[G.R. No. 174379. August 31, 2016.

]
E.I. DUPONT DE NEMOURS AND CO. (assignee of inventors Carini, Duncia and
Wong), petitioner, vs. DIRECTOR EMMA C. FRANCISCO (in her capacity as DIRECTOR
GENERAL OF THE INTELLECTUAL PROPERTY OFFICE), DIRECTOR EPIFANIO M.
EVASCO (in his capacity as the DIRECTOR OF THE BUREAU OF PATENTS), and
THERAPHARMA, INC., respondents.
DECISION
LEONEN, J p:
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 Decision 2 dated
August 30, 2006, which denied the revival of Philippine Patent Application No. 35526, and the Court of Appeals
Resolution 3 dated 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 inventors 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 invention related to the treatment of hypertension and 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
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 Office 11a letter requesting that an office action be issued on
Philippine Patent Application No. 35526. 12
In response, Patent Examiner Precila O. Bulihan of the Intellectual Property Office sent an office action
marked Paper No. 2 on January 30, 2002, 13 which stated:CAIHTE
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.
xxx xxx xxx
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. This record is complemented
by the Examiner-in-charge's own record. . . .
xxx xxx xxx
 2. It was noted that it took thirteen (13) long years for the 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
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 Resolution 22 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. DETACa
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 Decision 25 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, 2004 30 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 Resolution 35 granting the Motion for Leave to
Intervene. According to the Court of Appeals, Therapharma, Inc. had an interest in the revival of E.I. Dupont
Nemours' patent application since it was the local competitor for the losartan product. 36 It stated that even if the
Petition for Review was premised on the revival of the patent application, Therapharma, Inc.'s intervention was not
premature since E.I. Dupont Nemours, through Merck, already threatened Therapharma, Inc. with legal action if it
continued to market its losartan product. 37
E.I. Dupont Nemours moved for reconsideration on February 22, 2006, assailing the Court of Appeals'
January 31, 2006 Resolution. 38
On August 30, 2006, the Court of Appeals resolved both Motions for Reconsideration and rendered the
Amended Decision 39 reversing its August 31, 2004 Decision.
The Court of Appeals ruled that the public interest would be 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 million Filipinos," 41 and noted that the presence of competition lowered the price for losartan
products. 42 It also found that the revival of the application prejudiced Therapharma, Inc.'s interest, in that it had
already invested more than P20,000,000.00 to develop its own losartan product and that it acted in good faith when it
marketed its product. 43 aDSIHc
The Court of Appeals likewise found that it erroneously based 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 might have taken that long to issue the patent, it did not take that long for the
Intellectual Property Office to act on application. 45 Citing Schuartz v. Court of Appeals, 46 it found that both E.I.
Dupont Nemours and Atty. Mapili were inexcusably negligent in prosecuting the patent application. 47
On October 19, 2006, petitioner E.I. Dupont Nemours filed before this Court this Petition for Review
on Certiorari. 48 Both respondents Intellectual Property Office and Therapharma, Inc. were directed to comment on
the comment on the Petition. 49 Upon submission of their respective Comments, 50 petitioner was directed to file its
Consolidated Reply. 51 Thereafter, the parties were directed to file their respective memoranda. 52
The arguments of the parties present several issues for this Court's resolution, as follows:
First, whether the Petition for Review on Certiorari complied with Rule 45, Section 4 of the Rules of
Court when petitioner failed to attach certain documents to support the allegations in the complaint;
Second, whether petitioner should have filed a petition for certiorari under Rule 65 of the Rules of Court;
Third, whether the Petition for Review on Certiorari raises questions of fact;
Fourth, whether the Court of Appeals erred in allowing the intervention of respondent Therapharma, Inc. in
petitioner's appeal;
Fifth, whether the Court of Appeals erred in denying petitioner's appeal for the revival of its patent application
on the grounds that (a) petitioner committed inexcusable negligence in the prosecution of its patent application; and
(b) third-party rights and the public interest would be prejudiced by the appeal;
Sixth, whether Schuartz applies to this case in that the negligence of a patent applicant's counsel binds the
applicant; and
Lastly, whether the invention has already become part of public domain.
I
The question of whether the Court of Appeals may resolve a motion for intervention is a question that assails
an interlocutory order and requests a review of a lower court's exercise of discretion. Generally, a petition
for certiorari under Rule 65 of the Rules of Court will lie to raise this issue in a limited manner. There must be a clear
showing of grave abuse of discretion for the writ of certiorari to be issued.
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 oncertiorari 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. 60 A petition for review under Rule 45, on the other hand, is a mode of appeal intended to correct errors
of judgment. 61 Errors of judgment are errors committed by a court within its jurisdiction. 62 This includes a review
of the conclusions of law 63 of the lower court and, in appropriate cases, evaluation of the admissibility, weight, and
inference from the evidence presented. ETHIDa
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 theRules 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 TIADCc
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 Magsino may apply to this case since the contents of a pleading under Rule 42 80 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 AIDSTE
(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 Director-General 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 appeal 99 since the revival of a
patent application is ex parte and is "strictly a contest between the examiner and the applicant" 100 under Sections
78 101 and 79 102 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:
PART X
PETITION AND APPEALS
xxx xxx xxx
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: AaCTcI
SECTION 7. The Director General and Deputies Director General. —
7.1. Functions. — The Director General shall exercise the following powers and functions:
xxx xxx xxx
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. acEHCD
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: SDHTEC
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?
xxx xxx xxx
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 240 119 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 Agreement 123 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: AScHCD
MR. TAÑADA:
  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. TAÑADA:
 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. TAÑADA:
 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. AcICHD
 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 person 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. caITAC
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 the 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 P25. 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 application 133 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. 137 Respondent 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 111 (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 the
notice of the last action by the Bureau of Patents, Trademarks, and Technology Transfer, and not from applicant's
actual notice. Section 111 (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. 140 Under 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. ICHDca
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. —
xxx xxx xxx
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
Even assuming that the four (4)-month period could be extended, petitioner was inexcusably 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 their counsels' conduct."143
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. TCAScE
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. 145 Although 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 of Attorney and Appointment of Resident
Agent in favor of Bito, 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. cTDaEH
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. 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 111 156 of the 1962 Revised Rules of Practice, however, is not counted
from actual notice of abandonment but from mailingof 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: cSaATC
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 States 162 and the Philippines 163 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 cHDAIS
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 two interests:
"(The p)atent system thus embodies a carefully crafted 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 theIntellectual 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 ISHCcT
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. 182According 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 of
hypertension. 184 CAacTH
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 unemployed and
indigent." 186 Several measures have been enacted by the government to address the high costs of medicine, among
them, parallel drug importation 187 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.
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
BRAND TRADER RETAIL PRICE RETAIL PRICE
    As of Lifezar's first Within one month
    entry into the from Lifezar's entry
    market on June 4, or by July 4, 2004
    2004  
       
LIFEZAR Therapharma 50 mg — P20.20 50 mg — P20.20
COZAAR Merck 50 mg — P39.50 50 mg — P39.50
    100 mg — P55.00 100 — P44.00
Respondent Therapharma, Inc. also presented figures showing that there was a 44% increase in the number of
losartan units sold within five (5) months of its entry into the market. 190 More Filipinos are able to purchase losartan
products when there are two (2) different players providing competitive prices in the market.
Lifezar, and another of respondent Therapharma, Inc.'s products, Combizar, have also been recommended as
cheaper alternative losartan medication, since they were priced "50 percent less than foreign brands." 191
Public interest will be prejudiced if, despite petitioner's inexcusable negligence, its Petition for Revival is
granted. Even 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.
 WHEREFORE, the Petition is DENIED. The Resolution dated January 31, 2006 and the Amended Decision
dated August 30, 2006 of the Court of Appeals areAFFIRMED.
SO ORDERED.
||| (E.I. Dupont De Nemours and Co. v. Francisco, G.R. No. 174379, [August 31, 2016], 794 PHIL 97-148)

[G.R. No. 148222. August 15, 2003.]

PEARL & DEAN (PHIL.), INCORPORATED, petitioner, vs. SHOEMART, INCORPORATED,
and NORTH EDSA MARKETING, INCORPORATED, respondents.
Rilloraza Africa De Ocampo & Africa for petitioner.
Poblador Bautista & Reyes for ShoeMart.
Gonzales Batiller Bilog & Associates for North Edsa Mktg., Inc.
SYNOPSIS
Petitioner Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display units
simply referred to as light boxes. Pearl and Dean was able to secure a Certificate of Copyright Registration over the
illuminated display units. Sometime in 1985, Pearl and Dean negotiated with respondent Shoemart, Inc. (SMI) for the
lease and installation of the light boxes in SM City North Edsa. Since SM City North Edsa was under construction at that
time, SMI offered as an alternative, SM Makati and SM Cubao, to which Pearl and Dean agreed. Only the contract for SM
Makati, however, was returned signed. However, in 1986, SMI rescinded the contract for SM Makati due to non-
performance of the terms thereof. Sometime in 1989, Pearl and Dean received reports that exact copies of its light boxes
were installed at SM City and in the fastfood section of SM Cubao. It further discovered that respondent North Edsa
Marketing Inc. (NEMI) is a sister company of SMI and was set up primarily to sell advertising space in lighted display
units located in SMI's different branches. In the light of its discoveries, Pearl and Dean, sent a letter to both SMI and
NEMI enjoining them to cease using the subject light boxes and to remove the same from SMI's establishments and the
payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos (P20,000,000.00). Claiming
that both SMI and NEMI failed to meet all its demands, Pearl and Dean filed a case for infringement of trademark and
copyright, unfair competition and damages. The Regional Trial Court of Makati ruled in favor of Pearl and Dean. On
appeal, however, the Court of Appeals reversed the trial court. The appellate court upheld SMI when it posited that what
was copyrighted were the technical drawings only, and not the light boxes themselves, and since the light boxes cannot,
by any stretch of the imagination, be considered as either prints, pictorial illustrations, advertising copies, labels, tags or
box wraps, to be properly classified as copyrightable under the law. Hence, the present petition.
The Supreme Court affirmed the decision of the Court of Appeals and denied the petition. According to the Court,
petitioner Pearl & Dean secured its copyright under the classification class "O" work or under Section 2 (O) of P.D. 49.
As such, petitioner's copyright protection extended only to the technical drawings and not to the light box itself because
the latter was not at all in the category of "prints, pictorial illustrations, advertising copies, labels, tags and box wraps."
While P & D indeed owned a valid copyright, the same could have referred only to the technical drawings within the
category of "pictorial illustrations." It could not have possibly stretched out to include the underlying light box The strict
application of the law's enumeration in Section 2 of PD 49 prevented the Court from giving petitioner even a little leeway,
that is, even if its copyright certificate was entitled "Advertising Display Units." What the law does not include, it
excludes, and for the good reason: the light box was not a literary or artistic piece which could be copyrighted under the
copyright law. The Court also ruled that petitioner could not legally prevent anyone from manufacturing or commercially
using its invention for the main reason that it never secured a patent for it. The Court emphasized that to be able to
effectively and legally preclude others from copying and profiting from an 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.
SYLLABUS
1. MERCANTILE LAW; INTELLECTUAL PROPERTY LAW (P.D. 49); PETITIONER'S COPYRIGHT
PROTECTION EXTENDED ONLY TO THE TECHNICAL DRAWINGS AND NOT TO THE LIGHT BOX ITSELF
BECAUSE THE LATTER WAS NOT AT ALL IN THE CATEGORY OF "PRINTS, PICTORIALS ILLUSTRATIONS,
ADVERTISING COPIES, LABELS, TAGS AND BOX WRAPS" UNDER SECTION 2, (O) OF THE LAW. —
Petitioner's application for a copyright certificate as well as Copyright Certificate No. PD-R2588 issued by the National
Library on January 20, 1981 — clearly stated that it was for a class "O" work under Section 2 (O) of PD 49 (The
Intellectual Property Decree) which was the statute then prevailing. Said Section 2 expressly enumerated the works
subject to copyright: SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to
any of the following works: . . . (O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps; . . .
Although petitioner's copyright certificate was entitled "Advertising Display Units" (which depicted the box-type
electrical devices), its claim of copyright infringement cannot be sustained. Copyright, in the strict sense of the term, is
purely a statutory right. Being a mere statutory grant, the rights are limited to what the statute confers. It may be obtained
and enjoyed only with respect to the subjects and by the-persons, and on terms and conditions specified in the
statute. Accordingly, it can cover only the works falling within the statutory enumeration or description. P & D secured its
copyright under the classification class "O" work. This being so, petitioner's copyright protection extended only to the
technical drawings and not to the light box itself because the latter was not at all in the category of "prints, pictorial
illustrations, advertising copies, labels, tags and box wraps." Stated otherwise, even as we find that P & D indeed owned a
valid copyright, the same could have referred only to the technical drawings within the category of "pictorial
illustrations." It could not have possibly stretched out to include the underlying light box. The strict application of the
law's enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is, even if its copyright
certificate was entitled "Advertising Display Units." What the law does not include, it excludes, and for the good reason:
the light box was not a literary or artistic piece which could be copyrighted under the copyright law. And no less clearly,
neither could the lack of statutory authority to make the light box copyrightable be remedied by the simplistic act of
entitling the copyright certificate issued by the National Library as "Advertising Display Units."
2. ID.; ID.; SINCE PETITIONER NEVER SECURED A PATENT OVER THE LIGHT BOXES, IT
THEREFORE ACQUIRED NO PATENT RIGHTS WHICH COULD HAVE PROTECTED ITS INVENTION; NO
PATENT, NO PROTECTION; CASE AT BAR. — For some reason or another, petitioner never secured a patent for the
light boxes. It therefore acquired no patent rights which could have protected its invention, if in fact it really was. And
because it had no patent, petitioner could not legally prevent anyone from manufacturing or commercially using the
contraption. In Creser Precision Systems, Inc. vs. Court of Appeals, we held that "there can be no infringement of a patent
until a patent has been issued, since whatever right one has to the invention covered by the patent  arises alone from the
grant of patent. . . . (A)n inventor has no common law right to a monopoly of his invention. He has the right to make use
of and vend his 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, selling or using the invention. On the assumption that petitioner's advertising units were patentable
inventions, petitioner revealed them fully to the public by submitting the engineering drawings thereof to the National
Library. 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.
3. ID.; ID.; NOT HAVING UNDERGONE THE STRINGENT REQUIREMENTS AND EXHAUSTIVE
EXAMINATION FOR PATENTS, PETITIONER CANNOT EXCLUDE OTHERS FROM THE MANUFACTURE,
SALE OR COMMERCIAL USE OF THE LIGHT BOXES ON THE SOLE BASIS OF ITS COPYRIGHT
CERTIFICATE OVER THE TECHNICAL DRAWINGS. — 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." There is no
such scrutiny in the case of copyrights nor any notice published before its grant to the effect that a person is claiming the
creation of a work. The law confers the copyright from the moment of creation and the copyright certificate is issued upon
registration with the National Library of a sworn ex parte claim of creation. Therefore, not having gone through the
arduous examination for patents, the petitioner cannot exclude others from the manufacture, sale or commercial use of the
light boxes on the sole basis of its copyright certificate over the technical drawings.
 
 4. ID.; ID.; PETITIONER'S FAILURE TO SECURE A TRADEMARK REGISTRATION FOR SPECIFIC USE
ON THE LIGHT BOXES MEANT THAT THERE COULD NOT HAVE BEEN ANY TRADEMARK
INFRINGEMENT SINCE REGISTRATION WAS AN ESSENTIAL ELEMENT THEREOF. — The Court of Appeals
correctly cited Faberge Inc. vs. Intermediate Appellate Court, where we, invoking Section 20 of the old Trademark Law,
ruled that "the certificate of registration issued by the Director of Patents can confer (upon petitioner) the exclusive right
to use its own symbol only to those goods specified in the certificate, subject to any conditions and limitations specified in
the certificate . . . One who has adopted and used a trademark on his goods  does not prevent the adoption and use of the
same trademark by others or products which are of a different description. " Faberge, Inc. was correct and was in fact
recently reiterated in Canon Kabushiki Kaisha vs. Court of Appeals. Assuming arguendo that "Poster Ads" could validly
qualify as a trademark, the failure of P & D to secure a trademark registration for specific use on the light boxes meant
that there could not have been any trademark infringement since registration was an essential element thereof.
5. ID.; ID.; NO UNFAIR COMPETITION UNDER THE LAW ON COPYRIGHTS. — If at all, the cause of
action should have been for unfair competition, a situation which was possible even if P & D had no registration.
However, while the petitioner's complaint in the RTC also cited unfair competition, the trial court did  not find private
respondents liable therefor. Petitioner did not appeal this particular point; hence, it cannot now revive its claim of unfair
competition. But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair
competition. By the nature of things, there can be no unfair competition under the law on copyrights although it is
applicable to disputes over the use of trademarks. Even a name or phrase incapable of appropriation as a trademark or
tradename may, by long and exclusive use by a business (such that the name or phrase becomes associated with the
business or product in the mind of the purchasing public), be entitled to protection against unfair competition. In this case,
there was no evidence, that P & D's use of "Poster Ads" was distinctive or well-known. As noted by the Court of Appeals,
petitioner's expert witnesses himself had testified that "'Poster Ads' was too generic a name. So it was difficult to identify
it with any company, honestly speaking." This crucial admission by its own expert witness that "Poster Ads" could not be
associated with P & D showed that, in the mind of the public, the goods and services carrying the trademark "Poster Ads"
could not be distinguished from the goods and services of other entities.
6. ID.; ID.; DOCTRINE OF SECONDARY MEANING; NOT APPLICABLE IN CASE AT BAR. — This fact
also prevented the application of the doctrine of secondary meaning. "Poster Ads" was generic and incapable of being
used as a trademark because it was used in the field of poster advertising, the very business engaged in by petitioner.
"Secondary meaning" means that a word or phrase originally incapable of exclusive appropriation with reference to an
article in the market (because it is geographically or otherwise descriptive) might nevertheless have been used for so long
and so exclusively by one producer with reference to his article that, in the trade and to that branch of the purchasing
public, the word or phrase has come to mean that the article was his property. The admission by petitioner's own expert
witness that he himself could not associate "Poster Ads" with petitioner P & D because it was "too generic" definitely
precluded the application of this exception.
DECISION
CORONA, J p:
In the instant petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Pearl & Dean
(Phil.) Inc. (P & D) assails the May 22, 2001 decision 1 of the Court of Appeals reversing the October 31, 1996
decision 2 of the Regional Trial Court of Makati, Branch 133, in Civil Case No. 92-516 which declared private
respondents Shoemart Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and
copyright, and unfair competition.
FACTUAL ANTECEDENTS
The May 22, 2001 decision of the Court of Appeals 3 contained a summary of this dispute:
"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of
advertising display units simply referred to as light boxes. These units utilize specially printed posters
sandwiched between plastic sheets and illuminated with back lights. Pearl and Dean was able to secure
a Certificate of Copyright Registration dated January 20, 1981 over these illuminated display units. The
advertising light boxes were marketed under the trademark "Poster Ads." The application for
registration of the trademark was filed with the Bureau of Patents, Trademarks and Technology
Transfer on June 20, 1983, but was approved only on September 12, 1988, per Registration No. 41165.
From 1981 to about 1988, Pearl and Dean employed the services of Metro Industrial Services to
manufacture its advertising displays.
 Sometime in 1985, Pearl, and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI)
for the lease and installation of the light boxes in SM City North Edsa. Since SM City North Edsa was
under construction at that time, SMI offered as an alternative, SM Makati and SM Cubao, to which
Pearl and Dean agreed. On September 11, 1985, Pearl and Dean's General Manager, Rodolfo Vergara,
submitted for signature the contacts covering SM Cubao and SM Makati to SMI's Advertising
Promotions and Publicity Division Manager, Ramonlito Abano. Only the contract for SM Makati,
however, was returned signed. On October 4, 1985, Vergara wrote Abano inquiring about the other
contract and reminding him that their agreement for installation of light boxes was not only for its SM
Makati branch, but also for SM Cubao. SMI did not bother to reply.
Instead, in a letter dated January 14, 1986, SMI's house counsel informed Pearl and Dean that it
was rescinding the contract for SM Makati due to non-performance of the terms thereof. In his reply
dated February 17, 1986, Vergara protested the unilateral action of SMI, saying it was without basis. In
the same letter, he pushed for the signing of the contract for SM Cubao.
Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean
to fabricate its display units, offered to construct light boxes for Shoemart's chain of stores. SMI
approved the proposal and ten (10) light boxes were subsequently fabricated by Metro Industrial for
SMI. After its contract with Metro Industrial was terminated, SMI engaged the services of EYD
Rainbow Advertising Corporation to make the light boxes. Some 300 units were fabricated in 1991.
These were delivered on a staggered basis and installed at SM Megamall and SM City.
Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were
installed at SM City and in the fastfood section of SM Cubao. Upon investigation, Pearl and Dean
found out that aside from the two (2) reported SM branches, light boxes similar to those it manufactures
were also installed in two (2) other SM stores. It further discovered that defendant-appellant North Edsa
Marketing Inc. (NEMI), through its marketing arm, Prime Spots Marketing Services, was set up
primarily to sell advertising space in lighted display units located in SMI's different branches. Pearl and
Dean noted that NEMI is a sister company of SMI.
In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both
SMI and NEMI enjoining them to cease using the subject light boxes and to remove the same from
SMI's establishments. It also demanded the discontinued use of the trademark "Poster Ads," and the
payment to Pearl and Dean of compensatory damages in the amount of Twenty Million Pesos
(P20,000,000.00).
Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four
(224) light boxes and NEMI took down its advertisements for "Poster Ads" from the lighted display
units in SMI's stores. Claiming that both SMI and NEMI failed to meet all its demands, Pearl and Dean
filed this instant case for infringement of trademark and copyright, unfair competition and damages.
In denying the charges hurled against it, SMI maintained that it independently developed its
poster panels using commonly known techniques and available technology, without notice of or
reference to Pearl and Dean's copyright. SMI noted that the registration of the mark "Poster Ads" was
only for stationeries such as letterheads, envelopes, and the like. Besides, according to SMI, the word
"Poster Ads" is a generic term which cannot be appropriated as a trademark, and, as such, registration
of such mark is invalid. It also stressed that Pearl and Dean is not entitled to the reliefs prayed for in its
complaint since its advertising display units contained no copyright notice, in violation of Section 27
of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it and that the suit was
purely intended to malign SMI's good name. On this basis, SMI, aside from praying for the dismissal of
the case, also counterclaimed for moral, actual and exemplary damages and for the cancellation of Pearl
and Dean's Certification of Copyright Registration No. PD-R-2558 dated January 20, 1981 and
Certificate of Trademark Registration No. 4165 dated September 12, 1988.
NEMI, for its part, denied having manufactured, installed or used any advertising display units,
nor having engaged in the business of advertising. It repleaded SMI's averments, admissions and
denials and prayed for similar reliefs and counterclaims as SMI."
The RTC of Makati City decided in favor of P & D:
 Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement
of copyright under Section 2 of PD 49, as amended, and infringement of trademark under Section 22
of RA No. 166, as amended, and are hereby penalized under Section 28 of PD 49, as amended, and
Sections 23 and 24 of RA 166, as amended. Accordingly, defendants are hereby directed: 
(1) to pay plaintiff the following damages:
(a) actual damages — P16,600,000.00,
  representing profits    
  derived by defendants    
  as a result of infringement    
  of plaintiff's copyright    
  from 1991 to 1992    
       
(b) moral damages — P1,000,000.00
       
(c) exemplary damages — P1,000,000.00
(d) attorney's fees — P1,000,000.00
  plus    
       
(e) costs of suit;    
(2) to deliver, under oath, for impounding in the National Library, all light boxes of SMI which were
fabricated by Metro Industrial Services and EYD Rainbow Advertising Corporation;
(3) to deliver, under oath, to the National Library, all filler-posters using the trademark "Poster Ads,"
for destruction; and
(4) to permanently refrain from infringing the copyright on plaintiff's light boxes and its trademark
"Poster Ads."
Defendants' counterclaims are hereby ordered dismissed for lack of merit.
SO ORDERED. 4
On appeal, however, the Court of Appeals reversed the trial court:
Since the light boxes cannot, by any stretch of the imagination, be considered as either prints,
pictorial illustrations, advertising copies, labels, tags or box wraps, to be properly classified as a
copyrightable class "O" work, we have to agree with SMI when it posited that what was copyrighted
were the technical drawings only, and not the light boxes themselves, thus:
42. When a drawing is technical and depicts a utilitarian object, a copyright over the
drawings like plaintiff-appellant's will not extend to the actual object. It has so been held under
jurisprudence, of which the leading case is Baker vs. Selden (101 U.S. 841 [1879]. In that case,
Selden had obtained a copyright protection for a book entitled "Selden's Condensed Ledger or
Bookkeeping Simplified" which purported to explain a new system of bookkeeping. Included
as part of the book were blank forms and illustrations consisting of ruled lines and headings,
specially designed for use in connection with the system explained in the work. These forms
showed the entire operation of a day or a week or a month on a single page, or on two pages
following each other. The defendant Baker then produced forms which were similar to the
forms illustrated in Selden's copyrighted books. The Court held that exclusivity to the actual
forms is not extended by a copyright. The reason was that "to grant a monopoly in the
underlying art when no examination of its novelty has ever been made would be a surprise and
a fraud upon the public; that is the province of letters patent, not of copyright." And that is
precisely the point. No doubt aware that its alleged original design would never pass the
 rigorous examination of a patent application, plaintiff-appellant fought to foist a fraudulent
monopoly on the public by conveniently resorting to a copyright registration which merely
employs a recordal system without the benefit of an in-depth examination of novelty.
The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge
Authority [43 F. Supp. 298 (S.D.N.Y. 1942)]. In this case, Muller had obtained a copyright over an
unpublished drawing entitled "Bridge Approach — the drawing showed a novel bridge approach to
unsnarl traffic congestion." The defendant constructed a bridge approach which was alleged to be an
infringement of the new design illustrated in plaintiff's drawings. In this case it was held that protection
of the drawing does not extend to the unauthorized duplication of the object drawn because copyright
extends only to the description or expression of the object and not to the object itself. It does not
prevent one from using the drawings to construct the object portrayed in the drawing.
In two other cases, Imperial Homes Corp. v. Lamont, 458 F. 2d 895 and Scholtz Homes, Inc. v.
Maddox, 379 F. 2d 84, it was held that there is no copyright infringement when one who, without being
authorized, uses a copyrighted architectural plan to construct a structure. This is because the copyright
does not extend to the structures themselves.
In fine, we cannot find SMI liable for infringing Pearl and Dean's copyright over the technical
drawings of the latter's advertising display units.
xxx xxx xxx
The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate
Court that the protective mantle of the Trademark Law extends only to the goods used by the first user
as specified in the certificate of registration, following the clear mandate conveyed by Section 20
of Republic Act 166, as amended, otherwise known as the Trademark Law, which reads:
SEC. 20. Certification of registration prima facie evidence of validity. — A certificate
of registration of a mark or trade-name shall be prima facie evidence of the validity of the
registration, the registrant's ownership of the mark or trade-name, and of the registrant's
exclusive right to use the same in connection with the goods, business or services specified in
the certificate, subject to any conditions and limitations stated therein." (italics supplied)
The records show that on June 20, 1983, Pearl and Dean applied for the registration of the
trademark "Poster Ads" with the Bureau of Patents, Trademarks, and Technology Transfer. Said
trademark was recorded in the Principal Register on September 12, 1988 under Registration No. 41165
covering the following products: stationeries such as letterheads, envelopes and calling cards and
newsletters.
With this as factual backdrop, we see no legal basis to the finding of liability on the part of the
defendants-appellants for their use of the words "Poster Ads," in the advertising display units in suit.
Jurisprudence has interpreted Section 20 of the Trademark Law as "an implicit permission to a
manufacturer to venture into the production of goods and allow that producer to appropriate the brand
name of the senior registrant on goods other than those stated in the certificate of registration." The
Supreme Court further emphasized the restrictive meaning of Section 20 when it stated, through Justice
Conrado V. Sanchez, that:
Really, if the certificate of registration were to be deemed as including goods not
specified therein, then a situation may arise whereby an applicant may be tempted to register a
trademark on any and all goods which his mind may conceive even if he had never intended to
use the trademark for the said goods. We believe that such omnibus registration is not
contemplated by our Trademark Law.
While we do not discount the striking similarity between Pearl and Dean's registered trademark
and defendants-appellants' "Poster Ads" design, as well as the parallel use by which said words were
used in the parties' respective advertising copies, we cannot find defendants-appellants liable for
infringement of trademark. "Poster Ads" was registered by Pearl and Dean for specific use in its
stationeries, in contrast to defendants-appellants who used the same words in their advertising display
units. Why Pearl and Dean limited the use of its trademark to stationeries is simply beyond us. But,
having already done so, it must stand by the consequence of the registration which it had caused.
 xxx xxx xxx
We are constrained to adopt the view of defendants-appellants that the words "Poster Ads" are a
simple contraction of the generic term poster advertising. In the absence of any convincing proof that
"Poster Ads" has acquired a secondary meaning in this jurisdiction, we find that Pearl and Dean's
exclusive right to the use of "Poster Ads" is limited to what is written in its certificate of registration,
namely, stationeries.
Defendants-appellants cannot thus be held liable for infringement of the trademark "Poster
Ads."
There being no finding of either copyright or trademark infringement on the part of SMI and
NEMI, the monetary award granted by the lower court to Pearl and Dean has no leg to stand on.
xxx xxx xxx
WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE,
and another is rendered DISMISSING the complaint and counterclaims in the above-entitled case for
lack of merit. 5
Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the following errors for
the Court's consideration:
A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHT
INFRINGEMENT WAS COMMITTED BY RESPONDENTS SM AND NEMI;
B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO INFRINGEMENT
OF PEARL & DEAN'S TRADEMARK "POSTER ADS" WAS COMMITTED BY
RESPONDENTS SM AND NEMI;
C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD OF THE
TRIAL COURT, DESPITE THE LATTER'S FINDING, NOT DISPUTED BY THE
HONORABLE COURT OF APPEALS, THAT SM WAS GUILTY OF BAD FAITH IN ITS
NEGOTIATION OF ADVERTISING CONTRACTS WITH PEARL & DEAN.
D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENTS SM
AND NEMI LIABLE TO PEARL & DEAN FOR ACTUAL, MORAL & EXEMPLARY
DAMAGES, ATTORNEY'S FEES AND COSTS OF SUIT. 6
ISSUES
In resolving this very interesting case, we are challenged once again to put into proper perspective four main
concerns of intellectual property law — patents, copyrights, trademarks and unfair competition arising from infringement
of any of the first three. We shall focus then on the following issues:
(1) if the engineering or technical drawings of an advertising display unit (light box) are
granted copyright protection (copyright certificate of registration) by the National Library, is the light
box depicted in such engineering drawings ipso facto also protected by such copyright?
(2) or should the light box be registered separately and protected by a patent issued by the
Bureau of Patents Trademarks and Technology Transfer (now Intellectual Property Office) — in
addition to the copyright of the engineering drawings?
(3) can the owner of a registered trademark legally prevent others from using such trademark if
it is a mere abbreviation of a term descriptive of his goods, services or business?
ON THE ISSUE OF COPYRIGHT INFRINGEMENT
Petitioner P & D's complaint was that SMI infringed on its copyright over the light boxes when SMI had the units
manufactured by Metro and EYD Rainbow Advertising for its own account. Obviously, petitioner's position was premised
on its belief that its copyright over the engineering drawings extended ipso facto to the light boxes depicted or illustrated
in said drawings. In ruling that there was no copyright infringement, the Court of Appeals held that the copyright was
limited to the drawings alone and not to the light box itself. We agree with the appellate court.
First, petitioner's application for a copyright certificate — as well as Copyright Certificate No. PD-R2588 issued
by the National Library on January 20, 1981 — clearly stated that it was for a class "O" work under Section 2 (O) of  PD
49 (The Intellectual Property Decree) which was the statute then prevailing. Said Section 2 expressly enumerated the
works subject to copyright:
SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with
respect to any of the following works:
xxx xxx xxx
(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;
xxx xxx xxx
Although petitioner's copyright certificate was entitled "Advertising Display Units" (which depicted the box-type
electrical devices), its claim of copyright infringement cannot be sustained.
Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant, the rights are
limited to what the statute confers. It may be obtained and enjoyed only with respect to the subjects and by the persons,
and on terms and conditions specified in the statute. 7 Accordingly, it can cover only the works falling within the statutory
enumeration or description. 8
P & D secured its copyright under the classification class "O" work. This being so, petitioner's copyright
protection extended only to the technical drawings and not to the light box itself because the latter was not at all in the
category of "prints, pictorial illustrations, advertising copies, labels, tags and box wraps." Stated otherwise, even as we
find that P & D indeed owned a valid copyright, the same could have referred only to the technical drawings within the
category of "pictorial illustrations." It could not have possibly stretched out to include the underlying light box. The strict
application 9 of the law's enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is, even if
its copyright certificate was entitled "Advertising Display Units." What the law does not include, it excludes, and for the
good reason: the light box was not a literary or artistic piece which could be copyrighted under the copyright law. And no
less clearly, neither could the lack of statutory authority to make the light box copyrightable be remedied by the simplistic
act of entitling the copyright certificate issued by the National Library as "Advertising Display Units."
In fine, if SMI and NEMI reprinted P & D's technical drawings for sale to the public without license from P & D,
then no doubt they would have been guilty of copyright infringement. But this was not the case. SMI's and NEMI's acts
complained of by P & D were to have units similar or identical to the light box illustrated in the technical drawings
manufactured by Metro and EYD Rainbow Advertising, for leasing out to different advertisers. Was this an infringement
of petitioner's copyright over the technical drawings? We do not think so.
During the trial, the president of P & D himself admitted that the light box was neither a literary nor an artistic
work but an "engineering or marketing invention." 10Obviously, there appeared to be some confusion regarding what
ought or ought not to be the proper subjects of copyrights, patents and trademarks. In the leading case of  Kho vs. Court of
Appeals, 11 we ruled that these three legal rights are completely distinct and separate from one another, and the protection
afforded by one cannot be used interchangeably to cover items or works that exclusively pertain to the others:
Trademark, copyright and patents are different intellectual property rights that cannot be
interchanged with one another. A trademark is 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. In relation thereto, a trade name means the name or designation identifying or
distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to literary and artistic
works which are original intellectual creations in the literary and artistic domain protected from the
moment of their creation. Patentable inventions, on the other hand, refer to any technical solution of a
problem in any field of human activity which is new, involves an inventive step and is industrially
applicable.
ON THE ISSUE OF PATENT INFRINGEMENT
This brings us to the next point: if, despite its manufacture and commercial use of the  light boxes without license
from petitioner, private respondents cannot be held legally liable for infringement of P & D's copyright over its technical
drawings of the said light boxes, should they be liable instead for infringement of patent? We do not think so either.
For some reason or another, petitioner never secured a patent for the light boxes. It therefore acquired no patent
rights which could have protected its invention, if in fact it really was. And because it had no patent, petitioner could not
legally prevent anyone from manufacturing or commercially using the contraption. In Creser Precision Systems, Inc. vs.
Court of Appeals, 12 we held that "there can be no infringement of a patent until a patent has been issued, since whatever
right one has to the invention covered by the patent arises alone from the grant of patent. . . . (A)n inventor has no
common law right to a monopoly of his invention. He has the right to make use of and vend his 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, selling or
using the invention. 13 On the assumption that petitioner's advertising units were patentable inventions, petitioner
revealed them fully to the public by submitting the engineering drawings thereof to the National Library.
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. 14 Ideas, once disclosed to the public without the protection of a
valid patent, are subject to appropriation without significant restraint. 15
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,16 "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 two interests:
"(The p)atent system thus embodies a carefully crafted 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." 17
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." 18
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." 19
There is no such scrutiny in the case of copyrights nor any notice published before its grant to the effect that a
person is claiming the creation of a work. The law confers the copyright from the moment of creation  20 and the
copyright certificate is issued upon registration with the National Library of a sworn ex-parte claim of creation.
Therefore, not having gone through the arduous examination for patents, the petitioner cannot exclude others from
the manufacture, sale or commercial use of the light boxes on the sole basis of its copyright certificate over the technical
drawings.
Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent office (IPO) to
scrutinize the light box's eligibility as a patentable invention. The irony here is that, had petitioner secured a patent
instead, its exclusivity would have been for 17 years only. But through the simplified procedure of copyright-registration
with the National Library — without undergoing the rigor of defending the patentability of its invention before the IPO
and the public — the petitioner would be protected for 50 years. This situation could not have been the intention of the
law.
In the oft-cited case of Baker vs. Selden, 21 the United States Supreme Court held that only the expression of an
idea is protected by copyright, not the idea itself.In that case, the plaintiff held the copyright of a book which expounded
on a new accounting system he had developed. The publication illustrated blank forms of ledgers utilized in such a
system. The defendant reproduced forms similar to those illustrated in the plaintiffs copyrighted book. The US Supreme
Court ruled that:
 "There is no doubt that a work on the subject of book-keeping, though only explanatory of well
known systems, may be the subject of a copyright; but, then, it is claimed only as a book. . . . But there
is a clear distinction between the books, as such, and the art, which it is, intended to illustrate. The mere
statement of the proposition is so evident that it requires hardly any argument to support it. The same
distinction may be predicated of every other art as well as that of bookkeeping. A treatise on the
composition and use of medicines, be they old or new; on the construction and use of ploughs or
watches or churns; or on the mixture and application of colors for painting or dyeing; or on the mode of
drawing lines to produce the effect of perspective, would be the subject of copyright; but no one would
contend that the copyright of the treatise would give the exclusive right to the art or manufacture
described therein. The copyright of the book, if not pirated from other works, would be valid without
regard to the novelty or want of novelty of its subject matter. The novelty of the art or thing described
or explained has nothing to do with the validity of the copyright. To give to the author of the book an
exclusive property in the art described therein, when no examination of its novelty has ever been
officially made, would be a surprise and a fraud upon the public. That is the province of letters patent,
not of copyright. The claim to an invention of discovery of an art or manufacture must be subjected to
the examination of the Patent Office before an exclusive right therein can be obtained; and a patent
from the government can only secure it.
The difference between the two things, letters patent and copyright, may be illustrated by
reference to the subjects just enumerated. Take the case of medicines. Certain mixtures are found to be
of great value in the healing art. If the discoverer writes and publishes a book on the subject (as regular
physicians generally do), he gains no exclusive right to the manufacture and sale of the medicine; he
gives that to the public. If he desires to acquire such exclusive right, he must obtain a patent for the
mixture as a new art, manufacture or composition of matter. He may copyright his book, if he pleases;
but that only secures to him the exclusive right of printing and publishing his book. So of all other
inventions or discoveries.
The copyright of a book on perspective, no matter how many drawings and illustrations it may
contain, gives no exclusive right to the modes of drawing described, though they may never have been
known or used before. By publishing the book without getting a patent for the art, the latter is given to
the public.
xxx xxx xxx
Now, whilst no one has a right to print or publish his book, or any material part thereof, as a
book intended to convey instruction in the art, any person may practice and use the art itself which he
has described and illustrated therein. The use of the art is a totally different thing from a publication of
the book explaining it. The copyright of a book on bookkeeping cannot secure the exclusive right to
make, sell and use account books prepared upon the plan set forth in such book. Whether the art might
or might not have been patented, is a question, which is not before us. It was not patented, and is open
and free to the use of the public. And, of course, in using the art, the ruled lines and headings of
accounts must necessarily be used as incident to it.
The plausibility of the claim put forward by the complainant in this case arises from a
confusion of ideas produced by the peculiar nature of the art described in the books, which have been
made the subject of copyright. In describing the art, the illustrations and diagrams employed happened
to correspond more closely than usual with the actual work performed by the operator who uses the
art. . . . The description of the art in a book, though entitled to the benefit of copyright, lays no
foundation for an exclusive claim to the art itself. The object of the one is explanation; the object of the
other is use. The former may be secured by copyright. The latter can only be secured, if it can be
secured at all, by letters patent." (italics supplied)
ON THE ISSUE OF TRADEMARK INFRINGEMENT
This issue concerns the use by respondents of the mark "Poster Ads" which petitioner's president said was a
contraction of "poster advertising." P & D was able to secure a trademark certificate for it, but one where the goods
specified were "stationeries such as letterheads, envelopes, calling cards and newsletters." 22 Petitioner admitted it did not
commercially engage in or market these goods. On the contrary, it dealt in electrically operated backlit advertising units
and the sale of advertising spaces thereon, which, however, were not at all specified in the trademark certificate.
 Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate
Court, 23 where we, invoking Section 20 of the old Trademark Law, ruled that "the certificate of registration issued by the
Director of Patents can confer (upon petitioner) the exclusive right to use its own symbol only to those goods specified in
the certificate, subject to any conditions and limitations specified in the certificate. . . . . One who has adopted and used a
trademark on his goods does not prevent the adoption and use of the same trademark by others for products which are of
a different description." 24 Faberge, Inc. was correct and was in fact recently reiterated in Canon Kabushiki Kaisha vs.
Court of Appeals. 25
Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P & D to secure a
trademark registration for specific use on the light boxes meant that there could not have been any trademark infringement
since registration was an essential element thereof.
ON THE ISSUE OF UNFAIR COMPETITION
If at all, the cause of action should have been for unfair competition, a situation which was possible even if P & D
had no registration. 26 However, while the petitioner's complaint in the RTC also cited unfair competition, the trial court
did not find private respondents liable therefor. Petitioner did not appeal this particular point; hence, it cannot now revive
its claim of unfair competition.
But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair competition.
By the nature of things, there can be no unfair competition under the law on copyrights although it is applicable to
disputes over the use of trademarks. Even a name or phrase incapable of appropriation as a trademark or tradename may,
by long and exclusive use by a business (such that the name or phrase becomes associated with the business or product in
the mind of the purchasing public), be entitled to protection against unfair competition. 27 In this case, there was no
evidence that P & D's use of "Poster Ads" was distinctive or well-known. As noted by the Court of Appeals, petitioner's
expert witnesses himself had testified that "'Poster Ads' was too generic a name. So it was difficult to identify it with any
company, honestly speaking." 28 This crucial admission by its own expert witness that "Poster Ads" could not be
associated with P & D showed that, in the mind of the public, the goods and services carrying the trademark "Poster Ads"
could not be distinguished from the goods and services of other entities.
This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was generic and
incapable of being used as a trademark because it was used in the field of poster advertising, the very business engaged in
by petitioner. "Secondary meaning" means that a word or phrase originally incapable of exclusive appropriation with
reference to an article in the market (because it is geographically or otherwise descriptive) might nevertheless have been
used for so long and so exclusively by one producer with reference to his article that, in the trade and to that branch of the
purchasing public, the word or phrase has come to mean that the article was his property. 29 The admission by petitioner's
own expert witness that he himself could not associate "Poster Ads" with petitioner P & D because it was "too generic"
definitely precluded the application of this exception.
Having discussed the most important and critical issues, we see no need to belabor the rest.
All told, the Court finds no reversible error committed by the Court of Appeals when it reversed the Regional
Trial Court of Makati City. ITSaHC
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May 22, 2001 is
AFFIRMED in toto.
SO ORDERED.
||| (Pearl & Dean (Phil.) v. Shoemart, G.R. No. 148222, [August 15, 2003], 456 PHIL 474-497)
 [G.R. No. 126627. August 14, 2003.]
SMITH KLINE BECKMAN CORPORATION, petitioner, vs. THE HONORABLE COURT OF
APPEALS and TRYCO PHARMA CORPORATION, respondents.
Sapalo and Velez for petitioner.
Eduardo J Marino, Jr. for respondents.
SYNOPSIS
Petitioner, the registered patent holder of Letters Patent No. 14561, filed a complaint for infringement of patent
against private respondent alleging that private respondent appropriated for its drug Impregon, the active ingredient of
Albendazole, which is substantially the same as Methyl 5 Propylthio-2-Benzimidazole Carbamate covered by petitioner's
patent since both of them are meant to combat worm or parasite infestation in animals. Petitioner also pointed out that its
application for a patent in the Philippine Patent Office on account of which it was granted Letters Patent No. 14561 was
merely a divisional application of a prior application in the U.S. which granted a patent for Albendazole. Both the trial
court and the CA held that the respondent was not liable for any infringement of the patent of petitioner in light of the
latter's failure to show that Albendazole is the same as the compound subject of Letters Patent No. 14561.
The Supreme Court affirmed the assailed decision with modification. The Court held that petitioner's evidence
failed to show the substantial sameness of petitioner's patented compound and Albendazole. While both compounds have
the effect of neutralizing parasites in animals, the identity of result does not amount to infringement of patent unless
Albendazole operates in substantially the same way as the patented compound, even though it performs the same function
or the same result. As for the concept of divisional applications proffered by petitioner, what this only means is that
petitioner's Methyl 5 Prophylthio-2-Benzimidazole Carbamate is an invention distinct from the other inventions claimed
in the original application divided out, Albendazole being one of those other inventions. Otherwise, Methyl 5 Propylthio-
2-Benzimidazole Carbamate would not have been the subject of a divisional application if a single patent could have been
issued for it as well as Albendazole. The Supreme Court did not award actual damages because no documentary evidence
was presented to substantiate private respondent's claim therefore. Neither did the Court award attorney's fees because
there was no evidence indicating that petitioner was moved by malice in suing private respondent. The Court, however,
awarded private respondent P20,000.00 temperate or moderate damages, it having suffered some pecuniary loss the
amount of which cannot, by the nature of the case, be established with certainty.
SYLLABUS
1. COMMERCIAL LAW; PATENT LAW; INFRINGEMENT; DOCTRINE OF EQUIVALENTS; TAKES
PLACE WHEN A DEVICE APPROPRIATES A PRIOR INVENTION BY DOING SUBSTANTIALLY THE SAME
FUNCTION IN SUBSTANTIALLY THE SAME WAY; CASE AT BAR NOT A CASE OF. — The doctrine of
equivalents provides that an infringement also takes place when a device appropriates a prior invention by incorporating
its innovative concept and, although with some modification and change, performs substantially the same function in
substantially the same way to achieve substantially the same result. Yet again, a scrutiny of petitioner's evidence fails to
convince this Court of the substantial sameness of petitioner's patented compound and Albendazole. While both
compounds have the effect of neutralizing parasites in animals,identity of result does not amount to infringement of patent
unless Albendazole operates in substantially the same way or by substantially the same means as the patented compound,
even though it performs the same function and achieves the same result. In other words, the principle or mode of
operation must be the same or substantially the same. The doctrine of equivalents thus requires satisfaction of the
function-means-and-result test, the patentee having the burden to show that all three components of such equivalency test
are met. As stated early on, petitioner's evidence fails to explain how Albendazole is in every essential detail identical to
methyl 5 propylthio-2-benzimidazole carbamate. Apart from the fact that Albendazole is an anthelmintic agent like
methyl 5 propylthio-2-benzimidazole carbamate, nothing more is asserted and accordingly substantiated regarding the
method or means by which Albendazole weeds out parasites in animals, thus giving no information on whether that
method is substantially the same as the manner by which petitioner's compound works. The testimony of Dr. Orinion
lends no support to petitioner's cause, he not having been presented or qualified as an expert witness who has the
knowledge or expertise on the matter of chemical compounds.
2. ID.; ID.; ID.; CONCEPT OF DIVISIONAL APPLICATIONS, EXPLAINED; CASE AT BAR. — As for the
concept of divisional applications proffered by petitioner, it comes into play when two or more inventions are claimed in a
single application but are of such a nature that a single patent may not be issued for them. The applicant thus is required
"to divide," that is, to limit the claims to whichever invention he may elect, whereas those inventions not elected may be
made the subject of separate applications which are called "divisional applications." What this only means is that
petitioner's methyl 5 propylthio-2-benzimidazole Carbamate is an invention distinct from the other inventions claimed in
the original application divided out, Albendazole being one of those other inventions. Otherwise, methyl 5 propylthio-2-
benzimidazole carbamate would not have been the subject of a divisional application if a single patent could have been
issued for it as well as Albendazole.
3. CIVIL LAW; CIVIL CODE; DAMAGES; ACTUAL DAMAGES, ATTORNEY'S FEES, TEMPERATE
DAMAGES; AWARD THEREOF, WHEN PROPER; CASE AT BAR. — This Court does not sustain the award of actual
damages and attorney's fees in favor of private respondent. The claimed actual damages of P330,000.00 representing lost
profits or revenues incurred by private respondent as a result of the issuance of the injunction against it, computed at the
rate of 30% of its alleged P100,000.00 monthly gross sales for eleven months, were supported by the testimonies of
private respondent's President and Executive Vice-President that the average monthly sale of Impregon was P100,000.00
and that sales plummeted to zero after the issuance of the injunction. While indemnification for actual or compensatory
damages covers not only the loss suffered (damnum emergens) but also profits which the obligee failed to obtain (lucrum
cessans or ganacias frustradas), it is necessary to prove the actual amount of damages with a reasonable degree of
certainty based on competent proof and on the best evidence obtainable by the injured party. The testimonies of private
respondent's officers are not the competent proof or best evidence obtainable to establish its right to actual or
compensatory damages for such damages also require presentation of documentary evidence to substantiate a claim
therefor. In the same vein, this Court does not sustain the grant by the appellate court of attorney's fees to private
respondent anchored on Article 2208 (2) of the Civil Code, private respondent having been allegedly forced to litigate as a
result of petitioner's suit. Even if a claimant is compelled to litigate with third persons or to incur expenses to protect its
rights, still attorney's fees may not be awarded where no sufficient showing of bad faith could be reflected in a party's
persistence in a case other than an erroneous conviction of the righteousness of his cause. There exists no evidence on
record indicating that petitioner was moved by malice in suing private respondent. This Court, however, grants private
respondent temperate or moderate damages in the amount of P20,000.00 which it finds reasonable under the
circumstances, it having suffered some pecuniary loss the amount of which cannot, from the nature of the case, be
established with certainty.
DECISION
CARPIO MORALES, J p:
Smith Kline Beckman Corporation (petitioner), a corporation existing by virtue of the laws of the state of
Pennsylvania, United States of America (U.S.) and licensed to do business in the Philippines, filed on October 8, 1976, as
assignee, before the Philippine Patent Office (now Bureau of Patents, Trademarks and Technology Transfer) an
application for patent over an invention entitled "Methods and Compositions for Producing Biphasic Parasiticide Activity
Using Methyl 5 Propylthio-2-Benzimidazole Carbamate." The application bore Serial No. 18989.
On September 24, 1981, Letters Patent No. 14561 1 for the aforesaid invention was issued to petitioner for a term
of seventeen (17) years.
The letters patent provides in its claims 2 that the patented invention consisted of a new compound named methyl
5 propylthio-2-benzimidazole carbamate and the methods or compositions utilizing the compound as an active ingredient
in fighting infections caused by gastrointestinal parasites and lungworms in animals such as swine, sheep, cattle, goats,
horses, and even pet animals.
Tryco Pharma Corporation (private respondent) is a domestic corporation that manufactures, distributes and sells
veterinary products including Impregon, a drug that has Albendazole for its active ingredient and is claimed to be
effective against gastro-intestinal roundworms, lungworms, tapeworms and fluke infestation in carabaos, cattle and goats.
 Petitioner sued private respondent for infringement of patent and unfair competition before the Caloocan City
Regional Trial Court (RTC). 3 It claimed that its patent covers or includes the substance Albendazole such that private
respondent, by manufacturing, selling, using, and causing to be sold and used the drug Impregon without its authorization,
infringed Claims 2, 3, 4, 7, 8 and 9 of Letters Patent No. 14561 4 as well as committed unfair competition under Article
189, paragraph 1 of the Revised Penal Code and Section 29 of Republic Act No. 166 (The Trademark Law) for
advertising and selling as its own the drug Impregon although the same contained petitioner's patented Albendazole. 5
On motion of petitioner, Branch 125 of the Caloocan RTC issued a temporary restraining order against private
respondent enjoining it from committing acts of patent infringement and unfair competition. 6 A writ of preliminary
injunction was subsequently issued. 7
Private respondent in its Answer 8 averred that Letters Patent No. 14561 does not cover the substance
Albendazole for nowhere in it does that word appear; that even if the patent were to include Albendazole, such substance
is unpatentable; that the Bureau of Food and Drugs allowed it to manufacture and market Impregon with Albendazole as
its known ingredient; that there is no proof that it passed off in any way its veterinary products as those of petitioner; that
Letters Patent No. 14561 is null and void, the application for the issuance thereof having been filed beyond the one year
period from the filing of an application abroad for the same invention covered thereby, in violation of Section 15
of Republic Act No. 165 (The Patent Law); and that petitioner is not the registered patent holder.
Private respondent lodged a Counterclaim against petitioner for such amount of actual damages as may be proven;
P1,000,000.00 in moral damages; P300,000.00 in exemplary damages; and P150,000.00 in attorney's fees. DaTICE
Finding for private respondent, the trial court rendered a Decision dated July 23, 1991, 9 the dispositive portion of
which reads:
WHEREFORE, in view of the foregoing, plaintiff's complaint should be, as it is hereby,
DISMISSED. The Writ of injunction issued in connection with the case is hereby ordered DISSOLVED.
The Letters Patent No. 14561 issued by the then Philippine Patents Office is hereby declared
null and void for being in violation of Sections 7, 9 and 15 of the Patents Law.
Pursuant to Sec. 46 of the Patents Law, the Director of Bureau of Patents is hereby directed
to cancel Letters Patent No. 14561 issued to the plaintiff and to publish such cancellation in the Official
Gazette.
Defendant Tryco Pharmaceutical Corporation is hereby awarded P330,000.00 actual damages
and P100,000.00 attorney's fees as prayed for in its counterclaim but said amount awarded to defendant
is subject to the lien on correct payment of filing fees.
SO ORDERED. (Italics supplied)
On appeal, the Court of Appeals, by Decision of April 21, 1995, 10 upheld the trial court's finding that private
respondent was not liable for any infringement of the patent of petitioner in light of the latter's failure to show that
Albendazole is the same as the compound subject of Letters Patent No. 14561. Noting petitioner's admission of the
issuance by the U.S. of a patent for Albendazole in the name of Smith Kline and French Laboratories which was
petitioner's former corporate name, the appellate court considered the U.S. patent as implying that Albendazole is
different from methyl 5 propylthio-2-benzimidazole carbamate. It likewise found that private respondent was not guilty of
deceiving the public by misrepresenting that Impregon is its product.
The appellate court, however, declared that Letters Patent No. 14561 was not void as it sustained petitioner's
explanation that Patent Application Serial No. 18989 which was filed on October 8, 1976 was a divisional application of
Patent Application Serial No. 17280 filed on June 17, 1975 with the Philippine Patent Office, well within one year from
petitioner's filing on June 19, 1974 of its Foreign Application Priority Data No. 480,646 in the U.S. covering the same
compound subject of Patent Application Serial No. 17280.
Applying Section 17 of the Patent Law, the Court of Appeals thus ruled that Patent Application Serial No. 18989
was deemed filed on June 17, 1995 or still within one year from the filing of a patent application abroad in compliance
with the one-year rule under Section 15 of the Patent Law. And it rejected the submission that the compound in Letters
Patent No. 14561 was not patentable, citing the jurisprudentially established presumption that the Patent Office's
determination of patentability is correct. Finally, it ruled that petitioner established itself to be the one and the same
assignee of the patent notwithstanding changes in its corporate name. Thus the appellate court disposed:
 WHEREFORE, the judgment appealed from is AFFIRMED with the MODIFICATION that the
orders for the nullification of Letters Patent No. 14561 and for its cancellation are deleted therefrom.
SO ORDERED.
Petitioner's motion for reconsideration of the Court of Appeals' decision having been denied 11 the present
petition for review on certiorari 12 was filed, assigning as errors the following:
I. THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING THAT ALBENDAZOLE,
THE ACTIVE INGREDIENT IN TRYCO'S "IMPREGON" DRUG, IS INCLUDED IN
PETITIONER'S LETTERS PATENT NO. 14561, AND THAT CONSEQUENTLY TRYCO IS
ANSWERABLE FOR PATENT INFRINGEMENT.
II. THE COURT OF APPEALS GRAVELY ERRED IN AWARDING TO PRIVATE RESPONDENT
TRYCO PHARMA CORPORATION P330,000.00 ACTUAL DAMAGES AND P100,000.00
ATTORNEY'S FEES.
Petitioner argues that under the doctrine of equivalents for determining patent infringement, Albendazole, the
active ingredient it alleges was appropriated by private respondent for its drug Impregon, is substantially the same as
methyl 5 propylthio-2-benzimidazole carbamate covered by its patent since both of them are meant to combat worm or
parasite infestation in animals. It cites the "unrebutted" testimony of its witness Dr. Godofredo C. Orinion (Dr. Orinion)
that the chemical formula in Letters Patent No. 14561 refers to the compound Albendazole. Petitioner adds that the two
substances substantially do the same function in substantially the same way to achieve the same results, thereby making
them truly identical. Petitioner thus submits that the appellate court should have gone beyond the literal wordings used in
Letters Patent No. 14561, beyond merely applying the literal infringement test, for in spite of the fact that the word
Albendazole does not appear in petitioner's letters patent, it has ably shown by evidence its sameness with methyl 5
propylthio-2-benzimidazole carbamate.
Petitioner likewise points out that its application with the Philippine Patent Office on account of which it was
granted Letters Patent No. 14561 was merely a divisional application of a prior application in the U.S. which granted a
patent for Albendazole. Hence, petitioner concludes that both methyl 5 propylthio-2-benzimidazole carbamate and the
U.S.-patented Albendazole are dependent on each other and mutually contribute to produce a single result, thereby
making Albendazole as much a part of Letters Patent No. 14561 as the other substance is.
Petitioner concedes in its Sur-Rejoinder 13 that although methyl 5 propylthio-2-benzimidazole carbamate is not
identical with Albendazole, the former is an improvement or improved version of the latter thereby making both
substances still substantially the same.
With respect to the award of actual damages in favor of private respondent in the amount of P330,000.00
representing lost profits, petitioner assails the same as highly, speculative and conjectural, hence, without basis. It assails
too the award of P100,000.00 in attorney's fees as not falling under any of the instances enumerated by law where
recovery of attorney's fees is allowed. ECcDAH
In its Comment, 14 private respondent contends that application of the doctrine of equivalents would not alter the
outcome of the case, Albendazole and methyl 5 propylthio-2-benzimidazole carbamate being two different compounds
with different chemical and physical properties. It stresses that the existence of a separate U.S. patent for Albendazole
indicates that the same and the compound in Letters Patent No. 14561 are different from each other; and that since it was
on account of a divisional application that the patent for methyl 5 propylthio-2-benzimidazole carbamate was issued, then,
by definition of a divisional application, such a compound is just one of several independent inventions alongside
Albendazole under petitioner's original patent application.
As has repeatedly been held, only questions of law may be raised in a petition for review on certiorari before this
Court. Unless 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, 15 this Court does not review
them.
From an examination of the evidence on record, this Court finds nothing infirm in the appellate court's
conclusions with respect to the principal issue of whether private respondent committed patent infringement to the
prejudice of petitioner.
The burden of proof to substantiate a charge for patent infringement rests on the plaintiff.  16 In the case at bar,
petitioner's evidence consists primarily of its Letters Patent No. 14561, and the testimony of Dr. Orinion, its general
manager in the Philippines for its Animal Health Products Division, by which it sought to show that its patent for the
compound methyl 5 propylthio-2-benzimidazole carbamate also covers the substance Albendazole.
From a reading of the 9 claims of Letters Patent No. 14561 in relation to the other portions thereof, no mention is
made of the compound Albendazole. All that the claims disclose are: the covered invention, that is, the compound methyl
5 propylthio-2-benzimidazole carbamate; the compound's being anthelmintic but nontoxic for animals or its ability to
destroy parasites without harming the host animals; and the patented methods, compositions or preparations involving the
compound to maximize its efficacy against certain kinds of parasites infecting specified animals.
When the language of its claims is clear and distinct, the patentee is bound thereby and may not claim anything
beyond them. 17 And so are the courts bound which may not add to or detract from the claims matters not expressed or
necessarily implied, nor may they enlarge the patent beyond the scope of that which the inventor claimed and the patent
office allowed, even if the patentee may have been entitled to something more than the words it had chosen would
include. 18
It bears stressing that the mere absence of the word Albendazole in Letters Patent No. 14561 is not determinative
of Albendazole's non-inclusion in the claims of the patent. While Albendazole is admittedly a chemical compound that
exists by a name different from that covered in petitioner's letters patent, the language of Letter Patent No. 14561 fails to
yield anything at all regarding Albendazole. And no extrinsic evidence had been adduced to prove that Albendazole
inheres in petitioner's patent in spite of its omission therefrom or that the meaning of the claims of the patent embraces the
same.
While petitioner concedes that the mere literal wordings of its patent cannot establish private respondent's
infringement, it urges this Court to apply the doctrine of equivalents.
The doctrine of equivalents provides that an infringement also takes place when a device appropriates a prior
invention by incorporating its innovative concept and, although with some modification and change, performs
substantially the same function in substantially the same way to achieve substantially the same result.  19Yet again, a
scrutiny of petitioner's evidence fails to convince this Court of the substantial sameness of petitioner's patented compound
and Albendazole. While both compounds have the effect of neutralizing parasites in animals,  identity of result does not
amount to infringement of patent unless Albendazole operates in substantially the same way or by substantially the same
means as the patented compound, even though it performs the same function and achieves the same result. 20In other
words, the principle or mode of operation must be the same or substantially the same. 21
The doctrine of equivalents thus requires satisfaction of the function-means-and-result test, the patentee having
the burden to show that all three components of such equivalency test are met. 22
As stated early on, petitioner's evidence fails to explain how Albendazole is in every essential detail identical to
methyl 5 propylthio-2-benzimidazole carbamate. Apart from the fact that Albendazole is an anthelmintic agent like
methyl 5 propylthio-2-benzimidazole carbamate, nothing more is asserted and accordingly substantiated regarding the
method or means by which Albendazole weeds out parasites in animals, thus giving no information on whether that
method is substantially the same as the manner by which petitioner's compound works. The testimony of Dr. Orinion
lends no support to petitioner's cause, he not having been presented or qualified as an expert witness who has the
knowledge or expertise on the matter of chemical compounds.
As for the concept of divisional applications proffered by petitioner, it comes into play when two or more
inventions are claimed in a single application but are of such a nature that a single patent may not be issued for
them. 23 The applicant thus is required "to divide," that is, to limit the claims to whichever invention he may elect,
whereas those inventions not elected may be made the subject of separate applications which are called "divisional
applications." 24 What this only means is that petitioner's methyl 5 propylthio-2-benzimidazole carbamate is an invention
distinct from the other inventions claimed in the original application divided out, Albendazole being one of those other
inventions. Otherwise, methyl 5 propylthio-2-benzimidazole carbamate would not have been the subject of a divisional
application if a single patent could have been issued for it as well as Albendazole.
The foregoing discussions notwithstanding, this Court does not sustain the award of actual damages and attorney's
fees in favor of private respondent. The claimed actual damages of P330,000.00 representing lost profits or revenues
incurred by private respondent as a result of the issuance of the injunction against it, computed at the rate of 30% of its
alleged P100,000.00 monthly gross sales for eleven months, were supported by the testimonies of private respondent's
President 25and Executive Vice-President that the average monthly sale of Impregon was P100,000.00 and that sales
plummeted to zero after the issuance of the injunction. 26 While indemnification for actual or compensatory damages
covers not only the loss suffered (damnum emergens) but also profits which the obligee failed to obtain (lucrum cessans
or ganacias frustradas), it is necessary to prove the actual amount of damages with a reasonable degree of certainty based
on competent proof and on the best evidence obtainable by the injured party.  27 The testimonies of private respondent's
officers are not the competent proof or best evidence obtainable to establish its right to actual or compensatory damages
for such damages also require presentation of documentary evidence to substantiate a claim therefor. 28
In the same vein, this Court does not sustain the grant by the appellate court of attorney's fees to private
respondent anchored on Article 2208 (2) of the Civil Code, private respondent having been allegedly forced to litigate as a
result of petitioner's suit. Even if a claimant is compelled to litigate with third persons or to incur expenses to protect its
rights, still attorney's fees may not be awarded where no sufficient showing of bad faith could be reflected in a party's
persistence in a case other than an erroneous conviction of the righteousness of his cause. 29 There exists no evidence on
record indicating that petitioner was moved by malice in suing private respondent. cCaATD
This Court, however, grants private respondent temperate or moderate damages in the amount of P20,000.00
which it finds reasonable under the circumstances, it having suffered some pecuniary loss the amount of which cannot,
from the nature of the case, be established with certainty. 30
WHEREFORE, the assailed decision of the Court of Appeals is hereby AFFIRMED with MODIFICATION. The
award of actual or compensatory damages and attorney's fees to private respondent, Tryco Pharma Corporation, is
DELETED; instead, it is hereby awarded the amount of P20,000.00 as temperate or moderate damages.
SO ORDERED.
||| (Smith Kline Beckman Corp. v. Court of Appeals, G.R. No. 126627, [August 14, 2003], 456 PHIL 213-226)

[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 p:
Assailed in this Petition for Review on Certiorari 1 are the Court of Appeals' (CA) Decision 2 dated June 25,
2010 and Resolution 3 dated October 27, 2010 in CA-G.R. SP No. 112278 which reversed and set aside the Intellectual
Property Office (IPO) Director General's Decision 4 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 SUNBEAM" 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 AcDHCS
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 Year 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 CHEIcS
The Ruling of the BLA
In its Decision 15 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 Decision 17 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 HETDAC
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 Decision 21 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 Reconsideration 25 dated July 20, 2010, which was, however, denied in
a Resolution 26 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 Comment 28 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: CSTcEI
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. acCTSE
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 236 37 of the IP Codewhich 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 2 38 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-A 39 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 EaSCAH
It must be emphasized that registration of a trademark, by itself, is not a mode of acquiring ownership. 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. Abyadang 42 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. . . . 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. . . .
In other words, theprima facie presumption brought about by the registration of a mark may be
challenged and overcome in an appropriate action, . . . 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 ETDHaC
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.
||| (Birkenstock Orthopaedie GmbH and Co. KG v. Phil. Shoe Expo Marketing Corp., G.R. No. 194307, [November 20,
2013], 721 PHIL 867-882)

[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 p:
Assailed in this petition for review on certiorari 1 is the December 23, 2008 Decision 2 of the Court of Appeals
(CA) in CA-G.R. SP No. 104672 which affirmed in totothe Intellectual Property Office (IPO) Director General's April 21,
2008 Decision 3 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 STaCIA
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 Decision 8 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 establish Cointreau'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 AaHTIE
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 notipso 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 HCacDE
Finding the IPO Director General's reversal of the BLA's Decision unacceptable, Ecole filed a Petition for
Review 16 dated 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. ADSTCI
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 2 20 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-A 21 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: DHEACI
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. 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.
xxx xxx xxx
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. HCacDE
xxx xxx xxx
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. SDTaHc
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.
||| (Ecole de Cuisine Manille, Inc. v. Renaud Cointreau & Cie, G.R. No. 185830, [June 5, 2013], 710 PHIL 305-316)

[G.R. No. 198889. January 20, 2016.]

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 p:
For our disposition is a petition for review on certiorari under Rule 45 seeking to annul and set aside the June
23, 2011 Decision 1 and the October 4, 2011Resolution 2 of the Court of Appeals in CA-G.R. SP No. 107570, which
reversed and set aside the March 26, 2008 Decision 3 of the Bureau of Legal Affairs of the Intellectual Property
Office (IPO-BLA) and the January 29, 2009 Decision 4 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." 7The 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 "PAPA" for about twenty-seven (27) years, Neri Papa subsequently assigned
the mark "PAPA" to Hernan D. Reyes who, on September 17, 1981, filed an application to
register said mark "PAPA" for use on banana catsup, chili sauce, achara, banana chips, and
instant ube powder; CAIHTE
3. On August 14, 1983, Hernan 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. Hernan 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, Hernan 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 "PAPA Label Design";
9. The mark "PAPA 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 "PAPA" 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 theIP 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 "PAPA,"
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. DETACa
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 . . .;
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; aDSIHc
14. To protect its ownership over the mark "PAPA BOY & DEVICE"
considering that it is the first to adopt and use said mark, Respondent-applicant
applied for its registration under Application Serial No. 4-2002-002757 for Class 30,
and said application was found registrable by the Examiner as a consequence of
which the same was recommended for allowance after undergoing a thorough process
of examination, which recommendation was then approved by the Director of the
Bureau of Trademarks (BOT);
15. Respondent-applicant's mark "PAPA BOY & DEVICE" has been
commercially used in the Philippines;
16. Respondent-applicant's mark "PAPA BOY & DEVICE" has been
promoted and advertised for a considerable duration of time and over wide
geographical areas: Respondent-applicant has invested tremendous amount of
resources in the promotion of its mark "PAPA BOY & DEVICE" through various
media including print publications and promotional materials;
17. The widespread local commercial use of the subject mark by
Respondent-applicant to distinguish and identify its various high-quality consumer
products has earned Respondent-applicant a well-deserved business reputation and
goodwill;
18. Respondent-applicant's mark is distinctive and capable of identifying its
goods and distinguishing them from those offered for sale by others in the market
including Opposer's goods for which reason no confusion will result because
Respondent-applicant's mark is for lechon sauce while Opposer's mark is for banana
sauce; and
19. The presence of a common prefix "PAPA" in the marks of both parties
does not render said marks identical or confusingly similar: Opposer cannot
exclusively appropriate said prefix considering that other marks such as "Papa Heinz
Pizza", "Papa Heinz Sausage", "Papa Beaver", "Papa Pop", "Pizza Papa John's &
Design", "Papadoods", and "Papa in Wine and Device" are valid and active. 10
 Petitioner's mark and its variations appear as follows:
1. "PAPA" under Registration No. 32416 for Class 29 goods; 11
2. The mark "PAPA" as it appeared upon re-registration of Certificate No. 32416, under
Application No. 4-2005-010788 for Classes 29 and 30 goods; 12
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." Thefallo 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 underRA 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. . . . . 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.) TIADCc
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 "PAPA 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
"PAPA" 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 "PAPA" 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 AIDSTE
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 "undiscerningly 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 AaCTcI
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.
xxx xxx xxx
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. . . . 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".
xxx xxx xxx
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".
 xxx xxx xxx
In a dominancy test, the prominent feature of the competing trademarks must be similar to
cause confusion or deception. . . . . 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, S.A. 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 "PAPA 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 . . . 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.
xxx xxx xxx
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 SDHTEC
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 Reply 41 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 123.1 (d) of Republic Act No. 8293, or the Intellectual
Property Code (IP Code).
Petitioner reiterates its argument that the Court of Appeals erred in applying the holistic test and that the
proper test under the circumstances is the dominancy test, which was correctly applied by the IPO-BLA and the
Director General. 42
THIS COURT'S RULING
The petition has merit.
We find that the Court of Appeals erred in applying the holistic test and in reversing and setting aside the
decision of the IPO-BLA and that of the IPO Director General, both of which rejected respondent's application for the
mark "PAPA BOY & DEVICE."
In Dermaline, Inc. v. Myra Pharmaceuticals, Inc., 43 we defined a trademark as "any distinctive word, name,
symbol, emblem, sign, or device, or any combination thereof, adopted and used by a manufacturer or merchant on his
goods to identify and distinguish them from those manufactured, sold, or dealt by others." We held that a trademark is
"an intellectual property deserving protection by law."
The rights of the trademark owner are found in the Intellectual Property Code, which provides:
Section 147. Rights Conferred. — 147.1. The owner of a registered mark shall have the
exclusive right to prevent all third parties not having the owner's consent from using in the course of
trade identical or similar signs or containers for goods or services which are identical or similar to
those in respect of which the trademark is registered where such use would result in a likelihood of
confusion. In case of the use of an identical sign for identical goods or services, a likelihood of
confusion shall be presumed.
Section 168. Unfair Competition, Rights, Regulation and Remedies. — 168.1. A person
who has identified in the mind of the public the goods he manufactures or deals in, his business or
services from those of others, whether or not a registered mark is employed, has a property right in
the goodwill of the said goods, business or services so identified, which will be protected in the same
manner as other property rights.
The guideline for courts in determining likelihood of confusion is found in A.M. No. 10-3-10-SC, or
the Rules of Procedure for Intellectual Property Rights Cases, Rule 18, which provides:
RULE 18
Evidence in Trademark Infringement and Unfair Competition Cases
SECTION 1. Certificate of Registration. — A certificate of registration of a mark shall
be prima facie evidence of:
a) the validity of the registration;
b) the registrant's ownership of the mark; and
c) the registrant's exclusive right to use the same in connection with the goods or services and
those that are related thereto specified in the certificate. AScHCD
xxx xxx xxx
 SECTION 3. Presumption of Likelihood of Confusion. — Likelihood of confusion shall be
presumed in case an identical sign or mark is used for identical goods or services.
SECTION 4. Likelihood of Confusion in Other Cases. — In determining whether one
trademark is confusingly similar to or is a colorable imitation of another, the court must consider the
general impression of the ordinary purchaser, buying under the normally prevalent conditions in trade
and giving the attention such purchasers usually give in buying that class of goods. Visual, aural,
connotative comparisons and overall impressions engendered by the marks in controversy as they are
encountered in the realities of the marketplace must be taken into account. Where there are both
similarities and differences in the marks, these must be weighed against one another to see which
predominates.
In determining likelihood of confusion between marks used on non-identical goods or
services, several factors may be taken into account, such as, but not limited to:
a) the strength of plaintiff's mark;
b) the degree of similarity between the plaintiff's and the defendant's marks;
c) the proximity of the products or services;
d) the likelihood that the plaintiff will bridge the gap;
e) evidence of actual confusion;
f) the defendant's good faith in adopting the mark;
g) the quality of defendant's product or service; and/or
h) the sophistication of the buyers.
"Colorable imitation" denotes such a close or ingenious imitation as to be calculated to
deceive ordinary persons, or such a resemblance to the original as to deceive an ordinary purchaser
giving such attention as a purchaser usually gives, as to cause him to purchase the one supposing it to
be the other.
SECTION 5. Determination of Similar and Dissimilar Goods or Services. — Goods or
services may not be considered as being similar or dissimilar to each other on the ground that, in any
registration or publication by the Office, they appear in different classes of the Nice Classification.
In this case, the findings of fact of the highly technical agency, the Intellectual Property Office, which has the
expertise in this field, should have been given great weight by the Court of Appeals. As we held in Berris
Agricultural Co., Inc. v. Abyadang: 44
R.A. No. 8293 defines a "mark" as any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise and shall include a stamped or marked
container of goods. It also defines a "collective mark" as any visible sign designated as such in the
application for registration and capable of distinguishing the origin or any other common
characteristic, including the quality of goods or services of different enterprises which use the sign
under the control of the registered owner of the collective mark.
On the other hand, R.A. No. 166 defines a "trademark" as any distinctive word, name,
symbol, emblem, sign, or device, or any combination thereof, adopted and used by a manufacturer or
merchant on his goods to identify and distinguish them from those manufactured, sold, or dealt by
another. A trademark, being a special property, is afforded protection by law. But for one to enjoy
this legal protection, legal protection ownership of the trademark should rightly be established.
The ownership of a trademark is acquired by its registration and its actual use by the
manufacturer or distributor of the goods made available to the purchasing public. Section 122 of  R.A.
No. 8293 provides that the rights in a mark shall be acquired by means of its valid registration with
the IPO. A certificate of registration of a mark, once issued, constitutes prima facie evidence of the
validity of the registration, of the registrant's ownership of the mark, and of the registrant's exclusive
right to use the same in connection with the goods or services and those that are related thereto
specified in the certificate. R.A. No. 8293, however, requires the applicant for registration or the
registrant to file a declaration of actual use (DAU) of the mark, with evidence to that effect, within
 three (3) years from the filing of the application for registration; otherwise, the application shall be
refused or the mark shall be removed from the register. In other words, the prima facie presumption
brought about by the registration of a mark may be challenged and overcome, in an appropriate
action, by proof of the nullity of the registration or of non-use of the mark, except when excused.
Moreover, the presumption may likewise be defeated by evidence of prior use by another person,  i.e.,
it will controvert a claim of legal appropriation or of ownership based on registration by a subsequent
user. This is because a trademark is a creation of use and belongs to one who first used it in trade or
commerce.
The determination of priority of use of a mark is a question of fact. Adoption of the mark
alone does not suffice. One may make advertisements, issue circulars, distribute price lists on certain
goods, but these alone will not inure to the claim of ownership of the mark until the goods bearing the
mark are sold to the public in the market. Accordingly, receipts, sales invoices, and testimonies of
witnesses as customers, or orders of buyers, best prove the actual use of a mark in trade and
commerce during a certain period of time.
xxx xxx xxx
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.) AcICHD
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.
xxx xxx xxx
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 astylized "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.
xxx xxx xxx
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. . . . .
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. TAIaHE
xxx xxx xxx
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:
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). . . . .
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.
xxx xxx xxx
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. . . . .
xxx xxx xxx
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: cDHAES
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.
xxx xxx xxx
 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. . . . .
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 . . . 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:
. . . 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 xxx xxx
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 . . . 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, S.A. 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. ASEcHI
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:
xxx xxx xxx
The scope of protection afforded to registered trademark owners is not limited to
protection from infringers with identical goods. 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. . . . .
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.
xxx xxx xxx
. . . . 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:
xxx xxx xxx
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 Am. 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 155.1 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 featurethereof 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 . . . . ITAaHc
xxx xxx xxx
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.
xxx xxx xxx
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.
xxx xxx xxx
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 actualmarket
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 123.1 (d) of the IP Code provides:
A mark cannot be registered if it:
xxx xxx 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[.]
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. CHTAIc
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 Liong 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 "PAPA" 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.
xxx xxx xxx
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.
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 EATCcI
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
theIntellectual Property Code.
The Court of Appeals likewise erred in finding that "PAPA," being a common term of endearment for one's
father, is a word over which petitioner could not claim exclusive use and ownership. The Merriam-Webster dictionary
defines "Papa" simply as "a person's father." True, a person's father has no logical connection with catsup products,
and that precisely makes "PAPA" as an arbitrary mark capable of being registered, as it is distinctive, coming from a
family name that started the brand several decades ago. What was registered was not the word "Papa" as defined in
the dictionary, but the word "Papa" as the last name of the original owner of the brand. In fact, being part of several of
petitioner's marks, there is no question that the IPO has found "PAPA" to be a registrable mark.
Respondent had an infinite field of words and combinations of words to choose from to coin a mark for its
lechon sauce. While its claim as to the origin of the term "PAPA BOY" is plausible, it is not a strong enough claim to
overrule the rights of the owner of an existing and valid mark. Furthermore, this Court cannot equitably allow
respondent to profit by the name and reputation carefully built by petitioner without running afoul of the basic
demands of fair play. 51
WHEREFORE, we hereby GRANT the petition. We SET ASIDE the June 23, 2011 Decision and the
October 4, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 107570, and REINSTATE the March 26,
2008 Decision of the Bureau of Legal Affairs of the Intellectual Property Office (IPO-BLA) and the January 29,
2009Decision of the Director General of the IPO.
SO ORDERED.
||| (UFC Philippines, Inc. v. Barrio Fiesta Manufacturing Corp., G.R. No. 198889, [January 20, 2016], 778 PHIL 763-
807)
 [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 p:
Assailed in this petition for review on certiorari 1 is the Decision 2 dated December 18, 2009 of the Court of
Appeals (CA) in CA-G.R. SP No. 105425 which affirmed with modification the Decision 3 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 (c) ordered petitioners to jointly and severally pay respondent St.
Francis Square Development Corporation (respondent) a fine in the amount of P200,000.00.
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 Partes Case 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 that includes 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 CSIcTa
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 of the mark "ST. FRANCIS"
because the same is geographically descriptive of the 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 located along the streets bearing the name
"St. Francis," particularly, St. Francis Avenue 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 Decision 9 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,
opining that 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 Avenue and 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 Decision 12 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 Decision 14 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 Case was appealed by either party and, thus, is deemed to have lapsed into finality. SITCEA
The IPO Director-General Ruling
In a Decision 16 dated September 3, 2008, then IPO Director-General Adrian S. Cristobal, Jr. affirmed the rulings
of the BLA that: (a) petitioners cannot register the mark "THE ST. 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
Director-General reversed the BLA's finding that petitioners committed unfair competition through their use of the mark
"THE ST. FRANCIS TOWERS," thus dismissing such charge. He found that 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 services believing 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 same to the CA.
In contrast, records do not show that either party appealed the IPO Director-General's ruling on the issue of the
registrability of the mark "THE ST. FRANCIS TOWERS" (the bone of contention in the St. Francis Towers IP Case). As
such, said pronouncement is also deemed to have lapsed into finality.
The CA Ruling
 In a Decision 19 dated December 18, 2009, the CA found petitioners guilty of unfair competition not only with
respect to their use of the mark "THE ST. FRANCIS TOWERS" but also of the mark "THE ST. FRANCIS SHANGRI-
LA PLACE". Accordingly, it ordered 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 P200,000.00.
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 much entitled 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, adequate protection must still be given 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 Partes Cases 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 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". cHSTEA
Section 168.2 proceeds 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 . . . ."
Without limiting its generality, Section 168.3 goes 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 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 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, 22 157, 23 and 161 24 shall apply mutatis mutandis."
The statutory attribution of the unfair competition concept is well-supplemented 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 theintention of deceiving the public that the goods are those of his competitor." 26 The "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 the particular 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, 27determined through a judicious scrutiny of the factual circumstances attendant to a
particular case. 28 TAcCDI
Here, the Court finds the element of fraud to be wanting; hence, there can be no unfair competition. The CA's
contrary conclusion was faultily premised on its impression that respondent had 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 geographically-descriptive 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 in the '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
meaning is 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 originate in that place. To hold such a 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. 32 The 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 significance and 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 123.2 34 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 the products are concerned; and (c) proof of substantially exclusive and
continuous commercial use in the Philippines for five (5) years before the date on which the claim of distinctiveness
is made. Unless secondary meaning has been established, a geographically-descriptive mark, due to 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:
xxx xxx xxx
 (j) Consists exclusively of signs or of indications that may serve in trade to designate
the kind, quality, quantity, intended purpose, value, geographical origin, time or
production of the goods or rendering of the services, or other characteristics of the
goods or services; (Emphasis supplied) HcSETI
xxx xxx xxx
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 equate to fraud under the parameters of Section 168 of the  IP Code as above-cited.
In fact, the records are bereft of any showing that petitioners 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 to prove 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 that there was substantial commercial use of
the same recognized all 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 source 35 —
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 be said 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 Director-General: 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 foods 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. CHaDIT
SO ORDERED.
||| (Shang Properties Realty Corp. v. St. Francis Development Corp., G.R. No. 190706, [July 21, 2014])
[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 and Gatmaitan for petitioner.
Roco, Bunag, Kapunan Law Office for private respondent.
SYLLABUS
1. REMEDIAL LAW; APPEAL; FACTUAL FINDINGS OF COURT OF APPEALS CONCLUSIVE AND BINDING
ON SUPREME COURT; EXCEPTIONS; CASE AT BAR. — 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.
2. COMMERCIAL LAW; TRADEMARK LAW (REPUBLIC ACT NO. 166); INFRINGEMENT; DEFINED; NATURE
THEREOF. — 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. 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."
3. ID.; ID.; HOW QUESTION OF INFRINGEMENT OF TRADEMARK DETERMINED; QUESTION AT ISSUE IN
CASES OF INFRINGEMENT. — 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; not 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 While 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; . . .)" 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."
4. ID.; ID.; ID.; ID.; CASE AT BAR. — 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 "SAM 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.
5. ID.; ID.; GENERIC OR DESCRIPTIVE AND PRIMARILY GEOGRAPHICALLY DESCRIPTIVE WORDS NON-
REGISTRABLE AND NOT APPROPRIABLE; REASON THEREFOR; CASE AT BAR. — 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.,) 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 distinguished 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: . . . "(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." 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]).
6. ID.; ID.; UNFAIR COMPETITION; DEFINED. — Unfair competition is the employment of deception or any other
means contrary to good faith by which a person shall pass off the goods manufactured by him or in which he deals, or his
business, or services, for those of another who has already established goodwill for his similar goods, business or services,
or any acts calculated to produce the same result. (Sec. 29, Republic Act No. 166, as amended.)
 
7. ID.; ID.; ID.; TEST TO DETERMINE EXISTENCE THEREOF. — The universal test question is whether the public is
likely to be deceived. Nothing less than conduct tending to pass off one man's goods or business as that of another will
constitute unfair competition. Actual or probable deception and confusion on the part of the customers by reason of
defendant's practices must always appear." (Shell Co. of the Philippines, Ltd. vs. Insular Petroleum Refining Co. Ltd. et
al., 120 Phil. 434, 439.) . . . In Dy Buncio vs. 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."
8. ID.; ID.; PROTECTION AGAINST IMITATION PROPERLY LIMITED TO NONFUNCTIONAL FEATURES;
CASE AT BAR. — 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.) . . . 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 but 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. 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 from the others.
9. ID.; ID.; TRADEMARK ALLEGEDLY INFRINGED CONSIDERED AS A WHOLE AND NOT AS DISSECTED;
DOCTRINE ENUNCIATED IN DEL MONTE CORPORATION vs. COURT OF APPEALS AND SUNSHINE SAUCE
MANUFACTURING INDUSTRIES, 181 SCRA 410, 419, NOT APPLICABLE TO CASE AT BAR. — 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, 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 is
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 up from a store shelf but ordered by brand by the beer drinker himself from the
storekeeper or waiter in a pub or restaurant.
CRUZ, J., dissenting:
1. COMMERCIAL LAW; TRADEMARK LAW (REPUBLIC ACT NO. 166); INFRINGEMENT; TOUCHSTONE IN
DETERMINATION OF EXISTENCE THEREOF; TO DETERMINE WHETHER TRADEMARK HAS BEEN
INFRINGED, THE MARK IS CONSIDERED AS A WHOLE AND NOT AS DISSECTED. — The question is not
whether the two articles are distinguishable by their labels when set side by side but whether the general confusion made
by the article upon the eye of the casual purchaser who is unsuspicious and off his guard, is such as to likely result in his
confounding it with the original. As observed in several cases, the general impression of the ordinary purchaser, buying
under the normally prevalent conditions in trade and giving the attention such purchasers usually give in buying that class
of goods, is the touchstone. 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.
DECISION
GRIÑO-AQUINO, J p:
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). prcd
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 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 of 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 IncorporatedGUILTY 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 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; Italics
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; Italics supplied.)
Does ABI's BEER PALE PILSEN label or "design" infringe upon SMC's SAN MIGUEL PALE PILSEN WITH
RECTANGULAR MALT AND HOPS DESIGN? The answer is "No."
Infringement is determined by the "test of dominancy" rather than by differences or variations in the details of one
trademark and of another. The rule was formulated in Co Tiong Sa vs. Director of Patents, 95 Phil. 1, 4 (1954); reiterated
in Lim Hoa vs. Director of Patents, 100 Phil. 214, 216-217 (1956), thus:
"It has been consistently held that the question of infringement of a trademark is to be determined by
the test of dominancy. Similarity in size, form and color, while relevant, is not conclusive. If the
competing trademark contains the main or essential or dominant features of another, and confusion and
deception is likely to result, infringement takes place. Duplication or imitation is not necessary; nor it is
necessary that the infringing label should suggest an effort to imitate. [C. Neilman Brewing Co. vs.
Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180 Fed.
579]. The question at issue in cases of infringement of trademarks is whether the use of the marks
involved would be likely to cause confusion or mistakes in the mind of the public or deceive
purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; . . .)" (Emphasis
supplied.)
 
In Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272, 275), the test was similarity or "resemblance between the two
(trademarks) such as would be likely to cause the one mark to be mistaken for the other . . . [But] this is not such
similitude as amounts to identity."
In Phil. Nut Industry Inc. vs. Standard Brands Inc., 65 SCRA 575, the court was more specific: the test is "similarity in the
dominant features of the trademarks."
What are the dominant features of the competing trademarks before us?
There is hardly any dispute that the dominant feature of SMC's trademark is the name of the product: SAN MIGUEL
PALE PILSEN, written in white Gothic letters with elaborate serifs at the beginning and end of the letters "S" and "M" on
an amber background across the upper portion of the rectangular design.
On the other hand, the dominant feature of ABI's trademark is the name: BEER PALE PILSEN, with the word "Beer"
written in large amber letters, larger than any of the letters found in the SMC label.
The trial court perceptively observed that the word "BEER" does not appear in SMC's trademark, just as the words "SAN
MIGUEL" do not appear in ABI's trademark. Hence, there is absolutely no similarity in the dominant features of both
trademarks.
Neither in sound, spelling or appearance can BEER PALE PILSEN be said to be confusingly similar to SAN MIGUEL
PALE PILSEN. No one who purchases BEER PALE PILSEN can possibly be deceived that it is SAN MIGUEL PALE
PILSEN. No evidence whatsoever was presented by SMC proving otherwise.
Besides the dissimilarity in their names, the following other dissimilarities in the trade dress or appearance of the
competing products abound:
(1) The SAN MIGUEL PALE PILSEN bottle has a slender tapered neck.
The BEER PALE PILSEN bottle has a fat, bulging neck.
(2) The words "pale pilsen" on SMC's label are printed in bold and laced letters along a diagonal band, whereas the words
"pale pilsen" on ABI's bottle are half the size and printed in slender block letters on a straight horizontal band. (See
Exhibit "8-a".)
(3) The names of the manufacturers are prominently printed on their respective bottles.
SAN MIGUEL PALE PILSEN is "Bottled by the San Miguel Brewery, Philippines," whereas BEER PALE PILSEN is
"Especially brewed and bottled by Asia Brewery Incorporated, Philippines."
(4) On the back of ABI's bottle is printed in big, bold letters, under a row of flower buds and leaves, its copyrighted
slogan:
"BEER NA BEER!"
Whereas SMC's bottle carries no slogan.
(5) The back of the SAN MIGUEL PALE PILSEN bottle carries the SMC logo, whereas the BEER PALE PILSEN bottle
has no logo.
(6) The SAN MIGUEL PALE PILSEN bottle cap is stamped with a coat of arms and the words "San Miguel Brewery
Philippines" encircling the same.
The BEER PALE PILSEN bottle cap is stamped with the name "BEER" in the center, surrounded by the words "Asia
Brewery Incorporated Philippines."
(7) Finally, there is a substantial price difference between BEER PALE PILSEN (currently at P4.25 per bottle) and SAN
MIGUEL PALE PILSEN (currently at P7.00 per bottle). One who pays only P4.25 for a bottle of beer cannot expect to
receive San Miguel Pale Pilsen from the storekeeper or bartender.
The fact that the words pale pilsen are part of ABI's trademark does not constitute an infringement of SMC's trademark:
SAN MIGUEL PALE PILSEN, for "pale pilsen" are generic words descriptive of the color ("pale"), of a type of beer
("pilsen"), which is a light bohemian beer with a strong hops flavor that originated in the City of Pilsen in Czechoslovakia
and became famous in the Middle Ages. (Webster's Third New International Dictionary of the English Language,
Unabridged. Edited by Philip Babcock Gove. Springfield, Mass.: G & C Merriam Co., c) 1976, page 1716.) "Pilsen" is a
"primarily geographically descriptive word," (Sec. 4, subpar. [e] Republic Act No. 166, as inserted by Sec. 2 of R.A. No.
638) hence, non-registerable and not appropriable by any beer manufacturer. The Trademark Law provides:
 "Sec. 4. . . . The owner of trade-mark, trade-name or service-mark used to distinguish his goods,
business or services from the goods, business or services of others shall have the right to register the
same [on the principal register], unless it:
xxx xxx xxx
"(e) Consists of a mark or trade-name which, when applied to or used in connection with the goods,
business or services of the applicant is merely descriptive or deceptively misdescriptive of them, or
when applied to or used in connection with the goods, business or services of the applicant is primarily
geographically descriptive or deceptively misdescriptive of them, or is primarily merely a surname."
(Emphasis supplied.)
The words "pale pilsen" may not be appropriated by SMC for its exclusive use even if they are part of its registered
trademark: SAN MIGUEL PALE PILSEN, any more than such descriptive words as "evaporated milk," "tomato
ketchup," "cheddar cheese," "corn flakes" and "cooking oil" may be appropriated by any single manufacturer of these
food products, for no other reason than that he was the first to use them in his registered trademark. In Masso Hermanos,
S.A. vs. Director of Patents, 94 Phil. 136, 139 (1953), it was held that a dealer in shoes cannot register "Leather Shoes" as
his trademark because that would be merely descriptive and it would be unjust to deprive other dealers in leather shoes of
the right to use the same words with reference to their merchandise. No one may appropriate generic or descriptive words.
They belong to the public domain (Ong Ai Gui vs. Director of Patents, 96 Phil. 673, 676 [1955]):
"A word or a combination of words which is merely descriptive of an article of trade, or of its
composition, characteristics, or qualities, cannot be appropriated and protected as a trademark to the
exclusion of its use by others . . . inasmuch as all persons have an equal right to produce and vend
similar articles, they also have the right to describe them properly and to use any appropriate language
or words for that purpose, and no person can appropriate to himself exclusively any word or
expression, properly descriptive of the article, its qualities, ingredients or characteristics, and thus limit
other persons in the use of language appropriate to the description of their manufactures,the right to the
use of such language being common to all. This rule excluding descriptive terms has also been held to
apply to trade-names. As to whether words employed fall within this prohibition, it is said that the true
test is not whether they are exhaustively descriptive of the article designated, but whether in
themselves, and as they are commonly used by those who understand their meaning, they are
reasonably indicative and descriptive of the thing intended. If they are thus descriptive, and not
arbitrary, they cannot be appropriated from general use and become the exclusive property of anyone.
(52 Am. Jur. 542-543.)
". . . Others may use the same or similar descriptive word in connection with their own wares, provided
they take proper steps to prevent the public being deceived. (Richmond Remedies Co. vs. Dr. Miles
Medical Co., 16 E. [2d] 598.)
". . . A descriptive word may be admittedly distinctive, especially if the user is the first creator of the
article. It will, however, be denied protection, not because it lacks distinctiveness, but rather because
others are equally entitled to its use. (2 Callman, Unfair Competition and Trademarks, pp. 869-870.)"
(Emphasis supplied.)
The circumstance that the manufacturer of BEER PALE PILSEN, Asia Brewery Incorporated, has printed its name all
over the bottle of its beer product: on the label, on the back of the bottle, as well as on the bottle cap, disproves SMC's
charge that ABI dishonestly and fraudulently intends to palm off its BEER PALE PILSEN as SMC's product. In view of
the visible differences between the two products, the Court believes it is quite unlikely that a customer of average
intelligence would mistake a bottle of BEER PALE PILSEN for SAN MIGUEL PALE PILSEN.
The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN is bottled in amber-colored steinie bottles of 320
ml. capacity and is also advertised in print, broadcast, and television media, does not necessarily constitute unfair
competition.
Unfair competition is the employment of deception or any other means contrary to good faith by which a person shall pass
off the goods manufactured by him or in which he deals, or his business, or services, for those of another who has already
established goodwill for his similar goods, business or services, or any acts calculated to produce the same result. (Sec.
29, Republic Act No. 166, as amended.) The law further enumerates the more common ways of committing unfair
competition, thus:
"Sec. 29.  . . .
 "In particular, and without in any way limiting the scope of unfair competition, the following shall be
deemed guilty of unfair competition:
"(a) Any person, who in selling his goods shall give them the general appearance of goods of another
manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in which
they are contained, or the devices or words thereon, or in any other feature of their appearance, which
would be likely to influence purchasers to believe that the goods offered are those of a manufacturer or
dealer other than the actual manufacturer or dealer, or who otherwise clothes the goods with such
appearance as shall deceive the public and defraud another of his legitimate trade, or any subsequent
vendor of such goods or any agent of any vendor engaged in selling such goods with a like purpose.
"(b) Any person who by any artifice, or device, or who employs any other means calculated to induce
the false belief that such person is offering the services of another who has identified such services in
the mind of the public; or
"(c) Any person who shall make any false statement in the course of trade or who shall commit any
other act contrary to good faith of a nature calculated to discredit the goods, business or services of
another."
 
In this case, the question to be determined is whether ABI is using a name or mark for its beer that has previously come to
designate SMC's beer, or whether ABI is passing off its BEER PALE PILSEN as SMC's SAN MIGUEL PALE PILSEN.
". . . The universal test question is whether the public is likely to be deceived. Nothing less than conduct
tending to pass off one man's goods or business as that of another will constitute unfair competition.
Actual or probable deception and confusion on the part of the customers by reason of defendant's
practices must always appear." (Shell Co. of the Philippines, Ltd. vs. Insular Petroleum Refining Co.
Ltd. et al., 120 Phil. 434, 439.)
The use by 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 but 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 from the others. prLL
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 is not infringement of its trademark, but unfair competition arising from 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 standard 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. prcd
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, 3that:
". . . 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 up 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
off 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.
Petition 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, the
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., no part. One party represented by my former firm.
Padilla, J., no part, in view of substantial interest in SMC.
Separate Opinions
CRUZ, J ., dissenting:
The present ponenciastresses 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 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 side by side but
whether the general confusion made by the article upon the eye of the casual purchaser who is
unsuspicious and off his guard, is such as to likely result in his confounding it with the original. As
observed in several cases, the general impression of the ordinary purchaser, buying under the normally
prevalent conditions in trade and giving the attention such purchasers usually give in buying that class
of goods, is the touchstone.
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.
||| (Asia Brewery, Inc. v. Court of Appeals, G.R. No. 103543, [July 5, 1993])
 [G.R. No. 192294. November 21, 2012.]
GREAT WHITE SHARK ENTERPRISES, INC., petitioner, vs. DANILO M. CARALDE,
JR., respondent.
DECISION
PERLAS-BERNABE, J p:
Assailed in this Petition for Review on Certiorari under Rule 45 of the Rules of Court is the December 14, 2009
Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 105787, which reversed and set aside the October 6, 2008
Decision 2 of the Director General of the Intellectual Property Office (IPO), and directed him to grant the application for
the mark "SHARK & LOGO" filed by respondent Danilo M. Caralde, Jr. (Caralde).
The Factual Antecedents
On July 31, 2002, Caralde filed before the Bureau of Legal Affairs (BLA), IPO a trademark application seeking to
register the mark "SHARK & LOGO" for his manufactured goods under Class 25, such as slippers, shoes and sandals.
Petitioner Great White Shark Enterprises, Inc. (Great White Shark), a foreign corporation domiciled in Florida, USA,
opposed 3 the application claiming to be the owner of the mark consisting of a representation of a shark in color, known
as "GREG NORMAN LOGO" (associated with apparel worn and promoted by Australian golfer Greg Norman). It alleged
that, being a world famous mark which is pending registration before the BLA since February 19, 2002, 4 the confusing
similarity between the two (2) marks is likely to deceive or confuse the purchasing public into believing that Caralde's
goods are produced by or originated from it, or are under its sponsorship, to its damage and prejudice. aHTCIc
In his Answer, 5 Caralde explained that the subject marks are distinctively different from one another and easily
distinguishable. When compared, the only similarity in the marks is in the word "shark" alone, differing in other factors
such as appearance, style, shape, size, format, color, ideas counted by marks, and even in the goods carried by the parties.
Pending the inter partes proceedings, Great White Shark's trademark application was granted and it was issued
Certificate of Registration No. 4-2002-001478 on October 23, 2006 for clothing, headgear and footwear, including socks,
shoes and its components. 6
The Ruling of the BLA Director
On June 14, 2007, the BLA Director rendered a Decision 7 rejecting Caralde's application, ratiocinating, as
follows:
Prominent in both competing marks is the illustration of a shark. The dominant feature in
opposer's mark is the illustration of a shark drawn plainly. On the other hand, the dominant feature in
respondent's mark is a depiction of shark shaded darkly, with its body designed in a way to contain the
letters "A" and "R" with the tail suggestive of the letter "K." Admittedly, there are some differences
between the competing marks. Respondent's mark contains additional features which are absent in
opposer's mark. Their dominant features, i.e., that of an illustration of a shark, however, are of such
degree that the overall impression it create [sic] is that the two competing marks are at least strikingly
similar to each another [sic], hence, the likelihood of confusion of goods is likely to occur. . . .
Moreover, the goods of the competing marks falls [sic] under the same Class 25. Opposer's
mark GREG NORMAN LOGO, which was applied for registration on February 19, 2002, pertains to
clothing apparel particularly hats, shirts and pants. Respondent, on the other hand, later applied for the
registration of the mark SHARK & LOGO on July 3, 2002 (should be July 31, 2002) for footwear
products particularly slippers, shoes, sandals. Clearly, the goods to which the parties use their marks
belong to the same class and are related to each other." 8 (Italics ours)
The BLA Director, however, found no merit in Great White Shark's claim that its mark was famous and well-
known for insufficiency of evidence.
The Ruling of the IPO Director General
 On appeal, the IPO Director General affirmed 9 the final rejection of Caralde's application, ruling that the
competing marks are indeed confusingly similar. Great White Shark's mark is used in clothing and footwear, among
others, while Caralde's mark is used on similar goods like shoes and slippers. Moreover, Great White Shark was first in
applying for registration of the mark on February 19, 2002, followed by Caralde on July 31, 2002. Furthermore, Great
White Shark's mark consisted of an illustration of a shark while Caralde's mark had a composite figure forming a
silhouette of a shark. Thus, as to content, word, sound and meaning, both marks are similar, barring the registration of
Caralde's mark under Section 123.1 (d) of Republic Act No. 8293, otherwise known as the Intellectual Property Code (IP
Code). Nonetheless, while Great White Shark submitted evidence of the registration of its mark in several other countries,
the IPO Director General considered its mark as not well-known for failing to meet the other criteria laid down under Rule
102 10 of the Rules and Regulations on Trademarks, Service Marks, Trade Names and Marked or Stamped
Containers. cCaATD
The Ruling of the Court of Appeals
However, on petition for review, the CA reversed and set aside the foregoing Decision and directed the IPO to
grant Caralde's application for registration of the mark "SHARK & LOGO." The CA found no confusing similarity
between the subject marks notwithstanding that both contained the shape of a shark as their dominant feature. It observed
that Caralde's mark is more fanciful and colorful, and contains several elements which are easily distinguishable from that
of the Great White Shark. It further opined that considering their price disparity, there is no likelihood of confusion as
they travel in different channels of trade. 11
Issues Before the Court
THE COURT OF APPEALS ERRED IN RULING THAT THE RESPONDENT'S MARK SUBJECT
OF THE APPLICATION BEING OPPOSED BY THE PETITIONER IS NOT CONFUSINGLY
SIMILAR TO PETITIONER'S REGISTERED MARK
THE COURT OF APPEALS ERRED IN RULING THAT THE COST OF GOODS COULD
NEGATE LIKELIHOOD OF CON[F]USION
THE COURT OF APPEALS ERRED IN REVERSING THE PREVIOUS RESOLUTIONS OF THE
DIRECTOR GENERAL AND THE BLA 12
The Court's Ruling
In the instant petition for review on certiorari, Great White Shark maintains that the two (2) competing marks are
confusingly similar in appearance, shape and color scheme because of the dominant feature of a shark which is likely to
deceive or cause confusion to the purchasing public, suggesting an intention on Caralde's part to pass-off his goods as that
of Great White Shark and to ride on its goodwill. This, notwithstanding the price difference, targets market and channels
of trade between the competing products. Hence, the CA erred in reversing the rulings of the IPO Director General and
the BLA Director who are the experts in the implementation of the IP Code.
The petition lacks merit.
A trademark device 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. Apart from its commercial
utility, the benchmark of trademark registrability is distinctiveness. 13 Thus, a generic figure, as that of a shark in this
case, if employed and designed in a distinctive manner, can be a registrable trademark device, subject to the provisions of
the IP Code.
Corollarily, Section 123.1 (d) of the IP Code provides that 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 the same or
closely related goods or services, or has a near resemblance to such mark as to likely deceive or cause confusion. HCEISc
In determining similarity and likelihood of confusion, case law has developed the Dominancy Test and the
Holistic or Totality Test. The Dominancy Test focuses on the similarity of the dominant features of the competing
trademarks that might cause confusion, mistake, and deception in the mind of the ordinary purchaser, and gives more
consideration to 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. In contrast, the Holistic or Totality Test considers the
entirety of the marks as applied to the products, including the labels and packaging, and focuses not only on the
predominant words but also on the other features appearing on both labels to determine whether one is confusingly similar
to the other 14 as to mislead the ordinary purchaser. The "ordinary purchaser" refers to one "accustomed to buy, and
therefore to some extent familiar with, the goods in question." 15
 Irrespective of both tests, the Court finds no confusing similarity between the subject marks. While both marks
use the shape of a shark, the Court noted distinctvisual and aural differences between them. In Great White Shark's
"GREG NORMAN LOGO," there is an outline of a shark formed with the use of green, yellow, blue and
red 16 lines/strokes, to wit:

In contrast, the shark in Caralde's "SHARK & LOGO" mark 17 is illustrated in letters outlined in the form of a
shark with the letter "S" forming the head, the letter "H" forming the fins, the letters "A" and "R" forming the body, and
the letter "K" forming the tail. In addition, the latter mark includes several more elements such as the word "SHARK" in a
different font underneath the shark outline, layers of waves, and a tree on the right side, and liberally used the color blue
with some parts in red, yellow, green and white. 18 The whole design is enclosed in an elliptical shape with two linings,
thus:

As may be gleaned from the foregoing, the visual dissimilarities between the two (2) marks are evident and
significant, negating the possibility of confusion in the minds of the ordinary purchaser, especially considering the
distinct aural difference between the marks.
Finally, there being no confusing similarity between the subject marks, the matter of whether Great White Shark's
mark has gained recognition and acquired goodwill becomes unnecessary. 19 Besides, both the BLA Director and the IPO
Director General have ruled that Great White Shark failed to meet the criteria under Rule 102 of the Rules and
Regulations on Trademarks, Service Marks, Trade Names and Marked or Stamped Containers to establish that its mark is
well-known, and the latter failed to show otherwise.
WHEREFORE, the Court resolves to DENY the instant petition and AFFIRM the assailed December 14, 2009
Decision of the Court of Appeals (CA) for failure to show that the CA committed reversible error in setting aside the
Decision of the IPO Director General and allowing the registration of the mark "SHARK & LOGO" by respondent Danilo
M. Caralde, Jr. cACEHI
SO ORDERED.
Carpio, Brion, Del Castillo and Perez, JJ., concur.
 
||| (Great White Shark Enterprises, Inc. v. Caralde, Jr., G.R. No. 192294, [November 21, 2012], 699 PHIL 196-205)

[G.R. No. 138900. September 20, 2005.]

LEVI STRAUSS & CO., & LEVI STRAUSS (PHILS.), INC., petitioners, vs. CLINTON
APPARELLE, INC., respondent.
Poblador Bautista & Reyes for petitioners.
Arnold V. Guerrero for respondent.
SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; DEFINED. — 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. 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. 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.
2. ID.; ID.; ID.; NOT A REMEDY TO PROTECT OR ENFORCE CONTINGENT, ABSTRACT OR FUTURE
RIGHTS. — 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. 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.
3. ID.; ID.; ID.; KINDS. — 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.
4. ID.; ID.; ID.; THE EXERCISE OF DISCRETION BY THE TRIAL COURT IN INJUNCTIVE MATTERS IS
GENERALLY NOT INTERFERED WITH SAVE IN CASES OF MANIFEST ABUSE. — 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. 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.
5. COMMERCIAL LAW; INTELLECTUAL PROPERTY LAW; TRADEMARKS; TRADEMARK DILUTION,
DEFINED; WHEN ELIGIBLE FOR PROTECTION FROM DILUTION; CASE AT BAR. — 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. 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.
6. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; IN GRANTING THE
INJUNCTIVE RELIEF, THE TRIAL COURT MUST STATE ITS OWN FINDINGS OF FACT AND CITE THE
PARTICULAR LAW JUSTIFYING THE GRANT. — 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., 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." 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, 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."
7. ID.; ID.; ID.; A WRIT OF INJUNCTION SHOULD NEVER BE ISSUED WHEN AN ACTION FOR
DAMAGES WOULD ADEQUATELY COMPENSATE THE INJURIES CAUSED. — [W]e 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: ". . . 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."
8. ID.; ID.; ID.; COURTS SHOULD AVOID ISSUING A WRIT OF PRELIMINARY INJUNCTION THAT
WOULD IN EFFECT DISPOSE OF THE MAIN CASE WITHOUT TRIAL. — 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. 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.
9. POLITICAL LAW; CONSTITUTIONAL LAW; BILL OF RIGHTS; DUE PROCESS; ESSENCE IS SIMPLY
AN OPPORTUNITY TO BE HEARD. — 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.
 
DECISION
TINGA, J p:
Before us is a petition for review on certiorari 1 under Rule 45 of the 1997 Rules of Civil Procedure filed by Levi
Strauss & Co. (LS & Co.) and Levi Strauss (Philippines), Inc. (LSPI) assailing the Court of
Appeals' Decision 2 and Resolution 3 respectively dated 21 December 1998 and 10 May 1999. The
questioned Decisiongranted respondent's prayer for a writ of preliminary injunction in its Petition 4 and set aside the trial
court's orders dated 15 May 1998 5 and 4 June 1998 6 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 Complaint 7 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. SDATEc
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 3 11 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. DIEAHc
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 Order 14 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 Order 17 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 Order 19 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 P2,500,000.00 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 P2,500,000.00 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 Dismiss 22 and a Motion for Reconsideration 23 of
the Order granting the writ of preliminary injunction. Meantime, the trial court issued an Order 24 approving the bond
filed by petitioners.
On 22 June 1998, the trial court required 25 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 P2,500,000.00.
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. SDEITC
The writ of preliminary injunction was thereafter issued on 8 October 1998. 27
 Thus, Clinton Apparelle filed with the Court of Appeals a Petition 28 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 Resolution 29 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. cTCADI
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. TaEIAS
 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.HScAEC
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. HESAIT
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.
Puno, Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.
 
||| (Levi Strauss & Co. v. Clinton Apparelle Inc., G.R. No. 138900, [September 20, 2005], 507 PHIL 238-258)

[G.R. No. 222366. December 4, 2017.]

W LAND HOLDING, INC., petitioner, vs. STARWOOD HOTELS AND RESORTS
WORLDWIDE, INC., respondent.
DECISION
PERLAS-BERNABE, J p:
Assailed in this petition for review on certiorari 1 are the Decision 2 dated June 22, 2015 and the
Resolution 3 dated January 7, 2016 of the Court of Appeals (CA) in CA-G.R. SP No. 133825 affirming the
Decision 4 dated January 10, 2014 of the Intellectual Property Office (IPO)-Director General (IPO DG), which, in
turn, reversed the Decision 5 dated May 11, 2012 of the IPO Bureau of Legal Affairs (BLA) in Inter Partes Case No.
14-2009-00143, and accordingly, dismissed petitioner W Land Holdings, Inc.'s (W Land) petition for cancellation of
the trademark "W" registered in the name of respondent Starwood Hotels and Resorts, Worldwide, Inc. (Starwood).
The Facts
On December 2, 2005, Starwood filed before the IPO an application for registration of the trademark "W" for
Classes 43 6 and 44 7 of the International Classification of Goods and Services for the Purposes of the Registration of
Marks 8 (Nice Classification). 9 On February 26, 2007, Starwood's application was granted and thus, the "W" mark
was registered in its name. 10 However, on April 20, 2006, W Land applied 11 for the registration of its own "W"
mark for Class 36, 12 which thereby prompted Starwood to oppose the same. 13 In a Decision 14 dated April 23,
2008, the BLA found merit in Starwood's opposition, and ruled that W Land's "W" mark is confusingly similar with
Starwood's mark, 15 which had an earlier filing date. W Land filed a motion for reconsideration  16 on June 11, 2008,
which was denied by the BLA in a Resolution 17 dated July 23, 2010.
 On May 29, 2009, W Land filed a Petition for Cancellation 18 of Starwood's mark for non-use under Section
151.1 19 of Republic Act No. 8293 or the "Intellectual Property Code of the Philippines" (IP Code), 20 claiming that
Starwood has failed to use its mark in the Philippines because it has no hotel or establishment in the Philippines
rendering the services covered by its registration; and that Starwood's "W" mark application and registration barred its
own "W" mark application and registration for use on real estate. 21
In its defense, 22 Starwood denied having abandoned the subject mark on the ground of non-use, asserting
that it filed with the Director of Trademarks a notarized Declaration of Actual Use 23 (DAU) 24 with evidence of use
on December 2, 2008, 25 which was not rejected. In this relation, Starwood argued that it conducts hotel and leisure
business both directly and indirectly through subsidiaries and franchisees, and operates interactive websites for its W
Hotels in order to accommodate its potential clients worldwide. 26 According to Starwood, apart from viewing
agents, discounts, promotions, and other marketing fields being offered by it, these interactive websites allow
Philippine residents to make reservations and bookings, which presuppose clear and convincing use of the "W" mark
in the Philippines. 27
The BLA Ruling
In a Decision 28 dated May 11, 2012, the BLA ruled in W Land's favor, and accordingly ordered the
cancellation of Starwood's registration for the "W" mark. The BLA found that the DAU and the attachments thereto
submitted by Starwood did not prove actual use of the "W" mark in the Philippines, considering that the "evidences of
use" attached to the DAU refer to hotel or establishments that are located abroad.  29 In this regard, the BLA opined
that "the use of a trademark as a business tool and as contemplated under [Section 151.1 (c) of  RA 8293] refers to the
actual attachment thereof to goods and services that are sold or availed of and located in the Philippines." 30
Dissatisfied, Starwood appealed 31 to the IPO DG.
The IPO DG Ruling
In a Decision 32 dated January 10, 2014, the IPO DG granted Starwood's appeal, 33 thereby dismissing W
Land's Petition for Cancellation. Contrary to the BLA's findings, the IPO DG found that Starwood's submission of its
DAU and attachments, coupled by the acceptance thereof by the IPO Bureau of Trademarks, shows that the "W" mark
still bears a "registered" status. Therefore, there is a presumption that Starwood sufficiently complied with the
registration requirements for its mark. 34The IPO DG likewise held that the absence of any hotel or establishment
owned by Starwood in the Philippines bearing the "W" mark should not be equated to the absence of its use in the
country, opining that Starwood's pieces of evidence, particularly its interactive website, indicate actual use in the
Philippines, 35 citing Rule 205 36 of the Trademark Regulations, as amended by IPO Office Order No. 056-
13. 37 Finally, the IPO DG stressed that since Starwood is the undisputed owner of the "W" mark for use in hotel and
hotel-related services, any perceived damage on the part of W Land in this case should be subordinated to the essence
of protecting Starwood's intellectual property rights. To rule otherwise is to undermine the intellectual property
system. 38
Aggrieved, W Land filed a petition for review 39 under Rule 43 of the Rules of Court before the CA.
The CA Ruling
In a Decision 40 dated June 22, 2015, the CA affirmed the IPO DG ruling. At the onset, the CA observed that
the hotel business is peculiar in nature in that the offer, as well as the acceptance of room reservations or bookings
wherever in the world is an indispensable element. As such, the actual existence or presence of a hotel in one place is
not necessary before it can be considered as doing business therein. 41 In this regard, the CA recognized that the
internet has become a powerful tool in allowing businesses to reach out to consumers in a given market without being
physically present thereat; thus, the IPO DG correctly held that Starwood's interactive websites already indicate its
actual use in the Philippines of the "W" mark. 42 Finally, the CA echoed the IPO DG's finding that since Starwood is
the true owner of the "W" mark — as shown by the fact that Starwood had already applied for the registration of this
mark even before W Land was incorporated — its registration over the same should remain valid, absent any showing
that it has abandoned the use thereof. 43
Unperturbed, W Land moved for reconsideration, 44 but was denied in a Resolution 45 dated January 7,
2016; hence, this petition.
The Issue Before the Court
The essential issue for the Court's resolution is whether or not the CA correctly affirmed the IPO DG's
dismissal of W Land's Petition for Cancellation of Starwood's "W" mark.
 The Court's Ruling
The petition is without merit.
The IP Code defines a "mark" as "any visible sign capable of distinguishing the goods (trademark) or services
(service mark) of an enterprise." 46 Case law explains that "[t]rademarks deal with the psychological function of
symbols and the effect of these symbols on the public at large." 47 It is a merchandising short-cut, and, "[w]hatever
the means employed, the aim is the same — to convey through the mark, in the minds of potential customers, the
desirability of the commodity upon which it appears." 48 Thus, the protection of trademarks as intellectual property is
intended not only to preserve the goodwill and reputation of the business established on the goods or services bearing
the mark through actual use over a period of time, but also to safeguard the public as consumers against confusion on
these goods or services. 49 As viewed by modern authorities on trademark law, trademarks perform three (3) 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. 50
In Berris Agricultural Co., Inc. v. Abyadang, 51 this Court explained that "[t]he 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 facieevidence 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." 52 However, "the prima facie presumption brought about by the registration of a mark may be challenged
and overcome, in an appropriate action, by proof of[, among others,] non-use of the mark, except when
excused." 53
The actual use of the mark representing the goods or services introduced and transacted in commerce over a
period of time creates that goodwill which the law seeks to protect. For this reason, the  IP Code, under Section
124.2, 54 requires the registrant or owner of a registered mark to declare "actual use of the mark" (DAU) and present
evidence of such use within the prescribed period. Failing in which, the IPO DG may cause the motu proprio removal
from the register of the mark's registration. 55 Also, any person, believing that "he or she will be damaged by the
registration of a mark," which has not been used within the Philippines, may file a petition for
cancellation. 56 Following the basic rule that he who alleges must prove his case, 57 the burden lies on the petitioner
to show damage and non-use. CAIHTE
The IP Code and the Trademark Regulations have not specifically defined "use." However, it is understood
that the "use" which the law requires to maintain the registration of a mark must be genuine, and not merely
token. Based on foreign authorities, 58 genuine use may be characterized as a bona fide use which results or tends
to result, in one way or another, into a commercial interaction or transaction "in the ordinary course of
trade." 59
What specific act or acts would constitute use of the mark sufficient to keep its registration in force may be
gleaned from the Trademark Regulations, Rule 205 of which reads:
RULE 205. Contents of the Declaration and Evidence of Actual Use. — The declaration
shall be under oath, must refer to only one application or registration, must contain the name and
address of the applicant or registrant declaring that the mark is in actual use in the Philippines, list
of goods where the mark is attached; list the name or names and the exact location or locations of
the outlet or outlets where the products are being sold or where the services are being rendered,
recite sufficient facts to show that the mark described in the application or registration is being
actually used in the Philippines and, specifying the nature of such use. The declarant shall attach
five labels as actually used on the goods or the picture of the stamped or marked container visibly and
legibly showing the mark as well as proof of payment of the prescribed fee. [As amended by Office
Order No. 08 (2000)] (Emphases supplied)
The Trademark Regulations was amended by Office Order No. 056-13. Particularly, Rule 205 now mentions
certain items which "shall be accepted as proof of actual use of the mark:"
RULE 205. Contents of the Declaration and Evidence of Actual Use. —
(a) The declaration shall be under oath and filed by the applicant or registrant (or the
authorized officer in case of a juridical entity) or the attorney or authorized representative of the
applicant or registrant. The declaration must refer to only one application or registration, shall contain
the name and address of the applicant or registrant declaring that the mark is in actual use in the
 Philippines, the list of goods or services where the mark is used, the name/s of the establishment and
address where the products are being sold or where the services are being rendered. If the goods or
services are available only by online purchase, the website must be indicated on the form in lieu of
name or address of the establishment or outlet. The applicant or registrant may include other facts to
show that the mark described in the application or registration is actually being used in the
Philippines. The date of first use shall not be required.
(b) Actual use for some of the goods and services in the same class shall constitute use for the
entire class of goods and services. Actual use for one class shall be considered use for related classes.
In the event that some classes are not covered in the declaration, a subsequent declaration of actual
use may be filed for the other classes of goods or services not included in the first declaration,
provided that the subsequent declaration is filed within the three-year period or the extension period,
in case an extension of time to file the declaration was timely made. In the event that no subsequent
declaration of actual use for the other classes of goods and services is filed within the prescribed
period, the classes shall be automatically dropped from the application or registration without need of
notice to the applicant or registrant.
(c) The following shall be accepted as proof of actual use of the mark: (1) labels of the
mark as these are used; (2) downloaded pages from the website of the applicant or registrant
clearly showing that the goods are being sold or the services are being rendered in the
Philippines; (3) photographs (including digital photographs printed on ordinary paper) of goods
bearing the marks as these are actually used or of the stamped or marked container of goods and of
the establishment/s where the services are being rendered; (4) brochures or advertising materials
showing the actual use of the mark on the goods being sold or services being rendered in the
Philippines; (5) for online sale, receipts of sale of the goods or services rendered or other similar
evidence of use, showing that the goods are placed on the market or the services are available in
the Philippines or that the transaction took place in the Philippines; (6) copies of contracts for
services showing the use of the mark. Computer printouts of the drawing or reproduction of marks
will not be accepted as evidence of use.
(d) The Director may, from time to time, issue a list of acceptable evidence of use and
those that will not be accepted by the Office. (Emphases and underscoring supplied)
Office Order No. 056-13 was issued by the IPO DG on April 5, 2013, pursuant to his delegated rule-making
authority under Section 7 of the IP Code. 60 The rationale for this issuance, per its whereas clauses, is to further "the
policy of the [IPO] to streamline administrative procedures in registering trademarks" and in so doing, address the
need "to clarify what will be accepted as proof of use." In this regard, the parameters and list of evidence introduced
under the amended Trademark Regulations are thus mere administrative guidelines which are only meant to flesh out
the types of acceptable evidence necessary to prove what the law already provides, i.e., the requirement of actual use.
As such, contrary to W Land's postulation, 61 the same does not diminish or modify any substantive right and hence,
may be properly applied to "all pending and registered marks," 62 as in Starwood's "W" mark for hotel/hotel
reservation services being rendered or, at the very least, made available in the Philippines.
Based on the amended Trademark Regulations, it is apparent that the IPO has now given due regard to the
advent of commerce on the internet. Specifically, it now recognizes, among others, "downloaded pages from the
website of the applicant or registrant clearly showing that the goods are being sold or the services are being rendered
in the Philippines," as well as "for online sale, receipts of sale of the goods or services rendered or other similar
evidence of use, showing that the goods are placed on the market or the services are available in the Philippines or
that the transaction took place in the Philippines," 63 as acceptable proof of actual use. Truly, the Court discerns that
these amendments are but an inevitable reflection of the realities of the times. In Mirpuri v. CA, 64 this Court noted
that "[a]dvertising on the Net and cybershopping are turning the Internet into a commercial marketplace:" 65
The Internet is a decentralized computer network linked together through routers and
communications protocols that enable anyone connected to it to communicate with others likewise
connected, regardless of physical location. Users of the Internet have a wide variety of
communication methods available to them and a tremendous wealth of information that they may
access. The growing popularity of the Net has been driven in large part by the World Wide Web,  i.e.,
a system that facilitates use of the Net by sorting through the great mass of information available on
it. Advertising on the Net and cybershopping are turning the Internet into a commercial
marketplace.66 (Emphasis and underscoring supplied)
 Thus, as modes of advertising and acquisition have now permeated into virtual zones over cyberspace, the
concept of commercial goodwill has indeed evolved:
In the last half century, the unparalleled growth of industry and the rapid development of
communications technology have enabled trademarks, tradenames and other distinctive signs of a
product to penetrate regions where the owner does not actually manufacture or sell the product
itself. Goodwill is no longer confined to the territory of actual market penetration; it extends to
zones where the marked article has been fixed in the public mind through advertising. Whether
in the print, broadcast or electronic communications medium, particularly on the
Internet, advertising has paved the way for growth and expansion of the product by creating
and earning a reputation that crosses over borders, virtually turning the whole world into one
vast marketplace. 67 (Emphasis and underscoring supplied)
Cognizant of this current state of affairs, the Court therefore agrees with the IPO DG, as affirmed by the CA,
that the use of a registered mark representing the owner's goods or services by means of an interactive website may
constitute proof of actual use that is sufficient to maintain the registration of the same. Since the internet has turned
the world into one vast marketplace, the owner of a registered mark is clearly entitled to generate and further
strengthen his commercial goodwill by actively marketing and commercially transacting his wares or services
throughout multiple platforms on the internet. The facilities and avenues present in the internet are, in fact, more
prominent nowadays as they conveniently cater to the modern-day consumer who desires to procure goods or services
at any place and at any time, through the simple click of a mouse, or the tap of a screen. Multitudinous commercial
transactions are accessed, brokered, and consummated everyday over websites. These websites carry the mark which
represents the goods or services sought to be transacted. For the owner, he intentionally exhibits his mark to attract the
customers' interest in his goods or services. The mark displayed over the website no less serves its functions of
indicating the goods or services' origin and symbolizing the owner's goodwill than a mark displayed in the physical
market. Therefore, there is no less premium to recognize actual use of marks through websites than their actual use
through traditional means. Indeed, as our world evolves, so too should our appreciation of the law. Legal
interpretation — as it largely affects the lives of people in the here and now — never happens in a vacuum. As such, it
should not be stagnant but dynamic; it should not be ensnared in the obsolete but rather, sensitive to surrounding
social realities. DETACa
It must be emphasized, however, that the mere exhibition of goods or services over the internet, without more,
is not enough to constitute actual use. To reiterate, the "use" contemplated by law is genuine use — that is, a  bona
fide kind of use tending towards a commercial transaction in the ordinary course of trade. Since the internet creates a
borderless marketplace, it must be shown that the owner has actually transacted, or at the very least,
intentionally targeted customers of a particular jurisdiction in order to be considered as having used the trade
mark in the ordinary course of his trade in that country. A showing of an actual commercial link to the country
is therefore imperative. Otherwise, an unscrupulous registrant would be able to maintain his mark by the mere
expedient of setting up a website, or by posting his goods or services on another's site, although no commercial
activity is intended to be pursued in the Philippines. This type of token use renders inutile the commercial purpose of
the mark, and hence, negates the reason to keep its registration active. As the IP Code expressly requires, the use of
the mark must be "within the Philippines." This is embedded in Section 151 of the IP Code on cancellation, which
reads:
SECTION 151. Cancellation. — 151.1. A petition to cancel a registration of a mark under
this Act may be filed with the Bureau of Legal Affairs by any person who believes that he is or will
be damaged by the registration of a mark under this Act as follows:
(a) Within five (5) years from the date of the registration of the mark under this Act.
(b) At any time, if the registered mark becomes the generic name for the goods or services, or a
portion thereof, for which it is registered, or has been abandoned, or its registration was
obtained fraudulently or contrary to the provisions of this Act, or if the registered mark
is being used by, or with the permission of, the registrant so as to misrepresent the
source of the goods or services on or in connection with which the mark is used. If the
registered mark becomes the generic name for less than all of the goods or services for
which it is registered, a petition to cancel the registration for only those goods or
services may be filed. A registered mark shall not be deemed to be the generic name of
goods or services solely because such mark is also used as a name of or to identify a
unique product or service. The primary significance of the registered mark to the
 relevant public rather than purchaser motivation shall be the test for determining
whether the registered mark has become the generic name of goods or services on or in
connection with which it has been used.
(c) At any time, if the registered owner of the mark without legitimate reason fails to use
the mark within the Philippines, or to cause it to be used in the Philippines by
virtue of a license during an uninterrupted period of three (3) years or longer.
(Emphasis and underscoring supplied)
The hotel industry is no stranger to the developments and advances in technology. Like most businesses
nowadays, hotels are utilizing the internet to drive almost every aspect of their operations, most especially the offering
and accepting of room reservations or bookings, regardless of the client or customer base. The CA explained this
booking process in that the "business transactions commence with the placing of room reservations, usually by or
through a travel agent who acts for or in behalf of his principal, the hotel establishment. [The] reservation is first
communicated to the reservations and booking assistant tasked to handle the transaction. After the reservation is
made, the specific room reserved for the guest will be blocked and will not be offered to another guest. As such, on
the specified date of arrival, the room reserved will be available to the guest." 68
In this accord, a hotel's website has now become an integral element of a hotel business. Especially with the
uptrend of international travel and tourism, the hotel's website is now recognized as an efficient and necessary tool in
advertising and promoting its brand in almost every part of the world. More so, interactive websites that allow
customers or clients to instantaneously book and pay for, in advance, accommodations and other services of a hotel
anywhere in the world, regardless of the hotel's actual location, dispense with the need for travel agents or hotel
employees to transact the reservations for them. In effect, the hotel's website acts as a bridge or portal through which
the hotel reaches out and provides its services to the client/customer anywhere in the world, with the booking
transaction completed at the client/customer's own convenience. It is in this sense that the CA noted that the "actual
existence or presence of a hotel in one place is not necessary before it can be considered as doing business
therein." 69
As earlier intimated, mere use of a mark on a website which can be accessed anywhere in the world will not
automatically mean that the mark has been used in the ordinary course of trade of a particular country. Thus, the use
of mark on the internet must be shown to result into a within-State sale, or at the very least, discernibly intended to
target customers that reside in that country. This being so, the use of the mark on an interactive website, for
instance, may be said to target local customers when they contain specific details regarding or pertaining to the
target State, sufficiently showing an intent towards realizing a within-State commercial activity or interaction.
These details may constitute a local contact phone number, specific reference being available to local customers, a
specific local webpage, whether domestic language and currency is used on the website, and/or whether domestic
payment methods are accepted. 70 Notably, this paradigm of ascertaining local details to evince within-state
commercial intent is subscribed to by a number of jurisdictions, namely, the European Union, Hong Kong, Singapore,
Malaysia, Japan, Australia, Germany, France, Russia, and the United Kingdom. 71 As for the U.S. — where most of
our intellectual property laws have been patterned 72 — there have been no decisions to date coming from its
Trademark Trial and Appeal Board involving cases challenging the validity of mark registrations through a
cancellation action based on the mark's internet use. However, in International Bancorp LLC v. Societe des Bains de
Mer et du Cercle des Etrangers a Monaco, 73 it was ruled that mere advertising in the U.S. combined with rendering
of services to American customers in a foreign country constituted "use" for the purpose of establishing trademark
rights in the U.S.
In this case, Starwood has proven that it owns Philippine registered domain
names, 74 i.e., www.whotels.ph, www.wreservations.ph, www.whotel.ph,www.wreservation.ph, for its website that
showcase its mark. The website is readily accessible to Philippine citizens and residents, where they can avail and
book amenities and other services in any of Starwood's W Hotels worldwide. Its website also readily provides a phone
number 75 for Philippine consumers to call for information or other concerns. The website further uses the English
language 76 — considered as an official language in this country 77 — which the relevant market in the Philippines
understands and often uses in the daily conduct of affairs. In addition, the prices for its hotel accommodations and/or
services can be converted into the local currency or the Philippine Peso. 78 Amidst all of these features, Starwood's
"W" mark is prominently displayed in the website through which consumers in the Philippines can instantaneously
book and pay for their accommodations, with immediate confirmation, in any of its W Hotels. Furthermore, it has
presented data showing a considerably growing number of internet users in the Philippines visiting its website since
 2003, which is enough to conclude that Starwood has established commercially-motivated relationships with
Philippine consumers. 79
Taken together, these facts and circumstances show that Starwood's use of its "W" mark through its
interactive website is intended to produce a discernable commercial effect or activity within the Philippines, or at the
very least, seeks to establish commercial interaction with local consumers. Accordingly, Starwood's use of the "W"
mark in its reservation services through its website constitutes use of the mark sufficient to keep its registration in
force.
To be sure, Starwood's "W" mark is registered for Classes 43, i.e., for hotel, motel, resort and motor inn
services, hotel reservation services, restaurant, bar and catering services, food and beverage preparation services,
café and cafeteria services, provision of conference, meeting and social function facilities, under the Nice
Classification. 80 Under Section 152.3 of the IP Code, "[t]he use of a mark in connection with one or more of the
goods or services belonging to the class in respect of which the mark is registered shall prevent its cancellation or
removal in respect of all other goods or services of the same class." Thus, Starwood's use of the "W" mark for
reservation services through its website constitutes use of the mark which is already sufficient to protect its
registration under the entire subject classification from non-use cancellation. This, notwithstanding the absence of a
Starwood hotel or establishment in the Philippines.
Finally, it deserves pointing out that Starwood submitted in 2008 its DAU with evidence of use which the
IPO, through its Director of Trademarks and later by the IPO DG in the January 10, 2014 Decision, had accepted and
recognized as valid. The Court finds no reason to disturb this recognition. According to jurisprudence, administrative
agencies, such as the IPO, by means of their special knowledge and expertise over matters falling within their
jurisdiction are in a better position to pass judgment on this issue. 81 Thus, their findings are generally accorded
respect and finality, as long as they are supported by substantial evidence. In this case, there is no compelling basis to
reverse the IPO DG's findings — to keep Starwood's registration for the "W" mark in force — as they are well
supported by the facts and the law and thus, deserve respect from this Court. aDSIHc
WHEREFORE, the petition is DENIED. The Decision dated June 22, 2015 and the Resolution dated
January 7, 2016 of the Court of Appeals in CA-G.R. SP No. 133825 are hereby AFFIRMED.
SO ORDERED.
||| (W Land Holding, Inc. v. Starwood Hotels and Resorts Worldwide, Inc., G.R. No. 222366, [December 4, 2017])

[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 p:
The Case
This is a petition for review 1 of the Decision dated 26 November 1999 of the Court of Appeals 2 finding
respondent L.C. Big Mak Burger, Inc. not liable for trademark infringement and unfair competition and ordering
petitioners to pay respondents P1,900,000 in damages, and of its Resolution dated 11 July 2000 denying reconsideration.
The Court of Appeals’ Decision reversed the 5 September 1994 Decision 3 of the Regional Trial Court of Makati, Branch
137, finding respondent L.C. Big Mak Burger, Inc. liable for trademark infringement and unfair competition.
The Facts
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’s 4 owns a family of marks 5 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 items 8 and paraphernalia 9 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. ADaSET
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.
xxx xxx xxx
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.
xxx xxx xxx
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 . . .
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 . . .
The . . . 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. . . . 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 of P400,000.00, 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, William 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”. DHACES
xxx xxx xxx
To Our mind, however, this Court is fully convinced that no colorable imitation exists. As the
definition dictates, it is not sufficient that a similarity exists in both names, but that more importantly,
the over-all presentation, or in their essential, substantive and distinctive parts is such as would likely
MISLEAD or CONFUSE persons in the ordinary course of purchasing the genuine article. A careful
comparison of the way the trademark “B[ig] M[ac]” is being used by plaintiffs-appellees and corporate
name L.C. Big Mak Burger, Inc. by defendants-appellants, would readily reveal that no confusion could
take place, or that the ordinary purchasers would be misled by it. As pointed out by defendants-
appellants, the plaintiffs-appellees’ trademark is used to designate only one product, a double decker
sandwich sold in a Styrofoam box with the “McDonalds” logo. On the other hand, what the defendants-
appellants corporation is using is not a trademark for its food product but a business or corporate name.
They use the business name “L.C. Big Mak Burger, Inc.” in their restaurant business which serves
diversified food items such as siopao, noodles, pizza, and sandwiches such as hotdog, ham, fish burger
and hamburger. Secondly, defendants-appellants’ corporate or business name appearing in the food
packages and signages are written in silhouette red-orange letters with the “b” and “m” in upper case
letters. Above the words “Big Mak” are the upper case letter “L.C.”. Below the words “Big Mak” are
the words “Burger, Inc.” spelled out in upper case letters. Furthermore, said corporate or business name
appearing in such food packages and signages is always accompanied by the company mascot, a young
chubby boy named Maky who wears a red T-shirt with the upper case “m” appearing therein and a blue
lower garment. Finally, the defendants-appellants’ food packages are made of plastic material.
xxx xxx 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 . . . sold in a Styrofoam box with the “McDonald’s” logo and trademark in red, bl[o]ck
capital letters printed thereon . . . 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 . . . . 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 . . .
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. ADEaHT
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 Appeals 27 which also involved a suit for trademark infringement and unfair
competition in which the trial court and the Court of Appeals arrived at conflicting findings.
 
On the Manner Respondents Used
“Big Mak” in their Business
Petitioners contend that the Court of Appeals erred in ruling that the corporate name “L.C. Big Mak Burger, Inc.”
appears in the packaging for respondents’ hamburger products and not the words “Big Mak” only.
The contention has merit.
The evidence presented during the hearings on petitioners’ motion for the issuance of a writ of preliminary
injunction shows that the plastic wrappings and plastic bags used by respondents for their hamburger sandwiches bore the
words “Big Mak.” The other descriptive words “burger” and “100% pure beef” were set in smaller type, along with the
locations of branches. 28 Respondents’ cash invoices simply refer to their hamburger sandwiches as “Big Mak.” 29 It is
respondents’ snack vans that carry the words “L.C. Big Mak Burger, Inc.” 30
It was only during the trial that respondents presented in evidence the plastic wrappers and bags for their
hamburger sandwiches relied on by the Court of Appeals. 31 Respondents’ plastic wrappers and bags were identical with
those petitioners presented during the hearings for the injunctive writ except that the letters “L.C.” and the words “Burger,
Inc.” in respondents’ evidence were added above and below the words “Big Mak,” respectively. Since petitioners’
complaint was based on facts existing before and during the hearings on the injunctive writ, the facts established during
those hearings are the proper factual bases for the disposition of the issues raised in this petition.
On the Issue of Trademark Infringement
Section 22 (“Section 22) of Republic Act No. 166, as amended (“RA 166”), the law applicable to this
case, 32 defines trademark infringement as follows:
Infringement, what constitutes. — Any person who [1] shall use, without the consent of the
registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or trade-
name in connection with the sale, offering for sale, or advertising of any goods, business or services on
or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or services, or identity of such business; or [2] reproduce,
counterfeit, copy, or colorably imitate 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 4 36 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 of
goods, 40 such as “Lite” for beer 41 or “Chocolate Fudge” for chocolate soda drink. 42Descriptive marks, on the other
hand, convey the characteristics, functions, qualities or ingredients of a product to one who has never seen it or does not
know it exists,43 such as “Arthriticare” for arthritis medication. 44 On the contrary, “Big Mac” falls under the class of
fanciful or arbitrary marks as it bears no logical relation to the 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, Topacio 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.” . . . 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.” 51Thus, 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: IDTcHa
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]”, . . . Defendant Big Mak Burger has thus unjustly created the impression that its business is
approved and sponsored by, or affiliated with, plaintiffs . . .
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 sufficient that a
similarity exists in both name(s), but that more importantly, the overall presentation, or in their essential, substantive and
distinctive parts is such as would likely MISLEAD or CONFUSE persons in the ordinary course of purchasing the
genuine article.” The holistic test considers the two marks in their entirety, as they appear on the goods with their labels
and packaging. It is not enough to consider their words and compare the spelling and pronunciation of the words. 58
Respondents now vigorously argue that the Court of Appeals’ application of the holistic test to this case is correct
and in accord with prevailing jurisprudence.
This Court, however, has relied on the dominancy test rather than the holistic test. The dominancy test considers
the dominant features in the competing marks in determining whether they are confusingly similar. Under the dominancy
test, courts give greater weight to the similarity of the appearance of the product arising from 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:
. . . 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; . . .)
(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 . . . 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: aAHTDS
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’ . . . “B[ig] M[ac]”
trademark, with their alleged sentiment-focused “explanation” merely thought of as a convenient, albeit
unavailing, excuse or defense for such an unfair choice of name. 67
 Absent proof that respondents’ adoption of the “Big Mak” mark was due to honest mistake or was
fortuitous, 68 the inescapable conclusion is that respondents adopted the “Big Mak” mark to “ride on the coattails” of the
more established “Big Mac” mark. 69 This saves respondents much of the expense in advertising to create market
recognition of their mark and hamburgers. 70
Thus, we hold that confusion is likely to result in the public mind. We sustain petitioners’ claim of trademark
infringement.
On the Lack of Proof of
Actual Confusion
Petitioners’ failure to present proof of actual confusion does not negate their claim of trademark infringement. As
noted in American Wire & Cable Co. v. Director of Patents, 71 Section 22 requires the less stringent standard of
“likelihood of confusion” only. While proof of actual confusion is the best evidence of infringement, its absence is
inconsequential. 72
On the Issue of Unfair Competition
Section 29 (“Section 29”) 73 of RA 166 defines unfair competition, thus:
xxx xxx xxx
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 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. (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. 75Actual 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. . .
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. ASTcEa
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 23 83 (“Section 23”) in relation to Section 29 of RA 166, a plaintiff who successfully maintains
trademark infringement and unfair competition claims is entitled to injunctive and monetary reliefs. Here, the RTC did not
err in issuing the injunctive writ of 16 August 1990 (made permanent in its Decision of 5 September 1994) and in ordering
the payment of P400,000 actual damages in favor of petitioners. The injunctive writ is indispensable to prevent further
acts of infringement by respondent corporation. Also, the amount of actual damages is a reasonable percentage (11.9%) of
respondent 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 good  85 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.
||| (McDonald's Corp. v. L.C. Big Mak Burger, Inc., G.R. No. 143993, [August 18, 2004], 480 PHIL 402-443)

[G.R. No. 166391. October 21, 2015.]

MICROSOFT CORPORATION, petitioner, vs. ROLANDO D. MANANSALA and/or MEL
MANANSALA, doing business as DATAMAN TRADING COMPANY and/or COMIC
ALLEY, respondent.
DECISION
BERSAMIN, J p:
This appeal seeks to overturn the decision promulgated on February 27, 2004, 1 whereby the Court of
Appeals (CA) dismissed the petition for certiorari filed by petitioner to annul the orders of the Department of Justice
(DOJ) dated March 20, 2000, 2 May 15, 2001, 3 and January 27, 2003 4 dismissing the criminal charge of violation of
Section 29 of Presidential Decree No. 49 (Decree on Intellectual Property) it had instituted against the respondents;
and the resolution promulgated on December 6, 2004 denying its motion for reconsideration. 5
Antecedents
The CA summarized the factual and procedural antecedents thusly:
Petitioner (Microsoft Corporation) is the copyright and trademark owner of all rights relating
to all versions and editions of Microsoft software (computer programs) such as, but not limited to,
MS-DOS (disk operating system), Microsoft Encarta, Microsoft Windows, Microsoft Word,
Microsoft Excel, Microsoft Access, Microsoft Works, Microsoft Powerpoint, Microsoft Office,
Microsoft Flight Simulator and Microsoft FoxPro, among others, and their user's guide/manuals.
Private Respondent-Rolando Manansala is doing business under the name of DATAMAN
TRADING COMPANY and/or COMIC ALLEY with business address at 3rd Floor, University Mall
Building, Taft Ave., Manila.
Private Respondent Manansala, without authority from petitioner, was engaged in distributing
and selling Microsoft computer software programs. aDSIHc
 On November 3, 1997, Mr. John Benedict A. Sacriz, a private investigator accompanied by
an agent from the National Bureau of Investigation (NBI) was able to purchase six (6) CD-ROMs
containing various computer programs belonging to petitioner.
As a result of the test-purchase, the agent from the NBI applied for a search warrant to search
the premises of the private respondent.
On November 17, 1997, a Search Warrant was issued against the premises of the private
respondent.
On November 19, 1997, the search warrant was served on the private respondent's premises
and yielded several illegal copies of Microsoft programs.
Subsequently, petitioner, through Atty. Teodoro Kalaw IV filed an Affidavit-Complaint in
the DOJ based on the results of the search and seizure operation conducted on private respondent's
premises.
However, in a Resolution dated March 20, 2000, public respondent State Prosecutor
dismissed the charge against private respondent for violation of Section 29 P.D. 49 in this wise, to
quote:
'The evidence is extant in the records to show that respondent is selling
Microsoft computer software programs bearing the copyrights and trademarks owned
by Microsoft Corporation. There is, however, no proof that respondent was the one
who really printed or copied the products of complainant for sale in his store.
WHEREFORE, it is hereby, recommended that respondent be charged for
violation of Article 189 of the Revised Penal Code. The charge for violation of
Section 29 of PD No. 49 is recommended dismissed for lack of evidence.'
Petitioner filed a Motion for Partial Reconsideration arguing that printing or copying is not
essential in the crime of copyright infringement under Section 29 of PD No. 49.
On May 15, 2001, the public respondent issued a Resolution denying the Motion for Partial
Reconsideration.
Thereafter, petitioner filed a Petition for Review with the DOJ, which denied the petition for
review. 6
Dissatisfied with the outcome of its appeal, the petitioner filed its petition for  certiorari in the CA to annul the
DOJ's dismissal of its petition for review on the ground of grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the DOJ.
On February 27, 2004, the CA rendered the assailed decision affirming the dismissal by the DOJ,  7 disposing
as follows:
WHEREFORE, premises considered, the instant petition is DENIED. Consequently, the
Orders dated March 20, 2000, May 15, 2001 and January 27, 2003 respectively are
hereby AFFIRMED.
SO ORDERED. 8
Issue
The petitioner insists that printing or copying was not essential in the commission of the crime of copyright
infringement under Section 29 of Presidential Decree No. 49; hence, contrary to the holding of the DOJ, as upheld by
the CA, the mere selling of pirated computer software constituted copyright infringement. 9
Ruling of the Court
The appeal is meritorious.
Although the general rule is that the determination of the existence of probable cause by the public prosecutor
is not to be judicially scrutinized because it is an executive function, an exception exists when the determination is
tainted with grave abuse of discretion. 10 Bearing this in mind, we hold that the DOJ committed grave abuse of
discretion in sustaining the public prosecutor's dismissal of the charge of copyright infringement under Section 29
of Presidential Decree No. 49 on the ground of lack of evidence because the public prosecutor thereby flagrantly
disregarded the existence of acts sufficient to engender the well-founded belief that the crime of copyright
infringement had been committed, and that the respondent was probably guilty thereof. 11
Section 5 of Presidential Decree No. 49 specifically defined copyright as an exclusive right in the following
manner:
Section 5. Copyright shall consist in the exclusive right;
(A) To print, reprint, publish, copy, distribute, multiply, sell, and make photographs, photo-
engravings, and pictorial illustrations of the works;
(B) To make any translation or other version or extracts or arrangements or adaptations
thereof; to dramatize it if it be a non-dramatic work; to convert it into a non-dramatic work if it be a
drama; to complete or execute if it be a model or design;
(C) To exhibit, perform, represent, produce, or reproduce, the work in any manner or by any
method whatever for profit or otherwise; it not reproduced in copies for sale, to sell any manuscript or
any record whatsoever thereof;
(D) To make any other use or disposition of the work consistent with the laws of the
land. ETHIDa
Accordingly, the commission of any of the acts mentioned in Section 5 of Presidential Decree No. 49 without
the copyright owner's consent constituted actionable copyright infringement. In Columbia Pictures, Inc. v. Court of
Appeals, 12 the Court has emphatically declared:
Infringement of a copyright is a trespass on a private domain owned and occupied by the owner of the
copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which is a
synonymous term in this connection, consists in the doing by any person, without the consent of the
owner of the copyright, of anything the sole right to do which is conferred by statute on the owner of
the copyright.
The "gravamen of copyright infringement," according to NBI-Microsoft Corporation v. Hwang: 13
is not merely the unauthorized manufacturing of intellectual works but rather the unauthorized
performance of any of the acts covered by Section 5. Hence, any person who performs any of the acts
under Section 5 without obtaining the copyright owners prior consent renders himself civilly and
criminally liable for copyright infringement. 14
The CA stated in the assailed decision as follows:
A reading of Section 5 (a) of the Copyright Law shows that the acts enumerated therein are
punctuated by commas and the last phrase is conjoined by the words 'and'. Clearly, the same should
be interpreted to mean as 'relating to one another' because it is basic in legal hermeneutics that the
word 'and' is not meant to separate words but is a conjunction used to denote a 'joinder' or 'union'.
In the book of Noli C. Diaz entitled as STATUTORY CONSTRUCTION, the word 'and' was
defined as a 'conjunction connecting words or phrases expressing the idea that the latter is to be added
to or taken along with the first'. Stated differently, the word 'and' is a conjunction pertinently defined
as meaning 'together with', 'joined with', 'along or together with', 'added to or linked to' used to
conjoin 'word with word', 'phrase with phrase', 'clause with clause'. The word 'and' does not mean 'or',
it is a conjunction used to denote a joinder or union, 'binding together', relating the one to the other.
Hence the key to interpret and understand Section 5 (a) of P.D. 49 is the word 'and'. From the
foregoing definitions of the word 'and' it is unmistakable that to hold a person liable under the said
provision of law, all the acts enumerated therein must be present and proven. As such, it is not correct
to construe the acts enumerated therein as being separate or independent from one another.
In the case at bar, petitioner failed to allege and adduce evidence showing that the private
respondent is the one who copied, replicated or reproduced the software programs of the petitioner. In
other words, 'sale' alone of pirated copies of Microsoft software programs does not constitute
copyright infringement punishable under P.D. 49. 15
 The CA erred in its reading and interpretation of Section 5 of Presidential Decree No. 49. Under the rules on
syntax, the conjunctive word "and" denotes a "joinder or union" of words, phrases, or clause;  16 it is different from
the disjunctive word "or" that signals disassociation or independence. 17 However, a more important rule of statutory
construction dictates that laws should be construed in a manner that avoids absurdity or unreasonableness. 18 As the
Court pointed out in Automotive Parts & Equipment Company, Inc. v. Lingad: 19
Nothing is better settled then that courts are not to give words a meaning which would lead to
absurd or unreasonable consequence. That is a principle that goes back to In re Allen decided on
October 29, 1903, where it was held that a literal interpretation is to be rejected if it would be unjust
or lead to absurd results. That is a strong argument against its adoption. The words of Justice Laurel
are particularly apt. Thus: 'The fact that the construction placed upon the statute by the appellants
would lead to an absurdity is another argument for rejecting it . . . .'
It is of the essence of judicial duty to construe statutes so as to avoid such a deplorable result.
That has long been a judicial function. A literal reading of a legislative act which could be thus
characterized is to be avoided if the language thereof can be given a reasonable application consistent
with the legislative purpose. In the apt language of Frankfurter: "A decent respect for the policy of
Congress must save us from imputing to it a self-defeating, if not disingenuous purpose. Certainly, we
must reject a construction that at best amounts to a manifestation of verbal ingenuity but hardly
satisfies the test of rationality on which law must be based. 20
The conjunctive "and" should not be taken in its ordinary acceptation, but should be construed like the
disjunctive "or" if the literal interpretation of the law would pervert or obscure the legislative intent.  21 To accept the
CA's reading and interpretation is to accept absurd results because the violations listed in Section 5 (a) of  Presidential
Decree No. 49 — "To print, reprint, publish, copy, distribute, multiply, sell, and make photographs, photo-
engravings, and pictorial illustrations of the works" — cannot be carried out on all of the classes of works
enumerated in Section 2 of Presidential Decree No. 49, viz.:
Section 2. — The Rights granted by this Decree shall, from the moment of creation, subsist
with respect to any of the following classes of works:
(A) Books, including composite and encyclopedic works, manuscripts, directories, and
gazetteers;
(B) Periodicals, including pamphlets and newspapers; cSEDTC
(C) Lectures, sermons, addresses, dissertations prepared for oral delivery;
(D) Letters;
(E) Dramatic or dramatico-musical compositions; choreographic works and entertainments in
dumb shows, the acting form of which is fixed in writing or otherwise;
(F) Musical compositions, with or without words;
(G) Works of drawing, painting, architecture, sculpture, engraving, lithography, and other
works of art; models or designs for works of art;
(H) Reproductions of a work of art;
(I) Original ornamental designs or models for articles of manufacture, whether or not
patentable, and other works of applied art;
(J) Maps, plans, sketches, and charts;
(K) Drawings, or plastic works of a scientific or technical character;
(L) Photographic works and works produced by a process analogous to photography; lantern
slides;
(M) Cinematographic works and works produced by a process analogous to cinematography
or any process for making audio-visual recordings;
(N) Computer programs;
(O) Prints, pictorial, illustration, advertising copies, labels, tags, and box wraps;
 (P) Dramatization, translations, adaptations, abridgements, arrangements and other alterations
of literary, musical or artistic works or of works of the Philippine Government as herein defined,
which shall be protected as provided in Section 8 of this Decree.
(Q) Collection of literary, scholarly, or artistic works or of works referred to in Section 9 of
this Decree which by reason of the selection and arrangement of their contents constitute intellectual
creations, the same to be protected as such in accordance with Section 8 of this Decree.
(R) Other literary, scholarly, scientific and artistic works.
Presidential Decree No. 49 thereby already acknowledged the existence of computer programs as works or
creations protected by copyright. 22 To hold, as the CA incorrectly did, that the legislative intent was to require that
the computer programs be first photographed, photo-engraved, or pictorially illustrated as a condition for the
commission of copyright infringement invites ridicule. Such interpretation of Section 5 (a) of  Presidential Decree No.
49 defied logic and common sense because it focused on terms like "copy," "multiply," and "sell," but blatantly
ignored terms like "photographs," "photo-engravings," and "pictorial illustrations." Had the CA taken the latter words
into proper account, it would have quickly seen the absurdity of its interpretation.
The mere sale of the illicit copies of the software programs was enough by itself to show the existence of
probable cause for copyright infringement. There was no need for the petitioner to still prove who copied, replicated
or reproduced the software programs. Indeed, the public prosecutor and the DOJ gravely abused their discretion in
dismissing the petitioner's charge for copyright infringement against the respondents for lack of evidence. There was
grave abuse of discretion because the public prosecutor and the DOJ acted whimsically or arbitrarily in disregarding
the settled jurisprudential rules on finding the existence of probable cause to charge the offender in court.
Accordingly, the CA erred in upholding the dismissal by the DOJ of the petitioner's petition for review. We reverse.
WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS
ASIDE the decision promulgated on February 27, 2004 in C.A.-G.R. SP No. 76402; DIRECTS the Department of
Justice to render the proper resolution to charge respondent ROLANDO D. MANANSALA and/or MEL
MANANSALA, doing business as DATAMAN TRADING COMPANY and/or COMIC ALLEY in accordance
with this decision; and ORDERS the respondents to pay the costs of suit. acEHCD
SO ORDERED.
||| (Microsoft Corp. v. Manansala, G.R. No. 166391, [October 21, 2015], 772 PHIL 14-25)
 [G.R. No. 131522. July 19, 1999.]
PACITA I. HABANA, ALICIA L. CINCO and JOVITA N. FERNANDO, petitioners, vs.
FELICIDAD C. ROBLES and GOODWILL TRADING CO., INC., respondents.
Jesus R. Cornego for petitioners.
Crisanto L. Francisco & Associates for respondents.
SYNOPSIS
Petitioners herein are authors and copyright owners of their published books while respondents Robles and
Goodwill Trading Co., Inc. are authors and publishers, respectively, of another published work that was also covered by
copyrights issued to them. In the course of revising their published works, petitioners chanced upon the book of
respondent Robles. After an itemized examination and comparison of the books, petitioners found that several pages of
the respondents' book are similar, if not altogether a copy from the petitioners' book, which is a case of plagiarism and
copyright infringement. When respondents ignored demands of petitioners for damages, the latter filed a complaint for
infringement and/or unfair competition with damages. The trial court dismissed the complaint of the petitioners herein.
Petitioners appealed their case to the Court of Appeals (CA), which affirmed the judgment of the trial court. The CA also
deleted the award of attorneys' fees, since its view was that there was no bad faith on the part of the petitioners in
instituting the action. The petitioners filed a motion for reconsideration, but, the CA denied the same, hence, this petition
for review on certiorari. HTcDEa
In cases of infringement, copying alone is not what is prohibited. The copying must produce an "injurious effect."
Here, the injury consists in that respondent Robles lifted from petitioners' book materials that were the result of the latter's
research work and compilation and misrepresented them as her own. The least that respondent Robles could have done
was to acknowledge petitioners as the source of her book. To allow another to copy the book without appropriate
acknowledgment is injury enough. The petition was granted. The case was ordered remanded to the trial court for further
proceedings to receive evidence of the parties to ascertain the damages caused and sustained by petitioners and to render
decision in accordance with the evidence submitted to it.
SYLLABUS
1. COMMERCIAL LAW; INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES; PROVIDES
PROTECTION FOR COPYRIGHT OWNER. — At present, all laws dealing with the protection of intellectual property
rights have been consolidated and as the law now stands, the protection of copyrights is governed by Republic Act No.
8293. Notwithstanding the change in the law, the same principles are reiterated in the new law under Section 177. It
provides for the copy or economic rights of an owner of a copyright as follows: "Sec. 177. Copy or Economic rights. —
Subject to the provisions of chapter VIII, copyright or economic rights shall consist of the exclusive right to carry out,
authorize or prevent the following acts: 177.1 Reproduction of the work or substantial portion of the work; 177.2
Dramatization, translation, adaptation, abridgment, arrangement or other transformation of the work; 177.3 The first
public distribution of the original and each copy of the work by sale or other forms of transfer of ownership; 177.4 Rental
of the original or a copy of an audiovisual or cinematographic work, a work embodied in a sound recording, a computer
program, a compilation of data and other materials or a musical work in graphic form, irrespective of the ownership of the
original or the copy which is the subject of the rental; (n) 177.5 Public display of the original or copy of the work; 177.6
Public performance of the work; and 177.7 Other communication to the public of the work." The law also provided for the
limitations on copyright, thus: "Sec. 184.1 Limitations on copyright. — Notwithstanding the provisions of Chapter V, the
following acts shall not constitute infringement of copyright: (a) the recitation or performance of a work, once it has been
lawfully made accessible to the public, if done privately and free of charge or if made strictly for a charitable or religious
institution or society; [Sec. 10(1), P.D. No. 49] (b) The making of quotations from a published work if they are compatible
with fair use and only to the extent justified for the purpose, including quotations from newspaper articles and periodicals
in the form of press summaries; Provided, that the source and the name of the author, if appearing on the work are
mentioned; (Sec. 11 third par. P.D. 49) . . . (e) The inclusion of a work in a publication, broadcast, or other
communication to the public, sound recording of film, if such inclusion is made by way of illustration for teaching
purposes and is compatible with fair use: Provided, That the source and the name of the author, if appearing in the work
is mentioned; In the above-quoted provisions, "work" has reference to literary and artistic creations and this includes
books and other literary, scholarly and scientific works.
2. ID.; ID.; INFRINGEMENT; CONSTRUED; WHEN COMMITTED. — When is there a substantial
reproduction of a book? It does not necessarily require that the entire copyrighted work, or even a large portion of it, be
copied. If so much is taken that the value of the original work is substantially diminished, there is an infringement of
copyright and to an injurious extent, the work is appropriated. In determining the question of infringement, the amount of
matter copied from the copyrighted work is an important consideration. To constitute infringement, it is not necessary that
the whole or even a large portion of the work shall have been copied. If so much is taken that the value of the original is
sensibly diminished, or the labors of the original author are substantially and to an injurious extent appropriated by
another, that is sufficient in point of law to constitute piracy. The essence of intellectual piracy should be essayed in
conceptual terms in order to underscore its gravity by an appropriate understanding thereof. Infringement of a copyright is
a trespass on a private domain owned and occupied by the owner of the copyright, and, therefore, protected by law, and
infringement of copyright, or piracy, which is a synonymous term in this connection, consists in the doing by any person,
without the consent of the owner of the copyright, of anything the sole right to do which is conferred by statute on the
owner of the copyright.
3. ID.; ID.; ID.; WHEN NOT COMMITTED. — In this jurisdiction under Sec. 184 of Republic Act 8293 it is
provided that: Limitations on Copyright. Notwithstanding the provisions of Chapter V, the following shall not constitute
infringement of copyright: . . . (c) The making of quotations from a published work if they are compatible with fair use
and only to the extent justified for the purpose, including quotations from newspaper articles and periodicals in the form
of press summaries: Provided, That the source and the name of the author, if appearing on the work, are mentioned. A
copy of a piracy is an infringement of the original, and it is no defense that the pirate, in such cases, did not know whether
or not he was infringing any copyright; he at least knew that what he was copying was not his, and he copied at his
peril. DaAISH
4. ID.; ID.; COPYRIGHT; PURPOSE THEREOF. — In copyrighting books the purpose is to give protection to
the intellectual product of an author. This is precisely what the law on copyright protected, under Section 184.1 (b).
Quotations from a published work if they are compatible with fair use and only to the extent justified by the purpose,
including quotations from newspaper articles and periodicals in the form of press summaries are allowed provided that the
source and the name of the author, if appearing on the work, are mentioned.
DAVIDE, JR., C.J., dissenting opinion:
1. COMMERCIAL LAW; R.A. No. 8293 (INTELLECTUAL PROPERTY CODE); COPYRIGHT; DEFINED;
PURPOSE OF THE LAW. — A copyright may be accurately defined as the right granted by statute to the proprietor of an
intellectual production to its exclusive use and enjoyment to the extent specified in the statute. Under Section 177 of R.A.
No. 8293, the copy or economic right (copyright and economic right are used interchangeably in the statute) consists of
the exclusive right to carry out, authorize or prevent the following acts: 177.1 Reproduction of the work or substantial
portion of the work; 177.2 Dramatization, translation, adaptation, abridgment, arrangement or other transformation of the
work; 177.3 The first public distribution of the original and each copy of the work by sale or other forms of transfer of
ownership; 177.4 Rental of the original or a copy of an audiovisual or cinematographic work, a work embodied in a sound
recording, a computer program, a compilation of data and other materials or a musical work in graphic form, irrespective
of the ownership of the original or the copy which is the subject of the rental; 177.5 Public display of the original or a
copy of the work; 177.6 Public performance of the work; and 177.7 Other communication to the public of the work. "The
work," as repeatedly mentioned, refers to the literary and artistic works defined as original intellectual creations in the
literary and artistic domain protected from the moment of their creation and enumerated in Section 172.1, which includes
books and other literary, scholarly, scientific and artistic works. Stripped in the meantime of its indisputable social and
beneficial actions, the use of intellectual property or creations should basically promote the creator or author's personal
and economic gain. Hence, the copyright protection extended to the creator should ensure his attainment of some form of
personal satisfaction and economic reward from the work he produced. SCaEcD
2. ID.; ID.; ID.; INFRINGEMENT; CONSTRUED. — The execution of any one or more of the exclusive rights
conferred by law on a copyright owner, without his consent, constitutes copyright infringement. In essence, copyright
infringement, known in general as "piracy," is a trespass on a domain owned and occupied by a copyright owner; it is
violation of a private right protected by law. With the invasion of his property rights, a copyright owner is naturally
entitled to seek redress, enforce and hold accountable the defrauder or usurper of said economic rights.
3. ID.; ID.; ID.; ID.; TEST TO DETERMINE COPYRIGHT INFRINGEMENT; NO VIOLATION; CASE AT
BAR. — To constitute infringement, the usurper must have copied or appropriated the "original" work of an author or
copyright proprietor; absent copying, there can be no infringement of copyright. In turn, a work is deemed by law an
original if the author created it by his own skill, labor and judgment. On its part, a copy is that which comes so near to the
original so as to give to every person seeing it the idea created by the original. It has been held that the test of copyright
infringement is whether an ordinary observer comparing the works can readily see that one has been copied from the
other. To constitute a substantial reproduction, it is not necessary that the entire copyrighted work, or even a large portion
of it, be copied, if so much is taken that the value of the original is substantially diminished, or if the labors of the original
author are substantially, and to an injurious extent, appropriated. But the similarity of the books here does not amount to
an appropriation of a substantial portion of the published work COLLEGE ENGLISH FOR TODAY. If the existence of
substantial similarities does not of itself establish infringement, mere similarities (not substantial similarities) in some
sections of the books in question decisively militate against a claim for infringement where the similarities had been
convincingly established as proceeding from a number of reasons and/or factors.
4. ID.; ID.; ID.; FAIR USE OF COPYRIGHTED MATERIAL; DEFINED AND CONSTRUED. — Fair use has
been defined as a privilege to use the copyrighted material in a reasonable manner without the consent of the copyright
owner or as copying the theme or ideas rather than their expression. No question of fair or unfair use arises however, if no
copying is proved to begin with. This is in consonance with the principle that there can be no infringement if there was no
copying. It is only where some form of copying has been shown that it becomes necessary to determine whether it has
been carried to an "unfair," that is, illegal, extent.
5. REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS OF THE COURT OF APPEALS AND THE TRIAL
COURT; CONCLUSIVE AND BINDING UPON THE SUPREME COURT; EXCEPTION. — Of doctrinal persuasion is
the principle that factual determinations of the Court of Appeals and the trial court are conclusive and binding upon this
Court, and the latter will not, as a rule, disturb these findings unless compelling and cogent reasons necessitate a
reexamination, if not a reversal, of the same. Tested against this jurisprudential canon, to subject the challenged decision
of the Court of Appeals to further scrutiny would be superfluous, if not, improvident. DECSIT
DECISION
PARDO, J p:
The case before us is a petition for review on certiorari 1 to set aside the (a) decision of the Court of
Appeals, 2 and (b) the resolution denying petitioners' motion for reconsideration, 3 in which the appellate court affirmed
the trial court's dismissal of the complaint for infringement and/or unfair competition and damages but deleted the award
for attorney's fees. prcd
The facts are as follows:
Petitioners are authors and copyright owners of duly issued certificates of copyright registration covering their
published works, produced through their combined resources and efforts, entitled COLLEGE ENGLISH FOR TODAY
(CET for brevity), Books 1 and 2, and WORKBOOK FOR COLLEGE FRESHMAN ENGLISH, Series 1.
Respondent Felicidad Robles and Goodwill Trading Co., Inc. are the author/publisher and distributor/seller of
another published work entitled "DEVELOPING ENGLISH PROFICIENCY" (DEP for brevity), Books 1 and 2 (1985
edition) which book was covered by copyrights issued to them.
In the course of revising their published works, petitioners scouted and looked around various bookstores to check
on other textbooks dealing with the same subject matter. By chance they came upon the book of respondent Robles and
upon perusal of said book they were surprised to see that the book was strikingly similar to the contents, scheme of
presentation, illustrations and illustrative examples in their own book, CET. cdrep
After an itemized examination and comparison of the two books (CET and DEP), petitioners found that several
pages of the respondent's book are similar, if not all together a copy of petitioners' book, which is a case of plagiarism and
copyright infringement.
Petitioners then made demands for damages against respondents and also demanded that they cease and desist
from further selling and distributing to the general public the infringed copies of respondent Robles' works.
However, respondents ignored the demands, hence, on July 7, 1988, petitioners filed with the Regional Trial
Court, Makati, a complaint for "Infringement and/or unfair competition with damages" 4 against private respondents. 5
In the complaint, petitioners alleged that in 1985, respondent Felicidad C. Robles being substantially familiar with
the contents of petitioners' works, and without securing their permission, lifted, copied, plagiarized and/or transposed
certain portions of their book CET. The textual contents and illustrations of CET were literally reproduced in the book
DEP. The plagiarism, incorporation and reproduction of particular portions of the book CET in the book DEP, without the
authority or consent of petitioners, and the misrepresentations of respondent Robles that the same was her original work
and concept adversely affected and substantially diminished the sale of the petitioners' book and caused them actual
damages by way of unrealized income. cdasia
Despite the demands of the petitioners for respondents to desist from committing further acts of infringement and
for respondent to recall DEP from the market, respondents refused. Petitioners asked the court to order the submission of
all copies of the book DEP, together with the molds, plates and films and other materials used in its printing destroyed,
and for respondents to render an accounting of the proceeds of all sales and profits since the time of its publication and
sale.
Respondent Robles was impleaded in the suit because she authored and directly committed the acts of
infringement complained of, while respondent Goodwill Trading Co., Inc. was impleaded as the publisher and joint co-
owner of the copyright certificates of registration covering the two books authored and caused to be published by
respondent Robles with obvious connivance with one another.
On July 27, 1988, respondent Robles filed a motion for a bill of particulars 6 which the trial court approved on
August 17, 1988. Petitioners complied with the desired particularization, and furnished respondent Robles the specific
portions, inclusive of pages and lines, of the published and copyrighted books of the petitioners which were transposed,
lifted, copied and plagiarized and/or otherwise found their way into respondent's book. llcd
On August 1, 1988, respondent Goodwill Trading Co., Inc. filed its answer to the complaint  7 and alleged that
petitioners had no cause of action against Goodwill Trading Co., Inc. since it was not privy to the misrepresentation,
plagiarism, incorporation and reproduction of the portions of the book of petitioners; that there was an agreement between
Goodwill and the respondent Robles that Robles guaranteed Goodwill that the materials utilized in the manuscript were
her own or that she had secured the necessary permission from contributors and sources; that the author assumed sole
responsibility and held the publisher without any liability.
On November 28, 1988, respondent Robles filed her answer, 8 and denied the allegations of plagiarism and
copying that petitioners claimed. Respondent stressed that (1) the book DEP is the product of her independent researches,
studies and experiences, and was not a copy of any existing valid copyrighted book; (2) DEP followed the scope and
sequence or syllabus which are common to all English grammar writers as recommended by the Association of Philippine
Colleges of Arts and Sciences (APCAS), so any similarity between the respondents book and that of the petitioners was
due to the orientation of the authors to both works and standards and syllabus; and (3) the similarities may be due to the
authors' exercise of the "right to fair use of copyrighted materials, as guides."
Respondent interposed a counterclaim for damages on the ground that bad faith and malice attended the filing of
the complaint, because petitioner Habana was professionally jealous and the book DEP replaced CET as the official
textbook of the graduate studies department of the Far Eastern University. 9 LLphil
During the pre-trial conference, the parties agreed to a stipulation of facts 10 and for the trial court to first resolve
the issue of infringement before disposing of the claim for damages.
After the trial on the merits, on April 23, 1993, the trial court rendered its judgment finding thus:
"WHEREFORE, premises considered, the court hereby orders that the complaint filed against
defendants Felicidad Robles and Goodwill Trading Co., Inc. shall be DISMISSED; that said plaintiffs
solidarily reimburse defendant Robles for P20,000.00 attorney's fees and defendant Goodwill for
P5,000.00 attorney's fees. Plaintiffs are liable for cost of suit.
IT IS SO ORDERED.
"Done in the City of Manila this 23rd day of April, 1993. LibLex
"(s/t) MARVIE R. ABRAHAM SINGSON
"Assisting Judge
"S.C. Adm. Order No. 124-92" 11
On May 14, 1993, petitioners filed their notice of appeal with the trial court, 12 and on July 19, 1993, the court
directed its branch clerk of court to forward all the records of the case to the Court of Appeals. 13
In the appeal, petitioners argued that the trial court completely disregarded their evidence and fully subscribed to
the arguments of respondent Robles that the books in issue were purely the product of her researches and studies and that
the copied portions were inspired by foreign authors and as such not subject to copyright. Petitioners also assailed the
findings of the trial court that they were animated by bad faith in instituting the complaint. 14
On June 27, 1997, the Court of Appeals rendered judgment in favor of respondents Robles and Goodwill Trading
Co., Inc. The relevant portions of the decision state: LLphil
"It must be noted, however, that similarity of the allegedly infringed work to the author's or
proprietor's copyrighted work does not of itself establish copyright infringement, especially if the
similarity results from the fact that both works deal with the same subject or have the same common
source, as in this case.
Appellee Robles has fully explained that the portion or material of the book claimed by
appellants to have been copied or lifted from foreign books. She has duly proven that most of the topics
or materials contained in her book, with particular reference to those matters claimed by appellants to
have been plagiarized were topics or matters appearing not only in appellants and her books but also in
earlier books on College English, including foreign books, i.e. Edmund Burke's "Speech on
Conciliation", Boerigs' "Competence in English" and Broughton's, "Edmund Burke's
Collection." LibLex
xxx xxx xxx
"Appellant's reliance on the last paragraph on Section 11 is misplaced. It must be emphasized
that they failed to prove that their books were made sources by appellee." 15
The Court of Appeals was of the view that the award of attorneys' fees was not proper, since there was no bad
faith on the part of petitioners Habana et al. in instituting the action against respondents.
On July 12, 1997, petitioners filed a motion for reconsideration, 16 however, the Court of Appeals denied the
same in a Resolution 17 dated November 25, 1997. cdll
Hence, this petition.
In this appeal, petitioners submit that the appellate court erred in affirming the trial court's decision.
Petitioners raised the following issues: (1) whether or not, despite the apparent textual, thematic and sequential
similarity between DEP and CET, respondents committed no copyright infringement; (2) whether or not there was animus
furandi on the part of respondent when they refused to withdraw the copies of CET from the market despite notice to
withdraw the same; and (3) whether or not respondent Robles abused a writer's right to fair use, in violation of  Section 11
of Presidential Decree No. 49. 18
We find the petition impressed with merit. prcd
The complaint for copyright infringement was filed at the time that Presidential Decree No. 49 was in force. At
present, all laws dealing with the protection of intellectual property rights have been consolidated and as the law now
stands, the protection of copyrights is governed by Republic Act No. 8293. Notwithstanding the change in the law, the
same principles are reiterated in the new law under Section 177. It provides for the copy or economic rights of an owner
of a copyright as follows:
"SECTION 177. Copy or Economic rights. — Subject to the provisions of chapter VIII,
copyright or economic rights shall consist of the exclusive right to carry out, authorize or prevent the
following acts:
177.1 Reproduction of the work or substantial portion of the work;
177.2 Dramatization, translation, adaptation, abridgment, arrangement or other transformation of the
work; cda
177.3 The first public distribution of the original and each copy of the work by sale or other forms of
transfer of ownership;
177.4 Rental of the original or a copy of an audiovisual or cinematographic work, a work embodied in a
sound recording, a computer program, a compilation of data and other materials or a musical
work in graphic form, irrespective of the ownership of the original or the copy which is the
subject of the rental; (n)
177.5 Public display of the original or copy of the work;
 177.6 Public performance of the work; and
177.7 Other communication to the public of the work" 19
The law also provided for the limitations on copyright, thus: cdasia
"SECTION 184.1 Limitations on copyright. — Notwithstanding the provisions of Chapter V,
the following acts shall not constitute infringement of copyright:
(a) the recitation or performance of a work, once it has been lawfully made accessible to the public, if
done privately and free of charge or if made strictly for a charitable or religious institution or
society; [Sec. 10(1), P.D. No. 49]
(b) The making of quotations from a published work if they are compatible with fair use and only to the
extent justified for the purpose, including quotations from newspaper articles and periodicals in
the form of press summaries; Provided, that the source and the name of the author, if appearing
on the work are mentioned; (Sec. 11 third par. P.D. 49) prLL
xxx xxx xxx
(e) The inclusion of a work in a publication, broadcast, or other communication to the public, sound
recording of film, if such inclusion is made by way of illustration for teaching purposes and is
compatible with fair use: Provided, That the source and the name of the author, if appearing in
the work is mentioned; 20
In the above quoted provisions, "work" has reference to literary and artistic creations and this includes books and
other literary, scholarly and scientific works. 21
A perusal of the records yields several pages of the book DEP that are similar if not identical with the text of
CET. cdphil
On page 404 of petitioners' Book 1 of College English for Today, the authors wrote:
Items in dates and addresses:
He died on Monday, April 15, 1975.
Miss Reyes lives in 214 Taft Avenue, Manila 22
On page 73 of respondents Book 1 Developing English Today, they wrote: cdasia
He died on Monday, April 25, 1975.
Miss Reyes address is 214 Taft Avenue Manila 23
On Page 250 of CET, there is this example on parallelism or repetition of sentence structures, thus:
"The proposition is peace. Not peace through the medium of war; not peace to be hunted
through the labyrinth of intricate and endless negotiations; not peace to arise out of universal discord,
fomented from principle, in all parts of the empire; not peace to depend on the juridical determination
of perplexing questions, or the precise marking of the boundary of a complex government. It is simple
peace; sought in its natural course, and in its ordinary haunts. It is peace sought in the spirit of peace,
and laid in principles purely pacific.
— Edmund Burke, "Speech on Criticism." 24
On page 100 of the book DEP, 25 also in the topic of parallel structure and repetition, the same example is
found in toto. The only difference is that petitioners acknowledged the author Edmund Burke, and respondents did not.
In several other pages 26 the treatment and manner of presentation of the topics of DEP are similar if not a rehash
of that contained in CET. LexLib
We believe that respondent Robles' act of lifting from the book of petitioners substantial portions of discussions
and examples, and her failure to acknowledge the same in her book is an infringement of petitioners' copyrights.
When is there a substantial reproduction of a book? It does not necessarily require that the entire copyrighted
work, or even a large portion of it, be copied. If so much is taken that the value of the original work is substantially
diminished, there is an infringement of copyright and to an injurious extent, the work is appropriated. 27
 In determining the question of infringement, the amount of matter copied from the copyrighted work is an
important consideration. To constitute infringement, it is not necessary that the whole or even a large portion of the work
shall have been copied. If so much is taken that the value of the original is sensibly diminished, or the labors of the
original author are substantially and to an injurious extent appropriated by another, that is sufficient in point of law to
constitute piracy. 28 LexLib
The essence of intellectual piracy should be essayed in conceptual terms in order to underscore its gravity by an
appropriate understanding thereof. Infringement of a copyright is a trespass on a private domain owned and occupied by
the owner of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which is a
synonymous term in this connection, consists in the doing by any person, without the consent of the owner of the
copyright, of anything the sole right to do which is conferred by statute on the owner of the copyright. 29
The respondents' claim that the copied portions of the book CET are also found in foreign books and other
grammar books, and that the similarity between her style and that of petitioners can not be avoided since they come from
the same background and orientation may be true. However, in this jurisdiction under Sec. 184 ofRepublic Act 8293 it is
provided that:
Limitations on Copyright. Notwithstanding the provisions of Chapter V, the following shall not
constitute infringement of copyright: llcd
xxx xxx xxx
(c) The making of quotations from a published work if they are compatible with fair use and only to the
extent justified for the purpose, including quotations from newspaper articles and periodicals in
the form of press summaries: Provided, That the source and the name of the author, if
appearing on the work, are mentioned.
A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in such cases, did not
know whether or not he was infringing any copyright; he at least knew that what he was copying was not his, and he
copied at his peril. 30
The next question to resolve is to what extent can copying be injurious to the author of the book being copied. Is it
enough that there are similarities in some sections of the books or large segments of the books are the same? cdrep
In the case at bar, there is no question that petitioners presented several pages of the books CET and DEP that
more or less had the same contents. It may be correct that the books being grammar books may contain materials similar
as to some technical contents with other grammar books, such as the segment about the "Author Card". However, the
numerous pages that the petitioners presented showing similarity in the style and the manner the books were presented
and the identical examples can not pass as similarities merely because of technical consideration. prLL
The respondents claim that their similarity in style can be attributed to the fact that both of them were exposed to
the APCAS syllabus and their respective academic experience, teaching approach and methodology are almost identical
because they were of the same background.
However, we believe that even if petitioners and respondent Robles were of the same background in terms of
teaching experience and orientation, it is not an excuse for them to be identical even in examples contained in their books.
The similarities in examples and material contents are so obviously present in this case. How can similar/identical
examples not be considered as a mark of copying?
We consider as an indicia of guilt or wrongdoing the act of respondent Robles of pulling out from Goodwill
bookstores the book DEP upon learning of petitioners' complaint while pharisaically denying petitioners' demand. It was
further noted that when the book DEP was re-issued as a revised version, all the pages cited by petitioners to contain
portion of their book College English for Today were eliminated.
In cases of infringement, copying alone is not what is prohibited. The copying must produce an "injurious effect".
Here, the injury consists in that respondent Robles lifted from petitioners' book materials that were the result of the latter's
research work and compilation and misrepresented them as her own. She circulated the book DEP for commercial use and
did not acknowledge petitioners as her source. cdphil
Hence, there is a clear case of appropriation of copyrighted work for her benefit that respondent Robles
committed. Petitioners' work as authors is the product of their long and assiduous research and for another to represent it
as her own is injury enough. In copyrighting books the purpose is to give protection to the intellectual product of an
author. This is precisely what the law on copyright protected, under Section 184.1 (b). Quotations from a published work
if they are compatible with fair use and only to the extent justified by the purpose, including quotations from newspaper
articles and periodicals in the form of press summaries are allowed provided that the source and the name of the author, if
appearing on the work, are mentioned.
In the case at bar, the least that respondent Robles could have done was to acknowledge petitioners Habana et al.
as the source of the portions of DEP. The final product of an author's toil is her book. To allow another to copy the book
without appropriate acknowledgment is injury enough.
WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of Appeals in CA-
G.R. CV No. 44053 are SET ASIDE. The case is ordered remanded to the trial court for further proceedings to receive
evidence of the parties to ascertain the damages caused and sustained by petitioners and to render decision in accordance
with the evidence submitted to it. LLpr
SO ORDERED.
||| (Habana v. Robles, G.R. No. 131522, [July 19, 1999], 369 PHIL 764-798)

[G.R. No. 217916. June 20, 2018.]

ABS-CBN PUBLISHING, INC., petitioner, vs. DIRECTOR OF THE BUREAU OF
TRADEMARKS, respondent.
DECISION
REYES, JR., J p:
The Case
Challenged before the Court via this Petition for Review on Certiorari under Rule 45 of the Rules of Court is
the Resolution 1 of the Court of Appeals promulgated on May 20, 2014, which denied ABS-CBN Publishing, Inc.'s
(petitioner) "Motion for Extension of Time [To File Petition for Review]." Likewise challenged is the subsequent
Resolution 2 of the Court of Appeals promulgated on April 15, 2015, which upheld the earlier Resolution.
The Antecedent Facts
In 2004, 3 the petitioner filed with the Intellectual Property Office of the Philippines (IPO) its application for
the registration of its trademark "METRO" (applicant mark) under class 16 of the Nice classification, with specific
reference to "magazines." 4 The case was assigned to Examiner Arlene M. Icban (Examiner Icban), who, after a
judicious examination of the application, refused the applicant mark's registration.
According to Examiner Icban, the applicant mark is identical with three other cited marks, and is therefore
unregistrable according to Section 123.1 (d) of theIntellectual Property Code of the Philippines (IPC). 5 The cited
marks were identified as (1) "Metro" (word) by applicant Metro International S.A. with Application No.
42000002584, 6 (2) "Metro" (logo) also by applicant Metro International S.A. with Application No.
42000002585, 7 and (3) "Inquirer Metro" by applicant Philippine Daily Inquirer, Inc. with Application No.
42000003811. 8
 On August 16, 2005, the petitioner wrote a letter 9 in response to Examiner Icban's assessment, and the latter,
through Official Action Paper No. 04, subsequently reiterated her earlier finding which denied the registration of the
applicant mark. Eventually, in the "Final Rejection" 10 of the petitioner's application, Examiner Icban "determined
that the mark subject of the application cannot be registered because it is identical with the cited marks METRO with
Regn. No. 42000002584 ['Metro' (word)] and Regn. No. 42000003811 ['Inquirer Metro']." 11
The petitioner appealed the assessment of Examiner Icban before the Director of the Bureau of Trademarks of
the IPO, who eventually affirmed Examiner Icban's findings. The decision averred that the applicant and cited marks
were indeed confusingly similar, so much so that there may not only be a confusion as to the goods but also a
confusion as to the source or origin of the goods. The fallo of the Bureau Director's decision reads:
WHEREFORE, premises considered, the instant appeal is hereby DENIED and the Final
Rejection contained in Official Action Paper No. 04, SUSTAINED. Serve copies of this Decision to
[petitioner] and herein Examiner Arlene M. Icban.
SO ORDERED. 12
Upon the denial of the petitioner's motion for reconsideration, the petitioner appealed to the Office of the
Director General (ODG) of the IPO. After the submission of the memoranda from the parties, the ODG, on September
19, 2013, rendered a Decision which upheld Examiner Icban's assessment and the Bureau Director's decision.
According to the ODG, there is no merit in the petitioner's appeal because (1) the applicant and cited marks
are identical and confusingly similar, 13 (2) the petitioner's mark was deemed abandoned under the old Trademark
Law, and thus, petitioner's prior use of the same did not create a vested right 14 under the IPC, 15and (3) the applicant
mark has not acquired secondary meaning. 16 The fallo of the ODG decision reads:
Wherefore, premises considered, the appeal is hereby DENIED and the Decision dated 29
March 2010 and the Order denying the Appellant's Motion for Reconsideration, of the Director of the
Bureau of Trademarks, are hereby SUSTAINED. The Appellant's Trademark Application No. 4-
2004-004507 for METRO is likewiseDENIED.
Let a copy of this Decision as well as the trademark application and records be furnished and
returned to the Director of the Bureau of Trademarks. Let a copy of this Decision be furnished also
the library of the Documentation, Information and Technology Transfer Bureau for its information
and records purposes.
SO ORDERED. 17
The petitioner received a copy of the ODG decision only on October 9, 2013. On the same day, the petitioner
filed before the Court of Appeals its "Motion for Extension of Time (To File Petition for Review)" which requested
for an extension of fifteen (15) days from October 24, 2013, or until November 8, 2013, to file its petition for
review. 18 On October 25, 2013, the petitioner once more filed a motion for extension of time. In the second motion,
the petitioner asked the appellate court for another extension of the deadline from November 8, 2013 to November 23,
2013. 19
Meanwhile, on October 25, 2013, the Court of Appeals issued a Resolution which granted the petitioner's first
motion praying for an extension of time to file its petition for review, subject to the "warning against further
extension." Thus, the Court of Appeals extended the deadline only until November 8, 2013. 20
Relying on the appellate court's favorable response to its second motion for extension (which was not acted
upon by the Court of Appeals), the petitioner failed to file its petition for review on the deadline set in the Resolution
dated October 25, 2013. Instead, the petitioner filed its petition for review only on November 11, 2013 — three (3)
days after the deadline. 21
To justify this delay in filing, the petitioner stated that: (1) it received a copy of the October 25, 2013
Resolution only on November 8, 2013 at 11:30 in the morning; (2) on that same day, this Court, through its Public
Information Office, suspended offices in the National Capital Judicial Region in view of Typhoon Yolanda; and (3)
November 9 and 10, 2013 fell on a Saturday and Sunday, respectively. 22
On May 20, 2014, the Court of Appeals rendered the assailed Resolution. It ruled that the petitioner violated
its October 25, 2013 Resolution, as well as Section 4, Rule 43 of the Rules of Court, which provides for the period of
appeal. 23
 On the basis of the foregoing, and the prevailing jurisprudence, the Court of Appeals consequently denied the
petitioner's second motion for extension of time, and dismissed the petition for the petitioner's failure to file its
petition for review within the deadline. 24
On April 15, 2015, the appellate court denied the petitioner's motion for reconsideration. 25
Hence, this petition.
The Issues
The ground upon which the petitioner prays for the reversal of the ruling of the Court of Appeals is two-fold:
first is on procedural law — whether or not the Court of Appeals erred in dismissing the petition outright for the
petitioner's failure to file its petition for review within the time prescribed by the Court of Appeals; and second is on
substantive law — whether or not the ODG was correct in refusing to register the applicant mark for being identical
and confusingly similar with the cited marks already registered with the IPO.
The Court's Ruling
After a careful perusal of the arguments presented and the evidence submitted, the Court finds no merit in the
petition.
First, on the procedural issue:
In Bañez vs. Social Security System, 26 the Court had occasion to reiterate that appeal is not a constitutional
right, but a mere statutory privilege. Hence, parties who seek to avail themselves of it must comply with the statutes
or rules allowing it. 27 The rule is that failure to file or perfect an appeal within the reglementary period will make the
judgment final and executory by operation of law. Perfection of an appeal within the statutory or reglementary period
is not only mandatory but also jurisdictional; failure to do so renders the questioned decision/resolution final and
executory, and deprives the appellate court of jurisdiction to alter the decision/resolution, much less to entertain the
appeal. 28
In connection herewith, Section 4, Rule 43 of the Rules of Court is clear. The appeal shall be taken within
fifteen (15) days from the notice of the award, judgment, final order or resolution, or from the date of its last
publication, if publication is required by law for its effectivity, or of the denial of petitioner's motion for new trial or
reconsideration duly filed in accordance with the governing law of the court or agency a quo. 29
More, a litigant is allowed to file only one (1) motion for reconsideration, subject to the payment of the full
amount of the docket fee prior to the expiration of the reglementary period. Beyond this, another motion for extension
of time may be granted but only for the most compelling reasons. 30
Again, in Bañez, the Court ruled that filing of an appeal beyond the reglementary period may, under
meritorious cases, be excused if the barring of the appeal would be inequitable and unjust in light of certain
circumstances therein. 31 While there are instances when the Court has relaxed the governing periods of appeal in
order to serve substantial justice, this was done only in exceptional cases. 32
In this case, no exceptional circumstance exists.
In asking the Court of Appeals for a second extension to file its petition for review, the petitioner merely cited
as its excuse the following: (1) heavy pressure of other professional work; and (2) attendance of the lawyers in charge
in an international lawyers' conference. It said:
However, due to the heavy pressure of other equally important professional work coupled
with intervening delays and the fact of the necessary attendance of the lawyers in charge of the case
in an international lawyer's (sic) conference, the undersigned counsel will need more time to review
and finalize petitioner ABS-CBN Publishing, Inc.'s Petition for Review. 33
As the Court has ruled upon in a number of cases, a lawyer has the responsibility of monitoring and keeping
track of the period of time left to file pleadings, and to see to it that said pleadings are filed before the lapse of the
period. 34 Personal obligations and heavy workload do not excuse a lawyer from complying with his obligations
particularly in timely filing the pleadings required by the Court. 35 Indeed, if the failure of the petitioner's counsel to
cope with his heavy workload should be considered a valid justification to sidestep the reglementary period, there
would be no end to litigations so long as counsel had not been sufficiently diligent or experienced. 36
Further, the petitioner should not assume that its motion for extension of time would be granted by the
appellate court. Otherwise, the Court will be setting a dangerous precedent where all litigants will assume a favorable
outcome of a motion which is addressed to the discretion of the courts based on the prevailing circumstances of the
case.
To be sure, there is a dearth of jurisprudence that upholds the Court of Appeals' power of discretion in
disallowing a second extension of fifteen (15) days. As correctly cited by the appellate court,  Spouses Dycoco vs.
Court of Appeals 37 explains that the Court of Appeals could not be faulted for merely applying the rules, and that a
dismissal of a petition in accordance therewith is discretion duly exercised, and not misused or abused. 38
Based on the foregoing, and for the guidance of both the bench and the bar, the rule as it currently stands is
that, in the absence of, or in the event of a party's failure to receive, any resolution from the courts which specifically
grants a motion for extension of time to file the necessary pleading, the parties are required to abide by the
reglementary period provided for in the Rules of Court. Failure to comply thereto would result to a dismissal or denial
of the pleadings for being filed beyond the reglementary period.
In the case at hand, the Court of Appeals was correct in dismissing the petition. The petitioner could not
assume that its motion would be granted, especially in light of its flimsy excuse for asking the second extension of
time to file its petition for review.
On this ground alone, the dismissal of the current petition for review is justifiable. The Court reiterates its
warning in the case of Hernandez vs. Agoncillo: 39
Time and again, this Court has cautioned lawyers to handle only as many cases as they can
efficiently handle. The zeal and fidelity demanded of a lawyer to his client's cause require that not
only should he be qualified to handle a legal matter, he must also prepare adequately and give
appropriate attention to his legal work. Since a client is, as a rule, bound by the acts of his counsel, a
lawyer, once he agrees to take a case, should undertake the task with dedication and care. This Court
frowns upon a lawyer's practice of repeatedly seeking extensions of time to file pleadings and
thereafter simply letting the period lapse without submitting any pleading or even any explanation or
manifestation for his omission. Failure of a lawyer to seasonably file a pleading constitutes
inexcusable negligence on his part. 40 (Emphasis and underscoring supplied)
That said, however, even on the merits, the petition still fails to convince.
Second, on the substantive issue:
According to Section 123.1 (d) of the Intellectual Property Code of the Philippines (IPC), 41 a mark cannot be
registered if it is "identical with a registered mark belonging to a different proprietor or a mark with an earlier filing or
priority date," in respect of the following: (i) the same goods or services, or (ii) closely related goods or services, or
(iii) if it nearly resembles such a mark as to be likely to deceive or cause confusion. 42
To determine whether a mark is to be considered as "identical" or that which is confusingly similar with that
of another, the Court has developed two (2) tests: the dominancy and holistic tests. While the Court has time and
again ruled that the application of the tests is on a case to case basis, upon the passage of the IPC, the trend has been
to veer away from the usage of the holistic test and to focus more on the usage of the dominancy test. As stated by the
Court in the case ofMcDonald's Corporation vs. L.C. Big Mak Burger, Inc., 43 the "test of dominancy is now
explicitly incorporated into law in Section 155.1 of the Intellectual Property Codewhich defines infringement as the
'colorable imitation of a registered mark x x x or a dominant feature thereof.'" 44 This is rightly so because Sec. 155.1
provides that:
SECTION 155. Remedies; Infringement. — Any person who shall, without the consent of the
owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a
registered mark or the same container or a dominant feature thereof in connection with the sale,
offering for sale, distribution, advertising of any goods or services including other preparatory steps
necessary to carry out the sale of any goods or services on or in connection with which such use is
likely to cause confusion, or to cause mistake, or to deceive; or x x x. (Emphasis and underscoring
supplied)
In using this test, focus is to be given to the dominant features of the marks in question. In the 1954 case
of Co Tiong Sa vs. Director of Patents, 45 the Court, in using the dominancy test, taught that:
 But differences of variations in the details of one trademark and of another are not the legally
accepted tests of similarity in trademarks. It has been consistently held that the question of
infringement of a trademark is to be determined by the test of dominancy. Similarity in size, form,
and color, while relevant, is not conclusive. If the competing trademark contains the main or
essential or dominant features of another, and confusion and deception is likely to result,
infringement takes place. 46(Emphasis and underscoring supplied)
The Court, in Skechers, U.S.A., Inc. vs. Inter Pacific Industrial Trading Corp., 47 and in once again using the
dominancy test, reiterated Del Monte Corporation vs. Court of Appeals 48 in saying that "the defendants in cases of
infringement do not normally copy but only make colorable changes." 49 The Court emphasized that "the most
successful form of copying is to employ enough points of similarity to confuse the public, with enough points of
difference to confuse the courts." 50
In other words, in committing the infringing act, the infringer merely introduces negligible changes in an
already registered mark, and then banks on these slight differences to state that there was no identity or confusing
similarity, which would result in no infringement. This kind of act, which leads to confusion in the eyes of the public,
is exactly the evil that the dominancy test refuses to accept. The small deviations from a registered mark are
insufficient to remove the applicant mark from the ambit of infringement.
In the present case, the dominant feature of the applicant mark is the word "METRO" which is identical,  both
visually and aurally, to the cited marks already registered with the IPO. As held by the ODG — and correctly at that
—
x x x there is no dispute that the subject and cited marks share the same dominant
word, "Metro". (sic) Even if, as the Appellant (petitioner herein) points out, the second cited mark
owned by Metro International contains an accompanying device, and the third cited mark contains the
terms "Philippine Daily Inquirer", (sic) the dominant feature of the subject and cited marks is still
clearly the word "Metro", (sic) spelled and pronounced in exactly the same way . The identity
between the marks would indubitably result in confusion of origin as well as goods. 51 (Emphasis
and underscoring supplied, citations omitted)
Also, greater relevance is to be accorded to the finding of Examiner Icban on the confusing similarity
between, if not the total identity of, the applicant and cited marks. Examiner Icban, in reiterating with finality her
earlier findings, said that the applicant and cited marks are "the same in sound, spelling, meaning, overall commercial
impression, covers substantially the same goods and flows through the same channel of trade," which leads to no
other conclusion than that "confusion as to the source of origin is likely to occur." 52 This is also the tenor of
Examiner Icban's "Final Rejection" of the application, which stated that:
After an examination of the application, the undersigned IPRS has determined that the mark
subject of the application cannot be registered because it is identical with the cited marks METRO
with Regn. No. 42000002584 and Regn. No. 42000003811. METRO being dominant
word (sic) among the marks causes remarkable similarity in sound, spelling, meaning, connotation,
overall commercial impression, covers identical goods and flows through the same channel of
trade. The concurrent use by the parties of the word METRO is likely to cause confusion among
purchasers as well as confusion of business or origin hence, registration of this subject
application is proscribed under R.A. 8293, Sec. 123.1(d). 53 (Emphasis and underscoring supplied)
The findings of Examiner Icban, reviewed first by the Director of the Bureau of Trademarks, and again by the
Director General of the IPO, are the result of a judicious study of the case by no less than the government agency duly
empowered to examine applications for the registration of marks. 54 These findings deserve great respect from the
Court. Absent any strong justification for the reversal thereof — as in this case — the Court shall not reverse and set
aside the same. As such, the prior findings remain: the applicant mark, "METRO," is identical to and confusingly
similar with the other cited marks already registered. By authority of the Sec. 123.1 (d) of the IPC, the applicant mark
cannot be registered. The ODG is correct in upholding the Decision of both the Director of the Bureau of Trademarks
and Examiner Icban.
This ruling stands despite the specious arguments presented by the petitioner in the current petition.
The petitioner asserts that it has a vested right over the applicant mark because Metro Media Publishers, Inc.
(Metro Media), the corporation from which the petitioner acquired the applicant mark, first applied for the registration
of the same under the old Trademark Law, 55 and since then, actually used the applicant mark in commerce. The
petitioner belabors the point that under the old Trademark law, actual use in commerce is a pre-requisite to the
acquisition of ownership over a trademark and a trade name. 56 The petitioner even went on further in asserting that
its actual use of the applicant mark enabled it to automatically acquire trademark rights, which should have extended
even upon the promulgation of the IPC in 1998.
Two things must be said of this argument.
First, there is no question that the petitioner's predecessor already applied for the registration of the applicant
mark "METRO" on November 3, 1994 under Class 16 of the Nice classification. It was docketed as Application No.
4-1994-096162. 57 There is likewise no question that as early as 1989, Metro Media has already used the applicant
mark "METRO" in its magazine publication. At that point, Metro Media exercised all the rights conferred by law to a
trademark applicant.
Second, however, the petitioner itself admitted in its petition that its application/registration with the IPO
under Application No. 4-1994-096162 was already"deemed abandoned." 58
While it is quite noticeable that the petitioner failed to discuss the implications of this abandonment, it
remains a fact that once a trademark is considered abandoned, the protection accorded by the IPC, or in this case the
old Trademark Law, is also withdrawn. The petitioner, in allowing this abandonment, cannot now come before the
Court to cry foul if another entity has, in the time that it has abandoned its trademark and in full cognizance of
the IPC and the IPO rules, registered its own.
In fact, in Birkenstock Orthopaedie GMBH and Co. KG. vs. Philippine Shoe Expo Marketing
Corporation, 59 the Court accorded no right at all to a trademark owner whose trademark was abandoned for failure
to file the declaration of actual use as required by Sec. 12 of the old Trademark Law. 60 In Mattel, Inc. vs.
Francisco,61 the Court rendered a petition as moot and academic because the cited mark has effectively been
abandoned for the non-filing of a declaration of actual use, and thus presents no hindrance to the registration of the
applicant mark.
Also, as correctly pointed out by the ODG, this abandonment is the very reason why the petitioner lost its
rights over its trademark, and that it is also the reason why, after twenty years (20) from the initial application and
after actual use of the applicant mark, the petitioner once again came before the IPO to apply for registration. The
ODG said:
Records show that this is the very situation the [petitioner] finds itself in. It has acquired no
right under the old trademark law since its original application way back 1994 has been
deemed abandoned, which is the reason why it filed the current application in 2004 under the
new law. Clearly, then, if [petitioner] has acquired no right under R.A. 166, it possesses no existing
right that ought to be preserved by virtue of Section 236 of the IP Code. 62 (Emphasis and
underscoring supplied)
Anent the petitioner's argument that "confusion between the marks is highly unlikely," 63 the petitioner
asserts that the applicant mark "METRO" (word) is covered by class 16 of the Nice classification under "magazines,"
the copies of which are sold in "numerous retail outlets in the Philippines," 64 whereas the cited mark "METRO"
(word) is used in the Philippines only in the internet through its website and does not have any printed circulation. 65
But like the petitioner's earlier argument, this does not hold water.
Section 3, Rule 18 of the Rules of Procedure for Intellectual Property Cases 66 provides for the legal
presumption that there is likelihood of confusion if an identical mark is used for identical goods. The provision states:
SEC. 3. Presumption of likelihood of confusion. — Likelihood of confusion shall be
presumed in case an identical sign or mark is used for identical goods or services.
In the present case, the applicant mark is classified under "magazines," which is found in class 16 of the Nice
classification. A perusal of the records would reveal, however, that the cited marks "METRO" (word) and "METRO"
(logo) are also both classified under magazines. In fact, Examiner Icban found that the cited marks were used on the
following classification of goods:
Paper, cardboard and goods made from these materials, not included in other classes;
newspapers, magazines, printed matter and other printed publications; bookbinding material;
photographs; stationery; adhesives for stationery or household purposes; artists materials; paint
brushes; typewriters and office requisites (except furniture); instructional and teaching material
 (except apparatus); plastics materials for packaging (not included in other classes); playing cards;
printers types; printing blocks. 67 (Emphasis and underscoring supplied)
Thus, the presumption arises.
Even then, it must be emphasized that absolute certainty of confusion or even actual confusion is not required
to refuse registration. Indeed, it is the mere likelihood of confusion that provides the impetus to accord protection to
trademarks already registered with the IPO. The Court cannot emphasize enough that the cited marks "METRO"
(word) and "METRO" (logo) are identical with the registrant mark "METRO" both in spelling and in sound. In fact, it
is the same exact word. Considering that both marks are used in goods which are classified as magazines, it requires
no stretch of imagination that a likelihood of confusion may occur. Again, the Court points to the finding of Examiner
Icban which was reviewed and upheld twice: one by the Director of the Bureau of Trademarks and another by the
Director General of the IPO.
As a final point, the petitioner, in the pleadings submitted, manifested that the cited marks are no longer valid.
It said that: (1) the cited mark "METRO" (logo) was removed from the IPO register for non-use, citing the IPO online
database, 68 (2) the cited mark "INQUIRER METRO," while valid according to the IPO online database, was
cancelled according to a certain certification from the Bureau of Trademarks of the IPO; and (3) the cited mark
"METRO" (word) already expired on June 26, 2016 according to yet another certification from the IPO.
A perusal of the records, however, would reveal that these alleged de-registration and cancellation all
allegedly occurred after the ODG has already ruled on the instant case. Considering that the Court is not a trier of
facts, the Court could therefore not make a determination of the validity and accuracy of the statements made in the
petitioner's manifestation. As such, the Court, through the limited facts extant in the records, could not give weight
and credence thereto.
Nonetheless, not all is lost for the petitioner. Should it be true that the cited marks, which were the basis of the
IPO in refusing to register the applicant mark, were already de-registered and cancelled, nothing prevents the
petitioner from once again applying for the registration of the applicant mark before the IPO.
WHEREFORE, premises considered, the Resolutions of the Court of Appeals dated May 20, 2014 and April
15, 2015, are hereby AFFIRMED without prejudice to the petitioner's refiling of its application for the registration of
the trademark "METRO" before the Intellectual Property Office.
SO ORDERED.
||| (ABS-CBN Publishing, Inc. v. Director of the Bureau of Trademarks, G.R. No. 217916, [June 20, 2018])