G.R. No.

174379

E.I DUPONT DE NEMOURS AND CO., (assignee of inventors Carino, Duncia and Wong),
Petitioner
vs.
DIRECTOR EMMA C. FRANCISCO (in ger capacity as DIRECTOR GENERAL OF THE
INTELLECTUAL PROPERTY OFFICE), DIRECTOR EPIFANIO M. VELASCO (in his capacity as
the DIRECTOR OF THE BUREAU OF PATENTS, and THERAPHARMA, INC., Respondents

DECISION

LEONEN, J.:

A patent is granted to provide rights and protection to the inventor after an invention is disclosed
to the public. It also seeks to restrain and prevent unauthorized persons from unjustly profiting
from a protected invention. However, ideas not covered by a patent are free for the public to use
and exploit. Thus, there are procedural rules on the application and grant of patents established
to protect against any infringement. To balance the public interests involved, failure to comply
with strict procedural rules will result in the failure to obtain a patent.

This resolves a Petition for Review on Certiorari 1 assailing the Court of Appeals Amended
Decision2 dated August 30, 2006, which denied the revival of Philippine Patent Application No.
35526, and the Court of Appeals Resolution3 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 inv~ntors David John Carini, John
Jonas Vytautas Duncia, and Pancras Chor Bun Wong, all citizens of the United States of America.5

On July 10, 1987, E.I. Dupont Nemours filed Philippine Patent Application No. 35526 before the
Bureau of Patents, Trademarks, and Technology Transfer.6 The application was for Angiotensin
II Receptor Blocking Imidazole (losartan), an 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 Office11 a letter requesting that an office
action be issued on Philippine Patent Application No. 35526. 12

In response, Patent Examiner Precila O. Bulihan of Intellectual Property Office sent an office
action marked Paper No. 2 on January 30, 2002,13 which stated:
The appointed attorney on record was the late Atty. Nicanor D. Mapili. The reconstituted
documents provided no documents that will show that the authority to prosecute the instant
application is now transferred to the present counsel. No official revocation on record is available.

Therefore, an official revocation of the Power of Attorney of the former counsel and the
appointment of the present by the applicant is therefore required before further action can be
undertaken.

....

1. Contrary to what was alleged, the Chemical Examining Division's (CED) record will show that
as far as the said division is concern[ ed], it did not fail to issue the proper and timely action on
the instant application. CED record shows that the subject application was assigned to the
examiner on June 7, 1988. A month after that was July 19, 1988, the first Office Action was mailed
but was declared abandoned as of September 20, 1988 for applicant's failure to respond within
the period as prescribed under Rule 112. Since then, no other official transactions were recorded.
Tlris record is complemented by the Examiner-in-charge's own record ....

....

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 Resolution22 stated:

Propriety dictates that the well-settled rule on agency should be applied to this case to maintain
the objectivity and discipline of the Office. Therefore, for cases such as the instant case, let the
Office maintain its position that mistakes of the counsel bind the client,' regardless of the degree
of negligence committed by the former counsel. Although it appears that the former counsel, Atty.
Nicanor Mapili was remiss in his obligations as counsel for the applicants, the Office cannot revive
the abandoned application because of the limitations provided in Rule 115. Clearly, the Petition
for Revival was filed beyond the reglementary period. Since the law and rules do not give the
Director of Patents the discretion to stretch the period for revival, the Office is constrained to
apply Rule 115 to the instant case.

In view of the foregoing considerations, applicants' petition to revive the subject application is
hereby denied.

SO ORDERED.23

E.I. Dupont Nemours appealed the denial to the Director-General of the Intellectual Property
Office on August 26, 2002.24 In the Decision25 dated October 22, 2003, Director-General Emma
C. Francisco denied the appeal and affirmed the Resolution of the Director of Patents.

On November 21, 2003, petitioner filed before the Court of Appeals a Petition for Review seeking
to set aside the Intellectual Property Office's Decision dated October 22, 2003. 26

On August 31, 2004, the Court of Appeals granted the Petition for Review. 27 In allowing the
Petition for Revival, the Court of Appeals stated:

After an exhaustive examination of the records of this case, this Court believes that there is
sufficient justification to relax the application of the above-cited doctrine in this case, and to afford
petitioner some relief from the gross negligence committed by its former lawyer, Atty. Nicanor D.
Mapili[.]28

The Office of the Solicitor General, on behalf of the Intellectual Property Office, moved for
reconsideration of this Decision on September 22, 2004. 29

In the interim, Therapharma, Inc. moved for leave to intervene and admit the Attached Motion
for Reconsideration dated October 11, 200430 and argued that the Court of Appeals' August 31,
2004 Decision directly affects its "vested" rights to sell its own product. 31

Therapharma, Inc. alleged that on January 4, 2003, it filed before the Bureau of Food and Drugs
its own application for a losartan product "Lifezar," a medication for hypertension, which the
Bureau granted.32 It argued that it made a search of existing patent applications for similar
products before its application, and that no existing patent registration was found since E.I.
Dupont Nemours' application for its losartan product was considered abandoned by the Bureau
of Patents, Trademarks, and Technology Transfer.33 It alleged that sometime in 2003 to 2004,
there was an exchange of correspondence between Therapharma, Inc. and Merck. In this
exchange, Merck informed Therapharma, Inc. that it was pursuing a patent on the losartan
products in the Philippines and that it would pursue any legal action necessary to protect its
product.34

On January 31, 2006, the Court of Appeals issued the Resolution35 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 hat 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 Decision39 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

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.

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 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 on certiorari under Rule 45 of the Rules
of Court is the proper remedy.

Respondent Therapharma, Inc. argues that the Petition should be dismissed outright for being
the wrong mode of appeal.53 It argues that petitioner should have filed a petition for certiorari
under Rule 65 since petitioner was assailing an act done by the Court of Appeals in the exercise of
its discretion. 54 It argues that petitions under Rule 45 are limited to questions of law, and
petitioner raised findings of fact that have already been affirmed by the Court of Appeals. 55
Petitioner, on the other hand, argues that Rule 65 is only available when there is no appeal or any
plain, speedy remedy in the ordinary course of law. Since a petition for review under Rule 45 was
still available to it, it argues that it correctly availed itself of this remedy. 56 Petitioner also argues
that there are exceptions to the general rule on the conclusiveness of the Court of Appeals' findings
of fact. 57 It argues that it was necessary for it to discuss relevant facts in order for it to show that
the Court of Appeals made a misapprehension of facts. 58

The special civil action of certiorari under Rule 65 is intended to correct errors of jurisdiction. 59
Courts lose competence in relation to an order if it acts in grave abuse of discretion amounting to
lack or excess of jurisdiction.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 law63 of the lower
court and, in appropriate cases, evaluation of the admissibility, weight, and inference from the
evidence presented.

Intervention results in an interlocutory order ancillary to a principal action.64 Its grant or denial
is subject to the sound discretion of the court.65 Interlocutory orders, or orders that do not make
a final disposition of the merits of the main controversy or cause of action,66 are generally not
reviewable.67 The only exception is a limited one, in that when there is no plain, speedy, and
adequate remedy, and where it can be shown that the court acted without, in excess, or with such
grave abuse of discretion that such action ousts it of jurisdiction.

Judicial economy, or the goal to have cases prosecuted with the least cost to the parties,68
requires that unnecessary or frivolous reviews of orders by the trial court, which facilitate the
resolution of the main merits of the case, be reviewed together with the main merits of the case.
After all, it would be more efficient for an appellate court to review a case in its entire context
when the case is finally disposed.

The question of whether intervention is proper is a question of law. Settled is the distinction
between a question of law and a question of fact. A question of fact arises when there is doubt as
to the truth or falsity of certain facts.69 A question of law, on the other hand, arises when "the
appeal raises doubt as to the applicable law on a certain set of facts." 70 The test often used by
this Court to determine whether there is a question of fact or a question of law "is not the
appellation given to such question by the party raising the same; rather, it is whether the appellate
court can determine the issue raised without reviewing or evaluating the evidence, in which case,
it is a question of law; otherwise it is a question of fact."71

Petitioner raises the question of whether Republic Act No. 165 allows the Court of Appeals to grant
a motion for intervention. This necessarily requires a determination of whether Rule 19 of the
Rules of Court 72 applies in appeals of cases filed under Republic Act No. 165. The determination
of this question does not require a review of re-evaluation of the evidence. It requires a
determination of the applicable law.

II

If a petition fails to attach material portions of the record, it may still be given due course if it falls
under certain exceptions. Although Rule 45, Section 4 of the Rules of Court requires that the
petition "be accompanied by ... such material portions of the record as would support the
petition," the failure to do so will not necessarily warrant the outright dismissal of the complaint.
73

Respondent Therapharma, Inc. argues that the Petition should have been outright dismissed since
it failed to attach certain documents to support its factual allegations and legal arguments,
particularly: the annexes of the Petition for Review it had filed before the Court of Appeals and
the annexes in the Motion for Leave to Intervene it had filed. 74 It argues that petitioner's failure
to attach the documents violates Rule 45, Section 4, which requires the submission of material
portions of the record. 75

On the other hand, petitioner argues that it was able to attach the Court of Appeals Decision dated
August 31, 2004, the Resolution dated January 31, 2006, and the Amended Decision dated August
30, 2006, all of which were sufficient for this Court to give due course to its Petition. 76

In Magsino v. De Ocampo, 77 this Court applied the procedural guideposts in Galvez v. Court of
Appeals 78 in determining whether the Court of Appeals correctly dismissed a petition for review
under Rule 42 for failure to attach relevant portions of the record. Thus:

In Galvez v. Court of Appeals, a case that involved the dismissal of a petition for certiorari to assail
an unfavorable ruling brought about by the failure to attach copies of all pleadings submitted and
other material portions of the record in the trial court (like the complaint, answer and position
paper) as would support the allegations of the petition, the Court recognized three guideposts for
the CA to consider in determining whether or not the rules of procedures should be relaxed, as
follows:
First, not all pleadings and parts of case records are required to be attached to the petition. Only
those which are relevant and pertinent must accompany it. The test of relevancy is whether the
document in question will support the material allegations in the petition, whether said document
will make out a prima facie case of grave abuse of discretion as to convince the court to give due
course to the petition.

Second, even if a document is relevant and pertinent to the petition, it need not be appended if it
is shown that the contents thereof can also [sic] found in another document already attached to
the petition. Thus, if the material allegations in a position paper are summarized in a questioned
judgment, it will suffice that only a certified true copy of the judgment is attached.

Third, a petition lacking an essential pleading or part of the case record may still be given due
course or reinstated (if earlier dismissed) upon showing that petitioner later submitted the
documents required, or that it will serve the higher interest of justice that the case be decided on
the merits.79

Although Magsino referred to a petition for review under Rule 42 before the Court of Appeals, the
procedural guideposts cited in Mafilsino may apply to this case since the contents of a pleading
under Rule 4280 are substantially the same as the contents of a pleading under Rule 45,81 in that
both procedural rules require the submission of "material portions of the record as would support
the allegations of the petition."82

In support of its Petition for Review on Certiorari, petitioner attached the Court of Appeals
Decision dated August 31, 2004, 83 the Resolution dated January 31, 2006,84 and the Amended
Decision dated August 30, 2006.85 The Court of Appeals Resolution and Amended Decision
quoted extensive portions of its rollo in support of its rulings. 86 These conclusions were sufficient
to convince this Court not to outright dismiss the Petition but to require respondents to first
comment on the Petition, in satisfaction of the first and second procedural guideposts in Magsino.

Upon filing of its Consolidated Reply,87 petitioner was able to attach the following additional
documents:

(1) Petition for Review filed before the Court of Appeals;88

(2) Letters dated July 18, 1995, December 12, 1995, and December 29, 1995;89

(3) Declaration of Ms. Miriam Meconnahey dated June 25, 2002;90

(4) Spreadsheet of petitioner's patent applications handled by Atty. Mapili;91

(5) Power of Attorney and Appointment of Resident Agent dated September 26, 1996;92

(6) Letter dated December 19, 2000 requesting an Office Action on Patent Application No.
35526;93

(7) Paper No. 2 dated January 30, 2002;94

(8) Petition for Revival dated January 30, 2002 with attached Power of Attorney and
Appointment of Resident Agent;95

(9) Resolution dated July 24, 2002 by Director of the Bureau of Patents;96 and

(10) Notice of and Memorandum on Appeal before the DirectorGeneral of the Intellectual
Property Office.97

The third procedural guidepost in Magsino was complied with upon the submission of these
documents. Petitioner, therefore, has substantially complied with Rule 45, Section 4 of the Rules
of Court.

III

Appeal is not a right but a mere privilege granted by statute.98 It may only be exercised in
accordance with the law that grants it.

Accordingly, the Court of Appeals is not bound by the rules of procedure in administrative
agencies. The procedural rules of an administrative agency only govern proceedings within the
agency. Once the Court of Appeals has given due course to an appeal from a ruling of an
administrative agency, the proceedings before it are governed by the Rules of Court.

However, petitioner argues that intervention should not have been allowed on appeal99 since the
revival of a patent application is ex parte and is "strictly a contest between the examiner and the
applicant"100 under Sections 78101 and 79102 of the 1962 Revised Rules of Practice. 103 It argues
that the disallowance of any intervention is to ensure the confidentiality of the proceedings under
Sections 13 and 14 of the 1962 Revised Rules of Practice. 104

Respondents argue that the 1962 Revised Rules of Practice is only applicable before the
Intellectual Property Office. 105 In particular, respondent Therapharma, Inc. argues that the issue
before the Court of Appeals was beyond the realm of patent examination proceedings since it did
not involve the patentability of petitioner's invention. 106 It further argues that its intervention
did not violate the confidentiality of the patent application proceedings since petitioner was not
required to divulge confidential information regarding its patent application. 107

In the 1962 Revised Rules of Practice, final decisions of the Director of Patents are appealed to
this Court and governed by Republic Act No. 165. In particular:

PARTX
PETITION AND APPEALS

....

CHAPTER IV
APPEALS TO THE SUPREME COURT FROM FINAL ORDERS OR
DECISIONS OF THE DIRECTOR OF PATENTS IN EX PARTE AND
INTER PARTES PROCEEDINGS
265. Appeals to the Supreme Court in ex parte and inter partes proceedings.-Any person who is
dissatisfied with the final decision of the Director of Patents, (affirming that of a Principal
Examiner) denying him a patent for an invention, industrial design or utility model; any person
who is dissatisfied with any final decision of the Director of Patents (affirming that of the
Executive Examiner) in any proceeding; and any party who is dissatisfied with any final decision
of the Director of Patents in an inter partes proceeding, may appeal such final decision to the
Supreme Court within thirty days from the date he receives a copy of such decision. (Republic Act
No. 165, section 16, as amended by section 3, Republic Act No. 864.)

266. Procedure on appeal to the Supreme Court.-For the procedure on appeal to the Supreme
Court, from the final decisions of the Director of Patents, see sections 63 to 73, inclusive, of
Republic Act No. 165 (patent law).

Particularly instructive is Section 73 of Republic Act No. 165, which provides:

Section 73. Rules of Court applicable. - In all other matters not herein provided, the applicable
provisions of the Rules of Court shall govern.

Republic Act No. 165 has since been amended by Republic Act No. 8293, otherwise known as the
Intellectual Property Code of the Philippines (Intellectual Property Code), in 1997. This is the
applicable law with regard to the revival of petitioner's patent application. Section 7 (7.1 )(a) of
the Intellectual Property Code states:

SECTION 7. The Director General and Deputies Director General. -

7 .1. Functions. - The Director General shall exercise the following powers and functions:

....

b. Exercise exclusive appellate jurisdiction over all decisions rendered by the Director of Legal
Affairs, the Director of Patents, the Director of Trademarks, and the Director of the
Documentation, Information and Technology Transfer Bureau. The decisions of the Director
General in the exercise of his appellate jurisdiction in respect of the decisions of the Director of
Patents, and the Director of Trademarks shall be appealable to the Court of Appeals in accordance
with the Rules of Court; and those in respect of the decisions of the Director of Documentation,
Information and Technology Transfer Bureau shall be appealable to the Secretary of Trade and
Industry[.] (Emphasis supplied)

Thus, it is the Rules of Court, not the 1962 Revised Rules of Practice, which governs the Court of
Appeals' proceedings in appeals from the decisions of the Director-General of the Intellectual
Property Office regarding the revival of patent applications.

Rule 19 of the Rules of Court provides that a court has the discretion to determine whether to give
due course to an intervention. Rule 19, Section 1 states:

RULE 19
INTERVENTION
SECTION 1. Who may intervene. -A person who has a legal interest in the matter in litigation, or
in the success of either of the parties, or an interest against both, or is so situated as to be adversely
affected by a distribution or other disposition of property in the custody of the court or of an officer
thereof may, with leave of court, be allowed to intervene in the action. The court shall consider
whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the
original parties, and whether or not the intervenor's rights may be fully protected in a separate
proceeding.

The only questions the court need to consider in a motion to intervene are whether the intervenor
has standing to intervene, whether the motion will / unduly delay the proceedings or prejudice
rights already established, and whether the intervenor's rights may be protected in a separate
action.108

If an administrative agency's procedural rules expressly prohibit an intervention by third parties,

the prohibition is limited only to the proceedings before the administrative agency. Once the
matter is brought before the Court of Appeals in a petition for review, any prior prohibition on
intervention does not apply since the only question to be determined is whether the intervenor
has established a right to intervene under the Rules of Court.

In this case, respondent Therapharma, Inc. filed its Motion for Leave to Intervene 109 before the
Court of Appeals, not before the Intellectual Property Office. In assessing whether to grant the
intervention, the Court of Appeals considered respondent Therapharma, Inc.' s legal interest in
the case and its other options for the protection of its interests. 110 This was within the discretion
of the Court of Appeals under the Rules of Court.

Respondent Therapharma, Inc. was able to show that it had legal interest to intervene in the
appeal of petitioner's revival of its patent application. While its intervention may have been
premature as no patent has been granted yet, petitioner's own actions gave rise to respondent
Therapharma, Inc.' s right to protect its losartan product.

Respondent Therapharma, Inc. filed an application for product registration before the Bureau of
Food and Drugs on June 4, 2003 and was granted a Certificate of Product Registration on January
27, 2004. 111 It conducted patent searches from October 15, 1995 and found that no patent
application for losartan had been filed either before the Bureau of Patents, Trademarks, and
Technology Transfer or before the Intellectual Property Office.112

As early as December 11, 2003, petitioner through Merck was already sending communications
threatening legal action if respondent Therapharma, Inc. continued to develop and market
losartan in the Philippines. The letter stated:

Merck is strongly committed to the protection of its valuable intellectual property rights, including
the subject losartan patents. While fair competition by sale of pharmaceutical products which are
domestically produced legally is always welcomed by Merck and MSD Philippines, Merck will
vigorously pursue all available legal remedies against any unauthorized manufacturer, distributor
or supplier of losartan in countries where its patents are in force and where such activity is
prohibited by law. Thus, Merck is committed to preventing the distribution of losartan in the
Philippines if it originates from, or travels through, a country in which Merck holds patent rights.
113 (Emphasis supplied)
This letter was presented before the Court of Appeals, which eventually granted the revival of the
patent application in its August 31, 2004 Decision. Petitioner had no pending patent application
for its losartan product when it threatened respondent Therapharma, Inc. with legal action.114

Respondent Therapharma, Inc. expressed its willingness to enter into a Non-Use and
Confidentiality Contract if there was a pending patent application. 115 After several negotiations
on the clauses of the contract, 116 the parties were unable to come to an agreement. In its letter
dated May 24, 2004, 117 respondent Therapharma, Inc. expressed its frustration on petitioner's
refusal to give a clear answer on whether it had a pending patent application:

For easy reference, we have reproduced below paragraph 5 of the Confidentiality and Non-Use
Agreement ("Confidentiality Agreement"), underscoring your proposed amendment:

"THERAPHARMA agrees that upon receipt of Specifications and Claims of Application No. 35526
or at any time thereafter, before it becomes part of the public domain, through no fault of
THERAPHARMA, it will not, either directly or indirectly, alone, or through, on behalf of, or in
conjunction with any other person or entity, make use of any information contained therein,
particularly the product covered by its claims and the equivalents thereof, in any manner
whatsoever."

We find your proposed insertion odd. What may be confidential, and which we agree you have
every right to protect by way of the Confidentiality Agreement, are the Specifications and Claims
in the patent application, not the product per se. The product has been in the market for years.
Hence, how can it be confidential? Or is the ambiguity intended to create a legal handle because
you have no cause of action against us should we launch our own version of the losartan product?

....

Finally, the questions we posed in our previous letters are plain and simple - Is the Philippine
Patent Application No. 35526 still pending before the IPO, i.e., it has neither been withdrawn by
your licensor nor denied registration by the IPO for any reason whatsoever? When did your
licensor file said application with the IPO? These questions are easy to answer, unless there is an
intention to mislead. You are also

aware that the IPO is the only government agency that can grant letters patent. This is why we
find disturbing your statement that the pendency of the patent application before the IPO is "not
relevant". Hence, unless we receive unequivocal answers to the questions above, we regret that
we cannot agree to execute the Confidentiality Agreement; otherwise, we may be acknowledging
by contract a right that you do not have, and never will have, by law. 118 (Emphasis and
underscoring in the original)

The threat of legal action against respondent Therapharma, Inc. was real and imminent. If
respondent Therapharma, Inc. waited until petitioner was granted a patent application so it could
file a petition for compulsory licensing and petition for cancellation of patent under Section
240119 and Section 247 120 of the 1962 Revised Rules of Practice, 121 its continued marketing of
Lifezar would be considered as an infringement of petitioner's patent.
Even assuming that the Intellectual Property Office granted the revival of Philippine Patent
Application No. 35526 back in 2000, petitioner's claim of absolute confidentiality in patent
proceedings is inaccurate.

In the 1962 Revised Rules of Practice, the Bureau of Patents, Trademarks, and Technology
Transfer previously required secrecy in pending patent applications. Section 13 states:

13. Pending applications are preserved in secrecy.-No information will be given to anyone
respecting the filing by any particular person of any application for a patent, the pendency of any
particular case before the Office, or the subject matter of any particular application, unless the
same is authorized by the applicant in writing, and unless it shall be necessary, in the opinion of
the Director of Patents for the proper conduct of business before the Office.

The Intellectual Property Code, however, changed numerous aspects of the old patent law. The
Intellectual Property Code was enacted not only to amend certain provisions of existing laws on
trademark, patent, and copyright, but also to honor the country's commitments under the World
Trade Organization - Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS
Agreement), a treaty that entered force in the Philippines on January 1, 1995.122

The mandatory disclosure requirement in the TRIPS Agreement123 precipitated the shift from a
first-to-invent system to a first-to-file system. The first-to-file system required citizens of foreign
countries to register their patents in the Philippines before they can sue for infringement. 124

Lawmakers, however, expressed their concern over the extension of the period of protection for
registered patents. 125 Under Section 21 126 of Republic Act No. 165, a patent had a term of 17
years. The Intellectual Property Code extended the period to 20 years. 127

During the interpellations before the House of Representatives, then Representative Neptali
Gonzales II (Gonzales) explained that under the Intellectual Property Code, the period of
protection would have been shortened because of the publication requirement:

MR. TANADA. Under the proposed measure, Your Honor, what is the period of protection that is
given to the holder of the patent registered?

MR. GONZALES. Seventeen years from grant of patent, Mr. Speaker. Unlike before ...

MR. TANADA. Under the present law, Mr. Speaker.

MR. GONZALES. I mean 17 years from filing, Mr. Speaker, unlike before which is 20 years from
grant. Okay.

I am sorry, Mr. Speaker. Seventeen years from filing under the existing law, 20 years from grant
under the proposed measure. It would appear, Mr. Speaker, that the proposed measure seeks to
extend the grant of the patent.

MR. TA.NADA. But you have made the period of protection longer, Mr. Speaker.
MR. GONZALES. On the contrary, Mr. Speaker, when a similar question was previously
propounded before, actually Mr. Speaker, it may decrease in fact the period of protection, Mr.
Speaker. Because unlike before 17 years from grant, Mr. Speaker, now 20 years from application
or from filing but actually, Mr. Speaker, it normally takes three to four years before a patent is
actually granted even under the proposed measure. Because as you can see[,] publication in the
BPTTT Gazette would even taken place after 18 months from filing. In other words, the procedure
itself is such a manner that normally takes a period of about three years to finally grant the patent.
So even if 20 years is given from the time of filing actually in essence it will be the same, Mr.
Speaker, because under the existing law 17 years from grant. But even under our existing law from
the time that a patent application is filed it also takes about three to four years, Mr. Speaker, to
grant the same.

Now, why from filing, Mr. Speaker? Because the patent holder applicant is now required to
publish in a manner easily understood by a person trained or with the same skill as that of a patent
holder. And from that time this is published, this process covered by the patent is already made
available. In fact, from the time that it is published, any interested person may even examine and
go over the records as filed with the BPTTT and, therefore, this new technology or new invention
is now made available to persons equipped or possessed with the same skills as that of the patent
holder. And that is the reason why the patent is - the time of the patent is now tacked from the
time it is filed because as a compromise it is now mandatory to publish the said patent together
with its description - the description of the process and even would, at times demand the deposit
of sample of the industrial design, Mr. Speaker. 128

Gonzales further clarified that the publication requirements of the Intellectual Property Code
would necessarily shorten the period for confidentiality of patent applications:

MR. MONFORT. Now, another question is, (another is) you know, the time from the filing of the
date up to publication which is the period of pendency or confidentiality, may I know how many
years will it take, that confidentiality period, variability.

MR. GONZALES. Eighteen months, Mr. Speaker.

MR. MONFORT. How many?

MR. GONZALES. Eighteen months.

MR. MONFORT. I do not think it is 18 months.

MR. GONZALES. It is provided for in the law, Mr. Speaker, because prior to the publication,
naturally, the records become confidential because the essence of a patent, trademark, or
copyright is to give the author or the inventor exclusive right to work on his own invention. And
that is his invention, and naturally, it is but right that he should have the exclusive right over his
invention.

On the other hand, the law requires that after 18 months, it should now be published. When it is
now published, naturally, it ceases to be confidential in character because it is now ready for
examination. It is now ready for possible copying of any interested person because the application,
as we have repeatedly said on the floor, would require the filing of a description of the invention
that can be carried out by a Eerson similarly trained in the arts and sciences as that of the patent
holder.129

Thus, the absolute secrecy required by the 1962 Revised Rules of Practice would not be applicable
to a patent application before the Intellectual Property Office. Section 13 of the 1962 Revised Rules
of Practice does not appear in the Intellectual Property Code, 130 in the Rules and Regulations on
Inventions, 131 or in the Revised Implementing Rules and Regulations for Patents, Utility Models
and Industrial Design. 132 The Intellectual Property Code now states that all patent applications
must be published in the Intellectual Property Office Gazette and that any interested party may
inspect all documents submitted to the Intellectual Property Office. The patent application is only
confidential before its publication. Sections 44 and 45 of the Intellectual Property Code provide:

SECTION 44. Publication of Patent Application. -

44.1. The patent application shall be published in the IPO Gazette together with a search
document established by or on behalf of the Office citing any documents that reflect prior art,
after the expiration of eighteen (18) months from the filing date or priority date.

44.2. After publication of a patent application, any interested party may inspect the application
documents filed with the Office.

44.3. The Director General, subject to the approval of the Secretary of Trade and Industry, may
prohibit or restrict the publication of an application, if in his opinion, to do so would be prejudicial
to the national security and interests of the Republic of the Philippines. (n)

SECTION 45. Confidentiality Before Publication. -A patent application, which has not yet been
published, and all related documents, shall not be made available for inspection without the
consent of the applicant.

It was inaccurate, therefore, for petitioner to argue that secrecy in patent applications prevents
any intervention from interested parties. The confidentiality in patent applications under the
Intellectual Property Code is not absolute since a party may already intervene after the publication
of application.

IV

An abandoned patent application may only be revived within four (4) months from the date of
abandonment. No extension of this period is provided by the 1962 Revised Rules of Practice.
Section 113 states:

113. Revival of abandoned application.-An application abandoned for failure to prosecute may be
revived as a pending application if it is shown to the satisfaction of the Director that the delay was
unavoidable. An abandoned application may be revived as a pending application within four
months from the date of abandonment upon good cause shown and upon the payment of the
required fee of ₱25. An application not revived within the specified period shall be deemed
forfeited.
Petitioner argues that it was not negligent in the prosecution of its patent application133 since it
was Atty. Mapili or his heirs who failed to inform it of crucial developments with regard to its
patent application. 134 It argues that as a client in a foreign country, it does not have immediate
supervision over its local counsel so it should not be bound by its counsel's negligence. 135 In any
case, it complied with all the requirements for the revival of an abandoned application under Rule
113 of the 1962 Revised Rules of Practice. 136

Respondents, on the other hand, argue that petitioner was inexcusably and grossly negligent in
the prosecution of its patent application since it allowed eight (8) years to pass before asking for
a status update on its application. 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 1 ll(a) of the 1962 Revised Rules of Practice, a patent application is
deemed abandoned if the applicant fails to prosecute the application within four months from the
date of the mailing of J the notice of the last action by the Bureau of Patents, Trademarks, and
Technology Transfer, and not from applicant's actual notice. Section 11 l(a)

states:

Chapter VII

TIME FOR RESPONSE BY APPLICANT; ABANDONMENT OF APPLICATION

111. Abandonment for failure to respond within the time limit.-

(a) If an applicant fails to prosecute his application within four months after the date when the
last official notice of action by the Office was mailed to him, or within such time as may be fixed
(rule 112), the application will become abandoned.

According to the records of the Bureau of Patents, Trademarks, and Technology Transfer
Chemical Examining Division, petitioner filed Philippine Patent Application No. 35526 on July
10, 1987. It was assigned to an examiner on June 7, 1988. An Office Action was mailed to
petitioner's agent, Atty. Mapili, on July 19, 1988. Because petitioner failed to respond within the
allowable period, the application was deemed abandoned on September 20, 1988.140 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.

Section 113 has since been superseded by Section 133.4 of the Intellectual Property Code, Rule
930 of the Rules and Regulations on Inventions, and Rule 929 of the Revised Implementing Rules
and Regulations for Patents, Utility Models and Industrial Design. The period of four (4) months
from the date of abandonment, however, remains unchanged. The Intellectual Property Code even
provides for a shorter period of three (3) months within which to file for revival:

SECTION 133. Examination and Publication. –

....

133.4. An abandoned application may be revived as a pending application within three (3) months
from the date of abandonment, upon good cause shown and the payment of the required fee.

Rule 930 of the Rules and Regulations on Inventions provides:

Rule 930. Revival of application. - An application deemed withdrawn for failure to prosecute may
be revived as a pending application within a

period of four (4) months from the mailing date of the notice of withdrawal if it is shown to the
satisfaction of the Director that the failure was due to fraud, accident, mistake or excusable
negligence.

A petition to revive an application deemed withdrawn must be accompanied by (1) a showing of

the cause of the failure to prosecute, (2) a complete proposed response, and (3) the required fee.

An application not revived in accordance with this rule shall be deemed forfeited.

Rule 929 of the Revised Implementing Rules and Regulations for Patents, Utility Models and
Industrial Design provides:

Rule 929. Revival of Application. - An application deemed withdrawn for failure to prosecute may
be revived as a pending application within a period of four (4) months from the mailing date of
the notice of withdrawal if it is shown to the satisfaction of the Director that the failure was due
to fraud, accident, mistake, or excusable negligence. A petition to revive an application deemed
withdrawn shall be accompanied by:

(a) A showing of a justifiable reason for the failure to prosecute;

(b) A complete proposed response; and

(c) Full payment of the required fee.

No revival shall be granted to an application that has been previously revived with cost.

An application not revived in accordance with this Rule shall be deemed forfeited.

Even if the delay was unavoidable, or the failure to prosecute was due to fraud, accident, mistake,
or excusable negligence, or the Petition was accompanied by a complete proposed response, or all
fees were paid, the Petition would still be denied since these regulations only provide a four (4 )-
month period within which to file for the revival of the application. The rules do not provide any
exception that could extend this four (4)-month period to 13 years.

Petitioner’s patent application, therefore, should not be revived since it was filed beyond the
allowable period.

V
Even assuming that the four (4)-month period could be extended, petitioner was inexcussably
negligent in the prosecution of its patent application.

Negligence is inexcusable if its commission could have been avoided through ordinary diligence
and prudence. 142 It is also settled that negligence of counsel binds the client as this "ensures
against the resulting uncertainty and tentativeness of proceedings if clients were allowed to
merely disown. 143 their counsels' conduct."

Petitioner's resident agent, Atty. Mapili, was undoubtedly negligent in failing to respond to the
Office Action sent by the Bureau of Patents, Trademarks, and Technology Transfer on June 19,
1988. Because of his negligence, petitioner's patent application was declared abandoned. He was
again negligent when he failed to revive the abandoned application within four (4) months from
the date of abandonment.

Petitioner tries to disown Atty. Mapili 's conduct by arguing that it was not informed of the
abandonment of its patent application or of Atty. Mapili's death. By its own evidence, however,
petitioner requested a status update from Atty. Mapili only on July 18, 1995, eight (8) years after
the filing of its application. 144 It alleged that it only found out about Atty. Mapili 's death
sometime in March 1996, as a result of its senior patent attorney's visit to the Philippines. 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.

Facts show that the patent attorneys appointed to follow up the applications for patent
registration had been negligent in complying with the rules of practice prescribed by the Bureau
of Patents.1âwphi1 The firm had been notified about the abandonment as early as June 1987, but
it was only after December 7, 1987, when their employees Bangkas and Rosas had been dismissed,
that they came to know about it. This clearly showed that petitioners' counsel had been remiss in
the handling of their clients' applications.

"A lawyer's fidelity to the cause of his client requires him to be ever mindful of the responsibilities
that should be expected of him. A lawyer shall not neglect a legal matter entrusted to him." In the
instant case, petitioners' patent attorneys not only failed to take notice of the notices of
abandonment, but they failed to revive the application within the four-month period, as provided
in the rules of practice in patent cases. These applications are deemed forfeited upon the lapse of
such period. 155 (Emphasis supplied)

Petitioner attempts to distinguish itself from Schuartz by arguing that the petitioners in Schuartz
had actual notice of abandonment while petitioner here was only able to have actual notice when
it received Paper No. 2.

The four (4 )-month period in Section 111 156of the 1962 Revised Rules of Practice, however, is
not counted from actual notice of abandonment but from mailing of the notice. Since it appears
from the Intellectual Property Office's records that a notice of abandonment was mailed to
petitioner's resident agent on July 19, 1988,157 the time for taking action is counted from this
period. Petitioner's patent application cannot be revived simply because the period for revival has
already lapsed and no extension of this period is provided for by the 1962 Revised Rules of
Practice.

VI

The right of priority given to a patent applicant is only relevant when there are two or more
conflicting patent applications on the same invention. Because a right of priority does not
automatically grant letters patent to an applicant, possession of a right of priority does not confer
any property rights on the applicant in the absence of an actual patent.

Petitioner argues that its patent application was filed on July 10, 1987, within 12 months from the
prior filing of a U.S. patent application on July 11, 1986.158 It argues that it is protected from
becoming part of the public domain because of convention priority under the Paris Convention
for the Protection of Industrial Property and Section 9 of Republic Act No. 165. 159

Respondent Therapharma, Inc., on the other hand, argues that a mere patent application does
not vest any right in the applicant before the issuance of the patent.160 It argues that the "priority
date" argued by petitioner is only relevant in determining who has a better right to the patent
among the other applicants who subsequently apply for the same invention. 161

Under Section 31 of the Intellectual Property Code, a right of priority is given to any patent
applicant who has previously applied for a patent in a country that grants the same privilege to
Filipinos. Section 31 states:

SECTION 31. Right of Priority. - An application for patent filed by any person who has previously
applied for the same invention in another country which by treaty, convention, or law affords
similar privileges to Filipino citizens, shall be considered as filed as of the date of filing the foreign
application: Provided, That:

a. the local application expressly claims priority;

b. it is filed within twelve (12) months from the date the earliest foreign application was filed; and

c. a certified copy of the foreign application together with an English translation is filed within six
(6) months from the date of filing in the Philippines.

A patent applicant with the right of priority is given preference in the grant of a patent when there
are two or more applicants for the same invention. Section 29 of the Intellectual Property Code
provides:

SECTION 29. First to File Rule. - If two (2) or more persons have made the invention separately
and independently of each other, the right to the patent shall belong to the person who filed an
application for such invention, or where two or more applications are filed for the same invention,
to the applicant who has the earliest filing date or, the earliest priority date.

Since both the United States162 and the Philippines163 are signatories to the Paris Convention
for the Protection of Industrial Property, an applicant who has filed a patent application in the
United States may have a right of priority over the same invention in a patent application in the
Philippines.164 However, this right of priority does not immediately entitle a patent applicant the
grant of a patent. A right of priority is not equivalent to a patent. Otherwise, a patent holder of
any member-state of the Paris Convention need not apply for patents in other countries where it
wishes to exercise its patent.

It was, therefore, inaccurate for petitioner to argue that its prior patent application in the United
States removed the invention from the public domain in the Philippines. This argument is only
relevant if respondent Therapharma, Inc. had a conflicting patent application with the Intellectual
Property Office. A right of priority has no bearing in a case for revival of an abandoned patent
application.

VII

The grant of a patent is to provide protection to any inventor from any patent infringement. 165
Once an invention is disclosed to the public, only the patent holder has the exclusive right to
manufacture, utilize, and market the invention.166 In Creser Precision Systems v. Court of
Appeals:167

Under American jurisprudence, an inventor has no common-law right to a monopoly of his

invention. He has the right to make, use and vend his own invention, but if he voluntarily discloses
it, such as by offering it for sale, the world is free to copy and use it with impunity. A patent,
however, gives the inventor the right to exclude all others. As a patentee, he has the exclusive right
of making, using or selling the invention. 168

Under the Intellectual Property Code, a patent holder has the right to "to restrain, prohibit and
prevent" 169 any unauthorized person or entity from manufacturing, selling, or importing any
product derived from the patent. However, after a patent is granted and published in the
Intellectual Property Office Gazette, 170 any interested third party "may inspect the complete
description, claims, and drawings of the patent." 171

The grant of a patent provides protection to the patent holder from the indiscriminate use of the
invention. However, its mandatory publication also has the correlative effect of bringing new ideas
into the public consciousness. After the publication of the patent, any person may examine the
invention and develop it into something further than what the original patent holder may have
envisioned. After the lapse of 20 years, 172 the invention becomes part of the public domain and
is free for the public to use. In Pearl and Dean v. Shoemart, Inc.: 173

To be able to effectively and legally preclude others from copying and profiting from the invention,
a patent is a primordial requirement. No patent, no protection. The ultimate goal of a patent
system is to bring new designs and technologies into the public domain through disclosure. Ideas,
once disclosed to the public without the protection of a valid patent, are subject to appropriation
without significant restraint.

On one side of the coin is the public which will benefit from new ideas; on the other are the
inventors who must be protected. As held in Bauer & Cie vs. O'Donnell, "The act secured to the
inventor the exclusive right to make use, and vend the thing patented, and consequently to
prevent others from exercising like privileges without the consent of the patentee. It was passed
for the purpose of encouraging useful invention and promoting new and useful inventions by the
protection and stimulation new and useful inventions by the protection and stimulation given to
inventive genius, and was intended to secure to the public, after the lapse of the exclusive
privileges granted the benefit of such inventions and improvements."

The law attempts to strike an ideal balance between the interests:

"(The p)atent system thus embodies a carefully varafted bargain for encouraging the creation and
disclosure of new useful and non-obvious advances in technology and design, in return for the
exclusive right to practice the invention for a number of years. The inventor may keep his
invention secret and reap its fruits indefinitely. In consideration of its disclosure and the
consequent benefit to the community, the patent is granted. An exclusive enjoyment is guaranteed
him for 17 years, but upon the expiration of that period, the knowledge of the invention inures to
the people, who are thus enabled to practice it and profit by its use."

The patent law has a three-fold purpose: "first, patent law seeks to foster and reward invention;
second, it promotes disclosures of inventions to stimulate further innovation and to permit the
public to practice the invention once the patent expires; third, the stringent requirements for
patent protection. seek to ensure that ideas in the public domain remain there for the free use of
the public."

It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-
depth investigation is required because "in rewarding a useful invention, the rights and welfare of
the community must be fairly dealt with and effectively guarded. To that end, the prerequisites to
obtaining a patent are strictly observed and when a patent is issued, the limitations on its exercise
are equally strictly enforced. To begin with, a genuine invention or discovery must be
demonstrated lest in the constant demand for new appliances, the heavy hand of tribute be laid
on each slight technological advance in art."174 (Emphasis supplied)

In addition, a patent holder of inventions relating to food or medicine does not enjoy absolute
monopoly over the patent. Both Republic Act No. 165 and the Intellectual Property Code provide
for compulsory licensing. Compulsory licensing is defined in the Intellectual Property Code as the
"grant a license to exploit a patented invention, even without the agreement of the patent owner."
175

Under Republic Act No. 165, a compulsory license may be granted to any applicant three (3) years
after the grant of a patent if the invention relates to food or medicine necessary for public health
or safety. 176 In Smith Kline & French Laboratories, Ltd. vs. Court of Appeals: 177

Section 34 of R.A. No. 165, even if the Act was enacted prior to the Philippines' adhesion to the
[Paris] Convention, fits well within the aforequoted provisions of Article 5 of the Paris Convention.
In the explanatory note of Bill No. 1156 which eventually became R.A. No. 165, the legislative
intent in the grant of a compulsory license was not only to afford others an opportunity to provide
the public with the quantity of the patented product, but also to prevent the growth of monopolies.
Certainly, the growth of monopolies was among the abuses which Section A, Article 5 of the
Convention foresaw, and which our Congress likewise wished to prevent in enacting R.A. No. 165.
178
The patent holder’s proprietary right over the patent only lasts for three (3) years from the grant
of the patent, after which any person may be allowed to manufacture, use or sell the invention
subject to the payment of royalties:

The right to exclude others from the manufacturing, using or vending an invention relating to
food or medicine should be conditioned to allowing any person to manufacture, use or vend the
same after a period of three years from the date of the grant of the letters patent. After all, the
patentee is not entirely deprived of any proprietary right. In fact, he has been given the period of
three years of complete monopoly over the patent. Compulsory licensing of a patent on food or
medicine without regard to the other conditions imposed in Section 34 is not an undue
deprivation of proprietary interests over a patent right because the law sees to it that even after
three years of complete monopoly something is awarded to the inventor in the form of a bilateral
and workable licensing agreement and a reasonable royalty to be agreed upon by the parties and
in default of such agreement, the Director of Patent may fix the terms and conditions of the
license.179

A patent is a monopoly granted only for specific purposes and objectives. Thus, its procedures
must be complied with to attain its social objective. Any request for leniency in its procedures
should be taken in this context. Petitioner, however, has failed to convince this court that the
revival of its patent application would have a significant impact on the pharmaceutical industry.

Hypertension, or high blood pressure, is considered a "major risk factor for cardiovascular
disease" 180 such as "heart disease, stroke, kidney failure and blindness." 181 In a study
conducted by the World Health Organization, 25% of adults aged 21 years and older in the
Philippines suffer from high blood pressure. 182 According to the Department of Health, heart
disease remains the leading cause of mortality in the Philippines. 183 Angiotensin II Receptor
Blocking Imidazole or "losartan" is one of the medications used for the treatment ofhypertension.
184

In a study conducted by the Philippine Institute for Development Studies, "affordability of drugs
remains a serious problem" 185 in the Philippines. It found that because of the cost of drugs,
accessibility to drugs become prohibitive for the lowest-earning households and are "even more
prohibitive for the u:nemployed and indigent." 186 Several measures have been enacted by the
government to address the high costs of medicine, among them, parallel drug importation187 and
the passage of Republic Act No. 9502, otherwise known as the Universally Accessible Cheaper and
Quality Medicines Act of 2008. 188 Figures submitted by respondent Therapharma, Inc.,
however, also show that the presence of competition in the local pharmaceutical market may
ensure the public access to cheaper medicines.

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

As of Lifezar's first entry into the market on June 4, 2004 RETAIL PRICE Within one month
from Lifezar's entry or by July 4, 2004
LIFEZAR
Therapharma

50 mg - P20.20

50 mg - P20.20

COZAAR

Merck

50 mg - P39.50
100 mg - P55.00

50 mg - P39.50
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.1awp++i1 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 are AFFIRMED.

SO ORDERED.

G.R. No. 204605

INTELLECTUAL PROPERTY ASSOCIATION OF THE PHILIPPINES, Petitioner,

vs.
HON. PAQUITO OCHOA, IN HIS CAPACITY AS EXECUTIVE SECRETARY, HON. ALBERT DEL
ROSARIO, IN HIS CAPACITY AS SECRETARY OF THE DEPARTMENT OF FOREIGN AFFAIRS,
AND HON. RICARDO BLANCAFLOR, IN HIS CAPACITY AS THE DIRECTOR GENERAL OF
THE INTELLECTUAL PROPERTY OFFICE OF THE PHILIPPINES, Respondents.
DECISION

BERSAMIN, J.:

In this special civil action for certiorari and prohibition, the Intellectual Property Association of
the Philippines (IPAP) seeks to declare the accession of the Philippines to the Protocol Relating
to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol)
unconstitutional on the ground of the lack of concurrence by the Senate, and in the alternative, to
declare the implementation thereof as unconstitutional because it conflicts with Republic Act No.
8293, otherwise known as the Intellectual Property Code of the Philippines (IP Code).1

We find and declare that the President's ratification is valid and constitutional because the Madrid
Protocol, being an executive agreement as determined by the Department of Foreign Affairs, does
not require the concurrence of the Senate.

Antecedents

The Madrid System for the International Registration of Marks (Madrid System), which is the
centralized system providing a one-stop solution for registering and managing marks worldwide,
allows the trademark owner to file one application in one language, and to pay one set of fees to
protect his mark in the territories of up to 97 member-states.2 The Madrid System is governed by
the Madrid Agreement, concluded in 1891, and the Madrid Protocol, concluded in 1989.3

The Madrid Protocol, which was adopted in order to remove the challenges deterring some
countries from acceding to the Madrid Agreement, has two objectives, namely: (1) to facilitate
securing protection for marks; and (2) to make the management of the registered marks easier in
different countries.4

In 2004; the Intellectual Property Office of the Philippines (IPOPHL), the government agency
mandated to administer the intellectual property system of the country and to implement the state
policies on intellectual property; began considering the country's accession to the Madrid
Protocol. However, based on its assessment in 2005, the IPOPHL needed to first improve its own
operations before making the recommendation in favor of accession. The IPOPHL thus
implemented reforms to eliminate trademark backlogs and to reduce the turnaround time for the
registration of marks.5

In the meanwhile, the IPOPHL mounted a campaign for information dissemination to raise
awareness of the Madrid Protocol. It launched a series of consultations with stakeholders and
various business groups regarding the Philippines' accession to the Madrid Protocol. It ultimately
arrived at the conclusion that accession would benefit the country and help raise the level of
competitiveness for Filipino brands. Hence, it recommended in September 2011 to the
Department of Foreign Affairs (DFA) that the Philippines should accede to the Madrid Protocol.6

After its own review, the DFA endorsed to the President the country's accession to the Madrid
Protocol. Conformably with its express authority under Section 9 of Executive Order No. 459
(Providing for the Guidelines in the Negotiation of International Agreements and its Ratification)
dated November 25, 1997, the DFA determined that the Madrid Protocol was an executive
agreement.1âwphi1 The IPOPHL, the Department of Science and Technology, and the
Department of Trade and Industry concurred in the recommendation of the DFA.7

On March 27, 2012, President Benigno C. Aquino III ratified the Madrid Protocol through an
instrument of accession, The instrument of accession was deposited with the Director General of
the World Intellectual Property Organization (WIPO) on April 25, 2012.8 The Madrid Protocol
entered into force in the Philippines on July 25, 2012.9

Petitioner IP AP, an association of more than 100 law firms and individual practitioners in
Intellectual Property Law whose main objective is to promote and protect intellectual property
rights in the Philippines through constant assistance and involvement in the legislation of
intellectual property law,10 has commenced this special civil action for certiorari and
prohibition11 to challenge the validity of the President's accession to the Madrid Protocol without
the concurrence of the Senate. Citing Pimentel, Jr. v. Office of the Executive Secretary, the IPAP
has averred:

Nonetheless, while the President has the sole authority to negotiate and enter into treaties, the
Constitution provides a limitation to his power by requiring the concurrence of 2/3 of all the
members of the Senate for the validity of the treaty entered into by him. Section 21, Article VII of
the 1987 Constitution provides that "no treaty or international agreement shall be valid and
effective unless concurred in by at least two-thirds of all the Members of the Senate." The 1935
and the 1973 Constitution also required the concurrence by the legislature to the treaties entered
into by the executive.12

According to the IPAP, the Madrid Protocol is a treaty, not an executive agreement; hence,
respondent DFA Secretary Albert Del Rosario acted with grave abuse of discretion in determining
the Madrid Protocol as an executive agreement.13

The IPAP has argued that the implementation of the Madrid Protocol in the Philippines;
specifically the processing of foreign trademark applications, conflicts with the IP Code,14 whose
Section 125 states:

Sec. 125. Representation; Address for Service. - If the applicant is not domiciled or has no real and
effective commercial establishment in the Philippines; he shall designate by a written document
filed in the office, the name and address of a Philippine resident who may be served notices or
process in proceedings affecting the mark. Such notices or services may be served upon the person
so designated by leaving a copy thereof at the address specified in the last designation filed. If the
person so designated cannot be found at the address given in the last designation, such notice or
process may be served upon the Director. (Sec. 3; R.A. No. 166 a)

It has posited that Article 2 of the Madrid Protocol provides in contrast:

Article 2

Securing Protection through International Registration

(1) Where an application for the registration of a mark has been filed with the Office of a
Contracting Party, or where a mark has been registered in the register of the Office of a
Contracting Party, the person in whose name that application (hereinafter referred to as "the basic
application;') or that registration (hereinafter referred to as "the basic registration") stands may,
subject to the provisions of this Protocol secure protection for his mark in the territory of the
Contracting Parties, by obtaining the registration of that mark in the register of the International
Bureau of the World Intellectual Property Organization (hereinafter referred to as "the
international registration," "the International Register," "the International Bureau" and "the
Organization'', respectively), provided that,

(i) where the basic application has been filed with the Office of a Contracting State or where the
basic registration has been made by such an Office, the person in whose name that application or
registration stands is a national of that Contracting State, or is domiciled, or has a real and
effective industrial or commercial establishment, in the said Contracting State,

(ii) where the basic application has been filed with the Office of a Contracting Organization or
where the basic registration has been made by such an Office, the person in whose name that
application or registration stands is a national of a State member of that Contracting
Organization, or is domiciled, or has a real and effective industrial or commercial establishment,
in the territory of the said Contracting Organization.

(2) The application for international registration (hereinafter referred to as "the international
application") shall be filed with the International Bureau through the intermediary of the Office
with which the basic application was filed or by which the basic registration was made (hereinafter
referred to as "the Office of origin"), as the case may be.

(3) Any reference in this Protocol to an "Office" or an "Office of a Contracting Party" shall be
construed as a reference to the office that is in charge, on behalf of a Contracting Party, of the
registration of marks, and any reference in this Protocol to "marks" shall be construed as a
reference to trademarks and service marks.

(4) For the purposes of this Protocol, "territory of a Contracting Party" means, where the
Contracting Party is a State, the territory of that State and, where the Contracting Party is an
intergovernmental organization, the territory in which the constituting treaty of that
intergovernmental organization applied.

The IPAP has insisted that Article 2 of the Madrid Protocol means that foreign trademark
applicants may file their applications through the International Bureau or the WIPO, and their
applications will be automatically granted trademark protection without the need for designating
their resident agents in the country.15

Moreover, the IPAP has submitted that the procedure outlined in the Guide to the International
Registration of Marks relating to representation before the International Bureau is the following,
to wit:

Rule 3(1)(a) 09.02 References in the Regulations, Administrative Instructions or in this Guide to
representation relate only to representation before the International Bureau. The questions of the
need for a representative before the Office of origin or the Office of a designated Contracting Party
(for example, in the event of a refusal of protection issued by such an Office), who may act as a
representative in such cases and the method of appointment, are outside the scope of the
Agreement, Protocol and Regulations and are governed by the law and practice of the Contracting
Party concerned.

which procedure is in conflict with that under Section 125 of the IP Code, and constitutes in effect
an amendment of the local law by the Executive Department.16

The IPAP has prayed that the implementation of the Madrid Protocol in the Philippines be
restrained in order to prevent future wrongs considering that the IP AP and its constituency have
a clear and unmistakable right not to be deprived of the rights granted them by the IP Code and
existing local laws.17

In its comment in behalf of the respondents, the Office of the Solicitor General (OSG) has stated
that the IPAP does not have the locus standi to challenge the accession to the Madrid Protocol;
that the IPAP cannot invoke the Court's original jurisdiction absent a showing of any grave abuse
of discretion on the part of the respondents; that the President's ratification of the Madrid
Protocol as an executive agreement is valid because the Madrid Protocol is only procedural, does
not create substantive rights, and does not require the amendment of the IP Code; that the IPAP
is not entitled to the restraining order or injunction because it suffers no damage from the
ratification by the President, and there is also no urgency for such relief; and the IPAP has no clear
unmistakable right to the relief sought.18

Issues

The following issues are to be resolved, namely:

I. Whether or not the IP AP has locus standi to challenge the President's ratification of the Madrid
Protocol;

II. Whether or not the President's ratification of the Madrid Protocol is valid and constitutional;
and

III. Whether or not the Madrid Protocol is in conflict with the IP Code.

Ruling of the Court

The petition for certiorari and prohibition is without merit.

A.

The issue of legal standing to sue, or locus standi

The IPAP argues in its reply19 that it has the locus standi to file the present case by virtue of its
being an association whose members stand to be injured as a result of the enforcement of the
Madrid Protocol in the Philippines; that the injury pertains to the acceptance and approval of
applications submitted through the Madrid Protocol without local representation as required by
Section 125 of the IP Code;20 and that such will diminish the rights granted by the IP Code to
Intellectual Property Law practitioners like the members of the IPAP.21
The argument of the IPAP is untenable.

Legal standing refers to "a right of appearance in a court of justice on a given question."22
According to Agan, Jr. v. Philippine International Air Terminals Co., Inc.,23standing is "a peculiar
concept in constitutional law because in some cases, suits are not brought by parties who have
been personally injured by the operation of a law or any other government act but by concerned
citizens, taxpayers or voters who actually sue in the public interest."

The Court has frequently felt the need to dwell on the issue of standing in public or constitutional
litigations to sift the worthy from the unworthy public law litigants seeking redress or relief. The
following elucidation in De Castro v. Judicial and Bar Council24offers the general understanding
of the context of legal standing, or locus standi for that purpose, viz. :

In public or constitutional litigations, the Court is often burdened with the determination of the
locus standi of the petitioners due to the ever-present need to regulate the invocation of the
intervention of the Court to correct any official action or policy in order to avoid obstructing the
efficient functioning of public officials and offices involved in public service. It is required,
therefore, that the petitioner must have a personal stake in the outcome of the controversy, for,
as indicated in Agan, Jr. v. Philippine International Air Terminals Co., Inc.:

The question on legal standing is whether such parties have "'alleged such a personal stake in the
outcome of the controversy as to assure that concrete adverseness which sharpens the
presentation of issues upon which the court so largely depends for illumination of difficult
constitutional questions," Accordingly, it has been held that the interest of a person assailing the
constitutionality of a statute must be direct and personal. He must be able to show, not only that
the law or any government act is invalid, but also that he sustained or is in imminent danger of
sustaining some direct injury as a result of its enforcement, and not merely that he suffers thereby
in some indefinite way. It must appear that the person complaining has been or is about to be
denied some right or privilege to which he is lawfully entitled or that he is about to be subjected
to some burdens or penalties by reason of the statute or act complained of.

It is true that as early as in 1937, in People v. Vera, the Court adopted the direct injury test for
determining whether a petitioner in a public action had locus standi. There, the Court held that
the person who would assail the validity of a statute must have "a personal and substantial interest
in the case such that he has sustained, or will sustain direct injury as a result." Vera was followed
in Custodio v. President of the Senate, Manila Race Horse Trainers' Association v. De la Fuente,
Anti-Chinese League of the Philippines v. Felix, and Pascual v. Secretary of Public Works.

Yet, the Court has also held that the requirement of locus standi, being a mere procedural
technicality, can be waived by the Court in the exercise of its discretion. For instance, in 1949, in
Araneta v. Dinglasan, the Court liberalized the approach when the cases had "transcendental
importance." Some notable controversies whose petitioners did not pass the direct injury test were
allowed to be treated in the same way as in Araneta v. Dinglasan.

In the 1975 decision in Aquino v. Commission on Elections, this Court decided to resolve the issues
raised by the petition due to their "farreaching implications,'; even if the petitioner had no
personality to file the suit. The liberal approach of Aquino v. Commission on Elections has been
adopted in several notable cases, permitting ordinary citizens, legislators, and civic organizations
to bring their suits involving the constitutionality or validity of laws, regulations, and rulings.

However, the assertion of a public right as a predicate for challenging a supposedly illegal or
unconstitutional executive or legislative action rests on the theory that the petitioner represents
the public in general. Although such petitioner may not be as adversely affected by the action
complained against as are others, it is enough that he sufficiently demonstrates in his petition that
he is entitled to protection or relief from the Court in the vindication ofa public right.25

The injury that the IPAP will allegedly suffer from the implementation of the Madrid Protocol is
imaginary, incidental and speculative as opposed to a direct and material injury required by the
foregoing tenets on locus standi. Additionally, as the OSG points out in the comment,26 the IPAP
has misinterpreted Section 125 of the IP Code on the issue of representation. The provision only
states that a foreign trademark applicant "shall designate by a written document filed in the office,
the name and address of a Philippine resident who may be served notices or process in
proceedings affecting the mark;" it does not grant anyone in particular the right to represent the
foreign trademark applicant. Hence, the IPAP cannot justly claim that it will suffer irreparable
injury or diminution of rights granted to it by Section 125 of the IP Code from the implementation
of the Madrid Protocol.

Nonetheless, the IPAP also emphasizes that the paramount public interest involved has
transcendental importance because its petition asserts that the Executive Department has
overstepped the bounds of its authority by thereby cutting into another branch's functions and
responsibilities.27 The assertion of the IPAP may be valid on this score. There is little question
that the issues raised herein against the implementation of the Madrid Protocol are of
transcendental importance. Accordingly, we recognize IPAP's locus standi to bring the present
challenge. Indeed, the Court has adopted a liberal attitude towards locus standi whenever the
issue presented for consideration has transcendental significance to the people, or whenever the
issues raised are of paramount importance to the public.28

B.

Accession to the

Madrid Protocol was constitutional

The IP AP submits that respondents Executive Secretary and DFA Secretary Del Rosario gravely
abused their discretion in determining that there was no need for the Philippine Senate's
concurrence with the Madrid Protocol; that the Madrid Protocol involves changes of national
policy, and its being of a permanent character requires the Senate's concurrence,29 pursuant to
Section 21, Article VII of the Constitution, which states that "no treaty or international agreement
shall be valid and effective unless concurred in by at least two-thirds of all the Members of the
Senate."

Before going further, we have to distinguish between treaties and international agreements, which
require the Senate's concurrence, on one hand, and executive agreements, which may be validly
entered into without the Senate's concurrence. Executive Order No. 459, Series of 1997,30 notes
the following definitions, to wit:
Sec. 2. Definition of Terms.

a. International agreement - shall refer to a contract or understanding, regardless of

nomenclature, entered into between the Philippines and another government in written form and
governed by international law, whether embodied in a single instrument or in two or more related
instruments.

b. Treaties - international agreements entered into by the Philippines which require legislative
concurrence after executive ratification. This term may include compacts like conventions,
declarations, covenants and acts.

c. Executive Agreements - similar to treaties except that they do not require legislative
concurrence.

The Court has highlighted the difference between treaties and executive agreements in
Commissioner of Customs v. Eastern Sea Trading,31 thusly:

International agreements involving political issues or changes of national policy and those
involving international arrangements of a permanent character usually take the form of treaties.
But international agreements embodying adjustments of detail carrying out well-established
national policies and traditions and those involving arrangements of a more or less temporary
nature usually take the form of executive agreements.

In the Philippines, the DFA, by virtue of Section 9, Executive Order No. 459,32 is initially given
the power to determine whether an agreement is to be treated as a treaty or as an executive
agreement. To determine the issue of whether DFA Secretary Del Rosario gravely abused his
discretion in making his determination relative to the Madrid Protocol, we review the
jurisprudence on the nature of executive agreements, as well as the subject matters to be covered
by executive agreements.

The pronouncement in Commissioner of Customs v. Eastern Sea Trading33is instructive, to wit:

x x x The concurrence of said House of Congress is required by our fundamental law in the making
of "treaties" (Constitution of the Philippines; Article VII, Section 10[7]), which are, however,
distinct and different from "executive agreements," which may be validly entered into without
such concurrence.

"Treaties are formal documents which require ratification with the approval of two thirds of the
Senate. Executive agreements become binding through executive action without the need of a vote
by the Senate or by Congress.

xxxx

"x x x the right of the Executive to enter into binding agreements without the necessity of
subsequent Congressional approval has been confirmed by long usage. From the earliest days of
our history we have entered into executive agreements covering such subjects as commercial and
consular relations, most-favored-nation rights, patent rights, trademark and copyright
protection, postal and navigation arrangements and the settlement of claims. The validity of these
has never been seriously questioned by our courts.

xxxx

Agreements with respect to the registration of trademarks have been concluded by the Executive
with various countries under the Act of Congress of March 3, 1881 (21 Stat. 502), x x x

xxxx

In this connection, Francis B. Sayre, former U.S. High Commissioner to the Philippines, said in
his work on "The Constitutionality of Trade Agreement Acts":

Agreements concluded by the President which fall short of treaties are commonly referred to as
executive agreements and are no less common in our scheme of government than are the more
formal instruments - treaties and conventions. They sometimes take the form of exchanges of
notes and at other times that or more formal documents denominated 'agreements' or 'protocols'.
The point where ordinary correspondence between this and other governments ends and
agreements - whether denominated executive agreements or exchanges of notes or otherwise -
begin, may sometimes be difficult of ready ascertainment. It would be useless to undertake to
discuss here the large variety of executive agreements as such, concluded from time to time.
Hundreds of executive agreements, other than those entered into under the trade-agreements act,
have been negotiated with foreign governments. x x x It would seem to be sufficient, in order to
show that the trade agreements under the act of 1934 are not anomalous in character, that they
are not treaties, and that they have abundant precedent in our history, to refer to certain classes
of agreements heretofore entered into by the Executive without the approval of the Senate. They
cover such subjects as the inspection of vessels, navigation dues, income tax on shipping profits,
the admission of civil aircraft, customs matters, and commercial relations generally, international
claims, postal matters, the registration of trademarks and copyrights, etcetera. Some of them were
concluded not by specific congressional authorization but in conformity with policies declared in
acts of Congress with respect to the general subject matter, such as tariff acts; while still others,
particularly those with respect of the settlement of claims against foreign governments, were
concluded independently of any legislation. (Emphasis ours)

As the foregoing pronouncement indicates, the registration of trademarks and copyrights have
been the subject of executive agreements entered into without the concurrence of the Senate.
Some executive agreements have been concluded in conformity with the policies declared in the
acts of Congress with respect to the general subject matter.

It then becomes relevant to examine our state policy on intellectual property in general, as
reflected in Section 2 of our IP Code, to wit:

Section 2. Declaration of State Policy. - The State recognizes that an effective intellectual and
industrial property system is vital to the development of domestic and creative activity, facilitates
transfer of technology, attracts foreign investments, and ensures market access for our products.
It shall protect and secure the exclusive rights of scientists, inventors, artists and other gifted
citizens to their intellectual property and creations, particularly when beneficial to the people, for
such periods as provided in this Act.
The use of intellectual property bears a social function. To this end, the State shall promote the
diffusion of knowledge and information for the promotion of national development and progress
and the common good.

It is also the policy of the State to streamline administrative procedures of registering patents,
trademarks and copyright, to liberalize the registration on the transfer of technology; and to
enhance the enforcement of intellectual property rights in the Philippines.

In view of the expression of state policy having been made by the Congress itself, the IPAP is
plainly mistaken in asserting that "there was no Congressional act that authorized the accession
of the Philippines to the Madrid Protocol."34

Accordingly, DFA Secretary Del Rosario’s determination and treatment of the Madrid Protocol as
an executive agreement; being in apparent contemplation of the express state policies on
intellectual property as well as within his power under Executive Order No. 459, are upheld. We
observe at this point that there are no hard and fast rules on the propriety of entering into a treaty
or an executive agreement on a given subject as an instrument of international relations. The
primary consideration in the choice of the form of agreement is the parties' intent and desire to
craft their international agreement in the form they so wish to further their respective interests.
The matter of form takes a back seat when it comes to effectiveness and binding effect of the
enforcement of a treaty or an executive agreement; inasmuch as all the parties; regardless of the
form, become obliged to comply conformably with the time-honored principle of pacta sunt
servanda.35The principle binds the parties to perform in good faith their parts in the
agreements.36

c.

There is no conflict between the

Madrid Protocol and the IP Code.

The IPAP also rests its challenge on the supposed conflict between the Madrid Protocol and the
IP Code, contending that the Madrid Protocol does away with the requirement of a resident agent
under Section 125 of the IP Code; and that the Madrid Protocol is unconstitutional for being in
conflict with the local law, which it cannot modify.

The IPAP's contentions stand on a faulty premise. The method of registration through the
IPOPHL, as laid down by the IP Code, is distinct and separate from the method of registration
through the WIPO, as set in the Madrid Protocol. Comparing the two methods of registration
despite their being governed by two separate systems of registration is thus misplaced.

In arguing that the Madrid Protocol conflicts with Section 125 of the IP Code, the IP AP highlights
the importance of the requirement for the designation of a resident agent. It underscores that the
requirement is intended to ensure that non-resident entities seeking protection or privileges
under Philippine Intellectual Property Laws will be subjected to the country's jurisdiction. It
submits that without such resident agent, there will be a need to resort to costly, time consuming
and cumbersome extraterritorial service of writs and processes.37
The IPAP misapprehends the procedure for examination under the Madrid Protocol, The
difficulty, which the IPAP illustrates, is minimal, if not altogether inexistent. The IPOPHL actually
requires the designation of the resident agent when it refuses the registration of a mark. Local
representation is further required in the submission of the Declaration of Actual Use, as well as in
the submission of the license contract.38 The Madrid Protocol accords with the intent and spirit
of the IP Code, particularly on the subject of the registration of trademarks. The Madrid Protocol
does not amend or modify the IP Code on the acquisition of trademark rights considering that the
applications under the Madrid Protocol are still examined according to the relevant national law,
In that regard, the IPOPHL will only grant protection to a mark that meets the local registration
requirements.

WHEREFORE, this Court DISMISSES the petition for certiorari and prohibition for lack of merit;
and ORDERS the petitioner to pay the costs of suit.

SO ORDERED.

G.R. No. 209843

TAIWAN KOLIN CORPORATION, LTD., Petitioner,

vs.
KOLIN ELECTRONICS CO., INC., Respondent.

DECISION

VELASCO, JR., J.:

Nature of the Case

Before the Court is a petition for review under Rule 45 of the Rules of Court interposed by
petitioner Taiwan Kolin Corporation, Ltd. (Taiwan Kolin), assailing the April 30, 2013 Decision1
of the Court of Appeals (CA) in CA-G.R. SP No. 122565 and its subsequent November 6, 2013
Resolution.2 The assailed issuances effectively denied petitioner's trademark application for the
use of "KOLIN" on its television and DVD players.

The Facts

On February 29, 1996, Taiwan Kolin filed with the Intellectual Property Office (IPO), then Bureau
of Patents, Trademarks, and Technology Transfer, a trademark application, docketed as
Application No. 4-1996-106310, for the use of "KOLIN" on a combination of goods, including
colored televisions, refrigerators, window-type and split-type air conditioners, electric fans and
water dispensers. Said goods allegedly fall under Classes 9, 11, and 21 of the Nice Classification
(NCL).

Application No. 4-1996-106310 would eventually be considered abandoned for Taiwan Kolin’s
failure to respond to IPO’s Paper No. 5 requiring it to elect one class of good for its coverage.
However, the same application was subsequently revived through Application Serial No. 4-2002-
011002,3 with petitioner electing Class 9 as the subject of its application, particularly: television
sets, cassette recorder, VCD Amplifiers, camcorders and other audio/video electronic equipment,
flat iron, vacuum cleaners, cordless handsets, videophones, facsimile machines, teleprinters,
cellular phones and automatic goods vending machine. The application would in time be duly
published.4

On July 13, 2006, respondent Kolin Electronics Co., Inc. (Kolin Electronics) opposed petitioner’s
revived application, docketed as Inter Partes Case No. 14-2006-00096. As argued, the mark
Taiwan Kolin seeks to register is identical, if not confusingly similar, with its "KOLIN" mark
registered on November 23, 2003, covering the following products under Class 9 of the NCL:
automatic voltage regulator, converter, recharger, stereo booster, AC-DC regulated power supply,
step-down transformer, and PA amplified AC-DC.5

To digress a bit, Kolin Electronics’ "KOLIN" registration was, as it turns out, the subject of a prior
legal dispute between the parties in Inter Partes Case No. 14-1998-00050 beforethe IPO. In the
said case, Kolin Electronics’ own application was opposed by Taiwan Kolin, being, as Taiwan Kolin
claimed, the prior registrant and user of the "KOLIN" trademark, having registered the same in
Taipei, Taiwan on December 1, 1988. The Bureau of Legal Affairs of the IPO (BLA-IPO), however,
did not accord priority right to Taiwan Kolin’s Taipei registration absent evidence to prove that it
has already used the said mark in the Philippines as early as 1988. On appeal, the IPO Director
General affirmed the BLA-IPO’s Decision. Taiwan Kolin elevated the case to the CA, but without
injunctive relief, Kolin Electronics was able to register the "KOLIN" trademark on November 23,
2003for its products.6 Subsequently, the CA, on July 31, 2006, affirmed7 the Decision of the
Director General.

In answer to respondent’s opposition in Inter Partes Case No. 14-2006-00096, petitioner argued
that it should be accorded the benefits of a foreign-registered mark under Secs. 3 and 131.1 of
Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines (IP
Code);8 that it has already registered the "KOLIN" mark in the People’s Republic of China,
Malaysia and Vietnam, all of which are parties to the Paris Convention for the Protection of
Industrial Property (Paris Convention) and the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS); and that benefits accorded to a well-known mark should be
accorded to petitioner.9

Ruling of the BLA-IPO

By Decision10 dated August 16, 2007, the BLA-IPO denied petitioner’s application disposing as
follows:

In view of all the foregoing, the instant Opposition is as, it is hereby SUSTAINED. Accordingly,
application bearing Serial No. 4-1996-106310 for the mark "KOLIN" filed in the name of TAIWAN
KOLIN., LTD. on February 29, 1996 for goods falling under Class 09 of the International
Classification of Goods such as cassette recorder, VCD, woofer, amplifiers, camcorders and other
audio/video electronic equipment, flat iron, vacuum cleaners, cordless handsets, videophones,
facsimile machines, teleprinters, cellular phones, automatic goods vending machines and other
electronic equipment is hereby REJECTED.

Let the file wrapper of "KOLIN", subject of this case be forwarded to the Bureau of Trademarks
(BOT) for appropriate action in accordance with this Decision.
SO ORDERED.

Citing Sec. 123(d) of the IP Code,11 the BLA-IPO held that a mark cannot be registered if it is
identical with a registered mark belonging to a different proprietor in respect of the same or
closely-related goods. Accordingly, respondent, as the registered owner of the mark "KOLIN" for
goods falling under Class 9 of the NCL, should then be protected against anyone who impinges on
its right, including petitioner who seeks to register an identical mark to be used on goods also
belonging to Class 9 of the NCL.12 The BLA-IPO also noted that there was proof of actual
confusion in the form of consumers writing numerous e-mails to respondent asking for
information, service, and complaints about petitioner’s products.13

Petitioner moved for reconsideration but the same was denied on January 26, 2009 for lack of
merit.14 Thus, petitioner appealed the above Decision to the Office of the Director General of the
IPO.

Ruling of the IPO Director General

On November 23, 2011, the IPO Director General rendered a Decision15 reversing that of the BLA-
IPO in the following wise:

Wherefore, premises considered, the appeal is hereby GRANTED. The Appellant’s Trademark
Application No. 4-1996-106310 is hereby GIVEN DUE COURSE subject to the use limitation or
restriction for the goods "television and DVD player". 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 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.

SO ORDERED.

In so ruling, the IPO Director General ratiocinated that product classification alone cannot serve
as the decisive factor in the resolution of whether or not the goods are related and that emphasis
should be on the similarity of the products involved and not on the arbitrary classification or
general description of their properties or characteristics. As held, the mere fact that one person
has adopted and used a particular trademark for his goods does not prevent the adoption and use
of the same trademark by others on articles of a different description.16

Aggrieved, respondent elevated the case to the CA.

Ruling of the Court of Appeals

In its assailed Decision, the CA found for Kolin Electronics, on the strength of the following
premises: (a) the mark sought to be registered by Taiwan Kolin is confusingly similar to the one
already registered in favor of Kolin Electronics; (b) there are no other designs, special shape or
easily identifiable earmarks that would differentiate the products of both competing companies;17
and (c) the intertwined use of television sets with amplifier, booster and voltage regulator
bolstered the fact that televisions can be considered as within the normal expansion of Kolin
Electronics,18 and is thereby deemed covered by its trademark as explicitly protected under Sec.
13819 of the IP Code.20 Resultantly, the CA granted respondent’s appeal thusly:

WHEREFORE, the appeal is GRANTED. The November 23, 2011 Decision of the Director General
of the Intellectual Property Office in Inter Partes Case No. 14-2006-0096 is REVERSED and SET
ASIDE. The September 17, 2007 Decision of the Bureau of Legal Affairs of the same office is
REINSTATED.

SO ORDERED.

Petitioner moved for reconsideration only to be denied by the CA through its equally assailed
November 6, 2013 Resolution. Hence, the instant recourse.

The Issue

The primordial issue to be resolved boils down to whether or not petitioner is entitled to its
trademark registration of "KOLIN" over its specific goods of television sets and DVD players.
Petitioner postulates, in the main, that its goods are not closely related to those of Kolin
Electronics. On the other hand, respondent hinges its case on the CA’s findings that its and
petitioner’s products are closely-related. Thus, granting petitioner’s application for trademark
registration, according to respondent, would cause confusion as to the public.

The Court's Ruling

The petition is impressed with merit.

Identical marks may be registered for

products from the same classification

To bolster its opposition against petitioner’s application to register trademark "KOLIN,"

respondent maintains that the element of mark identity argues against approval of such
application, quoting the BLA IPO’s ruling in this regard:21

Indubitably, Respondent-Applicant’s [herein petitioner] mark is identical to the registered mark

of herein Opposer [herein respondent] and the identical mark is used on goods belonging to Class
9 to which Opposer’s goods are also classified. On this point alone, Respondent-Applicant’s
application should already be denied.

The argument is specious.

The parties admit that their respective sets of goods belong to Class 9 of the NCL, which includes
the following:22

Class 9

Scientific, nautical, surveying, photographic, cinematographic, optical, weighing, measuring,

signalling, checking (supervision), life-saving and teaching apparatus and instruments; apparatus
and instruments for conducting, switching, transforming, accumulating, regulating or controlling
electricity; apparatus for recording, transmission or reproduction of sound or images;
magneticdata carriers, recording discs; compact discs, DVDs and other digital recording media;
mechanisms for coin-operated apparatus; cash registers, calculating machines, data processing
equipment, computers; computer software; fire-extinguishing apparatus.

But mere uniformity in categorization, by itself, does not automatically preclude the registration
of what appears to be an identical mark, if that be the case. In fact, this Court, in a long line of
cases, has held that such circumstance does not necessarily result in any trademark infringement.
The survey of jurisprudence cited in Mighty Corporation v. E. & J Gallo Winery23 is enlightening
on this point:

(a) in Acoje Mining Co., Inc. vs. Director of Patents,24 we ordered the approval of Acoje Mining’s
application for registration of the trademark LOTUS for its soy sauce even though Philippine
Refining Company had prior registration and use of such identical mark for its edible oil which,
like soy sauce, also belonged to Class 47;

(b) in Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents,25 we upheld the Patent
Director’s registration of the same trademark CAMIA for Ng Sam’s ham under Class 47, despite
Philippine Refining Company’s prior trademark registration and actual use of such mark on its
lard, butter, cooking oil (all of which belonged to Class 47), abrasive detergents, polishing
materials and soaps;

(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos Lim Bun Liong,26 we
dismissed Hickok’s petition to cancel private respondent’s HICKOK trademark registration for its
Marikina shoes as against petitioner’s earlier registration of the same trademark for
handkerchiefs, briefs, belts and wallets.

Verily, whether or not the products covered by the trademark sought to be registered by Taiwan
Kolin, on the one hand, and those covered by the prior issued certificate of registration in favor of
Kolin Electronics, on the other, fall under the same categories in the NCL is not the sole and
decisive factor in determining a possible violation of Kolin Electronics’ intellectual property right
should petitioner’s application be granted. It is hornbook doctrine, as held in the above-cited
cases, that emphasis should be on the similarity of the products involved and not on the arbitrary
classification or general description of their properties or characteristics. The mere fact that one
person has adopted and used a trademark on his goods would not, without more, prevent the
adoption and use of the same trademark by others on unrelated articles of a different kind.27 The
CA erred in denying petitioner’s registration application

Respondent next parlays the idea of relation between products as a factor militating against
petitioner’s application. Citing Esso Standard Eastern, Inc. v. Court of Appeals,28 respondent
argues that the goods covered by petitioner’s application and those covered by its registration are
actually related belonging as they do to the same class or have the same physical characteristics
with reference to their form, composition, texture, or quality, or if they serve the same purpose.
Respondent likewise draws parallelisms between the present controversy and the following
cases:29

(a) In Arce & Sons, Inc. vs. Selecta Biscuit Company,30 biscuits were held related to milk because
they were both food products;
(b) In Chua Che vs. Phil. Patents Office,31 soap and perfume, lipstick and nail polish are held to
be similarly related because they are common household items;

(c) In Ang vs. Teodoro,32 the trademark "Ang Tibay" for shoes and slippers was disallowed to be
used for shirts and pants because they belong to the same general class of goods; and

(d) In Khe vs. Lever Bros. Co.,33 soap and pomade, although noncompetitive, were held to be
similar or belong to the same class, since both are toilet articles.

Respondent avers that Kolin Electronics’ and Taiwan Kolin’s products are closely-related not only
because both fall under Class 9 of the NCL, but mainly because they both relate to electronic
products, instruments, apparatus, or appliances.34 Pushing the point, respondent would argue
that Taiwan Kolin and Kolin Electronics’ goods are inherently similar in that they are all plugged
into electric sockets and perform a useful function.35 Furthermore, respondent echoes the
appellate court’s ratiocination in denying petitioner’s application, viz:36

Significantly, Kolin Electronics’ goods (automatic voltage regulator; converter; recharger; stereo
booster; AC-DC regulated power supply; step-down transformer; and PA amplified AC-DC) and
Taiwan Kolin’s television sets and DVD players are both classified under class 9 of the NICE
agreement. At first glance, it is also evident that all these goods are generally described as
electrical devices. x x x [T]he goods of both Kolin Electronics and Taiwan Kolin will inevitably be
introduced to the public as "KOLIN" products and will be offered for sale in the same channels of
trade. Contrary to Taiwan Kolin’s claim, power supply as well as audio and stereo equipment like
booster and amplifier are not only sold in hardware and electrical shops. These products are
commonly found in appliance stores alongside television sets and DVD players. With the present
trend in today’s entertainment of having a home theater system, it is not unlikely to see a stereo
booster, amplifier and automatic voltage regulator displayed together with the television sets and
DVD players. With the intertwined use of these products bearing the identical "KOLIN" mark, the
ordinary intelligent consumer would likely assume that they are produced by the same
manufacturer.

In sum, the intertwined use, the same classification of the products as class 9 under the NICE
Agreement, and the fact that they generally flow through the same channel of trade clearly
establish that Taiwan Kolin’s television sets and DVD players are closely related to Kolin
Electronics’ goods. As correctly pointed out by the BLA-IPO, allowing Taiwan Kolin’s registration
would only confuse consumers as to the origin of the products they intend to purchase.
Accordingly, protection should be afforded to Kolin Electronics, as the registered owner of the
"KOLIN" trademark.37 (emphasis added)

The CA’s approach and reasoning to arrive at the assailed holding that the approval of petitioner’s
application is likely to cause confusion or deceive fail to persuade.

a. The products covered by

petitioner’s application and
respondent’s registration are
unrelated
A certificate of trademark registration confers upon the trademark owner the exclusive right to
sue those who have adopted a similar mark not only in connection with the goods or services
specified in the certificate, but also with those that are related thereto.38

In resolving one of the pivotal issues in this case––whether or not the products of the parties
involved are related––the doctrine in Mighty Corporation is authoritative. There, the Court held
that the goods should be tested against several factors before arriving at a sound conclusion on
the question of relatedness. Among these are:

(a) the business (and its location) to which the goods belong;

(b) the class of product to which the goods belong;

(c) the product’s quality, quantity, or size, including the nature of the package, wrapper or
container;

(d) the nature and cost of the articles;

(e) the descriptive properties, physical attributes or essential characteristics with reference to
their form, composition, texture or quality;

(f) the purpose of the goods;

(g) whether the article is bought for immediate consumption, that is, day-to-day household items;

(h) the fields of manufacture;

(i) the conditions under which the article is usually purchased; and

(j) the channels of trade through which the goods flow, how they are distributed, marketed,
displayed and sold.39

As mentioned, the classification of the products under the NCL is merely part and parcel of the
factors to be considered in ascertaining whether the goods are related. It is not sufficient to state
that the goods involved herein are electronic products under Class 9 in order to establish
relatedness between the goods, for this only accounts for one of many considerations enumerated
in Mighty Corporation. In this case, credence is accorded to petitioner’s assertions that:40

a. Taiwan Kolin’s goods are classified as home appliances as opposed to Kolin Electronics’ goods
which are power supply and audio equipment accessories;

b. Taiwan Kolin’s television sets and DVD players perform distinct function and purpose from
Kolin Electronics’ power supply and audio equipment; and

c. Taiwan Kolin sells and distributes its various home appliance products on wholesale and to
accredited dealers, whereas Kolin Electronics’ goods are sold and flow through electrical and
hardware stores.
Clearly then, it was erroneous for respondent to assume over the CA to conclude that all electronic
products are related and that the coverage of one electronic product necessarily precludes the
registration of a similar mark over another. In this digital age wherein electronic products have
not only diversified by leaps and bounds, and are geared towards interoperability, it is difficult to
assert readily, as respondent simplistically did, that all devices that require plugging into sockets
are necessarily related goods.

It bears to stress at this point that the list of products included in Class 941 can be sub-categorized
into five (5) classifications, namely: (1) apparatus and instruments for scientific or research
purposes, (2) information technology and audiovisual equipment, (3) apparatus and devices for
controlling the distribution and use of electricity, (4) optical apparatus and instruments, and (5)
safety equipment.42 From this sub-classification, it becomes apparent that petitioner’s products,
i.e., televisions and DVD players, belong to audio visiual equipment, while that of respondent,
consisting of automatic voltage regulator, converter, recharger, stereo booster, AC-DC regulated
power supply, step-down transformer, and PA amplified AC-DC, generally fall under devices for
controlling the distribution and use of electricity.

b. The ordinarily intelligent

buyer is not likely to be
confused

In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to

another, no rigid set rules can plausible be formulated. Each case must be decided on its merits,
with due regard to the goods or services involved, the usual purchaser’s character and attitude,
among others. In such cases, even more than in any other litigation, precedent must be studied in
the light of the facts of a 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.43 For a clearer
perspective and as matter of record, the following image on the left44 is the trademark applied
for by petitioner, while the image juxtaposed to its right45 is the trademark registered by
respondent:

While both competing marks refer to the word "KOLIN" written in upper case letters and in bold
font, the Court at once notes the distinct visual and aural differences between them: Kolin
Electronics’ mark is italicized and colored black while that of Taiwan Kolin is white in pantone
red color background. The differing features between the two, though they may appear minimal,
are sufficient to distinguish one brand from the other.

It cannot be stressed enough that the products involved in the case at bar are, generally speaking,
various kinds of electronic products. These are not ordinary consumable household items, like
catsup, soy sauce or soap which are of minimal cost.46 The products of the contending parties are
relatively luxury items not easily considered affordable. Accordingly, the casual buyer is
predisposed to be more cautious and discriminating in and would prefer to mull over his purchase.
Confusion and deception, then, is less likely.47 As further elucidated in Del Monte Corporation v.
Court of Appeals:48
x x x Among these, what essentially determines the attitudes of the purchaser, specifically his
inclination to be cautious, is the cost of the goods. To be sure, a person who buys a box of candies
will not exercise as much care as one who buys an expensive watch. As a general rule, an ordinary
buyer does not exercise as much prudence in buying an article for which he pays a few centavos
as he does in purchasing a more valuable thing. Expensive and valuable items are normally bought
only after deliberate, comparative and analytical investigation. But mass products, low priced
articles in wide use, and matters of everyday purchase requiring frequent replacement are bought
by the casual consumer without great care x x x. (emphasis added) Respondent has made much
reliance on Arce & Sons, Chua Che, Ang, and Khe, oblivious that they involved common household
items––i.e., biscuits and milk, cosmetics, clothes, and toilet articles, respectively–– whereas the
extant case involves luxury items not regularly and inexpensively purchased by the consuming
public. In accord with common empirical experience, the useful lives of televisions and DVD
players last for about five (5) years, minimum, making replacement purchases very infrequent.
The same goes true with converters and regulators that are seldom replaced despite the
acquisition of new equipment to be plugged onto it. In addition, the amount the buyer would be
parting with cannot be deemed minimal considering that the price of televisions or DVD players
can exceed today’s monthly minimum wage. In light of these circumstances, it is then expected
that the ordinary intelligent buyer would be more discerning when it comes to deciding which
electronic product they are going to purchase, and it is this standard which this Court applies
herein in determining the likelihood of confusion should petitioner’s application be granted.

To be sure, the extant case is reminiscent of Emerald Garment Manufacturing Corporation v.

Court of Appeals,49 wherein the opposing trademarks are that of Emerald Garment
Manufacturing Corporation’s "Stylistic Mr. Lee" and H.D. Lee’s "LEE." In the said case, the
appellate court affirmed the decision of the Director of Patents denying Emerald Garment’s
application for registration due to confusing similarity with H.D. Lee’s trademark. This Court,
however, was of a different beat and ruled that there is no confusing similarity between the marks,
given that the products covered by the trademark, i.e., jeans, were, at that time, considered pricey,
typically purchased by intelligent buyers familiar with the products and are more circumspect,
and, therefore, would not easily be deceived. As held:

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

The definition laid down in Dy Buncio v. Tan Tiao Bok50 is better suited to the present case.
There, the "ordinary purchaser" was defined as one "accustomed to buy, and therefore to some
extent familiar with, the goods in question. The test of fraudulent simulation is to be found in the
likelihood of the deception of some persons in some measure acquainted with an established
design and desirous of purchasing the commodity with which that design has been associated.
The test is not found in the deception, or the possibility of deception, of the person who knows
nothing about the design which has been counterfeited, and who must be indifferent between that
and the other. The simulation, in order to be objectionable, must be such as appears likely to
mislead the ordinary intelligent buyer who has a need to supply and is familiar with the article
that he seeks to purchase."51 (emphasis added)
Consistent with the above ruling, this Court finds that the differences between the two marks,
subtle as they may be, are sufficient to prevent any confusion that may ensue should petitioner’s
trademark application be granted. As held in Esso Standard Eastern, Inc.:52

Respondent court correctly ruled that considering the general appearances of each mark as a
whole, the possibility of any confusion is unlikely. A comparison of the labels of the samples of
the goods submitted by the parties shows a great many differences on the trademarks used. As
pointed out by respondent court in its appealed decision, "(A) witness for the plaintiff, Mr. Buhay,
admitted that the color of the ‘ESSO’ used by the plaintiff for the oval design where the blue word
ESSO is contained is the distinct and unique kind of blue. In his answer to the trial court’s
question, Mr. Buhay informed the court that the plaintiff never used its trademark on any product
where the combination of colors is similar to the label of the Esso cigarettes," and "Another
witness for the plaintiff, Mr. Tengco, testified that generally, the plaintiff’s trademark comes all in
either red, white, blue or any combination of the three colors. It is to be pointed out that not even
a shade of these colors appears on the trademark of the appellant’s cigarette. The only color that
the appellant uses in its trademark is green."

Even the lower court, which ruled initially for petitioner, found that a "noticeable difference
between the brand ESSO being used by the defendants and the trademark ESSO of the plaintiff is
that the former has a rectangular background, while in that of the plaintiff the word ESSO is
enclosed in an oval background."

All told, We are convinced that petitioner's trademark registration not only covers unrelated good,
but is also incapable of deceiving the ordinary intelligent buyer. The ordinary purchaser must be
thought of as having, and credited with, at least a modicum of intelligence to be able to see the
differences between the two trademarks in question.53

Questions of fact may still be entertained

On a final note, the policy according factual findings of courts a quo great respect, if not finality,
is not binding where they have overlooked, misapprehended, or misapplied any fact or
circumstance of weight and substances.54 So it must be here; the nature of the products involved
materially affects the outcome of the instant case. A reversal of the appellate Court's Decision is
then in order.

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The Decision and the
Resolution of the Court of Appeals in CA-G.R. SP No. 122565, dated April 30, 2013 and November
6, 2013, respectively, are hereby REVERSED and SET ASIDE. Accordingly, the Decision of the
Intellectual Property Office Director General in Inter Partes Case No. 14-2006-00096, dated
November 23, 2011, is hereby REINSTATED.

SO ORDERED.

G.R. No. 210693, June 07, 2017

EMERALD GARMENT MANUFACTURING CORPORATION, Petitioner, v. THE H.D. LEE

COMPANY, INC., Respondent.
RESOLUTION

REYES, J.:

Before the Court is the Petition for Review on Certiorari1 filed by Emerald Garment
Manufacturing Corporation (Emerald) against The H.D. Lee Company, Inc. (H.D. Lee) to assail
the Decision2 and Resolution3 of the Court of Appeals (CA), dated April 8, 2013 and January 6,
2014, respectively, in CA-G.R. SP No. 126253. The CA reversed the Decision4 dated August 10,
2012, of the Intellectual Property Office's (IPO) then Director General Ricardo R. Blancaflor (DG
Blancaflor) in Inter Partes Case No. 14-2007-00054, approving H.D. Lee's application for
registration of the trademark "LEE & OGIVE CURVE DESIGN."

Antecedents

On December 21, 2001, H.D. Lee filed before the IPO an application for the registration of the
trademark, "LEE & OGIVE CURVE DESIGN." H.D. Lee claimed that the said mark was first used
in the Philippines on October 31, 1996. Relative thereto, Application No. 4-2201-009602, on outer
clothing categorized under Class 25, which includes jeans, casual pants, trousers, slacks, shorts,
jackets, vests, shirts, blouses, sweaters, tops, skirts, jumpers, caps, hats, socks, shoes, suspenders,
belts and bandannas, was filed. Within three years from the filing of the application, H.D. Lee
submitted to the IPO a Declaration of Actual Use of the mark.5

H.D. Lee's application was published in the Intellectual Property Philippines' Electronic Gazette
for Trademarks, which was belatedly released on January 5, 2007.6

Emerald opposed H.D. Lee's application; hence, Inter Partes Case No. 14-2007-00054 arose.
Emerald argued that the approval of the application will violate the exclusive use of its marks,
"DOUBLE REVERSIBLE WAVE LINE," and "DOUBLE CURVE LINES," which it has been using
on a line of clothing apparel since October 1, 19737 and 1980, respectively. Further, Section
123.1(d)8 of Republic Act No. 8293, otherwise known as the Intellectual Property Code (IPC), will
likewise be breached because the "LEE & OGIVE CURVE DESIGN” is confusingly similar or
identical to the "DOUBLE CURVE LINES" previously registered in Emerald's name.9

Refuting Emerald's opposition, H.D. Lee insisted that it is the owner and prior user of "LEE &
OGIVE CURVE DESIGN." H.D. Lee maintained that it initially used the said mark on February
18, 1946, and registered the same in the United States of America (USA) on April 10, 1984 under
Registration No. 1,273,602. The mark has been commercially advertised and used all over the
world as well.10

Decision of the IPO's Director of the Bureau of Legal Affairs

On February 27, 2009, the then Director of Bureau of Legal Affairs (BLA), Atty. Estrellita Beltran
Abelardo (Atty. Abelardo), denied H.D. Lee's application. In its Decision,11 Atty. Abelardo
explained that H.D. Lee established neither its ownership of the mark "LEE & OGIVE CURVE
DESIGN'' nor its international reputation, viz.:
The evidence on record disclose that on December 21, 2001, when [H.D. Lee] filed Application
No. 4-2001-009602, [Emerald's] Application Serial No. 4-65682 for the re-registration of the
mark "DOUBLE CURVE LINES" was already pending as it was filed as early as September 6, 1988
x x x. In addition, long before December 21, 2001, [Emerald] adopted and has been using in
commerce since January 8, 1980 the trademark "DOUBLE CURVE LINES" together with its other
registered marks x x x up to the present x x x. Thus[,] pursuant to Section 2-A of Republic Act No.
166,12 as amended, the law then in force and effect, [Emerald] has become the owner of the mark
"DOUBLE CURVE LINES" through continuous commercial use thereof. On May 5, 1981, said
"DOUBLE CURVE LINES" was registered in favor of [Emerald] in the Supplemental Register
under Registration No. 5513 x x x, and on May 31, 1982, in the Principal Register under
Registration N[o]. 30810 x x x.

xxxx

The evidence on record also discloses that on December 21, 2001, when [H.D. Lee] filed its
opposed application, [Emerald's] Application Serial No. 70497 for the registration of the mark
DOUBLE REVERSIBLE WAVE LINE was also pending, the same having been filed on January 8,
1990 x x x. In addition, long before December 21, 2001, [Emerald] adopted and has been using in
commerce since October 1, 1973, the trademark "DOUBLE REVERSIBLE WAVE LINE[,]"
together with its other registered marks x x x, up to the present x x x. Thus, pursuant to Section
2-A of Republic Act No. 166, as amended, the law then in force and effect, [Emerald] has become
the owner of the mark "DOUBLE REVERSIBLE WAVE LINE" through continuous commercial
use thereof.

xxxx

The near resemblance or confusing similarity between the competing marks of the parties is
further heightened by the fact that both marks are used on identical goods, particularly, on jeans
and pants falling under Class 25.

xxxx

Moreover, it is a fundamental principle in Philippine Trademark Law that only the owner of a
trademark is entitled to register a mark in his[/her]/its name and that the actual use in commerce
in the Philippines is a prerequisite to the acquisition of ownership over a trademark. The evidence
on record clearly and convincingly shows (sic), that [Emerald] adopted and has been using the
mark DOUBLE REVERSIBLE WAVE LINE since October 1, 1973 x x x and the mark DOUBLE
CURVE LINES since January 8, 1980 x x x. Although [H.D. Lee] claimed in its Answer that it first
used the LEE & OGIVE CURVE DESIGNB [sic] trademark in the [USA] on or about February 18,
1946 x x x, it did not present any evidence to prove such claim of first use. The evidence presented
by [H.D. Lee] shows that it entered into a License Agreement with Authentic American Apparel,
Inc., only on January 1, 1996 x x x and its yearly sales reports started only from October 1996 x x
x.

[H.D. Lee] also claimed in its Answer that it registered its LEE & OGIVE CURVE DESIGN mark
in the [USA] on April 10, 1984 under Registration No. 1,273,602 x x x. [H.D. Lee], however, failed
to submit a duly certified and authenticated copy of its certificate of registration for Registration
No. 1,273,602. In fact, [H.D. Lee] did not submit any certified and authenticated certificate of
registration of its mark LEE & OGIVE CURVE DESIGN issued anywhere else. x x x.

x x xx

Examination of the documentary evidence submitted by [H.D. Lee] will show that it did not
submit any certified and authenticated certificate of registration of its mark anywhere else in the
world; likewise, it did not submit any proof of use of its mark outside of the Philippines, while its
use in the Philippines appears to have started only in October 1996 x x x, twenty[-]three (23) years
after [Emerald] started using its DOUBLE REVERSIBLE WAVE LINE (Back Pocket Design) on
October 1, 1973 x x x. [H.D. Lee] did not submit any proof of having promoted and advertised its
mark outside the Philippines, while in the Philippines[,] x x x it started preparing its yearly
advertising expenditures only on January 2000 x x x. None of its advertising clippings submitted
in evidence appeared before 2003 x x x.13 (Citations omitted, underlining ours and emphasis in
the original)

Decision of the IPO's DG

On appeal, DG Blancaflor rendered on August 10, 2012 a Decision14 reversing the findings of Atty.
Abelardo based on the grounds cited below:

[H.D. Lee] has established by substantial evidence that it is the owner of LEE & OGIVE CURVE
DESIGN. It has adduced evidence showing that it has registered and/or applied in 115 countries
around the world the mark LEE & OGIVE CURVE DESIGN and that it secured a certificate of
registration for this mark in the [USA] on April 1984. [H.D. Lee] also submitted proof of its
advertising activities and sales invoices.

That [Emerald] has trademark applications and/or registrations in the Philippines on marks
similar to [H.D. Lee] and which were filed and/or registered earlier than [H.D. Lee's] trademark
application is not sufficient to overcome the pieces of evidence proving [H.D. Lee's] ownership of
LEE & OGIVE CURVE DESIGN. It is not the application or the registration that confers ownership
of a mark but it is the ownership thereof that confers the right to registration.

Moreover, [H.D. Lee] has shown that LEE & OGIVE CURVE DESIGN is a well-known mark. x x
x

xxxx

[H.D. Lee's] pieces of evidence satisfy a combination of the criteria x x x such as the duration,
extent and geographical area of any use of the mark, the extent to which the mark has been
registered in the world, and the extent to which the mark has been used in the world. [H.D. Lee]
cited the over 100 countries where it has registered and/ or applied for the registration of LEE &
OGIVE CURVE DESIGN. The affidavits of Helen L. Winslow and Wilfred T. Siy explained the
long, continuous and global use of [H.D. Lee's] mark. These pieces of evidence are sufficient
enough to consider [H.D. Lee's] mark as well-known internationally and in the Philippines.

Furthermore, there is nothing in the records which explained how [Emerald] came to use a highly
distinctive sign such as a "Back Pocket Design" or the "Double Curve Lines" which are identical
or confusingly similar to the well-known mark LEE & OGIVE CURVE DESIGN. The absence of
any explanation on how [Emerald] conceived these marks gives credence to the position that
[H.D. Lee] is the owner and creator of LEE & OGIVE CURVE DESIGN and is, therefore, entitled
to the registration of this mark.15 (Citations omitted and underlining ours)

Ruling of the CA

Undaunted, Emerald filed a petition for review16 under Rule 43 of the Rules of Court, which the
CA denied in the herein assailed decision.17

According to the CA, H.D. Lee substantially complied with the procedural requirements in filing
before the IPO a petition for registration of the mark "LEE & OGIVE CURVE DESIGN."

Further, the CA considered the following factors in H.D. Lee's favor: (1) while the mark "LEE &
OGIVE CURVE DESIGN" is registered only in India and Greece, with pending application in the
Philippines, the "OGIVE CURVE DESIGN" is registered and/or applied for registration in about
100 countries;18 (2) the inconsistent dates, to wit, 1946 and 1949, which H.D. Lee claimed as the
year when it initially used the mark "LEE & OGIVE CURVE DESIGN," will not affect its position
as being the first and prior user thereof for at least 20 years before Emerald utilized the marks
"DOUBLE REVERSIBLE WAVE LINE” and "DOUBLE CURVE LINES" in 1973 and 1980,
respectively;19 (3) registration in the Principal Register is limited to the actual owner of the
trademark, hence, the Certificate of Registration issued to Emerald by the IPO on May 31, 1982
covering the mark "DOUBLE CURVE LINES," which pre-dated the registration in the USA of the
mark "OGIVE CURVE DESIGN'' on April 10, 1984, merely gave rise to a prima facie but rebuttable
proof of registrant's ownership of a mark;20 (4) even if the mark "LEE & OGIVE CURVE
DESIGN” is not locally registered, it is entitled to protection as a well-known brand under the IPC
and international treaties entered into by the Philippines;21 (5) H.D. Lee cannot be blamed
regarding the confusing similarity between the marks "DOUBLE REVERSIBLE WAVE LINE” and
"OGIVE CURVE DESIGN'' considering that it has been using the latter design for at least two
decades earlier than Emerald;22 and (6) it is of judicial notice that in the 1950s movie, "Rebel
Without a Cause," James Dean wore H.D. Lee's jeans with the "OGIVE CURVE DESIGN'' sewn in
the back pockets.23

Emerald moved for reconsideration, pointing out that in G.R. No. 195415,24 the Court issued
Resolutions, dated November 28, 201225 and January 28, 2013,26 which denied with finality
H.D. Lee's opposition against Emerald's registration of the mark "DOUBLE REVERSIBLE WAVE
LINE." In the Resolution dated November 28, 2012, the Court's reasons were unequivocal, viz.:

First, the evidence proferred by [Emerald] sufficiently proves that it has been actually using the
mark "DOUBLE REVERSIBLE WAVE LINE (Back Pocket Design)" since October 1973. The sales
invoices established actual commercial use of the mark more than two months prior to
[Emerald's] application for its registration in 1990.

Second, [H.D. Lee] was not able to prove that the mark "OGIVE CURVE DEVICE" was well known
internationally and in the Philippines at the time of the filing of [Emerald's] application for
registration. For a trademark to be protected, the same must be "well known" in the country where
protection is sought. Such is not the case here, since the sale of garments in the Philippines
bearing [H.D. Lee's] mark "OGIVE CURVE DEVICE" began only in 1996. Prior to said date, there
was no substantial evidence proving commercial use of goods bearing the mark in the
Philippines.27

In the herein assailed Resolution28 dated January 6, 2014, the CA denied Emerald's motion for
reconsideration. According to the CA, it was belatedly notified of the Court's Resolutions dated
November 28, 2012 and January 28, 2013 in G.R. No. 195415 only on April 10, 2013.29 Further,
even if the aforementioned resolutions were promptly brought to the CA's attention, the rule on
"conclusiveness of judgment" still finds no application. In G.R. No. 195415, the issue was the non-
registrability of Emerald's mark "DOUBLE REVERSIBLE WAVE LINE" based on the opposer
H.D. Lee's claim that "OGIVE CURVE DESIGN" is internationally well-known and legally
protected by the Paris Convention and other pertinent trademark laws. The issues, which were
resolved, centered on the goodwill and prior use of Emerald's mark in the Philippines.30 On the
other hand, in CA-G.R. SP No. 12625, from which the petition now before the Court arose, the
issue was the non-registrability of H.D. Lee's mark "LEE & OGIVE CURVE DESIGN" for being
confusingly similar to the marks "DOUBLE REVERSIBLE WAVE LINE" and "DOUBLE CURVE
LINES," which are registered in Emerald's name. The focal issue is "LEE & OGIVE CURVE
DESIGN's" alleged international reputation, hence, the dispensability of its prior use in the
Philippines.31

The Proceedings Before the Court

In the instant petition for review on certiorari,32 Emerald argues that the herein assailed decision
and resolution are in conflict with the final and executory dispositions rendered in G.R. No.
195415. The Court already upheld the registration of Emerald's mark "DOUBLE REVERSIBLE
WAVE LINE (Back Pocket Design)," and an Entry of Judgment33 was thereafter recorded on
March 20, 2013.34 Further, Emerald's prior application for the registration of its mark "DOUBLE
CURVE LINES''35 had likewise been resolved with finality by the IPO DG on June 5, 2008, and
the corresponding Entry of Judgment was recorded on October 21, 2008.36 Hence, the principle
of conclusiveness of judgment under Rule 39, Section 47(b) and (c)37 of the Rules of Court
applies. The issues of confusing similarity between the marks involved herein and their prior use
had been determined with finality by the Court and the IPO DG. The same issues can no longer
be raised before the CA in CA-G.R. SP No. 126253 from which the instant petition arose.

Repetitive as it may be, in G.R. No. 195415, the Court had adjudged that Emerald had prior actual
use in the Philippines of the mark "DOUBLE REVERSIBLE WAVE LINE (Back Pocket Design)"
since October of 1973. In Inter Partes Case No. 3498, the IPO DG had ruled that Emerald started
using the mark "DOUBLE CURVE LINES” on January 8, 1980. On the other hand, H.D. Lee
initially sold in the Philippines garments with the mark "OGIVE CURVE DEVICE” only in 1996,
and filed an application for the said mark in the USA on November 9, 1981.38

Emerald likewise emphasizes the following: (1) on January 19, 1990, H.D Lee applied for the
registration of the mark "OGIVE CURVE DESIGN," but the same was abandoned with finality as
indicated in the IPO's website;39 (2) contrary to H.D. Lee's representations, the mark "LEE &
OGIVE CURVE DESIGN” is not registered in the USA, its home country, as USA Registration No.
1,273,602 issued on April 10, 1984 merely covers the mark "OGIVE CURVE DESIGN”;40 (3) the
mark "LEE & OGIVE CURVE DESIGN" was only registered in Greece and India in 1996, while in
other countries, the pending applications for registration pertain to "OGIVE CURVE DESIGN”;41
and (4) in the Declaration of Actual Use filed before the IPO on May 13, 2002, H.D. Lee indicated
that it first used the mark "LEE & OGIVE CURVE DESIGN” in the Philippines only on October
31, 1996.42

In the Resolution43 dated March 24, 2014, the Court initially denied the instant petition for
failure to sufficiently show any reversible error committed by the CA.

Emerald moved for reconsideration44 primarily anchored on the argument that the non-
registrability of H.D. Lee's mark "LEE & OGIVE CURVE DESIGN" is a foregone conclusion in
view of the finality of the Resolution issued by the Court relative to the mark "DOUBLE
REVERSIBLE WAVE LINE (Back Pocket Design)" in G.R. No. 195415.

It was further argued that "OGIVE CURVE DESIGN," being the dominant feature of the mark
"LEE & OGIVE CURVE DESIGN," can no longer be registered by H.D. Lee due to its confusing
similarity to Emerald's "DOUBLE REVERSIBLE WAVE LINE (Back Pocket Design)" and
"DOUBLE CURVE LINES." Section 123.1(d) of the IPC precludes registration of a mark identical
with another with an earlier filing or priority date.45

Emerald concluded that the principle of conclusiveness of judgment applies. The Court's
disposition in G.R. No. 195415 and the IPO's ruling in Inter Partes Case No. 3498, both of which
had become final and executory, proscribe H.D. Lee from further pursuing the registration of the
mark "LEE & OGIVE CURVE DESIGN."46

In the Comment47 on the Motion for Reconsideration, H.D. Lee averred that Emerald merely
reiterated the arguments raised in the petition, which had already been judiciously resolved by
the Court.48 Further, there exists no identity of issues raised in G.R. No. 195415, on one hand,
and in the instant petition, on the other. In G.R. No. 195415, the issue was the non-registrability
of the mark "DOUBLE REVERSIBLE WAVE LINE” in view of the alleged international use and
well-renowned character of the mark "OGIVE CURVE DESIGN" In the instant petition, the issue
is the non-registrability of the mark "LEE & OGIVE CURVE DESIGN," which has confusing
similarity with the already registered marks "DOUBLE CURVE LINES'' and "DOUBLE
REVERSIBLE WAVE LINE."49

In its Reply,50 Emerald insisted that the instant petition still involves the issue of the confusing
similarity between "OGIVE CURVE DESIGN," on one hand, and "DOUBLE REVERSIBLE WAVE
LINE” and "DOUBLE CURVE LINES," on the other. While H.D. Lee claims that the issue herein
is the registrability of "LEE & OGIVE CURVE DESIGN," the dominant feature of the mark sought
to be registered remains to be the "OGIVE CURVE DESIGN." The latter had been among the foci
of G.R. No. 195415. Moreover, "LEE & OGIVE CURVE DESIGN" is a composite mark, the parts
of which can be registered separately. H.D. Lee already registered "LEE" in its name, but it
abandoned the application to register "OGIVE CURVE DESIGN” which was filed before the IPO
on January 19, 1990.51 Emerald also stressed anew that on April 4, 2013, before the promulgation
of the herein assailed Decision on April 8, 2013, the CA had been furnished with copies of the
Court's Resolutions dated November 28, 2013 and January 28, 2014 in G.R. No. 195415.52

On November 28, 2016, the Court issued a Resolution53 reinstating the instant petition to afford
the contending parties ample opportunities to argue their respective stances.
In its Comment54 on the instant petition, H.D. Lee once again stresses the lack of identity between
the facts and issues presented herein with those resolved in G.R. No. 195415 and Inter Partes Case
No. 3498. H.D. Lee posits that G.R. No. 195415 and Inter Partes Case No. 3498 dealt with the
registrability of the mark "OGIVE CURVE DESIGN," which is distinct and separate from "LEE &
OGIVE CURVE DEVICE," subject of the instant petition.55

Further, even granting for argument's sake that by reason of the similarities of the marks involved,
the issues are indeed identical, prior decisions cannot bar a contrary disposition from being
subsequently rendered as the result would be the preclusion of any application for registration of
variants of a mark.56

By way of a Reply57 to H.D. Lee's Comment, Emerald reiterates its contentions already raised in
the instant petition.

Ruling of the Court

The instant petition is impressed with merit.

The present controversy arose from H.D. Lee's application for the registration of the mark "LEE
& OGIVE CURVE DESIGN," which was filed in 2001, pending the final resolution of Emerald's
separate applications for the registration of the marks "DOUBLE CURVE LINES'' and "DOUBLE
REVERSIBLE WAVE LINE (Back Pocket Design)."

In 2009, then BLA Director Atty. Abelardo denied H.D. Lee's application for registration of
"OGIVE CURVE DESIGN" by reason of opposer Emerald's proven prior commercial use of
"DOUBLE REVERSIBLE WAVE LINE." Back then, Atty. Abelardo already took note of the
pendency of Emerald's two separate applications for the registration of "DOUBLE CURVE LINES"
and "DOUBLE REVERSIBLE WAVE LINE." 58

Despite the foregoing, the IPO's DG and CA proceeded to resolve the case unmindful of the
pending applications for the registration of "DOUBLE CURVE LINES" and "DOUBLE
REVERSIBLE WAVE LINE" previously filed by Emerald.

Meanwhile, in G.R. No. 195415, the Court, via the Resolutions dated November 28, 2012 and
January 28, 2013, made the following findings with finality: (1) Emerald has been using the mark
"DOUBLE REVERSIBLE WAVE LINE (Back Pocket Design)" since October 1973, with sales
invoices proving actual commercial use of the mark more than two months before the application
for its registration in 1990; (2) H.D. Lee's sale of its garments in the Philippines only began in
1996; and (3) H.D. Lee failed to prove that the mark "OGIVE CURVE DEVICE" was well-known
locally and internationally at the time Emerald filed its application for the registration of the mark
"DOUBLE REVERSIBLE WAVE LINE (Back Pocket Design)."59

On the other hand, Emerald's application for the registration of its mark "DOUBLE CURVE
LINES" had likewise been resolved with finality by the IPO DG on June 5, 2008, and the
corresponding Entry of Judgment was recorded on October 21, 2008.60

In Pryce Corporation v. China Banking Corporation,61 the Court declared that:

[W]ell-settled is the principle that a decision that has acquired finality becomes immutable and
unalterable and may no longer be modified in any respect even if the modification is meant to
correct erroneous conclusions of fact or law and whether it will be made by the court that rendered
it or by the highest court of the land.

The reason for this is that litigation must end and terminate sometime and somewhere, and it is
essential to an effective and efficient administration of justice that, once a judgment has become
final, the winning party be not deprived of the fruits of the verdict. Courts must guard against any
scheme calculated to bring about that result and must frown upon any attempt to prolong the
controversies.62

The Court also emphatically instructs anent the concept and application of res judicata, viz.:

According to the doctrine of res judicata, "a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on
all points and matters determined in the former suit."

The elements for res judicata to apply are as follows: (a) the former judgment was final; (b) the
court that rendered it had jurisdiction over the subject matter and the parties; (c) the judgment
was based on the merits; and (d) between the first and the second actions, there was an identity
of parties, subject matters, and causes of action.

Res judicata embraces two concepts: (1) bar by prior judgment and (2) conclusiveness of
judgment.

Bar by prior judgment exists "when, as between the first case where the judgment was rendered
and the second case that is sought to be barred, there is identity of parties, subject matter, and
causes of action."

On the other hand, the concept of conclusiveness of judgment finds application "when a fact or
question has been squarely put in issue, judicially passed upon, and adjudged in a former suit by
a court of competent jurisdiction." This principle only needs identity of parties and issues to
apply.63 (Citations omitted)

H.D. Lee argues that the principle of conclusiveness of judgment does not apply since no identity
of issue exists between the instant petition, on one hand, and G.R. No. 195415, on the other. The
Court finds the foregoing untenable as the issues all point to the registrability of the confusingly
similar marks "DOUBLE CURVE LINES," "DOUBLE REVERSIBLE WAVE LINE," and "OGIVE
CURVE DESIGN." Further, H.D. Lee's claim that the instant petition involves the mark "LEE &
OGIVE CURVE DESIGN" and not "OGIVE CURVE DESIGN" is specious and a clear attempt to
engage into hair-splitting distinctions. A thorough examination of the pleadings submitted by
H.D. Lee itself shows that indeed, the focus is the "OGIVE CURVE DESIGN," which remains to
be the dominant feature of the mark sought to be registered. The Court needs to stress that in G.R.
No. 195415 and Inter Partes Case No. 3498 before the IPO, Emerald had already established with
finality its rights over the registration of the marks "DOUBLE CURVE LINES" and "DOUBLE
REVERSIBLE WAVE LINE" as against H.D. Lee's "OGIVE CURVE DESIGN."
As a final note, the courts are reminded to be constantly vigilant in extending their judicial gaze
to cases related to the matters submitted for their resolution as to ensure against judicial
confusion and any seeming conflict in the judiciary's decisions.64

WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution, of the
Court of Appeals dated April 8, 2013 and January 6, 2014, respectively, in CA-G.R. SP No. 126253,
are REVERSED and SET ASIDE. The H.D. Lee Company, Inc.'s application for the registration of
the mark "LEE & OGIVE CURVE DESIGN" is DENIED.

SO ORDERED.

SOCIETE DES PRODUITS, NESTLE, S.A., PETITIONER, VS. PUREGOLD PRICE CLUB, INC.,
RESPONDENT.

DECISION
CARPIO, ACTING C.J.:

The Case

Before the Court is a petition for review on certiorari[1] assailing the 15 May 2014 Resolution[2]
and the 14 October 2014 Resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 134592.

The Facts

Petitioner Societe des Produits Nestle, S.A. (Nestle) is a corporation organized and existing under
the laws of Switzerland which is engaged in the business of marketing and selling of coffee, ice
cream, chocolates, cereals, sauces, soups, condiment mixes, dairy and non-dairy products, etc.[4]
Respondent Puregold Price Club, Inc. (Puregold) is a corporation organized under Philippine law
which is engaged in the business of trading goods such as consumer goods on wholesale or on
retail basis.[5]

On 14 June 2007, Puregold filed an application[6] for the registration of the trademark "COFFEE
MATCH" with the Intellectual Property Office (IPO). The registration was filed by Puregold for
use on coffee, tea, cocoa, sugar, artificial coffee, flour and preparations made from cereals, bread,
pastry and confectionery, and honey under Class 30 of the International Classification of
Goods.[7]

On 5 December 2008, Nestle filed an opposition[8] against Puregold's application for

registration. Nestle alleged that it is the exclusive owner of the "COFFEE-MATE" trademark and
that there is confusing similarity between the "COFFEE-MATE" trademark and Puregold's
"COFFEE MATCH" application.[9] Nestle alleged that "COFFEE-MATE" has been declared an
internationally well-known mark and Puregold's use of "COFFEE MATCH" would indicate a
connection with the goods covered in Nestle's "COFFEE-MATE" mark because of its distinct
similarity. Nestle claimed that it would suffer damages if the application were granted since
Puregold's "COFFEE MATCH" would likely mislead the public that the mark originated from
Nestle.[10]

The Decision of the Bureau of Legal Affairs-Intellectual Property Office

In a Decision[11] dated 16 April 2012, the Bureau of Legal Affairs-Intellectual Property Office
(BLA-IPO) dismissed Nestle's opposition. The BLA-IPO ruled that Nestle's opposition was
defective because the verification and certification against forum shopping attached to Nestle's
opposition did not include a board of directors' resolution or secretary's certificate stating Mr.
Dennis Jose R. Barot's (Barot) authority to act on behalf of Nestle. The BLA-IPO ruled that the
defect in Nestle's opposition was sufficient ground to dismiss.[12]

The BLA-IPO held that the word "COFFEE" as a mark, or as part of a trademark, which is used on
coffee and similar or closely related goods, is not unique or highly distinctive. Nestle combined
the word "COFFEE" with the word "-MATE," while Puregold combined the word "COFFEE" with
the word "MATCH." The BLA-IPO ruled that while both Nestle's "-MATE" and Puregold's
"MATCH" contain the same first three letters, the last two in Puregold's mark rendered a visual
and aural character that makes it easily distinguishable from Nestle's "COFFEE-MATE."[13] Also,
the letter "M" in Puregold's mark is written as an upper case character and the eyes of a consumer
would not be confused or deceived by Nestle's "COFFEE-MATE" where the letter "M" is written
in lower case. Consequently, the BLA-IPO held that the consumer cannot mistake the mark and
the products of Nestle as those of Puregold's.[14]

The dispositive portion of the Decision states:

WHEREFORE, premises considered, the instant opposition is hereby DISMISSED. Let the
filewrapper of Trademark Application Serial No. 4-2007-006134 be returned, together with a
copy of this DECISION, to the Bureau of Trademarks for information and appropriate action.

SO ORDERED.[15]
On 11 June 2012, Nestle filed an appeal[16] with the Office of the Director General of the
Intellectual Property Office (ODG-IPO).

The Decision of the ODG-IPO

In a Decision[17] dated 7 February 2014, the Office of the ODG-IPO dismissed Nestle's appeal.
The ODG-IPO held that Barot's authority to sign the certification against forum shopping was not
sufficiently proven by Nestle. The ODG-IPO ruled that Barot's authority, which was contained in
the power of attorney executed, should not be given weight unless accompanied by proof or
evidence of his authority from Nestle.[18]

The ODG-IPO held that the competing marks are not confusingly similar and that consumers
would unlikely be deceived or confused from Puregold's use of "COFFEE MATCH." The ODG-IPO
ruled that the common feature of "COFFEE" between the two marks cannot be exclusively
appropriated since it is generic or descriptive of the goods in question. The ODG-IPO ruled that
there is no visual, phonetic, or conceptual similarity between the two marks. Visual similarity is
not present in the two marks, as Nestle's mark consists of a hyphenated word with the paired word
being "MATE" while Puregold's mark consists of the paired word "MATCH." While it is true that
the first three letters "M," "A," and "T" are common in the two marks, Puregold's mark, which are
two separate words, with the capitalization of the letters "C" and "M," is readily apparent when
"COFFEE MATCH" and "COFFEE-MATE" are compared side by side.[19]

The dispositive portion of the Decision states:

WHEREFORE, premises considered, the appeal is hereby DISMISSED. Let a copy of this Decision
and the records of this case be furnished and returned to the Director of 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.

SO ORDERED.[20]
On 14 April 2014, Nestle filed a Petition for Review[21] with the Court of Appeals.

The Decision of the CA

In a Resolution dated 15 May 2014, the CA dismissed Nestle's petition for review on procedural
grounds.

The Resolution states:

A perusal of the Petition for Review shows that:

1. the title thereof does not bear the name of party respondent Puregold Price Club, Inc.

2. there is no board resolution and/or secretary's certificate to prove the authority of Dennis Jose
R. Barot to file the petition and to sign the Verification/Certification of Non-Forum Shopping on
behalf of petitioner-corporation; and

3. certified true copies of material [portions] of the record which were mentioned therein were
not attached, such as respondent's trademark application (rollo, p. 12), petitioner's Opposition
thereto, Reply, the parties' respective position papers, petitioner's appeal, respondent's Comment,
the parties' respective memoranda, etc.

The above considering, the Court RESOLVES to DISMISS the petition outright.[22]
On 13 June 2014, Nestle filed a Motion for Reconsideration[23] which was denied by the CA on
14 October 2014.[24] The Resolution of the CA states:
We DENY the Motion for Reconsideration because it is without merit.

The petitioner filed the Petition beyond the 15-day reglementary period.

Under Rule 43, Section 4 of the Rules of Court, a party may file an appeal to this Court from quasi-
judicial bodies like the Intellectual Property Office, within 15 days from receipt of the assailed
judgment, order, or resolution.

Petitioner's counsel of record before the Intellectual Property Office ("IPO"), the Sapalo Velez
Bundang & Bulilan Law Offices ("SVBB Law Offices") received a copy of the assailed Decision on
19 February 2014. Thus, petitioner had until 7 March 2014 to appeal. While the Bengzon Negre &
Untalan Law Offices ("Bengzon Law Offices") entered its appearance before the IPO, no evidence
was submitted before this Court showing that the Bengzon Law Offices was properly substituted
as petitioner's counsel in place of SVBB Law Offices (petitioner's counsel of record). Thus, the 15-
day reglementary period started to run from the date SVBB Law Offices received a copy of the
Decision.
Clearly, when petitioner filed the Motion for Extension on 27 March 2014, and the Petition on 14
April 2014, the reglementary period had already lapsed.

Further, the petitioner obstinately refuses to cure the procedural infirmities we observed in the
Resolution of 15 May 2014.

SO ORDERED.[25]
The Issues

Nestle presented the following issues in this petition:

1. The Honorable Court of Appeals erred in dismissing petitioner's motion for reconsideration
upon an erroneous appreciation of certain antecedent facts, and similarly erred in dismissing the
petition for review on procedural grounds.

2. There is merit to the substantive issues raised by petitioner, which deserves to be given due
course and a final ruling.[26]
The Ruling of this Court

We deny the petition.

Before discussing the substantive issues, we shall first discuss the procedural issues in this case.

Nestle filed its petition for review within the period granted by the Court of Appeals.

The CA dismissed Nestle's petition for review on the ground that Nestle filed its petition for review
after the 15-day reglementary period required by Section 4, Rule 43 of the Rules of Court.

The CA is wrong.

Section 4, Rule 43 of the Rules of Court states:

Section 4. Period of appeal. — The appeal shall be taken within fifteen (15) days from 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. Only
one (1) motion for reconsideration shall be allowed. Upon proper motion and the payment of the
full amount of the docket fee before the expiration of the reglementary period, the Court of
Appeals may grant an additional period of fifteen (15) days only within which to file the petition
for review. No further extension shall be granted except for the most compelling reason and in no
case to exceed fifteen (15) days.
During the proceedings in the ODG-IPO, Nestle substituted its counsel, Sapalo, Velez, Bundang
and Bulilan Law Offices, with Bengzon, Negre and Untalan Law Offices (Nestle's substituted
counsel). On 20 September 2013, Nestle's substituted counsel entered its appearance in the ODG-
IPO.[27] In an Order[28] dated 1 October 2013, the ODG-IPO noted the appearance of Nestle's
substituted counsel and included their appearance in the records of the case, to wit:
Wherefore, the APPEARANCE is hereby noted and included in the records. Accordingly, let copies
of all pleadings, orders, notices and communications, be sent to the aforementioned address.

SO ORDERED.[29]
The Decision of the ODG-IPO was received by Nestle's substituted counsel on 14 March 2014. On
27 March 2014, within the 15-day reglementary period provided for by Section 4 of Rule 43, Nestle
filed a Motion for Extension of Time to file Verified Petition for Review[30] (motion for extension)
with the CA. In a Resolution[31] dated 3 April 2014, the CA granted Nestle's motion for extension
and gave Nestle until 13 April 2014 to file its petition for review. The resolution states:
The Court GRANTS petitioner's Motion for Extension of Time to File Verified Petition for Review
and gives petitioner until April 13, 2014 within which to do so.[32]
Since 13 April 2014 fell on a Sunday, Nestle had until 14 April 2014, which was the next working
day, within which to file the petition for review. Nestle did file the petition for review with the CA
on 14 April 2014. Accordingly, the CA committed a grave error when it ruled that Nestle's petition
for review was filed beyond the prescribed period.

Nestle failed to properly execute a certification against forum shopping as required by Section 5,
Rule 7 of the Rules of Court.

Section 5, Rule 7 of the Rules of Court provides:

Section 5. Certification against forum shopping. — The plaintiff or principal party shall certify
under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore
commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-
judicial agency and, to the best of his knowledge, no such other action or claim is pending therein;
(b) if there is such other pending action or claim, a complete statement of the present status
thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed
or is pending, he shall report that fact within five (5) days therefrom to the court wherein his
aforesaid complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of
the complaint or other initiatory pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall constitute indirect
contempt of court, without prejudice to the corresponding administrative and criminal actions. If
the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the
same shall be ground for summary dismissal with prejudice and shall constitute direct contempt,
as well as a cause for administrative sanctions. (Emphasis supplied)
In Zulueta v. Asia Brewery, Inc.,[33] this Court ruled that the requirements under the Rules of
Court involving the certification against forum shopping apply both to natural and juridical
persons, to wit: "[t]he requirement that the petitioner should sign the certificate of non-forum
shopping applies even to corporations, considering that the mandatory directives of the Circular
and the Rules of Court make no distinction between natural and juridical persons."[34]

In Fuentebella v. Castro,[35] this Court held that the certification against forum shopping must
be signed by the principal party. In case the principal party cannot sign, the one signing on his or
her behalf must have been duly authorized, to wit: "the petitioner or the principal party must
execute the certification against forum shopping. The reason for this is that the principal party
has actual knowledge whether a petition has previously been filed involving the same case or
substantially the same issues. If, for any reason, the principal party cannot sign the petition, the
one signing on his behalf must have been duly authorized."[36]
Juridical persons, including corporations, that cannot personally sign the certification against
forum shopping, must act through an authorized representative. The exercise of corporate powers
including the power to sue is lodged with the board of directors which acts as a body representing
the stockholders. For corporations, the authorized representative to sign the certification against
forum shopping must be selected or authorized collectively by the board of directors. In Eslaban,
Jr. v. Vda. de Onorio,[37] this Court ruled that if the real party in interest is a corporation, an
officer of the corporation acting alone has no authority to sign the certification against forum
shopping. An officer of the corporation can only validly sign the certification against forum
shopping if he or she is authorized by the board of directors through a board resolution or
secretary's certificate. In Gonzales v. Climax Mining Ltd.,[38] this Court ruled that a board
resolution authorizing a corporate officer to execute the certification against forum shopping is a
necessary requirement under the Rules. A certification signed by a person who was not duly
authorized by the board of directors renders the petition for review subject to dismissal.[39]

The authority of the representative of a corporation to sign the certification against forum
shopping originates from the board of directors through either a board of directors' resolution or
secretary's certificate which must be submitted together with the certification against forum
shopping. In Zulueta, this Court declared invalid a petition for review with a certification against
forum shopping signed by the party's counsel which was not supported by a board resolution or
secretary's certificate proving the counsel's authority. This Court dismissed the case and held:
"[t]he signatory in the Certification of the Petition before the CA should not have been
respondents' retained counsel, who would not know whether there were other similar cases of the
corporation. Otherwise, this requirement would easily be circumvented by the signature of every
counsel representing corporate parties."[40] Likewise, in Eslaban, this Court held that a
certification signed by counsel alone is defective and constitutes a valid cause for the dismissal of
the petition.[41]

Nestle, itself, acknowledged in this petition the absence of a board resolution or secretary's
certificate issued by the board of directors of Nestle to prove the authority of Barot to sign the
certification against forum shopping on behalf of Nestle, to wit: "[t]hus, while there is no board
resolution and/or secretary's certificate to prove the authority of Dennis Jose R. Barot to file the
petition and Verification/Certification of Non-Forum Shopping on behalf of petitioner-
corporation, there is a Power of Attorney evidencing such authority."[42] The power of attorney
submitted by Nestle in favor of Barot was signed by Celine Jorge. However, the authority of Celine
Jorge to sign the power of attorney on behalf of Nestle, allowing Barot to represent Nestle, was
not accompanied by a board resolution or secretary's certificate from Nestle showing that Celine
Jorge was authorized by the board of directors of Nestle to execute the power of attorney in favor
of Barot. In Development Bank of the Philippines v. Court of Appeals,[43] this Court held that the
failure to attach a copy of a board resolution proving the authority of the representative to sign
the certification against forum shopping was fatal to its petition and was sufficient ground to
dismiss since the courts are not expected to take judicial notice of board resolutions or secretary's
certificates issued by corporations, to wit:
What petitioners failed to explain, however, is their failure to attach a certified true copy of
Resolution No. 0912 to their petition for certiorari in CA-G.R. SP No. 60838. Their omission is
fatal to their case. Courts are not, after all, expected to take judicial notice of corporate board
resolutions or a corporate officer's authority to represent a corporation. To be sure, petitioners'
failure to submit proof that Atty. Demecillo has been authorized by the DBP to file the petition is
a "sufficient ground for the dismissal thereof."[44] (Emphasis supplied)
Accordingly, the CA did not err in ruling that the petition for review should be dismissed due to
the failure of Nestle to comply with the proper execution of the certification against forum
shopping required by Section 5, Rule 7 of the Rules of Court.

Puregold's mark may be registered.

A trademark is any distinctive word, name, symbol, emblem, sign, or device, or any combination
thereof, adopted and used by a manufacturer or merchant on his goods to identify and distinguish
them from those manufactured, sold, or dealt by others.[45] Section 123 of Republic Act No.
8293[46] (RA 8293) provides for trademarks which cannot be registered, to wit:
Sec. 123. Registrability. -
123.1 A mark[47] cannot be registered if it:
xxxx

(d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier
filing or priority date, in respect of:

(i) The same goods or services, or

(ii) Closely related goods or services, or

(iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion;

(e) Is identical with, or confusingly similar to, or constitutes a translation of a mark which is
considered by the competent authority of the Philippines to be well- known internationally and in
the Philippines, whether or not it is registered here, as being already the mark of a person other
than the applicant for registration, and used for identical or similar goods or services: Provided,
That in determining whether a mark is well-known, account shall be taken of the knowledge of
the relevant sector of the public, rather than of the public at large, including knowledge in the
Philippines which has been obtained as a result of the promotion of the mark;

(f) Is identical with, or confusingly similar to, or constitutes a translation of a mark considered
well-known in accordance with the preceding paragraph, which is registered in the Philippines
with respect to goods or services which are not similar to those with respect to which registration
is applied for: Provided, That use of the mark in relation to those goods or services would indicate
a connection between those goods or services, and the owner of the registered mark: Provided
further, That the interests of the owner of the registered mark are likely to be damaged by such
use;

(g) Is likely to mislead the public, particularly as to the nature, quality, characteristics or
geographical origin of the goods or services;

(h) Consists exclusively of signs that are generic for the goods or services that they seek to identify;

x x x x (Emphasis supplied)
In Coffee Partners, Inc. v. San Francisco & Roastery, Inc.,[48] this Court held that the gravamen
of trademark infringement is the likelihood of confusion. There is no absolute standard for the
likelihood of confusion. Only the particular, and sometimes peculiar, circumstances of each case
can determine its existence. Thus, in infringement cases, precedents must be evaluated in the light
of each particular case.[49]

In determining similarity or likelihood of confusion, our jurisprudence has developed two tests:
the dominancy test and the holistic test.[50] The dominancy test focuses on the similarity of the
prevalent features of the competing trademarks that might cause confusion and deception. If the
competing trademark contains the main, essential, and dominant features of another, and
confusion or deception is likely to result, likelihood of confusion exists. The question is whether
the use of the marks involved is likely to cause confusion or mistake in the mind of the public or
to deceive consumers.[51] In McDonald's Corporation v. L.C. Big Mak Burger, Inc.,[52] this Court
gave greater weight to the similarity of the appearance of the product arising from the adoption
of the dominant features of the registered mark, to wit: "[c]ourts 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."[53] The dominancy test is now incorporated
into law in Section 155.1 of RA 8293 which states:
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; (Emphasis supplied)
In contrast, the holistic test entails a consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity. The discerning
eye of the observer must focus not only on the predominant words but also on the other features
appearing on both marks in order that the observer may draw his conclusion whether one is
confusingly similar to the other.[54]

The word "COFFEE" is the common dominant feature between Nestle's mark "COFFEE-MATE"
and Puregold's mark "COFFEE MATCH." However, following Section 123, paragraph (h) of RA
8293 which prohibits exclusive registration of generic marks, the word "COFFEE" cannot be
exclusively appropriated by either Nestle or Puregold since it is generic or descriptive of the goods
they seek to identify. In Asia Brewery, Inc. v. Court of Appeals,[55] this Court held that generic or
descriptive words are not subject to registration and belong to the public domain. Consequently,
we must look at the word or words paired with the generic or descriptive word, in this particular
case "-MATE" for Nestle's mark and "MATCH" for Puregold's mark, to determine the
distinctiveness and registrability of Puregold's mark "COFFEE MATCH."

We agree with the findings of the BLA-IPO and ODG-IPO. The distinctive features of both marks
are sufficient to warn the purchasing public which are Nestle's products and which are Puregold's
products. While both "-MATE" and "MATCH" contain the same first three letters, the last two
letters in Puregold's mark, "C" and "H," rendered a visual and aural character that made it easily
distinguishable from Nestle's mark. Also, the distinctiveness of Puregold's mark with two separate
words with capital letters "C" and "M" made it distinguishable from Nestle's mark which is one
word with a hyphenated small letter "-m" in its mark. In addition, there is a phonetic difference
in pronunciation between Nestle's "-MATE" and Puregold's "MATCH." As a result, the eyes and
ears of the consumer would not mistake Nestle's product for Puregold's product. Accordingly, this
Court sustains the findings of the BLA-IPO and ODG-IPO that the likelihood of confusion between
Nestle's product and Puregold's product does not exist and upholds the registration of Puregold's
mark.

WHEREFORE, we DENY the petition. We AFFIRM the 15 May 2014 Resolution and the 14
October 2014 Resolution of the Court of Appeals in CA-G.R. SP No. 134592.

SO ORDERED.

KENSONIC, INC., PETITIONER, VS. UNI-LINE MULTI-RESOURCES, INC., (PHIL.),

RESPONDENT.

[G.R. Nos. 211834-35]

UNI-LINE MULTI-RESOURCES, INC., PETITIONER, VS. KENSONIC, INC., RESPONDENT.

DECISION
BERSAMIN, J.:

The case concerns the cancellation of the registration of the trademark SAKURA for the goods of
Uni-Line Multi Resources, Inc. (Phils.) (Uni--Line) being sought by Kensonic, Inc. (Kensonic) on
the ground that the latter had prior use and registration of the SAKURA mark.

The Case

Under consideration are the consolidated appeals urging the review and reversal of the decision
promulgated on July 30, 2013[1] and the amended decision promulgated on March 19, 2014,[2]
whereby the Court of Appeals (CA) affirmed the decision rendered on June 11, 2012 by the
Director General of the Intellectual Property Office (IPO) upholding the cancellation of the
application of Uni-Line for the registration of the SAKURA mark for goods falling under Class 09
of the Nice International Classification of Goods (Nice Classification), and allowing the
registration of Uni-Line's SAKURA mark registration for goods falling under Class 07 and Class
11 of the Nice Classification.[3]

Antecedents

The CA summarized the following factual and procedural antecedents, viz.:

On June 15, 1999, Uni-Line filed an application for the registration of the mark "SAKURA" for
amplifier, speaker, cassette, cassette disk, video cassette disk, car stereo, television, digital video
disk, mini component, tape deck, compact disk charger, VHS, and tape rewinder falling under
Class 9 of the Nice International Classification of Goods. Kensonic opposed Uni-Line's application
which was docketed as IPC No. 14-2004-00160 (IPC 1). The Director of the Bureau of Legal Affairs
(BLA) rendered Decision No. 2005-01 dated November 29, 2005 finding that Kensonic was the
first to adopt and use the mark SAKURA since 1994 and thus rejecting Uni-Line's application. On
January 19, 2006, said Decision became final and executory.

While IPC Case 1 was pending, Uni-Line filed an application and was issued a certificate of
registration for the mark "SAKURA & FLOWER DESIGN" for use on recordable compact disk
(CD-R) computer, computer parts and accessories falling under Class 9. On September 7, 2006,
Kensonic filed a petition for cancellation docketed as IPC No. 14-2006-00183 (IPC 2) of Uni-
Line's registration. In Decision No. 08-113 dated August 7, 2008, the BLA Director held that Uni-
Line's goods are related to Kensonic's goods and that the latter was the first user of the mark
SAKURA used on products under Class 9. The BLA Director thus cancelled Uni-Line's certificate
of registration. Uni-Line moved for reconsideration of the BLA Director's Decision which is
pending resolution to date.

On June 6, 2002, Uni-Line filed an application for the registration of the trademark SAKURA for
use on the following:
Goods
Nice Classification
Washing machines, high pressure washers, vacuum cleaners, floor polishers, blender, electric
mixer, electrical juicer
Class 07
Television sets, stereo components, DVD/VCD players, voltage regulators, portable generators,
switch breakers, fuse
Class 09
Refrigerators, air conditioners, oven toaster, turbo broiler, rice cooker, microwave oven, coffee
maker, sandwich/waffle maker, electric stove, electric fan, hot & cold water dispenser, airpot,
electric griller and electric hot pot
Class 11
Uni-Line's application was thereafter published, and there being no opposition thereto, Certificate
of Registration No. 4-2002-004572 for the mark SAKURA effective March 18, 2006 was issued.

On September 7, 2006, Kensonic filed with the BLA a Petition for Cancellation of Uni-Line's
Certificate of Registration alleging that in October 1994, it introduced the marketing of SAKURA
products in the Philippines and that it owned said SAKURA products and was the first to use,
introduce and distribute said products. Kensonic also alleged that in IPC 1, it opposed Uni-Line's
application to register SAKURA and was already sustained by the Director General, which
Decision is now final and executory. Kensonic further alleged that it is the owner of a copyright
for SAKURA and that since 1994, has maintained and established a good name and goodwill over
the SAKURA products.

Kensonic filed its Supplemental Petition for Cancellation and its Reply to Uni-Line's Answer. Uni-
Line filed its Rejoinder thereto.[4]
Decision of the Bureau of Legal Affairs (BLA), IPO

After due proceedings, the BLA issued Decision No. 2008-149 dated August 11, 2008,[5] whereby
it ruled in favor of Kensonic and against Uni--Line, and directed the cancellation of Registration
No. 4-2002-004572 of the latter's SAKURA mark. It observed that an examination of the SAKURA
mark of Kensonic and that of Uni-Line revealed that the marks were confusingly similar with each
other; that the goods sought to be covered by the SAKURA registration of Uni-Line were related
to the goods of Kensonic, thereby necessitating the cancellation of the registration of Uni--Line's
mark; and that considering that Kensonic had used the SAKURA mark as early as 1994 in Class
09 goods (namely: amplifiers, speakers, cassette disks, video cassette disks, car stereos,
televisions, digital video disks, mini components, tape decks, compact disk chargers, VHS and
tape rewinders), Kensonic had acquired ownership of the SAKURA mark, and should be legally
protected thereon. The dispositive portion reads:
WHEREFORE, premises considered, the Verified Petition for Cancellation is hereby GRANTED.
Accordingly, Certificate of Registration No. 4-2002-004572 issued on 18 March 2006 for the
trademark "SAKURA" in the name of Uni-Line Multi Resources, Inc. Phils., is hereby ordered
CANCELLED.

Let the file wrapper of this case be forwarded to the Bureau of Trademark (BOT) for appropriate
action in accordance with this Decision.

SO ORDERED.[6]
Decision of the Director General, IPO

On appeal,[7] the Director General of the IPO modified the decision of the BLR by upholding Uni-
Line's registration of the SAKURA mark as to goods classified as Class 07 and Class 11, thereby
effectively reversing the BLR, but affirmed the BLR as regards the treatment of the SAKURA mark
that covered the goods falling under Class 09. The Director General clarified that the marks of
Uni-Line and Kensonic were similar if not identical; that considering that Inter Partes Case No.
14-2004-00160 (IPC 1) already effectively ruled that the products registered by Uni-Line were
goods related to those covered by the registration of Kensonic, the registration of Uni-Line insofar
as those products sought to be registered under Class 09 were concerned (i.e., television sets,
stereo components, DVD/VCD players, voltage regulators, portable generators, switch breakers,
fuse) was correctly cancelled; that the registration of products of Uni-Line falling under Class 07
and Class 11 should not be cancelled because the products were different from the goods registered
under Class 09 in the name of Kensonic; that there should be evidence showing how the continued
registration of the SAKURA mark of Uni-Line would cause damage to Kensonic; and that the
goods covered by the SAKURA registration of Uni--Line and the SAKURA registration of Kensonic
should be distinguished because:
In addition, the ordinary purchaser must be thought of, as having, and credited with, at least a
modicum of intelligence. It does not defy common sense to assert that a purchaser would be
cognizant of the product he is buying. As a general rule, an ordinary buyer does not exercise as
much pendence in buying an article for which he pays a few centavos as he does in purchasing a
more valuable thing. Expensive and valuable items are normally bought only after deliberate,
comparative and analytical investigation.

In this instance, the products of the Appellants under Classes 7 and 11 are home appliances which
are not the ordinary everyday goods the public buys and consumes. These products are not
inexpensive items and a purchaser would ordinarily examine carefully the features and
characteristics of the same. It is, therefore, farfetched that the purchasing public would be misled
or be deceived as to the source or origin of the products. Furthermore, there is nothing in the
records that indicate any plans by the Appellee to enter into business transactions or to the
manufacture and distribution of goods similar to the products of the Appellants under Classes 7
and 11.[8]
The Director General of the IPO decreed as follows:
Wherefore, premises considered, the appeal is hereby dismissed in so far as the cancellation of
the Appellant's Cert. of Reg. No. 4-2002- 004572 for goods enumerated and falling under Class 9
is concerned. However, the appeal is hereby granted in so far as the cancellation of Cert. of Reg.
No. 4-2002-004572 for goods enumerated and falling under Classes 7 and 11 is concerned.
Accordingly, Cert. of Reg. No. 4-2002-004572 issued in favor of the Appellant for the mark
SAKURA is hereby amended. The registration of goods enumerated under Class 9, namely
television sets, stereo components, DVD/VCD players, voltage regulators, portable generators,
switch breakers, fuse is hereby cancelled.

Let a copy of this Decision as well as the records of this case 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 Documentation, Information and Technology Transfer
Bureau be furnished a copy of this Decision for information, guidance, and records purposes.

SO ORDERED.[9]
Judgment of the CA

Both parties appealed to the CA, which promulgated its decision on July 30, 2013 dismissing the
appeal of Kensonic (C.A.-G.R. SP No. 125420) and granting Uni-Line's appeals (C.A.-G.R. SP No.
125424). The CA upheld Kensonic's ownership of the SAKURA mark based on its showing of its
use of the mark since 1994, but ruled that despite the identical marks of Kensonic and Uni-Line,
Kensonic's goods under Class 09 were different from or unrelated to Uni-Line's goods under Class
07 and Class 11. It observed that the protection of the law regarding the SAKURA mark could only
extend to television sets, stereo components, DVD and VCD players but not to Uni-Line's voltage
regulators, portable generators, switch breakers and fuses due to such goods being unrelated to
Kensonic's goods; that Kensonic's registration only covered electronic audio-video products, not
electrical home appliances; and that the similarity of the marks would not confuse the public
because the products were different and unrelated. It ruled:
WHEREFORE, the Petition filed by Kensonic, Inc., in C.A.-G.R. SP No. 125420 is DENIED and
the Petition filed by Uni-Line Multi Resources, Inc. (Phils.) is GRANTED.

Accordingly, the Decision dated June 11, 2012 of Director General Ricardo R. Blancaflor of the
Intellectual Property Office is MODIFIED such that Uni-Line's Appeal insofar as the cancellation
of its Certificate of Registration No. 4-2002-004572 for goods enumerated and falling under Class
9 is GRANTED but DELETING therefrom the goods television sets, stereo components, DVD
players and VCD players. The Decision dated June 11, 2012 of the Director General is hereby
UPHELD insofar as it granted Uni-Line's Appeal on the cancellation of its Certificate of
Registration No. 4-2002-004572 for goods enumerated and falling under Class 7 and Class 11.

SO ORDERED.[10]
Kensonic sought partial reconsideration, submitting that voltage regulators, portable generators,
switch breakers and fuse were closely related to its products; that maintaining the two SAKURA
marks would cause confusion as to the source of the goods; and that Uni-Line's goods falling
under Class 07 and Class 11 were closely related to its goods falling under Class 09.

In the assailed amended decision promulgated on March 19, 2014,[11] the CA sided with
Kensonic, and reverted to the ruling by the Director General of IPO cancelling the registration of
the SAKURA mark covering all the goods of Uni-Line falling under Class 09 on the basis that all
the goods belonged to the general class of goods. The CA decreed:
WHEREFORE, the Motion for Partial Reconsideration filed by Kensonic Inc. is PARTIALLY
GRANTED. Uni-Line is prohibited from using the mark SAKURA for goods falling under Class 9,
but is allowed to use the mark SAKURA for goods falling under Classes 7 and 11. Thus, the
DENIAL of Uni-Line's Appeal insofar as the cancellation of its Certificate of Registration No. 4-
2002-004572 for goods enumerated and falling under Class 9 is UPHELD. The Decision dated
June 11, 2012 of the Director General is AFFIRMED in toto.

SO ORDERED.[12]
Issues

Hence, this appeal by both parties.

Kensonic (G.R. Nos. 211820-21) insists that the CA erred in not considering that Uni-Line's goods
under Class 07 and Class 11 were related to its goods falling under Class 09; and that all the
agencies below were unanimous in declaring that the marks were identical, and, as such, the use
of the SAKURA marks would lead to confusion about the source of the goods.

Uni-Line (G.R. Nos. 211834-35) contends that the SAKURA mark could not be appropriated
because it simply referred to cherry blossom in Japanese and was thus a generic name that was
not copyrightable; that it was grave error for the IPO and the CA to rule that Kensonic owned the
mark; and that voltage regulators, portable generators, switch breakers and fuse were unrelated
to Kensonic's products because Uni-Line's products were not electronic.

The following issues are, therefore, to be resolved:

(1)
Is the SAKURA mark capable of appropriation?

(2)
Are Kensonic's goods falling under Class 09 related to Uni-Line's goods falling under Class 07 and
Class 11?; and

(3)
Are Uni-Line's goods falling under Class 9, namely: voltage regulators, portable generators, switch
breakers and fuses, related to Kensonic's goods falling under Class 9?
Ruling of the Court

The appeal of Kensonic in G.R. Nos. 211820-21 is dismissed but the petition in G.R. Nos. 211834-
35 is partially granted.

I.

The SAKURA mark can be appropriated

Uni-Line's opposition to Kensonic's ownership of the SAKURA mark insists that the: SAKURA
mark is not copyrightable for being generic. Such insistence is unacceptable.

To be noted is that the controversy revolves around the SAKURA mark which is not a copyright.
The distinction is significant. A mark is any visible sign capable of distinguishing the goods
(trademark) or services (service mark) of an enterprise, and includes a stamped or marked
container of goods.[13] In contrast, a copyright is the right to literary property as recognized and
sanctioned by positive law; it is an intangible, incorporeal right granted by statute to the author
or originator of certain literary or artistic productions, whereby he or she is invested, for a specific
period, with the sole and exclusive privilege of multiplying copies of the same and publishing and
selling them.[14] Obviously, the SAKURA mark is not an artistic or literary work but a sign used
to distinguish the goods or services of one enterprise from those of another.

An examination of the pertinent laws also reveals that Uni-Line mistakenly argues that the
SAKURA mark was not capable of registration for being generic.

Section 123(h) of the Intellectual Property Code prohibits the registration of a trademark that
consists exclusively of signs that are generic for the goods or services that they seek to identify. It
is clear from the law itself, therefore, that what is prohibited is not having a generic mark but
having such generic mark being identifiable to the good or service. In Asia Brewery, Inc., v. Court
of Appeals,[15] the Court ruled that there was no infringement of San Miguel Brewery's Pale Pilsen
trademark because Pale Pilsen could not be appropriated. The Court explained:
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," "com 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.)"
This, however, is not the situation herein. Although SAKURA refers to the Japanese flowering
cherry[16] and is, therefore, of a generic nature, such mark did not identify Kensonic's goods
unlike the mark in Asia Brewery, Inc., v. Court of Appeals. Kensonic's DVD or VCD players and
other products could not be identified with cherry blossoms. Hence, the mark can be
appropriated.

Kensonic's prior use of the mark since 1994 made it the owner of the mark, and its ownership
cannot anymore be challenged at this stage of the proceedings. Seeking the review of Kensonic's
ownership would entail the examination of facts already settled by the lower tribunals. Uni-Line's
challenge to the ownership of the SAKURA mark should stop here because the Court cannot act
on a factual matter in this appeal by petition for review on certiorari, which is limited to the
consideration of questions of law. Section 1, Rule 45 of the Rules of Court specifically so provides:
Section 1. Filing of petition with Supreme Court. - A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Court of
Tax Appeals, the Regional Trial Court or other courts whenever authorized by law, may file with
the Supreme Court a verified petition for review on certiorari. The petition may include an
application for a writ of preliminary injunction or other provisional remedies and shall raise only
questions of law which must be distinctly set forth. The petitioner may seek the same provisional
remedies by verified motion filed in the same action or proceeding lat any time during its
pendency.
The distinction between a question of law and a question of fact is well defined. According to
Tongonan Holdings and Development Corporation v. Escaño, Jr.:[17]
A question of law arises when there is doubt as to what the law is on a certain state of facts, while
there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a
question to be one of law, the same must not involve an examination of the probative value of the
evidence presented by the litigants or any of them. The resolution of the issue must rest solely on
what the law provides on the given set of circumstances. Once it is clear that the issue invites a
review of the evidence presented, the question posed is one of fact. Thus, the test of whether a
question is one of law or of fact 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.
It is timely to remind, too, that the Court is not a trier of facts. Hence, the factual findings of the
quasi-judicial body like the IPO, especially when affirmed by the CA, are binding on the Court.[18]
Jurisprudence has laid down certain exceptions to the rule of bindingness,[19] but, alas, Uni-Line
did not discharge its burden to show how its urging for a review of the factual findings came within
any of the exceptions.

II.

Uni-Line's goods classified under Class 07 and Class 11 were not related to Kensonic's goods
registered under Class 09

The CA did not err in allowing the registration of Uni-Line's products falling under Class 07 and
Class 11, for, indeed, those products - as found by the lower tribunals were unrelated to the goods
of Kensonic registered under Class 09.

Still, Kensonic contends that the goods of Uni-Line classified under Class 07 and Class 11 were
covered by the prohibition from registration for being within the normal potential expansion of
Kensonic.

The contention is unwarranted.

The prohibition under Section 123 of the Intellectual Property Code extends to goods that are
related to the registered goods, not to goods that the registrant may produce in the future. To
allow the expansion of coverage is to prevent future registrants of goods from securing a
trademark on the basis of mere possibilities and conjectures that may or may not occur at all.
Surely, the right to a trademark should not be made to depend on mere possibilities and
conjectures.

In Mighty Corporation v. E. & J. Gallo Winery,[20] the Court has identified the different factors
by which to determine whether or not goods are related to each other for purposes of registration:
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. They may also be
those which, being entirely unrelated, cannot be assumed to have a common source; hence, there
is no confusion of business, even though similar marks are used. Thus, there is no trademark
infringement if the public does not expect the plaintiff to make or sell the same class of goods as
those made or sold by the defendant.

In resolving whether goods are related, several factors come into play:

(a)
the business (and its location) to which the goods belong
(b)
the class of product to which the goods belong

(c)
the product's quality, quantity, or size, including the nature of the package, wrapper or container

(d)
the nature and cost of the articles

(e)
the descriptive properties, physical attributes or essential characteristics with reference to their
form, composition, texture or quality

(f)
the purpose of the goods

(g)
whether the article is bought for immediate consumption, that is, day-to-day household items

(h)
the fields of manufacture

(i)
the conditions under which the article is usually purchased and

(j)
the channels of trade through which the goods flow, how they are distributed, marketed, displayed
and sold. (Citations omitted)
An examination of the foregoing factors reveals that the goods of Uni-Line were not related to the
goods of Kensonic by virtue of their differences in class, the descriptive attributes, the purposes
and the conditions of the goods.

In Taiwan Kolin Corporation, Ltd. v. Kolin Electronics, Co., Inc.,[21] the Court has opined that
the mere fact that goods belonged to the same class does not necessarily mean that they are
related; and that the factors listed in Mighty Corporation v. E. & J. Gallo Winery should be taken
into consideration, to wit:
As mentioned, the classification of the products under the NCL is merely part and parcel of the
factors to be considered in ascertaining whether the goods are related. It is not sufficient to state
that the goods involved herein are electronic products under Class 9 in order to establish
relatedness between the goods, for this only accounts for one of many considerations enumerated
in Mighty Corporation. xxx

Clearly then, it was erroneous for respondent to assume over the CA to conclude that all electronic
products are related and that the coverage of one electronic product necessarily precludes the
registration of a similar; mark over another. In this digital age wherein electronic products have
not only diversified by leaps and bounds, and are geared towards interoperability, it is difficult to
assert readily, as respondent simplistically did, that all devices that require plugging into sockets
are necessarily related goods.

It bears to stress at this point that the list of products included in Class 9 can be sub-categorized
into five (5) classifications, namely: (1) apparatus and instruments for scientific or research
purposes, (2) information technology and audiovisual equipment, (3) apparatus and devices for
controlling the distribution and use of electricity, (4) optical apparatus and instruments, and (5)
safety equipment. From this sub-classification, it becomes apparent that petitioner's products,
i.e., televisions and DVD players, belong to audiovisual equipment, while that of respondent,
consisting of automatic voltage regulator, converter, recharger, stereo booster, AC-DC regulated
power supply, step-down transformer, and PA amplified AC-DC, generally fall under devices for
controlling the distribution and use of electricity.
Based on the foregoing pronouncement in Taiwan Kolin Corporation, Ltd. v. Kolin Electronics,
Co., Inc., there are other sub-classifications present even if the goods are classified under Class
09. For one, Kensonic's goods belonged to the information technology and audiovisual equipment
sub-class, but Uni-Line's goods pertained to the apparatus and devices for controlling the
distribution of electricity sub-class. Also, the Class 09 goods of Kensonic were final products but
Uni-Line's Class 09 products were spare parts. In view of these distinctions, the Court agrees with
Uni-Line that its Class 09 goods were unrelated to the Class 09 goods of Kensonic.

WHEREFORE, the Court DENIES the petition for review on certiorari in G.R. No. 211820-21;
PARTIALLY GRANTS the petition for review on certiorari in G.R. No. 211834-35; REVERSES and
SETS ASIDE the amended decision promulgated on March 19, 2014; PARTIALLY REINSTATES
the decision promulgated on July 30, 2013 insofar as it allowed the registration by Uni-Line Multi-
Resources, Inc. under the SAKURA mark of its voltage regulators, portable generators, switch
breakers and fuses; and ORDERS Kensonic, Inc. to pay the costs of suit.

SO ORDERED.

MANG INASAL PHILIPPINES, INC., PETITIONER, VS. IFP MANUFACTURING

CORPORATION, RESPONDENT.

DECISION
VELASCO JR., J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court of the
Resolutions dated June 10, 2015[1] and December 2, 2015[2] of the Court of Appeals (CA) in CA-
G.R. SP No. 139020.

The Facts
The Trademark Application and the Opposition

Respondent IFP Manufacturing Corporation is a local manufacturer of snacks and beverages.

On May 26, 2011, respondent filed with the Intellectual Property Office (IPO) an application[3]
for the registration of the mark "OK Hotdog Inasal Cheese Hotdog Flavor Mark" (OK Hotdog
Inasal mark) in connection with goods under Class 30 of the Nice Classification.[4] The said mark,
which respondent intends to use on one of its curl snack products, appears as follows:

(See Image)

The application of respondent was opposed[5] by petitioner Mang Inasal Philippines, Inc.

Petitioner is a domestic fast food company and the owner of the mark "Mang Inasal, Home of Real
Pinoy Style Barbeque and Device" Mang Inasal mark) for services under Class 43 of the Nice
Classification.[6] The said mark, which was registered with the IPO in 2006[7] and had been used
by petitioner for its chain of restaurants since 2003,[8] consists of the following insignia:

(See Image)

Petitioner, in its opposition, contended that the registration of respondent's OK Hotdog Inasal
mark is prohibited under Section 123.1(d)(iii) of Republic Act No. (RA) 8293.[9] Petitioner
averred that the OK Hotdog Inasal mark and the Mang Inasal mark share similarities—both as to
their appearance and as to the goods or services that they represent—which tend to suggest a false
connection or association between the said marks and, in that regard, would likely cause
confusion on the part of the public.[10] As petitioner explained:

The OK Hotdog Inasal mark is similar to the Mang Inasal mark. Both marks feature the same
dominant element—i.e., the word "INASAL"—printed and stylized in the exact same manner, viz:

In both marks, the word "INASAL" is spelled using the same font style and red color;

In both marks, the word "INASAL" is placed inside the same black outline and yellow background;
and

In both marks, the word "INASAL" is arranged in the same staggered format.

The goods that the OK Hotdog Inasal mark is intended to identify (i.e., curl snack products) are
also closely related to the services represented by the Mang Inasal mark (i.e., fast food
restaurants). Both marks cover inasal or inasal-flavored food products.

Petitioner's opposition was referred to the Bureau of Legal Affairs (BLA) of the IPO for hearing
and disposition.
Decisions of the IPO-BLA and the IPO-DG

On September 19, 2013, after due proceedings, the IPO-BLA issued a Decision[11] dismissing
petitioner's opposition. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, the instant opposition is hereby DISMISSED. Let the
filewrapper [sic] of Trademark Application Serial No. 4-2011-006098 be returned, together with
a copy of this Decision, to the Bureau of Trademarks for further information and appropriate
action.

SO ORDERED.

Aggrieved, petitioner appealed the Decision of IPO-BLA to the Director General (DG) of the
IPO.[12]

On December 15, 2014, the IPO-DG rendered a Decision[13] dismissing the appeal of petitioner.
The fallo of the Decision accordingly reads:

Wherefore, premises considered, the appeal is hereby dismissed. Let a copy of this Decision be
furnished to the Director ofBureau ofLegal Affairs and the Director of Bureau of Trademarks for
their appropriate action and information. Further, let a copy of this Decision be furnished to the
library ofthe Documentation, Information and Technology Transfer Bureau for records purposes.

SO ORDERED.

Both the IPO-BLA and the IPO-DG were not convinced that the OK Hotdog Inasal mark is
confusingly similar to the Mang Inasal mark. They rebuffed petitioner's contention, thusly:

The OK Hotdog Inasal mark is not similar to the Mang Inasal mark. In terms of appearance, the
only similarity between the two marks is the word "INASAL." However, there are other words like
"OK," "HOTDOG," and "CHEESE" and images like that of curls and cheese that are found in the
OK Hotdog Inasal mark but are not present in the Mang Inasal mark.[14]

In addition, petitioner cannot prevent the application of the word "INASAL" in the OK Hotdog
Inasal mark. No person or entity can claim exclusive right to use the word "INASAL" because it is
merely a generic or descriptive word that means barbeque or barbeque products.[15]

Neither can the underlying goods and services of the two marks be considered as closely related.
The products represented by the two marks are not competitive and are sold in different channels
of trade. The curl snack products of the OK Hotdog Inasal mark are sold in sari-sari stores, grocery
stores and other small distributor outlets, whereas the food products associated with the Mang
Inasal mark are sold in petitioner's restaurants.[16]

Undeterred, petitioner appealed to the CA.

Resolutions of the CA and the Instant Appeal

On June 10, 2015, the CA issued a Resolution[17] denying the appeal of petitioner. Petitioner filed
a motion for reconsideration, but this too was denied by the CA through its Resolution[18] dated
December 2, 2015. The CA, in its Resolutions, simply agreed with the ratiocinations of the IPO-
BLA and IPO-DG.

Hence, the instant appeal.

Here, petitioner prays for the reversal of the CA Resolutions. Petitioner maintains that the OK
Hotdog Inasal mark is confusingly similar to the Mang Inasal mark and insists that the trademark
application of respondent ought to be denied for that reason.

Our Ruling

We have examined the OK Hotdog Inasal and Mang Inasal marks under the lens of pertinent law
and jurisprudence. And, through it, we have determined the justness of petitioner's claim. By our
legal and jurisprudential standards, the respondent's OK Hotdog Inasal mark is, indeed, likely to
cause deception or confusion on the part of the public. Hence, contrary to what the IPO-BLA, IPO-
DG, and the CA had ruled, the respondent's application should have been denied.

We, therefore, grant the appeal.

The Proscription: Sec. 123.1 (d)(iii) of RA 8293

A mark that is similar to a registered mark or a mark with an earlier filing or priority date (earlier
mark) and which is likely to cause confusion on the part of the public cannot be registered with
the IPO. Such is the import of Sec. 123.1(d)(iii) of RA 8293:

SECTION 123. Registrability. -

123. 1. A mark cannot be registered if it:

xxxx

d. x x x:

xxx
xxx
...nearly resembles [a registered mark belonging to a different proprietor or a mark with an earlier
filing or priority date] as to be likely to deceive or cause confusion.
The concept of confusion, which is at the heart of the proscription, could either refer to confusion
of goods or confusion of business. In Skechers U.S.A., Inc. v. Trendworks International
Corporation,[19] we discussed and differentiated both types of confusion, as follows:

Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2)
types of confusion, viz.: (1) confusion of goods (product confusion), where the ordinarily prudent
purchaser would be induced to purchase one product in the belief that he was purchasing the
other; and (2) confusion of business (source or origin confusion), where, although the goods of
the parties are different, the product, the mark of which registration is applied for by one party, is
such as might reasonably be assumed to originate with the registrant of an earlier product, and
the public would then be deceived either into that belief or into the belief that there is some
connection between the two parties, though inexistent.

Confusion, in either of its forms, is, thus, only possible when the goods or services covered by
allegedly similar marks are identical, similar or re1ated in some manner.[20]

Verily, to fall under the ambit of Sec. 123.1(d)(iii) and be regarded as likely to deceive or cause
confusion upon the purchasing public, a prospective mark must be shown to meet two (2)
minimum conditions:

The prospective mark must nearly resemble or be similar to an earlier mark; and

The prospective mark must pertain to goods or services that are either identical, similar or related
to the goods or services represented by the earlier mark.

The rulings of the IPO-BLA, IPO-DG, and the CA all rest on the notion that the OK Hotdog Inasal
mark does not fulfill both conditions and so may be granted registration.

We disagree.

II

The OK Hotdog Inasal Mark Is Similar to the Mang Inasal Mark

The first condition of the proscription requires resemblance or similarity between a prospective
mark and an earlier mark Similarity does not mean absolute identity of marks.[21] To be regarded
as similar to an earlier mark, it is enough that a prospective mark be a colorable imitation of the
former.[22] Colorable imitation denotes such likeness in form, content, words, sound, meaning,
special arrangement or general appearance of one mark with respect to another as would likely
mislead an average buyer in the ordinary course of purchase.[23]

In determining whether there is similarity or colorable imitation between two marks, authorities
employ either the dominancy test or the holistic test.[24] In Mighty Corporation v. E. & J. Gallo
Winery,[25] we distinguished between the two tests as follows:
The Dominancy Test focuses on the similarity of the prevalent features of the competing
trademarks which might cause confusion or deception, and thus infringement. If the competing
trademark contains the main, essential or dominant features of another, and confusion or
deception is likely to result, infringement takes place. Duplication or imitation is not necessary;
nor is it necessary that the infringing label should suggest an effort to imitate. The question is
whether the use of the marks involved is likely to cause confusion or mistake in the mind of the
public or deceive purchasers.

On the other hand, the Holistic Test requires that the entirety of the marks in question be
considered in resolving confusing similarity. Comparison of words is not the only determining
factor. The trademarks in their entirety as they appear in their respective labels or hang tags must
also be considered in relation to the goods to which they are attached. The discerning eye of the
observer must focus not only on the predominant words but also on the other features appearing
in both labels in order that he may draw his conclusion whether one is confusingly similar to the
other. (citations omitted and emphasis supplied)

There are currently no fixed rules as to which of the two tests can be applied in any given case.[26]
However, recent case law on trademark seems to indicate an overwhelming judicial preference
towards applying the dominancy test.[27] We conform.

Our examination of the marks in controversy yielded the following findings:

The petitioner's Mang Inasal mark has a single dominant feature—the word "INASAL" written in
a bold red typeface against a black outline and yellow background with staggered design. The
other perceptible elements of the mark—such as the word "MANG" written in black colored font
at the upper left side of the mark and the phrase "HOME OF REAL PINOY STYLE BARBEQUE"
written in a black colored stylized font at the lower portion of the mark—are not as visually
outstanding as the mentioned feature.

Being the sole dominant element, the word "INASAL," as stylized in the Mang Inasal mark, is also
the most distinctive and recognizable feature of the said mark.

The dominant element "INASAL," as stylized in the Mang Inasal mark, is different from the term
"inasaf' per se. The term "inasal" per se is a descriptive term that cannot be appropriated.
However, the dominant element "INASAL," as stylized in the Mang Inasal mark, is not. Petitioner,
as the registered owner of the Mang Inasal mark, can claim exclusive use of such element.

The respondent's OK Hotdog Inasal mark, on the other hand, has three (3) dominant features: (a)
the word "INASAL" written in a bold red typeface against a black and yellow outline with
staggered design; (b) the word "HOTDOG" written in green colored font; and (c) a picture of three
pieces of curls. Though there are other observable elements in the mark—such as the word "OK"
written in red colored font at the upper left side of the mark, the small red banner overlaying the
picture of the curls with the words "CHEESE HOTDOG FLAVOR" written on it, and the image of
a block of cheese beside the picture of the curls—none of those are as prevalent as the two features
aforementioned.
The dominant element "INASAL" in the OK Hotdog Inasal mark is exactly the same as the
dominant element "NASAL" in the Mang Inasal mark. Both elements in both marks are printed
using the exact same red colored font, against the exact same black outline and yellow background
and is arranged in the exact same staggered format.

Apart from the element "INASAL," there appear no other perceivable similarities between the two
marks.

Given the foregoing premises, and applying the dominancy test, we hold that the OK Hotdog
Inasal mark is a colorable imitation of the Mang Inasal mark.

First. The fact that the conflicting marks have exactly the same dominant element is key. It is
undisputed that the OK Hotdog Inasal mark copied and adopted as one of its dominant features
the "INASAL" element of the Mang Inasal mark. Given that the "INASAL" element is, at the same
time, the dominant and most distinctive feature of the Mang Inasal mark, the said element's
incorporation in the OK Hotdog Inasal mark, thus, has the potential to project the deceptive and
false impression that the latter mark is somehow linked or associated with the former mark.

Second. The differences between the two marks are trumped by the

overall impression created by their similarity. The mere fact that there are other elements in the
OK Hotdog Inasal mark that are not present in the Mang Inasal mark actually does little to change
the probable public perception that both marks are linked or associated. It is worth reiterating
that the OK Hotdog Inasal mark actually brandishes a literal copy of the most recognizable feature
of the Mang Inasal mark. We doubt that an average buyer catching a casual glimpse of the OK
Hotdog Inasal mark would pay more attention to the peripheral details of the said mark than it
would to the mark's more prominent feature, especially when the same invokes the distinctive
feature of another more popular brand.

All in all, we find that the OK Hotdog Inasal mark is similar to the Mang Inasal mark.

III

The Goods for which the Registration of the

OK Hotdog Inasal Mark Is Sought Are Related to the
Services Being Represented by the Mang Inasal Mark

The second condition of the proscription requires that the prospective mark pertain to goods or
services that are either identical, similar or related to the goods or services represented by the
earlier mark. While there can be no quibble that the curl snack product for which the registration
of the OK Hotdog Inasal mark is sought cannot be considered as identical or similar to the
restaurant services represented by the Mang Inasal mark, there is ample reason to conclude that
the said product and services may nonetheless be regarded as related to each other.

Related goods and services are those that, though non-identical or non-similar, are so logically
connected to each other that they may reasonably be assumed to originate from one manufacturer
or from economically-linked manufacturers.[28] In determining whether goods or services are
related, several factors may be considered. Some of those factors recognized in our jurisprudence
are:[29]

the business (and its location) to which the goods belong;

the class of product to which the goods belong;

the product's quality, quantity, or size, including the nature of the package, wrapper or container;

the nature and cost of the articles;

the descriptive properties, physical attributes or essential characteristics with reference to their
form, composition, texture or quality;

the purpose of the goods;

whether the article is bought for immediate consumption, that is, day-to-day household items;

the fields of manufacture;

the conditions under which the article is usually purchased, and

the channels of trade through which the goods flow, how they are distributed, marketed, displayed
and sold.

Relative to the consideration of the foregoing factors, however, Mighty Corporation[30]

significantly imparted:

The wisdom of this approach is its recognition that each trademark infringement case presents its
own unique set of facts. No single factor is preeminent, nor can the presence or absence of one
determine, without analysis of the others, the outcome of an infringement suit. Rather, the court
is required to sift the evidence relevant to each of the criteria. This requires that the entire panoply
of elements constituting the relevant factual landscape be comprehensively examined. It is a
weighing and balancing process. With reference to this ultimate question, and from a balancing
of the determinations reached on all of the factors, a conclusion is reached whether the parties
have a right to the relief sought.

A very important circumstance though is whether there exists a likelihood that an appreciable
number of ordinarily prudent purchasers will be misled, or simply confused, as to the source of
the goods in question. The "purchaser" is not the "completely unwary consumer" but is the
"ordinarily intelligent buyer" considering the type of product involved he is accustomed to buy,
and therefore to some extent familiar with, the goods in question. The test of fraudulent
simulation is to be found in the likelihood of the deception of some persons in some measure
acquainted with an established design and desirous of purchasing the commodity with which that
design has been associated. The test is not found in the deception, or the possibility of deception,
of the person who knows nothing about the design which has been counterfeited, and who must
be indifferent between that and the other. The simulation, in order to be objectionable, must be
such as appears likely to mislead the ordinary intelligent buyer who has a need to supply and is
familiar with the article that he seeks to purchase. (citations omitted and emphasis supplied)

Mindful of the foregoing precepts, we hold that the curl snack product for which the registration
of the OK Hotdog Inasal mark is sought is related to the restaurant services represented by the
Mang Inasal mark, in such a way that may lead to a confusion of business. In holding so, we took
into account the specific kind of restaurant business that petitioner is engaged in, the reputation
of the petitioner's mark, and the particular type of curls sought to be marketed by the respondent,
thus:

First. Petitioner uses the Mang Inasal mark in connection with its restaurant services that is
particularly known for its chicken inasal, i.e., grilled chicken doused in a special inasal
marinade.[31] The inasal marinade is different from the typical barbeque marinade and it is what
gives the chicken inasal its unique taste and distinct orange color.[32] Inasal refers to the manner
of grilling meat products using an inasal marinade.

Second. The Mang Inasal mark has been used for petitioner's restaurant business since 2003. The
restaurant started in Iloilo but has since expanded its business throughout the country. Currently,
the Mang Inasal chain of restaurants has a total of 464 branches scattered throughout the nation's
three major islands.[33] It is, thus, fair to say that a sizeable portion of the population is
knowledgeable of the Mang Inasal mark.

Third. Respondent, on the other hand, seeks to market under the OK Hotdog Inasal mark curl
snack products which it publicizes as having a cheese hotdog inasal flavor.[34]

Accordingly, it is the fact that the underlying goods and services of both marks deal with inasal
and inasal-flavored products which ultimately fixes the relations between such goods and
services. Given the foregoing circumstances and the aforesaid similarity between the marks in
controversy, we are convinced that an average buyer who comes across the curls marketed under
the OK Hotdog Inasal mark is likely to be confused as to the true source of such curls. To our
mind, it is not unlikely that such buyer would be led into the assumption that the curls are of
petitioner and that the latter has ventured into snack manufacturing or, if not, that the petitioner
has supplied the flavorings for respondent's product. Either way, the reputation of petitioner
would be taken advantage of and placed at the mercy of respondent.

All in all, we find that the goods for which the registration of the OK Hotdog Inasal mark is sought
are related to the services being represented by the Mang Inasal mark.

IV

Conclusion

The OK Hotdog Inasal mark meets the two conditions of the proscription under Sec. 123.1(d)(iii)
ofRA 8293. First, it is similar to the Mang Inasal mark, an earlier mark Second, it pertains to
goods that are related to the services represented by such earlier mark Petitioner was, therefore,
correct; and the IPO-BLA, IPO-DG, and the CA's rulings must be reversed. The OK Hotdog Inasal
mark is not entitled to be registered as its use will likely deceive or cause confusion on the part of
the public and, thus, also likely to infringe the Mang Inasal mark The law, in instances such as
this, must come to the succor of the owner of the earlier mark.

WHEREFORE, premises considered, the petition is hereby GRANTED. We hereby render a

decision as follows:

REVERSING and SETTING ASIDE the Resolutions dated June 10, 2015 and December 2, 2015
of the Court of Appeals in CA-G.R. SP No. 139020;

SETTING ASIDE the Decision dated December 15, 2014 of the Director General of the Intellectual
Property Office in Appeal No. 14-2013-0052;

SETTING ASIDE the Decision dated September 19, 2013 of the Director of the Bureau of Legal
Affairs of the Intellectual Property Office in IPC No. 14-2012-00369; and

DIRECTING the incumbent Director General and Director of the Bureau of Legal Affairs of the
Intellectual Property Office to DENY respondent's Application No. 4-2011-006098 for the
registration of the mark "OK Hotdog Inasal Cheese Hotdog Flavor Mark."

SO ORDERED.

CITIGROUP, INC., PETITIONER, VS. CITYSTATE SAVINGS BANK, INC. RESPONDENT.

DECISION
LEONEN, J.:

This resolves a Petition for Review on Certiorari[1] assailing the August 29, 2012 Decision[2] and
the January 15, 2013 Resolution[3] of the Court of Appeals in CA-G.R. SP No. 109679.

The facts which led to the controversy before this Court, as summarized by the Court of Appeals,
are as follows:
Petitioner Citigroup, Inc. is a corporation duly organized under the laws of the State of Delaware
engaged in banking and financial services.

In the late 1970s, Citibank N.A., a wholly-owned subsidiary of petitioner, installed its first
automated teller machines in over a hundred New York City branches. In 1984, Citibank N.A.,
Philippine Branch, began the development of its domestic Automated Teller Machine (ATM)
network, and started operating ATMs and issuing ATM cards in the Philippines. Citibank N.A.,
Philippine Branch then joined Bancnet Inc. ("Bancnet") in 1990, the first year Bancnet
commenced operations. To date, Citibank N.A., Philippine Branch has six branches and 22 ATMs
in the Philippines.

In 2005, Citibank Savings, Inc. became an indirect wholly-owned subsidiary of Citibank, N.A. As
a pre-existing thrift bank, it offered ATM services in the Philippines in 1995 and joined Bancnet
in 2005. Citibank Savings, Inc. now has 36 branches and 27 ATMs in the Philippines.
Combining the branches and ATMs of Citibank N.A., Philippine Branch and Citibank Savings,
Inc., there are a total of 42 branches and 29 ATMs in the Philippines marketed and identified to
the public under the CITI family of marks.

The ATM cards issued by Citibank N.A., Philippine Branch and Citibank Savings, Inc. are labelled
"CITICARD". The trademark CITICARD is owned by Citibank N.A. and is registered in the
[Intellectual Property Office] of the Philippines on 27 September 1995 under Registration Number
34731.

In addition, petitioner or Citibank N.A., a wholly-owned subsidiary of petitioner, owns the

following other trademarks currently registered with the Philippine [Intellectual Property Office],
to wit: "CITI and arc design", "CITIBANK", "CITIBANK PAYLINK", "CITIBANK
SPEEDCOLLECT", "CITIBANKING", "CITICARD", "CITICORP", "CITIFINANCIAL",
"CITIGOLD", "CITIGROUP", "CITIPHONE BANKING'', and "CITISERVICE".

On the other hand, sometime in the mid-nineties, a group of Filipinos and Singaporean companies
formed a consortium to establish respondent Citystate Savings Bank, Inc. The consortium
included established Singaporean companies, specifically Citystate Insurance Group and
Citystate Management Group Holdings Pte, Ltd.

Respondent's registered mark has in its name affixed a lion's head, which is likened to the national
symbol of Singapore, the Merlion. On 08 August 1997, respondent opened its initial branch in
Makati City. From then on, it endeavored to expand its branch network. At present it has 19
branches in key cities and municipalities including 3 branches in the province of Bulacan and 1 in
Cebu City. Respondent had also established off site ATMs in key locations in the Philippines as
one of its banking products and services.

In line with this, respondent filed an application for registration with the [Intellectual Property
Office] on 21 June 2005 of the trademark "CITY CASH WITH GOLDEN LION'S HEAD" for its
ATM service, under Application Serial No. 42005005673.[4]
After respondent Citystate Savings Bank, Inc. (Citystate) applied for registration of its trademark
"CITY CASH WITH GOLDEN LION'S HEAD" with the Intellectual Property Office, Citigroup, Inc.
(Citigroup) filed an opposition to Citystate's application. Citigroup claimed that the "CITY CASH
WITH GOLDEN LION'S HEAD" mark is confusingly similar to its own "CITI" marks.[5] After an
exchange of pleadings, the Director of the Bureau of Legal Affairs of the Intellectual Property
Office rendered a Decision[6] dated November 20, 2008. The Intellectual Property Office
concluded that the dominant features of the marks were the words "CITI" and "CITY," which were
almost the same in all aspects. It further ratiocinated that Citigroup had the better right over the
mark, considering that 'its "CITI" and "CITI"-related marks have been registered with the
Intellectual Property Office, as well as with the United States Patent and Trademark Office,
covering "financial services" under Class 36 of the International Classification of Goods.[7] Thus,
applying the dominancy test and considering that Citystate's dominant feature of the applicant's
mark was identical or confusingly similar to a registered trademark, the Intellectual Property
Office ruled that approving it would be contrary to Section 138 of the Intellectual Property Code
and Citigroup's exclusive right to use its marks.
This was appealed to the Office of the Director General of the Intellectual Property Office. In a
Decision[8] dated July 3, 2009, Director General Adrian S. Cristobal, Jr. (Director General
Cristobal) reversed the November 20, 2008 Decision of the Director of the Bureau of Legal Affairs
and gave due course to Citystate's trademark application. He made a visual comparison of the
parties' respective marks and considered the golden lion head device to be the prominent or
dominant feature of Citystate's mark, and not the word "CITY." Thus, Citystate's mark did not
resemble Citigroup's mark such that deception or confusion was likely. Director General Cristobal
found plausible Citystate's explanation for choosing "CITYSTATE," i.e., that its name was based
on the country of Singapore, which was referred to as "city-state," and that the golden lion head
device was similar to the national symbol of Singapore, the merlion.[9] He appreciated that
availing of the products and services related to the parties' marks would entail very detailed
procedures, like sales representatives explaining the products and clients filling up and
submitting application forms, such that customers would necessarily be well informed and not
confused.[10]

Thus, Citigroup filed a Petition for Review[11] before the Court of Appeals, which dismissed the
petition. The Court of Appeals found that Director General Cristobal did not act with grave abuse
of discretion in ruling that the parties' trademarks were not confusingly similar, and in giving due
course to Citystate's trademark application.[12] It found that Citystate's mark was not confusingly
or deceptively similar to Citigroup's marks:
[Citystate's] trademark is the entire "CITY CASH WITH GOLDEN LION'S HEAD". Although the
words "CITY CASH" are prominent, the entirety of the trademark must be considered, and focus
should not be made solely on the phonetic similarity of the words "CITY" and "CITI".

The dissimilarities between the two marks are noticeable and substantial. [Citystate's] mark,
"CITY CASH WITH GOLDEN LION'S HEAD", has an insignia of a golden lion's head at the left
side of the words "CITY CASH", while [Citigroup's] "CITI" mark usually has an arc between the
two I's. A further scrutiny of the other "CITI" marks of [Citigroup] would show that their font type,
font size, and color schemes of the said "CITI" marks vary for each product or service. Most of the
time, [Citigroup's] "CITI" mark is joined with another term to form a single word, with each
product or service having different font types and color schemes. On the contrary, the trademark
of [Citystate] consists of the words "CITY CASH", with a golden lion's head emblem on the left
side. It is, therefore, improbable that the public would immediately and naturally conclude that
[Citystate's] "CITY CASH WITH GOLDEN LION'S HEAD" is but another variation under
[Citigroup's] "CITI" marks.

Verily, the variations in the appearance of the "CITI" marks by [Citigroup], when conjoined with
other words, would dissolve the alleged similarity between them and the trademark of [Citystate].
These dissimilarities, and the insignia of a golden lion's head before the words "CITY CASH" in
the mark of [Citystate] would sufficiently acquaint and apprise the public that [Citystate's]
trademark "CITY CASH WITH GOLDEN LION'S HEAD" is not connected with the "CITI" marks
of [Citigroup].

Moreover, more credit should be given to the "ordinary purchaser." Cast in this particular
controversy, the ordinary purchaser is not the "completely unwary consumer" but is the
"ordinarily intelligent buyer" considering the type of product involved. It bears to emphasize that
the mark "CITY CASH WITH GOLDEN LION'S HEAD" is a mark of [Citystate] for its ATM
services which it offers to the public. It cannot be gainsaid that an ATM service is not an ordinary
product which could be obtained at any store without the public noticing its association with the
banking institution that provides said service. Naturally, the customer must first open an account
with a bank before it could avail of its ATM service. Moreover, the name of the banking institution
is written and posted either inside or outside the ATM booth, not to mention the fact that the
name of the bank that operates the ATM is constantly flashed at the screen of the ATM itself. With
this, the public would accordingly be apprised that [Citystate's] "CITY CASH" is an ATM service
of [Citystate], and not that of [Citigroup's].[13] (Citation omitted)
Thus, the Court of Appeals quoted Director General Cristobal:
In evaluating the relevance of the prefix "CITI", due attention should be given not only to the other
features of the competing marks but also to the attendant circumstances of the case. Otherwise, a
blind adherence to [Citigroup's] claim over the prefix CITI is tantamount to handing it a monopoly
of all marks with such prefix or with a prefix that sounds alike but with a different spelling like
the word "city". Accordingly, the kind of products and services involved should likewise be
scrutinized.

....

Thus, this Court finds no cogent reason to believe [Citigroup's] contention that consumers may
confuse the products and services covered by the competing trademarks as coming from the same
source of origin. The fear that the consumer may mistake the products as to the source or origin,
or that the consumers seeking its products and services will be redirected or diverted to
[Citystate], is unfounded. The products or services involved are not the ordinary everyday
products that one can just pick up in a supermarket or grocery stores (sic). These products
generally require sales representatives explaining to their prospective customers the features of
and entitlements thereto. Availing the products and services involved follows certain procedures
that ordinarily and routinely gives the prospective customers or clients opportunity to know
exactly with whom they are dealing with (sic). The procedures usually include the clients filling-
up and submitting a pro-forma application form and other documentary requirements, which
means that the person is wel[l]-informed and thus, cannot be misled into believing that the
product or service is that of [Citystate] when in fact it is different from [Citigroup's].

The likelihood of confusion between two marks should be taken from the viewpoint of the
prospective buyer. In Emerald Garment Manufacturing Corp. vs. Court of Appeals, et al., the
Supreme Court ruled that:
"Finally, in line with the foregoing discussions, more credit should be given to the 'ordinary
purchaser.' Cast in this particular controversy, the ordinary purchaser is not the 'completely
unwary consumer' but is the 'ordinarily intelligent buyer' considering the type of product involved.

The definition laid down in Dy Buncio v. Tan Tiao Bok is better suited to the present case. There,
the 'ordinary purchaser' was defined as one 'accustomed to buy, and therefore to some extent
familiar with, the goods in question. The test of fraudulent simulation is to be found in the
likelihood of the deception of some persons in some measure acquainted with an established
design and desirous of purchasing the commodity with which that design has been associated.
The test is not found in the deception, or the possibility of deception, of the person who knows
nothing about the design which has been counterfeited, and who must be indifferent between that
and the other. The simulation, in order to be objectionable, must be such as appears likely to
mislead the ordinary intelligent buyer who has a need to supply and is familiar with the article
that he seeks to purchase."[14]
Citigroup filed a Motion for Reconsideration,[15] which the Court of Appeals denied in its January
15, 2013 Resolution.[16]

Thus, Citigroup filed a Petition for Review[17] against Citystate before this Court. After
respondent filed its Comment/Opposition[18] and petitioner filed its Reply,[19] respondent filed
its Memorandum.[20]

Petitioner claims that the Court of Appeals erred in finding that there was no confusing similarity
between the trademark that respondent applied for and petitioner's own trademarks.[21] It avers
that Emerald Manufacturing Company v. Court of Appeals[22] is not applicable to this case.[23]
Contrary to the Court of Appeals' finding, the arc design is not an integral part of petitioner's
"CITI" family of marks.[24]

Petitioner asserts that when the dominancy test is applied to the Court of Appeals' findings of fact,
the necessary result is a finding of confusing similarity.[25] It points out that the Court of Appeals
found that "CITY CASH" is the dominant feature of respondent's applied trademark. However,
because the word "CASH" was disclaimed in respondent's trademark application, only "CITY"
may be considered the dominant part of the mark. "'CITY' ... appears nearly identical to
'CITI'."[26]

Further, petitioner argues that the Court of Appeals did not understand the services offered in
relation to respondent's mark when it said that the mark is to be applied only in relation to
respondent's ATMs and within the bank premises. It insists that in actuality, the mark could be
used outside the bank premises, such as in radio, newspapers, and the internet, where there would
not necessarily be a "GOLDEN LION'S HEAD" symbol to disambiguate the mark from any of
petitioner's marks. It argues that the Court of Appeals should have appreciated the difference
between basic financial services on one hand, which include ATM services, and sophisticated
financial services on the other hand. It avers that customers do not select ATM services after
cautious evaluation, and that ATM services are marketed to ordinary consumers. Thus, petitioner
claims that the Court of Appeals erred when it concluded that customers are intelligent
purchasers, and failed to consider ordinary purchasers who have not yet used the financial
services of petitioner and respondent.[27]

It further holds that it is not claiming a monopoly of all marks prefixed by words sounding like
"city." It stresses that it opposes only marks which are registered under class 36 used in products
directly related and in competition with its "CITI" family of marks, sold under the same business
channels, and sold to the same group of consumers.[28]

Respondent argues that its mark is not confusingly similar to petitioner's[29] and that petitioner's
fears are purely speculative.[30] It claims that the phonetic similarity between "CITY" and "CITI"
is not sufficient to deny its registration, asserting that this Court has ruled that idem sonans alone
is insufficient basis for a determination of the existence of confusing similarity. As for petitioner's
arguments on possible confusion due to advertising, respondent states that advertisement aims
to inform the public of a certain entity's product and that not mentioning a supplier's trade name
in its advertisement defeats the purpose of advertisement. It disputes petitioner's claims on ATM
services and the kind of caution exercised prior to obtaining an ATM card, asserting that before
customers may avail of ATM services, they have to open an account with the bank offering
them.[31]
This Court denies the Petition.

The sole issue for this Court's resolution is whether or not the Court of Appeals committed an
error of law in finding that there exists no confusing similarity between petitioner Citigroup, Inc.'s
and respondent Citystate Savings Bank, Inc.'s marks.

In La Chemise Lacoste, S.A. v. Fernandez,[32] this Court explained why trademarks are protected
in the market:
The purpose of the law protecting a trademark cannot be overemphasized. They are to point out
distinctly the origin or ownership of the article to which it is affixed, to secure to him, who has
been instrumental in bringing into market a superior article of merchandise, the fruit of his
industry and skill, and to prevent fraud and imposition (Etepha v. Director of Patents, 16 SCRA
495).

The legislature has enacted laws to regulate the use of trademarks and provide for the protection
thereof. Modem trade and commerce demands that depredations on legitimate trade marks of
non-nationals including those who have not shown prior registration thereof should not be
countenanced. The law against such depredations is not only for the protection of the owner of
the trademark but also, and more importantly, for the protection of purchasers from confusion,
mistake, or deception as to the goods they are buying. (Asari Yoko Co., Ltd. v. Kee Boc, 1 SCRA 1;
General Garments Corporation v. Director of Patents, 41 SCRA 50).

The law on trademarks and tradenames is based on the principle of business integrity and
common justice. This law, both in letter and spirit, is laid upon the premise that, while it
encourages fair trade in every way and aims to foster, and not to hamper, competition, no one,
especially a trader, is justified in damaging or jeopardizing another's business by fraud, deceit,
trickery or unfair methods of any sort. This necessarily precludes the trading by one dealer upon
the good name and reputation built up by another (Baltimore v. Moses, 182 Md 229, 34 A (2d)
338).[33]
In Mirpuri v. Court of Appeals,[34] this Court traced the historical development of trademark law:
A "trademark" is defined under R.A. 166, the Trademark Law, as including "any word, name,
symbol, emblem, sign or device or any combination thereof adopted and used by a manufacturer
or merchant to identify his goods and distinguish them from those manufactured, sold or dealt in
by others." This definition has been simplified in R.A. No. 8293, the Intellectual Property Code of
the Philippines, which defines a "trademark" as "any visible sign capable of distinguishing goods."
In Philippine jurisprudence, the function of a trademark is to point out distinctly the origin or
ownership of the goods to which it is affixed; to secure to him, who has been instrumental in
bringing into the market a superior article of merchandise, the fruit of his industry and skill; to
assure the public that they are procuring the genuine article; to prevent fraud and imposition; and
to protect the manufacturer against substitution and sale of an inferior and different article as his
product.

Modern authorities on trademark law view trademarks as performing three distinct functions: (
1) they indicate origin or ownership of the articles to which they are attached; (2) they guarantee
that those articles come up to a certain standard of quality; and (3) they advertise the articles they
symbolize.
Symbols have been used to identify the ownership or origin of articles for several centuries. As
early as 5,000 B.C., markings on pottery have been found by archaeologists. Cave drawings in
southwestern Europe show bison with symbols on their flanks. Archaeological discoveries of
ancient Greek and Roman inscriptions on sculptural works, paintings, vases, precious stones,
glassworks, bricks, etc. reveal some features which are thought to be marks or symbols. These
marks were affixed by the creator or maker of the article, or by public authorities as indicators for
the payment of tax, for disclosing state monopoly, or devices for the settlement of accounts
between an entrepreneur and his workmen.

In the Middle Ages, the use of many kinds of marks on a variety of goods was commonplace.
Fifteenth century England saw the compulsory use of identifying marks in certain trades. There
were the baker's mark on bread, bottlemaker's marks, smith's marks, tanner's marks, watermarks
on paper, etc. Every guild had its own mark and every master belonging to it had a special mark
of his own. The marks were not trademarks but police marks compulsorily imposed by the
sovereign to let the public know that the goods were not "foreign" goods smuggled into an area
where the guild had a monopoly, as well as to aid in tracing defective work or poor craftsmanship
to the artisan. For a similar reason, merchants also used merchants' marks. Merchants dealt in
goods acquired from many sources and the marks enabled them to identify and reclaim their
goods upon recovery after shipwreck or piracy.

With constant use, the mark acquired popularity and became voluntarily adopted. It was not
intended to create or continue monopoly but to give the customer an index or guarantee of quality.
It was in the late 18th century when the industrial revolution gave rise to mass production and
distribution of consumer goods that the mark became an important instrumentality of trade and
commerce. By this time, trademarks did not merely identify the goods; they also indicated the
goods to be of satisfactory quality, and thereby stimulated further purchases by the consuming
public. Eventually, they came to symbolize the goodwill and business reputation of the owner of
the product and became a property right protected by law. The common law developed the
doctrine of trademarks and tradenames "to prevent a person from palming off his goods as
another's, from getting another's business or injuring his reputation by unfair means, and, from
defrauding the public." Subsequently, England and the United States enacted national legislation
on trademarks as part of the law regulating unfair trade. It became the right of the trademark
owner to exclude others from the use of his mark, or of a confusingly similar mark where
confusion resulted in diversion of trade or financial injury. At the same time, the trademark served
as a warning against the imitation or faking of products to prevent the imposition of fraud upon
the public.

Today, the trademark is not merely a symbol of origin and goodwill; it is often the most effective
agent for the actual creation and protection of goodwill. It imprints upon the public mind an
anonymous and impersonal guaranty of satisfaction, creating a desire for further satisfaction. In
other words, the mark actually sells the goods. The mark has become the "silent salesman," the
conduit through which direct contact between the trademark owner and the consumer is assured.
It has invaded popular culture in ways never anticipated that it has become a more convincing
selling point than even the quality of the article to which it refers. In the last half century, the
unparalleled growth of industry and the rapid development of communications technology have
enabled trademarks, tradenames and other distinctive signs of a product to penetrate regions
where the owner does not actually manufacture or sell the product itself. Goodwill is no longer
confined to the territory of actual market penetration; it extends to zones where the marked article
has been fixed in the public mind through advertising. Whether in the print, broadcast or
electronic communications medium, particularly on the Internet, advertising has paved the way
for growth and expansion of the product by creating and earning a reputation that crosses over
borders, virtually turning the whole world into one vast marketplace.[35] (Citations omitted)
There is also an underlying economic justification for the protection of trademarks: an effective
trademark system helps bridge the information gap between producers and consumers, and thus,
lowers the costs incurred by consumers in searching for and deciding what products to purchase.
As summarized in a report of the World Intellectual Property Organization:
Economic research has shown that brands play an important role in bridging so-called
asymmetries of information between producers and consumers. In many modem markets,
product offerings differ across a wide range of quality characteristics. Consumers, in turn, cannot
always discern these characteristics at the moment of purchase; they spend time and money
researching different offerings before deciding which product to buy. Brand reputation helps
consumers to reduce these search costs. It enables them to draw on their past experience and
other information about products - such as advertisements and third party consumer reviews.
However, the reputation mechanism only works if consumers are confident that they will
purchase what they intend to purchase. The trademark system provides the legal framework
underpinning this confidence. It does so by granting exclusive rights to names, signs and other
identifiers in commerce. In addition, by employing trademarks, producers and sellers create
concise identifiers for specific goods and services, thereby improving communication about those
goods and services.[36]
Recognizing the significance, and to further the effectivity of our trademark system,[37] our
legislators proscribed the registration of marks under certain circumstances:
Section 123. Registrability. - 123.1. A mark cannot be registered if it:

(a) Consists of immoral, deceptive or scandalous matter, or matter which may disparage or falsely
suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or
bring them into contempt or disrepute;

(b) Consists of the flag or coat of arms or other insignia of the Philippines or any of its political
subdivisions, or of any foreign nation, or any simulation thereof;

(c) Consists of a name, portrait or signature identifying a particular living individual except by his
written consent, or the name, signature, or portrait of a deceased President of the Philippines,
during the life of his widow, if any, except by written consent of the widow;

(d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier
filing or priority date, in respect of:
(i) The same goods or services, or

(ii) Closely related goods or services, or

(iii) If it nearly resembles such a mark as to be likely to deceive or cause confusion;

(e) Is identical with, or confusingly similar to, or constitutes a translation of a mark which is
considered by the competent authority of the Philippines to be well-known internationally and in
the Philippines, whether or not it is registered here, as being already the mark of a person other
than the applicant for registration, and used for identical or similar goods or services: Provided,
That in determining whether a mark is well- known, account shall be taken of the knowledge of
the relevant sector of the public, rather than of the public at large, including knowledge in the
Philippines which has been obtained as a result of the promotion of the mark;

(f) Is identical with, or confusingly similar to, or constitutes a translation of a mark considered
well-known in accordance with the preceding paragraph, which is registered in the Philippines
with respect to goods or services which are not similar to those with respect to which registration
is applied for: Provided, That use of the mark in relation to those goods or services would indicate
a connection between those goods or services, and the owner of the registered mark: Provided,
further, That the interests of the owner of the registered mark are likely to be damaged by such
use;

(g) Is likely to mislead the public, particularly as to the nature, quality, characteristics or
geographical origin of the goods or services;

(h) Consists exclusively of signs that are generic for the goods or services that they seek to identify;

(i) Consists exclusively of signs or of indications that have become customary or usual to designate
the goods or services in everyday language or in bona fide and established trade practice;

(j) Consists exclusively of signs or of indications that may serve in trade to designate the kind,
quality, quantity, intended purpose, value, geographical origin, time or production of the goods
or rendering of the services, or other characteristics of the goods or services;

(k) Consists of shapes that may be necessitated by technical factors or by the nature of the goods
themselves or factors that affect their intrinsic value;

(l) Consists of color alone, unless defined by a given form; or

(m) Is contrary to public order or morality.

Based on this proscription, petitioner insists that respondent's mark cannot be registered because
it is confusingly similar to its own set of marks. Thus, granting the petition rests solely on the
question of likelihood of confusion between petitioner's and respondent's respective marks.

There is no objective test for determining whether the confusion is likely. Likelihood of confusion
must be determined according to the particular circumstances of each case.[38] To aid in
determining the similarity and likelihood of confusion between marks, our jurisprudence has
developed two (2) tests: the dominancy test and the holistic test. This Court explained these tests
in Coffee Partners, Inc. v. San Francisco Coffee & Roastery, Inc.[39]:
The dominancy test focuses on the similarity of the prevalent features of the competing
trademarks that might cause confusion and deception, thus constituting infringement. If the
competing trademark contains the main, essential, and dominant features of another, and
confusion or deception is likely to result, infringement occurs. Exact duplication or imitation is
not required. The question is whether the use of the marks involved is likely to cause confusion or
mistake in the mind of the public or to deceive consumers.

In contrast, the holistic test entails a consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity. The discerning
eye of the observer must focus not only on the predominant words but also on the other features
appearing on both marks in order that the observer may draw his conclusion whether one is
confusingly similar to the other.[40] (Citations omitted)
With these guidelines in mind, this Court considered "the main, essential, and dominant features"
of the marks in this case, as well as the contexts in which the marks are to be used. This Court
finds that the use of the "CITY CASH WITH GOLDEN LION'S HEAD" mark will not result in the
likelihood of confusion in the minds of customers.

A visual comparison of the marks reveals no likelihood of confusion.

Respondent's mark is:

(See image)

This Court agrees with the observation of Director General Cristobal that the most noticeable part
of this mark is the golden lion's head device,[41] and finds that after noticing the image of the
lion's head, the words "CITY" and "CASH" are equally prominent.

On the other hand, petitioner's marks, as noted by the Court of Appeals, often include the red arc
device:

(See image)

Petitioner's other registered marks which do not contain the red arc device include the following:

(See image)

Examining these marks, this Court finds that petitioner's marks can best be described as
consisting of the prefix "CITI" added to other words.

Applying the dominancy test, this Court sees that the prevalent feature of respondent's mark, the
golden lion's head device, is not present at all in any of petitioner's marks. The only similar feature
between respondent's mark and petitioner's collection of marks is the word "CITY" in the former,
and the "CITI" prefix found in the latter. This Court agrees with the findings of the Court of
Appeals that this similarity alone is not enough to create a likelihood of confusion.
The dis[s]imilarities between the two marks are noticeable and substantial. Respondent's mark,
"CITY CASH WITH GOLDEN LION'S HEAD", has an insignia of a golden lion's head at the left
side of the words "CITY CASH", while petitioner's "CITI" mark usually has an arc between the two
I's. A further scrutiny of the other "CITI" marks of petitioner would show that their font type, font
size, and color schemes of the said "CITI" marks vary for each product or service. Most of the time,
petitioner's "CITI" mark is joined with another term to form a single word, with each product or
service having different font types and color schemes. On the contrary, the trademark of
respondent consists of the words "CITY CASH", with a golden lion's head emblem on the left side.
It is, therefore, improbable that the public would immediately and naturally conclude that
respondent's "CITY CASH WITH GOLDEN LION'S HEAD" is but another variation under
petitioner's "CITI" marks.

Verily, the variations in the appearance of the "CITI" marks by petitioner, when conjoined with
other words, would dissolve the alleged similarity between them and the trademark of respondent.
These dissimilarities, and the insignia of a golden lion's head before the words "CITY CASH" in
the mark of the respondent would sufficiently acquaint and apprise the public that respondent's
trademark "CITY CASH WITH GOLDEN LION'S HEAD" is not connected with the "CITI" marks
of petitioner.[42]
This Court also agrees with the Court of Appeals that the context where respondent's mark is to
be used, namely, for its ATM services, which could only be secured at respondent's premises and
not in an open market of ATM services, further diminishes the possibility of confusion on the part
of prospective customers. Thus, this Court quotes with approval the Court of Appeals, which made
reference to Emerald Manufacturing:
Moreover, more credit should be given to the "ordinary purchaser." Cast in this particular
controversy, the ordinary purchaser is not the "completely unwary consumer" but is the
"ordinarily intelligent buyer" considering the type of product involved. It bears to emphasize that
the mark "CITY CASH WITH GOLDEN LION'S HEAD" is a mark of respondent for its ATM
services which it offers to the public. It cannot be gainsaid that an ATM service is not an ordinary
product which could be obtained at any store without the public noticing its association with the
banking institution that provides said service. Naturally, the customer must first open an account
with a bank before it could avail of its ATM service. Moreover, the name of the banking institution
is written and posted either inside or outside the ATM booth, not to mention the fact that the
name of the bank that operates the ATM is constantly flashed at the screen of the ATM itself. With
this, the public would accordingly be apprised that respondent's "CITY CASH" is an ATM service
of the respondent bank, and not of the petitioner's.[43]
Petitioner argues that Emerald Manufacturing is distinguishable from this case, insisting that
ATM services are more akin to ordinary household items than they are akin to brand name jeans,
in terms of how their customers choose their providers:
73. The Emerald Manufacturing case involved the marks "Lee" and "Stylistic Mr. Lee", and the
Supreme Court focused on the nature of the products as "not the ordinary household items",
pointing to the fact that, "the average Filipino consumer generally buys his jeans by brand. He
does not ask the sales clerk for his generic jeans but for, say a Levis, Guess, Wrangler or even an
Armani."

74. In contrast, when an ordinary consumer of ATM services wishes to withdraw cash, more often
than not he will simply locate the nearest ATM, without reference to brand as long as the ATM
accepts his card. When dealing with banks that belong to an ATM network such as Bancnet, which
both parties do, the cards are almost universally and interchangeably accepted.[44]
This scenario is unclear, and thus, unconvincing and insufficient to support a finding of error on
the part of the Court of Appeals. Petitioner hypothesizes that there could be some confusion
because ATM users "simply locate the nearest ATM, without reference to brand as long as the
ATM accepts [their] card."[45] This Court is at a loss to see how this supports petitioner's claims
that ATM users locate the nearest ATMs and use them without reference to brand as long as the
ATM accepts their cards. If petitioner's speculation is true, then bank branding is wholly irrelevant
after the ATM service has been secured. This Court is hard pressed to accept this assumption. In
any case, this Court simply cannot agree that a bank or ATM service is more akin to ordinary
household items than it is to brand name Jeans.

More relevant than the scenario discussed by petitioner is the stage when a bank is trying to attract
customers to avail of its services. Petitioner points out that in advertisements, such as in radio,
newspapers, and the internet, which are shown beyond the bank premises, there may be no golden
lion's head device to disambiguate "CITY CASH" from any of petitioner's own marks and
services.[46] This Court finds this unconvincing. ATM services, like other bank services, are
generally not marketed as independent products. Indeed, as pointed out by petitioner itself, ATM
cards accompany the basic deposit product in most banks.[47] They are generally adjunct to the
main deposit service provided by a bank. Since ATM services must be secured and contracted for
at the offering bank's premises, any marketing campaign for an ATM service must focus first and
foremost on the offering bank. Hence, any effective internet and newspaper advertisement for
respondent would include and emphasize the golden lion's head device. Indeed, a radio
advertisement would not have it. It should not be forgotten, however, that a mark is a question of
visuals, by statutory definition.[48] Thus, the similarity between the sounds of "CITI" and "CITY"
in a radio advertisement alone neither is sufficient for this Court to conclude that there is a
likelihood that a customer would be confused nor can operate to bar respondent from registering
its mark. This Court notes that any confusion that may arise from using "CITY CASH" in a radio
advertisement would be the same confusion that might arise from using respondent's own trade
name. Aurally, respondent's very trade name, which is not questioned, could be mistaken as
"CITISTATE SAVINGS BANK," and all of petitioner's fears of possible confusion would be just as
likely.

This Court agrees with Director General Cristobal's recognition of respondent's history and of
"Citystate" as part of its name.[49] Upon consideration, it notes that it may have been more
aligned with the purpose of trademark protection for respondent to have chosen the trademark
"CITYSTATE CASH" instead of "CITY CASH" to create a stronger association between its trade
name and the service provided. Nonetheless, there is no law requiring that trademarks match the
offeror's trade name precisely to be registrable. The only relevant issue is the likelihood of
confusion.

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

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

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

SO ORDERED.

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, v. FIESTA BARRIO MANUFACTURING
CORPORATION, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

For our disposition is a petition for review on certiorari under Rule 45 seeking to annul and set
aside the June 23, 2011 Decision1 and the October 4, 2011 Resolution2 of the Court of Appeals in
CA-G.R. SP No. 107570, which reversed and set aside the March 26, 2008 Decision3 of the Bureau
of Legal Affairs of the Intellectual Property Office (IPO-BLA) and the January 29, 2009 Decision4
of the Director General of the IPO. Petitioner Nutri-Asia, Inc. (petitioner) is a corporation duly
organized and existing under Philippine laws.5 It is the emergent entity in a merger with UFC
Philippines, Inc. that was completed on February 11, 2009.6 Respondent Barrio Fiesta
Manufacturing Corporation (respondent) is likewise a corporation organized and existing under
Philippine laws.

On April 4, 2002, respondent filed Application No. 4-2002-002757 for the mark "PAPA BOY &
DEVICE" for goods under Class 30, specifically for "lechon sauce."7 The Intellectual Property
Office (IPO) published said application for opposition in the IP Phil. e-Gazette released on
September 8, 2006. The mark appears as follows:

(Please see image G.R. No. 198889 pg. 2)

On December 11, 2006, petitioner filed with the IPO-BLA a Verified Notice of Opposition to the
above-mentioned application and alleged that:

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;

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;

On August 14, 1983, Hernan D. Reyes was issued Certificate of Registration No. 32416;

[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.;

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;

Hernan D. Reyes also filed on March 04, 1982 an application to register in the Supplemental
Register the "PAPA BANANA CATSUP Label";

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.;

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";
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;

On November 07, 2006, Registration No. 34681 was assigned to Opposer;

Opposer has not abandoned the use of the mark "PAPA" and the variations thereof as Opposer
has continued their use up to the present;

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;

[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";

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;

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;

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;

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;

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 13 8 of the IP Code;

The approval of the subject application has caused and will continue to cause great and irreparable
damage and injury to Opposer;

Respondent-applicant filed the subject application fraudulently and in bad faith; and
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 30.9chanroblesvirtuallawlibrary

Petitioner alleged that the registration of respondent's challenged mark was also likely to damage
the petitioner, considering that its former sister company, Southeast Asia Food, Inc., and the
latter's predecessors-in-interest, had been major manufacturers and distributors of lechon and
other table sauces since 1965, such as products employing the registered "Mang Tomas" mark.

In its Verified Answer, respondent argued that there is no likelihood of confusion between
petitioner's family of "PAPA" trademarks and respondent's "PAPA BOY & DEVICE" trademark.
Respondent raised affirmative defenses and we quote the relevant ones below:

3. Opposer cites several of its following marks in support of its opposition to the application but
an examination of said marks [reveals] that these have already expired and/or that no confusing
similarity exists x xx;

4. Assuming that the mark "PAPA KETSARAP" had been timely renewed on August 23, 2005 for
"banana sauce" under Class 30, the same is not a hindrance to the successful registration of the
mark "PAPA BOY & DEVICE": Jurisprudence provides that a certificate of registration confers
upon the trademark owner the exclusive right to use its own symbol only to those goods specified
in the certificate subject to the conditions and limitations stated therein;

5. As a result, Opposer's right to use the mark "PAPAKETSARAP" is limited to the products
covered by its certificate of registration which is Class 30 for banana sauce;

6. Contrary to Opposer's belief, the dominant features of Respondent-applicant's mark "PAPA

BOY & DEVICE" are the words "PAPA BOY" and the representation of a smiling hog-like character
gesturing the thumbs-up sign and wearing a traditional Filipino hat and scarf while the dominant
feature of Opposer's mark "PAPA KETSARAP" are the words "Papa" and "Ketsarap", not the word
"Papa"; and the word "Ketsarap " is more prominently printed and displayed in the foreground
than the word "Papa" for which reasons opposer's reference to the Dominancy Test fails;

7. Opposer's allegation that the registration of Respondent-applicant's mark "PAPA BOY &
DEVICE" will damage and prejudice the mark "MANG TOMAS" is irrelevant considering that
Opposer's basis for filing this opposition is the alleged confusing similarity between Respondent-
applicant's mark and Opposer's mark "PAPA KETSARAP", not the mark "MANG TOMAS";
8. Respondent-applicant's mark "PAPA BOY & DEVICE" is neither identical nor confusingly
similar to Opposer's mark "PAPA KETSARAP": Respondent-applicant's mark "PAPABOY &
DEVICE" is an arbitrary mark which differs in overall sound, spelling, meaning, style,
configuration, presentation, and appearance from Opposer's mark "PAPA KETSARAP";

9. The dissimilarities between the marks are so distinct, thus, confusion is very unlikely: While
Opposer's mark is a plain word mark, Respondent-applicant's mark "PAPA BOY & DEVICE" is
much more intricate and distinctive such as Opposer's mark not having the words "Lechon Sauce"
printed inside a blue ribbon-like device which is illustrated below the words "PAPA BOY",
Opposer's mark not having a prominent smiling hog-like character gesturing a thumbs-up sign
and wearing a Filipino hat and scarf stands beside the words "PAPA BOY", and Opposer's mark
not having the words "Barrio Fiesta" albeit conspicuously displayed above the mark, all which
leave no doubt in the consumer's mind on the product that he is purchasing;

10. Aside from the fact that Respondent-applicant's mark "PAPA BOY & DEVICE" is distinct and
different in appearance, spelling, sound, meaning, and style from Opposer's mark "PAPA
KETSARAP", the difference in the goods covered by both marks is obvious: Since the goods
covered by Respondent-applicant's mark is unrelated and non- competing to those covered by
Opposer's mark, the doctrine allowing the registrations of marks covering unrelated and non-
competing goods as enunciated by the Supreme Court is therefore applicable in this case;

11. Respondent-applicant's mark cannot be confusingly similar to Opposer's mark considering

that the products covered by these marks are different: While Respondent-applicant's mark
"PAPA BOY & DEVICE" covers lechon sauce under Class 30, Opposer's mark "PAPA KETSARAP"
covers banana sauce;

12. If a consumer is in the market for banana sauce, he will not buy lechon sauce and vice-versa
and as a result, the margin of error in the acquisition of one from the other is simply remote;

13. Respondent-applicant is the exclusive owner of the mark "PAPA BOY & DEVICE" for lechon
sauce under Class 30: The words "PAPA BOY" is a combination of the nickname of Bonifacio
Ongpauco who is one of Respondent-applicant's incorporators and founders- "BOY"- and the
word "PAPA" as Bonifacio Ongpauco's mother, Sixta P. Evangelista, had been fondly known as
"Mama Chit", making Respondent-applicant the prior adopter, user, and applicant of the mark
"PAPA BOY & DEVICE" in the Philippines;

14. To protect its ownership over the mark "PAPA BOY & DEVICE" considering that it is the first
to adopt and use said mark, Respondent-applicant applied for its registration under Application
Serial No. 4-2002-002757 for Class 30, and said application was found registrable by the
Examiner as a consequence of which the same was recommended for allowance after undergoing
a thorough process of examination, which recommendation was then approved by the Director of
the Bureau of Trademarks (BOT);

15. Respondent-applicant's mark "PAPA BOY & DEVICE" has been commercially used in the
Philippines;
16. Respondent-applicant's mark "PAPA BOY & DEVICE" has been promoted and advertised for
a considerable duration of time and over wide geographical areas: Respondent-applicant has
invested tremendous amount of resources in the promotion of its mark "PAPA BOY & DEVICE"
through various media including print publications and promotional materials;

17. The widespread local commercial use of the subject mark by Respondent-applicant to
distinguish and identify its various high-quality consumer products has earned Respondent-
applicant a well-deserved business reputation and goodwill;

18. Respondent-applicant's mark is distinctive and capable of identifying its goods and
distinguishing them from those offered for sale by others in the market including Opposer's goods
for which reason no confusion will result because Respondent-applicant's mark is for lechon sauce
while Opposer's mark is for banana sauce; and

19. The presence of a common prefix "PAPA" in the marks of both parties does not render said
marks identical or confusingly similar: Opposer cannot exclusively appropriate said prefix
considering that other marks such as "Papa Heinz Pizza", "Papa Heinz Sausage", "Papa Beaver",
"Papa Pop", "Pizza Papa John's & Design", "Papadoods", and "Papa in Wine and Device" are valid
and active.10chanrobleslaw

Petitioner's mark and its variations appear as follows:

1. "PAPA" under Registration No. 32416 for Class 29 goods;11

(Please see image G.R. No. 198889 page 7.)

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

(Please see image G.R. No. 198889 page 7.)

"PAPA LABEL DESIGN" under Registration No. 4-2006-012364;13 and

(Please see image G.R. No. 198889 page 7.)

"PAPA KETSARAP" under Certificate of Registration No. 34681, for banana sauce (Class 30).14

(Please see image G.R. No. 198889 page 8.)

PROCEEDINGS BEFORE THE INTELLECTUAL PROPERTY OFFICE

The case was referred to mediation but the parties failed to arrive at an amicable settlement. The
case was thus set for preliminary conference. Subsequently, the IPO-BLA directed the parties to
file their respective position papers and draft decisions.
The IPO-BLA rendered a Decision on March 26, 2008 sustaining petitioner's Opposition and
rejecting respondent's application for "PAPA BOY & DEVICE." The fallo of said decision reads as
follows:

WHEREFORE, the VERIFIED NOTICE OF OPPOSITION filed by UFC Philippines, Inc. is, as it
is hereby, SUSTAINED. Consequently, Application Serial No. 4-2002-002757 for the mark "PAPA
BOY & DEVICE" for lechon sauce under Class 30 filed on April 04, 2002 by Barrio Fiesta
Manufacturing Corporation, is, as it is hereby, REJECTED. Let the file wrapper of PAPA BOY &
Device subject matter of this case be forwarded to the Bureau of Trademarks (BOT) for
appropriate action in accordance with this Decision.15chanrobleslaw

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.17chanrobleslaw

As regards the first ground, the Court of Appeals held:

Records show that respondent UFC has Certificates of Registration for the trademarks PAPA,
PAPA BANANA CATSUP label and PAPA KETSARAP. A closer look at the respective Certificate[s]
of Registration of the aforementioned marks, however, reveals that at the time the trademark
application of petitioner was published in the IPO e-Gazette on September 8, 2006, the duration
of the trademark registration of respondent over the marks PAPA and PAPA BANANA CATSUP
have already expired. On the other hand, the mark PAPA KETSARAP was timely renewed by
respondent as shown by the Certificate of Renewal of Registration issued on September 1, 2006
by the Director of the Bureau of Trademarks.

Under R.A. No. 8293, as amended by R.A. No. 9150, the duration of a trademark registration is
10 years, renewable for periods of 10 years each renewal. The request for renewal must be made
within 6 months before or after the expiration of the registration. Respondent's PAPA mark was
not renewed within the period provided for under RA No. 8293. Its registered term ended on
August 11, 2003 but was reapplied for registration only on April 4, 2005. Meanwhile, the mark
PAPA BANANA CATSUP was registered by respondent only in the Supplemental Register, hence,
was not provided any protection, x x x. It is noted that the PAPA BANANA CATSUP label was
applied for registration on November 15, 2006, over three years after the expiration of its
registration in the Supplemental Register of the Philippine Patent Office on August 11, 2003.
Thus, while petitioner has a point that the marks PAPA and PAPA BANANA CATSUP have already
expired and the latter having been afforded no protection at all and should not be juxtaposed with
petitioner's trademark, respondent can still use the marks PAPA KETSARAP and PAPA BANANA
CATSUP, it appearing that the Intellectual Property Office issued a Certificate of Registration No.
4-2006-012364 for the latter on April 30, 2007, to bar the registration of petitioner's "PAPA BOY
& DEVICE" mark.18 (Emphases supplied, citations omitted.)

Anent the second ground, the Court of Appeals ruled in the following manner:

After taking into account the aforementioned doctrines and the factual circumstances of the case
at bar, this Court, after considering the trademarks involved as a whole, is of the view that
petitioner's trademark "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.20chanrobleslaw

Under the first ground, petitioner submitted the following arguments:

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.

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.23chanroblesvirtuallawlibrary

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."25cralawred

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."26chanroblesvirtuallawlibrary

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 "[bjeing 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."27chanroblesvirtuallawlibrary

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."28chanroblesvirtuallawlibrary

Petitioner claims that the mark "PAPA" falls under this class of arbitrary marks, even if "PAPA" is
also a common term of endearment for one's father. Petitioner states that there is no logical
connection between one's father and food sauces, such as ketchup; thus, with respect to ketchup,
food sauces, and their related products, and for the purpose of identifying its products, petitioner
claims exclusive ownership of the term "PAPA" as an arbitrary mark.

Petitioner alleges that if respondent "has a good faith and proud desire to unmistakably and
distinctly identify its lechon sauce product out in the market, it should have coined a mark that
departs from and is distinguished from those of its competitors." Petitioner claims that
respondent, with full knowledge of the fame and the decades-long commercial use of petitioner's
"PAPA" marks, opted for "PAPA BOY & DEVICE," which obviously is just a "colorable
imitation."29

THEORY OF RESPONDENT

In its Comment,30 respondent claims that petitioner's marks have either expired and/or "that no
confusing similarity exists between them and respondent's "PAPA BOY & DEVICE' mark."
Respondent alleges that under Section 15 of Republic Act No. 166, a renewal application should
be filed within six months before the expiration of the period or within three months after such
expiration. Respondent avers that the expiration of the 20-year term for the "PAPA" mark under
Registration No. 32416 issued on August 11, 1983 was August 11, 2003. The sixth month before
August 11, 2003 was February 11, 2003 and the third month after August 11, 2003 was November
11, 2003. Respondent claims that the application that petitioner filed on October 28, 2005 was
almost two years late. Thus, it was not a renewal application, but could only be considered a new
application under the new Trademark Law, with the filing date reckoned on October 28, 2005.
The registrability of the mark under the new application was examined again, and any certificate
issued for the registration of "PAPA" could not have been a renewal certificate.

As for petitioner's other mark "PAPA BANANA CATSUP LABEL," respondent claims that its 20-
year term also expired on August 11, 2003 and that petitioner only filed its application for the new
"PAPA LABEL DESIGN" on November 15, 2006. Having been filed three years beyond the
renewal application deadline, petitioner was not able to renew its application on time, and cannot
claim a "continuous existence of its rights over the 'PAPA BANANA CATSUP LABEL.'"
Respondent claims that the two marks are different from each other and that the registration of
one is independent of the other. Respondent concludes that the certificate of registration issued
for "PAPA LABEL DESIGN" is "not and will never be a renewal
certificate."31chanroblesvirtuallawlibrary

Respondent also avers as follows:

1.3. With regard to the two new registrations of petitioner namely: "PAPA" (Reg. No. 4-2005-
010788) and "PAPA LABEL DESIGN" (Reg. No. 4-2006-012364), these were filed on October 28,
2005 and November 15, 2006, respectively, under the Intellectual Property Code (RA 8293),
which follows the "first to file" rule, and were obviously filed later than respondent's "PAPA BOY
& DEVICE" mark filed on April 4, 2002. These new marks filed much later than the opposed
"PAPA BOY & DEVICE" mark cannot, therefore, be used as basis for the opposition and should in
fact, be denied outrightly.

xxxx

A search of the Online Trademark Database of Intellectual Property Office (IPO) will show that
only Registration No. 34681 issued for "PAPA KETSARAP" was properly renewed on August 23,
2005. x x x Clearly, the registrations of "PAPA" and "PAPA BANANA CATSUP LABEL" marks
under registration nos. 32416 and SR-6282 respectively, have already expired when Petitioner
filed its opposition proceeding against Respondent's trademark on December 11, 2006. Having
expired, and therefore, no longer legally existing, the "PAPA" and "PAPA BANANA CATSUP
LABEL" marks CANNOT BAR the registration of respondent's mark. To allow petitioner's expired
marks to prevent respondent's distinct "PAPA BOY & DEVICE" mark from being registered would
be the ultimate absurdity.32chanrobleslaw

Respondent posits that the Court of Appeals did not err in reversing the decisions of the
administrative agencies, alleging that "[while] it is true that the general rule is that the factual
findings of administrative bodies deserve utmost respect when supported by evidence, the same
is subject to exceptions,"33 and that the Court of Appeals had justifiable reasons to disregard the
factual finding of the IPO. Here, the Court of Appeals wisely identified certain material facts that
were overlooked by the IPO-BLA and the IPO Director General which it opined, when correctly
appreciated, would alter the result of the case.

Respondent alleges that the IPO-BLA erroneously considered petitioner's marks "PAPA" and
"PAPA BANANA CATSUP LABEL" when it applied the dominancy test in determining whether
petitioner's marks are confusingly similar to those of respondent's mark "PAPA BOY & DEVICE."

Respondent avers that the IPO-BLA absurdly took emphasis on the mark "PAPA" to arrive at its
decision and did not take into consideration that petitioner's mark was already expired when
respondent applied for the registration of its "PAPA BOY & DEVICE" mark. Respondent compares
its "PAPA BOY & DEVICE" with the only mark that respondent allegedly has, "PAPA KETSARAP,"
and found no confusing similarity between the two.

We quote below respondent's discussion of its application of the dominancy test to the marks in
question:

Applying the Dominancy test, as correctly emphasized by the Court of Appeals, the dominant
feature in respondent's mark is "PAPA BOY" and not "PAPA". It can be gleaned from respondent's
mark that the word "PAPA" was written in the same font, style and color as the word "BOY". There
is also the presence of a "smiling hog-like character" which is positioned very prominently, both
in size and location in said mark, at glance (sic) even more dominant than the word "PAPA BOY".

xxxx
On the other hand, the dominant feature in petitioner's mark is "KETSARAP", not "PAPA". Even
an ordinary examiner could observe that the word "KETSARAP" in petitioner's mark is more
prominently printed than the word "PAPA".

xxxx

In a dominancy test, the prominent feature of the competing trademarks must be similar to cause
confusion or deception, x x x.

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.35chanrobleslaw

Using the holistic test, respondent further discusses the differences in the marks in this wise:

Even the use of the holistic test x x x takes into consideration the entirety of the marks in question
[to] be considered in resolving confusing similarity. The differences are again very obvious.
Respondent's mark has (1) the word "lechon sauce" printed inside a blue ribbon-like device which
is illustrated below the word "PAPA BOY"; (2) a prominent smiling hog-like character gesturing
a thumbs-up sign and wearing a Filipino hat and scarf stands beside the word "PAPA BOY"; and
the word "BARRIO FIESTA" conspicuously displayed above the said trademark which leaves no
doubt in the consumer's mind on the product that he or she is purchasing. On the other hand,
petitioner's mark is the word "PAPA" enclosed by a cloud on top of the word "KETSARAP'
enclosed by a geometrical figure.

xxxx

In the instant case, the respective marks are obviously different in color scheme, logo, spelling,
sound, meaning and connotation. Thus, yet again, under the holistic test there can be no confusion
or deception between these marks.

It also bears stressing that petitioner's "PAPA KETSARAP" mark covers "banana catsup" while
respondent's "PAPA BOY & DEVICE" covers "lechon sauce", thereby obliterating any confusion
of products of both marks as they travel different channels of trade. If a consumer is in the market
for banana catsup, he or she will not buy lechon sauce and vice-versa. As a result, the margin of
error in the acquisition of one for the other is simply remote. Lechon sauce which is liver sauce is
distinct from catsup extracted/ made from banana fruit. The flavor and taste of a lechon sauce are
far from those of a banana catsup. Lechon sauce is sauce for "lechon" while banana catsup is
apparently catsup made from banana.36chanrobleslaw

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.37chanroblesvirtuallawlibrary

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.38chanroblesvirtuallawlibrary

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.39chanroblesvirtuallawlibrary

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.40chanroblesvirtuallawlibrary

Petitioner, in its Reply41 to respondent's Comment, contends that respondent cannot invoke a
prior filing date for the "PAPA BOY" mark as against Petitioner's "PAPA" and "PAPA BANANA
CATSUP LABEL" marks, because the latter marks were still registered when respondent applied
for registration of its "PAPA BOY" mark. Thus, the IPO-BLA and Director General correctly
considered them in deciding whether the "PAPA BOY" mark should be registered, using the "first
to file" rule under Section 123.1(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.

xxxx

SECTION 3. Presumption of Likelihood of Confusion. — Likelihood of confusion shall be

presumed in case an identical sign or mark is used for identical goods or services.

SECTION 4. Likelihood of Confusion in Other Cases. — In determining whether one trademark is

confusingly similar to or is a colorable imitation of another, the court must consider the general
impression of the ordinary purchaser, buying under the normally prevalent conditions in trade
and giving the attention such purchasers usually give in buying that class of goods. Visual, aural,
connotative comparisons and overall impressions engendered by the marks in controversy as they
are encountered in the realities of the marketplace must be taken into account. Where there are
both similarities and differences in the marks, these must be weighed against one another to see
which predominates.

In determining likelihood of confusion between marks used on non-identical goods or services,

several factors may be taken into account, such as, but not limited to:

a) the strength of plaintiff s mark;

b) the degree of similarity between the plaintiffs and the defendant's marks;

c) the proximity of the products or services;

d) the likelihood that the plaintiff will bridge the gap;

e) evidence of actual confusion;

f) the defendant's good faith in adopting the mark;

g) the quality of defendant's product or service; and/or h) the sophistication of the buyers.

"Colorable imitation" denotes such a close or ingenious imitation as to be calculated to deceive

ordinary persons, or such a resemblance to the original as to deceive an ordinary purchaser giving
such attention as a purchaser usually gives, as to cause him to purchase the one supposing it to be
the other.

SECTION 5. Determination of Similar and Dissimilar Goods or Services. — Goods or services may
not be considered as being similar or dissimilar to each other on the ground that, in any
registration or publication by the Office, they appear in different classes of the Nice Classification.

In this case, the findings of fact of the highly technical agency, the Intellectual Property Office,
which has the expertise in this field, should have been given great weight by the Court of Appeals.
As we held in Berris Agricultural Co., Inc. v. Abyadang44:

R.A. No. 8293 defines a "mark" as any visible sign capable of distinguishing the goods (trademark)
or services (service mark) of an enterprise and shall include a stamped or marked container of
goods. It also defines a "collective mark" as any visible sign designated as such in the application
for registration and capable of distinguishing the origin or any other common characteristic,
including the quality of goods or services of different enterprises which use the sign under the
control of the registered owner of the collective mark.

On the other hand, R.A. No. 166 defines a "trademark" as any distinctive word, name, symbol,
emblem, sign, or device, or any combination thereof, adopted and used by a manufacturer or
merchant on his goods to identify and distinguish them from those manufactured, sold, or dealt
by another. A trademark, being a special property, is afforded protection by law. But for one to
enjoy this legal protection, legal protection ownership of the trademark should rightly be
established.
The ownership of a trademark is acquired by its registration and its actual use by the manufacturer
or distributor of the goods made available to the purchasing public. Section 122 of R.A.. No. 8293
provides that the rights in a mark shall be acquired by means of its valid registration with the IPO.
A certificate of registration of a mark, once issued, constitutes prima facie evidence of the validity
of the registration, of the registrant's ownership of the mark, and of the registrant's exclusive right
to use the same in connection with the goods or services and those that are related thereto
specified in the certificate. R.A. No. 8293, however, requires the applicant for registration or the
registrant to file a declaration of actual use (DAU) of the mark, with evidence to that effect, within
three (3) years from the filing of the application for registration; otherwise, the application shall
be refused or the mark shall be removed from the register. In other words, the prima facie
presumption brought about by the registration of a mark may be challenged and overcome, in an
appropriate action, by proof of the nullity of the registration or of non-use of the mark, except
when excused. Moreover, the presumption may likewise be defeated by evidence of prior use by
another person, i.e., it will controvert a claim of legal appropriation or of ownership based on
registration by a subsequent user. This is because a trademark is a creation of use and belongs to
one who first used it in trade or commerce.

The determination of priority of use of a mark is a question of fact. Adoption of the mark alone
does not suffice. One may make advertisements, issue circulars, distribute price lists on certain
goods, but these alone will not inure to the claim of ownership of the mark until the goods bearing
the mark are sold to the public in the market. Accordingly, receipts, sales invoices, and testimonies
of witnesses as customers, or orders of buyers, best prove the actual use of a mark in trade and
commerce during a certain period of time.

xxxx

Verily, the protection of trademarks as intellectual property is intended not only to preserve the
goodwill and reputation of the business established on the goods bearing the mark through actual
use over a period of time, but also to safeguard the public as consumers against confusion on these
goods. On this matter of particular concern, administrative agencies, such as the IPO, by reason
of their special knowledge and expertise over matters falling under their jurisdiction, are in a
better position to pass judgment thereon. Thus, their findings of fact in that regard are generally
accorded great respect, if not finality by the courts, as long as they are supported by substantial
evidence, even if such evidence might not be overwhelming or even preponderant. It is not the
task of the appellate court to weigh once more the evidence submitted before the administrative
body and to substitute its own judgment for that of the administrative agency in respect to
sufficiency of evidence. (Emphasis added, citations omitted.)

In trademark controversies, each case must be scrutinized according to its peculiar circumstances,
such that jurisprudential precedents should only be made to apply if they are specifically in
point.45 The cases discussed below are mentioned only for purposes of lifting the applicable
doctrines, laws, and concepts, but not for their factual circumstances, because of the uniqueness
of each case in controversies such as this one.

There are two tests used in jurisprudence to determine likelihood of confusion, namely the
dominancy test used by the IPO, and the holistic test adopted by the Court of Appeals. In Skechers,
U.S.A., Inc. v. Inter Pacific Industrial Trading Corp.,46 we held:
The essential element of infringement under R.A. No. 8293 is that the infringing mark is likely to
cause confusion. In determining similarity and likelihood of confusion, jurisprudence has
developed tests — the Dominancy Test and the Holistic or Totality Test. The Dominancy Test
focuses on the similarity of the prevalent or dominant features of the competing trademarks that
might cause confusion, mistake, and deception in the mind of the purchasing public. Duplication
or imitation is not necessary; neither is it required that the mark sought to be registered suggests
an effort to imitate. Given more consideration are the aural and visual impressions created by the
marks on the buyers of goods, giving little weight to factors like prices, quality, sales outlets, and
market segments.

xxxx

Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2)
types of confusion, viz.: (1) confusion of goods (product confusion), where the ordinarily prudent
purchaser would be induced to purchase one product in the belief that he was purchasing the
other; and (2) confusion of business (source or origin confusion), where, although the goods of
the parties are different, the product, the mark of which registration is applied for by one party, is
such as might reasonably be assumed to originate with the registrant of an earlier product, and
the public would then be deceived either into that belief or into the belief that there is some
connection between the two parties, though inexistent.

Applying the Dominancy Test to the case at bar, this Court finds that the use of the stylized "S" by
respondent in its Strong rubber shoes infringes on the mark already registered by petitioner with
the IPO. While it is undisputed that petitioner's stylized "S" is within an oval design, to this Court's
mind, the dominant feature of the trademark is the stylized "S," as it is precisely the stylized "S"
which catches the eye of the purchaser. Thus, even if respondent did not use an oval design, the
mere fact that it used the same stylized "S", the same being the dominant feature of petitioner's
trademark, already constitutes infringement under the Dominancy Test.

This Court cannot agree with the observation of the CA that the use of the letter "S" could hardly
be considered as highly identifiable to the products of petitioner alone. The CA even supported its
conclusion by stating that the letter "S" has been used in so many existing trademarks, the most
popular of which is the trademark "S" enclosed by an inverted triangle, which the CA says is
identifiable to Superman. Such reasoning, however, misses the entire point, which is that
respondent had used a stylized "S," which is the same stylized "S" which petitioner has a registered
trademark for. The letter "S" used in the Superman logo, on the other hand, has a block-like tip
on the upper portion and a round elongated tip on the lower portion. Accordingly, the comparison
made by the CA of the letter "S" used in the Superman trademark with petitioner's stylized "S" is
not appropriate to the case at bar.

Furthermore, respondent did not simply use the letter "S," but it appears to this Court that based
on the font and the size of the lettering, the stylized "S" utilized by respondent is the very same
stylized "S" used by petitioner; a stylized "S" which is unique and distinguishes petitioner's
trademark. Indubitably, the likelihood of confusion is present as purchasers will associate the
respondent's use of the stylized "S" as having been authorized by petitioner or that respondent's
product is connected with petitioner's business.
XXXX

While there may be dissimilarities between the appearances of the shoes, to this Court's mind
such dissimilarities do not outweigh the stark and blatant similarities in their general features, x
x x.

Based on the foregoing, this Court is at a loss as to how the RTC and the CA, in applying the holistic
test, ruled that there was no colorable imitation, when it cannot be any more clear and apparent
to this Court that there is colorable imitation. The dissimilarities between the shoes are too trifling
and frivolous that it is indubitable that respondent's products will cause confusion and mistake in
the eyes of the public. Respondent's shoes may not be an exact replica of petitioner's shoes, but
the features and overall design are so similar and alike that confusion is highly likely.

xxxx

Neither can the difference in price be a complete defense in trademark infringement. In

McDonald's Corporation v. L.C. Big Mak Burger, Inc., this Court held:

Modern law recognizes that the protection to which the owner of a trademark is entitled is not
limited to guarding his goods or business from actual market competition with identical or similar
products of the parties, but extends to all cases in which the use by a junior appropriator of a
trade-mark or trade-name is likely to lead to a confusion of source, as where prospective
purchasers would be misled into thinking that the complaining party has extended his business
into the field (see 148 ALR 56 et seq; 53 Am. Jur. 576) or is in any way connected with the activities
of the infringer; or when it forestalls the normal potential expansion of his business (v. 148 ALR
77, 84; 52 Am. Jur. 576, 577). x x x.

Indeed, the registered trademark owner may use its mark on the same or similar products, in
different segments of the market, and at different price levels depending on variations of the
products for specific segments of the market. The purchasing public might be mistaken in
thinking that petitioner had ventured into a lower market segment such that it is not inconceivable
for the public to think that Strong or Strong Sport Trail might be associated or connected with
petitioner's brand, which scenario is plausible especially since both petitioner and respondent
manufacture rubber shoes.

Withal, the protection of trademarks as intellectual property is intended not only to preserve the
goodwill and reputation of the business established on the goods bearing the mark through actual
use over a period of time, but also to safeguard the public as consumers against confusion on these
goods. While respondent's shoes contain some dissimilarities with petitioner's shoes, this Court
cannot close its eye to the fact that for all intents and purpose, respondent had deliberately
attempted to copy petitioner's mark and overall design and features of the shoes. Let it be
remembered, that defendants in cases of infringement do not normally copy but only make
colorable changes. The most successful form of copying is to employ enough points of similarity
to confuse the public, with enough points of difference to confuse the courts. (Citations omitted.)

The Court discussed the concept of confusion of business in the case of Societe Des Produits
Nestle, S.A. v. Dy, Jr.,47 as quoted below:
Among the elements, the element of likelihood of confusion is the gravamen of trademark
infringement. There are two types of confusion in trademark infringement: confusion of goods
and confusion of business. In Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft, the Court distinguished the two types of confusion:

Callman notes two types of confusion. The first is the confusion of goods "in which event the
ordinarily prudent purchaser would be induced to purchase one product in the belief that he was
purchasing the other." In which case, "defendant's goods are then bought as the plaintiffs, and the
poorer quality of the former reflects adversely on the plaintiffs reputation." The other is the
confusion of business: "Here though the goods of the parties are different, the defendant's product
is such as might reasonably be assumed to originate with the plaintiff, and the public would then
be deceived either into that belief or into the belief that there is some connection between the
plaintiff and defendant which, in fact, does not exist."

There are two tests to determine likelihood of confusion: the dominancy test and holistic test. The
dominancy test focuses on the similarity of the main, prevalent or essential features of the
competing trademarks that might cause confusion. Infringement takes place when the competing
trademark contains the essential features of another. Imitation or an effort to imitate is
unnecessary. The question is whether the use of the marks is likely to cause confusion or deceive
purchasers.

xxxx

In cases involving trademark infringement, no set of rules can be deduced. Each case must be
decided on its own merits. Jurisprudential precedents must be studied in the light of the facts of
each particular case. In McDonald's Corporation v. MacJoy Fastfood Corporation, the Court held:

In trademark cases, particularly in ascertaining whether one trademark is confusingly similar to

another, no set rules can be deduced because each case must be decided on its merits. In such
cases, even more than in any other litigation, precedent must be studied in the light of the facts of
the particular case. That is the reason why in trademark cases, jurisprudential precedents should
be applied only to a case if they are specifically in point.

In the light of the facts of the present case, the Court holds that the dominancy test is applicable.
In recent cases with similar factual milieus, the Court has consistently applied the dominancy test,
x x x.

xxxx

In McDonald's Corporation v. MacJoy Fastfood Corporation, the Court applied the dominancy
test in holding that "MACJOY" is confusingly similar to "MCDONALD'S." The Court held:

While we agree with the CA's detailed enumeration of differences between the two (2) competing
trademarks herein involved, we believe that the holistic test is not the one applicable in this case,
the dominancy test being the one more suitable. In recent cases with a similar factual milieu as
here, the Court has consistently used and applied the dominancy test in determining confusing
similarity or likelihood of confusion between competing trademarks.
xxxx

Applying the dominancy test to the instant case, the Court finds that herein petitioner's
"MCDONALD'S" and respondent's "MACJOY" marks are confusingly similar with each other that
an ordinary purchaser can conclude an association or relation between the marks.

To begin with, both marks use the corporate "M" design logo and the prefixes "Me" and/or "Mac"
as dominant features, x x x.

For sure, it is the prefix "Me," 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," "Me Spaghetti," "McDo," "Big Mac" and the rest of the
MCDONALD'S marks which all use the prefixes Me and/or Mac.

Besides and most importantly, both trademarks are used in the sale of fastfood products.
Indisputably, the respondent's trademark application for the "MACJOY & DEVICE" trademark
covers goods under Classes 29 and 30 of the International Classification of Goods, namely, fried
chicken, chicken barbeque, burgers, fries, spaghetti, etc. Likewise, the petitioner's trademark
registration for the MCDONALD'S marks in the Philippines covers goods which are similar if not
identical to those covered by the respondent's application.

In McDonald's Corporation v. L.C. Big Mak Burger, Inc., the Court applied the dominancy test in
holding that "BIG MAK" is confusingly similar to "BIG MAC." The Court held:

This Court x x x has relied on the dominancy test rather than the holistic test. The dominancy test
considers the dominant features in the competing marks in determining whether they are
confusingly similar. Under the dominancy test, courts give greater weight to the similarity of the
appearance of the product arising from the adoption of the dominant features of the registered
mark, disregarding minor differences. Courts will consider more the aural and visual impressions
created by the marks in the public mind, giving little weight to factors like prices, quality, sales
outlets and market segments.

Thus, in the 1954 case of Co Tiong Sa v. Director of Patents, the Court ruled:

x x x It has been consistently held that the question of infringement of a trademark is to be

determined by the test of dominancy. Similarity in size, form and color, while relevant, is not
conclusive. If the competing trademark contains the main or essential or dominant features of
another, and confusion and deception is likely to result, infringement takes place. Duplication or
imitation is not necessary; nor is it necessary that the infringing label should suggest an effort to
imitate. (G. Heilman Brewing Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle
White Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue in cases of infringement of
trademarks is whether the use of the marks involved would be likely to cause confusion or
mistakes in the mind of the public or deceive purchasers. (Auburn Rubber Corporation vs.
Honover Rubber Co., 107 F. 2d 588; x x x)

xxxx
The test of dominancy is now explicitly incorporated into law in Section 155.1 of the Intellectual
Property Code which defines infringement as the "colorable imitation of a registered mark x x x
or a dominant feature thereof."

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.

Moreover, the totality or holistic test is contrary to the elementary postulate of the law on
trademarks and unfair competition that confusing similarity is to be determined on the basis of
visual, aural, connotative comparisons and overall impressions engendered by the marks in
controversy as they are encountered in the realities of the marketplace. The totality or holistic test
only relies on visual comparison between two trademarks whereas the dominancy test relies not
only on the visual but also on the aural and connotative comparisons and overall impressions
between the two trademarks.

For this reason, this Court agrees with the BPTTT when it applied the test of dominancy and held
that:

xxxx

The scope of protection afforded to registered trademark owners is not limited to protection from
infringers with identical goods. The scope of protection extends to protection from infringers with
related goods, and to market areas that are the normal expansion of business of the registered
trademark owners. Section 138 of R.A. No. 8293 states:

Certificates of Registration. — A certificate of registration of a mark shall be prima facie evidence

of validity of the registration, the registrant's ownership of the mark, and of the registrant's
exclusive right to use the same in connection with the goods or services and those that are related
thereto specified in the certificate, x x x.

In Mighty Corporation v. E. & J. Gallo Winery, the Court held that, "Non-competing goods may
be those which, though they are not in actual competition, are so related to each other that it can
reasonably be assumed that they originate from one manufacturer, in which case, confusion of
business can arise out of the use of similar marks." In that case, the Court enumerated factors in
determining whether goods are related: (1) classification of the goods; (2) nature of the goods; (3)
descriptive properties, physical attributes or essential characteristics of the goods, with reference
to their form, composition, texture or quality; and (4) style of distribution and marketing of the
goods, including how the goods are displayed and sold.

xxxx

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:

xxxx

Even respondent's use of the "Big Mak" mark on non-hamburger food products cannot excuse
their infringement of petitioners' registered mark, otherwise registered marks will lose their
protection under the law.

The registered trademark owner may use his mark on the same or similar products, in different
segments of the market, and at different price levels depending on variations of the products for
specific segments of the market. The Court has recognized that the registered trademark owner
enjoys protection in product and market areas that are the normal potential expansion of his
business. Thus, the Court has declared:

Modern law recognizes that the protection to which the owner of a trademark is entitled is not
limited to guarding his goods or business from actual market competition with identical or similar
products of the parties, but extends to all cases in which the use by a junior appropriator of a
trade-mark or trade-name is likely to lead to a confusion of source, as where prospective
purchasers would be misled into thinking that the complaining party has extended his business
into the field (see 148 ALR 56 et sq; 53 Am. Jur. 576) or is in any way connected with the activities
of the infringer; or when it forestalls the normal potential expansion of his business (v. 148 ALR,
77, 84; 52 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 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 x x x.

xxxx

Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2)
types of confusion, viz.: (1) confusion of goods (product confusion), where the ordinarily prudent
purchaser would be induced to purchase one product in the belief that he was purchasing the
other; and (2) confusion of business (source or origin confusion), where, although the goods of
the parties are different, the product, the mark of which registration is applied for by one party, is
such as might reasonably be assumed to originate with the registrant of an earlier product, and
the public would then be deceived either into that belief or into the belief that there is some
connection between the two parties, though inexistent.

xxxx

We agree with the findings of the IPO. As correctly applied by the IPO in this case, while there are
no set rules that can be deduced as what constitutes a dominant feature with respect to
trademarks applied for registration; usually, what are taken into account are signs, color, design,
peculiar shape or name, or some special, easily remembered earmarks of the brand that readily
attracts and catches the attention of the ordinary consumer.

xxxx

Further, Dermaline's stance that its product belongs to a separate and different classification from
Myra's products with the registered trademark does not eradicate the possibility of mistake on the
part of the purchasing public to associate the former with the latter, especially considering that
both classifications pertain to treatments for the skin.

Indeed, the registered trademark owner may use its mark on the same or similar products, in
different segments of the market, and at different price levels depending on variations of the
products for specific segments of the market. The Court is cognizant that the registered trademark
owner enjoys protection in product and market areas that are the normal potential expansion of
his business. Thus, we have held —

Modern law recognizes that the protection to which the owner of a trademark is entitled is not
limited to guarding his goods or business from actual market competition with identical or similar
products of the parties, but extends to all cases in which the use by a junior appropriator of a
trade-mark or trade-name is likely to lead to a confusion of source, as where prospective
purchasers would be misled into thinking that the complaining party has extended his business
into the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or is in any way connected with the activities
of the infringer; or when it forestalls the normal potential expansion of his business (v. 148 ALR
77, 84; 52 Am. Jur. 576, 577).

Thus, the public may mistakenly think that Dermaline is connected to or associated with Myra,
such that, considering the current proliferation of health and beauty products in the market, the
purchasers would likely be misled that Myra has already expanded its business through
Dermaline from merely carrying pharmaceutical topical applications for the skin to health and
beauty services.

Verily, when one applies for the registration of a trademark or label which is almost the same or
that very closely resembles one already used and registered by another, the application should be
rejected and dismissed outright, even without any opposition on the part of the owner and user of
a previously registered label or trademark. This is intended not only to avoid confusion on the
part of the public, but also to protect an already used and registered trademark and an established
goodwill. (Citations omitted.)

Section 123. l(d) of the IP Code provides:

A mark cannot be registered if it:

xxxx

(d) Is identical with a registered mark belonging to a different proprietor or a mark with an earlier
filing or priority date, in respect of:

The same goods or services, or

Closely related goods or services, or

If it nearly resembles such a mark as to be likely to deceive or cause confusion[.]

A scrutiny of petitioner's and respondent's respective marks would show that the IPO-BLA and
the IPO Director General correctly found the word "PAPA" as the dominant feature of petitioner's
mark "PAPA KETSARAP." Contrary to respondent's contention, "KETSARAP" cannot be the
dominant feature of the mark as it is merely descriptive of the product. Furthermore, it is the
"PAPA" mark that has been in commercial use for decades and has established awareness and
goodwill among consumers.

We likewise agree with the IPO-BLA that the word "PAPA" is also the dominant feature of
respondent's "PAPA BOY & DEVICE" mark subject of the application, such that "the word 'PAPA'
is written on top of and before the other words such that it is the first word/figure that catches the
eyes."49 Furthermore, as the IPO Director General put it, the part of respondent's mark which
appears prominently to the eyes and ears is the phrase "PAPA BOY" and that is what a purchaser
of respondent's product would immediately recall, not the smiling hog.

We quote the relevant portion of the IPO-BLA decision on this point below:
A careful examination of Opposer's and Respondent-applicant's respective marks shows that the
word "PAPA" is the dominant feature: In Opposer's marks, the word "PAPA" is either the mark by
itself or the predominant word considering its stylized font and the conspicuous placement of the
word "PAPA" before the other words. In Respondent-applicant's mark, the word "PAPA" is
written on top of and before the other words such that it is the first word figure that catches the
eyes. The visual and aural impressions created by such dominant word "PAPA" at the least is that
the respective goods of the parties originated from the other, or that one party has permitted or
has been given license to the other to use the word "PAPA" for the other party's product, or that
there is a relation/connection between the two parties when, in fact, there is none. This is
especially true considering that the products of both parties belong to the same class and are
closely related: Catsup and lechon sauce or liver sauce are both gravy-like condiments used to
spice up dishes. Thus, confusion of goods and of business may likely result.

Under the Dominancy Test, the dominant features of the competing marks are considered in
determining whether these competing marks are confusingly similar. Greater weight is given to
the similarity of the appearance of the products arising from the adoption of the dominant
features of the registered mark, disregarding minor differences. The visual, aural, connotative,
and overall comparisons and impressions engendered by the marks in controversy as they are
encountered in the realities of the marketplace are the main considerations (McDonald's
Corporation, et al., v. L. C. Big Mak Burger, Inc., et al., G. R. No. 143993, August 18, 2004; Societe
Des Produits Nestle, S. A." et al. v. Court of Appeals, et al., G. R. No. 112012, April 4, 2001). If the
competing trademark contains the main or essential or dominant features of another, and
confusion and deception is likely to result, infringement takes place. (Lim Hoa v. Director of
Patents, 100 Phil. 214 [1956]); Co Tiong Sa v. Director of Patents, et al., G. R. No. L-5378, May 24,
1954). Duplication or imitation is not necessary; nor is it necessary that the infringing label should
suggest an effort to imitate (Lim Hoa v. Director of Patents, supra, and Co 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.

xxxx

Pursuant to [Section 123.l(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.

We agree that respondent's mark cannot be registered. Respondent's mark is related to a product,
lechon sauce, an everyday all-purpose condiment and sauce, that is not subjected to great scrutiny
and care by the casual purchaser, who knows from regular visits to the grocery store under what
aisle to find it, in which bottle it is contained, and approximately how much it costs. Since
petitioner's product, catsup, is also a household product found on the same grocery aisle, in
similar packaging, the public could think that petitioner had expanded its product mix to include
lechon sauce, and that the "PAPA BOY" lechon sauce is now part of the "PAPA" family of sauces,
which is not unlikely considering the nature of business that petitioner is in. Thus, if allowed
registration, confusion of business may set in, and petitioner's hard-earned goodwill may be
associated to the newer product introduced by respondent, all because of the use of the dominant
feature of petitioner's mark on respondent's mark, which is the word "PAPA." The words "Barrio
Fiesta" are not included in the mark, and although printed on the label of respondent's lechon
sauce packaging, still do not remove the impression that "PAPA BOY" is a product owned by the
manufacturer of "PAPA" catsup, by virtue of the use of the dominant feature. It is possible that
petitioner could expand its business to include lechon sauce, and that would be well within
petitioner's rights, but the existence of a "PAPA BOY" lechon sauce would already eliminate this
possibility and deprive petitioner of its rights as an owner of a valid mark included in the
Intellectual Property Code.
The Court of Appeals likewise erred in finding that "PAPA," being a common term of endearment
for one's father, is a word over which petitioner could not claim exclusive use and ownership. The
Merriam-Webster dictionary defines "Papa" simply as "a person's father." True, a person's father
has no logical connection with catsup products, and that precisely makes "PAPA" as an arbitrary
mark capable of being registered, as it is distinctive, coming from a family name that started the
brand several decades ago. What was registered was not the word "Papa" as defined in the
dictionary, but the word "Papa" as the last name of the original owner of the brand. In fact, being
part of several of petitioner's marks, there is no question that the IPO has found "PAPA" to be a
registrable mark.

Respondent had an infinite field of words and combinations of words to choose from to coin a
mark for its lechon sauce. While its claim as to the origin of the term "PAPA BOY" is plausible, it
is not a strong enough claim to overrule the rights of the owner of an existing and valid mark.
Furthermore, this Court cannot equitably allow respondent to profit by the name and reputation
carefully built by petitioner without running afoul of the basic demands of fair play.51

WHEREFORE, we hereby GRANT the petition. We SET ASIDE the June 23, 2011 Decision and
the October 4, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 107570, and
REINSTATE the March 26, 2008 Decision of the Bureau of Legal Affairs of the Intellectual
Property Office (IPO-BLA) and the January 29, 2009 Decision of the Director General of the IPO.

SO ORDERED.

[ G.R. No. 222366, December 04, 2017 ]

W LAND HOLDINGS, INC., PETITIONER, V. STARWOOD HOTELS AND RESORTS
WORLDWIDE, INC., RESPONDENT.

DECISION
PERLAS-BERNABE, J.:

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.[34] The 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 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."[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 propio 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.

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.

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, cafe 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.

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.

G.R. No. 205972

CATERPILLAR, INC., Petitioner

vs.
MANOLO P. SAMSON, Respondent

x-----------------------x

G.R. No. 164352

CATERPILLAR, INC., Petitioner,

vs.
MANOLO P. SAMSON, Respondent.

DECISION

BERSAMIN, J.:

The determination of probable cause to charge a person in court for a criminal offense is
exclusively lodged in the Executive Branch of the Government, through the Department of Justice.
Initially, the determination is done by the investigating public prosecutor, and on review by the
Secretary of Justice or his duly authorized subordinate. The courts will respect the determination,
unless the same shall be shown to have been made in grave abuse of discretion amounting to lack
or excess of jurisdiction.

The Cases

Before us are the consolidated cases of G.R. No. 2059721 and G.R. No. 164352.2

G.R. No. 164352 involves the appeal by petition for review on certiorari of Caterpillar, Inc.
(Caterpillar) to reverse the decision promulgated on January 21, 20043 by the Court of Appeals
(CA) in CA-G.R. SP No. 75526, and the resolution promulgated on June 30, 2004 denying the
motion for reconsideration thereof.4

G.R. No. 205972 relates to the appeal brought by Caterpillar to assail the decision and resolution
promulgated in CA-G.R. SP No. 102316 respectively on May 8, 20125 and February 12, 2013,6
whereby the CA affirmed the resolutions of the Department of Justice (DOJ) finding that there
was no probable cause to indict Manolo P. Samson (Samson) for unfair competition.

Antecedents

Caterpillar is a foreign corporation engaged in the manufacture and distribution of footwear,

clothing and related items, among others. Its products are known for six core trademarks, namely,
"CATERPILLAR", "CAT" "CATERPILLAR & DESIGN" "CAT AND DESIGN", "WALKING
MACHINES" and "TRACK-TYPE TRACTOR & DESIGN (Core Marks),7 all of which are alleged
as internationally known. On the other hand, Samson, doing business under the names and styles
of Itti Shoes Corporation, Kolm's Manufacturing Corporation and Caterpillar Boutique and
General Merchandise, is the proprietor of various retail outlets in the Philippines selling footwear,
bags, clothing, and related items under the trademark "CATERPILLAR", registered in 1997 under
Trademark Registration No. 64705 issued by the Intellectual Property Office (IPO).8

G.R. No. 164352

On July 26, 2000, upon application of the National Bureau of Investigation (NBI), the Regional
Trial Court (RTC), Branch 56, in Makati City issued Search Warrants Nos. 00-022 to 00-032,
inclusive, all for unfair competition,9 to search the establishments owned, controlled and
operated by Samson. The implementation of the search warrants on July 27, 2000 led to the
seizure of various products bearing Caterpillar's Core Marks.
Caterpillar filed against Samson several criminal complaints for unfair competition in the
Department of Justice (DOJ), docketed as LS. Nos. 2000-13 54 to 2000-13 64, inclusive.

Additionally, on July 31, 2000, Caterpillar commenced a civil action against Samson and his
business entities, with the IPO as a nominal party10 - for Unfair Competition, Damages and
Cancellation of Trademark with Application for Temporary Restraining Order (TRO) and/or Writ
of Preliminary Injunction - docketed as Civil Case No. Q-00-41446 of the RTC in Quezon City. In
said civil action, the RTC denied Caterpillar's application for the issuance of the TRO on August
17, 2000.

The DOJ, through Senior State Prosecutor Jude R. Romano, issued a joint resolution dated
November 15, 200111 recommending that Samson be criminally charged with unfair competition
under Section 168.3 (a),12 in relation to Section 123.l(e),13 Section 131.114 and Section 170,15 all
of Republic Act No. 8293, or the Intellectual Property Code of the Philippines (IP Code).

However, because Samson and his affiliate companies allegedly continued to sell and distribute
products clothed with the general appearance of its own products, Caterpillar again applied for
another set of search warrants against Samson and his businesses. The RTC, Branch 172, in
Valenzuela City issued Search Warrants Nos. 12-V-00,16 13-V-00,17 20-V-0018 and 29-V-0019
upon application of the NBI, by virtue of the implementation of which several goods were seized
and confiscated by the NBI agents.

As a consequence, Caterpillar filed 26 criminal complaints for unfair competition on January 31,
2001, docketed as LS. Nos. 2001-42 to 2001-67, against Samson and/or the occupants of his
affiliate entities before the DOJ.20 In due course, the DOJ, through State Prosecutor Zenaida M.
Lim, issued a joint resolution dated September 28, 200121 recommending the filing of criminal
complaints for unfair competition under Section 168.3(a), in relation to Section 123 .1, Section
131.1 and Section 170 of the IP Code. Accordingly, six criminal complaints were filed in the RTC,
Branch 256, in Muntinlupa City, presided by Judge Alberto L. Lerma, docketed as Criminal Cases
Nos. 02-238 to 02-243.

On January 17 and 22, 2002, Samson filed a petitions for review with the Office of the Secretary
of Justice to appeal the joint resolutions in LS. Nos. 2000-1354 to 2000-136422 and LS. Nos.
2001-042 to 2001-067.23

On May 30, 2002, Samson filed a Motion to Suspend Arraignment in Criminal Cases Nos. 02-238
to 243,24 citing the following as grounds:25

I.

THERE EXISTS PREJUDICIAL QUESTIONS PENDING LITIGATION BEFORE THE

REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 90, IN CIVIL CASE NO. Q-00-41446
ENTITLED: "CATERPILLAR, INC., ET AL. VS. ITTI SHOES CORPORATION, ET AL.," THE
FINAL RESOLUTIONS OF WHICH WILL DETERMINE THE OUTCOME OF THE INSTANT
CRIMINAL CASES.

II.
ACCUSED HAS FILED PETITIONS FOR REVIEW WITH THE DEPARTMENT OF JUSTICE
ASSAILING THE RESOLUTIONS OF THE CHIEF STATE PROSECUTOR WHO CAUSED THE
FILING OF THE INSTANT CASES AND ARE STILL PENDING THEREIN UP TO THE
PRESENT.

In the meanwhile, on July 10, 2002, the DOJ, through Secretary Hernando B. Perez, issued a
resolution26 denying Samson's petition for review in I.S. Nos. 2000-1354 to 2000-1364. Samson's
motion for reconsideration was likewise denied on May 26, 2003.

On September 23, 2002, Presiding Judge Lerma of the RTC granted Samson's Motion to Suspend
Arraignment, and suspended the arraignment and all other proceedings in Criminal Cases Nos.
02-240 to 02-243 until Civil Case No. Q-00-41446 was finally resolved,27 holding:

After a careful scrutiny of the case, this Court finds that private complainant, in Civil Case No. Q-
00-41446, seeks for the cancellation of the trademark "CATERPILLAR" which is registered in the
name of the accused and to prevent the latter from using the said trademark ("CATERPILLAR"),
while the issue in the instant case is the alleged unlawful use by the accused of the trademark
"CATERPILLAR" which is claimed to be owned by the private complainant. From the foregoing,
this Court believes that there exists a prejudicial question since the determination of who is really
the lawful or registered user of the trademark "CATERPILLAR" will ultimately determine whether
or not the instant criminal action shall proceed. Clearly, the issues raised in Civil Case No. Q-00-
41446 is similar or intimately related to the issue in the case at bar for if the civil case will be
resolved sustaining the trademark registration of the accused for the trademark CATERPILLAR,
then the latter would have all the authority to continue the use of the said trademark as a
consequence of a valid registration, and by reason of which there may be no more basis to proceed
with the instant criminal action.28

After the RTC denied its motion for reconsideration29 on December 5, 2002,30 Caterpillar
elevated the matter to the CA by petition for certiorari on February 14, 2003,31 docketed as C.A.-
G.R. SP No. 75526 entitled Caterpillar, Inc. v. Hon. Alberto L. Lerma, in his capacity as Presiding
Judge of Branch 256 of the Regional Trial Court, Muntinlupa City, and Manolo P. Samson,
alleging grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the
RTC in suspending the arraignment and other proceedings in Criminal Cases Nos. 02-238 to 02-
243 on the ground of the existence of an alleged prejudicial question in Civil Case No. Q-00-41446
then pending in the RTC in Quezon City whose resolution would determine the outcome of the
criminal cases.

Meanwhile, on January 13, 2003, Acting Justice Secretary Ma. Merceditas N. Gutierrez reversed
and set aside the resolution issued by State Prosecutor Lim in I.S. No. 2001-042 to 2001-067, and
directed the Chief State Prosecutor to cause the withdrawal of the criminal informations filed
against Samson in court,32 disposing as follows:

ACCORDINGLY, the assailed joint resolution is hereby REVERSED and SET ASIDE. The Chief
State Prosecutor is directed to forthwith cause the withdrawal of the informations filed in court
against respondent Manolo P. Samson and to report action taken hereon within ten (10) days
from receipts hereof.33
Acting Justice Secretary Gutierrez based her resolution on the order dated June 26, 2001,
whereby the RTC of Valenzuela City, Branch 172, had quashed the 26 search warrants upon
motion of Samson.34 Consequently, the goods seized and confiscated by virtue of the quashed
search warrants could no longer be admitted in evidence

Correspondingly, Presiding Judge Lerma of the RTC ordered the withdrawal of Criminal Cases
Nos. 02-240 to 02-243 on February 4, 2003.35

Aggrieved, Caterpillar assailed the order of Judge Lerma for the withdrawal of Criminal Cases
Nos. 02-240 to 02-2432003 by petition for certiorari in the CA on October 16, 2003, docketed as
CA-G.R. SP No. 79937,36 and the CA ultimately granted the petition for certiorari,37 setting aside
the assailed January 13, 2003 resolution of the Acting Justice Secretary and directing the re-filing
of the withdrawn informations against Samson. The Court ultimately affirmed the CA's dec ision
through the resolution promulgated on October 17, 2005 in G.R. No. 169199, and ruling that
probable cause existed for the re-filing of the criminal charges for unfair competition under the
IP Code.38

In the assailed January 21, 2004 decision,39 the CA dismissed Caterpillar's petition for certiorari
in CA-G.R. SP No. 75526, viz.:

Petition has no merit.

The mere fact that public respondent denied petitioner's motion for reconsideration does not
justify this petition on the ground of abuse of discretion. Grave abuse of discretion means such
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other
words where the power is exercised in an arbitrary or despotic manner by reason of passion or
personal hostility and it must be so patent and gross as to amount to an evasion of positive duty
or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. (Benito
vs. Comelec, 349 SCRA 705).

Petitioner in this case failed to overcome the burden of showing how public respondent acted with
grave abuse of discretion in granting private respondent's motion and denying his own motion for
reconsideration. What is clear is that public respondent court acted judiciously. A petition for
certiorari under Rule 65 of the Rules of Court will prosper only if there is showing of grave abuse
of discretion or an act without or in excess of jurisdiction on the part of respondent tribunal
(Garcia vs. HRET, 312 SCRA 353).

Granting arguendo that public respondent court erred in its ruling, still a petition for certiorari
under Rule 65 cannot be justified. Where the court has jurisdiction over the subject matter, the
orders or decision upon all questions pertaining to the cause are orders or decisions within its
jurisdiction and however erroneous they may be, they cannot be corrected by certiorari (De Baron
vs. Court of Appeals, 368 SCRA 407).

WHEREFORE, foregoing premises considered, the Petition having no merit in fact and in law is
hereby DENIED DUE COURSE and ordered DISMISSED. With costs to Petitioners.

SO ORDERED.40
Caterpillar sought the reconsideration of the dismissal, but the CA denied the motion on June 30,
2004.41

Hence, Caterpillar appealed the CA's decision in C.A.-G.R. SP No. 75526 (G.R. No. 164352).

G .R. No. 205972

In the meanwhile, in August 2002, upon receiving the information that Samson and his affiliate
entities continuously sold and distributed products bearing Caterpillar's Core Marks without
Caterpillar's consent, the latter requested the assistance of the Regional Intelligence and
Investigation Division of the National Region Public Police (RIID-NCRPO) for the conduct of an
investigation. Subsequently, after the investigation, the RIID-NCRPO applied for and was granted
16 search warrants against various outlets owned or operated by Samson in Mandaluyong,
Quezon City, Manila, Caloocan, Makati, Parañaque, Las Piñas, Pampanga and Cavite. The
warrants were served on August 27, 2002,42 and as the result products bearing Caterpillar's Core
Marks were seized and confiscated. Consequently, on the basis of the search warrants issued by
the various courts, Caterpillar again instituted criminal complaints in the DOJ for violation of
Section 168.3(a), in relation to Sections 131.3, 123.l(e) and 170 of the IP Code against Samson,
docketed as LS. Nos. 2002-995 to 2002-997; 2002-999 to 2002-1010; and 2002-1036.

After the conduct of the preliminary investigation, the DOJ, through State Prosecutor Melvin
J.Abad, issued a joint resolution dated August 21, 2003 dismissing the complaint upon finding
that there was no probable cause to charge Samson with unfair competition.43

Caterpillar moved for the reconsideration of the dismissal, but State Prosecutor Abad denied the
motion on June 18, 2004.44

The Secretary of Justice affirmed the dismissal of the complaint through the resolution issued on
September 19, 2005,45 and denied Caterpillar's motion for reconsideration on December 20,
2007.

Accordingly, Caterpillar appealed to the CA through a petition for review under Rule 43, Rules of
Court (C.A.-G.R. SP No. 102316).46

On May 8, 2012,47 however, the CA denied due course to Caterpillar's petition for review, viz.:

WHEREFORE, premises considered, the petition is DENIED DUE COURSE, and accordingly,
DISMISSED.

SO ORDERED.48

The CA opined that an appeal under Rule 43 to assail the resolution by the Secretary of Justice
determining the existence or non-existence of probable cause was an improper remedy; and that
while it could treat an appeal as a special civil action for certiorari under Rule 65, it could not do
so therein because the allegations of the petition did not sufficiently show grave abuse of
discretion on the part of the Secretary of Justice in issuing the assailed resolutions.
Caterpillar filed a motion for reconsideration, but the CA denied the motion for its lack of merit
on February 12, 2013.49

Hence, Caterpillar commenced G.R. No. 205972.

Issues

Caterpillar submits that the CA erred as follows:

G.R. No. 164352

A.

THE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN DENYING DUE

COURSE TO CATERPILLAR INC.'S PETITION FOR CERTIORARI.

B.

THE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN NOT HOLDING

THAT THE ORDER SUSPENDING PROCEEDINGS IN CRIMINAL CASES NOS. 02-238 TO 02-
243, ON THE BASIS OF AN ALLEGED PREJUDICIAL QUESTION, WAS CONTRARY TO LAW
AND ESTABLISHED JURISPRUDENCE.

C.

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN

NOT HOLDING THAT A CRIMINAL COMPLAINT FOR UNFAIR COMPETITION CAN
PROCEED INDEPENDENTLY OF, AND SIMULTANEOUS WITH, THE CIVIL CASE FOR THE
SAME.50

Caterpillar posits that the suspension of proceedings in Criminal Cases Nos. 02-238 to 02-243
was contrary to Rule 111 of the Rules of Court, Article 33 of the Civil Code on independent civil
actions, and Section 170 of the IP Code, which specifically provides that the criminal penalties for
unfair competition were independent of the civil and administrative sanctions imposed by law;
that the determination of the lawful owner of the "CATERPILLAR" trademark in Civil Case No.
Q-00-41446 would not be decisive of the guilt of Samson for unfair competition in Criminal Cases
Nos. 02-238 to 02-243 because registration was not an element of the crime of unfair competition;
that the civil case sought to enforce Samson's civil liability arising from the IP Code while the
criminal cases would enforce Samson's liability arising from the crime of unfair competition; and
that the Court already ruled in Samson v. Daway51 that Civil Case No. Q-00-41446 was an
independent civil action under Article 33 of the Civil Code and, as such, could proceed
independently of the criminal actions.

In his comment,52 Samson counters that the issues of the lawful and registered owner of the
trademark, the true owner of the goodwill, and whether "CATERPILLAR" was an internationally
well-known mark are intimately related to the issue of guilt in the criminal actions, the resolution
of which should determine whether or not the criminal actions for unfair competition could
proceed.
G.R. No. 205972

In this appeal, the petitioner interposes that:

THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITIONER'S

PETITION FOR REVIEW SOLELY ON THE GROUND OF AN ALLEGED WRONG REMEDY,
DESPITE PETITIONERS HAVING CLEARLY ESTABLISHED THAT THE SECRETARY OF
JUSTICE ACTED WITH GRAVE ABUSE OF DISCRETION IN ISSUING THE RESOLUTIONS
DATED 19 SEPTEMBER 2005 AND 20 DECEMBER 2007, AFFIRMING THE FINDINGS OF
THE INVESTIGATING PROSECUTOR THAT NO PROBABLE CAUSE EXISTS TO CHARGE THE
RESPONDENT OF THE CRIME OF UNFAIR COMPETITION.53

Caterpillar seeks the liberal interpretation of procedural rules in order to serve the higher interest
of substantial justice following the denial by the CA of its petition for being an incorrect remedy;
and insists that it presented substantial evidence to warrant a finding of probable cause for unfair
competition against Samson.

In sum, the issues to be resolved in these consolidated cases are: firstly, whether or not the CA
committed a reversible error in ruling that the trial court a quo did not commit grave abuse of
discretion in suspending the criminal proceedings on account of a prejudicial question; and,
secondly, whether or not the CA committed reversible error in upholding the decision of the
Secretary of Justice finding that there was no probable cause to charge Samson with unfair
competition.

Rulings of the Court

G.R. No. 164352

The appeal in G.R. No. 164352 is meritorious.

We note, to begin with, that Civil Case No. Q-00-41446, the civil case filed by Caterpillar in the
RTC in Quezon City, was for unfair competition, damages and cancellation of trademark, while
Criminal Cases Nos. Q-02-108043-44 were the criminal prosecution of Samson for unfair
competition. A common element of all such cases for unfair competition - civil and criminal - was
fraud. Under Article 33 of the Civil Code, a civil action entirely separate and distinct from the
criminal action may be brought by the injured party in cases of fraud, and such civil action shall
proceed independently of the criminal prosecution. In view of its being an independent civil
action, Civil Case No. Q-00-41446 did not operate as a prejudicial question that justified the
suspension of the proceedings in Criminal Cases Nos. Q-02-108043-44.

In fact, this issue has already been raised in relation to the suspension of the arraignment of
Samson in Criminal Cases Nos. Q-02-108043-44 in Samson v. Daway,54 and the Court resolved
it against Samson and in favor of Caterpillar thusly:

Anent the second issue, petitioner failed to substantiate his claim that there was a prejudicial
question. In his petition, he prayed for the reversal of the March 26, 2003 order which sustained
the denial of his motion to suspend arraignment and other proceedings in Criminal Case Nos. Q-
02-108043-44. For unknown reasons, however, he made no discussion in support of said prayer
in his petition and reply to comment. Neither did he attach a copy of the complaint in Civil Case
No. Q-00-41446 nor quote the pertinent portion thereof to prove the existence of a prejudicial
question.

At any rate, there is no prejudicial question if the civil and the criminal action can, according to
law, proceed independently of each other. Under Rule 111, Section 3 of the Revised Rules on
Criminal Procedure, in the cases provided in Articles 32, 33, 34 and 2176 of the Civil Code, the
independent civil action may be brought by the offended party. It shall proceed independently of
the criminal action and shall require only a preponderance of evidence.

In the case at bar, the common element in the acts constituting unfair competition under Section
168 of R.A. No. 8293 is fraud. Pursuant to Article 33 of the Civil Code, in cases of defamation,
fraud, and physical injuries, a civil action for damages, entirely separate and distinct from the
criminal action, may be brought by the injured party. Hence, Civil Case No. Q-00-41446, which
as admitted by private respondent also relate to unfair competition, is an independent civil action
under Article 33 of the Civil Code. As such, it will not operate as a prejudicial question that will
justify the suspension of the criminal cases at bar.55 (Bold emphasis supplied)

Secondly, a civil action for damages and cancellation of trademark cannot be considered a
prejudicial question by which to suspend the proceedings in the criminal cases for unfair
competition. A prejudicial question is that which arises in a civil case the resolution of which is a
logical antecedent of the issues to be determined in the criminal case. It must appear not only that
the civil case involves facts upon which the criminal action is based, but also that the resolution
of the issues raised in the civil action will necessarily be determinative of the criminal case.56 As
stated in Librodo v. Judge Coscolluela, Jr.:57

A prejudicial question is one based on a fact distinct and separate from the crime but so intimately
connected with it that it determines the guilt or innocence of the accused, and for it to suspend
the criminal action, it must appear not only that said case involves facts intimately related to those
upon which the criminal prosecution would be based but also that in the resolution of the issue or
issues raised in the civil case, the guilt or innocence of the accused would necessarily be
determined. It comes into play generally in a situation where a civil action and a criminal action
are both pending and there exists in the former an issue which must be preemptively resolved
before the criminal action may proceed, because howsoever the issue raised in the civil action is
resolved would be determinative juris et de jure of the guilt or innocence of the accused in the
criminal case.58 (Bold underscoring supplied for emphasis)

The elements of a prejudicial question are provided in Section 7 of Rule 111, Rules of Court, to wit:
(a) a previously instituted civil action involves an issue similar to or intimately related to the issue
raised in the subsequent criminal action, and (b) the resolution of such issue determines whether
or not the criminal action may proceed.59

An examination of the nature of the two kinds of cases involved is necessary to determine whether
a prejudicial question existed.

An action for the cancellation of trademark like Civil Case No. Q-00-41446 is a remedy available
to a person who believes that he is or will be damaged by the registration of a mark.60 On the
other hand, the criminal actions for unfair competition (Criminal Cases Nos. Q-02-108043-44)
involved the determination of whether or not Samson had given his goods the general appearance
of the goods of Caterpillar, with the intent to deceive the public or defraud Caterpillar as his
competitor.61 In the suit for the cancellation of trademark, the issue of lawful registration should
necessarily be determined, but registration was not a consideration necessary in unfair
competition.62 Indeed, unfair competition is committed if the effect of the act is "to pass off to
the public the goods of one man as the goods of another;"63 it is independent of registration. As
fittingly put in R.F. & Alexander & Co. v. Ang,64 "one may be declared unfair competitor even if
his competing trade-mark is registered."

Clearly, the determination of the lawful ownership of the trademark in the civil action was not
determinative of whether or not the criminal actions for unfair competition shall proceed against
Samson.

G.R. No. 205972

The petition for review on certiorari in G.R. No. 205972 is denied for being bereft of merit.1âwphi1

Firstly, Caterpillar assailed the resolution of the Secretary of Justice by filing a petition for review
under Rule 43 of the Rules of Court. Such resort to the petition for review under Rule 43 was
erroneous,65 and the egregious error warranted the denial of the appeal. The petition for review
under Rule 43 applied to all appeals to the CA from quasi-judicial agencies or bodies, particularly
those listed in Section 1 of Rule 43. However, the Secretary of Justice, in the review of the findings
of probable cause by the investigating public prosecutor, was not exercising a quasi-judicial
function, but performing an executive function.66

Moreover, the courts could intervene in the determination of probable cause only through the
special civil action for certiorari under Rule 65 of the Rules of Court, not by appeal through the
petition for review under Rule 43. Thus, the CA could not reverse or undo the findings and
conclusions on probable cause by the Secretary of Justice except upon clear demonstration of
grave abuse of discretion amounting to lack or excess of jurisdiction committed by the Secretary
of Justice.67 Caterpillar did not so demonstrate.

And, secondly, even discounting the technicalities as to consider Caterpillar's petition for review
as one brought under Rule 65, the recourse must still fail.

Probable cause for the purpose of filing an information in court consists in such facts and
circumstances as would engender a well-founded belief that a crime has been committed and the
accused may probably be guilty thereof.68 The determination of probable cause lies solely within
the sound discretion of the investigating public prosecutor after the conduct of a preliminary
investigation. It is a sound judicial policy to refrain from interfering with the determination of
what constitutes sufficient and convincing evidence to establish probable cause for the
prosecution of the accused.69 Thus, it is imperative that by the nature of his office, the public
prosecutor cannot be compelled to file a criminal information in court if he is not convinced of
the sufficiency of the evidence adduced for a finding of probable cause.70 Neither can he be
precluded from filing an information if he is convinced of the merits of the case.
In not finding probable cause to indict Samson for unfair competition, State Prosecutor Abad as
the investigating public prosecutor discharged the discretion given to him by the law. Specifically,
he resolved as follows:

It appears from the records that respondent started marketing his (class 25) products bearing the
trademark Caterpillar as early as 1992. In 1994, respondent caused the registration of the
trademark "Caterpillar With A Triangle Device Beneath The Letter [A]" with the Intellectual
Property Office. Sometime on June 16, 1997, the IPO issued Certificate of Registration No. 64705
which appears to be valid for twenty (20) years, or up to June 16, 2017. Upon the strength of this
registration, respondent continued with his business of marketing shoes, slippers, sandals, boots
and similar Class 25 items bearing his registered trademark "Caterpillar". Under the law,
respondent's operative act of registering his Caterpillar trademark and the concomitant
approval/issuance by the governmental entity concerned, conferred upon him the exclusive right
to use said trademark unless otherwise declared illegal. There being no evidence to controvert the
fact that respondent's Certificate of Registration No. 64705 covering Caterpillar trademark was
fraudulently or illegally obtained, it necessarily follows that its subsequent use and/or being
passed on to the public militates malice or fraudulent intent on the part of respondent. Otherwise
stated and from the facts obtaining, presumption of regularity lies, both from the standpoint of
registration and use/passing on of the assailed Caterpillar products.

Complainant's argument that respondent may still be held liable for unfair competition by reason
of his having passed on five (5) other Caterpillar products like "Cat", "Caterpillar", "Cat and
Design", "Walking Machines" and "Track-Type Tractor Design" is equally difficult to sustain. As
may be gleaned from the records, respondent has been engaged in the sale and distribution of
Caterpillar products since 1992 leading to the establishment of numerous marketing outlets. As
such, it would be difficult to assail the presumption that respondent has already established
goodwill insofar as his registered Caterpillar products are concerned. On the other hand,
complainant's registration of the other Caterpillar products appears to have been caused only in
1995. In this premise, respondent may be considered as prior user, while the latter, a subsequent
one. Jurisprudence dictates that prior user of the trademark by one, will controvert the claim by
a subsequent one.71

We reiterate that the full discretionary authority to determine the existence of probable cause is
lodged in the Executive Branch of the Government, through the public prosecutor, in the first
instance, and the Secretary of Justice, on review. Such authority is exclusive, and the courts are
prohibited from encroaching on the executive function, unless there is a clear showing of grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of the public prosecutor
or the Secretary of Justice. As declared in Callo-Claridad v. Esteban:72

A public prosecutor alone determines the sufficiency of evidence that establishes the probable
cause justifying the filing of a criminal information against the respondent because the
determination of existence of a probable cause is the function of the public prosecutor. Generally,
the public prosecutor is afforded a wide latitude of discretion in the conduct of a preliminary
investigation. Consequently, it is a sound judicial policy to refrain from interfering in the conduct
of preliminary investigations, and to just leave to the Department of Justice the ample latitude of
discretion in the determination of what constitutes sufficient evidence to establish probable cause
for the prosecution of supposed offenders. Consistent with this policy, courts do not reverse the
Secretary of Justice's findings and conclusions on the matter of probable cause except in clear
cases of grave abuse of discretion. By way of exception, however, judicial review is permitted
where the respondent in the preliminary investigation clearly establishes that the public
prosecutor committed grave abuse of discretion, that is, when the public prosecutor has exercised
his discretion in an arbitrary, capricious, whimsical or despotic manner by reason of passion or
personal hostility, patent and gross enough as to amount to an evasion of a positive duty or virtual
refusal to perform a duty enjoined by law. Moreover, the trial court may ultimately resolve the
existence or nonexistence of probable cause by examining the records of the preliminary
investigation when necessary for the orderly administration of justice. Although policy
considerations call for the widest latitude of deference to the public prosecutor's findings, the
courts should never shirk from exercising their power, when the circumstances warrant, to
determine whether the public prosecutor's findings are supported by the facts, and by the law.

Relevantly, grave abuse of discretion means such capricious or whimsical exercise of judgment
that is equivalent to lack of jurisdiction. The abuse of discretion must be grave, as when the power
is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it
must be so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to
perform the duty enjoined, or to act at all, in contemplation of law, as to be equivalent to having
acted without jurisdiction.73 Herein, Caterpillar did not show the grave abuse of discretion on the
part of the Secretary of Justice.

WHEREFORE, the Court GRANTS the petition for review in G.R. No. 164352; SETS ASIDE the
decision promulgated on January 21, 2004 in CA-G.R. SP No. 75526; DIRECTS the Regional Trial
Court in Muntinlupa City to reinstate Criminal Cases Nos. Q-02-108043-44 and forthwith try and
decide them without undue delay; DENIES the petition for review on certiorari in G.R. No.
205972; and ORDERS respondent Manolo P. Samson to pay the costs of suit.

SO ORDERED.

ABS-CBN PUBLISHING, INC., PETITIONER, VS. DIRECTOR OF THE BUREAU OF

TRADEMARKS, RESPONDENT.

DECISION
REYES, JR., J:

The Case

Challenged before the Court via this Petition for Review on Certiorari under Rule 45 of the Rules
of Court is the 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 the Intellectual Property Code of the
Philippines (IPC).[5] The cited marks were identified as (1) "Metro" (word) by applicant Metro
International S.A. with Application No. 42000002584,[6] (2) "Metro" (logo) also by applicant
Metro International S.A. with Application No. 42000002585,[7] and (3) "Inquirer Metro" by
applicant Philippine Daily Inquirer, Inc. with Application No. 42000003811.[8]

On August 16, 2005, the petitioner wrote a 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,[15] and (3) the applicant mark has not acquired secondary
meaning.[16] The fallo of the ODG decision reads:
Wherefore, premises considered, the appeal is hereby DENIED and the Decision dated 29 March
2010 and the Order denying the Appellant's Motion for Reconsideration, of the Director of the
Bureau of Trademarks, are hereby SUSTAINED. The Appellant's Trademark Application No. 4-
2004-004507 for METRO is likewise DENIED.

Let a copy of this Decision as well as the trademark application and records be furnished and
returned to the Director of the Bureau of Trademarks. Let a copy of this Decision be furnished
also the library of the Documentation, Information and Technology Transfer Bureau for its
information and records purposes.

SO ORDERED.[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 of
McDonald's Corporation vs. L.C. Big Mak Burger, Inc.,[43] the "test of dominancy is now
explicitly incorporated into law in Section 155.1 of the Intellectual Property Code which defines
infringement as the 'colorable imitation of a registered mark x x x or a dominant feature
thereof.'"[44] This is rightly so because Sec. 155.1 provides that:
SECTION 155. Remedies; Infringement. - Any person who shall, without the consent of the owner
of the registered mark:

155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered
mark or the same container or a dominant feature thereof in connection with the sale, offering for
sale, distribution, advertising of any goods or services including other preparatory steps necessary
to carry out the sale of any goods or services on or in connection with which such use is likely to
cause confusion, or to cause mistake, or to deceive; or x x x. (Emphasis and underscoring supplied)
In using this test, focus is to be given to the dominant features of the marks in question. In the
1954 case of Co Tiong Sa vs. Director of Patents,[45] the Court, in using the dominancy test, taught
that:
But differences of variations in the details of one trademark and of another are not the legal!y
accepted tests of similarity in trademarks. It has been consistently held that the question of
infringement of a trademark is to be determined by the test of dominancy. Similarity in size, form,
and color, while relevant, is not conclusive. If the competing trademark contains the main or
essential or dominant features of another, and confusion and deception is likely to result,
infringement takes place.[46] (Emphasis and underscoring supplied)
The Court, in Skechers, U.S.A., Inc. vs. Inter Pacific Industrial Trading Corp.,[47] and in once
again using the dominancy test, reiterated Del Monte Corporation vs. Court of 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.l(d) of the IPC, the
applicant mark cannot be registered. The ODG is correct in upholding the Decision of both the
Director of the Bureau of Trademarks and Examiner Icban.

This ruling stands despite the specious arguments presented by the petitioner in the current
petition.

The petitioner asserts that it has a vested right over the applicant mark because Metro Media
Publishers, Inc. (Metro Media), the corporation from which the petitioner acquired the applicant
mark, first applied for the registration of the same under the old Trademark Law,[55] and since
then, actually used the applicant mark in commerce. The petitioner belabors the point that under
the old Trademark law, actual use in commerce is a pre-requisite to the acquisition of ownership
over a trademark and a trade name.[56] The petitioner even went on further in asserting that its
actual use of the applicant mark enabled it to automatically acquire trademark rights, which
should have extended even upon the promulgation of the IPC in 1998.

Two things must be said of this argument.

First, there is no question that the petitioner's predecessor already applied for the registration of
the applicant mark "METRO" on November 3, 1994 under Class 16 of the Nice classification. It
was docketed as Application No. 4-1994-096162.[57] There is likewise no question that as early
as 1989, Metro Media has already used the applicant mark "METRO" in its magazine publication.
At that point, Metro Media exercised all the rights conferred by law to a trademark applicant.

Second, however, the petitioner itself admitted in its petition that its application/registration with
the IPO under Application No. 4-1994-096162 was already "deemed abandoned."[58]

While it is quite noticeable that the petitioner failed to discuss the implications of this
abandonment, it remains a fact that once a trademark is considered abandoned, the protection
accorded by the IPC, or in this case the old Trademark Law, is also withdrawn. The petitioner, in
allowing this abandonment, cannot now come before the Court to cry foul if another entity has, in
the time that it has abandoned its trademark and in full cognizance of the IPC and the IPO rules,
registered its own.

In fact, in Birkenstock Orthopaedie GMBH and Co. KG. vs. Philippine Shoe Expo Marketing
Corporation,[59] the Court accorded no right at all to a trademark owner whose trademark was
abandoned for failure to file the declaration of actual use as required by Sec. 12 of the old
Trademark Law.[60] In Mattel, Inc. vs. Francisco,[61] the Court rendered a petition as moot and
academic because the cited mark has effectively been abandoned for the non-filing of a declaration
of actual use, and thus presents no hindrance to the registration of the applicant mark.

Also, as correctly pointed out by the ODG, this abandonment is the very reason why the petitioner
lost its rights over its trademark, and that it is also the reason why, after twenty years (20) from
the initial application and after actual use of the applicant mark, the petitioner once again came
before the IPO to apply for registration. The ODG said:
Records show that this is the very situation the [petitioner] finds itself in. It has acquired no right
under the old trademark law since its original application way back 1994 has been deemed
abandoned, which is the reason why it filed the current application in 2004 under the new law.
Clearly, then, if [petitioner] has acquired no right under R.A. 166, it possesses no existing right
that ought to be preserved by virtue of Section 236 of the IP Code.[62] (Emphasis and
underscoring supplied)
Anent the petitioner's argument that "confusion between the marks is highly unlikely,"[63] the
petitioner asserts that the applicant mark "METRO" (word) is covered by class 16 of the Nice
classification under "magazines," the copies of which are sold in "numerous retail outlets in the
Philippines,"[64] whereas the cited mark "METRO" (word) is used in the Philippines only in the
internet through its website and does not have any printed circulation.[65]

But like the petitioner's earlier argument, this does not hold water. Section 3, Rule 18 of the Rules
of Procedure for Intellectual Property 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.

[ G.R. No. 233073, February 14, 2018 ]

L.C. BIG MAK BURGER, INC., PETITIONER, V. MCDONALD'S CORPORATION,
RESPONDENT.

DECISION
TIJAM, J.:

This is a Petition for Review on Certiorari[1] under Rule 45, assailing the Decision[2] dated
February 2, 2017 and Resolution[3] dated July 26, 2017 of the Court of Appeals (CA) in CA-G.R.
CR No. 36768 entitled McDonald's Corporation v. L.C. Big Mak Burger, Inc. and Francis Dy (in
his capacity as President of L.C. Big Mak Burger, Inc.).
The Factual Antecedents

The instant petition stemmed from Civil Case No. 90-1507, which McDonald's Corporation
(respondent) filed against L.C. Big Mak Burger, Inc. (petitioner) for trademark infringement and
unfair competition raffled to the Regional Trial Court (RTC) of Makati City, Branch 137
(Infringement Court).[4]
In the said case, the Infringement Court, acting on the prayer for the issuance of a writ preliminary
injunction, issued an Order[5] dated August 16, 1990, directing petitioner to refrain from:

a) using for its fast food restaurant business the name "Big Mak" or any other mark, word, name,
or device, which by colorable imitation is likely to confuse, mislead or deceive the public into
believing that the [petitioner's] goods and services originate from, or are sponsored by or affiliated
with those of [respondent's], and from otherwise unfairly trading on the reputation and goodwill
of the Mcdonald's Marks, in particular the mark "BIG MAC";

b) selling, distributing, advertising, offering for sale or procuring to be sold, or otherwise

disposing of any article described as or purporting to be manufactured by [respondent];

c) directly or indirectly using any mark, or doing any set or thing, likely to induce the belief on the
part of the public that [petitioner] and their products and services are in any way connected with
[respondent's] and their products and services

in such places within the jurisdiction of the National Capital Judicial Region.

xxxx

SO ORDERED.[6]

After trial, the said court rendered a Decision[7] dated September 5, 1994, disposing of the case
as follows:

WHEREFORE, judgment is rendered in favor of [respondent] McDonald's Corporation and

McGeorge Food Industries Inc. and against [petitioner] L.C. Big Mak Burgers, Inc. as follows:

1. The writ of preliminary injunction issued in this case on 11 November 1190 [sic] is made
permanent;

2. [Petitioner] L.C. Mak Burger, Inc. is ordered to pay [respondent] actual damages in the amount
of P400,000.00, exemplary damages in the amount of P100,000.00 and attorneys 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.

SO ORDERED.[8]

The CA overturned the September 5, 1994 Decision in a decision[9] dated November 26, 1999 in
CA-G.R. CV No. 53722. However, We reversed the CA in Our Decision[10] dated August 18, 2004
in G.R. No. 143993 and thus reinstated the Infringement Court's Decision, viz.:

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.[11]

Thusly, on November 14, 2005, Infringement Court, issued a Writ of Execution[12] to implement
its September 5, 1994 Decision.

On May 5, 2008, however, respondent filed a Petition for Contempt [13] against petitioner and
Francis Dy, in his capacity as President of L.C. Big Mak Burger, Inc., docketed as Spec. Pro. No.
08-370 and raffled to the RTC of Makati, Branch 59 (Contempt Court). Basically, respondent
averred therein that despite service upon the petitioner and its president of the Writ of Execution
in the trademark infringement and unfair competition case, the latter continues to disobey and
ignore their judgment obligation by continuously using, as part of their food and restaurant
business, the words "Big Mak." It was also alleged that petitioner refused to fully pay the damages
awarded to the respondent in the said case.[14]

In its Answer with Compulsory Counterclaims,[15] petitioner denied refusing to settle its
judgment debt, averring that as a matter of fact, it offered and tendered payment to the
respondent through the sheriff but respondent refused to accept the same and demanded that
payment be made directly to it. Petitioner further argued that it is evident from the August 18,
2004 Decision of the Supreme Court, that the prohibition covers only the use of the mark "Big
Mak" and not the name "L.C. Big Mak Burger, Inc." Petitioner then averred that at that time, its
stalls were using its company name "L.C. Big Mak Burger, Inc." and not the mark "Big Mak" and
that it had already stopped selling "Big Mak" burgers for several years already. Moreover,
petitioner averred that it has already changed the name of some of its stalls and products to
"Supermak" as evidenced by pictures of its stalls in Metro Manila. Also, petitioner pointed out
that the preliminary injunction issued in Civil Case No. 90-1507 was enforceable only within the
National Capital Judicial Region as can be gleaned from its express provision.[16]

On April 7, 2014, RTC-Makati Branch 59, rendered a Decision[17] as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of [petitioner] L.C.

BIG MAK BURGER, INC. and FRANCIS DY, and against [respondent] DISMISSING this instant
petition for lack of merit. [Respondent] is also ordered to pay the [petitioner and Francis Dy] the
following sums:

1. P500,000.00 to [petitioner] L.C. Big Mak Burger, Inc. for the damages it suffered to its business
reputation;

2. P500,000.00 to xxx Francis Dy as moral damages;

3. P100,000.00 for exemplary damages; and

4. P100,000.00 as and for attorney's fees. Costs against [respondent].

SO ORDERED.[18]
On appeal, the CA, in its assailed Decision,[19] reversed the Contempt Court's ruling and instead
found petitioner guilty of indirect contempt, thus:

WHEREFORE, premises considered, the present appeal is GRANTED. The Decision dated April
7, 2014 issued by the RTC, Branch 59, Makati City in Civil Case No. 08-370 is REVERSED and a
new one is entered finding [petitioner] L.C. Big Mak Burger, Inc. guilty of indirect contempt.

Accordingly, [petitioner] L.C. Big Mak Burger, Inc. is ordered to pay a FINE in the amount of
Thirty Thousand Pesos (P30,000.00) and is enjoined to faithfully comply with the ruling of the
Supreme Court in G.R. No. 143993 as implemented by RTC, Branch 59, [sic] Makati City.

SO ORDERED.[20]

Petitioner's motion for reconsideration was denied m the CA's Resolution[21] dated July 26, 2017,
thus:

WHEREFORE, the Motion for Reconsideration filed by [petitioner and Francis Dy] is hereby
DENIED.

The Decision promulgated on February 2, 2017 stays.

SO ORDERED.[22]

Hence, this petition.

The Issue

Is petitioner guilty of indirect contempt?

The Ruling of this Court

At the outset, once again, it is important to emphasize that the only issue for Our resolution is
whether or not petitioner is guilty of indirect contempt.

Section 3, Rule 71 of the Rules of Court provides:

SEC. 3. Indirect Contempt to be punished after charge and hearing - After a charge in writing has
been filed, and an opportunity given to the respondent to comment thereon within such period as
may be fixed by the court and to be heard by himself or counsel, a person guilty of any of the
following acts may be punished for indirect contempt:

xxxx

b) Disobedience of or resistance to a lawful writ, process, order, or judgment of a court, including

the act of a person who, after being dispossessed or ejected from any real property by the judgment
or process of any court of competent jurisdiction, enters or attempts or induces another to enter
into or upon such real property, for the purpose of executing acts of ownership or possession, or
in any manner disturbs the possession given to the person adjudged to be entitled thereto;
c) Any abuse of or any unlawful interference with the processes or proceedings of a court not
constituting direct contempt under section 1 of this Rule:

d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the
administration of justice;

xxxx

But nothing in this section shall be construed as to prevent the court from issuing process to bring
the respondent into court, or from holding him in custody pending such proceedings.

Respondent maintains that even after the service of the writ of execution of the said Decision on
November 17, 2005 upon the petitioner, the latter continues to use the words "Big Mak" in its
stalls and products in and out of Metro Manila. Also, respondent averred that petitioner
continuously refused to fully pay the damages awarded to it.

We resolve.

Let Us examine once again the court's lawful order that was allegedly defied by the petitioner. In
the August 16, 1990 injunction order made permanent by this Court in Our final and executory
Decision in G.R. No. 143993 dated August 18, 2004, petitioner was ordered to refrain from:

a) using for its fast food restaurant business the name "Big Mak" or any other mark, word, name,
or device, which by colorable imitation is likely to confuse, mislead or deceive the public into
believing that the [petitioner's] goods and services originate from, or are sponsored by or affiliated
with those of [respondent's], and from otherwise unfairly trading on the reputation and goodwill
of the Mcdonald's Marks, in particular the mark "BIG MAC";

b) selling, distributing, advertising, offering for sale or procuring to be sold, or otherwise

disposing of any article described as or purporting to be manufactured by [respondent];

c) directly or indirectly using any mark, or doing any set or thing, likely to induce the belief on the
part of the public that [petitioner] and their products and services are in any way connected with
[respondent's] and their products and services

in such places within the jurisdiction of the National Capital Judicial Region.

xxxx

SO ORDERED.[23]

In ruling that there was disobedience tantamount to an indirect contempt on the part of the
petitioner, the CA found that: (1) there is an express admission on Francis Dy's judicial
affidavit[24] that the company complied with the court's order only in 2009 or after the petition
for indirect contempt was filed against them;[25] (2) that petitioner's use of its corporate name is
likewise an infringement of respondent's mark, a defiance therefore to the subject injunction
order.[26]
We do not agree.

First, contrary to what respondent attempted to impress to the courts, it is not wholly true that
petitioner continues to use the mark "Big Mak" in its business, in complete defiance to this Court's
Decision.

Testimonial and documentary evidence were in fact presented to show that petitioner had been
using "Super Mak" and/or its corporate name "L.C. Big Mak Burger Inc." in its business
operations instead of the proscribed mark "Big Mak" pursuant to the ruling of the Infringement
Court.

There is also nothing on record that will show that Francis Dy made an admission that petitioner
began to comply with the writ of execution only in 2009. If at all, the CA misinterpreted Francis
Dy's allegation in the said. judicial affidavit that "by early 2009" petitioner's stalls and vans only
reflected "Super Mak" and the corporate name "L.C. Big Mak Burger, Inc." Also, the fact that the
photographs presented during trial were taken in 2009 was taken by the CA as the time when the
petitioner started to implement changes in their business operations pursuant to the writ of
execution. A careful reading of the pertinent portions of the said judicial affidavit, however, would
show no such admission, thus:

29.
Q:
What did you do when you received the Writ of Execution?

A:
We issued 6 checks each for P100,000.00 to pay the P600,000.00 that our company was ordered
to pay. I believe we gave the checks to the Sheriff.

30.
Q:
What else did you do?

A:
Since the decision of the trial court also ordered us to stop using the name "Big Mak" in our
restaurants in Metro Manila, we complied. We desisted from using the words "Big Mak", standing
alone, within Metro Manila, and even outside of it.

xxxx

36.
Q:
Aside from complying with the order to stop the use of Big Mak, what else did you do?

A:
We changed the name of our stalls within Metro Manila from "Big Mak" to "Super Mak".
37.
Q:
Do you have any proof that would show the change of the name?

A:
There are some photographs of the stalls within Metro Manila that now reflect the name "Super
Mak".

xxxx

39.
Q:
I am now showing you six (6) photographs of stalls bearing the name "Super Mak". What relation
do these documents have with the photographs you mentioned?

A:
These photographs are accurate depictions of our stalls in Metro Manila that have the name
"Super Mak".

xxxx

40.
Q:
So you have already stopped using "Big Mak" in Metro Manila?

A:
Yes. In fact, by early 2009, our stalls and vans in Metro Manila only reflect "Super Mak" and our
corporate name "L.C. Big Mak Burger, Inc."

41.
Q:
Do you have any proof to show the use of "Super Mak" and "L.C. Big Mak Burger, Inc.” in early
2009?

A:
There are photographs of our stalls and vans in Pasig, Trinoma, V. Luna, Lagro, and Fatima were
taken on 12 January 2009 as depicted by the newspaper being held in front of our vans and stalls.

42.
Q:
If I show you the photographs of the stalls and vans in Pasig, Trinoma, V. Luna, Lagro, and Fatima,
would you be able to identify those?
A:
Yes, Sir.

43.
Q:
I am now showing you fourteen (14) phtographs of stalls bearing the name "Super Mak" and or
"L.C. Big Mak Burger, Inc." What relation do these documents have with the photographs you
mentioned.

A:
These photographs are accurate depictions of our stalls in Pasig, Trinoma, V. Luna, Lagro, and
Fatima in that have [sic] the name "Super Mak” or "LC Big Mak Burger, Inc."

xxxx

44.
Q:
What about the newspaper you mentioned that was in the photographs?

A:
The newspaper, The Philippine Star, being held in the photographs shows the date when the
photographs were taken. The date of the newspaper is 12 January 2009, to show that the
photographs were taken on 12 January 2009. Photographs were also taken on February 28, 2009
and the front page of the said issue of the Philippine Star was also shown in some of them.[27]

xxxx
Evidently, there is nothing on the aforequoted judicial affidavit which may be taken as an
admission of a belated compliance with the subject injunction order. At most, what was
established is the fact that the subject photographs were taken in 2009, which does not in any way
mean that the changes depicted in those photographs were implemented only at the time they
were taken.

What could readily be seen in the aforecited circumstances is the fact that petitioner indeed
implemented changes in its business to address the matter of infringement and unfair
competition. In fact, in as early as during the trial of the said case, certain changes had already
been made by the petitioner to rule out the charge of infringement and unfair competition. During
the trial of the infringement and unfair competition case, the wrappers and bags for petitioner's
burger sandwiches already reflected its corporate name instead of the words "Big Mak."

These circumstances belie the imputation of disobedience, much less contemptuous acts, against
the petitioner.

Second, petitioner's use of its corporate name in its stalls and products cannot, by itself, be
considered to be tantamount to indirect contempt, contrary to the CA's conclusion.
What is actually being argued in this case is petitioner's use of its corporate name. According to
the respondent, as the proscribed "Big Mak" words appears in petitioner's corporate name, the
use of the same in petitioner's stalls and products is still an infringement of respondent's mark.
Ultimately, thus, respondent argues that petitioner's use of its corporate name is a defiance to the
injunction order. This argument was sustained by the CA in its assailed Decision.

Again, We do not agree.

It bears stressing that the proscription in the injunction order is against petitioner's use of the
mark "Big Mak." However, as established, petitioner had already been using its corporate name
instead of the proscribed mark. The use of petitioner's corporate name instead of the words "Big
Mak" solely was evidently pursuant to the directive of the court in the injunction order. Clearly,
as correctly found by the RTC, petitioner had indeed desisted from the use of "Big Mak" to comply
with the injunction order.

Third, at any rate, whether or not petitioner's action in complying with the court's order was
proper is not an issue in this contempt case. Settled is the rule that in contempt proceedings, what
should be considered is the intent of the alleged contemnor to disobey or defy the court.

Contempt of court has been defined as a willful disregard or disobedience of a public authority.
In its broad sense, contempt is a disregard of, or disobedience to, the rules or orders of a legislative
or judicial body or an interruption of its proceedings by disorderly behavior or insolent language
in its presence or so near thereto as to disturb its proceedings or to impair the respect due to such
a body. In its restricted and more usual sense, contempt comprehends a despising of the authority,
justice, or dignity of a court.[28] (emphasis supplied)

Indeed, as can be gleaned from the above-cited jurisprudential definition of contempt, the intent
goes to the gravamen of the offense. Thus, the good faith, or lack of it, of the alleged contemnor
should be considered.[29] A person should not be condemned for contempt where he contends
for what he believes to be right and in good faith however erroneous may be his conclusion as to
his rights. To constitute contempt, the act must be done willfully and for an illegitimate or
improper purpose.[30]

Petitioner's good faith in complying with the court's order is manifest in this case.

Petitioner's questioned action, i.e., the use of its corporate name, is anchored upon the January 3,
1994 Decision[31] of the Securities and Exchange Commission (SEC) in SEC-AC No. 426 entitled
McDonald's Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak Burger, Inc., et al.,
wherein respondent sought the change of petitioner's corporate name to some other name which
is not confusingly or deceptively similar to respondent's "Big Mac" mark. In the said case, the SEC
dismissed respondent's case, ruling that petitioner's use of the name "Big Mak Burger" has
priority in right; and that petitioner's corporate name is not identical or confusingly similar to
respondent's "Big Mac" mark, hence, there is no basis to cancel petitioner's corporate name,
among others.

Notably, it was a patent error on the part of the CA to rule that the said SEC Decision was binding
upon the parties until this Court issued its final and executory Decision in G.R. No. 143993, giving
the impression that the latter Decision overturned or modified SEC's final and executory
Decision.[32] To be sure, the complaint for change of corporate name before the SEC is a separate
and distinct case from that of the infringement and unfair competition case before the trial court.
Hence, inasmuch as the SEC Decision had long attained finality, the judgment in the separate case
of infringement and unfair competition cannot reverse nor modify the said SEC Decision.

In any event, what is relevant and essential in this contempt case is the fact that by virtue of
petitioner's reliance upon the said lawful and binding SEC Decision in the use of its corporate
name in lieu of the proscribed "Big Mak" mark to comply with the subject injunction order,
petitioner's good faith is clearly manifest. Petitioner's justification of its questioned action is not
at all implausible. This Court finds no reason to reject petitioner's explanation or doubt its good
faith as certainly, the use of its corporate name was warranted by the SEC Decision. It was also
not unreasonable for the petitioner, through its officers, to think that the stalls and products
bearing its corporate name would send the message to the public that the products were the
petitioner's and not those of respondent's, the very evil sought to be prevented and/or eradicated
by the decision in the infringement/unfair competition case.

Considering that condemnation for contempt should not be made lightly, and that the power to
punish contempt should be exercised on the preservative and not on the vindictive principle, the
Court finds no difficulty in reaching the conclusion that there was no willful disregard or defiance
of its order/decision.[33]

We are, therefore, one with the Contempt Court in dismissing the contempt case. There being no
issue raised as to the damages awarded and more importantly, finding that the Contempt Court
had correctly discussed the rationale for such award, We find it unnecessary to disturb the same.

WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Decision
dated February 2, 2017 and Resolution dated July 26, 2017 of the Court of Appeals (CA) in CA-
G.R. CR No. 36768 are hereby REVERSED and SET ASIDE. Accordingly, the Decision dated April
7, 2014 of the Regional Trial Court of Makati City, Branch 59 is REINSTATED.

SO ORDERED.

Sereno, C.J., (Chairperson), Leonardo-De Castro, Del Castillo, and Jardeleza, JJ., concur.

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, v. ST. FRANCIS DEVELOPMENT CORPORATION, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 is the Decision2 dated December 18, 2009 of the
Court of Appeals (CA) in CA-G.R. SP No. 105425 which affirmed with modification the Decision3
dated September 3, 2008 of the Intellectual Property Office (IPO) Director-General. The CA: (a)
affirmed the denial of the application for registration of the mark “ST. FRANCIS TOWERS” filed
by petitioners Shang Properties Realty Corporation and Shang Properties, Inc. (petitioners); (b)
found petitioners to have committed unfair competition for using the marks “THE ST. FRANCIS
TOWERS” and “THE ST. FRANCIS SHANGRI-LA PLACE”; (c) ordered petitioners to cease and
desist from using “ST. FRANCIS” singly or as part of a composite mark; and (d) ordered
petitioners to jointly and severally pay respondent St. Francis Square Development Corporation
(respondent) a fine in the amount of ?200,000.00.

The Facts

Respondent – a domestic corporation engaged in the real estate business and the developer of the
St. Francis Square Commercial Center, built sometime in 1992, located at Ortigas Center,
Mandaluyong City, Metro Manila (Ortigas Center)4 – filed separate complaints against
petitioners before the IPO - Bureau of Legal Affairs (BLA), namely: (a) an intellectual property
violation case for unfair competition, false or fraudulent declaration, and damages arising from
petitioners’ use and filing of applications for the registration of the marks “THE ST. FRANCIS
TOWERS” and “THE ST. FRANCIS SHANGRI-LA PLACE,” docketed as IPV Case No. 10-2005-
00030 (IPV Case); and (b) an inter partes case opposing the petitioners’ application for
registration of the mark “THE ST. FRANCIS TOWERS” for use relative to the latter’s business,
particularly the construction of permanent buildings or structures for residential and office
purposes, docketed as Inter 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

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 Decision9 in the IPV Case, and found that petitioners
committed acts of unfair competition against respondent by its use of the mark “THE ST.
FRANCIS TOWERS” but not with its use of the mark “THE ST. FRANCIS SHANGRI-LA PLACE.”
It, however, refused to award damages in the latter’s favor, considering that there was no evidence
presented to substantiate the amount of damages it suffered due to the former’s acts. The BLA
found that “ST. FRANCIS,” being a name of a Catholic saint, may be considered as an arbitrary
mark capable of registration when used in real estate development projects as the name has no
direct connection or significance when used in association with real estate. The BLA neither
deemed “ST. FRANCIS” as a geographically descriptive mark, 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 Decision12 in the St. Francis Towers IP Case,
denying petitioners’ application for registration of the mark “THE ST. FRANCIS TOWERS.”
Excluding the word “TOWERS” in view of petitioners’ disclaimer thereof, the BLA ruled that
petitioners cannot register the mark “THE ST. FRANCIS” since it is confusingly similar to
respondent’s “ST. FRANCIS” marks which are registered with the Department of Trade and
Industry (DTI). It held that respondent had a better right over the use of the mark “ST. FRANCIS”
because of the latter’s appropriation and continuous usage thereof for a long period of time.13

A little over a year after, or on March 31, 2008, the BLA then rendered a Decision14 in the St.
Francis Shangri-La IP Case, allowing petitioners’ application for registration of the mark “THE
ST. FRANCIS SHANGRI-LA PLACE.” It found that respondent cannot preclude petitioners from
using the mark “ST. FRANCIS” as the records show that the former’s use thereof had not been
attended with exclusivity. More importantly, it found that petitioners had adequately appended
the word “Shangri-La” to its composite mark to distinguish it from that of respondent, in which
case, the former had removed any likelihood of confusion that may arise from the
contemporaneous use by both parties of the mark “ST. FRANCIS.”

Both parties appealed the decision in the IPV Case, while petitioners appealed the decision in the
St. Francis Towers IP Case. Due to the identity of the parties and issues involved, the IPO Director-
General ordered the consolidation of the separate appeals.15 Records are, however, bereft of any
showing that the decision in the St. Francis Shangri-La IP Case was appealed by either party and,
thus, is deemed to have lapsed into finality.

The IPO Director-General Ruling

In a Decision16 dated September 3, 2008, then IPO Director-General Adrian S. Cristobal, Jr.
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 Decision19 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.”

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 x x x.”

Without limiting its generality, Section 168.3 goes on to specify examples of acts which are
considered as constitutive of unfair competition, viz.:chanroblesvirtuallawlibrary

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 16124 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 the intention 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,27 determined through a judicious
scrutiny of the factual circumstances attendant to a particular case.28

Here, the Court finds the element of fraud to be wanting; hence, there can be no unfair
competition. The CA’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 123.234 of the IP Code, specific requirements have to be met in order to conclude
that a geographically-descriptive mark has acquired secondary meaning, to wit: (a) the secondary
meaning must have arisen as a result of substantial commercial use of a mark in the Philippines;
(b) such use must result in the distinctiveness of the mark insofar as the goods or 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:chanroblesvirtuallawlibrary

SEC. 123. Registrability. –

123.1 A mark cannot be registered if it:

xxxx

(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)

xxxx

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 source35 – that
is, the enterprise of respondent. Thus, absent any showing that there exists a clear goods/service-
association between the realty projects located in the aforesaid area and herein respondent as the
developer thereof, the latter cannot 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 goods or services there can be no description of its
geographical origin as precise and accurate as that of the name of the place where they are
situated. (Emphasis and underscoring supplied)

Hence, for all the reasons above-discussed, the Court hereby grants the instant petition, and, thus,
exonerates petitioners from the charge of unfair competition in the IPV Case. As the decisions in
the Inter Partes Cases were not appealed, the registrability issues resolved therein are hereby
deemed to have attained finality and, therefore, are now executory.

WHEREFORE, the petition is GRANTED. The Decision dated December 18, 2009 of the Court of
Appeals in CA-G.R. SP No. 105425 is hereby REVERSED and SET ASIDE. Accordingly, the
Decision dated September 3, 2008 of the Intellectual Property Office-Director General is
REINSTATED.

SO ORDERED.

G.R. No. 212705 September 10, 2014

ROBERTO CO, Petitioner,

vs.
KENG HUAN JERRY YEUNG and EMMA YEUNG, Respondents.

RESOLUTION

PERLAS-BERNABE, J.:

Before the Court is a petition for review on certiorari1 assailing the Decision2 dated September
16, 2013 and the Resolution3 dated May 29, 2014 of the Court of Appeals (CA) in CA-G.R. CV No.
93679 which affirmed the Decision4 dated October 27, 2008 of the Regional Trial Court of Quezon
City, Branch 90 (RTC), finding petitioner Roberto Co (Co), among others, guilty of unfair
competition and, thus, liable for damages to respondents Keng Huan Jerry Yeung and Emma
Yeung (Sps. Yeung).

The Facts

At the core of the controversy isthe product Greenstone Medicated Oil Item No. 16 (Greenstone)
which is manufactured by Greenstone Pharmaceutical, a traditional Chinese medicine
manufacturing firm based in Hong Kong and owned by Keng HuanJerry Yeung (Yeung), and is
exclusively imported and distributed in the Philippines by Taka Trading owned by Yeung’s wife,
Emma Yeung (Emma).5

On July 27, 2000, Sps. Yeung filed a civil complaint for trademark infringement and unfair
competition before the RTC against Ling Na Lau, her sister Pinky Lau (the Laus), and Cofor
allegedly conspiring in the sale of counterfeit Greenstone products tothe public. In the complaint,
Sps. Yeung averred that on April 24, 2000, Emma’s brother, Jose Ruivivar III (Ruivivar), bought
a bottle of Greenstone from Royal Chinese Drug Store (Royal) in Binondo, Manila, owned by Ling
Na Lau.However, when he used the product, Ruivivar doubted its authenticity considering that it
had a different smell, and the heat it producedwas not as strong as the original Greenstone he
frequently used. Having been informed by Ruivivar of the same, Yeung, together with his son,
John Philip, went to Royal on May 4, 2000 to investigate the matter, and, there, found seven (7)
bottles of counterfeit Greenstone on display for sale. He was then told by Pinky Lau (Pinky) – the
store’s proprietor – thatthe items came from Co of Kiao An Chinese Drug Store. According to
Pinky, Co offered the products on April 28, 2000 as "Tienchi Fong Sap Oil Greenstone" (Tienchi)
which she eventually availed from him. Upon Yeung’s prodding, Pinky wrote a note stating these
events.6

In defense, Co denied having supplied counterfeit items to Royal and maintained that the stocks
of Greenstone came only from Taka Trading. Meanwhile, the Laus denied selling Greenstone and
claimed that the seven (7) items of Tienchi were left by an unidentified male person at the counter
of their drug store and that when Yeung came and threatened to report the matter to the
authorities, the items were surrendered to him. As to Pinky’s note, it was claimed that she was
merely forced by Yeung to sign the same.7

The RTC Ruling

In a Decision8 dated October 27, 2008, the RTC ruled in favor of Sps. Yeung, and accordingly
ordered Co and the Laus to pay Sps. Yeung: (a) ₱300,000.00 as temperate damages; (b)
₱200,000.00 as moral damages; (c) ₱100,000.00 as exemplary damages; (d) ₱100,000.00 as
attorney’s fees; and (e) costs of suit.9

It found that the Sps. Yeung had proven by preponderance of evidence that the Laus and Co
committed unfair competition through their conspiracy to sell counterfeit Greenstone products
that resulted in confusion and deception not only to the ordinary purchaser, like Ruivivar, but
also to the public.10 It, however, did not find the Laus and Co liable for trademark infringement
as there was no showing that the trademark "Greenstone" was registered at the time the acts
complained of occurred, i.e., in May 2000.11 Dissatisfied, the Laus and Co appealed to the CA.
The CA Ruling

In a Decision12 dated September 16, 2013, the CA affirmed the RTC Decision, pointing out that
in the matter of credibility of witnesses, the findings of the trial court are given great weight and
the highest degree of respect.13 Accordingly, it sustained the RTC’s finding of unfair competition,
considering that Sps. Yeung’s evidence preponderated over that of the Laus and Co which was
observed to be shiftyand contradictory. Resultantly, all awards of damages in favor of Sps. Yeung
were upheld.14

The Laus and Co respectively moved for reconsideration but were, however, denied in a
Resolution15 dated May 29, 2014, hence, Co filed the instant petition. On the other hand, records
are bereft of any showing that the Laus instituted any appeal before this Court.

The Issue Before the Court

The sole issue for the Court’s resolution is whether or not the CA correctly upheld Co’s liability for
unfair competition.

The Court’s Ruling

The petition is without merit.

The Court’s review of the present case is via a petition for review under Rule 45 of the Rules of
Court,which generally bars any question pertaining to the factual issues raised. The well-settled
rule is that questions of fact are not reviewable in petitionsfor review under Rule 45, subject only
to certain exceptions, among them, the lack of sufficient support in evidence of the trial court’s
judgment or the appellate court’s misapprehension of the adduced facts.16

Co, who mainly interposes a denialof the acts imputed against him, fails to convince the Court
that any of the exceptions exists so as to warrant a review of the findings of facts in this case.
Factual findings of the RTC, when affirmed by the CA, are entitled to great weight and respect by
the Court and are deemed final and conclusive when supported by the evidence on record.17 The
Court finds that both the RTC and the CA fully considered the evidence presented by the parties,
and have adequately explained the legal and evidentiary reasons in concluding that Co committed
acts of unfair competition.

Unfair competition is defined as the passing off (or palming off) or attempting to pass off upon
the public of the goods or business of one person as the goods or business of another with the end
and probable effect of deceiving the public. This takes place where the defendant gives his goods
the general appearance ofthe goods of his competitor with the intention of deceiving the public
that the goods are those of his competitor.18

Here, it has been established that Coconspired with the Laus in the sale/distribution of counterfeit
Greenstone products to the public, which were even packaged in bottles identical to that of the
original, thereby giving rise to the presumption of fraudulent intent.19 In light of the foregoing
definition, it is thus clear that Co, together with the Laus, committed unfair competition, and
should, consequently, beheld liable therefor. To this end, the Court finds the award of
₱300,000.00 as temperate damages to be appropriate in recognition of the pecuniary loss
suffered by Sps. Yeung, albeit its actual amount cannot, from the nature of the case, as it involves
damage to goodwill, be proved with certainty.20 The awards of moral and exemplary damages,
attorney's fees, and costs of suit are equally sustained for the reasons already fully-explained by
the courts a quo in their decisions.

Although liable for unfair competition, the Court deems it apt to clarify that Co was properly
exculpated from the charge of trademark infringement considering that the registration of the
trademark "Greenstone" – essential as it is in a trademark infringement case – was not proven to
have existed during the time the acts complained of were committed, i.e., in May 2000. In this
relation, the distinctions between suits for trademark infringement and unfair competition prove
useful: (a) the former is the unauthorized use of a trademark, whereas the latter is the passing off
of one's goods as those of another; (b) fraudulent intent is unnecessary in the former, while it is
essential in the latter; and (c) in the former, prior registration of the trademark is a pre-requisite
to the action, while it is not necessary in the latter.21

WHEREFORE, the petition is DENIED. The Decision dated September 16, 2013 and the
Resolution dated May 29, 2014 of the Court of Appeals in CA-G.R. CV No. 93679 are hereby
AFFIRMED.

SO ORDERED.

[ G.R. No. 217781, June 20, 2018 ]

SAN MIGUEL PURE FOODS COMPANY, INC., PETITIONER, VS. FOODSPHERE, INC.,
RESPONDENT.

[G.R. No. 217788]

FOODSPHERE, INC., PETITIONER, VS. SAN MIGUEL PURE FOODS COMPANY, INC.,
RESPONDENT.

DECISION
PERALTA, J.:

Before the Court are the consolidated cases of G.R. No. 217781 and G.R. No. 217788. On the one
hand, San Miguel Pure Foods Company, Inc. (SMPFCI), in G.R. No. 217781, filed a Petition for
Review on Certiorari under Rule 45 of the Rules of Court, questioning the Resolution[1] dated
April 8, 2015 of the Court of Appeals (CA), Former Fourteenth Division, in CA--G.R. SP No.
131945, but only insofar as the same resolved to delete from the body of its Decision[2] dated
September 24, 2014 the award of exemplary damages. On the other hand, in G.R. No. 217788,
Foodsphere, Inc., via a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeks
to reverse and set aside the same September 24, 2014 Decision and April 8, 2015 Resolution of
the CA declaring it guilty of unfair competition and holding it liable for damages.

The antecedent facts are as follows:

The parties herein are both engaged in the business of the manufacture, sale, and distribution of
food products, with SMPFCI owning the trademark "PUREFOODS FIESTA HAM" while
Foodsphere, Inc. products (Foodsphere) bear the "CDO" brand. On November 4, 2010, SMPFCI
filed a Complaint[3] for trademark infringement and unfair competition with prayer for
preliminary injunction and temporary restraining order against Foodsphere before the Bureau of
Legal Affairs (BLA) of the Intellectual Property Office (IPO) pursuant to Sections 155 and 168 of
Republic Act (R.A.) No. 8293, otherwise known as the Intellectual Property Code (IP Code), for
using, in commerce, a colorable imitation of its registered trademark in connection with the sale,
offering for sale, and advertising of goods that are confusingly similar to that of its registered
trademark.[4]

In its complaint, SMPFCI alleged that its "FIESTA" ham, first introduced in 1980, has been sold
in countless supermarkets in the country with an average annual sales of P10,791,537.25 and is,
therefore, a popular fixture in dining tables during the Christmas season. Its registered "FIESTA"
mark has acquired goodwill to mean sumptuous ham of great taste, superior quality, and food
safety, and its trade dress "FIESTA", combined with a figure of a partly sliced ham served on a
plate with fruits on the side had likewise earned goodwill. Notwithstanding such tremendous
goodwill already earned by its mark, SMPFCI continues to invest considerable resources to
promote the FIESTA ham, amounting to no less than P3,678,407.95.[5]

Sometime in 2006, however, Foodsphere introduced its "PISTA" ham and aggressively promoted
it in 2007, claiming the same to be the real premium ham. In 2008, SMPFCI launched its "Dapat
ganito ka-espesyal" campaign, utilizing the promotional material showing a picture of a whole
meat ham served on a plate with fresh fruits on the side. The ham is being sliced with a knife and
the other portion, held in place by a serving fork. But in the same year, Foodsphere launched its
"Christmas Ham with Taste" campaign featuring a similar picture. Moreover, in 2009,
Foodsphere launched its "Make Christmas even more special" campaign, directly copying
SMPFCI's "Dapat ganito ka-espesyal" campaign. Also in 2009, Foodsphere introduced its paper
ham bag which looked significantly similar to SMPFCI's own paper ham bag and its trade dress
and its use of the word "PISTA" in its packages were confusingly similar to SMPFCI's "FIESTA"
mark.[6]

Thus, according to SMPFCI, the striking similarities between the marks and products of
Foodsphere with those of SMPFCI warrant its claim of trademark infringement on the ground of
likelihood of confusion as to origin, and being the owner of "FIESTA," it has the right to prevent
Foodsphere from the unauthorized use of a deceptively similar mark. The word "PISTA" in
Foodsphere's mark means "fiesta," "feast," or "festival" and connotes the same meaning or
commercial impression to the buying public of SMPFCI's "FIESTA" trademark. Moreover,
"FIESTA" and "PISTA" are similarly pronounced, have the same number of syllables, share
common consonants and vowels, and have the same general appearance in their respective
product packages. In addition, the "FIESTA" and "PISTA" marks are used in the same product
which are distributed and marketed in the same channels of trade under similar conditions, and
even placed in the same freezer and/or displayed in the same section of supermarkets.
Foodsphere's use, therefore, of the "PISTA" mark will mislead the public into believing that its
goods originated from, or are licensed or sponsored by SMPFCI, or that Foodsphere is associated
with SMPFCI, or its affiliate. The use of the "PISTA" trademark would not only result in likelihood
of confusion, but in actual confusion.[7]

Apart from trademark infringement, SMPFCI further alleged that Foodsphere is likewise guilty of
unfair competition. This is because there is confusing similarity in the general appearance of the
goods of the parties and intent on the part of Foodsphere, to deceive the public and defraud
SMPFCL According to SMPFCI, there is confusing similarity because the display panel of both
products have a picture of a partly sliced ham served on a plate of fruits, while the back panel
features other ham varieties offered, both "FIESTA" and "PISTA" are printed in white bold
stylized font, and the product packaging for both "FIESTA" and "PISTA" consists of box-typed
paper bags made of cardboard materials with cut-out holes on the middle top portion for use as
handles and predominantly red in color with a background design of Christmas balls, stars,
snowflakes, and ornate scroll. Moreover, Foodsphere's intent to deceive the public is seen from
its continued use of the word "PISTA" for its ham products and its adoption of packaging with a
strong resemblance of SMPFCI's "FIESTA" ham packaging. For SMPFCI, this is deliberately
carried out for the purpose of capitalizing on the valuable goodwill of its trademark and causing
not only confusion of goods but also confusion as to the source of the ham product. Consequently,
SMPFCI claimed to have failed to realize income of at least P27,668,538.38 and P899,294.77 per
month in estimated actual damages representing foregone income in sales. Thus, it is entitled to
actual damages and attorney's fees.[8]

For its part, Foodsphere denied the charges of trademark infringement and countered that the
marks "PISTA" and "PUREFOODS FIESTA HAM" are not confusingly similar and are, in fact,
visually and aurally distinct from each other. This is because PISTA is always used in conjunction
with its house mark "CDO" and that "PUREFOODS FIESTA HAM" bears the housemark
"PUREFOODS," rendering confusion impossible. Moreover, Foodsphere maintained that
SMPFCI does not have a monopoly on the mark "FIESTA" for the IPO database shows that there
are two (2) other registrations for "FIESTA," namely "FIESTA TROPICALE" and "HAPPY
FIESTA." Also, there are other products in supermarkets that bear the mark "FIESTA" such as
"ARO FIESTA HAM," "ROYAL FIESTA," and "PUREGOLD FIESTA HAM," but SMPFCI has done
nothing against those manufacturers, making it guilty of estoppel in pais, and is, therefore,
estopped from claiming that the use of other manufacturers of the mark "FIESTA" will result in
confusion and/or damage to itself. Even assuming that the marks are confusingly similar,
Foodsphere asserted that it is SMPFCI who is guilty of infringement vis-a-vis its registered
trademark "HOLIDAY," a translation and word bearing the same meaning as "FIESTA."
Foodsphere has been using its "HOLIDAY" trademark since 1970 and had registered the same in
1986, while SMPFCI registered its "FIESTA" trademark only in 2007. In fact, Foodsphere noted
that it has been using "PISTA" since 2006 which is earlier than SMPFCI's filing for registration of
"FIESTA" in 2007. In addition, Foodsphere asseverated that SMPFCI cannot appropriate for itself
images of traditional utensils and garnishing of ham in its advertisements. Confusion between the
marks, moreover, is rendered impossible because the products are sold in booths manned by
different "promodisers." Also, hams are expensive products and their purchasers are well-
informed not only as to their features but also as to the manufacturers thereof.[9]

Furthermore, Foodsphere similarly denied the allegation that it is guilty of unfair competition or
passing off its product as that of SMPFCI. As mentioned, the "PISTA" and "FIESTA" labels are
substantially different in the manner of presentation, carrying their respective house marks.
Moreover, its paper ham bags are labeled with their respective house marks and are given to
consumers only after purchase, hence, they do not factor in when the choice of ham is being made.
Also, Foodsphere claims to have been using the red color for its boxes and it was SMPFCI, by its
own admission, that switched colors from green to red in 2009 for its own ham bags.[10]
On July 17, 2012, the BLA, through its Director, rendered its Decision[11] dismissing SMPFCI's
complaint for lack of merit. First, the BLA held that there could be no trademark infringement
because Foodsphere began using the "PISTA" mark in 2006 and even filed a trademark
application therefor in the same year, while SMPFCI's application for trademark registration for
"FIESTA" was filed and approved only in 2007. SMPFCI, thus, had no cause of action. Second,
SMPFCI's complaint was filed beyond the four (4)-year prescriptive period prescribed under the
Rules and Regulation on Administrative Complaints for Violation of Law Involving Intellectual
Property Rights. Third, the BLA found the testimonies and surveys adduced in evidence by
SMPFCI to be self-serving. Fourth, comparing the competing marks would not lead to confusion,
much less deception of the public. Finally, the BLA ruled that SMPFCI failed to convincingly prove
the presence of the elements of unfair competition.[12]

On September 10, 2013, however, the Office of the Director General partially granted SMPFCI's
appeal, affirming the BLA's ruling on the absence of trademark infringement but finding
Foodsphere liable for unfair competition.[13] The Director General held that one can see the
obvious differences in the marks of the parties. SMPFCI's mark is a composite mark where its
house mark, namely "PURE FOODS," is clearly indicated and is followed by the phrase "FIESTA
HAM" written in stylized font whereas Foodsphere's mark is the word "PISTA" written also in
stylized font. Applying the 'Dominancy Test' and the 'Holistic Test' show that Foodsphere cannot
be held liable for trademark infringement due to the fact that the marks are not visually or aurally
similar and that the glaring differences in the presentation of these marks will prevent any likely
confusion, mistake, or deception to the purchasing public. Moreover, "PISTA" was duly registered
in the IPO, strengthening the position that "PISTA" is not an infringement of "PURE FOODS
FIESTA HAM" for a certificate of registration of a mark is prima facie evidence of the validity of
the registration, the registrant's ownership of the mark, and of the registrant's exclusive right to
use the same.[14] On the other hand, the Director General found Foodsphere to be guilty of unfair
competition for it gave its "PISTA" ham the general appearance that would likely influence
purchasers to believe that it is similar with SMPFCI's "FIESTA" ham. Moreover, its intention to
deceive is inferred from the similarity of the goods as packed and offered for sale. Thus, the
Director General ordered Foodsphere to pay nominal damages in the amount of P100,000.00 and
attorney's fees in the amount of P300,000.00 and to cease and desist from using the labels, signs,
prints, packages, wrappers, receptacles, and materials used in committing unfair competition, as
well as the seizure and disposal thereof.[15]

Both SMPFCI and Foodsphere filed their appeals before the CA via Petitions for Review dated
October 8, 2013[16] and October 29, 2013,[17] respectively. SMPFCI sought a reconsideration of
the Director General's finding that Foodsphere is not guilty of trademark infringement while
Foodsphere faulted said Director General for declaring it guilty of unfair competition.

On March 6, 2014, the CA, Eleventh Division, denied SMPFCI's petition and affirmed the ruling
of the Director General on the absence of trademark infringement. According to the appellate
court, Foodsphere was merely exercising, in good faith, its right to use its duly registered
trademark "PISTA" in the lawful pursuit of its business.[18] Thereafter, in a Decision dated
September 24, 2014, the CA Fourteenth Division likewise denied Foodsphere's petition, affirming
the Director General's finding that Foodsphere was guilty of unfair competition. The CA held that
the elements thereof are present herein. Consequently, it ordered Foodsphere to pay SMPFCI
nominal and exemplary damages as well as attorney' fees.[19] In a Resolution dated April 8, 2015,
however, the CA clarified its September 24, 2014 Decision and resolved to delete the award of
exemplary damages for SMPFCI never prayed for the same.[20]

In a Resolution[21] dated June 13, 2016, the Court, in G.R. No. 215475, denied SMPFCI's Petition
for Review on Certiorari for failure to sufficiently show that the CA, in its Decision and Resolution,
dated March 6, 2014 and November 13, 2014, respectively, finding that Foodsphere is not liable
for trademark infringement, and committed any reversible error in the challenged decision and
resolution as to warrant the exercise of the Court's discretionary appellate jurisdiction. The Court
also found that the issues raised by SMPFCI are factual in nature.

Meanwhile, on June 8, 2015, both SMPFCI and Foodsphere filed the instant Petitions for Review
on Certiorari docketed as G.R. No. 217781 and 217788, respectively. In G.R. No. 217781, SMPFCI
invoked the following argument:
I.

THE HONORABLE COURT OF APPEALS ERRED IN RESOLVING THAT THE AWARD OF

EXEMPLARY DAMAGES BE DELETED FROM THE BODY OF ITS DECISION DATED 24
SEPTEMBER 2014 WHEN SMPFCI'S ENTITLEMENT THERETO IS CLEARLY SUPPORTED
NOT ONLY BY PLEADINGS AND EVIDENCE ON RECORD, BUT ALSO BY THE HONORABLE
COURT OF APPEALS' OWN RATIOCINATIONS FOUND IN THE BODY OF ITS DECISION.
Conversely, G.R. No. 217788, Foodsphere raised the following argument:
I.

THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN EXCESS OF OR

AMOUNTING TO LACK OF JURISDICTION WHEN IT ISSUED THE ASSAILED DECISION
AND RESOLUTION BEING NOT IN ACCORDANCE WITH LAW OR WITH APPLICABLE
DECISIONS OF THE HONORABLE COURT WHEN IT DECLARED THAT FOODSPHERE WAS
GUILTY OF UNFAIR COMPETITION.
In G.R. No. 217781, SMPFCI clarifies that it assails the April 8, 2015 Resolution of the CA, not on
its finding that Foodsphere was guilty of unfair competition, but only insofar as it deleted its
award of exemplary damages in its September 24, 2014 Decision. According to SMPFCI, it was a
mere mistake that the said Decision failed to state the amount of exemplary damages and that its
dispositive portion failed to award said exemplary damages, merely stating that "the petition is
DENIED, and the Decision x x x of the Director General is AFFIRMED."[22] SMPFCI asserts that
where there is a conflict between the dispositive portion and the body of the decision, the
dispositive portion controls. But where the inevitable conclusion from the body of the decision is
so clear as to show that there was a mistake in the dispositive portion, the body of the decision
will prevail.[23] Here, when the CA held that "as for exemplary damages, the award thereof was
warranted," it is beyond cavil that SMPFCI is entitled thereto.

Moreover, SMPFCI maintains that the CA ruling that it never prayed for exemplary damages in
the proceedings, its prayer for damages being limited only to actual damages and attorney's fees,
is utterly false for it specifically prayed for the same in several pleadings it filed before the BLA
and the Office of the Director General. Even assuming that it indeed failed to pray for exemplary
damages, SMPFCI alleges that it was still erroneous for the CA to delete the award of the same. It
is well settled that a court may grant relief to a party, even if said party did not pray for it in his
pleadings for a prayer for "other remedies just and equitable under the premises" is broad enough
to justify the extension of a remedy different from that requested. Thus, in view of the foregoing,
coupled with the factual circumstances of the case leading to the conclusion that Foodsphere is
guilty of unfair competition, SMPFCI essentially prays that the Court: (1) issue a permanent
injunction against Foodsphere to prevent it from infringing the rights of SMPFCI by seizing all
products violative of SMPFCI's IP rights and by forfeiting all properties used in the infringing acts;
(2) order Foodsphere to pay SMPFCI the amount of P27,668,538.38, representing lost income of
SMPFCI, P899,294.77 per month in estimated actual damages, or moderate or temperate
damages; (3) order Foodsphere to pay attorney's fees in the amount of P300,000.00; and (4)
order Foodsphere to pay exemplary damages in the amount of P300,000.00.[24]

In G.R. No. 217788, Foodsphere denied the allegations of unfair competition, denying SMPFCI's
claim that the confusing similarity between the respective packaging of the parties' products
began in 2009 when Foodsphere changed its packaging from a paper box to a paper ham bag,
significantly similar to SMPFCI's paper ham bag. According to Foodsphere, while the packages
were both in the form of bags, their respective trademarks were boldly printed thereon. Moreover,
even prior to SMPFCI's use of the questioned ham bags in 2009, Foodsphere had already been
adopting the image of partly-sliced hams laced with fruits and red color on its packages.[25] In
addition, Foodsphere alleged that any similarity in the general appearance of the packaging does
not, by itself, constitute unfair competition. This is because first, packaging is not the exclusive
ownership of SMPFCI which does not have a patent or trademark protection therefor. Second, the
mere fact of being the first user does not bestow vested right to use the packaging to the exclusion
of everyone else. Third, the circumstance that the manufacturer has printed its name all over the
packaging negates fraudulent intent to palm off its goods as another's product. Fourth, SMPFCI
cannot claim that it has exclusive right or monopoly to use the colors red and green in its
packaging or the image of partly sliced hams. Fifth, similarity in the packaging does not
necessarily constitute "confusing" similarity. Sixth, the circumstances under which the competing
products are sold negates the likelihood of confusion for consumers are more discerning on the
Christmas ham they will purchase, which is not any ordinary, low priced product. Seventh,
SMPFCI failed to prove likelihood of confusion or intent to deceive on the part of Foodsphere.
Finally, Foodsphere maintained that there was no basis for the CA to award nominal damages and
attorney's fees in view of the absence of any violation of SMPFCI's right.[26]

The petitions are devoid of merit.

With respect to G.R. No. 217781, the. Court finds no reason to reverse the April 8, 2015 Resolution
of the CA insofar as it resolved to delete from the body of its September 24, 2014 Decision the
award of exemplary damages. SMPFCI said so itself, when there is a conflict between the
dispositive portion or fallo of a decision and the opinion of the court contained in the text or body
of the judgment, the former prevails over the latter. This rule rests on the theory that the fallo is
the final order, while the opinion in the body is merely a statement ordering nothing. Thus, an
order of execution is based on the disposition, not on the body, of the Decision.[27] Contrary to
SMPFCI's assertion, moreover, the Court finds inapplicable the exception to the foregoing rule
which states that the body of the decision will prevail in instances where the inevitable conclusion
from the body of the decision is so clear as to show that there was a mistake in the dispositive
portion.

A cursory perusal of the challenged September 24, 2014 Decision reveals that the mistake lies not
in the fallo or dispositive portion but in the body thereof, the pertinent portions of which provide:
Having been found guilty of unfair competition, Foodsphere was correctly ordered to pay nominal
damages of P100,000.00. Under Article 2221 of the Civil Code, nominal damages are recoverable
in order to vindicate or recognize the rights of the plaintiff which have been violated or invaded
by the defendant. x x x

As for SMPFCI's claim for lost profit or unrealized income of more than P27 Million, its failure to
properly substantiate. the same left the Office of the Director General without any basis to award
it.

As for exemplary damages, the award thereof was warranted on the strength of In-N-Out Burger,
Inc. v. Sehwani, for correction or example for public good, such as the enhancement of the
protection accorded to intellectual property and the prevention of similar acts of unfair
competition. The award of attorney's fees must likewise be upheld as SMPFCI was compelled to
engage the services of counsel to protect its rights.[28]
As can be gleaned from above, the intention of the CA was merely to affirm the findings of the
Director General insofar as the award of damage was concerned. This was shown in its statements
such as "Foodsphere was correctly ordered to pay nominal damages," "its failure to properly
substantiate the same left the Office of the Director General without any basis to award it," "as for
exemplary damages, the award thereof was warranted," and "the award of attorney's fees must
likewise be upheld." This was also shown when the CA clearly disposed as follows:
"ACCORDINGLY, the petition is DENIED, and the Decision dated September 10, 2013 of the
Office of the Director General, AFFIRMED."[29] It can, therefore, be derived, from the wording
of the CA Decision, that it merely intended to adopt the resolution of the Director General on the
award of damages. Consequently, since nowhere in the affirmed Decision did the Director General
award exemplary damages to SMPFCI, for what was awarded was only nominal damages and
attorney's fees, it follows then that the CA likewise did not intend on awarding the same to
SMPFCI. Thus, what controls herein is the fallo.

Besides, it bears stressing that SMPFCI failed to prove its entitlement to exemplary damages.
Article 2233 of the Civil Code provides that exemplary damages cannot be recovered as a matter
of right; the court will decide whether or not they should be adjudicated while Article 2234 thereof
provides that while the amount of the exemplary damages need not be proven, the plaintiff must
show that he is entitled to moral, temperate or compensatory damages before the court may
consider the question of whether or not exemplary damages should be awarded.

Thus, the Court has held, time and again, that exemplary damages may be awarded for as long as
the following requisites are present: (1) they may be imposed, by way of example, only in addition,
among others, to compensatory damages, only after the claimant's right to them has been
established, and cannot be recovered as a matter of right, their determination depending upon
the amount of compensatory damages that may be awarded to the claimant; (2) the claimant must
first establish his right to moral, temperate, liquidated or compensatory damages; and (3) the act
must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or malevolent
manner.[30]

Here, SMPFCI particularly failed to prove its right to moral, temperate, liquidated or
compensatory damages. In its complaint, SMPFCI prayed that Foodsphere be ordered to pay
P27,668,538.38 representing income it would have made if not for the infringement and
P899,294.77 per month in estimated actual damages, representing foregone income in sales for
the continuous use of the "PISTA" mark in connection with the selling, offering for sale and
distribution of its ham product during the pendency of the case.[31] But as the Director General
aptly found, SMPFCI neither adduced sufficient evidence to prove its claim of foregone income or
sales nor presented evidence to show the profit or sales. Thus,.in view of such failure to prove its
right to compensatory damages, as well as to moral and temperate damages, the CA correctly
resolved to delete from the body of its September 24, 2014 Decision the award of exemplary
damages.

As regards G.R. No. 217788, the Court likewise affirms the ruling of the CA, which in turn,
affirmed the findings of the Director General.

Section 168 of the IP Code provides that:

Section 168. Unfair Competition, Rights, Regulation and Remedies. - 168.1. A person who has
identified in the mind of the public the goods he manufactures or deals in, his business or services
from those of others, whether or not a registered mark is employed, has a property right in the
goodwill of the said goods, business or services so identified, which will be protected in the same
manner as other property rights.

168.2. Any person who shall employ deception or any other means contrary to good faith by which
he shall pass off the goods manufactured by him or in which he deals, or his business, or services
for those of the one having established such goodwill, or who shall commit any acts calculated to
produce said result, shall be guilty of unfair competition, and shall be subject to an action therefor.

168.3. In particular, and without in any way limiting the scope of protection against unfair
competition, the following shall. be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance of goods of another
manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in
which they are contained, or the devices or words thereon, or in any other feature of their
appearance, which would be likely to influence purchasers to believe that the goods offered are
those of a manufacturer or dealer, other than the actual manufacturer or dealer, or who otherwise
clothes the goods with such appearance as shall deceive the public and defraud another of his
legitimate trade, or any subsequent vendor of such goods or any agent of any vendor engaged in
selling such goods with a like purpose;

(b) Any person who by any artifice, or device, or who employs any other means calculated to
induce the false belief that such person is offering the services of another who has identified such
services in the mind of the public; or

(c) Any person who shall make any false statement in the course of trade or who shall commit any
other act contrary to good faith of a nature calculated to discredit the goods, business or services
of another.
168.4. The remedies provided by Sections 156, 157 and 161 shall apply mutatis mutandis. (Sec. 29,
R.A. No. 166a)
Time and again, the Court has held that unfair competition consists of the passing off (or palming
off) or attempting to pass off upon the public of the goods or business of one person as the goods
or business of another with the end and probable effect of deceiving the public. Passing off (or
palming off) takes place where the defendant, by imitative devices on the general appearance of
the goods, misleads prospective purchasers into buying his merchandise under the impression
that they are buying that of his competitors. In other words, the defendant gives his goods the
general appearance of the goods of his competitor with the intention of deceiving the public that
the goods are those of his competitor.[32] The "true test," therefore, of unfair competition has
thus been "whether the acts of the defendant have the intent of deceiving or are calculated to
deceive the ordinary buyer making his purchases under the ordinary conditions of the particular
trade to which the controversy relates."[33]

Thus, the essential elements of an action for unfair competition are: (1) confusing similarity in the
general appearance of the goods; and (2) intent to deceive the public and defraud a competitor.
The confusing similarity may or may not result from similarity in the marks, but may result from
other external factors in the packaging or presentation of the goods. The intent to deceive and
defraud may be inferred from the similarity of the appearance of the goods as offered for sale to
the public. Actual fraudulent intent need not be shown.[34]

In the instant case, the Court finds no error with the findings of the CA and Director General
insofar as the presence of the foregoing elements is concerned. First of all, there exists a
substantial and confusing similarity in the packaging of Foodsphere's product with that of
SMPFCI, which, as the records reveal, was changed by Foodsphere from a paper box to a paper
ham bag that is significantly similar to SMPFCI's paper ham bag. As duly noted by the Director
General and the CA, both packages use paper ham bags as the container for the hams, both paper
ham bags use the red color as the main colors, and both have the layout design appearing on the
bags consisting of a partly sliced ham and fruits on the front and other ham varieties offered at
the back. Thus, Foodsphere's packaging in its entirety, and not merely its "PISTA" mark thereon,
renders the general appearance thereof confusingly similar with the packaging of SMPFCI's ham,
that would likely influence purchasers to believe that these products are similar, if not the same,
as those of SMPFCI.

Second of all, Foodsphere's intent to deceive the public, to defraud its competitor, and to ride on
the goodwill of SMPFCI's products is evidenced by the fact that not only did Foodsphere switch
from its old box packaging to the same paper ham bag packaging as that used by SMPFCI, it also
used the same layout design printed on the same. As the Director General observed, why, of the
millions of terms and combinations of letters, designs, and packaging available, Foodsphere had
to choose those so closely similar to SMPFCI's if there was no intent to pass off upon the public
the ham of SMPFCI as its own with the end and probable effect of deceiving the public.

At this juncture, it is worthy to note that unfair competition is always a question of fact. There is
no inflexible rule that can be laid down as to what will constitute the same, each case being, in the
measure, a law unto itself. Thus, the question to be determined is whether or not, as a matter of
fact, the name or mark used by the defendant has previously come to indicate and designate
plaintiffs goods, or, to state it in another way, whether defendant, as a matter of fact, is, by his
conduct, passing off defendant's goods as plaintiffs goods or his business as plaintiffs
business.[35] As such, the Court is of the opinion that the case records readily supports the
findings of fact made by the Director General as to Foodsphere's commission of unfair
competition. Settled is the rule that factual findings of administrative agencies are generally
accorded respect and even finality by this Court, if such findings are supported by substantial
evidence, as it is presumed that these agencies have the knowledge and expertise over matters
under their jurisdiction,[36] more so when these findings are affirmed by the Court of
Appeals.[37]
WHEREFORE, premises considered, the instant petitions in G.R. Nos. 217781 and 217788 are
DENIED. The assailed Decision dated September 24, 2014 and Resolution dated April 8, 2015 of
the Court of Appeals in CA-G.R. SP No. 131945 are hereby AFFIRMED.

SO ORDERED.

[ G.R. No. 221732, August 23, 2017 ]

FERNANDO U. JUAN, PETITIONER, V. ROBERTO U. JUAN (SUBSTITUTED BY HIS SON
JEFFREY C. JUAN) AND LAUNDROMATIC CORPORATION, RESPONDENTS.

DECISION
PERALTA, J.:

For this Court's resolution is the Petition for Review on Certiorari under Rule 45 of the Rules of
Court dated January 25, 2016, of petitioner Fernando U. Juan that seeks to reverse and set aside
the Decision[1] dated May 7, 2015 and Resolution[2] dated December 4, 2015 of the Court of
Appeals (CA) dismissing his appeal for failure to comply with the requirements of Section 13, Rule
44 and Section 1, Rule 50 of the Rules of Court.
The facts follow.

Respondent Roberto U. Juan claimed that he began using the name and mark "Lavandera Ko" in
his laundry business on July 4, 1994. He then opened his laundry store at No. 119 Alfaro St.,
Salcedo St., Makati City in 1995. Thereafter, on March 17, 1997, the National Library issued to him
a certificate of copyright over said name and mark. Over the years, the laundry business expanded
with numerous franchise outlets in Metro Manila and other provinces. Respondent Roberto then
formed a corporation to handle the said business, hence, Laundromatic Corporation
(Laundromatic) was incorporated in 1997, while "Lavandera Ko" was registered as a business
name on November 13, 1998 with the Department of Trade and Industry (DTI). Thereafter,
respondent Roberto discovered that his brother, petitioner Fernando was able to register the
name and mark "Lavandera Ko" with the Intellectual Property Office (IPO) on October 18, 2001,
the registration of which was filed on June 5, 1995. Respondent Roberto also alleged that a certain
Juliano Nacino (Juliano) had been writing the franchisees of the former threatening them with
criminal and civil cases if they did not stop using the mark and name "Lavandera Ko." It was found
out by respondent Roberto that petitioner Fernando had been selling his own franchises.

Thus, respondent Roberto filed a petition for injunction, unfair competition, infringement of
copyright, cancellation of trademark and name with/and prayer for TRO and Preliminary
Injunction with the Regional Trial Court (RTC) and the case was raffled off at Branch 149, Makati
City. The RTC issued a writ of preliminary injunction against petitioner Fernando in Order dated
June 10, 2004. On July 21, 2008, due to the death of respondent Roberto, the latter was
substituted by his son, Christian Juan (Christian). Pre-trial conference was concluded on July 13,
2010 and after the presentation of evidence of both parties, the RTC rendered a Resolution dated
September 23, 2013, dismissing the petition and ruling that neither of the parties had a right to
the exclusive use or appropriation of the mark "Lavandera Ko" because the same was the original
mark and work of a certain Santiago S. Suarez (Santiago). According to the RTC, the mark in
question was created by Suarez in 1942 in his musical composition called, "Lavandera Ko" and
both parties of the present case failed to prove that they were the originators of the same mark.
The dispositive portion of the RTC's resolution reads as follows:

WHEREFORE, premises considered, this court finds both the plaintiff-Roberto and defendant-
Fernando guilty of making misrepresentations before this court, done under oath, hence, the
Amended Petition and the Answer with their money claims prayed for therein are hereby
DISMISSED.

Therefore, the Amended Petition and the Answer are hereby DISMISSED for no cause of action,
hence, the prayer for the issuance of a writ of injunction is hereby DENIED for utter lack of merit;
and the Writ of Preliminary Injunction issued on June 10, 2004 is hereby LIFTED AND SET
ASIDE.

Finally, the National Library is hereby ordered to cancel the Certificate of Registration issued to
Roberto U. Juan on March 17, 1997 over the word "Lavandera Ko," under certificate no. 97-362.
Moreover, the Intellectual Property Office is also ordered to cancel Certificate of Registration No.
4-1995-102749, Serial No. 100556, issued on October 18, 2001, covering the work LAVANDERA
KO AND DESIGN, in favor of Fernando U. Juan.

The two aforesaid government agencies are hereby requested to furnish this Court of the copy of
their cancellation.

Cost de oficio.

SO ORDERED.[3]

Herein petitioner elevated the case to the CA through a notice of appeal. In his appeal, petitioner
contended that a mark is different from a copyright and not interchangeable. Petitioner Fernando
insisted that he is the owner of the service mark in question as he was able to register the same
with the IPO pursuant to Section 122 of R.A. No. 8293. Furthermore, petitioner Fernando argued
that the RTC erred in giving credence to the article of information it obtained from the internet
stating that the Filipino folk song "Lavandera Ko" was a composition of Suarez in 1942 rather than
the actual pieces of evidence presented by the parties. As such, according to petitioner, such
information acquired by the RTC is hearsay because no one was presented to testify on the veracity
of such article.

Respondent Roberto, on the other hand, contended that the appeal should be dismissed outright
for raising purely questions of law. He further raised as a ground for the dismissal of the appeal,
the failure of the petitioner to cite the page references to the record as required in Section 13,
paragraphs (a), (c), (d) and (f) of Rule 44 of the Rules of Court and petitioner's failure to provide
a statement of facts. Respondent also argued that assuming that the Appellant's Brief complied
with the formal requirements of the Rules of Court, the RTC still did not err in dismissing the
petitioner's answer with counterclaim because he cannot be declared as the owner of "Lavandera
Ko," since there is prior use of said mark by another person.

The CA, in its Decision dated May 7, 2015, dismissed the petitioner's appeal based on technical
grounds, thus:
WHEREFORE, premises considered, the instant appeal is DISMISSED for failure to comply with
the requirements of Section 13, Rule 44 and Section 1, Rule 50 of the Rules of Court.

SO ORDERED.[4]

Hence, the present petition after the denial of petitioner Fernando's motion for reconsideration.
Petitioner Fernando raises the following issues:

A.

WHETHER OR NOT THE DISMISSAL OF THE APPEAL BY THE COURT OF APPEALS ON

PURELY TECHNICAL GROUNDS WAS PROPER CONSIDERING THAT THE CASE BEFORE IT
CAN BE RESOLVED BASED ON THE BRIEF ITSELF.

B.

WHETHER OR NOT A MARK IS THE SAME AS A COPYRIGHT.

C.

WHETHER OR NOT FERNANDO U. JUAN IS THE OWNER OF THE MARK "LAVANDERA KO."

D.

WHETHER OR NOT AN INTERNET ARTICLE IS SUPERIOR THAN ACTUAL EVIDENCE

SUBMITTED BY THE PARTIES.[5]

According to petitioner Fernando, the CA should have considered that the rules are there to
promote and not to defeat justice, hence, it should have decided the case based on the merits and
not dismiss the same based on a mere technicality. The rest of the issues are similar to those that
were raised in petitioner's appeal with the CA.

In his Comment[6] dated April 22, 2016, respondent Roberto insists that the CA did not commit
an error in dismissing the appeal considering that the formal requirements violated by the
petitioner in the Appellant's Brief are basic, thus, inexcusable and that petitioner did not proffer
any valid or substantive reason for his non-compliance with the rules. He further argues that there
was prior use of the mark "Lavandera Ko" by another, hence, petitioner cannot be declared the
owner of the said mark despite his subsequent registration with the IPO.

The petition is meritorious.

Rules of procedure must be used to achieve speedy and efficient administration of justice and not
derail it.[7] Technicality should not be allowed to stand in the way of equitably and completely
resolving the rights and obligations of the parties.[8] It is, [thus] settled that liberal construction
of the rules may be invoked in situations where there may be some excusable formal deficiency or
error in a pleading, provided that the same does not subvert the essence of the proceeding and it
at least connotes a reasonable attempt at compliance with the rules.[9] In Aguam v. CA,[10] this
Court ruled that:
x x x Technicalities, however, must be avoided. The law abhors technicalities that impede the
cause of justice. The court's primary duty is to render or dispense justice. "A litigation is not a
game of technicalities." "Law suits, unlike duels, are not to be won by a rapier's thrust.
Technicality, when it deserts its proper office as an aid to justice and becomes its great hindrance
and chief enemy, deserves scant consideration from courts." Litigations must be decided on their
merits and not on technicality. Every party litigant must be afforded the amplest opportunity for
the proper and just determination of his cause, free from the unacceptable plea of technicalities.
Thus, dismissal of appeals purely on technical grounds is frowned upon where the policy of the
court is to encourage hearings of appeals on their merits and the rules of procedure ought not to
be applied in a very rigid, technical sense; rules of procedure are used only to help secure, not
override substantial justice. It is a far better and more prudent course of action for the court to
excuse a technical lapse and afford the parties a review of the case on appeal to attain the ends of
justice rather than dispose of the case on technicality and cause a grave injustice to the parties,
giving a false impression of speedy disposal of cases while actually resulting in more delay, if not
a miscarriage of justice.

In this case, this Court finds that a liberal construction of the rules is needed due to the novelty of
the issues presented. Besides, petitioner had a reasonable attempt at complying with the rules.
After all, the ends of justice are better served when cases are determined on the merits, not on
mere technicality.[11]

The RTC, in dismissing the petition, ruled that neither of the parties are entitled to use the trade
name "Lavandera Ko" because the copyright of "Lavandera Ko", a song composed in 1942 by
Santiago S. Suarez belongs to the latter. The following are the RTC's reasons for such ruling:

The resolution of this Court - NO ONE OF THE HEREIN PARTIES HAS THE RIGHT TO USE
AND ENJOY "LAVANDERA KO"!

Based on the date taken from the internet - References: CCP encyclopedia of Philippine art, vol. 6
http://www.himig.coin.ph (http://kahimyang.info / kauswagan/articles/1420/today - in -
philippine -history this information was gathered: "In 1948, Cecil Lloyd established the first
Filipino owned record company, the Philippine Recording System, which featured his rendition
of Filipino folk songs among them the "Lavandera ko" (1942) which is a composition of Santiago
S. Suarez". Thus, the herein parties had made misrepresentation before this court, to say the least,
when they declared that they had coined and created the subject mark and name. How can the
herein parties have coined and created the subject mark and work when these parties were not
yet born; when the subject mark and work had been created and used in 1942.

The heirs of Mr. Santiago S. Suarez are the rightful owners of subject mark and work - "Lavandera
ko".

Therefore, the writ of injunction issued in the instant case was quite not proper, hence the same
shall be lifted and revoked. This is in consonance with the finding of this court of the origin of the
subject mark and work, e.g., a music composition of one Santiago S. Suarez in 1942.

Moreover, Section 171.1 of R.A. 8293 states: "Author" is the natural person who has created the
work." And, Section 172.1 of R.A. No. 8293 provides: Literary and artistic works, hereinafter
referred to as "works", are original intellectual creations in the literary and artistic domain
protected from the moment of their creation and shall include in particular:

(d) Letters;

(f) Musical compositions, with or without words;”

Thus, the subject mark and work was created by Mr. Santiago S. Suarez, hence, the subject mark
and work belong to him, alone.

The herein parties are just false claimants, done under oath before this court (paragraph 4 of
Roberto's affidavit, Exhibit A TRO, page 241, Vol. I and paragraph 2 of Fernando's affidavit,
Exhibit 26 TRO, page 354, Vol. I), of the original work of Mr. Santiago S. Suarez created in 1942.

Furthermore, Section 21 of R.A. 8293 declares: "Patentable Inventions - any technical solution of
a problem in any field of human activity which is new, involves an inventive step and is industrially
applicable shall be patentable. It may be, or may relate to, a product, or process, or an
improvement of any of the foregoing." Thus, the herein subject mark and work can never be
patented for the simple reason that it is not an invention. It is a title of a music composition
originated from the mind of Mr. Santiago S. Suarez in 1942.

Thus, the proper and appropriate jurisprudence applicable to this instant case is the wisdom of
the High Court in the case of Pearl & Dean (Phil.), Incorporation v. Shoemart, Incorporated (G.R.
No. 148222, August 15, 2003), the Supreme Court ruled: "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." The Supreme Court concluded: "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." (Pearl & Dean v. Shoemart, supra., citing the case of Baker v. Selden, 101
U.S. 99; 1879 U.S. Lexis 1888; 25 L. Ed. 841; 11 Otto 99, October, 1879 Term).

It is noted that the subject matter of Exhibit "5" (Annex 5) Of Fernando (IPO certificate of
registration) and Exhibit B of Roberto (Certificate of Copyright Registration) could not be
considered as a literary and artistic work emanating from the creative mind and/or hand of the
herein parties for the simple reason that the subject work was a creation of the mind of Mr.
Santiago S. Suarez in 1942. Thus, neither of the herein parties has an exclusive right over the
subject work "Lavandera Ko" for the simple reason that herein parties were not the maker, creator
or the original one who conceptualized it. Section 171.1 defines the author as the natural person
who has created the work. (R.A. No. 8293). Therefore, it can be said here, then and now, that said
registrations of the word "Lavandera Ko" by the herein parties cannot be protected by the law,
Republic Act No. 8293. Section 172.2 (R.A. No. 8293) is quite crystal clear on this point, it
declares: "Works are protected by the sole fact of their creation, irrespective of their mode or form
of expressions, as well as of their content, quality and purpose." Herein parties were not the
creators of the subject word. It was a creation of Santiago S. Suarez in 1942.

Finally, in the case of Wilson Ong Ching Kian Chuan v. Court of Appeals and Lorenzo Tan (G.R.
No. 130360, August 15, 2001), the Supreme Court ruled: "A person to be entitled to a copyright
must be the original creator of the work. He must have created it by his own skill, labor and
judgment without directly copying or evasively imitating the work of another." Again, herein
parties, both, miserably failed to prove and establish on how they have created this alleged work
before registering it with the National Library and the Intellectual Property Office, hence their
claim of ownership of the word "Lavandera Ko" is not conclusive or herein parties are both great
pretenders and imitators. Therefore, it is hereby declared that registration with the IPO by
Fernando is hereby cancelled, for one and many others stated herein, because of the admission of
Fernando that he coined the name from the lyrics of a song popularized in the 1950's by singer
Ruben Tagalog. Admission is admissible without need of evidence. (Section 4, Rule 129 of the
Revised Rules of Court).

Considering that herein parties had made misrepresentations before this court, hence, both the
herein parties came to this court with unclean hands. Thus, no damage could be awarded to
anyone of the herein parties.[12]

The above ruling is erroneous as it confused trade or business name with copyright.

The law on trademarks, service marks and trade names are found under Part III of Republic Act
(R.A.) No. 8293, or the Intellectual Code of the Philippines, while Part IV of the same law governs
copyrights.

"Lavandera Ko," the mark in question in this case is being used as a trade name or specifically, a
service name since the business in which it pertains involves the rendering of laundry services.
Under Section 121.1 of R.A. No. 8293, "mark" is defined 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. As such, the basic contention of the parties is, who has
the better right to use "Lavandera Ko" as a service name because Section 165.2[13] of the said law,
guarantees the protection of trade names and business names even prior to or without
registration, against any unlawful act committed by third parties. A cause of action arises when
the subsequent use of any third party of such trade name or business name would likely mislead
the public as such act is considered unlawful. Hence, the RTC erred in denying the parties the
proper determination as to who has the ultimate right to use the said trade name by ruling that
neither of them has the right or a cause of action since "Lavandera Ko" is protected by a copyright.

By their very definitions, copyright and trade or service name are different. Copyright is the right
of literary property as recognized and sanctioned by positive law.[14] An intangible, incorporeal
right granted by statute to the author or originator of certain literary or artistic productions,
whereby he is invested, for a limited period, with the sole and exclusive privilege of multiplying
copies of the same and publishing and selling them.[15] Trade name, on the other hand, is any
designation which (a) is adopted and used by person to denominate goods which he markets, or
services which he renders, or business which he conducts, or has come to be so used by other, and
(b) through its association with such goods, services or business, has acquired a special
significance as the name thereof, and (c) the use of which for the purpose stated in (a) is prohibited
neither by legislative enactment nor by otherwise defined public policy.[16]

Section 172.1 of R.A. 8293 enumerates the following original intellectual creations in the literary
and artistic domain that are protected from the moment of their creation, thus:
172.1 Literary and artistic works, hereinafter referred to as "works", are original intellectual
creations in the literary and artistic domain protected from the moment of their creation and shall
include in particular:

(a) Books, pamphlets, articles and other writings;

(b) Periodicals and newspapers;
(c) Lectures, sermons, addresses, dissertations prepared for oral delivery, whether or not reduced
in writing or other material form;
(d) Letters;
(e) Dramatic or dramatico-musical compositions; choreographic works or entertainment in dumb
shows;
(f) Musical compositions, with or without words;
(g) Works of drawing, painting, architecture, sculpture, engraving, lithography or other works of
art; models or designs for works of art;
(h) Original ornamental designs or models for articles of manufacture, whether or not registrable
as an industrial design, and other works of applied art;
(i) Illustrations, maps, plans, sketches, charts and three-dimensional works relative to geography,
topography, architecture or science;
(j) Drawings or plastic works of a scientific or technical character;
(k) Photographic works including works produced by a process analogous to photography; lantern
slides;
(l) Audiovisual works and cinematographic works and works produced by a process analogous to
cinematography or any process for making audio-visual recordings;
(m) Pictorial illustrations and advertisements;
(n) Computer programs; and
(o) Other literary, scholarly, scientific and artistic works.

As such, "Lavandera Ko," being a musical composition with words is protected under the
copyright law (Part IV, R.A. No. 8293) and not under the trademarks, service marks and trade
names law (Part III, R.A. No. 8293).

In connection therewith, the RTC's basis or source, an article appearing in a website,[17] in ruling
that the song entitled "Lavandera Ko" is protected by a copyright, cannot be considered a subject
of judicial notice that does not need further authentication or verification. Judicial notice is the
cognizance of certain facts that judges may properly take and act on without proof because these
facts are already known to them.[18] Put differently, it is the assumption by a court of a fact
without need of further traditional evidentiary support. The principle is based on convenience and
expediency in securing and introducing evidence on matters which are not ordinarily capable of
dispute and are not bona fide disputed.[19] In Spouses Latip v. Chua,[20] this Court expounded
on the nature of judicial notice, thus:

Sections 1 and 2 of Rule 129 of the Rules of Court declare when the taking of judicial notice is
mandatory or discretionary on the courts, thus:

SECTION 1. Judicial notice, when mandatory. - A court shall take judicial notice, without the
introduction of evidence, of the existence and territorial extent of states, their political history,
forms of government and symbols of nationality, the law of nations, the admiralty and maritime
courts of the world and their seals, the political constitution and history of the Philippines, the
official acts of the legislative, executive and judicial departments of the Philippines, the laws of
nature, the measure of time, and the geographical divisions.

SEC. 2. Judicial notice, when discretionary. - A court may take judicial notice of matters which
are of public knowledge, or are capable of unquestionable demonstration or ought to be known to
judges because of their judicial functions.

On this point, State Prosecutors v. Muro is instructive:

I. The doctrine of judicial notice rests on the wisdom and discretion of the courts. The power to
take judicial notice is to be exercised by courts with caution; care must be taken that the requisite
notoriety exists; and every reasonable doubt on the subject should be promptly resolved in the
negative.

Generally speaking, matters of judicial notice have three material requisites: (1) the matter must
be one of common and general knowledge; (2) it must be well and authoritatively settled and not
doubtful or uncertain; and (3) it must be known to be within the limits of the jurisdiction of the
court. The principal guide in determining what facts may be assumed to be judicially known is
that of notoriety. Hence, it can be said that judicial notice is limited to facts evidenced by public
records and facts of general notoriety.

To say that a court will take judicial notice of a fact is merely another way of saying that the usual
form of evidence will be dispensed with if knowledge of the fact can be otherwise acquired. This
is because the court assumes that the matter is so notorious that it will not be disputed. But
judicial notice is not judicial knowledge. The mere personal knowledge of the judge is not the
judicial knowledge of the court, and he is not authorized to make his individual knowledge of a
fact, not generally or professionally known, the basis of his action. Judicial cognizance is taken
only of those matters which are "commonly" known.

Things of "common knowledge," of which courts take judicial notice, may be matters coming to
the knowledge of men generally in the course of the ordinary experiences of life, or they may be
matters which are generally accepted by mankind as true and are capable of ready and
unquestioned demonstration. Thus, facts which are universally known, and which may be found
in encyclopedias, dictionaries or other publications, are judicially noticed, provided they are of
such universal notoriety and so generally understood that they may be regarded as forming part
of the common knowledge of every person.

We reiterated the requisite of notoriety for the taking of judicial notice in the recent case of
Expertravel & Tours, Inc. v. Court of Appeals, which cited State Prosecutors:

Generally speaking, matters of judicial notice have three material requisites: (1) the matter must
be one of common and general knowledge; (2) it must be well and authoritatively settled and not
doubtful or uncertain; and (3) it must be known to be within the limits of the jurisdiction of the
court. The principal guide in determining what facts may be assumed to be judicially known is
that of notoriety. Hence, it can be said that judicial notice is limited to facts evidenced by public
records and facts of general notoriety. Moreover, a judicially noticed fact must be one not subject
to a reasonable dispute in that it is either: (1) generally known within the territorial jurisdiction
of the trial court; or (2) capable of accurate and ready determination by resorting to sources whose
accuracy cannot reasonably be questionable.

Things of "common knowledge," of which courts take judicial notice, may be matters coming to
the knowledge of men generally in the course of the ordinary experiences of life, or they may be
matters which are generally accepted by mankind as true and are capable of ready and
unquestioned demonstration. Thus, facts which are universally known, and which may be found
in encyclopedias, dictionaries or other publications, are judicially noticed, provided, they are such
of universal notoriety and so generally understood that they may be regarded as forming part of
the common knowledge of every person. As the common knowledge of man ranges far and wide,
a wide variety of particular facts have been judicially noticed as being matters of common
knowledge. But a court cannot take judicial notice of any fact which, in part, is dependent on the
existence or non-existence of a fact of which the court has no constructive knowledge.

The article in the website cited by the RTC patently lacks a requisite for it to be of judicial notice
to the court because such article is not well and authoritatively settled and is doubtful or
uncertain. It must be remembered that some articles appearing in the internet or on websites are
easily edited and their sources are unverifiable, thus, sole reliance on those articles is greatly
discouraged.

Considering, therefore, the above premise, this Court deems it proper to remand the case to the
RTC for its proper disposition since this Court cannot, based on the records and some of the issues
raised by both parties such as the cancellation of petitioner's certificate of registration issued by
the Intellectual Property Office, make a factual determination as to who has the better right to use
the trade/business/service name, "Lavandera Ko."

WHEREFORE, the Petition for Review on Certiorari under Rule 45 of the Rules of Court dated
January 25, 2016, of petitioner Fernando U. Juan is GRANTED. Consequently, the Decision dated
May 7, 2015 and Resolution dated December 4, 2015 of the Court of Appeals are REVERSED and
SET ASIDE. This Court, however, ORDERS the REMAND of this case to the RTC for its prompt
disposition.

SO ORDERED.

G.R. No. 195835, March 14, 2016

SISON OLAÑO, SERGIO T. ONG, MARILYN O. GO, AND JAP FUK HAI, Petitioners, v. LIM ENG
CO, Respondent.

DECISION

REYES, J.:

This is a petition for review on certiorari1 under Rule 45 of the Rules of Court, assailing the
Decision2 dated July 9, 2010 and Resolution3 dated February 24, 2011 of the Court of Appeals
(CA) in CA-G.R. SP No. 95471, which annulled the Resolutions dated March 10, 20064 and May
25, 20065 of the Department of Justice (DOJ) in I.S. No. 2004-925, finding no probable cause for
copyright infringement against Sison Olano, Sergio Ong, Marilyn Go and Jap Fuk Hai
(petitioners) and directing the withdrawal of the criminal information filed against them.

The Antecedents

The petitioners are the officers and/or directors of Metrotech Steel Industries, Inc. (Metrotech).6
Lim Eng Co (respondent), on the other hand, is the Chairman of LEC Steel Manufacturing
Corporation (LEC), a company which specializes in architectural metal manufacturing.7

Sometime in 2002, LEC was invited by the architects of the Manansala Project (Project), a high-
end residential building in Rockwell Center, Makati City, to submit design/drawings and
specifications for interior and exterior hatch doors. LEC complied by submitting on July 16, 2002,
shop plans/drawings, including the diskette therefor, embodying the designs and specifications
required for the metal hatch doors.8

After a series of consultations and revisions, the final shop plans/drawings were submitted by
LEC on January 15, 2004 and thereafter copied and transferred to the title block of Ski-First
Balfour Joint Venture (SKI-FB), the Project's contractor, and then stamped approved for
construction on February 3, 2004.9

LEC was thereafter subcontracted by SKI-FB, to manufacture and install interior and exterior
hatch doors for the 7th to 22nd floors of the Project based on the final shop plans/drawings.10

Sometime thereafter, LEC learned that Metrotech was also subcontracted to install interior and
exterior hatch doors for the Project's 23rd to 41st floors.11

On June 24, 2004, LEC demanded Metrotech to cease from infringing its intellectual property
rights. Metrotech, however, insisted that no copyright infringement was committed because the
hatch doors it manufactured were patterned in accordance with the drawings provided by SKI-
FB.12

On July 2, 2004, LEC deposited with the National Library the final shop plans/drawings of the
designs and specifications for the interior and exterior hatch doors of the Project.13 On July 6,
2004, LEC was issued a Certificate of Copyright Registration and Deposit showing that it is the
registered owner of plans/drawings for interior and exterior hatch doors under Registration Nos.
1-2004-13 and 1-2004-14, respectively.14 This copyright pertains to class work "I" under Section
172 of Republic Act (R.A.) No. 8293, The Intellectual Property Code of the Philippines, which
covers "illustrations, maps, plans, sketches, charts and three-dimensional works relative to
geography, topography, architecture or science."
On December 9, 2004, LEC was issued another Certificate of Copyright Registration and Deposit
showing that it is the registered owner of plans/drawings for interior and exterior hatch doors
under Registration Nos. H-2004-566 and H-2004-56715 which is classified under Section 172(h)
of R.A. No. 8293 as "original ornamental designs or models for articles of manufacture, whether
or not registrable as an industrial design, and other works of applied art."

When Metrotech still refused to stop fabricating hatch doors based on LEC's shop plans/drawings,
the latter sought the assistance of the National Bureau of Investigation (NBI) which in turn
applied for a search warrant before the Regional Trial Court (RTC) of Quezon City, Branch 24.
The application was granted on August 13, 2004 thus resulting in the confiscation of finished and
unfinished metal hatch doors as well as machines used in fabricating and manufacturing hatch
doors from the premises of Metrotech.16

On August 13, 2004, the respondent filed a Complaint-Affidavit17 before the DOJ against the
petitioners for copyright infringement. In the meantime or on September 8, 2004, the RTC
quashed the search warrant on the ground that copyright infringement was not established.18

Traversing the complaint, the petitioners admitted manufacturing hatch doors for the Project.
They denied, however, that they committed copyright infringement and averred that the hatch
doors they manufactured were functional inventions that are proper subjects of patents and that
the records of the Intellectual Property Office reveal that there is no patent, industrial design or
utility model registration on LEC's hatch doors. Metrotech further argued that the manufacturing
of hatch doors per se is not copyright infringement because copyright protection does not extend
to the objects depicted in the illustrations and plans. Moreover, there is no artistic or ornamental
expression embodied in the subject hatch doors that would subject them to copyright
protection.19

Resolutions of the DOJ

In a Resolution20 dated August 18, 2005, the investigating prosecutor dismissed the respondent's
complaint based on inadequate evidence showing that: (1) the petitioners committed the
prohibited acts under Section 177 of R.A. No. 8293; and (2) the interior and exterior hatch doors
of the petitioners are among the classes of copyrightable work enumerated in Sections 172 and
173 of the same law.21

Adamant, the respondent filed a petition for review before the DOJ but it was also denied due
course in the Resolution22 dated November 16, 2005.

Upon the respondent's motion for reconsideration, however, the Resolution23 dated January 27,
2006 of the DOJ reversed and set aside the Resolution dated August 18, 2005 and directed the
Chief State Prosecutor to file the appropriate information for copyright infringement against the
petitioners.24 The DOJ reasoned that the pieces of evidence adduced show that the subject hatch
doors are artistic or ornamental with distinctive hinges, door and jamb, among others. The
petitioners were not able to sufficiently rebut these allegations and merely insisted on the non-
artistic nature of the hatch doors. The DOJ further held that probable cause was established
insofar as the artistic nature of the hatch doors and based thereon the act of the petitioners in
manufacturing or causing to manufacture hatch doors similar to those of the respondent can be
considered as unauthorized reproduction; hence, copyright infringement under Section 177.1 in
relation to Section 216 of R.A. No. 8293.25cralawred

Aggrieved, the petitioners moved for reconsideration. This time, the DOJ made a complete turn
around by granting the motion, vacating its Resolution dated January 27, 2006 and declaring that
the evidence on record did not establish probable cause because the subject hatch doors were
plainly metal doors with functional components devoid of any aesthetic or artistic features.
Accordingly, the DOJ Resolution26 dated March 10, 2006 disposed as follows:
chanRoblesvirtualLawlibrary
WHEREFORE, finding cogent reason to reverse the assailed resolution, the motion for
reconsideration is GRANTED finding no probable cause against the [petitioners]. Consequently,
the City Prosecutor of Manila is hereby directed to cause the withdrawal of the information, if any
has been filed in court, and to report the action taken thereon within TEN (10) DAYS from receipt
hereof.

SO ORDERED.27ChanRoblesVirtualawlibrary
The respondent thereafter filed a motion for reconsideration of the foregoing resolution but it was
denied28 on May 25, 2006. The respondent then sought recourse before the CA via a petition for
certiorari29 ascribing grave abuse of discretion on the part of the DOJ.

In its assailed Decision30 dated July 9, 2010, the CA granted the petition. The CA held that the
vacillating findings of the DOJ on the presence or lack of probable cause manifest capricious and
arbitrary exercise of discretion especially since its opposite findings were based on the same
factual evidence and arguments.

The CA then proceeded to make its own finding of probable cause and held that:
chanRoblesvirtualLawlibrary
[F]or probable cause for copyright infringement to exist, essentially, it must be shown that the
violator reproduced the works without the consent of the owner of the copyright.

In the present case before Us, [the petitioners] do not dispute that: (1) LEG was issued copyrights
for the illustrations of the hatch doors under Section 171.i, and for the hatch doors themselves as
ornamental design or model for articles of manufacture pursuant to Section 171.h of R.A. [No.]
8293; and (2) they manufactured hatch doors based on drawings and design furnished by SKI-
FB, which consists of LEC works subject of copyrights. These two (2) circumstances, taken
together, are sufficient to excite the belief in a reasonable mind that [the petitioners] are probably
guilty of copyright infringement. First, LEC has indubitably established that it is the owner of the
copyright for both the illustrations of the hatch doors and [the] hatch doors themselves, and
second, [the petitioners] manufactured hatch doors based on LEC's works, sans EEC's consent.

xxxx
[T]he fact that LEC enjoys ownership of copyright not only on the illustrations of the hatch doors
but on the hatch doors itself and that [the petitioners] manufactured the same is sufficient to
warrant a finding of probable cause for copyright infringement. x x
x.31ChanRoblesVirtualawlibrary
The CA further ruled that any allegation on the non-existence of ornamental or artistic values on
the hatch doors are matters of evidence which are best ventilated in a full-blown trial rather than
during the preliminary investigation stage. Accordingly, the CA disposed as follows:
chanRoblesvirtualLawlibrary
WHEREFORE, considering the foregoing premises, the present Petition is GRANTED, and
accordingly, the assailed Resolutions dated 10 March 2006 and 25 May 2006 are ANNULLED
and SET ASIDE. The Resolution of the Secretory of Justice dated 27 January 2006 finding
probable cause against [the petitioners], is REINSTATED.

SO ORDERED.32ChanRoblesVirtualawlibrary
The CA reiterated the above ruling in its Resolution33 dated February 24, 2011 when it denied the
petitioners' motion for reconsideration. Hence, the present appeal, arguing that:
There was no evidence of actual reproduction of the hatch doors during the preliminary
investigation that would lead the investigating prosecutor to declare the existence of probable
cause;34

Even assuming that the petitioners manufactured hatch doors based on the illustrations and plans
covered by the respondent's Certificate of Registration Nos. 1-2004-13 and 1-2004-14, the
petitioners could not have committed copyright infringement. Certificate of Registration Nos. 1-
2004-13 and 1-2004-14 are classified under Section 172(i) which pertains to "illustrations, maps,
plans, sketches, charts and three-dimensional works relative to geography, topography,
architecture or science." Hence the original works that are copyrighted are the illustrations and
plans of interior hatch doors and exterior hatch doors. Thus, it is the reproduction of the
illustrations and plans covered by the copyright registration that amounts to copyright
infringement. The petitioners did not reproduce the illustrations and plans covered under
Certificate of Registration Nos. 1-2004-13 and 1-2004-14.

The manufacturing of hatch doors per se does not fall within the purview of copyright
infringement because copyright protection does not extend to the objects depicted in the
illustrations and plans;35 and

LEC's copyright registration certificates are not conclusive proofs that the items covered thereby
are copyrightable. The issuance of registration certificate and acceptance of deposit by the
National Library is ministerial in nature and does not involve a determination of whether the item
deposited is copyrightable or not. Certificates of registration and deposit serve merely as a notice
of recording and registration of the work but do not confer any right or title upon the registered
copyright owner or automatically put his work under the protective mantle of the copyright law.36
Ruling of the Court

It is a settled judicial policy that courts do not reverse the Secretary of Justice's findings and
conclusions on the matter of probable cause. Courts are not empowered to substitute their
judgment for that of the executive branch upon which full discretionary authority has been
delegated in the determination of probable cause during a preliminary investigation. Courts may,
however, look into whether the exercise of such discretionary authority was attended with grave
abuse of discretion.37

Otherwise speaking, "judicial review of the resolution of the Secretary of Justice is limited to a
determination of whether there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction."38

The CA anchored its act of reversing the DOJ Resolution dated March 10, 2006 upon the foregoing
tenets. Thus, the Court's task in the present petition is only to determine if the CA erred in
concluding that the DOJ committed grave abuse of discretion in directing the withdrawal of any
criminal information filed against the petitioners.

Grave abuse of discretion has been defined as "such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be grave as where
the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility
and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal
to perform the duty enjoined by or to act at all in contemplation of law."39 "'Capricious,' usually
used in tandem with the term 'arbitrary,' conveys the notion of willful and unreasoning
action."40cralawred

According to the CA, the DOJ's erratic findings on the presence or absence of probable cause
constitute grave abuse of discretion. The CA explained:
chanRoblesvirtualLawlibrary
This, to Our minds, in itself creates a nagging, persistent doubt as to whether [the DOJ Secretary]
issued the said resolutions untainted with a whimsical and arbitrary use of his discretion. For one
cannot rule that there is reason to overturn the investigating prosecutor's findings at the first
instance and then go on to rule that ample evidence exists showing that the hatch doors possess
artistic and ornamental elements at the second instance and proceed to rule that no such artistry
can be found on the purely utilitarian hatch doors at the last instance. x x
x.41ChanRoblesVirtualawlibrary
The Court disagrees. It has been held that the issuance by the DOJ of several resolutions with
varying findings of fact and conclusions of law on the existence of probable cause, by itself, is not
indicative of grave abuse of discretion.42

Inconsistent findings and conclusions on the part of the DOJ will denote grave abuse of discretion
only if coupled with gross misapprehension of facts,43 which, after a circumspect review of the
records, is not attendant in the present case.

The facts upon which the resolutions issued by the investigating prosecutor and the DOJ were
actually uniform, viz:
chanRoblesvirtualLawlibrary
(a)
LEC is the registered owner of plans/drawings for interior and exterior hatch doors under
Certificate of Registration Nos. 1-2004-13 and 1-2004-14 classified under Section 172(i) of R.A.
No. 8293 as pertaining to "illustrations, maps, plans, sketches, charts and three-dimensional
works relative to geography, topography, architecture or science";
(b)
LEC is also the registered owner of plans/drawings for interior and exterior hatch doors under
Certificate of Registration Nos. H-2004-566 and H-2004-567 classified under Section 172(h) of
R.A. No. 8293 as to "original ornamental designs or models for articles of manufacture, whether
or not registrable as an industrial design, and other works of applied art";
(c)
LEC as the subcontractor of SKI-FB in the Project first manufactured and installed the interior
and exterior hatch doors at the Manansala Tower in Rockwell Center, Makati City, from the 7th
to 22nd floors. The hatch doors were based on the plans/drawings submitted by LEC to SKI-FB
and subject of the above copyright registration numbers; and
(d)
thereafter, Metrotech fabricated and installed hatch doors at the same building's 23rd to 41st floor
based on the drawings and specifications provided by SKI-FB.44
The positions taken by the DOJ and the investigating prosecutor differed only in the issues tackled
and the conclusions arrived at.

It may be observed that in the Resolution dated August 18, 2005 issued by the investigating
prosecutor, the primary issue was whether the hatch doors of LEC fall within copyrightable works.
This was resolved by ruling that hatch doors themselves are not covered by LEC's Certificate of
Registration Nos. 1-2004-13 and 1-2004-14 issued on the plans/drawing depicting them. The DOJ
reversed this ruling in its Resolution dated January 27, 2006 wherein the issue was streamlined
to whether the illustrations of the hatch doors under LEC's Certificate of Registration Nos. H-
2004-566 and H-2004-567 bore artistic ornamental designs.

This situation does not amount to grave abuse of discretion but rather a mere manifestation of
the intricate issues involved in the case which thus resulted in varying conclusions of law.
Nevertheless, the DOJ ultimately pronounced its definite construal of copyright laws and their
application to the evidence on record through its Resolution dated March 10, 2006 when it
granted the petitioners' motion for reconsideration. Such construal, no matter how erroneous to
the CA's estimation, did not amount to grave abuse of discretion. "[I]t is elementary that not every
erroneous conclusion of law or fact is an abuse of discretion."45

More importantly, the Court finds that no grave abuse of discretion was committed by the DOJ in
directing the withdrawal of the criminal information against the respondents because a finding of
probable cause contradicts the evidence on record, law, and jurisprudence.

"Probable cause has been defined as the existence of such facts and circumstances as would excite
the belief in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that
the person charged was guilty of the crime for which he was prosecuted. It is a reasonable ground
of presumption that a matter is, or may be, well-founded on such a state of facts in the mind of
the prosecutor as would lead a person of ordinary caution and prudence to believe, or entertain
an honest or strong suspicion, that a thing is so."46
"The term does not mean actual and positive cause nor does it import absolute certainty. It is
merely based on opinion and reasonable belief. Thus, a finding of probable cause does not require
an inquiry into whether there is sufficient evidence to procure a conviction. It is enough that it is
believed that the act or omission complained of constitutes the offense charged."47

"In order that probable cause to file a criminal case may be arrived at, or in order to engender the
well-founded belief that a crime has been committed, the elements of the crime charged should
be present. This is based on the principle that every crime is defined by its elements, without
which there should be - at the most - no criminal offense."48

A copyright refers to "the right granted by a statute to the proprietor of an intellectual production
to its exclusive use and enjoyment to the extent specified in the statute."49 Under Section 177 of
R.A. No. 8293, the Copyright or Economic Rights consist of the exclusive right to carry out,
authorize or prevent the following acts:
chanRoblesvirtualLawlibrary
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.
Copyright infringement is thus committed by any person who shall use original literary or artistic
works, or derivative works, without the copyright owner's consent in such a manner as to violate
the foregoing copy and economic rights. For a claim of copyright infringement to prevail, the
evidence on record must demonstrate: (1) ownership of a validly copyrighted material by the
complainant; and (2) infringement of the copyright by the respondent.50

While both elements subsist in the records, they did not simultaneously concur so as to
substantiate infringement of LEC's two sets of copyright registrations.

The respondent failed to substantiate the alleged reproduction of the drawings/sketches of hatch
doors copyrighted under Certificate of Registration Nos. 1-2004-13 and 1-2004-14. There is no
proof that the respondents reprinted the copyrighted sketches/drawings of LEC's hatch doors.
The raid conducted by the NBI on Metrotech's premises yielded no copies or reproduction of
LEC's copyrighted sketches/drawings of hatch doors. What were discovered instead were finished
and unfinished hatch doors.

Certificate of Registration Nos. 1-2004-13 and 1-2004-14 pertain to class work "I" under Section
172 of R.A. No. 8293 which covers "illustrations, maps, plans, sketches, charts and three-
dimensional works relative to geography, topography, architecture or science."51 As such, LEC's
copyright protection there under covered only the hatch door sketches/drawings and not the
actual hatch door they depict.52

As the Court held in Pearl and Dean (Philippines), Incorporated v. Shoemart, Incorporated:53
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.54
(Citations omitted and italics in the original)
Since the hatch doors cannot be considered as either illustrations, maps, plans, sketches, charts
and three-dimensional works relative to geography, topography, architecture or science, to be
properly classified as a copyrightable class "I" work, what was copyrighted were their
sketches/drawings only, and not the actual hatch doors themselves. 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.55

"Unlike a patent, a copyright gives no exclusive right to the art disclosed; protection is given only
to the expression of the idea — not the idea itself."56

The respondent claimed that the petitioners committed copyright infringement when they
fabricated/manufactured hatch doors identical to those installed by LEC. The petitioners could
not have manufactured such hatch doors in substantial quantities had they not reproduced the
copyrighted plans/drawings submitted by LEC to SK1-FB. This insinuation, without more, does
not suffice to establish probable cause for infringement against the petitioners. "[Although the
determination of probable cause requires less than evidence which would justify conviction, it
should at least be more than mere suspicion."57

Anent, LEC's Certificate of Registration Nos. H-2004-566 and H-2004-567, the Court finds that
the ownership thereof was not established by the evidence on record because the element of
copyrightability is absent.

"Ownership of copyrighted material is shown by proof of originality and copyrightability."58

While it is true that where the complainant presents a copyright certificate in support of the claim
of infringement, the validity and ownership of the copyright is presumed. This presumption,
however, is rebuttable and it cannot be sustained where other evidence in the record casts doubt
on the question of ownership,59 as in the instant case.

Moreover, "[t]he presumption of validity to a certificate of copyright registration merely orders

the burden of proof. The applicant should not ordinarily be forced, in the first instance, to prove
all the multiple facts that underline the validity of the copyright unless the respondent, effectively
challenging them, shifts the burden of doing so to the applicant."60
Here, evidence negating originality and copyrightability as elements of copyright ownership was
satisfactorily proffered against LEC's certificate of registration.

The following averments were not successfully rebuffed by LEC:

chanRoblesvirtualLawlibrary
[T]he hinges on LEC's "hatch doors" have no ornamental or artistic value. In fact, they are just
similar to hinges found in truck doors that had been in common use since the 1960's. The gaskets
on LEC's "hatch doors", aside from not being ornamental or artistic, were merely procured from
a company named Pemko and are not original creations of LEC. The locking device in LEC's
"hatch doors" are ordinary drawer locks commonly used in furniture and office
desks.61ChanRoblesVirtualawlibrary
In defending the copyrightability of its hatch doors' design, LEC merely claimed:
chanRoblesvirtualLawlibrary
LEC's Hatch Doors were particularly designed to blend in with the floor of the units in which they
are installed and, therefore, appeal to the aesthetic sense of the owner of units or any visitors
thereto[;]

LEC's Hatch Doors have a distinct set of hinges, a distinct door a distinct jamb, all of which are
both functional or utilitarian and artistic or ornamental at the same time[;] and

Moreover, the Project is a high-end residential building located in the Rockwell Center, a very
prime area in Metro Manila. As such, the owner of the Project is not expected to settle for Hatch
Doors that simply live up to their function as such. The owner would require, as is the case for the
Project, Hatch Doors that not only fulfill their utilitarian purposes but also appeal to the artistic
or ornamental sense of their beholders.62ChanRoblesVirtualawlibrary
From the foregoing description, it is clear that the hatch doors were not artistic works within the
meaning of copyright laws. A copyrightable work refers to literary and artistic works defined as
original intellectual creations in the literary and artistic domain.63

A hatch door, by its nature is an object of utility. It is defined as a small door, small gate or an
opening that resembles a window equipped with an escape for use in case of fire or emergency.64
It is thus by nature, functional and utilitarian serving as egress access during emergency. It is not
primarily an artistic creation but rather an object of utility designed to have aesthetic appeal. It is
intrinsically a useful article, which, as a whole, is not eligible for copyright.

A "useful article" defined as an article "having an intrinsic utilitarian function that is not merely
to portray the appearance of the article or to convey information" is excluded from copyright
eligibility.65

The only instance when a useful article may be the subject of copyright protection is when it
incorporates a design element that is physically or conceptually separable from the underlying
product. This means that the utilitarian article can function without the design element. In such
an instance, the design element is eligible for copyright protection.66

The design of a useful article shall be considered a pictorial, graphic, or sculptural work only if,
and only to the extent that, such design incorporates pictorial, graphic, or sculptural features that
can be identified separately from, and are capable of existing independently of, the utilitarian
aspects of the article.67
A belt, being an object utility with the function of preventing one's pants from falling down, is in
itself not copyrightable. However, an ornately designed belt buckle which is irrelevant to or did
not enhance the belt's function hence, conceptually separable from the belt, is eligible for
copyright. It is copyrightable as a sculptural work with independent aesthetic value, and not as an
integral element of the belt's functionality.68

A table lamp is not copyrightable because it is a functional object intended for the purpose of
providing illumination in a room. The general shape of a table lamp is likewise not copyrightable
because it contributes to the lamp's ability to illuminate the reaches of a room. But, a lamp base
in the form of a statue of male and female dancing figures made of semi vitreous china is
copyrightable as a work of art because it is unrelated to the lamp's utilitarian function as a device
used to combat darkness.69

In the present case, LEC's hatch doors bore no design elements that are physically and
conceptually separable, independent and distinguishable from the hatch door itself. The allegedly
distinct set of hinges and distinct jamb, were related and necessary hence, not physically or
conceptually separable from the hatch door's utilitarian function as an apparatus for emergency
egress. Without them, the hatch door will not function.

More importantly, they are already existing articles of manufacture sourced from different
suppliers. Based on the records, it is unrebutted that: (a) the hinges are similar to those used in
truck doors; (b) the gaskets were procured from a company named Pemko and are not original
creations of LEC; and (c) the locking device are ordinary drawer locks commonly used in furniture
and office desks.

Being articles of manufacture already in existence, they cannot be deemed as original creations.
As earlier stated, valid copyright ownership denotes originality of the copyrighted material.
Originality means that the material was not copied, evidences at least minimal creativity and was
independently created by the author.70 It connotes production as a result of independent labor.71
LEC did not produce the door jambs and hinges; it bought or acquired them from suppliers and
thereafter affixed them to the hatch doors. No independent original creation can be deduced from
such acts.

The same is true with respect to the design on the door's panel. As LEC has stated, the panels were
"designed to blend in with the floor of the units in which they [were] installed."72 Photos of the
panels indeed show that their color and pattern design were similar to the wooden floor parquet
of the condominium units.73 This means that the design on the hatch door panel was not a
product of LEC's independent artistic judgment and discretion but rather a mere reproduction of
an already existing design.

Verily then, the CA erred in holding that a probable cause for copyright infringement is imputable
against the petitioners. Absent originality and copyrightability as elements of a valid copyright
ownership, no infringement can subsist.chanrobleslaw

WHEREFORE, premises considered, the petition is hereby GRANTED. The Decision dated July
9, 2010 and Resolution dated February 24, 2011 of the Court of Appeals in CA-G.R. SP No. 95471
are REVERSED and SET ASIDE. The Resolutions dated March 10, 2006 and May 25, 2006 of the
Department of Justice in I.S. No. 2004-925 dismissing the complaint for copyright infringement
are REINSTATED.

SO ORDERED.cralawlawlibrary