAR the registration of respondent's
mark. To allow petitioner's expired marks to prevent
respondent's distinct "PAPA BOY & DEVICE" mark from being
registered would be the ultimate absurdity.32
Respondent posits that the Court of Appeals did not err in
reversing the decisions of the administrative agencies, alleging
that "[while] it is true that the general rule is that the factual
findings of administrative bodies deserve utmost respect when
supported by evidence, the same is subject to
exceptions,"33 and that the Court of Appeals had justifiable
reasons to disregard the factual finding of the IPO. Here, the
Court of Appeals wisely identified certain material facts that
were overlooked by the IPO-BLA and the IPO Director General
which it opined, when correctly appreciated, would alter the
result of the case.
Respondent alleges that the IPO-BLA erroneously considered
petitioner's marks "PAPA" and "PAPA BANANA CATSUP LABEL"
when it applied the dominancy test in determining whether
petitioner's marks are confusingly similar to those of
respondent's mark "PAPA BOY & DEVICE."
Respondent avers that the IPO-BLA absurdly took emphasis on
the mark "PAPA" to arrive at its decision and did not take into
consideration that petitioner's mark was already expired when
respondent applied for the registration of its "PAPA BOY &
DEVICE" mark. Respondent compares its "PAPA BOY & DEVICE"
with the only mark that respondent allegedly has, "PAPA
KETSARAP," and found no confusing similarity between the
two.
We quote below respondent's discussion of its application of
the dominancy test to the marks in question:
Applying the Dominancy test, as correctly emphasized by the
Court of Appeals, the dominant feature in respondent's mark is
"PAPA BOY" and not "PAPA". It can be gleaned from
respondent's mark that the word "PAPA" was written in the
same font, style and color as the word "BOY". There is also the
presence of a "smiling hog-like character" which is positioned
very prominently, both in size and location in said mark, at
glance (sic) even more dominant than the word "PAPA BOY".
xxxx
On the other hand, the dominant feature in petitioner's mark is
"KETSARAP", not "PAPA". Even an ordinary examiner could
observe that the word "KETSARAP" in petitioner's mark is more
prominently printed than the word "PAPA".
xxxx
In a dominancy test, the prominent feature of the competing
trademarks must be similar to cause confusion or deception. x x
x.34
Verily, respondent's dominant feature "PAPA BOY" and the
smiling hog-like character and petitioner's dominant feature
"KETSARAP", being the word written in a larger font, are
neither confusing nor deceiving to the public. In fact, the
differences between their dominant marks are very noticeable
and conspicuous to every purchaser.
Furthermore, the Supreme Court in Societe des Produits Nestle,
SA. v. Dy [ 641 Phil. 345], applied the dominancy test by taking
into account the aural effects of the words and letters
contained in the marks in determining the issue of confusing
similarity. Obviously, petitioners' "PAPA KETSARAP" mark does
not in any way sounds (sic) like respondent's "PAPA BOY" mark.
The common prefix "PAPA" does not render the marks aurally
the same. As discussed above, the dominant feature in
petitioner's mark is "KETSARAP" and the dominant feature in
respondent's mark is "PAPA BOY". Thus, the words "KETSARAP"
and "PAP A BOY" in petitioner's and respondent's respective
marks are obviously different in sound, making "PAPA BOY &
DEVICE" even more distinct from petitioner's "PAPA KETSARAP"
mark.35
Using the holistic test, respondent further discusses the
differences in the marks in this wise:
Even the use of the holistic test x x x takes into consideration
the entirety of the marks in question [to] be considered in
resolving confusing similarity. The differences are again very
obvious. Respondent's mark has (1) the word "lechon sauce"
printed inside a blue ribbon-like device which is illustrated
below the word "PAPA BOY"; (2) a prominent smiling hog-like
character gesturing a thumbs-up sign and wearing a Filipino hat
and scarf stands beside the word "PAPA BOY"; and the word
"BARRIO FIESTA" conspicuously displayed above the said
trademark which leaves no doubt in the consumer's mind on
the product that he or she is purchasing. On the other hand,
petitioner's mark is the word "PAPA" enclosed by a cloud on
top of the word "KETSARAP' enclosed by a geometrical figure.
xxxx
In the instant case, the respective marks are obviously different
in color scheme, logo, spelling, sound, meaning and
connotation. Thus, yet again, under the holistic test there can
be no confusion or deception between these marks.
It also bears stressing that petitioner's "PAPA KETSARAP" mark
covers "banana catsup" while respondent's "PAPA BOY &
DEVICE" covers "lechon sauce'', thereby obliterating any
confusion of products of both marks as they travel different
channels of trade. If a consumer is in the market for banana
catsup, he or she will not buy lechon sauce and vice-versa. As a
result, the margin of error in the acquisition of one for the
other is simply remote. Lechon sauce which is liver sauce is
distinct from catsup extracted/ made from banana fruit. The
flavor and taste of a lechon sauce are far from those of a
banana catsup. Lechon sauce is sauce for "lechon" while
banana catsup is apparently catsup made from banana.36
Respondent also contends that "PAPA BOY & DEVICE" mark is
not confusingly similar to petitioner's trademark "PAPA
KETSARAP" in terms of appearance, sound, spelling and
meaning. The difference in nature, usage, taste and appearance
of products decreases the possibility of deception among
buyers.37
Respondent alleges that since petitioner merely included
banana catsup as its product in its certificate, it cannot claim
any further right to the mark "PAPA KETSARAP" on products
other than banana catsup. Respondent also alleges that
petitioner cannot raise "international notoriety of the mark" for
the first time on appeal and that there is no proof that
petitioner's mark is internationally well-known.38
Furthermore, respondent argues that petitioner cannot claim
exclusive ownership over the use of the word "PAPA," a term of
endearment for one's father. Respondent points out that there
are several other valid and active marks owned by third parties
which use the word "PAPA," even in classes of goods similar to
those of petitioner's. Respondent avers that petitioner's claim
that its "PAPA" mark is an arbitrary mark is belatedly raised in
the instant petition, and cannot be allowed because the "PAPA
KETSARAP" mark would immediately bring the consuming
public to thinking that the product involved is catsup and the
description of said catsup is "masarap" (delicious) and due to
the logical relation of the petitioner's mark to the actual
product, it being descriptive or generic, it is far from being
arbitrary or fanciful.39
Lastly, respondent claims that the Court of Appeals correctly
ruled that respondent's product cannot be confused as
originating from the petitioner. Since it clearly appears in the
product label of the respondent that it is manufactured by
Barrio Fiesta, the public is dutifully informed of the identity of
the lechon sauce manufacturer. The Court of Appeals further
took into account the fact that petitioner's products have been
in commercial use for decades.40
Petitioner, in its Reply41 to respondent's Comment, contends
that respondent cannot invoke a prior filing date for the "PAPA
BOY" mark as against Petitioner's "PAPA" and "PAPA BANANA
CATSUP LABEL" marks, because the latter marks were still
registered when respondent applied for registration of its
"PAPA BOY" mark. Thus, the IPO-BLA and Director General
correctly considered them in deciding whether the "PAPA BOY"
mark should be registered, using the "first to file" rule under
Section 123.l(d) of Republic Act No. 8293, or the Intellectual
Property Code (IP Code).
Petitioner reiterates its argument that the Court of Appeals
erred in applying the holistic test and that the proper test
under the circumstances is the dominancy test, which was
correctly applied by the IPO-BLA and the Director General.42
THIS COURT'S RULING
The petition has merit.
We find that the Court of Appeals erred in applying the holistic
test and in reversing and setting aside the decision of the IPO-
BLA and that of the IPO Director General, both of which
rejected respondent's application for the mark "PAPA BOY &
DEVICE."
In Dermaline, Inc. v. Myra Pharmaceuticals, Inc.,43 we defined a
trademark as "any distinctive word, name, symbol, emblem,
sign, or device, or any combination thereof, adopted and used
by a manufacturer or merchant on his goods to identify and
distinguish them from those manufactured, sold, or dealt by
others." We held that a trademark is "an intellectual property
deserving protection by law."
The rights of the trademark owner are found in the Intellectual
Property Code, which provides:
Section 147. Rights Conferred. - 147.1. The owner of a
registered mark shall have the exclusive right to prevent all
third parties not having the owner's consent from using in the
course of trade identical or similar signs or containers for goods
or services which are identical or similar to those in respect of
which the trademark is registered where such use would result into account. Where there are both similarities and differences
in a likelihood of confusion. In case of the use of an identical in the marks, these must be weighed against one another to
sign for identical goods or services, a likelihood of confusion see which predominates.
shall be presumed.
In determining likelihood of confusion between marks used on
Section 168. Unfair Competition, Rights, Regulation and non-identical goods or services, several factors may be taken
Remedies. - 168.1. A person who has identified in the mind of into account, such as, but not limited to:
the public the goods he manufactures or deals in, his business
or services from those of others, whether or not a registered a) the strength of plaintiffs mark;
mark is employed, has a property right in the goodwill of the
said goods, business or services so identified, which will be
b) the degree of similarity between the plaintiffs and
protected in the same manner as other property rights.
the defendant's marks;
The guideline for courts in determining likelihood of confusion
c) the proximity of the products or services;
is found in A.M. No. 10-3-10-SC, or the Rules of Procedure for
Intellectual Property Rights Cases, Rule 18, which provides:
d) the likelihood that the plaintiff will bridge the gap;
RULE 18
Evidence in Trademark Infringement and Unfair Competition e) evidence of actual confusion;
Cases
f) the defendant's good faith in adopting the mark;
SECTION 1. Certificate of Registration. - A certificate of
registration of a mark shall be prima facie evidence of: g) the quality of defendant's product or service;
and/or
a) the validity of the registration;
h) the sophistication of the buyers.
b) the registrant's ownership of the mark; and
"Colorable imitation" denotes such a close or ingenious
imitation as to be calculated to deceive ordinary persons, or
c) the registrant's exclusive right to use the same in
such a resemblance to the original as to deceive an ordinary
connection with the goods or services and those that
purchaser giving such attention as a purchaser usually gives, as
are related thereto specified in the certificate.
to cause him to purchase the one supposing it to be the other.
xxxx
SECTION 5. Determination of Similar and Dissimilar Goods or
Services. - Goods or services may not be considered as being
SECTION 3. Presumption of Likelihood of Confusion. - Likelihood
similar or dissimilar to each other on the ground that, in any
of confusion shall be presumed in case an identical sign or mark
registration or publication by the Office, they appear in
is used for identical goods or services.
different classes of the Nice Classification.
SECTION 4. Likelihood of Confusion in Other Cases. - In
In this case, the findings of fact of the highly technical agency,
determining whether one trademark is confusingly similar to or
the Intellectual Property Office, which has the expertise in this
is a colorable imitation of another, the court must consider the
field, should have been given great weight by the Court of
general impression of the ordinary purchaser, buying under the
Appeals. As we held in Berris Agricultural Co., Inc. v.
normally prevalent conditions in trade and giving the attention
Abyadang44:
such purchasers usually give in buying that class of goods.
Visual, aural, connotative comparisons and overall impressions
R.A. No. 8293 defines a "mark" as any visible sign capable of
engendered by the marks in controversy as they are
distinguishing the goods (trademark) or services (service mark)
encountered in the realities of the marketplace must be taken
of an enterprise and shall include a stamped or marked
container of goods. It also defines a "collective mark" as any
visible sign designated as such in the application for registration
and capable of distinguishing the origin or any other common
characteristic, including the quality of goods or services of
different enterprises which use the sign under the control of
the registered owner of the collective mark.
On the other hand, R.A. No. 166 defines a "trademark" as any
distinctive word, name, symbol, emblem, sign, or device, or any
combination thereof, adopted and used by a manufacturer or
merchant on his goods to identify and distinguish them from
those manufactured, sold, or dealt by another. A trademark,
being a special property, is afforded protection by law. But for
one to enjoy this legal protection, legal protection ownership of
the trademark should rightly be established.
The ownership of a trademark is acquired by its registration and
its actual use by the manufacturer. or distributor of the goods
made available to the purchasing public. Section 122 of R.A..
No. 8293 provides that the rights in a mark shall be acquired by
means of its valid registration with the IPO. A certificate of
registration of a mark, once issued, constitutes prima
facie evidence of the validity of the registration, of the
registrant's ownership of the mark, and of the registrant's
exclusive right to use the same in connection with the goods or
services and those that are related thereto specified in the
certificate. R.A. No. 8293, however, requires the applicant for
registration or the registrant to file a declaration of actual use
(DAU) of the mark, with evidence to that effect, within three (3)
years from the filing of the application for registration;
otherwise, the application shall be refused or the mark shall be
removed from the register. In other words, the prima
facie presumption brought about by the registration of a mark
may be challenged and overcome, in an appropriate action, by
proof of the nullity of the registration or of non-use of the
mark, except when excused. Moreover, the presumption may
likewise be defeated by evidence of prior use by another
person, i.e., it will controvert a claim of legal appropriation or of
ownership based on registration by a subsequent user. This is
because a trademark is a creation of use and belongs to one
who first used it in trade or commerce.
The determination of priority of use of a mark is a question of
fact. Adoption of the mark alone does not suffice. One may
make advertisements, issue circulars, distribute price lists on
certain goods, but these alone will not inure to the claim of
ownership of the mark until the goods bearing the mark are
sold to the public in the market. Accordingly, receipts, sales
invoices, and testimonies of witnesses as customers, or orders
of buyers, best prove the actual use of a mark in trade and
commerce during a certain period of time.
xxxx
Verily, the protection of trademarks as intellectual property is
intended not only to preserve the goodwill and reputation of
the business established on the goods bearing the mark
through actual use over a period of time, but also to safeguard
the public as consumers against confusion on these goods. On
this matter of particular concern, administrative agencies,
such as the IPO, by reason of their special knowledge and
expertise over matters falling under their jurisdiction, are in a
better position to pass judgment thereon. Thus, their findings
of fact in that regard are generally accorded great respect, if
not finality by the courts, as long as they are supported by
substantial evidence, even if such evidence might not be
overwhelming or even preponderant. It is not the task of the
appellate court to weigh once more the evidence submitted
before the administrative body and to substitute its own
judgment for that of the administrative agency in respect to
sufficiency of evidence. (Emphasis added, citations omitted.)
In trademark controversies, each case must be scrutinized
according to its peculiar circumstances, such that
jurisprudential precedents should only be made to apply if they
are specifically in point.45 The cases discussed below are
mentioned only for purposes of lifting the applicable doctrines,
laws, and concepts, but not for their factual circumstances,
because of the uniqueness of each case in controversies such as
this one.
There are two tests used in jurisprudence to determine
likelihood of confusion, namely the dominancy test used by the
IPO, and the holistic test adopted by the Court of Appeals.
In Skechers, U.S.A., Inc. v. Inter Pacific Industrial Trading
Corp.,46 we held:
The essential element of infringement under R.A. No. 8293 is
that the infringing mark is likely to cause confusion. In
determining similarity and likelihood of confusion,
jurisprudence has developed tests - the Dominancy Test and
the Holistic or Totality Test. The Dominancy Test focuses on the
similarity of the prevalent or dominant features of the
competing trademarks that might cause confusion, mistake,
and deception in the mind of the purchasing public. Duplication
or imitation is not necessary; neither is it required that the
mark sought to be registered suggests an effort to imitate.
Given more consideration are the aural and visual impressions
created by the marks on the buyers of goods, giving little
weight to factors like prices, quality, sales outlets, and market
segments.
xxxx
Relative to the question on confusion of marks and trade
names, jurisprudence has noted two (2) types of
confusion, viz.: (1) confusion of goods (product confusion),
where the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the
other; and (2) confusion of business (source or origin
confusion), where, although the goods of" the parties are
different, the product, the mark of which registration is applied
for by one party, is such as might reasonably be assumed to
originate with the registrant of an earlier product, and the
public would then be deceived either into that belief or into the
belief that there is some connection between the two parties,
though inexistent.
Applying the Dominancy Test to the case at bar, this Court finds
that the use of the stylized "S" by respondent in its Strong
rubber shoes infringes on the mark already registered by
petitioner with the IPO. While it is undisputed that petitioner's
stylized "S" is within an oval design, to this Court's mind, the
dominant feature of the trademark is the stylized "S," as it is
precisely the stylized "S" which catches the eye of the
purchaser. Thus, even if respondent did not use an oval design,
the mere fact that it used the same stylized "S", the same being
the dominant feature of petitioner's trademark, already
constitutes infringement under the Dominancy Test.
This Court cannot agree with the observation of the CA that the
use of the letter "S" could hardly be considered as highly
identifiable to the products of petitioner alone. The CA even
supported its conclusion by stating that the letter "S" has been
used in so many existing trademarks, the most popular of which
is the trademark "S" enclosed by an inverted triangle, which the
CA says is identifiable to Superman. Such reasoning, however,
misses the entire point, which is that respondent had used a
stylized "S," which is the same stylized "S" which petitioner has
a registered trademark for. The letter "S" used in the Superman
logo, on the other hand, has a block-like tip on the upper
portion and a round elongated tip on the lower portion.
Accordingly, the comparison made by the CA of the letter "S"
used in the Superman trademark with petitioner's stylized "S" is
not appropriate to the case at bar.
Furthermore, respondent did not simply use the letter "S," but
it appears to this Court that based on the font and the size of
the lettering, the stylized "S" utilized by respondent is the very
same stylized "S" used by petitioner; a stylized "S" which is
unique and distinguishes petitioner's trademark. Indubitably,
the likelihood of confusion is present as purchasers will
associate the respondent's use of the stylized "S" as having
been authorized by petitioner or that respondent's product is
connected with petitioner's business.
xxxx
While there may be dissimilarities between the appearances of
the shoes, to this Court's mind such dissimilarities do not
outweigh the stark and blatant similarities in their general
features.xx x.
Based on the foregoing, this Court is at a loss as to how the RTC
and the CA, in applying the holistic test, ruled that there was no
colorable imitation, when it cannot be any more clear and
apparent to this Court that there is colorable imitation. The
dissimilarities between the shoes are too trifling and frivolous
that it is indubitable that respondent's products will cause
confusion and mistake in the eyes of the public. Respondent's
shoes may not be an exact replica of petitioner's shoes, but the
features and overall design are so similar and alike that
confusion is highly likely.
xxxx
Neither can the difference in price be a complete defense in
trademark infringement. In McDonald's Corporation v. L.C Big
Mak Burger, Inc., this Court held:
Modem law recognizes that the protection to which the owner
of a trademark is entitled is not limited to guarding his goods or
business from actual market competition with identical or
similar products of the parties, but extends to all cases in which
the use by a junior appropriator of a trade-mark or trade-name
is likely to lead to a confusion of source, as where prospective
purchasers would be misled into thinking that the complaining
party has extended his business into the field (see 148 ALR
56 et seq; 53 Am. Jur. 576) or is in any way connected with the
activities of the infringer; or when it forestalls the normal
potential expansion of his business (v. 148 ALR 77, 84; 52 Am.
Jur. 576, 577). xx x.
Indeed, the registered trademark owner may use its mark on
the same or similar products, in different segments of the
market, and at different price levels depending on variations of
the products for specific segments of the market. The
purchasing public might be mistaken in thinking that petitioner
had ventured into a lower market segment such that it is not
inconceivable for the public to think that Strong or Strong Sport
Trail might be associated or connected with petitioner's brand,
which scenario is plausible especially since both petitioner and
respondent manufacture rubber shoes.
Withal, the protection of trademarks as intellectual property is
intended not only to preserve the goodwill and reputation of
the business established on the goods bearing the mark
through actual use over a period of time, but also to safeguard
the public as consumers against confusion on these goods.
While respondent's shoes contain some dissimilarities with
petitioner's shoes, this Court cannot close its eye to the fact
that for all intents and purpose, respondent had deliberately
attempted to copy petitioner's mark and overall design and
features of the shoes. Let it be remembered, that defendants in
cases of infringement do not normally copy but only make
colorable changes. The most successful form of copying is to
employ enough points of similarity to confuse the public, with
enough points of difference to confuse the courts. (Citations
omitted.)
The Court discussed the concept of confusion of business in the
case of Societe Des Produits Nestle, S.A. v. Dy, Jr.,47 as quoted
below:
Among the elements, the element of likelihood of confusion is
the gravamen of trademark infringement. There are two types
of confusion in trademark infringement: confusion of goods and
confusion of business. In Sterling Products International, Inc. v.
Farbenfabriken Bayer Aktiengesellschaft, the Court
distinguished the two types of confusion:
Callman notes two types of confusion. The first is the confusion
of goods "in which event the ordinarily prudent purchaser
would be induced to purchase one product in the belief that he
was purchasing the other." In which case, "defendant's goods
are then bought as the plaintiff's, and the poorer quality of the
former reflects adversely on the plaintiff's reputation." The
other is the confusion of business: "Here though the goods of
the parties are different, the defendant's product is such as
might reasonably be assumed to originate with the plaintiff,
and the public would then be deceived either into that belief or
into the belief that there is some connection between the
plaintiff and defendant which, in fact, does not exist."
There are two tests to determine likelihood of confusion: the
dominancy test and holistic test. The dominancy test focuses on
the similarity of the main, prevalent or essential features of the
competing trademarks that might cause confusion.
Infringement takes place when the competing trademark
contains the essential features of another. Imitation or an
effort to imitate is unnecessary. The question is whether the
use of the marks is likely to cause confusion or deceive
purchasers.
xxxx
In cases involving trademark infringement, no set of rules can
be deduced. Each case must be decided on its own merits.
Jurisprudential precedents must be studied in the light of the
facts of each particular case. In McDonald's Corporation v.
MacJoy Fastfood Corporation, the Court held:
In trademark cases, particularly in ascertaining whether one
trademark is confusingly similar to another, no set rules can be
deduced because each case must be decided on its merits. In
such cases, even more than in any other litigation, precedent
must be studied in the light of the facts of the particular case.
That is the reason why in trademark cases, jurisprudential
precedents should be applied only to a case if they are
specifically in point.
In the light of the facts of the present case, the Court holds that
the dominancy test is applicable. In recent cases with similar
factual milieus, the Court has consistently applied the
dominancy test. x x x.
xxxx
In McDonald's Corporation v. MacJoy Fastfood Corporation, the
Court applied the dominancy test in holding that "MACJOY" is
confusingly similar to "MCDONALD'S." The Court held:
While we agree with the CA's detailed enumeration of
differences between the two (2) competing trademarks herein
involved, we believe that the holistic test is not the one
applicable in this case, the dominancy test being the one more
suitable. In recent cases with a similar factual milieu as here,
the Court has consistently used and applied the dominancy test
in determining confusing similarity or likelihood of confusion
between competing trademarks.
xxxx
Applying the dominancy test to the instant case, the Court finds
that herein petitioner's "MCDONALD'S" and respondent's
"MACJOY" marks are confusingly similar with each other that
an ordinary purchaser can conclude an association or relation
between the marks.
To begin with, both marks use the corporate "M" design logo
and the prefixes "Mc" and/or "Mac" as dominant features. x x
x.
For sure, it is the prefix "Mc," and abbreviation of "Mac," which
visually and aurally catches the attention of the consuming
public. Verily, the word "MACJOY" attracts attention the same
way as did "McDonalds," "Mac Fries," "Mc Spaghetti," "McDo,"
"Big Mac" and the rest of the MCDONALD'S marks which all use
the prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the
sale of fastfood products. Indisputably, the respondent's
trademark application for the "MACJOY & DEVICE" trademark
covers goods under Classes 29 and 30 of the International
Classification of Goods, namely, fried chicken, chicken
barbeque, burgers, fries, spaghetti, etc. Likewise, the
petitioner's trademark registration for the MCDONALD'S marks
in the Philippines covers goods which are similar if not identical
to those covered by the respondent's application.
In McDonald's Corporation v. L. C. Big Mak Burger, Inc., the
Court applied the dominancy test in holding that "BIG MAK" is
confusingly similar to "BIG MAC." The Court held:
This Court x x x has relied on the dominancy test rather than
the holistic test. The dominancy test considers the dominant
features in the competing marks in determining whether they
are confusingly similar. Under the dominancy test, courts give
greater weight to the similarity of the appearance of the
product arising from the adoption of the dominant features of
the registered mark, disregarding minor differences. Courts will
consider more the aural and visual impressions created by the
marks in the public mind, giving little weight to factors like
prices, quality, sales outlets and market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the
Court ruled:
x x x It has been consistently held that the question of
infringement of a trademark is to be determined by the test of
dominancy. Similarity in size, form and color, while relevant, is
not conclusive. If the competing trademark contains the main
or essential or dominant features of another, and confusion
and deception is likely to result, infringement takes place.
Duplication or imitation is not necessary; nor is it necessary
that the infringing label should suggest an effort to imitate.
(G. Heilman Brewing Co. vs. Independent Brewing Co., 191 F.,
489, 495, citing Eagle White Lead Co. vs. Pflugh (CC) 180 Fed.
579). The question at issue in cases of infringement of
trademarks is whether the use of the marks involved would be
likely to cause confusion or mistakes in the mind of the public
or deceive purchasers. (Auburn Rubber Corporation vs. Hanover
Rubber Co., 107 F. 2d 588; xx x)
xxxx
The test of dominancy is now explicitly incorporated into law in
Section 155.l of the Intellectual Property Code which defines
infringement as the "colorable imitation of a registered mark x
x x or a dominant feature thereof."
Applying the dominancy test, the Court finds that respondents'
use of the "Big Mak" mark results in likelihood of confusion.
First, "Big Mak" sounds exactly the same as "Big Mac." Second,
the first word in "Big Mak" is exactly the same as the first word
in "Big Mac." Third, the first two letters in "Mak" are the same
as the first two letters in "Mac." Fourth, the last letter "Mak"
while a "k" sounds the same as "c" when the word "Mak" is
pronounced. Fifth, in Filipino, the letter "k" replaces "c" in
spelling, thus "Caloocan" is spelled "Kalookan."
In Societe Des Produits Nestle, SA. v. Court of Appeals, the Court
applied the dominancy test in holding that "FLAVOR MASTER" is
confusingly similar to "MASTER ROAST" and "MASTER BLEND."
The Court held:
While this Court agrees with the Court of Appeals' detailed
enumeration of differences between the respective trademarks
of the two coffee products, this Court cannot agree that totality
test is the one applicable in this case. Rather, this Court
believes that the dominancy test is more suitable to this case in
light of its peculiar factual milieu.
Moreover, the totality or holistic test is contrary to the
elementary postulate of the law on trademarks and unfair
competition that confusing similarity is to be determined on
the basis of visual, aural, connotative comparisons and overall
impressions engendered by the marks in controversy as they
are encountered in the realities of the marketplace. The totality
or holistic test only relies on visual comparison between two
trademarks whereas the dominancy test relies not only on the
visual but also on the aural and connotative comparisons and
overall impressions between the two trademarks.
For this reason, this Court agrees with the BPTTT when it
applied the test of dominancy and held that:
xxxx
The scope of protection afforded to registered trademark
owners is not limited to protection from. infringers with
identical goods.1âwphi1 The scope of protection extends to
protection from infringers with related goods, and to market
areas that are the normal expansion of business of the
registered trademark owners. Section 138 of R.A. No. 8293
states:
Certificates of Registration. - A certificate of registration of a
mark shall be prima facie evidence of validity of the
registration, the registrant's ownership of the mark, and of the
registrant's exclusive right to use the same in connection with
the goods or services and those that are related thereto
specified in the certificate. x x x.
In Mighty Corporation v. E. & J Gallo Winery, the Court held
that, "Non-competing goods may be those which, though they
are not in actual competition, are so related to each other that
it can reasonably be assumed that they originate from one
manufacturer, in which case, confusion of business can arise
out of the use of similar marks." In that case, the Court
enumerated factors in determining whether goods are related:
(1) classification of the goods; (2) nature of the goods; (3)
descriptive properties, physical attributes or essential
characteristics of the goods, with reference to their form,
composition, texture or quality; and (4) style of distribution and
marketing of the goods, including how the goods are displayed
and sold.
xxxx
x x x. However, as the registered owner of the "NAN" mark,
Nestle should be free to use its mark on similar products, in
different segments of the market, and at different price levels.
In McDonald's Corporation v. L.C. Big Mak Burger, Inc., the
Court held that the scope of protection afforded to registered
trademark owners extends to market areas that are the normal
expansion of business:
xxxx
Even respondent's use of the "Big Mak" mark on non-
hamburger food products cannot excuse their infringement of
petitioners' registered mark, otherwise registered marks will
lose their protection under the law.
The registered trademark owner may use his mark on the
same or similar products, in different segments of the market,
and at different price levels depending on variations of the
products for specific segments of the market. The Court has
recognized that the registered trademark owner enjoys
protection in product and market areas that are the normal
potential expansion of his business. Thus, the Court has
declared:
Modern law recognizes that the protection to which the owner
of a trademark is entitled is not limited to guarding his goods or
business from actual market competition with identical or
similar products of the parties, but extends to all cases in which
the use by a junior appropriator of a trade-mark or trade-name
is likely to lead to a confusion of source, as where prospective
purchasers would be misled into thinking that the complaining
party has extended his business into the field (see 148 ALR
56 et sq; 53 Am. Jur. 576) or is in any way connected with the
activities of the infringer; or when it forestalls the normal
potential expansion of his business (v. 148 ALR, 77, 84; 52 Arn.
Jur. 576, 577). (Emphases supplied, citations omitted.)
Again, this Court discussed the dominancy test and confusion of
business in Dermaline, Inc. v. Myra Pharmaceuticals, Inc.,48 and
we quote:
The Dominancy Test focuses on the similarity of the prevalent
features of the competing trademarks that might cause
confusion or deception. It is applied when the trademark
sought to be registered contains the main, essential and
dominant features of the earlier registered trademark, and
confusion or deception is likely to result. Duplication or
imitation is not even required; neither is it necessary that the
label of the applied mark for registration should suggest an
effort to imitate. The important issue is whether the use of the
marks involved would likely cause confusion or mistake in the
mind of or deceive the ordinary purchaser, or one who is
accustomed to buy, and therefore to some extent familiar with,
the goods in question. Given greater consideration are the
aural and visual impressions created by the marks in the public
mind, giving little weight to factors like prices, quality, sales
outlets, and market segments. The test of dominancy is now
explicitly incorporated into law in Section 155.l of R.A. No. 8293
which provides-
155.1. Use in commerce any reproduction,
counterfeit, copy, or colorable imitation of a
registered mark or the same container or a dominant
feature thereof in connection with the sale, offering
for sale, distribution, advertising of any goods or
services including other preparatory steps necessary
to carry out the sale of any goods or services on or in
connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive xx x.
xxxx
Relative to the question on confusion of marks and trade
names, jurisprudence has noted two (2) types of
confusion, viz.: (1) confusion of goods (product confusion),
where the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the
other; and (2) confusion of business (source or origin
confusion), where, although the goods of the parties are
different, the product, the mark of which registration is applied
for by one party, is such as might reasonably be assumed to
originate with the registrant of an earlier product, and the
public would then be deceived either into that belief or into the
belief that there is some connection between the two parties,
though inexistent.
xxxx
We agree with the findings of the IPO. As correctly applied by
the IPO in this case, while there are no set rules that can be
deduced as what constitutes a dominant feature with respect
to trademarks applied for registration; usually, what are taken
into account are signs, color, design, peculiar shape or name, or
some special, easily remembered earmarks of the brand that
readily attracts and catches the attention of the ordinary
consumer.
xxxx
Further, Dermaline's stance that its product belongs to a
separate and different classification from Myra's products with
the registered trademark does not eradicate the possibility of
mistake on the part of the purchasing public to associate the
former with the latter, especially considering that both
classifications pertain to treatments for the skin.
Indeed, the registered trademark owner may use its mark on
the same or similar products, in different segments of the
market, and at different price levels depending on variations of
the products for specific segments of the market. The Court is
cognizant that the registered trademark owner enjoys
protection in product and market areas that are the normal
potential expansion of his business. Thus, we have held-
Modern law recognizes that the protection to which
the owner of a trademark is entitled is not limited to
guarding his goods or business from actual market
competition with identical or similar products of the
parties, but extends to all cases in which the use by a
junior appropriator of a trade-mark or trade-name
is likely to lead to a confusion of source, as where
prospective purchasers would be misled into
thinking that the complaining party has extended his
business into the field (see 148 ALR 56 et seq; 53 Am
Jur. 576) or is in any way connected with the activities
of the infringer; or when it forestalls the normal
potential expansion of his business (v. 148 ALR 77,
84; 52 Am. Jur. 576, 577).
Thus, the public may mistakenly think that Dermaline is
connected to or associated with Myra, such that, considering
the current proliferation of health and beauty products in the
market, the purchasers would likely be misled that Myra has
already expanded its business through Dermaline from merely
carrying pharmaceutical topical applications for the skin to
health and beauty services.
Verily, when one applies for the registration of a trademark or
label which is almost the same or that very closely resembles
one already used and registered by another, the application
should be rejected and dismissed outright, even without any
opposition on the part of the owner and user of a previously
registered label or trademark. This is intended not only to avoid
confusion on the part of the public, but also to protect an
already used and registered trademark and an established
goodwill. (Citations omitted.)
Section 123.l(d) of the IP Code provides:
A mark cannot be registered if it:
xxxx
(d) Is identical with a registered mark belonging to a different
proprietor or a mark with an earlier filing or priority date, in
respect of:
i. The same goods or services, or
ii. Closely related goods or services, or
iii. If it nearly resembles such a mark as to be likely to
deceive or cause confusion[.]
A scrutiny of petitioner's and respondent's respective marks
would show that the IPO-BLA and the IPO Director General
correctly found the word "PAPA" as the dominant feature of
petitioner's mark "PAPA KETSARAP." Contrary to respondent's
contention, "KETSARAP" cannot be the dominant feature of the
mark as it is merely descriptive of the product. Furthermore, it
is the "PAPA" mark that has been in commercial use for
decades and has established awareness and goodwill among
consumers.
We likewise agree with the IPO-BLA that the word "PAPA" is
also the dominant feature of respondent's "PAPA BOY &
DEVICE" mark subject of the application, such that "the word
'PAPA' is written on top of and before the other words such
that it is the first word/figure that catches the
eyes."49 Furthermore, as the IPO Director General put it, the
part of respondent's mark which appears prominently to the
eyes and ears is the phrase "PAPA BOY" and that is what a
purchaser of respondent's product would immediately recall,
not the smiling hog.
We quote the relevant portion of the IPO-BLA decision on this
point below:
A careful examination of Opposer's and Respondent-applicant's
respective marks shows that the word "PAPA" is the dominant
feature: In Opposer's marks, the word "PAPA" is either the
mark by itself or the predominant word considering its stylized
font and the conspicuous placement of the word "PAPA" before
the other words. In Respondent-applicant's mark, the word
"PAPA" is written on top of and before the other words such
that it is the first word figure that catches the eyes. The visual
and aural impressions created by such dominant word "PAPA"
at the least is that the respective goods of the parties
originated from the other, or that one party has permitted or
has been given license to the other to use the word "PAPA" for
the other party's product, or that there is a relation/connection
between the two parties when, in fact, there is none. This is
especially true considering that the products of both parties
belong to the same class and are closely related: Catsup and
lechon sauce or liver sauce are both gravy-like condiments used
to spice up dishes. Thus, confusion of goods and of business
may likely result.
Under the Dominancy Test, the dominant features of the
competing marks are considered in determining whether these
competing marks are confusingly similar. Greater weight is
given to the similarity of the appearance of the products arising
from the adoption of the dominant features of the registered
mark, disregarding minor differences. The visual, aural,
connotative, and overall comparisons and impressions
engendered by the marks in controversy as they are
encountered in the realities of the marketplace are the main
considerations (McDonald's Corporation, et al., v. L. C. Big Mak
Burger, Inc., et al., G. R. No.143993, August 18, 2004; Societe
Des Produits Nestle, S. A." et al. v. Court of Appeals, et al., G. R.
No. 112012, April 4, 2001). If the competing trademark contains
the main or essential or dominant features of another, and
confusion and deception is likely to result, infringement takes
place. (Lim Hoa v. Director of Patents, 100 Phil. 214 [1956]); Co
Tiong Sa v. Director of Patents, et al., G. R. No. L-5378, May 24,
1954). Duplication or imitation is not necessary; nor is it
necessary that the infringing label should suggest an effort to
imitate (Lim Hoa v. Director of Patents, supra, and Co Liang Sa
v. Director of Patents, supra). Actual confusion is not required:
Only likelihood of confusion on the part of the buying public is
necessary so as to render two marks confusingly similar so as to
deny the registration of the junior mark (Sterling Products
International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft, 137 Phil. 838 [1969]).
As to the first issue of whether PAPA BOY is confusingly similar
to Opposer's PAPA mark, this Bureau rules in the affirmative.
The records bear the following:
1. Registration No. 32416 issued for the mark "PAPA"
under Class 29 goods was deemed expired as of
February 11, 2004 (Exhibit "A" attached to the
VERIFIED NOTICE OF OPPOSITION). Application Serial
No. 4-2005-010788 was filed on October 28, 2005 for
the same mark "PAPA" for Class 30 goods and
Registration No. 42005010788 was issued on March
19, 2007;
2. Opposer was issued for the mark "PAPA BANANA
CATSUP LABEL" on August 11, 1983 Registration No.
SR-6282 for Class 30 goods in the Supplemental
Register, which registration expired in 2003.
Application Serial No. 4-2006-012364 was filed for the
mark "PAPA LABEL DESIGN" for Class 30 goods on
November 15, 2006, and Registration No.
42006012364 was issued on April 30, 2007; and
3. Lastly, Registration No. 34681 for the mark "PAPA
KETSARAP" for Class 30 goods was issued on August
23, 1985 and was renewed on August 23, 2005.
Though Respondent-applicant was first to file the subject
application on April 04, 2002 vis-a-vis the mark "PAP A" the
filing date of which is reckoned on October 28, 2005, and the
mark "PAPA LABEL DESIGN" the filing date of which is reckoned
on November 15, 2006, Opposer was able to secure a
registration for the mark "PAPA KETSARAP" on August 23, 1985
considering that Opposer was the prior registrant and that its
renewal application timely filed on August 23, 2005.
xxxx
Pursuant to [Section 123 .1 (d) of the IP Code], the application
for registration of the subject mark cannot be allowed
considering that Opposer was earlier registrant of the marks
PAPA and PAPA KETSARAP which registrations were timely
renewed upon its expiration. Respondent-applicant's mark
"PAPA BOY & DEVICE" is confusingly similar to Opposer's mark
"PAPA KETSARAP" and is applied to goods that are related to
Opposer's goods, but Opposer's mark "PAPA KETSARAP" was
registered on August 23, 1985 per Certificate of Registration
No. 34681, which registration was renewed for a period of 10
years counted from August 23, 2005 per Certificate of Renewal
of Registration No. 34681 issued on August 23, 2005. To repeat,
Opposer has already registered a mark which Respondent-
applicant's mark nearly resembles as to likely deceive or cause
confusion as to origin and which is applied to goods to which
respondent-applicant's goods under Class 30 are closely
related.1âwphi1
Section 138 of the IP Code provides that a certificate of
registration of a mark is prima facie evidence of the validity of
the registration, the registrant's ownership of the mark, and of
the registrant's exclusive right to use the same in connection
with the goods and those that are related thereto specified in
the certificate.50
We agree that respondent's mark cannot be registered.
Respondent's mark is related to a product, lechon sauce, an
everyday all-purpose condiment and sauce, that is not
subjected to great scrutiny and care by the casual purchaser,
who knows from regular visits to the grocery store under what
aisle to find it, in which bottle it is contained, and
approximately how much it costs. Since petitioner's product,
catsup, is also a household product found on the same grocery
aisle, in similar packaging, the public could think that petitioner
had expanded its product mix to include lechon sauce, and that
the "PAPA BOY" lechon sauce is now part of the "PAPA" family
of sauces, which is not unlikely considering the nature of
business that petitioner is in. Thus, if allowed. registration,
confusion of business may set in, and petitioner's hard-earned
goodwill may be associated to the newer product introduced by
respondent, all because of the use of the dominant feature of
petitioner's mark on respondent's mark, which is the word
"PAPA." The words "Barrio Fiesta" are not included in the mark,
and although printed on the label of respondent's lechon sauce
packaging, still do not remove the impression that "PAPA BOY"
is a product owned by the manufacturer of "PAPA" catsup, by
virtue of the use of the dominant feature. It is possible that
petitioner could expand its business to include lechon sauce,
and that would be well within petitioner's rights, but the
existence of a "PAPA BOY" lechon sauce would already
eliminate this possibility and deprive petitioner of its rights as
an owner of a valid mark included in the Intellectual Property
Code.
The Court of Appeals likewise erred in finding that "PAPA,"
being a common term of endearment for one's father, is a word
over which petitioner could not claim exclusive use and
ownership. The Merriam-Webster dictionary defines "Papa"
simply as "a person's father." True, a person's father has no
logical connection with catsup products, and that precisely
makes "PAPA" as an arbitrary mark capable of being registered,
as it is distinctive, coming from a family name that started the
brand several decades ago. What was registered was not the
word "Papa" as defined in the dictionary, but the word "Papa"
as the last name of the original owner of the brand. In fact,
being part of several of petitioner's marks, there is no question
that the IPO has found "PAPA" to be a registrable mark.
Respondent had an infinite field of words and combinations of mark "OK Hotdog Inasal Cheese Hotdog Flavor Mark" (OK
words to choose from to coin a mark for its lechon sauce. While Hotdog Inasal mark) in connection with goods under Class 30 of
its claim as to the origin of the term "PAPA BOY" is plausible, it the Nice Classification.4 The said mark, which respondent
is not a strong enough claim to overrule the rights of the owner intends to use on one of its curl snack products, appears as
of an existing and valid mark. Furthermore, this Court cannot follows:
equitably allow respondent to profit by the name and
reputation carefully built by petitioner without running afoul of
the basic demands of fair play.51
WHEREFORE, we hereby GRANT the petition. We SET
ASIDE the June 23, 2011 Decision and the October 4,
2011 Resolution of the Court of Appeals in CA-G.R. SP No.
107570, and REINSTATE the March 26, 2008 Decision of the
Bureau of Legal Affairs of the Intellectual Property Office (IPO-
BLA) and the January 29, 2009 Decision of the Director General
of the IPO.
SO ORDERED.
G.R. No. 221717
MANG INASAL PHILIPPINES, INC., Petitioner
vs.
IFP MANUFACTURING CORPORATION, Respondent
DECISION
VELASCO, JR., J.:
Before us is a Petition for Review on Certiorari under Rule 45 of
the Rules of Court of the Resolutions dated June 10, 2015 1 and
December 2, 2015 2 of the Court of Appeals (CA) in CA-G.R. SP The application of respondent was opposed 5 by petitioner
No. 139020. Mang Inasal Philippines, Inc.
The Facts Petitioner is a domestic fast food company and the owner of
the mark "Mang Inasal, Home of Real Pinoy Style Barbeque
The Trademark Application and the Opposition Respondent IFP and Device" (Mang Inasal mark) for services under Class 43 of
Manufacturing Corporation is a local manufacturer of snacks the Nice Classification. 6 The said mark, which was registered
and beverages. with the IPO in 2006 7 and had been used by petitioner for its
chain of restaurants since 2003, 8 consists of the following
Insignia:
On May 26, 2011, respondent filed with the Intellectual
Property Office (IPO) an application 3 for the registration of the

Petitioner, in its opposition, contended that the registration of
respondent's OK Hotdog Inasal mark is prohibited under
Section 123.l (d)(iii) of Republic Act No. (RA) 8293. 9 Petitioner
averred that the OK Hotdog Inasal mark and the Mang Inasal
mark share similarities-both as to their appearance and as to
the goods or services that they represent which tend to suggest
a false connection or association between the said marks and,
in that regard, would likely cause confusion on the part of the
public. 10 As petitioner explained:
1. The OK Hotdog Inasal mark is similar to the Mang Inasal
mark. Both marks feature the same dominant element-i.e., the
word "INASAL"-printed and stylized in the exact same manner,
viz:
a. In both marks, the word "INASAL" is
spelled using the same font style and red
color;
b. In both marks, the word "INASAL" is
placed inside the same black outline and
yellow background; and
c. In both marks, the word "INASAL" is
arranged in the same staggered format.
2. The goods that the OK Hotdog Inasal mark is intended to
identify (i.e., curl snack products) are also closely related to the
services represented by the Mang Inasal mark (i.e., fast food
restaurants). Both marks cover inasal or inasal-flavored food
products.
Petitioner's opposition was referred to the Bureau of Legal
Affairs (BLA) of the IPO for hearing and disposition.
Decisions of the IPO-BLA and the IPO-DG
On September 19, 2013, after due proceedings, the IPO-BLA
issued a Decision 11 dismissing petitioner's opposition. The
dispositive portion of the Decision reads:
WHEREFORE, premises considered, the instant opposition is
hereby DISMISSED. Let the filewrapper [sic] of Trademark
Application Serial No. 4-2011-006098 be returned, together
with a copy of this Decision, to the Bureau of Trademarks for
further information and appropriate action.
SO ORDERED.
Aggrieved, petitioner appealed the Decision of IPO-BLA to the
Director General (DG) of the IPO. 12
On December 15, 2014, the IPO-DG rendered a
Decision 13 dismissing the appeal of petitioner. The fallo of the
Decision accordingly reads:
Wherefore, premises considered, the appeal is hereby
dismissed. Let a copy of this Decision be furnished to the
Director of Bureau of Legal Affairs and the Director of Bureau of
Trademarks for their appropriate action and information.
Further, let a copy of this Decision be furnished to the library of
the Documentation, Information and Technology Transfer
Bureau for records purposes.
SO ORDERED.
Both the IPO-BLA and the IPO-DG were not convinced that the
OK Hotdog Inasal mark is confusingly similar to the Mang Inasal
mark. They rebuffed petitioner's contention, thusly:
1. The OK Hotdog Inasal mark is not similar to the Mang !nasal
mark. In terms of appearance, the only similarity between the
two marks is the word "INASAL." However, there are other
words like "OK," "HOTDOG," and "CHEESE' and images like that
of curls and cheese that are found in the OK Hotdog Inasal mark
but are not present in the Mang Inasal mark. 14
In addition, petitioner cannot prevent the application of the
word "INASAL" in the OK Hotdog Inasal mark. No person or
entity can claim exclusive right to use the
word "INASAL" because it is merely a generic or descriptive
word that means barbeque or barbeque products. 15
Neither can the underlying goods and services of the two marks
be considered as closely related. The products represented by
the two marks are not competitive and are sold in different
channels of trade. The curl snack products of the OK Hotdog
Inasal mark are sold in sari-sari stores, grocery stores and other
small distributor outlets, whereas the food products associated
with the Mang Inasal mark are sold in petitioner's
restaurants. 16
Undeterred, petitioner appealed to the CA.
Resolutions of the CA and the Instant Appeal
On June 10, 2015, the CA issued a Resolution 17 denying the
appeal of petitioner. Petitioner filed a motion for
reconsideration, but this too was denied by the CA through its
Resolution18 dated December 2, 2015. The CA, in its
Resolutions, simply agreed with the ratiocinations of the
IPOBLA and IPO-DG.
Hence, the instant appeal.
Here, petitioner prays for the reversal of the CA Resolutions.
Petitioner maintains that the OK Hotdog Inasal mark is
confusingly similar to the Mang Inasal mark and insists that the
trademark application of respondent ought to be denied for
that reason.
Our Ruling
We have examined the OK Hotdog Inasal and Mang Inasal
marks under the lens of pertinent law and jurisprudence. And,
through it, we have determined the justness of petitioner's
claim. By our legal and jurisprudential standards, the
respondent's OK Hotdog Inasal mark is, indeed, likely to cause
deception or confusion on the part of the public. Hence,
contrary to what the IPO-BLA, IPO-DG, and the CA had ruled,
the respondent's application should have been denied.
We, therefore, grant the appeal.
I
The Proscription: Sec. 123.l(d)(iii) of RA 8293
A mark that is similar to a registered mark or a mark with an
earlier filing or priority date (earlier mark) and which is likely to
cause confusion on the part of the public cannot be registered
with the IPO. Such is the import of Sec. 123.l(d)(iii) of RA 8293:
SECTION 123. Registrability. –
123. 1. A mark cannot be registered if it:
xxxx
d. xxx:
1. x x x
11. x x x
iii. ... nearly resembles [a registered mark belonging to a
different proprietor or a mark with an earlier filing or priority
date] as to be likely to deceive or cause confusion.
The concept of confusion, which is at the heart of the
proscription, could either refer to confusion of
goods or confusion of business. In Skechers U.S.A., Inc. v.
Trendworks International Corporation, 19 we discussed and
differentiated both types of confusion, as follows:
Relative to the question on confusion of marks and trade
names, jurisprudence has noted two (2) types of confusion, viz.:
(1) confusion of goods (product confusion), where the
ordinarily prudent purchaser would be induced to purchase one
product in the belief that he was purchasing the other; and (2)
confusion of business (source or origin confusion), where,
although the goods of the parties are different, the product, the
mark of which registration is applied for by one party, is such as
might reasonably be assumed to originate with the registrant of
an earlier product, and the public would then be deceived
either into that belief or into the belief that there is some
connection between the two parties, though inexistent.
Confusion, in either of its forms, is, thus, only possible when the
goods or services covered by allegedly similar marks are
identical, similar or related in some manner. 20
Verily, to fall under the ambit of Sec. 123. l(d)(iii) and be
regarded as likely to deceive or cause confusion upon the
purchasing public, a prospective mark must be shown to meet
two (2) minimum conditions:
1. The prospective mark must nearly resemble or be
similar to an earlier mark; and
2. The prospective mark must pertain to goods or
services that are either identical, similar or related to
the goods or services represented by the earlier
mark.
The rulings of the IPO-BLA, IPO-DG, and the CA all rest on the
notion that the OK Hotdog Inasal mark does not fulfill both
conditions and so may be granted registration.
We disagree.
II
The OK Hotdog Inasal Mark Is Similar to the Mang Inasal Mark
The first condition of the proscription requires resemblance
or similarity between a prospective mark and an earlier mark.
Similarity does not mean absolute identity of marks. 21 To be
regarded as similar to an earlier mark, it is enough that a
prospective mark be a colorable imitation of the
former. 22 Colorable imitation denotes such likeness in form,
content, words, sound, meaning, special arrangement or
general appearance of one mark with respect to another as
would likely mislead an average buyer in the ordinary course of
purchase. 23
In determining whether there is similarity or colorable imitation
between two marks, authorities employ either the dominancy
test or the holistic test.24 In Mighty Corporation v. E. & J. Gallo
Winery,25 we distinguished between the two tests as follows:
The Dominancy Test focuses on the similarity of the prevalent
features of the competing trademarks which might cause
confusion or deception, and thus infringement. If the
competing trademark contains the main, essential or dominant
features of another, and confusion or deception is likely to
result, infringement takes place. Duplication or imitation is not
necessary; nor is it necessary that the infringing label should
suggest an effort to imitate. The question is whether the use of
the marks involved is likely to cause confusion or mistake in the
mind of the public or deceive purchasers.
On the other hand, the Holistic Test requires that the entirety
of the marks in question be considered in resolving confusing
similarity. Comparison of words is not the only determining
factor. The trademarks in their entirety as they appear in their
respective labels or hang tags must also be considered in
relation to the goods to which they are attached. The
discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing in
both labels in order that he may draw his conclusion whether
one is confusingly similar to the other. (citations omitted and
emphasis supplied)
There are currently no fixed rules as to which of the two tests
can be applied in any given case. 26 However, recent case law
on trademark seems to indicate an overwhelming judicial
preference towards applying the dominancy test. 27 We
conform.
Our examination of the marks in controversy yielded the
following findings:
1. The petitioner's Mang Inasal mark has a single dominant
feature-the word "INASAL" written in a bold red typeface
against a black outline and yellow background with staggered
design. The other perceptible elements of the mark-such as the
word "MANG" written in black colored font at the upper left
side of the mark and the phrase "HOME OF REAL PINOY STYLE
BARBEQUF' written in a black colored stylized font at the lower
portion of the mark-are not as visually outstanding as the
mentioned feature.
2. Being the sole dominant element, the word "INASAL," as
stylized in the Mang Inasal mark, is also the most distinctive
and recognizable feature of the said mark.
3. The dominant element "INASAL," as stylized in the Mang
Inasal mark, is different from the term "inasal' per se. The
term "inasal" per se is a descriptive term that cannot be
appropriated. However, the dominant element "INASAL," as
stylized in the Mang Inasal mark, is not. Petitioner, as the
registered owner of the Mang Inasal mark, can claim exclusive
use of such element.
4. The respondent's OK Hotdog Inasal mark, on the other hand,
has three (3) dominant features: (a) the word "INASAL" written
in a bold red typeface against a black and yellow outline with
staggered design; (b) the word "HOTDOG" written in green
colored font; and (c) a picture of three pieces of curls. Though
there are other observable elements in the mark-such as the
word "OK'' written in red colored font at the upper left side of
the mark, the small red banner overlaying the picture of the
curls with the words "CHEESE HOTDOG FLAVOR" written on it,
and the image of a block of cheese beside the picture of the
curls-none of those are as prevalent as the two features
aforementioned.
5. The dominant element "INASAL" in the OK Hotdog Inasal
mark is exactly the same as the dominant element "INASAL" in
the Mang Inasal mark. Both elements in both marks are printed
using the exact same red colored font, against the exact same
black outline and yellow background and is arranged in the
exact same staggered format.
6. Apart from the element "INASAL," there appear no other
perceivable similarities between the two marks.
Given the foregoing premises, and applying the dominancy test,
we hold that the OK Hotdog Inasal mark is a colorable imitation
of the Mang Inasal mark.
First. The fact that the conflicting marks have exactly the same
dominant element is key. It is undisputed that the OK Hotdog
Inasal mark copied and adopted as one of its dominant features
the "INASAL" element of the Mang Inasal mark. Given that
the "INASAL" element is, at the same time, the dominant and
most distinctive feature of the Mang Inasal mark, the said
element's incorporation in the OK Hotdog Inasal mark, thus, has
the potential to project the deceptive and false impression that
the latter mark is somehow linked or associated with the
former mark.
Second. The differences between the two marks are I trumped
by the overall impression created by their similarity. The mere
fact that there are other elements in the OK Hotdog Inasal mark
that are not present in the Mang Inasal mark actually does little
to change the probable public perception that both marks are
linked or associated.1âwphi1 It is worth reiterating that the OK
Hotdog Inasal mark actually brandishes a literal copy of the
most recognizable feature of the Mang Inasal mark. We doubt
that an average buyer catching a casual glimpse of the OK
Hotdog Inasal mark would pay more attention to the peripheral
details of the said mark than it would to the mark's more
prominent feature, especially when the same invokes the
distinctive feature of another more popular brand.
All in all, we find that the OK Hotdog Inasal mark is similar to
the Mang Inasal mark.
III
The Goods for which the Registration of the OK Hotdog Inasal
Mark Is Sought Are Related to the Services Being Represented
by the Mang Inasal Mark
The second condition of the proscription requires that the
prospective mark pertain to goods or services that are either
identical, similar or related to the goods or services
represented by the earlier mark. While there can be no quibble
that the curl snack product for which the registration of the OK
Hotdog Inasal mark is sought cannot be considered as identical
or similar to the restaurant services represented by the Mang
Inasal mark, there is ample reason to conclude that the said
product and services may nonetheless be regarded
as related to each other.
Related goods and services are those that, though non-identical
or non-similar, are so logically connected to each other that
they may reasonably be assumed to originate from one
manufacturer or from economically-linked manufacturers. 28 In
determining whether goods or services are related, several
factors may be considered. Some of those factors recognized in
our jurisprudence are: 29
1. the business (and its location) to which the goods belong;
2. the class of product to which the goods belong;
3. the product's quality, quantity, or size, including the nature
of the package, wrapper or container;
4. the nature and cost of the articles;
5. the descriptive properties, physical attributes or essential
characteristics with reference to their form, composition,
texture or quality;
6. the purpose of the goods;
7. whether the article is bought for immediate consumption,
that is, day-to-day household items;
8. the fields of manufacture;
9. the conditions under which the article is usually purchased,
and
10. the channels of trade through which the goods flow, how
they are distributed, marketed, displayed and sold.
Relative to the consideration of the foregoing factors,
however, Mighty Corporation 30 significantly imparted:
The wisdom of this approach is its recognition that each
trademark infringement case presents its own unique set of
facts. No single factor is preeminent, nor can the presence or
absence of one determine, without analysis of the others, the
outcome of an infringement suit. Rather, the court is required
to sift the evidence relevant to each of the criteria. This
requires that the entire panoply of elements constituting the
relevant factual landscape be comprehensively examined. It is a
weighing and balancing process. With reference to this ultimate
question, and from a balancing of the determinations reached
on all of the factors, a conclusion is reached whether the
parties have a right to the relief sought.
A very important circumstance though is whether there exists a
likelihood that an appreciable number of ordinarily prudent
purchasers will be misled, or simply confused, as to the source
of the goods in question. The "purchaser" is not the
"completely unwary consumer" but is the "ordinarily intelligent
buyer" considering the type of product involved he is
accustomed to buy, and therefore to some extent familiar with,
the goods in question. The test of fraudulent simulation is to be
found in the likelihood of the deception of some persons in
some measure acquainted with an established design and
desirous of purchasing the commodity with which that design
has been associated. The test is not found in the deception, or
the possibility of deception, of the person who knows nothing
about the design which has been counterfeited, and who must
be indifferent between that and the other. The simulation, in
order to be objectionable, must be such as appears likely to
mislead the ordinary intelligent buyer who has a need to supply
and is familiar with the article that he seeks to purchase.
(citations omitted and emphasis supplied)
Mindful of the foregoing precepts, we hold that the curl snack
product for which the registration of the OK Hotdog Inasal mark
is sought is related to the restaurant services represented by
the Mang !nasal mark, in such a way that may lead to a
confusion of business. In holding so, we took into account the
specific kind of restaurant business that petitioner is engaged
in, the reputation of the petitioner's mark, and the particular
type of curls sought to be marketed by the respondent, thus:
First. Petitioner uses the Mang Inasal mark in connection with
its restaurant services that is particularly known for its
chicken inasal, i.e., grilled chicken doused in a
special inasal marinade. 31 The inasal marinade is different from
the typical barbeque marinade and it is what gives the chicken
inasal its unique taste and distinct orange color. 32 Inasal refers
to the manner of grilling meat products using
an inasal marinade.
Second. The Mang Inasal mark has been used for petitioner's
restaurant business since 2003. The restaurant started in Iloilo
but has since expanded its business throughout the country.
Currently, the Mang Inasal chain of restaurants has a total of
464 branches scattered throughout the nation's three major
islands. 33 It is, thus, fair to say that a sizeable portion of the
population is knowledgeable of the Mang Inasal mark.
Third. Respondent, on the other hand, seeks to market under
the OK Hotdog Inasal mark curl snack products which it
publicizes as having a cheese hotdog inasal flavor. 34
Accordingly, it is the fact that the underlying goods and services
of both marks deal with inasal and inasal-flavored products
which ultimately fixes the relations between such goods and
services. Given the foregoing circumstances and the aforesaid
similarity between the marks in controversy, we are convinced
that an average buyer who comes across the curls marketed
under the OK Hotdog Inasal mark is likely to be confused as to
the true source of such curls. To our mind, it is not unlikely that
such buyer would be led into the assumption that the curls are
of petitioner and that the latter has ventured into snack
manufacturing or, if not, that the petitioner has supplied the
flavorings for respondent's product. Either way, the reputation
of petitioner would be taken advantage of and placed at the
mercy of respondent.
All in all, we find that the goods for which the registration of
the OK Hotdog Inasal mark is sought are related to the services
being represented by the Mang Inasal mark.1âwphi1
IV
Conclusion
The OK Hotdog Inasal mark meets the two conditions of the
proscription under Sec. 123.l(d)(iii) of RA 8293. First, it is similar
to the Mang Inasal mark, an earlier mark. Second, it pertains to
goods that are related to the services represented by such
earlier mark. Petitioner was, therefore, correct; and the IPO-
BLA, IPO-DG, and the CA's rulings must be reversed. The OK
Hotdog Inasal mark is not entitled to be registered as its use
will likely deceive or cause confusion on the part of the public
and, thus, also likely to infringe the Mang Inasal mark. The law,
in instances such as this, must come to the succor of the owner
of the earlier mark.
WHEREFORE, premises considered, the petition is
hereby GRANTED. We hereby render a decision as follows:
1. REVERSING and SETTING ASIDE the Resolutions dated June
10, 2015 and December 2, 2015 of the Court of Appeals in CA-
G.R. SP No. 139020;
2. SETTING ASIDE the Decision dated December 15, 2014 of the
Director General of the Intellectual Property Office in Appeal
No. 14-2013-0052;
3. SETTING ASIDE the Decision dated September 19, 2013 of
the Director of the Bureau of Legal Affairs of the Intellectual
Property Office in IPC No. 14-2012-00369; and
4. DIRECTING the incumbent Director General and Director of
the Bureau of Legal Affairs of the Intellectual Property Office
to DENY respondent's Application No. 4-2011-006098 for the
registration of the mark "OK Hotdog Inasal Cheese Hotdog
Flavor Mark"
SO ORDERED.
G.R. No. 185830 June 5, 2013
ECOLE DE CUISINE MANILLE (CORDON BLEU OF THE
PHILIPPINES), INC., Petitioner,
vs.
RENAUD COINTREAU & CIE and LE CORDON BLEU INT'L.,
B.V., Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 is the
December 23, 2008 Decision2 of the Court of Appeals (CA) in
CA-G.R. SP No. 104672 which affirmed in toto the Intellectual
Property Office (IPO) Director General’s April 21, 2008
Decision3 that declared respondent Renaud Cointreau & Cie
(Cointreau) as the true and lawful owner of the mark "LE
CORDON BLEU & DEVICE" and thus, is entitled to register the
same under its name.
The Facts
On June 21, 1990, Cointreau, a partnership registered under
the laws of France, filed before the (now defunct) Bureau of
Patents, Trademarks, and Technology Transfer (BPTTT) of the
Department of Trade and Industry a trademark application for
the mark "LE CORDON BLEU & DEVICE" for goods falling under
classes 8, 9, 16, 21, 24, 25, 29, and 30 of the International
Classification of Goods and Services for the Purposes of
Registrations of Marks ("Nice Classification") (subject mark).
The application was filed pursuant to Section 37 of Republic Act
No. 166, as amended (R.A. No. 166), on the basis of Home
Registration No. 1,390,912, issued on November 25, 1986 in
France. Bearing Serial No. 72264, such application was
published for opposition in the March-April 1993 issue of the
BPTTT Gazette and released for circulation on May 31, 1993.4
On July 23, 1993, petitioner Ecole De Cuisine Manille, Inc.
(Ecole) filed an opposition to the subject application, averring
that: (a) it is the owner of the mark "LE CORDON BLEU, ECOLE
DE CUISINE MANILLE," which it has been using since 1948 in
cooking and other culinary activities, including in its restaurant
business; and (b) it has earned immense and invaluable
goodwill such that Cointreau’s use of the subject mark will
actually create confusion, mistake, and deception to the buying
public as to the origin and sponsorship of the goods, and cause
great and irreparable injury and damage to Ecole’s business
reputation and goodwill as a senior user of the same.5
On October 7, 1993, Cointreau filed its answer claiming to be
the true and lawful owner of the subject mark. It averred that:
(a) it has filed applications for the subject mark’s registration in
various jurisdictions, including the Philippines; (b) Le Cordon
Bleu is a culinary school of worldwide acclaim which was
established in Paris, France in 1895; (c) Le Cordon Bleu was the
first cooking school to have set the standard for the teaching of
classical French cuisine and pastry making; and (d) it has trained
students from more than eighty (80) nationalities, including
Ecole’s directress, Ms. Lourdes L. Dayrit. Thus, Cointreau
concluded that Ecole’s claim of being the exclusive owner of
the subject mark is a fraudulent misrepresentation.6
During the pendency of the proceedings, Cointreau was issued
Certificates of Registration Nos. 60631 and 54352 for the marks
"CORDON BLEU & DEVICE" and "LE CORDON BLEU PARIS 1895
& DEVICE" for goods and services under classes 21 and 41 of
the Nice Classification, respectively.7
The Ruling of the Bureau of Legal Affairs
In its Decision8 dated July 31, 2006, the Bureau of Legal Affairs
(BLA) of the IPO sustained Ecole’s opposition to the subject
mark, necessarily resulting in the rejection of Cointreau’s
application.9 While noting the certificates of registration
obtained from other countries and other pertinent materials
showing the use of the subject mark outside the Philippines,
the BLA did not find such evidence sufficient to
establishCointreau’s claim of prior use of the same in the
Philippines. It emphasized that the adoption and use of
trademark must be in commerce in the Philippines and not
abroad. It then concluded that Cointreau has not established
any proprietary right entitled to protection in the Philippine
jurisdiction because the law on trademarks rests upon the
doctrine of nationality or territoriality.10
On the other hand, the BLA found that the subject mark, which
was the predecessor of the mark "LE CORDON BLEU MANILLE"
has been known and used in the Philippines since 1948 and
registered under the name "ECOLE DE CUISINE MANILLE (THE
CORDON BLEU OF THE PHILIPPINES), INC." on May 9, 1980.11
Aggrieved, Cointreau filed an appeal with the IPO Director
General.
The Ruling of the IPO Director General
In his Decision dated April 21, 2008, the IPO Director General
reversed and set aside the BLA’s decision, thus, granting
Cointreau’s appeal and allowing the registration of the subject
mark.12 He held that while Section 2 of R.A. No. 166 requires
actual use of the subject mark in commerce in the Philippines
for at least two (2) months before the filing date of the
application, only the owner thereof has the right to register the
same, explaining that the user of a mark in the Philippines is
not ipso facto its owner. Moreover, Section 2-A of the same law
does not require actual use in the Philippines to be able to
acquire ownership of a mark.13
In resolving the issue of ownership and right to register the
subject mark in favor of Cointreau, he considered Cointreau’s
undisputed use of such mark since 1895 for its culinary school
in Paris, France (in which petitioner’s own directress, Ms.
Lourdes L. Dayrit, had trained in 1977). Contrarily, he found
that while Ecole may have prior use of the subject mark in the
Philippines since 1948, it failed to explain how it came up with
such name and mark. The IPO Director General therefore
concluded that Ecole has unjustly appropriated the subject
mark, rendering it beyond the mantle of protection of Section
4(d)14 of R.A. No. 166.15
Finding the IPO Director General’s reversal of the BLA’s
Decision unacceptable, Ecole filed a Petition for Review16dated
June 7, 2008 with the CA.
Ruling of the CA
In its Decision dated December 23, 2008, the CA affirmed the
IPO Director General’s Decision in toto.17 It declared Cointreau
as the true and actual owner of the subject mark with a right to
register the same in the Philippines under Section 37 of R.A. No.
166, having registered such mark in its country of origin on
November 25, 1986.18
The CA likewise held that Cointreau’s right to register the
subject mark cannot be barred by Ecole’s prior use thereof as
early as 1948 for its culinary school "LE CORDON BLEU
MANILLE" in the Philippines because its appropriation of the
mark was done in bad faith. Further, Ecole had no certificate of
registration that would put Cointreau on notice that the former
had appropriated or has been using the subject mark. In fact, its
application for trademark registration for the same which was
just filed on February 24, 1992 is still pending with the IPO.19
Hence, this petition.
Issues Before the Court
The sole issue raised for the Court’s resolution is whether the
CA was correct in upholding the IPO Director General’s ruling
that Cointreau is the true and lawful owner of the subject mark
and thus, entitled to have the same registered under its name.
At this point, it should be noted that the instant case shall be
resolved under the provisions of the old Trademark Law, R.A.
No. 166, which was the law in force at the time of Cointreau’s
application for registration of the subject mark.
The Court’s Ruling
The petition is without merit.
In the petition, Ecole argues that it is the rightful owner of the
subject mark, considering that it was the first entity that used
the same in the Philippines. Hence, it is the one entitled to its
registration and not Cointreau.
Petitioner’s argument is untenable.
Under Section 220 of R.A. No. 166, in order to register a
trademark, one must be the owner thereof and must have
actually used the mark in commerce in the Philippines for two
(2) months prior to the application for registration. Section 2-
A21 of the same law sets out to define how one goes about
acquiring ownership thereof. Under Section 2-A, it is clear that
actual use in commerce is also the test of ownership but the
provision went further by saying that the mark must not have
been so appropriated by another. Additionally, it is significant
to note that Section 2-A does not require that the actual use of
a trademark must be within the Philippines. Thus, as correctly
mentioned by the CA, under R.A. No. 166, one may be an
owner of a mark due to its actual use but may not yet have the
right to register such ownership here due to the owner’s failure
to use the same in the Philippines for two (2) months prior to
registration.22
Nevertheless, foreign marks which are not registered are still
accorded protection against infringement and/or unfair
competition. At this point, it is worthy to emphasize that the
Philippines and France, Cointreau’s country of origin, are both
signatories to the Paris Convention for the Protection of
Industrial Property (Paris Convention).23 Articles 6bis and 8 of
the Paris Convention state:
ARTICLE 6bis
(1) The countries of the Union undertake, ex officio if their
legislation so permits, or at the request of an interested party,
to refuse or to cancel the registration, and to prohibit the use,
of a trademark which constitutes a reproduction, an imitation,
or a translation, liable to create confusion, of a mark
considered by the competent authority of the country of
registration or use to be well known in that country as being
already the mark of a person entitled to the benefits of this
Convention and used for identical or similar
goods.1âwphi1 These provisions shall also apply when the
essential part of the mark constitutes a reproduction of any
such well-known mark or an imitation liable to create confusion
therewith.
ARTICLE 8
A trade name shall be protected in all the countries of the
Union without the obligation of filing or registration, whether
or not it forms part of a trademark. (Emphasis and underscoring
supplied)
In this regard, Section 37 of R.A. No. 166 incorporated Article 8
of the Paris Convention, to wit:
Section 37. Rights of foreign registrants. - Persons who are
nationals of, domiciled in, or have a bona fide or effective
business or commercial establishment in any foreign country,
which is a party to any international convention or treaty
relating to marks or trade-names, or the repression of unfair
competition to which the Philippines may be a party, shall be
entitled to the benefits and subject to the provisions of this Act
to the extent and under the conditions essential to give effect
to any such convention and treaties so long as the Philippines
shall continue to be a party thereto, except as provided in the
following paragraphs of this section.
xxxx
Trade-names of persons described in the first paragraph of this
section shall be protected without the obligation of filing or
registration whether or not they form parts of marks.
xxxx
In view of the foregoing obligations under the Paris Convention,
the Philippines is obligated to assure nationals of the signatory-
countries that they are afforded an effective protection against
violation of their intellectual property rights in the Philippines
in the same way that their own countries are obligated to
accord similar protection to Philippine nationals.24 "Thus, under
Philippine law, a trade name of a national of a State that is a
party to the Paris Convention, whether or not the trade name
forms part of a trademark, is protected "without the obligation
of filing or registration.’"25
In the instant case, it is undisputed that Cointreau has been
using the subject mark in France since 1895, prior to Ecole’s
averred first use of the same in the Philippines in 1948, of
which the latter was fully aware thereof. In fact, Ecole’s present
directress, Ms. Lourdes L. Dayrit (and even its foundress, Pat
Limjuco Dayrit), had trained in Cointreau’s Le Cordon Bleu
culinary school in Paris, France. Cointreau was likewise the first
registrant of the said mark under various classes, both abroad
and in the Philippines, having secured Home Registration No.
1,390,912 dated November 25, 1986 from its country of origin,
as well as several trademark registrations in the Philippines.26
On the other hand, Ecole has no certificate of registration over
the subject mark but only a pending application covering
services limited to Class 41 of the Nice Classification, referring
to the operation of a culinary school. Its application was filed
only on February 24, 1992, or after Cointreau filed its
trademark application for goods and services falling under
different classes in 1990. Under the foregoing circumstances,
even if Ecole was the first to use the mark in the Philippines, it
cannot be said to have validly appropriated the same.
It is thus clear that at the time Ecole started using the subject
mark, the same was already being used by Cointreau, albeit
abroad, of which Ecole’s directress was fully aware, being an
alumna of the latter’s culinary school in Paris, France. Hence,
Ecole cannot claim any tinge of ownership whatsoever over the
subject mark as Cointreau is the true and lawful owner thereof.
As such, the IPO Director General and the CA were correct in
declaring Cointreau as the true and lawful owner of the subject
mark and as such, is entitled to have the same registered under
its name.
In any case, the present law on trademarks, Republic Act No.
8293, otherwise known as the Intellectual Property Code of the
Philippines, as amended, has already dispensed with the
requirement of prior actual use at the time of
registration.27 Thus, there is more reason to allow the
registration of the subject mark under the name of Cointreau as
its true and lawful owner.
As a final note, "the function of a trademark is to point out
distinctly the origin or ownership of the goods (or services) 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."28 As such, courts will protect trade names or marks,
although not registered or properly selected as trademarks, on
the broad ground of enforcing justice and protecting one in the
fruits of his toil.29
WHEREFORE, the petition is DENIED. Accordingly, the
December 23, 2008 Decision of the Court of Appeals in CA-G.R.
SP No. 104672 is hereby AFFIRMED in toto.
SO ORDERED.
G.R. No. 190706 July 21, 2014
SHANG PROPERTIES REALTY CORPORATION (formerly THE
SHANG GRAND TOWER CORPORATION) and SHANG
PROPERTIES, INC. (formerly EDSA PROPERTIES HOLDINGS,
INC.), Petitioners,
vs.
ST. FRANCIS DEVELOPMENT CORPORATION, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 is the
Decision2 dated December 18, 2009 of the Court of Appeals
(CA) in CA-G.R. SP No. 105425 which affirmed with modification
the Decision3 dated September 3, 2008 of the Intellectual
Property Office (IPO) Director-General. The CA: (a) affirmed the
denial of the application for registration of the mark "ST.
FRANCIS TOWERS" filed by petitioners Shang Properties Realty
Corporation and Shang Properties, Inc. (petitioners); ( b) found
petitioners to have committed unfair competition for using the
marks "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS
SHANGRI-LA PLACE"; (c) ordered petitioners to cease and desist
from using "ST. FRANCIS" singly or as part of a composite mark;
and (d) ordered petitioners to jointly and severally pay
respondent St. Francis Square Development Corporation
(respondent) a fine in the amount of ₱200,000.00.
The Facts
Respondent – a domestic corporation engaged in the real
estate business and the developer of the St. Francis Square
Commercial Center, built sometime in 1992, located at Ortigas
Center, Mandaluyong City, Metro Manila (Ortigas Center)4 –
filed separate complaints against petitioners before the IPO -
Bureau of Legal Affairs (BLA), namely: (a) an intellectual
property violation case for unfair competition, false or
fraudulent declaration, and damages arising from petitioners’
use and filing of applications for the registration of the marks
"THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS SHANGRI-LA
PLACE," docketed as IPV Case No. 10-2005-00030 (IPV Case);
and (b) an inter partes case opposing the petitioners’
application for registration of the mark "THE ST. FRANCIS
TOWERS" for use relative to the latter’s business, particularly
the construction of permanent buildings or structures for
residential and office purposes, docketed as Inter PartesCase
No. 14-2006-00098 (St. Francis Towers IP Case); and (c) an inter
partes case opposing the petitioners’ application for
registration of the mark "THE ST. FRANCIS SHANGRI-LA PLACE,"
docketed as IPC No. 14-2007-00218 (St. Francis Shangri-La IP
Case).5
In its complaints, respondent alleged that it has used the mark
"ST. FRANCIS" to identify its numerous property development
projects located at Ortigas Center, such as the aforementioned
St. Francis Square Commercial Center, a shopping mall called
the "St. Francis Square," and a mixed-use realty project plan
thatincludes the St. Francis Towers. Respondent added that as
a result of its continuous use of the mark "ST. FRANCIS" in its
real estate business,it has gained substantial goodwill with the
public that consumers and traders closely identify the said mark
with its property development projects. Accordingly,
respondent claimed that petitioners could not have the mark
"THE ST. FRANCIS TOWERS" registered in their names, and that
petitioners’ use of the marks "THE ST. FRANCIS TOWERS" and
"THE ST. FRANCIS SHANGRI-LA PLACE" in their own real estate
development projects constitutes unfair competition as well as
false or fraudulent declaration.6
Petitioners denied committing unfair competition and false or
fraudulent declaration, maintaining that they could register the
mark "THE ST. FRANCIS TOWERS" and "THE ST. FRANCIS
SHANGRI-LA PLACE" under their names. They contended that
respondent is barred from claiming ownership and exclusive
use ofthe mark "ST. FRANCIS" because the same is
geographically descriptive ofthe goods or services for which it is
intended to be used.7 This is because respondent’s as well as
petitioners’ real estate development projects are locatedalong
the streets bearing the name "St. Francis," particularly, St.
FrancisAvenue and St. Francis Street (now known as Bank
Drive),8 both within the vicinity of the Ortigas Center.
The BLA Rulings
On December 19, 2006, the BLA rendered a Decision9 in the IPV
Case, and found that petitioners committed acts of unfair
competition against respondent by its use of the mark "THE ST.
FRANCIS TOWERS" but not with its use of the mark "THE ST.
FRANCIS SHANGRI-LA PLACE." It, however, refused to award
damages in the latter’s favor, considering that there was no
evidence presented to substantiate the amount of damages it
suffered due to the former’s acts. The BLA found that "ST.
FRANCIS," being a name of a Catholic saint, may be considered
as an arbitrary mark capable of registration when used in real
estate development projects as the name has no direct
connection or significance when used in association with real
estate. The BLA neither deemed "ST. FRANCIS" as a
geographically descriptive mark, opiningthat there is no specific
lifestyle, aura, quality or characteristic that the real estate
projects possess except for the fact that they are located along
St. Francis Avenueand St. Francis Street (now known as Bank
Drive), Ortigas Center. In this light, the BLA found that while
respondent’s use of the mark "ST. FRANCIS" has not attained
exclusivity considering that there are other real estate
development projects bearing the name "St. Francis" in other
areas,10 it must nevertheless be pointed out that respondent
has been known to be the only real estate firm to transact
business using such name within the Ortigas Center vicinity.
Accordingly, the BLA considered respondent to have gained
goodwill and reputation for its mark, which therefore entitles it
to protection against the use by other persons, at least, to
those doing business within the Ortigas Center.11
Meanwhile, on March 28, 2007, the BLA rendered a
Decision12 in the St. Francis Towers IP Case, denying petitioners’
application for registration of the mark "THE ST. FRANCIS
TOWERS." Excluding the word "TOWERS" in view of petitioners’
disclaimer thereof, the BLA ruled that petitioners cannot
register the mark "THE ST. FRANCIS" since it is confusingly
similar to respondent’s"ST. FRANCIS" marks which are
registered with the Department of Trade and Industry(DTI). It
held that respondent had a better right over the use of the
mark "ST. FRANCIS" because of the latter’s appropriation and
continuous usage thereof for a long period of time.13 A little
over a year after, or on March 31, 2008, the BLA then rendered
a Decision14 in the St. Francis Shangri-La IP Case, allowing
petitioners’ application for registration of the mark "THE ST.
FRANCIS SHANGRI-LA PLACE." It found that respondent cannot
preclude petitioners from using the mark "ST. FRANCIS" as the
records show that the former’s use thereof had not been
attended with exclusivity. More importantly, it found that
petitioners had adequately appended the word "Shangri-La" to
its composite mark to distinguish it from that of respondent, in
which case, the former had removed any likelihood of
confusion that may arise from the contemporaneous use by
both parties of the mark "ST. FRANCIS."
Both parties appealed the decision in the IPV Case, while
petitioners appealed the decision in the St. Francis Towers IP
Case. Due to the identity of the parties and issues involved, the
IPO Director-General ordered the consolidation of the separate
appeals.15 Records are, however, bereft of any showing that the
decision in the St. Francis Shangri-La IP Casewas appealed by
either party and, thus, is deemed to have lapsed into finality.
The IPO Director-General Ruling
In a Decision16 dated September 3, 2008, then IPO Director-
General Adrian S. Cristobal, Jr. affirmedthe rulings of the BLA
that: (a) petitioners cannot register the mark "THEST. FRANCIS
TOWERS"; and (b) petitioners are not guilty of unfair
competition in its use of the mark "THE ST. FRANCIS SHANGRI-
LA PLACE." However, the IPO DirectorGeneral reversed the
BLA’s findingthat petitioners committed unfair competition
through their use of the mark "THE ST. FRANCIS TOWERS," thus
dismissing such charge. He foundthat respondent could not be
entitled to the exclusive use of the mark "ST. FRANCIS," even at
least to the locality where it conducts its business, because it is
a geographically descriptive mark, considering that it was
petitioners’ as well as respondent’s intention to use the mark
"ST. FRANCIS"in order to identify, or at least associate, their
real estate development projects/businesses with the place or
location where they are situated/conducted, particularly, St.
Francis Avenue and St. Francis Street (now known as Bank
Drive), Ortigas Center. He further opined that respondent’s
registration of the name "ST. FRANCIS" with the DTI is
irrelevant since what should be controlling are the trademark
registrations with the IPO itself.17 Also, the IPO Director-
General held that since the parties are both engaged in the real
estate business, it would be "hard to imagine that a prospective
buyer will be enticed to buy, rent or purchase [petitioners’]
goods or servicesbelieving that this is owned by [respondent]
simply because of the name ‘ST. FRANCIS.’ The prospective
buyer would necessarily discuss things with the representatives
of [petitioners] and would readily know that this does not
belong to [respondent]."18
Disagreeing solely with the IPO Director-General’s ruling on the
issue of unfair competition (the bone of contention in the IPV
Case), respondent elevated the sameto the CA.
In contrast, records do not show that either party appealed the
IPO Director-General’s ruling on the issue ofthe registrability of
the mark "THE ST. FRANCIS TOWERS" (the bone of contention
in the St. Francis Towers IP Case). As such, said pronouncement
isalso deemed to have lapsed into finality.
The CA Ruling
In a Decision19 dated December 18, 2009, the CA found
petitioners guilty of unfair competition not only withrespect to
their use of the mark "THE ST. FRANCIS TOWERS" but alsoof the
mark "THE ST. FRANCIS SHANGRI-LA PLACE." Accordingly,
itordered petitioners to cease and desist from using "ST.
FRANCIS" singly or as part of a composite mark, as well as to
jointly and severally pay respondent a fine in the amount of
₱200,000.00.
The CA did not adhere to the IPO Director-General’s finding
that the mark "ST. FRANCIS" is geographically descriptive, and
ruled that respondent – which has exclusively and continuously
used the mark "ST. FRANCIS" for more than a decade,
and,hence, gained substantial goodwill and reputation thereby
– is very muchentitled to be protected against the
indiscriminate usage by other companies of the
trademark/name it has so painstakingly tried to establish and
maintain. Further, the CA stated that even on the assumption
that "ST. FRANCIS" was indeed a geographically descriptive
mark, adequateprotection must still begiven to respondent
pursuant to the Doctrine of Secondary Meaning.20
Dissatisfied, petitioners filed the present petition.
The Issue Before the Court
With the decisions in both Inter PartesCases having lapsed into
finality, the sole issue thus left for the Court’s resolution is
whether or not petitioners are guilty of unfair competition in
using the marks "THE ST. FRANCIS TOWERS" and "THE ST.
FRANCIS SHANGRI-LA PLACE."
The Court’s Ruling
The petition is meritorious.
Section 168 of Republic Act No. 8293,21 otherwise known as the
"Intellectual Property Code of the Philippines" (IP Code),
provides for the rules and regulations on unfair competition.
To begin, Section 168.1 qualifies who is entitled to protection
against unfair competition. It states that "[a]person who has
identified in the mind of the public the goods he
manufacturesor 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 inthe same
manner as other property rights."
Section 168.2proceeds to the core of the provision, describing
forthwith who may be found guilty of and subject to an action
of unfair competition – that is, "[a]ny 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 x x x."
Without limiting its generality, Section 168.3goes on to specify
examples of acts which are considered as constitutive of unfair
competition, viz.:
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 ofsuch 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 service 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.
Finally, Section 168.4 dwells on a matter of procedure by
stating that the "[t]he remedies provided by Sections
156,22157,23 and 16124 shall apply mutatis mutandis."
The statutory attribution of the unfair competition concept is
wellsupplemented by jurisprudential pronouncements. In the
recent case of Republic Gas Corporation v. Petron
Corporation,25 the Court has echoed the classic definition of the
term which is "‘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 publicthat the
goods are those of his competitor."26The "true test" 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 theparticular trade to which the controversy
relates." Based on the foregoing, it is therefore essential to
prove the existence of fraud, or the intent to deceive, actual or
probable,27 determined through a judicious scrutiny of the
factual circumstances attendant to a particular case.28
Here, the Court finds the element of fraud to be wanting;
hence, there can be no unfair competition. The CA’scontrary
conclusion was faultily premised on its impression that
respondenthad the right to the exclusive use of the mark "ST.
FRANCIS," for which the latter had purportedly established
considerable goodwill. What the CA appears to have
disregarded or been mistaken in its disquisition, however, is the
geographicallydescriptive nature of the mark "ST. FRANCIS"
which thus bars its exclusive appropriability, unless a secondary
meaning is acquired. As deftly explained in the U.S. case of
Great Southern Bank v. First Southern Bank:29 "[d]escriptive
geographical terms are inthe ‘public domain’ in the sense that
every seller should have the right to inform customers of the
geographical origin of his goods. A ‘geographically descriptive
term’ is any noun or adjective that designates geographical
location and would tend to be regarded by buyers as
descriptive of the geographic location of origin of the goods or
services. A geographically descriptive term can indicate any
geographic location on earth, such as continents, nations,
regions, states, cities, streets and addresses, areas of cities,
rivers, and any other location referred to by a recognized name.
In order to determine whether or not the geographic term in
question is descriptively used, the following question is
relevant: (1) Is the mark the name of the place or region from
which the goods actually come? If the answer is yes, then the
geographic term is probably used in a descriptive sense, and
secondary meaning is required for protection."30
In Burke-Parsons-Bowlby Corporation v. Appalachian Log
Homes, Inc.,31 it was held that secondary meaningis established
when a descriptive mark no longer causes the public to
associate the goods with a particular place, but to associate the
goods with a particular source.In other words, it is not enough
that a geographically-descriptive mark partakes of the name of
a place known generally to the public to be denied registration
as it is also necessary to show that the public would make a
goods/place association – that is, to believe that the goods for
which the mark is sought to be registered originatein that
place.1âwphi1 To hold sucha belief, it is necessary, of course,
that the purchasers perceive the mark as a place name, from
which the question of obscurity or remoteness then comes to
the fore.32The more a geographical area is obscure and remote,
it becomes less likely that the public shall have a goods/place
association with such area and thus, the mark may not be
deemed as geographically descriptive. However, where there is
no genuine issue that the geographical significance of a term is
its primary significanceand where the geographical place is
neither obscure nor remote, a public association of the goods
with the place may ordinarily be presumed from the fact that
the applicant’s own goods come from the geographical place
named in the mark.33
Under Section 123.234 of the IP Code, specific requirements
have to be met in order to conclude that a geographically-
descriptive mark has acquired secondary meaning, to wit: (a)
the secondary meaning must have arisen as a result of
substantial commercial use of a mark in the Philippines; (b)
such use must result in the distinctiveness of the mark insofar
as the goods or theproducts are concerned; and (c) proof of
substantially exclusive and continuous commercial use in the
Philippines for five (5) years beforethe date on which the claim
of distinctiveness is made. Unless secondary meaning has been
established, a geographically-descriptive mark, dueto its
general public domain classification, is perceptibly disqualified
from trademark registration. Section 123.1(j) of the IP Code
states this rule as follows:
SEC. 123. Registrability. –
123.1 A mark cannot be registered if it:
xxxx
(j) Consists exclusively of signs orof 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; (Emphasis supplied) x x x x
Cognizant of the foregoing, the Court disagrees with the CA
that petitioners committed unfair competition due to the
mistaken notion that petitioner had established goodwill for
the mark "ST. FRANCIS" precisely because said circumstance, by
and of itself, does not equateto fraud under the parameters of
Section 168 of the IP Code as above-cited. In fact, the records
are bereft of any showing thatpetitioners gave their
goods/services the general appearance that it was respondent
which was offering the same to the public. Neither did
petitioners employ any means to induce the public towards a
false belief that it was offering respondent’s goods/services.
Nor did petitioners make any false statement or commit acts
tending to discredit the goods/services offered by respondent.
Accordingly, the element of fraud which is the core of unfair
competition had not been established.
Besides, respondent was not able toprove its compliance with
the requirements stated in Section 123.2 of the IP Code to be
able to conclude that it acquired a secondary meaning – and,
thereby, an exclusive right – to the "ST. FRANCIS" mark, which
is, as the IPO Director-General correctly pointed out,
geographically-descriptive of the location in which its realty
developments have been built, i.e., St. Francis Avenue and St.
Francis Street (now known as "Bank Drive"). Verily, records
would reveal that while it is true that respondent had been
using the mark "ST. FRANCIS" since 1992, its use thereof has
been merely confined to its realty projects within the Ortigas
Center, as specifically mentioned.As its use of the mark is
clearly limited to a certain locality, it cannot be said thatthere
was substantial commercial use of the same recognizedall
throughout the country. Neither is there any showing of a
mental recognition in buyers’ and potential buyers’ minds that
products connected with the mark "ST. FRANCIS" are
associated with the same source35 – that is, the enterprise of
respondent. Thus, absent any showing that there exists a clear
goods/service-association between the realty projects located
in the aforesaid area and herein respondent as the developer
thereof, the latter cannot besaid to have acquired a secondary
meaning as to its use of the "ST. FRANCIS" mark.
In fact, even on the assumption that secondary meaning had
been acquired, said finding only accords respondents
protectional qualification under Section 168.1 of the IP Code as
above quoted. Again, this does not automatically trigger the
concurrence of the fraud element required under Section 168.2
of the IP Code, as exemplified by the acts mentioned in Section
168.3 of the same. Ultimately, as earlier stated, there can be no
unfair competition without this element. In this respect,
considering too the notoriety of the Shangri-La brand in the real
estate industry which dilutes petitioners' propensity to merely
ride on respondent's goodwill, the more reasonable conclusion
is that the former's use of the marks "THE ST. FRANCIS
TOWERS" and "THE ST. FRANCIS SHANGRI-LA PLACE" was
meant only to identify, or at least associate, their real estate
project/s with its geographical location. As aptly observed by
the IPO DirectorGeneral:36
In the case at hand, the parties are business competitors
engaged in real estate or property development, providing
goods and services directly connected thereto. The "goods" or
"products" or "services" are real estate and the goods and the
services attached to it or directly related to it, like sale or lease
of condominium units, offices, and commercial spaces, such as
restaurants, and other businesses. For these kinds of goods or
services there can be no description of its geographical origin as
precise and accurate as that of the name of the place where
they are situated. (Emphasis and underscoring supplied)
Hence, for all the reasons above-discussed, the Court hereby
grants the instant petition, and, thus, exonerates petitioners
from the charge of unfair competition in the IPV Case. As the
decisions in the Inter Partes Cases were not appealed, the
registrability issues resolved therein are hereby deemed to
have attained finality and, therefore, are now executory.
WHEREFORE, the petition is GRANTED. The Decision dated
December 18, 2009 of the Court of Appeals in CA-G.R. SP No.
105425 is hereby REVERSED and SET ASIDE. Accordingly, the
Decision dated September 3, 2008 of the Intellectual Property
Office-Director General is REINSTATED.
SO ORDERED.
G.R. No. 186088
WILTON DY and/or PHILITES ELECTRONIC & LIGHTING
PRODUCTS, Petitioner
vs
KONINKLIJKE PHILIPS ELECTRONICS, N.V., Respondent
DECISION
SERENO, CJ.:
This Petition for Review on Certiorari1 filed by petitioner Wilton
Dy and/or Philites Electronic & Lighting Products ("PHILITES")
assails the Decision2 and Resolution3 of the Court of Appeals
(CA) in CA-G.R. SP No. 103350. The appellate court reversed
and set aside the Decision4 of the IPP Office of the Director
General (IPP-DG), which affirmed the Decision5 of the
Intellectual Property Philippines Bureau of Legal Affairs (IPP-
BLA) upholding petitioner's trademark application.
THE ANTECEDENT FACTS
On 12 April 2000, petitioner PHILITES filed a trademark
application (Application Serial Number 4-2000-002937)
covering its fluorescent bulb, incandescent light, starter and
ballast. After publication, respondent Koninklijke Philips
Electronics, N .V. ("PHILIPS") filed a Verified Notice of
Opposition on 17 March 2006, alleging the following:
(a) The approval of Application Serial No. 4-2000-002937 is
contrary to the following provisions of Republic Act No. [RAJ
8293 or the Intellectual Property Code of the Philippines (IP
Code): Sections 123.l(d), (i) and (iii), 123.l(e), 147, and 168.
(b) The approval of Application Serial No. 4-2000-002937 will
cause grave and irreparable damage and injury to oppose.
(c) The use and registration of the applied for mark by
[petitioner] will mislead the public as to the origin, nature,
quality, and characteristic of the goods on which it is affixed;
(d) [Petitioner's] application for registration is tantamount to
fraud as it seeks to register and obtain legal protection for an
identical or confusingly similar mark that clearly infringes upon
the established rights of the [respondent] over its registered
and internationally well-known mark.
(e) The registration of the trademark PHILITES & LETTER P
DEVICE in the name of the [petitioner] will violate the
proprietary rights and interests, business reputation and
goodwill of the [respondent] over its trademark, considering
that the distinctiveness of the trademark PHILIPS will be
diluted.
(t) The registration of the applied for mark will not only
prejudice the Opposer, but will also cause [petitioner] to
unfairly profit commercially from the goodwill, fame and
notoriety of Opposer's trademark and reputation.
(g) [Petitioner's] registration and use of the applied for mark in
connection with goods under Class 11 will weaken the unique
and distinctive significance of mark PHILIPS and will tarnish,
degrade or dilute the distinctive quality of Opposer's trademark
and will result in the gradual attenuation or whittling away of
the value of Opposer's trademark, in violation of Opposer's
proprietary rights.6
On 8 August 2006, petitioner filed a Verified Answer, stating
that its PHILITES & LETTER P DEVICE trademark and
respondent's PHILIPS have vast dissimilarities in terms of
spelling, sound and meaning.7
At the conclusion of the hearing, on 9 November 2006, IPP-BLA
Director Estrellita Beltran-Abelardo rendered a
Decision8 denying the Opposition filed by respondent PHILIPS.
The dispositive portion of the Decision reads:
WHEREFORE, premises considered the OPPOSITION filed by
Koninklijke Philips Electronics, N.V. is
hereby DENIED. Accordingly, Application Serial no. 4-2000-
002937 filed by Respondent-Applicant, Wilton Dy and/or
Philites Electronic & Lighting Products on 12 April 2000 for the
mark "PHILITES & LETTER P DEVICE" used on fluorescent bulb,
incandescent light starter, ballast under class 11, is as it is,
hereby GRANTED.
Let the filewrapper of "PHILITES & LETTER P DEVICE," subject
matter of this case together with this Decision be forwarded to
the Bureau of Trademarks (BOT) for appropriate action.
SO ORDERED.
In upholding petitioner's trademark application, the IPP-BLA
stated that assuming respondent's mark was well-known in the
Philippines, there should have been prior determination of
whether or not the mark under application for registration was
"identical with, or confusingly similar to, or constitutes a
translation of such well-known mark in order that the owner of
the well-known mark can prevent its registration."9 From the
evidence presented, the IPP-BLA concluded that the PHILIPS
and PHILITES marks were so unlike, both visually and aurally. It
held that no confusion was likely to occur, despite their
contemporaneous use, based on the following observations:
The Philips shield mark has four stars in different sizes located
at the north east and south west portions inside a circle within
the shield. There are three wavy lines dissecting the middle of
the circle. None of these appear in the respondent's mark.
[Respondent] declares that the word Philips is the surname of
the brothers who founded the Philips company engaged in
manufacturing and selling lighting products. [Petitioner] on the
other hand has testified that the word Philites is coined from
the word 'Philippines' and 'lights,' hence 'Philites.' This Bureau
finds that there is no dictionary meaning to the [petitioner's]
mark. It is a coined and arbitrary word capable of appropriation
as a trademark. x x x
Moreover, by mere pronouncing the two marks, the phonetic
sounds produced when each mark is uttered are not the same.
The last syllable of respondent's mark is uttered in a long vowel
sound, while the last vowel of the opposer's mark is not.
x x x. This Bureau believes that opposer has no monopoly over
the color or diameter or shape of a light bulb or packaging
shape unless registrations were secured to protect the same.
The images of the packages are reproduced below for
reference.
x x x. For one, respondent adopts a yellow to light yellow
dominant color while the oppose uses an orange yellow hue.
The mark "Philites" is printed in yellow with light blue
background as compared to the "Philips" mark typed in white
against a black background.
It is fundamental in trademark jurisprudence that color alone,
unless displayed in an arbitrary design docs not function as a
trademark.
Secondly, there appears to be other advertising slogans that
appear in respondent's package such as the words, "new",
"prolong lite life", "E-coat finished" and "with additional 35%
more than ordinary". These phrases are absent in opposer's
package. These phrases can be considered in the nature of
descriptive terms that can be appropriated by anyone.10
Upon appeal, the IPP-DG rendered a Decision11 on 16 April
2008, affirming the ruling of the IPP-BLA as follows:
WHEREFORE, premises considered, that instant appeal is
hereby DISMISSED for lack of merit. Accordingly, Decision No.
2006-125 of the Director of the Bureau of Legal Affairs dated 09
November 2006, is hereby AFFIRMED.
Let a copy of this Decision as well as the trademark application
and records be furnished and returned to the Director of
Bureau of Legal Affairs for appropriate action. Further, let also
the Directors of the Bureau of Trademarks, the Administrative,
Pinancial and Human Resources Development Services Bureau,
and the library of the Documentation, Information and
Technology Transfer Bureau be furnished a copy of this
Decision for information, guidance and records purposes.
SO ORDERED.
In so ruling, the IPP-DG noted that "[t]he dominant feature of
the [respondent's] trademark is 'PHILIPS' while that of the
[petitioner's] trademark is 'PHILITES.' While the first syllables of
the marks are identical - 'PHI' - the second syllables are not. The
differences in the last syllable accounted for the variance of the
trademarks visually and aurally."12 Moreover, there were
"glaring differences and dissimilarities in the design and general
appearance of the Philips shield emblem mark and the letter 'P'
of Philites mark."13 Thus, "even if the [petitioner's] products
bearing the trademark PHILIPS are placed side by side with
other brands, the purchaser would not be confused to pick up
the [petitioner's] product if this is his choice or preference,
unless the resemblance in the appearance of the trademarks is
so glaring which [it] is not in this case."14
As regards the issue of petitioner submitting a trademark
drawing different from that used in the packaging, the IPP-DG
noted that this case involved an opposition to the registration
of a mark, while labels and packaging were technically not a
part thereof.15 At best, respondent supposedly had the remedy
of filing a case for trademark infringement and/or unfair
competition.16
Upon intermediate appellate review, the CA rendered a
Decision 17 on 7 October 2008. The dispositive portion herein
reads:
WHEREFORE, premises considered, the Petition for Review is
GRANTED. The Decision dated 16 April 2008 of the Director
General of the Intellectual Property Office in Appeal No. 14-06-
28; IPC No. 14-2006- 00034 is REVERSED and SET ASIDE. The
application for trademark registration (Application Serial
Number 4-2000-002937) of respondent Wilton Dy and/or
Philites Electronic & Lighting Products is DISMISSED. Costs
against respondent.
SO ORDERED.
In so ruling, the CA reasoned that the "drawing of the
trademark submitted by [petitioner] has a different appearance
from that of [petitioner's] actual wrapper or packaging that
contain the light bulbs, which We find confusingly similar with
that of [respondent's] registered trademark and
packaging."18 Moreover, it found to be "self-serving
[petitioner's] asseveration that the mark 'PHILITES' is a coined
or arbitrary mark from the words 'Philippines' and 'lights.' Of all
the marks that [petitioner] could possibly think of for his light
bulbs, it is odd that [petitioner] chose a mark with the letters
'PHILI,' which are the same prevalent or dominant five letters
found in [respondent's] trademark 'PHILIPS' for the same
products, light bulbs."19 Hence, the appellate court concluded
that petitioner had intended to ride on the long-established
reputation and goodwill of respondent's trademark.20
On 25 October 2008, petitioner filed a Motion for
Reconsideration, which was denied in a Resolution21 issued by
the CA on 18 December 2008.
Hence, this petition.
Respondent filed its Comment22 on 23 June 2009, and
petitioner filed its Reply23 on 10 November 2009.
THE ISSUES
From the foregoing, we reduce the issues to the following:
1. Whether or not respondent's mark is a registered and well-
known mark in the Philippines; and
2. Whether or not the mark applied for by petitioner is identical
or confusingly similar with that of respondent.
OUR RULING
The Petition is bereft of merit.
A trademark is "any distinctive word, name, symbol, emblem,
sign, or device, or any combination thereof, adopted and used
by a manufacturer or merchant on his goods to identify and
distinguish them from those manufactured, sold, or dealt by
othcrs."24 It is "intellectual property deserving protection by
law,"25 and "susceptible to registration if it is crafted fancifully
or arbitrarily and is capable of identifying and distinguishing the
goods of one manufacturer or seller from those of another."26
Section 122 of the Intellectual Property Code of the Philippines
(IPC) provides that rights to a mark shall be acquired through
registration validly done in accordance with the provisions of
this law.27 Corollary to that rule, Section 123 provides which
marks cannot be registered.
Respondent opposes petitioner's application on the ground
that PHILITES' registration will mislead the public over an
identical or confusingly similar mark of PHILIPS, which is
registered and internationally well-known mark. Specifically,
respondent invokes the following provisions of Section 123:
Section 123. Registrability. - 123 .1. A mark cannot be
registered if it:
xxx
(d) Is identical with a registered mark belonging to a different
proprietor or a mark with an earlier filing or priority date, in
respect of:
(i) The same goods or services, or
(ii) Closely related goods or services, or
(iii) If it nearly resembles such a mark as to be likely to deceive
or cause confusion;
(e) Is identical with, or confusingly similar to, or constitutes a
translation of a mark whid1 is considered by the competent
authority of the Philippines to be well-known internationally
and in the Philippines, whether or not it is registered here, as
being already the mark of a person other than the applicant for
registration, and used for identical or similar goods or services:
Provided, That in determining whether a mark is well-known,
account shall be taken of the knowledge of the relevant sector
of the public, rather than of the public at large, including
knowledge in the Philipines which has been obtained as a result
of the promotion of the mark.28
Respondent's mark is a registered and well-known mark in the
Philippines
There is no question that respondent's mark PHILIPS is already
a registered and well-known mark in the Philippines.
As we have said in Fredco Manufacturing Corporation v.
Harvard University,29 "[i]ndeed, Section 123.l(e) of R.A. No.
8293 now categorically states that 'a mark which is considered
by the competent authority of the Philippines to be well-known
internationally and in the Philippines, whether or not it is
registered here,' cannot be registered by another in the Ph iii
ppines. "30
Rule l00(a) of the Rules and Regulations on Trademarks, Service
Marks, Tradenames and Marked or Stamped Containers defines
"competent authority" in the following manner:
(c) "Competent authority" for purposes of determining whether
a mark is well-known, means the Court, the Director General,
the Director of the Bureau of Legal Affairs, or any
administrative agency or office vested with quasi-judicial or
judicial jurisdiction to hear and adjudicate any action to enforce
the rights to a mark.
We thus affirm the following findings of the CA, inasmuch as
the trademark of PHILIPS is a registered and well-known mark,
as held in the Supreme Court Decision in Philips Export B. V, v.
CA:31
Petitioner (PHILIPS) is the registered owner in the Philippines of
the "PHILIPS" and "PHILIPS SHIELD EMBLEM" trademarks, as
shown by Certificates of Registration Nos. 42271 and 42270.
The Philippine trademark registrations of petitioner's "PHILIPS"
and "PHILIPS SHIELD EMBLEM" are also evidenced by
Certificates of Registration Nos. R- 1651, R-29134, R-1674, and
R-28981. The said registered trademarks "PHILIPS" and "PHILIPS
SHIELD EMBLEM" cover classes 7, 8, 9, 10, 11, 14, and 16. The
assailed Decision itself states that "(T)he Appellant's trademark
is already registered and in use in the Philippines". It also
appears that worldwide, petitioner has thousands of trademark
registrations x x x in various countries. As found by the High
Court in Philips Export B.V. vs Court of Appeals, PHILIPS is a
trademark or trade name which was registered as far back as
1922, and has acquired the status of a well-known mark in the
Philippines and internationally as well.32
Petitioner seeks to register a mark
nearly resembling that of respondent,
which may likely to deceive or cause
confusion among consumers.
Despite respondent's diversification to numerous and varied
industries,33 the records show that both parties are engaged in
the same line of business: selling identical or similar goods such
as fluorescent bulbs, incandescent lights, starters and ballasts.
In determining similarity and likelihood of confusion,
jurisprudence has developed two tests: the dominancy test,
and the holistic or totality test.34
On one hand, the dominancy test focuses on "the similarity of
the prevalent or dominant features of the competing
trademarks that might cause confusion, mistake, and deception
in the mind of the purchasing public. Duplication or imitation is
not necessary; neither is it required that the mark sought to be
registered suggests an effort to imitate. Given more
consideration are the aural and visual impressions created by
the marks on the buyers of goods, giving little weight to factors
like prices, quality, sales outlets, and market segments. "35
On the other hand, the holistic or totality test necessitates a
"consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining
confusing similarity. The discerning eye of the observer must
focus not only on the predominant words, but also on the other
features appearing on both labels so that the observer may
draw conclusion on whether one is confusingly similar to the
other."361âwphi1
Applying the dominancy test to this case requires us to look
only at the mark submitted by petitioner in its application,
while we give importance to the aural and visual impressions
the mark is likely to create in the minds of the buyers. We agree
with the findings of the CA that the mark "PHILITES" bears an
uncanny resemblance or confusing similarity with respondent's
mark "PHILIPS," to wit:
Applying the dominancy test in the instant case, it shows the SO ORDERED.
uncanny resemblance or confusing similarity between the
trademark applied for by respondent with that of petitioner's
registered trademark. An examination of the trademarks shows
that their dominant or prevalent feature is the five-letter
"PHILI", "PHILIPS" for petitioner, and "PHILITES" for respondent.
The marks are confusingly similar with each other such that an
ordinary purchaser can conclude an association or relation
between the marks. The consuming public does not have the
luxury of time to ruminate the phonetic sounds of the
trademarks, to find out which one has a short or long vowel
sound. At bottom, the letters "PHILI'' visually catch the
attention of the consuming public and the use of respondent's
trademark will likely deceive or cause confusion. Most
importantly, both trademarks are used in the sale of the same
goods, which are light bulbs.37

The confusing similarity becomes even more prominent when

we examine the entirety of the marks used by petitioner and
respondent, including the way the products are packaged. In
using the holistic test, we find that there is a confusing
similarity between the registered marks PHILIPS and PHILITES,
and note that the mark petitioner seeks to register is vastly
different from that which it actually uses in the packaging of its
products. We quote with approval the findings of the CA as
follows:

Applying the holistic test, entails a consideration of the entirety

of the marks as applied to the products, including the labels
and packaging, in determining confusing similarity. A
comparison between petitioner's registered trademark
"PHILIPS'' as used in the wrapper or packaging of its light bulbs
and that of respondent's applied for trademark "PHILITES" as
depicted in the container or actual wrapper/packaging of the
latter's light bulbs will readily show that there is a strong
similitude and likeness between the two trademarks that will
likely cause deception or confusion to the purchasing public.
The fact that the parties' wrapper or packaging reflects
negligible differences considering the use of a slightly different
font and hue of the yellow is of no moment because taken in
their entirety, respondent's trademark "PHILITES" will likely
cause confusion or deception to the ordinary purchaser with a
modicum of intelligence.38

WHEREFORE, in view of the foregoing, the Petition for Review

on Certiorari is hereby DENIED. The 7 October 2008 Decision
and 18 December 2008 Resolution of the Court of Appeals in
CA-G.R. SP No. 103350 are hereby AFFIRMED.
 The petitioners are questioning the decision of the respondent
court upholding the dismissal by the trial court of their
complaint against the private respondent for infringement of
trademark and unfair competition.

Petitioner Del Monte Corporation is a foreign company

organized under the laws of the United States and not engaged
in business in the Philippines. Both the Philippines and the
United States are signatories to the Convention of Paris of
September 27, 1965, which grants to the nationals of the
parties rights and advantages which their own nationals enjoy
for the repression of acts of infringement and unfair
competition.

Petitioner Philippine Packing Corporation (Philpack) is a

domestic corporation duly organized under the laws of the
Philippines. On April 11, 1969, Del Monte granted Philpack the
right to manufacture, distribute and sell in the Philippines
various agricultural products, including catsup, under the Del
Monte trademark and logo.

On October 27,1965, Del Monte authorized Philpack to register

with the Philippine Patent Office the Del Monte catsup bottle
configuration, for which it was granted Certificate of Trademark
Registration No. SR-913 by the Philippine Patent Office under
the Supplemental Register. 1 On November 20, 1972, Del
Monte also obtained two registration certificates for its
trademark "DEL MONTE" and its logo. 2

Respondent Sunshine Sauce Manufacturing Industries was

issued a Certificate of Registration by the Bureau of Domestic
Trade on April 17,1980, to engage in the manufacture, packing,
G.R. No. L-78325 January 25, 1990 distribution and sale of various kinds of sauce, identified by the
logo Sunshine Fruit Catsup.3
DEL MONTE CORPORATION and PHILIPPINE PACKING
CORPORATION, petitioners, This logo was registered in the Supplemental Register on
vs. September 20, 1983. 4
COURT OF APPEALS and SUNSHINE SAUCE MANUFACTURING
INDUSTRIES, respondents. The product itself was contained in various kinds of bottles,
including the Del Monte bottle, which the private respondent
Bito, Misa & Lozada for petitioners. bought from the junk shops for recycling.
Reynaldo F. Singson for private respondent.
Having received reports that the private respondent was using
its exclusively designed bottles and a logo confusingly similar to
Del Monte's, Philpack warned it to desist from doing so on pain
of legal action. Thereafter, claiming that the demand had been
ignored, Philpack and Del Monte filed a complaint against the
CRUZ, J.:
private respondent for infringement of trademark and unfair
competition, with a prayer for damages and the issuance of a
writ of preliminary injunction. 5
In its answer, Sunshine alleged that it had long ceased to use
the Del Monte bottle and that its logo was substantially
different from the Del Monte logo and would not confuse the
buying public to the detriment of the petitioners. 6
After trial, the Regional Trial Court of Makati dismissed the
complaint. It held that there were substantial differences
between the logos or trademarks of the parties; that the
defendant had ceased using the petitioners' bottles; and that in
any case the defendant became the owner of the said bottles
upon its purchase thereof from the junk yards. Furthermore,
the complainants had failed to establish the defendant's malice
or bad faith, which was an essential element of infringement of
trademark or unfair competition. 7
the goods he manufactures or deals in, his business or
services from those of others, whether or not a mark
or tradename is employed, has a property right in the
goodwill of the said goods, business or services so
identified, which will be protected in the same
manner as other property rights. Such a person shall
have the remedies provided in section twenty- three,
Chapter V hereof.
Any person who shall employ deception or any other
means contrary to good faith by which he shall pass
off the goods manufactured by him or in which he
deals, or his business, or services for those of the one
having established such goodwill, or who shall
commit any acts calculated to produce said result,
shall be guilty of unfair competition, and shall be
subject to an action therefor.
shall commit any other act contrary to good
faith of a nature calculated to discredit the
goods, business or services of another.
To arrive at a proper resolution of this case, it is
important to bear in mind the following distinctions
between infringement of trademark and unfair
competition.
(1) Infringement of trademark is the
unauthorized use of a trademark, whereas
unfair competition is the passing off of
one's goods as those of another.
(2) In infringement of trademark fraudulent
intent is unnecessary whereas in unfair
competition fraudulent intent is essential.

This decision was affirmed in toto by the respondent court,
which is now faulted in this petition for certiorari under Rule 45
of the Rules of Court.
Section 22 of R.A. No. 166, otherwise known as the Trademark
Law, provides in part as follows:
Sec. 22. Infringement, what constitutes. — Any
person who shall use, without the consent of the
registrant, any reproduction, counterfeit, copy or
colorable imitation of any registered mark or trade-
name in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in
connection with which such use is likely to cause
confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or
services or identity of such business; or reproduce,
counterfeit copy or colorably imitate any such mark
or trade name and apply such reproduction,
counterfeit copy or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such goods, business or services,
shall be liable to a civil action by the registrant for any
or all of the remedies herein provided.
Sec. 29 of the same law states as follows:
Sec. 29. Unfair competition, rights and remedies. — A
person who has identified in the mind of the public
In particular, and without in any way limiting the
(3) In infringement of trademark the prior
scope of unfair competition, the following shall be
registration of the trademark is a
deemed guilty of unfair competition:
prerequisite to the action, whereas in unfair
competition registration is not necessary. 8
(a) Any person, who in selling his goods
shall give them the general appearance of
In the challenged decision, the respondent court cited
goods of another manufacturer or dealer,
the following test laid down by this Court in a number
either as to the goods themselves or in the
of cases:
wrapping of the packages in which they are
contained, or the devices or words thereon,
In determining whether two trademarks are
or in any other feature of their appearance,
confusingly similar, the two marks in their
which would likely influence purchasers to
entirety as they appear in the respective
believe that the goods offered are those of
labels must be considered in relation to the
a manufacturer or dealer other than the
goods to which they are attached; the
actual manufacturer or dealer, or who
discerning eye of the observer must focus
otherwise clothes the goods with such
not only on the predorninant words but
appearance as shall deceive the public and
also on the other features appearing on
defraud another of his legitimate trade, or
both labels. 9
any subsequent vendor of such goods or
any agent of any vendor engaged in selling
such goods with a like purpose; and applying the same, held that there was no
colorable imitation of the petitioners' trademark and
(b) Any person who by any artifice, or logo by the private respondent. The respondent court
device, or who employs ally other means agreed with the findings of the trial court that:
calculated to induce the false belief that
such person is offering the services of In order to resolve the said issue, the Court now attempts to
another who has identified such services in make a comparison of the two products, to wit:
the mind of the public; or
1. As to the shape of label or make:
(c) Any person who shall make any false
statement in the course of trade or who
 Del Monte: Semi-rectangular with a crown
or tomato shape design on top of the
rectangle.
Sunshine: Regular rectangle.
2. As to brand printed on label:
Del Monte: Tomato catsup mark.
Sunshine: Fruit catsup.
3. As to the words or lettering on label or mark:
Del Monte: Clearly indicated words packed
by Sysu International, Inc., Q.C., Philippines.
Sunshine: Sunshine fruit catsup is clearly
indicated "made in the Philippines by
Sunshine Sauce Manufacturing Industries"
No. 1 Del Monte Avenue, Malabon, Metro
Manila.
4. As to color of logo:
Del Monte: Combination of yellow and dark
red, with words "Del Monte Quality" in
white.
Sunshine: White, light green and light red,
with words "Sunshine Brand" in yellow.
5. As to shape of logo:
Del Monte: In the shape of a tomato.
Sunshine: Entirely different in shape.
6. As to label below the cap:
Del Monte: Seal covering the cap down to
the neck of the bottle, with picture of
tomatoes with words "made from real
tomatoes."
Sunshine: There is a label below the cap
which says "Sunshine Brand."
7. As to the color of the products:
Del Monte: Darker red.
Sunshine: Lighter than Del Monte.
While the Court does recognize these distinctions, it does not
agree with the conclusion that there was no infringement or
unfair competition. It seems to us that the lower courts have
been so pre-occupied with the details that they have not seen
the total picture.
It has been correctly held that side-by-side comparison is not
the final test of similarity. 10 Such comparison requires a careful
scrutiny to determine in what points the labels of the products
differ, as was done by the trial judge. The ordinary buyer does
not usually make such scrutiny nor does he usually have the
time to do so. The average shopper is usually in a hurry and
does not inspect every product on the shelf as if he were
browsing in a library. Where the housewife has to return home
as soon as possible to her baby or the working woman has to
make quick purchases during her off hours, she is apt to be
confused by similar labels even if they do have minute
differences. The male shopper is worse as he usually does not
bother about such distinctions.
The question is not whether the two articles are distinguishable
by their label when set side by side but whether the general
confusion made by the article upon the eye of the casual
purchaser who is unsuspicious and off his guard, is such as to
likely result in his confounding it with the original. 11 As
observed in several cases, the general impression of the
ordinary purchaser, buying under the normally prevalent
conditions in trade and giving the attention such purchasers
usually give in buying that class of goods is the touchstone. 12
It has been held that in making purchases, the consumer must
depend upon his recollection of the appearance of the product
which he intends to purchase. 13 The buyer having in mind the
mark/label of the respondent must rely upon his memory of
the petitioner's mark. 14 Unlike the judge who has ample time
to minutely examine the labels in question in the comfort of his
sala, the ordinary shopper does not enjoy the same
opportunity.
A number of courts have held that to determine whether a
trademark has been infringed, we must consider the mark as a
whole and not as dissected. If the buyer is deceived, it is
attributable to the marks as a totality, not usually to any part of
it. 15 The court therefore should be guided by its first
impression, 16 for a buyer acts quickly and is governed by a
casual glance, the value of which may be dissipated as soon as
the court assumes to analyze carefully the respective features
of the mark. 17
It has also been held that it is not the function of the court in
cases of infringement and unfair competition to educate
purchasers but rather to take their carelessness for granted,
and to be ever conscious of the fact that marks need not be
identical. A confusing similarity will justify the intervention of
equity. 18 The judge must also be aware of the fact that usually
a defendant in cases of infringement does not normally copy
but makes only colorable changes. 19Well has it been said that
the most successful form of copying is to employ enough points
of similarity to confuse the public with enough points of
difference to confuse the courts. 20
We also note that the respondent court failed to take into
consideration several factors which should have affected its
conclusion, to wit: age, training and education of the usual
purchaser, the nature and cost of the article, whether the
article is bought for immediate consumption and also the
conditions under which it is usually purchased . 21Among these,
what essentially determines the attitude of the purchaser,
specifically his inclination to be cautious, is the cost of the
goods. To be sure, a person who buys a box of candies will not
exercise as much care as one who buys an expensive watch. As
a general rule, an ordinary buyer does not exercise as much
prudence in buying an article for which he pays a few centavos
as he does in purchasing a more valuable thing. 22 Expensive
and valuable items are normally bought only after deliberate,
comparative and analytical investigation. But mass products,
low priced articles in wide use, and matters of everyday
purchase requiring frequent replacement are bought by the
casual consumer without great care. 23 In this latter category is
catsup.
At that, even if the labels were analyzed together it is not
difficult to see that the Sunshine label is a colorable imitation of
the Del Monte trademark. The predominant colors used in the
Del Monte label are green and red-orange, the same with
Sunshine. The word "catsup" in both bottles is printed in white
and the style of the print/letter is the same. Although the logo
of Sunshine is not a tomato, the figure nevertheless
approximates that of a tomato.
As previously stated, the person who infringes a trade mark
does not normally copy out but only makes colorable changes,
employing enough points of similarity to confuse the public
with enough points of differences to confuse the courts. What
is undeniable is the fact that when a manufacturer prepares to
package his product, he has before him a boundless choice of
words, phrases, colors and symbols sufficient to distinguish his
product from the others. When as in this case, Sunshine chose,
without a reasonable explanation, to use the same colors and
letters as those used by Del Monte though the field of its
selection was so broad, the inevitable conclusion is that it was
done deliberately to deceive .24
It has been aptly observed that the ultimate ratio in cases of
grave doubt is the rule that as between a newcomer who by
the confusion has nothing to lose and everything to gain and
one who by honest dealing has already achieved favor with the
public, any doubt should be resolved against the newcomer
inasmuch as the field from which he can select a desirable
trademark to indicate the origin of his product is obviously a
large one. 25
Coming now to the second issue, we find that the private
respondent is not guilty of infringement for having used the Del
Monte bottle. The reason is that the configuration of the said
bottle was merely registered in the Supplemental Register. In
the case of Lorenzana v. Macagba, 26 we declared that:
(1) Registration in the Principal Register gives rise to a
presumption of the validity of the registration, the
registrant's ownership of the mark and his right to the
exclusive use thereof. There is no such presumption
in the registration in the Supplemental Register.
(2) Registration in the Principal Register is limited to
the actual owner of the trademark and proceedings
therein on the issue of ownership which may be
contested through opposition or interference
proceedings or, after registration, in a petition for
cancellation.
Registration in the Principal Register is constructive
notice of the registrant's claim of ownership, while
registration in the Supplemental Register is merely
proof of actual use of the trademark and notice that
the registrant has used or appropriated it. It is not
subject to opposition although it may be cancelled
after the issuance. Corollarily, registration in the
Principal Register is a basis for an action for
infringement while registration in the Supplemental
Register is not.
(3) In applications for registration in the Principal
Register, publication of the application is necessary.
This is not so in applications for registrations in the
Supplemental Register.
It can be inferred from the foregoing that although Del Monte
has actual use of the bottle's configuration, the petitioners
cannot claim exclusive use thereof because it has not been
registered in the Principal Register. However, we find that
Sunshine, despite the many choices available to it and
notwithstanding that the caution "Del Monte Corporation, Not
to be Refilled" was embossed on the bottle, still opted to use
the petitioners' bottle to market a product which Philpack also
produces. This clearly shows the private respondent's bad faith
and its intention to capitalize on the latter's reputation and
goodwill and pass off its own product as that of Del Monte.
The Court observes that the reasons given by the respondent
court in resolving the case in favor of Sunshine are untenable.
First, it declared that the registration of the Sunshine label
belied the company's malicious intent to imitate petitioner's
product. Second, it held that the Sunshine label was not
improper because the Bureau of Patent presumably considered
other trademarks before approving it. Third, it cited the case
of Shell Co. v. Insular Petroleum, 27 where this Court declared
that selling oil in containers of another with markings erased,
without intent to deceive, was not unfair competition.
Regarding the fact of registration, it is to be noted that the
Sunshine label was registered not in the Principal Register but
only in the Supplemental Register where the presumption of
the validity of the trademark, the registrant's ownership of the
mark and his right to its exclusive use are all absent.
Anent the assumption that the Bureau of Patent had
considered other existing patents, it is reiterated that since
registration was only in the Supplemental Register, this did not
vest the registrant with the exclusive right to use the label nor
did it give rise to the presumption of the validity of the
registration.
On the argument that no unfair competition was committed,
the Shell Case is not on all fours with the case at bar because:
(1) In Shell, the absence of intent to deceive was
supported by the fact that the respondent therein,
before marketing its product, totally obliterated and
erased the brands/mark of the different companies
stenciled on the containers thereof, except for a
single isolated transaction. The respondent in the
present case made no similar effort.
(2) In Shell, what was involved was a single isolated
transaction. Of the many drums used, there was only
one container where the Shell label was not erased,
while in the case at hand, the respondent admitted
that it made use of several Del Monte bottles and
without obliterating the embossed warning.
(3) In Shell, the product of respondent was sold to
dealers, not to ultimate consumers. As a general rule,
dealers are well acquainted with the manufacturer
from whom they make their purchases and since they
are more experienced, they cannot be so easily
deceived like the inexperienced public. There may
well be similarities and imitations which deceive all,
but generally the interests of the dealers are not
regarded with the same solicitude as are the interests
of the ordinary consumer. For it is the form in which
the wares come to the final buyer that is of
significance. 28
As Sunshine's label is an infringement of the Del Monte's
trademark, law and equity call for the cancellation of the
private respondent's registration and withdrawal of all its
products bearing the questioned label from the market. With
regard to the use of Del Monte's bottle, the same constitutes
unfair competition; hence, the respondent should be
permanently enjoined from the use of such bottles.
The court must rule, however, that the damage prayed for
cannot be granted because the petitioner has not presented
evidence to prove the amount thereof. Section 23 of R.A. No.
166 provides:
Sec. 23. Actions and damages and injunction for
infringement. — Any person entitled to the exclusive
use of a registered mark or trade name may recover
damages in a civil action from any person who
 infringes his rights, and the measure of the damages
suffered shall be either the reasonable profit which
the complaining party would have made, had the
defendant not infringed his said rights or the profit
which the defendant actually made out of the
infringement, or in the event such measure of
damages cannot be readily ascertained with
reasonable certainty the court may award as
damages reasonable percentage based upon the
amount of gross sales of the defendant or the value
of the services in connection with which the mark or
trade name was used in the infringement of the rights
of the complaining party. In cases where actual intent
to mislead the public or to defraud the complaining
party shall be shown, in the discretion of the court,
the damages may be doubled.
The complaining party, upon proper showing may
also be granted injunction.1âwphi1
Fortunately for the petitioners, they may still find some small
comfort in Art. 2222 of the Civil Code, which provides:
Art. 2222. The court may award nominal damages in
every obligation arising from any source enumerated
in Art. 1157, or in every case where any property right
has been invaded.
Accordingly, the Court can only award to the petitioners, as it
hereby does award, nominal damages in the amount of
Pl,000.00.
WHEREFORE, the petition is GRANTED. The decision of the
Court of Appeals dated December 24, 1986 and the Resolution
dated April 27,1987, are REVERSED and SET ASIDE and a new
judgment is hereby rendered:
(1) Canceling the private respondent's Certificate of
Register No. SR-6310 and permanently enjoining the
private respondent from using a label similar to that
of the petitioners.
(2) Prohibiting the private respondent from using the
empty bottles of the petitioners as containers for its
own products.
(3) Ordering the private respondent to pay the
petitioners nominal damages in the amount of
Pl,000.00, and the costs of the suit.
SO ORDERED.
G.R. No. 103543 July 5, 1993
ASIA BREWERY, INC., petitioner,
vs.
THE HON. COURT OF APPEALS and SAN MIGUEL
CORPORATION, respondents.
Abad Santos & Associates and Sycip, Salazar, Hernandez &
Gatmaitan for petitioner.
Roco, Bunag, Kapunan Law Office for private respondent.
GRIÑO-AQUINO, J.:
On September 15, 1988, San Miguel Corporation (SMC) filed a
complaint against Asia Brewery Inc. (ABI) for infringement of
trademark and unfair competition on account of the latter's
BEER PALE PILSEN or BEER NA BEER product which has been
competing with SMC's SAN MIGUEL PALE PILSEN for a share of
the local beer market. (San Miguel Corporation vs. Asia Brewery
Inc., Civ. Case. No. 56390, RTC Branch 166, Pasig, Metro
Manila.).
On August 27, 1990, a decision was rendered by the trial Court,
presided over by Judge Jesus O. Bersamira, dismissing SMC's
complaint because ABI "has not committed trademark
infringement or unfair competition against" SMC (p. 189, Rollo).
SMC appealed to the Court of Appeals (C.A.-G.R. CV No. 28104).
On September 30, 1991, the Court of Appeals (Sixth Division
composed of Justice Jose C. Campos, Jr., chairman and ponente,
and Justices Venancio D. Aldecoa Jr. and Filemon H. Mendoza,
as members) reversed the trial court. The dispositive part of the
decision reads as follows:
In the light of the foregoing analysis and
under the plain language of the applicable
rule and principle on the matter, We find
the defendant Asia Brewery Incorporated
GUILTY of infringement of trademark and
unfair competition. The decision of the trial
court is hereby REVERSED, and a new
judgment entered in favor of the plaintiff
and against the defendant as follows:
(1) The defendant Asia Brewery Inc. its
officers, agents, servants and employees
are hereby permanently enjoined and
restrained from manufacturing, putting up,
selling, advertising, offering or announcing
for sale, or supplying Beer Pale Pilsen, or
any similar preparation, manufacture or
beer in bottles and under labels
substantially identical with or like the said
bottles and labels of plaintiff San Miguel
Corporation employed for that purpose, or
substantially identical with or like the
bottles and labels now employed by the
defendant for that purpose, or in bottles or
under labels which are calculated to
deceive purchasers and consumers into the
belief that the beer is the product of the
plaintiff or which will enable others to
substitute, sell or palm off the said beer of
the defendant as and for the beer of the
plaintiff-complainant.
(2) The defendant Asia Brewery Inc. is
hereby ordered to render an accounting
and pay the San Miguel Corporation double
any and all the payments derived by
defendant from operations of its business
and the sale of goods bearing the mark
"Beer Pale Pilsen" estimated at
approximately Five Million Pesos
(P5,000,000.00); to recall all its products
bearing the mark "Beer Pale Pilsen" from its
retailers and deliver these as well as all
labels, signs, prints, packages, wrappers,
receptacles and advertisements bearing the
infringing mark and all plates, molds,
materials and other means of making the
same to the Court authorized to execute
this judgment for destruction.
 (3) The defendant is hereby ordered to pay
plaintiff the sum of Two Million Pesos
(P2,000,000.00) as moral damages and Half
a Million Pesos (P5,000,000.00) by way of
exemplary damages.
(4) The defendant is further ordered to pay
the plaintiff attorney's fees in the amount
of P250,000.00 plus costs to this suit. (p.
90, Rollo.)
Upon a motion for reconsideration filed by ABI, the above
dispositive part of the decision, was modified by the separate
opinions of the Special Sixth Division 1 so that it should read
thus:
In the light of the foregoing analysis and
under the plain language of the applicable
rule and principle on the matter, We find
the defendant Asia Brewery
Incorporated GUILTY of infringement of
trademark and unfair competition. The
decision of the trial court is hereby
REVERSED, and a new judgment entered in
favor of the plaintiff and against the
defendant as follows:
(1) The defendant Asia Brewery Inc., its
officers, agents, servants and employees
are hereby permanently enjoined and
restrained from manufacturing, putting up,
selling, advertising, offering or announcing
for sale, or supplying Beer Pale Pilsen, or
any similar preparation, manufacture or
beer in bottles and under labels
substantially identical with or like the said
bottles and labels of plaintiff San Miguel
Corporation employed for that purpose, or
substantially identical with or like the
bottles and labels now employed by the
defendant for that purpose, or in bottles or
under labels which are calculated to
deceive purchasers and consumers into the
belief that the beer if the product of the
plaintiff or which will enable others to
substitute, sell or palm off the said beer of
the defendant as and for the beer of the
plaintiff-complainant.
(2) The defendant Asia Brewery Inc. is
hereby ordered 2 to recall all its products
bearing the mark Beer Pale Pilsen from its
retailers and deliver these as well as all
labels, signs, prints, packages, wrappers,
receptacles and advertisements bearing the
infringing mark and all plates, molds,
materials and other means of making the
same to the Court authorized to execute
this judgment for destruction.
(3) The defendant is hereby ordered to pay
plaintiff the sum of Two Million Pesos
(P2,000,000.00) as moral damages and Half
a Million Pesos (P500,000.00) by way of
exemplary damages.
(4) The defendant is further ordered to pay
the plaintiff attorney's fees in the amount
of P250,000.00 plus costs of this suit.
In due time, ABI appealed to this Court by a petition
for certiorari under Rule 45 of the Rules of Court. The lone issue
in this appeal is whether ABI infringes SMC's trademark: San
Miguel Pale Pilsen with Rectangular Hops and Malt Design, and
thereby commits unfair competition against the latter. It is a
factual issue (Phil. Nut Industry Inc. v. Standard Brands Inc., 65
SCRA 575) and as a general rule, the findings of the Court of
Appeals upon factual questions are conclusive and ought not to
be disturbed by us. However, there are exceptions to this
general rule, and they are:
(1) When the conclusion is grounded
entirely on speculation, surmises and
conjectures;
(2) When the inference of the Court of
Appeals from its findings of fact is
manifestly mistaken, absurd and
impossible;
(3) Where there is grave abuse of
discretion;
(4) When the judgment is based on a
misapprehension of facts;
(5) When the appellate court, in making its
findings, went beyond the issues of the
case, and the same are contrary to the
admissions of both the appellant and the
appellee;
(6) When the findings of said court are
contrary to those of the trial court;
(7) When the findings are without citation
of specific evidence on which they are
based;
(8) When the facts set forth in the petition
as well as in the petitioner's main and reply
briefs are not disputed by the respondents;
and
(9) When the findings of facts of the Court
of Appeals are premised on the absence of
evidence and are contradicted on record.
(Reynolds Philippine Corporation vs. Court
of Appeals, 169 SCRA 220, 223 citing,
Mendoza vs. Court of Appeals, 156 SCRA
597; Manlapaz vs. Court of Appeals, 147
SCRA 238; Sacay vs. Sandiganbayan, 142
SCRA 593, 609; Guita vs. CA, 139 SCRA 576;
Casanayan vs. Court of Appeals, 198 SCRA
333, 336; also Apex Investment and
Financing Corp. vs. IAC, 166 SCRA 458
[citing Tolentino vs. De Jesus, 56 SCRA 167;
Carolina Industries, Inc. vs. CMS Stock
Brokerage, Inc., 97 SCRA 734; Manero vs.
CA, 102 SCRA 817; and Moran, Jr. vs. CA,
133 SCRA 88].)
Under any of these exceptions, the Court has to review the
evidence in order to arrive at the correct findings based on the
record (Roman Catholic Bishop of Malolos, Inc. vs. IAC, 191
SCRA 411, 420.) Where findings of the Court of Appeals and
trial court are contrary to each other, the Supreme Court may
scrutinize the evidence on record. (Cruz vs. CA, 129 SCRA 222,
227.)
The present case is one of the exceptions because there is no
concurrence between the trial court and the Court of Appeals
on the lone factual issue of whether ABI, by manufacturing and
selling its BEER PALE PILSEN in amber colored steinie bottles of
320 ml. capacity with a white painted rectangular label has
committed trademark infringement and unfair competition
against SMC.
Infringement of trademark is a form of unfair competition
(Clarke vs. Manila Candy Co., 36 Phil. 100, 106). Sec. 22 of
Republic Act No. 166, otherwise known as the Trademark Law,
defines what constitutes infringement:
Sec. 22. Infringement, what constitutes. —
Any person who shall use, without the
consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation of
any registered mark or trade-name in
connection with the sale, offering for sale,
or advertising of any goods, business or
services on or in connection with which
such use is likely to cause confusion or
mistake or to deceive purchasers or others
as to the source or origin of such goods or
services, or identity of such business; or
reproduce, counterfeit, copy or colorably
imitate any such mark or trade-name and
apply such reproduction, counterfeit, copy,
or colorable imitation to labels, signs,
prints, packages, wrappers, receptacles or
advertisements intended to be used upon
or in connection with such goods, business
or services, shall be liable to a civil action by
the registrant for any or all of the remedies
herein provided. (Emphasis supplied.)
This definition implies that only registered trade marks, trade
names and service marks are protected against infringement or
unauthorized use by another or others. The use of someone
else's registered trademark, trade name or service mark is
unauthorized, hence, actionable, if it is done "without the
consent of the registrant." (Ibid.)
The registered trademark of SMC for its pale pilsen beer is:
San Miguel Pale Pilsen With Rectangular
Hops and Malt Design. (Philippine Bureau of
Patents, Trademarks and Technology
Transfer Trademark Certificate of
Registration No. 36103, dated 23 Oct.
1986,
(p. 174, Rollo.)
As described by the trial court in its decision (Page 177, Rollo):
. . . . a rectangular design [is] bordered by
what appears to be minute grains arranged
in rows of three in which there appear in
each corner hop designs. At the top is a
phrase written in small print "Reg. Phil. Pat.
Off." and at the bottom "Net Contents: 320
Ml." The dominant feature is the phrase
"San Miguel" written horizontally at the
upper portion. Below are the words "Pale
Pilsen" written diagonally across the middle
of the rectangular design. In between is a
coat of arms and the phrase "Expertly
Brewed." The "S" in "San" and the "M" of
"Miguel," "P" of "Pale" and "Pilsen" are
written in Gothic letters with fine strokes of
serifs, the kind that first appeared in the
1780s in England and used for printing
German as distinguished from Roman and
Italic. Below "Pale Pilsen" is the statement
"And Bottled by" (first line, "San Miguel
Brewery" (second line), and "Philippines"
(third line). (p. 177, Rollo; Emphasis
supplied.)
On the other hand, ABI's trademark, as described by the trial
court, consists of:
. . . a rectangular design bordered by what
appear to be buds of flowers with leaves.
The dominant feature is "Beer" written
across the upper portion of the rectangular
design. The phrase "Pale Pilsen" appears
immediately below in smaller block letters.
To the left is a hop design and to the right,
written in small prints, is the phrase "Net
Contents 320 ml." Immediately below "Pale
Pilsen" is the statement written in three
lines "Especially brewed and bottled by"
(first line), "Asia Brewery Incorporated"
(second line), and "Philippines" (third line),
(p. 177, Rollo; Emphasis supplied.)
Does ABI's BEER PALE PILSEN label or "design" infringe upon
SMC's SAN MIGUEL PALE PILSEN WITH RECTANGULAR MALT
AND HOPS DESIGN? The answer is "No."
Infringement is determined by the "test of dominancy" rather
than by differences or variations in the details of one trademark
and of another. The rule was formulated in Co Tiong Sa vs.
Director of Patents, 95 Phil. 1, 4 (1954); reiterated in Lim Hoa
vs. Director of Patents, 100 Phil. 214, 216-217 (1956), thus:
It has been consistently held that the
question of infringement of a trademark is
to be determined by the test of dominancy.
Similarity in size, form and color, while
relevant, is not conclusive. If the competing
trademark contains the main or essential or
dominant features of another, and
confusion and deception is likely to result,
infringement takes place. Duplication or
imitation is not necessary; nor it is
necessary that the infringing label should
suggest an effort to imitate. [C. Neilman
Brewing Co. vs. Independent Brewing Co.,
191 F., 489, 495, citing Eagle White Lead
Co., vs. Pflugh (CC) 180 Fed. 579]. The
question at issue in cases of infringement of
trademarks is whether the use of the marks
involved would be likely to cause confusion
or mistakes in the mind of the public or
deceive purchasers. (Auburn Rubber
Corporation vs. Honover Rubber Co., 107 F.
2d 588; . . . .) (Emphasis supplied.)
In Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272, 275,
the test was similarity or "resemblance between the two
(trademarks) such as would be likely to cause the one mark to
be mistaken for the other. . . . [But] this is not such similitude as
amounts to identity."
In Phil. Nut Industry Inc. vs. Standard Brands Inc., 65 SCRA 575,
the court was more specific: the test is "similarity in the
dominant features of the trademarks."
What are the dominant features of the competing trademarks
before us?
There is hardly any dispute that the dominant feature of SMC's
trademark is the name of the product: SAN MIGUEL PALE
PILSEN, written in white Gothic letters with elaborate serifs at
the beginning and end of the letters "S" and "M" on an amber
background across the upper portion of the rectangular design.
On the other hand, the dominant feature of ABI's trademark is
the name: BEER PALE PILSEN, with the word "Beer" written in
large amber letters, larger than any of the letters found in the
SMC label.
The trial court perceptively observed that the word "BEER"
does not appear in SMC's trademark, just as the words "SAN
MIGUEL" do not appear in ABI's trademark. Hence, there is
absolutely no similarity in the dominant features of both
trademarks.
Neither in sound, spelling or appearance can BEER PALE PILSEN
be said to be confusingly similar to SAN MIGUEL PALE PILSEN.
No one who purchases BEER PALE PILSEN can possibly be
deceived that it is SAN MIGUEL PALE PILSEN. No evidence
whatsoever was presented by SMC proving otherwise.
Besides the dissimilarity in their names, the following other
dissimilarities in the trade dress or appearance of the
competing products abound:
(1) The SAN MIGUEL PALE PILSEN bottle has a slender tapered
neck.
The BEER PALE PILSEN bottle has a fat, bulging neck.
(2) The words "pale pilsen" on SMC's label are printed in bold
and laced letters along a diagonal band, whereas the words
"pale pilsen" on ABI's bottle are half the size and printed in
slender block letters on a straight horizontal band. (See Exhibit
"8-a".).
(3) The names of the manufacturers are prominently printed on
their respective bottles.
SAN MIGUEL PALE PILSEN is "Bottled by the San Miguel
Brewery, Philippines," whereas BEER PALE PILSEN is "Especially
brewed and bottled by Asia Brewery Incorporated, Philippines."
(4) On the back of ABI's bottle is printed in big, bold letters,
under a row of flower buds and leaves, its copyrighted slogan:
"BEER NA BEER!"
Whereas SMC's bottle carries no slogan.
(5) The back of the SAN MIGUEL PALE PILSEN bottle carries the
SMC logo, whereas the BEER PALE PILSEN bottle has no logo.
(6) The SAN MIGUEL PALE PILSEN bottle cap is stamped with a
coat of arms and the words "San Miguel Brewery Philippines"
encircling the same.
The BEER PALE PILSEN bottle cap is stamped with the name
"BEER" in the center, surrounded by the words "Asia Brewery
Incorporated Philippines."
(7) Finally, there is a substantial price difference between BEER
PALE PILSEN (currently at P4.25 per bottle) and SAN MIGUEL
PALE PILSEN (currently at P7.00 per bottle). One who pays only
P4.25 for a bottle of beer cannot expect to receive San Miguel
Pale Pilsen from the storekeeper or bartender.
The fact that the words pale pilsen are part of ABI's trademark
does not constitute an infringement of SMC's trademark: SAN
MIGUEL PALE PILSEN, for "pale pilsen" are generic words
descriptive of the color ("pale"), of a type of beer ("pilsen"),
which is a light bohemian beer with a strong hops flavor that
originated in the City of Pilsen in Czechoslovakia and became
famous in the Middle Ages. (Webster's Third New International
Dictionary of the English Language, Unabridged. Edited by Philip
Babcock Gove. Springfield, Mass.: G & C Merriam Co., [c] 1976,
page 1716.) "Pilsen" is a "primarily geographically descriptive
word," (Sec. 4, subpar. [e] Republic Act No. 166, as inserted by
Sec. 2 of R.A. No. 638) hence, non-registerable and not
appropriable by any beer manufacturer. The Trademark Law
provides:
Sec. 4. . . .. The owner of trade-mark, trade-
name or service-mark used to distinguish
his goods, business or services from the
goods, business or services of others shall
have the right to register the same [on the
principal register], unless it:
xxx xxx xxx
(e) Consists of a mark or trade-name which,
when applied to or used in connection with
the goods, business or services of the
applicant is merely descriptive or
deceptively misdescriptive of them, or when
applied to or used in connection with the
goods, business or services of the applicant
is primarily geographically descriptive or
deceptively misdescriptive of them, or is
primarily merely a surname." (Emphasis
supplied.)
The words "pale pilsen" may not be appropriated by SMC for its
exclusive use even if they are part of its registered trademark:
SAN MIGUEL PALE PILSEN, any more than such descriptive
words as "evaporated milk," "tomato ketchup," "cheddar
cheese," "corn flakes" and "cooking oil" may be appropriated
by any single manufacturer of these food products, for no other
reason than that he was the first to use them in his registered
trademark. In Masso Hermanos, S.A. vs. Director of Patents, 94
Phil. 136, 139 (1953), it was held that a dealer in shoes cannot
register "Leather Shoes" as his trademark because that would
be merely descriptive and it would be unjust to deprive other
dealers in leather shoes of the right to use the same words with
reference to their merchandise. No one may appropriate
generic or descriptive words. They belong to the public domain
(Ong Ai Gui vs. Director of Patents, 96 Phil. 673, 676 [1955]):
A word or a combination of words which is
merely descriptive of an article of trade, or
of its composition, characteristics, or
qualities, cannot be appropriated and
protected as a trademark to the exclusion
of its use by others. . . . inasmuch as all
persons have an equal right to produce and
vend similar articles, they also have the
right to describe them properly and to use
any appropriate language or words for that
purpose, and no person can appropriate to
himself exclusively any word or expression,
properly descriptive of the article, its
qualities, ingredients or characteristics, and
thus limit other persons in the use of
language appropriate to the description of
their manufactures, the right to the use of
such language being common to all. This
rule excluding descriptive terms has also
been held to apply to trade-names. As to
whether words employed fall within this
prohibition, it is said that the true test is not
whether they are exhaustively descriptive
of the article designated, but whether in
themselves, and as they are commonly used
by those who understand their meaning,
they are reasonably indicative and
descriptive of the thing intended. If they are
 thus descriptive, and not arbitrary, they In particular, and without in any way
cannot be appropriated from general use limiting the scope of unfair competition, the
and become the exclusive property of following shall be deemed guilty of unfair
anyone. (52 Am. Jur. 542-543.) competition:
. . . . Others may use the same or similar (a) Any person, who in selling his goods
descriptive word in connection with their shall give them the general appearance of
own wares, provided they take proper steps goods of another manufacturer or dealer,
to prevent the public being deceived. either as to the goods themselves or in the
(Richmond Remedies Co. vs. Dr. Miles wrapping of the packages in which they are
Medical Co., 16 E. [2d] 598.) contained, or the devices or words thereon,
or in any other feature of their appearance,
. . . . A descriptive word may be admittedly which would be likely to influence
distinctive, especially if the user is the first purchasers to believe that the goods
creator of the article. It will, however, be offered are those of a manufacturer or
denied protection, not because it lacks dealer other than the actual manufacturer
distinctiveness, but rather because others or dealer, or who otherwise clothes the
are equally entitled to its use. (2 Callman. goods with such appearance as shall
Unfair Competition and Trademarks, pp. deceive the public and defraud another of
869-870.)" (Emphasis supplied.) his legitimate trade, or any subsequent
vendor of such goods or any agent of any
vendor engaged in selling such goods with a
The circumstance that the manufacturer of BEER PALE PILSEN,
like purpose.
Asia Brewery Incorporated, has printed its name all over the
bottle of its beer product: on the label, on the back of the
bottle, as well as on the bottle cap, disproves SMC's charge that (b) Any person who by any artifice, or
ABI dishonestly and fraudulently intends to palm off its BEER device, or who employs any other means
PALE PILSEN as SMC's product. In view of the visible differences calculated to induce the false belief that
between the two products, the Court believes it is quite such person is offering the services of
unlikely that a customer of average intelligence would mistake another who has identified such services in
a bottle of BEER PALE PILSEN for SAN MIGUEL PALE PILSEN. the mind of the public; or
(c) Any person who shall make any false
The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN is
statement in the course of trade or who
bottled in amber-colored steinie bottles of 320 ml. capacity and
is also advertised in print, broadcast, and television media, does shall commit any other act contrary to good
not necessarily constitute unfair competition. faith of a nature calculated to discredit the
goods, business or services of another.
Unfair competition is the employment of deception or any
In this case, the question to be determined is whether ABI is
other means contrary to good faith by which a person shall pass
using a name or mark for its beer that has previously come to
off the goods manufactured by him or in which he deals, or his
designate SMC's beer, or whether ABI is passing off its BEER
business, or services, for those of another who has already
PALE PILSEN as SMC's SAN MIGUEL PALE PILSEN.
established goodwill for his similar goods, business or services,
or any acts calculated to produce the same result. (Sec. 29,
Republic Act No. 166, as amended.) The law further . . ..The universal test question is whether
enumerates the more common ways of committing unfair the public is likely to be deceived. Nothing
competition, thus: less than conduct tending to pass off one
man's goods or business as that of another
Sec. 29. . . . will constitute unfair competition. Actual or
probable deception and confusion on the
part of the customers by reason of
defendant's practices must always appear.
(Shell Co., of the Philippines, Ltd. vs. Insular
Petroleum Refining Co. Ltd. et al., 120 Phil.
434, 439.)
The use of ABI of the steinie bottle, similar but not identical to
the SAN MIGUEL PALE PILSEN bottle, is not unlawful. As
pointed out by ABI's counsel, SMC did not invent but merely
borrowed the steinie bottle from abroad and it claims neither
patent nor trademark protection for that bottle shape and
design. (See rollo, page 55.) The Cerveza Especial and the Efes
Pale Pilsen use the "steinie" bottle. (See Exhibits 57-D, 57-E.)
The trial court found no infringement of SMC's bottle —
The court agrees with defendant that there
is no infringement of plaintiff's bottle,
firstly, because according to plaintiff's
witness Deogracias Villadolid, it is a
standard type of bottle called steinie, and
to witness Jose Antonio Garcia, it is not a
San Miguel Corporation design but a design
originally developed in the United States by
the Glass Container Manufacturer's
Institute and therefore lacks exclusivity.
Secondly, the shape was never registered as
a trademark. Exhibit "C" is not a registration
of a beer bottle design required under Rep.
Act 165 but the registration of the name
and other marks of ownership stamped on
containers as required by Rep. Act 623.
Thirdly, the neck of defendant's bottle is
much larger and has a distinct bulge in its
uppermost part. (p. 186, Rollo.)
The petitioner's contention that bottle size, shape and color
may not be the exclusive property of any one beer
manufacturer is well taken. SMC's being the first to use the
steinie bottle does not give SMC a vested right to use it to the
exclusion of everyone else. Being of functional or common use,
and not the exclusive invention of any one, it is available to all
who might need to use it within the industry. Nobody can
acquire any exclusive right to market articles supplying simple
human needs in containers or wrappers of the general form,
size and character commonly and immediately used in
marketing such articles (Dy Buncio vs. Tan Tiao Bok, 42 Phil.
190, 194-195.)
. . . protection against imitation should be
properly confined to nonfunctional
 features. Even if purely functional elements
are slavishly copied, the resemblance will
not support an action for unfair
competition, and the first user cannot claim
secondary meaning protection. Nor can the
first user predicate his claim to protection
on the argument that his business was
established in reliance on any such
unpatented nonfunctional feature, even "at
large expenditure of money." (Callman
Unfair Competition, Trademarks and
Monopolies, Sec. 19.33 [4th Ed.].) (Petition
for Review, p. 28.)
ABI does not use SMC's steinie bottle. Neither did ABI copy it.
ABI makes its own steinie bottle which has a fat bulging neck to
differentiate it from SMC's bottle. The amber color is a
functional feature of the beer bottle. As pointed out by ABI, all
bottled beer produced in the Philippines is contained and sold
in amber-colored bottles because amber is the most effective
color in preventing transmission of light and provides the
maximum protection to beer. As was ruled in California Crushed
Fruit Corporation vs. Taylor B. and Candy Co., 38 F2d 885, a
merchant cannot be enjoined from using a type or color of
bottle where the same has the useful purpose of protecting the
contents from the deleterious effects of light rays. Moreover,
no one may have a monopoly of any color. Not only beer, but
most medicines, whether in liquid or tablet form, are sold in
amber-colored bottles.
That the ABI bottle has a 320 ml. capacity is not due to a desire
to imitate SMC's bottle because that bottle capacity is the
standard prescribed under Metrication Circular No. 778, dated
4 December 1979, of the Department of Trade, Metric System
Board.
With regard to the white label of both beer bottles, ABI
explained that it used the color white for its label because
white presents the strongest contrast to the amber color of
ABI's bottle; it is also the most economical to use on labels, and
the easiest to "bake" in the furnace (p. 16, TSN of September
20, 1988). No one can have a monopoly of the color amber for
bottles, nor of white for labels, nor of the rectangular shape
which is the usual configuration of labels. Needless to say, the
shape of the bottle and of the label is unimportant. What is all
important is the name of the product written on the label of
the bottle for that is how one beer may be distinguished form
the others.
In Dy Buncio v. Tan Tiao Bok, 42 Phil. 190, 196-197, where two
competing tea products were both labelled as Formosan tea,
both sold in 5-ounce packages made of ordinary wrapping
paper of conventional color, both with labels containing designs
drawn in green ink and Chinese characters written in red ink,
one label showing a double-decked jar in the center, the other,
a flower pot, this court found that the resemblances between
the designs were not sufficient to mislead the ordinary
intelligent buyer, hence, there was no unfair competition. The
Court held:
. . . . In order that there may be deception
of the buying public in the sense necessary
to constitute unfair competition, it is
necessary to suppose a public accustomed
to buy, and therefore to some extent
familiar with, the goods in question. The
test of fraudulent simulation is to be found
in the likelihood of the deception of persons
in some measure acquainted with an
established design and desirous of
purchasing the commodity with which that
design has been associated. The test is not
found in the deception, or possibility of the
deception, of the person who knows
nothing about the design which has been
counterfeited, and who must be indifferent
as between that and the other. The
simulation, in order to be objectionable,
must be such as appears likely to mislead
the ordinarily intelligent buyer who has a
need to supply and is familiar with the
article that he seeks to purchase.
The main thrust of SMC's complaint if not infringement of its
trademark, but unfair competition arising form the allegedly
"confusing similarity" in the general appearance or trade dress
of ABI's BEER PALE PILSEN beside SMC's SAN MIGUEL PALE
PILSEN (p. 209, Rollo)
SMC claims that the "trade dress" of BEER PALE PILSEN is
"confusingly similar" to its SAN MIGUEL PALE PILSEN because
both are bottled in 320 ml. steinie type, amber-colored bottles
with white rectangular labels.
However, when as in this case, the names of the competing
products are clearly different and their respective sources are
prominently printed on the label and on other parts of the
bottle, mere similarity in the shape and size of the container
and label, does not constitute unfair competition. The steinie
bottle is a standard bottle for beer and is universally used. SMC
did not invent it nor patent it. The fact that SMC's bottle is
registered under R.A. No. 623 (as amended by RA 5700, An Act
to Regulate the Use of Duly Stamped or Marked Bottles, Boxes,
Casks, Kegs, Barrels and Other Similar Containers) simply
prohibits manufacturers of other foodstuffs from the
unauthorized use of SMC's bottles by refilling these with their
products. It was not uncommon then for products such
as patis (fish sauce) and toyo (soy sauce) to be sold in recycled
SAN MIGUEL PALE PILSEN bottles. Registration of SMC's beer
bottles did not give SMC a patent on the steinie or on bottles of
similar size, shape or color.
Most containers are standardized because they are usually
made by the same manufacturer. Milk, whether in powdered or
liquid form, is sold in uniform tin cans. The same can be said of
the standard ketchup or vinegar bottle with its familiar
elongated neck. Many other grocery items such as coffee,
mayonnaise, pickles and peanut butter are sold in standard
glass jars. The manufacturers of these foodstuffs have equal
right to use these standards tins, bottles and jars for their
products. Only their respective labels distinguish them from
each other. Just as no milk producer may sue the others for
unfair competition because they sell their milk in the same size
and shape of milk can which he uses, neither may SMC claim
unfair competition arising from the fact that ABI's BEER PALE
PILSEN is sold, like SMC's SAN MIGUEL PALE PILSEN in amber
steinie bottles.
The record does not bear out SMC's apprehension that BEER
PALE PILSEN is being passed off as SAN MIGUEL PALE PILSEN.
This is unlikely to happen for consumers or buyers of beer
generally order their beer by brand. As pointed out by ABI's
counsel, in supermarkets and tiendas, beer is ordered by brand,
and the customer surrenders his empty replacement bottles or
pays a deposit to guarantee the return of the empties. If his
empties are SAN MIGUEL PALE PILSEN, he will get SAN MIGUEL
PALE PILSEN as replacement. In sari-sari stores, beer is also
ordered from the tindera by brand. The same is true in
restaurants, pubs and beer gardens — beer is ordered from the
waiters by brand. (Op. cit. page 50.)
Considering further that SAN MIGUEL PALE PILSEN has virtually
monopolized the domestic beer market for the past hundred
years, those who have been drinking no other beer but SAN
MIGUEL PALE PILSEN these many years certainly know their
beer too well to be deceived by a newcomer in the market. If
they gravitate to ABI's cheaper beer, it will not be because they
are confused or deceived, but because they find the competing
product to their taste.
Our decision in this case will not diminish our ruling in "Del
Monte Corporation vs. Court of Appeals and Sunshine Sauce
Manufacturing Industries," 181 SCRA 410, 419, 3 that:
. . . to determine whether a trademark has
been infringed, we must consider the mark
as a whole and not as dissected. If the buyer
is deceived, it is attributable to the marks as
a totality, not usually to any part of it.
That ruling may not apply to all kinds of products. The Court
itself cautioned that in resolving cases of infringement and
unfair competition, the courts should "take into consideration
several factors which would affect its conclusion, to wit: the
age, training and education of the usual purchaser, the nature
and cost of the article, whether the article is bought for
immediate consumption and also the conditions under which it
is usually purchased" (181 SCRA 410, 418-419).
The Del Monte case involved catsup, a common household
item which is bought off the store shelves by housewives and
house help who, if they are illiterate and cannot identify the
product by name or brand, would very likely identify it by mere
recollection of its appearance. Since the competitor, Sunshine
Sauce Mfg. Industries, not only used recycled Del Monte bottles
for its catsup (despite the warning embossed on the bottles:
"Del Monte Corporation. Not to be refilled.") but also used
labels which were "a colorable imitation" of Del Monte's label,
we held that there was infringement of Del Monte's trademark
and unfair competition by Sunshine.
Our ruling in Del Monte would not apply to beer which is not
usually picked from a store shelf but ordered by brand by the
beer drinker himself from the storekeeper or waiter in a pub or
restaurant.
Moreover, SMC's brand or trademark: "SAN MIGUEL PALE
PILSEN" is not infringed by ABI's mark: "BEER NA BEER" or
"BEER PALE PILSEN." ABI makes its own bottle with a bulging
neck to differentiate it from SMC's bottle, and prints ABI's
name in three (3) places on said bottle (front, back and bottle
cap) to prove that it has no intention to pass of its "BEER" as
"SAN MIGUEL."
There is no confusing similarity between the competing beers
for the name of one is "SAN MIGUEL" while the competitor is
plain "BEER" and the points of dissimilarity between the two
outnumber their points of similarity.
Petitioner ABI has neither infringed SMC's trademark nor
committed unfair competition with the latter's SAN MIGUEL
PALE PILSEN product. While its BEER PALE PILSEN admittedly
competes with the latter in the open market, that competition
is neither unfair nor fraudulent. Hence, we must deny SMC's
prayer to suppress it.
WHEREFORE, finding the petition for review meritorious, the
same is hereby granted. The decision and resolution of the
Court of Appeals in CA-G.R. CV No. 28104 are hereby set aside
and that of the trial court is REINSTATED and AFFIRMED. Costs
against the private respondent.
SO ORDERED.
Narvasa, C.J., Bidin, Regalado, Romero, Nocon, Bellosillo and
Melo, JJ., concur.
Feliciano, J., took no part.
Separate Opinions
CRUZ, J., dissenting:
The present ponencia stresses the specific similarities and
differences of the two products to support the conclusion that
there is no infringement of trade marks or unfair competition.
That test was rejected in my own ponencia in Del Monte
Corporation vs. Court of Appeals, 181 SCRA 410, concurred in
by Justices Narvasa, Gancayco, Griño-Aquino and Medialdea,
where we declared:
While the Court does recognize these
distinctions, it does not agree with the
conclusion that there was no infringement
or unfair competition. It seems to us that
the lower courts have been so preoccupied
with the details that they have not seen the
total picture.
It has been correctly held that side-by-side
comparison is not the final test of similarity.
Such comparison requires a careful scrutiny
to determine in what points the labels of
the products differ, as was done by the trial
judge. The ordinary buyer does not usually
make such scrutiny nor does he usually
have the time to do so. The average
shopper is usually in a hurry and does not
inspect every product on the shelf as if he
were browsing in a library. Where the
housewife has to return home as soon as
possible to her baby or the working woman
has to make quick purchases during her off
hours, she is apt to be confused by similar
labels even if they do have minute
differences. The male shopper is worse as
he usually does not bother about such
distinctions.
The question is not whether the two articles
are distinguishable by their labels when set
aside by side but whether the general
confusion made by the article upon the eye
of the casual purchaser who is unsuspicious
and off his guard, is such as to likely result
in his confounding it with the original. As
observed in several cases, the general
impression of the ordinary purchaser,
buying under the normally prevalent
conditions in trade and giving the attention
such purchasers usually give in buying that
class of goods, is the touchstone.
It has been held that in making purchases,
the consumer must depend upon his
recollection of the appearance of the
product which he intends to purchase. The
buyer having in mind the mark/label of the
respondent must rely upon his memory of
the petitioner's mark. Unlike the judge who
 has ample time to minutely examine the
labels in question in the comfort of his sala,
the ordinary shopper does not enjoy the
same opportunity.
A number of courts have held that to
determine whether a trademark has been
infringed, we must consider the mark as a
whole and not as dissected. If the buyer is
deceived, it is attributable to the marks as a
totality, not usually to any part of it. The
court therefore should be guided by its first
impression, for a buyer acts quickly and is
governed by a casual glance, the value of
which may be dissipated as soon as the
court assumes to analyze carefully the
respective features of the mark.
It has also been held that it is not the
function of the court in cases of
infringement and unfair competition to
educate purchasers but rather to take their
carelessness for granted, and to be ever
conscious of the fact that marks need not
be identical. A confusing similarity will
justify the intervention of equity. The judge
must also be aware of the fact that usually a
defendant in cases of infringement does not
normally copy but makes only colorable
changes. Well has it been said that the most
successful form of copying is to employ
enough points of similarity to confuse the
public with enough points of difference to
confuse the courts.
For the above reasons, and the other
arguments stated in Del Monte, I dissent.
# Separate Opinions
CRUZ, J., dissenting:
The present ponencia stresses the specific similarities and
differences of the two products to support the conclusion that
there is no infringement of trade marks or unfair competition.
That test was rejected in my own ponencia in Del Monte
Corporation vs. Court of Appeals, 181 SCRA 410, concurred in
by Justices Narvasa, Gancayco, Griño-Aquino and Medialdea,
where we declared:
While the Court does recognize these
distinctions, it does not agree with the
conclusion that there was no infringement
or unfair competition. It seems to us that
the lower courts have been so preoccupied
with the details that they have not seen the
total picture.
It has been correctly held that side-by-side
comparison is not the final test of similarity.
Such comparison requires a careful scrutiny
to determine in what points the labels of
the products differ, as was done by the trial
judge. The ordinary buyer does not usually
make such scrutiny nor does he usually
have the time to do so. The average
shopper is usually in a hurry and does not
inspect every product on the shelf as if he
were browsing in a library. Where the
housewife has to return home as soon as
possible to her baby or the working woman
has to make quick purchases during her off
hours, she is apt to be confused by similar
labels even if they do have minute
differences. The male shopper is worse as
he usually does not bother about such
distinctions.
The question is not whether the two articles
are distinguishable by their labels when set
aside by side but whether the general
confusion made by the article upon the eye
of the casual purchaser who is unsuspicious
and off his guard, is such as to likely result
in his confounding it with the original. As
observed in several cases, the general
impression of the ordinary purchaser,
buying under the normally prevalent
conditions in trade and giving the attention
such purchasers usually give in buying that
class of goods, is the touchstone.
It has been held that in making purchases,
the consumer must depend upon his
recollection of the appearance of the
product which he intends to purchase. The
buyer having in mind the mark/label of the
respondent must rely upon his memory of
the petitioner's mark. Unlike the judge who
has ample time to minutely examine the
labels in question in the comfort of his sala,
the ordinary shopper does not enjoy the
same opportunity.
A number of courts have held that to
determine whether a trademark has been
infringed, we must consider the mark as a
whole and not as dissected. If the buyer is
deceived, it is attributable to the marks as a
totality, not usually to any part of it. The
court therefore should be guided by its first
impression, for a buyer acts quickly and is
governed by a casual glance, the value of
which may be dissipated as soon as the
court assumes to analyze carefully the
respective features of the mark.
It has also been held that it is not the
function of the court in cases of
infringement and unfair competition to
educate purchasers but rather to take their
carelessness for granted, and to be ever
conscious of the fact that marks need not
be identical. A confusing similarity will
justify the intervention of equity. The judge
must also be aware of the fact that usually a
defendant in cases of infringement does not
normally copy but makes only colorable
changes. Well has it been said that the most
successful form of copying is to employ
enough points of similarity to confuse the
public with enough points of difference to
confuse the courts.
For the above reasons, and the other
arguments stated in Del Monte, I dissent.
G.R. No. 183404 October 13, 2010
BERRIS AGRICULTURAL CO., INC., Petitioner,
vs.
NORVY ABYADANG, Respondent.
Inulit na case na ito
G.R. No. 180073 November 25, 2009
PROSOURCE INTERNATIONAL, INC., Petitioner,
vs.
HORPHAG RESEARCH MANAGEMENT SA, Respondent.
DECISION
NACHURA, J.:
This is a petition for review on certiorari under Rule 45 of the
Rules of Court seeking to reverse and set aside the Court of
Appeals (CA) Decision1 dated July 27, 2007 and
Resolution2 dated October 15, 2007 in CA-G.R. CV No. 87556.
The assailed decision affirmed the Regional Trial Court
(RTC)3 Decision4 dated January 16, 2006 and Order5 dated May
3, 2006 in Civil Case No. 68048; while the assailed resolution
denied petitioner’s motion for reconsideration.
The facts are as follows:
Respondent Horphag Research Management SA is a
corporation duly organized and existing under the laws of
Switzerland and the owner6 of trademark PYCNOGENOL, a food
supplement sold and distributed by Zuellig Pharma
Corporation. Respondent later discovered that petitioner
Prosource International, Inc. was also distributing a similar food
supplement using the mark PCO-GENOLS since 1996.7 This
prompted respondent to demand that petitioner cease and
desist from using the aforesaid mark.8
Without notifying respondent, petitioner discontinued the use
of, and withdrew from the market, the products under the
name PCO-GENOLS as of June 19, 2000. It, likewise, changed its
mark from PCO-GENOLS to PCO-PLUS.9
On August 22, 2000, respondent filed a Complaint10 for
Infringement of Trademark with Prayer for Preliminary
Injunction against petitioner, praying that the latter cease and
desist from using the brand PCO-GENOLS for being confusingly
similar with respondent’s trademark PYCNOGENOL. It, likewise,
prayed for actual and nominal damages, as well as attorney’s
fees.11
In its Answer,12 petitioner contended that respondent could not
file the infringement case considering that the latter is not the
registered owner of the trademark PYCNOGENOL, but one
Horphag Research Limited. It, likewise, claimed that the two
marks were not confusingly similar. Finally, it denied liability,
since it discontinued the use of the mark prior to the institution
of the infringement case. Petitioner thus prayed for the
dismissal of the complaint. By way of counterclaim, petitioner
prayed that respondent be directed to pay exemplary damages
and attorney’s fees.13
During the pre-trial, the parties admitted the following:
1. Defendant [petitioner] is a corporation duly
organized and existing under the laws of the Republic
of the Philippines with business address at No. 7
Annapolis Street, Greenhills, San Juan, Metro Manila;
2. The trademark PYCNOGENOL of the plaintiff is duly
registered with the Intellectual Property Office but
not with the Bureau of Food and Drug (BFAD).
3. The defendant’s product PCO-GENOLS is duly
registered with the BFAD but not with the Intellectual
Property Office (IPO).
4. The defendant corporation discontinued the use of
and had withdrawn from the market the products
under the name of PCO-GENOLS as of June 19, 2000,
with its trademark changed from PCO-GENOLS to
PCO-PLUS.
5. Plaintiff corporation sent a demand letter to the
defendant dated 02 June 2000.14
On January 16, 2006, the RTC decided in favor of respondent. It
observed that PYCNOGENOL and PCO-GENOLS have the same
suffix "GENOL" which appears to be merely descriptive and
thus open for trademark registration by combining it with other
words. The trial court, likewise, concluded that the marks,
when read, sound similar, and thus confusingly similar
especially since they both refer to food supplements. The court
added that petitioner’s liability was not negated by its act of
pulling out of the market the products bearing the questioned
mark since the fact remains that from 1996 until June 2000,
petitioner had infringed respondent’s product by using the
trademark PCO-GENOLS. As respondent manifested that it was
no longer interested in recovering actual damages, petitioner
was made to answer only for attorney’s fees amounting to
₱50,000.00.15 For lack of sufficient factual and legal basis, the
court dismissed petitioner’s counterclaim. Petitioner’s motion
for reconsideration was likewise denied.
On appeal to the CA, petitioner failed to obtain a favorable
decision. The appellate court explained that under the
Dominancy or the Holistic Test, PCO-GENOLS is deceptively
similar to PYCNOGENOL. It also found just and equitable the
award of attorney’s fees especially since respondent was
compelled to litigate.16
Hence, this petition, assigning the following errors:
I. THAT THE COURT OF APPEALS ERRED IN AFFRIMING
THE RULING OF THE LOWER [COURT] THAT
RESPONDENT’S TRADEMARK P[YC]NOGENOLS (SIC)
WAS INFRINGED BY PETITIONER’S PCO-GENOLS.
II. THAT THE COURT OF APPEALS ERRED IN
AFFIRMING THE AWARD OF ATTORNEY’S FEES IN
FAVOR OF RESPONDENT HORPHAG RESEARCH
MANAGEMENT S.A. IN THE AMOUNT OF
Php50,000.00.17
The petition is without merit.
It must be recalled that respondent filed a complaint for
trademark infringement against petitioner for the latter’s use of
the mark PCO-GENOLS which the former claimed to be
confusingly similar to its trademark PYCNOGENOL. Petitioner’s
use of the questioned mark started in 1996 and ended in June
2000. The instant case should thus be decided in light of the
provisions of Republic Act (R.A.) No. 16618 for the acts
committed until December 31, 1997, and R.A. No. 829319 for
those committed from January 1, 1998 until June 19, 2000.
A trademark is any distinctive word, name, symbol, emblem,
sign, or device, or any combination thereof, adopted and used
by a manufacturer or merchant on his goods to identify and
distinguish them from those manufactured, sold, or dealt by
others. Inarguably, a trademark deserves protection.20
Section 22 of R.A. No. 166, as amended, and Section 155 of R.A.
No. 8293 define what constitutes trademark infringement, as
follows:
Sec. 22. Infringement, what constitutes. – Any person who shall
use, without the consent of the registrant, any reproduction,
counterfeit, copy or colorable imitation of any registered mark
or tradename in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in
connection with which such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or
origin of such goods or services, or identity of such business; or
reproduce, counterfeit, copy of colorably imitate any such mark
or tradename and apply such reproduction, counterfeit, copy or
colorable imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in
connection with such goods, business, or services, shall be
liable to a civil action by the registrant for any or all of the
remedies herein provided.
Sec. 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
155.2. Reproduce, counterfeit, copy or colorably imitate a
registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in
connection with the sale, offering for sale, distribution, or
advertising of goods or services on or in connection with which
such use is likely to cause confusion, or to cause mistake, or to
deceive, shall be liable in a civil action for infringement by the
registrant for the remedies hereinafter set forth: Provided, That
infringement takes place at the moment any of the acts stated
in Subsection 155.1 or this subsection are committed regardless
of whether there is actual sale of goods or services using the
infringing material.
In accordance with Section 22 of R.A. No. 166, as well as
Sections 2, 2-A, 9-A, and 20 thereof, the following constitute
the elements of trademark infringement:
(a) A trademark actually used in commerce in the
Philippines and registered in the principal register of
the Philippine Patent Office[;]
(b) [It] is used by another person in connection with
the sale, offering for sale, or advertising of any goods,
business or services or in connection with which such
use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or
origin of such goods or services, or identity of such
business; or such trademark is reproduced,
counterfeited, copied or colorably imitated by
another person and such reproduction, counterfeit,
copy or colorable imitation is applied to labels, signs,
prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such goods, business or services as
to likely cause confusion or mistake or to deceive
purchasers[;]
(c) [T]he trademark is used for identical or similar
goods[;] and
(d) [S]uch act is done without the consent of the
trademark registrant or assignee.21
On the other hand, the elements of infringement under R.A.
No. 8293 are as follows:
(1) The trademark being infringed is registered in the
Intellectual Property Office; however, in infringement
of trade name, the same need not be registered;
(2) The trademark or trade name is reproduced,
counterfeited, copied, or colorably imitated by the
infringer;
(3) The infringing mark or trade name is used in
connection with the sale, offering for sale, or
advertising of any goods, business or services; or the
infringing mark or trade name is applied to labels,
signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such goods, business or services;
(4) The use or application of the infringing mark or
trade name is likely to cause confusion or mistake or
to deceive purchasers or others as to the goods or
services themselves or as to the source or origin of
such goods or services or the identity of such
business; and
(5) It is without the consent of the trademark or trade
name owner or the assignee thereof.22
In the foregoing enumeration, it is the element of "likelihood of
confusion" that is the gravamen of trademark infringement. But
"likelihood of confusion" is a relative concept. The particular,
and sometimes peculiar, circumstances of each case are
determinative of its existence. Thus, in trademark infringement
cases, precedents must be evaluated in the light of each
particular case.23
In determining similarity and likelihood of confusion,
jurisprudence has developed two tests: the Dominancy Test
and the Holistic or Totality Test. The Dominancy Test focuses on
the similarity of the prevalent features of the competing
trademarks that might cause confusion and deception, thus
constituting infringement.24 If the competing trademark
contains the main, essential and dominant features of another,
and confusion or deception is likely to result, infringement
takes place. Duplication or imitation is not necessary; nor is it
necessary that the infringing label should suggest an effort to
imitate. The question is whether the use of the marks involved
is likely to cause confusion or mistake in the mind of the public
or to deceive purchasers.25 Courts will consider more the aural
and visual impressions created by the marks in the public mind,
giving little weight to factors like prices, quality, sales outlets,
and market segments.26
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.27 The
discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing
on both labels in order that the observer may draw his
conclusion whether one is confusingly similar to the other.28
The trial and appellate courts applied the Dominancy Test in
determining whether there was a confusing similarity between
the marks PYCNOGENOL and PCO-GENOL. Applying the test,
the trial court found, and the CA affirmed, that:
Both the word[s] PYCNOGENOL and PCO-GENOLS have the
same suffix "GENOL" which on evidence, appears to be merely
descriptive and furnish no indication of the origin of the article
and hence, open for trademark registration by the plaintiff thru
combination with another word or phrase such as
PYCNOGENOL, Exhibits "A" to "A-3." Furthermore, although the
letters "Y" between P and C, "N" between O and C and "S" after
L are missing in the [petitioner’s] mark PCO-GENOLS,
nevertheless, when the two words are pronounced, the sound
effects are confusingly similar not to mention that they are
both described by their manufacturers as a food supplement
and thus, identified as such by their public consumers. And
although there were dissimilarities in the trademark due to the
type of letters used as well as the size, color and design
employed on their individual packages/bottles, still the close
relationship of the competing products’ name in sounds as they
were pronounced, clearly indicates that purchasers could be
misled into believing that they are the same and/or originates
from a common source and manufacturer.29
We find no cogent reason to depart from such conclusion.
This is not the first time that the Court takes into account the
aural effects of the words and letters contained in the marks in
determining the issue of confusing similarity. In Marvex
Commercial Co., Inc. v. Petra Hawpia & Co., et al.,30 cited in
McDonald’s Corporation v. L.C. Big Mak Burger, Inc.,31 the Court
held:
The following random list of confusingly similar sounds in the
matter of trademarks, culled from Nims, Unfair Competition
and Trade Marks, 1947, Vol. 1, will reinforce our view that
"SALONPAS" and "LIONPAS" are confusingly similar in sound:
"Gold Dust" and "Gold Drop"; "Jantzen" and "Jass-Sea"; "Silver
Flash" and "Supper Flash"; "Cascarete" and "Celborite";
"Celluloid" and "Cellonite"; "Chartreuse" and "Charseurs";
"Cutex" and "Cuticlean"; "Hebe" and "Meje"; "Kotex" and
"Femetex"; "Zuso" and "Hoo Hoo." Leon Amdur, in his book
"Trade-Mark Law and Practice," pp. 419-421, cities, as
coming within the purview of the idem sonans rule, "Yusea"
and "U-C-A," "Steinway Pianos" and "Steinberg Pianos," and
"Seven-Up" and "Lemon-Up." In Co Tiong vs. Director of
Patents, this Court unequivocally said that "Celdura" and
"Cordura" are confusingly similar in sound; this Court held in
Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the name "Lusolin"
is an infringement of the trademark "Sapolin," as the sound of
the two names is almost the same.32
Finally, we reiterate that the issue of trademark infringement is
factual, with both the trial and appellate courts finding the
allegations of infringement to be meritorious. As we have
consistently held, factual determinations of the trial court,
concurred in by the CA, are final and binding on this
Court.33 Hence, petitioner is liable for trademark infringement.
We, likewise, sustain the award of attorney’s fees in favor of
respondent. Article 2208 of the Civil Code enumerates the
instances when attorney’s fees are awarded, viz.:
Art. 2208. In the absence of stipulation, attorney’s fees and
expenses of litigation, other than judicial costs, cannot be
recovered, except:
1. When exemplary damages are awarded;
2. When the defendant’s act or omission has
compelled the plaintiff to litigate with third persons
or to incur expenses to protect his interest;
3. In criminal cases of malicious prosecution against
the plaintiff;
4. In case of a clearly unfounded civil action or
proceeding against the plaintiff;
5. Where the defendant acted in gross and evident
bad faith in refusing to satisfy the plaintiff"s plainly
valid, just and demandable claim;
6. In actions for legal support;
7. In actions for the recovery of wages of household
helpers, laborers and skilled workers;
8. In actions for indemnity under workmen’s
compensation and employer’s liability laws;
9. In a separate civil action to recover civil liability
arising from a crime;
10. When at least double judicial costs are awarded;
11. In any other case where the court deems it just
and equitable that attorney’s fees and expenses of
litigation should be recovered.
In all cases, the attorney’s fees and expenses of litigation must
be reasonable.
As a rule, an award of attorney’s fees should be deleted where
the award of moral and exemplary damages is not
granted.34 Nonetheless, attorney’s fees may be awarded where
the court deems it just and equitable even if moral and
exemplary damages are unavailing.35 In the instant case, we
find no reversible error in the grant of attorney’s fees by the
CA.
WHEREFORE, premises considered, the petition is DENIED for
lack of merit. The Court of Appeals Decision dated July 27, 2007
and its Resolution dated October 15, 2007 in CA-G.R. CV No.
87556 are AFFIRMED.
SO ORDERED.
G.R. No. 164321 March 23, 2011
SKECHERS, U.S.A., INC., Petitioner,
vs.
INTER PACIFIC INDUSTRIAL TRADING CORP., and/or INTER
PACIFIC TRADING CORP. and/or STRONG SPORTS GEAR CO.,
LTD., and/or STRONGSHOES WAREHOUSE and/or STRONG
FASHION SHOES TRADING and/or TAN TUAN HONG and/or
VIOLETA T. MAGAYAGA and/or JEFFREY R. MORALES and/or
any of its other proprietor/s, directors, officers, employees
and/or occupants of its premises located at S-7, Ed & Joe's
Commercial Arcade, No. 153 Quirino Avenue, Parañaque
City, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
TRENDWORKS INTERNATIONAL CORPORATION, Petitioner-
Intervenor,
vs.
INTER PACIFIC INDUSTRIAL TRADING CORP. and/or INTER
PACIFIC TRADING CORP. and/or STRONG SPORTS GEAR CO.,
LTD., and/or STRONGSHOES WAREHOUSE and/or STRONG
FASHION SHOES TRADING and/or TAN TUAN HONG and/or
VIOLETA T. MAGAYAGA and/or JEFFREY R. MORALES and/or
any of its other proprietor/s, directors, officers, employees
and/or occupants of its premises located at S-7, Ed & Joe's
Commercial Arcade, No. 153 Quirino Avenue, Parañaque
City, Respondents.
RESOLUTION
PERALTA, J.:
For resolution are the twin Motions for Reconsideration1 filed
by petitioner and petitioner-intervenor from the Decision
rendered in favor of respondents, dated November 30, 2006.
At the outset, a brief narration of the factual and procedural
antecedents that transpired and led to the filing of the motions
is in order.
The present controversy arose when petitioner filed with
Branch 24 of the Regional Trial Court (RTC) of Manila an
application for the issuance of search warrants against an
outlet and warehouse operated by respondents for
infringement of trademark under Section 155, in relation to
Section 170 of Republic Act No. 8293, otherwise known as the
Intellectual Property Code of the Philippines.2 In the course of
its business, petitioner has registered the trademark
"SKECHERS"3 and the trademark "S" (within an oval
design)4 with the Intellectual Property Office (IPO).
Two search warrants5 were issued by the RTC and were served
on the premises of respondents. As a result of the raid, more
than 6,000 pairs of shoes bearing the "S" logo were seized.
Later, respondents moved to quash the search warrants,
arguing that there was no confusing similarity between
petitioner’s "Skechers" rubber shoes and its "Strong" rubber
shoes.
On November 7, 2002, the RTC issued an Order6 quashing the
search warrants and directing the NBI to return the seized
goods. The RTC agreed with respondent’s view that Skechers
rubber shoes and Strong rubber shoes have glaring differences
such that an ordinary prudent purchaser would not likely be
misled or confused in purchasing the wrong article.
Aggrieved, petitioner filed a petition for certiorari7 with the
Court of Appeals (CA) assailing the RTC Order. On November
17, 2003, the CA issued a Decision8 affirming the ruling of the
RTC.
Subsequently, petitioner filed the present petition9 before this
Court which puts forth the following assignment of errors:
A. WHETHER THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN CONSIDERING
MATTERS OF DEFENSE IN A CRIMINAL TRIAL FOR
TRADEMARK INFRINGEMENT IN PASSING UPON THE
VALIDITY OF THE SEARCH WARRANT WHEN IT
SHOULD HAVE LIMITED ITSELF TO A DETERMINATION
OF WHETHER THE TRIAL COURT COMMITTED GRAVE
ABUSE OF DISCRETION IN QUASHING THE SEARCH
WARRANTS.
B. WHETHER THE COURT OF APPEALS COMMITTED
GRAVE ABUSE OF DISCRETION IN FINDING THAT
RESPONDENTS ARE NOT GUILTY OF TRADEMARK
INFRINGEMENT IN THE CASE WHERE THE SOLE
TRIABLE ISSUE IS THE EXISTENCE OF PROBABLE CAUSE
TO ISSUE A SEARCH WARRANT.10
In the meantime, petitioner-intervenor filed a Petition-in-
Intervention11 with this Court claiming to be the sole licensed
distributor of Skechers products here in the Philippines.
On November 30, 2006, this Court rendered a
Decision12 dismissing the petition.
Both petitioner and petitioner-intervenor filed separate
motions for reconsideration.
In petitioner’s motion for reconsideration, petitioner moved for
a reconsideration of the earlier decision on the following
grounds:
(a) THIS HONORABLE COURT MUST RE-EXAMINE THE
FACTS OF THIS CASE DUE TO THE SIGNIFICANCE AND
REPERCUSSIONS OF ITS DECISION.
(b) COMMERCIAL QUANTITIES OF THE SEIZED ITEMS
WITH THE UNAUTHORIZED REPRODUCTIONS OF THE
"S" TRADEMARK OWNED BY PETITIONER WERE
INTENDED FOR DISTRIBUTION IN THE PHILIPPINE
MARKET TO THE DETRIMENT OF PETITIONER –
RETURNING THE GOODS TO RESPONDENTS WILL
ADVERSELY AFFECT THE GOODWILL AND
REPUTATION OF PETITIONER.
(c) THE SEARCH WARRANT COURT AND THE COURT
OF APPEALS BOTH ACTED WITH GRAVE ABUSE OF
DISCRETION.
(d) THE SEARCH WARRANT COURT DID NOT
PROPERLY RE-EVALUATE THE EVIDENCE PRESENTED
DURING THE SEARCH WARRANT APPLICATION
PROCEEDINGS.
(e) THE SOLID TRIANGLE CASE IS NOT APPLICABLE IN
THIS CASE, AS IT IS BASED ON A DIFFERENT FACTUAL
MILIEU. PRELIMINARY FINDING OF GUILT (OR
ABSENCE THEREOF) MADE BY THE SEARCH WARRANT
COURT AND THE COURT OF APPEALS WAS IMPROPER.
(f) THE SEARCH WARRANT COURT OVERSTEPPED ITS
DISCRETION. THE LAW IS CLEAR. THE DOMINANCY
TEST SHOULD BE USED.
(g) THE COURT OF APPEALS COMMITTED ERRORS OF
JURISDICTION.13
On the other hand, petitioner-intervenor’s motion for
reconsideration raises the following errors for this Court’s
consideration, to wit:
(a) THE COURT OF APPEALS AND THE SEARCH
WARRANT COURT ACTED CONTRARY TO LAW AND
JURISPRUDENCE IN ADOPTING THE ALREADY-
REJECTED HOLISTIC TEST IN DETERMINING THE ISSUE
OF CONFUSING SIMILARITY;
(b) THE COURT OF APPEALS AND THE SEARCH
WARRANT COURT ACTED CONTRARY TO LAW IN
HOLDING THAT THERE IS NO PROBABLE CAUSE FOR
TRADEMARK INFRINGEMENT; AND
(c) THE COURT OF APPEALS SANCTIONED THE TRIAL
COURT’S DEPARTURE FROM THE USUAL AND
ACCEPTED COURSE OF JUDICIAL PROCEEDINGS WHEN
IT UPHELD THE QUASHAL OF THE SEARCH WARRANT
 ON THE BASIS SOLELY OF A FINDING THAT THERE IS
NO CONFUSING SIMILARITY.14
A perusal of the motions submitted by petitioner and
petitioner-intervenor would show that the primary issue posed
by them dwells on the issue of whether or not respondent is
guilty of trademark infringement.
After a thorough review of the arguments raised herein, this
Court reconsiders its earlier decision.
The basic law on trademark, infringement, and unfair
competition is Republic Act (R.A.) No. 8293. Specifically, Section
155 of R.A. No. 8293 states:
Remedies; Infringement. — Any person who shall, without the
consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark or the same container
or a dominant feature thereof in connection with the sale,
offering for sale, distribution, advertising of any goods or
services including other preparatory steps necessary to carry
out the sale of any goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake,
or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a
registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in
connection with the sale, offering for sale, distribution, or
advertising of goods or services on or in connection with which
such use is likely to cause confusion, or to cause mistake, or to
deceive, shall be liable in a civil action for infringement by the
registrant for the remedies hereinafter set forth: Provided, That
the infringement takes place at the moment any of the acts
stated in Subsection 155.1 or this subsection are committed
regardless of whether there is actual sale of goods or services
using the infringing material.15
The essential element of infringement under R.A. No. 8293 is
that the infringing mark is likely to cause confusion. In
determining similarity and likelihood of confusion,
jurisprudence has developed tests the Dominancy Test and
the Holistic or Totality Test. The Dominancy Test focuses on the
similarity of the prevalent or dominant features of the
competing trademarks that might cause confusion, mistake,
and deception in the mind of the purchasing public. Duplication
or imitation is not necessary; neither is it required that the
mark sought to be registered suggests an effort to imitate.
Given more consideration are the aural and visual impressions
created by the marks on the buyers of goods, giving little
weight to factors like prices, quality, sales outlets, and market
segments.16
In contrast, the Holistic or Totality Test necessitates a
consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining
confusing similarity. The discerning eye of the observer must
focus not only on the predominant words, but also on the other
features appearing on both labels so that the observer may
draw conclusion on whether one is confusingly similar to the
other.17
Relative to the question on confusion of marks and trade
names, jurisprudence has noted two (2) types of confusion, viz.:
(1) confusion of goods (product confusion), where the
ordinarily prudent purchaser would be induced to purchase one
product in the belief that he was purchasing the other; and (2)
confusion of business (source or origin confusion), where,
although the goods of the parties are different, the product, the
mark of which registration is applied for by one party, is such as
might reasonably be assumed to originate with the registrant of
an earlier product, and the public would then be deceived
either into that belief or into the belief that there is some
connection between the two parties, though inexistent.18
Applying the Dominancy Test to the case at bar, this Court finds
that the use of the stylized "S" by respondent in its Strong
rubber shoes infringes on the mark already registered by
petitioner with the IPO. While it is undisputed that petitioner’s
stylized "S" is within an oval design, to this Court’s mind, the
dominant feature of the trademark is the stylized "S," as it is
precisely the stylized "S" which catches the eye of the
purchaser. Thus, even if respondent did not use an oval design,
the mere fact that it used the same stylized "S", the same being
the dominant feature of petitioner’s trademark, already
constitutes infringement under the Dominancy Test.
This Court cannot agree with the observation of the CA that the
use of the letter "S" could hardly be considered as highly
identifiable to the products of petitioner alone. The CA even
supported its conclusion by stating that the letter "S" has been
used in so many existing trademarks, the most popular of which
is the trademark "S" enclosed by an inverted triangle, which the
CA says is identifiable to Superman. Such reasoning, however,
misses the entire point, which is that respondent had used
a stylized "S," which is the same stylized "S" which petitioner
has a registered trademark for. The letter "S" used in the
Superman logo, on the other hand, has a block-like tip on the
upper portion and a round elongated tip on the lower portion.
Accordingly, the comparison made by the CA of the letter "S"
used in the Superman trademark with petitioner’s stylized "S" is
not appropriate to the case at bar.
Furthermore, respondent did not simply use the letter "S," but
it appears to this Court that based on the font and the size of
the lettering, the stylized "S" utilized by respondent is the very
same stylized "S" used by petitioner; a stylized "S" which is
unique and distinguishes petitioner’s trademark. Indubitably,
the likelihood of confusion is present as purchasers will
associate the respondent’s use of the stylized "S" as having
been authorized by petitioner or that respondent’s product is
connected with petitioner’s business.
Both the RTC and the CA applied the Holistic Test in ruling that
respondent had not infringed petitioner’s trademark. For its
part, the RTC noted the following supposed dissimilarities
between the shoes, to wit:
1. The mark "S" found in Strong Shoes is not enclosed
in an "oval design."
2. The word "Strong" is conspicuously placed at the
backside and insoles.
3. The hang tags and labels attached to the shoes
bears the word "Strong" for respondent and
"Skechers U.S.A." for private complainant;
4. Strong shoes are modestly priced compared to the
costs of Skechers Shoes.19
While there may be dissimilarities between the appearances of
the shoes, to this Court’s mind such dissimilarities do not
outweigh the stark and blatant similarities in their general
features. As can be readily observed by simply comparing
petitioner’s Energy20 model and respondent’s Strong21 rubber
shoes, respondent also used the color scheme of blue, white
and gray utilized by petitioner. Even the design and "wavelike"
pattern of the midsole and outer sole of respondent’s shoes are
very similar to petitioner’s shoes, if not exact patterns thereof.
At the side of the midsole near the heel of both shoes are two
elongated designs in practically the same location. Even the
outer soles of both shoes have the same number of ridges, five
at the back and six in front. On the side of respondent’s shoes,
near the upper part, appears the stylized "S," placed in the
exact location as that of the stylized "S" on petitioner’s shoes.
On top of the "tongue" of both shoes appears the stylized "S" in
practically the same location and size. Moreover, at the back of
petitioner’s shoes, near the heel counter, appears "Skechers
Sport Trail" written in white lettering. However, on
respondent’s shoes appears "Strong Sport Trail" noticeably
written in the same white lettering, font size, direction and
orientation as that of petitioner’s shoes. On top of the heel
collar of petitioner’s shoes are two grayish-white semi-
transparent circles. Not surprisingly, respondent’s shoes also
have two grayish-white semi-transparent circles in the exact
same location.lihpwa1
Based on the foregoing, this Court is at a loss as to how the RTC
and the CA, in applying the holistic test, ruled that there was no
colorable imitation, when it cannot be any more clear and
apparent to this Court that there is colorable imitation. The
dissimilarities between the shoes are too trifling and frivolous
that it is indubitable that respondent’s products will cause
confusion and mistake in the eyes of the public. Respondent’s
shoes may not be an exact replica of petitioner’s shoes, but the
features and overall design are so similar and alike that
confusion is highly likely.1avvphi1
In Converse Rubber Corporation v. Jacinto Rubber & Plastic Co.,
Inc.,22 this Court, in a case for unfair competition, had opined
that even if not all the details are identical, as long as the
general appearance of the two products are such that any
ordinary purchaser would be deceived, the imitator should be
liable, to wit:
From said examination, We find the shoes manufactured by
defendants to contain, as found by the trial court, practically all
the features of those of the plaintiff Converse Rubber
Corporation and manufactured, sold or marketed by plaintiff
Edwardson Manufacturing Corporation, except for their
respective brands, of course. We fully agree with the trial court
that "the respective designs, shapes, the colors of the ankle
patches, the bands, the toe patch and the soles of the two
products are exactly the same ... (such that) at a distance of a
few meters, it is impossible to distinguish "Custombuilt" from
"Chuck Taylor." These elements are more than sufficient to
serve as basis for a charge of unfair competition. Even if not all
the details just mentioned were identical, with the general
appearances alone of the two products, any ordinary, or even
perhaps even a not too perceptive and discriminating customer
could be deceived, and, therefore, Custombuilt could easily be
passed off for Chuck Taylor. Jurisprudence supports the view
that under such circumstances, the imitator must be held liable.
x x x23
Neither can the difference in price be a complete defense in
trademark infringement. In McDonald’s Corporation v. L.C. Big
Mak Burger. Inc.,24 this Court held:
Modern law recognizes that the protection to which the owner
of a trademark is entitled is not limited to guarding his goods or
business from actual market competition with identical or
similar products of the parties, but extends to all cases in which
the use by a junior appropriator of a trade-mark or trade-name
is likely to lead to a confusion of source, as where prospective
purchasers would be misled into thinking that the complaining
party has extended his business into the field (see 148 ALR 56
et seq; 53 Am. Jur. 576) or is in any way connected with the
activities of the infringer; or when it forestalls the normal
potential expansion of his business (v. 148 ALR 77, 84; 52 Am.
Jur. 576, 577). x x x25
Indeed, the registered trademark owner may use its mark on
the same or similar products, in different segments of the
market, and at different price levels depending on variations of
the products for specific segments of the market.26 The
purchasing public might be mistaken in thinking that petitioner
had ventured into a lower market segment such that it is not
inconceivable for the public to think that Strong or Strong Sport
Trail might be associated or connected with petitioner’s brand,
which scenario is plausible especially since both petitioner and
respondent manufacture rubber shoes.
Withal, the protection of trademarks as intellectual property is
intended not only to preserve the goodwill and reputation of
the business established on the goods bearing the mark
through actual use over a period of time, but also to safeguard
the public as consumers against confusion on these
goods.27 While respondent’s shoes contain some dissimilarities
with petitioner’s shoes, this Court cannot close its eye to the
fact that for all intents and purpose, respondent had
deliberately attempted to copy petitioner’s mark and overall
design and features of the shoes. Let it be remembered, that
defendants in cases of infringement do not normally copy but
only make colorable changes.28The most successful form of
copying is to employ enough points of similarity to confuse the
public, with enough points of difference to confuse the
courts.29
WHEREFORE, premises considered, the Motion for
Reconsideration is GRANTED. The Decision dated November 30,
2006 is RECONSIDERED and SET ASIDE.
SO ORDERED.
G.R. No. 172775 December 19, 2007
HON NE CHAN, YUNJI ZENG, AND JOHN DOE, Petitioners,
vs.
HONDA MOTOR CO., LTD., AND HONDA PHIL.,
INC., Respondents.
DECISION
CHICO-NAZARIO, J.:
Before the Court is a Petition for Review on Certiorari of the
Decision1 of the Court of Appeals in CA-G.R. SP No. 85353,
granting respondents’ Petition for Certiorari and setting aside
the Orders dated 20 February 2004 and 18 May 2004, of the
Regional Trial Court (RTC) of Manila, Branch 46.
On 14 November 2003, the National Bureau of Investigation
(NBI), through Special Investigator (SI) Glenn Lacaran, applied
for search warrants with the RTC against petitioners for alleged
violation of Section 1682 in relation to Section 1703 of Republic
Act No. 8293 or the Intellectual Property Code of the
Philippines.4
On the same date, RTC Judge Artemio S. Tipon issued two
search warrants. The first warrant, Search Warrant No. 03-
4438,5 was directed against petitioner "Hon Ne Chan and John
Does, operating under the name and style ‘Dragon Spirit
Motorcycle Center,’ located at No. 192 M.H. del Pilar Street
corner 10th Avenue, Grace Park, Caloocan City, Metro Manila."
On the other hand, the second search warrant, or Search
Warrant No. 03-44396 was issued against petitioner "Yunji Zeng
and John Does, operating under the name and style ‘Dragon
Spirit Motorcycle Center,’ located at No. 192 E. Delos Santos
Avenue, Caloocan City, Metro Manila."
Except for the names of respondents and addresses to be
searched, both search warrants stated the following:
SEARCH WARRANT7
TO ANY PEACE OFFICER:
G R E E T I N G S:
It appearing to the satisfaction of the undersigned, after
examining under oath the applicant Special Investigator Glenn
M. Lacaran of the National Bureau of Investigation, and his
witnesses Atty. Elmer NA. Cadano and Mr. Rene C. Baltazar,
that there are good and sufficient reasons to believe that a
violation of Sec. 168 in relation to Sec. 170 of the R.A. No. 8293
has been committed and that there are good and sufficient
reasons to believe that the following :
a) Motorcycles bearing the model names and/or markings "DS-
110", "DSM-110", "SUPER WAVE", "DS-125","DSM-125",
"WAVE R", and "WAVE" and the engines, moldings, spare
parts, tires and accessories for the manufacture and assembly
of such motorcycles;
b) Papers, documents, brochures, documents, receipts,
invoices, ledgers, books of accounts, labels, materials,
paraphernalia, effects, computer software, computer systems,
central processing units, hard disks, floppy disks, diskettes, date
storage and retrieval devices, monitors, and vehicles used or
intended to be used in importing, producing, manufacturing,
assembling, selling, marketing, distributing, dealing with and/or
otherwise disposing of motorcycles bearing the model names
and/or markings "DS-110", "DSM-110", "SUPER WAVE", DS-
125, DSM-125", "WAVE R", and WAVE",
are in the possession and control of Respondents HON NE
CHAN8 and JOHN DOES, operating under the name and
style "DRAGON SPIRIT MOTORCYCLE CENTER", located at No.
192 M. H. Del Pilar Street corner 10th Avenue, Grace Park,
Caloocan City, Metro Manila, and are being kept and concealed
at the said address.9
You are hereby commanded to make an immediate search at
any time of the day of the premises above-described and to
search for, and seize, the above-described personal properties
which are the subject of the aforesaid offense and bring to this
Court said properties to be dealt with as the law directs.
GIVEN UNDER MY HAND AND SEAL this 14th day of November,
2003 at the City of Manila, Philippines.
ARTEMIO S. TIPON
Judge
On the strength of these search warrants, NBI agents
conducted a search of petitioners’ premises and seized the
following items:
1. from petitioner Hon Ne Chan’s premises:
a) seven (7) motorcycles bearing the model name "DSM WAVE
R;"
b) three (3) motorcycles bearing the model name "DSM SUPER
WAVE", and
c) one (1) motorcycle bearing the model name "WAVE CX".
2. from petitioner Yunji Zeng’s premises:
a) twenty-one (21) motorcycles bearing the model name
"WAVE CX 110;"
b) eight (8) motorcycles bearing the model name "WAVE 110;"
c) thirty-five (35) motorcycles bearing the model name "WAVE
125";
d) one (1) motorcycle bearing the model name "WAVE R";
e) eight (8) motorcycles bearing the model name "SUPER WAVE
110;" and
f) two (2) plastic bags containing various documents.10
On 1 December 2003, petitioners filed with the RTC a Joint
Motion to Quash Search Warrants and to Return Illegally Seized
Items,11 averring therein that the search warrants were issued
despite the absence of probable cause and that they were in
the nature of general search warrants. Respondents filed their
Opposition thereto on 7 January 200412 but despite this, the
trial court still issued an Order dated 20 February 2004 which
quashed both Search Warrants No. 03-4438 and 03-4439 and
ordered the NBI to return to petitioners the articles seized. In
quashing the search warrants, the trial court held that the
return of the twenty-two "WAVE CX 110" motorcycle units was
proper for they were never specifically mentioned therein. As
regards the rest of the items seized by the NBI agents, the trial
court decreed that their return to petitioners was justified due
to lack of probable cause in the issuance of the search
warrants.
Respondents’ Motion for Reconsideration dated 12 March
200413 was denied by the court a quo through its Order of 18
May 2004.14 This prompted respondents to seek recourse
before the Court of Appeals via a Petition for Certiorari.15
On 31 January 2006, the Court of Appeals rendered the now
assailed Decision granting respondents’ petition and setting
aside the RTC’s Orders dated 20 February 2004 and 18 May
2004.16 The appellate court likewise denied petitioners’ Motion
for Reconsideration due to lack of merit.
Hence, the present petition imputing error to the Court of
Appeals because of the following:
i.
THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY
ABUSED ITS DISCRETION IN RULING THAT THE WARRANTS
COMPLIED WITH THE CONSTITUTIONAL AND STATUTORY
REQUIREMENTS FOR THE ISSUANCE OF VALID SEARCH
WARRANTS NOTWITHSTANDING THE LACK OF PROBABLE
CAUSE IN CONNECTION WITH ONE SPECIFIC OFFENSE TO
SEARCH AND SEIZE THE MOTORCYCLE UNITS OF THE
PETITIONERS AND THE LACK OF PARTICULARITY IN THE
DESCRIPTION OF THE THINGS TO BE SEARCHED.
ii.
THE COURT OF APPEALS COMMITTED GRAVE, SERIOUS AND
REVERSIBLE ERROR IN RULING THAT RESPONDENT HAD
ESTABLISHED GOODWILL IN HONDA WAVE MOTORCYCLE
DESPITE OF THE FACT THAT THERE IS NO EVIDENCE ON RECORD
SUPPORTING THE CLAIM.
iii.
THE COURT OF APPEALS COMMITTED A MISAPPREHENSION OF
FACTS IN RULING THAT THE PETITIONERS PASSED OFF THEIR
GOODS AS THAT OF THE RESPONDENTS BY USING THE MODEL
NAME WAVE AND EMBODYING THE PROMINENT FEATURES OF
THE DESIGNS, WHICH IS THE VERY ESSENCE OF UNFAIR
COMPETITION.17
We are primarily tasked to resolve the questions of: 1) whether
probable cause existed in the issuance of the subject search
warrants; 2) whether said search warrants were in the nature
of general search warrants and therefore null and void; and 3)
whether there existed an offense to which the issuance of the
search warrants was connected.
We affirm the Decision of the Court of Appeals.
The pertinent provision of the Rules of Court on the issuance of
a search warrant provides:
Rule 126
Search and Seizure
xxxx
SEC. 4. Requisites for issuing search warrant. – A search warrant
shall not issue but upon probable cause in connection with one
specific offense to be determined personally by the judge after
examination under oath or affirmation of the complainant and
the witnesses he may produce, and particularly describing the
place to be searched and the things to be seized which may be
anywhere in the Philippines.
Thus, the validity of the issuance of a search warrant rests upon
the following factors: (1) it must be issued upon probable
cause; (2) the probable cause must be determined by the judge
himself and not by the applicant or any other person; (3) in the
determination of probable cause, the judge must examine,
under oath or affirmation, the complainant and such witnesses
as the latter may produce; and (4) the warrant issued must
particularly describe the place to be searched and persons or
things to be seized.18
In this case, petitioners argue that the requirements
enumerated in Rule 126 of the Rules of Court pertaining to the
issuance of a search warrant were not fulfilled when Search
Warrants No. 03-4438 and 03-4439 were issued by the trial
court. First, they contend that no probable cause existed
meriting the issuance of the search warrants in that it was
stated in the Application for Search Warrant of National Bureau
of Investigation Special Investigator (NBI SI) Lacaran that "(h)e
has information and verily believes that (petitioners) are in
possession or has in their control properties which are being
sold, retailed, distributed, imported, dealt with or otherwise
disposed of, or intended to be used as a means of committing a
violation of Section 168 in relation to Section 170 of Republic
Act No. 8293 otherwise known as the Intellectual Property
Code of the Philippines"19 Said statement, petitioners insist,
failed to meet the condition that probable cause must be
shown to be within the personal knowledge of the complainant
or the witnesses he may produce and not based on mere
hearsay.20
It is settled that in determining probable cause, a judge is duty-
bound to personally examine under oath the complainant and
the witnesses he may present. Emphasis must be laid on the
fact that the oath required must refer to "the truth of the facts
within the personal knowledge of the petitioner or his
witnesses, because the purpose thereof is to convince the
committing magistrate, not the individual making the affidavit
and seeking the issuance of the warrant, of the existence of
probable cause."21 Search warrants are not issued on loose,
vague or doubtful basis of fact, or on mere suspicion or belief.22
In the case at bar, petitioners capitalize on the first paragraph
of the Application for Search Warrant executed by NBI SI
Lacaran to support their argument that he lacked the personal
knowledge required by both the Rules of Court and by
jurisprudence. However, the very next paragraph of the
application reveals the tremulous nature of their argument for
it is clearly stated therein that far from merely relying on mere
information and belief, NBI SI Lacaran "personally verified the
report and found [it] to be a fact."23 This, to our mind, removed
the basis of his application from mere hearsay and supported
the earlier finding of probable cause on the part of the
examining judge. We cannot, thus, agree in his Order of 20
February 2004 quashing the search warrants he earlier issued
on 14 November 2003.
It is likewise well to reiterate here that "probable cause," as far
as the issuance of a search warrant is concerned, has been
uniformly defined as such facts and circumstances which would
lead a reasonable, discreet and prudent man to believe that an
offense has been committed, and that the objects sought in
connection with the offense are in the place sought to be
searched.24 Equally important is our declaration in Microsoft
Corporation and Lotus Development Corporation v. Maxicorp,
Inc.25 that –
The determination of probable cause does not call for the
application of rules and standards of proof that a judgment of
conviction requires after trial on the merits. As implied by the
words themselves, "probable cause" is concerned with
probability, not absolute or even moral certainty. The
prosecution need not present at this stage reasonable doubt.
The standards of judgment are those of a reasonably prudent
man, not the exacting calibrations of a judge after a full-blown
trial.26
Applying these standards, we hold that the trial court
overstepped its boundaries as far as determination of probable
cause is concerned when it ratiocinated in its Order dated 20
February 2004 that –
With respect to the other units seized by the NBI, their
immediate release is likewise proper since there is no showing
of probable cause that justified the issuance of the search
warrant. The (herein respondents) claims (sic) that the (herein
petitioners) are guilty of Unfair Competition because of the
alleged similarities between its motorcycle units and those of
the (petitioners). There maybe similarities as claimed by the
(respondents) but the differences far outweigh the similarities
that any confusion to the consumer is remote and speculative.
These differences are quite evident from the very comparative
pictures attached by the (petitioners) in its (sic) application for
Search Warrant as well as in the Opposition filed relative to the
pending "Joint Motion to Quash Search Warrants and to Return
Illegally Seized Items."
Aside from the differences in features, the motorcycle units
sold by the (petitioners) prominently bear the distinct trade
name "DRAGON SPIRIT." This is not the same trade name of the
(respondents), which is Honda. The fact alone would practically
eliminate any possible confusion on the part of the public that
the motorcycle units they would be buying from the
(petitioners) are those manufactured and/or sold by
(respondents).27
Such pronouncement by the RTC is utterly premature for, at
that point, all that was presented before it by respondents was
evidence, which to their minds, was sufficient to support a
finding of probable cause. The trial court’s above-cited
declaration unmistakably conveys the message that no unfair
competition exists in this case – a conclusion that is not within
its competence to make, for its task is merely confined to the
preliminary matter of determination of probable cause and
nothing more. The evidence it requires to dispense this
function is, as stated before, far less stringent than that
required in the trial on the merits of the charge involving unfair
competition.
Petitioners also argue that the search warrants in question
partook the nature of general search warrants in that they
included motorcycles bearing the model name "WAVE." They
insist that word "WAVE" is generic and that it fails to pass the
requirement of particularity of the items to be seized. They also
maintain that had the word "WAVE" been enough, there would
have been no need for petitioners to state in their application
for search warrants the specific motorcycle models, i.e., "DSM
WAVE," "DSM SUPERWAVE 110," and "WAVE R 125."28
It is elemental that in order to be valid, a search warrant must
particularly describe the place to be searched and the things to
be seized. The constitutional requirement of reasonable
particularity of description of the things to be seized is primarily
meant to enable the law enforcers serving the warrant to: (1)
readily identify the properties to be seized and thus prevent
them from seizing the wrong items; and (2) leave said peace
officers with no discretion regarding the articles to be seized
and thus prevent unreasonable searches and seizures.29 It is
not, however, required that the things to be seized must be
described in precise and minute detail as to leave no room for
doubt on the part of the searching authorities.30
In Bache and Co. (Phil.), Inc. v. Judge Ruiz,31 it was pointed out
that one of the tests to determine the particularity in the
description of objects to be seized under a search warrant is
when the things described are limited to those which bear
direct relation to the offense for which the warrant is being
issued. A reading of the search warrants issued by the trial
court in this case reveals that the items to be seized, including
motorcycles, are those which are connected with the alleged
violation of Section 168 in relation to Section 170 of Republic
Act No. 8293, notwithstanding the use of the generic word
"WAVE." We, therefore, adopt the following finding of the
appellate court:
We may say this of the Wave motorcycles. It is evident that
Wave is the model name of the motorcycles produced by the
(herein respondents) Honda and, therefore, any imitation unit
that is in the possession of the (herein petitioners) and carries
the name Wave is the fit object of the warrants – whether
some other name or figure is affixed to it or not. The name
Wave CX 110 is but a [species] of units under the generic name
Wave. The warrant that directs the seizure of Wave logically
includes Wave CX 110 and is by no means converted into a
roving commission when it allows the officer to seize it.32
Anent petitioners’ contention that the search warrants were
issued in relation to no particular offense, they rely on the
holding of this Court in Savage v. Judge Taypin,33 where it was
held that –
There is evidently no mention of any crime of "unfair
competition" involving design patents in the controlling
provisions on Unfair Competition. It is therefore unclear
whether the crime exists at all, for the enactment of RA 8293
did not result in the reenactment of Art. 189 of the Revised
Penal Code. In the face of this ambiguity, we must strictly
construe the statute against the State and liberally in favor of
the accused, for penal statutes cannot be enlarged or extended
by intendment, implication or any equitable consideration.34
A reading of said case readily exposes its stark inapplicability to
the instant Petition.
To be sure, the search warrant in Savage was issued in the face
of possible violation of Republic Act No. 8293.1avvphi1 The acts
complained of in said case were the alleged manufacture and
fabrication of wrought iron furniture similar to that patented by
private respondent therein sans any license or patent for the
same, for the purpose of deceiving or defrauding private
respondent and the buying public.
In making the above-quoted declaration in said case, this Court
recognized that paragraph 3 of Article 189 of the Revised Penal
Code stating that –
3. Any person who, by means of false or fraudulent
representations or declarations, orally or in writing, or by other
fraudulent means shall procure from the patent office or from
any other office which may hereafter be established by law for
the purposes, the registration of a tradename, trademark, or
service mark, or of himself as the owner of such tradename,
trademark, or service mark or an entry respecting a tradename,
trademark, or servicemark.
was not included in the enactment of Section 168 of Republic
Act No. 8293.
On the other hand, in the Application for Search Warrant filed
by NBI SI Lacaran, it is clearly stated that what respondents are
complaining about was the alleged violation of the goodwill
they have established with respect to their motorcycle models
"WAVE 110 S" and "WAVE 125 S" and which goodwill is entitled
to protection in the same manner as other property rights. It is
quite obvious then that their cause of action arose out of the
intrusion into their established goodwill involving the two
motorcycle models and not patent infringement, as what
existed in Savage.
WHEREFORE, premises considered the present petition for
review is DENIED, and the 31 January 2006 Decision of the
Court of Appeals and its 17 May 2006 Resolution in CA-G.R. SP
No. 85353 are AFFIRMED. Costs against petitioners.
SO ORDERED
G.R. No. 157216 November 20, 2003
246 CORPORATION, doing business under the name and style
of ROLEX MUSIC LOUNGE, petitioner,
vs.
HON. REYNALDO B. DAWAY, in his capacity as Presiding Judge
of Branch 90 of the Regional Trial Court of Quezon City,
MONTRES ROLEX S.A. and ROLEX CENTRE PHIL.
LIMITED, respondents.
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari under Rule 45 of the
1997 Rules of Civil Procedure assailing the November 28, 2002
Decision1 of the Court of Appeals in CA-G.R. SP No. 64660 which
dismissed the petition for certiorari filed by petitioner, as well
as the Resolution2 dated February 13, 2003 denying its motion
for reconsideration.
The undisputed facts show that on November 26, 1998,
respondents Montres Rolex S.A. and Rolex Centre Phil., Limited,
owners/proprietors of Rolex and Crown Device, filed against
petitioner 246 Corporation the instant suit for trademark
infringement and damages with prayer for the issuance of a
restraining order or writ of preliminary injunction3 before the
Regional Trial Court of Quezon City, Branch 90. Respondents
alleged that sometime in July 1996, petitioner adopted and,
since then, has been using without authority the mark "Rolex"
in its business name "Rolex Music Lounge" as well as in its
newspaper advertisements as – "Rolex Music Lounge, KTV,
Disco & Party Club."
In its answer raising special affirmative defenses, petitioner
argued that respondents have no cause of action because no
trademark infringement exist; that no confusion would arise
from the use by petitioner of the mark "Rolex" considering that
its entertainment business is totally unrelated to the items
catered by respondents such as watches, clocks, bracelets and
parts thereof. It also contended that the complaint was not
properly verified and certified against forum shopping
considering that Atty. Alonzo Ancheta, the counsel of record of
respondents who signed the verification and certification, was
not authorized to represent respondents.4
On July 21, 2000, petitioner filed a motion for preliminary
hearing on its affirmative defenses.5 Subsequently, on motion
of petitioner, the trial court issued a subpoena ad
testificandum requiring Atty. Alonzo Ancheta to appear at the
preliminary hearing.6 Respondents, in the meantime, filed a
Comment and Opposition7 to the motion for preliminary
hearing and a motion to quash the subpoena ad testificandum.
In an Order dated October 27, 2000, the trial court quashed the
subpoena ad testificandum and denied petitioner’s motion for
preliminary hearing on affirmative defenses with motion to
dismiss.8
With the denial of the motion for reconsideration on March 16,
2001, petitioner filed a petition for certiorari with the Court of
Appeals contending that the trial court gravely abused its
discretion in issuing the October 27, 2000 and March 16, 2001
orders.
On November 28, 2002, the Court of Appeals dismissed the
petition. The motion for reconsideration filed by petitioner was
denied. Hence, the instant petition anchored on the following
grounds:
I ORDER DATED OCTOBER 20, 2000 OF
IN ISSUING THE ASSAILED DECISIONS, THE
HONORABLE COURT OF APPEALS PERFUNCTORILY
BRUSHED ASIDE THE CONTROLLING PRECEDENTS
LAID DOWN BY THIS HONORABLE COURT IN ESSO
STANDARD EASTERN, INC. VS. COURT OF APPEALS
AND UNITED CIGARETTE CORPORATION AND OTHER
COMPANION CASES HOLDING THAT NO TRADEMARK
INFRINGEMENT CAN POSSIBLY OCCUR WHERE THE
CONTENDING PARTIES DEAL WITH GOODS AND
SERVICES THAT ARE TOTALLY UNRELATED AND NON-
COMPETING WITH EACH OTHER.
II
IN ARBITRARILY AND CAPRICIOUSLY RULING THAT
THE ISSUES RAISED IN PETITIONER’S CERTIORARI
PETITION ARE QUESTIONS OF FACT, THE HONORABLE
COURT OF APPEALS VIOLATED NOT ONLY
PETITIONERS SUBSTANTIVE DUE PROCESS RIGHTS
BUT ALSO THE WELL-SETTLED RULE THAT THE
ALLEGATIONS OF THE COMPLAINT IS
HYPOTHETICALLY ADMITTED WHEN THE MOTION TO
DISMISS IS GROUNDED UPON LACK OF CAUSE OF
ACTION. MOREOVER, INDEPENDENT OF THE
HYPOTHETICALLY ADMITTED FACTS EMBODIED IN
THE COMPLAINT A QUO, THERE ARE SELF-EVIDENT
FACTS AND IMPLIEDLY ADMITTED FACTS CONTAINED
IN PRIVATE RESPONDENTS’ PLEADINGS THAT WOULD
CLEARLY AND UNMISTAKABLY SHOW PRIVATE
RESPONDENTS’ LACK OF CAUSE OF ACTION AGAINST
HEREIN PETITIONER.
III
THE HONORABLE COURT OF APPEALS VIOLATED
PETITIONER’S RIGHT TO SUBSTANTIVE DUE PROCESS
WHEN IT ARBITRARILY AND CAPRICIOUSLY RULED
THAT WHAT WAS SPECIFICALLY DENIED IN THE
ASSAILED OCTOBER 20, 2000 ORDER IS PETITIONER’S
MOTION FOR PRELIMINARY HEARING ON
DEFENDANT’S AFFIRMATIVE DEFENSES AND NOT
PETITIONER’S MOTION TO DISMISS PER SE
CONSIDERING THAT:
A. THERE IS ABSOLUTELY NOTHING IN THE
RESPONDENT JUDGE WHICH SUGGESTS
THAT THE RESOLUTION OF PETITIONER’S
MOTION TO DISMISS PER SE WAS HELD IN
ABEYANCE BY THE RESPONDENT JUDGE.
HENCE THE SAID ORDER DATED OCTOBER
20, 2000 ALSO CONSTITUTES A DENIAL ON
THE MERITS OF PETITIONER’S MOTION TO
DISMISS PER SE AND NOT MERELY OF
PETITIONER’S MOTION FOR PRELIMINARY
HEARING THEREON.
B. PRIVATE RESPONDENTS’ COMMENT AND
OPPOSITION DATED 11 AUGUST 2000,
WHICH WAS CITED AND SUSTAINED BY
RESPONDENT JUDGE, CLEARLY TRAVERSED
THE MERITS OF THE GROUNDS FOR
PETITIONER’S MOTION TO DISMISS PER SE.
HENCE, THE SAID 20 OCTOBER 2000
ORDER’S DENIAL OF PETITIONER’S MOTION
IS NOT LIMITED TO THE MOTION FOR
PRELIMINARY HEARING BUT ALSO
CONSTITUTES A DENIAL OF PETITIONER’S
MOTION TO DISMISS PER SE.
IV
IN ARBITRARILY AND CAPRICIOUSLY RULING THAT
ATTY. ALONZO ANCHETA PROPERLY VERIFIED AND
CERTIFIED PRIVATE RESPONDENTS’ COMPLAINT A
QUO, THE HONORABLE COURT OF APPEALS VIOLATED
NOT ONLY PETITIONER’S SUBSTANTIVE DUE PROCESS
RIGHTS, BUT ALSO THE DOCTRINE OF SEPARATE
CORPORATE PERSONALITY; CONSIDERING THAT THE
RECORDS OF THIS CASE IS (sic) COMPLETELY BEREFT
AND DEVOID OF ANY DULY EXECUTED SPECIAL
POWER OF ATTORNEY, EMANATING FROM PRIVATE
RESPONDENTS, WHICH EXPLICITLY AND SPECIFICALLY
AUTHORIZES ATTY. ALONZO ANCHETA TO REPRESENT
PRIVATE RESPONDENTS MONTRES ROLEX S.A. IN THE
FILING OF THE COMPLAINT A QUO. BY REASON
THEREOF, PRIVATE RESPONDENTS COULD NOT BE
DEEMED TO HAVE VOLUNTARILY APPEARED BEFORE
THE RESPONDENT JUDGE; CONSEQUENTLY, THE
TRIAL COURT COULD NOT HAVE VALIDLY ACQUIRED
JURISDICTION OVER THE PERSON OF PRIVATE
RESPONDENTS.
V
IN ARBITRARILY AND CAPRICIOUSLY AFFIRMING
RESPONDENT JUDGE’S QUASHAL OF THE SUBPOENA
DATED 14 AUGUST 2000 DIRECTED AGAINST ATTY.
ALONZO ANCHETA, THE HONORABLE COURT OF
APPEALS VIOLATED NOT ONLY PETITIONER’S
SUBSTANTIVE DUE PROCESS RIGHTS, BUT ALSO
SECTION 9, RULE 132 AND SECTION 7 RULE 133 OF
THE 1989 REVISED RULES ON EVIDENCE, AND THE
RULING OF THIS HONORABLE COURT IN THE CASE OF
PEOPLE VS. RIVERA.9
Simply put, the issues are as follows – (1) whether the trial
court denied not only petitioner’s motion for preliminary
hearing on its affirmative defenses but its motion to dismiss as
well; (2) if the answer is in the affirmative, whether or not the
trial court gravely abused its discretion in denying said motions;
and (3) whether the trial court gravely abused its discretion in
quashing the subpoena ad testificandum issued against Atty.
Ancheta.
Anent the first issue, we find that what was denied in the order
dated October 27, 2000 was not only the motion for
preliminary hearing but the motion to dismiss as well. A reading
of the dispositive portion of said order shows that the trial
court neither qualified its denial nor held in abeyance the ruling
on petitioner’s motion to dismiss thus –
IN VIEW OF THE FOREGOING, the aforecited Motion To Quash
Subpoena Ad Testificandum is granted; and the aforecited
Motion For Preliminary Hearing On Defendant’s Affirmative
Defenses With Motion To dismiss The Instant Complaint Based
On Said Affirmative Defenses is denied.10 (Emphasis supplied)
In issuing the assailed order, the trial court ruled on the merits
of petitioner’s Motion to Dismiss vis-à-visrespondents’
Comment and Opposition which clearly traversed the
affirmative defenses raised by petitioner, to wit:
After carefully going over the pleadings, this Court
finds, on the first motion that the arguments raised in
the said motion and the reply filed in connection
thereto appear to be meritorious; and on the second
motion, that the arguments raised in the comments
and opposition and the rejoinder filed by the plaintiffs
likewise appear to be meritorious.11
Moreover, it is presumed that all matters within an issue raised
in a case were passed upon by the court. In the absence of
evidence to the contrary, the presumption is that the court a
quo discharged its task properly.12
In Municipality of Biñan Laguna v. Court of Appeals,13 decided
under the old Rules of Civil Procedure, it was held that a
preliminary hearing permitted under Rule 16, Section 5, is not
mandatory even when the same is prayed for. It rests largely on
the sound discretion of the trial court, thus –
SEC. 5. Pleading grounds as affirmative defenses. —
Any of the grounds for dismissal provided for in this
Rule, except improper venue, may be pleaded as an
affirmative defense, and a preliminary hearing may
be had thereon as if a motion to dismiss had been
filed. (Emphasis supplied)
The use of the word "may" in the aforequoted provision shows
that such a hearing is not a matter of right demandable from
the trial court; it is not mandatory but discretionary. "May" is
an auxiliary verb indicating liberty, opportunity, permission and
possibility.14 Such interpretation is specifically stated under the
1997 Rules of Civil Procedure. Rule 16, Section 6, now provides
that a grant of a preliminary hearing rests on the
sound discretion of the court, to wit –
SEC. 6. Pleading grounds as affirmative defenses.— If
no motion to dismiss has been filed, any of the
grounds for dismissal provided for in this Rule may be
pleaded as an affirmative defense in the answer
and, in the discretion of the court, a preliminary
hearing may be had thereon as if a motion to
dismiss had been filed. (Emphasis supplied)
In the case at bar, the Court of Appeals did not err in finding
that no abuse of discretion could be ascribed to the trial court’s
denial of petitioner’s motion for preliminary hearing on its
affirmative defenses with motion to dismiss. The issue of
whether or not a trademark infringement exists, is a question
of fact that could best be determined by the trial court.
Under the old Trademark Law15 where the goods for which the
identical marks are used are unrelated, there can be no
likelihood of confusion and there is therefore no infringement
in the use by the junior user of the registered mark on the
entirely different goods.16 This ruling, however, has been to
some extent, modified by Section 123.1(f) of the Intellectual
Property Code (Republic Act No. 8293), which took effect on
January 1, 1998. The said section reads:
Sec. 123. Registrability. – 123.1. A mark cannot be
registered if it:
xxx xxx xxx
(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 interest of the
owner of the registered mark are likely to be
damaged by such use; (Emphasis supplied)
A junior user of a well-known mark on goods or services which
are not similar to the goods or services, and are therefore
unrelated, to those specified in the certificate of registration of
the well-known mark is precluded from using the same on the
entirely unrelated goods or services, subject to the following
requisites, to wit:
1. The mark is well-known internationally and in the
Philippines. Under Rule 102 of the Rules and
Regulations on Trademarks, Service Marks, Trade
Names and Marked or Stamped Containers,17 in
determining whether a mark is well known, the
following criteria or any combination thereof may be
taken into account:
(a) the duration, extent and geographical
area of any use of the mark, in particular,
the duration, extent and geographical area
of any promotion of the mark, including
advertising or publicity and presentation, at
fairs or exhibitions, of the goods and/or
services to which the mark applies;
(b) the market share in the Philippines and
in other countries, of the goods and/or
services to which the mark applies;
(c) the degree of the inherent or acquired
distinction of the mark;
(d) the quality-image or reputation acquired
by the mark;
(e) the extent to which the mark has been
registered in the world;
(f) the exclusivity of the registration
attained by the mark in the world;
 (g) the extent to which the mark has been
used in the world;
(h) the exclusivity of use attained by the
mark in the world;
(i) the commercial value attributed to the
mark in the world;
(j) the record of successful protection of the
rights in the mark;
(k) the outcome of litigations dealing with
the issue of whether the mark is a well-
known mark; and
(l) the presence of absence of identical or
similar marks validly registered for or used
on identical or similar goods or services and
owned by persons other than the person
claiming that his mark is a well-known
mark.
2. The use of the well-known mark on the entirely
unrelated goods or services would indicate a
connection between such unrelated goods or services
and those goods or services specified in the
certificate of registration in the well known mark. This
requirement refers to the likelihood of confusion of
origin or business or some business connection or
relationship between the registrant and the user of
the mark.
3. The interests of the owner of the well-known mark
are likely to be damaged. For instance, if the
registrant will be precluded from expanding its
business to those unrelated good or services, or if the
interests of the registrant of the well-known mark will
be damaged because of the inferior quality of the
good or services of the user.18
Section 123.1(f) is clearly in point because the Music Lounge of
petitioner is entirely unrelated to respondents’ business
involving watches, clocks, bracelets, etc. However, the Court
cannot yet resolve the merits of the present controversy
considering that the requisites for the application of Section
123.1(f), which constitute the kernel issue at bar, clearly
require determination facts of which need to be resolved at the
trial court. The existence or absence of these requisites should
be addressed in a full blown hearing and not on a mere
preliminary hearing. The respondent must be given ample
opportunity to prove its claim, and the petitioner to debunk the
same.
The same is true with respect to the issue of whether Atty.
Alonzo Ancheta was properly authorized to sign the verification
and certification against forum shopping in behalf of
respondents. This could be properly resolved during the trial
together with the substantive issues raised by petitioner.
Considering that the trial court correctly denied petitioner’s
motion for preliminary hearing on its affirmative defenses with
motion to dismiss, there exists no reason to compel Atty.
Ancheta to testify. Hence, no abuse of discretion was
committed by the trial court in quashing the subpoena ad
testificandum issued against Atty. Ancheta.
Grave abuse of discretion implies such capricious and whimsical
exercise of judgment as equivalent to lack of jurisdiction, or, in
other words, where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, and
it must be so patent and gross as to amount to an evasion of
positive duty or to a virtual refusal to perform the duty
enjoined or to act at all in contemplation of law. None of these
was committed by the trial court; hence, the Court of Appeals
correctly dismissed the petition.
WHEREFORE, in view of all the foregoing, the petition for
review on certiorari filed by petitioner is DENIED. The
November 28, 2002 Decision and the February 13, 2003
Resolution of the Court of Appeals in CA-G.R. SP No. 64660
which dismissed the petition for certiorari filed by petitioner
are AFFIRMED.
SO ORDERED.
G.R. No. 180677 February 18, 2013
VICTORIO P. DIAZ, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES AND LEVI STRAUSS [PHILS.],
INC., Respondents.
DECISION
BERSAMIN, J.:
It is the tendency of the allegedly infringing mark to be
confused with the registered trademark that is the gravamen of
the offense of infringement of a registered trademark. The
acquittal of the accused should follow if the allegedly infringing
mark is not likely to cause confusion. Thereby, the evidence of
the State does not satisfy the quantum of proof beyond
reasonable doubt.
Accused Victorio P. Diaz (Diaz) appeals the resolutions
promulgated on July 17, 20071 and November 22,
2007,2whereby the Court of Appeals (CA), respectively,
dismissed his appeal in C.A.-G.R. CR No. 30133 for the belated
filing of the appellant's brief, and denied his motion for
reconsideration. Thereby, the decision rendered on February
13, 2006 in Criminal Case No. 00-0318 and Criminal Case No.
00-0319 by the Regional Trial Court, Branch 255, in Las Pifias
City (RTC) convicting him for two counts of infringement of
trademark were affirmed.3
Antecedents
On February 10, 2000, the Department of Justice filed two
informations in the RTC of Las Piñas City, charging Diaz with
violation of Section 155, in relation to Section 170, of Republic
Act No. 8293, also known as the Intellectual Property Code of
the Philippines (Intellectual Property Code), to wit:
Criminal Case No. 00-0318
That on or about August 28, 1998, and on dates prior thereto,
in Las Pinas City, and within the jurisdiction of this Honorable
Court, the abovenamed accused, with criminal intent to
defraud Levi’s Strauss (Phil.) Inc. (hereinafter referred to as
LEVI’S), did then and there, willfully, unlawfully, feloniously,
knowingly and intentionally engaged in commerce by
reproducing, counterfeiting, copying and colorably imitating
Levi’s registered trademarks or dominant features thereof such
as the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE
PATCH, TWO HORSE LABEL WITH PATTERNED ARCUATE
DESIGN, TAB AND COMPOSITE ARCUATE/TAB/TWO HORSE
PATCH, and in connection thereto, sold, offered for sale,
manufactured, distributed counterfeit patches and jeans,
including other preparatory steps necessary to carry out the
sale of said patches and jeans, which likely caused confusion,
mistake, and /or deceived the general consuming public,
without the consent, permit or authority of the registered
owner, LEVI’S, thus depriving and defrauding the latter of its
right to the exclusive use of its trademarks and legitimate trade,
to the damage and prejudice of LEVI’S.
CONTRARY TO LAW.4
with pattern arcuate, and the composite tab arcuate. LEVI’S
501 has the following registered trademarks, to wit: (1) the
leather patch showing two horses pulling a pair of pants; (2) the
arcuate pattern with the inscription "LEVI STRAUSS & CO;" (3)
the arcuate design that refers to "the two parallel stitching
curving downward that are being sewn on both back pockets of
a Levi’s Jeans;" and (4) the tab or piece of cloth located on the
structural seam of the right back pocket, upper left side. All
these trademarks were registered in the Philippine Patent
Office in the 1970’s, 1980’s and early part of 1990’s.7
easily recognizable because the label "LS Jeans Tailoring," and
the names of the customers were placed inside the pockets,
and each of the jeans had an "LSJT" red tab; that "LS" stood for
"Latest Style;" and that the leather patch on his jeans had two
buffaloes, not two horses.9
Ruling of the RTC
On February 13, 2006, the RTC rendered its decision finding
Diaz guilty as charged, disposing thus:

Criminal Case No. 00-0319
That on or about August 28, 1998, and on dates prior thereto,
in Las Pinas City, and within the jurisdiction of this Honorable
Court, the abovenamed accused, with criminal intent to
defraud Levi’s Strauss (Phil.) Inc. (hereinafter referred to as
LEVI’S), did then and there, willfully, unlawfully, feloniously,
knowingly and intentionally engaged in commerce by
reproducing, counterfeiting, copying and colorably imitating
Levi’s registered trademarks or dominant features thereof such
as the ARCUATE DESIGN, TWO HORSE BRAND, TWO HORSE
PATCH, TWO HORSE LABEL WITH PATTERNED ARCUATE
DESIGN, TAB AND COMPOSITE ARCUATE/TAB/TWO HORSE
PATCH, and in connection thereto, sold, offered for sale,
manufactured, distributed counterfeit patches and jeans,
including other preparatory steps necessary to carry out the
sale of said patches and jeans, which likely caused confusion,
mistake, and /or deceived the general consuming public,
without the consent, permit or authority of the registered
owner, LEVI’S, thus depriving and defrauding the latter of its
right to the exclusive use of its trademarks and legitimate trade,
to the damage and prejudice of LEVI’S.
CONTRARY TO LAW.5
The cases were consolidated for a joint trial. Diaz entered his
pleas of not guilty to each information on June 21, 2000.6
1.
Evidence of the Prosecution
Levi Strauss and Company (Levi’s), a foreign corporation based
in the State of Delaware, United States of America, had been
engaged in the apparel business. It is the owner of trademarks
and designs of Levi’s jeans like LEVI’S 501, the arcuate design,
the two-horse brand, the two-horse patch, the two-horse patch
Levi Strauss Philippines, Inc. (Levi’s Philippines) is a licensee of
WHEREFORE, premises considered, the Court finds accused
Levi’s. After receiving information that Diaz was selling
Victorio P. Diaz, a.k.a. Vic Diaz, GUILTY beyond reasonable
counterfeit LEVI’S 501 jeans in his tailoring shops in Almanza
doubt of twice violating Sec. 155, in relation to Sec. 170, of RA
and Talon, Las Piñas City, Levi’s Philippines hired a private
No. 8293, as alleged in the Informations in Criminal Case Nos.
investigation group to verify the information. Surveillance and
00-0318 & 00-0319, respectively, and hereby sentences him to
the purchase of jeans from the tailoring shops of Diaz
suffer in each of the cases the penalty of imprisonment of TWO
established that the jeans bought from the tailoring shops of
(2) YEARS of prision correcional, as minimum, up to FIVE (5)
Diaz were counterfeit or imitations of LEVI’S 501. Levi’s
YEARS of prision correcional, as maximum, as well as pay a fine
Philippines then sought the assistance of the National Bureau
of ₱50,000.00 for each of the herein cases, with subsidiary
of Investigation (NBI) for purposes of applying for a search
imprisonment in case of insolvency, and to suffer the accessory
warrant against Diaz to be served at his tailoring shops. The
penalties provided for by law.
search warrants were issued in due course. Armed with the
search warrants, NBI agents searched the tailoring shops of
Also, accused Diaz is hereby ordered to pay to the private
Diaz and seized several fake LEVI’S 501 jeans from them. Levi’s
complainant Levi’s Strauss (Phils.), Inc. the following, thus:
Philippines claimed that it did not authorize the making and
selling of the seized jeans; that each of the jeans were mere
imitations of genuine LEVI’S 501 jeans by each of them bearing 1. ₱50,000.00 in exemplary damages; and
the registered trademarks, like the arcuate design, the tab, and
the leather patch; and that the seized jeans could be mistaken 2. ₱222,000.00 as and by way of attorney’s fees.
for original LEVI’S 501 jeans due to the placement of the
arcuate, tab, and two-horse leather patch.8
Costs de officio.
2.
SO ORDERED.10
Evidence of the Defense
Ruling of the CA
On his part, Diaz admitted being the owner of the shops
searched, but he denied any criminal liability. Diaz appealed, but the CA dismissed the appeal on July 17,
2007 on the ground that Diaz had not filed his appellant’s brief
on time despite being granted his requested several extension
Diaz stated that he did not manufacture Levi’s jeans, and that periods.
he used the label "LS Jeans Tailoring" in the jeans that he made
and sold; that the label "LS Jeans Tailoring" was registered with
the Intellectual Property Office; that his shops received clothes Upon denial of his motion for reconsideration, Diaz is now
for sewing or repair; that his shops offered made-to-order before the Court to plead for his acquittal.
jeans, whose styles or designs were done in accordance with
instructions of the customers; that since the time his shops Issue
began operating in 1992, he had received no notice or warning
regarding his operations; that the jeans he produced were
Diaz submits that:
THE COURT OF APPEALS VIOLATED EXISTING LAW AND
JURISPRUDENCE WHEN IT APPLIED RIGIDLY THE RULE ON
TECHNICALITIES AND OVERRIDE SUBSTANTIAL JUSTICE BY
DISMISSING THE APPEAL OF THE PETITIONER FOR LATE FILING
OF APPELLANT’S BRIEF.11
Ruling
The Court first resolves whether the CA properly dismissed the
appeal of Diaz due to the late filing of his appellant’s brief.
Under Section 7, Rule 44 of the Rules of Court, the appellant is
required to file the appellant’s brief in the CA "within forty-five
(45) days from receipt of the notice of the clerk that all the
evidence, oral and documentary, are attached to the record,
seven (7) copies of his legibly typewritten, mimeographed or
printed brief, with proof of service of two (2) copies thereof
upon the appellee." Section 1(e) of Rule 50 of the Rules of
Court grants to the CA the discretion to dismiss an appeal
either motu proprio or on motion of the appellee should the
appellant fail to serve and file the required number of copies of
the appellant’s brief within the time provided by the Rules of
Court.12
The usage of the word may in Section 1(e) of Rule 50 indicates
that the dismissal of the appeal upon failure to file the
appellant’s brief is not mandatory, but discretionary. Verily, the
failure to serve and file the required number of copies of the
appellant’s brief within the time provided by the Rules of
Court does not have the immediate effect of causing the
outright dismissal of the appeal. This means that the discretion
to dismiss the appeal on that basis is lodged in the CA, by virtue
of which the CA may still allow the appeal to proceed despite
the late filing of the appellant’s brief, when the circumstances
so warrant its liberality. In deciding to dismiss the appeal, then,
the CA is bound to exercise its sound discretion upon taking all
the pertinent circumstances into due consideration.
The records reveal that Diaz’s counsel thrice sought an
extension of the period to file the appellant’s brief. The first
time was on March 12, 2007, the request being for an
extension of 30 days to commence on March 11, 2007. The CA
granted his motion under its resolution of March 21, 2007. On
April 10, 2007, the last day of the 30-day extension, the counsel
filed another motion, seeking an additional 15 days. The CA
allowed the counsel until April 25, 2007 to serve and file the
appellant’s brief. On April 25, 2007, the counsel went a third
time to the CA with another request for 15 days. The CA still
granted such third motion for extension, giving the counsel
until May 10, 2007. Notwithstanding the liberality of the CA,
the counsel did not literally comply, filing the appellant’s brief
only on May 28, 2007, which was the 18th day beyond the third
extension period granted.
Under the circumstances, the failure to file the appellant’s brief
on time rightly deserved the outright rejection of the appeal.
The acts of his counsel bound Diaz like any other client. It was,
of course, only the counsel who was well aware that the Rules
of Court fixed the periods to file pleadings and equally
significant papers like the appellant’s brief with the lofty
objective of avoiding delays in the administration of justice.
Yet, we have before us an appeal in two criminal cases in which
the appellant lost his chance to be heard by the CA on appeal
because of the failure of his counsel to serve and file the
appellant’s brief on time despite the grant of several extensions
the counsel requested. Diaz was convicted and sentenced to
suffer two indeterminate sentences that would require him to
spend time in detention for each conviction lasting two years,
as minimum, to five years, as maximum, and to pay fines
totaling ₱100,000.00 (with subsidiary imprisonment in case of
his insolvency). His personal liberty is now no less at stake. This
reality impels us to look beyond the technicality and delve into
the merits of the case to see for ourselves if the appeal, had it
not been dismissed, would have been worth the time of the CA
to pass upon. After all, his appellant’s brief had been
meanwhile submitted to the CA. While delving into the merits
of the case, we have uncovered a weakness in the evidence of
guilt that cannot be simply ignored and glossed over if we were
to be true to our oaths to do justice to everyone.
We feel that despite the CA being probably right in dismissing
the excuses of oversight and excusable negligence tendered by
Diaz’s counsel to justify the belated filing of the appellant’s
brief as unworthy of serious consideration, Diaz should not be
made to suffer the dire consequence. Any accused in his shoes,
with his personal liberty as well as his personal fortune at stake,
expectedly but innocently put his fullest trust in his counsel’s
abilities and professionalism in the handling of his appeal. He
thereby delivered his fate to the hands of his counsel. Whether
or not those hands were efficient or trained enough for the job
of handling the appeal was a learning that he would get only in
the end. Likelier than not, he was probably even unaware of
the three times that his counsel had requested the CA for
extensions. If he were now to be left to his unwanted fate, he
would surely suffer despite his innocence. How costly a learning
it would be for him! That is where the Court comes in. It is most
important for us as dispensers of justice not to allow the
inadvertence or incompetence of any counsel to result in the
outright deprivation of an appellant’s right to life, liberty or
property.13
We do not mind if this softening of judicial attitudes be
mislabeled as excessive leniency. With so much on the line, the
people whose futures hang in a balance should not be left to
suffer from the incompetence, mindlessness or lack of
professionalism of any member of the Law Profession. They
reasonably expect a just result in every litigation. The courts
must give them that just result. That assurance is the people’s
birthright. Thus, we have to undo Diaz’s dire fate.
Even as we now set aside the CA’s rejection of the appeal of
Diaz, we will not remand the records to the CA for its review. In
an appeal of criminal convictions, the records are laid open for
review. To avoid further delays, therefore, we take it upon
ourselves to review the records and resolve the issue of guilt,
considering that the records are already before us.
Section 155 of R.A. No. 8293 defines the acts that constitute
infringement of trademark, viz:
Remedies; Infringement. — Any person who shall, without the
consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark or the same container
or a dominant feature thereof in connection with the sale,
offering for sale, distribution, advertising of any goods or
services including other preparatory steps necessary to carry
out the sale of any goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake,
or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a
registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in
connection with the sale, offering for sale, distribution, or
advertising of goods or services on or in connection with which
such use is likely to cause confusion, or to cause mistake, or to
deceive, shall be liable in a civil action for infringement by the
registrant for the remedies hereinafter set forth: Provided, That
the infringement takes place at the moment any of the acts
stated in Subsection 155.1 or this subsection are committed
regardless of whether there is actual sale of goods or services
using the infringing material.
The elements of the offense of trademark infringement under
the Intellectual Property Code are, therefore, the following:
1. The trademark being infringed is registered in the
Intellectual Property Office;
2. The trademark is reproduced, counterfeited,
copied, or colorably imitated by the infringer;
3. The infringing mark is used in connection with the
sale, offering for sale, or advertising of any goods,
business or services; or the infringing mark is applied
to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used
upon or in connection with such goods, business or
services;
4. The use or application of the infringing mark is
likely to cause confusion or mistake or to deceive
purchasers or others as to the goods or services
themselves or as to the source or origin of such goods
or services or the identity of such business; and
5. The use or application of the infringing mark is
without the consent of the trademark owner or the
assignee thereof.14
As can be seen, the likelihood of confusion is the gravamen of
the offense of trademark infringement.15 There are two tests to
determine likelihood of confusion, namely: the dominancy test,
and the holistic test. The contrasting concept of these tests was
explained in Societes Des Produits Nestle, S.A. v. Dy, Jr., thus:
x x x. The dominancy test focuses on the similarity of the main,
prevalent or essential features of the competing trademarks
that might cause confusion. Infringement takes place when the
competing trademark contains the essential features of
another. Imitation or an effort to imitate is unnecessary. The
question is whether the use of the marks is likely to cause
confusion or deceive purchasers.
The holistic test considers the entirety of the marks, including
labels and packaging, in determining confusing similarity. The
focus is not only on the predominant words but also on the
other features appearing on the labels.16
As to what test should be applied in a trademark infringement
case, we said in McDonald’s Corporation v. Macjoy Fastfood
Corporation17 that:
In trademark cases, particularly in ascertaining whether one
trademark is confusingly similar to another, no set rules can be
deduced because each case must be decided on its merits. In
such cases, even more than in any other litigation, precedent
must be studied in the light of the facts of the particular case.
That is the reason why in trademark cases, jurisprudential
precedents should be applied only to a case if they are
specifically in point.
The case of Emerald Garment Manufacturing Corporation v.
Court of Appeals,18 which involved an alleged trademark
infringement of jeans products, is worth referring to. There,
H.D. Lee Co., Inc. (H.D. Lee), a corporation based in the United
States of America, claimed that Emerald Garment’s trademark
of "STYLISTIC MR. LEE" that it used on its jeans products was
confusingly similar to the "LEE" trademark that H.D. Lee used
on its own jeans products. Applying the holistic test, the Court
ruled that there was no infringement.
The holistic test is applicable here considering that the herein
criminal cases also involved trademark infringement in relation
to jeans products. Accordingly, the jeans trademarks of Levi’s
Philippines and Diaz must be considered as a whole in
determining the likelihood of confusion between them.
The maong pants or jeans made and sold by Levi’s Philippines,
which included LEVI’S 501, were very popular in the Philippines.
The consuming public knew that the original LEVI’S 501 jeans
were under a foreign brand and quite expensive. Such jeans
could be purchased only in malls or boutiques as ready-to-wear
items, and were not available in tailoring shops like those of
Diaz’s as well as not acquired on a "made-to-order" basis.
Under the circumstances, the consuming public could easily
discern if the jeans were original or fake LEVI’S 501, or were
manufactured by other brands of jeans. Confusion and
deception were remote, for, as the Court has observed
in Emerald Garments:
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, soy sauce 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, 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 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.19
Diaz used the trademark "LS JEANS TAILORING" for the jeans he
produced and sold in his tailoring shops. His trademark was
visually and aurally different from the trademark "LEVI
STRAUSS & CO" appearing on the patch of original jeans under
the trademark LEVI’S 501. The word "LS" could not be confused
as a derivative from "LEVI STRAUSS" by virtue of the "LS" being
connected to the word "TAILORING", thereby openly suggesting
that the jeans bearing the trademark "LS JEANS TAILORING"
came or were bought from the tailoring shops of Diaz, not from
the malls or boutiques selling original LEVI’S 501 jeans to the
consuming public.
There were other remarkable differences between the two
trademarks that the consuming public would easily perceive.
Diaz aptly noted such differences, as follows:
The prosecution also alleged that the accused copied the "two
horse design" of the petitioner-private complainant but the
evidence will show that there was no such design in the seized
jeans. Instead, what is shown is "buffalo design." Again, a horse
and a buffalo are two different animals which an ordinary
customer can easily distinguish. x x x.
The prosecution further alleged that the red tab was copied by
the accused. However, evidence will show that the red tab used
by the private complainant indicates the word "LEVI’S" while
that of the accused indicates the letters "LSJT" which means LS
JEANS TAILORING. Again, even an ordinary customer can
distinguish the word LEVI’S from the letters LSJT.
xxxx
In terms of classes of customers and channels of trade, the
jeans products of the private complainant and the accused
cater to different classes of customers and flow through the
different channels of trade. The customers of the private
complainant are mall goers belonging to class A and B market
group – while that of the accused are those who belong to class
D and E market who can only afford Php 300 for a pair of made-
toorder pants.20 x x x.
Moreover, based on the certificate issued by the Intellectual
Property Office, "LS JEANS TAILORING" was a registered
trademark of Diaz. He had registered his trademark prior to the
filing of the present cases.21 The Intellectual Property Office
would certainly not have allowed the registration had Diaz’s
trademark been confusingly similar with the registered
trademark for LEVI’S 501 jeans.
Given the foregoing, it should be plain that there was no
likelihood of confusion between the trademarks involved.
Thereby, the evidence of guilt did not satisfy the quantum of
proof required for a criminal conviction, which is proof beyond
reasonable doubt. According to Section 2, Rule 133 of the Rules
of Court, proof beyond a reasonable doubt does not mean such
a degree of proof as, excluding possibility of error, produces
absolute certainty. Moral certainty only is required, or that
degree of proof which produces conviction in an unprejudiced
mind. Consequently, Diaz should be acquitted of the charges.
WHEREFORE, the Court ACQUITS petitioner VICTORIO P.
DIAZ of the crimes of infringement of trademark charged in
Criminal Case No. 00-0318 and Criminal Case No. 00-0319 for
failure of the State to establish his guilt by proof beyond
reasonable doubt.
No pronouncement on costs of suit.
SO ORDERED.
G.R. No. 180073 November 25, 2009
PROSOURCE INTERNATIONAL, INC., Petitioner,
vs.
HORPHAG RESEARCH MANAGEMENT SA, Respondent.
Inulit na case
G.R. No. 190065 August 16, 2010
DERMALINE, INC., Petitioner,
vs.
MYRA PHARMACEUTICALS, INC. Respondent.
DECISION
NACHURA, J.:
This is a petition for review on certiorari1 seeking to reverse and
set aside the Decision dated August 7, 20092 and the Resolution
dated October 28, 20093 of the Court of Appeals (CA) in CA-G.R.
SP No. 108627.
The antecedent facts and proceedings—
On October 21, 2006, petitioner Dermaline, Inc. (Dermaline)
filed before the Intellectual Property Office (IPO) an application
for registration of the trademark "DERMALINE DERMALINE,
INC." (Application No. 4-2006011536). The application was
published for Opposition in the IPO E-Gazette on March 9,
2007.
On May 8, 2007, respondent Myra Pharmaceuticals, Inc. (Myra)
filed a Verified Opposition4 alleging that the trademark sought
to be registered by Dermaline so resembles its trademark
"DERMALIN" and will likely cause confusion, mistake and
deception to the purchasing public. Myra said that the
registration of Dermaline’s trademark will violate Section
1235 of Republic Act (R.A.) No. 8293 (Intellectual Property Code
of the Philippines). It further alleged that Dermaline’s use and
registration of its applied trademark will diminish the
distinctiveness and dilute the goodwill of Myra’s "DERMALIN,"
registered with the IPO way back July 8, 1986, renewed for ten
(10) years on July 8, 2006. Myra has been extensively using
"DERMALIN" commercially since October 31, 1977, and said
mark is still valid and subsisting.
Myra claimed that, despite Dermaline’s attempt to differentiate
its applied mark, the dominant feature is the term
"DERMALINE," which is practically identical with its own
"DERMALIN," more particularly that the first eight (8) letters of
the marks are identical, and that notwithstanding the
additional letter "E" by Dermaline, the pronunciation for both
marks are identical. Further, both marks have three (3) syllables
each, with each syllable identical in sound and appearance,
even if the last syllable of "DERMALINE" consisted of four (4)
letters while "DERMALIN" consisted only of three (3).
Myra also pointed out that Dermaline applied for the same
mark "DERMALINE" on June 3, 2003 and was already refused
registration by the IPO. By filing this new application for
registration, Dermaline appears to have engaged in a fishing
expedition for the approval of its mark. Myra argued that its
intellectual property right over its trademark is protected under
Section 1476 of R.A. No. 8293.
Myra asserted that the mark "DERMALINE DERMALINE, INC." is
aurally similar to its own mark such that the registration and
use of Dermaline’s applied mark will enable it to obtain benefit
from Myra’s reputation, goodwill and advertising and will lead
the public into believing that Dermaline is, in any way,
connected to Myra. Myra added that even if the subject
application was under Classification 447 for various skin
treatments, it could still be connected to the "DERMALIN" mark
under Classification 58 for pharmaceutical products, since
ultimately these goods are very closely related.
In its Verified Answer,9 Dermaline countered that a simple
comparison of the trademark "DERMALINE DERMALINE, INC."
vis-à-vis Myra’s "DERMALIN" trademark would show that they
have entirely different features and distinctive presentation,
thus it cannot result in confusion, mistake or deception on the
part of the purchasing public. Dermaline contended that, in
determining if the subject trademarks are confusingly similar, a
comparison of the words is not the only determinant, but their
entirety must be considered in relation to the goods to which
they are attached, including the other features appearing in
both labels. It claimed that there were glaring and striking
dissimilarities between the two trademarks, such that its
trademark "DERMALINE DERMALINE, INC." speaks for itself (Res
ipsa loquitur). Dermaline further argued that there could not be
any relation between its trademark for health and beauty
services from Myra’s trademark classified under medicinal
goods against skin disorders.
The parties failed to settle amicably. Consequently, the
preliminary conference was terminated and they were directed
to file their respective position papers.10
On April 10, 2008, the IPO-Bureau of Legal Affairs rendered
Decision No. 2008-7011 sustaining Myra’s opposition pursuant
to Section 123.1(d) of R.A. No. 8293. It disposed—
WHEREFORE, the Verified Opposition is, as it is, hereby
SUSTAINED. Consequently, Application Serial No. 4-2006-
011536 for the mark ‘DERMALINE, DERMALINE, INC. Stylized
Wordmark’ for Dermaline, Inc. under class 44 covering the
aforementioned goods filed on 21 October 2006, is as it is
hereby, REJECTED.
Let the file wrapper of ‘DERMALINE, DERMALINE, INC. Stylized
Wordmark’ subject matter of this case be forwarded to the
Bureau of Trademarks (BOT) for appropriate action in
accordance with this Decision.
SO ORDERED.12
Aggrieved, Dermaline filed a motion for reconsideration, but it
was denied under Resolution No. 2009-12(D)13 dated January
16, 2009.
Expectedly, Dermaline appealed to the Office of the Director
General of the IPO. However, in an Order14 dated April 17,
2009, the appeal was dismissed for being filed out of time.
Undaunted, Dermaline appealed to the CA, but it affirmed and
upheld the Order dated April 17, 2009 and the rejection of
Dermaline’s application for registration of trademark. The CA
likewise denied Dermaline’s motion for reconsideration; hence,
this petition raising the issue of whether the CA erred in
upholding the IPO’s rejection of Dermaline’s application for
registration of trademark.
The petition is without merit.
A trademark is any distinctive word, name, symbol, emblem,
sign, or device, or any combination thereof, adopted and used
by a manufacturer or merchant on his goods to identify and
distinguish them from those manufactured, sold, or dealt by
others.15 Inarguably, it is an intellectual property deserving
protection by law. In trademark controversies, each case must
be scrutinized according to its peculiar circumstances, such that
jurisprudential precedents should only be made to apply if they
are specifically in point.16
As Myra correctly posits, as a registered trademark owner, it
has the right under Section 147 of R.A. No. 8293 to prevent
third parties from using a trademark, or similar signs or
containers for goods or services, without its consent, identical
or similar to its registered trademark, where such use would
result in a likelihood of confusion.
In determining likelihood of confusion, case law has developed
two (2) tests, the Dominancy Test and the Holistic or Totality
Test.
The Dominancy Test focuses on the similarity of the prevalent
features of the competing trademarks that might cause
confusion or deception.17 It is applied when the trademark
sought to be registered contains the main, essential and
dominant features of the earlier registered trademark, and
confusion or deception is likely to result. Duplication or
imitation is not even required; neither is it necessary that the
label of the applied mark for registration should suggest an
effort to imitate. The important issue is whether the use of the
marks involved would likely cause confusion or mistake in the
mind of or deceive the ordinary purchaser, or one who is
accustomed to buy, and therefore to some extent familiar with,
the goods in question.18 Given greater consideration are the
aural and visual impressions created by the marks in the public
mind, giving little weight to factors like prices, quality, sales
outlets, and market segments.19 The test of dominancy is now
explicitly incorporated into law in Section 155.1 of R.A. No.
8293 which provides—
155.1. Use in commerce any reproduction, counterfeit, copy, or
colorable imitation of a registered mark or the same container
or a dominant feature thereof in connection with the sale,
offering for sale, distribution, advertising of any goods or
services including other preparatory steps necessary to carry
out the sale of any goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake,
or to deceive; (emphasis supplied)
On the other hand, the Holistic Test entails a consideration of
the entirety of the marks as applied to the products, including
labels and packaging, in determining confusing similarity. The
scrutinizing eye of the observer must focus not only on the
predominant words but also on the other features appearing in
both labels so that a conclusion may be drawn as to whether
one is confusingly similar to the other.20
Relative to the question on confusion of marks and trade
names, jurisprudence has noted two (2) types of confusion, viz:
(1) confusion of goods (product confusion), where the
ordinarily prudent purchaser would be induced to purchase one
product in the belief that he was purchasing the other; and (2)
confusion of business (source or origin confusion), where,
although the goods of the parties are different, the product, the
mark of which registration is applied for by one party, is such as
might reasonably be assumed to originate with the registrant of
an earlier product, and the public would then be deceived
either into that belief or into the belief that there is some
connection between the two parties, though inexistent.21
In rejecting the application of Dermaline for the registration of
its mark "DERMALINE DERMALINE, INC.," the IPO applied the
Dominancy Test. It declared that both confusion of goods and
service and confusion of business or of origin were apparent in
both trademarks. It also noted that, per Bureau Decision No.
2007-179 dated December 4, 2007, it already sustained the
opposition of Myra involving the trademark "DERMALINE" of
Dermaline under Classification 5. The IPO also upheld Myra’s
right under Section 138 of R.A. No. 8293, which provides that a
certification of registration of a mark is prima facie evidence of
the validity of the registration, the registrant’s ownership of the
mark, and of the registrant’s exclusive right to use the same in
connection with the goods and those that are related thereto
specified in the certificate.
We agree with the findings of the IPO. As correctly applied by
the IPO in this case, while there are no set rules that can be
deduced as what constitutes a dominant feature with respect
to trademarks applied for registration; usually, what are taken
into account are signs, color, design, peculiar shape or name, or
some special, easily remembered earmarks of the brand that
readily attracts and catches the attention of the ordinary
consumer.22
Dermaline’s insistence that its applied trademark "DERMALINE
DERMALINE, INC." had differences "too striking to be mistaken"
from Myra’s "DERMALIN" cannot, therefore, be sustained.
While it is true that the two marks are presented differently –
Dermaline’s mark is written with the first "DERMALINE" in
script going diagonally upwards from left to right, with an upper
case "D" followed by the rest of the letters in lower case, and
the portion "DERMALINE, INC." is written in upper case letters,
below and smaller than the long-hand portion; while Myra’s
mark "DERMALIN" is written in an upright font, with a capital
"D" and followed by lower case letters – the likelihood of
confusion is still apparent. This is because they are almost
spelled in the same way, except for Dermaline’s mark which
ends with the letter "E," and they are pronounced practically in
the same manner in three (3) syllables, with the ending letter
"E" in Dermaline’s mark pronounced silently. Thus, when an
ordinary purchaser, for example, hears an advertisement of
Dermaline’s applied trademark over the radio, chances are he
will associate it with Myra’s registered mark.
Further, Dermaline’s stance that its product belongs to a
separate and different classification from Myra’s products with
the registered trademark does not eradicate the possibility of
mistake on the part of the purchasing public to associate the
former with the latter, especially considering that both
classifications pertain to treatments for the skin.1avvphi1
Indeed, the registered trademark owner may use its mark on
the same or similar products, in different segments of the
market, and at different price levels depending on variations of
the products for specific segments of the market. The Court is
cognizant that the registered trademark owner enjoys
protection in product and market areas that are the normal
potential expansion of his business. Thus, we have held –
Modern law recognizes that the protection to which the owner
of a trademark is entitled is not limited to guarding his goods or
business from actual market competition with identical or
similar products of the parties, but extends to all cases in which
the use by a junior appropriator of a trade-mark or trade-name
is likely to lead to a confusion of source, as where prospective
purchasers would be misled into thinking that the complaining
party has extended his business into the field (see 148 ALR 56
et seq; 53 Am Jur. 576) or is in any way connected with the
activities of the infringer; or when it forestalls the normal
potential expansion of his business (v. 148 ALR 77, 84; 52 Am.
Jur. 576, 577).23 (Emphasis supplied)
Thus, the public may mistakenly think that Dermaline is
connected to or associated with Myra, such that, considering
the current proliferation of health and beauty products in the
market, the purchasers would likely be misled that Myra has
already expanded its business through Dermaline from merely
carrying pharmaceutical topical applications for the skin to
health and beauty services.
Verily, when one applies for the registration of a trademark or
label which is almost the same or that very closely resembles
one already used and registered by another, the application
should be rejected and dismissed outright, even without any
opposition on the part of the owner and user of a previously
registered label or trademark. This is intended not only to avoid
confusion on the part of the public, but also to protect an
already used and registered trademark and an established
goodwill.24
Besides, the issue on protection of intellectual property, such as
trademarks, is factual in nature. The findings of the IPO, upheld
on appeal by the same office, and further sustained by the CA,
bear great weight and deserves respect from this Court.
Moreover, the decision of the IPO had already attained finality
when Dermaline failed to timely file its appeal with the IPO
Office of the Director General.
WHEREFORE, the petition is DENIED. The Decision dated August
7, 2009 and the Resolution dated October 28, 2009 of the Court
of Appeals in CA-G.R. SP No. 108627 are AFFIRMED. Costs
against petitioner.
SO ORDERED.
G.R. No. 138900 September 20, 2005
LEVI STRAUSS & CO., & LEVI STRAUSS (PHILS.),
INC., Petitioners,
vs.
CLINTON APPARELLE, INC., Respondent.
DECISION
Tinga, J.:
Before us is a petition for review on certiorari1 under Rule 45 of
the 1997 Rules of Civil Procedure filed by Levi Strauss & Co. (LS
& Co.) and Levi Strauss (Philippines), Inc. (LSPI) assailing the
Court of Appeals’ Decision2 and Resolution3 respectively dated
21 December 1998 and 10 May 1999. The
questioned Decision granted respondent’s prayer for a writ of
preliminary injunction in its Petition4 and set aside the trial
court’s orders dated 15 May 19985 and 4 June 19986 which
respectively granted petitioners’ prayer for the issuance of a
temporary restraining order (TRO) and application for the
issuance of a writ of preliminary injunction.
This case stemmed from the Complaint7 for Trademark
Infringement, Injunction and Damages filed by petitioners LS &
Co. and LSPI against respondent Clinton Apparelle,
Inc.* (Clinton Aparelle) together with an alternative defendant,
Olympian Garments, Inc. (Olympian Garments), before the
Regional Trial Court of Quezon City, Branch
90.8 The Complaint was docketed as Civil Case No. Q-98-34252,
entitled "Levi Strauss & Co. and Levi Strauss (Phils.), Inc. v.
Clinton Aparelle, Inc. and/or Olympian Garments, Inc."
The Complaint alleged that LS & Co., a foreign corporation duly
organized and existing under the laws of the State of Delaware,
U.S.A., and engaged in the apparel business, is the owner by
prior adoption and use since 1986 of the internationally famous
"Dockers and Design" trademark. This ownership is evidenced
by its valid and existing registrations in various member
countries of the Paris Convention. In the Philippines, it has a
Certificate of Registration No. 46619 in the Principal Register
for use of said trademark on pants, shirts, blouses, skirts,
shorts, sweatshirts and jackets under Class 25.9
The "Dockers and Design" trademark was first used in the
Philippines in or about May 1988, by LSPI, a domestic
corporation engaged in the manufacture, sale and distribution
of various products bearing trademarks owned by LS & Co. To
date, LSPI continues to manufacture and sell Dockers Pants
with the "Dockers and Design" trademark.10
LS & Co. and LSPI further alleged that they discovered the
presence in the local market of jeans under the brand name
"Paddocks" using a device which is substantially, if not exactly,
similar to the "Dockers and Design" trademark owned by and
registered in the name of LS & Co., without its consent. Based
on their information and belief, they added, Clinton Apparelle
manufactured and continues to manufacture such "Paddocks"
jeans and other apparel.
However, since LS & Co. and LSPI are unsure if both, or just one
of impleaded defendants are behind the manufacture and sale
of the "Paddocks" jeans complained of, they brought this suit
under Section 13, Rule 311 of the 1997 Rules of Civil
Procedure.12
The Complaint contained a prayer that reads as follows:
1. That upon the filing of this complaint, a temporary
restraining order be immediately issued restraining defendants,
their officers, employees, agents, representatives, dealers,
retailers or assigns from committing the acts herein complained
of, and, specifically, for the defendants, their officers,
employees, agents, representatives, dealers and retailers or
assigns, to cease and desist from manufacturing, distributing,
selling, offering for sale, advertising, or otherwise using denims,
jeans or pants with the design herein complained of as
substantially, if not exactly similar, to plaintiffs’ "Dockers and
Design" trademark.
2. That after notice and hearing, and pending trial on the
merits, a writ of preliminary injunction be issued enjoining
defendants, their officers, employees, agents, dealers, retailers,
or assigns from manufacturing, distributing, selling, offering for
sale, advertising, jeans the design herein complained of as
substantially, if not exactly similar, to plaintiffs’ "Dockers and
Design" trademark.
3. That after trial on the merits, judgment be rendered as
follows:
a. Affirming and making permanent the writ of preliminary
injunction;
b. Ordering that all infringing jeans in the possession of either
or both defendants as the evidence may warrant, their officers,
employees, agents, retailers, dealers or assigns, be delivered to
the Honorable Court of plaintiffs, and be accordingly
destroyed;13
Acting on the prayer for the issuance of a TRO, the trial court
issued an Order14 setting it for hearing on 5 May 1998. On said
date, as respondent failed to appear despite notice and the
other defendant, Olympian Garments, had yet to be notified,
the hearing was re-scheduled on 14 May 1998.15
On 14 May 1998, neither Clinton Apparelle nor Olympian
Garments appeared. Clinton Apparelle claimed that it was not
notified of such hearing. Only Olympian Garments allegedly had
been issued with summons. Despite the absence of the
defendants, the hearing on the application for the issuance of a
TRO continued.16
The following day, the trial court issued an Order17 granting the
TRO applied for, the pertinent portions of which state:
…Considering the absence of counsel/s for the defendant/s
during the summary hearing scheduled on May 5, 1998 and
also during the re-scheduled summary hearing held on May 14,
1998 set for the purpose of determining whether or not a
Temporary Restraining Order shall be issued, this Court allowed
the counsel for the plaintiffs to present on May 14, 1998 their
arguments/evidences in support of their application. After
hearing the arguments presented by the counsel for the
plaintiffs during the summary hearing, this Court is of the
considered and humble view that grave injustice and
irreparable injury to the plaintiffs would arise before the matter
of whether or not the application for the issuance of a Writ of
Preliminary Injunction can be heard, and that, in the interest of
justice, and in the meantime, a Temporary Restraining Order be
issued.
WHEREFORE, let this Temporary Restraining Order be issued
restraining the defendants, their officers, employees, agents,
representatives, dealers, retailers or assigns from committing
the acts complained of in the verified Complaint, and
specifically, for the defendants, their officers, employees,
agents, representatives, dealers and retailers or assigns, to
cease and desist from manufacturing, distributing, selling,
offering for sale, advertising or otherwise using denims, jeans
or pants with the design complained of in the verified
Complaint as substantially, if not exactly similar, to plaintiffs’
"Dockers and Design" trademark; until after the
application/prayer for the issuance of a Writ of Preliminary
Injunction is heard/resolved, or until further orders from this
Court.
The hearing on the application for the issuance of a Writ of
Preliminary Injunction as embodied in the verified Complaint is
set on May 26, 1998 (Tuesday) at 2:00 P.M. which setting is
intransferable in character considering that the lifetime of this
Temporary Restraining Order is twenty (20) days from date
hereof.18
On 4 June 1998, the trial court issued another Order19 granting
the writ of preliminary injunction, to wit:
ORDER
This resolves the plaintiffs’ application or prayer for the
issuance of a writ of preliminary injunction as embodied in the
verified complaint in this case. Parenthetically, this Court earlier
issued a temporary restraining order. (see Order dated May 15,
1998; see also Order dated May 26, 1998)
After a careful perusal of the contents of the pleadings and
documents on record insofar as they are pertinent to the issue
under consideration, this Court finds that at this point in time,
the plaintiffs appear to be entitled to the relief prayed for and
this Court is of the considered belief and humble view that,
without necessarily delving on the merits, the paramount
interest of justice will be better served if the status quo shall be
maintained and that an injunction bond of ₱2,500,000.00
appears to be in order. (see Sections 3 and 4, Rule 58, 1997
Rules of Civil Procedure)
IN VIEW OF THE FOREGOING, the plaintiffs’ prayer for the
issuance of a writ of preliminary injunction is GRANTED.
Accordingly, upon the plaintiffs’ filing, within ten (10) days from
their receipt hereof, an injunction bond of ₱2,500,000.00
executed to the defendants to the effect that the plaintiffs will
pay all damages the defendants may sustain by reason of this
injunction in case the Court should finally decide that the
plaintiffs are not entitled thereto, let a writ of preliminary
injunction issue enjoining or restraining the commission of the
acts complained of in the verified Complaint in this case, and
specifically, for the defendants, their officers, employees,
agents, representatives, dealers and retailers or assigns or
persons acting in their behalf to cease and desist from
manufacturing, distributing, selling, offering for sale,
advertising, or otherwise using, denims, jeans or pants with the
design complained of in the verified Complaint in this case,
which is substantially, if not exactly, similar to plaintiffs’
"DOCKERS and DESIGN" trademark or logo as covered by the
Bureau of Patents, Trademarks and Technology Transfer
Certificate of Registration No. 46619, until after this case shall
have been decided on the merits and/or until further orders
from this Court.20
The evidence considered by the trial court in granting injunctive
relief were as follows: (1) a certified true copy of the certificate
of trademark registration for "Dockers and Design"; (2) a pair of
DOCKERS pants bearing the "Dockers and Design" trademark;
(3) a pair of "Paddocks" pants bearing respondent’s assailed
logo; (4) the Trends MBL Survey Report purportedly proving
that there was confusing similarity between two marks; (5) the
affidavit of one Bernabe Alajar which recounted petitioners’
prior adoption, use and registration of the "Dockers and
Design" trademark; and (6) the affidavit of one Mercedes Abad
of Trends MBL, Inc. which detailed the methodology and
procedure used in their survey and the results thereof.21
Clinton Apparelle thereafter filed a Motion to Dismiss22 and
a Motion for Reconsideration23 of the Order granting the writ of
preliminary injunction. Meantime, the trial court issued
an Order24 approving the bond filed by petitioners.
On 22 June 1998, the trial court required25 the parties to file
their "respective citation of authorities/
jurisprudence/Supreme Court decisions" on whether or not the
trial court may issue the writ of preliminary injunction pending
the resolution of the Motion for Reconsideration and
the Motion to Dismiss filed by respondent.
On 2 October 1998, the trial court denied Clinton
Apparelle’s Motion to Dismiss and Motion for
Reconsideration in an Omnibus Order,26 the pertinent portions
of which provide:
After carefully going over the contents of the pleadings in
relation to pertinent portions of the records, this Court is of the
considered and humble view that:
On the first motion, the arguments raised in the plaintiffs’
aforecited Consolidated Opposition appears to be meritorious.
Be that as it may, this Court would like to emphasize, among
other things, that the complaint states a cause of action as
provided under paragraphs 1 to 18 thereof.
On the second motion, the arguments raised in the plaintiffs’
aforecited Consolidated Opposition likewise appear to be
impressed with merit. Besides, there appears to be no strong
and cogent reason to reconsider and set aside this Court’s
Order dated June 4, 1998 as it has been shown so far that the
trademark or logo of defendants is substantially, if not exactly,
similar to plaintiffs’ "DOCKERS and DESIGN" trademark or logo
as covered by BPTTT Certificate of Registration No. 46619 even
as the BPTTT Certificate of Registration No. 49579 of Clinton
Apparelle, Inc. is only for the mark or word "PADDOCKS" (see
Records, p. 377) In any event, this Court had issued an Order
dated June 18, 1998 for the issuance of the writ of preliminary
injunction after the plaintiffs filed the required bond of
₱2,500,000.00.
IN VIEW OF THE FOREGOING, the aforecited Motion To Dismiss
and Motion For Reconsideration are both DENIED for lack of
merit, and accordingly, this Court’s Order dated June 18, 1998
for the issuance of the writ of preliminary injunction is
REITERATED so the writ of preliminary injunction could be
implemented unless the implementation thereof is restrained
by the Honorable Court of Appeals or Supreme Court.
The writ of preliminary injunction was thereafter issued on 8
October 1998.27
Thus, Clinton Apparelle filed with the Court of Appeals
a Petition28 for certiorari, prohibition and mandamus with
prayer for the issuance of a temporary restraining order and/or
writ of preliminary injunction, assailing the orders of the trial
court dated 15 May 1998, 4 June 1998 and 2 October 1998.
On 20 October 1998, the Court of Appeals issued
a Resolution29 requiring herein petitioners to file their comment
on the Petition and at the same time issued the prayed-for
temporary restraining order.
The appellate court rendered on 21 December 1998 its now
assailed Decision granting Clinton Apparelle’s petition. The
Court of Appeals held that the trial court did not follow the
procedure required by law for the issuance of a temporary
restraining order as Clinton Apparelle was not duly notified of
the date of the summary hearing for its issuance. Thus, the
Court of Appeals ruled that the TRO had been improperly
issued.30
The Court of Appeals also held that the issuance of the writ of
preliminary injunction is questionable. In its opinion, herein
petitioners failed to sufficiently establish its material and
substantial right to have the writ issued. Secondly, the Court of
Appeals observed that the survey presented by petitioners to
support their contentions was commissioned by petitioners.
The Court of Appeals remarked that affidavits taken ex-
parte are generally considered to be inferior to testimony given
in open court. The appellate court also considered that the
injury petitioners have suffered or are currently suffering may
be compensated in terms of monetary consideration, if after
trial, a final judgment shall be rendered in their favor.31
In addition, the Court of Appeals strongly believed that the
implementation of the questioned writ would effectively shut
down respondent’s business, which in its opinion should not be
sanctioned. The Court of Appeals thus set aside the orders of
the trial court dated 15 May 1998 and 4 June 1998, respectively
issuing a temporary restraining order and granting the issuance
of a writ of preliminary injunction.
With the denial of their Motion for
Reconsideration,32 petitioners are now before this Court
seeking a review of the appellate
court’s Decision and Resolution. LS & Co. and LSPI claim that the
Court of Appeals committed serious error in: (1) disregarding
the well-defined limits of the writ of certiorari that questions
on the sufficiency of evidence are not to be resolved in such a
petition; (2) in holding that there was no confusion between
the two marks; (3) in ruling that the erosion of petitioners’
trademark is not protectable by injunction; (4) in ignoring the
procedure previously agreed on by the parties and which was
adopted by the trial court; and (5) in declaring that the
preliminary injunction issued by the trial court will lead to the
closure of respondent’s business.
In its Comment,33 Clinton Apparelle maintains that only
questions of law may be raised in an appeal by certiorari under
Rule 45 of the Rules of Court. It asserts that the question of
whether the Court of Appeals erred in: (1) disregarding the
survey evidence; (2) ruling that there was no confusion
between the two marks; and (c) finding that the erosion of
petitioners’ trademark may not be protected by injunction, are
issues not within the ambit of a petition for review on certiorari
under Rule 45. Clinton Apparelle also contends that the Court
of Appeals acted correctly when it overturned the writ of
preliminary injunction issued by the trial court. It believes that
the issued writ in effect disturbed the status quo and disposed
of the main case without trial.
There is no merit in the petition.
At issue is whether the issuance of the writ of preliminary
injunction by the trial court was proper and whether the Court
of Appeals erred in setting aside the orders of the trial court.
Section 1, Rule 58 of the Rules of Court defines a preliminary
injunction as an order granted at any stage of an action prior to
the judgment or final order requiring a party or a court, agency
or a person to refrain from a particular act or acts. Injunction is
accepted as the strong arm of equity or a transcendent remedy
to be used cautiously as it affects the respective rights of the
parties, and only upon full conviction on the part of the court of
its extreme necessity. An extraordinary remedy, injunction is
designed to preserve or maintain the status quo of things and is
generally availed of to prevent actual or threatened acts until
the merits of the case can be heard.34 It may be resorted to
only by a litigant for the preservation or protection of his rights
or interests and for no other purpose during the pendency of
the principal action.35 It is resorted to only when there is a
pressing necessity to avoid injurious consequences, which
cannot be remedied under any standard compensation. The
resolution of an application for a writ of preliminary injunction
rests upon the existence of an emergency or of a special
recourse before the main case can be heard in due course of
proceedings.36
Section 3, Rule 58, of the Rules of Court enumerates the
grounds for the issuance of a preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. – A
preliminary injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and
the whole or part of such relief consists in restraining the
commission or continuance of the act or acts complained of, or
in requiring the performance of an act or acts, either for a
limited period or perpetually;
(b) That the commission, continuance, or non-performance of
the act or acts complained of during the litigation would
probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening,
or is attempting to do, or is procuring or suffering to be done,
some act or acts probably in violation of the rights of the
applicant respecting the subject of the action or proceeding,
and tending to render the judgment ineffectual.
Under the cited provision, a clear and positive right especially
calling for judicial protection must be shown. Injunction is not a
remedy to protect or enforce contingent, abstract, or future
rights; it will not issue to protect a right not in esse and which
may never arise, or to restrain an act which does not give rise
to a cause of action. There must exist an actual right.37 There
must be a patent showing by the complaint that there exists a
right to be protected and that the acts against which the writ is
to be directed are violative of said right.38
There are generally two kinds of preliminary injunction: (1) a
prohibitory injunction which commands a party to refrain from
doing a particular act; and (2) a mandatory injunction which
commands the performance of some positive act to correct a
wrong in the past.39
The Court of Appeals did not err in reviewing proof adduced by
petitioners to support its application for the issuance of the
writ. While the matter of the issuance of a writ of preliminary
injunction is addressed to the sound discretion of the trial
court, this discretion must be exercised based upon the
grounds and in the manner provided by law. The exercise of
discretion by the trial court in injunctive matters is generally
not interfered with save in cases of manifest abuse.40 And to
determine whether there was abuse of discretion, a scrutiny
must be made of the bases, if any, considered by the trial court
in granting injunctive relief. Be it stressed that injunction is the
strong arm of equity which must be issued with great caution
and deliberation, and only in cases of great injury where there
is no commensurate remedy in damages.41
In the present case, we find that there was scant justification
for the issuance of the writ of preliminary injunction.
Petitioners anchor their legal right to "Dockers and Design"
trademark on the Certificate of Registration issued in their
favor by the Bureau of Patents, Trademarks and Technology
Transfer.* According to Section 138 of Republic Act No.
8293,42 this Certificate of Registration is prima facie evidence of
the validity of the registration, the registrant’s ownership of the
mark and of the exclusive right to use the same in connection
with the goods or services and those that are related thereto
specified in the certificate. Section 147.1 of said law likewise
grants the owner of the registered mark the exclusive right to
prevent all third parties not having the owner’s consent from
using in the course of trade identical or similar signs for goods
or services which are identical or similar to those in respect of
which the trademark is registered if such use results in a
likelihood of confusion.
However, attention should be given to the fact that petitioners’
registered trademark consists of two elements: (1) the word
mark "Dockers" and (2) the wing-shaped design or logo.
Notably, there is only one registration for both features of the
trademark giving the impression that the two should be
considered as a single unit. Clinton Apparelle’s trademark, on
the other hand, uses the "Paddocks" word mark on top of a
logo which according to petitioners is a slavish imitation of the
"Dockers" design. The two trademarks apparently differ in their
word marks ("Dockers" and "Paddocks"), but again according to
petitioners, they employ similar or identical logos. It could thus
be said that respondent only "appropriates" petitioners’ logo
and not the word mark "Dockers"; it uses only a portion of the
registered trademark and not the whole.
Given the single registration of the trademark "Dockers and
Design" and considering that respondent only uses the assailed
device but a different word mark, the right to prevent the latter
from using the challenged "Paddocks" device is far from clear.
Stated otherwise, it is not evident whether the single
registration of the trademark "Dockers and Design" confers on
the owner the right to prevent the use of a fraction thereof in
the course of trade. It is also unclear whether the use without
the owner’s consent of a portion of a trademark registered in
its entirety constitutes material or substantial invasion of the
owner’s right.
It is likewise not settled whether the wing-shaped logo, as
opposed to the word mark, is the dominant or central feature
of petitioners’ trademark—the feature that prevails or is
retained in the minds of the public—an imitation of which
creates the likelihood of deceiving the public and constitutes
trademark infringement.43 In sum, there are vital matters which
have yet and may only be established through a full-blown trial.
From the above discussion, we find that petitioners’ right to
injunctive relief has not been clearly and unmistakably
demonstrated. The right has yet to be determined. Petitioners
also failed to show proof that there is material and substantial
invasion of their right to warrant the issuance of an injunctive
writ. Neither were petitioners able to show any urgent and
permanent necessity for the writ to prevent serious damage.
Petitioners wish to impress upon the Court the urgent necessity
for injunctive relief, urging that the erosion or dilution of their
trademark is protectable. They assert that a trademark owner
does not have to wait until the mark loses its distinctiveness to
obtain injunctive relief, and that the mere use by an infringer of
a registered mark is already actionable even if he has not yet
profited thereby or has damaged the trademark owner.
Trademark dilution is the lessening of the capacity of a famous
mark to identify and distinguish goods or services, regardless of
the presence or absence of: (1) competition between the
owner of the famous mark and other parties; or (2) likelihood
of confusion, mistake or deception. Subject to the principles of
equity, the owner of a famous mark is entitled to an injunction
"against another person’s commercial use in commerce of a
mark or trade name, if such use begins after the mark has
become famous and causes dilution of the distinctive quality of
the mark." This is intended to protect famous marks from
subsequent uses that blur distinctiveness of the mark or tarnish
or disparage it.44
Based on the foregoing, to be eligible for protection from
dilution, there has to be a finding that: (1) the trademark
sought to be protected is famous and distinctive; (2) the use by
respondent of "Paddocks and Design" began after the
petitioners’ mark became famous; and (3) such subsequent use
defames petitioners’ mark. In the case at bar, petitioners have
yet to establish whether "Dockers and Design" has acquired a
strong degree of distinctiveness and whether the other two
elements are present for their cause to fall within the ambit of
the invoked protection. The Trends MBL Survey Report which
petitioners presented in a bid to establish that there was
confusing similarity between two marks is not sufficient proof
of any dilution that the trial court must enjoin.
The Court also finds that the trial court’s order granting the writ
did not adequately detail the reasons for the grant, contrary to
our ruling in University of the Philippines v. Hon. Catungal
Jr., 45 wherein we held that:
The trial court must state its own findings of fact and cite
particular law to justify grant of preliminary injunction. Utmost
care in this regard is demanded.46
The trial court in granting the injunctive relief tersely
ratiocinated that "the plaintiffs appear to be entitled to the
relief prayed for and this Court is of the considered belief and
humble view that, without necessarily delving on the merits,
the paramount interest of justice will be better served if
the status quo shall be maintained." Clearly, this statement falls
short of the requirement laid down by the above-quoted case.
Similarly, in Developers Group of Companies, Inc. v. Court of
Appeals,47 we held that it was "not enough" for the trial court,
in its order granting the writ, to simply say that it appeared
"after hearing that plaintiff is entitled to the relief prayed for."
In addition, we agree with the Court of Appeals in its holding
that the damages the petitioners had suffered or continue to
suffer may be compensated in terms of monetary
consideration. As held in Government Service Insurance System
v. Florendo:48
…a writ of injunction should never have been issued when an
action for damages would adequately compensate the injuries
caused. The very foundation of the jurisdiction to issue the writ
of injunction rests in the probability of irreparable injury,
inadequacy of pecuniary estimation and the prevention of the
multiplicity of suits, and where facts are not shown to bring the
case within these conditions, the relief of injunction should be
refused.49
We also believe that the issued injunctive writ, if allowed,
would dispose of the case on the merits as it would effectively
enjoin the use of the "Paddocks" device without proof that
there is basis for such action. The prevailing rule is that courts
should avoid issuing a writ of preliminary injunction that would
in effect dispose of the main case without trial.50 There would
be a prejudgment of the main case and a reversal of the rule on
the burden of proof since it would assume the proposition
which petitioners are inceptively bound to prove.51
Parenthetically, we find no flaw in the Court of Appeals’
disquisition on the consequences of the issued injunction. An
exercise of caution, we believe that such reflection is necessary
to weigh the alleged entitlement to the writ vis-à-vis its
possible effects. The injunction issued in the instant case is of a
serious nature as it tends to do more than to maintain
the status quo. In fact, the assailed injunction if sustained
would bring about the result desired by petitioners without a
trial on the merits.
Then again, we believe the Court of Appeals overstepped its
authority when it declared that the "alleged similarity as to the
two logos is hardly confusing to the public." The only issue
brought before the Court of Appeals through
respondent’s Petition under Rule 65 of the Rules of Court
involved the grave abuse of discretion allegedly committed by
the trial court in granting the TRO and the writ of preliminary
injunction. The appellate court in making such a statement
went beyond that issue and touched on the merits of the
infringement case, which remains to be decided by the trial
court. In our view, it was premature for the Court of Appeals to
declare that there is no confusion between the two devices or
logos. That matter remains to be decided on by the trial court.
Finally, we have no contention against the procedure adopted
by the trial court in resolving the application for an injunctive
writ and we believe that respondent was accorded due process.
Due process, in essence, is simply an opportunity to be heard.
And in applications for preliminary injunction, the requirement
of hearing and prior notice before injunction may issue has
been relaxed to the point that not all petitions for preliminary
injunction must undergo a trial-type hearing, it being a
hornbook doctrine that a formal or trial-type hearing is not at
all times and in all instances essential to due process. Due
process simply means giving every contending party the
opportunity to be heard and the court to consider every piece
of evidence presented in their favor. Accordingly, this Court has
in the case of Co v. Calimag, Jr.,52 rejected a claim of denial of
due process where such claimant was given the opportunity to
be heard, having submitted his counter-affidavit and
memorandum in support of his position.53
After a careful consideration of the facts and arguments of the
parties, the Court finds that petitioners did not adequately
prove their entitlement to the injunctive writ. In the absence of
proof of a legal right and the injury sustained by the applicant,
an order of the trial court granting the issuance of an injunctive
writ will be set aside for having been issued with grave abuse of
discretion.54 Conformably, the Court of Appeals was correct in
setting aside the assailed orders of the trial court.
WHEREFORE, the instant petition is DENIED. The Decision of the
Court of Appeals dated 21 December 1998 and
its Resolution dated 10 May 1999 are AFFIRMED. Costs against
petitioners.
SO ORDERED.
G.R. No. 206779, April 20, 2016
 LEVI STRAUSS & CO., Petitioner, v. ATTY. RICARDO R.
BLANCAFLOR, IN HIS OFFICIAL CAPACITY AS THE DIRECTOR
GENERAL OF THE INTELLECTUAL PROPERTY
OFFICE, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari1 filed by the
petitioner Levi Strauss & Co. (Levi's) assailing the August 13,
20122 and April 17, 20133 resolutions of the Court of Appeals
(CA) in CA-G.R. SP No. 123957.
THE FACTS
Levi's is a corporation registered under the laws of the State of
Delaware, United States of America.4
On October 11, 1999, Levi's filed an application5 before the
Intellectual Property Office (IPO) to register the mark TAB
DEVICE covering various goods.6
The TAB DEVICE trademark is described as a small marker or
tab of textile material, appearing on and affixed permanently to
the garment's exterior and is visible while the garment is worn.7
On February 17, 2006, the trademark examiner rejected8 Levi's
trademark application because there is nothing in the subject
mark that serves to distinguish Levi's goods; hence, the tab
itself does not function as a trademark.9 The trademark
examiner also stated that Levi's cannot exclusively appropriate
the tab's use because a tab of textile is customarily used on the
products covered by the trademark application.10
On July 5, 2006, Levi's appealed the examiner's rejection of the
trademark application to the IPO Director of Trademarks
(Director).11 The Director issued a decision12 that affirmed the
trademark examiner's findings. On August 22, 2007, Levi's filed
a motion for reconsideration13 of the Director's decision, which
the Director denied14 for "lack of merit."
On March 24, 2011, Levi's filed its Appeal Memorandum15 with
the respondent IPO Director-General, Atty. Ricardo R.
Blancaflor (Director-General), and provided a list of certificates
of registration16 in other countries covering "nearly identical
TAB DEVICE trademark registrations."
THE IPO DIRECTOR-GENERAL RULING
On March 12, 2012, the Director-General issued a
decision17 rejecting the TAB DEVICE trademark application and
dismissing Levi's appeal.18
The Director-General held that the TAB DEVICE mark is not
distinctive because there is nothing in the mark that enables a
person to distinguish it from other similar "tabs of
textile."19 The subject mark consists solely of a rectangular tab
of textile that does not point out the origin or source of the
goods or services to distinguish it from another.20
The Director-General adopted the Director's observations that
there is the garment industry practice of sewing small tabs of
textile in the seams of clothing, which Levi's cannot appropriate
to its exclusive use by the registration of the TAB DEVICE
mark.21
The Director-General did not accord evidentiary weight to the
certificates of registrations of Levi's in other countries and held
that the rights to a mark are not acquired through registration
in other countries.22 The Director-General explained that under
the Intellectual Property Code, the mark's capability to
distinguish one's goods or services from another is the very
essence of a mark registration.23 The registered marks are
different from the subject TAB DEVICE mark.24 The certificates
of registration also do not show that they cover similar goods
covered by the subject trademark application.25cralawred
Levi's only recourse was to file a Petition for Review with the CA
within 15 days from receipt of the IPO Director-General ruling,
or until March 29, 2012, under Rule 43 of the Rules of Court to
assail the IPO Director-General's ruling.26
On March 28, 2012, Levi's filed a Motion for Extension of
Time (first motion for extension) to file a verified petition for
review with the CA; it sought an additional 15 days, or until
April 13, 2012, to file the petition for review.27 Levi's counsel
averred that it needed the extension because of pressure from
other equally important professional work and it needed to
gather further evidence.28
On April 13, 2012, Levi's filed a Second Motion for Extension of
Time;29 it asked this time for an additional 15 days, or until April
28, 2012, to file the petition for review.
Levi's claimed that while the draft of the petition was almost
complete, there was yet again pressure from other equally
urgent professional work; and the consularized special power
of attorney (SPA) needed for the filing of the petition and its
verification were still en route from the United States.30 Levi's
claimed that the delay in the SPA consularization was due to
the closed Philippine Consulate Office in San Francisco, USA,
from April 5, 2012 to April 9, 2012, in observance of the Holy
Week and the Araw ng Kagitingan holiday.31
THE CA RULING
On April 27, 2012, Levi's filed its petition for review (CA petition
for review).32
On June 1, 2012, the CA granted the first motion for
extension.33
On August 13, 2012, the CA issued a Resolution34 dismissing
Levi's petition outright. The CA held that Levi's failed to present
a compelling reason for the CA to grant the second motion for
extension.35According to the CA, Levi's should have secured the
necessary SPA earlier and anticipated the closure of the
Philippine Consulate Office due to the Philippine
holidays.36 Further, pressure from other equally urgent
professional work is not a compelling reason for an extension.37
On September 6, 2012, Levi's filed a motion for reconsideration
of the CA dismissal of the petition.38Levi's counsel explained
that Levi's only decided to proceed with the filing of the CA
petition for review on April 3, 2012 and it was only on that date
that the SPA was executed and notarized.39
In a CA Resolution dated April 17, 2013,40 the CA denied Levi's
motion for reconsideration. The CA held that Levi's should have
been diligent enough to decide before the end of the first
fifteen days or until March 29, 2012 whether it would proceed
with the filing of the petition for review.41 The first extension
was not granted to give Levi's time to decide on whether to file
its petition, but to give Levi's more time to gather further
evidence and to finalize the petition.42
THE PETITION
Levi's filed the present petition for review on certiorari43 to
challenge the CA resolutions which dismissed Levi's CA petition
for review.
Levi's principally argues that there are compelling reasons to
grant the second motion for extension.44
Levi's avers that its SPA had already been executed and
notarized as early as April 3, 2012.45 In order to comply with
Section 24,46 Rule 132 of the Revised Rules on Evidence, Levi's
sought the Philippine consulate's authentication of the
notarized SPA.47 Levi's, however, did not anticipate that the
Philippine Consulate Office would be closed during the Holy
Week and the Araw ng Kagitingan holiday since these were
regular working days in the United States.48
Levi's also avers that there was no point for the CA to deny the
second motion for extension since the CA did not promptly act
on Levi's first motion for extension and no prejudice would
accrue to the respondent by granting the second motion for
extension.49 Levi's pointed out that the Court belatedly granted
the first motion for extension only on June 1, 2012, or
only after three and a half months since Levi's filing of the CA
petition for review on April 27, 2012.50
THE ISSUE
The core issue of the petition is whether or not the CA gravely
erred in dismissing Levi's CA petition for review on the ground
that Levi's filed the CA petition beyond the extended
reglementary period.
OUR RULING
We deny the petition for lack of merit.
Rule 43 of the Rules of Court governs the appeals from quasi-
judicial agencies, such as the IPO, to the CA. Section 1 of Rule
43 provides:
chanRoblesvirtualLawlibrary
G.R. No. 194062 June 17, 2013
REPUBLIC GAS CORPORATION, ARNEL U. TY, MARI
ANTONETTE N. TY, ORLANDO REYES, FERRER SUAZO and
ALVIN U. TV, Petitioners,
vs.
PETRON CORPORATION, PILIPINAS SHELL PETROLEUM
CORPORATION, and SHELL INTERNATIONAL PETROLEUM
COMPANY LIMITED, Respondents.
DECISION
PERALTA, J.:
This resolves the Petition for Review on Certiorari under Rule
45 of the Rules of Court filed by petitioners seeking the reversal
of the Decision1 dated July 2, 2010, and Resolution2 dated
October 11, 2010 of the Court of Appeals (CA) in CA-G.R. SP No.
106385.
Stripped of non-essentials, the facts of the case, as summarized
by the CA, are as follows:
Petitioners Petron Corporation ("Petron" for brevity) and
Pilipinas Shell Petroleum Corporation ("Shell" for brevity) are
two of the largest bulk suppliers and producers of LPG in the
Philippines. Petron is the registered owner in the Philippines of
the trademarks GASUL and GASUL cylinders used for its LGP
products. It is the sole entity in the Philippines authorized to
allow refillers and distributors to refill, use, sell, and distribute
GASUL LPG containers, products and its trademarks.
Pilipinas Shell, on the other hand, is the authorized user in the
Philippines of the tradename, trademarks, symbols or designs
of its principal, Shell International Petroleum Company Limited,
including the marks SHELLANE and SHELL device in connection
with the production, sale and distribution of SHELLANE LPGs. It
is the only corporation in the Philippines authorized to allow
refillers and distributors to refill, use, sell and distribute
SHELLANE LGP containers and products. Private respondents,
on the other hand, are the directors and officers of Republic
Gas Corporation ("REGASCO" for brevity), an entity duly
licensed to engage in, conduct and carry on, the business of
refilling, buying, selling, distributing and marketing at wholesale
and retail of Liquefied Petroleum Gas ("LPG").
LPG Dealers Associations, such as the Shellane Dealers
Association, Inc., Petron Gasul Dealers Association, Inc. and
Totalgaz Dealers Association, received reports that certain
entities were engaged in the unauthorized refilling, sale and
distribution of LPG cylinders bearing the registered tradenames
and trademarks of the petitioners. As a consequence, on
February 5, 2004, Genesis Adarlo (hereinafter referred to as
Adarlo), on behalf of the aforementioned dealers associations,
filed a letter-complaint in the National Bureau of Investigation
("NBI") regarding the alleged illegal trading of petroleum
products and/or underdelivery or underfilling in the sale of LPG
products.
Acting on the said letter-complaint, NBI Senior Agent Marvin E.
De Jemil (hereinafter referred to as "De Jemil") was assigned to
verify and confirm the allegations contained in the letter-
complaint. An investigation was thereafter conducted,
particularly within the areas of Caloocan, Malabon, Novaliches
and Valenzuela, which showed that several persons and/or
establishments, including REGASCO, were suspected of having
violated provisions of Batas Pambansa Blg. 33 (B.P. 33). The
surveillance revealed that REGASCO LPG Refilling Plant in
Malabon was engaged in the refilling and sale of LPG cylinders
bearing the registered marks of the petitioners without
authority from the latter. Based on its General Information
Sheet filed in the Securities and Exchange Commission,
REGASCO’s members of its Board of Directors are: (1) Arnel U.
Ty – President, (2) Marie Antoinette Ty – Treasurer, (3) Orlando
Reyes – Corporate Secretary, (4) Ferrer Suazo and (5) Alvin Ty
(hereinafter referred to collectively as private respondents).
De Jemil, with other NBI operatives, then conducted a test-buy
operation on February 19, 2004 with the former and a
confidential asset going undercover. They brought with them
four (4) empty LPG cylinders bearing the trademarks of
SHELLANE and GASUL and included the same with the purchase
of J&S, a REGASCO’s regular customer. Inside REGASCO’s
refilling plant, they witnessed that REGASCO’s employees
carried the empty LPG cylinders to a refilling station and refilled
the LPG empty cylinders. Money was then given as payment for
the refilling of the J&S’s empty cylinders which included the
four LPG cylinders brought in by De Jemil and his companion.
Cash Invoice No. 191391 dated February 19, 2004 was issued as
evidence for the consideration paid.
After leaving the premises of REGASCO LPG Refilling Plant in
Malabon, De Jemil and the other NBI operatives proceeded to
the NBI headquarters for the proper marking of the LPG
cylinders. The LPG cylinders refilled by REGASCO were likewise
found later to be underrefilled.
Thus, on March 5, 2004, De Jemil applied for the issuance of
search warrants in the Regional Trial Court, Branch 24, in the
City of Manila against the private respondents and/or
occupants of REGASCO LPG Refilling Plant located at Asucena
Street, Longos, Malabon, Metro Manila for alleged violation of
Section 2 (c), in relation to Section 4, of B.P. 33, as amended by
PD 1865. In his sworn affidavit attached to the applications for
search warrants, Agent De Jemil alleged as follows:
"x x x.
"4. Respondent’s REGASCO LPG Refilling Plant-Malabon is not
one of those entities authorized to refill LPG cylinders bearing
the marks of PSPC, Petron and Total Philippines Corporation. A
Certification dated February 6, 2004 confirming such fact,
together with its supporting documents, are attached as Annex
"E" hereof.
6. For several days in the month of February 2004, the other
NBI operatives and I conducted surveillance and investigation
on respondents’ REGASCO LPG refilling Plant-Malabon. Our
surveillance and investigation revealed that respondents’
REGASCO LPG Refilling Plant-Malabon is engaged in the refilling
and sale of LPG cylinders bearing the marks of Shell
International, PSPC and Petron.
x x x.
8. The confidential asset and I, together with the other
operatives of the NBI, put together a test-buy operation. On
February 19, 2004, I, together with the confidential asset, went
undercover and executed our testbuy operation. Both the
confidential assets and I brought with us four (4) empty LPG
cylinders branded as Shellane and Gasul. x x x in order to have a
successful test buy, we decided to "ride-on" our purchases with
the purchase of Gasul and Shellane LPG by J & S, one of
REGASCO’s regular customers.
9. We proceeded to the location of respondents’ REGASCO LPG
Refilling Plant-Malabon and asked from an employee of
REGASCO inside the refilling plant for refill of the empty LPG
cylinders that we have brought along, together with the LPG
cylinders brought by J & S. The REGASCO employee, with some
assistance from other employees, carried the empty LPG
cylinders to a refilling station and we witnessed the actual
refilling of our empty LPG cylinders.
10. Since the REGASCO employees were under the impression
that we were together with J & S, they made the necessary
refilling of our empty LPG cylinders alongside the LPG cylinders
brought by J & S. When we requested for a receipt, the
REGASCO employees naturally counted our LPG cylinders
together with the LPG cylinders brought by J & S for refilling.
Hence, the amount stated in Cash Invoice No. 191391 dated
February 19, 2004, equivalent to Sixteen Thousand Two
Hundred Eighty-Six and 40/100 (Php16,286.40), necessarily
included the amount for the refilling of our four (4) empty LPG
cylinders. x x x.
11. After we accomplished the purchase of the illegally refilled
LPG cylinders from respondents’ REGASCO LPG Refilling Plant-
Malabon, we left its premises bringing with us the said LPG
cylinders. Immediately, we proceeded to our headquarters and
made the proper markings of the illegally refilled LPG cylinders
purchased from respondents’ REGASCO LPG Refilling Plant-
Malabon by indicating therein where and when they were
purchased. Since REGASCO is not an authorized refiller, the four
(4) LPG cylinders illegally refilled by respondents’ REGASCO LPG
Refilling Plant-Malabon, were without any seals, and when
weighed, were underrefilled. Photographs of the LPG cylinders
illegally refilled from respondents’ REGASCO LPG Refilling Plant-
Malabon are attached as Annex "G" hereof. x x x."
After conducting a personal examination under oath of Agent
De Jemil and his witness, Joel Cruz, and upon reviewing their
sworn affidavits and other attached documents, Judge Antonio
M. Eugenio, Presiding Judge of the RTC, Branch 24, in the City
of Manila found probable cause and correspondingly issued
Search Warrants Nos. 04-5049 and 04-5050.
Upon the issuance of the said search warrants, Special
Investigator Edgardo C. Kawada and other NBI operatives
immediately proceeded to the REGASCO LPG Refilling Station in
Malabon and served the search warrants on the private
respondents. After searching the premises of REGASCO, they
were able to seize several empty and filled Shellane and Gasul
cylinders as well as other allied paraphernalia.
Subsequently, on January 28, 2005, the NBI lodged a complaint
in the Department of Justice against the private respondents
for alleged violations of Sections 155 and 168 of Republic Act
(RA) No. 8293, otherwise known as the Intellectual Property
Code of the Philippines.
On January 15, 2006, Assistant City Prosecutor Armando C.
Velasco recommended the dismissal of the complaint. The
prosecutor found that there was no proof introduced by the
petitioners that would show that private respondent REGASCO
was engaged in selling petitioner’s products or that it imitated
and reproduced the registered trademarks of the petitioners.
He further held that he saw no deception on the part of
REGASCO in the conduct of its business of refilling and
marketing LPG. The Resolution issued by Assistant City
Prosecutor Velasco reads as follows in its dispositive portion:
"WHEREFORE, foregoing considered, the undersigned finds the
evidence against the respondents to be insufficient to form a
well-founded belief that they have probably committed
violations of Republic Act No. 9293. The DISMISSAL of this case
is hereby respectfully recommended for insufficiency of
evidence."
On appeal, the Secretary of the Department of Justice affirmed
the prosecutor’s dismissal of the complaint in a Resolution
dated September 18, 2008, reasoning therein that:
"x x x, the empty Shellane and Gasul LPG cylinders were
brought by the NBI agent specifically for refilling. Refilling the
same empty cylinders is by no means an offense in itself – it
being the legitimate business of Regasco to engage in the
refilling and marketing of liquefied petroleum gas. In other
words, the empty cylinders were merely filled by the
employees of Regasco because they were brought precisely for
that purpose. They did not pass off the goods as those of
complainants’ as no other act was done other than to refill
them in the normal course of its business.
"In some instances, the empty cylinders were merely swapped
by customers for those which are already filled. In this case, the
end-users know fully well that the contents of their cylinders
are not those produced by complainants. And the reason is
quite simple – it is an independent refilling station.
"At any rate, it is settled doctrine that a corporation has a
personality separate and distinct from its stockholders as in the
case of herein respondents. To sustain the present allegations,
the acts complained of must be shown to have been committed
by respondents in their individual capacity by clear and
convincing evidence. There being none, the complaint must
necessarily fail. As it were, some of the respondents are even
gainfully employed in other business pursuits. x x x."3
Dispensing with the filing of a motion for reconsideration,
respondents sought recourse to the CA through a petition for
certiorari.
In a Decision dated July 2, 2010, the CA granted respondents’
certiorari petition. The fallo states:
WHEREFORE, in view of the foregoing premises, the petition
filed in this case is hereby GRANTED. The assailed Resolution
dated September 18, 2008 of the Department of Justice in I.S.
No. 2005-055 is hereby REVERSED and SET ASIDE.
SO ORDERED.4
Petitioners then filed a motion for reconsideration. However,
the same was denied by the CA in a Resolution dated October
11, 2010.
Accordingly, petitioners filed the instant Petition for Review on
Certiorari raising the following issues for our resolution:
Whether the Petition for Certiorari filed by RESPONDENTS
should have been denied outright.
Whether sufficient evidence was presented to prove that the
crimes of Trademark Infringement and Unfair Competition as
defined and penalized in Section 155 and Section 168 in
relation to Section 170 of Republic Act No. 8293 (The
Intellectual Property Code of the Philippines) had been
committed.
Whether probable cause exists to hold INDIVIDUAL
PETITIONERS liable for the offense charged.5
Let us discuss the issues in seriatim.
Anent the first issue, the general rule is that a motion for
reconsideration is a condition sine qua non before a certiorari
petition may lie, its purpose being to grant an opportunity for
the court a quo to correct any error attributed to it by re-
examination of the legal and factual circumstances of the case. 6
However, this rule is not absolute as jurisprudence has laid
down several recognized exceptions permitting a resort to the
special civil action for certiorari without first filing a motion for
reconsideration, viz.:
(a) Where the order is a patent nullity, as where the
court a quo has no jurisdiction;
(b) Where the questions raised in the certiorari
proceedings have been duly raised and passed upon
by the lower court, or are the same as those raised
and passed upon in the lower court.
(c) Where there is an urgent necessity for the
resolution of the question and any further delay
would prejudice the interests of the Government or
of the petitioner or the subject matter of the petition
is perishable;
(d) Where, under the circumstances, a motion for
reconsideration would be useless;
(e) Where petitioner was deprived of due process and
there is extreme urgency for relief;
(f) Where, in a criminal case, relief from an order of
arrest is urgent and the granting of such relief by the
trial court is improbable;
(g) Where the proceedings in the lower court are a
nullity for lack of due process;
(h) Where the proceeding was ex parte or in which
the petitioner had no opportunity to object; and,
(i) Where the issue raised is one purely of law or
public interest is involved.7
In the present case, the filing of a motion for reconsideration
may already be dispensed with considering that the questions
raised in this petition are the same as those that have already
been squarely argued and passed upon by the Secretary of
Justice in her assailed resolution.
Apropos the second and third issues, the same may be
simplified to one core issue: whether probable cause exists to
hold petitioners liable for the crimes of trademark infringement
and unfair competition as defined and penalized under Sections
155 and 168, in relation to Section 170 of Republic Act (R.A.)
No. 8293.
Section 155 of R.A. No. 8293 identifies the acts constituting
trademark infringement as follows:
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 of the same container
or a dominant feature thereof in connection with the sale,
offering for sale, distribution, advertising of any goods or
services including other preparatory steps necessary to carry
out the sale of any goods or services on or in connection with
which such use is likely to cause confusion, or to cause mistake,
or to deceive; or
155.2 Reproduce, counterfeit, copy or colorably imitate a
registered mark or a dominant feature thereof and apply such
reproduction, counterfeit, copy or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles or
advertisements intended to be used in commerce upon or in
connection with the sale, offering for sale, distribution, or
advertising of goods or services on or in connection with which
such use is likely to cause confusion, or to cause mistake, or to
deceive, shall be liable in a civil action for infringement by the
registrant for the remedies hereinafter set forth: Provided, That
the infringement takes place at the moment any of the acts
stated in Subsection 155.1 or this subsection are committed
regardless of whether there is actual sale of goods or services
using the infringing material.8
From the foregoing provision, the Court in a very similar case,
made it categorically clear that the mere unauthorized use of a
container bearing a registered trademark in connection with
the sale, distribution or advertising of goods or services which is
likely to cause confusion, mistake or deception among the
buyers or consumers can be considered as trademark
infringement.9
Here, petitioners have actually committed trademark
infringement when they refilled, without the respondents’
consent, the LPG containers bearing the registered marks of the
respondents. As noted by respondents, petitioners’ acts will
inevitably confuse the consuming public, since they have no
way of knowing that the gas contained in the LPG tanks bearing
respondents’ marks is in reality not the latter’s LPG product
after the same had been illegally refilled. The public will then be
led to believe that petitioners are authorized refillers and
distributors of respondents’ LPG products, considering that
they are accepting empty containers of respondents and
refilling them for resale.
As to the charge of unfair competition, Section 168.3, in
relation to Section 170, of R.A. No. 8293 describes the acts
constituting unfair competition as follows:
Section 168. Unfair Competition, Rights, Regulations and
Remedies. x x x.
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;
xxxx
Section 170. Penalties. Independent of the civil and
administrative sanctions imposed by law, a criminal penalty of
imprisonment from two (2) years to five (5) years and a fine
ranging from Fifty thousand pesos (₱50,000) to Two hundred
thousand pesos (₱200,000), shall be imposed on any person
who is found guilty of committing any of the acts mentioned in
Section 155, Section 168 and Subsection 169.1.
From jurisprudence, unfair competition has been defined as 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.10
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. Thus, the defendant gives his goods the general
appearance of the goods of his competitor with the intention of
deceiving the public that the goods are those of his
competitor.11
In the present case, respondents pertinently observed that by
refilling and selling LPG cylinders bearing their registered
marks, petitioners are selling goods by giving them the general
appearance of goods of another manufacturer.
What's more, the CA correctly pointed out that there is a
showing that the consumers may be misled into believing that
the LPGs contained in the cylinders bearing the marks "GASUL"
and "SHELLANE" are those goods or products of the petitioners
when, in fact, they are not. Obviously, the mere use of those
LPG cylinders bearing the trademarks "GASUL" and "SHELLANE"
will give the LPGs sold by REGASCO the general appearance of
the products of the petitioners.
In sum, this Court finds that there is sufficient evidence to
warrant the prosecution of petitioners for trademark
infringement and unfair competition, considering that
petitioner Republic Gas Corporation, being a corporation,
possesses a personality separate and distinct from the person
of its officers, directors and stockholders.12Petitioners, being
corporate officers and/or directors, through whose act, default
or omission the corporation commits a crime, may themselves
be individually held answerable for the crime.13 Veritably, the
CA appropriately pointed out that petitioners, being in direct
control and supervision in the management and conduct of the
affairs of the corporation, must have known or are aware that
the corporation is engaged in the act of refilling LPG cylinders
bearing the marks of the respondents without authority or
consent from the latter which, under the circumstances, could
probably constitute the crimes of trademark infringement and
unfair competition. The existence of the corporate entity does
not shield from prosecution the corporate agent who
knowingly and intentionally caused the corporation to commit
a crime. Thus, petitioners cannot hide behind the cloak of the
separate corporate personality of the corporation to escape
criminal liability. A corporate officer cannot protect himself
behind a corporation where he is the actual, present and
efficient actor.14
WHEREFORE, premises considered, the petition is hereby
DENIED and the Decision dated July 2, 2010 and Resolution
dated October 11, 2010 of the Court of Appeals in CA-G.R. SP
No. 106385 are AFFIRMED.
SO ORDERED.
G.R. No. 195549 September 3, 2014
WILLAWARE PRODUCTS CORPORATION, Petitioner,
vs.
JESICHRIS MANUFACTURING CORPORATION, Respondent.
DECISION
PERALTA, J.:
Before the Court is a Petition for Review on Certiorari under
Rule 45 of the Rules of Court seeking to set aside the
Decision1 dated November 24, 2010 and Resolution2 dated
February 10, 2011 of the Court of Appeals (CA) in CA-G.R. CV
No. 86744.
The facts, as found by the Regional Trial Court (RTC), are as
follows:
[Respondent] Jesichris Manufacturing Company ([respondent]
for short) filed this present complaint for damages for unfair
competition with prayer for permanent injunction to enjoin
[petitioner] Willaware Products Corporation ([petitioner] for
short) from manufacturing and distributing plastic-made
automotive parts similar to those of [respondent].
[Respondent] alleged that it is a duly registeredpartnership
engaged in the manufacture and distribution of plastic and
metal products, with principal office at No. 100 Mithi Street,
Sampalukan, Caloocan City. Since its registration in 1992,
[respondent] has been manufacturing in its Caloocan plant and
distributing throughout the Philippines plastic-made
automotive parts. [Petitioner], on the other hand, which is
engaged in the manufacture and distribution of kitchenware
items made of plastic and metal has its office near that of
[respondent]. [Respondent] further alleged that in view of the
physical proximity of [petitioner’s] office to [respondent’s]
office, and in view of the fact that some of the [respondent’s]
employeeshad transferred to [petitioner], [petitioner] had
developed familiarity with [respondent’s] products, especially
its plastic-made automotive parts.
That sometime in November 2000, [respondent] discovered
that [petitioner] had been manufacturing and distributing the
same automotive parts with exactly similar design, same
material and colors but was selling these products at a lower
price as [respondent’s] plastic-made automotive parts and to
the same customers.
[Respondent] alleged that it had originated the use of plastic in
place of rubber in the manufacture ofautomotive underchassis
parts such as spring eye bushing, stabilizer bushing, shock
absorberbushing, center bearing cushions, among others.
[Petitioner’s] manufacture of the same automotive parts with
plastic materialwas taken from [respondent’s] idea of using
plastic for automotive parts. Also, [petitioner] deliberately
copied [respondent’s] products all of which acts constitute
unfair competition, is and are contrary to law, morals, good
customs and public policy and have caused [respondent]
damages in terms oflost and unrealizedprofits in the amount of
TWO MILLION PESOS as of the date of [respondent’s]
complaint.
Furthermore, [petitioner’s] tortuous conduct compelled
[respondent] to institute this action and thereby to incur
expenses in the way of attorney’s fees and other litigation
expenses in the amount of FIVE HUNDRED THOUSAND PESOS
(₱500,000.00).
In its Answer, [petitioner] denies all the allegations of the
[respondent] except for the following facts: that it is engaged in
the manufacture and distribution of kitchenware items made of
plastic and metal and that there’s physical proximity of
[petitioner’s] office to [respondent]’s office, and that someof
[respondent’s] employees had transferred to [petitioner] and
that over the years [petitioner] had developed familiarity with
[respondent’s] products, especially its plastic made automotive
parts.
As its Affirmative Defenses, [petitioner] claims that there can
be no unfair competition as the plastic-made automotive parts
are mere reproductions of original parts and their construction
and composition merely conforms to the specificationsof the
original parts of motor vehicles they intend to replace. Thus,
[respondent] cannot claim that it "originated" the use of plastic
for these automotive parts. Even assuming for the sake of
argument that [respondent] indeed originated the use of these
plastic automotive parts, it still has no exclusive right to use,
manufacture and sell these as it has no patent over these
products. Furthermore, [respondent] is not the only exclusive
manufacturer of these plastic-made automotive parts as there
are other establishments which were already openly selling
them to the public.3
After trial on the merits, the RTC ruled in favor of respondent. It
ruled that petitioner clearly invaded the rights or interest of
respondent by deliberately copying and performing acts
amounting to unfair competition. The RTC further opined that
under the circumstances, in order for respondent’s property
rights to be preserved, petitioner’s acts of manufacturing
similar plastic-made automotive parts such as those of
respondent’s and the selling of the sameproducts to
respondent’s customers, which it cultivated over the years, will
have to be enjoined. The dispositive portion of the decision
reads:
WHEREFORE, premises considered, the court finds the
defendant liable to plaintiff Two Million (₱2,000,000.00) Pesos,
as actual damages, One Hundred Thousand (₱100,000.00)
Pesos as attorney’s fees and One Hundred Thousand
(₱100,000.00) Pesos for exemplary damages. The court hereby
permanently [enjoins] defendant from manufacturing the
plastic-made automotive parts as those manufactured by
plaintiffs.
SO ORDERED.4
Thus, petitioner appealed to the CA.
On appeal, petitioner asserts that ifthere is no intellectual
property protecting a good belonging to another,the copying
thereof for production and selling does not add up to unfair
competition as competition is promoted by law to benefit
consumers. Petitioner further contends that it did not lure
away respondent’s employees to get trade secrets. It points out
that the plastic spare parts sold by respondent are traded in the
market and the copying of these can be done by simplybuying a
sample for a mold to be made.
Conversely, respondent averred that copyright and patent
registrations are immaterial for an unfair competition case to
prosper under Article 28 of the Civil Code. It stresses that the
characteristics of unfair competition are present in the instant
case as the parties are trade rivals and petitioner’s acts are
contrary to good conscience for deliberately copying its
products and employing its former employees.
In a Decision dated November 24,2010, the CA affirmed with
modification the ruling of the RTC. Relevant portions of said
decision read:
Despite the evidence showing thatWillaware took dishonest
steps in advancing its business interest against Jesichris,
however, the Court finds no basis for the award by the RTC of
actual damages. One is entitled to actual damages as one has
duly proven. The testimony of Quejada, who was engaged by
Jesichris in 2001 to audit its business, only revealed that there
was a discrepancy between the sales of Jesichris from 2001 to
2002. No amount was mentioned. As for Exhibit "Q," which is a
copy of the comparative income statement of Jesichris for
1999-2002, it shows the decline of the sales in 2002 in
comparison with those made in 2001 but it does not disclose if
this pertains to the subject automotive parts or to the other
products of Jesichris like plates.
In any event, it was clearly shown that there was unfair
competition on the part of Willaware that prejudiced Jesichris.
It is only proper that nominal damages be awarded in the
amount of Two Hundred Thousand Pesos (₱200,000.00) in
order to recognize and vindicate Jesichris’ rights. The RTC’s
award of attorney’s fees and exemplary damages is also
maintained.
xxxx
WHEREFORE, premises considered, the Decision dated April 15,
2003 of the Regional Trial Court of Caloocan City, Branch 131, in
Civil Case No. C-19771 is hereby MODIFIED. The award of Two
Million Pesos (₱2,000,000.00) actual damages is deleted and in
its place, Two Hundred Thousand Pesos nominal damages is
awarded.
SO ORDERED.5
Dissatisfied, petitioner moved for reconsideration. However,
the same was denied for lack of merit by the CA in a Resolution
dated February 10, 2011.
Hence, the present Petition for Review wherein petitioner
raises the following issues for our resolution:
(1) Whether or not there is unfair competition under
human relations when the parties are not
competitors and there is actually no damage on the
part of Jesichris?
(2) Consequently, if there is no unfair competition,
should there be moral damages and attorney’s fees?
(3) Whether or not the addition of nominal damages
is proper although no rights have been established?
(4) If ever the right of Jesichris refersto its copyright
on automotive parts, should it be considered in the
light of the said copyrights were considered to be
void by no less than this Honorable Court in SC GR
No. 161295?
(5) If the right involved is "goodwill" then the issue is:
whether or not Jesichris has established "goodwill?"6
In essence, the issue for our resolution is: whether or not
petitioner committed acts amounting to unfair competition
under Article 28 of the Civil Code.
Prefatorily, we would like to stress that the instant case falls
under Article 28 of the Civil Code on humanrelations, and not
unfair competition under Republic Act No. 8293,7 as the
present suit is a damage suit and the products are not covered
by patent registration. A fortiori, the existence of patent
registration is immaterial in the present case.
The concept of "unfair competition"under Article 28 is very
much broader than that covered by intellectual property laws.
Under the present article, which follows the extended concept
of "unfair competition" in American jurisdictions, the term
coverseven cases of discovery of trade secrets of a competitor,
bribery of his employees, misrepresentation of all kinds,
interference with the fulfillment of a competitor’s contracts, or
any malicious interference with the latter’s business.8
With that settled, we now come to the issue of whether or not
petitioner committed acts amounting tounfair competition
under Article 28 of the Civil Code.
We find the petition bereft of merit.
Article 28 of the Civil Code provides that "unfair competition in
agricultural, commercial or industrial enterprises or in labor
through the use of force, intimidation, deceit, machination or
any other unjust, oppressive or high-handed method shall give
rise to a right of action by the person who thereby suffers
damage."
From the foregoing, it is clear thatwhat is being sought to be
prevented is not competitionper sebut the use of unjust,
oppressive or high- handed methods which may deprive others
of a fair chance to engage in business or to earn a living.
Plainly,what the law prohibits is unfair competition and not
competition where the means usedare fair and legitimate.
In order to qualify the competition as "unfair," it must have two
characteristics: (1) it must involve an injury to a competitor or
trade rival, and (2) it must involve acts which are characterized
as "contrary to good conscience," or "shocking to judicial
sensibilities," or otherwise unlawful; in the language of our law,
these include force, intimidation, deceit, machination or any
other unjust, oppressive or high-handed method. The public
injury or interest is a minor factor; the essence of the matter
appears to be a private wrong perpetrated by unconscionable
means.9
Here, both characteristics are present.
First, both parties are competitors or trade rivals, both being
engaged in the manufacture of plastic-made automotive parts.
Second, the acts of the petitioner were clearly "contrary to
good conscience" as petitioner admitted having employed
respondent’s formeremployees, deliberately copied
respondent’s products and even went to the extent of selling
these products to respondent’s customers.10
To bolster this point, the CA correctly pointed out that
petitioner’s hiring of the former employees of respondent and
petitioner’s act of copying the subject plastic parts of
respondent were tantamount to unfair competition, viz.:
The testimonies of the witnesses indicate that [petitioner] was
in bad faith in competing with the business of
[respondent].1âwphi1 [Petitioner’s] acts can be characterized
as executed with mischievous subtle calculation. To illustrate, in
addition to the findings of the RTC, the Court observes that
[petitioner] is engaged in the production of plastic kitchenware
previous to its manufacturing of plasticautomotive spare parts,
it engaged the services of the then mold setter and
maintenance operator of [respondent], De Guzman, while he
was employed by the latter. De Guzman was hired by
[petitioner] in order to adjust its machinery since quality plastic
automotive spare parts were not being made. It baffles the
Court why [petitioner] cannot rely onits own mold setter and
maintenance operator to remedy its problem. [Petitioner’s]
engagement of De Guzman indicates that it is banking on his
experience gained from working for [respondent].
Another point we observe is that Yabut, who used to be a
warehouse and delivery man of [respondent], was fired
because he was blamed of spying in favor of [petitioner].
Despite this accusation, he did not get angry. Later on, he
applied for and was hired by [petitioner] for the same position
he occupied with [respondent]. These sequence of events
relating to his employment by [petitioner] is suspect too like
the situation with De Guzman.11
Thus, it is evident that petitioner isengaged in unfair
competition as shown by his act of suddenly shifting his
business from manufacturing kitchenware to plastic-made
automotive parts; his luring the employees of the respondent
to transfer to his employ and trying to discover the trade
secrets of the respondent.12
Moreover, when a person starts an opposing place of business,
not for the sake of profit to himself, but regardless of loss and
for the sole purpose of driving his competitor out of business so
that later on he can take advantage of the effects of his
malevolent purpose, he is guilty of wanton wrong.13 As aptly
observed by the courta quo, the testimony of petitioner’s
witnesses indicate that it acted in bad faith in competing with
the business of respondent, to wit: [Petitioner], thru its General
Manager, William Salinas, Jr., admitted that it was never
engaged in the business of plastic-made automotive parts until
recently, year 2000:
Atty. Bautista: The business name of Willaware Product
Corporation is kitchenware, it is (sic) not? Manufacturer of
kitchenware and distributor ofkitchenware, is it not? Mr.
Salinas: Yes, sir. Atty. Bautista: And you said you have known
the [respondent] Jesichris Manufacturing Co., you have known
it to be manufacturing plastic automotive products, is it not?
Mr. Salinas: Yes, sir. Atty. Bautista: In fact, you have been (sic)
physically become familiar with these products, plastic
automotive products of Jesichris? Mr. Salinas: Yes, sir.
How [petitioner] was able to manufacture the same products,
in terms of color, size, shape and composition as those sold by
Jesichris was due largely to the sudden transfer ofJesichris’
employees to Willaware.
Atty. Bautista: Since when have you been familiar with Jesichris
Manufacturing Company?
Mr. Salinas: Since they transferred there (sic) our place.
Atty. Bautista: And that was in what year? Mr. Salinas: Maybe
four (4) years. I don’t know the exact date.
Atty. Bautista: And some of the employees of Jesichris
Manufacturing Co. have transferred to your company, is it not?
Mr. Salinas: Yes, sir.
Atty. Bautista: How many, more or less?
Mr. Salinas: More or less, three (3).
Atty. Bautista: And when, in what year or month did they
transfer to you?
Mr. Salinas: First, November 1.
Atty. Bautista: Year 2000?
Mr. Salinas: Yes sir. And then the other maybe February, this
year. And the other one, just one month ago.
That [petitioner] was clearly outto take [respondent] out of
business was buttressed by the testimony of [petitioner’s]
witness, Joel Torres:
Q: Are you familiar with the [petitioner], Willaware Product
Corporation?
A: Yes, sir.
Q: Will you kindly inform this court where is the office of this
Willaware Product Corporation (sic)?
A: At Mithi Street, Caloocan City, sir.
Q: And Mr. Witness, sometime second Saturday of January
2001, will you kindly inform this court what unusual even (sic)
transpired between you and Mr. Salinas on said date?
A: There was, sir.
Q: What is that?
A: Sir, I was walking at that time together with my wife going to
the market and then I passed by the place where they were
having a drinking spree, sir.
Q: You mentioned they, who were they who were drinking at
that time?
A: I know one Jun Molina, sir.
Q: And who else was there?
A: William Salinas, sir.
Q: And will you kindly inform us what happened when you
spotted upon them drinking?
A: Jun Molina called me, sir.
Q: And what happened after that?
A: At that time, he offered mea glass of wine and before I was
able to drink the wine, Mr. Salinas uttered something, sir.
Q: And what were those words uttered by Mr. Salinas to you?
A: "O, ano naapektuhan na kayo sa ginaya (sic) ko sa inyo?"
Q: And what did you do after that, after hearing those words?
A: And he added these words, sir. "sabihin mo sa amo mo,
dalawang taon na lang pababagsakin ko na siya."
Q: Alright, hearing those words, will you kindly tell this court
whom did you gather to be referred to as your "amo"?
A: Mr. Jessie Ching, sir.14
In sum, petitioner is guilty of unfair competition under Article
28 of the Civil Code.
However, since the award of Two Million Pesos (₱2,000,000.00)
in actual damages had been deleted and in its place Two
Hundred Thousand Pesos (₱200,000.00) in nominal damages is
awarded, the attorney's fees should concomitantly be modified
and lowered to Fifty Thousand Pesos (₱50,000.00).
WHEREFORE, the instant petition is DENIED. The Decision dated
November 24, 2010 and Resolution dated February 10, 2011 of
the Court of Appeals in CA-G.R. CV No. 86744 are hereby
AFFIRMED with MODIFICATION that the award of attorney's
fees be lowered to Fifty Thousand Pesos (₱50,000.00).
SO ORDERED.
G.R. No. 154491 November 14, 2008
COCA-COLA BOTTLERS, PHILS., INC. (CCBPI), Naga
Plant, petitioner,
vs.
QUINTIN J. GOMEZ, a.k.a. "KIT" GOMEZ and DANILO E.
GALICIA, a.k.a. "DANNY GALICIA",respondents.
DECISION
BRION, J.:
Is the hoarding of a competitor's product containers punishable
as unfair competition under the Intellectual Property Code (IP
Code, Republic Act No. 8293) that would entitle the aggrieved
party to a search warrant against the hoarder? This is the issue
we grapple with in this petition for review
on certiorari involving two rival multinational softdrink giants;
petitioner Coca-Cola Bottlers, Phils., Inc. (Coca-Cola) accuses
Pepsi Cola Products Phils., Inc. (Pepsi), represented by the
respondents, of hoarding empty Coke bottles in bad faith to
discredit its business and to sabotage its operation in
Bicolandia.
BACKGROUND
The facts, as culled from the records, are summarized below.
On July 2, 2001, Coca-Cola applied for a search warrant against
Pepsi for hoarding Coke empty bottles in Pepsi's yard in
Concepcion Grande, Naga City, an act allegedly penalized as
unfair competition under the IP Code. Coca-Cola claimed that
the bottles must be confiscated to preclude their illegal use,
destruction or concealment by the respondents.1 In support of
the application, Coca-Cola submitted the sworn statements of
three witnesses: Naga plant representative Arnel John Ponce
said he was informed that one of their plant security guards
had gained access into the Pepsi compound and had seen
empty Coke bottles; acting plant security officer Ylano A.
Regaspi said he investigated reports that Pepsi was hoarding
large quantities of Coke bottles by requesting their security
guard to enter the Pepsi plant and he was informed by the
security guard that Pepsi hoarded several Coke bottles; security
guard Edwin Lirio stated that he entered Pepsi's yard on July 2,
2001 at 4 p.m. and saw empty Coke bottles inside Pepsi shells
or cases.2
Municipal Trial Court (MTC) Executive Judge Julian C. Ocampo
of Naga City, after taking the joint deposition of the witnesses,
issued Search Warrant No. 2001-013 to seize 2,500 Litro and
3,000 eight and 12 ounces empty Coke bottles at Pepsi's Naga
yard for violation of Section 168.3 (c) of the IP Code.4 The local
police seized and brought to the MTC's custody 2,464 Litro and
4,036 eight and 12 ounces empty Coke bottles, 205 Pepsi shells
for Litro, and 168 Pepsi shells for smaller (eight and 12 ounces)
empty Coke bottles, and later filed with the Office of the City
Prosecutor of Naga a complaint against two Pepsi officers for
violation of Section 168.3 (c) in relation to Section 170 of the IP
Code.5The named respondents, also the respondents in this
petition, were Pepsi regional sales manager Danilo E.
Galicia (Galicia) and its Naga general manager Quintin J.
Gomez, Jr. (Gomez).
In their counter-affidavits, Galicia and Gomez claimed that the
bottles came from various Pepsi retailers and wholesalers who
included them in their return to make up for shortages of
empty Pepsi bottles; they had no way of ascertaining
beforehand the return of empty Coke bottles as they simply
received what had been delivered; the presence of the bottles
in their yard was not intentional nor deliberate; Ponce and
Regaspi's statements are hearsay as they had no personal
knowledge of the alleged crime; there is no mention in the IP
Code of the crime of possession of empty bottles; and that the
ambiguity of the law, which has a penal nature, must be
construed strictly against the State and liberally in their favor.
Pepsi security guards Eduardo E. Miral and Rene Acebuche
executed a joint affidavit stating that per their logbook, Lirio did
not visit or enter the plant premises in the afternoon of July 2,
2001.
The respondents also filed motions for the return of their shells
and to quash the search warrant. They contended that no
probable cause existed to justify the issuance of the search
warrant; the facts charged do not constitute an offense; and
their Naga plant was in urgent need of the shells.
Coca-Cola opposed the motions as the shells were part of the
evidence of the crime, arguing that Pepsi used the shells in
hoarding the bottles. It insisted that the issuance of warrant
was based on probable cause for unfair competition under the
IP Code, and that the respondents violated R.A. 623, the law
regulating the use of stamped or marked bottles, boxes, and
other similar containers.
THE MTC RULINGS
On September 19, 2001, the MTC issued the first assailed
order6 denying the twin motions. It explained there was an
exhaustive examination of the applicant and its witnesses
through searching questions and that the Pepsi shells are prima
facie evidence that the bottles were placed there by the
respondents.
In their motion for reconsideration, the respondents argued for
the quashal of the warrant as the MTC did not conduct a
probing and exhaustive examination; the applicant and its
witnesses had no personal knowledge of facts surrounding the
hoarding; the court failed to order the return of the "borrowed"
shells; there was no crime involved; the warrant was issued
based on hearsay evidence; and the seizure of the shells was
illegal because they were not included in the warrant.
On November 14, 2001, the MTC denied the motion for
reconsideration in the second assailed order,7 explaining that
the issue of whether there was unfair competition can only be
resolved during trial.
The respondents responded by filing a petition for certiorari
under Rule 65 of the Revised Rules of Court before the Regional
Trial Court (RTC) of Naga City on the ground that the subject
search warrant was issued without probable cause and that the
empty shells were neither mentioned in the warrant nor the
objects of the perceived crime.
THE RTC RULINGS
On May 8, 2002, the RTC voided the warrant for lack of
probable cause and the non-commission of the crime of unfair
competition, even as it implied that other laws may have been
violated by the respondents. The RTC, though, found no grave
abuse of discretion on the part of the issuing MTC judge.8 Thus,
Accordingly, as prayed for, Search Warrant No. 2001-
02 issued by the Honorable Judge Julian C. Ocampo III
on July 2, 2001 is ANNULLED and SET ASIDE. The
Orders issued by the Pairing Judge of Br. 1, MTCC of
Naga City dated September 19, 2001 and November
14, 2001 are also declared VOID and SET ASIDE. The
City Prosecutor of Naga City and SPO1 Ernesto
Paredes are directed to return to the Petitioner the
properties seized by virtue of Search Warrant No.
2001-02. No costs.
SO ORDERED.9
In a motion for reconsideration, which the RTC denied on July
12, 2002, the petitioner stressed that the decision of the RTC
was contradictory because it absolved Judge Ocampo of grave
abuse of discretion in issuing the search warrant, but at the
same time nullified the issued warrant. The MTC should have
dismissed the petition when it found out that Judge Ocampo
did not commit any grave abuse of discretion.
Bypassing the Court of Appeals, the petitioner asks us through
this petition for review on certiorariunder Rule 45 of the Rules
of Court to reverse the decision of the RTC. Essentially, the
petition raises questions against the RTC's nullification of the
warrant when it found no grave abuse of discretion committed
by the issuing judge.
THE PETITION and
THE PARTIES' POSITIONS
In its petition, the petitioner insists the RTC should have
dismissed the respondents' petition for certiorari because it
found no grave abuse of discretion by the MTC in issuing the
search warrant. The petitioner further argues that the IP Code
was enacted into law to remedy various forms of unfair
competition accompanying globalization as well as to replace
the inutile provision of unfair competition under Article 189 of
the Revised Penal Code. Section 168.3(c) of the IP Code does
not limit the scope of protection on the particular acts
enumerated as it expands the meaning of unfair competition to
include "other acts contrary to good faith of a nature calculated
to discredit the goods, business or services of another." The
inherent element of unfair competition is fraud or deceit, and
that hoarding of large quantities of a competitor's empty
bottles is necessarily characterized by bad faith. It claims that
its Bicol bottling operation was prejudiced by the respondents'
hoarding and destruction of its empty bottles.
The petitioner also argues that the quashal of the search
warrant was improper because it complied with all the essential
requisites of a valid warrant. The empty bottles were concealed
in Pepsi shells to prevent discovery while they were
systematically being destroyed to hamper the petitioner's
bottling operation and to undermine the capability of its
bottling operations in Bicol.
The respondents counter-argue that although Judge Ocampo
conducted his own examination, he gravely erred and abused
his discretion when he ignored the rule on the need of
sufficient evidence to establish probable cause; satisfactory and
convincing evidence is essential to hold them guilty of unfair
competition; the hoarding of empty Coke bottles did not cause
actual or probable deception and confusion on the part of the
general public; the alleged criminal acts do not show conduct
aimed at deceiving the public; there was no attempt to use the
empty bottles or pass them off as the respondents' goods.
The respondents also argue that the IP Code does not
criminalize bottle hoarding, as the acts penalized must always
involve fraud and deceit. The hoarding does not make them
liable for unfair competition as there was no deception or fraud
on the end-users.
THE ISSUE
Based on the parties' positions, the basic issue submitted to us
for resolution is whether the Naga MTC was correct in issuing
Search Warrant No. 2001-01 for the seizure of the empty Coke
bottles from Pepsi's yard for probable violation of Section 168.3
(c) of the IP Code. This basic issue involves two sub-issues,
namely, the substantive issue of whether the application for
search warrant effectively charged an offense, i.e., a violation
of Section 168.3 (c) of the IP Code; and the procedural issue of
whether the MTC observed the procedures required by the
Rules of Court in the issuance of search warrants.
OUR RULING
We resolve to deny the petition for lack of merit.
We clarify at the outset that while we agree with the RTC
decision, our agreement is more in the result than in the
reasons that supported it. The decision is correct in nullifying
the search warrant because it was issued on an invalid
substantive basis - the acts imputed on the respondents do not
violate Section 168.3 (c) of the IP Code. For this reason, we
deny the present petition.
The issuance of a search warrant10 against a personal
property11 is governed by Rule 126 of the Revised Rules of
Court whose relevant sections state:
Section 4. Requisites for issuing search warrant. - A
search warrant shall not issue except upon probable
cause in connection with one specific offense to be
determined personally by the judge after examination
under oath or affirmation of the complainant and the
witnesses he may produce, and particularly
describing the place to be searched and the things to
be seized which may be anywhere in the Philippines.
Section 5. Examination of complainant; record. - The
judge must, before issuing the warrant, personally
examine in the form of searching questions and
answers, in writing and under oath, the complainant
and the witnesses he may produce on facts
personally known to them and attach to the record
their sworn statements together with the affidavits
submitted.
Section 6. Issuance and form of search warrant. - If
the judge is satisfied of the existence of facts upon
which the application is based or that there is
probable cause to believe that they exist, he shall
issue the warrant, which must be substantially in the
form prescribed by these Rules. [Emphasis supplied]
To paraphrase this rule, a search warrant may be issued only if
there is probable cause in connection with a specific offense
alleged in an application based on the personal knowledge of
the applicant and his or her witnesses. This is the substantive
requirement in the issuance of a search warrant. Procedurally,
the determination of probable cause is a personal task of the
judge before whom the application for search warrant is filed,
as he has to examine under oath or affirmation the applicant
and his or her witnesses in the form of "searching questions
and answers" in writing and under oath. The warrant, if issued,
must particularly describe the place to be searched and the
things to be seized.
We paraphrase these requirements to stress that they have
substantive and procedural aspects. Apparently, the RTC
recognized this dual nature of the requirements and, hence,
treated them separately; it approved of the way the MTC
handled the procedural aspects of the issuance of the search
warrant but found its action on the substantive aspect wanting.
It therefore resolved to nullify the warrant, without however
expressly declaring that the MTC gravely abused its discretion
when it issued the warrant applied for. The RTC's error,
however, is in the form rather than the substance of the
decision as the nullification of the issued warrant for the reason
the RTC gave was equivalent to the declaration that grave
abuse of discretion was committed. In fact, we so rule as the
discussions below will show.
Jurisprudence teaches us that probable cause, as a condition
for the issuance of a search warrant, is such reasons supported
by facts and circumstances as will warrant a cautious man in
the belief that his action and the means taken in prosecuting it
are legally just and proper. Probable cause requires facts and
circumstances that would lead a reasonably prudent man to
believe that an offense has been committed and the objects
sought in connection with that offense are in the place to be
searched.12 Implicit in this statement is the recognition that an
underlying offense must, in the first place, exist. In other words,
the acts alleged, taken together, must constitute an offense
and that these acts are imputable to an offender in relation
with whom a search warrant is applied for.
In the context of the present case, the question is whether the
act charged - alleged to be hoarding of empty Coke bottles -
constitutes an offense under Section 168.3 (c) of the IP Code.
Section 168 in its entirety states:
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)
The petitioner theorizes that the above section does not limit
the scope of protection on the particular acts enumerated as it
expands the meaning of unfair competition to include "other
acts contrary to good faith of a nature calculated to discredit
the goods, business or services of another." Allegedly, the
respondents' hoarding of Coca Cola empty bottles is one such
act.
We do not agree with the petitioner's expansive interpretation
of Section 168.3 (c).
"Unfair competition," previously defined in Philippine
jurisprudence in relation with R.A. No. 166 and Articles 188 and
189 of the Revised Penal Code, is now covered by Section 168
of the IP Code as this Code has expressly repealed R.A. No. 165
and R.A. No. 166, and Articles 188 and 189 of the Revised Penal
Code.
Articles 168.1 and 168.2, as quoted above, provide the concept
and general rule on the definition of unfair competition. The
law does not thereby cover every unfair act committed in the
course of business; it covers only acts characterized by
"deception or any other means contrary to good faith" in
the passing off of goods and services as those of another who
has established goodwill in relation with these goods or
services, or any other act calculated to produce the same
result.
What unfair competition is, is further particularized under
Section 168.3 when it provides specifics of what unfair
competition is "without in any way limiting the scope of
protection against unfair competition." Part of these particulars
is provided under Section 168.3(c) which provides the general
"catch-all" phrase that the petitioner cites. Under this phrase, a
person shall be guilty of unfair competition "who shall commit
any other act contrary to good faith of a nature calculated to
discredit the goods, business or services of another."
From jurisprudence, unfair competition has been defined as the
passing off (or palming off) or attempting to pass off upon the
public the goods or business of one person as the goods or
business of another with the end and probable effect of
deceiving the public. It formulated the "true test" of unfair
competition: whether the acts of defendant are such as are
calculated to deceive the ordinary buyer making his purchases
under the ordinary conditions which prevail in the particular
trade to which the controversy relates.13 One of the essential
requisites in an action to restrain unfair competition is proof of
fraud; the intent to deceive must be shown before the right to
recover can exist.14 The advent of the IP Code has not
significantly changed these rulings as they are fully in accord
with what Section 168 of the Code in its entirety
provides. Deception, passing off and fraud upon the public are
still the key elements that must be present for unfair
competition to exist.
The act alleged to violate the petitioner's rights under Section
168.3 (c) is hoarding which we gather to be the collection of the
petitioner's empty bottles so that they can be withdrawn from
circulation and thus impede the circulation of the petitioner's
bottled products. This, according to the petitioner, is an act
contrary to good faith - a conclusion that, if true, is indeed an
unfair act on the part of the respondents. The critical question,
however, is not the intrinsic unfairness of the act of hoarding;
what is critical for purposes of Section 168.3 (c) is to determine
if the hoarding, as charged, "is of a nature calculated to
discredit the goods, business or services" of the petitioner.
We hold that it is not. Hoarding as defined by the petitioner is
not even an act within the contemplation of the IP Code.
The petitioner's cited basis is a provision of the IP Code, a set of
rules that refer to a very specific subject - intellectual property.
Aside from the IP Code's actual substantive contents (which
relate specifically to patents, licensing, trademarks, trade
names, service marks, copyrights, and the protection and
infringement of the intellectual properties that these protective
measures embody), the coverage and intent of the Code is
expressly reflected in its "Declaration of State Policy" which
states:
Section 2. Declaration of State Policy. - The State
recognizes that an effective intellectual and industrial
property system is vital to the development of
domestic and creative activity, facilitates transfer of
technology, attracts foreign investments, and ensures
market access for our products. It shall protect and
secure the exclusive rights of scientists, inventors,
artists and other gifted citizens to their intellectual
property and creations, particularly when beneficial
to the people, for such periods as provided in this Act.
The use of intellectual property bears a social
function. To this end, the State shall promote the
diffusion of knowledge and information for the
promotion of national development and progress and
the common good.
It is also the policy of the State to streamline
administrative procedures of registering patents,
trademarks and copyright, to liberalize the
registration on the transfer of technology, and to
enhance the enforcement of intellectual property
rights in the Philippines. (n)
"Intellectual property rights" have furthermore been defined
under Section 4 of the Code to consist of: a) Copyright and
Related Rights; b) Trademarks and Service Marks; c) Geographic
Indications; d) IndustrialDesigns; e) Patents; f) Layout-Designs
(Topographies) of Integrated Circuits; and g)Protection of
Undisclosed Information.
Given the IP Code's specific focus, a first test that should be
made when a question arises on whether a matter is covered
by the Code is to ask if it refers to an intellectual property as
defined in the Code. If it does not, then coverage by the Code
may be negated.
A second test, if a disputed matter does not expressly refer to
an intellectual property right as defined above, is whether it
falls under the general "unfair competition" concept and
definition under Sections 168.1 and 168.2 of the Code. The
question then is whether there is "deception" or any other
similar act in "passing off" of goods or services to be those of
another who enjoys established goodwill.
Separately from these tests is the application of the principles
of statutory construction giving particular attention, not so
much to the focus of the IP Code generally, but to the terms of
Section 168 in particular. Under the principle of "noscitur a
sociis," when a particular word or phrase is ambiguous in itself
or is equally susceptible of various meanings, its correct
construction may be made clear and specific by considering the
company of words in which it is found or with which it is
associated.15
As basis for this interpretative analysis, we note that Section
168.1 speaks of a person who has earned goodwill with respect
to his goods and services and who is entitled to protection
under the Code, with or without a registered mark. Section
168.2, as previously discussed, refers to the general definition
of unfair competition. Section 168.3, on the other hand, refers
to the specific instances of unfair competition, with Section
168.1 referring to the sale of goods given the appearance of the
goods of another; Section 168.2, to the inducement of belief
that his or her goods or services are that of another who has
earned goodwill; while the disputed Section 168.3 being a
"catch all" clause whose coverage the parties now dispute.
Under all the above approaches, we conclude that the
"hoarding" - as defined and charged by the petitioner - does
not fall within the coverage of the IP Code and of Section 168 in
particular. It does not relate to any patent, trademark, trade
name or service mark that the respondents have invaded,
intruded into or used without proper authority from the
petitioner. Nor are the respondents alleged to be fraudulently
"passing off" their products or services as those of the
petitioner. The respondents are not also alleged to be
undertaking any representation or misrepresentation that
would confuse or tend to confuse the goods of the petitioner
with those of the respondents, or vice versa. What in fact the
petitioner alleges is an act foreign to the Code, to the concepts
it embodies and to the acts it regulates; as alleged, hoarding
inflicts unfairness by seeking to limit the opposition's sales by
depriving it of the bottles it can use for these sales.
In this light, hoarding for purposes of destruction is closer to
what another law - R.A. No. 623 - covers, to wit:
SECTION 1. Persons engaged or licensed to engage in
the manufacture, bottling or selling of soda water,
mineral or aerated waters, cider, milk, cream, or
other lawful beverages in bottles, boxes, casks, kegs,
or barrels, and other similar containers, with their
names or the names of their principals or products, or
other marks of ownership stamped or marked
thereon, may register with the Philippine Patent
Office a description of the names or are used by
them, under the same conditions, rules, and
regulations, made applicable by law or regulation to
the issuance of trademarks.
SECTION 2. It shall be unlawful for any person,
without the written consent of the manufacturer,
bottler or seller who has successfully registered the
marks of ownership in accordance with the provisions
of the next preceding section, to fill such bottles,
boxes, kegs, barrels, or other similar containers so
marked or stamped, for the purpose of sale, or to
sell, dispose of, buy, or traffic in, or wantonly destroy
the same, whether filled or not, or to use the same
for drinking vessels or glasses or for any other
purpose than that registered by the manufacturer,
bottler or seller. Any violation of this section shall be
punished by a fine or not more than one hundred
pesos or imprisonment of not more than thirty days
or both.
As its coverage is defined under Section 1, the Act appears to
be a measure that may overlap or be affected by the provisions
of Part II of the IP Code on "The Law on Trademarks, Service
Marks and Trade Names." What is certain is that the IP Code
has not expressly repealed this Act. The Act appears, too, to
have specific reference to a special type of registrants - the
manufacturers, bottlers or sellers of soda water, mineral or
aerated waters, cider, milk, cream, or other lawful beverages in
bottles, boxes, casks, kegs, or barrels, and other similar
containers - who are given special protection with respect to
the containers they use. In this sense, it is in fact a law of
specific coverage and application, compared with the general
terms and application of the IP Code. Thus, under its Section 2,
it speaks specifically of unlawful use of containers and even of
the unlawfulness of their wanton destruction - a matter that
escapes the IP Code's generalities unless linked with the
concepts of "deception" and "passing off" as discussed above.
Unfortunately, the Act is not the law in issue in the present case
and one that the parties did not consider at all in the search
warrant application. The petitioner in fact could not have cited
it in its search warrant application since the "one specific
offense" that the law allows and which the petitioner used was
Section 168.3 (c). If it serves any purpose at all in our
discussions, it is to show that the underlying factual situation of
the present case is in fact covered by another law, not by the IP
Code that the petitioner cites. Viewed in this light, the lack of
probable cause to support the disputed search warrant at once
becomes apparent.
Where, as in this case, the imputed acts do not violate the cited
offense, the ruling of this Court penned by Mr. Justice Bellosillo
is particularly instructive:
In the issuance of search warrants, the Rules of Court
requires a finding of probable cause in connection
with one specific offense to be determined personally
by the judge after examination of the complainant
and the witnesses he may produce, and particularly
describing the place to be searched and the things to
be seized. Hence, since there is no crime to speak of,
the search warrant does not even begin to fulfill
these stringent requirements and is therefore
defective on its face. The nullity of the warrant
renders moot and academic the other issues raised in
petitioners' Motion to Quash and Motion for
Reconsideration. Since the assailed search warrant is
null and void, all property seized by virtue thereof
should be returned to petitioners in accordance with
established jurisprudence.16
Based on the foregoing, we conclude that the RTC correctly
ruled that the petitioner's search warrant should properly be
quashed for the petitioner's failure to show that the acts
imputed to the respondents do not violate the cited offense.
There could not have been any probable cause to support the
issuance of a search warrant because no crime in the first place
was effectively charged. This conclusion renders unnecessary
any further discussion on whether the search warrant
application properly alleged that the imputed act of holding
Coke empties was in fact a "hoarding" in bad faith aimed to
prejudice the petitioner's operations, or whether the MTC duly
complied with the procedural requirements for the issuance of
a search warrant under Rule 126 of the Rules of Court.
WHEREFORE, we hereby DENY the petition for lack of merit.
Accordingly, we confirm that Search Warrant No. 2001-01,
issued by the Municipal Trial Court, Branch 1, Naga City,
is NULL and VOID. Costs against the petitioner.
SO ORDERED.
G.R. No. 179367 January 29, 2014
UNILEVER PHILIPPINES, INC., Petitioner,
vs.
MICHAEL TAN a.k.a. PAUL D. TAN, Respondent.
DECISION
BRION, J.:
Before us is a petition for review on certiorari1 filed by Unilever
Philippines, Inc. (petitioner), assailing the decision2dated June
18, 2007 and the resolution3 dated August 16, 2007 of the
Court of Appeals (CA) in CA G.R. SP No. 87000. These CA rulings
dismissed the petitioner's petition for certiorari and mandamus
for lack of merit.
The Factual Antecedents
The records show that on January 17, 2002, agents of the
National Bureau of Investigation (NBI) applied for the issuance
of search warrants for the search of a warehouse located on
Camia Street, Marikina City, and of an office located on the 3rd
floor of Probest International Trading Building, Katipunan
Street, Concepcion, Marikina City, allegedly owned by Michael
Tan a.k.a. Paul D. Tan (respondent). The application alleged that
the respondent had in his possession counterfeit shampoo
products which were being sold, retailed, distributed, dealt
with or intended to be disposed of, in violation of Section 168,
in relation with Section 170, of Republic Act (R.A.) No. 8293,
otherwise known as the Intellectual Property Code of the
Philippines.
On the same date, Judge Antonio M. Eugenio, Jr. of the
Regional Trial Court of Manila, Branch 1, granted the
application and issued Search Warrant Nos. 02-2606 and 02-
2607. Armed with the search warrants, the NBI searched the
premises and, in the course of the search, seized the following
items:
(A) From [the respondent’s] office:
(a) 192 sachets of Creamsilk Hair
Conditioner (White);
(b) 156 sachets of Creamsilk Hair
Conditioner (Blue);
(c) 158 sachets of Creamsilk Hair
Conditioner (Green);
(d) 204 sachets of Creamsilk Hair
Conditioner (Black);
(e) 192 sachets of Vaseline Amino Collagen
Shampoo;
(f) 192 sachets of Sunsilk Nutrient Shampoo
(Pink);
(g) 144 sachets of Sunsilk Nutrient Shampoo
(Blue);
(h) 136 sachets of Sunsilk Nutrient Shampoo
(Orange);
(i) 144 sachets of Sunsilk Nutrient Shampoo
(Green); and
(j) 1 box of assorted commercial
documents.
(B) From [the respondent’s] warehouse[:]
(a) 372 boxes each containing six (6) cases
of Sunsilk Nutrient Shampoo; and
(b) 481 boxes each containing six (6) cases
Creamsilk Hair Conditioner.4
The NBI thereafter filed with the Department of Justice (DOJ) a
complaint against the respondent for violation of R.A. No. 8293,
specifically Section 168 (unfair competition), in relation with
Section 170, docketed as I.S. No. 2002-667.
In his counter-affidavit, the respondent claimed that he is "Paul
D. Tan," and not "Michael Tan" as alluded in the complaint; he
is engaged in the business of selling leather goods and raw
materials for making leather products, and he conducts his
business under the name "Probest International Trading,"
registered with the Department of Trade and Industry; he is not
engaged in the sale of counterfeit Unilever shampoo products;
the sachets of Unilever shampoos seized from his office in
Probest International Trading Building are genuine shampoo
products which they use for personal consumption; he does not
own and does not operate the warehouse located on Camia
Street, Marikina City, where a substantial number of alleged
counterfeit Unilever shampoo products were found; and he did
not violate R.A. No. 8293 because there is no prima facie
evidence that he committed the offense charged.
Rulings of the DOJ
On December 18, 2002, State Prosecutor Melvin J. Abad issued
a Resolution5 dismissing the criminal complaint on the ground
of insufficiency of evidence. To quote:
After a thorough evaluation of the evidence, we find no
sufficient evidence so as to warrant a finding of probable cause
to indict respondent Paul D. Tan (not Michael Tan) for violation
of Section 168 (unfair competition) in relation to Section 170 of
R.A. No. 8293.
xxxx
WHEREFORE, it is respectfully recommended that the instant
complaint for Violation of Section 168 (unfair competition) in
relation to Section 170 of R.A. No. 8293 be DISMISSED for
insufficiency of evidence.6
The State Prosecutor found that the petitioner failed to show
the respondent’s actual and direct participation in the offense
charged. While the Certificate of Registration of Probest
International Trading shows that a certain "Paul D. Tan" is the
registered owner and proprietor of the office, there is no
showing that he is also the registered owner of the warehouse
where the alleged counterfeit Unilever shampoo products were
found. There is also no evidence to support the claim that the
respondent was engaged in the sale of counterfeit products
other than the self-serving claim of the petitioner’s
representatives. Lastly, the State Prosecutor found that the
pieces of evidence adduced against the respondent, e.g. alleged
counterfeit Unilever shampoo products, by themselves, are not
sufficient to support a finding of probable cause that he is
engaged in unfair competition.
The motion for reconsideration that followed was denied in a
resolution7 dated June 5, 2003.
On September 9, 2003, the petitioner filed a petition for review
with the DOJ,8 which the Acting Secretary of Justice, Merceditas
N. Gutierrez, dismissed in her March 16, 2004 resolution. In the
resolution, the Acting Secretary of Justice affirmed the State
Prosecutor’s finding of lack of probable cause.
The petitioner thereafter sought, but failed, to secure a
reconsideration.
On October 19, 2004, the petitioner filed with the CA a petition
for certiorari under Rule 65 of the Rules of Court, imputing
grave abuse of discretion on the Acting Secretary of Justice, et
al., in deciding the case in the respondent’s favor.
The Rulings of the CA
The CA, in a decision dated June 18, 2007, dismissed the
petition on the ground that the petitioner failed to establish
facts and circumstances that would constitute acts of unfair
competition under R.A. No. 8293. The CA took into account the
insufficiency of evidence that would link the respondent to the
offense charged. It also ruled that the Acting Secretary of
Justice did not gravely abuse her discretion when she affirmed
the State Prosecutor’s resolution dismissing the petitioner’s
complaint for insufficiency of evidence to establish probable
cause.
The petitioner sought reconsideration of the aforementioned
decision rendered by the CA but its motion was denied in a
resolution dated August 16, 2007.
The present Rule 45 petition questions the CA’s June 18, 2007
decision and August 16, 2007 resolution.
The Petition
The petitioner contends that the CA erred in dismissing its
petition for certiorari and in affirming the DOJ’s rulings. It
argues that while it may be possible that the respondent is not
the owner of the warehouse, the overwhelming pieces of
evidence nonetheless prove that he is the owner of the
counterfeit shampoo products found therein. The petitioner
also maintains that the voluminous counterfeit shampoo
products seized from the respondent are more than sufficient
evidence to indict him for unfair competition.
The Issue
The case presents to us the issue of whether the CA committed
a reversible error in upholding the Acting Secretary of Justice’s
decision dismissing the information against the respondent.
The resolution of this issue requires a determination of the
existence of probable cause in order to indict the respondent of
unfair competition.
The Court’s Ruling
We find merit in the petition.
Determination of Probable Cause
Lies Within the Competence of the
Public Prosecutor
The determination of probable cause for purposes of filing of
information in court is essentially an executive function that is
lodged, at the first instance, with the public prosecutor and,
ultimately, to the Secretary of Justice.9 The prosecutor and the
Secretary of Justice have wide latitude of discretion in the
conduct of preliminary investigation;10and their findings with
respect to the existence or non-existence of probable cause are
generally not subject to review by the Court.
Consistent with this rule, the settled policy of non-interference
in the prosecutor’s exercise of discretion requires the courts to
leave to the prosecutor and to the DOJ the determination of
what constitutes sufficient evidence to establish probable
cause.11 Courts can neither override their determination nor
substitute their own judgment for that of the latter. They
cannot likewise order the prosecution of the accused when the
prosecutor has not found a prima facie case.12
Nevertheless, this policy of non-interference is not without
exception. The Constitution itself allows (and even directs)
court action where executive discretion has been gravely
abused.13 In other words, the court may intervene in the
executive determination of probable cause, review the findings
and conclusions, and ultimately resolve the existence or non-
existence of probable cause by examining the records of the
preliminary investigation when necessary for the orderly
administration of justice.14
Courts Cannot Reverse the Secretary
of Justice’s Findings Except in Clear
Cases of Grave Abuse of Discretion
The term "grave abuse of discretion" means such capricious or
whimsical exercise of judgment which is equivalent to lack of
jurisdiction. To justify judicial intervention, the abuse of
discretion must be so patent and gross as to amount to an
evasion of a positive duty or to a virtual refusal to perform a
duty enjoined by law or to act at all in contemplation of law, as
where the power is exercised in an arbitrary and despotic
manner by reason of passion or hostility.15 In Elma v.
Jacobi,16 we said that:
This error or abuse alone, however, does not render his act
amenable to correction and annulment by the extraordinary
remedy of certiorari. To justify judicial intrusion into what is
fundamentally the domain of the Executive, the petitioner must
clearly show that the prosecutor gravely abused his discretion
amounting to lack or excess of jurisdiction in making his
determination and in arriving at the conclusion he reached. This
requires the petitioner to establish that the prosecutor
exercised his power in an arbitrary and despotic manner by
reason of passion or personal hostility; and it must be so patent
and gross as to amount to an evasion or to a unilateral refusal
to perform the duty enjoined or to act in contemplation of law,
before judicial relief from a discretionary prosecutorial action
may be obtained. [emphasis supplied]
An examination of the decisions of the State Prosecutor and of
the DOJ shows that the complaint’s dismissal was anchored on
the insufficiency of evidence to establish the respondent’s
direct, personal or actual participation in the offense charged.
As the State Prosecutor found (and affirmed by the DOJ), the
petitioner failed to prove the ownership of the warehouse
where counterfeit shampoo products were found. This finding
led to the conclusion that there was insufficient basis for an
indictment for unfair competition as the petitioner failed to
sufficiently prove that the respondent was the owner or
manufacturer of the counterfeit shampoo products found in
the warehouse.
A careful analysis of the lower courts’ rulings and the records,
however, reveals that substantial facts and circumstances that
could affect the result of the case have been overlooked. While
the ownership of the warehouse on Camia Street, Marikina
City, was not proven, sufficient evidence to prove the existence
of probable cause nevertheless exists. These pieces of evidence
consist of: (1) the result of the NBI agents’ search of the office
and of the warehouse; (2) Elmer Cadano’s complaint-affidavit;
(3) Rene Baltazar’s affidavit; (4) Unilever’s representatives’
claim that all the laborers present at the warehouse confirmed
that it was operated by Probest International Trading; (5) other
object evidence found and seized at the respondent’s office
and warehouse; (6) the NBI operatives’ Joint Affidavit; (7) the
subsequent seizure of counterfeit Unilever products from the
respondent’s warehouse in Antipolo City; and (8) other
photographs and documents relative to the counterfeit
products.
These pieces of evidence, to our mind, are sufficient to form a
reasonable ground to believe that the crime of unfair
competition was committed and that the respondent was its
author.
First, a total of 1,238 assorted counterfeit Unilever products
were found at, and seized from, the respondent’s office located
on the 3rd floor of Probest International Trading Building,
Katipunan Street, Concepcion, Marikina City. The huge volume
and the location where these shampoos were found (inside a
box under a pile of other boxes located inside the respondent’s
office) belie the respondent’s claim of personal consumption.
Human experience and common sense dictate that shampoo
products (intended for personal consumption) will ordinarily
and logically be found inside the house, specifically, inside the
bathroom or in a private room, not in the consumer’s office.
Second, the failure to prove that the respondent is the owner
of the warehouse located on Camia St., Marikina City, does not
automatically free him from liability. Proof of the warehouse’s
ownership is not crucial to the finding of probable cause. In
fact, ownership of the establishment where the counterfeit
products were found is not even an element of unfair
competition. While the respondent may not be its owner, this
does not foreclose the possibility that he was the manufacturer
or distributor of the counterfeit shampoo products. Needless to
say, what is material to a finding of probable cause is the
commission of acts constituting unfair competition, the
presence of all its elements and the reasonable belief, based on
evidence, that the respondent had committed it.
Third, the result of the NBI’s search conducted on January 17,
2002 (yielding to several boxes of counterfeit shampoo sachets)
and the NBI’s Joint Affidavits in support of the application for
search warrants serve as corroborating evidence. The striking
similarities17 between the genuine Unilever shampoo sachets
and the counterfeit sachets seized by the NBI support the belief
that the respondent had been engaged in dealing,
manufacturing, selling and distributing counterfeit Unilever
shampoo products.
Fourth, there were also allegations that the respondent’s
laborers and warehousemen who were present during the
search had confirmed that the warehouse was being
maintained and operated by Probest International Trading. The
NBI investigators who served the search warrant also claimed
that several persons, introducing themselves as the
respondent’s relatives and friends, had requested them to seize
only a portion of the counterfeit shampoo products. Whether
these claims are admissible in evidence or whether they should
be excluded as hearsay are matters that should be determined
not in a preliminary investigation, but in a full-blown trial.
In Lee v. KBC Bank N.V.,18 citing Andres v. Justice Secretary
Cuevas,19 we held that:
[A preliminary investigation] is not the occasion for the full and
exhaustive display of [the prosecution’s] evidence.1âwphi1The
presence or absence of the elements of the crime is evidentiary
in nature and is a matter of defense that may be passed upon
after a full-blown trial on the merits.
We also emphasized in that case that:
In fine, the validity and merits of a party’s defense or
accusation, as well as the admissibility of testimonies and
evidence, are better ventilated during trial proper than at the
preliminary investigation level.20
Finally, the subsequent events that occurred – after the filing of
the petitioner’s complaint and the institution of its appeal to
the CA – are too significant to be ignored.
In its motion to reconsider the CA’s decision,21 the petitioner
pointed to the reports it received sometime in October 2005
that the respondent had resumed its operations involving
counterfeit Unilever products. Notably, these significant
reports, albeit supported by the subsequent seizure of large
quantity of counterfeit Unilever shampoos22in the respondent’s
warehouse23 (located at No. 13 First Street Corner Sevilla
Avenue, Virginia Summerville Subdivision, Barangay
Mambugan, Antipolo City), were ignored by the CA. We,
however, find that this development is significant, although
they were not part of the mass of evidence considered below.
Even without them and based solely on the evidentiary
materials available below, we conclude that sufficient grounds
exist to indict the respondent for unfair competition.
Determination of Probable Cause
Merely Requires Probability of Guilt
or Reasonable Ground for Belief
The determination of probable cause needs only to rest on
evidence showing that more likely than not, a crime has been
committed and there is enough reason to believe that it was
committed by the accused.24 It need not be based on clear and
convincing evidence of guilt, neither on evidence establishing
absolute certainty of guilt.25 What is merely required is
"probability of guilt." Its determination, too, does not call for
the application of rules or standards of proof that a judgment
of conviction requires after trial on the merits.26 Thus, in
concluding that there is probable cause, it suffices that it is
believed that the act or omission complained of constitutes the
very offense charged.
It is also important to stress that the determination of probable
cause does not depend on the validity or merits of a party’s
accusation or defense or on the admissibility or veracity of
testimonies presented. As previously discussed, these matters
are better ventilated during the trial proper of the case.27 As
held in Metropolitan Bank & Trust Company v. Gonzales:28
Probable cause has been defined as the existence of such facts
and circumstances as would excite the belief in a reasonable
mind, acting on the facts within the knowledge of the
prosecutor, that the person charged was guilty of the crime for
which he was prosecuted. xxx The term does not mean "actual
or positive cause" nor does it import absolute certainty. It is
merely based on opinion and reasonable belief. Thus, a finding
of probable cause does not require an inquiry into whether
there is sufficient evidence to procure a conviction. It is enough
that it is believed that the act or omission complained of
constitutes the offense charged. Precisely, there is a trial for
the reception of evidence of the prosecution in support of the
charge.
Guided by this ruling, we find that the CA gravely erred in
sustaining the Acting Secretary of Justice’s finding that there
was no probable cause to indict the respondent for unfair
competition. The dismissal of the complaint, despite ample
evidence to support a finding of probable cause, clearly
constitutes grave error that warrants judicial intervention and
correction.
WHEREFORE, in view of the foregoing, judgment is hereby
rendered GRANTING the petition filed by Unilever Philippines,
Inc. The appealed decision dated June 18, 2007 and the
resolution dated August 16, 2007 of the Court of Appeals are
ANNULLED AND SET ASIDE.
The State Prosecutor is hereby ORDERED to file the appropriate
Information against Michael Tan a.k.a. Paul D. Tan.
SO ORDERED.
G.R. No. 205972
CATERPILLAR, INC., Petitioner
vs.
MANOLO P. SAMSON, Respondent
x-----------------------x
G.R. No. 164352
CATERPILLAR, INC., Petitioner,
vs.
MANOLO P. SAMSON, Respondent.
DECISION
BERSAMIN, J.:
The determination of probable cause to charge a person in
court for a criminal offense is exclusively lodged in the
Executive Branch of the Government, through the Department
of Justice. Initially, the determination is done by the
investigating public prosecutor, and on review by the Secretary
of Justice or his duly authorized subordinate. The courts will
respect the determination, unless the same shall be shown to
have been made in grave abuse of discretion amounting to lack
or excess of jurisdiction.
The Cases
Before us are the consolidated cases of G.R. No. 2059721 and
G.R. No. 164352.2
G.R. No. 164352 involves the appeal by petition for review
on certiorari of Caterpillar, Inc. (Caterpillar) to reverse the
decision promulgated on January 21, 20043 by the Court of
Appeals (CA) in CA-G.R. SP No. 75526, and the resolution
promulgated on June 30, 2004 denying the motion for
reconsideration thereof.4
G.R. No. 205972 relates to the appeal brought by Caterpillar to
assail the decision and resolution promulgated in CA-G.R. SP
No. 102316 respectively on May 8, 20125 and February 12,
2013,6 whereby the CA affirmed the resolutions of the
Department of Justice (DOJ) finding that there was no probable
cause to indict Manolo P. Samson (Samson) for unfair
competition.
Antecedents
Caterpillar is a foreign corporation engaged in the manufacture
and distribution of footwear, clothing and related items, among
others. Its products are known for six core trademarks, namely,
"CATERPILLAR", "CAT" "CATERPILLAR & DESIGN" "CAT AND
DESIGN", "WALKING MACHINES" and "TRACK-TYPE TRACTOR &
DESIGN (Core Marks),7 all of which are alleged as
internationally known. On the other hand, Samson, doing
business under the names and styles of Itti Shoes Corporation,
Kolm's Manufacturing Corporation and Caterpillar Boutique and
General Merchandise, is the proprietor of various retail outlets
in the Philippines selling footwear, bags, clothing, and related
items under the trademark "CATERPILLAR", registered in 1997
under Trademark Registration No. 64705 issued by the
Intellectual Property Office (IPO).8
G.R. No. 164352
On July 26, 2000, upon application of the National Bureau of
Investigation (NBI), the Regional Trial Court (RTC), Branch 56, in
Makati City issued Search Warrants Nos. 00-022 to 00-032,
inclusive, all for unfair competition,9 to search the
establishments owned, controlled and operated by Samson.
The implementation of the search warrants on July 27, 2000 led
to the seizure of various products bearing Caterpillar's Core
Marks.
Caterpillar filed against Samson several criminal complaints for
unfair competition in the Department of Justice (DOJ),
docketed as LS. Nos. 2000-13 54 to 2000-13 64, inclusive.
Additionally, on July 31, 2000, Caterpillar commenced a civil
action against Samson and his business entities, with the IPO as
a nominal party10 - for Unfair Competition, Damages and
Cancellation of Trademark with Application for Temporary
Restraining Order (TRO) and/or Writ of Preliminary Injunction -
docketed as Civil Case No. Q-00-41446 of the RTC in Quezon
City. In said civil action, the RTC denied Caterpillar's application
for the issuance of the TRO on August 17, 2000.
The DOJ, through Senior State Prosecutor Jude R. Romano,
issued a joint resolution dated November 15,
200111recommending that Samson be criminally charged with
unfair competition under Section 168.3 (a),12 in relation to
Section 123.l(e),13 Section 131.114 and Section 170,15 all of
Republic Act No. 8293, or the Intellectual Property Code of the
Philippines (IP Code).
However, because Samson and his affiliate companies allegedly
continued to sell and distribute products clothed with the
general appearance of its own products, Caterpillar again
applied for another set of search warrants against Samson and
his businesses. The RTC, Branch 172, in Valenzuela City issued
Search Warrants Nos. 12-V-00,16 13-V-00,17 20-V-0018 and 29-V-
0019 upon application of the NBI, by virtue of the
implementation of which several goods were seized and
confiscated by the NBI agents.
As a consequence, Caterpillar filed 26 criminal complaints for
unfair competition on January 31, 2001, docketed as LS. Nos.
2001-42 to 2001-67, against Samson and/or the occupants of
his affiliate entities before the DOJ.20 In due course, the DOJ,
through State Prosecutor Zenaida M. Lim, issued a joint
resolution dated September 28, 200121recommending the filing
of criminal complaints for unfair competition under Section
168.3(a), in relation to Section 123 .1, Section 131.1 and Section
170 of the IP Code. Accordingly, six criminal complaints were
filed in the RTC, Branch 256, in Muntinlupa City, presided by
Judge Alberto L. Lerma, docketed as Criminal Cases Nos. 02-238
to 02-243.
On January 17 and 22, 2002, Samson filed a petitions for review
with the Office of the Secretary of Justice to appeal the joint
resolutions in LS. Nos. 2000-1354 to 2000-136422 and LS. Nos.
2001-042 to 2001-067.23
On May 30, 2002, Samson filed a Motion to Suspend
Arraignment in Criminal Cases Nos. 02-238 to 243,24 citing the
following as grounds:25
I.
THERE EXISTS PREJUDICIAL QUESTIONS PENDING LITIGATION
BEFORE THE REGIONAL TRIAL COURT OF QUEZON CITY,
BRANCH 90, IN CIVIL CASE NO. Q-00-41446 ENTITLED:
"CATERPILLAR, INC., ET AL. VS. ITTI SHOES CORPORATION, ET
AL.," THE FINAL RESOLUTIONS OF WHICH WILL DETERMINE THE
OUTCOME OF THE INSTANT CRIMINAL CASES.
II.
ACCUSED HAS FILED PETITIONS FOR REVIEW WITH THE
DEPARTMENT OF JUSTICE ASSAILING THE RESOLUTIONS OF THE
CHIEF STATE PROSECUTOR WHO CAUSED THE FILING OF THE
INSTANT CASES AND ARE STILL PENDING THEREIN UP TO THE
PRESENT.
In the meanwhile, on July 10, 2002, the DOJ, through Secretary
Hernando B. Perez, issued a resolution26 denying Samson's
petition for review in I.S. Nos. 2000-1354 to 2000-1364.
Samson's motion for reconsideration was likewise denied on
May 26, 2003.
On September 23, 2002, Presiding Judge Lerma of the RTC
granted Samson's Motion to Suspend Arraignment, and
suspended the arraignment and all other proceedings in
Criminal Cases Nos. 02-240 to 02-243 until Civil Case No. Q-00-
41446 was finally resolved,27 holding:
After a careful scrutiny of the case, this Court finds that private
complainant, in Civil Case No. Q-00-41446, seeks for the
cancellation of the trademark "CATERPILLAR" which is
registered in the name of the accused and to prevent the latter
from using the said trademark ("CATERPILLAR"), while the issue
in the instant case is the alleged unlawful use by the accused of
the trademark "CATERPILLAR" which is claimed to be owned by
the private complainant. From the foregoing, this Court
believes that there exists a prejudicial question since the
determination of who is really the lawful or registered user of
the trademark "CATERPILLAR" will ultimately determine
whether or not the instant criminal action shall proceed.
Clearly, the issues raised in Civil Case No. Q-00-41446 is similar
or intimately related to the issue in the case at bar for if the
civil case will be resolved sustaining the trademark registration
of the accused for the trademark CATERPILLAR, then the latter
would have all the authority to continue the use of the said
trademark as a consequence of a valid registration, and by
reason of which there may be no more basis to proceed with
the instant criminal action.28
After the RTC denied its motion for reconsideration29 on
December 5, 2002,30 Caterpillar elevated the matter to the CA
by petition for certiorari on February 14, 2003,31 docketed as
C.A.-G.R. SP No. 75526 entitled Caterpillar, Inc. v. Hon. Alberto
L. Lerma, in his capacity as Presiding Judge of Branch 256 of the
Regional Trial Court, Muntinlupa City, and Manolo P.
Samson, alleging grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of the RTC in suspending the
arraignment and other proceedings in Criminal Cases Nos. 02-
238 to 02-243 on the ground of the existence of an alleged
prejudicial question in Civil Case No. Q-00-41446 then pending
in the RTC in Quezon City whose resolution would determine
the outcome of the criminal cases.
Meanwhile, on January 13, 2003, Acting Justice Secretary Ma.
Merceditas N. Gutierrez reversed and set aside the resolution
issued by State Prosecutor Lim in I.S. No. 2001-042 to 2001-
067, and directed the Chief State Prosecutor to cause the
withdrawal of the criminal informations filed against Samson in
court,32 disposing as follows:
ACCORDINGLY, the assailed joint resolution is
hereby REVERSED and SET ASIDE. The Chief State Prosecutor is
directed to forthwith cause the withdrawal of the informations
filed in court against respondent Manolo P. Samson and to
report action taken hereon within ten (10) days from receipts
hereof.33
Acting Justice Secretary Gutierrez based her resolution on the
order dated June 26, 2001, whereby the RTC of Valenzuela City,
Branch 172, had quashed the 26 search warrants upon motion
of Samson.34 Consequently, the goods seized and confiscated
by virtue of the quashed search warrants could no longer be
admitted in evidence
Correspondingly, Presiding Judge Lerma of the RTC ordered the
withdrawal of Criminal Cases Nos. 02-240 to 02-243 on
February 4, 2003.35
Aggrieved, Caterpillar assailed the order of Judge Lerma for the
withdrawal of Criminal Cases Nos. 02-240 to 02-2432003 by
petition for certiorari in the CA on October 16, 2003, docketed
as CA-G.R. SP No. 79937,36 and the CA ultimately granted the
petition for certiorari,37 setting aside the assailed January 13,
2003 resolution of the Acting Justice Secretary and directing the
re-filing of the withdrawn informations against Samson. The
Court ultimately affirmed the CA's dec ision through the
resolution promulgated on October 17, 2005 in G.R. No.
169199, and ruling that probable cause existed for the re-filing
of the criminal charges for unfair competition under the IP
Code.38
In the assailed January 21, 2004 decision,39 the CA dismissed
Caterpillar's petition for certiorari in CA-G.R. SP No. 75526, viz.:
Petition has no merit.
The mere fact that public respondent denied petitioner's
motion for reconsideration does not justify this petition on the
ground of abuse of discretion. Grave abuse of discretion means
such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, or, in other words where the
power is exercised in an arbitrary or despotic manner by reason
of passion or personal hostility and it must be so patent and
gross as to amount to an evasion of positive duty or to a virtual
refusal to perform the duty enjoined or to act at all in
contemplation of law. (Benito vs. Comelec, 349 SCRA 705).
Petitioner in this case failed to overcome the burden of
showing how public respondent acted with grave abuse of
discretion in granting private respondent's motion and denying
his own motion for reconsideration. What is clear is that public
respondent court acted judiciously. A petition
for certiorariunder Rule 65 of the Rules of Court will prosper
only if there is showing of grave abuse of discretion or an act
without or in excess of jurisdiction on the part of respondent
tribunal (Garcia vs. HRET, 312 SCRA 353).
Granting arguendo that public respondent court erred in its
ruling, still a petition for certiorari under Rule 65 cannot be
justified. Where the court has jurisdiction over the subject
matter, the orders or decision upon all questions pertaining to
the cause are orders or decisions within its jurisdiction and
however erroneous they may be, they cannot be corrected
by certiorari (De Baron vs. Court of Appeals, 368 SCRA 407).
WHEREFORE, foregoing premises considered, the Petition
having no merit in fact and in law is hereby DENIED DUE
COURSE and ordered DISMISSED. With costs to Petitioners.
SO ORDERED.40
Caterpillar sought the reconsideration of the dismissal, but the
CA denied the motion on June 30, 2004.41
Hence, Caterpillar appealed the CA's decision in C.A.-G.R. SP
No. 75526 (G.R. No. 164352).
G .R. No. 205972
In the meanwhile, in August 2002, upon receiving the
information that Samson and his affiliate entities continuously
sold and distributed products bearing Caterpillar's Core Marks
without Caterpillar's consent, the latter requested the
assistance of the Regional Intelligence and Investigation
Division of the National Region Public Police (RIID-NCRPO) for
the conduct of an investigation. Subsequently, after the
investigation, the RIID-NCRPO applied for and was granted 16
search warrants against various outlets owned or operated by
Samson in Mandaluyong, Quezon City, Manila, Caloocan,
Makati, Parañaque, Las Piñas, Pampanga and Cavite. The
warrants were served on August 27, 2002,42 and as the result
products bearing Caterpillar's Core Marks were seized and
confiscated. Consequently, on the basis of the search warrants
issued by the various courts, Caterpillar again instituted
criminal complaints in the DOJ for violation of Section 168.3(a),
in relation to Sections 131.3, 123.l(e) and 170 of the IP Code
against Samson, docketed as LS. Nos. 2002-995 to 2002-997;
2002-999 to 2002-1010; and 2002-1036.
After the conduct of the preliminary investigation, the DOJ,
through State Prosecutor Melvin J.Abad, issued a joint
resolution dated August 21, 2003 dismissing the complaint
upon finding that there was no probable cause to charge
Samson with unfair competition.43
Caterpillar moved for the reconsideration of the dismissal, but
State Prosecutor Abad denied the motion on June 18, 2004.44
The Secretary of Justice affirmed the dismissal of the complaint
through the resolution issued on September 19, 2005,45 and
denied Caterpillar's motion for reconsideration on December
20, 2007.
Accordingly, Caterpillar appealed to the CA through a petition
for review under Rule 43, Rules of Court (C.A.-G.R. SP No.
102316).46
On May 8, 2012,47 however, the CA denied due course to
Caterpillar's petition for review, viz.:
WHEREFORE, premises considered, the petition is DENIED DUE
COURSE, and accordingly, DISMISSED.
SO ORDERED.48
The CA opined that an appeal under Rule 43 to assail the
resolution by the Secretary of Justice determining the existence
or non-existence of probable cause was an improper remedy;
and that while it could treat an appeal as a special civil action
for certiorari under Rule 65, it could not do so therein because
the allegations of the petition did not sufficiently show grave
abuse of discretion on the part of the Secretary of Justice in
issuing the assailed resolutions.
Caterpillar filed a motion for reconsideration, but the CA denied
the motion for its lack of merit on February 12, 2013.49
Hence, Caterpillar commenced G.R. No. 205972.
Issues
Caterpillar submits that the CA erred as follows:
G.R. No. 164352
A.
THE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE
ERROR IN DENYING DUE COURSE TO CATERPILLAR INC.'S
PETITION FOR CERTIORARI.
B.
THE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE
ERROR IN NOT HOLDING THAT THE ORDER SUSPENDING
PROCEEDINGS IN CRIMINAL CASES NOS. 02-238 TO 02-243, ON
THE BASIS OF AN ALLEGED PREJUDICIAL QUESTION, WAS
CONTRARY TO LAW AND ESTABLISHED JURISPRUDENCE.
C.
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS
REVERSIBLE ERROR IN NOT HOLDING THAT A CRIMINAL
COMPLAINT FOR UNFAIR COMPETITION CAN PROCEED
INDEPENDENTLY OF, AND SIMULTANEOUS WITH, THE CIVIL
CASE FOR THE SAME.50
Caterpillar posits that the suspension of proceedings in Criminal
Cases Nos. 02-238 to 02-243 was contrary to Rule 111 of
the Rules of Court, Article 33 of the Civil Code on independent
civil actions, and Section 170 of the IP Code, which specifically
provides that the criminal penalties for unfair competition were
independent of the civil and administrative sanctions imposed
by law; that the determination of the lawful owner of the
"CATERPILLAR" trademark in Civil Case No. Q-00-41446 would
not be decisive of the guilt of Samson for unfair competition in
Criminal Cases Nos. 02-238 to 02-243 because registration was
not an element of the crime of unfair competition; that the civil
case sought to enforce Samson's civil liability arising from the IP
Code while the criminal cases would enforce Samson's liability
arising from the crime of unfair competition; and that the Court
already ruled in Samson v. Daway51 that Civil Case No. Q-00-
41446 was an independent civil action under Article 33 of
the Civil Code and, as such, could proceed independently of the
criminal actions.
In his comment,52 Samson counters that the issues of the lawful
and registered owner of the trademark, the true owner of the
goodwill, and whether "CATERPILLAR" was an internationally
well-known mark are intimately related to the issue of guilt in
the criminal actions, the resolution of which should determine
whether or not the criminal actions for unfair competition
could proceed.
G.R. No. 205972
In this appeal, the petitioner interposes that:
THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING
THE PETITIONER'S PETITION FOR REVIEW SOLELY ON THE
GROUND OF AN ALLEGED WRONG REMEDY, DESPITE
PETITIONERS HAVING CLEARLY ESTABLISHED THAT THE
SECRETARY OF JUSTICE ACTED WITH GRAVE ABUSE OF
DISCRETION IN ISSUING THE RESOLUTIONS DATED 19
SEPTEMBER 2005 AND 20 DECEMBER 2007, AFFIRMING THE
FINDINGS OF THE INVESTIGATING PROSECUTOR THAT NO
PROBABLE CAUSE EXISTS TO CHARGE THE RESPONDENT OF THE
CRIME OF UNFAIR COMPETITION.53
Caterpillar seeks the liberal interpretation of procedural rules in
order to serve the higher interest of substantial justice
following the denial by the CA of its petition for being an
incorrect remedy; and insists that it presented substantial
evidence to warrant a finding of probable cause for unfair
competition against Samson.
In sum, the issues to be resolved in these consolidated cases
are: firstly, whether or not the CA committed a reversible error
in ruling that the trial court a quo did not commit grave abuse
of discretion in suspending the criminal proceedings on account
of a prejudicial question; and, secondly, whether or not the CA
committed reversible error in upholding the decision of the
Secretary of Justice finding that there was no probable cause to
charge Samson with unfair competition.
Rulings of the Court
G.R. No. 164352
The appeal in G.R. No. 164352 is meritorious.
We note, to begin with, that Civil Case No. Q-00-41446, the civil
case filed by Caterpillar in the RTC in Quezon City, was for
unfair competition, damages and cancellation of trademark,
while Criminal Cases Nos. Q-02-108043-44 were the criminal
prosecution of Samson for unfair competition. A common
element of all such cases for unfair competition - civil and
criminal - was fraud. Under Article 33 of the Civil Code, a civil
action entirely separate and distinct from the criminal action
may be brought by the injured party in cases of fraud, and such
civil action shall proceed independently of the criminal
prosecution. In view of its being an independent civil action,
Civil Case No. Q-00-41446 did not operate as a prejudicial
question that justified the suspension of the proceedings in
Criminal Cases Nos. Q-02-108043-44.
In fact, this issue has already been raised in relation to the
suspension of the arraignment of Samson in Criminal Cases
Nos. Q-02-108043-44 in Samson v. Daway,54 and the Court
resolved it against Samson and in favor of Caterpillar thusly:
Anent the second issue, petitioner failed to substantiate his
claim that there was a prejudicial question. In his petition, he
prayed for the reversal of the March 26, 2003 order which
sustained the denial of his motion to suspend arraignment and
other proceedings in Criminal Case Nos. Q-02-108043-44. For
unknown reasons, however, he made no discussion in support
of said prayer in his petition and reply to comment. Neither did
he attach a copy of the complaint in Civil Case No. Q-00-41446
nor quote the pertinent portion thereof to prove the existence
of a prejudicial question.
At any rate, there is no prejudicial question if the civil and the
criminal action can, according to law, proceed independently of
each other. Under Rule 111, Section 3 of the Revised Rules on
Criminal Procedure, in the cases provided in Articles 32, 33, 34
and 2176 of the Civil Code, the independent civil action may be
brought by the offended party. It shall proceed independently
of the criminal action and shall require only a preponderance of
evidence.
In the case at bar, the common element in the acts constituting
unfair competition under Section 168 of R.A. No. 8293 is fraud.
Pursuant to Article 33 of the Civil Code, in cases of
defamation, fraud, and physical injuries, a civil action for
damages, entirely separate and distinct from the criminal
action, may be brought by the injured party. Hence, Civil Case
No. Q-00-41446, which as admitted by private respondent
also relate to unfair competition, is an independent civil
action under Article 33 of the Civil Code. As such, it will not
operate as a prejudicial question that will justify the
suspension of the criminal cases at bar.55 (Bold emphasis
supplied)
Secondly, a civil action for damages and cancellation of
trademark cannot be considered a prejudicial question by
which to suspend the proceedings in the criminal cases for
unfair competition. A prejudicial question is that which arises in
a civil case the resolution of which is a logical antecedent of the
issues to be determined in the criminal case. It must appear not
only that the civil case involves facts upon which the criminal
action is based, but also that the resolution of the issues raised
in the civil action will necessarily be determinative of the
criminal case.56 As stated in Librodo v. Judge Coscolluela, Jr.:57
A prejudicial question is one based on a fact distinct and
separate from the crime but so intimately connected with it
that it determines the guilt or innocence of the accused, and for
it to suspend the criminal action, it must appear not only that
said case involves facts intimately related to those upon which
the criminal prosecution would be based but also that in the
resolution of the issue or issues raised in the civil case, the guilt
or innocence of the accused would necessarily be
determined. It comes into play generally in a situation where a
civil action and a criminal action are both pending and there
exists in the former an issue which must be preemptively
resolved before the criminal action may proceed, because
howsoever the issue raised in the civil action is resolved
would be determinative juris et de jure of the guilt or
innocence of the accused in the criminal case.58 (Bold
underscoring supplied for emphasis)
The elements of a prejudicial question are provided in Section 7
of Rule 111, Rules of Court, to wit: (a) a previously instituted
civil action involves an issue similar to or intimately related to
the issue raised in the subsequent criminal action, and (b) the
resolution of such issue determines whether or not the criminal
action may proceed.59
An examination of the nature of the two kinds of cases involved
is necessary to determine whether a prejudicial question
existed.
An action for the cancellation of trademark like Civil Case No.
Q-00-41446 is a remedy available to a person who believes that
he is or will be damaged by the registration of a mark.60 On the
other hand, the criminal actions for unfair competition
(Criminal Cases Nos. Q-02-108043-44) involved the
determination of whether or not Samson had given his goods
the general appearance of the goods of Caterpillar, with the
intent to deceive the public or defraud Caterpillar as his
competitor.61 In the suit for the cancellation of trademark, the
issue of lawful registration should necessarily be determined,
but registration was not a consideration necessary in unfair
competition.62 Indeed, unfair competition is committed if the
effect of the act is "to pass off to the public the goods of one
man as the goods of another;"63 it is independent of
registration. As fittingly put in R.F. & Alexander & Co. v.
Ang,64 "one may be declared unfair competitor even if his
competing trade-mark is registered."
Clearly, the determination of the lawful ownership of the
trademark in the civil action was not determinative of whether
or not the criminal actions for unfair competition shall proceed
against Samson.
G.R. No. 205972
The petition for review on certiorari in G.R. No. 205972 is
denied for being bereft of merit.1âwphi1
Firstly, Caterpillar assailed the resolution of the Secretary of
Justice by filing a petition for review under Rule 43 of the Rules
of Court. Such resort to the petition for review under Rule 43
was erroneous,65 and the egregious error warranted the denial
of the appeal. The petition for review under Rule 43 applied to
all appeals to the CA from quasi-judicial agencies or bodies,
particularly those listed in Section 1 of Rule 43. However, the
Secretary of Justice, in the review of the findings of probable
cause by the investigating public prosecutor, was not exercising
a quasi-judicial function, but performing an executive
function.66
Moreover, the courts could intervene in the determination of
probable cause only through the special civil action
for certiorari under Rule 65 of the Rules of Court, not by appeal
through the petition for review under Rule 43. Thus, the CA
could not reverse or undo the findings and conclusions on
probable cause by the Secretary of Justice except upon clear
demonstration of grave abuse of discretion amounting to lack
or excess of jurisdiction committed by the Secretary of
Justice.67 Caterpillar did not so demonstrate.
And, secondly, even discounting the technicalities as to
consider Caterpillar's petition for review as one brought under
Rule 65, the recourse must still fail.
Probable cause for the purpose of filing an information in court
consists in such facts and circumstances as would engender a
well-founded belief that a crime has been committed and the
accused may probably be guilty thereof.68The determination of
probable cause lies solely within the sound discretion of the
investigating public prosecutor after the conduct of a
preliminary investigation. It is a sound judicial policy to refrain
from interfering with the determination of what constitutes
sufficient and convincing evidence to establish probable cause
for the prosecution of the accused.69 Thus, it is imperative that
by the nature of his office, the public prosecutor cannot be
compelled to file a criminal information in court if he is not
convinced of the sufficiency of the evidence adduced for a
finding of probable cause.70 Neither can he be precluded from
filing an information if he is convinced of the merits of the case.
In not finding probable cause to indict Samson for unfair
competition, State Prosecutor Abad as the investigating public
prosecutor discharged the discretion given to him by the law.
Specifically, he resolved as follows:
It appears from the records that respondent started marketing
his (class 25) products bearing the trademark Caterpillar as
early as 1992. In 1994, respondent caused the registration of
the trademark "Caterpillar With A Triangle Device Beneath The
Letter [A]" with the Intellectual Property Office. Sometime on
June 16, 1997, the IPO issued Certificate of Registration No.
64705 which appears to be valid for twenty (20) years, or up to
June 16, 2017. Upon the strength of this registration,
respondent continued with his business of marketing shoes,
slippers, sandals, boots and similar Class 25 items bearing his
registered trademark "Caterpillar". Under the law, respondent's
operative act of registering his Caterpillar trademark and the
concomitant approval/issuance by the governmental entity
concerned, conferred upon him the exclusive right to use said
trademark unless otherwise declared illegal. There being no
evidence to controvert the fact that respondent's Certificate of
Registration No. 64705 covering Caterpillar trademark was
fraudulently or illegally obtained, it necessarily follows that its
subsequent use and/or being passed on to the public militates
malice or fraudulent intent on the part of respondent.
Otherwise stated and from the facts obtaining, presumption of
regularity lies, both from the standpoint of registration and
use/passing on of the assailed Caterpillar products.
Complainant's argument that respondent may still be held
liable for unfair competition by reason of his having passed on
five (5) other Caterpillar products like "Cat", "Caterpillar", "Cat
and Design", "Walking Machines" and "Track-Type Tractor
Design" is equally difficult to sustain. As may be gleaned from
the records, respondent has been engaged in the sale and
distribution of Caterpillar products since 1992 leading to the
establishment of numerous marketing outlets. As such, it would
be difficult to assail the presumption that respondent has
already established goodwill insofar as his registered Caterpillar
products are concerned. On the other hand, complainant's
registration of the other Caterpillar products appears to have
been caused only in 1995. In this premise, respondent may be
considered as prior user, while the latter, a subsequent one.
Jurisprudence dictates that prior user of the trademark by one,
will controvert the claim by a subsequent one.71
We reiterate that the full discretionary authority to determine
the existence of probable cause is lodged in the Executive
Branch of the Government, through the public prosecutor, in
the first instance, and the Secretary of Justice, on review. Such
authority is exclusive, and the courts are prohibited from
encroaching on the executive function, unless there is a clear
showing of grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of the public prosecutor or the
Secretary of Justice. As declared in Callo-Claridad v. Esteban:72
A public prosecutor alone determines the sufficiency of
evidence that establishes the probable cause justifying the
filing of a criminal information against the respondent because
the determination of existence of a probable cause is the
function of the public prosecutor. Generally, the public
prosecutor is afforded a wide latitude of discretion in the
conduct of a preliminary investigation. Consequently, it is a
sound judicial policy to refrain from interfering in the conduct
of preliminary investigations, and to just leave to the
Department of Justice the ample latitude of discretion in the
determination of what constitutes sufficient evidence to
establish probable cause for the prosecution of supposed
offenders. Consistent with this policy, courts do not reverse the
Secretary of Justice's findings and conclusions on the matter of
probable cause except in clear cases of grave abuse of
discretion. By way of exception, however, judicial review is
permitted where the respondent in the preliminary
investigation clearly establishes that the public prosecutor
committed grave abuse of discretion, that is, when the public
prosecutor has exercised his discretion in an arbitrary,
capricious, whimsical or despotic manner by reason of passion
or personal hostility, patent and gross enough as to amount to
an evasion of a positive duty or virtual refusal to perform a duty
enjoined by law. Moreover, the trial court may ultimately
resolve the existence or nonexistence of probable cause by
examining the records of the preliminary investigation when
necessary for the orderly administration of justice. Although
policy considerations call for the widest latitude of deference to
the public prosecutor's findings, the courts should never shirk
from exercising their power, when the circumstances warrant,
to determine whether the public prosecutor's findings are
supported by the facts, and by the law.
Relevantly, grave abuse of discretion means such capricious or
whimsical exercise of judgment that is equivalent to lack of
jurisdiction. The abuse of discretion must be grave, as when the
power is exercised in an arbitrary or despotic manner by reason
of passion or personal hostility, and it must be so patent and
gross as to amount to an evasion of a positive duty or to a
virtual refusal to perform the duty enjoined, or to act at all, in
contemplation of law, as to be equivalent to having acted
without jurisdiction.73 Herein, Caterpillar did not show the
grave abuse of discretion on the part of the Secretary of Justice.
WHEREFORE, the Court GRANTS the petition for review in G.R.
No. 164352; SETS ASIDE the decision promulgated on January
21, 2004 in CA-G.R. SP No. 75526; DIRECTS the Regional Trial
Court in Muntinlupa City to reinstate Criminal Cases Nos. Q-02-
108043-44 and forthwith try and decide them without undue
delay; DENIES the petition for review on certiorari in G.R. No.
205972; and ORDERS respondent Manolo P. Samson to pay the
costs of suit.
SO ORDERED.
G.R. No. 202423 January 28, 2013
CHESTER UYCO, WINSTON UYCHIYONG, and CHERRY C. UYCO-
ONG, Petitioners,
vs.
VICENTE LO, Respondent.
RESOLUTION
BRION, J.:
We resolve the motion for reconsideration1 dated October 22,
2012 filed by petitioners Chester Uyco, Winston Uychiyong and
Cherry C. Uyco-Ong to set aside the Resolution2 dated
September 12, 2012 of this Court, which affirmed the
decision3 dated March 9, 2012 and the resolution4 dated June
21, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 111964.
The CA affirmed the resolution5 dated September 1, 2008 of
the Department of Justice (DOJ). Both the CA and the DOJ
found probable cause to charge the petitioners with false
designation of origin, in violation of Section 169.1, in relation
with Section 170, of Republic Act No. (RA) 8293, otherwise
known as the "Intellectual Property Code of the Philippines."6
The disputed marks in this case are the "HIPOLITO & SEA HORSE
& TRIANGULAR DEVICE," "FAMA," and other related marks,
service marks and trade names of Casa Hipolito S.A. Portugal
appearing in kerosene burners. Respondent Vicente Lo and
Philippine Burners Manufacturing Corporation (PBMC) filed a
complaint against the officers of Wintrade Industrial
SalesCorporation (Wintrade), including petitioners Chester
Uyco, Winston Uychiyong and Cherry Uyco-Ong, and of
National Hardware, including Mario Sy Chua, for violation of
Section 169.1, in relation to Section 170, of RA 8293.
Lo claimed in his complaint that Gasirel-Industria de Comercio e
Componentes para Gass, Lda. (Gasirel), the owner of the
disputed marks, executed a deed of assignment transferring
these marks in his favor, to be used in all countries except for
those in Europe and America.7 In a test buy, Lo purchased from
National Hardware kerosene burners with the subject marks
and the designations "Made in Portugal" and "Original
Portugal" in the wrappers. These products were manufactured
by Wintrade. Lo claimed that as the assignee for the
trademarks, he had not authorized Wintrade to use these
marks, nor had Casa Hipolito S.A. Portugal. While a prior
authority was given to Wintrade’s predecessor-in-interest,
Wonder Project & Development Corporation (Wonder), Casa
Hipolito S.A. Portugal had already revoked this authority
through a letter of cancellation dated May 31, 1993.8 The
kerosene burners manufactured by Wintrade have caused
confusion, mistake and deception on the part of the buying
public. Lo stated that the real and genuine burners are those
manufactured by its agent, PBMC.
In their Answer, the petitioners stated that they are the officers
of Wintrade which owns the subject trademarks and their
variants. To prove this assertion, they submitted as evidence
the certificates of registration with the Intellectual Property
Office. They alleged that Gasirel, not Lo, was the real party-in-
interest. They allegedly derived their authority to use the marks
from Casa Hipolito S.A. Portugal through Wonder, their
predecessor-in-interest. Moreover, PBMC had already ceased
to be a corporation and, thus, the licensing agreement between
PBMC and Lo could not be given effect, particularly because the
agreement was not notarized and did not contain the
provisions required by Section 87 of RA 8293. The petitioners
pointed out that Lo failed to sufficiently prove that the burners
bought from National Hardware were those that they
manufactured. But at the same time, they also argued that the
marks "Made in Portugal" and "Original Portugal" are merely
descriptive and refer to the source of the design and the history
of manufacture.
In a separate Answer, Chua admitted that he had dealt with
Wintrade for several years and had sold its products. He had
not been aware that Wintrade had lost the authority to
manufacture, distribute, and deal with products containing the
subject marks, and he was never informed of Wintrade’s loss of
authority. Thus, he could have not been part of any conspiracy.
After the preliminary investigation, the Chief State Prosecutor
found probable cause to indict the petitioners for violation of
Section 169.1, in relation with Section 170, of RA 8293. This law
punishes any person who uses in commerce any false
designation of origin which is likely to cause confusion or
mistake as to the origin of the product. The law seeks to protect
the public; thus, even if Lo does not have the legal capacity to
sue, the State can still prosecute the petitioners to prevent
damage and prejudice to the public.
On appeal, the DOJ issued a resolution affirming the finding of
probable case. It gave credence to Lo’s assertion that he is the
proper assignee of the subject marks. More importantly, it took
note of the petitioners’ admission that they used the words
"Made in Portugal" when in fact, these products were made in
the Philippines. Had they intended to refer to the source of the
design or the history of the manufacture, they should have
explicitly said so in their packaging. It then concluded that the
petitioners’ defenses would be better ventilated during the trial
and that the admissions of the petitioners make up a sufficient
basis for probable cause.
The CA found no grave abuse of discretion on the part of the
DOJ and affirmed the DOJ’s ruling.
When the petitioners filed their petition before us, we denied
the petition for failure to sufficiently show any reversible error
in the assailed judgment to warrant the exercise of the Court’s
discretionary power.
We find no reversible error on the part of the CA and the DOJ
to merit reconsideration. The petitioners reiterate their
argument that the products bought during the test buy bearing
the trademarks in question were not manufactured by, or in
any way connected with, the petitioners and/or Wintrade. They
also allege that the words "Made in Portugal" and "Original
Portugal" refer to the origin of the design and not to the origin
of the goods.
The petitioners again try to convince the Court that they have
not manufactured the products bearing the marks "Made in
Portugal" and "Original Portugal" that were bought during the
test buy. However, their own admission and the statement
given by Chua bear considerable weight.
The admission in the petitioners’ Joint Affidavit is not in any
way hypothetical, as they would have us believe. They narrate
incidents that have happened. They refer to Wintrade’s former
association with Casa Hipolito S.A. Portugal; to their decision to
produce the burners in the Philippines; to their use of the
disputed marks; and to their justification for their use. It reads
as follows:
24. As earlier mentioned, the predecessor-in-interest of
Wintrade was the former exclusive licensee of Casa Hipolito SA
of Portugal since the 1970’s, and that Wintrade purchased all
the rights on the said trademarks prior to the closure of said
company. Indeed, the burners sold by Wintrade used to be
imported from Portugal, but Wintrade later on discovered the
possibility of obtaining these burners from other sources or of
manufacturing the same in the Philippines.
Wintrade’s decision to procure these burners from sources
other than Portugal is certainly its management prerogative.
The presence of the words "made in Portugal" and "original
Portugal" on the wrappings of the burners and on the burners
themselves which are manufactured by Wintrade is an allusion
to the fact that the origin of the design of said burners can be
traced back to Casa Hipolito SA of Portugal, and that the history
of the manufacture of said burners are rooted in Portugal.
These words were not intended to deceive or cause mistake
and confusion in the minds of the buying public.9
State Prosecutor, the DOJ and the CA that probable cause exists
to charge the petitioners with false designation of origin. The
fact that the evidence did not come from Lo, but had been
given by the petitioners, is of no significance.
The argument that the words "Made in Portugal" and "Original
Portugal" refer to the origin of the design and not to the origin
of the goods does not negate the finding of probable cause; at
the same time, it is an argument that the petitioners are not
barred by this Resolution from raising as a defense during the
hearing of the case.
WHEREFORE, premises considered, we hereby DENY the
motion for reconsideration for lack of merit.
SO ORDERED.

Chua, the owner of National Hardware — the place where the

test buy was conducted — admits that Wintrade has been
furnishing it with kerosene burners with the markings "Made in
Portugal" for the past 20 years, to wit:

5. I hereby manifests (sic) that I had been dealing with

Wintrade Industrial Sales Corporation (WINTRADE for brevity)
for around 20 years now by buying products from it. I am not
however aware that WINTRADE was no longer authorized to
deal, distribute or sell kerosene burner bearing the mark
HIPOLITO and SEA HORSE Device, with markings "Made in
Portugal" on the wrapper as I was never informed of such by
WINTRADE nor was ever made aware of any notices posted in
the newspapers informing me of such fact. Had I been
informed, I would have surely stopped dealing with
WINTRADE.101âwphi1

Thus, the evidence shows that petitioners, who are officers of

Wintrade, placed the words "Made in Portugal" and "Original
Portugal" with the disputed marks knowing fully well —
because of their previous dealings with the Portuguese
company — that these were the marks used in the products of
Casa Hipolito S.A. Portugal. More importantly, the products
that Wintrade sold were admittedly produced in the
Philippines, with no authority from Casa Hipolito S.A. Portugal.
The law on trademarks and trade names precisely precludes a
person from profiting from the business reputation built by
another and from deceiving the public as to the origins of
products. These facts support the consistent findings of the