[52]
to which we are a party and which we entered into because it is in our national
LA CHEMISE LACOSTE, S. A., petitioner,
vs.HON. OSCAR C. FERNANDEZ, and GOBINDRAM HEMANDAS,
respondents.
Unfair Competition; Trademarks and Tradenames; Corporation Law;
Petitioner is not doing business in the Philippines.—Applying the above provisions
to the facts of this case, we find and conclude that the petitioner is not doing business
in the Philippines. Rustan is actually a middleman acting and transacting business in
its own name and/or its own account and not in the name or for the account of the
petitioner.
Same; Same; Same; A foreign corporation not doing business in the
Philippines needs no license to sue in the Philippines for trademark violations.—But
even assuming the truth of the private respondent’s allegation that the petitioner
failed to allege material facts in its petition relative to capacity to sue, the petitioner
may still maintain the present suit against respondent Hemandas. As early as 1927,
this Court was, and it still is, of the view that a foreign corporation not doing
business in the Philippines needs no license to sue before Philippine courts for
infringement of trademark and unfair competition.
Same; Same; Same; Criminal Procedure; Where a violation of our unfair
trade lanes which provide a penal sanction is alleged, lack of capacity to sue of
injured foreign corporation becomes immaterial.—More important is the nature of
the case which led to this petition. What preceded this petition for certiorari was a
letter-complaint filed before the NBI charging Hemandas with a criminal offense,
i.e., violation of Article 189 of the Revised Penal Code. If prosecution follows after
the completion of the preliminary investigation being conducted by the Special
Prosecutor the information shall be in the name of the People of the Philippines and
no longer the petitioner which is only an aggrieved party since a criminal offense is
essentially an act against the State. It is the latter which is principally the injured
party although there is a private right violated. Petitioner’s capacity to sue would
become, therefore, of not much significance in the main case. We cannot allow a
possible violator of our criminal statutes to escape prosecution upon a far-fetched
contention that the aggrieved party or victim of a crime has no standing to sue.
Same; Same; Same; Same; International Law; The Philippines being a
party to the Paris Convention for the Protection of Industrial Property, the right of a
foreign corporation to file suit in our courts to protect its trademark is to be
enforced.— In upholding the right of the petitioner to maintain the present suit before
our courts for unfair competition or infringement of trademarks of a foreign
corporation, we are moreover recognizing our duties and the rights of foreign states
under the Paris Convention for the Protection of Industrial Property to which the
Philippines and France are parties. We are simply interpreting and enforcing a
IPL- Assignment No. 6
solemn international commitment of the Philippines embodied in a multilateral treaty
interest to do so.
Same; Same; Same; Same; Same; Foreign nationals are, by treaty, entitled
to the same protection as Filipino citizens against unfair competition.—By the same
token, the petitioner should be given the same treatment in the Philippines as we
make available to our own citizens. We are obligated to assure to nationals of
“countries of the Union” an effective protection against unfair competition in the
same way that they are obligated to similarly protect Filipino citizens and firms.
Same; Same; Same; Same; Patents Office; Director of Patents should obey
directive of Minister of Trade against registration of internationally known brands in
favor of persons other than their original owners or users.—The memorandum is a
clear manifestation of our avowed adherence to a policy of cooperation and amity
with all nations. It is not, as wrongly alleged by the private respondent, a personal
policy of Minister Luis Villafuerte which expires once he leaves the Ministry of
Trade. For a treaty or convention is not a mere moral obligation to be enforced or not
at the whims of an incumbent head of a Ministry. It creates a legally binding
obligation on the parties founded on the generally accepted principle of international
law of pacta sunt servanda which has been adopted as part of the law of our land.
(Constitution, Art. II, Sec. 3). The memorandum reminds the Director of Patents of
his legal duty to obey both law and treaty. It must also be obeyed.
Same; Same; Criminal Procedure; A bare allegation that respondent’s
trademark is different from that of petitioner’s is a matter of defense. It is not
sufficient ground for a motion to quash a search warrant.—A review of the grounds
invoked by Hemandas in his motion to quash the search warrants reveals the fact that
they are not appropriate for quashing a warrant. They are matters ot defense which
should be ventilated during the trial on the merits ot the case. For instance, on the
basis of the facts before the Judge, we fail to understand how he could treat a bare
allegation that the respondent’s trademark is different from the petitioner’s trademark
as a sufficient basis to grant the motion to quash. We will treat the issue of
prejudicial question later. Granting that respondent Hemandas was only trying to
show the absence of probable cause, we, nonetheless, hold the arguments to be
untenable.
Criminal Procedure; Words and Phrases; “Probable cause” defined.—This
concept of probable cause was amplified and modified by our ruling in Stonehill v.
Diokno, (20 SCRA 383) that probable cause “presupposes the introduction of
competent proof that the party against whom it is sought has performed particular
acts, or committed specific omissions, violating a given provision of our criminal
laws.”
Page 1 of 143
 Same; An allegation that applicant for search warrant withheld certain
information from the court is not of itself a sufficient basis to quash the search
warrant issued.—True, the lower court should be given the opportunity to correct its
errors, if there be any, but the rectification must, as earlier stated be based on sound
and valid grounds. In this case, there was no compelling justification for the about
face. The allegation that vital facts were deliberately suppressed or concealed by the
petitioner should have been assessed more carefully because the object of the quashal
was the return of items already seized and easily examined by the court. The items
were alleged to be fake and quite obviously would be needed as evidence in the
criminal prosecution. Moreover, an application for a search warrant is heard ex parte.
It is neither a trial nor a part of the trial Action on these applications must be
expedited for time is of the essence. Great reliance has to be accorded by the judge to
the testimonies under oath of the complainant and the witnesses. The allegation of
Hemandas that the applicant withheld information from the respondent court was
clearly no basis to order the return of the seized items.
Same; Unfair Competition, Trademarks and Tradenames; A certificate of
registration in the supplemental register is not prima facie evidence of validity of a
registration; Quashal of search warrant not justified.—A certificate of registration in
the Supplemental Register is not prima facie evidence of the validity of registration,
of the registrant’s exclusive right to use the same in connection with the goods,
business, or services specified in the certificate. Such a certificate of registration
cannot be filed, with effect, with the Bureau of Customs in order to exclude from the
Philippines, foreign goods bearing infringement marks or trade names (Rule 124,
Revised Rules of Practice Before the Phil. Pat. Off. in Trademark Cases; Martin,
Philippine Commercial Laws, 1981, Vol. 2, pp. 513-515).
Same; Same; Same; Same.—Registration in the Supplemental Register,
therefore, serves as notice that the registrant is using or has appropriated the
trademark. By the very fact that the trademark cannot as yet be entered in the
Principal Register, all who deal with it should be on guard that there are certain
defects, some obstacles which the user must still overcome before he can claim legal
ownership of the mark or ask the courts to vindicate his claims of an exclusive right
to the use of the same. It would be deceptive for a party with nothing more than a
registration in the Supplemental Register to posture before courts of justice as if the
registration is in the Principal Register.
Same; Same; Same; Pendency of application for registration in the Patent
Office not a prejudicial question to the issuance of search warrant on a charge of
unfair competition.—By the same token, the argument that the application was
premature in view of the pending case before the Patent Office is likewise without
legal basis. The proceedings pending before the Patent Office involving IPC No.
1658 do not partake of the nature of a prejudicial question which must first be
definitely resolved.
IPL- Assignment No. 6
Same; Same; Same; Administrative Law; Patent Office; The Minister of
Trade has the power to direct the Patent Office not to register certain trademarks
except to its original users and to cancel those registered in violation of its directive.
—The Intermediate Appellate Court, in the La Chemise Lacoste S.A. v. Sadhwani
decision which we cite with approval sustained the power of the Minister of Trade to
issue the implementing memorandum and, after going over the evidence in the
records, affirmed the decision of the Director of Patents declaring La Chemise
Lacoste S.A. the owner of the disputed trademark and crocodile or alligator device.
Same; Same; Same; Same; Same.—Indeed, due process is a rule of reason.
In the case at bar the order of the Patent Office is based not only on the undisputed
fact of ownership of the trademark by the appellee but on a prior determination by
the Minister of Trade, as the competent authority under the Paris Convention, that
the trademark and device sought to be registered by the appellant are well-known
marks which the Philippines, as party to the Convention, is bound to protect in favor
of its owners. It would be to exalt form over substance to say that under the
circumstances, due process requires that a hearing should be held before the
application is acted upon.
Same; Same; Same; Petitioner is the owner of the trademarks at bar.—We
have carefully gone over the records of all the cases filed in this Court and find more
than enough evidence to sustain a finding that the petitioner is the owner of the
trademarks “LACOSTE”, “CHEMISE LACOSTE”, the crocodile or alligator device,
and the composite mark of LACOSTE and the representation of the crocodile or
alligator. Any pretensions of the private respondent that he is the owner are
absolutely without basis. Any further ventilation of the issue of ownership before the
Patent Office will be a superfluity and a dilatory tactic.
Same; Same; Same; Right of owner of a trademark cannot be preempted by
fact that another first secure its registration in the Supplemental Register.—The
records show that the goodwill and reputation of the petitioner’s products bearing the
trademark LACOSTE date back even before 1964 when LACOSTE clothing
apparels were first marketed in the Philippines. To allow Hemandas to continue
using the trademark Lacoste for the simple reason that he was the first registrant in
the Supplemental Register of a trademark used in international commerce and not
belonging to him is to render nugatory the very essence of the law on trademarks and
tradenames
GUTIERREZ, JR., J.:
It is among this Court's concerns that the Philippines should not acquire an
unbecoming reputation among the manufacturing and trading centers of the
world as a haven for intellectual pirates imitating and illegally profiting from
trademarks and tradenames which have established themselves in
international or foreign trade.
Page 2 of 143
Before this Court is a petition for certiorari with preliminary injunction filed by
La Chemise Lacoste, S.A., a well known European manufacturer of clothings
and sporting apparels sold in the international market and bearing the
trademarks "LACOSTE" "CHEMISE LACOSTE", "CROCODILE DEVICE"
and a composite mark consisting of the word "LACOSTE" and a
representation of a crocodile/alligator. The petitioner asks us to set aside as
null and void, the order of judge Oscar C. Fernandez, of Branch XLIX,
Regional Trial Court, National Capital Judicial Region, granting the motion to
quash the search warrants previously issued by him and ordering the return
of the seized items.
The facts are not seriously disputed. The petitioner is a foreign corporation,
organized and existing under the laws of France and not doing business in
the Philippines, It is undeniable from the records that it is the actual owner of
the abovementioned trademarks used on clothings and other goods
specifically sporting apparels sold in many parts of the world and which have
been marketed in the Philippines since 1964, The main basis of the private
respondent's case is its claim of alleged prior registration.
In 1975, Hemandas & Co., a duly licensed domestic firm applied for and was
issued Reg. No. SR-2225 (SR stands for Supplemental Register) for the
trademark "CHEMISE LACOSTE & CROCODILE DEVICE" by the Philippine
Patent Office for use on T-shirts, sportswear and other garment products of
the company. Two years later, it applied for the registration of the same
trademark under the Principal Register. The Patent Office eventually issued
an order dated March 3, 1977 which states that:
... Considering that the mark was already registered in the Supplemental
Register in favor of herein applicant, the Office has no other recourse but to
allow the application, however, Reg. No. SR-2225 is now being contested in
a Petition for Cancellation docketed as IPC No. 1046, still registrant is
presumed to be the owner of the mark until after the registration is declared
cancelled.
Thereafter, Hemandas & Co. assigned to respondent Gobindram Hemandas
all rights, title, and interest in the trademark "CHEMISE LACOSTE &
DEVICE".
On November 21, 1980, the petitioner filed its application for registration of
the trademark "Crocodile Device" (Application Serial No. 43242) and
"Lacoste" (Application Serial No. 43241).The former was approved for
publication while the latter was opposed by Games and Garments in Inter
Partes Case No. 1658. In 1982, the petitioner filed a Petition for the
Cancellation of Reg. No. SR-2225 docketed as Inter Partes Case No. 1689.
IPL- Assignment No. 6
Both cases have now been considered by this Court in Hemandas v. Hon.
Roberto Ongpin  (G.R. No. 65659).
On March 21, 1983, the petitioner filed with the National Bureau of
Investigation (NBI) a letter-complaint alleging therein the acts of unfair
competition being committed by Hemandas and requesting their assistance
in his apprehension and prosecution. The NBI conducted an investigation
and subsequently filed with the respondent court two applications for the
issuance of search warrants which would authorize the search of the
premises used and occupied by the Lacoste Sports Center and Games and
Garments both owned and operated by Hemandas.
The respondent court issued Search Warrant Nos. 83-128 and 83-129 for
violation of Article 189 of the Revised Penal Code, "it appearing to the
satisfaction of the judge after examining under oath applicant and his
witnesses that there are good and sufficient reasons to believe that
Gobindram Hemandas ... has in his control and possession in his premises
the ... properties subject of the offense," (Rollo, pp. 67 and 69) The NBI
agents executed the two search warrants and as a result of the search found
and seized various goods and articles described in the warrants.
Hemandas filed a motion to quash the search warrants alleging that the
trademark used by him was different from petitioner's trademark and that
pending the resolution of IPC No. 1658 before the Patent Office, any criminal
or civil action on the same subject matter and between the same parties
would be premature.
The petitioner filed its opposition to the motion arguing that the motion to
quash was fatally defective as it cited no valid ground for the quashal of the
search warrants and that the grounds alleged in the motion were absolutely
without merit. The State Prosecutor likewise filed his opposition on the
grounds that the goods seized were instrument of a crime and necessary for
the resolution of the case on preliminary investigation and that the release of
the said goods would be fatal to the case of the People should prosecution
follow in court.
The respondent court was, however, convinced that there was no probable
cause to justify the issuance of the search warrants. Thus, in its order dated
March 22, 1983, the search warrants were recalled and set aside and the
NBI agents or officers in custody of the seized items were ordered to return
the same to Hemandas. (Rollo, p. 25)
The petitioner anchors the present petition on the following issues:
Page 3 of 143
Did respondent judge act with grave abuse of discretion amounting to lack of
jurisdiction,
(i) in reversing the finding of probable cause which he himself had made in
issuing the search warrants, upon allegations which are matters of defense
and as such can be raised and resolved only upon trial on the merits; and
(ii) in finding that the issuance of the search warrants is premature in the face
of the fact that (a) Lacoste's registration of the subject trademarks is still
pending with the Patent Office with opposition from Hemandas; and (b) the
subject trademarks had been earlier registered by Hemandas in his name in
the Supplemental Register of the Philippine Patent Office?
Respondent, on the other hand, centers his arguments on the following
issues:
I
THE PETITIONER HAS NO CAPACITY TO SUE BEFORE PHILIPPINE
COURTS.
II
THE RESPONDENT JUDGE DID NOT COMMIT A GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OF JURISDICTION IN ISSUING
THE ORDER DATED APRIL 22, 1983.
Hemandas argues in his comment on the petition for certiorari  that the
petitioner being a foreign corporation failed to allege essential facts bearing
upon its capacity to sue before Philippine courts. He states that not only is
the petitioner not doing business in the Philippines but it also is not licensed
to do business in the Philippines. He also cites the case of Leviton Industries
v. Salvador  (114 SCRA 420) to support his contention The Leviton case,
however, involved a complaint for unfair competition under Section 21-A of
Republic Act No. 166 which provides:
Sec. 21 — A. Any foreign corporation or juristic person to which a mark or
tradename has been registered or assigned under this Act may bring an
action hereunder for infringement, for unfair competition, or false designation
of origin and false description, whether or not it has been licensed to do
business in the Philippines under Act numbered Fourteen Hundred and Fifty-
Nine, as amended, otherwise known as the Corporation Law, at the time it
brings the complaint; Provided, That the country of which the said foreign
corporation or juristic person is a citizen, or in which it is domiciled, by treaty,
IPL- Assignment No. 6
convention or law, grants a similar privilege to corporate or juristic persons of
the Philippines.
We held that it was not enough for Leviton, a foreign corporation organized
and existing under the laws of the State of New York, United States of
America, to merely allege that it is a foreign corporation. It averred in
Paragraph 2 of its complaint that its action was being filed under the
provisions of Section 21-A of Republic Act No. 166, as amended.
Compliance with the requirements imposed by the abovecited provision was
necessary because Section 21-A of Republic Act No. 166 having explicitly
laid down certain conditions in a specific proviso, the same must be
expressly averred before a successful prosecution may ensue. It is therefore,
necessary for the foreign corporation to comply with these requirements or
aver why it should be exempted from them, if such was the case. The foreign
corporation may have the right to sue before Philippine courts, but our rules
on pleadings require that the qualifying circumstances necessary for the
assertion of such right should first be affirmatively pleaded.
In contradistinction, the present case involves a complaint for violation of
Article 189 of the Revised Penal Code. The Leviton case is not applicable.
Asserting a distinctly different position from the Leviton argument, Hemandas
argued in his brief that the petitioner was doing business in the Philippines
but was not licensed to do so. To support this argument, he states that the
applicable ruling is the case of Mentholatum Co., Inc. v. Mangaliman: (72
Phil. 524) where Mentholatum Co. Inc., a foreign corporation and Philippine-
American Drug Co., the former's exclusive distributing agent in the
Philippines filed a complaint for infringement of trademark and unfair
competition against the Mangalimans.
The argument has no merit. The Mentholatum  case is distinct from and
inapplicable to the case at bar. Philippine American Drug Co., Inc., was
admittedly selling products of its principal Mentholatum Co., Inc., in the
latter's name or for the latter's account. Thus, this Court held that "whatever
transactions the Philippine-American Drug Co., Inc. had executed in view of
the law, the Mentholatum Co., Inc., did it itself. And, the Mentholatum Co.,
Inc., being a foreign doing business in the Philippines without the license
required by Section 68 of the Corporation Law, it may not prosecute this
action for violation of trademark and unfair competition."
In the present case, however, the petitioner is a foreign corporation not doing
business in the Philippines. The marketing of its products in the Philippines is
done through an exclusive distributor, Rustan Commercial Corporation The
latter is an independent entity which buys and then markets not only products
of the petitioner but also many other products bearing equally well-known
Page 4 of 143
and established trademarks and tradenames. in other words, Rustan is not a
mere agent or conduit of the petitioner.
The rules and regulations promulgated by the Board of Investments pursuant
to its rule-making power under Presidential Decree No. 1789, otherwise
known as the Omnibus Investment Code, support a finding that the petitioner
is not doing business in the Philippines. Rule I, Sec. 1  (g) of said rules and
regulations defines "doing business" as one" which includes, inter alia:
(1) ... A foreign firm which does business through middlemen acting on their
own names, such as indentors, commercial brokers or commission
merchants, shall not be deemed doing business in the Philippines. But such
indentors, commercial brokers or commission merchants shall be the ones
deemed to be doing business in the Philippines.
(2) Appointing a representative or distributor who is domiciled in the
Philippines, unless said representative or distributor has an independent
status, i.e., it transacts business in its name and for its account, and not in
the name or for the account of a principal Thus, where a foreign firm is
represented by a person or local company which does not act in its name but
in the name of the foreign firm the latter is doing business in the Philippines.
Applying the above provisions to the facts of this case, we find and conclude
that the petitioner is not doing business in the Philippines. Rustan is actually
a middleman acting and transacting business in its own name and or its own
account and not in the name or for the account of the petitioner.
But even assuming the truth of the private respondent's allegation that the
petitioner failed to allege material facts in its petition relative to capacity to
sue, the petitioner may still maintain the present suit against respondent
Hemandas. As early as 1927, this Court was, and it still is, of the view that a
foreign corporation not doing business in the Philippines needs no license to
sue before Philippine courts for infringement of trademark and unfair
competition. Thus, in Western Equipment and Supply Co. v. Reyes (51 Phil.
115), this Court held that a foreign corporation which has never done any
business in the Philippines and which is unlicensed and unregistered to do
business here, but is widely and favorably known in the Philippines through
the use therein of its products bearing its corporate and tradename, has a
legal right to maintain an action in the Philippines to restrain the residents
and inhabitants thereof from organizing a corporation therein bearing the
same name as the foreign corporation, when it appears that they have
personal knowledge of the existence of such a foreign corporation, and it is
apparent that the purpose of the proposed domestic corporation is to deal
and trade in the same goods as those of the foreign corporation.
IPL- Assignment No. 6
We further held:
... That company is not here seeking to enforce any legal or control rights
arising from, or growing out of, any business which it has transacted in the
Philippine Islands. The sole purpose of the action:
Is to protect its reputation, its corporate name, its goodwill, whenever that
reputation, corporate name or goodwill have, through the natural
development of its trade, established themselves.' And it contends that its
rights to the use of its corporate and trade name:
Is a property right, a right in rem, which it may assert and protect against all
the world, in any of the courts of the world-even in jurisdictions where it does
not transact business-just the same as it may protect its tangible property,
real or personal, against trespass, or conversion. Citing sec. 10, Nims on
Unfair Competition and TradeMarks and cases cited; secs. 21-22, Hopkins
on TradeMarks, Trade Names and Unfair Competition and cases cited.' That
point is sustained by the authorities, and is well stated in Hanover Star
Mining Co. v. Allen and Wheeler Co. (208 Fed., 513). in which the syllabus
says:
Since it is the trade and not the mark that is to be protected, a trade-mark
acknowledges no territorial boundaries of municipalities or states or nations,
but extends to every market where the trader's goods have become known
and Identified by the use of the mark.
Our recognizing the capacity of the petitioner to sue is not by any means
novel or precedent setting. Our jurisprudence is replete with cases illustrating
instances when foreign corporations not doing business in the Philippines
may nonetheless sue in our courts. In East Board Navigation Ltd, v. Ysmael
and Co., Inc. (102 Phil. 1), we recognized a right of foreign corporation to sue
on isolated transactions. In General Garments Corp. v. Director of
Patents  (41 SCRA 50), we sustained the right of Puritan Sportswear Corp., a
foreign corporation not licensed to do and not doing business in the
Philippines, to file a petition for cancellation of a trademark before the Patent
Office.
More important is the nature of the case which led to this petition. What
preceded this petition for certiorari was a letter complaint filed before the NBI
charging Hemandas with a criminal offense, i.e., violation of Article 189 of the
Revised Penal Code. If prosecution follows after the completion of the
preliminary investigation being conducted by the Special Prosecutor the
information shall be in the name of the People of the Philippines and no
longer the petitioner which is only an aggrieved party since a criminal offense
is essentially an act against the State. It is the latter which is principally the
Page 5 of 143
injured party although there is a private right violated. Petitioner's capacity to
sue would become, therefore, of not much significance in the main case. We
cannot snow a possible violator of our criminal statutes to escape
prosecution upon a far-fetched contention that the aggrieved party or victim
of a crime has no standing to sue.
In upholding the right of the petitioner to maintain the present suit before our
courts for unfair competition or infringement of trademarks of a foreign
corporation, we are moreover recognizing our duties and the rights of foreign
states under the Paris Convention for the Protection of Industrial Property to
which the Philippines and France are parties. We are simply interpreting and
enforcing a solemn international commitment of the Philippines embodied in
a multilateral treaty to which we are a party and which we entered into
because it is in our national interest to do so.
The Paris Convention provides in part that:
ARTICLE 1
(1) The countries to which the present Convention applies constitute
themselves into a Union for the protection of industrial property.
(2) The protection of industrial property is concerned with patents, utility
models, industrial designs, trademarks service marks, trade names, and
indications of source or appellations of origin, and the repression of unfair
competition.
ARTICLE 2
(2) Nationals of each of the countries of the Union shall as regards the
protection of industrial property, enjoy in all the other countries of the Union
the advantages that their respective laws now grant, or may hereafter grant,
to nationals, without prejudice to the rights specially provided by the present
Convention. Consequently, they shall have the same protection as the latter,
and the same legal remedy against any infringement of their rights, provided
they observe the conditions and formalities imposed upon nationals.
ARTICLE 6
(1) The countries of the Union undertake, either administratively if their
legislation so permits, or at the request of an interested party, to refuse or to
cancel the registration and to prohibit the use of a trademark which
constitutes a reproduction, imitation or translation, liable to create confusion,
of a mark considered by the competent authority of the country of registration
or use to be well-known in that country as being already the mark of a person
IPL- Assignment No. 6
entitled to the benefits of the present Convention and used for Identical or
similar goods. These provisions shall also apply when the essential part of
the mark constitutes a reproduction of any such well-known mark or an
imitation liable to create confusion therewith.
ARTICLE 8
A trade name shall be protected in all the countries of the Union without the
obligation of filing or registration, whether or not it forms part of a trademark.
ARTICLE 10bis
(1) The countries of the Union are bound to assure to persons entitled to the
benefits of the Union effective protection against unfair competition.
ARTICLE 10ter
(1) The countries of the Union undertake to assure to nationals of the other
countries of the Union appropriate legal remedies to repress effectively all the
acts referred to in Articles 9, 10 and l0bis.
(2) They undertake, further, to provide measures to permit syndicates and
associations which represent the industrialists, producers or traders
concerned and the existence of which is not contrary to the laws of their
countries, to take action in the Courts or before the administrative authorities,
with a view to the repression of the acts referred to in Articles 9, 10 and
10bis, in so far as the law of the country in which protection is claimed allows
such action by the syndicates and associations of that country.
ARTICLE 17
Every country party to this Convention undertakes to adopt, in accordance
with its constitution, the measures necessary to ensure the application of this
Convention.
It is understood that at the time an instrument of ratification or accession is
deposited on behalf of a country; such country will be in a position under its
domestic law to give effect to the provisions of this Convention. (61 O.G.
8010)
In Vanity Fair Mills, Inc. v. T Eaton Co.  (234 F. 2d 633) the United States
Circuit Court of Appeals had occasion to comment on the extraterritorial
application of the Paris Convention It said that:
Page 6 of 143
[11] The International Convention is essentially a compact between the
various member countries to accord in their own countries to citizens of the
other contracting parties trademark and other rights comparable to those
accorded their own citizens by their domestic law. The underlying principle is
that foreign nationals should be given the same treatment in each of the
member countries as that country makes available to its own citizens. In
addition, the Convention sought to create uniformity in certain respects by
obligating each member nation 'to assure to nationals of countries of the
Union an effective protection against unfair competition.'
[12] The Convention is not premised upon the Idea that the trade-mark and
related laws of each member nation shall be given extra-territorial
application, but on exactly the converse principle that each nation's law shall
have only territorial application. Thus a foreign national of a member nation
using his trademark in commerce in the United States is accorded extensive
protection here against infringement and other types of unfair competition by
virtue of United States membership in the Convention. But that protection has
its source in, and is subject to the limitations of, American law, not the law of
the foreign national's own country. ...
By the same token, the petitioner should be given the same treatment in the
Philippines as we make available to our own citizens. We are obligated to
assure to nationals of "countries of the Union" an effective protection against
unfair competition in the same way that they are obligated to similarly protect
Filipino citizens and firms.
Pursuant to this obligation, the Ministry of Trade on November 20, 1980
issued a memorandum addressed to the Director of the Patents Office
directing the latter:
... to reject all pending applications for Philippine registration of signature and
other world famous trademarks by applicants other than its original owners or
users.
The conflicting claims over internationally known trademarks involve such
name brands as Lacoste, Jordache, Gloria Vanderbilt, Sasson, Fila, Pierre
Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy,
Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.
It is further directed that, in cases where warranted, Philippine registrants of
such trademarks should be asked to surrender their certificates of
registration, if any, to avoid suits for damages and other legal action by the
trademarks' foreign or local owners or original users.
IPL- Assignment No. 6
The memorandum is a clear manifestation of our avowed adherence to a
policy of cooperation and amity with all nations. It is not, as wrongly alleged
by the private respondent, a personal policy of Minister Luis Villafuerte which
expires once he leaves the Ministry of Trade. For a treaty or convention is not
a mere moral obligation to be enforced or not at the whims of an incumbent
head of a Ministry. It creates a legally binding obligation on the parties
founded on the generally accepted principle of international law of pacta sunt
servanda which has been adopted as part of the law of our land.
(Constitution, Art. II, Sec. 3). The memorandum reminds the Director of
Patents of his legal duty to obey both law and treaty. It must also be obeyed.
Hemandas further contends that the respondent court did not commit grave
abuse of discretion in issuing the questioned order of April 22, 1983.
A review of the grounds invoked by Hemandas in his motion to quash the
search warrants reveals the fact that they are not appropriate for quashing a
warrant. They are matters of defense which should be ventilated during the
trial on the merits of the case. For instance, on the basis of the facts before
the Judge, we fail to understand how he could treat a bare allegation that the
respondent's trademark is different from the petitioner's trademark as a
sufficient basis to grant the motion to quash. We will treat the issue of
prejudicial question later. Granting that respondent Hemandas was only
trying to show the absence of probable cause, we, nonetheless, hold the
arguments to be untenable.
As a mandatory requirement for the issuance of a valid search warrant, the
Constitution requires in no uncertain terms the determination of probable
cause by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce (Constitution, Art. IV, Sec.
3). Probable cause has traditionally meant such facts and circumstances
antecedent to the issuance of the warrant that are in themselves sufficient to
induce a cautious man to rely upon them and act in pursuance thereof
(People v. Sy Juco, 64 Phil. 667).
This concept of probable cause was amplified and modified by our ruling
in Stonehill v. Diokno,  (20 SCRA 383) that probable cause "presupposes the
introduction of competent proof that the party against whom it is sought has
performed particular  acts, or committed specific omissions, violating a given
provision of our criminal laws."
The question of whether or not probable cause exists is one which must be
decided in the light of the conditions obtaining in given situations (Central
Bank v. Morfe, 20 SCRA 507). We agree that there is no general formula or
fixed rule for the determination of the existence of probable cause since, as
we have recognized in Luna v. Plaza  (26 SCRA 310), the existence depends
Page 7 of 143
to a large degree upon the finding or opinion of the judge conducting the
examination. However, the findings of the judge should not disregard the
facts before him nor run counter to the clear dictates of reason. More so it is
plain that our country's ability to abide by international commitments is at
stake.
The records show that the NBI agents at the hearing of the application for the
warrants before respondent court presented three witnesses under oath,
sworn statements, and various exhibits in the form of clothing apparels
manufactured by Hemandas but carrying the trademark Lacoste. The
respondent court personally interrogated Ramon Esguerra, Samuel Fiji, and
Mamerto Espatero by means of searching questions. After hearing the
testimonies and examining the documentary evidence, the respondent court
was convinced that there were good and sufficient reasons for the issuance
of the warrant. And it then issued the warrant.
The respondent court, therefore, complied with the constitutional and
statutory requirements for the issuance of a valid search warrant. At that
point in time, it was fully convinced that there existed probable cause. But
after hearing the motion to quash and the oppositions thereto, the respondent
court executed a complete turnabout and declared that there was no
probable cause to justify its earlier issuance of the warrants.
True, the lower court should be given the opportunity to correct its errors, if
there be any, but the rectification must, as earlier stated be based on sound
and valid grounds. In this case, there was no compelling justification for the
about face. The allegation that vital facts were deliberately suppressed or
concealed by the petitioner should have been assessed more carefully
because the object of the quashal was the return of items already seized and
easily examined by the court. The items were alleged to be fake and quite
obviously would be needed as evidence in the criminal prosecution.
Moreover, an application for a search warrant is heard ex parte.  It is neither a
trial nor a part of the trial. Action on these applications must be expedited for
time is of the essence. Great reliance has to be accorded by the judge to the
testimonies under oath of the complainant and the witnesses. The allegation
of Hemandas that the applicant withheld information from the respondent
court was clearly no basis to order the return of the seized items.
Hemandas relied heavily below and before us on the argument that it is the
holder of a certificate of registration of the trademark "CHEMISE LACOSTE
& CROCODILE DEVICE". Significantly, such registration is only in the
Supplemental Register.
A certificate of registration in the Supplemental Register is not prima
facie  evidence of the validity of registration, of the registrant's exclusive right
IPL- Assignment No. 6
to use the same in connection with the goods, business, or services specified
in the certificate. Such a certificate of registration cannot be filed, with effect,
with the Bureau of Customs in order to exclude from the Philippines, foreign
goods bearing infringement marks or trade names (Rule 124, Revised Rules
of Practice Before the Phil. Pat. Off. in Trademark Cases; Martin, Philippine
Commercial Laws, 1981, Vol. 2, pp. 513-515).
Section 19-A of Republic Act 166 as amended not only provides for the
keeping of the supplemental register in addition to the principal register but
specifically directs that:
The certificates of registration for marks and trade names registered on the
supplemental register shall be conspicuously different from certificates issued
for marks and trade names on the principal register.
The reason is explained by a leading commentator on Philippine Commercial
Laws:
The registration of a mark upon the supplemental register is not, as in the
case of the principal register, prima facie evidence of (1) the validity of
registration; (2) registrant's ownership of the mark; and (3) registrant's
exclusive right to use the mark. It is not subject to opposition, although it may
be cancelled after its issuance. Neither may it be the subject of interference
proceedings. Registration on the supplemental register is not constructive
notice of registrant's claim of ownership. A supplemental register is provided
for the registration of marks which are not registrable on the principal register
because of some defects (conversely, defects which make a mark
unregistrable on the principal register, yet do not bar them from the
supplemental register.) (Agbayani, II Commercial Laws of the Philippines,
1978, p. 514, citing Uy Hong Mo v. Titay & Co., et al., Dec. No. 254 of
Director of Patents, Apr. 30, 1963);
Registration in the Supplemental Register, therefore, serves as notice that
the registrant is using or has appropriated the trademark. By the very fact
that the trademark cannot as yet be entered in the Principal Register, all who
deal with it should be on guard that there are certain defects, some obstacles
which the user must Still overcome before he can claim legal ownership of
the mark or ask the courts to vindicate his claims of an exclusive right to the
use of the same. It would be deceptive for a party with nothing more than a
registration in the Supplemental Register to posture before courts of justice
as if the registration is in the Principal Register.
The reliance of the private respondent on the last sentence of the Patent
office action on application Serial No. 30954 that "registrant is presumed to
be the owner of the mark until after the registration is declared cancelled" is,
Page 8 of 143
therefore, misplaced and grounded on shaky foundation, The supposed
presumption not only runs counter to the precept embodied in Rule 124 of
the Revised Rules of Practice before the Philippine Patent Office in
Trademark Cases but considering all the facts ventilated before us in the four
interrelated petitions involving the petitioner and the respondent, it is devoid
of factual basis. And even in cases where presumption and precept may
factually be reconciled, we have held that the presumption is rebuttable, not
conclusive, (People v. Lim Hoa, G.R. No. L10612, May 30, 1958,
Unreported). One may be declared an unfair competitor even if his competing
trademark is registered (Parke, Davis & Co. v. Kiu Foo & Co., et al., 60 Phil.
928; La Yebana Co. v. Chua Seco & Co., 14 Phil. 534).
By the same token, the argument that the application was premature in view
of the pending case before the Patent Office is likewise without legal basis.
The proceedings pending before the Patent Office involving IPC Co. 1658 do
not partake of the nature of a prejudicial question which must first be
definitely resolved.
Section 5 of Rule 111 of the Rules of Court provides that:
A petition for the suspension of the criminal action based upon the pendency
of a pre-judicial question in a civil case, may only be presented by any party
before or during the trial of the criminal action.
The case which suspends the criminal prosecution must be a civil case which
is determinative of the innocence or, subject to the availability of other
defenses, the guilt of the accused. The pending case before the Patent Office
is an administrative proceeding and not a civil case. The decision of the
Patent Office cannot be finally determinative of the private respondent's
innocence of the charges against him.
In Flordelis v. Castillo (58 SCRA 301), we held that:
As clearly delineated in the aforecited provisions of the new Civil Code and
the Rules of Court, and as uniformly applied in numerous decisions of this
Court, (Berbari v. Concepcion, 40 Phil. 837 (1920); Aleria v. Mendoza, 83
Phil. 427 (1949); People v. Aragon, 94 Phil. 357 (1954); Brito-Sy v. Malate
Taxicab & Garage, Inc., 102 Phil 482 (1957); Mendiola v. Macadael, 1 SCRA
593; Benitez v. Concepcion, 2 SCRA 178; Zapante v. Montesa, 4 SCRA 510;
Jimenez v. Averia, 22 SCRA 1380.) In Buenaventura v. Ocampo (55 SCRA
271) the doctrine of prejudicial question was held inapplicable because no
criminal case but merely an administrative case and a civil suit were involved.
The Court, however, held that, in view of the peculiar circumstances of that
case, the respondents' suit for damages in the lower court was premature as
IPL- Assignment No. 6
it was filed during the pendency of an administrative case against the
respondents before the POLCOM. 'The possibility cannot be overlooked,'
said the Court, 'that the POLCOM may hand down a decision adverse to the
respondents, in which case the damage suit will become unfounded and
baseless for wanting in cause of action.') the doctrine of pre-judicial question
comes into play generally in a situation where a civil action and a criminal
action both penned 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.
In the present case, no civil action pends nor has any been instituted. What
was pending was an administrative case before the Patent Office.
Even assuming that there could be an administrative proceeding with
exceptional or special circumstances which render a criminal prosecution
premature pending the promulgation of the administrative decision, no such
peculiar circumstances are present in this case.
Moreover, we take note of the action taken by the Patents Office and the
Minister of Trade and affirmed by the Intermediate Appellate Court in the
case of La Chemise Lacoste S. A. v. Ram Sadhwani  (AC-G.R. No. SP-
13356, June 17, 1983).
The same November 20, 1980 memorandum of the Minister of Trade
discussed in this decision was involved in the appellate court's decision. The
Minister as the "implementing authority" under Article 6bis of the Paris
Convention for the protection of Industrial Property instructed the Director of
Patents to reject applications for Philippine registration of signature and other
world famous trademarks by applicants other than its original owners or
users. The brand "Lacoste" was specifically cited together with Jordache,
Gloria Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar
dela Renta, Calvin Klein, Givenchy, Ralph Laurence, Geoffrey Beene,
Lanvin, and Ted Lapidus. The Director of Patents was likewise ordered to
require Philippine registrants of such trademarks to surrender their
certificates of registration. Compliance by the Director of Patents was
challenged.
The Intermediate Appellate Court, in the La Chemise Lacoste S.A. v.
Sadhwani  decision which we cite with approval sustained the power of the
Minister of Trade to issue the implementing memorandum and, after going
over the evidence in the records, affirmed the decision of the Director of
Patents declaring La Chemise Lacoste &A. the owner of the
Page 9 of 143
disputed  trademark and crocodile or alligator device. The Intermediate
Appellate Court speaking through Mr. Justice Vicente V. Mendoza stated:
In the case at bar, the Minister of Trade, as 'the competent authority of the
country of registration,' has found that among other well-known trademarks
'Lacoste' is the subject of conflicting claims. For this reason, applications for
its registration must be rejected or refused, pursuant to the treaty obligation
of the Philippines.
Apart from this finding, the annexes to the opposition, which La Chemise
Lacoste S.A. filed in the Patent Office, show that it is the owner of the
trademark 'Lacoste' and the device consisting of a representation of a
crocodile or alligator by the prior adoption and use of such mark and device
on clothing, sports apparel and the like. La Chemise Lacoste S.A, obtained
registration of these mark and device and was in fact issued renewal
certificates by the French National Industry Property Office.
Indeed, due process is a rule of reason. In the case at bar the order of the
Patent Office is based not only on the undisputed fact of ownership of the
trademark by the appellee but on a prior determination by the Minister of
Trade, as the competent authority under the Paris Convention, that the
trademark and device sought to be registered by the appellant are well-
known marks which the Philippines, as party to the Convention, is bound to
protect in favor of its owners. it would be to exalt form over substance to say
that under the circumstances, due process requires that a hearing should be
held before the application is acted upon.
The appellant cites section 9 of Republic Act No. 166, which requires notice
and hearing whenever an opposition to the registration of a trademark is
made. This provision does not apply, however, to situations covered by the
Paris Convention, where the appropriate authorities have determined that a
well-known trademark is already that of another person. In such cases, the
countries signatories to the Convention are obliged to refuse or to cancel the
registration of the mark by any other person or authority. In this case, it is not
disputed that the trademark Lacoste is such a well-known mark that a
hearing, such as that provided in Republic Act No. 166, would be
superfluous.
The issue of due process was raised and fully discussed in the appellate
court's decision. The court ruled that due process was not violated.
In the light of the foregoing it is quite plain that the prejudicial question
argument is without merit.
IPL- Assignment No. 6
We have carefully gone over the records of all the cases filed in this Court
and find more than enough evidence to sustain a finding that the petitioner is
the owner of the trademarks "LACOSTE", "CHEMISE LACOSTE", the
crocodile or alligator device, and the composite mark of LACOSTE and the
representation of the crocodile or alligator. Any pretensions of the private
respondent that he is the owner are absolutely without basis. Any further
ventilation of the issue of ownership before the Patent Office will be a
superfluity and a dilatory tactic.
The issue of whether or not the trademark used by the private respondent is
different from the petitioner's trade mark is a matter of defense and will be
better resolved in the criminal proceedings before a court of justice instead of
raising it as a preliminary matter in an administrative proceeding.
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. Modern 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, deceipt, 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).
The records show that the goodwill and reputation of the petitioner's products
bearing the trademark LACOSTE date back even before 1964 when
LACOSTE clothing apparels were first marketed in the Philippines. To allow
Hemandas to continue using the trademark Lacoste for the simple reason
that he was the first registrant in the Supplemental Register of a trademark
Page 10 of 143
used in international commerce and not belonging to him is to render
nugatory the very essence of the law on trademarks and tradenames.
We now proceed to the consideration of the petition in Gobindram
Hemandas Suianani u. Hon. Roberto V Ongpin, et al.  (G.R. No. 65659).
Actually, three other petitions involving the same trademark and device have
been filed with this Court.
In Hemandas & Co. v. Intermediate Appellate Court, et al. (G.R. No. 63504)
the petitioner asked for the following relief:
IN VIEW OF ALL THE FOREGOING, it is respectfully prayed (a) that the
Resolutions of the respondent Court of January 3, 1983 and February 24,
1983 be nullified; and that the Decision of the same respondent Court of
June 30, 1983 be declared to be the law on the matter; (b) that the Director of
Patents be directed to issue the corresponding registration certificate in the
Principal Register; and (c) granting upon the petitioner such other legal and
equitable remedies as are justified by the premises.
On December 5, 1983, we issued the following resolution:
Considering the allegations contained, issues raised and the arguments
adduced in the petition for review, the respondent's comment thereon, and
petitioner's reply to said comment, the Court Resolved to DENY the petition
for lack of merit.
The Court further Resolved to CALL the attention of the Philippine Patent
Office to the pendency in this Court of G.R. No. 563796-97 entitled 'La
Chemise Lacoste, S.A. v. Hon. Oscar C. Fernandez and Gobindram
Hemandas' which was given due course on June 14, 1983 and to the fact
that G.R. No. 63928-29 entitled 'Gobindram Hemandas v. La Chemise
Lacoste, S.A., et al.' filed on May 9, 1983 was dismissed for lack of merit on
September 12, 1983. Both petitions involve the same dispute over the use of
the trademark 'Chemise Lacoste'.
The second case of Gobindram Hemandas vs. La Chemise Lacoste, S.A., et
al. (G.R. No. 63928-29) prayed for the following:
I. On the petition for issuance of writ of preliminary injunction, an order be
issued after due hearing:
IPL- Assignment No. 6
l. Enjoining and restraining respondents Company, attorneys-in-fact, and
Estanislao Granados from further proceedings in the unfair competition
charges pending with the Ministry of Justice filed against petitioner;
2. Enjoining and restraining respondents Company and its attorneys-in-fact
from causing undue publication in newspapers of general circulation on their
unwarranted claim that petitioner's products are FAKE pending proceedings
hereof; and
3. Enjoining and restraining respondents Company and its attorneys-in-fact
from sending further threatening letters to petitioner's customers unjustly
stating that petitioner's products they are dealing in are FAKE and
threatening them with confiscation and seizure thereof.
II. On the main petition, judgment be rendered:
l. Awarding and granting the issuance of the Writ of Prohibition, prohibiting,
stopping, and restraining respondents from further committing the acts
complained of;
2. Awarding and granting the issuance of the Writ of Mandamus, ordering
and compelling respondents National Bureau of Investigation, its aforenamed
agents, and State Prosecutor Estanislao Granados to immediately comply
with the Order of the Regional Trial Court, National Capital Judicial Region,
Branch XLIX, Manila, dated April 22, 1983, which directs the immediate
return of the seized items under Search Warrants Nos. 83-128 and 83-129;
3. Making permanent any writ of injunction that may have been previously
issued by this Honorable Court in the petition at bar: and
4. Awarding such other and further relief as may be just and equitable in the
premises.
As earlier stated, this petition was dismissed for lack of merit on September
12, 1983. Acting on a motion for reconsideration, the Court on November 23,
1983 resolved to deny the motion for lack of merit and declared the denial to
be final.
Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659) is the third petition.
In this last petition, the petitioner prays for the setting aside as null and void
and for the prohibiting of the enforcement of the following memorandum of
respondent Minister Roberto Ongpin:
Page 11 of 143
MEMORANDUM:
FOR: THE DIRECTOR OF PATENTS
Philippine Patent Office
Pursuant to Executive Order No. 913 dated 7 October 1983 which
strengthens the rule-making and adjudicatory powers of the Minister of Trade
and Industry and provides inter alia, that 'such rule-making and adjudicatory
powers should be revitalized in order that the Minister of Trade and Industry
can ...apply more swift and effective solutions and remedies to old and new
problems ... such as the infringement of internationally-known tradenames
and trademarks ...'and in view of the decision of the Intermediate Appellate
Court in the case of LA CHEMISE LACOSTE, S.A., versus RAM
SADWHANI  [AC-G.R. Sp. No. 13359 (17) June 1983] which affirms the
validity of the MEMORANDUM of then Minister Luis R. Villafuerte dated 20
November 1980 confirming our obligations under the PARIS CONVENTION
FOR THE PROTECTION OF INDUSTRIAL PROPERTY to which the
Republic of the Philippines is a signatory, you are hereby directed to
implement measures necessary to effect compliance with our obligations
under said convention in general, and, more specifically, to honor our
commitment under Section 6 bis thereof, as follows:
1. Whether the trademark under consideration is well-known in the
Philippines or is a mark already belonging to a person entitled to the benefits
of the CONVENTION, this should be established, pursuant to Philippine
Patent Office procedures in inter partes and ex parte cases, according to any
of the following criteria or any combination thereof:
(a) a declaration by the Minister of Trade and Industry that' the trademark
being considered is already well-known in the Philippines such that
permission for its use by other than its original owner will constitute a
reproduction, imitation, translation or other infringement;
(b) that the trademark is used in commerce internationally, supported by
proof that goods bearing the trademark are sold on an international scale,
advertisements, the establishment of factories, sales offices, distributorships,
and the like, in different countries, including volume or other measure of
international trade and commerce;
(c) that the trademark is duly registered in the industrial property office(s) of
another country or countries, taking into consideration the dates of such
registration;
IPL- Assignment No. 6
(d) that the trademark has been long established and obtained goodwill and
general international consumer recognition as belonging to one owner or
source;
(e) that the trademark actually belongs to a party claiming ownership and has
the right to registration under the provisions of the aforestated PARIS
CONVENTION.
2. The word trademark, as used in this MEMORANDUM, shall include
tradenames, service marks, logos, signs, emblems, insignia or other similar
devices used for Identification and recognition by consumers.
3. The Philippine Patent Office shall refuse all applications for, or cancel the
registration of, trademarks which constitute a reproduction, translation or
imitation of a trademark owned by a person, natural or corporate, who is a
citizen of a country signatory to the PARIS CONVENTION FOR THE
PROTECTION OF INDUSTRIAL PROPERTY.
4. The Philippine Patent Office shall give due course to the Opposition in
cases already or hereafter filed against the registration of trademarks entitled
to protection of Section 6 bis of said PARIS CONVENTION as outlined
above, by remanding applications filed by one not entitled to such protection
for final disallowance by the Examination Division.
5. All pending applications for Philippine registration of signature and other
world famous trademarks filed by applicants other than their original owners
or users shall be rejected forthwith. Where such applicants have already
obtained registration contrary to the abovementioned PARIS CONVENTION
and/or Philippine Law, they shall be directed to surrender their Certificates of
Registration to the Philippine Patent Office for immediate cancellation
proceedings.
6. Consistent with the foregoing, you are hereby directed to expedite the
hearing and to decide without delay the following cases pending before your
Office:
1. INTER PARTES CASE NO. 1689-Petition filed by La Chemise Lacoste,
S.A. for the cancellation of Certificate of Registration No. SR-2225 issued to
Gobindram Hemandas, assignee of Hemandas and Company;
2. INTER PARTES CASE NO. 1658-Opposition filed by Games and
Garments Co. against the registration of the trademark Lacoste sought by La
Chemise Lacoste, S.A.;
Page 12 of 143
3. INTER PARTES CASE NO. 1786-Opposition filed by La Chemise Lacoste,
S.A. against the registration of trademark Crocodile Device and Skiva sought
by one Wilson Chua.

Considering our discussions in G.R. Nos. 63796-97, we find the petition in

G.R. No. 65659 to be patently without merit and accordingly deny it due
course.

In complying with the order to decide without delay the cases specified in the
memorandum, the Director of Patents shall limit himself to the ascertainment
of facts in issues not resolved by this decision and apply the law as
expounded by this Court to those facts.

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

WHEREFORE, the petition in G.R. NOS. 63797-97 is hereby GRANTED.

The order dated April 22, 1983 of the respondent regional trial court is
REVERSED and SET ASIDE. Our Temporary Restraining Order dated April
29, 1983 is ma(i.e. PERMANENT. The petition in G.R. NO. 65659 is DENIED
due course for lack of merit. Our Temporary Restraining Order dated
December 5, 1983 is LIFTED and SET ASIDE, effective immediately.

SO ORDERED.

IPL- Assignment No. 6 Page 13 of 143

[53] No. L-40163. June 19, 1982. plaintiff, founded in 1906 by Isidor Leviton, is the largest manufacturer of
electrical wiring devices in the United States under the trademark Leviton,
LEVITON INDUSTRIES, NENA DE LA CRUZ LIM, DOMINGO GO, and LIM which various electrical wiring devices bearing the trademark Leviton and
KIAT, petitioners, vs. HON. SERAFIN SALVADOR, and LEVITON trade name Leviton Manufacturing Co., Inc. had been exported to the
MANUFACTURING CO., INC., respondents. Philippines since 1954; that due to the superior quality and widespread use
of its products by the public, the same are well known to Filipino consumers
under the trade name Leviton Manufacturing Co., Inc. and trademark Leviton;
Corporation Law; Actions; Unfair Competition; Foreign Corporations;
that long subsequent to the use of plaintiff's trademark and trade name in the
Failure of a foreign corporation to allege essential facts under the Trademark Law
Philippines, defendants began manufacturing and selling electrical ballast,
regarding its capacity to sue before Philippine courts is fatal to its cause; Case at
fuse and oval buzzer under the trademark Leviton and trade name Leviton
bar.—All that is alleged in private respondent’s complaint is that it is a foreign
Industries Co.; that Domingo Go, partner and general manager of defendant
corporation. Such bare averment not only fails to comply with the requirements
partnership, had registered with the Philippine Patent Office the trademarks
imposed by the aforesaid Section 21-A but violates as well the directive of Section 4,
Leviton Label and Leviton with respect to ballast and fuse under Certificate of
Rule 8 of the Rules of Court that “facts showing the capacity of a party to sue or be
Registration Nos. SR-1132 and 15517, respectively, which registration was
sued or the authority of a party to sue or be sued in a representative capacity or the
contrary to paragraphs (d) and (e) of Section 4 of RA 166, as amended, and
legal existence of an organized association of persons that is made a party, must be
violative of plaintiff's right over the trademark Leviton; that defendants not
averred.” In the case at bar, private respondent has chosen to anchor its action under
only used the trademark Leviton but likewise copied the design used by
the Trademark Law of the Philippines, a law which, as pointed out, explicitly sets
plaintiff in distinguishing its trademark; and that the use thereof by
down the conditions precedent for the successful prosecution thereof. It is therefore
defendants of its products would cause confusion in the minds of the
incumbent upon private respondent to comply with these requirements or aver its
consumers and likely to deceive them as to the source of origin, thereby
exemption therefrom, if such be the case. It may be that private respondent has the
enabling defendants to pass off their products as those of plaintiff's. Invoking
right to sue before Philippine courts, but our rules on pleadings require that the
the provisions of Section 21-A of Republic Act No. 166, plaintiff prayed for
necessary qualifying circumstances which clothe it with such right be affirmatively
damages. It also sought the issuance of a writ of injunction to prohibit
pleaded.
defendants from using the trade name Leviton Industries, Co. and the
trademark Leviton.
ESCOLIN, J:
Defendants moved to dismiss the complaint for failure to state a cause of
Challenged in this petition for certiorari and prohibition is the order of the action, drawing attention to the plaintiff's failure to allege therein its capacity
respondent Judge Serafin Salvador in Civil Case No. C-2891 of the Court of to sue under Section 21-A of Republic Act No. 166, as amended. After the
First Instance of Rizal, sustaining the legal capacity of a foreign corporation filing of the plaintiff's opposition and the defendant's reply, the respondent
to maintain a suit for unfair competition under Section 21-A of Republic Act judge denied the motion on the ground that the same did not appear to be
No. 166, as amended, otherwise known as the Trademark Law. indubitable. On September 21, 1973, defendants filed their answer,
reiterating the ground supporting their motion to dismiss. Thereafter,
On April 17, 1973, private respondent Leviton Manufacturing Co., Inc. filed a defendants served upon plaintiff a request for admission under Rule 26 of the
complaint for unfair competition against petitioners Leviton Industries, Nena Rules of Court, of the following matters of fact, to wit:
de la Cruz Lim, Domingo Go and Lim Kiat before the Court of First Instance
of Rizal, Branch XXXIII, presided by respondent Judge Serafin Salvador. The (1) That the plaintiff is not actually manufacturing, selling and/or distributing
complaint substantially alleges that plaintiff is a foreign corporation organized ballasts generally used in flourescent lighting;
and existing under the laws of the State of New York, United States of
America, with office located at 236 Greenpoint Avenue, Brooklyn City, State
(2) That plaintiff has no registered trademark or trade name in the Philippine
of New York, U.S.A.; that defendant Leviton Industries is a partnership
Patent Office of any of its products; and
organized and existing under the laws of the Philippines with principal office
at 382 10th Avenue, Grace Park, Caloocan City; while defendants Nena de la
Cruz Lim, Domingo Go and Lim Kiat are the partners, with defendant
Domingo Go acting as General Manager of defendant Leviton Industries; that

IPL- Assignment No. 6 Page 14 of 143

(3) That plaintiff has no license to do business in the Philippines under and
by virtue of the provision of Act No. 1459, better known as the Philippine
Corporation Law, at the time it filed the complaint. 1
Complying with the said request, plaintiff admitted:
That it does not manufacture ballasts; that it has not registered its trademark
in the Philippine Patent Office, but has filed with the same office an
application of its trade mark on April 16, 1971; and that it has no license to do
business in the Philippines. 2
On the basis of these admissions, defendants filed an Urgent Supplemental
Motion to Dismiss. This was followed by the plaintiff's opposition, and the
defendant's rejoinder, after which respondent judge issued the questioned
order 3denying the motion, thus:
Acting on the Urgent Supplemental Motion to Dismiss, dated July 2, 1974,
filed by counsels for the defendants, as well as the oppositions thereto, the
Court after a careful consideration of the reasons adduced for and against
said motion, is of the opinion that the same should be, as it is hereby
DENIED.
SO ORDERED.
The motion for reconsideration having likewise been denied, defendants
instituted the instant petition for certiorari and prohibition, charging
respondent judge with grave abuse of discretion in denying their motion to
dismiss.
We agree with petitioners that respondent Leviton Marketing Co., Inc. had
failed to allege the essential facts bearing upon its capacity to sue before
Philippine courts. Private respondent's action is squarely founded on Section
21-A of Republic Act No. 166, as amended, which we quote:
Sec. 21-A. Any foreign corporation or juristic person to which a mark or
tradename has been registered or assigned under this Act may bring an
action hereunder for infringement, for unfair competition, or false designation
of origin and false description, whether or not it has been licensed to do
business in the Philippines under Act numbered Fourteen Hundred and Fifty-
Nine, as amended, otherwise known as the Corporation Law, at the time it
brings the complaint; Provided, That the country of which the said foreign
corporation or juristic person is a citizen, or in which it is domiciled, by treaty,
convention or law, grants a similar privilege to corporate or juristic persons of
the Philippines. (As amended by R.A. No. 638)
IPL- Assignment No. 6
Undoubtedly, the foregoing section grants to a foreign corporation, whether
or not licensed to do business in the Philippines, the right to seek redress for
unfair competition before Philippine courts. But the said law is not without
qualifications. Its literal tenor indicates as a condition sine qua non the
registration of the trade mark of the suing foreign corporation with the
Philippine Patent Office or, in the least, that it be an asignee of such
registered trademark. The said section further requires that the country, of
which the plaintiff foreign corporation or juristic person is a citizen or
domicilliary, grants to Filipino corporations or juristic entities the same
reciprocal treatment, either thru treaty, convention or law,
All that is alleged in private respondent's complaint is that it is a foreign
corporation. Such bare averment not only fails to comply with the
requirements imposed by the aforesaid Section 21-A but violates as well the
directive of Section 4, Rule 8 of the Rules of Court that "facts showing the
capacity of a party to sue or be sued or the authority of a party to sue or be
sued in a representative capacity or the legal existence of an organized
association of persons that is made a party, must be averred "
In the case at bar, private respondent has chosen to anchor its action under
the Trademark Law of the Philippines, a law which, as pointed out, explicitly
sets down the conditions precedent for the successful prosecution thereof. It
is therefore incumbent upon private respondent to comply with these
requirements or aver its exemption therefrom, if such be the case. It may be
that private respondent has the right to sue before Philippine courts, but our
rules on pleadings require that the necessary qualifying circumstances which
clothe it with such right be affirmatively pleaded. And the reason therefor, as
enunciated in "Atlantic Mutual Insurance Co., et al. versus Cebu Stevedoring
Co., Inc." 4 is that —
these are matters peculiarly within the knowledge of appellants alone, and it
would be unfair to impose upon appellees the burden of asserting and
proving the contrary. It is enough that foreign corporations are allowed by law
to seek redress in our courts under certain conditions: the interpretation of
the law should not go so far as to include, in effect, an inference that those
conditions had been met from the mere fact that the party sued is a foreign
corporation.
It was indeed in the light of this and other considerations that this Court has
seen fit to amend the former rule by requiring in the revised rules (Section 4,
Rule 8) that "facts showing the capacity of a party to sue or be sued or the
authority of a party to sue or be sued in a representative capacity or the legal
existence of an organized association of persons that is made a party, must
be averred,
Page 15 of 143
IN VIEW OF THE FOREGOING, the instant petition is hereby granted and,
accordingly, the order of the respondent judge dated September 27, 1974
denying petitioner's motion to dismiss is hereby set aside. The Court of First
Instance of Rizal (Caloocan City), the court of origin, is hereby restrained
from conducting further proceedings in Civil Case No. C-2891, except to
dismiss the same. No costs. SO ORDERED.
[54] No. L-75067. February 26, 1988. *
PUMA SPORTSCHUHFABRIKEN RUDOLF DASSLER, K G., petitioner,
vs. THE INTERMEDIATE APPELLATE COURT and MIL-ORO
MANUFACTURING CORPORATION, respondents.
Corporation Law; Trademarks and Tradenames; Action; A foreign
corporation not doing business in the Philippines needs no license to site before
Philippine courts for infringement of trademark and unfair competition.—In the
leading case of La Chemise Lacoste, S.A. v. Fernandez, (129 SCRA 373), we ruled:
"But even assuming the truth of the private respondent's allegation that the petitioner
failed to allege material facts in its petition relative to capacity to sue, the petitioner
may still maintain the present suit against respondent Hemandas. As early as 1927,
this Court was, and it still is, of the view that a foreign corporation not doing
business in the Philippines needs no license to sue before Philippine courts for
infringement of trademark and unfair competition, Thus, in Western Equipment and
Supply Co. v. Reyes (51 Phil. 115), this Court held that a foreign corporation which
has never done any business in the Philippines and which is unlicensed and
unregistered to do business here, but is widely and favorably known in the
Philippines through the use therein of its products bearing its corporate and
tradename, has a legal right to maintain an action in the Philippines to restrain the
residents and inhabitants thereof from organizing a corporation therein bearing the
same name as the foreign corporation, when it appears that they have personal
knowledge of the existence of such a foreign corporation, and it is apparent that the
purpose of the proposed domestic corporation is to deal and trade in the same goods
as those of the foreign corporation."
Same; Same; Adherence to the Paris Convention re-affirmed. —In the case
of Converse Rubber Corporation v. Universal Rubber Products, Inc. (147 SCRA
165). we likewise re-affirmed our adherence to the Paris Convention: "The ruling in
the aforecited case is in consonance with the Convention of the Union of Paris for
the Protection of Industrial Property to which the Philippines became a party on
September 27, 1965. Article 8 thereof provides that 'a trade name [corporation name]
shall be protected in all the countries of the Union without the obligation of filing or
registration, whether or not it forms part of the trademark.
Same; Same; Same; Object of the convention.—"The object of the
Convention is to accord a national of a member nation extensive protection 'against
IPL- Assignment No. 6
infringement and other types of unfair competition' [Vanity Fair Mills, Inc. v. T.
Eaton Co., 234 F. 2d 633]." (at p. 165)
Civil Procedure; Action; Lis Pendens; Other case pending must be a court
action.—Anent the issue of lis pendens as a ground for a motion to dismiss, the
petitioner submits that the relief prayed for in its civil action is different from the
relief sought in the Inter Partes cases. More important, however, is the fact that for lis
pendens to be a valid ground for the dismissal of a case, the other case pending
between the same parties and having the same cause must be a court action.
GUTIERREZ, JR., J.:
This is a petition for review by way of certiorari of the Court of Appeals'
decision which reversed the order of the Regional Trial Court and dismissed
the civil case filed by the petitioner on the grounds of litis pendentia  and lack
of legal capacity to sue.
On July 25, 1985, the petitioner, a foreign corporation duly organized and
existing under the laws of the Federal Republic of Germany and the
manufacturer and producer of "PUMA PRODUCTS," filed a complaint for
infringement of patent or trademark with a prayer for the issuance of a writ of
preliminary injunction against the private respondent before the Regional
Trial Court of Makati.
Prior to the filing of the said civil suit, three cases were pending before the
Philippine Patent Office, namely:
Inter Partes Case No. 1259 entitled 'PUMA SPORTSCHUHFABRIKEN v.
MIL-ORO MANUFACTURING CORPORATION, respondent-applicant which
is an opposition to the registration of petitioner's trademark 'PUMA and
DEVICE' in the PRINCIPAL REGISTER;
Inter Partes Case No. 1675 similarly entitled, 'PUMA
SPORTSCHUHFABRIKEN RUDOLF DASSLER, K.G., petitioner, versus
MIL-ORO MANUFACTURING CORPORATION, respondent-registrant,'
which is a case for the cancellation of the trademark registration of the
petitioner; and
Inter Partes Case No. 1945 also between the same parties this time the
petitioner praying for the cancellation of private respondent's Certificate of
Registration No. 26875 (pp. 40-41, 255, Rollo) (pp. 51 -52, Rollo)
On July 31, 1985, the trial court issued a temporary restraining order,
restraining the private respondent and the Director of Patents from using the
Page 16 of 143
trademark "PUMA' or any reproduction, counterfeit copy or colorable imitation
thereof, and to withdraw from the market all products bearing the same
trademark.
On August 9, 1985, the private respondent filed a motion to dismiss on the
grounds that the petitioners' complaint states no cause of action, petitioner
has no legal personality to sue, and litis pendentia.
On August 19, 1985, the trial court denied the motion to dismiss and at the
same time granted the petitioner's application for a writ of injunction. The
private respondents appealed to the Court of Appeals.
On June 23, 1986, the Court of Appeals reversed the order of the trial court
and ordered the respondent judge to dismiss the civil case filed by the
petitioner.
In reversing the order of the trial court, the Court of Appeals ruled that the
requisites of lis pendens as ground for the motion to dismiss have been met.
It said:
Obviously, the parties are Identical. They are the same protagonists. As to
the second requisite, which is Identity of rights and reliefs prayed for, both
sides maintain that they are the rightful owners of the trademark "PUMA" for
socks and belts such that both parties seek the cancellation of the trademark
of the other (see prayer in private respondent's complaint, pp, 54-55, Rollo,
Annex "A" to the Petition). Inevitably, in either the lower court or in the Patent
Office, there is a need to resolve the issue as to who is the rightful owner of
the TRADEMARK 'PUMA' for socks and belts.After all,the right to register a
trademark must be based on ownership thereof (Operators Inc. v. Director of
Patents, L-17910, Oct. 29,1965,15 SCRA 147). Ownership of the trademark
is an essential requisite to be proved by the applicant either in a cancellation
case or in a suit for infringement of trademark. The relief prayed for by the
parties in Inter Partes Cases Nos. 1259, 1675 and 1945 and Civil Case No.
11189 before respondent court seek for the cancellation of usurper's
trademark, and the right of the legal owner to have exclusive use of said
trademark. From the totality of the obtaining circumstances, the rights of the
respective parties are dependent upon the resolution of a single issue, that
is, the rightful ownership of the trademark in question. The second requisite
needed to justify a motion to dismiss based on lis pendens is present.
As to the third requisite, the decisions and orders of administrative agencies
rendered pursuant to their quasi-judicial authority have upon their finality the
character of res judicata (Brilliantes v. Castro, 99 Phil. 497). The rule which
forbids the re-opening of a matter once judicially determined by competent
authority applies as well to judicial acts of public executive and administrative
IPL- Assignment No. 6
officers and boards acting within their jurisdiction as to the judgments of
Courts having general judicial powers (Brilliantes vs. Castro, supra). It may
be recalled that the resolution and determination of the issue on ownership
are both within the jurisdiction of the Director of Patents and the Regional
Trial Court (Sec 25, RA 166). It would thus be confusing for two (2) different
forums to hear the same case and resolve a main and determinative issue
with both forums risking the possibility of arriving at different conclusions. In
the construction of laws and statutes regarding jurisdiction, one must
interpret them in a complementary manner for it is presumed that the
legislature does not intend any absurdity in the laws it makes (Statutory
Construction, Martin, p. 133). Ms is precisely the reason why both decisions
of the Director of Patents and Regional Trial Court are appealable to the
Intermediate Appellate Court (Sec. 9, BP 129), as both are co-equal in rank
regarding the cases that may fall within their jurisdiction.
The record reveals that on March 31, 1986, the Philippine Patent Office
rendered a decision in Inter Partes Cases Nos. 1259 and 1675 whereby it
concluded that petitioner is the prior and actual adaptor of the trademark
'PUMA and DEVICE used on sports socks and belts, and that MIL-ORO
CORPORATION is the rightful owner thereof. ... (pp. 6-7, CA — decision, pp.
51-52, Rollo)
With regard to the petitioner's legal capacity to sue, the Court of Appeals
likewise held that it had no such capacity because it failed to allege
reciprocity in its complaint:
As to private respondent's having no legal personality to sue, the record
discloses that private respondent was suing under Sec. 21-A of Republic Act
No. 166, as amended (p. 50, Annex "A", Petition). This is the exception to the
general rule that a foreign corporation doing business in the Philippines must
secure a license to do business before said foreign corporation could
maintain a court or administrative suit (Sec. 133, Corporation Code, in
relation to Sec. 21-A, RA 638, as amended). However, there are some
conditions which must be met before that exception could be made to apply,
namely: (a) the trademark of the suing corporation must be registered in the
Philippines, or that it be the assignee thereof: and (b) that there exists a
reciprocal treatment to Philippine Corporations either by law or convention by
the country of origin of the foreign corporation (Sec. 21-A Trademark Law).
Petitioner recognizes that private respondent is the holder of several
certificates of registration, otherwise, the former would not have instituted
cancellation proceedings in the Patent's Office. Petitioner actually zeroes on
the second requisite provided by Section 21-A of the Trademark Law which is
the private respondent's failure to allege reciprocity in the complaint. ...
Citing the case of Leviton Industries v. Salvador (114 SCRA 420), it further
ruled:
Page 17 of 143
Failure to allege reciprocity, it being an essential fact under the trademark
law regarding its capacity to sue before the Philippine courts, is fatal to the
foreign corporations' cause. The Concurring Opinion of Chief Justice Aquino
on the same case is more emphatic when he said:
Respondent Leviton Manufacturing Co. Inc., alleged in par. 2 of its complaint
for unfair competition that its action 'is being filed under the provisions of
Section 21-A of Republic Act No. 166, as amended.' Respondent is bound by
the allegation in its complaint. It cannot sue under Section 21-A because it
has not complied with the requirements hereof that (1) its trademark Leviton
has been registered with the Patent Office and (2) that it should show that the
State of New York grants to Philippine Corporations the privilege to bring an
action for unfair competition in that state. Respondent 'Leviton has to comply
with those requirements before it can be allowed to maintain an action for
unfair competition. (p. 9, CA — decision). (p. 55, Rollo).
The Court of Appeals further ruled that in issuing the writ of preliminary
injunction, the trial court committed grave abuse of discretion because it
deprived the private respondent of its day in court as the latter was not given
the chance to present its counter-evidence.
In this petition for review, the petitioner contends that the Court of appeals
erred in holding that: (1) it had no legal capacity to sue; (2) the doctrine of lis
pendens is applicable as a ground for dismissing the case and (3) the writ of
injunction was improperly issued.
Petitioner maintains that it has substantially complied with the requirements
of Section 21-A of Republic Act R.A. No. 166, as amended. According to the
petitioner, its complaint specifically alleged that it is not doing business in the
Philippines and is suing under the said Repulbic Act; that Section 21-A
thereof provides that "the country of which the said corporation or juristic
person is a citizen, or in which it is domiciled, by treaty, convention or law,
grants a similar privilege to corporate or juristic persons of the Philippines"
but does not mandatorily require that such reciprocity between the Federal
Republic of Germany and the Philippines be pleaded; that such reciprocity
arrangement is embodied in and supplied by the Union Convention for the
Protection of Industrial Property Paris Convention) to which both the
Philippines and Federal Republic of Germany are signatories and that since
the Paris 'Convention is a treaty which, pursuant to our Constitution, forms
part of the law of the land, our courts are bound to take judicial notice of such
treaty, and, consequently, this fact need not be averred in the complaint.
We agree.
IPL- Assignment No. 6
In the leading case of La Chemise Lacoste, S.A .v. Fernandez, (129 SCRA
373), we ruled:
But even assuming the truth of the private respondents allegation that the
petitioner failed to allege material facto in its petition relative to capacity to
sue, the petitioner may still maintain the present suit against respondent
Hernandes. As early as 1927, this Court was, and it still is, of the view that a
foreign corporation not doing business in the Philippines needs no license to
sue before Philippine courts for infringement of trademark and unfair
competition. Thus, in Western Equipment and Supply Co. v. Reyes (51 Phil.
11 5), this Court held that a foreign corporation which has never done any
business in the Philippines and which is unlicensed and unregistered to do
business here, but is widely and favorably known in the Philippines through
the use therein of its products bearing its corporate and tradename, has a
legal right to maintain an action in the Philippines to restrain the residents
and inhabitants thereof from organizing a corporation therein bearing the
same name as the foreign corporation, when it appears that they have
personal knowledge of the existence of such a foreign corporation, and it is
apparent that the purpose of the proposed domestic corporation is to deal
and trade in the same goods as those of the foreign corporation.
Quoting the Paris Convention and the case of Vanity Fair Mills, Inc. v. T.
Eaton, Co. (234 F. 2d 633), this Court further said:
By the same token, the petitioner should be given the same treatment in the
Philippines as we make available to our own citizens. We are obligated to
assure to nationals of 'countries of the Union' an effective protection against
unfair competition in the same way that they are obligated to similarly protect
Filipino citizens and firms.
Pursuant to this obligation, the Ministry of Trade on November 20,1980
issued a memorandum addressed to the Director of the Patents Office
directing the latter --
xxx xxx xxx
... [T]o reject all pending applications for Philippine registration of signature
and other world famous trademarks by applicants other than its original
owners or users.
The conflicting claims over internationally known trademarks involve such
name brands as Lacoste, Jordache, Gloria Vanderbilt, Sasson, Fila, Pierre
Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein, Givenchy,
Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.
Page 18 of 143
It is further directed that, in cases where warranted, Philippine registrants of
such trademarks should be asked to surrender their certificates of
registration, if any, to avoid suits for damages and other legal action by the
trademarks' foreign or local owners or original users.
The memorandum is a clear manifestation of our avowed adherence to a
policy of cooperation and amity with an nations. It is not, as wrongly alleged
by the private respondent, a personal policy of Minister Luis Villafuerte which
expires once he leaves the Ministry of trade. For a treaty or convention is not
a mere moral obligation to be enforced or not at the whims of an incumbent
head of a Ministry. It creates a legally binding obligation on the parties
founded on the generally accepted principle of international law of pacta sunt
servanda which has been adopted as part of the law of our land.
(Constitution, Art. II, Sec. 3). The memorandum reminds the Director of
Patents of his legal duty to obey both law and treaty. It must also be obeyed.
(at pp. 389-390, La Chemise Lacoste, S.A. v. Fernandez, supra).
In the case of of Cerverse Rubber Corporation V. Universal Rubber
Products, Inc. (174 SCRA 165), we likewise re-aafirmed our adherence to
the Paris Convention:
The ruling in the aforecited case is in consonance with the Convention of
Converse Rubber Corporation v. Universal Rubber Products, Inc. (I 47 SCRA
165),  we likewise re-affirmed our adherence to the Paris Convention: the
Union of Paris for the Protection of Industrial Property to which the
Philippines became a party on September 27, 1965. Article 8 thereof
provides that 'a trade name [corporation name] shall be protected in all the
countries of the Union without the obligation of filing or registration, whether
or not it forms part of the trademark.'
The object of the Convention is to accord a national of a member nation
extensive protection 'against infringement and other types of unfair
competition [Vanity Fair Mills, Inc. v. T. Eaton Co., 234 F. 2d 633]." (at p.
165)
The mandate of the aforementioned Convention finds implementation in
Section 37 of RA No. 166, otherwise known as the trademark Law:
Rights of Foreign Registrants. — Persons who are nationals of, domiciled in,
or have a bona fide or effective business or commercial establishment in any
foreign country, which is a party to an international convention or treaty
relating to marks or tradenames on the represssion of unfair competition to
which the Philippines may be party, shall be entitled to the benefits and
subject to the provisions of this Act ...
IPL- Assignment No. 6
Tradenames of persons described in the first paragraph of this section shall
be protected without the obligation of filing or registration whether or not they
form part of marks.
We, therefore, hold that the petitioner had the legal capacity to file the action
below.
Anent the issue of lis pendens as a ground for a motion to dismiss, the
petitioner submits that the relief prayed for in its civil action is different from
the relief sought in the Inter Partes cases. More important, however, is the
fact that forlis pendens  to be a valid ground for the dismissal of a case, the
other case pending between the same parties and having the same cause
must be a court action. As we have held in Solancho v. Ramos  (19 SCRA
848):
As noted above, the defendants contend that the pendency of an
administrative between themselves and the plaintiff before the Bureau of
Lands is a sufficient ground to dismiss the action. On the other hand, the
plaintiff, believing that this ground as interposed by the defendants is a
sufficient ground for the dismissal of his complaint, filed a motion to withdraw
his free patent application No. 16649.
This is not what is contemplated under the law because under section 1(d),
Rule 16 (formerly Rule 8) of the Rules of Court, one of the grounds for the
dismissal of an action is that "there is another action pending between the
same parties for the same cause." Note that the Rule uses the phrase
another action. This phrase should be construed in line with Section 1 of Rule
2, which defines the word action, thus--
Action means an ordinary suit in a court of justice by which one party
prosecutes another for the enforcement or protection of alright, or the
prevention or redress of a wrong. Every other remedy is a special
proceeding.
It is,therefore,very clear that the Bureau of Land is not covered under the
aforementioned provisions of the Rules of Court. (at p. 851)
Thus, the Court of Appeals likewise erred in holding that the requisites of lis
pendens were present so as to justify the dismissal of the case below.
As regards the propriety of the issuance of the writ of preliminary injunuction,
the records show that herein private respondent was given the opportunity to
present its counter-evidence against the issuance thereof but it intentionally
refused to do so to be consistent with its theory that the civil case should be
dismissed in the first place.
Page 19 of 143
Considering the fact that "PUMA" is an internationally known brand name, it
is pertinent to reiterate the directive to lower courts, which equally applies to
administrative agencies, found in La Chemise Lacoste, S.A. v. Fernandez,
supra):

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

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

SO ORDERED.

IPL- Assignment No. 6 Page 20 of 143

[55] No. L-18289. March 31, 1964
ANDRES ROMERO, petitioner, vs. MAIDEN FORM BRASSIERE CO.,
INC., and THE DIRECTOR OF PATENTS, respondents.
Trademarks; Registrability; "Adagio" as a musical term, not a common
descriptive name for brassieres.—The trademark "Adagio" is a musical term, which
means slowly or in an easy manner, and when applied to brassieres is used in an
arbitrary (fanciful) sense, not being a common descriptive name of a particular style
of brassieres, and is therefore registrable.
Same; Same; Long continuous use of trademark does not render it
descriptive of a product.—A company's long and continuous use of a trademark does
not by itself render it merely descriptive of the product.
Same; Same; Using trademark for one type of the product does not affect its
validity as a trademark.—Where a product is usually of different types or styles and
the manufacturer has used different trademarks for every type as shown by its labels,
the mere fact that said manufacturer uses a trademark, like "Adagio", for one type or
style, does not affect the validity of such word as a trademark.
Same; Abandonment; Temporary non-use occasioned by government
restrictions not deemed abandonment.—Temporary nonuse of a trademark
occasioned by government restrictions. not being permanent, intentional and
voluntary, does not affect the right to a trademark.
Same; Foreign trademarks; May be availed of in the Philippines despite
lack of actual use only when the Philippines is a party to a trademark treaty.—
Section 37 of Republic Act No. 166 can be availed of only where the Philippines is a
party to an international convention or treaty relating to trademarks, in which case
the trademark sought to be registered need not be in use in the Philippines.
BARRERA, J.:
From the decision of the Director of Patents (of January 17, 1961) dismissing
his petition for cancellation of the registration of the trademark "Adagio" for
brassieres manufactured by respondent Maiden Form Brassiere Co., Inc.,
petitioner Andres Romero, interposed this appeal.
On February 12, 1957, respondent company, a foreign corporation, filed with
respondent Director of Patents an application for registration (pursuant to
Republic Act No. 166) of the trademark "Adagio" for the brassieres
manufactured by it. In its application, respondent company alleged that said
IPL- Assignment No. 6
trademark was first used by it in the United States on October 26, 1937, and
in the Philippines on August 31, 1946; that it had been continuously used by
it in trade in, or with the Philippines for over 10 years; that said trademark "is
on the date of this application, actually used by respondent company on the
following goods, classified according to the official classification of goods
(Rule 82) - Brassieres, Class 40"; and that said trademark is applied or
affixed by respondent to the goods by placing thereon a woven label on
which the trademark is shown.
Acting on said application, respondent Director, on August 13, 1957,
approved for publication in the Official Gazette said trademark of respondent
company, in accordance with Section 7 of Republic Act No. 166 (Trademark
Law), having found, inter alia, that said trademark is "a fanciful and arbitrary
use of a foreign word adopted by applicant as a trademark for its product;
that it is neither a surname nor a geographical term, nor any that comes
within the purview of Section 4 of Republic Act No. 166; and that the mark as
used by respondent company convincingly shows that it identifies and
distinguishes respondent company's goods from others."
On October 17, 1957, respondent Director issued to respondent company a
certificate of registration of with, trademark "Adagio".
On February 26, 1958, petitioner filed with respondent Director a petition for
cancellation of said trademark, on the grounds that it is a common descriptive
name of an article or substance on which the patent has expired; that its
registration was obtained fraudulently or contrary to the provisions of Section
4, Chapter II of Republic Act No. 166; and that the application for its
registration was not filed in accordance with the provisions of Section 37,
Chapter XI of the same Act. Petitioner also alleged that said trademark has
not become distinctive of respondent company's goods or business; that it
has been used by respondent company to classify the goods (the brassieres)
manufactured by it, in the same manner as petitioner uses the same; that
said trademark has been used by petitioner for almost 6 years; that it has
become a common descriptive name; and that it is not registered in
accordance with the requirements of Section 37(a), Chapter XI of Republic
Act No. 166.
Issues having been joined, the case was heard and, after hearing,
respondent Director (on January 17, 1961) rendered the decision above
adverted to.
Petitioner filed a motion for reconsideration of said decision, on the grounds
that (1) it is contrary to the evidence, and (2) it is contrary to law. Said motion
was denied by respondent Director by resolution of March 7, 1961.
Page 21 of 143
Hence, this appeal.
Appellant claims that the trademark "Adagio" has become a common
descriptive name of a particular style of brassiere and is, therefore,
unregistrable. It is urged that said trademark had been used by local
brassiere manufacturers since 1948, without objection on the part of
respondent company.
This claim is without basis in fact. The evidence shows that the trademark
"Adagio" is a musical term, which means slowly or in an easy manner, and
was used as a trademark by the owners thereof (the Rosenthals of Maiden
Form Co., New York) because they are musically inclined. Being a musical
term, it is used in an arbitrary (fanciful) sense as a trademark for brassieres
manufactured by respondent company. It also appears that respondent
company has, likewise, adopted other musical terms such as "Etude" (Exh.
W-2), "Chansonette" (Exh. W-3), "Prelude" (Exh. W-4), "Over-ture" (Exh. W-
6), and "Concerto" (Exh. V), to identify, as a trademark, the different styles or
types of its brassieres. As respondent Director pointed out, "the fact that said
mark is used also to designate a particular style of brassiere, does not affect
its registrability as a trademark" (Kiekhaefer Corp. v. Willys-Overland Motors,
Inc., 111 USPQ 105).1äwphï1.ñët
It is not true that respondent company did not object to the use of said
trademark by petitioner and other local brassiere manufacturers. The records
show that respondent company's agent, Mr. Schwartz, warned the Valleson
Department Store to desist from the sale of the "Adagio" Royal Form
brassieres manufactured by petitioner (t.s.n., pp. 27-28, Oct. 7, 1958), and
even placed an advertisement (Exhs. 3 & 4) in the local newspapers (Manila
Daily Bulletin, Manila Times, Fookien Times, and others) warning the public
against unlawful use of said trademark (t.s.n., p. 15, Aug. 17, 1959). The
advertisement (Exh. U) in the Manila Times made by respondent company
on February 9, 1958, was brought to petitioner's attention (t.s.n., p. 24, Oct.
7, 1958), which must have prompted him to file this present petition for
cancellation, on February 26, 1958.
On the other hand, respondent company's long and continuous use of the
trademark "Adagio" has not rendered it merely descriptive of the product. In
Winthrop Chemical Co. v. Blackman (268 NYS 653), it was held that
widespread dissemination does not justify the defendants in the use of the
trademark.
Veronal has been widely sold in this country by the plaintiff; over 5,250,000
packages have been sold since 1919. This is a consequence of the long and
continued use by the plaintiff of this trademark and is the result of its efforts
to inform the profession and the public of its product. This widespread
IPL- Assignment No. 6
dissemination does not justify the defendants in the use of this trademark. If
this argument were sound, then every time a plaintiff obtained the result of
having the public purchase its article, that fact of itself would destroy a
trademark. Arbitrary trademarks cannot become generic in this way. Jacobs
v. Beecham, 221 U.S. 263, 31 S. Ct. 555, 55 L. Ed. 729; Coca-Cola Co. v.
Koke Co. of American, 254 U.S. 143, 41 S. Ct. 113, 65 L. Ed. 189. (emphasis
supplied.)
Appellant next contends that the trademark "Adagio at the time it was
registered (in the Philippines) on October 17, 1957, had long been used by
respondent company, only "to designate a particular style or quality of
brassiere and, therefore, is unregistrable as a trademark. In support of the
contention, he alleges that the sentence "Maidenform bras are packaged for
your quick shopping convenience. For other popular Maidenform styles writ
for free style booklet to: Maiden Form Brassiere Co., Inc 200 Madison
Avenue, New York 16, N.Y." printed on the package (Exh. W), shows that the
trademark "Adagio" is used to designate a particular style or quality of
brassiere. He also cites portions of the testimonies of his witnesses Bautista
and Barro, to the effect that said trademark refers to the style of brassieres
sold in the stores of which they are salesmen.
This contention is untenable. Said sentence appearing on the package (Exh.
W), standing alone, does not conclusively indicate that the trademark
"Adagio" is merely a style of brassiere. The testimony of Mr. Schwartz,
witness of respondent company, belies petitioner's claim:
Q. There is a statement at the bottom of Exhibit W which reads, 'There is a
Maidenform for every type of figure'. As you stated you are very familiar with
these bras manufacture by Maidenform Brassiere Company, what are these
types of figures this Exhibit W refer to?
A. This is a product sold primarily in the United States they have cold climate
there, and a style to suit the climate and we have different here. This kind of
bra very seldom comes here. This type is very expensive and sold primarily
in the United States. We do not sell it here; it is very expensive an import
restrictions do not allow our dollar allocations for such sort.
As to the testimonies of Bautista and Barro, they are me conclusions of said
witnesses. Note that when Bautista was asked why he considered the
trademark "Adagio" as a style, he replied that the brand "Adagio" is attached
distinguish the style. He stated as follows:
Q. You said that those bras mentioned by you such as Adagio, Prelude,
Alloette, are styles, will you please tell us the reason why you said that those
are styles?
Page 22 of 143
A. You know his brand like Adagio, Alloette are just attached to the bras just
to distinguish the style: It is not the main brand.
Barro, on the other hand, said that "Adagio" is a mark. She declared as
follows:
Q. You state that you used to sell brassieres in the store in which you work;
when customers come to your store and ask for brassieres, what do they
usually ask from you?
A. Well, I tell you there are so many types and certain types of people ask for
certain brassiere. There are people who ask for Royal Form Adagio and
there are others who ask for Duchess Ideal Form, and so many kinds of
marks.
Brassieres are usually of different types or styles, and appellee has used
different trademarks for every type as shown by its labels, Exhibits W-2
(Etude), W-3 (Chansonette), W-4 (Prelude), W-5 (Maidenette), and W-6,
(Overture). The mere fact that appellee uses "Adagio" for one type or style,
does not affect the validity of such word as a trademark. In. the case of
Kiekhaefer Corp. v. Willys-Overland Motors, 111 USPQ 105, it was held that
the fact that the word "Hurricane" was used to designate only one model of
automobile, did not affect the validity of that word as a trademark. In
Minnesota Mining Co. V. Motloid Co., 74 USPQ 235, the applicant sought to
register the letters "MM" in diagonal relationship within a circle. Applicant
admitted that this mark was used only for its medium price and medium
quality denture-base materials. The Assistant Commissioner of Patents held:
It clearly appears, however, that the mark serves to indicate origin of
applicant's goods; and the fact that it is used on only one of several types or
grades does not affect its registrability as a trade mark.
Appellant also claims that respondent Director erred in registering the
trademark in question, despite appellee's non-compliance with Section 37,
paragraphs 1 and 4 (a) of Republic Act No. 166.
This contention flows from a misconception of the application for registration
of trademark of respondent. As we see it, respondent's application was filed
under the provisions of Section 2 of Republic Act No. 166 as amended by
Section 1 of Republic Act 865 which reads as follows:
"SEC. 2. What are registrable — Trademarks, ... own by persons,
corporations, partnerships or associations domiciled ... in any foreign country
may be registered in accordance with the provisions of this Act: Provided,
That said trademarks, trade-names, or service marks are actually in use in
IPL- Assignment No. 6
commerce and services not less than two months in the Philippines before
the time the applications for registration are filed: ..."
Section 37 of Republic Act No. 166 can be availed of only where the
Philippines is a party to an international convention or treaty relating to
trademarks, in which the trade-mark sought to be registered need not be use
in the Philippines. The applicability of Section 37 has been commented on by
the Director of Patents, in this wise:
Trademark rights in the Philippines, without actual use the trademark in this
country can, of course, be created artificially by means of a treaty or
convention with another country or countries. Section 37 of the present
Philippine Trademark Law, Republic Act No. 166 (incorporated as Rule 82 in
the Rules of Practice for Registration of Trademarks) envisions the eventual
entrance of the Philippines into such convention treaty. It is provided in said
section that applications filed thereunder need not allege use in the
Philippines of the trade mark sought to be registered. The Philippines has,
however not yet entered into any such treaty or convention and, until she
does, actual use in the Philippines of the trademark sought to be registered
and allegation in the application of such fact, will be required in all
applications for original or renewal registration submitted to the Philippine
Patent Office. (Circular Release No. 8.)
Appellant, likewise, contends that the registration the trademark in question
was fraudulent or contrary Section 4 of Republic Act No. 166. There is no
evidence to show that the registration of the trademark "Adagio" was
obtained fraudulently by appellee. The evidence record shows, on the other
hand, that the trademark "Adagio" was first exclusively in the Philippines by a
appellee in the year 1932. There being no evidence of use of the mark by
others before 1932, or that appellee abandoned use thereof, the registration
of the mark was made in accordance with the Trademark Law. Granting that
appellant used the mark when appellee stopped using it during the period of
time that the Government imposed restrictions on importation of respondent's
brassiere bearing the trademark, such temporary non-use did not affect the
rights of appellee because it was occasioned by government restrictions and
was not permanent, intentional, and voluntary.
To work an abandonment, the disuse must be permanent and not ephemeral;
it must be intentional and voluntary, and not involuntary or even compulsory.
There must be a thorough-going discontinuance of any trade-mark use of the
mark in question (Callman, Unfair Competition and Trademark, 2nd Ed., p.
1341).
The use of the trademark by other manufacturers did not indicate an intention
on the part of appellee to abandon it.
Page 23 of 143
"The instances of the use by others of the term 'Budweiser, cited by the
defendant, fail, even when liberally construed, to indicate an intention upon
the part of the complainant to abandon its rights to that name. 'To establish
the defense of abandonment, it is necessary to show not only acts indicating
a practical abandonment, but an actual intention to abandon. Saxlehner v.
Eisener & Mendelson Co., 179 U.S. 19, 21 S. Ct. 7 (45 L. Ed. 60).
(Anheuser-Busch, Inc. v. Budweiser Malt Products Corp., 287 F. 245.)

Appellant next argues that respondent Director erred in declaring illegal the
appropriation in the Philippines of the trademark in question by appellant
and, therefore, said appropriation did not affect appellee's right thereto and
the subsequent registration thereof. Appellant urges that its appropriation of
the trademark in question cannot be considered illegal under Philippine laws,
because of non-compliance by appellee of Section 37 of Republic Act No.
166. But we have already shown that Section 37 is not the provision invoked
by respondent because the Philippines is not as yet a party to any
international convention or treaty relating to trademarks. The case of United
Drug Co. v. Rectanus, 248 U.S. 90, 39 S. Ct. 48, 63 L. Ed. 141, cited by
appellant, is not applicable to the present case, as the records show that
appellee was the first user of the trademark in the Philippines, whereas
appellant was the later user. Granting that appellant used the trade-mark at
the time appellee stopped using it due to government restrictions on certain
importations, such fact did not, as heretofore stated, constitute abandonment
of the trademark as to entitle anyone to its free use.

Non-use because of legal restrictions is not evidence of an intent to abandon.

Non-use of their ancient trade-mark and the adoption of new marks by the
Carthusian Monks after they had been compelled to leave France was
consistent with an intention to retain their right to use their old mark.
Abandonment will not be inferred from a disuse over a period of years
occasioned by statutory restrictions on the name of liquor. (Nims Unfair
Competition and Trade-Mark p. 1269.)

IN VIEW OF ALL THE FOREGOING, we are of the opinion and so hold, that
respondent Director of Patents did not err in dismissing the present petition
for cancellation of the registered trademark of appellee company, and the
decision appealed from is therefore hereby affirmed, with costs against the
appellant. So ordered.

IPL- Assignment No. 6 Page 24 of 143

[56] G.R. No. 111580. June 21, 2001.
SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT LTD, SHANGRI-
LA PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL AND RESORT,
INC. and KUOK PHILIPPINE PROPERTIES, INC, petitioners, vs. THE
COURT OF APPEALS, HON. FELIX M. DE GUZMAN, as Judge, RTC of
Quezon City, Branch 99 and DEVELOPERS GROUP OF COMPANIES,
INC, respondents.
Trademarks and Tradenames; Infringement; Actions; The earlier institution
of an Inter Partes case for the cancellation of a registered service mark and
device/logo with the Bureau of Patents, Trademarks and Technology Transfer
(BPTTT) cannot effectively bar the subsequent filing of an infringement case by the
registrant.—Hence, as applied in the case at bar, the earlier institution of an Inter
Partes case by the Shangri-La Group for the cancellation of the “Shangri-La” mark
and “S” device/logo with the BPTTT cannot effectively bar the subsequent filing of
an infringement case by registrant Developers Group. The law and the rules are
explicit. The rationale is plain: Certificate of Registration No. 31904, upon which the
infringement case is based, remains valid and subsisting for as long as it has not been
cancelled by the Bureau or by an infringement court. As such, Developers Group’s
Certificate of Registration in the principal register continues as “prima facie evidence
of the validity of the registration, the registrant’s ownership of the mark or
tradename, and of the registrant’s exclusive right to use the same in connection with
the goods, business or services specified in the certificate.” Since the certificate still
subsists, Developers Group may thus file a corresponding infringement suit and
recover damages from any person who infringes upon the former’s rights.
Same; Same; Same; In the same light that the infringement case can and
should proceed independently from the cancellation case with the Bureau so as to
afford the owner of certificates of registration redress and injunctive reliefs, so must
the cancellation case with the BPTTT (now the Bureau of Legal Affairs, Intellectual
Property Office) continue independently from the infringement case so as to
determine whether a registered mark may ultimately be cancelled.—Following both
law and the jurisprudence enunciated in Conrad and Company, Inc. v. Court of
Appeals, the infringement case can and should proceed independently from the
cancellation case with the Bureau so as to afford the owner of certificates of
registration redress and injunctive writs. In the same light, so must the cancellation
case with the BPTTT (now the Bureau of Legal Affairs, Intellectual Property Office)
continue independently from the infringement case so as to determine whether a
registered mark may ultimately be cancelled. However, the Regional Trial Court, in
granting redress in favor of Developers Group, went further and upheld the validity
and preference of the latter’s registration over that of the Shangri-La Group.
IPL- Assignment No. 6
Same; Same; Same; With the decision of the Regional Trial Court
upholding the validity of the registration of the service mark “Shangri-La” and “S”
logo in the name of Developers Group, the cancellation case filed with the Bureau
becomes moot.—With the decision of the Regional Trial Court upholding the validity
of the registration of the service mark “Shangri-La” and “S” logo in the name of
Developers Group, the cancellation case filed with the Bureau hence becomes moot.
To allow the Bureau to proceed with the cancellation case would lead to a possible
result contradictory to that which the Regional Trial Court has rendered, albeit the
same is still on appeal. Such a situation is certainly not in accord with the orderly
administration of justice. In any event, the Court of Appeals has the competence and
jurisdiction to resolve the merits of the said RTC decision.
Same; Same; Same; To provide a judicious resolution of the issues, the
Court finds it apropos to order the suspension of the proceedings before the Bureau
pending final determination of the infringement case, where the issue of the validity
of the registration of the subject trademark and logo in the name of Developers
Group was passed upon.—We are not unmindful of the fact that in G.R. No. 114802,
the only issue submitted for resolution is the correctness of the Court of Appeals’
decision sustaining the BPTTPs denial of the motion to suspend the proceedings
before it. Yet, to provide a judicious resolution of the issues at hand, we find it
apropos to order the suspension of the proceedings before the Bureau pending final
determination of the infringement case, where the issue of the validity of the regis
tration of the subject trademark and logo in the name of Developers Group was
passed upon.
YNARES-SANTIAGO, J.:
On June 21, 1988, the Shangri-La International Hotel Management, Ltd.,
Shangri-La Properties, Inc., Makati Shangri-La Hotel and Resort, Inc. and
Kuok Philippine Properties, Inc. (hereinafter collectively referred as the
"Shangri-La Group"), filed with the Bureau of Patents, Trademarks and
Technology Transfer (BPTTT) a petition, docketed as Inter Partes Case No.
3145, praying for the cancellation of the registration of the "Shangri-La" mark
and "S" device/logo issued to the Developers Group of Companies, Inc., on
the ground that the same was illegally and fraudulently obtained and
appropriated for the latter's restaurant business. The Shangri-La Group
alleged that it is the legal and beneficial owners of the subject mark and logo;
that it has been using the said mark and logo for its corporate affairs and
business since March 1962 and caused the same to be specially designed
for their international hotels in 1975, much earlier than the alleged first use
thereof by the Developers Group in 1982.
Likewise, the Shangri-La Group filed with the BPTTT its own application for
registration of the subject mark and logo. The Developers Group filed an
Page 25 of 143
opposition to the application, which was docketed as Inter Partes Case No.
3529.
Almost three (3) years later, or on April 15, 1991, the Developers Group
instituted with the Regional Trial Court of Quezon City, Branch 99, a
complaint for infringement and damages with prayer for injunction, docketed
as Civil Case No. Q-91-8476, against the Shangri-La Group.
On January 8, 1992, the Shangri-La Group moved for the suspension of the
proceedings in the infringement case on account of the pendency of the
administrative proceedings before the BPTTT.1 This was denied by the trial
court in a Resolution issued on January 16, 1992. 2 The Shangri-La Group
filed a Motion for Reconsideration. 3 Soon thereafter, it also filed a Motion to
Inhibit against Presiding Judge Felix M. de Guzman. 4 On July 1, 1992, the
trial court denied both motions.5
The Shangri-La Group filed a petition for certiorari before the Court of
Appeals, docketed as CA-G.R. SP No. 29006. 6 On February 15, 1993, the
Court of Appeals rendered its decision dismissing the petition for
certiorari.7 The Shangri-La Group filed a Motion for Reconsideration, which
was denied on the ground that the same presented no new matter that
warranted consideration.8
Hence, the instant petition, docketed as G.R. No. 111580, based on the
following grounds:
THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS
DISCRETION AND COMMITTED A REVERSIBLE ERROR IN NOT
FINDING THAT:
I. THE INFRINGEMENT CASE SHOULD BE DISMISSED OR AT LEAST
SUSPENDED; AND
II. THE HONORABLE PRESIDING JUDGE SHOULD INHIBIT HIMSELF
FROM TRYING THE INFRINGEMENT CASE.9
Meanwhile, on October 28, 1991, the Developers Group filed in Inter Partes
Case No. 3145 an Urgent Motion to Suspend Proceedings, invoking the
pendency of the infringement case it filed before the Regional Trial Court of
Quezon City.10 On January 10, 1992, the BPTTT, through Director Ignacio S.
Sapalo, issued an Order denying the Motion. 11 A Motion for Reconsideration
was filed which was, however, denied in a Resolution dated February 11,
1992.12
IPL- Assignment No. 6
From the denial by the BPTTT of its Urgent Motion to Suspend Proceedings
and Motion for Reconsideration, the Developers Group filed with the Court of
Appeals a petition for certiorari, mandamus and prohibition, docketed as CA-
G.R. SP No. 27742.13 On March 29, 1994, the Court of Appeals dismissed
the petition for lack of merit.14
A petition for review was thereafter filed, docketed as G.R. No. 114802,
raising the issue of:
WHETHER OR NOT, GIVEN THE ESTABLISHED FACTS AND
CIRCUMSTANCES ON RECORD AND THE LAW AND JURISPRUDENCE
APPLICABLE TO THE MATTER, THE RESPONDENT COURT ERRED IN
HOLDING THAT, INASMUCH AS BOTH THE CIVIL ACTION AND THE
ADMINISTRATIVE PROCEEDINGS HERE INVOLVED MAY CO-EXIST
AND THE LAW DOES NOT PROVIDE FOR ANY PREFERENCE BY ONE
OVER THE OTHER, THE RESPONDENT DIRECTOR HAD JURISDICTION
TO RULE AS HE DID AND HAD NOT INCURRED ANY GRAVE ABUSE OF
DISCRETION CORRECTIBLE BY THE EXTRAORDINARY REMEDIES OF
CERTIORARI, PROHIBITION AND MANDAMUS.15
On February 2, 1998, G.R. Nos. 111580 and 114802 were ordered
consolidated.
The core issue is simply whether, despite the institution of an Inter Partes
case for cancellation of a mark with the BPTTT (now the Bureau of Legal
Affairs, Intellectual Property Office) by one party, the adverse party can file a
subsequent action for infringement with the regular courts of justice in
connection with the same registered mark.
We rule in the affirmative.
Section 151.2 of Republic Act No. 8293, otherwise known as the Intellectual
Property Code, provides, as follows –
Section 151.2. Notwithstanding the foregoing provisions, the court or the
administrative agency vested with jurisdiction to hear and adjudicate any
action to enforce the rights to a registered mark shall likewise exercise
jurisdiction to determine whether the registration of said mark may be
cancelled in accordance with this Act. The filing of a suit to enforce the
registered mark with the proper court or agency shall exclude any other court
or agency from assuming jurisdiction over a subsequently filed petition to
cancel the same mark. On the other hand, the earlier filing of petition to
cancel the mark with the Bureau of Legal Affairs shall not constitute a
prejudicial question that must be resolved before an action to enforce
the rights to same registered mark may be decided. (Emphasis provided)
Page 26 of 143
Similarly, Rule 8, Section 7, of the Regulations on Inter Partes Proceedings,
provides to wit –
Section 7. Effect of filing of a suit before the Bureau or with the proper court. -
The filing of a suit to enforce the registered mark with the proper court or
Bureau shall exclude any other court or agency from assuming jurisdiction
over a subsequently filed petition to cancel the same mark. On the other
hand, the earlier filing of petition to cancel the mark with the Bureau
shall not constitute a prejudicial question that must be resolved before
an action to enforce the rights to same registered mark may be
decided. (Emphasis provided)
Hence, as applied in the case at bar, the earlier institution of an Inter Partes
case by the Shangri-La Group for the cancellation of the "Shangri-La" mark
and "S" device/logo with the BPTTT cannot effectively bar the subsequent
filing of an infringement case by registrant Developers Group. The law and
the rules are explicit.
The rationale is plain: Certificate of Registration No. 31904, upon which the
infringement case is based, remains valid and subsisting for as long as it has
not been cancelled by the Bureau or by an infringement court. As such,
Developers Group's Certificate of Registration in the principal register
continues as "prima facie evidence of the validity of the registration, the
registrant's ownership of the mark or trade-name, and of the registrant's
exclusive right to use the same in connection with the goods, business or
services specified in the certificate."16 Since the certificate still subsists,
Developers Group may thus file a corresponding infringement suit and
recover damages from any person who infringes upon the former's rights. 17
Furthermore, the issue raised before the BPTTT is quite different from that
raised in the trial court. The issue raised before the BPTTT was whether the
mark registered by Developers Group is subject to cancellation, as the
Shangri-La Group claims prior ownership of the disputed mark. On the other
hand, the issue raised before the trial court was whether the Shangri-La
Group infringed upon the rights of Developers Group within the
contemplation of Section 22 of Republic Act 166.
The case of Conrad and Company, Inc. v. Court of Appeals18  is in point.
We held:
We cannot see any error in the above disquisition. It might be mentioned that
while an application for the administrative cancellation of a registered
trademark on any of the grounds enumerated in Section 17 of Republic Act
No. 166, as amended, otherwise known as the Trade-Mark Law, falls under
the exclusive cognizance of BPTTT (Sec. 19, Trade-Mark Law), an action,
IPL- Assignment No. 6
however, for infringement or unfair competition, as well as the remedy of
injunction and relief for damages, is explicitly and unquestionably within the
competence and jurisdiction of ordinary courts.
x x x      x x x      x x x
Surely, an application with BPTTT for an administrative cancellation of a
registered trade mark cannot per se have the effect of restraining or
preventing the courts from the exercise of their lawfully conferred jurisdiction.
A contrary rule would unduly expand the doctrine of primary jurisdiction
which, simply expressed, would merely behoove regular courts, in
controversies involving specialized disputes, to defer to the findings or
resolutions of administrative tribunals on certain technical matters. This rule,
evidently, did not escape the appellate court for it likewise decreed that for
"good cause shown, the lower court, in its sound discretion, may suspend the
action pending outcome of the cancellation proceedings" before the BPTTT.
However, while the instant Petitions have been pending with this Court, the
infringement court rendered a Decision, dated March 8, 1996, in Civil Case
No. Q-91-8476,19 the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff Developers
Group of Companies, Inc. and against defendants Shangri-La International
Hotel Management, Ltd., Shangri-La Properties, Inc., Makati Shangri-La
Hotel and Resort, Inc., and Kuok Philippine Properties, Inc. –
a) Upholding the validity of the registration of the service mark "Shangri-La"
and "S-Logo" in the name of plaintiff;
b) Declaring defendants' use of said mark and logo as an infringement of
plaintiff's right thereto;
c) Ordering defendants, their representatives, agents, licensees, assignees
and other persons acting under their authority and with their permission, to
permanently cease and desist from using and/or continuing to use said mark
and logo, or any copy, reproduction or colorable imitation thereof, in the
promotion, advertisement, rendition of their hotel and allied projects and
services or in any other manner whatsoever;
d) Ordering defendants to remove said mark and logo from any premises,
objects, materials and paraphernalia used by them and/or destroy any and all
prints, signs, advertisements or other materials bearing said mark and logo in
their possession and/or under their control; and
Page 27 of 143
e) Ordering defendants, jointly and severally, to indemnify plaintiff in the
amounts of P2,000,000.00 as actual and compensatory damages,
P500,000.00 as attorney's fees and expenses of litigation.
Let a copy of this Decision be certified to the Director, Bureau of Patents,
Trademarks and Technology Transfer, for his information and appropriate
action in accordance with the provisions of Section 25, Republic Act No. 166.
Costs against defendants.
SO ORDERED.20
the Court of Appeals has the competence and jurisdiction to resolve the
merits of the said RTC decision.
We are not unmindful of the fact that in G.R. No. 114802, the only issue
submitted for resolution is the correctness of the Court of Appeals' decision
sustaining the BPTTT's denial of the motion to suspend the proceedings
before it. Yet, to provide a judicious resolution of the issues at hand, we find
it apropos to order the suspension of the proceedings before the Bureau
pending final determination of the infringement case, where the issue of the
validity of the registration of the subject trademark and logo in the name of
Developers Group was passed upon.

WHEREFORE, in view of the foregoing, judgment is hereby rendered

The said Decision is now on appeal with respondent Court of Appeals. 21
dismissing G.R. No. 111580 for being moot and academic, and ordering the
Bureau of Legal Affairs, Intellectual Property Office, to suspend further
Following both law and the jurisprudence enunciated in Conrad and proceedings in Inter Partes Case No. 3145, to await the final outcome of the
Company, Inc. v. Court of Appeals,22 the infringement case can and should appeal in Civil Case No. Q-91-8476.
proceed independently from the cancellation case with the Bureau so as to
afford the owner of certificates of registration redress and injunctive writs. In
SO ORDERED.
the same light, so must the cancellation case with the BPTTT (now the
Bureau of Legal Affairs, Intellectual Property Office) continue independently
from the infringement case so as to determine whether a registered mark
may ultimately be cancelled. However, the Regional Trial Court, in granting
redress in favor of Developers Group, went further and upheld the validity
and preference of the latter's registration over that of the Shangri-La Group.

There can be no denying that the infringement court may validly pass upon
the right of registration. Section 161 of Republic Act No. 8293 provides to wit
–

SEC. 161. Authority to Determine Right to Registration –  In any action

involving a registered mark the court may determine the right to
registration, order the cancellation of the registration, in whole or in
part, and otherwise rectify the register with respect to the registration
of any party to the action in the exercise of this. Judgement and orders
shall be certified by the court to the Director, who shall make appropriate
entry upon the records of the Bureau, and shall be controlled thereby. (Sec.
25, R.A. No. 166a). (Emphasis provided)

With the decision of the Regional Trial Court upholding the validity of the
registration of the service mark "Shangri-La" and "S" logo in the name of
Developers Group, the cancellation case filed with the Bureau hence
becomes moot. To allow the Bureau to proceed with the cancellation case
would lead to a possible result contradictory to that which the Regional Trial
Court has rendered, albeit the same is still on appeal. Such a situation is
certainly not in accord with the orderly administration of justice. In any event,

IPL- Assignment No. 6 Page 28 of 143

[57] No. L-23035. July 31, 1975
PHILIPPINE NUT INDUSTRY, INC., petitioner, vs. STANDARD BRANDS
INCORPORATED and TIBURCIO S. EVALLE, as Director of Patents,
respondents.
Trademarks; Infringement of; Marks likely to cause confusion, mistake or
even deception.—There is infringement of trademark when the use of the mark
involved would be likely to cause confusion or mistake in the mind of the public or
to deceive purchasers as to the origin or source of the commodity.
Same; Same; Determination of infringement a question of fact; Test of
dominancy.—Whether or not a trademark causes confusion and is likely to deceive
the public is a question of fact which is to be resolved by applying the “test of
dominancy”, meaning, if the competing trademark contains the main, or essential or
dominant features of another by reason of which confusion and deception are likely
to result, then infringement takes place; that duplication or imitation is not necessary
a similarity in the dominant features of the trademarks would be sufficient.
Same; Same; Same; Same; Word PLANTERS considered the dominant
feature of trademark; Case at bar.—While it is true that PLANTERS is an ordinary
word, nevertheless it is used in the labels not to describe the nature of the product,
but to project the source or origin of the salted peanuts contained in the cans, the
word PLANTERS printed across the upper portion of the label in bold letters easily
attracts and catches the eye of the ordinary consumer and it is that word and none
other that sticks in his mind when he thinks of salted peanuts.
Same; Same; Intent to pass to public one’s product as that of another;
Similarity of coloring scheme, layout of words, and type and size of lettering.—No
producer or manufacturer may have a monopoly of any color scheme or form of
words in a label. But when a competitor adopts a distinctive or dominant mark or
feature of another’s trademark and with it makes use of the same color ensemble,
employs similar words written in a style, type and size of lettering almost identical
with those found in the other trademark, the intent to pass to the public his product as
that of the other is quite obvious.
Same: Same; Same Insignificant differences in trademarks; Effect of; Case
at bar.—The merchandize or goods being sold by the parties herein are very ordinary
commodities purchased by the average person and many times by the ignorant and
unlettered and these are the persons who will not as a rule examine the printed small
letterings on the container but will simply be guided by the presence of the striking
mark PLANTERS on the label. Differences there will always be, but whatever
differences exist, these pale into insignificance in the face of an evident similarity in
the dominant feature and overall appearance of the labels of the parties.
IPL- Assignment No. 6
Same; Same; Doctrine of secondary meaning.—The doctrine is to the effect
that a word or phrase originally incapable of exclusive appropriation with reference
to an article on the market, because geographically or otherwise descriptive, might
nevertheless have been used so long and so exclusively by one producer with
reference to his article that, in that trade and to that branch of the purchasing public,
the word or phrase has come to mean that the article was his product.
Same; Same; Same; Preferential right to adoption of trademark by priority
of use; Case at bar.—There is evidence to show that the term PLANTERS has
become a distinctive mark or symbol insofar as salted peanuts are concerned, and by
priority of use dating as far back as 1938, respondent Standard Brands has acquired a
preferential right to its adoption as its trademark warranting protection against its
usurpation by another. Ubi jus ibi remedium. Where there is a right there is a
remedy.
Same; Same; Same; Temporary non-use of trademark; Effect of.—Non-use
of a trademark on an article of merchandize due to legal restrictions or circumstances
beyond one’s control is not to be considered as an abandonment.
Same; Same; Same; Abandonment of use of trademark; Abandonment must
be permanent, intentional and voluntary.—To work an abandonment, the disuse must
be permanent and not ephemeral; it must be intentional and voluntary, and not
involuntary or even compulsory. There must be a thorough-going discontinuance of
any trade-mark use of the mark in question.
Same; Findings of facts of Director of Patents conlusive on Supreme Court.
—Findings of fact by the Director of Patents are conclusive and binding on the
Supreme Court provided they are supported by substantial evidence.
MUNOZ PALMA, J.:
Challenged in this petition for review is the decision of respondent Director of
Patents which orders the cancellation of Certificate of Registration No. SR-
416 issued in favor of herein petitioner Philippine Nut Industry, Inc.
(hereinafter called Philippine Nut) for the trademark "PHILIPPINE
PLANTERS CORDIAL PEANUTS," upon complaint of Standard Brands Inc.
(hereinafter to be called Standard Brands).
The records of the case show the following incidents:
Philippine Nut, a domestic corporation, obtained from the Patent Office on
August 10, 1961, Certificate of Registration No. SR-416 covering the
Page 29 of 143
trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS," the label used
on its product of salted peanuts.
On May 14, 1962, Standard Brands a foreign corporation, 1 filed with the
Director of Patents Inter Partes Case No. 268 asking for the cancellation of
Philippine Nut's certificate of registration on the ground that "the registrant
was not entitled to register the mark at the time of its application for
registration thereof" for the reason that it (Standard Brands) is the owner of
the trademark "PLANTERS COCKTAIL PEANUTS" covered by Certificate of
Registration No. SR-172, issued by the Patent Office on July 28, 1958.
Standard Brands alleged in its petition that Philippine Nut's trademark
"PHILIPPINE PLANTERS CORDIAL PEANUTS" closely resembles and is
confusingly similar to its trademark "PLANTERS COCKTAIL PEANUTS"
used also on salted peanuts, and that the registration of the former is likely to
deceive the buying public and cause damage to it.
On June 1, 1962, Philippine Nut filed its answer invoking the special defense
that its registered label is not confusingly similar to that of Standard Brands
as the latter alleges.
At the hearing of October 4, 1962, the parties submitted a partial stipulation
of facts. On December 12, 1962, an amended partial stipulation of facts was
submitted, the pertinent agreements contained in which are: (1) that
Standard Brands is the present owner of the trademark "PLANTERS
COCKTAIL PEANUTS" covered by Certificate of Registration No. SR-172
issued on July 28, 1958; (2) that Standard Brands trademark was first used in
commerce in the Philippines in December, 1938 and (3) that Philippine Nut's
trademark "PHILIPPINE PLANTERS CORDIAL PEANUTS" was first used in
the Philippines on December 20, 1958 and registered with the Patent Office
on August 10, 1961.
On December 10, 1963, after the presentation of oral and documentary
evidence and the filing by the parties of their memoranda, respondent
Director of Patents rendered Decision No. 281 giving due course to Standard
Brand's petition and ordering the cancellation of Philippine Nut's Certificate of
Registration No. SR-416. The Director of Patents found and held that in the
labels using the two trademarks in question, the dominant part is the word
"Planters", displayed "in a very similar manner" so much so that "as to
appearance and general impression" there is "a very confusing similarity,"
and he concluded that Philippine Nut "was not entitled to register the mark at
the time of its filing the application for registration" as Standard Brands will be
damaged by the registration of the same. Its motion for reconsideration
having been denied, Philippine Nut came up to this Court for a review of said
decision.
IPL- Assignment No. 6
In seeking a reversal of the decision of respondent Director of Patents,
petitioner brings forth eleven assigned errors all of which revolve around one
main issue: is the trademark "PHILIPPINE PLANTERS CORDIAL
PEANUTS" used by Philippine Nut on its label for salted peanuts confusingly
similar  to the trademark "PLANTERS COCKTAIL PEANUTS" used by
Standard Brands on its product so as to constitute an infringement of the
latter's trademark rights and justify its cancellation? 2
The applicable law to the case is found in Republic Act 166 otherwise known
as the Trade-Mark Law from which We quote the following pertinent
provisions:
Chapter II-A. —
Sec. 4. Registration of trade-marks, trade-names and service-marks on the
principal register. — There is hereby established a register of trade-marks,
trade-names and service-marks which shall be known as the principal
register. The owner of a trade-mark, trade-name or service-mark used to
distinguish his goods, business or services from the goods, business or
services of others shall have the right to register the same on the principal
register, unless it:
(d) Consists of or comprises a mark or trade-name which so resembles a
mark or trade-name  registered in the Philippines or a mark or trade-name
previously used in the Philippines by another and not abandoned, as to be
likely, when applied to or used in connection with the goods, business or
services of the applicant, to cause confusion or mistake or to deceive
purchasers; ... (emphasis Ours)
Sec. 17. Grounds for cancellation — Any person, who believes that he is or
will be damaged by the registration of a mark or trade-name, may, upon the
payment of the prescribed fee, apply to cancel said registration upon any of
the following grounds:
(c) That the registration was obtained fraudulently or contrary to the
provisions of section four, Chapter II hereof; ....
Sec. 22. Infringement, what constitutes. — Any person who shall use, without
the consent of the registrant, any reproduction, counterfeit, copy or colorable
imitation of any registered mark or trade-name in connection with the sale,
offering for sale, or advertising of any goods, business or services on or in
connection with which such use is likely to cause confusion or mistake  or to
deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business; or reproduce, counterfeit, copy or
colorably imitate any such mark or trade-name and apply such reproduction,
Page 30 of 143
counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in
connection with such goods, business or services, shall be liable to a civil
action by the registrant for any or all of the remedies herein provided.
(emphasis supplied).
In the cases involving infringement of trademark brought before the Court it
has been consistently held that there is infringement of trademark when the
use of the mark involved would be likely to cause confusion or mistake in the
mind of the public or to deceive purchasers as to the origin or source of the
commodity; that whether or not a trademark causes confusion and is likely to
deceive the public is a question of fact which is to be resolved by applying
the "test of dominancy", meaning, if the competing trademark contains the
main or essential or dominant features of another by reason of which
confusion and deception are likely to result, then infringement takes pIace;
that duplication or imitation is not necessary, a similarity in the dominant
features of the trademarks would be sufficient.3
1. The first argument advanced by petitioner which We believe goes to the
core of the matter in litigation is that the Director of Patents erred in holding
that the dominant portion of the label of Standard Brands in its cans of salted
peanuts consists of the word PLANTERS which has been used in the label of
Philippine Nut for its own product. According to petitioner, PLANTERS cannot
be considered as the dominant feature of the trademarks in question
because it is a mere descriptive term, an ordinary word which is defined in
Webster International Dictionary as "one who or that which plants or sows, a
farmer or an agriculturist." (pp. 10-11, petitioner's brief)
We find the argument without merit. While it is true that PLANTERS is an
ordinary word, nevertheless it is used in the labels not to describe the nature
of the product, but to project the source or origin of the salted peanuts
contained in the cans. The word PLANTERS printed across the upper portion
of the label in bold letters easily attracts and catches the eye of the ordinary
consumer and it is that word and none other that sticks in his mind when he
thinks of salted peanuts.
In cases of this nature there can be no better evidence as to what is the
dominant feature of a label and as to whether there is a confusing similarity in
the contesting trademarks than the labels themselves. A visual and graphic
presentation of the labels will constitute the best argument for one or the
other, hence, we are reproducing hereunder a picture of the cans of salted
peanuts of the parties to the case.
The picture below is part of the documentary evidence appearing in the
original records, and it clearly demonstrates the correctness of the finding of
IPL- Assignment No. 6
respondent Director that the word PLANTERS is the dominant, striking mark
of the labels in question.
It is true that there are other words used such as "Cordial" in petitioner's can
and "Cocktail" in Standard Brands', which are also prominently displayed, but
these words are mere adjectives describing the type of peanuts in the labeled
containers and are not sufficient to warn the unwary customer that the two
products come form distinct sources. As a whole it is the word PLANTERS
which draws the attention of the buyer and leads him to conclude that the
salted peanuts contained in the two cans originate from one and the same
manufacturer. In fact, when a housewife sends her housemaid to the market
to buy canned salted peanuts, she will describe the brand she wants by using
the word PLANTERS and not "Cordial" nor "Cocktail".
2. The next argument of petitioner is that respondent Director should not
have based his decision simply on the use of the term PLANTERS, and that
what he should have resolved is whether there is a confusing similarity in the
trademarks of the parties.
It is quite obvious from the record, that respondent Director's decision is
based not only on the fact that petitioner herein adopted the same dominant
mark of Standard Brands, that is, the word PLANTERS, but that it also used
in its label the same coloring scheme of gold, blue, and white, and basically
the same lay-out of words such as "salted peanuts" and "vacuum packed"
with similar type and size of lettering as appearing in Standard Brands' own
trademark, all of which result in a confusing similarity between the two
labels.4 Thus, the decision states: "Furthermore, as to appearance and
general impression of the two trademarks, I find a very confusing similarity."
(Emphasis supplied)5
Referring again to the picture We have reproduced, the striking similarity
between the two labels is quite evident not only in the common use of
PLANTERS but also in the other words employed. As a matter of fact, the
capital letter "C" of petitioner's "Cordial" is alike to the capital "C" of
Standard's "Cocktail", with both words ending with an "1".
Admittedly, no producer or manufacturer may have a monopoly of any color
scheme or form of words in a label. But when a competitor adopts a
distinctive or dominant mark or feature of another's trademark and with it
makes use of the same color ensemble, employs similar words written in a
style, type and size of lettering almost identical with those found in the other
trademark, the intent to pass to the public his product as that of the other is
quite obvious. Hence, there is good reason for Standard Brands' to ask why
did petitioner herein use the word PLANTERS, the same coloring scheme,
even almost identical size and contour of the cans, the same lay-out of words
Page 31 of 143
on its label when there is a myriad of other words, colors, phrases, symbols,
and arrangements to choose from to distinguish its product from Standard
Brands, if petitioner was not motivated to simulate the label of the latter for its
own can of salted peanuts, and thereby deceive the public?
A similar question was asked by this Court in Clarke vs. Manila Candy Co.,
36 Phil. 100, when it resolved in favor of plaintiff a case of unfair competition
based on an imitation of Clarke's packages and wrappers of its candies the
main feature of which was one rooster. The Court queried thus: "... why, with
all the birds in the air, and all the fishes in the sea, and all the animals on the
face of the earth to choose from, the defendant company (Manila Candy Co.)
selected two roosters as its trademark, although its directors and managers
must have been well aware of the long-continued use of a rooster by the
plaintiff with the sale and advertisement of its goods? ... A cat, a dog, a
carabao, a shark or an eagle stamped upon the container in which candies
are sold would serve as well as a rooster for purposes of identification as the
product of defendant's factory. Why did defendant select two roosters as its
trademark ?" (p.109, supra)
Petitioner contends, however, that there are differences between the two
trademarks, such as, the presence of the word "Philippine" above
PLANTERS on its label, and other phrases, to wit: "For Quality and Price, Its
Your Outstanding Buy", the address of the manufacturer in Quezon City, etc.,
plus a pictorial representation of peanuts overflowing from a tin can, while in
the label of Standard Brands it is stated that the product is manufactured in
San Francisco, California, and on top of the tin can is printed "Mr. Peanut"
and the representation of a "humanized peanut". (pp. 30-33, petitioner's brief)
We have taken note of those alleged differences but We find them
insignificant in the sense that they are not sufficient to call the attention of the
ordinary buyer that the labeled cans come from distinct and separate
sources. The word "Philippine" printed in small type in petitioner's label may
simply give to the purchaser the impression that that particular can of
PLANTERS salted peanuts is locally produced or canned but that what he is
buying is still PLANTERS canned salted peanuts and nothing else. As
regards "Mr. Peanut" on Standard Brands' label, the same appears on the
top cover and is not visible when the cans are displayed on the shelves,
aside from the fact that the figure of "Mr. Peanut" is printed on the tin cover
which is thrown away after opening the can, leaving no lasting impression on
the consumer. It is also for this reason that We do not agree with petitioner
that it is "Mr. Peanut and the Humanized Peanut" which is the trademark of
Standard Brands salted peanuts, it being a mere descriptive pictorial
representation of a peanut not prominently displayed on the very body of the
label covering the can, unlike the term PLANTERS which dominates the
label.
IPL- Assignment No. 6
It is correctly observed by respondent Director that the merchandize or goods
being sold by the parties herein are very ordinary commodities purchased by
the average person and many times by the ignorant and unlettered 6 and
these are the persons who will not as a rule examine the printed small
letterings on the container but will simply be guided by the presence of the
striking mark PLANTERS on the label. Differences there will always be, but
whatever differences exist, these pale into insignificance in the face of an
evident similarity in the dominant feature and overall appearance of the
labels of the parties.
It is not necessary, to constitute trademark "infringement", that every word of
a trade-mark should be appropriated, but it is sufficient that enough be taken
to deceive the public in the purchase of a protected article. (Bunte Bros. v.
Standard Chocolates, D.C. Mass., 45 F. Supp. 478, 481)
A trade-name in order to be an `infringement' upon another need not be
exactly like it in form and sound, but it is enough if the one so resembles
another as to deceive or mislead persons of ordinary caution into the belief
that they are dealing with the one concern when in fact they are dealing with
the other. (Foss v. Culbertson, 136 P. 2d 711, 718, 17 Wash. 2d 610)
Where a trade-mark contains a dominating or distinguishing word, and
purchasing public has come to know and designate the article by such
dominating word, the use of such word by another in marking similar goods
may constitute Infringement though the marks aside from such dominating
word may be dissimilar. (Queen Mfg. Co. v. lsaac Ginsberg & Bros., C.C.A.
Mon., 25 F. 2d 284, 287)
(d) "Infringement" of trade-mark does not depend on the use of identical
words, nor on the question whether they are so similar that a person looking
at one would be deceived into the belief that it was the other; it being
sufficient if one mark is so like another in form, spelling, or sound that one
with not a very definite or clear recollection as to the real mark is likely to be
confused or misled. (Northam Warren Corporation v. Universal Cosmetic Co.,
C. C. A; III., 18 F. 2d 774, 775)
3. What is next submitted by petitioner is that it was error for respondent
Director to have enjoined it from using PLANTERS in the absence of
evidence showing that the term has acquired secondary meaning. Petitioner,
invoking American jurisprudence, asserts that the first user of a tradename
composed of common words is given no special preference unless it is
shown that such words have acquired secondary meaning, and this,
respondent Standard Brands failed to do when no evidence was presented to
establish that fact. (pp. 14-16, petitioner's brief)
Page 32 of 143
The doctrine of secondary meaning is found in Sec. 4 (f), Chapter II-A of the
Trade-Mark Law, viz:
Except as expressly excluded in paragraphs (a), (b), (c) and (d) of this
section, nothing herein shall prevent the registration of a mark or trade-name
used by the applicant which has become distinctive of the applicant's goods,
business or services. The Director may accept as prima facie  evidence that
the mark or trade-name has become distinctive, as applied to or used in
connection with the applicant's goods, business or services, proof of
substantially exclusive and continuous use thereof as a mark or trade-name
by the applicant in connection with the sale of goods, business or services for
the five years next preceding the date of the filing of the application for its
registration. (As amended by Sec. 3, Rep. Act No. 638.)
This Court held that the doctrine is to the effect that a word or phrase
originally incapable of exclusive appropriation with reference to an article on
the market, because geographically or otherwise descriptive, might
nevertheless have been used so long and so exclusively by one producer
with reference to his article that, in that trade and to that branch of the
purchasing public, the word or phrase has come to mean that the article was
his product.7
By way of illustration, is the word "Selecta" which according to this Court is a
common ordinary term in the sense that it may be used or employed by any
one in promoting his business or enterprise, but which once adopted or
coined in connection with one's business as an emblem, sign or device to
characterize its products, or as a badge of authenticity, may acquire a
secondary meaning as to be exclusively associated with its products and
business, so that its use by another may lead to confusion in trade and cause
damage to its business.8
The applicability of the doctrine of secondary meaning to the situation now
before Us is appropriate because there is oral and documentary evidence
showing that the word PLANTERS has been used by and closely associated
with Standard Brands for its canned salted peanuts since 1938 in this
country. Not only is that fact admitted by petitioner in the amended stipulation
of facts (see p. 2 of this Decision), but the matter has been established by
testimonial (tsn October 4, 1962, pp. 2-8) and documentary evidence
consisting of invoices covering the sale of "PLANTERS cocktail peanuts".
(Exhibits C to C-4; D to D-10; E to E-10; F to F-2) In other words, there is
evidence to show that the term PLANTERS has become a distinctive mark or
symbol insofar as salted peanuts are concerned, and by priority of use dating
as far back as 1938, respondent Standard Brands has acquired a preferential
right to its adoption as its trademark warranting protection against its
usurpation by another. Ubi jus ibi remedium. Where there is a right there is a
remedy. Standard Brands has shown the existence of a property right(Arce
IPL- Assignment No. 6
Sons & Co. vs. Selecta Biscuit Co., Inc., supra, pp. 262-263) and respondent
Director, has afforded the remedy.
Still on this point, petitioner contends that Standard Brands' use of the
trademark PLANTERS was interrupted during the Japanese occupation and
in fact was discontinued when the importation of peanuts was prohibited by
Central Bank regulations effective July 1, 1953, hence it cannot be presumed
that it has acquired a secondary meaning. We hold otherwise. Respondent
Director correctly applied the rule that non-use of a trademark on an article of
merchandize due to legal restrictions or circumstances beyond one's control
is not to be considered as an abandonment.
In the case of Andres Romero vs. Maiden Form Brassiere Co., Inc., L-18289,
March 31, 1964, 10 SCRA 556, the same question was raised by petitioner
Romero when he filed with the Bureau of Patents a petition to cancel the
registration of the trademark "Adagio" for brassieres manufactured by Maiden
Form Brassiere Co., Inc. His petition having been dismissed by the Director
of Patents, Romero appealed to this Court and one of the issues posed by
him was that when the Government imposed restrictions on importations of
brassieres bearing that particular trademark, there was abandonment of the
same by respondent company which entitled petitioner to adopt it for his own
use and which in fact he had been using for a number of years. That
argument was met by the Court in the words of Justice Jesus Barrera thus:
... The evidence on record shows, on the other hand, that the trademark
"Adagio" was first used exlusively in the Philippines by appellee in the year
1932. There being no evidence of use of the mark by others before 1932, or
that appellee abandoned use thereof, the registration of the mark was made
in accordance with the Trademark Law. Granting that appellant used the
mark when appellee stopped using it during the period of time that the
Government imposed restrictions on importation of respondent's brassiere
being the trademark, such temporary non-use did not affect the rights of
appellee because it was occasioned by government restrictions and was not
permanent, intentional, and voluntary.
To work an abandonment, the disuse must be permanent and not ephemeral;
it must, be intentional and voluntary, and not involuntary or even compulsory.
There must be a thoroughgoing discontinuance of any trade-mark use of the
mark in question (Callman, Unfair Competition and Trademark, 2nd Ed., p.
1341).1äwphï1.ñët
The use of the trademark by other manufacturers did not indicate an intention
on the part of appellee to abandon it.
Page 33 of 143
The instances of the use by others of the term Budweiser, cited by the
defendant, fail, even when liberally construed, to indicate an intention upon
the part of the complainant to abandon its rights to that name. "To establish
the defense of abandonment, it is necessary to show not only acts indicating
a practical abandonment, but an actual intention to abandon." Sanlehner v.
Eisener & Mendelson Co., 179 U.S. 19, 21 S. Ct. 7 (45 L. Ed. 6.0).
(Anheuser-Busch, Inc, v. Budweiser Malt Products Corp., 287 F. 245.)

xxx xxx xxx

Non-use because of legal restrictions is not evidence of an intent to abandon.

Non-use of their ancient trade-mark and the adoption of new marks by the
Carthusian Monks after they had been compelled to leave France was
consistent with an intention to retain their right to use their old mark.
Abandonment will not be inferred from a disuse over a period of years
occasioned by statutory restrictions on the name of liquor. (Nims, Unfair
Competition and Trade-Mark, p. 1269.) (pp. 562-564, supra) (emphasis
Ours)

Applying the words of Justice Roman Ozaeta in the "Ang Tibay" case (Ang
vs. Toribio Teodoro, p. 56, supra) to the case now before Us, petitioner
herein must not be allowed to get a free ride on the reputation and selling
power of Standard Brands PLANTERS salted peanuts, for a self-respecting
person, or a reputable business concern as is the case here, does not remain
in the shelter of another's popularity and goodwill but builds one of his own.

4. Findings of fact by the Director of Patents are conclusive and binding on

this Court provided they are supported by substantial evidence. 9 The
testimonial and documentary evidence in addition to the stipulation of facts
submitted by the parties fully support the findings of respondent Director
that(1) there is a confusing similarity between the labels or trademarks of
Philippine Nut and Standard Brands used in their respective canned salted
peanuts; (2) respondent Standard Brands has priority of adoption and use of
the label with PLANTERS as the dominant feature and the same has
acquired secondary meaning in relation to salted peanuts; and (3) there has
been no abandonment or non-use of said trademark by Standard Brands
which would justify its adoption by petitioner or any other competitor for the
sale of salted peanuts in the market.

PREMISES CONSIDERED, We AFFIRM the decision of respondent Director

of Patents with costs against petitioner.

So Ordered.

IPL- Assignment No. 6 Page 34 of 143

[58] No. L-19531. August 10, 1967.
THE CLOROX COMPANY, petitioner, vs. THE DIRECTOR OF PATENTS
and Go SIU GIAN, respondents.
Trademarks; When opposition to registration must be filed.— An opposition
to an application for registration of a trademark should be filed within 30 days from
the publication of the application in the Official Gazette. However, "an unverified
notice of opposition may be filed by a duly authorized attorney, but such opposition
will be null and void unless verified by the opposer in person within sixty days after
such filing". A verified opposition filed on time under an erroneous covering letter is
valid,
Courts; Duty of clerk of court as to filing of papers.— It is the duty of the
clerk of court to receive and file the necessary papers of a case in their corresponding
files. It is gross negligence on his part to receive and file pleadings in the records of
the case by relying upon a letter of submittal or covering letter without bothering to
examine whether or not the pleading or document submitted corresponds to the
enclosure mentioned in the letter.
Pleading and Practice; Liberal construction; Technicalities.— The rule is
always in favor of liberality in construction so that the real matter in dispute may be
submitted to the judgment of the court. Imperfections of form and technicalities of
procedure should be disregarded, unless substantial rights would otherwise be
prejudiced.
Trial; New trial; Grounds for new trial are substantially similar to those of
petition for relief.—The grounds of fraud, accident, mistake or excusable negligence
for new trial are substantially similar to the grounds of a petition for relief under the
Rules; the only difference being that a motion for new trial or for reconsideration is
filed before the order or judgment becomes final, while a petition for relief should be
filed after the finality of the judgment or order, but within certain periods.
Same; Courts may vacate judgments or grant new trials due to error in fact
or law.—Courts may vacate judgments and grant new trials or enter new judgments
on the ground of error in fact or in law. They have the power, of course, to vacate
judgments after they have become final, in the sense that the party in whose favor
they are rendered is entitled as of right, to have execution thereon, but prior thereto,
the courts have plenary control over the proceedings including the judgment, and, in
the exercise of a sound judicial discretion, may take such proper action in this regard
as truth and justice may require.
Same; Public officers; Legal discretion.—The only discretion conferred
upon officers is a legal discretion, and when anything is left to any officer to be done
IPL- Assignment No. 6
according to his discretion, the law intends it to be done with a sound discretion and
according to law.
Same; Motion for reconsideration; Abuse of discretion.—When the
allegations of the pleading clearly show circumstances constituting mistake and
excusable negligence, which are grounds for a motion for reconsideration, a
dismissal of the motion and a denial of the relief sought upon the flimsy excuse that
the same was filed as a petition for relief amounts to an abuse of that discretion.
Trademarks; Nature of opposition to registration and petition for
cancellation.—The opposition to the registration of a trademark and the petition for
its cancellation are alternative proceedings which a party may avail of according to
his purposes, needs, and predicament and the petitioner has the right to choose which
remedy he deems best f or the protection of his rights.
ANGELES, J.:
We have before us petition to review the order of the Director of Patents in
"inter Partes Case No. 204," dated January 6, 1961, dismissing the
opposition of the Clorox Company to the registration of the trade-mark
"OLDROX" in the name of Go Siu Gian, and the resolution of said Official,
dated February 12, 1962, denying the Clorox Company's motion and petition
for relief from said order.1äwphï1.ñët
The facts of the case, either appearing in the record or admitted by the
parties in their pleadings, are as follows:
On April 7, 1959, respondent Go Siu Gian filed with the Patent Office an
application for registration of the trademark "OLDROX," with an
accompanying statement that he is a citizen of China, residing and doing
business in the Philippines at 838 Folgueras St., Manila; that he has adopted
the trademark "OLDROX" for his goods (whitening agent for bleaching) in
trade and commerce in the country; and that said trademark, shown on
printed labels affixed to the goods, or to the containers thereof, has been
used by him since February 1, 1959. The application was allowed and
published in the issue of the Official Gazette dated April 25, 1960, which was
released for circulation on August 22, 1960.
On September 21 of the same year, or within 30 days from the date of its
publication in the Official Gazette, an unverified opposition to the application
was filed by the law firm Lichauco, Picazo and Agcaoili in behalf of the Clorox
Company, herein petitioner.
Page 35 of 143
On January 6, 1961, respondent Director of Patents issued the order
appealed from, dismissing the petitioner's opposition to the application upon
the ground, which is stated in said order, that the Clorox Company failed to
filed the required verified notice of opposition within the period allowed by
law. Upon notice of the said order, petitioner's counsel filed a motion with the
Patent Office, dated January 10, 1961, advising that it has filed the verified
notice of opposition on time, i.e., on November 16, 1960; although it also
admitted that the covering letter of said verified opposition was given another
case number (Inter Partes Case No. 200, entitled "The Shell Company of the
Philippines versus Faustino Co") which is also handled by the same counsel
in the Patent Office. Petitioner requested in that motion that the verified
opposition be detached from the record of Inter Partes Case No. 200 and to
transfer the same in the corresponding file of this case. The motion was
opposed by herein respondent Go Siu Gian.
Before the motion could be acted upon by the Director of Patents, petitioner
filed on January 26, 1961, a petition for relief from the order dismissing its
opposition, alleging circumstances constituting mistake or excusable
negligence of its counsel and his employee which led to the misfiling of its
verified opposition, and praying that said order of January 6, 1961, be set
aside.
After due consideration of the arguments of both parties relative to the
aforesaid motion and petition for relief from the order of January 6, 1961, the
Director of Patents issued the resolution of February 12, 1962, also appealed
from, denying both the motion and the petition for relief, and ordering the
issuance of the Certificate of Registration of the trademark "OLDROX" in the
name of Go Siu Gian. The Clorox Company has come to Us on Appeal.
In a nutshell, the various errors pointed out in the petitioner's brief which
were allegedly committed by the respondent Director of Patents in issuing the
order and resolution appealed from, really boil down to two main
propositions, namely: (1) that the Director of Patents erred in dismissing its
opposition to the registration of the trademark in question, on the ground of
failure to file the required "verified" opposition on time; and (2) that said
Official erred in denying altogether its motion and petition for relief from said
order.
Under the first proposition, the petitioner argues that it was error for the
respondent official to have dismissed the opposition, it appearing in an
indubitable manner that a verified opposition was timely filed. The Director of
Patents, on the other hand, maintains that the verified opposition cannot be
considered as having been filed on time, for the reason that it was misfiled in
the record of another opposition case through the negligence of its own
counsel.
IPL- Assignment No. 6
Section 8 of Republic Act No. 166 requires that an opposition to an
application for registration of a trademark should be filed within 30 days from
the publication of the application in the Official Gazette. This requirement is
relaxed under Rule 187 (c) of the Revised Rules of Practice in Trademark
Cases which provide as follows:
Rule 187 (c). Notice filed by attorney. — An unverified notice of opposition
may be filed by a duly authorized attorney, but such opposition will be null
and void unless verified by the opposer in person within sixty days after such
filing. . . .
There is no question that petitioner's counsel filed an unverified notice of
opposition to the application for registration of the trademark "OLDROX"
within 30 days from the date of its publication in the Official Gazette. There is
no disagreement also that the record of the case shows that an unverified
opposition was filed, and it was for this reason that the order of January 8,
1961, was issued, because the law requires that for an opposition to be valid,
it must be verified. It is not disputed, however, that immediately after it
received the notice of dismissal of its opposition, petitioner, in due time, filed
a motion dated January 10, 1961, advising the Director of Patents that its
verified opposition was filed on time, although it admitted its error in
submitting it under a covering letter designating another opposition case.
Under the circumstances, it is our considered opinion that the verified
opposition mentioned was filed on time, although it was submitted under an
erroneous covering letter. That fact alone is no argument to the proposition
that a pleading "misfiled" is a pleading "not filed." A covering letter is not part
of the pleading. What is important is the fact that the pleading reached the
official designated by law to receive it within the prescribed time, regardless
of the mistake in the indorsement or covering letter which is not a necessary
element of filing. It is the duty of the clerk of court to receive and file the
necessary papers of a case in their corresponding files. It is gross negligence
on the part of a clerk of court to receive and file pleadings in the record of a
case by relying upon a letter of submittal or covering letter without bothering
to examine whether or not the pleading or document submitted corresponds
to the enclosure mentioned in the letter. And when, as in this case, the
pleading is misfiled in the record of another case through the fault of its clerk,
it can not be said that the papers were not filed. It is admitted in this case that
the verified opposition of herein petitioner was lodged with the proper official
authorized to receive. Under the circumstances, we hold, that there was
substantial compliance with the requirement of the law.
As a second proposition, petitioner contends that the Director of Patents
erred in denying its motion and petition for relief from the order of January 6,
1961, dismissing its opposition to the registration of the trademark in
question. It holds the view that said Official should have set aside the order
and given due course to its opposition.
Page 36 of 143
The respondents, on the other hand, argue that the petition for relief filed by to 197 of the Rules of Practice in Trademark Cases. The opposition to a
petitioner before the order dismissing the opposition became final was registration and the petition for cancellation are alternative proceedings
premature and may not be legally considered for purposes of setting aside which a party may avail of according to his purposes, needs, and
said order. This is being too technical about it. The rule is always in favor of predicaments (Anchor Trading Company vs. Director of Patents, G.R. No. L-
liberality in construction so that the real matter in dispute may be submitted to 8004, May 30, 1956), and herein petitioner has the right to choose which
the judgment of the court. Imperfections of form and technicalities of remedy it deems best for the protection of its rights.
procedure should be disregarded unless substantial rights would otherwise
be prejudiced (Gaspar vs. Dorado, et al., G.R. No. L-17884, November 29, Wherefore and considering all the foregoing, the order and resolution of the
1965). It should be noted that the grounds of fraud, accident, mistake or Director of Patents appealed from are hereby set aside, and the case
excusable negligence for new trial are substantially similar to the grounds of remanded to the Patent Office for further proceedings. Costs against the
a petition for relief under the Rules; the only difference being that a motion for private respondent.
new trial or for reconsideration is filed before the order or judgment becomes
final, while a petition for relief should be filed after the finality of the judgment
or order, but within the periods prescribed in Section 3 of Rule 38. Had herein
respondents so minded, the petition for relief filed by the petitioner in this
case, having been filed before the finality of the order dismissing its
opposition, could have been treated as a motion. for reconsideration of the
order of January 6, 1961, and having been previously apprised of the fact
that the verified opposition in this case was misfiled in the record of another
case, should have set aside said order. The rule is well settled that courts
may vacate judgments and grant new trials or enter new judgments on the
grounds of error in fact or in law. They have no power, of course, to vacate
judgments after they have become final, in the sense that the party in whose
favor they are rendered is entitled as of right, to have execution thereon, but
prior thereto, the courts have plenary control over the proceedings including
the judgment, and in the exercise of a sound judicial discretion, may take
such proper action in this regard as truth and justice may require (Arnedo vs.
Llorente and Liongson, 18 Phil. 257). The order of herein respondent
dismissing the opposition of petitioner to the registration of the trademark in
question may amount to considerable injustice to the opposer Clorox
Company, the order having been entered not upon the merits of the
controversy; and the possibility of such serious consequences necessitates a
careful examination of the grounds upon which it requests that the order be
set aside. It must be remembered that the only discretion conferred upon
officers is a legal discretion, and when anything is left to any officer to be
done according to his discretion, the law intends it to be done with a sound
discretion and according to law (Coombs vs. Santos, 24 Phil. 446). And
when, as in this case, the allegation of the pleading clearly show
circumstances constituting mistake and excusable negligence which are
grounds for a motion for reconsideration of the order in question, a dismissal
of the motion and a denial of the relief sought upon the flimsy excuse that the
same was filed as a petition for relief, will amount to an abuse of that
discretion. Neither may we consider the argument of herein respondent that
the petitioner is not totally deprived of its right to question the registration of
the trademark in question because it may still pursue a cancellation
proceeding under Sections 17 to 19 of Republic Act No. 166, and Rules 191

IPL- Assignment No. 6 Page 37 of 143

[59] G.R. No. 78298. January 30, 1989. *
WOLVERINE WORLDWIDE, INC., petitioner, vs. HONORABLE COURT
OF APPEALS AND LOLITO P. CRUZ, respondents.
Remedial Law; Civil Procedure; Judgments; Res Judicata; A judgment or
order is final, as to give it the element of res judicata, if it can no longer be modified
by the court issuing it or by any other court.—Contrary to the petitioner’s assertion,
the judgment in Inter Partes Cases Nos. 700, 701, and 709 had long since become
final and executory. That Sec. 17 of Republic Act 166, also known as the Trademark
Law, allows the cancellation of a registered trademark is not a valid premise for the
petitioner’s proposition that a decision granting registration of a trademark cannot be
imbued with the character of absolute finality as is required in res judicata. A
judgment or order is final, as to give it the authority of res judicata, if it can no longer
be modified by the court issuing it or by any other court. In the case at bar, the
decision of the Court of Appeals affirming that of the Director of Patents, in the
cancellation cases filed in 1973, was never appealed to us. Consequently, when the
period to appeal from the Court of Appeals to this Court lapsed, with no appeal
having been perfected, the foregoing judgment denying cancellation of registration in
the name of private respondent’s predecessor-ininterest but ordering cancellation of
registration in the name of the petitioner’s predecessor-in-interest, became the settled
law in the case.
Same; Same; Same; Same; Civil Law; Torts and Damages; Trademarks
and Patents; The principle of res judicata applies in appropriate cases in
proceedings for cancellation of trademarks before the Philippines Patent Office.—It
must be stressed anew that, generally, the fundamental principle of res judicata
applies to all cases and proceedings in whatever form they may be. We now
expressly affirm that this principle applies, in the appropriate cases, to proceedings
for cancellation of trademarks before the Philippine Patent Office (now Bureau of
Patents, Trademarks and Technology Transfer). In Ipekjan Merchandising Co., Inc.
vs. Court of Tax Appeals, we said: To say that the doctrine applies exclusively to
decisions rendered by what are usually understood as courts would be to
unreasonably circumscribe the scope thereof. The more equitable attitude is to allow
extension of the defense to decisions of bodies upon whom judicial powers have
been conferred.
Same; Same; Same; Same; Same; Same; Same; Ownership is the basis of
registration of a trademark.—The aforesaid cases, involving as they were the
registration of a trademark, necessarily litigated the issue of ownership of such
trademark because ownership is, indeed, the basis of registration of a trademark.
Thus, Section 4 of R.A. 166 provides: "... The owner of a trademark, 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
IPL- Assignment No. 6
register . . ." Res judicata now bars the petitioner from reopening, by way of another
petition for cancellation (the present Inter Partes Case No. 1807), the issue of
ownership of the trademark HUSH PUPPIES. Otherwise, there will never be an end
to litigation.
SARMIENTO,  J.:
The subject of this petition for review is the resolution of the Court of
Appeals 1 granting the private respondents's motion for reconsideration and
reviving the decision of the Director of Patents which ordered the dismissal,
on the ground of res judicata,  of Inter Partes Case No. 807 instituted by the
petitioner herein.
On February 8, 1984, the petitioner, a foreign corporation organized and
existing under the laws of the United States, brought a petition before the
Philippine Patent Office, docketed as Inter Partes Case No. 1807, for the
cancellation of Certificate of Registration No. 24986-B of the trademark
HUSH PUPPIES and DOG DEVICE issued to the private respondent, a
Filipino citizen.
In support of its petition for cancellation, the petitioner alleged, inter alia, that
it is the registrant of the internationally known trademark HUSH PUPPIES
and the DEVICE of a Dog in the United States and in other countries which
are members of the Paris Convention for the Protection of Industrial Property;
that the goods sold by the private respondent, on the one hand, and by the
petitioner, on the other hand, belong to the same class such that the private
respondent's use of the same trademark in the Philippines (which is a
member of said Paris Convention) in connection with the goods he sells
constitutes an act of unfair competition, as denied in the Paris Convention.
Subsequently, the private respondent moved to dismiss the petition on the
ground of res judicata, averring that in 1973, or more than ten years before
this petition (Inter Partes Case No. 1807) was filed, the same petitioner filed
two petitions for cancellation (Inter Partes Cases Nos. 700 and 701) and was
a party to an interference proceeding (Inter Partes Case No. 709), all of
which involved the trademark HUSH PUPPIES and DEVICE, before the
Philippine Patent Office. The Director of Patents had ruled in all three inter
parties cases in favor of Ramon Angeles, the private respondent's
predecessor-in-interest, to wit:
WHEREFORE, for all the foregoing considerations,
1. The petitions seeking cancellation of Registration Nos. SR-1099 and SR-
1526, respectively, are both denied and accordingly DISMISSED;
Page 38 of 143
2. Respondent-Registrant/Junior Party-Applicant, Roman Angeles, is hereby
adjudged as the prior user and adopter of the trademark HUSH PUPPIES &
DEVICE, under Appl. Serial No. 17174, and therefore, the same given due
course; and
3. Registration No. 14969 of Dexter Sales Company, assignor to Wolverine
Worldwide, Inc., covering the trademark HUSH PUPPIES & Representation
of a Dogie Head, is hereby CANCELLED. 2
On June 29, 1979, the Court of Appeals affirmed tile above decision, finding
the same to be in accordance with law and supported by substantial
evidence. 3
In the present case, after both parties had submitted their respective
memoranda, the Director of Patents rendered the questioned decision (in
Inter Partes Case No. 1807), the dispositive portion of which states:
WHEREFORE, in view of the foregoing considerations this Office is
constrained to hold that Respondent's Motion to Dismiss be, as it is hereby,
GRANTED and that the subject Petition for Cancellation be, as it is hereby
DISMISSED.
Accordingly, Certificate of Registration No. 24986-B issued on May 3, 1983
to the herein Respondent-Registrant, Lolito P. Cruz, for the trademark
"HUSH PUPPIES" for use on shoes is, as it is hereby, declared valid and
subsisting for the duration of its term unless owner cancelled in accordance
with law. 4
On appeal, the Court of Appeals at first set aside the Director's
decision; 5 however, upon reconsideration the latter was revived. 6
The principal legal question raised in this petition for review is whether or not
the present petition for cancellation (Inter Partes Case No. 1807) is barred
by res judicata in the light of the final and executory decision in Inter Partes
Cases Nos. 700 701, and 709.
We rule in the affirmative.
The Court has repeatedly held that for a judgment to be a bar to a
subsequent case, the following requisites must concur: (1) it must be a final
judgment; (2) the court which rendered it had jurisdiction over the subject
matter and the parties; (3) it must be a judgment on the merits; and (4) there
must be Identity between the two cases, as to parties, — subject matter, and
cause of action. 7
IPL- Assignment No. 6
Contrary to the petitioner's assertion, the judgment in Inter Partes Cases
Nos. 700, 701, and 709 had long since become final and executory. That
Sec. 17 of Republic Act 166, also known as the Trademark Law, allows the
cancellation of a registered trademark is not a valid premise for the
petitioner's proposition that a decision granting registration of a trademark
cannot be imbued with the character of absolute finality as is required in res
judicata. A judgment or order is final, as to give it the authority of res
judicata, if it can no longer be modified by the court issuing it or by any other
court. 8 In the case at bar, the decision of the Court of Appeals affirming that
of the Director of Patents, in the cancellation cases filed in 1973, was never
appealed to us. Consequently, when the period to appeal from the Court of
Appeals to this Court lapsed, with no appeal having been perfected, the
foregoing judgment denying cancellation of registration in the name of private
respondent's predecessor-in-interest but ordering cancellation of registration
in the name of the petitioner's predecessor-in-interest, became the settled
law in the case. In the words of the Court of Appeals:
The subsequent failure of appellant-oppositor to elevate the decision of the
Court of Appeals, which affirmed the ruling of the Director of Patents, to the
Supreme Court, sounded the death knell of appellant-oppositor's instant
case. Having become final and executory, the decision in Case No. 967 now
bars the prosecution of the present action under the principle of res
judicata.  9
It must be stressed anew that, generally, the fundamental principle of res
judicata applies to all cases and proceedings in whatever form they may
be. 10 We now expressly affirm that this principle applies, in the appropriate
cases, to proceedings for cancellation of trademarks before the Philippine
Patent Office (now Bureau of Patents, Trademarks and Technology
Transfer). In Ipekjan Merchandising Co., Inc. vs Court of Tax Appeals, we
said:
To say that the doctrine applies exclusively to decisions rendered by what
are usually understood as courts would be to unreasonably circumscribe the
scope thereof. The more equitable attitude is to allow extension of the
defense to decisions of bodies upon whom judicial powers have been
conferred. 11
Undoubtedly, final decisions, orders, and resolutions, of the Director of
Patents are clothed with a judicial character as they are, in fact, reviewable
by the Court of Appeals and by us.
The subject judgment is undeniably on the merits of the case, rendered after
both parties and actually submitted their evidence.
Page 39 of 143
Between the earlier petitions and the present one there is substantial identity
of parties, subject matter, and cause of action.
The petitioner in all of these cases is Wolverine Worldwide, Inc. The
respondent-registrant in this case is the assignee of Randelson Agro-
Industrial Development, Inc. (formerly known as Randelson Shoes, Inc.)
which in turn, acquired its right from Ramon Angeles, the original
respondents-registrant.
As regards the subject matter, all of these cases refer to the cancellation of
registration of the trademark HUSH PUPPIES and DEVICE of a Dog.
Finally, there is identity of cause of action, which is the alleged wrongful or
erroneous registration of the trademark.
It is argued, however, that res judicata  does not apply in this particular
instance because when the May 9, 1977 decision was handed down by the
Director of Patents, Executive Order No. 913 dated October 7, 1983 and the
resulting memorandum of Minister Roberto Ongpin dated October 25, 1983
had not yet been issued. (The validity of this memorandum was later upheld
by this Court in La Chemise Lacoste, S.A. vs. Fernandez and Sujanani vs.
Ongpin). 12 The petitioner underscores the following specific directive
contained in the abovementioned memorandum of Minister Ongpin for the
Director of Patents:
5. All pending applications for Philippine registration of signature and other
world famous trademarks filed by applicants other than their original owners
or users shall be rejected forthwith. Where such applicants have already
obtained registration contrary to the abovementioned PARIS CONVENTION
and/or Philippine Law, they shall be directed to surrender their Certificates of
Registration to the Philippine Patent Office for immediate cancellation
proceedings. 13
It is thus contended that despite the previous grant of registration to the
private respondent, the present petition for cancellation could still be brought,
and the same should be granted by the Director of Patents, pursuant to the
abovequoted clause. Stated otherwise, the petitioner suggests that the
petition is not barred by res judicata  because while the former petitions were
filed under Republic Act 166, the present one was brought pursuant to the
cited memorandum which expressly sanctions the cancellation of registration
of a trademark granted even prior to the same memorandum.
In the first place, the subject memorandum never amended, nor was it meant
to amend, the Trademark Law. It did not indicate a new policy with respect to
the registration in the Philippines of world-famous trademarks. The protection
IPL- Assignment No. 6
against unfair competition, and other benefits, accorded to owners of
internationally known marks, as mandated by the Paris Convention, is
already guaranteed under the Trademark Law. 14 Thus, the subject
memorandum, as well as Executive Order No. 913, merely reiterated the
policy already existing at the time of its issuance. As accurately enunciated
by the Court of Appeals:
Such being the case, appellant-oppositor could have properly ventilated the
issue of whether or not it fell within the protective ambit of the Paris
Convention in the previous proceedings which culminated in the registration
of the Hush Puppies trademark in appellee-movant's name, i.e., in Case No.
967 before the Philippine Patent Office. The Director of Patents in that case,
after hearing both parties and thereafter, deciding that appellee-movant was
entitled to the registration of the trademark in its name, must have concluded
that appellant-oppositor had not established the fact that it was entitled to the
application of the favorable provision; of the Paris Convention. 15
Furthermore, we agree with the conclusion of the Court of Appeals that the
memorandum discussed here is subject to the doctrine of res judicata. The
same memorandum has, in the words of the Court of Appeals:
... no room for application where the oppositor previously availed of the same
remedy to contest and cancel the registration of subject trademark but did not
prevail, against the same registrant regarding the same subject matter (the
trademark in question) and for the same cause of action. This is the more so
when, as in this present controversy, the certificate of registration,
cancellation of which is sought anew, was issued by the Patent office after
due hearing in the prior appropriate inter partes case, pursuant to a decision
of the Director of Patents which was affirmed on appeal by the Court of
Appeals, and has become final and executory. 16
In the same light, the repeated filing of petitions for cancellation founded on
substantially the same ground as provided in Sec. 17 of the Trademark Law,
we rule, is not permissible. For to allow without any limitation whatsoever
such a practice would be clearly violative of the time-honored doctrine of res
judicata. The present petition for cancellation raises basically the same issue
of ownership of the trademark HUSH PUPPIES, which issue was already
discussed and settled in Inter Partes Cases Nos. 700, 701, and 709. As
pointed out by the private respondent, the petitioner itself expressly
recognized the issue of ownership when in the brief it filed in the Court of
Appeals it included the following in the assignment of errors:
That the Philippine Patent Office erred in holding that respondent-appellee
has established prior use and adoption of the trademark HUSH PUPPIES
Page 40 of 143
and is the true and lawful owner thereof, instead of petitioner-appellant
herein. (Emphasis supplied). 17

The aforesaid cases, involving as they were the registration of a trademark,

necessarily litigated the issue of ownership of such trademark because
ownership is, indeed, the basis of registration of a trademark. 18 Thus,
Section 4 of R.A. 166 provides: ". . . The owner of a trademark, 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. . . " Res judicata  now bars the petitioner from
reopening, by way of another petition for cancellation (the present Inter
Partes Case No. 1807), the issue of ownership of the trademark HUSH
PUPPIES. Otherwise, there will never be an end to litigation.

WHEREFORE, the petition for review is DENIED.

SO ORDERED.

IPL- Assignment No. 6 Page 41 of 143

[60] G.R. No. 132993. June 29, 2005. *
LEVI STRAUSS (PHILS.), INC., petitioner, vs. VOGUE TRADERS
CLOTHING COMPANY, respondent.
Trademarks and Trade Names; Infringement; Actions; A certificate of
registration gives rise to a presumption of its validity and the right to the exclusive
use of the trademarks.—Petitioner is a holder of Certificate of Registration No. 1379-
A for its Levi’s trademarks. The registration gives rise to a presumption of its
validity and the right to the exclusive use of the same. As set forth in Section 17 of
Republic Act (R.A.) No. 166 or “The Trademark Law,” an entity having a duly
registered trademark can file a suit against another entity for the protection of its
right.
Same; Same; Same; While an administrative cancellation of a registered
trademark, on any of the grounds under Section 17 of R.A. No. 166, is within the
ambit of the BPTTT, an action for infringement or any other incidental remedy
sought is within the jurisdiction of the ordinary courts.—In Conrad and Company,
Inc. v. Court of Appeals, as reiterated in the case of Shangri-La International Hotel
Management Ltd. v. Court of Appeals, the Court clarified that while an
administrative cancellation of a registered trademark, on any of the grounds under
Section 17 of R.A. No. 166, is within the ambit of the BPTTT, an action for
infringement or any other incidental remedy sought is within the jurisdiction of the
ordinary courts.
Same; Same; Same; The rights accorded to an owner of a registered
trademark expanded with the passage of Republic Act No. 8293.—The passage of
Republic Act No. 8293, otherwise known as the “Intellectual Property Code of the
Philippines,” expanded the rights accorded to an owner of a registered trademark.
Same; Same; Same; The remedy of an owner of a registered mark to
institute an action for infringement or damages provided in Sections 155 (2), 156
and 163 of the law.—Sections 155 (2), 156, and 163 of the said law further provide
for the remedy of an owner of a registered mark to institute an action for
infringement or damages against a person or entity that may reproduce, counterfeit,
copy or colorably imitate a registered mark or a dominant feature thereof and apply
such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used in commerce
upon or in connection with the sale, offering for sale, distribution, or advertising of
goods or services on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive.
Same; Same; Same; An action for infringement or unfair competition,
including the available remedies of injunction and damages, in the regular courts
IPL- Assignment No. 6
can proceed independently or simultaneously with an action for the administrative
cancellation of a registered trademark in the BPTTT.—It bears stressing that an
action for infringement or unfair competition, including the available remedies of
injunction and damages, in the regular courts can proceed independently or
simultaneously with an action for the administrative cancellation of a registered
trademark in the BPTTT. As applied to the present case, petitioner’s prior filing of
two inter partes cases against the respondent before the BPTTT for the cancellation
of the latter’s trademark registrations, namely, “LIVE’S” and “LIVE’S Label Mark,”
does not preclude petitioner’s right (as a defendant) to include in its answer (to
respondent’s complaint for damages in Civil Case No. No. 96-76944) a counterclaim
for infringement with a prayer for the issuance of a writ of preliminary injunction.
Remedial Law; Actions; Forum Shopping; The requirement of certification
against forum shopping under the Rules is to be executed by the petitioner, or in the
case of a corporation, its duly authorized director or officer, but not petitioner’s
counsel whose professional services have been engaged to handle the subject case.
—The requirement of certification against forum shopping under the Rules is to be
executed by the petitioner, or in the case of a corporation, its duly authorized director
or officer, but not petitioner’s counsel whose professional services have been
engaged to handle the subject case. The reason is that it is the petitioner who has
personal knowledge whether there are cases of similar nature pending with the other
courts, tribunals, or agencies. Thus, in the present case, the Court of Appeals should
have outrightly dismissed the petition for certiorari filed by the respondent (as
therein petitioner in the appeals court) due to the defective certification of non-forum
shopping. The certification made by Atty. Soriano, counsel for the respondent, who
is not one of its duly authorized directors or officers, is defective. Even if Atty.
Soriano was the “in-house counsel,” the fact remains that no board resolution, or
even a Secretary’s Certificate containing the board resolution, was submitted to show
that he was indeed authorized to file the said petition in the Court of Appeals.
Same; Same; Injunction; A writ of preliminary injunction would become a
prejudgment of a case only when it grants the main prayer in the complaint or
responsive pleading, so much so that there is nothing left for the trial court to try
except merely incidental matters.—Indeed, a writ of preliminary injunction is
generally based solely on initial and incomplete evidence adduced by the applicant
(herein petitioner). The evidence submitted during the hearing of the incident is not
conclusive, for only a “sampling” is needed to give the trial court an idea of the
justification for its issuance pending the decision of the case on the merits. As such,
the findings of fact and opinion of a court when issuing the writ of preliminary
injunction are interlocutory in nature. Moreover, the sole object of a preliminary
injunction is to preserve the status quo until the merits of the case can be heard.
Since Section 4 of Rule 58 of the Rules of Civil Procedure gives the trial courts
sufficient discretion to evaluate the conflicting claims in an application for a
provisional writ which often involves a factual determination, the appellate courts
generally will not interfere in the absence of manifest abuse of such discretion. A
Page 42 of 143
writ of preliminary injunction would become a prejudgment of a case only when it
grants the main prayer in the complaint or responsive pleading, so much so that there
is nothing left for the trial court to try except merely incidental matters. Such fact
does not obtain in the present case.
DECISION
AZCUNA, J.:
This is a petition for review on certiorari seeking to annul the decision1 of the
Court of Appeals, dated August 13, 1997, which annulled and set aside the
orders,2 dated December 10, 1996 and April 11, 1997, issued by the
Regional Trial Court of Manila, Branch 1 and which directed the trial court to
desist from proceeding with the said case until the Bureau of Patents,
Trademarks and Technology Transfer (BPTTT) has finally resolved Inter
PartesCases Nos. 4216 and 4217, and the resolution of the Court of
Appeals, dated March 5, 1998, denying petitioner’s motion for
reconsideration.
The factual antecedents are as follows:
In 1972, per "Trademark, Technical Data, and Technical Assistance
Agreement,"3 Levi Strauss & Co., the principal based in Delaware, United
States of America, granted petitioner Levi Strauss (Phils.) a non-exclusive
license to use LEVI’S trademark, design, and name in the manufacturing,
marketing, distribution, and sale of its clothing and other goods. 4 The
licensing agreement was renewed several times, the recent one being under
Certificate of Registration No. 1379-A.5 Levi Strauss & Co. obtained
certificates of registration from the BPTTT for the following trademarks:
"LEVI’S"6; "501"7; "Two Horse Design"8; "Two Horse Label"9; "Two Horse
Patch"10; "Two Horse Label with Patterned Arcuate Design" 11; "Arcuate
Design"12; and the composite trademarks,13 namely, "Arcuate," "Tab," and
"Two Horse Patch."
Petitioner discovered the existence of some trademark registrations
belonging to respondent which, in its view, were confusingly similar to its
trademarks. Thus, it instituted two cases before the BPTTT for the
cancellation of respondent’s trademark registrations, to wit: Inter Partes Case
No. 4216, a petition for cancellation of Certificate of Registration No. 53918
(for "LIVE’S") and Inter Partes Case No. 4217, a petition for cancellation of
Certificate of Registration No. 8868 (for "LIVE’S" Label Mark).
Petitioner then applied for the issuance of a search warrant on the premises
of respondent Vogue Traders Clothing Company, owned by one Tony Lim,
with the Regional Trial Court of Manila, Branch 3. On December 12, 1995,
IPL- Assignment No. 6
said trial court issued Search Warrant No. 95-757 14 and Search Warrant No.
95-75815 based on its finding of probable cause that the respondent had
violated Article 189 of the Revised Penal Code 16 in manufacturing, selling,
and incorporating designs or marks in its jeans which were confusingly
similar to petitioner’s "LEVI’s jeans." These search warrants commanded the
seizure of certain goods bearing copies or imitations of the trademarks which
belonged to petitioner.17 On December 13, 1995, the search warrants were
enforced and several goods belonging to respondent were
seized.18 Meanwhile, it appears that criminal charges were filed against Tony
Lim of respondent company in the Department of Justice, 19 but the same
were eventually dismissed and the search warrants were quashed.
Consequently, on February 1, 1996, respondent filed a complaint 20 for
damages in the Regional Trial Court of Manila, Branch 50, against petitioner.
The complaint alleged that since January 1, 1988, respondent, through
Antonio Sevilla, with business address at 1082 Carmen Planas Street,
Tondo, Manila, had been a lawful assignee and authorized user of: (a) the
trademark "LIVE’S" under Certificate of Registration No. 53918 issued by the
BPTTT, (b) the trademark "LIVE’S LABEL MARK" under Certificate of
Registration No. SR 8868 issued by the BPTTT, and (c) the copyright
registrations of "LIVE’S ORIGINAL JEANS," its pocket design, and hand tag;
that the goods, articles, and effects seized from respondent’s establishment
were manufactured and used in its legitimate business of manufacturing and
selling of the duly registered trademark "LIVE’S" and "LIVE’S ORIGINAL
JEANS;" and that the trademarks of respondent did not have any deceptive
resemblance with the trademarks of petitioner. Respondent sought to recover
the seized assorted sewing materials, equipment, and finished products or
the value thereof, in case the same had been destroyed or impaired as a
result of the seizure. Respondent also prayed that, after due trial, judgment
be rendered ordering the petitioner to pay compensatory damages of
₱320,000 with an additional amount of damages of ₱11,000 per day until the
seized properties are restored; ₱2,000,000 as exemplary damages;
₱100,000 for attorney’s fees with an additional amount of ₱100,000 in the
event of an appeal plus ₱1,500 per court appearance and the costs of the
suit.
In its amended answer with counterclaim, 21 petitioner countered that
respondent’s LIVE’S brand infringed upon its licensed brand name LEVI’S. It
sought to cancel respondent’s Copyright Registration No. I-3838 and enjoin
the respondent from further manufacturing, selling, offering for sale, and
advertising the denim jeans or slacks by using a design substantially, if not
exactly similar to, or a colorable imitation of the trademarks 22 of petitioner.
Upon manifestation/motion23 by petitioner, the RTC of Manila, Branch 50
issued an order dated May 9, 1996, 24forwarding the case to the Executive
Judge (RTC of Manila, Branch 23) for re-raffle among the courts designated
Page 43 of 143
as Special Courts to try and decide cases involving violations of Intellectual
Property Rights pursuant to Administrative Order No. 113-95, dated October
2, 1995. On May 17, 1996, Branch 23 issued an order 25 directing that the
case be forwarded to Branch 1 (a designated Special Court per said
administrative order) for further proceedings.
On the scheduled hearing on December 4, 1996 in the RTC of Manila,
Branch 1, respondent (as therein plaintiff) failed to appear. Upon motion of
petitioner, the trial court declared respondent to have waived its right to
present evidence to controvert petitioner’s application for a writ of preliminary
injunction.26
In an order dated December 10, 1996, the trial court found that the
respondent intended to appropriate, copy, and slavishly imitate the genuine
appearance of authentic LEVI’s jeans and pass off its LIVE’s jeans as
genuine LEVI’s jeans. Thus,
In opposing defendant’s application for preliminary in injunction, plaintiff
alleges that it has obtained Certificates of Registration for the trademarks
"LIVE[‘]S," "LIVE[‘]S LABEL MARK," ["]LIVE[‘]S ORIGINAL JEANS["] as well
as the patch pocket design and hand tag. It did not, however, present any
evidence to support the same.
In any event, plaintiff’s backpocket design is not copyrightable, as it is neither
an original work nor a novel design. Rather it is a copy or slavish imitation of
LS & Co./LSPI’s Arcuate trademark which was first used by LS & Co.
worldwide in 1873 and the Philippines Registration of which is based on LS &
Co.’s US Certificate of Registration No. 404243, issued on November 16,
1943. Thus, no rights attendant to a copyright can ever attach to plaintiff’s
infringing backpocket design.
Also, it could not have been pure chance or coincidence that plaintiff’s LIVE’S
jeans use a trademark, symbol or design which is substantially, if not exactly
similar to, or a colorable imitation of LS & CO./LSPI trademarks, since there
is a practically limitless array of other marks, words, numbers, devices,
symbols and designs which plaintiff could have used on its products to
identify and distinguish them from those of defendant and other
manufacturers. All told, from the mass of evidence adduced, plaintiff’s intent
to appropriate, copy, and slavishly imitate the genuine appearance of
authentic LEVI’s jeans and pass off its LIVE’s jeans as genuine LEVI’S jeans
in much too stark.
As above-discussed, through more than a century’s use and continuous
substantial promotions and advertising of the LEVI’s TRADEMARKS on its
products — on jeans and trousers in particular — LS & Co. has cultivated,
IPL- Assignment No. 6
gained and established an invaluable goodwill in its name "LEVI’s STRAUSS
& COMPANY" and in the products which carry such name and the LEVI’s
TRADEMARKS. Hence, unless plaintiff is immediately enjoined from further
manufacturing, selling, offering for sale and advertising denims, jeans or
slacks using a design substantially, if not exactly similar to, or a colorable
imitation of the LS & Co./LSPI trademarks, it will continue to have a free ride
on, and erode such invaluable goodwill and reputation by the mere effortless
expedient of imitating the overall visual impression of genuine LEVI’s JEANS
on its own designs, employing minute points of distinction sufficient to
muddle the overall conclusion which is actually generated, but do not dispel
the similitude between the trademarks. Well has been said that the most
successful form of copying is to employ enough points of similarity to confuse
the public with enough points of difference to confuse the court. [(]Del Monte
Corporation vs. Court of Appeals, 181 SCRA 418[)].
There is no question that the above-discussed circumstances call for the
intervention of equity to prevent further irreparable harm to defendant’s
goodwill and reputation. In consonance with Section 3 (a), (b) and (c), Rule
58 of the Rules, defendant is thus entitled to the ancillary relief demanded
either for a limited period or perpetually.
Corollarily, defendant is hereby directed to execute a bond to the party
enjoined to the effect that defendant will pay to plaintiff all damages it may
sustain by reason of the injunction if the court should finally decide that
defendant is not entitled thereto.
WHEREFORE, upon the filing of a bond in the sum of FIVE HUNDRED
THOUSAND PESOS (₱500,000.00), let a writ of preliminary injunction issue
restraining plaintiff, its officers, employees, agents, representatives, dealers,
retailers or assigns from manufacturing, distributing, selling, offering for sale,
advertising or otherwise using denims or jeans with a design which is
substantially, if not exactly similar to defendant’s trademarks.
Meanwhile, the hearing on the main cause of action is hereby set on
February 5 and 12, 1997, both at 9:00 a.m.
SO ORDERED.27
On motion for reconsideration, respondent prayed that the petitioner’s
counterclaim be dismissed and that the order dated December 10, 1996, be
set aside. In an order dated April 11, 1997, the trial court denied the motion,
stating that:
Considering:
Page 44 of 143
(1) That the defendant’s application for injunctive relief was properly directed
against the real property in interest, the self-proclaimed lawful assignee and
authorized user of the subject trademarks, hence, the party who would be
benefited or injured by this court’s final decision on the application;
(2) That the acts which plaintiff was enjoined from doing are within the scope
of the reliefs demanded by defendant;
(3) That the institution of defendant’s counterclaim for infringement and
damages does not amount to forum-shopping in that the elements of litis
pendentia which form the basis for a charge for forum-shopping are not all
present in the instant case;
(4) That the injunctive order sought to be reconsidered, by its very nature, is
merely provisional and does not dispose of the case on the merits. Hence, it
would not amount to a prejudgment considering that the defendant still has
the burden of proving during trial on the merits that it is entitled to protection
and that confusion does, in fact, or likely to exist, and, on the other hand,
plaintiff would have its opportunity to prove that confusion does not exist or is
not likely to happen; and
(5) That the evidence on record justifies the injunctive relief granted by this
court in favor of defendant.
WHEREFORE, in view of all the foregoing, plaintiff’s motion for
reconsideration and supplemental motion for reconsideration are DENIED for
lack of merit.
SO ORDERED.28
Respondent took the matter to the Court of Appeals. On August 13, 1997, the
Court of Appeals rendered a decision in favor of the respondent, enjoining
the trial court from further proceeding with the case. The dispositive portion
thereof reads:
WHEREFORE, the petition is GRANTED. The assailed Orders dated
December 10, 1996 and April 11, 1997 are annulled and set aside for having
been issued with grave abuse of discretion and in excess of jurisdiction.
Respondent court is ordered to desist from proceeding with Civil Case No.
96-76944, entitled "Vogue Traders Clothing Company, Plaintiff, versus Levi
Strauss (Phil.), Inc., Defendant.", until the Bureau of Patents, Trademarks
and Technology Transfer has finally resolved Inter Partes Cases Nos. 4216
and 4217.
No costs.
IPL- Assignment No. 6
SO ORDERED.29
After its motion for reconsideration was denied, petitioner filed the present
petition for review on certiorari, raising the following assignment of errors:
I
THE COURT OF APPEALS COMMITTED CLEARLY REVERSIBLE ERROR
IN HOLDING THAT THE DOCTRINE OF PRIMARY JURISDICTION
OPERATES TO SUSPEND ANY AND ALL PROCEEDINGS IN CIVIL CASE
NO. 96-76944, PARTICULARLY THE ABILITY OF THE TRIAL COURT TO
ISSUE PRELIMINARY INJUNCTIVE RELIEF, AND THAT THE TRIAL
COURT JUDGE THEREFORE COMMITTED ABUSE OF DISCRETION IN
GRANTING SUCH RELIEF.
II
THE COURT OF APPEALS ERRED IN FAILING TO HOLD THAT THE
CERTIFICATION AGAINST FORUM-SHOPPING ATTACHED BY
RESPONDENT TO ITS PETITION FOR CERTIORARI AND PROHIBITION
IS FATALLY DEFECTIVE.
III
THE COURT OF APPEALS ERRED IN HOLDING THAT THE TRIAL
COURT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION IN
DECLARING RESPONDENT TO HAVE WAIVED ITS RIGHT TO ADDUCE
EVIDENCE TO COUNTER PETITIONER’S EVIDENCE IN SUPPORT OF
ITS APPLICATION FOR PRELIMINARY INJUNCTIVE RELIEF.
IV
THE COURT OF APPEALS ERRED IN HOLDING THAT THE
PRELIMINARY INJUNCTIVE ORDER ISSUED IN CIVIL CASE NO. 96-
76944 PREJUDGES THE CASE.30
The petition has merit.
First. Petitioner points out that while the Court of Appeals categorically
stated that it did not commit forum-shopping when it filed its counterclaim for
infringement (to the petitioner’s complaint for damages in the Regional Trial
Court of Manila, Branch 1 — Civil Case No. 96-76944) as the causes of
action in the said civil case and the two inter partes cases (Inter
Partes Cases Nos. 4216 and 4217 pending before the BPTTT) are different
Page 45 of 143
and do not involve the same subject matter and issues, it erred in applying
the "doctrine of primary jurisdiction." The appeals court declared that the trial
court never had the authority to hear and grant petitioner’s prayer for
injunctive relief nor to proceed with the hearing of the case in view of the
pendency of the two inter partes cases.
Petitioner is a holder of Certificate of Registration No. 1379-A for its Levi’s
trademarks. The registration gives rise to a presumption of its validity and the
right to the exclusive use of the same. As set forth in Section 17 of Republic
Act (R.A.) No. 166 or "The Trademark Law," an entity having a duly
registered trademark can file a suit against another entity for the protection of
its right:
Sec. 17. Grounds for cancellation. — Any person, who believes that he is or
will be damaged by the registration of a mark or trade-name, may, upon the
payment of the prescribed fee, apply to cancel said registration upon any of
the following grounds:
(a) That the registered mark or trade-name becomes the common descriptive
name of an article or substance on which the patent has expired;
(b) That it has been abandoned;
(c) That the registration was obtained fraudulently or contrary to the
provisions of section four, Chapter II hereof;
(d) That the registered mark or trade-name has been assigned, and is being
used by, or with the permission of, the assignee, so as to misrepresent the
source of the goods, business or services in connection with which the mark
or trade-name is used; or
(e) That cancellation is authorized by other provisions of this Act.
Section 27 thereof states that the proper Regional Trial Court shall have
jurisdiction over the damage suits.
In Conrad and Company, Inc. v. Court of Appeals,31 as reiterated in the case
of Shangri-La International Hotel Management Ltd. v. Court of Appeals,32 the
Court clarified that while an administrative cancellation of a registered
trademark, on any of the grounds under Section 17 of R.A. No. 166, is within
the ambit of the BPTTT, an action for infringement or any other incidental
remedy sought is within the jurisdiction of the ordinary courts. Thus,
IPL- Assignment No. 6
. . . It might be mentioned that while an application for the
administrative cancellation of a registered trademark on any of the grounds
enumerated in Section 17 of Republic Act No. 166, as amended, otherwise
known as the Trade-Mark Law, falls under the exclusive cognizance of
BPTTT (Sec. 19, Trade-Mark Law), an action, however, for infringement or
unfair competition, as well as the remedy of injunction and relief for damages,
is explicitly and unquestionably within the competence and jurisdiction of
ordinary courts.
...
Surely, an application with BPTTT for an administrative cancellation of a
registered trade mark cannot per se have the effect of restraining or
preventing the courts from the exercise of their lawfully conferred jurisdiction.
A contrary rule would unduly expand the doctrine of primary jurisdiction
which, simply expressed, would merely behoove regular courts, in
controversies involving specialized disputes, to defer to the findings or
resolutions of administrative tribunals on certain technical matters. This rule,
evidently, did not escape the appellate court for it likewise decreed that for
"good cause shown, the lower court, in its sound discretion, may suspend the
action pending outcome of the cancellation proceedings" before BPTTT.
(Underscoring supplied.)
The passage of Republic Act No. 8293, otherwise known as the "Intellectual
Property Code of the Philippines,"33expanded the rights accorded to an
owner of a registered trademark. Sections 151 (2), 156, and 161 thereof
state:
Section 151.2. Notwithstanding the foregoing provisions, the court or the
administrative agency vested with jurisdiction to hear and adjudicate any
action to enforce the rights to a registered mark shall likewise exercise
jurisdiction to determine whether the registration of said mark may be
cancelled in accordance with this Act. The filing of a suit to enforce the
registered mark with the proper court or agency shall exclude any other court
or agency from assuming jurisdiction over a subsequently filed petition to
cancel the same mark. On the other hand, the earlier filing of petition to
cancel the mark with the Bureau of Legal Affairs {formerly BPTTT] shall not
constitute a prejudicial question that must be resolved before an action to
enforce the rights to same registered mark may be decided.(Sec. 17, R.A.
No. 166a)
Section 156. Actions, and Damages and Injunction for Infringement. — 156.1
The owner of a registered mark may recover damages from any person who
infringes his rights, and the measure of the damages suffered shall be either
the reasonable profit which the complaining party would have made, had the
Page 46 of 143
defendant not infringed his rights, or the profit which the defendant actually
made out of the infringement, or in the event such measure of damages
cannot be readily ascertained with reasonable certainty, then the court may
award as damages a reasonable percentage based upon the amount of
gross sales of the defendant or the value of the services in connection with
which the mark or trade name was used in the infringement of the rights of
the complaining party (Sec. 23, first par., R.A. No. 166a).
156.2 On application of the complainant, the court may impound during the
pendency of the action, sales invoices and other documents evidencing
sales. (n)
156.3. In cases where actual intent to mislead the public or to defraud the
complainant is shown, in the discretion of the court, the damages may be
doubled. (Sec. 23, first par., R.A. No. 166)
156.4 The complainant, upon proper showing, may also be granted
injunction. (Sec. 23, second par., R.A. No. 166a)
Section 161. Authority to Determine Right to Registration.  — In any action
involving a registered mark, the court may determine the right to registration,
order the cancellation of a registration, in whole or in part, and otherwise
rectify the register with respect to the registration of any party to the action in
the exercise of this. Judgment and orders shall be certified by the court to the
Director, who shall make appropriate entry upon the records of the Bureau,
and shall be controlled thereby (Sec. 25, R.A. No. 166a).
Sections 155 (2), 156, and 163 of the said law further provide for the remedy
of an owner of a registered mark to institute an action for infringement or
damages against a person or entity that may reproduce, counterfeit, copy or
colorably imitate a registered mark or a dominant feature thereof and apply
such reproduction, counterfeit, copy or colorable imitation to labels, signs,
prints, packages, wrappers, receptacles or advertisements intended to be
used in commerce upon or in connection with the sale, offering for sale,
distribution, or advertising of goods or services on or in connection with which
such use is likely to cause confusion, or to cause mistake, or to deceive.
Finally, Rule 8, Section 7 of the Regulations on Inter Partes Proceedings,
provides:
Section 7. Effect of filing of a suit before the Bureau or with the proper court.
— The filing of a suit to enforce the registered mark with the proper court or
Bureau shall exclude any other court or agency from assuming jurisdiction
over a subsequently filed petition to cancel the same mark. On the other
hand, the earlier filing of petition to cancel the mark with the Bureau shall not
IPL- Assignment No. 6
constitute a prejudicial question that must be resolved before an action to
enforce the rights to same registered mark may be decided. (Emphasis
supplied)
It bears stressing that an action for infringement or unfair competition,
including the available remedies of injunction and damages, in the regular
courts can proceed independently or simultaneously with an action for the
administrative cancellation of a registered trademark in the BPTTT. As
applied to the present case, petitioner’s prior filing of two inter partes cases
against the respondent before the BPTTT for the cancellation of the latter’s
trademark registrations, namely, "LIVE’S" and "LIVE’S Label Mark," does not
preclude petitioner’s right (as a defendant) to include in its answer (to
respondent’s complaint for damages in Civil Case No. No. 96-76944) a
counterclaim for infringement with a prayer for the issuance of a writ of
preliminary injunction.
Second. As to the procedural matter, petitioner argues that the Court of
Appeals erred in giving due course to the respondent’s petition
for certiorari even if it was the latter’s counsel, Atty. Danilo A. Soriano, not
one of its duly authorized officers, who executed the certification of non-
forum shopping.
Section 5, Rule 7 of the Rules of Civil Procedure incorporating Administrative
Circular Nos. 28-91 (effective January 1, 1992) and 04-94 (effective April 1,
1994) states the requirement of a plaintiff or petitioner to include in his
initiatory pleading or petition a certification of non-forum shopping. Thus,
Sec. 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
Page 47 of 143
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.
In Digital Microwave Corp. v. CA,34 this Court gave the rationale for this rule,
namely, that the certification against forum shopping is required to be
accomplished by petitioner himself because only the petitioner himself has
actual knowledge of whether or not he has initiated similar actions or
proceedings in different courts or agencies. Even his counsel may be
unaware of such fact as he may only be aware of the action for which he has
been retained. As to corporations, the law requires that the certification could
be made by its duly authorized director or officer. The Court also stresses
that the petitioner’s non-compliance and utter disregard of the rules cannot
be rationalized by invoking the policy of liberal construction.
The requirement of certification against forum shopping under the Rules is to
be executed by the petitioner, or in the case of a corporation, its duly
authorized director or officer, but not petitioner’s counsel whose professional
services have been engaged to handle the subject case. The reason is that it
is the petitioner who has personal knowledge whether there are cases of
similar nature pending with the other courts, tribunals, or agencies. Thus, in
the present case, the Court of Appeals should have outrightly dismissed the
petition for certiorari filed by the respondent (as therein petitioner in the
appeals court) due to the defective certification of non-forum shopping. The
certification made by Atty. Soriano, counsel for the respondent, who is not
one of its duly authorized directors or officers, is defective.Even if Atty.
Soriano was the "in-house counsel," the fact remains that no board
resolution, or even a Secretary’s Certificate containing the board resolution,
was submitted to show that he was indeed authorized to file the said petition
in the Court of Appeals.
Third. Petitioner avers that the Court of Appeals erred in finding that the
respondent was denied due process. It contends that the trial court had
correctly ruled that respondent was deemed to have waived its right to
present evidence due to its non-appearance at the scheduled hearing (to
oppose the petitioner’s application for the issuance of a writ of preliminary
injunction) on December 4, 1996.
The records show that respondent, through its former counsel, Atty. Alfonso
R. Yatco, was present during the hearing on November 6, 1996 as reflected
in the minutes of the court proceedings that day. The counsels for both
parties had been duly notified in open court. The Branch Clerk of Court of
RTC of Manila, Branch 1, Atty. Joselito C. Frial, even made a notation in the
minutes that respondent (as oppositor) shall be given a period of 10 days to
IPL- Assignment No. 6
interpose its opposition to the petitioner’s prayer for injunctive relief. 35 The
Order dated November 6, 1996 states:
After witness Atty. Gilbert Raymond T. Reyes [witness for the petitioner] had
finished his testimony, the counsel for defendant [herein petitioner] moved for
and was allowed ten (10) days from today within which to file a written formal
offer of exhibits, copy furnish[ed] the counsel for plaintiff [herein respondent]
who is allowed a similar period of time from receipt thereof within which to file
comment and/or objection.
In the meantime, let the hearing be continued on December 4 & 11, 1996,
both at 9:00 a.m. as previously scheduled.
The counsels are notified of this order in open court.
SO ORDERED.36
However, on December 4, 1996, Atty. Yatco failed to appear without
proferring any valid reason which prompted the trial court to issue an order
that respondent was deemed to have waived its right to present evidence:
On call for hearing, only the counsel for defendant [herein petitioner]
appeared. There was no appearance for plaintiff [herein respondent]
although its counsel was duly notified. In view thereof, upon motion of
counsel for defendant, plaintiff is considered to have waived its right to
present evidence to controvert defendant’s application for a writ of
preliminary injunction, which, consequently, is hereby deemed submitted for
resolution.
The counsel for defendant is notified in open court. Furnish the counsel for
plaintiff with a copy hereof.
SO ORDERED.37
Respondent explained to the trial court that its former counsel, Atty. Yatco,
had honestly thought that the December 4, 1996 hearing had been
rescheduled to December 11, 1996 per agreement with the petitioner’s
counsel. This is not a sufficient ground. It was correct for the trial court, upon
motion of petitioner, to consider the matter submitted for resolution on the
basis of petitioner’s evidence. Respondent cannot find solace in its lame
excuse of honest mistake which was, in fact, negligence and lack of
vigilance.
Page 48 of 143
Fourth. Petitioner claims that the assailed orders of the trial court, dated No costs.
December 10, 1996 and April 11, 1997, did not prejudge the case. On the
other hand, respondent counters that the trial court’s order dated December SO ORDERED.
10, 1996 amounted to a prejudgment of the case, to wit: that its LIVE’s
backpocket design was not copyrightable because it was neither an original
work nor a novel design; that it was a copy or slavish imitation of petitioner’s
LEVI’s Arcuate trademark; and that no rights attendant to a copyright can
ever attach to respondent’s backpocket design.

The trial court granted petitioner’s prayer for the issuance of a writ of
preliminary injunction in its answer with counterclaim (to respondent’s
complaint for damages). The writ did not have the effect of prejudging or
disposing of the merits of the case, but merely enjoined the respondent’s acts
of manufacturing, distributing, selling, or offering for sale the jeans which had
allegedly incorporated exact or colorable imitations of the products belonging
to petitioner. The Order dated April 11, 1997 of the trial court denying the
respondent’s motion for reconsideration categorically stated that the said
Order did not amount to a prejudgment of the case. Petitioner has yet to
establish during the trial that it is entitled to a permanent injunction by reason
of respondent’s confusingly similar LIVE’S products. Otherwise, the trial court
could declare that the LIVE’S trademark belonging to respondent was not
confusingly similar with the LEVI’s trademark of petitioner.

Indeed, a writ of preliminary injunction is generally based solely on initial and

incomplete evidence adduced by the applicant (herein petitioner). The
evidence submitted during the hearing of the incident is not conclusive, for
only a "sampling" is needed to give the trial court an idea of the justification
for its issuance pending the decision of the case on the merits. As such, the
findings of fact and opinion of a court when issuing the writ of preliminary
injunction are interlocutory in nature. Moreover, the sole object of a
preliminary injunction is to preserve the status quo until the merits of the case
can be heard. Since Section 4 of Rule 58 of the Rules of Civil Procedure
gives the trial courts sufficient discretion to evaluate the conflicting claims in
an application for a provisional writ which often involves a factual
determination, the appellate courts generally will not interfere in the absence
of manifest abuse of such discretion.38 A writ of preliminary injunction would
become a prejudgment of a case only when it grants the main prayer in the
complaint or responsive pleading, so much so that there is nothing left for the
trial court to try except merely incidental matters. 39 Such fact does not obtain
in the present case.

WHEREFORE, the petition is GRANTED and the Decision of the Court of

Appeals dated August 13, 1997 and its Resolution dated March 5, 1998 are
REVERSED and SET ASIDE. The Regional Trial Court of Manila, Branch 1
is ORDERED to proceed with the hearing of Civil Case No. 96-76944 with
dispatch.

IPL- Assignment No. 6 Page 49 of 143

[61] No. L-11818. July 31, 1959
LA ESTRELLA DISTILLERY, INC., petitioner, vs. THE DIRECTOR OF
PATENTS, CHENG CHIONG, and Foo U. CHING & Co., respondents.
TRADEMARK; CANCELLATION OF; PETITIONER MUST SHOW THAT
HE WILL BE DAMAGED BY CONTINUANCE OF TRADEMARK.—Despite the
favorable decision of the Director of Patents, the petitioner moved for its
reconsideration praying for the elimination of the findings that the label trademarks
of the petitioner and respondent are distinctly different. The reason given for this
motion for reconsideration is that the similarity of the trademarks having been
admitted, the only issues to be decided were: (1) whether or not the label trademark
of the respondent consisted a valid trademark; and (2) whether or not the registration
of said trademark had been obtained through fraud and false representation; hence, it
was error for the Director of Patents to disregard them and to pass on the question of
the similarity or dissimilarity of the label trademarks. Held: These two issues are not
important. Even if proved, these two facts were not sufficient to warrant the
cancellation of the respondent's label trademark. In order that these two facts might
produce cancellation, it was necessary that they be coupled with a showing that the
maintenance of the respondent's label trademark on the register would damage the
petitioner. The continuance of the respondent's label trademark on the register would
damage the petitioner only if the respondent's and petitioner's marks were similar;
hence the necessity and the importance of making a finding on the similarity or
dissimilarity between the two marks.
BARRERA, J.:
La Estrella Distillery, Inc. (hereinafter referred to as La Estrella) and Cheng
Chiong & Foo U. Ching Company (Cheng Chiong for short) are both holders
of Supplemental Registration label trademarks.
Before the Patent Office, proceedings for the cancellation of La Estrella's
label by trademark registration No. SR-13 were instituted by Cheng Chiong
under Section 19-A of Republic Act No. 166. After answer by La Estrella and
after trial on the merits, the Director of Patents found that the two label
trademarks are distinctly differently in appearance and possess different
identifying marks which make each satisfy the statutory requirement for
registration — the requirement of being capable of distinguishing the
particular goods upon which each is used. The Director accordingly held that
no damage to Cheng Chiong could possibly result from La Estrella's
registration and use of its own label trademark and dismissed the petition for
its cancellation.
IPL- Assignment No. 6
Despite this favorable decision, La Estrella moved for its reconsideration
praying for the elimination of "the findings made therein that the label
trademarks of the petitioner and respondents are distinctly different" and "that
in lieu thereof a pronouncement be made to the effect that said label
trademarks are similar." The reason given for this motion for reconsideration
is that the matter of similarly or dissimilarity has not been raised in issue and
that in fact the parties have impliedly admitted that the labels are similar.
Its motion for reconsideration having been denied, La Estrella has taken the
present appeal and here urges the same contention that the Director of
Patents has committed error in making a pronouncement in his decision that
the two labels in question are not similar, contrary to the pleadings and
evidence presented by the parties.
This appeal is without merit. While appellant attacks the grounds upon which
the decision of the Director of Patents is based, it does not question the
dispositive part thereof because it is favorable to it. Appellant claims that the
matter of dissimilarity of the two labels has never been put in issue. This is
not true. The whole theory upon which this case was presented, tried and
decided in the Patent Office was predicated mainly on this question.
The pleadings of the parties disclose their respective contentions. The
petition for cancellation alleges, among others:
(1) That La Estrella's label "is not and cannot be a trademark as defined by
law" because it is a "common label affixed to rice wine, Chinese wine and
similar goods and also to other kinds of goods."
(2) That "it is also used by petitioner (Cheng Chiong) and other
manufacturers of same or similar products."
(3) That therefore petitioners (Cheng Chiong) deem themselves "prejudiced
and/or injured damage by said registration."
The answer of La Estrella avers:
(1) That its trademark "meets all the necessary elements of a valid
trademark" in that it is "so disposed as to attract attention, impress the
memory, and advertises more effectually the origin of the article to which it is
attached."
Page 50 of 143
(2) That it has been long and continuously used by it "for no other purpose
than to further distinguish the products of said respondent (La Estrella) from
those of its competitors."
(3) "That the trademark in question is the original and exclusive creation of
respondent" (La Estrella).
During the trial, Cheng Chiong, in support of their claim that La Estrella's
label trademark is "publici juris" and therefore incapable of distinguish La
Estrella's goods, presented over a dozen labels of different merchants
including his own. To counteract this, La Estrella exhibited its own label in
color and other evidence to prove that its trademark sufficiently identifies and
differentiates its merchandise from those of its competitors.
The record disclose similar testimonies of witnesses and statements of
counsel of both parties sustaining respectively their opposing stands.
In disposing of and denying the motion for reconsideration of appellant La
Estrella, the Director of Patents correctly ruled:
It is alleged in said motion that the Director of Patents erred (1) in finding that
the label trade-mark of the petitioner and of the respondent-registrant are not
similar, and (2) in making pronouncement on why they are not similar.
Under Sec. 19-A Rep. Act 166, as amended, a label, used as a trademark,
may be registered on the Supplemental Register provided (1) it is not a mark
prescribed or prohibited under paragraph (a), (b), (c) and (d) of Sec. 4 of the
same acts; (2) it is capable of distinguishing the goods upon it is used; (3) it
had been used by the applicants for registration for one year next preceding
the filing of the application.
Under the same Sec. 19-A, a person may petition for the cancellation of the
registration on the Supplementary Register was not label, used as a
trademark, provided (1) the registrant was not entitled to register the mark at
the time he filed his application for its registration; and (2) provided the
register of the registered mark.
Under the same Sec. 19-A, among the facts that they may be established to
show that the registrant was not entitled to the registration of the mark sought
to be cancelled are (1) the mark was prescribed under paragraph (a), (b), (c)
and (d), of Sec. 4 of the Rep. Act 166, as amended; (2) the mark was and is
not capable of distinguishing the registrant's goods; (3) the registrants had
never used the mark or had not actually used the mark for one year next
preceding the filing of his application for registration; and (4) the registrants
had abandoned his mark after registration. But although the petitioner for
IPL- Assignment No. 6
cancellation may succeed in establishing one or all of the above four facts,
his petition for cancellation will nevertheless be dismissed, under the same
Sec. 19-A unless he is able clearly to establish that he will damaged by the
continuance on the register of the mark he seeks to cancel.
Of the two grounds alleged by the petitioner for cancellation (loser in this
case, for canceling the respondent's mark, the one pertinent to the instant
motion of the respondent (winner in this case) for reconsideration, is the
following that respondent's label trademark was and is common to the trade,
being used not only by the respondent, but by the petitioner and by the New
Occidental Distillery as well. If this allegation be true, then the respondent's
trademark is not only incapable of distinguishing respondent's goods, but its
continuance on the register will damage the petitioner for cancellation.
To determine whether respondent's label trademark was incapable of
distinguishing respondent's goods and whether its continuance on the
register would damage the petitioner for cancellation, it was necessary for
this tribunal to examine the label trademark of the respondent, the petitioner,
and the New Occidental Distillery and to make a finding thereon. The finding
was that the label trademark were different; that therefore, respondent's
goods, the petitioner for cancellation would not be damaged by the
continuance on the registers of the respondent's label trademark, and
petitioner's petition for cancellation should be dismissed.
xxx     xxx     xxx
It is urged by the respondent's that the similarity of the label trademark
having been admitted the only issue to be decided were —
1. Whether or not the label trademark of the respondent constitutes a valid
trademark as defined by law; and
2. Whether or nor not the registration of respondent's trademark in the
Supplemental Register had been obtained trough fraud and false
representation.
and, because these were the only issues, it was an error, for this tribunal to
disregard them and to pass on the questions of the similarity of dissimilarity
of the label trademark.
These two issues are not important. What if the respondent's label trademark
was not valid trademark, not registerable under Sec. 19-A of Rep. Act No.
166? What if the registration of the respondent's label trademark was
obtained thru the misrepresentation that respondent had been using the
same since 1905? Even if proved, these two facts were not sufficient to
Page 51 of 143
warrant the cancellation of the respondent's label trademark. In order that
these two facts produce cancellation, it was necessary that they he coupled
with a showing that the maintenance of the respondent's label trademark on
the register would damage the petitioner. The continuance of the
respondent's label trademark and petitioner's on the register would damage
the petitioner for cancellation only if the respondent's mark were similar.
Hence the necessity and the importance of this tribunal making a finding on
the similarity or dissimilarity between the two marks.

For the above reasons it is ruled that this tribunal committed no error as
alleged in the instant motion for reconsideration. The motion for
reconsideration is, therefore, denied.

We find no error either in the reasoning or in the conclusion reached by the

Director of Patents.

Wherefore, the present petition for review is hereby dismissed, with costs
against the petitioner. It is so ordered.

IPL- Assignment No. 6 Page 52 of 143

[62] No. L-53672. May 31, 1982
BATA INDUSTRIES, LTD., petitioner, vs. THE HONORABLE COURT OF
APPEALS; TIBURCIO S. EVALLE, DIRECTOR OF PATENTS, NEW
OLYMPIAN RUBBER PRODUCTS CO., INC., respondents.
Courts; Courts of Appeals; Judgments; There is nothing wrong where a
new set of Justices in the Court of Appeals reconsiders a decision of the Justices they
have replaced.—It should be stated that there is nothing wrong and unusual when a
decision is reconsidered. This is so when the reconsideration is made by a division
composed of the same justices who rendered the decision but much more so when
the reconsideration is made by a different set of justices as happened in this case.
Obviously, the new set of justices would have a fresh perspective unencumbered by
the views expressed in the decision sought to be reconsidered. Nor should it be a
cause for wonder why Justices Gutierrez, Agrava and Nocon had replaced the
original justices. Justice Cortez resigned to become a candidate for the governorship
of Cagayan (he was elected), while Justices Serrano and Jimenez retired upon
reaching the age of 65.
Tradenames and Trademarks; A slight goodwill generated by a foreign
company before World War II can be considered an abandoned after more than 35
years.—We are satisfied from the evidence that any slight goodwill generated by the
Czechoslovakian product during the Commonwealth years was completely
abandoned and lost in the more than 35 years that have passed since the liberation of
Manila from the Japanese troops.
Same; Same.—The applicant-appellee has reproduced excerpts from the
testimonies of the opposer-appellant’s witnesses to prove that the opposer-appellant
was never a user of the trademark BATA either before or after the war, that the
appellant is not the successor-in-interest of Gerbec and Hrdina who were not its
representatives or agents, and could not have passed any rights to the appellant, that
there was no privity of interest between the Czechoslovakian owner and the
Canadian appellant and that the Czechoslovakian trademark has been abandoned in
Czechoslovakia.
Same; A foreign company selling a brand (BATA) of shoes abroad but not
in the Philippines has no goodwill that would be damaged by registration of the
same trademark in favor of a domestic corporation which has been using it for years
here.—The appellant has no Philippine goodwill that would be damaged by the
registration of the mark in the appellee’s favor. We agree with the decision of the
Director of Patents which sustains, on the basis of clear and convincing evidence, the
right of the appellee to the registration and protection of its industrial property, the
BATA trademark.
IPL- Assignment No. 6
RESOLUTION
ABAD SANTOS, J.:
On October 27, 1980, the petition in this case was denied for lack of merit.
Petitioner moved to reconsider and as required, private respondent submitted
comments. A hearing on the motion for reconsideration was held on June 7,
1982. This is Our resolution on the motion for reconsideration.
In Inter Partes Case No. 654 of the Philippine Patent Office, New Olympian
Rubber Products Co., Inc. sought the registration of the mark BATA for
casual rubber shoes. It alleged that it has used the mark since July 1, 1970.
Registration was opposed by Bata Industries, Ltd., a Canadian corporation,
which alleged that it owns and has not abandoned the trademark BATA.
Stipulated by the parties were the following:
1. Bata Industries, Ltd. has no license to do business in the Philippines;
2. It is not presently selling footwear under the trademark BATA in the
Philippines; and
3. It has no licensing agreement with any local entity or firm to sell its
products in the Philippines.
Evidence received by the Philippine Patent Office showed that Bata shoes
made by Gerbec and Hrdina of Czechoslovakia were sold in the Philippines
prior to World War II. Some shoes made by Bata of Canada were perhaps
also sold in the Philippines until 1948. However, the trademark BATA was
never registered in the Philippines by any foreign entity. Under the
circumstances, it was concluded that "opposer has, to all intents and
purposes, technically abandoned its trademark BATA in the Philippines."
Upon the other hand, the Philippine Patent Office found that New Olympian
Rubber Products Co., Inc.:
... has overwhelmingly and convincingly established its right to the trademark
BATA and consequently, its use and registration in its favor. There is no
gainsaying the truth that the respondent has spent a considerable amount of
money and effort in popularizing the trademark BATA for shoes in the
Philippines through the advertising media since it was lawfully used in
commerce on July 1, 1970. It can not be denied, therefore, that it is the
Page 53 of 143
respondent-applicant's expense that created the enormous goodwill of the
trademark BATA in the Philippines and not the opposer as claimed in its
opposition to the registration of the BATA mark by the respondent.
Additionally, on evidence of record, having also secured (three) copyright
registrations for the word BATA, respondent-applicant's right to claim
ownership of the trademark BATA in the Philippines, which it claims to be a
Tagalog word which literally means "a little child" (Exh. 5), is all the more
fortified.
The Philippine Patent Office dismissed the opposition and ordered the
registration of the trademark BATA in favor of the domestic corporation.
Appeal from the decision of the Philippine Patent Office was made to the
Court of Appeals by Bata Industries, Ltd. In a decision penned by Justice
Justiniano P. Cortez dated August 9, 1979, with Justices Mariano Serrano
and Jose B. Jimenez concurring, the PPO decision was reversed. A motion
for reconsideration filed by New Olympian Rubber Products Co., Inc. was
denied on October 17, 1979, by the same justices.
However, in a resolution on a second motion for reconsideration penned by
Justice Hugo E. Gutierrez who is now a member of this Court, to which
Justices Corazon J. Agrava and Rodolfo A. Nocon concurred (with the former
filing a separate opinion), the decision of August 9, 1979, was set aside and
that of the Director of Patents was affirmed.
In addition to points of law, Bata Industries, Ltd. questions "the
circumstances surrounding the issuance of the questioned resolutions of the
respondent Court of Appeals." In effect, it insinuates that there was
something wrong when a new set of justices rendered a completely different
decision.
We are satisfied from the evidence that any slight goodwill generated by the
Czechoslovakian product during the Commonwealth years was completely
abandoned and lost in the more than 35 years that have passed since the
liberation of Manila from the Japanese troops.
The applicant-appellee has reproduced excerpts from the testimonies of the
opposer-appellant's witnesses to prove that the opposer-appellant was never
a user of the trademark BATA either before or after the war, that the
appellant is not the successor-in-interest of Gerbec and Hrdina who were not
is representatives or agents, and could not have passed any rights to the
appellant, that there was no privity of interest between the Czechoslovakian
owner and the Canadian appellant and that the Czechoslovakian trademark
has been abandoned in Czechoslovakia.
We agree with the applicant-appellee that more than substantial evidence
supports the findings and conclusions of the Director of Patents. The
appellant has no Philippine goodwill that would be damaged by the
registration of the mark in the appellee's favor. We agree with the decision of
the Director of Patents which sustains, on the basis of clear and convincing
evidence, the right of the appellee to the registration and protection of its
industrial property, the BATA trademark.
WHEREFORE, the motion for reconsideration is hereby denied for lack of
merit. No special pronouncement as to costs.
SO ORDERED.

It should be stated that there is nothing wrong and unusual when a decision
is reconsidered. This is so when the reconsideration is made by a division
composed of the same justices who rendered the decision but much more so
when the reconsideration is made by a different set of justices as happened
in this case. Obviously, the new set of justices would have a fresh
perspective unencumbered by the views expressed in the decision sought to
be reconsidered. Nor should it be a cause for wonder why Justices Gutierrez,
Agrava and Nocon had replaced the original justices. Justice Cortez resigned
to become a candidate for the governorship of Cagayan (he was elected),
while Justices Serrano and Jimenez retired upon reaching the age of 65.

On the merits, the extended resolution penned by Justice Gutierrez does not
have to be fortified by Us. We agree with Mr. Justice Gutierrez when he says:

IPL- Assignment No. 6 Page 54 of 143

[63]
ETEPHA, A.G., petitioner,  vs.DIRECTOR OF PATENTS and WESTMONT
PHARMACEUTICALS, INC., respondents.
Objects of trademarks.—The objects of a trademark 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.
Same; Infringement of trademarks; “Colorable imitation” explained.—The
validity of a cause for infringement is predicated upon colorable imitation. The
phrase “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, and
to cause him to purchase the one supposing it to be the other.” (87 C.J.S. 287.)
Same; Word “Tussin” in combination with another word or phrase may be
used as a trademark.—“Tussin” is merely descriptive; it is generic; it furnishes to the
buyer no indication of the origin of the goods; it is open for appropriation by anyone.
It is accordingly barred from registration as a trademark. But while “Tussin” by itself
cannot thus be used exclusively to identify one’s goods, it may properly become the
subject of a trademark “by combination with another word or phrase.” (Annotations,
Lawyers’ Reports, Annotated, 1918 A, p. 966.)
Same; How similarity and dissimilarity of trademarks is determined.—A
practical approach to the problem of similarity or dissimilarity is to go into the whole
of the two trademarks pictured in their manner of display. Inspection should be
undertaken from the viewpoint of prospective buyer. The trademark complained of
should be compared and contrasted with the purchaser’s memory (not in
juxtaposition) of the trademark said to be infringed. (87 C.J.S. 288-291.) Some such
factors as “sound; appearance; form, style, shape, size or format; color; ideas
connoted by marks; the meaning, spelling, and pronunciation of words used and the
setting in which the words appears” may be considered. (87 C.J.S. 291-292.) For,
indeed, trademark infringement is a form of unfair competition. (Clarke vs. Manila
Candy Co., 36 Phil. 100, 106; Co Tiong Sa vs. Director of Patents, 95 Phil. 1, 4.)
Same; When there is confusion between trademarks.— Confusion is likely
between trademarks only if their overall presentations in any of the particulars of
sound, appearance, or meaning are such as would lead the purchasing public into
believing that the products to which the marks are applied emanated from the same
source.
IPL- Assignment No. 6
Same; “Pertussin” and “Atussin” are different.—Considering the two
labels in question—Pertussin and Atussin.—as they appear on the respective labels,
these words are presented to the public in different styles of writing and methods of
design. The horizontal plain, block letters of Atussin and the diagonally and
artistically upward writing of Pertussin leave distinct visual impressions. One look is
enough to denude the mind of that illuminating similarity so essential for a trademark
infringement case to prosper. Moreover, the two words do not sound alike— when
pronounced. There is not much phonetic similarity between the two. In Pertussin the
pronunciation of the prefix “Per”, whether correct or incorrect, includes a
combination of three letters P, e and r; whereas, in Atussin the whole words starts
with the single letter A added to the suffix “tussin.” Appeals to the ear are dissimilar.
And this, because in a word-combination, the part that comes first is the most
pronounced.
Same; In the solution of trademark infringement problem, the class of
persons who buy the product should be considered.—In the solution of a trademark
infringement problem, regard too should be given to the class of persons who buy the
particular product and the circumstances ordinarily attendant to its acquisition (87
C.J.S. 295). The medicinal preparations, clothed with the trademarks in question, are
unlike articles of everyday use such as candies, ice cream, milk, soft drinks and the
like which may be freely obtained by anyone, anytime, anywhere. Petitioner’s and
respondent’s products are to be dispensed upon medical prescription. An intending
buyer must have to go first to a licensed doctor of medicine; he receives instructions
as to what to purchase; he examines the product sold to him; he checks to find out
whether it conforms to the medical prescription. Similarly, the pharmacist or druggist
verifies the medicine sold. The margin of error in the acquisition of one for the other
is quite remote. It is possible that buyers might be able to obtain Pertussin or Atussin
without prescription. When this happens, then the buyer must be one thoroughly
familiar with what he intends to get, else he would not have the temerity to ask for a
medicine—specifically needed to cure a given ailment. For a person who purchases
with open eyes is hardly the man to be deceived.
SANCHEZ, J.:
To the question: May trademark ATUSSIN be registered, given the fact that
PERTUSSIN, another trademark, had been previously registered in the
Patent Office? — the Director of Patents answered affirmatively. Hence this
appeal.
On April 23, 1959, respondent Westmont Pharmaceuticals, Inc., a New York
corporation, sought registration of trademark "Atussin" placed on its
"medicinal preparation of expectorant antihistaminic, bronchodilator sedative,
ascorbic acid (Vitamin C) used in the treatment of cough". The trademark is
used exclusively in the Philippines since January 21, 1959. 1
Page 55 of 143
Petitioner, Etepha, A. G., a Liechtenstin (principality) corporation, objected.
Petitioner claims that it will be damaged because Atussin is so confusedly
similar to its Pertussin (Registration No. 6089, issued on September 25,
1957) used on a preparation for the treatment of coughs, that the buying
public will be misled into believing that Westmont's product is that of
petitioner's which allegedly enjoys goodwill.
1. The objects of a trademark are "to point out distinctly the origin or
ownership of the articles to which it is affixed, to secure to him who has been
instrumental in bringing into market a superior article or merchandise the fruit
of his industry and skill, and to prevent fraud and imposition." 2 Our over-all
task then is to ascertain whether or not Atussin so resembles Pertussin "as to
be likely, when applied to or used in connection with the goods ... of the
applicant, to cause confusion or mistake or to deceive purchasers". 3 And, we
are to be guided by the rule that the validity of a cause for infringement is
predicated upon colorable imitation. The phrase "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, and to cause
him to purchase the one supposing it to be the other."4
2. That the word "tussin" figures as a component of both trademarks is
nothing to wonder at. The Director of Patents aptly observes that it is "the
common practice in the drug and pharmaceutical industries to 'fabricate'
marks by using syllables or words suggestive of the ailments for which they
are intended and adding thereto distinctive prefixes or suffixes". 5 And
appropriately to be considered now is the fact that, concededly, the "tussin"
(in Pertussin and Atussin) was derived from the Latin root-word "tussis"
meaning cough.6
"Tussin" is merely descriptive; it is generic; it furnishes to the buyer no
indication of the origin of the goods; it is open for appropriation by anyone. It
is accordingly barred from registration as trademark. With jurisprudence
holding the line, we feel safe in making the statement that any other
conclusion would result in "appellant having practically a monopoly" 7 of the
word "tussin" in a trademark.8
While "tussin" by itself cannot thus be used exclusively to identify one's
goods, it may properly become the subject of a trademark "by combination
with another word or phrase". 9 And this union of words is reflected in
petitioner's Pertussin  and respondent's Atussin, the first with prefix "Per" and
the second with Prefix "A".1äwphï1.ñët
3. A practical approach to the problem of similarity or dissimilarity is to go into
the whole of the two trademarks pictured in their manner of display.
IPL- Assignment No. 6
Inspection should be undertaken from the viewpoint of a prospective buyer.
The trademark complained of should be compared and contrasted with the
purchaser's memory (not in juxtaposition) of the trademark said to be
infringed. 10 Some such factors as "sound; appearance; form, style, shape,
size or format; color; ideas connoted by marks; the meaning, spelling, and
pronunciation, of words used; and the setting in which the words appear"
may be considered. 11 For, indeed, trademark infringement is a form of unfair
competition. 12
We take a casual look at the two labels — without spelling out the details —
bearing in mind the easy-to-remember earmarks thereof. Respondent's label
underscores the trademark Atussin in bold, block letters horizontally written.
In petitioner's, on the other hand, Pertussin is printed diagonally upwards and
across in semiscript style with flourishes and with only the first letter "P"
capitalized. Each label plainly shows the source of the medicine: petitioner's
at the foot bears "Etepha Ltd. Schaan Fl", and on top, "Apothecary E.
Taeschner's"; respondent's projects "Westmont Pharmaceuticals, Inc. New
York, USA" at the bottoms, and on the lower left side the word "Westmont"
upon a white diamond shaped enclosure and in red ink — a color different
from that of the words above and below it. Printed prominently along the left,
bottom and right edges of petitioner's label are indications of the use: "for
bronchial catarrh — whopping-cough — coughs and asthma". Respondent's
for its part briefly represents what its produce actually is - a "cough syrup".
The two labels are entirely different in colors, contents, arrangement of words
thereon, sizes, shapes and general appearance. The contrasts in pictorial
effects and appeals to the eye is so pronounced that the label of one cannot
be mistaken for that of the other, not even by persons unfamiliar with the two
trademarks. 13
On this point the following culled from a recent decision of the United States
Court of Customs and Patent Appeals (June 15, 1956) is persuasive: 14
Confusion is likely between trademarks, however, only if their  over-
all  presentations in any of the particulars of sound, appearance, or meaning
are such as would lead the purchasing public into believing that the products
to which the marks are applied emanated from the same source. In testing
this issue, fixed legal rules exist — if not in harmony, certainly in abundance
— but, in the final analysis, the application of these rules in any given
situation necessarily reflects a matter of individual judgment largely
predicated on opinion. There is, however, and can be no disagreement with
the rule that the purchaser is confused, if at all, by the marks as a whole.
4. We now consider exclusively the two words — Pertussin and Atussin — as
they appear on the respective labels. As previously adverted to, these words
are presented to the public in different styles of writing and methods of
design. The horizontal plain, block letters of Atussin and the diagonally and
Page 56 of 143
artistically upward writing of Pertussin leave distinct visual impressions. One
look is enough to denude the mind of that illuminating similarity so essential
for a trademark infringement case to prosper.

5. As we take up Pertussin and Atussin once again, we cannot escape notice

of the fact that the two words do not sound alike — when pronounced. There
is not much phonetic similarity between the two. The Solicitor General well-
observed that in Pertussin the pronunciation of the prefix "Per", whether
correct or incorrect, includes a combination of three letters P, e and r;
whereas, in Atussin the whole starts with the single letter A added to suffix
"tussin". Appeals to the ear are disimilar. And this, because in a word
combination, the part that comes first is the  most pronounced. An expositor
of the applicable rule here is the decision in the Syrocol-Cheracol
controversy. 15 There, the ruling is that trademark Syrocol (a cough medicine
preparation) is not confusedly similar to trademark Cheracol (also a cough
medicine preparation). Reason: the two words "do not look or sound enough
alike to justify a holding of trademark infringement", and the "only similarity is
in the last syllable, and that is not uncommon in names given drug
compounds".

6. In the solution of a trademark infringement problem, regard too should be

given to the class of persons who buy the particular product and the
circumstances ordinarily attendant to its acquisition. 16 The medicinal
preparation clothed with the trademarks in question, are unlike articles of
everyday use such as candies, ice cream, milk, soft drinks and the like which
may be freely obtained by anyone, anytime, anywhere. Petitioner's and
respondent's products are to be dispensed upon medical prescription. The
respective labels say so. An intending buyer must have to go first to a
licensed doctor of medicine; he receives instructions as to what to purchase;
he reads the doctor's prescription; he knows what he is to buy. He is not of
the incautious, unwary, unobservant or unsuspecting type; he examines the
product sold to him; he checks to find out whether it conforms to the medical
prescription. The common trade channel is the pharmacy or the drugstore.
Similarly, the pharmacist or druggist verifies the medicine sold. The margin of
error in the acquisition of one for the other is quite remote.

We concede the possibility that buyers might be able to obtain Pertussin or

Attusin without prescription. When this happens, then the buyer must be one
throughly familiar with what he intends to get, else he would not have the
temerity to ask for a medicine — specifically needed to cure a given ailment.
In which case, the more improbable it will be to palm off one for the other. For
a person who purchases with open eyes is hardly the man to be deceived.

For the reasons given, the appealed decision of the respondent Director of
Patents — giving due course to the application for the registration of
trademark ATTUSIN is hereby affirmed. Costa against petitioner. So ordered.

IPL- Assignment No. 6 Page 57 of 143

[64]
ESSO STANDARD EASTERN, INC., petitioner, vs. THE HONORABLE
COURT OF APPEALS** and UNITED CIGARETTE CORPORATION,
respondents.
Tradenames and Trademarks; Words and Phrases; “Infringement” of
trademark, defined.—The law defines infringement as the use without consent of the
trademark owner of any “reproduction, counterfeit, copy or colorable imitation of
any registered mark or tradename in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection with which such
use is likely to cause confusion or mistake or to deceive purchasers or others as to the
source or origin of such goods or services, or identity of such business; or reproduce,
counterfeit, copy or colorably imitate any such mark or tradename and apply such
reproduction, counterfeit, copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used upon or in
connection with such goods, business or services.” Implicit in this definition is the
concept that the goods must be so related that there is a likelihood either of confusion
of goods or business. But likelihood of confusion is a relative concept; to be
determined only according to the particular, and sometimes peculiar, circumstances
of each case. It is unquestionably true that, as stated in Coburn vs. Puritan Mills, Inc.:
“In trademark cases, even more than in other litigation, precedent must be studied in
the light of the facts of the particular case.”
Same; Same, Infringement of trademark depends on whether the goods of
the two contending parties using the same trademark, such as “ESSO,” are so
related as to lead the public to be deceived. —It is undisputed that the goods on
which petitioner uses the trademark ESSO, petroleum products, and the product of
respondent, cigarettes, are non-competing. But as to whether trademark infringement
exists depends for the most part upon whether or not the goods are so related that the
public may be, or is actually, deceived and misled that they came from the same
maker or manufacturer. For non-competing goods may be those which, though they
are not in actual competition, are so related to each other that it might reasonably be
assumed that they originate from one manufacturer. Non-competing goods may also
be those which, being entirely unrelated, could not reasonably be assumed to have a
common source. In the former case of related goods, confusion of business could
arise out of the use of similar marks; in the latter case of non-related goods, it could
not. The vast majority of courts today follow the modern theory or concept of
“related goods” which the Court has likewise adopted and uniformly recognized and
applied.
Same; Same; “Related goods” defined.—Goods are related when they
belong to the same class or have the same descriptive properties; when they possess
the same physical attributes or essential characteristics with reference to their form
IPL- Assignment No. 6
composition, texture or quality. They may also be related because they serve the
same purpose or are sold in grocery stores. Thus, biscuits were held related to milk
because they are both food products. Soap and perfume, lipstick and nail polish are
similarly related because they are common household items nowadays. 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. Soap and pomade,
although non-competitive, were held to be similar or to belong to the same class,
since both are toilet articles. But no confusion or deception can possibly result or
arise when the name “Wellington” which is the trademark for shirts, pants, drawers
and other articles of wear for men. women and children is used as a name of a
department store.
Same; The trademark ESSO which the petitioner uses for its various
petroleum products may also be used as a trademark by a manufacturer of
cigarettes, the two products not being related and the public cannot be deceived as
to which product they are buying. —Petitioner uses the trademark ESSO and holds
certificate of registration of the trademark for petroleum products, including aviation
gasoline, grease, cigarette lighter fluid and other various products such as plastics,
chemicals, synthetics, gasoline solvents, kerosene, automotive and industrial fuel,
bunker fuel, lubricating oil, fertilizers, gas, alcohol, insecticides and the “ESSO
Gasul” burner, while respondent’s business is solely for the manufacture and sale of
the unrelated product of cigarettes. The public knows too well that petitioner deals
solely with petroleum products that there is no possibility that cigarettes with ESSO
brand will be associated with whatever good name petitioner’s ESSO trademark may
have generated. Although petitioner’s products are numerous, they are of the same
class or line of merchandise which are non-competing with respondent’s product of
cigarettes, which as pointed out in the appealed judgment is beyond petitioner’s
“zone of potential or natural and logical expansion.” When a trademark is used by a
party for a product in which the other party does not deal, the use of the same
trademark on the latter’s product cannot be validly objected to.
Same; The trademark ESSO which petitioner uses for its various petroleum
products can be used by another as trademark for cigarettes as the two classes of
products flow through different trade channels.—Another factor that shows that the
goods involved are non-competitive and non-related is the appellate court’s finding
that they flow through different channels of trade, thus: “The products of each party
move along and are disposed through different channels of distribution. The
(petitioner’s) products are distributed principally through gasoline service and
lubrication stations, automotive shops and hardware stores. On the other hand, the
(respondent’s) cigarettes are sold in sari-sari stores, grocery stores, and other small
distributor outlets. (Respondent’s) cigarettes are even peddled in the streets while
(petitioner’s) ‘gasul’ burners are not. Finally, there is a marked distinction between
oil and tobacco, as well as between petroleum and cigarettes. Evidently, in kind and
nature the products of (respondent) and of (petitioner) are poles apart.”
Page 58 of 143
 Same; Same.—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 conies 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,”
TEEHANKEE, J.:
The Court affirms on the basis of controlling doctrine the appealed decision
of the Court of Appeals reversing that of the Court of First Instance of Manila
and dismissing the complaint filed by herein petitioner against private
respondent for trade infringement for using petitioner's trademark ESSO,
since it clearly appears that the goods on which the trademark ESSO is used
by respondent is non-competing and entirely unrelated to the products of
petitioner so that there is no likelihood of confusion or deception on the part
of the purchasing public as to the origin or source of the goods.
Petitioner Esso Standard Eastern, Inc., 1 then a foreign corporation duly
licensed to do business in the Philippines, is engaged in the sale of
petroleum products which are Identified with its trademark ESSO (which as
successor of the defunct Standard Vacuum Oil Co. it registered as a
business name with the Bureaus of Commerce and Internal Revenue in April
and May, 1962). Private respondent in turn is a domestic corporation then
engaged in the manufacture and sale of cigarettes, after it acquired in
November, 1963 the business, factory and patent rights of its predecessor La
Oriental Tobacco Corporation, one of the rights thus acquired having been
the use of the trademark ESSO on its cigarettes, for which a permit had been
duly granted by the Bureau of Internal Revenue.
Barely had respondent as such successor started manufacturing cigarettes
with the trademark ESSO, when petitioner commenced a case for trademark
infringement in the Court of First Instance of Manila. The complaint alleged
that the petitioner had been for many years engaged in the sale of petroleum
products and its trademark ESSO had acquired a considerable goodwill to
such an extent that the buying public had always taken the trademark ESSO
as equivalent to high quality petroleum products. Petitioner asserted that the
continued use by private respondent of the same trademark ESSO on its
IPL- Assignment No. 6
cigarettes was being carried out for the purpose of deceiving the public as to
its quality and origin to the detriment and disadvantage of its own products.
In its answer, respondent admitted that it used the trademark ESSO on its
own product of cigarettes, which was not Identical to those produced and
sold by petitioner and therefore did not in any way infringe on or imitate
petitioner's trademark. Respondent contended that in order that there may be
trademark infringement, it is indispensable that the mark must be used by
one person in connection or competition with goods of the same kind as the
complainant's.
The trial court, relying on the old cases of Ang vs. Teodoro 2 and Arce &
Sons, Inc. vs. Selecta Biscuit Company, 3referring to related products,
decided in favor of petitioner and ruled that respondent was guilty of
infringement of trademark.
On appeal, respondent Court of Appeals found that there was no trademark
infringement and dismissed the complaint. Reconsideration of the decision
having been denied, petitioner appealed to this Court by way of certiorari to
reverse the decision of the Court of Appeals and to reinstate the decision of
the Court of First Instance of Manila. The Court finds no ground for granting
the petition.
The law defines infringement as the use without consent of the trademark
owner of any "reproduction, counterfeit, copy or colorable limitation of any
registered mark or tradename in connection with the sale, offering for sale, or
advertising of any goods, business or services on or in connection with which
such use is likely to cause confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or services, or Identity of such
business; or reproduce, counterfeit, copy or colorably imitate any such mark
or tradename and apply such reproduction, counterfeit, copy or colorable
limitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods,
business or services." 4 Implicit in this definition is the concept that the goods
must be so related that there is a likelihood either of confusion of goods or
business. 5But likelihood of confusion is a relative concept; to be determined
only according to the particular, and sometimes peculiar, circumstances of
each case. 6 It is unquestionably true that, as stated in Coburn vs. Puritan
Mills, Inc. 7 "In trademark cases, even more than in other litigation, precedent
must be studied in the light of the facts of the particular case.
It is undisputed that the goods on which petitioner uses the trademark ESSO,
petroleum products, and the product of respondent, cigarettes, are non-
competing. But as to whether trademark infringement exists depends for the
most part upon whether or not the goods are so related that the public may
Page 59 of 143
be, or is actually, deceived and misled that they came from the same maker
or manufacturer. For non-competing goods may be those which, though they
are not in actual competition, are so related to each other that it might
reasonably be assumed that they originate from one manufacturer. Non-
competing goods may also be those which, being entirely unrelated,
could  not reasonably be assumed to have a common source. in the former
case of related goods, confusion of business could arise out of the use of
similar marks; in the latter case of non-related goods, it could not. 8 The vast
majority of courts today follow the modern theory or concept of "related
goods" 9 which the Court has likewise adopted and uniformly recognized and
applied. 10
Goods are related when they belong to the same class or have the same
descriptive properties; when they possess the same physical attributes or
essential characteristics with reference to their form, composition, texture or
quality. They may also be related because they serve the same purpose or
are sold in grocery stores. 11 Thus, biscuits were held related to milk because
they are both food products. 12 Soap and perfume, lipstick and nail polish are
similarly related because they are common household items now a
days. 13 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. 14 Soap and pomade although non- competitive, were held to be
similar or to belong to the same class, since both are toilet articles. 15 But no
confusion or deception can possibly result or arise when the name
"Wellington" which is the trademark for shirts, pants, drawers and other
articles of wear for men, women and children is used as a name of a
department store. 16
Thus, in Acoje Mining Co., Inc. vs. Director of Patents, 17 the Court, through
now Chief Justice Fernando, reversed the patent director's decision on the
question of "May petitioner Acoje Mining Company register for the purpose of
advertising its product, soy sauce, the trademark LOTUS, there being already
in existence one such registered in favor of the Philippine Refining Company
for its product, edible oil, it being further shown that the trademark applied for
is in smaller type, colored differently, set on a background which is dissimilar
as to yield a distinct appearance?" and ordered the granting of petitioner's
application for registration ruling that "there is quite a difference between soy
sauce and edible oil. If one is in the market for the former, he is not likely to
purchase the latter just because of the trademark LOTUS" and "when regard
is had for the principle that the two trademarks in their entirety as they appear
in their respective labels should be considered in relation to the goods
advertised before registration could be denied, the conclusion is inescapable
that respondent Director ought to have reached a different conclusion. "
By the same token, in the recent case of Philippine Refining Co., Inc. vs. Ng
Sam and Director of Patents, 18 the Court upheld the patent director's
IPL- Assignment No. 6
registration of the same trademark CAMIA for therein respondent's product of
ham notwithstanding its already being used by therein petitioner for a wide
range of products: lard butter, cooking oil, abrasive detergents, polishing
materials and soap of all kinds. The Court, after noting that the same CAMIA
trademark had been registered by two other companies, Everbright
Development Company and F. E. Zuellig, Inc. for their respective products of
thread and yarn (for the former) and textiles, embroideries and laces (for the
latter) ruled that "while ham and some of the products of petitioner are
classified under Class 47 (Foods and Ingredients of Food), this alone cannot
serve as the decisive factor in the resolution of whether or not they are
related goods. 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 Court, therefore, concluded that "In fine, We hold that
the businesses of the parties are non-competitive and their products
so unrelated that the use of Identical trademarks is not likely to give rise to
confusion, much less cause damage to petitioner."
In the situation before us, the goods are obviously different from each other
with "absolutely no iota of similitude" 19as stressed in respondent court's
judgment. They are so foreign to each other as to make it unlikely that
purchasers would think that petitioner is the manufacturer of respondent's
goods.ït¢@lFº The mere fact that one person has adopted and used a
trademark on his goods does not prevent the adoption and use of the same
trademark by others on unrelated articles of a different kind. 20
Petitioner uses the trademark ESSO and holds certificate of registration of
the trademark for petroleum products, including aviation gasoline, grease,
cigarette lighter fluid and other various products such as plastics, chemicals,
synthetics, gasoline solvents, kerosene, automotive and industrial fuel,
bunker fuel, lubricating oil, fertilizers, gas, alcohol, insecticides and the ESSO
Gasul" burner, while respondent's business is solely for the manufacture and
sale of the unrelated product of cigarettes. The public knows too well that
petitioner deals solely with petroleum products that there is no possibility that
cigarettes with ESSO brand will be associated with whatever good name
petitioner's ESSO trademark may have generated. Although petitioner's
products are numerous, they are of the same class or line of merchandise
which are non-competing with respondent's product of cigarettes, which as
pointed out in the appealed judgment is beyond petitioner's "zone of potential
or natural and logical expansion" 21When a trademark is used by a party for a
product in which the other party does not deal, the use of the same
trademark on the latter's product cannot be validly objected to. 22
Another factor that shows that the goods involved are non-competitive and
non-related is the appellate court's finding that they flow through different
channels of trade, thus: "The products of each party move along and are
disposed through different channels of distribution. The (petitioner's) products
Page 60 of 143
are distributed principally through gasoline service and lubrication stations,
automotive shops and hardware stores. On the other hand, the
(respondent's) cigarettes are sold in sari-sari stores, grocery stores, and
other small distributor outlets. (Respondent's) cigarettes are even peddled in
the streets while (petitioner's) 'gasul' burners are not. Finally, there is a
marked distinction between oil and tobacco, as well as between petroleum
and cigarettes. Evidently, in kind and nature the products of (respondent) and
of (petitioner) are poles apart." 23
no others, it is difficult to conceive of confusion in the minds of the buying
public in the sense it can be thought that appellant (Shell) is the manufacturer
of appellee's (Fortune's) cigarettes, or that appellee (Fortune) is the
manufacturer or processor of appellant's (Shell's) petroleum and chemical
products." 26
ACCORDINGLY, the petition is dismissed and the decision of respondent
Court of Appeals is hereby affirmed.

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." 24

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."

In point of fact and time, the Court's dismissal of the petition at bar was
presaged by its Resolution of May 21, 1979 dismissing by minute resolution
the petition for review for lack of merit in the Identical case of Shell Company
of the Philippines, Ltd vs. Court of Appeals  25, wherein the Court thereby
affirmed the patent office's registration of the trademark SHELL as used in
the cigarettes manufactured by therein respondent Fortune Tobacco
Corporation notwithstanding the therein petitioner Shell Company's
opposition thereto as the prior registrant of the same trademark for its
gasoline and other petroleum trademarks, on the strength of the controlling
authority of Acoje Mining Co. vs. Director of Patents, Supra, and the same
rationale that "(I)n the Philippines, where buyers of appellee's (Fortune
Corp.'s) cigarettes, which are low cost articles, can be more numerous
compared to buyers of the higher priced petroleum and chemical products of
appellant (Shell Co.) and where appellant (Shell) is known to be in the
business of selling petroleum and petroleum-based chemical products, and

IPL- Assignment No. 6 Page 61 of 143

[65] No. L-32747. November 29, 1984. *
FRUIT OF THE LOOM, INC., petitioner, vs. COURT OF APPEALS and
GENERAL GARMENTS CORPORATION, respondents.
Trademarks; In what cases there is an infringement of trademark.—In cases
involving infringement of trademark brought before this Court it has been
consistently held that there is infringement of trademark when the use of the mark
involved would be likely to cause confusion or mistake in the mind of the public or
to deceive purchasers as to the origin or source of the commodity (Co Tiong Sa vs.
Director of Patents, 95 Phil. 1; Alhambra Cigar & Cigarette Co. vs. Mojica, 27 Phil.
266; Sapolin Co. vs. Balmaceda, 67 Phil. 705; La Insular vs. Jao Oge, 47 Phil. 75).
Same; In determining whether two trademarks are confusingly similar, the
entirety of both and not just a comparison of words used must be considered.—
Petitioner asseverates in the third and fourth assignment of errors, which, as We have
said, constitute the main argument, that the dominant features of both trademarks is
the word FRUIT. In determining whether the trademarks are confusingly similar, a
comparison of the words is not the only determinant factor. The trademarks in their
entirety as they appear in their respective labels or hang tags must also be considered
in relation to the goods to which they are attached. The discerning eye of the
observer must focus not only on the predominant words but also on the other features
appearing in both labels in order that he may draw his conclusion whether one is
confusingly similar to the other (Bristol Myers Co. vs. Director of Patents, 17 SCRA
131).
Same; The trademarks “Fruit of the Loom” and “Fruit for Eve” are not
confusingly similar.—In the trademarks FRUIT OF THE LOOM and FRUIT FOR
EVE, the lone similar word is FRUIT. WE agree with the respondent court that by
mere pronouncing the two marks, it could hardly be said that it will provoke a
confusion, as to mistake one for the other. Standing by itself, FRUIT OF THE
LOOM is wholly different from FRUIT FOR EVE. WE do not agree with petitioner
that the dominant feature of both trademarks is the word FRUIT for even in the
printing of the trademark in both hang tags, the word FRUIT is not at all made
dominant over the other words.
Same; Where two trademarks present striking or glaring dissimilarities, no
infringement case obtains.—As to the design and coloring scheme of the hang tags,
We believe that while there are similarities in the two marks like the red apple at the
center of each mark, We also find differences or dissimilarities which are glaring and
striking to the eye.
Same; Same.—The similarities of the competing trademarks in this case are
completely lost in the substantial differences in the design and general appearance of
IPL- Assignment No. 6
their respective hang tags. WE have examined the two trademarks as they appear in
the hang tags submitted by the parties and We are impressed more by the
dissimilarities than by the similarities appearing therein. We hold that the trademarks
FRUIT OF THE LOOM and FRUIT FOR EVE do not resemble each other as to
confuse or deceive an ordinary purchaser. The ordinary purchaser must be thought of
as having, and credited with, at least a modicum of intelligence (Carnation Co. vs.
California Growers Wineries, 97 F. 2d 80; Hyram Walke and Sons vs. Penn-
Maryland Corp., 79 F. 2d 836) to be able to see the obvious differences between the
two trademarks in question. Furthermore, We believe that a person who buys
petitioner’s products and starts to have a liking for it, will not get confused and reach
out for private respondent’s products when she goes to a garment store.
MAKASIAR, J.:
This is a petition for review on certiorari of the decision dated October 8,
1970 of the former Court of Appeals reversing the decision of the defunct
Court of First Instance of Manila, Branch XIV, ordering the cancellation of
private respondent's registration of the trademark FRUIT FOR EVE, enjoining
it permanently from using trademark and ordering it to pay herein petitioner
P10,000.00 as attorney's fees.
Petitioner, a corporation duly organized and existing under the laws of the
State of Rhode Island, United States of America, is the registrant of a
trademark, FRUIT OF THE LOOM, in the Philippines Patent Office and was
issued two Certificates of Registration Nos. 6227 and 6680, on November 29,
1957 and July 26, 1958, respectively. The classes of merchandise covered
by Registration Certificate No. 6227 are, among others, men's, women's and
children's underwear, which includes women's panties and which fall under
class 40 in the Philippine Patent Office's classification of goods. Registration
Certificate No. 6680 covers knitted, netted and textile fabrics.
Private respondent, a domestic corporation, is the registrant of a trademark
FRUIT FOR EVE in the Philippine Patent Office and was issued a Certificate
of Registration No. 10160, on January 10, 1963 covering garments similar to
petitioner's products like women's panties and pajamas.
On March 31, 1965 petitioner filed before the lower court, a complaint for
infringement of trademark and unfair competition against the herein private
respondent. Petitioner principally alleged in the complaint that private
respondent's trademark FRUIT FOR EVE is confusingly similar to its
trademark FRUIT OF THE LOOM used also on women's panties and other
textile products. Furthermore, it was also alleged therein that the color get-up
and general appearance of private respondent's hang tag consisting of a big
red apple is a colorable imitation to the hang tag of petitioner.
Page 62 of 143
On April 19, 1965, private respondent filed an answer invoking the special
defense that its registered trademark is not confusingly similar to that of
petitioner as the latter alleged. Likewise, private respondent stated that the
trademark FRUIT FOR EVE is being used on ladies' panties and pajamas
only whereas petitioner's trademark is used even on men's underwear and
pajamas.
At the pre-trial on May 5, 1965, the following admissions were made: (1) That
the trademark FRUIT OF THE LOOM has been registered with the Bureau of
Patents and it does not bear the notice 'Reg. Phil. Patent Off.', and (2) That
the trademark FRUIT FOR EVE has been registered with the Bureau of
Patents and it bears the notice "Reg. Phil. Patent Off." and (3) That at the
time of its registration, plaintiff filed no opposition thereto.
After trial, judgment was rendered by the lower court in favor of herein
petitioner, the dispositive portion of which reads as follows:
Judgment is, therefore, rendered ordering the Bureau of Patents to cancel
the registration of the Trademark "Fruit for Eve", permanently enjoining
Defendant from using the trademark "Fruit for Eve", ordering Defendant to
pay plaintiff the sum of P10,000.00 as attorney's fees and to pay the costs.
Both parties appealed to the former Court of Appeals, herein petitioner's
appeal being centered on the failure of the trial court to award damages in its
favor. Private respondent, on the other hand, sought the reversal of the lower
court's decision.
On October 8, 1970, the former Court of Appeals, as already stated,
rendered its questioned decision reversing the judgment of the lower court
and dismissing herein petitioner's complaint.
Petitioner's motion for reconsideration having been denied, the present
petition was filed before this Court.
The first and second arguments advanced by petitioner are that the
respondent court committed an error in holding that the word FRUIT, being a
generic word, is not capable of exclusive appropriation by petitioner and that
the registrant of a trademark is not entitled to the exclusive use of every word
of his mark. Otherwise stated, petitioner argues that the respondent court
committed an error in ruling that petitioner cannot appropriate exclusively the
word FRUIT in its trademark FRUIT OF THE LOOM.
The third and fourth arguments submitted by petitioner which We believe is
the core of the present controversy, are that the respondent court erred in
holding that there is no confusing similarity in sound and appearance
IPL- Assignment No. 6
between the two trademarks in question. According to petitioner, the
prominent and dominant features in both of petitioner's and private
respondent's trademark are the word FRUIT and the big red apple design;
that ordinary or average purchasers upon seeing the word FRUIT and the big
red apple in private respondent's label or hang tag would be led to believe
that the latter's products are those of the petitioner, The resolution of these
two assigned errors in the negative will lay to rest the matter in litigation and
there is no need to touch on the other issues raised by petitioner. Should the
said questions be resolved in favor of petitioner, then the other matters may
be considered.
Petitioner, on its fifth assigned error, blames the former Court of Appeals for
not touching the question of the fraudulent registration of private
respondent's trademark FRUIT FOR EVE. As may be gleaned from the
questioned decision, respondent court did not pass upon the argument of
petitioner that private respondent obtained the registration of its trademark
thru fraud or misrepresentation because of the said court's findings that there
is no confusing similarity between the two trademarks in question. Hence,
said court has allegedly nothing to determine as to who has the right to
registration because both parties have the right to have their respective
trademarks registered.
Lastly, petitioner asserts that respondent court should have awarded
damages in its favor because private respondent had clearly profited from the
infringement of the former's trademark.
The main issue involved in this case is whether or not private respondent's
trademark FRUIT FOR EVE and its hang tag are confusingly similar to
petitioner's trademark FRUIT OF THE LOOM and its hang tag so as to
constitute an infringement of the latter's trademark rights and justify the
cancellation of the former.
In cases involving infringement of trademark brought before this Court it has
been consistently held that there is infringement of trademark when the use
of the mark involved would be likely to cause confusion or mistake in the
mind of the public or to deceive purchasers as to the origin or source of the
commodity (Co Tiong Sa vs. Director of Patents, 95 Phil. 1; Alhambra Cigar
& Cigarette Co. vs. Mojica, 27 Phil. 266; Sapolin Co. vs. Balmaceda, 67 Phil.
705; La Insular vs. Jao Oge, 47 Phil. 75).
In cases of this nature, there can be no better evidence as to whether there is
a confusing similarity in the contesting trademarks than the labels or hang
tags themselves. A visual presentation of the labels or hang tags is the best
argument for one or the other, hence, We are reproducing hereunder pictures
of the hang tags of the products of the parties to the case. The pictures below
Page 63 of 143
are part of the documentary evidence appearing on page 124 of the original
records.
Petitioner asseverates in the third and fourth assignment of errors, which, as
We have said, constitute the main argument, that the dominant features of
both trademarks is the word FRUIT. In determining whether the trademarks
are confusingly similar, a comparison of the words is not the only determinant
factor. The trademarks in their entirety as they appear in their respective
labels or hang tags must also be considered in relation to the goods to which
they are attached. The discerning eye of the observer must focus not only on
the predominant words but also on the other features appearing in both
labels in order that he may draw his conclusion whether one is confusingly
similar to the other (Bristol Myers Co. vs. Director of Patents, 17 SCRA 131).
In the trademarks FRUIT OF THE LOOM and FRUIT FOR EVE, the lone
similar word is FRUIT. WE agree with the respondent court that by mere
pronouncing the two marks, it could hardly be said that it will provoke a
confusion, as to mistake one for the other. Standing by itself, FRUIT OF THE
LOOM is wholly different from FRUIT FOR EVE. WE do not agree with
petitioner that the dominant feature of both trademarks is the word FRUIT for
even in the printing of the trademark in both hang tags, the word FRUIT is not
at all made dominant over the other words.
respective hang tags. WE have examined the two trademarks as they appear
in the hang tags submitted by the parties and We are impressed more by the
dissimilarities than by the similarities appearing therein. WE hold that the
trademarks FRUIT OF THE LOOM and FRUIT FOR EVE do not resemble
each other as to confuse or deceive an ordinary purchaser. The ordinary
purchaser must be thought of as having, and credited with, at least a
modicum of intelligence (Carnation Co. vs. California Growers Wineries, 97
F. 2d 80; Hyram Walke and Sons vs. Penn-Maryland Corp., 79 F. 2d 836) to
be able to see the obvious differences between the two trademarks in
question. Furthermore, We believe that a person who buys petitioner's
products and starts to have a liking for it, will not get confused and reach out
for private respondent's products when she goes to a garment store.
These findings in effect render immaterial the other errors assigned by
petitioner which are premised on the assumption that private respondent's
trademark FRUIT FOR EVE had infringed petitioner's trademark FRUIT OF
THE LOOM.
WHEREFORE, THE DECISION APPEALED FROM IS AFFIRMED. COSTS
AGAINST PETITIONER.
SO ORDERED.

As to the design and coloring scheme of the hang tags, We believe that while
there are similarities in the two marks like the red apple at the center of each
mark, We also find differences or dissimilarities which are glaring and striking
to the eye such as:

1. The shape of petitioner's hang tag is round with a base that looks like a
paper rolled a few inches in both ends; while that of private respondent is
plain rectangle without any base.

2. The designs differ. Petitioner's trademark is written in almost semi-circle

while that of private respondent is written in straight line in bigger letters than
petitioner's. Private respondent's tag has only an apple in its center but that
of petitioner has also clusters of grapes that surround the apple in the center.

3. The colors of the hang tag are also very distinct from each other.
Petitioner's hang tag is fight brown while that of respondent is pink with a
white colored center piece. The apples which are the only similarities in the
hang tag are differently colored. Petitioner's apple is colored dark red, while
that of private respondent is light red.

The similarities of the competing trademarks in this case are completely lost
in the substantial differences in the design and general appearance of their

IPL- Assignment No. 6 Page 64 of 143

[66] G.R. No. 78325. January 25, 1990. *
DEL MONTE CORPORATION and PHILIPPINE PACKING
CORPORATION, petitioners, vs. COURT OF APPEALS and SUNSHINE
SAUCE MANUFACTURING INDUSTRIES, respondents.
Unfair Competition; Tradenames and Trademarks; Distinctions between
unfair competition and infringement of trademark.—To arrive at a proper resolution
of this case, it is important to bear in mind the following distinctions between
infringement of trademark and unfair competition: (1) Infringement of trademark is
the unauthorized use of a trademark, whereas unfair competition is the passing off of
one’s goods as those of another. (2) In infringement of trademark fraudulent intent is
unnecessary, whereas in unfair competition fraudulent intent is essential. (3) In
infringement of trademark the prior registration of the trademark is a prerequisite to
the action, whereas in unfair competition registration is not necessary.
Same; Same; Side-by-side comparison not final test of similarity because
average buyers do not make minute scrutiny of label details.—It has been correctly
held that side-by-side comparison is not the final test of similarity. Such comparison
requires a careful scrutiny to determine in what points the labels of the products
differ, as was done by the trial judge. The ordinary buyer does not usually make such
scrutiny nor does he usually have the time to do so. The average shopper is usually in
a hurry and does not inspect every product on the shelf as if he were browsing in a
library. Where the housewife has to return home as soon as possible to her baby or
the working woman has to make quick purchases during her off hours, she is apt to
be confused by similar labels even if they do have minute differences. The male
shopper is worse as he usually does not bother about such distinctions.
Same; Same; Sunshine Tomato catsup label is a colorable imitation of the
Del Monte trademark due to prominent similarities in general design although there
are some differences. —We also note that the respondent court failed to take into
consideration several factors which should have affected its conclusion, to wit: age,
training and education of the usual purchaser, the nature and cost of the article,
whether the article is bought for immediate consumption and also the conditions
under which it is usually purchased. Among these, what essentially determines the
attitude of the purchaser, specifically his inclination to be cautious, is the cost of the
goods. To be sure, a person who buys a box of candies will not exercise as much care
as one who buys an expensive watch. As a general rule, an ordinary buyer does not
exercise as much prudence in buying an article for which he pays a few centavos as
he does in purchasing a more valuable thing. 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.
In this latter category is catsup.
IPL- Assignment No. 6
Same; Same; Same.—At that, even if the labels were analyzed together it is
not difficult to see that the Sunshine label is a colorable imitation of the Del Monte
trademark. The predominant colors used in the Del Monte label are green and red-
orange, the same with Sunshine. The word “catsup” in both bottles is printed in white
and the style of the print/letter is the same. Although the logo of Sunshine is not a
tomato, the figure nevertheless approximates that of a tomato.
Tradenames and Trademarks; No exclusive right of use can be claimed if
bottle design registered only in Supplemental Register. —It can be inferred from the
foregoing that although Del Monte has actual use of the bottle’s configuration, the
petitioners cannot claim exclusive use thereof because it has not been registered in
the Principal Register.
Same; Sunshine Sauce Manufacturing Industries guilty of bad faith in using
Del Monte catsup bottles despite warning; Same constitutes unfair competition.—
However, we find that Sunshine, despite the many choices available to it and
notwithstanding that the caution “Del Monte Corporation, Not to be Refilled” was
embossed on the bottle, still opted to use the petitioners’ bottle to market a product
which Philpack also produces. This clearly shows the private respondent’s bad faith
and its intention to capitalize on the latter’s reputation and goodwill and pass off its
own products as that of Del Monte.
Same; Same; Same.—As Sunshine’s label is an infringement of the Del
Monte’s trademark, law and equity call for the cancellation of the private
respondent’s registration and withdrawal of all its products bearing the questioned
label from the market. With regard to the use of Del Monte’s bottle, the same
constitutes unfair competition; hence, the respondent should be permanently enjoined
from the use of such bottles.
Same; Damages; Evidence; Proof of damages necessary in unfair
competition and trademark infringement; If no proof is submitted, aggrieved party
entitled to nominal damages of P1,000.00.—The court must rule, however, that the
damage prayed for cannot be granted because the petitioner has not presented
evidence to prove the amount thereof. x x x Accordingly, the Court can only award
to the petitioners, as it hereby does award, nominal damages in the amount of
P1,000.00.
CRUZ, J.:
The petitioners are questioning the decision of the respondent court
upholding the dismissal by the trial court of their complaint against the private
respondent for infringement of trademark and unfair competition.
Page 65 of 143
Petitioner Del Monte Corporation is a foreign company organized under the
laws of the United States and not engaged in business in the Philippines.
Both the Philippines and the United States are signatories to the Convention
of Paris of September 27, 1965, which grants to the nationals of the parties
rights and advantages which their own nationals enjoy for the repression of
acts of infringement and unfair competition.
Petitioner Philippine Packing Corporation (Philpack) is a domestic
corporation duly organized under the laws of the Philippines. On April 11,
1969, Del Monte granted Philpack the right to manufacture, distribute and sell
in the Philippines various agricultural products, including catsup, under the
Del Monte trademark and logo.
On October 27,1965, Del Monte authorized Philpack to register with the
Philippine Patent Office the Del Monte catsup bottle configuration, for which it
was granted Certificate of Trademark Registration No. SR-913 by the
Philippine Patent Office under the Supplemental Register. 1 On November
20, 1972, Del Monte also obtained two registration certificates for its
trademark "DEL MONTE" and its logo. 2
Respondent Sunshine Sauce Manufacturing Industries was issued a
Certificate of Registration by the Bureau of Domestic Trade on April 17,1980,
to engage in the manufacture, packing, distribution and sale of various kinds
of sauce, identified by the logo Sunshine Fruit Catsup. 3
This logo was registered in the Supplemental Register on September 20,
1983. 4
The product itself was contained in various kinds of bottles, including the Del
Monte bottle, which the private respondent bought from the junk shops for
recycling.
Having received reports that the private respondent was using its exclusively
designed bottles and a logo confusingly similar to Del Monte's, Philpack
warned it to desist from doing so on pain of legal action. Thereafter, claiming
that the demand had been ignored, Philpack and Del Monte filed a complaint
against the private respondent for infringement of trademark and unfair
competition, with a prayer for damages and the issuance of a writ of
preliminary injunction. 5
In its answer, Sunshine alleged that it had long ceased to use the Del Monte
bottle and that its logo was substantially different from the Del Monte logo
and would not confuse the buying public to the detriment of the petitioners. 6
IPL- Assignment No. 6
After trial, the Regional Trial Court of Makati dismissed the complaint. It held
that there were substantial differences between the logos or trademarks of
the parties; that the defendant had ceased using the petitioners' bottles; and
that in any case the defendant became the owner of the said bottles upon its
purchase thereof from the junk yards. Furthermore, the complainants had
failed to establish the defendant's malice or bad faith, which was an essential
element of infringement of trademark or unfair competition. 7
This decision was affirmed in toto by the respondent court, which is now
faulted in this petition for certiorari under Rule 45 of the Rules of Court.
Section 22 of R.A. No. 166, otherwise known as the Trademark Law,
provides in part as follows:
Sec. 22.  Infringement, what constitutes. — Any person who shall use,
without the consent of the registrant, any reproduction, counterfeit, copy or
colorable imitation of any registered mark or trade-name in connection with
the sale, offering for sale, or advertising of any goods, business or services
on or in connection with which such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or origin of such
goods or services or identity of such business; or reproduce, counterfeit copy
or colorably imitate any such mark or trade name and apply such
reproduction, counterfeit copy or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used
upon or in connection with such goods, business or services, shall be liable
to a civil action by the registrant for any or all of the remedies herein
provided.
Sec. 29 of the same law states as follows:
Sec. 29.  Unfair competition, rights and remedies. — A person who has
identified in the mind of the public the goods he manufactures or deals in, his
business or services from those of others, whether or not a mark or
tradename is employed, has a property right in the goodwill of the said
goods, business or services so identified, which will be protected in the same
manner as other property rights. Such a person shall have the remedies
provided in section twenty- three, Chapter V hereof.
Any person who shall employ deception or any other means contrary to good
faith by which he shall pass off the goods manufactured by him or in which
he deals, or his business, or services for those of the one having established
such goodwill, or who shall commit any acts calculated to produce said
result, shall be guilty of unfair competition, and shall be subject to an action
therefor.
Page 66 of 143
In particular, and without in any way limiting the scope of unfair competition, observer must focus not only on the predorninant words but also on the other
the following shall be deemed guilty of unfair competition: features appearing on both labels. 9

(a) Any person, who in selling his goods shall give them the general and applying the same, held that there was no colorable imitation of the
appearance of goods of another manufacturer or dealer, either as to the petitioners' trademark and logo by the private respondent. The respondent
goods themselves or in the wrapping of the packages in which they are court agreed with the findings of the trial court that:
contained, or the devices or words thereon, or in any other feature of their
appearance, which would likely influence purchasers to believe that the In order to resolve the said issue, the Court now attempts to make a
goods offered are those of a manufacturer or dealer other than the actual comparison of the two products, to wit:
manufacturer or dealer, or who otherwise clothes the goods with such
appearance as shall deceive the public and defraud another of his legitimate 1. As to the shape of label or make:
trade, or any subsequent vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose;
Del Monte: Semi-rectangular with a crown or tomato shape design on top of
the rectangle.
(b) Any person who by any artifice, or device, or who employs ally 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; Sunshine: Regular rectangle.
or
2. As to brand printed on label:
(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 Del Monte: Tomato catsup mark.
to discredit the goods, business or services of another.
Sunshine: Fruit catsup.
To arrive at a proper resolution of this case, it is important to bear in mind the
following distinctions between infringement of trademark and unfair 3. As to the words or lettering on label or mark:
competition.
Del Monte: Clearly indicated words packed by Sysu International, Inc., Q.C.,
(1) Infringement of trademark is the unauthorized use of a trademark, Philippines.
whereas unfair competition is the passing off of one's goods as those of
another. Sunshine: Sunshine fruit catsup is clearly indicated "made in the Philippines
by Sunshine Sauce Manufacturing Industries" No. 1 Del Monte Avenue,
(2) In infringement of trademark fraudulent intent is unnecessary whereas in Malabon, Metro Manila.
unfair competition fraudulent intent is essential.
4. As to color of logo:
(3) In infringement of trademark the prior registration of the trademark is a
prerequisite to the action, whereas in unfair competition registration is not Del Monte: Combination of yellow and dark red, with words "Del Monte
necessary. 8 Quality" in white.

In the challenged decision, the respondent court cited the following test laid Sunshine: White, light green and light red, with words "Sunshine Brand" in
down by this Court in a number of cases: yellow.

In determining whether two trademarks are confusingly similar, the two marks 5. As to shape of logo:
in their entirety as they appear in the respective labels must be considered in
relation to the goods to which they are attached; the discerning eye of the
Del Monte: In the shape of a tomato.

IPL- Assignment No. 6 Page 67 of 143

Sunshine: Entirely different in shape.
6. As to label below the cap:
Del Monte: Seal covering the cap down to the neck of the bottle, with picture
of tomatoes with words "made from real tomatoes."
Sunshine: There is a label below the cap which says "Sunshine Brand."
7. As to the color of the products:
Del Monte: Darker red.
Sunshine: Lighter than Del Monte.
While the Court does recognize these distinctions, it does not agree with the
conclusion that there was no infringement or unfair competition. It seems to
us that the lower courts have been so pre-occupied with the details that they
have not seen the total picture.
It has been correctly held that side-by-side comparison is not the final test of
similarity. 10 Such comparison requires a careful scrutiny to determine in what
points the labels of the products differ, as was done by the trial judge. The
ordinary buyer does not usually make such scrutiny nor does he usually have
the time to do so. The average shopper is usually in a hurry and does not
inspect every product on the shelf as if he were browsing in a library. Where
the housewife has to return home as soon as possible to her baby or the
working woman has to make quick purchases during her off hours, she is apt
to be confused by similar labels even if they do have minute differences. The
male shopper is worse as he usually does not bother about such distinctions.
The question is not whether the two articles are distinguishable by their label
when set side by side but whether the general confusion made by the article
upon the eye of the casual purchaser who is unsuspicious and off his guard,
is such as to likely result in his confounding it with the original. 11 As observed
in several cases, the general impression of the ordinary purchaser, buying
under the normally prevalent conditions in trade and giving the attention such
purchasers usually give in buying that class of goods is the touchstone. 12
It has been held that in making purchases, the consumer must depend upon
his recollection of the appearance of the product which he intends to
purchase. 13 The buyer having in mind the mark/label of the respondent must
rely upon his memory of the petitioner's mark. 14 Unlike the judge who has
IPL- Assignment No. 6
ample time to minutely examine the labels in question in the comfort of his
sala, the ordinary shopper does not enjoy the same opportunity.
A number of courts have held that to determine whether a trademark has
been infringed, we must consider the mark as a whole and not as dissected.
If the buyer is deceived, it is attributable to the marks as a totality, not usually
to any part of it. 15 The court therefore should be guided by its first
impression, 16 for a buyer acts quickly and is governed by a casual glance,
the value of which may be dissipated as soon as the court assumes to
analyze carefully the respective features of the mark. 17
It has also been held that it is not the function of the court in cases of
infringement and unfair competition to educate purchasers but rather to take
their carelessness for granted, and to be ever conscious of the fact that
marks need not be identical. A confusing similarity will justify the intervention
of equity. 18 The judge must also be aware of the fact that usually a defendant
in cases of infringement does not normally copy but makes only colorable
changes. 19Well has it been said that the most successful form of copying is
to employ enough points of similarity to confuse the public with enough points
of difference to confuse the courts. 20
We also note that the respondent court failed to take into consideration
several factors which should have affected its conclusion, to wit: age, training
and education of the usual purchaser, the nature and cost of the article,
whether the article is bought for immediate consumption and also the
conditions under which it is usually purchased . 21Among these, what
essentially determines the attitude of the purchaser, specifically his
inclination to be cautious, is the cost of the goods. To be sure, a person who
buys a box of candies will not exercise as much care as one who buys an
expensive watch. As a general rule, an ordinary buyer does not exercise as
much prudence in buying an article for which he pays a few centavos as he
does in purchasing a more valuable thing. 22 Expensive and valuable items
are normally bought only after deliberate, comparative and analytical
investigation. But mass products, low priced articles in wide use, and matters
of everyday purchase requiring frequent replacement are bought by the
casual consumer without great care. 23 In this latter category is catsup.
At that, even if the labels were analyzed together it is not difficult to see that
the Sunshine label is a colorable imitation of the Del Monte trademark. The
predominant colors used in the Del Monte label are green and red-orange,
the same with Sunshine. The word "catsup" in both bottles is printed in white
and the style of the print/letter is the same. Although the logo of Sunshine is
not a tomato, the figure nevertheless approximates that of a tomato.
Page 68 of 143
As previously stated, the person who infringes a trade mark does not
normally copy out but only makes colorable changes, employing enough
points of similarity to confuse the public with enough points of differences to
confuse the courts. What is undeniable is the fact that when a manufacturer
prepares to package his product, he has before him a boundless choice of
words, phrases, colors and symbols sufficient to distinguish his product from
the others. When as in this case, Sunshine chose, without a reasonable
explanation, to use the same colors and letters as those used by Del Monte
though the field of its selection was so broad, the inevitable conclusion is that
it was done deliberately to deceive .24
It has been aptly observed that the ultimate ratio in cases of grave doubt is
the rule that as between a newcomer who by the confusion has nothing to
lose and everything to gain and one who by honest dealing has already
achieved favor with the public, any doubt should be resolved against the
newcomer inasmuch as the field from which he can select a desirable
trademark to indicate the origin of his product is obviously a large one. 25
Coming now to the second issue, we find that the private respondent is not
guilty of infringement for having used the Del Monte bottle. The reason is that
the configuration of the said bottle was merely registered in the Supplemental
Register. In the case of Lorenzana v. Macagba, 26 we declared that:
(1) Registration in the Principal Register gives rise to a presumption of the
validity of the registration, the registrant's ownership of the mark and his right
to the exclusive use thereof. There is no such presumption in the registration
in the Supplemental Register.
(2) Registration in the Principal Register is limited to the actual owner of the
trademark and proceedings therein on the issue of ownership which may be
contested through opposition or interference proceedings or, after
registration, in a petition for cancellation.
Registration in the Principal Register is constructive notice of the registrant's
claim of ownership, while registration in the Supplemental Register is merely
proof of actual use of the trademark and notice that the registrant has used or
appropriated it. It is not subject to opposition although it may be cancelled
after the issuance. Corollarily, registration in the Principal Register is a basis
for an action for infringement while registration in the Supplemental Register
is not.
(3) In applications for registration in the Principal Register, publication of the
application is necessary. This is not so in applications for registrations in the
Supplemental Register.
IPL- Assignment No. 6
It can be inferred from the foregoing that although Del Monte has actual use
of the bottle's configuration, the petitioners cannot claim exclusive use
thereof because it has not been registered in the Principal Register.
However, we find that Sunshine, despite the many choices available to it and
notwithstanding that the caution "Del Monte Corporation, Not to be Refilled"
was embossed on the bottle, still opted to use the petitioners' bottle to market
a product which Philpack also produces. This clearly shows the private
respondent's bad faith and its intention to capitalize on the latter's reputation
and goodwill and pass off its own product as that of Del Monte.
The Court observes that the reasons given by the respondent court in
resolving the case in favor of Sunshine are untenable. First, it declared that
the registration of the Sunshine label belied the company's malicious intent to
imitate petitioner's product. Second, it held that the Sunshine label was not
improper because the Bureau of Patent presumably considered other
trademarks before approving it. Third, it cited the case of Shell Co. v. Insular
Petroleum, 27 where this Court declared that selling oil in containers of
another with markings erased, without intent to deceive, was not unfair
competition.
Regarding the fact of registration, it is to be noted that the Sunshine label
was registered not in the Principal Register but only in the Supplemental
Register where the presumption of the validity of the trademark, the
registrant's ownership of the mark and his right to its exclusive use are all
absent.
Anent the assumption that the Bureau of Patent had considered other
existing patents, it is reiterated that since registration was only in the
Supplemental Register, this did not vest the registrant with the exclusive right
to use the label nor did it give rise to the presumption of the validity of the
registration.
On the argument that no unfair competition was committed, the Shell Case is
not on all fours with the case at bar because:
(1) In Shell, the absence of intent to deceive was supported by the fact that
the respondent therein, before marketing its product, totally obliterated and
erased the brands/mark of the different companies stenciled on the
containers thereof, except for a single isolated transaction. The respondent in
the present case made no similar effort.
(2) In Shell, what was involved was a single isolated transaction. Of the many
drums used, there was only one container where the Shell label was not
erased, while in the case at hand, the respondent admitted that it made use
of several Del Monte bottles and without obliterating the embossed warning.
Page 69 of 143
(3) In Shell, the product of respondent was sold to dealers, not to ultimate
consumers. As a general rule, dealers are well acquainted with the
manufacturer from whom they make their purchases and since they are more
experienced, they cannot be so easily deceived like the inexperienced public.
There may well be similarities and imitations which deceive all, but generally
the interests of the dealers are not regarded with the same solicitude as are
the interests of the ordinary consumer. For it is the form in which the wares
come to the final buyer that is of significance. 28
As Sunshine's label is an infringement of the Del Monte's trademark, law and
equity call for the cancellation of the private respondent's registration and
withdrawal of all its products bearing the questioned label from the market.
With regard to the use of Del Monte's bottle, the same constitutes unfair
competition; hence, the respondent should be permanently enjoined from the
use of such bottles.
The court must rule, however, that the damage prayed for cannot be granted
because the petitioner has not presented evidence to prove the amount
thereof. Section 23 of R.A. No. 166 provides:
Accordingly, the Court can only award to the petitioners, as it hereby does
award, nominal damages in the amount of Pl,000.00.
WHEREFORE, the petition is GRANTED. The decision of the Court of
Appeals dated December 24, 1986 and the Resolution dated April 27,1987,
are REVERSED and SET ASIDE and a new judgment is hereby rendered:
(1) Canceling the private respondent's Certificate of Register No. SR-6310
and permanently enjoining the private respondent from using a label similar
to that of the petitioners.
(2) Prohibiting the private respondent from using the empty bottles of the
petitioners as containers for its own products.
(3) Ordering the private respondent to pay the petitioners nominal damages
in the amount of Pl,000.00, and the costs of the suit.
SO ORDERED.

Sec. 23. Actions and damages and injunction for infringement. — Any person
entitled to the exclusive use of a registered mark or trade name may recover
damages in a civil action from any person who infringes his rights, and the
measure of the damages suffered shall be either the reasonable profit which
the complaining party would have made, had the defendant not infringed his
said rights or the profit which the defendant actually made out of the
infringement, or in the event such measure of damages cannot be readily
ascertained with reasonable certainty the court may award as damages
reasonable percentage based upon the amount of gross sales of the
defendant or the value of the services in connection with which the mark or
trade name was used in the infringement of the rights of the complaining
party. In cases where actual intent to mislead the public or to defraud the
complaining party shall be shown, in the discretion of the court, the damages
may be doubled.

The complaining party, upon proper showing may also be granted

injunction.1âwphi1

Fortunately for the petitioners, they may still find some small comfort in Art.
2222 of the Civil Code, which provides:

Art. 2222. The court may award nominal damages in every obligation arising
from any source enumerated in Art. 1157, or in every case where any
property right has been invaded.

IPL- Assignment No. 6 Page 70 of 143

[67] G.R. No. 103543. July 5, 1993.
ASIA BREWERY, INC., petitioner, vs. THE HON. COURT OF APPEALS
and SAN MIGUEL CORPORATION, respondents.
Remedial Law; Appeal; As a general rule, the findings of the Court of
Appeals upon factual questions are conclusive and ought not to be disturbed by the
Court; Exceptions to the general rule.— The lone issue in this appeal is whether ABI
infringes SMC’s trademark: San Miguel Pale Pilsen with Rectangular Hops and Malt
Design, and thereby commits unfair competition against the latter. It is a factual issue
(Phil. Nut Industry Inc. v. Standard Brands Inc., 65 SCRA 575) and as a general rule,
the findings of the Court of Appeals upon factual questions are conclusive and ought
not to be disturbed by us. However, there are exceptions to this general rule, and they
are: (1) When the conclusion is grounded entirely on speculation, surmises and
conjectures; (2) When the inference of the Court of Appeals from its findings of fact
is manifestly mistaken, absurd and impossible; (3) Where there is grave abuse of
discretion; (4) When the judgment is based on a misapprehension of facts; (5) When
the appellate court, in making its findings, went beyond the issues of the case, and
the same are contrary to the admissions of both the appellant and the appellee; (6)
When the findings of said court are contrary to those of the trial court; (7) When the
findings are without citation of specific evidence on which they are based; (8) When
the facts set forth in the petition as well as in the petitioner’s main and reply briefs
are not disputed by the respondents; and (9) When the findings of facts of the Court
of Appeals are premised on the absence of evidence and are contradicted on record.
Same; Same; Same; Where findings of the Court of Appeals and trial court
are contrary to each other, the Supreme Court may scrutinize the evidence on
record.—Under any of these exceptions, the Court has to review the evidence in
order to arrive at the correct findings based on the record (Roman Catholic Bishop of
Malolos, Inc. vs. IAC, 191 SCRA 411, 420.) Where findings of the Court of Appeals
and trial court are contrary to each other, the Supreme Court may scrutinize the
evidence on record.
Unfair Competition; Trademarks; Infringement; Infringement of trademark
is a form of unfair competition.—Infringement of trademark is a form of unfair
competition (Clarke vs. Manila Candy Co., 36 Phil. 100, 106). Sec 22 of Republic
Act No. 166, otherwise known as the Trademark Law, defines what constitutes
infringement.
Same; Same; Same; Definition of infringement implies that only registered
trademarks, tradenames and service marks are protected against infringement or
unauthorized use by another or others.—This definition implies that only registered
trade marks, trade names and service marks are protected against infringement or
unauthorized use by another or others. The use of someone else’s registered
IPL- Assignment No. 6
trademark, trade name or service mark is unauthorized, hence, actionable, if it is
done “without the consent of the registrant.”
Same; Same; Same; Infringement determined by the test of dominancy
rather than by differences or variations in the details of one trademark and of
another.—Infringement is determined by the “test of dominancy” rather than by
differences or variations in the details of one trademark and of another.
Same; Same; Same; Same; Fact that the words pale pilsen are part of ABI’s
trademark does not constitute an infringement of SMC’s trademark; “Pilsen” is a
primarily geographically descriptive work, hence non-registerable and not
appropriable by any beer manufacturer.—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.
Same; Same; Same; The universal test question is whether the public is
likely to be deceived.—“x x x. The universal test question is whether the public is
likely to be deceived. Nothing less than conduct tending to pass off one man’s goods
or business as that of another will constitute unfair competition. Actual or probable
deception and confusion on the part of the customers by reason of defendant’s
practices must always appear.”
Same; Same; Same; Same; Use by ABI of the steinie bottle similar but not
identical to the San Miguel Pale Pilsen bottle is not unlawful.—The use by ABI of
the steinie bottle, similar but not identical to the SAN MIGUEL PALE PILSEN
bottle, is not unlawful. As pointed out by ABI’s counsel, SMC did not invent but
merely borrowed the steinie bottle from abroad and it claims neither patent nor
trademark protection for that bottle shape and design. (See rollo, page 55.) The
Cerveza Especial and the Efes Pale Pilsen use the “steinie” bottle.
Same; Same; Same; Same; Same; SMC’s being the first to use the steinie
bottle does not give SMC a vested right to use it to the exclusion of everyone else.—
The petitioner’s contention that bottle size, shape and color may not be the exclusive
property of any one beer manufacturer is well taken. SMC’s being the first to use the
steinie bottle does not give SMC a vested right to use it to the exclusion of everyone
else. Being of functional or common use, and not the exclusive invention of any one,
Page 71 of 143
it is available to all who might need to use it within the industry. Nobody can acquire
any exclusive right to market articles supplying simple human needs in containers or
wrappers of the general form, size and character commonly and immediately used in
marketing such articles.
Same; Same; Same; In resolving cases of infringement and unfair
competition, courts should take into consideration several factors which would affect
its conclusion.—The Court itself cautioned that in resolving cases of infringement
and unfair competition, the courts should “take into consideration several factors
which would affect its conclusion, to wit: the age, training and education of the usual
purchaser, the nature and cost of the article, whether the article is bought for
immediate consumption and also the conditions under which it is usually purchased”.
GRIÑO-AQUINO, J.:
On September 15, 1988, San Miguel Corporation (SMC) filed a complaint
against Asia Brewery Inc. (ABI) for infringement of trademark and unfair
competition on account of the latter's BEER PALE PILSEN or BEER NA
BEER product which has been competing with SMC's SAN MIGUEL PALE
PILSEN for a share of the local beer market. (San Miguel Corporation vs.
Asia Brewery Inc., Civ. Case. No. 56390, RTC Branch 166, Pasig, Metro
Manila.).
On August 27, 1990, a decision was rendered by the trial Court, presided
over by Judge Jesus O. Bersamira, dismissing SMC's complaint because
ABI "has not committed trademark infringement or unfair competition against"
SMC (p. 189, Rollo).
SMC appealed to the Court of Appeals (C.A.-G.R. CV No. 28104). On
September 30, 1991, the Court of Appeals (Sixth Division composed of
Justice Jose C. Campos, Jr., chairman and ponente, and Justices Venancio
D. Aldecoa Jr. and Filemon H. Mendoza, as members) reversed the trial
court. The dispositive part of the decision reads as follows:
In the light of the foregoing analysis and under the plain language of the
applicable rule and principle on the matter, We find the defendant Asia
Brewery Incorporated GUILTY of infringement of trademark and unfair
competition. The decision of the trial court is hereby REVERSED, and a new
judgment entered in favor of the plaintiff and against the defendant as
follows:
(1) The defendant Asia Brewery Inc. its officers, agents, servants and
employees are hereby permanently enjoined and restrained from
manufacturing, putting up, selling, advertising, offering or announcing for
sale, or supplying Beer Pale Pilsen, or any similar preparation, manufacture
IPL- Assignment No. 6
or beer in bottles and under labels substantially identical with or like the said
bottles and labels of plaintiff San Miguel Corporation employed for that
purpose, or substantially identical with or like the bottles and labels now
employed by the defendant for that purpose, or in bottles or under labels
which are calculated to deceive purchasers and consumers into the belief
that the beer is the product of the plaintiff or which will enable others to
substitute, sell or palm off the said beer of the defendant as and for the beer
of the plaintiff-complainant.
(2) The defendant Asia Brewery Inc. is hereby ordered to render an
accounting and pay the San Miguel Corporation double any and all the
payments derived by defendant from operations of its business and the sale
of goods bearing the mark "Beer Pale Pilsen" estimated at approximately
Five Million Pesos (P5,000,000.00); to recall all its products bearing the mark
"Beer Pale Pilsen" from its retailers and deliver these as well as all labels,
signs, prints, packages, wrappers, receptacles and advertisements bearing
the infringing mark and all plates, molds, materials and other means of
making the same to the Court authorized to execute this judgment for
destruction.
(3) The defendant is hereby ordered to pay plaintiff the sum of Two Million
Pesos (P2,000,000.00) as moral damages and Half a Million Pesos
(P5,000,000.00) by way of exemplary damages.
(4) The defendant is further ordered to pay the plaintiff attorney's fees in the
amount of P250,000.00 plus costs to this suit. (p. 90, Rollo.)
Upon a motion for reconsideration filed by ABI, the above dispositive part of
the decision, was modified by the separate opinions of the Special Sixth
Division 1 so that it should read thus:
In the light of the foregoing analysis and under the plain language of the
applicable rule and principle on the matter, We find the defendant Asia
Brewery Incorporated GUILTY of infringement of trademark and unfair
competition. The decision of the trial court is hereby REVERSED, and a new
judgment entered in favor of the plaintiff and against the defendant as
follows:
(1) The defendant Asia Brewery Inc., its officers, agents, servants and
employees are hereby permanently enjoined and restrained from
manufacturing, putting up, selling, advertising, offering or announcing for
sale, or supplying Beer Pale Pilsen, or any similar preparation, manufacture
or beer in bottles and under labels substantially identical with or like the said
bottles and labels of plaintiff San Miguel Corporation employed for that
purpose, or substantially identical with or like the bottles and labels now
Page 72 of 143
employed by the defendant for that purpose, or in bottles or under labels
which are calculated to deceive purchasers and consumers into the belief
that the beer if the product of the plaintiff or which will enable others to
substitute, sell or palm off the said beer of the defendant as and for the beer
of the plaintiff-complainant.
(2) The defendant Asia Brewery Inc. is hereby ordered 2 to recall all its
products bearing the mark Beer Pale Pilsen from its retailers and deliver
these as well as all labels, signs, prints, packages, wrappers, receptacles
and advertisements bearing the infringing mark and all plates, molds,
materials and other means of making the same to the Court authorized to
execute this judgment for destruction.
(3) The defendant is hereby ordered to pay plaintiff the sum of Two Million
Pesos (P2,000,000.00) as moral damages and Half a Million Pesos
(P500,000.00) by way of exemplary damages.
(4) The defendant is further ordered to pay the plaintiff attorney's fees in the
amount of P250,000.00 plus costs of this suit.
In due time, ABI appealed to this Court by a petition for certiorari under Rule
45 of the Rules of Court. The lone issue in this appeal is whether ABI
infringes SMC's trademark: San Miguel Pale Pilsen with Rectangular Hops
and Malt Design, and thereby commits unfair competition against the latter. It
is a factual issue (Phil. Nut Industry Inc. v. Standard Brands Inc., 65 SCRA
575) and as a general rule, the findings of the Court of Appeals upon factual
questions are conclusive and ought not to be disturbed by us. However, there
are exceptions to this general rule, and they are:
(1) When the conclusion is grounded entirely on speculation, surmises and
conjectures;
(2) When the inference of the Court of Appeals from its findings of fact is
manifestly mistaken, absurd and impossible;
(3) Where there is grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the appellate court, in making its findings, went beyond the issues
of the case, and the same are contrary to the admissions of both the
appellant and the appellee;
(6) When the findings of said court are contrary to those of the trial court;
IPL- Assignment No. 6
(7) When the findings are without citation of specific evidence on which they
are based;
(8) When the facts set forth in the petition as well as in the petitioner's main
and reply briefs are not disputed by the respondents; and
(9) When the findings of facts of the Court of Appeals are premised on the
absence of evidence and are contradicted on record. (Reynolds Philippine
Corporation vs. Court of Appeals, 169 SCRA 220, 223 citing, Mendoza vs.
Court of Appeals, 156 SCRA 597; Manlapaz vs. Court of Appeals, 147 SCRA
238; Sacay vs. Sandiganbayan, 142 SCRA 593, 609; Guita vs. CA, 139
SCRA 576; Casanayan vs. Court of Appeals, 198 SCRA 333, 336; also Apex
Investment and Financing Corp. vs. IAC, 166 SCRA 458 [citing Tolentino vs.
De Jesus, 56 SCRA 167; Carolina Industries, Inc. vs. CMS Stock Brokerage,
Inc., 97 SCRA 734; Manero vs. CA, 102 SCRA 817; and Moran, Jr. vs. CA,
133 SCRA 88].)
Under any of these exceptions, the Court has to review the evidence in order
to arrive at the correct findings based on the record (Roman Catholic Bishop
of Malolos, Inc. vs. IAC, 191 SCRA 411, 420.) Where findings of the Court of
Appeals and trial court are contrary to each other, the Supreme Court may
scrutinize the evidence on record. (Cruz vs. CA, 129 SCRA 222, 227.)
The present case is one of the exceptions because there is no concurrence
between the trial court and the Court of Appeals on the lone factual issue of
whether ABI, by manufacturing and selling its BEER PALE PILSEN in amber
colored steinie bottles of 320 ml. capacity with a white painted rectangular
label has committed trademark infringement and unfair competition against
SMC.
Infringement of trademark is a form of unfair competition (Clarke vs. Manila
Candy Co., 36 Phil. 100, 106). Sec. 22 of Republic Act No. 166, otherwise
known as the Trademark Law, defines what constitutes infringement:
Sec. 22. Infringement, what constitutes. — Any person who shall use, without
the consent of the registrant, any reproduction, counterfeit, copy or colorable
imitation of any registered mark or trade-name in connection with the sale,
offering for sale, or advertising of any goods, business or services on or in
connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business; or reproduce, counterfeit, copy or
colorably imitate any such mark or trade-name and apply such reproduction,
counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in
connection with such goods, business or services, shall be liable to a civil
Page 73 of 143
action by the registrant for any or all of the remedies herein provided.
(Emphasis supplied.)
This definition implies that only registered trade marks, trade names and
service marks are protected against infringement or unauthorized use by
another or others. The use of someone else's registered trademark, trade
name or service mark is unauthorized, hence, actionable, if it is done "without
the consent of the registrant." (Ibid.)
The registered trademark of SMC for its pale pilsen beer is:
San Miguel Pale Pilsen With Rectangular Hops and Malt Design. 
As described by the trial court in its decision (Page 177, Rollo):
. . . . a rectangular design [is] bordered by what appears to be minute grains
arranged in rows of three in which there appear in each corner hop designs.
At the top is a phrase written in small print "Reg. Phil. Pat. Off." and at the
bottom "Net Contents: 320 Ml." The dominant feature is the phrase "San
Miguel" written horizontally at the upper portion. Below are the words "Pale
Pilsen" written diagonally across the middle of the rectangular design. In
between is a coat of arms and the phrase "Expertly Brewed." The "S" in
"San" and the "M" of "Miguel," "P" of "Pale" and "Pilsen" are written in Gothic
letters with fine strokes of serifs, the kind that first appeared in the 1780s in
England and used for printing German as distinguished from Roman and
Italic. Below "Pale Pilsen" is the statement "And Bottled by" (first line, "San
Miguel Brewery" (second line), and "Philippines" (third line). (p. 177, Rollo;
Emphasis supplied.)
On the other hand, ABI's trademark, as described by the trial court, consists
of:
. . . a rectangular design bordered by what appear to be buds of flowers with
leaves. The dominant feature is "Beer" written across the upper portion of the
rectangular design. The phrase "Pale Pilsen" appears immediately below in
smaller block letters. To the left is a hop design and to the right, written in
small prints, is the phrase "Net Contents 320 ml." Immediately below "Pale
Pilsen" is the statement written in three lines "Especially brewed and bottled
by" (first line), "Asia Brewery Incorporated" (second line), and "Philippines"
(third line), (p. 177, Rollo; Emphasis supplied.)
Does ABI's BEER PALE PILSEN label or "design" infringe upon SMC's SAN
MIGUEL PALE PILSEN WITH RECTANGULAR MALT AND HOPS
DESIGN? The answer is "No."
IPL- Assignment No. 6
Infringement is determined by the "test of dominancy" rather than by
differences or variations in the details of one trademark and of another. The
rule was formulated in Co Tiong Sa vs. Director of Patents, 95 Phil. 1, 4
(1954); reiterated in Lim Hoa vs. Director of Patents, 100 Phil. 214, 216-217
(1956), thus:
It has been consistently held that the question of infringement of a trademark
is to be determined by the test of dominancy. Similarity in size, form and
color, while relevant, is not conclusive. If the competing trademark contains
the main or essential or dominant features of another, and confusion and
deception is likely to result, infringement takes place. Duplication or imitation
is not necessary; nor it is necessary that the infringing label should suggest
an effort to imitate. [C. Neilman Brewing Co. vs. Independent Brewing Co.,
191 F., 489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180 Fed. 579].
The question at issue in cases of infringement of trademarks is whether the
use of the marks involved would be likely to cause confusion or mistakes in
the mind of the public or deceive purchasers. (Auburn Rubber Corporation
vs. Honover Rubber Co., 107 F. 2d 588; . . . .) (Emphasis supplied.)
In Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272, 275, the test was
similarity or "resemblance between the two (trademarks) such as would be
likely to cause the one mark to be mistaken for the other. . . . [But] this is not
such similitude as amounts to identity."
In Phil. Nut Industry Inc. vs. Standard Brands Inc., 65 SCRA 575, the court
was more specific: the test is "similarity in the dominant features of the
trademarks."
What are the dominant features of the competing trademarks before us?
There is hardly any dispute that the dominant feature of SMC's trademark is
the name of the product: SAN MIGUEL PALE PILSEN, written in white
Gothic letters with elaborate serifs at the beginning and end of the letters "S"
and "M" on an amber background across the upper portion of the rectangular
design.
On the other hand, the dominant feature of ABI's trademark is the name:
BEER PALE PILSEN, with the word "Beer" written in large amber letters,
larger than any of the letters found in the SMC label.
The trial court perceptively observed that the word "BEER" does not appear
in SMC's trademark, just as the words "SAN MIGUEL" do not appear in ABI's
trademark. Hence, there is absolutely no similarity in the dominant features of
both trademarks.
Page 74 of 143
Neither in sound, spelling or appearance can BEER PALE PILSEN be said to
be confusingly similar to SAN MIGUEL PALE PILSEN. No one who
purchases BEER PALE PILSEN can possibly be deceived that it is SAN
MIGUEL PALE PILSEN. No evidence whatsoever was presented by SMC
proving otherwise.
Besides the dissimilarity in their names, the following other dissimilarities in
the trade dress or appearance of the competing products abound:
(1) The SAN MIGUEL PALE PILSEN bottle has a slender tapered neck.
The BEER PALE PILSEN bottle has a fat, bulging neck.
(2) The words "pale pilsen" on SMC's label are printed in bold and laced
letters along a diagonal band, whereas the words "pale pilsen" on ABI's
bottle are half the size and printed in slender block letters on a
straight horizontal band. (See Exhibit "8-a".).
(3) The names of the manufacturers are prominently printed on their
respective bottles.
SAN MIGUEL PALE PILSEN is "Bottled by the San Miguel Brewery,
Philippines," whereas BEER PALE PILSEN is "Especially brewed and bottled
by Asia Brewery Incorporated, Philippines."
(4) On the back of ABI's bottle is printed in big, bold letters, under a row of
flower buds and leaves, its copyrighted slogan:
"BEER NA BEER!"
Whereas SMC's bottle carries no slogan.
(5) The back of the SAN MIGUEL PALE PILSEN bottle carries the SMC logo,
whereas the BEER PALE PILSEN bottle has no logo.
(6) The SAN MIGUEL PALE PILSEN bottle cap is stamped with a coat of
arms and the words "San Miguel Brewery Philippines" encircling the same.
The BEER PALE PILSEN bottle cap is stamped with the name "BEER" in the
center, surrounded by the words "Asia Brewery Incorporated Philippines."
(7) Finally, there is a substantial price difference between BEER PALE
PILSEN (currently at P4.25 per bottle) and SAN MIGUEL PALE PILSEN
(currently at P7.00 per bottle). One who pays only P4.25 for a bottle of beer
IPL- Assignment No. 6
cannot expect to receive San Miguel Pale Pilsen from the storekeeper or
bartender.
The fact that the words pale pilsen are part of ABI's trademark does not
constitute an infringement of SMC's trademark: SAN MIGUEL PALE PILSEN,
for "pale pilsen" are generic words descriptive of the color ("pale"), of a type
of beer ("pilsen"), which is a light bohemian beer with a strong hops flavor
that originated in the City of Pilsen in Czechoslovakia and became famous in
the Middle Ages. (Webster's Third New International Dictionary of the English
Language, Unabridged. Edited by Philip Babcock Gove. Springfield, Mass.: G
& C Merriam Co., [c] 1976, page 1716.) "Pilsen" is a "primarily geographically
descriptive word," (Sec. 4, subpar. [e] Republic Act No. 166, as inserted by
Sec. 2 of R.A. No. 638) hence, non-registerable and not appropriable by any
beer manufacturer. The Trademark Law provides:
Sec. 4. . . .. The owner of trade-mark, trade-name or service-mark used to
distinguish his goods, business or services from the goods, business or
services of others shall have the right to register the same [on the principal
register], unless it:
(e) Consists of a mark or trade-name which, when applied to or used in
connection with the goods, business or services of the applicant is merely
descriptive or deceptively misdescriptive of them, or when applied to or used
in connection with the goods, business or services of the applicant
is primarily geographically descriptive or deceptively misdescriptive of them,
or is primarily merely a surname." (Emphasis supplied.)
The words "pale pilsen" may not be appropriated by SMC for its exclusive
use even if they are part of its registered trademark: SAN MIGUEL PALE
PILSEN, any more than such descriptive words as "evaporated milk,"
"tomato ketchup," "cheddar cheese," "corn flakes" and "cooking oil" may be
appropriated by any single manufacturer of these food products, for no other
reason than that he was the first to use them in his registered trademark.
In Masso Hermanos, S.A. vs. Director of Patents, 94 Phil. 136, 139 (1953), it
was held that a dealer in shoes cannot register "Leather Shoes" as his
trademark because that would be merely descriptive and it would be unjust to
deprive other dealers in leather shoes of the right to use the same words with
reference to their merchandise. No one may appropriate generic or
descriptive words. They belong to the public domain (Ong Ai Gui vs. Director
of Patents, 96 Phil. 673, 676 [1955]):
A word or a combination of words which is merely descriptive of an article of
trade, or of its composition, characteristics, or qualities, cannot be
appropriated and protected as a trademark to the exclusion of its use by
others. . . . inasmuch as all persons have an equal right to produce and vend
Page 75 of 143
similar articles, they also have the right to describe them properly and to use
any appropriate language or words for that purpose, and no person can
appropriate to himself exclusively any word or expression, properly
descriptive of the article, its qualities, ingredients or characteristics, and thus
limit other persons in the use of language appropriate to the description of
their manufactures,  the right to the use of such language being common to
all. This rule excluding descriptive terms has also been held to apply to trade-
names. As to whether words employed fall within this prohibition, it is said
that the true test is not whether they are exhaustively descriptive of the article
designated, but whether in themselves, and as they are commonly used by
those who understand their meaning, they are reasonably indicative and
descriptive of the thing intended. If they are thus descriptive, and not
arbitrary, they cannot be appropriated from general use and become the
exclusive property of anyone. (52 Am. Jur. 542-543.)
. . . . Others may use the same or similar descriptive word in connection with
their own wares, provided they take proper steps to prevent the public being
deceived. (Richmond Remedies Co. vs. Dr. Miles Medical Co., 16 E. [2d]
598.)
. . . . A descriptive word may be admittedly distinctive, especially if the user is
the first creator of the article. It will, however, be denied protection, not
because it lacks distinctiveness, but rather because others are equally
entitled to its use. (2 Callman. Unfair Competition and Trademarks, pp. 869-
870.)" (Emphasis supplied.)
The circumstance that the manufacturer of BEER PALE PILSEN, Asia
Brewery Incorporated, has printed its name all over the bottle of its beer
product: on the label, on the back of the bottle, as well as on the bottle cap,
disproves SMC's charge that ABI dishonestly and fraudulently intends to
palm off its BEER PALE PILSEN as SMC's product. In view of the visible
differences between the two products, the Court believes it is quite unlikely
that a customer of average intelligence would mistake a bottle of BEER
PALE PILSEN for SAN MIGUEL PALE PILSEN.
The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN is
bottled in amber-colored steinie bottles of 320 ml. capacity and is also
advertised in print, broadcast, and television media, does not necessarily
constitute unfair competition.
Unfair competition is the employment of deception or any other means
contrary to good faith by which a person shall pass off the goods
manufactured by him or in which he deals, or his business, or services, for
those of another who has already established goodwill for his similar goods,
business or services, or any acts calculated to produce the same result.
IPL- Assignment No. 6
(Sec. 29, Republic Act No. 166, as amended.) The law further enumerates
the more common ways of committing unfair competition, thus:
Sec. 29. . . .
In particular, and without in any way limiting the scope of unfair competition,
the following shall be deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as to the
goods themselves or in the wrapping of the packages in which they are
contained, or the devices or words thereon, or in any other feature of their
appearance, which would be likely to influence purchasers to believe that the
goods offered are those of a manufacturer or dealer other than the actual
manufacturer or dealer, or who otherwise clothes the goods with such
appearance as shall deceive the public and defraud another of his legitimate
trade, or any subsequent vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose.
(b) Any person who by any artifice, or device, or who employs any other
means calculated to induce the false belief that such person is offering the
services of another who has identified such services in the mind of the public;
or
(c) Any person who shall make any false statement in the course of trade or
who shall commit any other act contrary to good faith of a nature calculated
to discredit the goods, business or services of another.
In this case, the question to be determined is whether ABI is using a name or
mark for its beer that has previously come to designate SMC's beer, or
whether ABI is passing off its BEER PALE PILSEN as SMC's SAN MIGUEL
PALE PILSEN.
. . ..The universal test question is whether the public is likely to be deceived.
Nothing less than conduct tending to pass off one man's goods or business
as that of another will constitute unfair competition. Actual or probable
deception and confusion on the part of the customers by reason of
defendant's practices must always appear. (Shell Co., of the Philippines, Ltd.
vs. Insular Petroleum Refining Co. Ltd. et al., 120 Phil. 434, 439.)
The use of ABI of the steinie bottle, similar but not identical to the SAN
MIGUEL PALE PILSEN bottle, is not unlawful. As pointed out by ABI's
counsel, SMC did not invent but merely borrowed the steinie bottle from
abroad and it claims neither patent nor trademark protection for that bottle
shape and design. (See rollo, page 55.) The Cerveza Especial and the Efes
Page 76 of 143
Pale Pilsen use the "steinie" bottle. (See Exhibits 57-D, 57-E.) The trial court
found no infringement of SMC's bottle —
The court agrees with defendant that there is no infringement of plaintiff's
bottle, firstly, because according to plaintiff's witness Deogracias Villadolid, it
is a standard type of bottle called steinie, and to witness Jose Antonio
Garcia, it is not a San Miguel Corporation design but a design originally
developed in the United States by the Glass Container Manufacturer's
Institute and therefore lacks exclusivity. Secondly, the shape was never
registered as a trademark. Exhibit "C" is not a registration of a beer bottle
design required under Rep. Act 165 but the registration of the name and
other marks of ownership stamped on containers as required by Rep. Act
623. Thirdly, the neck of defendant's bottle is much larger and has a distinct
bulge in its uppermost part. (p. 186, Rollo.)
The petitioner's contention that bottle size, shape and color may not be the
exclusive property of any one beer manufacturer is well taken. SMC's being
the first to use the steinie bottle does not give SMC a vested right to use it to
the exclusion of everyone else. Being of functional or common use, and not
the exclusive invention of any one, it is available to all who might need to use
it within the industry. Nobody can acquire any exclusive right to market
articles supplying simple human needs in containers or wrappers of the
general form, size and character commonly and immediately used in
marketing such articles (Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190, 194-195.)
. . . protection against imitation should be properly confined to nonfunctional
features. Even if purely functional elements are slavishly copied, the
resemblance will not support an action for unfair competition, and the first
user cannot claim secondary meaning protection. Nor can the first user
predicate his claim to protection on the argument that his business was
established in reliance on any such unpatented nonfunctional feature, even
"at large expenditure of money." (Callman Unfair Competition, Trademarks
and Monopolies, Sec. 19.33 [4th Ed.].) (Petition for Review, p. 28.)
ABI does not use SMC's steinie bottle. Neither did ABI copy it. ABI makes its
own steinie bottle which has a fat bulging neck to differentiate it from SMC's
bottle. The amber color is a functional feature of the beer bottle. As pointed
out by ABI, all bottled beer produced in the Philippines is contained and sold
in amber-colored bottles because amber is the most effective color in
preventing transmission of light and provides the maximum protection to
beer. As was ruled in California Crushed Fruit Corporation vs. Taylor B. and
Candy Co., 38 F2d 885, a merchant cannot be enjoined from using a type or
color of bottle where the same has the useful purpose of protecting the
contents from the deleterious effects of light rays. Moreover, no one may
have a monopoly of any color. Not only beer, but most medicines, whether in
liquid or tablet form, are sold in amber-colored bottles.
IPL- Assignment No. 6
That the ABI bottle has a 320 ml. capacity is not due to a desire to imitate
SMC's bottle because that bottle capacity is the standard prescribed under
Metrication Circular No. 778, dated 4 December 1979, of the Department of
Trade, Metric System Board.
With regard to the white label of both beer bottles, ABI explained that it used
the color white for its label because white presents the strongest contrast to
the amber color of ABI's bottle; it is also the most economical to use on
labels, and the easiest to "bake" in the furnace (p. 16, TSN of September 20,
1988). No one can have a monopoly of the color amber for bottles, nor of
white for labels, nor of the rectangular shape which is the usual configuration
of labels. Needless to say, the shape of the bottle and of the label is
unimportant. What is all important is the name of the product written on the
label of the bottle for that is how one beer may be distinguished form the
others.
In Dy Buncio v. Tan Tiao Bok, 42 Phil. 190, 196-197, where two competing
tea products were both labelled as Formosan tea, both sold in 5-ounce
packages made of ordinary wrapping paper of conventional color, both with
labels containing designs drawn in green ink and Chinese characters written
in red ink, one label showing a double-decked jar in the center, the other, a
flower pot, this court found that the resemblances between the designs were
not sufficient to mislead the ordinary intelligent buyer, hence, there was no
unfair competition. The Court held:
. . . . In order that there may be deception of the buying public in the sense
necessary to constitute unfair competition, it is necessary to suppose a public
accustomed to buy, and therefore to some extent familiar with, the goods in
question. The test of fraudulent simulation is to be found in the likelihood of
the deception of persons in some measure acquainted with an established
design and desirous of purchasing the commodity with which that design has
been associated. The test is not found in the deception, or possibility of the
deception, of the person who knows nothing about the design which has
been counterfeited, and who must be indifferent as between that and the
other. The simulation, in order to be objectionable, must be such as appears
likely to mislead the ordinarily intelligent buyer who has a need to supply and
is familiar with the article that he seeks to purchase.
The main thrust of SMC's complaint if not infringement of its trademark, but
unfair competition arising form the allegedly "confusing similarity" in the
general appearance or trade dress of ABI's BEER PALE PILSEN beside
SMC's SAN MIGUEL PALE PILSEN (p. 209, Rollo)
Page 77 of 143
SMC claims that the "trade dress" of BEER PALE PILSEN is "confusingly
similar" to its SAN MIGUEL PALE PILSEN because both are bottled in 320
ml. steinie type, amber-colored bottles with white rectangular labels.
However, when as in this case, the names of the competing products are
clearly different and their respective sources are prominently printed on the
label and on other parts of the bottle, mere similarity in the shape and size of
the container and label, does not constitute unfair competition. The steinie
bottle is a standard bottle for beer and is universally used. SMC did not
invent it nor patent it. The fact that SMC's bottle is registered under R.A. No.
623 (as amended by RA 5700, An Act to Regulate the Use of Duly Stamped
or Marked Bottles, Boxes, Casks, Kegs, Barrels and Other Similar
Containers) simply prohibits manufacturers of other foodstuffs from the
unauthorized use of SMC's bottles by refilling these with their products. It
was not uncommon then for products such as  patis (fish sauce)
and toyo (soy sauce) to be sold in recycled SAN MIGUEL PALE PILSEN
bottles. Registration of SMC's beer bottles did not give SMC a patent on the
steinie or on bottles of similar size, shape or color.
Most containers are standardized because they are usually made by the
same manufacturer. Milk, whether in powdered or liquid form, is sold in
uniform tin cans. The same can be said of the standard ketchup or vinegar
bottle with its familiar elongated neck. Many other grocery items such as
coffee, mayonnaise, pickles and peanut butter are sold in standard glass jars.
The manufacturers of these foodstuffs have equal right to use these
standards tins, bottles and jars for their products. Only their respective labels
distinguish them from each other. Just as no milk producer may sue the
others for unfair competition because they sell their milk in the same size and
shape of milk can which he uses, neither may SMC claim unfair competition
arising from the fact that ABI's BEER PALE PILSEN is sold, like SMC's SAN
MIGUEL PALE PILSEN in amber steinie bottles.
The record does not bear out SMC's apprehension that BEER PALE PILSEN
is being passed off as SAN MIGUEL PALE PILSEN. This is unlikely to
happen for consumers or buyers of beer generally order their beer by brand.
As pointed out by ABI's counsel, in supermarkets and tiendas, beer is
ordered by brand, and the customer surrenders his empty replacement
bottles or pays a deposit to guarantee the return of the empties. If his
empties are SAN MIGUEL PALE PILSEN, he will get SAN MIGUEL PALE
PILSEN as replacement. In sari-sari stores, beer is also ordered from
the tindera by brand. The same is true in restaurants, pubs and beer gardens
— beer is ordered from the waiters by brand. (Op. cit. page 50.)
Considering further that SAN MIGUEL PALE PILSEN has virtually
monopolized the domestic beer market for the past hundred years, those
who have been drinking no other beer but SAN MIGUEL PALE PILSEN
IPL- Assignment No. 6
these many years certainly know their beer too well to be deceived by a
newcomer in the market. If they gravitate to ABI's cheaper beer, it will not be
because they are confused or deceived, but because they find the competing
product to their taste.
Our decision in this case will not diminish our ruling in "Del Monte
Corporation vs. Court of Appeals and Sunshine Sauce Manufacturing
Industries," 181 SCRA 410, 419, 3 that:
. . . to determine whether a trademark has been infringed, we must consider
the mark as a whole and not as dissected. If the buyer is deceived, it is
attributable to the marks as a totality, not usually to any part of it.
That ruling may not apply to all kinds of products. The Court itself cautioned
that in resolving cases of infringement and unfair competition, the courts
should "take into consideration several factors which would affect its
conclusion, to wit: the age, training and education of the usual purchaser, the
nature and cost of the article, whether the article is bought for immediate
consumption and also the conditions under which it is usually purchased"
(181 SCRA 410, 418-419).
The Del Monte case involved catsup, a common household item which is
bought off the store shelves by housewives and house help who, if they are
illiterate and cannot identify the product by name or brand, would very likely
identify it by mere recollection of its appearance. Since the competitor,
Sunshine Sauce Mfg. Industries, not only used recycled Del Monte bottles for
its catsup (despite the warning embossed on the bottles: "Del Monte
Corporation. Not to be refilled.") but also used labels which were "a colorable
imitation" of Del Monte's label, we held that there was infringement of Del
Monte's trademark and unfair competition by Sunshine.
Our ruling in Del Monte would not apply to beer which is not usually picked
from a store shelf but ordered by brand by the beer drinker himself from the
storekeeper or waiter in a pub or restaurant.
Moreover, SMC's brand or trademark: "SAN MIGUEL PALE PILSEN" is not
infringed by ABI's mark: "BEER NA BEER" or "BEER PALE PILSEN." ABI
makes its own bottle with a bulging neck to differentiate it from SMC's bottle,
and prints ABI's name in three (3) places on said bottle (front, back and bottle
cap) to prove that it has no intention to pass of its "BEER" as "SAN
MIGUEL."
There is no confusing similarity between the competing beers for the name of
one is "SAN MIGUEL" while the competitor is plain "BEER" and the points of
dissimilarity between the two outnumber their points of similarity.
Page 78 of 143
Petitioner ABI has neither infringed SMC's trademark nor committed unfair
competition with the latter's SAN MIGUEL PALE PILSEN product. While its
BEER PALE PILSEN admittedly competes with the latter in the open market,
that competition is neither unfair nor fraudulent. Hence, we must deny SMC's
prayer to suppress it.

WHEREFORE, finding the petition for review meritorious, the same is hereby
granted. The decision and resolution of the Court of Appeals in CA-G.R. CV
No. 28104 are hereby set aside and that of the trial court is REINSTATED
and AFFIRMED. Costs against the private respondent.

SO ORDERED.

IPL- Assignment No. 6 Page 79 of 143

[68] G.R. No. 115115. July 18, 1995. *
CONRAD AND COMPANY, INC., petitioner, vs. HON. COURT OF
APPEALS, FITRITE INC., and VICTORIA BISCUITS CO., INC.,
respondents.
Trademarks; Jurisdiction; Infringement; Unfair Competition; While an
application for the administrative cancellation of a registered trademark on any of
the grounds enumerated in Section 17 of R.A. 166 falls under the exclusive
cognizance of the Bureau of Patents, Trademarks and Technology Transfer
(BPTTT), an action for infringement or unfair competition, as well as the remedy of
injunction and relief for damages, is explicitly and unquestionably within the
competence and jurisdiction of ordinary courts.—It might be mentioned that while
an application for the administrative cancellation of a registered trademark on any of
the grounds enumerated in Section 17 of Republic Act No. 166, as amended,
otherwise known as the Trade-Mark Law, falls under the exclusive cognizance of
BPTTT (Sec. 19, Trade-Mark Law), an action, however, for infringement or unfair
competition, as well as the remedy of injunction and relief for damages, is explicitly
and unquestionably within the competence and jurisdiction of ordinary courts.
Same; Same; Administrative Law; Words and Phrases; Doctrine of Primary
Jurisdiction, Explained; An application with BPTTT for an administrative
cancellation of a registered trade mark cannot per se have the effect of restraining
or preventing the courts from the exercise of their lawfully conferred jurisdiction.—
Surely, an application with BPTTT for an administrative cancellation of a registered
trade mark cannot per se have the effect of restraining or preventing the courts from
the exercise of their lawfully conferred jurisdiction. A contrary rule would unduly
expand the doctrine of primary jurisdiction which, simply expressed, would merely
behoove regular courts, in controversies involving specialized disputes, to defer to
the findings or resolutions of administrative tribunals on certain technical matters.
This rule, evidently, did not escape the appellate court for it likewise decreed that for
“good cause shown, the lower court, in its sound discretion, may suspend the action
pending outcome of the cancellation proceedings” before BPTTT.
VITUG, J.:
In an Amended Decision, dated 20 April 1994, the Court of
Appeals reversed an order of the Regional Trial Court ("RTC") which
dismissed Civil Case No. 91-3119 for "Injunction with Damages with Prayer
for Preliminary Injunction" filed by herein private respondents Fitrite, Inc., and
Victoria Biscuits Co., Inc., against petitioner Conrad and Company, Inc.
The RTC, acting on a motion to dismiss filed by petitioner, ordered the
dismissal of the complaint. Accordingly, for purposes of this review, the facts
IPL- Assignment No. 6
alleged in the complaint, narrated by the appellate court and hereunder
reproduced, should be deemed hypothetically admitted.
. . . Plaintiffs appellants FITRITE, INC. and VICTORIA BISCUIT CO., INC.
[private respondents here], both domestic corporations, are engaged in the
business of manufacturing, selling and distributing biscuits and cookies
bearing the trademark "SUNSHINE" in the Philippines. Defendant CONRAD
AND COMPANY [petitioner here] is also engaged in the business of
importing, selling and distributing biscuits and cookies in the Philippines.
Sometime in April 1982, plaintiff FITRITE filed in the Bureau of Patents,
Trademarks and Technology Transfer (hereto referred as BPTTT)
applications for registration of the trademark "SUNSHINE," both in the
Supplemental and Principal Registers, to be used on biscuits and cookies.
Since March 31, 1981 FITRITE had exclusively used this trademark in the
concept of owner on its biscuits and cookies. On May 20, 1983 
FITRITE's application for this trademark in the Supplemental Register was
approved by the BPTTT and FITRITE was issued a Certificate of Registration
No. SR-6217 for a term of 20 years from the date of approval. On March 22,
1990 FITRITE's application for the same trademark in the Principal
Registerwas approved by BPTTT and FITRITE was issued a Certificate of
Registration No. 47590 for a term of 20 years from said date of approval. On
June 28, 1984 FITRITE authorized its sister company, co-plaintiff VICTORIA
BISCUIT CO., to use this trademark on its biscuits and cookies, as well as to
manufacture, promote, sell and distribute products bearing said trademark.
On September 7, 1990, FITRITE assigned its trademark "SUNSHINE AND
DEVICE LABEL," together with its interest and business goodwill to said
VICTORIA BISCUIT. From the time FITRITE was issued the Certificate of
Registration for this trademark on May 20, 1983 up to the filing of the
complaint a quoFITRITE and VICTORIA BISCUIT have been manufacturing,
selling and distributing on a massive scale biscuits and cookies bearing this
trademark; so that through the years of extensive marketing of plaintiffs'
biscuits and cookies with this trademark, their products have become
popularly known and enjoyed wide acceptability in Metro Manila and in the
provinces.
Then sometime in June 1990, through the affidavit executed on May 30,
1990 by defendant CONRAD's own Import Manager and Executive Assistant
by the name of Raul Olaya, plaintiffs succeeded in tracing and discovered
that CONRAD had been importing, selling and distributing biscuits and
cookies, and other food items bearing this trademark in the Philippines.
Although CONRAD had never before been engaged in the importation, sale
and distribution of products similar to those of plaintiffs, on April 18, 1988
Page 80 of 143
CONRAD was suddenly designated exclusive importer and dealer of the
products of "Sunshine Biscuits, Inc." for sale in the Philippine market; and on
April 21, 1988, per the affidavit of said Raul Olaya, CONRAD made its first
importation, which was continuously repeated up to the present (May 30,
1990 [date of the affidavit]), altogether consisting of 51,575 cartons and
amounting to $579,224.35.
Those acts of CONRAD, done without plaintiffs' consent, were deliberately
calculated to mislead and deceive the purchasers by making them believe
that its (CONRAD'S) "Sunshine" products had originated from plaintiffs and
thereby inducing them to patronize those products, all to the damage and
prejudice of both the purchasing public and plaintiffs. Through their counsel,
plaintiffs addressed a letter to CONRAD demanding, among other things, that
it cease and desist from continuing with those acts, but the demand was
ignored. Being acts of infringement and unfair competition in violation of
plaintiffs' rights, plaintiffs can validly avail themselves of the remedies against
infringement under Sec. 23 of Republic Act No. 166, as amended, as well as
of the remedies against unfair competition under  its "affirmative defense" could have been alleged and later raised in a motion
Sec. 29 of the same statute.1
In seeking the dismissal of the complaint filed by private respondents with the
trial court, petitioner invoked, among other grounds, litis pendentia, the
doctrine of primary jurisdiction and failure to state a cause of action.
The trial court, agreeing with petitioner, granted the motion to dismiss the
complaint in an Order, dated 26 February 1992, reading thusly:
The Court agrees with defendant that internationally accepted trademarks
enjoy protection under Philippine laws. Defendant having been granted
distributorship by Sunshine Biscuits USA over Philippine territory it follows
that the resolution of the issue with respect to the ownership of Sunshine
Biscuits which is the basis of plaintiffs' claim is lodged under the exclusive
jurisdiction of the BPTTT.The action filed by defendant's principal in whose
name the trademark "SUNSHINE BISCUITS" is  Principal Registers as registrant of said "SUNSHINE" trademark are
alleged to be registered in the United States should be considered as
including defendant Conrad and Company, Inc., it being the
beneficiary/agent/assignee of said Sunshine Biscuits, Inc. Thus, the Court
finds the ground of forum shopping applicable to the case at bar. It cannot
also be denied that there is another action pending between the same parties
for the same cause. Plaintiffs, therefore, should not have filed this case with
this court. It must, therefore, be summarily dismissed. The ground of  those acts of importing, selling and distributing by CONRAD constitute
litis pendentia is no doubt meritorious. The doctrine of primary jurisdiction
should be made to apply in this case considering that the BPTTT had already
acquired jurisdiction over the suit brought by defendant's principal against the
plaintiffs involving the right of plaintiffs to use said trademark. No doubt the
BPTTT is better situated, considering its experience and special knowledge
IPL- Assignment No. 6
to determine the matters of fact involved. Indeed, the rulings laid down by the
Supreme Court on the point is along this trend.
WHEREFORE, premises considered, the Motion To Dismiss filed by
defendant is hereby GRANTED. The instant case filed by plaintiffs is hereby
ordered DISMISSED.2 (Emphasis ours)
Unsuccessful in their attempt to have the order reconsidered, private
respondents brought the case to the Court of Appeals (CA-G.R. CV No.
38822).
In an amended decision, dated 20 April 1994, the appellate
court reversed the order of the trial court and ordered the reinstatement of
the case, holding, in part, thusly:
1. It was a motion to dismiss that CONRAD filed instead of an answer where
for preliminary hearing for reception of evidence and not, as CONRAD did,
raise such defense in a mere motion to dismiss, although such defense
involved factual matters outside of the allegations contained in the complaint;
2. No evidence whatever had been introduced before the outright dismissal,
despite the fact that the factual issues involved in CONRAD's "affirmative
defense" were whether the "SUNSHINE" trademark has been registered in
the United States of America as claimed by CONRAD; if so registered,
whether such registration antedated the registered trademark of FITRITE in
the Philippines; whether Sunshine Biscuits, Inc., CONRAD's principal, is the
actual registrant thereof; and whether CONRAD is truly an agent of Sunshine
Biscuits, Inc. who is protected by the alleged American "SUNSHINE"
trademark and therefore vested with the legal capacity to raise such
"affirmative defense" in the action a quo; etc.; and
3. Unless and until FITRITE's certificates both in the Supplemental and
cancelled by BPTTT, or so long as said "SUNSHINE" trademark has not
been successfully proved by CONRAD in the action 
a quo as belonging to Sunshine Biscuits, Inc. or so long as said trademark
has not been successfully proved by Sunshine Biscuits, Inc. in the
cancellation proceeding before BPTTT as belonging to it (Sunshine Biscuits),
for all legal intents and purposes the trademark belongs to FITRITE and all
infringement as defined in said Sec. 22 of Republic Act No. 166, as
amended.
xxx xxx xxx
Page 81 of 143
In sum, we find the appeal impressed with merit, considering that FITRITE is
the registrant of the "SUNSHINE" trademark in the Philippines; that
CONRAD's claim that its principal, Sunshine Biscuits, Inc., is the registrant of
a "SUNSHINE" trademark in the United States of America is a mere
allegation still subject to proof; that there is no identity of causes of action
and because the cause before BPTTT is the cancellability of FITRITE's
registration while the cause in the case a quo is infringement by CONRAD of
said "SUNSHINE" trademark of FITRITE; that there is implied admission that
CONRAD has been importing, selling and distributing biscuits, cookies and
other food items bearing said "SUNSHINE" trademark without FITRITE's
consent; that so long as the cancellation proceeding remains pending in
BPTTT, said "SUNSHINE" trademark belongs exclusively to FITRITE in the
Philippines, and any person using it without FITRITE's consent is guilty of
infringement.
WHEREFORE, the Court hereby:
(1) SETS ASIDE the appealed order dated February 26, 1992 dismissing the
complaint a quo;
(2) REINSTATES the complaint;
(3) ORDERS defendant Conrad and Company, Inc. to file its answer within
the reglementary period from receipt hereof;
(4) ORDERS the lower court to proceed with the action a quo, although for a
good cause shown the lower court, in its sound discretion, may suspend the
action pending outcome of the cancellation proceeding between Sunshine
Biscuits, Inc. and Fitrite, Inc. in Inter Partes Case  BPTTT.4
No. 3397 before BPTTT, subject to the condition provided for in No. (5)
below;
(5) ORDERS defendant-appellee Conrad and Company, Inc. to desist and
refrain from importing, manufacturing, selling and distributing in the
Philippines any goods bearing the trademark "SUNSHINE & DEVICE
LABEL" registered in FITRITE's name pending final decision in the action a
quo, it being understood that this order, to effect such desistance and enjoin
defendant-appellee from the aforesaid activities, shall be considered as the
Writ of Injunction itself and an integral part of this Amended Decision.
No pronouncement as to costs.
SO ORDERED.3 (Emphasis ours.)
IPL- Assignment No. 6
In the instant petition for review, which has additionally prayed for a writ of
preliminary injunction or for a temporary restraining order, petitioner tells us
that the appellate court has erred —
1. When it ordered the issuance of a writ of preliminary injunction, upon
private respondents, posting of a bond in the sum of P10,000.00, despite the
pendency of the cancellation proceedings in Inter Partes case Nos. 3397 and
3739, and in subsequently amending its decision by issuing the writ of
preliminary injunction itself.
2. When respondent court failed to apply and totally disregarded the
provisions of the Paris Convention for the protection of industrial property, as
well as the memorandum of the Minister of Trade, dated November 20, 1980.
3. In holding that the doctrine of primary jurisdiction by the Bureau of Patents,
Trademarks and Technology Transfer (BPTTT) is not applicable in this case,
and in further holding that the issues involved in this case is not whether the
"SUNSHINE" trademark in question is registerable or cancellable.
4. Respondent court erred in holding that the ground of litis pendentia under
the Rules of Court does not apply in this case for the reason that the cause of
action in the cancellation proceedings before the BPTTT is not the same as
the cause of action in the case a quo.
5. In ordering the lower court to proceed with the action a quo, although for a
good cause shown the lower court, in its sound discretion, may suspend the
action pending outcome of the cancellation proceeding between Sunshine
Biscuits, Inc. and Fitrite, Inc. in inter partes Case No. 3397 and 3739 before
The petition was given due course; however, neither a writ of preliminary
injunction nor a restraining order was issued by this Court.
Unadorned, the issues would revolve simply around the question of whether
or not the Court of Appeals committed reversible error (1) in allowing the trial
court to proceed with the case for "injunction with damages" filed by private
respondents notwithstanding the pendency of an administrative case for the
cancellation of the former's trademark filed by supposedly "petitioner's
principal" with the Bureau of Patents, Trademarks and Technology Transfer
("BPTTT"); and (2) in meanwhile issuing an injunction order against
petitioner.
We find for private respondents.
Page 82 of 143
The assailed amended decision of the appellate court reinstated the
complaint for "Injunction with Damages with Prayer for Preliminary Injunction"
filed by private respondents with the trial court and ordered petitioner to file
its answer. The appellate court enjoined petitioner in the meantime from
importing, manufacturing, selling and distributing in the Philippines goods
bearing the trademark "Sunshine and Device Label" duly registered with
BPTTT in private respondents' name.
Petitioner, invoking the case of Developers Group of Companies vs.  Court of
Appeals (219 SCRA 715), contends that the "Petitions for Cancellation" of
Fitrite's Certificate of Registration No. SR-6217 and No. 47590 in the
Supplemental Register and the Principal Register, respectively, which
Sunshine Biscuits, Inc., of the United States of America filed in 1989 and in
1990 (docketed Inter Partes Case No. 3397 and 3739) with BPTTT cast a
cloud of doubt on private respondents' claim of ownership and exclusive right
to the use of the trademark "Sunshine." Considering that this matter is at
issue before the BPTTT, which has primary jurisdiction over the case,
petitioner argues, an injunctive relief from any court would be precipitate and
improper.
The appellate court, in disposing of petitioner's argument, points out:
Notwithstanding those provisions, it is CONRAD's contention — relying on
the ruling in Industrial Enterprises, Inc.  vs. Court of Appeals (G.R. No.
88550, 184 SCRA 426 [1990]) — that, because technical matters or intricate
issues of fact regarding the ownership of the trademark in question are
involved, its determination requires the expertise, specialized skills and
knowledge of the proper administrative body, which is BPTTT, which has the
primary jurisdiction over the action a quo; and therefore the trial court should,
and as it correctly did, yield its jurisdiction to BPTTT.
The trial court erred in adopting such fallacious argument. The issue involved
in the action a quo is not whether the "SUNSHINE" trademark in question is
registerable or cancellable — which is the issue pending in BPTTT that may
be technical in nature requiring "expertise, specialized skills and knowledge"
— since the trademark has already been registered in both the Supplemental
and Principal Registers of BPTTT in the name of FITRITE; actually, the issue
involved in the action a quo is whether CONRAD's acts of importing, selling
and distributing biscuits, cookies and other food items bearing said registered
"SUNSHINE" trademark in the Philippines without the consent of its registrant
(FITRITE) constitute infringement thereof in contemplation of Sec. 22 of
Republic Act No. 166, as amended. Under Sec. 22, the elements that
constitute infringement are simply (1) the use by any person, without the
consent of the registrant, (2) of any registered mark or trade-name in
connection with the sale, business or services, among other things, bearing
such registered mark or trade-name. This, clearly, is a factual question that
IPL- Assignment No. 6
does not require any specialized skill and knowledge for resolution to justify
the exercise of primary jurisdiction by BPTTT.
But, even assuming — which is not the case — that the issue involved here
is technical in nature requiring specialized skills and knowledge,
still Industrialized Enterprises does not authorize the outright dismissal of a
case originally cognizable in the courts; what it says is where primary
jurisdiction comes into play in a case "the judicial process is suspended
pending referral of such issues to the administrative body for its view. 5
We cannot see any error in the above disquisition. It might be mentioned that
while an application for the administrative cancellation of a registered
trademark on any of the grounds enumerated in Section 17 6 of Republic Act
No. 166, as amended, otherwise known as the Trade-Mark Law, falls under
the exclusive cognizance of BPTTT (Sec. 19, Trade-Mark Law), an action,
however, for infringement or unfair competition, as well as the remedy of
injunction and relief for damages, is explicitly and unquestionably within the
competence and jurisdiction of ordinary courts.
Private respondents are the holder of Certificate of Registration No. 47590
(Principal Register) for the questioned trademark. In Lorenzana
vs.  Macagba, 154 SCRA 723, cited with approval in Del Monte Corporation
vs.  Court of Appeals, 181 SCRA 410, we have declared that registration in
the Principal Register gives rise to a presumption of validity of the registration
and of the registrant's ownership and right to the exclusive use of the mark. It
is precisely such a registration that can serve as the basis for an action for
infringement.7 An invasion of this right entitles the registrant to court
protection and relief. Section 23 and Section 27, Chapter V, of the Trade-
Mark Law provides:
Sec. 23. Actions, and damages and injunction for infringement. — Any
person entitled to the exclusive use of a registered mark or trade-name may
recover damages in a civil action from any person who infringes his rights,
and the measure of the damages suffered shall be either the reasonable
profit which the complaining party would have made, had the defendant not
infringe his said rights, or the profit which the defendant actually made out of
the infringement, or in the event such measure of damages cannot be readily
ascertained with reasonable certainty, then the court may award as damages
a reasonable percentage based upon the amount of gross sales of the
defendant or the value of the services in connection with which the mark or
trade-name was used in the infringement of the rights of the complaining
party. In cases where actual intent to mislead the public or to defraud the
complaining party shall be shown, in the discretion of the court, the damages
may be doubled.
Page 83 of 143
The complaining party, upon proper showing, may also be granted injunction.
Sec. 27. Jurisdiction of [Regional Trial Court]. All actions under this Chapter
and Chapters VI and VII hereof shall be brought before the proper [Regional
Trial Court].
Surely, an application with BPTTT for an administrative cancellation of a
registered trade mark cannot  per se have the effect of restraining or
preventing the courts from the exercise of their lawfully conferred jurisdiction.
A contrary rule would unduly expand the doctrine of primary jurisdiction
which, simply expressed, would merely behoove regular courts, in
controversies involving specialized disputes, to defer to the findings of
resolutions of administrative tribunals on certain technical matters. This rule,
evidently, did not escape the appellate court for it likewise decreed that for
"good cause shown, the lower court, in its sound discretion, may suspend the
action pending outcome of the cancellation proceedings" before BPTTT.
Needless to say, we cannot at this stage delve into the merits of the
cancellation case. In this instance, the sole concern, outside of the
jurisdictional aspect of the petition hereinbefore discussed, would be that
which focuses on the propriety of the injunction order of the appellate court.
On this score, the appellate court has said:
the administrative case (Inter Partes Case No. 3397). The averment that
Sunshine USA is petitioner's principal, and that it has a prior foreign
registration that should be respected conformably with the Convention of the
Union of Paris for the Protection of Industrial Property are mere
asseverations in the motion to dismiss which, along with some other factual
assertions, are yet to be established.
All given, we find no reversible error on the part of the appellate court in its
appealed decision.
In closing, the Court would urge the Bureau of Patents, Trademarks and
Technology Transfer to resolve with dispatch the administrative cases (Inter
Partes Case No. 3397 and No. 3739) referred to in this decision.
WHEREFORE, the petition for review is DENIED for lack of merit, and the
questioned amended decision of the Court of Appeals is AFFIRMED. Costs
against petitioner.

Thus, having the exclusive right over said trademark, FITRITE should be
protected in the use thereof (Philips Export B.V. vs. Court of Appeals, G.R.
No. 96161, 206 SCRA 457 [1992]); and considering that it is apparent from
the record that the invasion of the right FITRITE sought to protect is material
and substantial; that such right of FITRITE is clear and unmistakable; and
that there is an urgent necessity to prevent serious damage to FITRITE's
business interest, goodwill and profit, thus under the authority of Sec. 23 of
said Republic Act No. 166, as amended, a preliminary injunction may be
issued in favor of FITRITE to maintain the status quo pending trial of the
action a quo on the merits without prejudice to the suspension of such
action if the aforesaid cancellation proceeding before the BPTTT has not
been concluded. 8 (Emphasis supplied.)

The appellate court's finding that there is an urgent necessity for the
issuance of the writ of preliminary injunction pending resolution by BPTTT of
the petition for cancellation filed by Sunshine USA in Inter Partes Case No.
3397 would indeed appear to have merit. The prematurity of petitioner's
motion to dismiss places the case at bench quite apart from that
of Developers Group of Companies, Inc. vs.  Court of Appeals, 219 SCRA
715. The allegations of the complaint, perforced hypothetically deemed
admitted by petitioner, would here justify the issuance by appellate court of
its injunction order. Petitioner, itself, does not even appear to be a party in

IPL- Assignment No. 6 Page 84 of 143

[69] G.R. No. 100098. December 29, 1995. *
EMERALD GARMENT MANUFACTURING CORPORATION, petitioner,
vs. HON. COURT OF APPEALS, BUREAU OF PATENTS, TRADEMARKS
AND TECHNOLOGY TRANSFER and H.D. LEE COMPANY, INC.,
respondents.
Trademarks and Tradenames; The reckoning point for the filing of a
petition for cancellation of certificate of registration of trademark is not from the
alleged date of use but from the date the certificate of registration was published in
the Official Gazette and issued to the registrant.—Petitioner alleges that it has been
using its trademark “STYLISTIC MR. LEE” since 1 May 1975, yet, it was only on
18 September 1981 that private respondent filed a petition for cancellation of
petitioner’s certificate of registration for the said trademark. We reject petitioner’s
contention. Petitioner’s trademark is registered in the supplemental register. The
Trademark Law (R.A. No. 166) provides that “marks and tradenames for the
supplemental register shall not be published for or be subject to opposition, but shall
be published on registration in the Official Gazette.” The reckoning point, therefore,
should not be 1 May 1975, the date of alleged use by petitioner of its assailed
trademark but 27 October 1980, the date the certificate of registration SR No. 5054
was published in the Official Gazette and issued to petitioner.
Same; Estoppel; Laches; Actions; To be barred from bringing suit on
grounds of estoppel and laches, the delay must be lengthy. —Corollarily, private
respondent could hardly be accused of inexcusable delay in filing its notice of
opposition to petitioner’s application for registration in the principal register since
said application was published only on 20 February 1984. From the time of
publication to the time of filing the opposition on 27 July 1984 barely five (5)
months had elapsed. To be barred from bringing suit on grounds of estoppel and
laches, the delay must be lengthy.
Same; In the history of trademark cases in the Philippines, particularly in
ascertaining whether one trademark is confusingly similar to or is a colorable
imitation of another, no set rules can be deduced—each case must be decided on its
own merits.—Practical application of the provision of Section 22 of R.A. No. 166
(Trademark Law) is easier said than done. In the history of trademark cases in the
Philippines, particularly in ascertaining whether one trademark is confusingly similar
to or is a colorable imitation of another, no set rules can be deduced. Each case must
be decided on its own merits.
Same; Infringements; The essential element of infringement is colorable
imitation.—Proceeding to the task at hand, the essential element of infringement is
colorable imitation. This term has been defined as “such a close or ingenious
imitation as to be calculated to deceive ordinary purchasers, or such resemblance of
IPL- Assignment No. 6
the infringing mark to the original as to deceive an ordinary purchaser giving such
attention as a purchaser usually gives, and to cause him to purchase the one
supposing it to be the other.”
Same; Same; In determining whether colorable imitation exists,
jurisprudence has developed two kinds of tests—the Dominancy Test and the Holistic
Test.—In determining whether colorable imitation exists, jurisprudence has
developed two kinds of tests—the Dominancy Test applied in Asia Brewery, Inc. v.
Court of Appeals and other cases and the Holistic Test developed in Del Monte
Corporation v. Court of Appeals and its proponent cases.
Same; Same; Dominancy Test and Holistic Test, Compared.— As its title
implies, the test of dominancy focuses on the similarity of the prevalent features of
the competing trademarks which might cause confusion or deception and thus
constitutes infringement. On the other side of the spectrum, the holistic test mandates
that the entirety of the marks in question must be considered in determining
confusing similarity.
Same; Same; Maong pants and jeans are not inexpensive, and as the casual
buyer is predisposed to be more cautious and discriminating in and would prefer to
mull over his purchase, confusion and deception is less likely.—The products
involved in the case at bar are, in the main, various kinds of jeans. These are not your
ordinary household items like catsup, soy sauce or soap which are of minimal cost.
Maong pants or jeans are not inexpensive. Accordingly, the casual buyer is
predisposed to be more cautious and discriminating in and would prefer to mull over
his purchase. Confusion and deception, then, is less likely.
Same; Same; Words and Phrases; “Ordinary Purchaser,” Defined.—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.”
Same; Same; A personal name or surname may not be monopolized as a
trademark or tradename as against others of the same name or surname.—“LEE” is
primarily a surname. Private respondent cannot, therefore, acquire exclusive
ownership over and singular use of said term . . . It has been held that a personal
Page 85 of 143
name or surname may not be monopolized as a trademark or tradename as against
others of the same name or surname. For in the absence of contract, fraud, or
estoppel, any man may use his name or surname in all legitimate ways. Thus,
“Wellington” is a surname, and its first user has no cause of action against the junior
user of “Wellington” as it is incapable of exclusive appropriation.
Same; Same; Actual use in commerce in the Philippines is an essential
prerequisite for the acquisition of ownership over a trademark.—In addition to the
foregoing, we are constrained to agree with petitioner’s contention that private
respondent failed to prove prior actual commercial use of its “LEE” trademark in the
Philippines before filing its application for registration with the BPTTT and hence,
has not acquired ownership over said mark. Actual use in commerce in the
Philippines is an essential prerequisite for the acquisition of ownership over a
trademark pursuant to Sec. 2 and 2-A of the Philippine Trademark Law (R.A. No.
166).
Same; Same; International Law; Conflict of Laws; Paris Convention for the
Protection of Industrial Property; Following universal acquiescence and comity, our
municipal law on trademarks regarding the requirements of actual use in the
Philippines must subordinate an international agreement inasmuch as the apparent
clash is being decided by a municipal tribunal.—The provisions of the 1965 Paris
Convention for the Protection of Industrial Property relied upon by private
respondent and Sec. 21-A of the Trademark Law (R.A. No. 166) were sufficiently
expounded upon and qualified in the recent case of Philip Morris, Inc. v. Court of
Appeals: Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirement of actual use in the Philippines must
subordinate an international agreement inasmuch as the apparent clash is being
decided by a municipal tribunal (Mortisen vs. Peters, Great Britain, High Court of
Judiciary of Scotland, 1906, 8 Sessions, 93; Paras, International Law and World
Organization, 1971 Ed., p. 20). Withal, the fact that international law has been made
part of the law of the land does not by any means imply the primacy of international
law over national law in the municipal sphere. Under the doctrine of incorporation as
applied in most countries, rules of international law are given a standing equal, not
superior, to national legislative enactments.
Same; Evidence; A registration certificate serves merely as prima facie
evidence—it is not conclusive but can and may be rebutted by controverting
evidence.—The credibility placed on a certificate of registration of one’s trademark,
or its weight as evidence of validity, ownership and exclusive use, is qualified. A
registration certificate serves merely as prima facie evidence. It is not conclusive but
can and may be rebutted by controverting evidence.
Same; Same; A supplemental register was created precisely for the
registration of marks which are not registrable on the principal register due to some
defects.—Moreover, the aforequoted provision applies only to registrations in the
IPL- Assignment No. 6
principal register. Registrations in the supplemental register do not enjoy a similar
privilege. A supplemental register was created precisely for the registration of marks
which are not registrable on the principal register due to some defects.
Same; Same; Administrative Law; The findings of fact of the Director of
Patents are conclusive upon the Supreme Court provided they are supported by
substantial evidence.—The determination as to who is the prior user of the trademark
is a question of fact and it is this Court’s working principle not to disturb the findings
of the Director of Patents on this issue in the absence of any showing of grave abuse
of discretion. The findings of facts of the Director of Patents are conclusive upon the
Supreme Court provided they are supported by substantial evidence.
KAPUNAN, J.:
In this petition for review on certiorari  under Rule 45 of the Revised Rules of
Court, Emerald Garment Manufacturing Corporation seeks to annul the
decision of the Court of Appeals dated 29 November 1990 in CA-G.R. SP
No. 15266 declaring petitioner's trademark to be confusingly similar to that of
private respondent and the resolution dated 17 May 1991 denying petitioner's
motion for reconsideration.
The record reveals the following antecedent facts:
On 18 September 1981, private respondent H.D. Lee Co., Inc., a foreign
corporation organized under the laws of Delaware, U.S.A., filed with the
Bureau of Patents, Trademarks & Technology Transfer (BPTTT) a Petition
for Cancellation of Registration No. SR 5054 (Supplemental Register) for the
trademark "STYLISTIC MR. LEE" used on skirts, jeans, blouses, socks,
briefs, jackets, jogging suits, dresses, shorts, shirts and lingerie under Class
25, issued on 27 October 1980 in the name of petitioner Emerald Garment
Manufacturing Corporation, a domestic corporation organized and existing
under Philippine laws. The petition was docketed as Inter Partes Case No.
1558.1
Private respondent, invoking Sec. 37 of R.A. No. 166 (Trademark Law) and
Art. VIII of the Paris Convention for the Protection of Industrial Property,
averred that petitioner's trademark "so closely resembled its own trademark,
'LEE' as previously registered and used in the Philippines, and not
abandoned, as to be likely, when applied to or used in connection with
petitioner's goods, to cause confusion, mistake and deception on the part of
the purchasing public as to the origin of the goods." 2
In its answer dated 23 March 1982, petitioner contended that its trademark
was entirely and unmistakably different from that of private respondent and
that its certificate of registration was legally and validly granted. 3
Page 86 of 143
On 20 February 1984, petitioner caused the publication of its application for
registration of the trademark "STYLISTIC MR. LEE" in the Principal
Register."4
On 27 July 1984, private respondent filed a notice of opposition to petitioner's
application for registration also on grounds that petitioner's trademark was
confusingly similar to its "LEE" trademark. 5 The case was docketed as Inter
Partes Case No. 1860.
On 21 June 1985, the Director of Patents, on motion filed by private
respondent dated 15 May 1985, issued an order consolidating Inter Partes
Cases Nos. 1558 and 1860 on grounds that a common question of law was
involved.6
On 19 July 1988, the Director of Patents rendered a decision granting private
respondent's petition for cancellation and opposition to registration.
The Director of Patents found private respondent to be the prior registrant of
the trademark "LEE" in the Philippines and that it had been using said mark
in the Philippines.7
Moreover, the Director of Patents, using the test of dominancy, declared that
petitioner's trademark was confusingly similar to private respondent's mark
because "it is the word 'Lee' which draws the attention of the buyer and leads
him to conclude that the goods originated from the same manufacturer. It is
undeniably the dominant feature of the mark."8
On 3 August 1988, petitioner appealed to the Court of Appeals and on 8
August 1988, it filed with the BPTTT a Motion to Stay Execution of the 19
July 1988 decision of the Director of Patents on grounds that the same would
cause it great and irreparable damage and injury. Private respondent
submitted its opposition on 22 August 1988.9
On 23 September 1988, the BPTTT issued Resolution No. 88-33 granting
petitioner's motion to stay execution subject to the following terms and
conditions:
1. That under this resolution, Respondent-Registrant is authorized only to
dispose of its current stock using the mark "STYLISTIC MR. LEE";
2. That Respondent-Registrant is strictly prohibited from further production,
regardless of mode and source, of the mark in question (STYLISTIC MR.
LEE) in addition to its current stock;
IPL- Assignment No. 6
3. That this relief Order shall automatically cease upon resolution of the
Appeal by the Court of Appeals and, if the Respondent's appeal loses, all
goods bearing the mark "STYLISTIC MR. LEE" shall be removed from the
market, otherwise such goods shall be seized in accordance with the law.
SO ORDERED.10
On 29 November 1990, the Court of Appeals promulgated its decision
affirming the decision of the Director of Patents dated 19 July 1988 in all
respects.11
In said decision the Court of Appeals expounded, thus:
Whether or not a trademark causes confusion and is likely to deceive the
public is a question of fact which is to be resolved by applying the "test of
dominancy", meaning, if the competing trademark contains the main or
essential or dominant features of another by reason of which confusion and
deception are likely to result, then infringement takes place; that duplication
or imitation is not necessary, a similarity in the dominant features of the
trademark would be sufficient.
The word "LEE" is the most prominent and distinctive feature of the
appellant's trademark and all of the appellee's "LEE" trademarks. It is the
mark which draws the attention of the buyer and leads him to conclude that
the goods originated from the same manufacturer. While it is true that there
are other words such as "STYLISTIC", printed in the appellant's label, such
word is printed in such small letters over the word "LEE" that it is not
conspicuous enough to draw the attention of ordinary buyers whereas the
word "LEE" is printed across the label in big, bold letters and of the same
color, style, type and size of lettering as that of the trademark of the appellee.
The alleged difference is too insubstantial to be noticeable. Even
granting arguendo that the word "STYLISTIC" is conspicuous enough to draw
attention, the goods may easily be mistaken for just another variation or line
of garments under the ap appelle's "LEE" trademarks in view of the fact that
the appellee has registered trademarks which use other words in addition to
the principal mark "LEE" such as "LEE RIDERS", "LEESURES" and "LEE
LEENS". The likelihood of confusion is further made more probable by the
fact that both parties are engaged in the same line of business. It is well to
reiterate that the determinative factor in ascertaining whether or not the
marks are confusingly similar to each other is not whether the challenged
mark would actually cause confusion or deception of the purchasers but
whether the use of such mark would likely cause confusion or mistake on the
part of the buying public.
Page 87 of 143
The appellee has sufficiently established its right to prior use and registration
of the trademark "LEE" in the Philippines and is thus entitled to protection
from any infringement upon the same. It is thus axiomatic that one who has
identified a peculiar symbol or mark with his goods thereby acquires a
property right in such symbol or mark, and if another infringes the trademark,
he thereby invokes this property right.
The merchandise or goods being sold by the parties are not that expensive
as alleged to be by the appellant and are quite ordinary commodities
purchased by the average person and at times, by the ignorant and the
unlettered. Ordinary purchasers will not as a rule examine the small letterings
printed on the label but will simply be guided by the presence of the striking
mark "LEE". Whatever difference there may be will pale in insignificance in
the face of an evident similarity in the dominant features and overall
appearance of the labels of the parties.12
On 19 December 1990, petitioner filed a motion for reconsideration of the
above-mentioned decision of the Court of Appeals.
Private respondent opposed said motion on 8 January 1991 on grounds that
it involved an impermissible change of theory on appeal. Petitioner allegedly
raised entirely new and unrelated arguments and defenses not previously
raised in the proceedings below such as laches and a claim that private
respondent appropriated the style and appearance of petitioner's trademark
when it registered its "LEE" mark under Registration No. 44220. 13
On 17 May 1991, the Court of Appeals issued a resolution rejecting
petitioner's motion for reconsideration and ruled thus:
A defense not raised in the trial court cannot be raised on appeal for the first
time. An issue raised for the first time on appeal and not raised timely in the
proceedings in the lower court is barred by estoppel.
The object of requiring the parties to present all questions and issues to the
lower court before they can be presented to this Court is to have the lower
court rule upon them, so that this Court on appeal may determine whether or
not such ruling was erroneous. The purpose is also in furtherance of justice
to require the party to first present the question he contends for in the lower
court so that the other party may not be taken by surprise and may present
evidence to properly meet the issues raised.
Moreover, for a question to be raised on appeal, the same must also be
within the issues raised by the parties in their pleadings. Consequently, when
a party deliberately adopts a certain theory, and the case is tried and decided
based upon such theory presented in the court below, he will not be
IPL- Assignment No. 6
permitted to change his theory on appeal. To permit him to do so would be
unfair to the adverse party. A question raised for the first time on appeal,
there having opportunity to raise them in the court of origin constitutes a
change of theory which is not permissible on appeal.
In the instant case, appellant's main defense pleaded in its answer dated
March 23, 1982 was that there was "no confusing similarity between the
competing trademark involved. On appeal, the appellant raised a single
issue, to wit:
The only issue involved in this case is whether or not respondent-registrant's
trademark "STYLISTIC MR. LEE" is confusingly similar with the petitioner's
trademarks "LEE or LEERIDERS, LEE-LEENS and LEE-SURES."
Appellant's main argument in this motion for reconsideration on the other
hand is that the appellee is estopped by laches from asserting its right to its
trademark. Appellant claims although belatedly that appellee went to court
with "unclean hands" by changing the appearance of its trademark to make it
identical to the appellant's trademark.
Neither defenses were raised by the appellant in the proceedings before the
Bureau of Patents. Appellant cannot raise them now for the first time on
appeal, let alone on a mere motion for reconsideration of the decision of this
Court dismissing the appellant's appeal.
While there may be instances and situations justifying relaxation of this rule,
the circumstance of the instant case, equity would be better served by
applying the settled rule it appearing that appellant has not given any reason
at all as to why the defenses raised in its motion for reconsideration was not
invoked earlier.14
Twice rebuffed, petitioner presents its case before this Court on the following
assignment of errors:
I. THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE
RESPONDENT CAUSED THE ISSUANCE OF A FOURTH "LEE"
TRADEMARK IMITATING THAT OF THE PETITIONER'S ON MAY 5,
1989 OR MORE THAN EIGHT MONTHS AFTER THE BUREAU OF
PATENT'S DECISION DATED JULY 19, 1988.
II. THE COURT OF APPEALS ERRED IN RULING THAT THE DEFENSE
OF ESTOPPEL BY LACHES MUST BE RAISED IN THE PROCEEDINGS
BEFORE THE BUREAU OF PATENTS, TRADEMARKS AND
TECHNOLOGY TRANSFER.
Page 88 of 143
III. THE COURT OF APPEALS ERRED WHEN IT CONSIDERED PRIVATE
RESPONDENT'S PRIOR REGISTRATION OF ITS TRADEMARK AND
DISREGARDED THE FACT THAT PRIVATE RESPONDENT HAD FAILED
TO PROVE COMMERCIAL  We reject petitioner's contention.
USE THEREOF BEFORE FILING OF APPLICATION FOR
REGISTRATION.15
In addition, petitioner reiterates the issues it raised in the Court of Appeals:
I. THE ISSUE INVOLVED IN THIS CASE IS WHETHER OR NOT
PETITIONER'S TRADEMARK SYTLISTIC MR. LEE, IS CONFUSINGLY
SIMILAR WITH THE PRIVATE RESPONDENT'S TRADEMARK LEE OR
LEE-RIDER, LEE-LEENS AND LEE-SURES.
II. PETITIONER'S EVIDENCES ARE CLEAR AND SUFFICIENT TO SHOW
THAT IT IS THE PRIOR USER AND ITS TRADEMARK IS DIFFERENT
FROM THAT OF THE PRIVATE RESPONDENT.
III. PETITIONER'S TRADEMARK IS ENTIRELY DIFFERENT FROM THE
PRIVATE RESPONDENT'S AND THE REGISTRATION OF ITS
TRADEMARK IS PRIMA FACIE EVIDENCE OF GOOD FAITH.
IV. PETITIONER'S "STYLISTIC MR. LEE" TRADEMARK CANNOT BE
CONFUSED WITH PRIVATE RESPONDENT'S LEE TRADEMARK.16
Petitioner contends that private respondent is estopped from instituting an
action for infringement before the BPTTT under the equitable principle of
laches pursuant to Sec. 9-A of R.A. No. 166, otherwise known as the Law on
Trade-marks, Trade-names and Unfair Competition:
Sec. 9-A. Equitable principles to govern proceedings. — In opposition
proceedings and in all other inter partes proceedings in the patent office
under this act, equitable principles of laches, estoppel, and acquiescence,
where applicable, may be considered and applied.
Petitioner alleges that it has been using its trademark "STYLISTIC MR. LEE"
since 1 May 1975, yet, it was only on 18 September 1981 that private
respondent filed a petition for cancellation of petitioner's certificate of
registration for the said trademark. Similarly, private respondent's notice of
opposition to petitioner's application for registration in the principal register
was belatedly filed on 27 July 1984.17
Private respondent counters by maintaining that petitioner was barred from
raising new issues on appeal, the only contention in the proceedings below
IPL- Assignment No. 6
being the presence or absence of confusing similarity between the two
trademarks in question.18
Petitioner's trademark is registered in the supplemental register. The
Trademark Law (R.A. No. 166) provides that "marks and tradenames for the
supplemental register shall not be published for or be subject to opposition,
but shall be published on registration in the Official Gazette." 19 The reckoning
point, therefore, should not be 1 May 1975, the date of alleged use by
petitioner of its assailed trademark but 27 October 1980, 20 the date the
certificate of registration SR No. 5054 was published in the Official Gazette
and issued to petitioner.
It was only on the date of publication and issuance of the registration
certificate that private respondent may be considered "officially" put on notice
that petitioner has appropriated or is using said mark, which, after all, is the
function and purpose of registration in the supplemental register. 21 The
record is bereft of evidence that private respondent was aware of petitioner's
trademark before the date of said publication and issuance. Hence, when
private respondent instituted cancellation proceedings on 18 September
1981, less than a year had passed.
Corollarily, private respondent could hardly be accused of inexcusable delay
in filing its notice of opposition to petitioner's application for registration in the
principal register since said application was published only on 20 February
1984.22 From the time of publication to the time of filing the opposition on 27
July 1984 barely five (5) months had elapsed. To be barred from bringing suit
on grounds of estoppel and laches, the delay must be 
lengthy.23
More crucial is the issue of confusing similarity between the two trademarks.
Petitioner vehemently contends that its trademark "STYLISTIC MR. LEE" is
entirely different from and not confusingly similar to private respondent's
"LEE" trademark.
Private respondent maintains otherwise. It asserts that petitioner's trademark
tends to mislead and confuse the public and thus constitutes an infringement
of its own mark, since the dominant feature therein is the word "LEE."
The pertinent provision of R.A. No. 166 (Trademark Law) states thus:
Sec. 22. Infringement, what constitutes. — Any person who shall use,
without the consent of the registrant, any reproduction, counterfeit, copy or
colorable imitation of any registered mark or trade-name in connection with
Page 89 of 143
the sale, offering for sale, or advertising of any goods, business or services
on or in connection with which such use is likely to cause confusion or
mistake or to deceive purchasers or others as to the source or origin of such
goods or services, or identity of such business; or reproduce, counterfeit,
copy or colorably imitable any such mark or trade-name and apply such
reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or advertisements intended to be used
upon or in connection with such goods, business or services; shall be liable
to a civil action by the registrant for any or all of the remedies herein
provided.
Practical application, however, of the aforesaid provision is easier said than
done. In the history of trademark cases in the Philippines, particularly in
ascertaining whether one trademark is confusingly similar to or is a colorable
imitation of another, no set rules can be deduced. Each case must be
decided on its own merits.
In Esso Standard Eastern, Inc. v.  Court of Appeals,24 we held:
. . . But likelihood of confusion is a relative concept; to be determined only
according to the particular, and sometimes peculiar, circumstances of each
case. It is unquestionably true that, as stated in Coburn vs. Puritan Mills, Inc.:
"In trademark cases, even more than in other litigation, precedent must be
studied in the light of the facts of the particular case."
Likewise, it has been observed that:
In determining whether a particular name or mark is a "colorable imitation" of
another, no all-embracing rule seems possible in view of the great number of
factors which must necessarily be considered in resolving this question of
fact, such as the class of product or business to which the article belongs; the
product's quality, quantity, or size, including its wrapper or container; the
dominant color, style, size, form, meaning of letters, words, designs and
emblems used; the nature of the package, wrapper or container; the
character of the product's purchasers; location of the business; the likelihood
of deception or the mark or name's tendency to confuse;
etc.25
Proceeding to the task at hand, the essential element of infringement is
colorable imitation. This term has been defined as "such a close or ingenious
imitation as to be calculated to deceive ordinary purchasers, or such
resemblance of the infringing mark to the original as to deceive an ordinary
purchaser giving such attention as a purchaser usually gives, and to cause
him to purchase the one supposing it to be the other."26
IPL- Assignment No. 6
Colorable imitation does not mean such similitude as amounts to identity. Nor
does it require that all the details be literally copied. Colorable imitation refers
to such similarity in form, content, words, sound, meaning, special
arrangement, or general appearance of the trademark or tradename with that
of the other mark or tradename in their over-all presentation or in their
essential, substantive and distinctive parts as would likely mislead or confuse
persons in the ordinary course of purchasing the genuine article. 27
In determining whether colorable imitation exists, jurisprudence has
developed two kinds of tests — the Dominancy Test applied in Asia Brewery,
Inc. v. Court of Appeals 28 and other cases 29 and the Holistic Test developed
in Del Monte Corporation v. Court of Appeals  30 and its proponent cases.31
As its title implies, the test of dominancy focuses on the similarity of the
prevalent features of the competing trademarks which might cause confusion
or deception and thus constitutes infringement.
. . . If the competing trademark contains the main or essential or dominant
features of another, and confusion and deception is likely to result,
infringement takes place. Duplication or imitation is not necessary; nor it is
necessary that the infringing label should suggest an effort to imitate. [C.
Neilman Brewing Co. v. Independent Brewing Co., 191 F., 489,
495, citing  Eagle White Lead Co., vs. Pflugh (CC) 180 Fed. 579]. The
question at issue in cases of infringement of trademarks is whether the use of
the marks involved would be likely to cause confusion or mistakes in the
mind of the public or deceive purchasers. (Auburn Rubber Corporation vs.
Honover Rubber Co., 107 F. 2d 588; . . .)32
On the other side of the spectrum, the holistic test mandates that the entirety
of the marks in question must be considered in determining confusing
similarity.
In determining whether the trademarks are confusingly similar, a comparison
of the words is not the only determinant factor. The trademarks in their
entirety as they appear in their respective labels or hang tags must also be
considered in relation to the goods to which they are attached. The
discerning eye of the observer must focus not only on the predominant words
but also on the other features appearing in both labels in order that he may
draw his conclusion whether one is confusingly similar to the other. 33
Applying the foregoing tenets to the present controversy and taking into
account the factual circumstances of this case, we considered the
trademarks involved as a whole and rule that petitioner's "STYLISTIC MR.
LEE" is not confusingly similar to private respondent's "LEE" trademark.
Page 90 of 143
Petitioner's trademark is the whole "STYLISTIC MR. LEE." Although on its
label the word "LEE" is prominent, the trademark should be considered as a
whole and not piecemeal. The dissimilarities between the two marks become
conspicuous, noticeable and substantial enough to matter especially in the
light of the following variables that must be factored in.
First, the products involved in the case at bar are, in the main, various kinds
of jeans. These are not your ordinary household items like catsup, soysauce
or soap which are of minimal cost. Maong pants or jeans are not inexpensive.
Accordingly, the casual buyer is predisposed to be more cautious and
discriminating in and would prefer to mull over his purchase. Confusion and
deception, then, is less likely. In Del Monte Corporation v. Court of
Appeals, 34 we noted that:
. . . Among these, what essentially determines the attitudes of the purchaser,
specifically his inclination to be cautious, is the cost of the goods. To be sure,
a person who buys a box of candies will not exercise as much care as one
who buys an expensive watch. As a general rule, an ordinary buyer does not
exercise as much prudence in buying an article for which he pays a few
centavos as he does in purchasing a more valuable thing. Expensive and
valuable items are normally bought only after deliberate, comparative and
analytical investigation. But mass products, low priced articles in wide use,
and matters of everyday purchase requiring frequent replacement are bought
by the casual consumer without great  CHAPTER
care. . . .
Second, like his beer, the average Filipino consumer generally buys his jeans
by brand. He does not ask the sales clerk for generic jeans but for, say, a
Levis, Guess, Wrangler or even an Armani. He is, therefore, more or less
knowledgeable and familiar with his preference and will not easily be
distracted.
Finally, in line with the foregoing discussions, more credit should be given to
the "ordinary purchaser." Cast in this particular controversy, the ordinary
purchaser is not the "completely unwary consumer" but is the "ordinarily
intelligent buyer" considering the type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok  35 is better suited to
the present case. There, the "ordinary purchaser" was defined as one
"accustomed to buy, and therefore to some extent familiar with, the goods in
question. The test of fraudulent simulation is to be found in the likelihood of
the deception of some persons in some measure acquainted with an
established design and desirous of purchasing the commodity with which that
design has been associated. The test is not found in the deception, or the
possibility of deception, of the person who knows nothing about the design
IPL- Assignment No. 6
which has been counterfeited, and who must be indifferent between that and
the other. The simulation, in order to be objectionable, must be such as
appears likely to mislead the ordinary intelligent buyer who has a need to
supply and is familiar with the article that he seeks to purchase."
There is no cause for the Court of Appeal's apprehension that petitioner's
products might be mistaken as "another variation or line of garments under
private respondent's 'LEE' trademark". 36 As one would readily observe,
private respondent's variation follows a standard format "LEERIDERS,"
"LEESURES" and "LEELEENS." It is, therefore, improbable that the public
would immediately and naturally conclude that petitioner's "STYLISTIC MR.
LEE" is but another variation under private respondent's "LEE" mark.
As we have previously intimated the issue of confusing similarity between
trademarks is resolved by considering the distinct characteristics of each
case. In the present controversy, taking into account these unique factors, we
conclude that the similarities in the trademarks in question are not sufficient
as to likely cause deception and confusion tantamount to infringement.
Another way of resolving the conflict is to consider the marks involved from
the point of view of what marks are registrable pursuant to Sec. 4 of R.A. No.
166, particularly paragraph 4 (e):
II-A.— The Principal Register
(Inserted by Sec. 2, Rep. Act No. 638.)
Sec. 4. Registration of trade-marks, trade-names and service-marks on the
principal register. — There is hereby established a register of trade-marks,
trade-names and service-marks which shall be known as the principal
register. The owner of a trade-mark, trade-name or service-mark used to
distinguish his goods, business or services from the goods, business or
services of others shall have the right to register the same on the principal
register, unless it:
(e) Consists of a mark or trade-name which, when applied to or used in
connection with the goods, business or services of the applicant is merely
descriptive or deceptively misdescriptive of them, or when applied to or used
in connection with the goods, business or services of the applicant is
primarily geographically descriptive or deceptively misdescriptive of them,  or
is primarily merely a surname; (Emphasis ours.)
"LEE" is primarily a surname. Private respondent cannot, therefore, acquire
exclusive ownership over and singular use of said term.
Page 91 of 143
. . . It has been held that a personal name or surname may not be
monopolized as a trademark or tradename as against others of the same
name or surname. For in the absence of contract, fraud, or estoppel, any
man may use his name or surname in all legitimate ways. Thus, "Wellington"
is a surname, and its first user has no cause of action against the junior user
of "Wellington" as it is incapable of exclusive appropriation. 37
In addition to the foregoing, we are constrained to agree with petitioner's
contention that private respondent failed to prove prior actual commercial use
of its "LEE" trademark in the Philippines before filing its application for
registration with the BPTTT and hence, has not acquired ownership over said
mark.
Actual use in commerce in the Philippines is an essential prerequisite for the
acquisition of ownership over a trademark pursuant to Sec. 2 and 2-A of the
Philippine Trademark Law (R.A. No. 166) which explicitly provides that:
CHAPTER II. Registration of Marks and Trade-names.
Sec. 2. What are registrable. — Trade-marks, trade-names, and service
marks owned by persons, corporations, partnerships or associations
domiciled in the Philippines and by persons, corporations, partnerships, or
associations domiciled in any foreign country may be registered in
accordance with the provisions of this act: Provided, That said trade-
marks, trade-names, or service marks are actually in use in commerce and
services not less than two months in the Philippines before the time the
applications for registration are filed: And Provided, further, That the country
of which the applicant for registration is a citizen grants by law substantially
similar privileges to citizens of the Philippines, and such fact is officially
certified, with a certified true copy of the foreign law translated into the
English language, by the government of the foreign country to the
Government of the Republic of the Philippines. (As amended.) (Emphasis
ours.)
Sec. 2-A. Ownership of trade-marks, trade-names and service-marks; how
acquired. — Anyone who lawfully produces or deals in merchandise of any
kind or who engages in lawful business, or who renders any lawful service in
commerce, by actual use hereof in manufacture or trade, in business, and in
the service rendered; may appropriate to his exclusive use a trade-mark, a
trade-name, or a service-mark not so appropriated by another, to distinguish
his merchandise, business or services from others. The ownership or
possession of trade-mark, trade-name, service-mark, heretofore or hereafter
appropriated, as in this section provided, shall be recognized and protected
in the same manner and to the same extent as are other property rights to
the law. (As amended.) (Emphasis ours.)
IPL- Assignment No. 6
The provisions of the 1965 Paris Convention for the Protection of Industrial
Property 38 relied upon by private respondent and Sec. 21-A of the
Trademark Law (R.A. No. 166) 39 were sufficiently expounded upon and
qualified in the recent case of Philip Morris, Inc. v. Court of Appeals:40
Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirement of actual use in the Philippines must
subordinate an international agreement inasmuch as the apparent clash is
being decided by a municipal tribunal (Mortisen vs. Peters, Great Britain,
High Court of Judiciary of Scotland, 1906, 8 Sessions, 93; Paras,
International Law and World Organization, 1971 Ed., p. 20). Withal, the fact
that international law has been made part of the law of the land does not by
any means imply the primacy of international law over national law in the
municipal sphere. Under the doctrine of incorporation as applied in most
countries, rules of international law are given a standing equal, not superior,
to national legislative enactments.
In other words, (a foreign corporation) may have the capacity to sue for
infringement irrespective of lack of business activity in the Philippines on
account of Section 21-A of the Trademark Law but the question of whether
they have an exclusive right over their symbol as to justify issuance of the
controversial writ will depend on actual use of their trademarks in the
Philippines in line with Sections 2 and 2-A of the same law. It is thus
incongruous for petitioners to claim that when a foreign corporation not
licensed to do business in the Philippines files a complaint for infringement,
the entity need not be actually using its trademark in commerce in the
Philippines. Such a foreign corporation may have the personality to file a suit
for infringement but it may not necessarily be entitled to protection due to
absence of actual use of the emblem in the local market.
Undisputably, private respondent is the senior registrant, having obtained
several registration certificates for its various trademarks "LEE,"
"LEERIDERS," and "LEESURES" in both the supplemental and principal
registers, as early as 1969 to 1973. 41 However, registration alone will not
suffice. In Sterling Products International, Inc. v.Farbenfabriken Bayer
Aktiengesellschaft,42 we declared:
A rule widely accepted and firmly entrenched because it has come down
through the years is that actual use in commerce or business is a
prerequisite in the acquisition of the right of ownership over a trademark.
It would seem quite clear that adoption alone of a trademark would not give
exclusive right thereto. Such right "grows out of their actual use." Adoption is
not use. One may make advertisements, issue circulars, give out price lists
on certain goods; but these alone would not give exclusive right of use. For
Page 92 of 143
trademark is a creation of use. The underlying reason for all these is that
purchasers have come to understand the mark as indicating the origin of the
wares. Flowing from this is the trader's right to protection in the trade he has
built up and the goodwill he has accumulated from use of the trademark.
Registration of a trademark, of course, has value: it is an administrative act
declaratory of a pre-existing right. Registration does not, however, perfect a
trademark right. (Emphasis ours.)
To augment its arguments that it was, not only the prior registrant, but also
the prior user, private respondent invokes Sec. 20 of the Trademark Law,
thus:
Sec. 20. Certificate of registration prima facie evidence of validity. — A
certificate of registration of a mark or tradename shall be a prima
facie evidence of the validity of the registration, the registrant's ownership of
the mark or trade-name, and of the registrant's exclusive right to use the
same in connection with the goods, business or services specified in the
certificate, subject to any conditions and limitations stated therein.
The credibility placed on a certificate of registration of one's trademark, or its
weight as evidence of validity, ownership and exclusive use, is qualified. A
registration certificate serves merely as prima facie evidence. It is not
conclusive but can and may be rebutted by controverting evidence.
Moreover, the aforequoted provision applies only to registrations in the
principal register.43 Registrations in the supplemental register do not enjoy a
similar privilege. A supplemental register was created precisely for the
registration of marks which are not registrable on the principal register due to
some defects.44
The determination as to who is the prior user of the trademark is a question
of fact and it is this Court's working principle not to disturb the findings of the
Director of Patents on this issue in the absence of any showing of grave
abuse of discretion. The findings of facts of the Director of Patents are
conclusive upon the Supreme Court provided they are supported by
substantial evidence.45
In the case at bench, however, we reverse the findings of the Director of
Patents and the Court of Appeals. After a meticulous study of the records, we
observe that the Director of Patents and the Court of Appeals relied mainly
on the registration certificates as proof of use by private respondent of the
trademark "LEE" which, as we have previously discussed are not sufficient.
We cannot give credence to private respondent's claim that its "LEE" mark
first reached the Philippines in the 1960's through local sales by the Post
Exchanges of the U.S. Military Bases in the Philippines 46 based as it was
IPL- Assignment No. 6
solely on the self-serving statements of Mr. Edward Poste, General Manager
of Lee (Phils.), Inc., a wholly owned subsidiary of the H.D. Lee, Co., Inc.,
U.S.A., herein private respondent. 47Similarly, we give little weight to the
numerous 
vouchers representing various advertising expenses in the Philippines for
"LEE" products. 48 It is well to note that these expenses were incurred only in
1981 and 1982 by LEE (Phils.), Inc. after it entered into a licensing
agreement with private respondent on 11 May 1981. 49
On the other hand, petitioner has sufficiently shown that it has been in the
business of selling jeans and other garments adopting its "STYLISTIC MR.
LEE" trademark since 1975 as evidenced by appropriate sales invoices to
various stores and retailers.50
Our rulings in Pagasa Industrial Corp. v. Court of Appeals  51 and Converse
Rubber Corp. v. Universal Rubber Products, Inc.,52respectively, are
instructive:
The Trademark Law is very clear. It requires actual commercial use of the
mark prior to its registration. There is no dispute that respondent corporation
was the first registrant, yet it failed to fully substantiate its claim that it used in
trade or business in the Philippines the subject mark; it did not present proof
to invest it with exclusive, continuous adoption of the trademark which should
consist among others, of considerable sales since its first use. The invoices
submitted by respondent which were dated way back in 1957 show that the
zippers sent to the Philippines were to be used as "samples" and "of no
commercial value." The evidence for respondent must be clear, definite and
free from inconsistencies. "Samples" are not for sale and therefore, the fact
of exporting them to the Philippines cannot be considered to be equivalent to
the "use" contemplated by law. Respondent did not expect income from such
"samples." There were no receipts to establish sale, and no proof were
presented to show that they were subsequently sold in the Philippines.
The sales invoices provide the best proof that there were actual sales of
petitioner's product in the country and that there was actual use for a
protracted period of petitioner's trademark or part thereof through these
sales.
For lack of adequate proof of actual use of its trademark in the Philippines
prior to petitioner's use of its own mark and for failure to establish confusing
similarity between said trademarks, private respondent's action for
infringement must necessarily fail.
WHEREFORE, premises considered, the questioned decision and resolution
are hereby REVERSED and SET ASIDE.
Page 93 of 143
SO ORDERED.

IPL- Assignment No. 6 Page 94 of 143

[70] G.R. No. 139300. March 14, 2001.
AMIGO MANUFACTURING, INC., petitioner, vs. CLUETT PEABODY CO.,
INC., respondent.
Trademarks and Tradenames; Infringement; Unfair Competition; A
certificate of registration of a mark or tradename is prima facie evidence of the
validity of the registration, the registrant’s ownership of the mark or tradename, and
of the registrant’s exclusive right to use the same in connection with the goods,
business or services specified in the certificate, subject to any conditions and
limitations stated therein.—The registration of the above marks in favor of
respondent constitutes prima facie evidence, which petitioner failed to overturn
satisfactorily, of respondent’s ownership of those marks, the dates of appropriation
and the validity of other pertinent facts stated therein. Indeed, Section 20 of Republic
Act 166 provides as follows: “Sec. 20. Certificate of registration prima facie
evidence of validity.—A certificate of registration of a mark or tradename shall be
prima facie evidence of the validity of the registration, the registrant’s ownership of
the mark or tradename, and of the registrant’s exclusive right to use the same in
connection with the goods, business or services specified in the certificate, subject to
any conditions and limitations stated therein.”
Same; Same; Same; The fact that the marks were indeed registered by a
party shows that it did use them on the date indicated in the Certificate of
Registration.—Section 5-A of Republic Act No. 166 states that an applicant for a
trademark or tradename shall, among others, state the date of first use. The fact that
the marks were indeed registered by respondent shows that it did use them on the
date indicated in the Certificate of Registration.
Same; Same; Same; Registration with the supplemental register gives no
presumption of ownership of the trademark.— Furthermore, petitioner registered its
trademark only with the supplemental register. In La Chemise Lacoste v. Fernandez,
the Court held that registration with the supplemental register gives no presumption
of ownership of the trademark. Said the Court: “The registration of a mark upon the
supplemental register is not, as in the case of the principal register, prima facie
evidence of (1) the validity of registration; (2) registrant’s ownership of the mark;
and (3) registrant’s exclusive right to use the mark. It is not subject to opposition,
although it may be cancelled after its issuance. Neither may it be the subject of
interference proceedings. Registration [i]n the supplemental register is not
constructive notice of registrant’s claim of ownership. A supplemental register is
provided for the registration because of some defects (conversely, defects which
make a mark unregistrable on the principal register, yet do not bar them from the
supplemental register.)’ (Agbayani, II Commercial Laws of the Philippines, 1978, p.
514, citing Uy Hong Mo v. Titay & Co., et al., Dec. No. 254 of Director of Patents,
Apr. 30, 1968.”
IPL- Assignment No. 6
Same; Same; Same; Administrative Law; Evidence; Administrative
agencies’ findings of fact in matters falling under their jurisdiction are generally
accorded great respect, if not finality.—In any case, absent any clear showing to the
contrary, this Court accepts the finding of the Bureau of Patents that it was
respondent which had prior use of its trademark, as shown in the various Certificates
of Registration issued in its favor. Verily, administrative agencies’ findings of fact in
matters falling under their jurisdiction are generally accorded respect, if not finality.
Thus, the Court has held: “x x x. By reason of the special knowledge and expertise of
said administrative agencies over matters falling under their jurisdiction, they 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. The findings of fact of
an administrative agency must be respected 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 an 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 of sufficiency of evidence.”
Same; Same; Same; Tests to Determine Whether Trademarks are
Confusingly Similar; Words and Phrases; “Dominancy Test” and “Holistic Test,”
Explained; The test of dominancy focuses on the similarity of the prevalent features
of the competing trademarks which might cause confusion or deception and thus
constitutes infringement, while the holistic test mandates that the entirety of the
marks in question must be considered in determining confusing similarity.—In
Emerald Garment Manufacturing Corporation v. Court of Appeals, this Court stated
that in determining whether trademarks are confusingly similar, jurisprudence has
developed two kinds of tests, the Dominancy Test and the Holistic Test. In its words:
“In determining whether colorable imitation exists, jurisprudence has developed two
kinds of tests—the Dominancy Test applied in Asia Brewery, Inc. v. Court of
Appeals and other cases and the Holistic Test developed in Del Monte Corporation v.
Court of Appeals and its proponent cases. As its title implies, the test of dominancy
focuses on the similarity of the prevalent features of the competing trademarks which
might cause confusion or deception and thus constitutes infringement, x x x x x x x x
x . . . 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. [C. Neilman Brewing Co. v. Independent
Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180
Fed. 579]. The question at issue in cases of infringement of trademarks is whether
the use of the marks involved would be likely to cause confusion or mistakes in the
mind of the public or deceive purchasers. (Auburn Rubber Corporation vs. Hanover
Rubber Co., 107 F. 2d 588; x x x.) x x x x x x x x x On the other side of the
spectrum, the holistic test mandates that the entirety of the marks in question must be
considered in determining confusing similarity.”
Page 95 of 143
 Same; Same; Same; Intellectual Property Law; Due Process; Duly
registered trademarks are protected by law as intellectual properties and cannot be
appropriated by others without violating the due process clause.—Let it be
remembered that duly registered trademarks are protected by law as intellectual
properties and cannot be appropriated by others without violating the due process
clause. An infringement of intellectual rights is no less vicious and condemnable as
theft of material property, whether personal or real.
Same; Same; Same; Conflict of Laws; Paris Convention; A foreign-based
trademark owner, whose country of domicile is a party to an international
convention relating to protection of trademarks, is accorded protection against
infringement or any unfair competition.—Thus, applicable is the Union Convention
for the Protection of Industrial Property adopted in Paris on March 20, 1883,
otherwise known as the Paris Convention, of which the Philippines and the United
States are members. Respondent is domiciled in the United States and is the
registered owner of the “Gold Toe” trademark. Hence, it is entitled to the protection
of the Convention. A foreign-based trademark owner, whose country of domicile is a
party to an international convention relating to protection of trademarks, is accorded
protection against infringement or any unfair competition as provided in Section 37
of Republic Act 166, the Trademark Law which was the law in force at the time this
case was instituted.
PANGANIBAN, J.:
The findings of the Bureau of Patents that two trademarks are confusingly
and deceptively similar to each other are binding upon the courts, absent any
sufficient evidence to the contrary. In the present case, the Bureau
considered the totality of the similarities between the two sets of marks and
found that they were of such degree, number and quality as to give the
overall impression that the two products are confusingly if not deceptively the
same.
Statement of the Case
Petitioner Amigo Manufacturing Inc. challenges, under Rule 45 of the Rules
of Court, the January 14, 1999 Resolution1 of the Court of Appeals (CA) in
CA-GR SP No. 22792, which reversed, on reconsideration, its own
September 29, 1998 Decision.2 The dispositive portion of the assailed
Resolution reads as follows:
"WHEREFORE, the Motion for Reconsideration is GRANTED, and the
Decision dated September 29, 1998 REVERSED. Consequently, the
decision rendered by the Director of Patents dated September 3, 1990 is
hereby AFFIRMED."
IPL- Assignment No. 6
The Decision of the Director of Patents, referred to by the CA, disposed as
follows:
"WHEREFORE, the Petition is GRANTED. Consequently, Certificate of
Registration No. SR-2206 issued to Respondent-Registrant [herein petitioner]
is hereby cancelled.
"Let the records of this case be remanded to the Patent/Trademark Registry
and EDP Division for appropriate action in accordance with this Decision."
Petitioner also seeks the reversal of the June 30, 1999 CA
Resolution3 denying its own Motion for Reconsideration.
The Facts
The facts, which are undisputed, are summarized by the Court of Appeals in
its original Decision, as follows:
"The source of the controversy that precipitated the filing by [herein
Respondent] Cluett Peabody Co., Inc. (a New York corporation) of the
present case against [herein Petitioner] Amigo Manufacturing Inc. (a
Philippine corporation) for cancellation of trademark is [respondent's] claim of
exclusive ownership (as successor in interest of Great American Knitting
Mills, Inc.) of the following trademark and devices, as used on men's socks:
a) GOLD TOE, under Certificate of Registration No. 6797 dated September
22, 1958;
b) DEVICE, representation of a sock and magnifying glass on the toe of a
sock, under Certificate of Registration No. 13465 dated January 25, 1968;
c) DEVICE, consisting of a 'plurality of gold colored lines arranged in parallel
relation within a triangular area of toe of the stocking and spread from each
other by lines of contrasting color of the major part of the stocking' under
Certificate of Registration No. 13887 dated May 9, 1968; and
d) LINENIZED, under Certificate of Registration No. 15440 dated April 13,
1970.
On the other hand, [petitioner's] trademark and device 'GOLD TOP,
Linenized for Extra Wear' has the dominant color 'white' at the center and a
'blackish brown' background with a magnified design of the sock's garter, and
is labeled 'Amigo Manufacturing Inc., Mandaluyong, Metro Manila, Made in
the Philippines'.
Page 96 of 143
In the Patent Office, this case was heard by no less than six Hearing Officers:
Attys. Rodolfo Gilbang, Rustico Casia, M. Yadao, Fabian Rufina, Neptali
Bulilan and Pausi Sapak. The last named officer drafted the decision under
appeal which was in due court signed and issued by the Director of Patents
(who never presided over any hearing) adversely against the respondent
Amigo Manufacturing, Inc. as heretofore mentioned (supra, p.1).
The decision pivots on two point: the application of the rule of idem sonans
and the existence of a confusing similarity in appearance between two
trademarks (Rollo, p. 33)."4
Ruling of the Court of Appeals
In its assailed Resolution, the CA held as follows:
"After a careful consideration of [respondent's] arguments and a re-
appreciation of the records of this case. [w]e find [respondent's] motion for
reconsideration meritorious. As shown by the records, and as correctly held
by the Director of Patents, there is hardly any variance in the appearance of
the marks 'GOLD TOP' and 'GOLD TOE' since both show a representation of
a man's foot wearing a sock, and the marks are printed in identical lettering.
Section 4(d) of R.A. No. 166 declares to be unregistrable, 'a mark which
consists o[r] comprises a mark or trademark which so resembles a mark or
tradename registered in the Philippines of tradename previously used in the
Philippines by another and not abandoned, as to be likely, when applied to or
used in connection with the goods, business or services of the applicant, to
cause confusion or mistake or to deceive the purchasers. [Petitioner]'s mark
is a combination of the different registered marks owned by [respondent]. As
held in Del Monte Corporation v. Court of Appeals, 181 SCRA 410 (1990),
the question is not whether the two articles are distinguishable by their label
when set aside but whether the general confusion made by the article upon
the eye of the casual purchaser who is unsuspicious and off his guard, is
such as to likely result in confounding it with the original. As held by the Court
in the same decision[,] '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.' Furthermore, [petitioner]'s mark is only
registered with the Supplemental Registry which gives no right of exclusivity
to the owner and cannot overturn the presumption of validity and exclusiv[ity]
given to a registered mark.
"Finally, the Philippines and the United States are parties to the Union
Convention for the Protection of Industrial Property adopted in Paris on
March 20, 1883, otherwise known as the Paris Convention. (Puma
Sportschuhfabriken Rudolf Dassler K.G. v. Intermediate Appellate Court, 158
SCRA 233). [Respondent] is domiciled in the United States of America and is
the lawful owner of several trademark registrations in the United States for
the mark 'GOLD TOE'.
x x x           x x x           x x x'
By virtue of the Philippines' membership to the Paris Union, trademark rights
in favor of the [respondent] were created. The object of the Convention is to
accord a national of a member nation extensive protection against
infringement and other types of unfair competition. (Puma
Sportschuhfabriken Rudolf Dassler K.G. v. Intermediate Appellate Court, 158
SCRA 233; La Chemise Lacoste, S.A. v. Fernandez, 129 SCRA 373)" 5
Hence, this Petition.6
Issues
In its Memorandum,7 petitioner raises the following issues for the
consideration of this Court:
"I
Whether or not the Court of Appeals overlooked that petitioner's trademark
was used in commerce in the Philippines earlier than respondent's actual use
of its trademarks, hence the Court of Appeals erred in affirming the Decision
of the Director of Patents dated September 3, 1990.
II
Since the petitioner's actual use of its trademark was ahead of the
respondent, whether or not the Court of Appeals erred in canceling the
registration of petitioner's trademark instead of canceling the trademark of
the respondent.
III
Whether or not the Court of Appeals erred in affirming the findings of the
Director of Patents that petitioner's trademark [was] confusingly similar to
respondent's trademarks.
IV
Whether or not the Court of Appeals erred in applying the Paris Convention
in holding that respondent ha[d] an exclusive right to the trademark 'gold toe'

IPL- Assignment No. 6 Page 97 of 143

without taking into consideration the absence of actual use in the Moreover, the validity of the Certificates of Registration was not questioned.
Philippines."8 Neither did petitioner present any evidence to indicate that they were
fraudulently issued. Consequently, the claimed dates of respondent's first
In the main, the Court will resolve three issues: (1) the date of actual use of use of the marks are presumed valid. Clearly, they were ahead of petitioner's
the two trademarks; (2) their confusing similarities, and (3) the applicability of claimed date of first use of "Gold Top and Device" in 1958.
the Paris Convention.
Section 5-A of Republic Act No. 166 10 states that an applicant for a trademark
The Court's Ruling or trade name shall, among others, state the date of first use. The fact that
the marks were indeed registered by respondent shows that it did use them
on the date indicated in the Certificate of Registration.
The Petition has no merit.

On the other hand, petitioner failed to present proof of the date of alleged first
First Issue: Dates of First Use of Trademark and Devices
use of the trademark "Gold Top and Device". Thus, even assuming that
respondent started using it only on May 15, 1962, we can make no finding
Petitioner claims that it started the actual use of the trademark "Gold Top and that petitioner had started using it ahead of respondent.
Device" in September 1956, while respondent began using the trademark
"Gold Toe" only on May 15, 1962. It contends that the claim of respondent
Furthermore, petitioner registered its trademark only with the supplemental
that it had been using the "Gold Toe" trademark at an earlier date was not
register. In La Chemise Lacoste v. Fernandez,11 the Court held that
substantiated. The latter's witnesses supposedly contradicted themselves as
registration with the supplemental register gives no presumption of ownership
to the date of first actual use of their trademark, coming up with different
of the trademark. Said the Court:
dates such as 1952, 1947 and 1938.

"The registration of a mark upon the supplemental register is not, as in the

We do not agree. Based on the evidence presented, this Court concurs in the
case of the principal register, prima facie evidence of (1) the validity of
findings of the Bureau of Patents that respondent had actually used the
registration; (2) registrant's ownership of the mark; and (3) registrant's
trademark and the devices in question prior to petitioner's use of its own.
exclusive right to use the mark. It is not subject to opposition, although it may
During the hearing at the Bureau of Patents, respondent presented Bureau
be cancelled after its issuance. Neither may it be the subject of interference
registrations indicating the dates of first use in the Philippines of the
proceedings. Registration [i]n the supplemental register is not constructive
trademark and the devices as follows: a) March 16, 1954, Gold Toe; b)
notice of registrant's claim of ownership. A supplemental register is provided
February 1, 1952, the Representation of a Sock and a Magnifying Glass; c)
for the registration because of some defects (conversely, defects which make
January 30, 1932, the Gold Toe Representation; and d) February 28, 1952,
a mark unregistrable on the principal register, yet do not bar them from the
"Linenized."
supplemental register.)' (Agbayani, II Commercial Laws of the Philippines,
1978, p. 514, citing Uy Hong Mo v. Titay & Co., et al., Dec. No. 254 of
The registration of the above marks in favor of respondent constitutes prima Director of Patents, Apr. 30, 1968."
facie evidence, which petitioner failed to overturn satisfactorily, of
respondent's ownership of those marks, the dates of appropriation and the
As to the actual date of first use by respondent of the four marks it registered,
validity of other pertinent facts stated therein. Indeed, Section 20 of Republic
the seeming confusion may have stemmed from the fact that the marks have
Act 166 provides as follows:
different dates of first use. Clearly, however, these dates are indicated in the
Certificates of Registration.
"Sec. 20. Certificate of registration prima facie evidence of validity. - A
certificate of registration of a mark or trade-name shall be prima facie
In any case, absent any clear showing to the contrary, this Court accepts the
evidence of the validity of the registration, the registrant's ownership of the
finding of the Bureau of Patents that it was respondent which had prior use of
mark or trade-name, and of the registrant's exclusive right to use the same in
its trademark, as shown in the various Certificates of Registration issued in
connection with the goods, business or services specified in the certificate,
its favor. Verily, administrative agencies' findings of fact in matters falling
subject to any conditions and limitations stated therein."9
under their jurisdiction are generally accorded great respect, if not finality.
Thus, the Court has held:

IPL- Assignment No. 6 Page 98 of 143

"x x x. By reason of the special knowledge and expertise of said
administrative agencies over matters falling under their jurisdiction, they 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.
The findings of fact of an administrative agency must be respected 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 an 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 of sufficiency of evidence."12
Second Issue: Similarity of Trademarks
Citing various differences between the two sets of marks, petitioner assails
the finding of the director of patents that its trademark is confusingly similar to
that of respondent. Petitioner points out that the director of patents erred in
its application of the idem sonans rule, claiming that the two trademarks
"Gold Toe" and "Gold Top" do not sound alike and are pronounced
differently. It avers that since the words gold and toe are generic, respondent
has no right to their exclusive use.
The arguments of petitioner are incorrect. True, it would not be guilty of
infringement on the basis alone of the similarity in the sound of petitioner's
"Gold Top" with that of respondent's "Gold Toe." Admittedly, the
pronunciations of the two do not, by themselves, create confusion.
The Bureau of Patents, however, did not rely on the idem sonans test alone
in arriving at its conclusion. This fact is shown in the following portion of its
Decision:
"As shown by the drawings and labels on file, the mark registered by
Respondent-Registrant under Registration No. SR-2206 is a combination of
the abovementioned trademarks registered separately by the petitioner in the
Philippines and the United States.
"With respect to the issue of confusing similarity between the marks of the
petitioner and that of the respondent-registrant applying the tests of idem
sonans, the mark 'GOLD TOP & DEVICE' is confusingly similar with the mark
'GOLD TOE'. The difference in sound occurs only in the final letter at the end
of the marks. For the same reason, hardly is there any variance in their
appearance. 'GOLD TOE' and 'GOLD TOP' are printed in identical lettering.
Both show [a] representation of a man's foot wearing a sock. 'GOLD TOP'
blatantly incorporates petitioner's 'LINENIZED' which by itself is a registered
mark."13
IPL- Assignment No. 6
The Bureau considered the drawings and the labels, the appearance of the
labels, the lettering, and the representation of a man's foot wearing a sock.
Obviously, its conclusion is based on the totality of the similarities between
the parties' trademarks and not on their sounds alone.
In Emerald Garment Manufacturing Corporation v. Court of Appeals,14 this
Court stated that in determining whether trademarks are confusingly similar,
jurisprudence has developed two kinds of tests, the Dominancy Test 15 and
the Holistic Test.16 In its words:
"In determining whether colorable imitation exists, jurisprudence has
developed two kinds of tests – the Dominancy Test applied in Asia Brewery,
Inc. v. Court of Appeals and other cases and the Holistic Test developed in
Del Monte Corporation v. Court of Appeals and its proponent cases.
As its title implies, the test of dominancy focuses on the similarity of the
prevalent features of the competing trademarks which might cause confusion
or deception and thus constitutes infringement.
x x x           x x x           x x x
. . . . 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. [C.
Neilman Brewing Co. v. Independent Brewing Co., 191 F., 489, 495, citing
Eagle White Lead Co., vs. Pflugh (CC) 180 Fed. 579]. The question at issue
in cases of infringement of trademarks is whether the use of the marks
involved would be likely to cause confusion or mistakes in the mind of the
public or deceive purchasers. (Auburn Rubber Corporation vs. Hanover
Rubber Co., 107 F. 2d 588; x x x.)
x x x           x x x           x x x
On the other side of the spectrum, the holistic test mandates that the entirety
of the marks in question must be considered in determining confusing
similarity."
In the present case, a resort to either the Dominancy Test or the Holistic Test
shows that colorable imitation exists between respondent's "Gold Toe" and
petitioner's "Gold Top." A glance at petitioner's mark shows that it definitely
has a lot of similarities and in fact looks like a combination of the trademark
and devices that respondent has already registered; namely, "Gold Toe," the
representation of a sock with a magnifying glass, the "Gold Toe"
representation and "linenized."
Page 99 of 143
Admittedly, there are some minor differences between the two sets of marks.
The similarities, however, are of such degree, number and quality that the
overall impression given is that the two brands of socks are deceptively the
same, or at least very similar to each another. An examination of the
products in question shows that their dominant features are gold checkered
lines against a predominantly black background and a representation of a
sock with a magnifying glass. In addition, both products use the same type of
lettering. Both also include a representation of a man's foot wearing a sock
and the word "linenized" with arrows printed on the label. Lastly, the names
of the brands are similar -- "Gold Top" and "Gold Toe." Moreover, it must also
be considered that petitioner and respondent are engaged in the same line of
business.
Petitioner cannot therefore ignore the fact that, when compared, most of the
features of its trademark are strikingly similar to those of respondent. In
addition, these representations are at the same location, either in the sock
itself or on the label. Petitioner presents no explanation why it chose those
representations, considering that these were the exact symbols used in
respondent's marks. Thus, the overall impression created is that the two
products are deceptively and confusingly similar to each other. Clearly,
petitioner violated the applicable trademark provisions during that time.
Convention, of which the Philippines and the United States are members.
Respondent is domiciled in the United States and is the registered owner of
the "Gold Toe" trademark. Hence, it is entitled to the protection of the
Convention. A foreign-based trademark owner, whose country of domicile is
a party to an international convention relating to protection of trademarks, 17 is
accorded protection against infringement or any unfair competition as
provided in Section 37 of Republic Act 166, the Trademark Law which was
the law in force at the time this case was instituted.
In sum, petitioner has failed to show any reversible error on the part of the
Court of Appeals. Hence, its Petition must fail.
WHEREFORE, the Petition is hereby DENIED and the assailed Resolution
AFFIRMED. Costs against petitioner.
SO ORDERED.

Let it be remembered that duly registered trademarks are protected by law as

intellectual properties and cannot be appropriated by others without violating
the due process clause. An infringement of intellectual rights is no less
vicious and condemnable as theft of material property, whether personal or
real.

Third Issue: The Paris Convention

Petitioner claims that the Court of Appeals erred in applying the Paris
Convention. Although respondent registered its trademark ahead, petitioner
argues that the actual use of the said mark is necessary in order to be
entitled to the protection of the rights acquired through registration.

As already discussed, respondent registered its trademarks under the

principal register, which means that the requirement of prior use had already
been fulfilled. To emphasize, Section 5-A of Republic Act 166 requires the
date of first use to be specified in the application for registration. Since the
trademark was successfully registered, there exists a prima facie
presumption of the correctness of the contents thereof, including the date of
first use. Petitioner has failed to rebut this presumption.

Thus, applicable is the Union Convention for the Protection of Industrial

Property adopted in Paris on March 20, 1883, otherwise known as the Paris

IPL- Assignment No. 6 Page 100 of 143

[71] G.R. No. 112012. April 4, 2001.
SOCIETE DES PRODUITS NESTLÉ, S.A. and NESTLÉ PHILIPPINES,
INC., petitioners, vs. COURT OF APPEALS and CFC CORPORATION,
respondents.
Trademarks and Tradenames; Words and Phrases; “Trademark,” Defined.
—A trademark has been generally defined as “any word, name, symbol or device
adopted and used by a manufacturer or merchant to identify his goods and
distinguish them from those manufactured and sold by others.”
Same; Same; Tests to Determine Colorable Imitation; “Dominancy Test,”
and “Holistic Test,” Explained; 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.—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. In
determining if colorable imitation exists, jurisprudence has developed two kinds of
tests—the Dominancy Test and the Holistic Test. The test of dominancy focuses on
the similarity of the prevalent features of the competing trademarks which might
cause confusion or deception and thus constitute infringement. On the other side of
the spectrum, the holistic test mandates that the entirety of the marks in question
must be considered in determining confusing similarity.
Same; Same; Same; Same; In infringement or trademark cases in the
Philippines, particularly in ascertaining whether one trademark is confusingly
similar to or is a colorable imitation of another, no set rules can be deduced—each
case must be decided on its own merits.—The Court of Appeals applied some judicial
precedents which are not on all fours with this case. It must be emphasized that in
infringement or trademark cases in the Philippines, particularly in ascertaining
whether one trademark is confusingly similar to or is a colorable imitation of
another, no set rules can be deduced. Each case must be decided on its own merits. In
Esso Standard, Inc. v. Court of Appeals, we ruled that the likelihood of confusion is
a relative concept; to be determined only according to the particular, and sometimes
peculiar, circumstances of each case. In trademark cases, even more than in any other
litigation, precedent must be studied in light of the facts of the particular case. The
wisdom of the likelihood of confusion test lies in its recognition that each trademark
infringement case presents its own unique set of facts. Indeed, the complexities
attendant to an accurate assessment of likelihood of confusion require that the entire
panoply of elements constituting the relevant factual landscape be comprehensively
examined.
IPL- Assignment No. 6
Same; Same; Same; Same; “Totality Rule,” Explained.—In the same
manner, the Court of Appeals erred in applying the totality rule as defined in the
cases of Bristol Myers v. Director of Patents; Mead Johnson & Co. v. NVJ Van Dorf
Ltd.; and American Cyanamid Co. v. Director of Patents. The totality rule states that
“the test is not simply to take their words and compare the spelling and pronunciation
of said words. In determining whether two trademarks are confusingly similar, the
two marks in their entirety as they appear in the respective labels must 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 on both labels.”
Same; Same; Same; Same; In view of the difficulty of applying
jurisprudential precedents to trademark cases due to the peculiarity of each case,
judicial fora should not readily apply a certain test or standard just because of
seeming similarities.—In the case at bar, other than the fact that both Nestle’s and
CFC’s products are inexpensive and common household items, the similarity ends
there. What is being questioned here is the use by CFC Of the trademark MASTER.
In view of the difficulty of applying jurisprudential precedents to trademark cases
due to the peculiarity of each case, judicial fora should not readily apply a certain test
or standard just because of seeming similarities. As this Court has pointed above,
there could be more telling differences than similarities as to make a jurisprudential
precedent inapplicable.
Same; Same; Same; Same; The application of the totality or holistic test is
improper since the ordinary purchaser would not be inclined to notice the specific
features, similarities or dissimilarities, considering that the product is an
inexpensive and common household item.—The Court of Appeals held that the test to
be applied should be the totality or holistic test reasoning, since what is of paramount
consideration is the ordinary purchaser who is, in general, undiscerningly rash in
buying the more common and less expensive household products like coffee, and is
therefore less inclined to closely examine specific details of similarities “and
dissimilarities between competing products. This Court cannot agree with the above
reasoning. If the ordinary purchaser is “undiscerningly rash” in buying such common
and inexpensive household products as instant coffee, and would therefore be “less
inclined to closely examine specific details of similarities and dissimilarities”
between the two competing products, then it would be less likely for the ordinary
purchaser to notice that CFC’s trademark FLAVOR MASTER carries the colors
orange and mocha while that of Nestle’s uses red and brown. The application of the
totality or holistic test is improper since the ordinary purchaser would not be inclined
to notice the specific features, similarities or dissimilarities, considering that the
product is an inexpensive and common household item.
Same; Same; Same; Same; The totality or holistic test only relies on visual
comparison between two trademarks whereas the dominancy test relies not only on
Page 101 of 143
the visual but also on the aural and connotative comparisons and overall
impressions between the two trademarks.—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.
Same; Same; Same; Same; “Generic Terms,” and “Descriptive Terms,”
Explained; The word “MASTER” is neither a generic nor a descriptive term, and as
such, said term can not be invalidated as a trademark and, therefore, may be legally
protected.—In addition, the word “MASTER” is neither a generic nor a descriptive
term. As such, said term can not be invalidated as a trademark and, therefore, may be
legally protected. Generic terms are those which constitute “the common descriptive
name of an article or substance,” or comprise the “genus of which the particular
product is a species,” or are “commonly used as the name or description of a kind of
goods,” or “imply reference to every member of a genus and the exclusion of
individuating characters,” or “refer to the basic nature of the wares or services
provided rather than to the more idiosyncratic characteristics of a particular product,”
and are not legally protectable. On the other hand, a term is descriptive and therefore
invalid as a trademark if, as understood in its normal and natural sense, it “forthwith
conveys the characteristics, functions, qualities or ingredients of a product to one
who has never seen it and does not know what it is,” or “if it forthwith conveys an
immediate idea of the ingredients, qualities or characteristics of the goods,” or if it
clearly denotes what goods or services are provided in such a way that the consumer
does not have to exercise powers of perception or imagination.
Same; Same; Same; Same; “Suggestive Terms,” Explained.— Rather, the
term “MASTER” is a suggestive term brought about by the advertising scheme of
Nestle. Suggestive terms are those which, in the phraseology of one court, require
“imagination, thought and perception to reach a conclusion as to the nature of the
goods.” Such terms, “which subtly connote something about the product,” are
eligible for protection in the absence of secondary meaning. While suggestive marks
are capable of shedding “some light” upon certain characteristics of the goods or
services in dispute, they nevertheless involve “an element of incongruity,”
“figurativeness,” or “imaginative effort on the part of the observer.”
Same; Same; Same; Same; The term “MASTER” has acquired a certain
connotation to mean the coffee products MASTER ROAST and MASTER BLEND
produced by Nestle.—The term “MASTER,” therefore, has acquired a certain
connotation to mean the coffee products MASTER ROAST and MASTER BLEND
produced by Nestlé. As such, the use by CFC of the term “MASTER” in the
trademark for its coffee product FLAVOR MASTER is likely to cause confusion or
mistake or even to deceive the ordinary purchasers.
IPL- Assignment No. 6
YNARES-SANTIAGO, J.:
This is a petition for review assailing the Decision of the Court of Appeals in
CA-G.R. SP No. 24101,1 reversing and setting aside the decision of the
Bureau of Patents, Trademarks and Technology Transfer (BPTTT), 2 which
denied private respondent’s application for registration of the trade-mark,
FLAVOR MASTER.
On January 18, 1984, private respondent CFC Corporation filed with the
BPTTT an application for the registration of the trademark "FLAVOR
MASTER" for instant coffee, under Serial No. 52994. The application, as a
matter of due course, was published in the July 18, 1988 issue of the
BPTTT’s Official Gazette.
Petitioner Societe Des Produits Nestle, S.A., a Swiss company registered
under Swiss laws and domiciled in Switzerland, filed an unverified Notice of
Opposition,3 claiming that the trademark of private respondent’s product is
"confusingly similar to its trademarks for coffee and coffee extracts, to wit:
MASTER ROAST and MASTER BLEND."
Likewise, a verified Notice of Opposition was filed by Nestle Philippines, Inc.,
a Philippine corporation and a licensee of Societe Des Produits Nestle S.A.,
against CFC’s application for registration of the trademark FLAVOR
MASTER.4Nestle claimed that the use, if any, by CFC of the trademark
FLAVOR MASTER and its registration would likely cause confusion in the
trade; or deceive purchasers and would falsely suggest to the purchasing
public a connection in the business of Nestle, as the dominant word present
in the three (3) trademarks is "MASTER"; or that the goods of CFC might be
mistaken as having originated from the latter.
In answer to the two oppositions, CFC argued that its trademark, FLAVOR
MASTER, is not confusingly similar with the former’s trademarks, MASTER
ROAST and MASTER BLEND, alleging that, "except for the word MASTER
(which cannot be exclusively appropriated by any person for being a
descriptive or generic name), the other words that are used respectively with
said word in the three trademarks are very different from each other – in
meaning, spelling, pronunciation, and sound". CFC further argued that its
trademark, FLAVOR MASTER, "is clearly very different from any of Nestle’s
alleged trademarks MASTER ROAST and MASTER BLEND, especially
when the marks are viewed in their entirety, by considering their pictorial
representations, color schemes and the letters of their respective labels."
In its Decision No. 90-47 dated December 27, 1990, the BPTTT denied
CFC’s application for registration.5 CFC elevated the matter to the Court of
Appeals, where it was docketed as CA-G.R. SP No. 24101.
Page 102 of 143
The Court of Appeals defined the issue thus: "Does appellant CFC’s trade
dress bear a striking resemblance with appellee’s trademarks as to create in
the purchasing public’s mind the mistaken impression that both coffee
products come from one and the same source?"
As stated above, the Court of Appeals, in the assailed decision dated
September 23, 1993, reversed Decision No. 90-47 of the BPTTT and ordered
the Director of Patents to approve CFC’s application. The Court of Appeals
ruled:
Were We to take even a lackadaisical glance at the overall appearance of the
contending marks, the physical discrepancies between appellant CFC’s and
appellee’s respective logos are so ostensible that the casual purchaser
cannot likely mistake one for the other. Appellant CFC’s label (Exhibit "4") is
predominantly a blend of dark and lighter shade of orange where the words
"FLAVOR MASTER", "FLAVOR" appearing on top of "MASTER", shaded in
mocha with thin white inner and outer sidings per letter and identically
lettered except for the slightly protruding bottom curve of the letter "S"
adjoining the bottom tip of the letter "A" in the word "MASTER", are printed
across the top of a simmering red coffee cup. Underneath "FLAVOR
MASTER" appears "Premium Instant Coffee" printed in white, slim and
slanted letters. Appellees’ "MASTER ROAST" label (Exhibit "7"), however, is
almost double the width of appellant CFC’s. At the top is printed in brown
color the word "NESCAFE" against a white backdrop. Occupying the center
is a square-shaped configuration shaded with dark brown and picturing a
heap of coffee beans, where the word "MASTER" is inscribed in the middle.
"MASTER" in appellees’ label is printed in taller capital letters, with the letter
"M" further capitalized. The letters are shaded with red and bounded with thin
gold-colored inner and outer sidings. Just above the word "MASTER" is a red
window like portrait of what appears to be a coffee shrub clad in gold. Below
the "MASTER" appears the word "ROAST" impressed in smaller, white print.
And further below are the inscriptions in white: "A selection of prime Arabica
and Robusta coffee." With regard to appellees’ "MASTER BLEND" label
(Exhibit "6") of which only a xeroxed copy is submitted, the letters are bolder
and taller as compared to appellant CFC’s and the word "MASTER" appears
on top of the word "BLEND" and below it are the words "100% pure instant
coffee" printed in small letters.
From the foregoing description, while the contending marks depict the same
product, the glaring dissimilarities in their presentation far outweigh and
dispel any aspect of similitude. To borrow the words of the Supreme Court in
American Cyanamid Co. v. Director of Patents (76 SCRA 568), appellant
CFC’s and appellees’ labels are entirely different in size, background, colors,
contents and pictorial arrangement; in short, the general appearances of the
labels bearing the respective trademarks are so distinct from each other that
appellees cannot assert that the dominant features, if any, of its trademarks
IPL- Assignment No. 6
were used or appropriated in appellant CFC’s own. The distinctions are so
well-defined so as to foreclose any probability or likelihood of confusion or
deception on the part of the normally intelligent buyer when he or she
encounters both coffee products at the grocery shelf. The answer therefore to
the query is a clear-cut NO.6
Petitioners are now before this Court on the following assignment of errors:
1. RESPONDENT COURT GRAVELY ERRED IN REVERSING AND
SETTING ASIDE THE DECISION (NO. 90-47) OF THE DIRECTOR OF THE
BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY TRANSFER
(BPTTT) DATED DECEMBER 27, 1990.
2. RESPONDENT COURT ERRED IN FINDING THAT APPELLANT CFC’S
TRADE DRESS IS BEYOND THE SCOPE OF THE PROSCRIPTION LAID
DOWN BY JURISPRUDENCE AND THE TRADEMARK LAW.
3. RESPONDENT COURT ERRED IN HOLDING THAT THE TOTALITY
RULE, RATHER THAN THE TEST OF DOMINANCY, APPLIES TO THE
CASE.
4. RESPONDENT COURT ERRED IN INVOKING THE TOTALITY RULE
APPLIED IN THE CASES OF BRISTOL MYERS V. DIRECTOR OF
PATENTS, ET AL. (17 SCRA 128), MEAD JOHNSON & CO. V. NVJ VAN
DORF LTD., (7 SCRA 768) AND AMERICAN CYANAMID CO. V.
DIRECTOR OF PATENTS (76 SCRA 568).
The petition is impressed with merit.
A trademark has been generally defined as "any word, name, symbol or
device adopted and used by a manufacturer or merchant to identify his goods
and distinguish them from those manufactured and sold by others." 7
A manufacturer’s trademark is entitled to protection. As Mr. Justice
Frankfurter observed in the case of Mishawaka Mfg. Co. v. Kresge Co.:8
The protection of trade-marks is the law’s recognition of the psychological
function of symbols. If it is true that we live by symbols, it is no less true that
we purchase goods by them. A trade-mark is a merchandising short-cut
which induces a purchaser to select what he wants, or what he has been led
to believe he wants. The owner of a mark exploits this human propensity by
making every effort to impregnate the atmosphere of the market with the
drawing power of a congenial symbol. Whatever 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. Once this
Page 103 of 143
is attained, the trade-mark owner has something of value. If another poaches
upon the commercial magnetism of the symbol he has created, the owner
can obtain legal redress.
Section 4 (d) of Republic Act No. 166 or the Trademark Law, as amended,
which was in force at the time, provides thus:
Registration of trade-marks, trade-names and service-marks on the principal
register. - There is hereby established a register of trade-marks, trade-names
and service marks which shall be known as the principal register. The owner
of a trade-mark, trade-name or service-mark used to distinguish his goods,
business or services from the goods, business or services of others shall
have the right to register the same on the principal register, unless it:
(d) Consists of or comprises a mark or trade-name which so resembles a
mark or trade-name registered in the Philippines or a mark or trade-name
previously used in the Philippines by another and not abandoned, as to be
likely, when applied to or used in connection with the goods, business or
services of the applicant, to cause confusion or mistake or to deceive
purchasers;
The law prescribes a more stringent standard in that there should not only be
confusing similarity but that it should not likely cause confusion or mistake or
deceive purchasers.
Hence, the question in this case is whether there is a likelihood that the
trademark FLAVOR MASTER may cause confusion or mistake or may
deceive purchasers that said product is the same or is manufactured by the
same company. In other words, the issue is whether the trademark FLAVOR
MASTER is a colorable imitation of the trademarks MASTER ROAST and
MASTER BLEND.
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.9 In determining if colorable imitation exists, jurisprudence has
developed two kinds of tests - the Dominancy Test and the Holistic
Test.10 The test of dominancy focuses on the similarity of the prevalent
features of the competing trademarks which might cause confusion or
deception and thus constitute infringement. On the other side of the
spectrum, the holistic test mandates that the entirety of the marks in question
must be considered in determining confusing similarity. 11
In the case at bar, the Court of Appeals held that:
IPL- Assignment No. 6
The determination of whether two trademarks are indeed confusingly similar
must be taken from the viewpoint of the ordinary purchasers who are, in
general, undiscerningly rash in buying the more common and less expensive
household products like coffee, and are therefore less inclined to closely
examine specific details of similarities and dissimilarities between competing
products. The Supreme Court in Del Monte Corporation v. CA, 181 SCRA
410, held that:
"The question is not whether the two articles are distinguishable by their
labels when set side by side but whether the general confusion made by the
article upon the eye of the casual purchaser who is unsuspicious and off his
guard, is such as to likely result in his confounding it with the original. As
observed in several cases, the general impression of the ordinary purchaser,
buying under the normally prevalent conditions in trade and giving the
attention such purchasers usually give in buying that class of goods, is the
touchstone."
From this perspective, the test of similarity is to consider the two marks in
their entirety, as they appear in the respective labels, in relation to the goods
to which they are attached (Bristol Myers Company v. Director of Patents, et
al., 17 SCRA 128, citing Mead Johnson & Co. v. NVJ Van Dorp, Ltd., et al., 7
SCRA 768). The mark must be considered as a whole and not as dissected.
If the buyer is deceived, it is attributable to the marks as a totality, not usually
to any part of it (Del Monte Corp. v. CA, supra), as what appellees would
want it to be when they essentially argue that much of the confusion springs
from appellant CFC’s use of the word "MASTER" which appellees claim to be
the dominant feature of their own trademarks that captivates the prospective
consumers. Be it further emphasized that 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 (Mead Johnson & Co. v. NVJ Van
Dorp, Ltd., supra).12
The Court of Appeals applied some judicial precedents which are not on all
fours with this case. It must be emphasized that in infringement or trademark
cases in the Philippines, particularly in ascertaining whether one trademark is
confusingly similar to or is a colorable imitation of another, no set rules can
be deduced. Each case must be decided on its own merits. 13 In Esso
Standard, Inc. v. Court of Appeals,14 we ruled that the likelihood of confusion
is a relative concept; to be determined only according to the particular, and
sometimes peculiar, circumstances of each case. In trademark cases, even
more than in any other litigation, precedent must be studied in light of the
facts of the particular case. The wisdom of the likelihood of confusion test lies
in its recognition that each trademark infringement case presents its own
unique set of facts. Indeed, the complexities attendant to an accurate
assessment of likelihood of confusion require that the entire panoply of
Page 104 of 143
elements constituting the relevant factual landscape be comprehensively
examined.15
The Court of Appeals’ application of the case of Del Monte Corporation v.
Court of Appeals16 is, therefore, misplaced. In Del Monte, the issue was about
the alleged similarity of Del Monte’s logo with that of Sunshine Sauce
Manufacturing Industries. Both corporations market the catsup product which
is an inexpensive and common household item.
Since Del Monte alleged that Sunshine’s logo was confusingly similar to or
was a colorable imitation of the former’s logo, there was a need to go into the
details of the two logos as well as the shapes of the labels or marks, the
brands printed on the labels, the words or lettering on the labels or marks
and the shapes and colors of the labels or marks. The same criteria,
however, cannot be applied in the instant petition as the facts and
circumstances herein are peculiarly different from those in the Del
Monte case.
In the same manner, the Court of Appeals erred in applying the totality rule
as defined in the cases of Bristol Myers v. Director of Patents;17 Mead
Johnson & Co. v. NVJ Van Dorf Ltd.;18 and American Cyanamid Co. v.
Director of Patents.19 The totality rule states that "the test is not simply to take
their words and compare the spelling and pronunciation of said words. In
determining whether two trademarks are confusingly similar, the two marks in
their entirety as they appear in the respective labels must 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 on both labels."20
As this Court has often declared, each case must be studied according to the
peculiar circumstances of each 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 above cases cited by the Court of Appeals to justify the application of
the totality or holistic test to this instant case, the factual circumstances are
substantially different. In the Bristol Myers case, this Court held that although
both BIOFERIN and BUFFERIN are primarily used for the relief of pains such
as headaches and colds, and their names are practically the same in spelling
and pronunciation, both labels have strikingly different backgrounds and
surroundings. In addition, one is dispensable only upon doctor’s prescription,
while the other may be purchased over-the-counter.
In the Mead Johnson case, the differences between ALACTA and ALASKA
are glaring and striking to the eye. Also, ALACTA refers to "Pharmaceutical
IPL- Assignment No. 6
Preparations which Supply Nutritional Needs," falling under Class 6 of the
official classification of Medicines and Pharmaceutical Preparations to be
used as prescribed by physicians. On the other hand, ALASKA refers to
"Foods and Ingredients of Foods" falling under Class 47, and does not
require medical prescription.
In the American Cyanamid case, the word SULMET is distinguishable from
the word SULMETINE, as the former is derived from a combination of the
syllables "SUL" which is derived from sulfa and "MET" from methyl, both of
which are chemical compounds present in the article manufactured by the
contending parties. This Court held that the addition of the syllable "INE" in
respondent’s label is sufficient to distinguish respondent’s product or
trademark from that of petitioner. Also, both products are for medicinal
veterinary use and the buyer will be more wary of the nature of the product
he is buying. In any case, both products are not identical as SULMET’s label
indicates that it is used in a drinking water solution while that of SULMETINE
indicates that they are tablets.
It cannot also be said that the products in the above cases can be bought off
the shelf except, perhaps, for ALASKA. The said products are not the usual
"common and inexpensive" household items which an "undiscerningly rash"
buyer would unthinkingly buy.In the case at bar, other than the fact that both
Nestle’s and CFC’s products are inexpensive and common household items,
the similarity ends there. What is being questioned here is the use by CFC of
the trademark MASTER. In view of the difficulty of applying jurisprudential
precedents to trademark cases due to the peculiarity of each case, judicial
fora should not readily apply a certain test or standard just because of
seeming similarities. As this Court has pointed above, there could be more
telling differences than similarities as to make a jurisprudential precedent
inapplicable.
Nestle points out that the dominancy test should have been applied to
determine whether there is a confusing similarity between CFC’s FLAVOR
MASTER and Nestle’s MASTER ROAST and MASTER BLEND.
We agree.
As the Court of Appeals itself has stated, "[t]he determination of whether two
trademarks are indeed confusingly similar must be taken from the viewpoint
of the ordinary purchasers who are, in general, undiscerningly rash in buying
the more common and less expensive household products like coffee, and
are therefore less inclined to closely examine specific details of similarities
and dissimilarities between competing products." 21
Page 105 of 143
The basis for the Court of Appeals’ application of the totality or holistic test is
the "ordinary purchaser" buying the product under "normally prevalent
conditions in trade" and the attention such products normally elicit from said
ordinary purchaser. An ordinary purchaser or buyer does not usually make
such scrutiny nor does he usually have the time to do so. The average
shopper is usually in a hurry and does not inspect every product on the shelf
as if he were browsing in a library.22
The Court of Appeals held that the test to be applied should be the totality or
holistic test reasoning, since what is of paramount consideration is the
ordinary purchaser who is, in general, undiscerningly rash in buying the more
common and less expensive household products like coffee, and is therefore
less inclined to closely examine specific details of similarities and
dissimilarities between competing products.
This Court cannot agree with the above reasoning. If the ordinary purchaser
is "undiscerningly rash" in buying such common and inexpensive household
products as instant coffee, and would therefore be "less inclined to closely
examine specific details of similarities and dissimilarities" between the two
competing products, then it would be less likely for the ordinary purchaser to
notice that CFC’s trademark FLAVOR MASTER carries the colors orange
and mocha while that of Nestle’s uses red and brown. The application of the
totality or holistic test is improper since the ordinary purchaser would not be
inclined to notice the specific features, similarities or dissimilarities,
considering that the product is an inexpensive and common household item.
It must be emphasized that the products bearing the trademarks in question
are "inexpensive and common" household items bought off the shelf by
"undiscerningly rash" purchasers. As such, if the ordinary purchaser is
"undiscerningly rash", then he would not have the time nor the inclination to
make a keen and perceptive examination of the physical discrepancies in the
trademarks of the products in order to exercise his choice.
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. 23 The totality or holistic test
only relies on visual comparison between two trademarks whereas the
IPL- Assignment No. 6
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:
From the evidence at hand, it is sufficiently established that the word
MASTER is the dominant feature of opposer’s mark. The word MASTER is
printed across the middle portion of the label in bold letters almost twice the
size of the printed word ROAST. Further, the word MASTER has always
been given emphasis in the TV and radio commercials and other
advertisements made in promoting the product. This can be gleaned from the
fact that Robert Jaworski and Atty. Ric Puno Jr.., the personalities engaged
to promote the product, are given the titles Master of the Game and Master of
the Talk Show, respectively. In due time, because of these advertising
schemes the mind of the buying public had come to learn to associate the
word MASTER with the opposer’s goods.
x x x. It is the observation of this Office that much of the dominance which the
word MASTER has acquired through Opposer’s advertising schemes is
carried over when the same is incorporated into respondent-applicant’s
trademark FLAVOR MASTER. Thus, when one looks at the label bearing the
trademark FLAVOR MASTER (Exh. 4) one’s attention is easily attracted to
the word MASTER, rather than to the dissimilarities that exist. Therefore, the
possibility of confusion as to the goods which bear the competing marks or
as to the origins thereof is not farfetched. x x x. 24
In addition, the word "MASTER" is neither a generic nor a descriptive term.
As such, said term can not be invalidated as a trademark and, therefore, may
be legally protected. Generic terms 25 are those which constitute "the common
descriptive name of an article or substance," or comprise the "genus of which
the particular product is a species," or are "commonly used as the name or
description of a kind of goods," or "imply reference to every member of a
genus and the exclusion of individuating characters," or "refer to the basic
nature of the wares or services provided rather than to the more idiosyncratic
characteristics of a particular product," and are not legally protectable. On the
other hand, a term is descriptive 26 and therefore invalid as a trademark if, as
understood in its normal and natural sense, it "forthwith conveys the
characteristics, functions, qualities or ingredients of a product to one who has
never seen it and does not know what it is," or "if it forthwith conveys an
immediate idea of the ingredients, qualities or characteristics of the goods,"
or if it clearly denotes what goods or services are provided in such a way that
the consumer does not have to exercise powers of perception or imagination.
Page 106 of 143
Rather, the term "MASTER" is a suggestive term brought about by the
advertising scheme of Nestle. Suggestive terms 27 are those which, in the
phraseology of one court, require "imagination, thought and perception to
reach a conclusion as to the nature of the goods." Such terms, "which subtly
connote something about the product," are eligible for protection in the
absence of secondary meaning. While suggestive marks are capable of
shedding "some light" upon certain characteristics of the goods or services in
dispute, they nevertheless involve "an element of incongruity,"
"figurativeness," or " imaginative effort on the part of the observer."
This is evident from the advertising scheme adopted by Nestle in promoting
its coffee products. In this case, Nestle has, over time, promoted its products
as "coffee perfection worthy of masters like Robert Jaworski and Ric Puno
Jr."
In associating its coffee products with the term "MASTER" and thereby
impressing them with the attributes of said term, Nestle advertised its
products thus:
In closing, it may not be amiss to quote the case of American Chicle Co. v.
Topps Chewing Gum, Inc.,30 to wit:
Why it should have chosen a mark that had long been employed by [plaintiff]
and had become known to the trade instead of adopting some other means
of identifying its goods is hard to see unless there was a deliberate purpose
to obtain some advantage from the trade that [plaintiff] had built up. Indeed, it
is generally true that, as soon as we see that a second comer in a market
has, for no reason that he can assign, plagiarized the "make-up" of an earlier
comer, we need no more; . . . [W]e feel bound to compel him to exercise his
ingenuity in quarters further afield.
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals
in CA-G.R. SP No. 24101 is REVERSED and SET ASIDE and the decision of
the Bureau of Patents, Trademarks and Technology Transfer in Inter Partes
Cases Nos. 3200 and 3202 is REINSTATED.
SO ORDERED.

Robert Jaworski. Living Legend. A true hard court hero. Fast on his feet.
Sure in every shot he makes. A master strategist. In one word, unmatched.

MASTER ROAST. Equally unmatched. Rich and deeply satisfying. Made

from a unique combination of the best coffee beans - Arabica for superior
taste and aroma, Robusta for strength and body. A masterpiece only
NESCAFE, the world’s coffee masters, can create.

MASTER ROAST. Coffee perfection worthy of masters like Robert

Jaworski.28

In the art of conversation, Ric Puno Jr. is master. Witty. Well-informed.

Confident.

In the art of coffee-making, nothing equals Master Roast, the coffee

masterpiece from Nescafe, the world’s coffee masters. A unique combination
of the best coffee beans - Arabica for superior taste and aroma, Robusta for
strength and body. Truly distinctive and rich in flavor.

Master Roast. Coffee perfection worthy of masters like Ric Puno Jr. 29

The term "MASTER", therefore, has acquired a certain connotation to mean

the coffee products MASTER ROAST and MASTER BLEND produced by
Nestle. As such, the use by CFC of the term "MASTER" in the trademark for
its coffee product FLAVOR MASTER is likely to cause confusion or mistake
or even to deceive the ordinary purchasers.

IPL- Assignment No. 6 Page 107 of 143

[72] G.R. No. 154342. July 14, 2004. *
MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO,
INC., petitioners, vs. E. & J. GALLO WINERY and THE ANDRESONS
GROUP, INC., respondents.
Remedial Law; Appeals; As a general rule, a petition for review on
certiorari under Rule 45 must raise only “questions of law.”—As a general rule, a
petition for review on certiorari under Rule 45 must raise only “questions of law”
that is, the doubt pertains to the application and interpretation of law to a certain set
of facts) and not “questions of fact” (where the doubt concerns the truth or falsehood
of alleged facts), otherwise, the petition will be denied. We are not a trier of facts and
the Court of Appeals’ factual findings are generally conclusive upon us.
Intellectual Property; Trademarks; Unfair Competition; The law on unfair
competition is broader and more inclusive than the law on trademark infringement;
Conduct constitutes unfair competition if the effect is to pass off on the public the
goods of one man as the goods of another.— Although the laws on trademark
infringement and unfair competition have a common conception at their root, that is,
a person shall not be permitted to misrepresent his goods or his business as the goods
or business of another, the law on unfair competition is broader and more inclusive
than the law on trademark infringement. The latter is more limited but it recognizes a
more exclusive right derived from the trademark adoption and registration by the
person whose goods or business is first associated with it. The law on trademarks is
thus a specialized subject distinct from the law on unfair competition, although the
two subjects are entwined with each other and are dealt with together in the
Trademark Law (now, both are covered by the IP Code). Hence, even if one fails to
establish his exclusive property right to a trademark, he may still obtain relief on the
ground of his competitor’s unfairness or fraud. Conduct constitutes unfair
competition if the effect is to pass off on the public the goods of one man as the
goods of another. It is not necessary that any particular means should be used to this
end.
Same; Same; Same; Distinction Between Trademark Infringement and
Unfair Competition.—In Del Monte Corporation vs. Court of Appeals, we
distinguished trademark infringement from unfair competition: (1) Infringement of
trademark is the unauthorized use of a trademark, whereas unfair competition is the
passing off of one’s goods as those of another. (2) In infringement of trademark
fraudulent intent is unnecessary, whereas in unfair competition fraudulent intent is
essential. (3) In infringement of trademark the prior registration of the trademark is a
prerequisite to the action, whereas in unfair competition registration is not necessary.
Same; Same; Same; Elements of Trademark Infringement under Article 6 of
the Paris Convention.—Under Article 6 of the Paris Convention, the following are
IPL- Assignment No. 6
the elements of trademark infringement: (a) registration or use by another person of a
trademark which is a reproduction, imitation or translation liable to create confusion,
(b) of a mark considered by the competent authority of the country of registration or
use to be well-known in that country and is already the mark of a person entitled to
the benefits of the Paris Convention, and (c) such trademark is used for identical or
similar goods.
Same; Same; Same; Section 20 of the Trademark Law considers the
trademark registration certificate as prima facie evidence of the validity of the
registration, the registrant’s ownership and exclusive right to use the trademark in
connection with the goods, business or services as classified by the Director of
Patents and as specified in the certificate; In the adjudication of trademark rights
between contending parties, equitable principles of laches, estoppel, and
acquiescence may be considered and applied.— Section 20 of the Trademark Law
considers the trademark registration certificate as prima facie evidence of the validity
of the registration, the registrant’s ownership and exclusive right to use the
trademark in connection with the goods, business or services as classified by the
Director of Patents and as specified in the certificate, subject to the conditions and
limitations stated therein. Sections 2 and 2-A of the Trademark Law emphasize the
importance of the trademark’s actual use in commerce in the Philippines prior to its
registration. In the adjudication of trademark rights between contending parties,
equitable principles of laches, estoppel, and acquiescence may be considered and
applied.
Same; Same; Same; Elements of Trademark Infringement Under the
Trademark Law.—Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law
therefore, the following constitute the elements of trademark infringement: (a) a
trademark actually used in commerce in the Philippines and registered in the
principal register of the Philippine Patent Office; (b) is used by another person in
connection with the sale, offering for sale, or advertising of any goods, business or
services or in connection with which such use is likely to cause confusion or mistake
or to deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business; or such trademark is reproduced, counterfeited,
copied or colorably imitated by another person and such reproduction, counterfeit,
copy or colorable imitation is applied to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in connection with such
goods, business or services as to likely cause confusion or mistake or to deceive
purchasers; (c) the trademark is used for identical or similar goods, and (d) such act
is done without the consent of the trademark registrant or assignee.
Same; Same; Same; In case of domestic legal disputes on any conflicting
provisions between the Paris Convention and the Trademark Law the latter will
prevail.—In summary, the Paris Convention protects wellknown trademarks only (to
be determined by domestic authorities), while the Trademark Law protects all
Page 108 of 143
trademarks, whether well-known or not, provided that they have been registered and
are in actual commercial use in the Philippines. Following universal acquiescence
and comity, in case of domestic legal disputes on any conflicting provisions between
the Paris Convention (which is an international agreement) and the Trademark law
(which is a municipal law) the latter will prevail.
Same; Same; Same; Under both the Paris Convention and the Trademark
Law, the protection of a registered trademark is limited only to goods identical or
similar to those in respect of which such trademark is registered and only when
there is likelihood of confusion; Proof of all the elements of trademark infringement
is a condition precedent to any finding of liability.— Under both the Paris
Convention and the Trademark Law, the protection of a registered trademark is
limited only to goods identical or similar to those in respect of which such trademark
is registered and only when there is likelihood of confusion. Under both laws, the
time element in commencing infringement cases is material in ascertaining the
registrant’s express or implied consent to another’s use of its trademark or a
colorable imitation thereof. This is why acquiescence, estoppel or laches may defeat
the registrant’s otherwise valid cause of action. Hence, proof of all the elements of
trademark infringement is a condition precedent to any finding of liability.
Same; Same; Same; Actual use in commerce in the Philippines is an
essential prerequisite for the acquisition of ownership over a trademark.— In
Emerald Garment Manufacturing Corporation vs. Court of Appeals, we reiterated our
rulings in Pagasa Industrial Corporation vs. Court of Appeals, Converse Rubber
Corporation vs. Universal Rubber Products, Inc., Sterling Products International, Inc.
vs. Farbenfabriken Bayer Aktiengesellschaft, Kabushi Kaisha Isetan vs. Intermediate
Appellate Court, and Philip Morris vs. Court of Appeals, giving utmost importance
to the actual commercial use of a trademark in the Philippines prior to its
registration, notwithstanding the provisions of the Paris Convention: x x x x x x x x x
In addition to the foregoing, we are constrained to agree with petitioner’s contention
that private respondent failed to prove prior actual commercial use of its “LEE”
trademark in the Philippines before filing its application for registration with the
BPTTT and hence, has not acquired ownership over said mark. Actual use in
commerce in the Philippines is an essential prerequisite for the acquisition of
ownership over a trademark pursuant to Sec. 2 and 2-A of the Philippine Trademark
Law (R.A. No. 166) x x x
Same; Same; Same; By strict application of Section 20 of the Trademark
Law, Gallo Winery’s exclusive right to use the GALLO trademark should be limited
to wines, the only product indicated in its registration certificates.—We also note
that the GALLO trademark registration certificates in the Philippines and in other
countries expressly state that they cover wines only, without any evidence or
indication that registrant Gallo Winery expanded or intended to expand its business
to cigarettes. Thus, by strict application of Section 20 of the Trademark Law, Gallo
Winery’s exclusive right to use the GALLO trademark should be limited to wines,
the only product indicated in its registration certificates. This strict statutory
IPL- Assignment No. 6
limitation on the exclusive right to use trademarks was amply clarified in our ruling
in Faberge, Inc. vs. Intermediate Appellate Court.
Same; Same; Same; There are two types of confusion in trademark
infringement, confusion of goods and confusion of business; Circumstances to
Determine the Likelihood of Confusion. —There are two types of confusion in
trademark infringement. The first is “confusion of goods” when an otherwise prudent
purchaser is induced to purchase one product in the belief that he is purchasing
another, in which case defendant’s goods are then bought as the plaintiff’s and its
poor quality reflects badly on the plaintiff’s reputation. The other is “confusion of
business” wherein the goods of the parties are different but the defendant’s product
can reasonably (though mistakenly) be assumed to originate from the plaintiff, thus
deceiving the public into believing that there is some connection between the
plaintiff and defendant which, in fact, does not exist. In determining the likelihood of
confusion, the Court must consider: [a] the resemblance between the trademarks; [b]
the similarity of the goods to which the trademarks are attached; [c] the likely effect
on the purchaser and [d] the registrant’s express or implied consent and other fair and
equitable considerations.
Same; Same; Same; Two Tests in Determining Similarity and Likelihood of
Confusion in Trademark Resemblance.— Jurisprudence has developed two tests in
determining similarity and likelihood of confusion in trademark resemblance: (a) the
Dominancy Test applied in Asia Brewery, Inc. vs. Court of Appeals and other cases,
and (b) the Holistic or Totality Test used in Del Monte Corporation vs. Court of
Appeals and its preceding cases.
Same; Same; Same; Same; Concept of “Related Goods.”— Thus, apart
from the strict application of Section 20 of the Trademark Law and Article 6 of the
Paris Convention which proscribe trademark infringement not only of goods
specified in the certificate of registration but also of identical or similar goods, we
have also uniformly recognized and applied the modern concept of “related goods.”
Simply stated, when goods are so related that the public may be, or is actually,
deceived and misled that they come from the same maker or manufacturer,
trademark infringement occurs.
Same; Same; Same; Same; Factors to be Considered in Resolving Whether
Goods are Related.—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
Page 109 of 143
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.
Same; Same; Same; Same; 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.—We are mindful
that product classification alone cannot serve as the decisive factor in the resolution
of whether or not wines and cigarettes are related goods. Emphasis should be on the
similarity of the products involved and not on the arbitrary classification or general
description of their properties or characteristics. But 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.
DECISION
CORONA, J.:
In this petition for review on certiorari under Rule 45, petitioners Mighty
Corporation and La Campana Fabrica de Tabaco, Inc. (La Campana) seek to
annul, reverse and set aside: (a) the November 15, 2001 decision 1 of the
Court of Appeals (CA) in CA-G.R. CV No. 65175 affirming the November 26,
1998 decision,2 as modified by the June 24, 1999 order, 3 of the Regional Trial
Court of Makati City, Branch 57 (Makati RTC) in Civil Case No. 93-850,
which held petitioners liable for, and permanently enjoined them from,
committing trademark infringement and unfair competition, and which
ordered them to pay damages to respondents E. & J. Gallo Winery (Gallo
Winery) and The Andresons Group, Inc. (Andresons); (b) the July 11, 2002
CA resolution denying their motion for reconsideration 4and (c) the aforesaid
Makati RTC decision itself.
I.
The Factual Background
Respondent Gallo Winery is a foreign corporation not doing business in the
Philippines but organized and existing under the laws of the State of
California, United States of America (U.S.), where all its wineries are located.
Gallo Winery produces different kinds of wines and brandy products and sells
them in many countries under different registered trademarks, including the
GALLO and ERNEST & JULIO GALLO wine trademarks.
Respondent domestic corporation, Andresons, has been Gallo Winery’s
exclusive wine importer and distributor in the Philippines since 1991, selling
these products in its own name and for its own account. 5
IPL- Assignment No. 6
Gallo Winery’s GALLO wine trademark was registered in the principal
register of the Philippine Patent Office (now Intellectual Property Office) on
November 16, 1971 under Certificate of Registration No. 17021 which was
renewed on November 16, 1991 for another 20 years. 6 Gallo Winery also
applied for registration of its ERNEST & JULIO GALLO wine trademark on
October 11, 1990 under Application Serial No. 901011-00073599-PN but the
records do not disclose if it was ever approved by the Director of Patents. 7
On the other hand, petitioners Mighty Corporation and La Campana and their
sister company, Tobacco Industries of the Philippines (Tobacco Industries),
are engaged in the cultivation, manufacture, distribution and sale of tobacco
products for which they have been using the GALLO cigarette trademark
since 1973. 8
The Bureau of Internal Revenue (BIR) approved Tobacco Industries’ use of
GALLO 100’s cigarette mark on September 14, 1973 and GALLO filter
cigarette mark on March 26, 1976, both for the manufacture and sale of its
cigarette products. In 1976, Tobacco Industries filed its manufacturer’s sworn
statement as basis for BIR’s collection of specific tax on GALLO cigarettes. 9
On February 5, 1974, Tobacco Industries applied for, but eventually did not
pursue, the registration of the GALLO cigarette trademark in the principal
register of the then Philippine Patent Office.10
In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to
La Campana which, on July 16, 1985, applied for trademark registration in
the Philippine Patent Office.11 On July 17, 1985, the National Library issued
Certificate of Copyright Registration No. 5834 for La Campana’s lifetime
copyright claim over GALLO cigarette labels.12
Subsequently, La Campana authorized Mighty Corporation to manufacture
and sell cigarettes bearing the GALLO trademark. 13 BIR approved Mighty
Corporation’s use of GALLO 100’s cigarette brand, under licensing
agreement with Tobacco Industries, on May 18, 1988, and GALLO SPECIAL
MENTHOL 100’s cigarette brand on April 3, 1989.14
Petitioners claim that GALLO cigarettes have been sold in the Philippines
since 1973, initially by Tobacco Industries, then by La Campana and finally
by Mighty Corporation.15
On the other hand, although the GALLO wine trademark was registered in
the Philippines in 1971, respondents claim that they first introduced and sold
the GALLO and ERNEST & JULIO GALLO wines in the Philippines circa1974
within the then U.S. military facilities only. By 1979, they had expanded their
Philippine market through authorized distributors and independent outlets. 16
Page 110 of 143
Respondents claim that they first learned about the existence of GALLO
cigarettes in the latter part of 1992 when an Andresons employee saw such
cigarettes on display with GALLO wines in a Davao supermarket wine cellar
section.17 Forthwith, respondents sent a demand letter to petitioners asking
them to stop using the GALLO trademark, to no avail.
II. The Legal Dispute
On March 12, 1993, respondents sued petitioners in the Makati RTC for
trademark and tradename infringement and unfair competition, with a prayer
for damages and preliminary injunction.
Respondents charged petitioners with violating Article 6bis of the Paris
Convention for the Protection of Industrial Property (Paris Convention) 18 and
RA 166 (Trademark Law),19 specifically, Sections 22 and 23 (for trademark
infringement),20 29 and 3021 (for unfair competition and false designation of
origin) and 37 (for tradename infringement). 22 They claimed that petitioners
adopted the GALLO trademark to ride on Gallo Winery’s GALLO and
ERNEST & JULIO GALLO trademarks’ established reputation and popularity,
thus causing confusion, deception and mistake on the part of the purchasing
public who had always associated GALLO and ERNEST & JULIO GALLO
trademarks with Gallo Winery’s wines. Respondents prayed for the issuance
of a writ of preliminary injunction and ex parte restraining order, plus P2
million as actual and compensatory damages, at least P500,000 as
exemplary and moral damages, and at least P500,000 as attorney’s fees and
litigation expenses.23
In their answer, petitioners alleged, among other affirmative defenses, that:
petitioner’s GALLO cigarettes and Gallo Winery’s wines were totally
unrelated products; Gallo Winery’s GALLO trademark registration certificate
covered wines only, not cigarettes; GALLO cigarettes and GALLO wines
were sold through different channels of trade; GALLO cigarettes, sold
at P4.60 for GALLO filters and P3 for GALLO menthols, were low-cost items
compared to Gallo Winery’s high-priced luxury wines which cost
between P98 to P242.50; the target market of Gallo Winery’s wines was the
middle or high-income bracket with at least P10,000 monthly income while
GALLO cigarette buyers were farmers, fishermen, laborers and other low-
income workers; the dominant feature of the GALLO cigarette mark was the
rooster device with the manufacturer’s name clearly indicated as MIGHTY
CORPORATION while, in the case of Gallo Winery’s wines, it was the full
names of the founders-owners ERNEST & JULIO GALLO or just their
surname GALLO; by their inaction and conduct, respondents were guilty of
laches and estoppel; and petitioners acted with honesty, justice and good
faith in the exercise of their right to manufacture and sell GALLO cigarettes.
IPL- Assignment No. 6
In an order dated April 21, 1993, 24 the Makati RTC denied, for lack of merit,
respondent’s prayer for the issuance of a writ of preliminary
injunction,25 holding that respondent’s GALLO trademark registration
certificate covered wines only, that respondents’ wines and petitioners’
cigarettes were not related goods and respondents failed to prove material
damage or great irreparable injury as required by Section 5, Rule 58 of the
Rules of Court.26
On August 19, 1993, the Makati RTC denied, for lack of merit, respondents’
motion for reconsideration. The court reiterated that respondents’ wines and
petitioners’ cigarettes were not related goods since the likelihood of
deception and confusion on the part of the consuming public was very
remote. The trial court emphasized that it could not rely on foreign rulings
cited by respondents "because the[se] cases were decided by foreign courts
on the basis of unknown facts peculiar to each case or upon factual
surroundings which may exist only within their jurisdiction. Moreover, there
[was] no showing that [these cases had] been tested or found applicable in
our jurisdiction."27
On February 20, 1995, the CA likewise dismissed respondents’ petition for
review on certiorari, docketed as CA-G.R. No. 32626, thereby affirming the
Makati RTC’s denial of the application for issuance of a writ of preliminary
injunction against petitioners.28
After trial on the merits, however, the Makati RTC, on November 26, 1998,
held petitioners liable for, and permanently enjoined them from, committing
trademark infringement and unfair competition with respect to the GALLO
trademark:
WHEREFORE, judgment is rendered in favor of the plaintiff (sic) and against
the defendant (sic), to wit:
a. permanently restraining and enjoining defendants, their distributors, trade
outlets, and all persons acting for them or under their instructions, from (i)
using E & J’s registered trademark GALLO or any other reproduction,
counterfeit, copy or colorable imitation of said trademark, either singly or in
conjunction with other words, designs or emblems and other acts of similar
nature, and (ii) committing other acts of unfair competition against plaintiffs
by manufacturing and selling their cigarettes in the domestic or export
markets under the GALLO trademark.
b. ordering defendants to pay plaintiffs –
(i) actual and compensatory damages for the injury and prejudice and
impairment of plaintiffs’ business and goodwill as a result of the acts and
Page 111 of 143
conduct pleaded as basis for this suit, in an amount equal to 10% of
FOURTEEN MILLION TWO HUNDRED THIRTY FIVE THOUSAND PESOS
(PHP14,235,000.00) from the filing of the complaint until fully paid;
(ii) exemplary damages in the amount of PHP100,000.00;
(iii) attorney’s fees and expenses of litigation in the amount of
PHP1,130,068.91;
(iv) the cost of suit.
SO ORDERED."29
On June 24, 1999, the Makati RTC granted respondent’s motion for partial
reconsideration and increased the award of actual and compensatory
damages to 10% of P199,290,000 or P19,929,000.30
On appeal, the CA affirmed the Makati RTC decision and subsequently
denied petitioner’s motion for reconsideration.
III. The Issues
Petitioners now seek relief from this Court contending that the CA did not
follow prevailing laws and jurisprudence when it held that: [a] RA 8293
(Intellectual Property Code of the Philippines [IP Code]) was applicable in
this case; [b] GALLO cigarettes and GALLO wines were identical, similar or
related goods for the reason alone that they were purportedly forms of vice;
[c] both goods passed through the same channels of trade and [d] petitioners
were liable for trademark infringement, unfair competition and damages. 31
Respondents, on the other hand, assert that this petition which invokes Rule
45 does not involve pure questions of law, and hence, must be dismissed
outright.
IV. Discussion
THE EXCEPTIONAL CIRCUMSTANCES IN THIS CASE OBLIGE THE
COURT TO REVIEW THE CA’S FACTUAL FINDINGS
As a general rule, a petition for review on certiorari under Rule 45 must raise
only "questions of law"32 (that is, the doubt pertains to the application and
interpretation of law to a certain set of facts) and not "questions of fact"
(where the doubt concerns the truth or falsehood of alleged
IPL- Assignment No. 6
facts),33 otherwise, the petition will be denied. We are not a trier of facts and
the Court of Appeals’ factual findings are generally conclusive upon us. 34
This case involves questions of fact which are directly related and intertwined
with questions of law. The resolution of the factual issues concerning the
goods’ similarity, identity, relation, channels of trade, and acts of trademark
infringement and unfair competition is greatly dependent on the interpretation
of applicable laws. The controversy here is not simply the identity or similarity
of both parties’ trademarks but whether or not infringement or unfair
competition was committed, a conclusion based on statutory interpretation.
Furthermore, one or more of the following exceptional circumstances oblige
us to review the evidence on record:35
(1) the conclusion is grounded entirely on speculation, surmises, and
conjectures;
(2) the inference of the Court of Appeals from its findings of fact is manifestly
mistaken, absurd and impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of facts;
(5) the appellate court, in making its findings, went beyond the issues of the
case, and the same are contrary to the admissions of both the appellant and
the appellee;
(6) the findings are without citation of specific evidence on which they are
based;
(7) the facts set forth in the petition as well as in the petitioner's main and
reply briefs are not disputed by the respondents; and
(8) the findings of fact of the Court of Appeals are premised on the absence
of evidence and are contradicted [by the evidence] on record. 36
In this light, after thoroughly examining the evidence on record, weighing,
analyzing and balancing all factors to determine whether trademark
infringement and/or unfair competition has been committed, we conclude that
both the Court of Appeals and the trial court veered away from the law and
well-settled jurisprudence.
Thus, we give due course to the petition.
Page 112 of 143
THE TRADEMARK LAW AND THE PARIS CONVENTION ARE THE
APPLICABLE LAWS, NOT THE INTELLECTUAL PROPERTY CODE
We note that respondents sued petitioners on March 12, 1993 for trademark
infringement and unfair competition committed during the effectivity of the
Paris Convention and the Trademark Law.
Yet, in the Makati RTC decision of November 26, 1998, petitioners were held
liable not only under the aforesaid governing laws but also under the IP Code
which took effect only on January 1, 1998,37 or about five years after the filing
of the complaint:
Defendants’ unauthorized use of the GALLO trademark constitutes
trademark infringement pursuant to Section 22 of Republic Act No.
166, Section 155 of the IP Code, Article 6bis of the Paris Convention, and
Article 16 (1) of the TRIPS Agreement as it causes confusion, deception and
mistake on the part of the purchasing public.38 (Emphasis and underscoring
supplied)
The CA apparently did not notice the error and affirmed the Makati RTC
decision:
In the light of its finding that appellants’ use of the GALLO trademark on its
cigarettes is likely to create confusion with the GALLO trademark on wines
previously registered and used in the Philippines by appellee E & J Gallo
Winery, the trial court thus did not err in holding that appellants’ acts not
only violated the provisions of the our trademark laws (R.A. No. 166
and R.A. Nos. (sic)  8293) but also Article 6bis of the Paris
Convention.39 (Emphasis and underscoring supplied)
We therefore hold that the courts a quo erred in retroactively applying the IP
Code in this case.
It is a fundamental principle that the validity and obligatory force of a law
proceed from the fact that it has first been promulgated. A law that is not yet
effective cannot be considered as conclusively known by the populace. To
make a law binding even before it takes effect may lead to the arbitrary
exercise of the legislative power.40 Nova constitutio futuris formam imponere
debet non praeteritis.  A new state of the law ought to affect the future, not
the past. Any doubt must generally be resolved against the retroactive
operation of laws, whether these are original enactments, amendments or
repeals.41 There are only a few instances when laws may be given retroactive
effect,42 none of which is present in this case.
IPL- Assignment No. 6
The IP Code, repealing the Trademark Law, 43 was approved on June 6, 1997.
Section 241 thereof expressly decreed that it was to take effect only on
January 1, 1998, without any provision for retroactive application. Thus, the
Makati RTC and the CA should have limited the consideration of the present
case within the parameters of the Trademark Law and the Paris Convention,
the laws in force at the time of the filing of the complaint.
DISTINCTIONS BETWEEN TRADEMARK INFRINGEMENTAND UNFAIR
COMPETITION
Although the laws on trademark infringement and unfair competition have a
common conception at their root, that is, a person shall not be permitted to
misrepresent his goods or his business as the goods or business of another,
the law on unfair competition is broader and more inclusive than the law on
trademark infringement. The latter is more limited but it recognizes a more
exclusive right derived from the trademark adoption and registration by the
person whose goods or business is first associated with it. The law on
trademarks is thus a specialized subject distinct from the law on unfair
competition, although the two subjects are entwined with each other and are
dealt with together in the Trademark Law (now, both are covered by the IP
Code). Hence, even if one fails to establish his exclusive property right to a
trademark, he may still obtain relief on the ground of his competitor’s
unfairness or fraud. Conduct constitutes unfair competition if the effect is to
pass off on the public the goods of one man as the goods of another. It is not
necessary that any particular means should be used to this end. 44
In Del Monte Corporation vs. Court of Appeals, 45 we distinguished trademark
infringement from unfair competition:
(1) Infringement of trademark is the unauthorized use of a trademark,
whereas unfair competition is the passing off of one's goods as those of
another.
(2) In infringement of trademark fraudulent intent is unnecessary, whereas in
unfair competition fraudulent intent is essential.
(3) In infringement of trademark the prior registration of the trademark is a
prerequisite to the action, whereas in unfair competition registration is not
necessary.
Pertinent Provisions on Trademark Infringement under the Paris
Convention and the Trademark Law
Article 6bis of the Paris Convention,46 an international agreement binding on
the Philippines and the United States (Gallo Winery’s country of domicile and
Page 113 of 143
origin) prohibits "the [registration] or use of a trademark which constitutes a
reproduction, imitation or translation, liable to create confusion, of a mark
considered by the competent authority of the country of registration or use to
be well-known in that country as being already the mark of a person entitled
to the benefits of the [Paris] Convention and used for identical
or similar  goods. [This rule also applies] when the essential part of the mark
constitutes a reproduction of any such well-known mark or an imitation liable
to createconfusion therewith." There is no time limit for seeking the
prohibition of the use of marks used in bad faith. 47
Thus, under Article 6bis of the Paris Convention, the following are the
elements of trademark infringement:
(a) registration or use by another person of a trademark which is a
reproduction, imitation or translation liable to create confusion,
(b) of a mark considered by the competent authority of the country of
registration or use48 to be well-known in that country and is already the mark
of a person entitled to the benefits of the Paris Convention, and
(c) such trademark is used for identical or similar goods.
On the other hand, Section 22 of the Trademark Law holds a person liable for
infringement when, among others, he "uses without the consent of the
registrant, any reproduction, counterfeit, copy or colorable imitation of any
registered mark or tradename in connection with the sale, offering for sale, or
advertising of any goods, business or services or in connection with which
such use is likely to cause confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or services, or identity of such
business; or reproduce, counterfeit, copy or colorably imitate any such mark
or tradename and apply such reproduction, counterfeit, copy or colorable
imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods,
business or services."49 Trademark registration and actual use are material to
the complaining party’s cause of action.
Corollary to this, Section 20 of the Trademark Law 50 considers the trademark
registration certificate as prima facieevidence of the validity of the
registration, the registrant’s ownership and exclusive right to use the
trademark in connection with the goods, business or services as classified by
the Director of Patents51 and as specified in the certificate, subject to the
conditions and limitations stated therein. Sections 2 and 2-A 52 of the
Trademark Law emphasize the importance of the trademark’s actual use in
commerce in the Philippines prior to its registration. In the adjudication of
IPL- Assignment No. 6
trademark rights between contending parties, equitable principles of laches,
estoppel, and acquiescence may be considered and applied. 53
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the
following constitute the elements of trademark infringement:
(a) a trademark actually used in commerce in the Philippines and registered
in the principal register of the Philippine Patent Office
(b) is used by another person in connection with the sale, offering for sale, or
advertising of any goods, business or services or in connection with which
such use is likely to cause confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or services, or identity of such
business; or such trademark is reproduced, counterfeited, copied or colorably
imitated by another person and such reproduction, counterfeit, copy or
colorable imitation is applied to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used upon or in connection
with such goods, business or services as to likely cause confusion or mistake
or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or
assignee.
In summary, the Paris Convention protects well-known trademarks only (to
be determined by domestic authorities), while the Trademark Law protects all
trademarks, whether well-known or not, provided that they have been
registered and are in actual commercial use in the Philippines. Following
universal acquiescence and comity, in case of domestic legal disputes on
any conflicting provisions between the Paris Convention (which is an
international agreement) and the Trademark law (which is a municipal law)
the latter will prevail.54
Under both the Paris Convention and the Trademark Law, the protection of a
registered trademark is limited only to goods identical or similar to those in
respect of which such trademark is registered and only when there is
likelihood of confusion. Under both laws, the time element in commencing
infringement cases is material in ascertaining the registrant’s express or
implied consent to another’s use of its trademark or a colorable imitation
thereof. This is why acquiescence, estoppel or laches may defeat the
registrant’s otherwise valid cause of action.
Hence, proof of all the elements of trademark infringement is a condition
precedent to any finding of liability.
Page 114 of 143
 THE ACTUAL COMMERCIAL USE IN THE PHILIPPINES OF GALLO
CIGARETTE TRADEMARK PRECEDED THAT OF GALLO WINE
TRADEMARK.
By respondents’ own judicial admission, the GALLO wine trademark was
registered in the Philippines in November 1971 but the wine itself was first
marketed and sold in the country only in 1974 and only within the former U.S.
military facilities, and outside thereof, only in 1979. To prove commercial use
of the GALLO wine trademark in the Philippines, respondents presented
sales invoice no. 29991 dated July 9, 1981 addressed to Conrad Company
Inc., Makati, Philippines and sales invoice no. 85926 dated March 22, 1996
addressed to Andresons Global, Inc., Quezon City, Philippines. Both invoices
were for the sale and shipment of GALLO wines to the Philippines during that
period.55 Nothing at all, however, was presented to evidence the alleged
sales of GALLO wines in the Philippines in 1974 or, for that matter, prior to
July 9, 1981.
On the other hand, by testimonial evidence supported by the BIR
authorization letters, forms and manufacturer’s sworn statement, it appears
that petitioners and its predecessor-in-interest, Tobacco Industries, have
indeed been using and selling GALLO cigarettes in the Philippines since
1973 or before July 9, 1981.56
In Emerald Garment Manufacturing Corporation vs. Court of Appeals, 57 we
reiterated our rulings in Pagasa Industrial Corporation vs. Court of
Appeals,58 Converse Rubber Corporation vs. Universal Rubber Products,
Inc.,59 Sterling Products International, Inc. vs. Farbenfabriken Bayer
Aktiengesellschaft,60 Kabushi Kaisha Isetan vs. Intermediate Appellate
Court,61 and  Philip Morris vs. Court of Appeals,62 giving utmost importance to
the actual commercial useof a trademark in the Philippines prior to its
registration, notwithstanding the provisions of the Paris Convention:
In addition to the foregoing, we are constrained to agree with petitioner's
contention that private respondent failed to prove prior actual
commercial use of its "LEE" trademark in the Philippines before filing
its application for registration with the BPTTT and hence, has not
acquired ownership over said mark.
Actual use in commerce in the Philippines is an essential prerequisite
for the acquisition of ownership over a trademark pursuant to Sec. 2 and
2-A of the Philippine Trademark Law (R.A. No. 166) x x x
The provisions of the 1965 Paris Convention for the Protection of
Industrial Property relied upon by private respondent and Sec. 21-A of the
Trademark Law (R.A. No. 166) were sufficiently expounded upon
IPL- Assignment No. 6
and qualified in the recent case of Philip Morris, Inc. v. Court of
Appeals  (224 SCRA 576 [1993]):
Following universal acquiescence and comity, our municipal law on
trademarks regarding the requirement of actual use in the Philippines
must subordinate an international agreement inasmuch as the apparent
clash is being decided by a municipal tribunal (Mortisen vs. Peters, Great
Britain, High Court of Judiciary of Scotland, 1906, 8 Sessions, 93; Paras,
International Law and World Organization, 1971 Ed., p. 20). Withal, the fact
that international law has been made part of the law of the land does not by
any means imply the primacy of international law over national law in the
municipal sphere. Under the doctrine of incorporation as applied in most
countries, rules of international law are given a standing equal, not superior,
to national legislative enactments.
In other words, (a foreign corporation) may have the capacity to sue for
infringement irrespective of lack of business activity in the Philippines
on account of Section 21-A of the Trademark Law but the question of
whether they have an exclusive right over their symbol as to justify
issuance of the controversial writ will depend on actual use of their
trademarks in the Philippines in line with Sections 2 and 2-A of the
same law. It is thus incongruous for petitioners to claim that when a foreign
corporation not licensed to do business in the Philippines files a complaint for
infringement, the entity need not be actually using the trademark in
commerce in the Philippines. Such a foreign corporation may have the
personality to file a suit for infringement but it may not necessarily be entitled
to protection due to absence of actual use of the emblem in the local market.
Undisputably, private respondent is the senior registrant, having
obtained several registration certificates for its various trademarks "LEE,"
"LEE RIDERS," and "LEESURES" in both the supplemental and principal
registers, as early as 1969 to 1973. However, registration alone will not
suffice. In Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft (27 SCRA 1214 [1969]; Reiterated inKabushi Isetan vs.
Intermediate Appellate Court (203 SCRA 583 [1991]) we declared:
A rule widely accepted and firmly entrenched because it has come down
through the years is that actual use in commerce or business is a
prerequisite in the acquisition of the right of ownership over a
trademark.
The credibility placed on a certificate of registration of one's trademark, or its
weight as evidence of validity, ownership and exclusive use, is qualified. A
registration certificate serves merely as prima facieevidence. It is not
conclusive but can and may be rebutted by controverting evidence.
Page 115 of 143
In the case at bench, however, we reverse the findings of the Director of
Patents and the Court of Appeals. After a meticulous study of the records,
we observe that the Director of Patents and the Court of Appeals relied
mainly on the registration certificates as proof of use by private
respondent of the trademark "LEE" which, as we have previously
discussed are not sufficient. We cannot give credence to private
respondent's claim that its "LEE" mark first reached the Philippines in
the 1960's through local sales by the Post Exchanges of the U.S.
Military Bases in the Philippines (Rollo, p. 177) based as it was solely
on the self-serving statements of Mr. Edward Poste, General Manager of
Lee (Phils.), Inc., a wholly owned subsidiary of the H.D. Lee, Co., Inc.,
U.S.A., herein private respondent. (Original Records, p. 52) Similarly, we
give little weight to the numerous vouchers representing various
advertising expenses in the Philippines for "LEE" products. It is well to
note that these expenses were incurred only in 1981 and 1982 by LEE
(Phils.), Inc. after it entered into a licensing agreement with private
respondent on 11 May 1981. (Exhibit E)
On the other hand, petitioner has sufficiently shown that it has been in
the business of selling jeans and other garments adopting its
"STYLISTIC MR. LEE" trademark since 1975 as evidenced by appropriate
sales invoices to various stores and retailers. (Exhibit 1-e to 1-o)
Our rulings in Pagasa Industrial Corp. v. Court of Appeals (118 SCRA 526
[1982])  and Converse Rubber Corp. v. Universal Rubber Products, Inc., (147
SCRA 154 [1987]), respectively, are instructive:
The Trademark Law is very clear. It requires actual commercial use of the
mark prior to its registration. There is no dispute that respondent
corporation was the first registrant, yet it failed to fully substantiate its
claim that it used in trade or business in the Philippines the subject
mark; it did not present proof to invest it with exclusive, continuous
adoption of the trademark which should consist among others, of
considerable sales since its first use. The invoices submitted by
respondent which were dated way back in 1957 show that the zippers
sent to the Philippines were to be used as "samples" and "of no
commercial value." The evidence for respondent must be clear, definite and
free from inconsistencies. "Samples" are not for sale and therefore, the fact
of exporting them to the Philippines cannot be considered to be equivalent to
the "use" contemplated by law. Respondent did not expect income from such
"samples." There were no receipts to establish sale, and no proof were
presented to show that they were subsequently sold in the Philippines.
For lack of adequate proof of actual use of its trademark in the
Philippines prior to petitioner's use of its own mark and for failure to
establish confusing similarity between said trademarks, private
IPL- Assignment No. 6
respondent's action for infringement must necessarily fail. (Emphasis
supplied.)
In view of the foregoing jurisprudence and respondents’ judicial admission
that the actual commercial use of the GALLO wine trademark
was subsequent to its registration in 1971 and to Tobacco Industries’
commercial use of the GALLO cigarette trademark in 1973, we rule that, on
this account, respondents never enjoyed the exclusive right to use the
GALLO wine trademark to the prejudice of Tobacco Industries and its
successors-in-interest, herein petitioners, either under the Trademark Law or
the Paris Convention.
Respondents’ GALLO trademark registration is limited to wines only
We also note that the GALLO trademark registration certificates in the
Philippines and in other countries expressly state that they cover wines only,
without any evidence or indication that registrant Gallo Winery expanded or
intended to expand its business to cigarettes.63
Thus, by strict application of Section 20 of the Trademark Law, Gallo
Winery’s exclusive right to use the GALLO trademark should be limited to
wines, the only product indicated in its registration certificates. This strict
statutory limitation on the exclusive right to use trademarks was amply
clarified in our ruling in Faberge, Inc. vs. Intermediate Appellate Court:64
Having thus reviewed the laws applicable to the case before Us, it is not
difficult to discern from the foregoing statutory enactments that private
respondent may be permitted to register the trademark "BRUTE" for briefs
produced by it notwithstanding petitioner's vehement protestations of unfair
dealings in marketing its own set of items which are limited to: after-shave
lotion, shaving cream, deodorant, talcum powder and toilet soap. Inasmuch
as petitioner has not ventured in the production of briefs, an item which
is not listed in its certificate of registration, petitioner cannot and
should not be allowed to feign that private respondent had invaded
petitioner's exclusive domain. To be sure, it is significant that petitioner
failed to annex in its Brief the so-called "eloquent proof that petitioner indeed
intended to expand its mark ‘BRUT’ to other goods" (Page 27, Brief for the
Petitioner; page 202, Rollo). Even then, a mere application by petitioner in
this aspect does not suffice and may not vest an exclusive right in its favor
that can ordinarily be protected by the Trademark Law. In
short, paraphrasing Section 20 of the Trademark Law as applied to the
documentary evidence adduced by petitioner, the certificate of
registration issued by the Director of Patents can confer upon
petitioner the exclusive right to use its own symbol only to those goods
specified in the certificate, subject to any conditions and limitations stated
Page 116 of 143
therein. This basic point is perhaps the unwritten rationale of Justice
Escolin in Philippine Refining Co., Inc. vs. Ng Sam (115 SCRA 472
[1982]), when he stressed the principle enunciated by the United States
Supreme Court in American Foundries vs. Robertson (269 U.S. 372, 381, 70
L ed 317, 46 Sct. 160) that one who has adopted and used a trademark
on his goods does not prevent the adoption and use of the same
trademark by others for products which are of a different
description. Verily, this Court had the occasion to observe in the 1966 case
of George W. Luft Co., Inc. vs. Ngo Guan (18 SCRA 944 [1966]) that no
serious objection was posed by the petitioner therein since the applicant
utilized the emblem "Tango" for no other product than hair pomade in which
petitioner does not deal.
This brings Us back to the incidental issue raised by petitioner which private
respondent sought to belie as regards petitioner's alleged expansion of its
business. It may be recalled that petitioner claimed that it has a pending
application for registration of the emblem "BRUT 33" for briefs (page 25, Brief
for the Petitioner; page 202, Rollo) to impress upon Us the Solomonic
wisdom imparted by Justice JBL Reyes in Sta. Ana vs. Maliwat  (24 SCRA
1018 [1968]), to the effect that dissimilarity of goods will not preclude
relief if the junior user's goods are not remote from any other product
which the first user would be likely to make or sell (vide, at page 1025).
Commenting on the former provision of the Trademark Law now embodied
substantially under Section 4(d) of Republic Act No. 166, as amended, the
erudite jurist opined that the law in point "does not require that the articles of
manufacture of the previous user and late user of the mark should possess
the same descriptive properties or should fall into the same categories as to
bar the latter from registering his mark in the principal register." (supra at
page 1026).
Yet, it is equally true that as aforesaid, the protective mantle of the
Trademark Law extends only to the goods used by the first user as
specified in the certificate of registration following the clear message
conveyed by Section 20.
How do We now reconcile the apparent conflict between Section 4(d)
which was relied upon by Justice JBL Reyes in the Sta. Ana case and
Section 20? It would seem that Section 4(d) does not require that the
goods manufactured by the second user be related to the goods
produced by the senior user while Section 20 limits the exclusive right
of the senior user only to those goods specified in the certificate of
registration. But the rule has been laid down that the clause which comes
later shall be given paramount significance over an anterior proviso upon the
presumption that it expresses the latest and dominant purpose. (Graham
Paper Co. vs. National Newspapers Asso. (Mo. App.) 193 S.W.
1003;  Barnett vs. Merchant's L. Ins. Co., 87 Okl. 42;  State ex nel Atty. Gen.
IPL- Assignment No. 6
vs. Toledo, 26 N.E., p. 1061; cited by Martin, Statutory Construction Sixth
ed., 1980 Reprinted, p. 144). It ineluctably follows that Section 20 is
controlling and, therefore, private respondent can appropriate its
symbol for the briefs it manufactures because as aptly remarked by
Justice Sanchez in Sterling Products International Inc. vs.
Farbenfabriken Bayer(27 SCRA 1214 [1969]):
"Really, if the certificate of registration were to be deemed as including
goods not specified therein, then a situation may arise whereby an
applicant may be tempted to register a trademark on any and all goods
which his mind may conceive even if he had never intended to use the
trademark for the said goods. We believe that such omnibus registration is
not contemplated by our Trademark Law." (1226).
NO LIKELIHOOD OF CONFUSION, MISTAKE OR DECEIT AS TO THE
IDENTITY OR SOURCE OF PETITIONERS’ AND RESPONDENTS’
GOODS OR BUSINESS
A crucial issue in any trademark infringement case is the likelihood of
confusion, mistake or deceit as to the identity, source or origin of the goods
or identity of the business as a consequence of using a certain mark.
Likelihood of confusion is admittedly a relative term, to be determined rigidly
according to the particular (and sometimes peculiar) circumstances of each
case. Thus, in trademark cases, more than in other kinds of litigation,
precedents must be studied in the light of each particular case. 65
There are two types of confusion in trademark infringement. The first is
"confusion of goods" when an otherwise prudent purchaser is induced to
purchase one product in the belief that he is purchasing another, in which
case defendant’s goods are then bought as the plaintiff’s and its poor quality
reflects badly on the plaintiff’s reputation. The other is "confusion of
business"  wherein the goods of the parties are different but the defendant’s
product can reasonably (though mistakenly) be assumed to originate from
the plaintiff, thus deceiving the public into believing that there is some
connection between the plaintiff and defendant which, in fact, does not
exist.66
In determining the likelihood of confusion, the Court must consider: [a] the
resemblance between the trademarks; [b] the similarity of the goods to which
the trademarks are attached; [c] the likely effect on the purchaser and [d] the
registrant’s express or implied consent and other fair and equitable
considerations.
Petitioners and respondents both use "GALLO" in the labels of their
respective cigarette and wine products. But, as held in the following cases,
Page 117 of 143
the use of an identical mark does not, by itself, lead to a legal conclusion that
there is trademark infringement:
(a) in Acoje Mining Co., Inc. vs. Director of Patent, 67 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, 68 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,69 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;
(d) in Shell Company of the Philippines vs. Court of Appeals, 70 in a minute
resolution, we dismissed the petition for review for lack of merit and affirmed
the Patent Office’s registration of the trademark SHELL used in the cigarettes
manufactured by respondent Fortune Tobacco Corporation, notwithstanding
Shell Company’s opposition as the prior registrant of the same trademark for
its gasoline and other petroleum products;
(e) in Esso Standard Eastern, Inc. vs. Court of Appeals, 71 we dismissed
ESSO’s complaint for trademark infringement against United Cigarette
Corporation and allowed the latter to use the trademark ESSO for its
cigarettes, the same trademark used by ESSO for its petroleum products,
and
(f) in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber
Corporation,72 we affirmed the rulings of the Patent Office and the CA that
NSR Rubber Corporation could use the trademark CANON for its sandals
(Class 25) despite Canon Kabushiki Kaisha’s prior registration and use of the
same trademark for its paints, chemical products, toner and dyestuff (Class
2).
Whether a trademark causes confusion and is likely to deceive the public
hinges on "colorable imitation"73 which has been defined as "such similarity in
form, content, words, sound, meaning, special arrangement or general
IPL- Assignment No. 6
appearance of the trademark or tradename in their overall presentation or in
their essential and substantive and distinctive parts as would likely mislead or
confuse persons in the ordinary course of purchasing the genuine article." 74
Jurisprudence has developed two tests in determining similarity and
likelihood of confusion in trademark resemblance:75
(a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of
Appeals76 and other cases,77 and
(b) the Holistic or Totality Test used in Del Monte Corporation vs. Court of
Appeals78 and its preceding cases.79
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. 80
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.81
In comparing the resemblance or colorable imitation of marks, various factors
have been considered, such as the dominant color, style, size, form, meaning
of letters, words, designs and emblems used, the likelihood of deception of
the mark or name's tendency to confuse82 and the commercial impression
likely to be conveyed by the trademarks if used in conjunction with the
respective goods of the parties.83
Applying the Dominancy and Holistic Tests, we find that the dominant feature
of the GALLO cigarette trademark is the device of a large rooster facing left,
outlined in black against a gold background. The rooster’s color is either
green or red – green for GALLO menthols and red for GALLO filters. Directly
below the large rooster device is the word GALLO. The rooster device is
given prominence in the GALLO cigarette packs in terms of size and location
on the labels.84
Page 118 of 143
The GALLO mark appears to be a fanciful and arbitrary mark for the
cigarettes as it has no relation at all to the product but was chosen merely as
a trademark due to the fondness for fighting cocks of the son of petitioners’
president. Furthermore, petitioners adopted GALLO, the Spanish word for
rooster, as a cigarette trademark to appeal to one of their target markets,
the sabungeros (cockfight aficionados).85
Also, as admitted by respondents themselves,86 on the side of the GALLO
cigarette packs are the words "MADE BY MIGHTY CORPORATION," thus
clearly informing the public as to the identity of the manufacturer of the
cigarettes.
On the other hand, GALLO Winery’s wine and brandy labels are diverse. In
many of them, the labels are embellished with sketches of buildings and
trees, vineyards or a bunch of grapes while in a few, one or two small
roosters facing right or facing each other (atop the EJG crest, surrounded by
leaves or ribbons), with additional designs in green, red and yellow colors,
appear as minor features thereof. 87 Directly below or above these sketches is
the entire printed name of the founder-owners, "ERNEST & JULIO GALLO"
or just their surname "GALLO,"88which appears in different fonts, sizes, styles
and labels, unlike petitioners’ uniform casque-font bold-lettered GALLO mark.
Moreover, on the labels of Gallo Winery’s wines are printed the words
"VINTED AND BOTTLED BY ERNEST & JULIO GALLO, MODESTO,
CALIFORNIA."89
The many different features like color schemes, art works and other
markings of both products drown out the similarity between them – the use of
the word “GALLO” ― a family surname for the Gallo Winery’s wines and a
Spanish word for rooster for petitioners’ cigarettes.
WINES AND CIGARETTES ARE NOT IDENTICAL, SIMILAR, COMPETING
OR RELATED GOODS
Confusion of goods is evident where the litigants are actually in competition;
but confusion of business may arise between non-competing interests as
well.90
Thus, apart from the strict application of Section 20 of the Trademark Law
and Article 6bis of the Paris Convention which proscribe trademark
infringement not only of goods specified in the certificate of registration but
also of identical or similar goods, we have also uniformly recognized and
applied the modern concept of "related goods." 91Simply stated, when goods
are so related that the public may be, or is actually, deceived and misled that
IPL- Assignment No. 6
they come from the same maker or manufacturer, trademark infringement
occurs.92
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. 93 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.94 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.95
In resolving whether goods are related,96 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 97
(d) the nature and cost of the articles98
(e) the descriptive properties, physical attributes or essential characteristics
with reference to their form, composition, texture or quality
(f) the purpose of the goods99
(g) whether the article is bought for immediate consumption, 100 that is, day-to-
day household items101
(h) the fields of manufacture102
(i) the conditions under which the article is usually purchased 103 and
(j) the channels of trade through which the goods flow, 104 how they are
distributed, marketed, displayed and sold.105
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
Page 119 of 143
that the entire panoply of elements constituting the relevant factual landscape
be comprehensively examined.106 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.107
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. 108 The
"purchaser" is not the "completely unwary consumer" but is the "ordinarily
intelligent buyer" considering the type of product involved. 109 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."110
Hence, in the adjudication of trademark infringement, we give due regard to
the goods’ usual purchaser’s character, attitude, habits, age, training and
education. 111
Applying these legal precepts to the present case, petitioner’s use of the
GALLO cigarette trademark is not likely to cause confusion or mistake, or to
deceive the "ordinarily intelligent buyer" of either wines or cigarettes or both
as to the identity of the goods, their source and origin, or identity of the
business of petitioners and respondents.
Obviously, wines and cigarettes are not identical or competing products.
Neither do they belong to the same class of goods. Respondents’ GALLO
wines belong to Class 33 under Rule 84[a] Chapter III, Part II of the Rules of
Practice in Trademark Cases while petitioners’ GALLO cigarettes fall under
Class 34.
We are mindful that product classification alone cannot serve as the decisive
factor in the resolution of whether or not wines and cigarettes are related
goods. Emphasis should be on the similarity of the products involved and not
on the arbitrary classification or general description of their properties or
characteristics. But 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. 112
IPL- Assignment No. 6
Both the Makati RTC and the CA held that wines and cigarettes are related
products because: (1) "they are related forms of vice, harmful when taken in
excess, and used for pleasure and relaxation" and (2) "they are grouped or
classified in the same section of supermarkets and groceries."
We find these premises patently insufficient and too arbitrary to support the
legal conclusion that wines and cigarettes are related products within the
contemplation of the Trademark Law and the Paris Convention.
First, anything –- not only wines and cigarettes ― can be used for pleasure
and relaxation and can be harmful when taken in excess. Indeed, it would be
a grave abuse of discretion to treat wines and cigarettes as similar or related
products likely to cause confusion just because they are pleasure-giving,
relaxing or potentially harmful. Such reasoning makes no sense.
Second, it is common knowledge that supermarkets sell an infinite variety of
wholly unrelated products and the goods here involved, wines and cigarettes,
have nothing whatsoever in common with respect to their essential
characteristics, quality, quantity, size, including the nature of their packages,
wrappers or containers.113
Accordingly, the U.S. patent office and courts have consistently held that the
mere fact that goods are sold in one store under the same roof does not
automatically mean that buyers are likely to be confused as to the goods’
respective sources, connections or sponsorships. The fact that different
products are available in the same store is an insufficient standard, in and of
itself, to warrant a finding of likelihood of confusion. 114
In this regard, we adopted the Director of Patents’ finding in Philippine
Refining Co., Inc. vs. Ng Sam and the Director of Patents:115
In his decision, the Director of Patents enumerated the factors that set
respondent’s products apart from the goods of petitioner. He opined and we
quote:
"I have taken into account such factors as probable purchaser attitude and
habits, marketing activities, retail outlets, and commercial impression likely to
be conveyed by the trademarks if used in conjunction with the respective
goods of the parties, I believe that ham on one hand, and lard, butter, oil,
and soap on the other are products that would not move in the same
manner through the same channels of trade. They pertain to unrelated
fields of manufacture, might be distributed and marketed under
dissimilar conditions, and are displayed separately even though they
frequently may be sold through the same retail food
establishments. Opposer’s products are ordinary day-to-day household
Page 120 of 143
items whereas ham is not necessarily so. Thus, the goods of the parties are
not of a character which purchasers would likely attribute to a common origin.
The observations and conclusion of the Director of Patents are correct. The
particular goods of the parties are so unrelated that consumers, would not, in
any probability mistake one as the source of origin of the product of the other.
(Emphasis supplied).
The same is true in the present case. Wines and cigarettes are non-
competing and are totally unrelated products not likely to cause
confusion vis-à-vis the goods or the business of the petitioners and
respondents.
Wines are bottled and consumed by drinking while cigarettes are packed in
cartons or packages and smoked. There is a whale of a difference between
their descriptive properties, physical attributes or essential characteristics like
form, composition, texture and quality.
GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO
wines are patronized by middle-to-high-income earners while GALLO
cigarettes appeal only to simple folks like farmers, fishermen, laborers and
other low-income workers.116 Indeed, the big price difference of these two
products is an important factor in proving that they are in fact unrelated and
that they travel in different channels of trade. There is a distinct price
segmentation based on vastly different social classes of purchasers. 117
GALLO cigarettes and GALLO wines are not sold through the same channels
of trade. GALLO cigarettes are Philippine-made and petitioners neither claim
nor pass off their goods as imported or emanating from Gallo Winery. GALLO
cigarettes are distributed, marketed and sold through ambulant and sidewalk
vendors, small local sari-saristores and grocery stores in Philippine rural
areas, mainly in Misamis Oriental, Pangasinan, Bohol, and Cebu. 118 On the
other hand, GALLO wines are imported, distributed and sold in the
Philippines through Gallo Winery’s exclusive contracts with a domestic entity,
which is currently Andresons. By respondents’ own testimonial evidence,
GALLO wines are sold in hotels, expensive bars and restaurants, and high-
end grocery stores and supermarkets, not through sari-sari  stores or
ambulant vendors.119
Furthermore, the Makati RTC and the CA erred in relying on Carling Brewing
Company vs. Philip Morris, Inc. 120 to support its finding that GALLO wines and
GALLO cigarettes are related goods. The courts a quo should have taken
into consideration the subsequent case of IDV North America, Inc. and R & A
Bailey Co. Limited vs. S & M Brands, Inc.:121
IPL- Assignment No. 6
IDV correctly acknowledges, however, that there is no per se  rule that the
use of the same mark on alcohol and tobacco products always will result in a
likelihood of confusion. Nonetheless, IDV relies heavily on the decision
in John Walker & Sons, Ltd. vs. Tampa Cigar Co.,  124 F. Supp. 254, 256
(S.D. Fla. 1954), aff’d,  222 F. 2d 460 (5th Cir. 1955), wherein the court
enjoined the use of the mark "JOHNNIE WALKER" on cigars because the
fame of the plaintiff’s mark for scotch whiskey and because the plaintiff
advertised its scotch whiskey on, or in connection with tobacco products. The
court, in John Walker & Sons,  placed great significance on the finding
that the infringers use was a deliberate attempt to capitalize on the
senior marks’ fame. Id.  At 256.  IDV also relies on Carling Brewing Co.
v. Philip Morris, Inc.,  297 F. Supp. 1330, 1338 (N.D. Ga. 1968), in which
the court enjoined the defendant’s use of the mark "BLACK LABEL" for
cigarettes because it was likely to cause confusion with the plaintiff’s
well-known mark "BLACK LABEL" for beer.
Those decisions, however, must be considered in perspective of the
principle that tobacco products and alcohol products should be
considered related only in cases involving special
circumstances.Schenley Distillers, Inc. v. General Cigar Co.,  57C.C.P.A.
1213, 427 F. 2d 783, 785 (1970). The presence of special circumstances
has been found to exist where there is a finding of unfair competition or
where a ‘famous’ or ‘well-known mark’ is involved and  there is a
demonstrated intent to capitalize on that mark. For example, in John
Walker & Sons, the court was persuaded to find a relationship between
products, and hence a likelihood of confusion, because of the plaintiff’s long
use and extensive advertising of its mark and placed great emphasis on the
fact that the defendant used the trademark ‘Johnnie Walker with full
knowledge of its fame and reputation and with the intention of taking
advantage thereof.’ John Walker & Sons,  124 F. Supp. At 256; see
Mckesson & Robbins, Inc. v. P. Lorillard Co.,  1959 WL 5894, 120 U.S.P.Q.
306, 307 (1959) (holding that the decision in John Walker & Sons was
‘merely the law on the particular case based upon its own peculiar
facts’); see also Alfred Dunhill, 350 F. Supp. At 1363 (defendant’s adoption
of ‘Dunhill’ mark was not innocent). However, in Schenley, the court noted
that the relation between tobacco and whiskey products is significant where a
widely known arbitrary mark has long been used for diversified products
emanating from a single source and a newcomer seeks to use the same
mark on unrelated goods. Schenley, 427 F.2d. at 785. Significantly,
in Schenley,  the court looked at the industry practice and the facts of the
case in order to determine the nature and extent of the relationship between
the mark on the tobacco product and the mark on the alcohol product.
The record here establishes conclusively that IDV has never advertised
BAILEYS liqueurs in conjunction with tobacco or tobacco accessory products
and that IDV has no intent to do so. And, unlike the defendant in Dunhill, S &
Page 121 of 143
M Brands does not market bar accessories, or liqueur related products, with
its cigarettes. The advertising and promotional materials presented a trial in
this action demonstrate a complete lack of affiliation between the tobacco
and liqueur products bearing the marks here at issue.
xxx xxx xxx
Of equal significance, it is undisputed that S & M Brands had no intent, by
adopting the family name ‘Bailey’s’ as the mark for its cigarettes, to capitalize
upon the fame of the ‘BAILEYS’ mark for liqueurs. See Schenley, 427 F. 2d
at 785.  Moreover, as will be discussed below, and as found
in Mckesson & Robbins,  the survey evidence refutes the contention
that cigarettes and alcoholic beverages are so intimately associated in
the public mind that they cannot under any circumstances be sold
under the same mark without causing confusion. See Mckesson &
Robbins, 120 U.S.P.Q. at 308.
Taken as a whole, the evidence here demonstrates the absence of the
‘special circumstances’ in which courts have found a relationship between
tobacco and alcohol products sufficient to tip the similarity of goods analysis
in favor of the protected mark and against the allegedly infringing mark. It is
true that BAILEYS liqueur, the world’s best selling liqueur and the
second best selling in the United States, is a well-known product. That
fact alone, however, is insufficient to invoke the special circumstances
connection here where so much other evidence and so many other
factors disprove a likelihood of confusion. The similarity of products
analysis, therefore, augers against finding that there is a likelihood of
confusion. (Emphasis supplied).
In short, tobacco and alcohol products may be considered related only in
cases involving special circumstanceswhich exist only if a famous mark is
involved and there is a demonstrated intent to capitalize on it. Both of these
are absent in the present case.
THE GALLO WINE TRADEMARK IS NOT A WELL-KNOWN MARK IN THE
CONTEXT OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT IDENTICAL OR SIMILAR
GOODS
First, the records bear out that most of the trademark registrations took place
in the late 1980s and the 1990s, that is, after Tobacco Industries’ use of the
GALLO cigarette trademark in 1973 and petitioners’ use of the same mark in
1984.
IPL- Assignment No. 6
GALLO wines and GALLO cigarettes are neither the same, identical, similar
nor related goods, a requisite elementunder both the Trademark Law and the
Paris Convention.
Second, the GALLO trademark cannot be considered a strong and distinct
mark in the Philippines. Respondents do not dispute the documentary
evidence that aside from Gallo Winery’s GALLO trademark registration, the
Bureau of Patents, Trademarks and Technology Transfer also issued on
September 4, 1992 Certificate of Registration No. 53356 under the Principal
Register approving Productos Alimenticios Gallo, S.A’s April 19, 1990
application for GALLO trademark registration and use for its "noodles,
prepared food or canned noodles, ready or canned sauces for noodles,
semolina, wheat flour and bread crumbs, pastry, confectionery, ice cream,
honey, molasses syrup, yeast, baking powder, salt, mustard, vinegar,
species and ice."122
Third and most important, pursuant to our ruling in  Canon Kabushiki Kaisha
vs. Court of Appeals and NSR Rubber Corporation,123 "GALLO" cannot be
considered a "well-known" mark within the contemplation and protection of
the Paris Convention in this case since wines and cigarettes are not identical
or similar goods:
We agree with public respondents that the controlling doctrine with respect to
the applicability of Article 8 of the Paris Convention is that established
in Kabushi Kaisha Isetan vs. Intermediate Appellate Court (203 SCRA 59
[1991]).  As pointed out by the BPTTT:
"Regarding the applicability of Article 8 of the Paris Convention, this
Office believes that there is no automatic protection afforded an entity
whose tradename is alleged to have been infringed through the use of
that name as a trademark by a local entity.
In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et. al., G.R.
No. 75420, 15 November 1991, the Honorable Supreme Court held that:
‘The Paris Convention for the Protection of Industrial Property does not
automatically exclude all countries of the world which have signed it
from using a tradename which happens to be used in one country. To
illustrate — if a taxicab or bus company in a town in the United
Kingdom or India happens to use the tradename ‘Rapid Transportation,’
it does not necessarily follow that ‘Rapid’ can no longer be registered in
Uganda, Fiji, or the Philippines.
This office is not unmindful that in (sic) the Treaty of Paris for the Protection
of Intellectual Property regarding well-known marks and possible application
Page 122 of 143
thereof in this case. Petitioner, as this office sees it, is trying to seek refuge
under its protective mantle, claiming that the subject mark is well known in
this country at the time the then application of NSR Rubber was filed.
However, the then Minister of Trade and Industry, the Hon. Roberto V.
Ongpin, issued a memorandum dated 25 October 1983 to the Director of
Patents, a set of guidelines in the implementation of Article 6 bis of the
Treaty of Paris. These conditions are:
a) the mark must be internationally known;
b) the subject of the right must be a trademark, not a patent or copyright or
anything else;
c) the mark must be for use in the same or similar kinds of goods; and
d) the person claiming must be the owner of the mark (The Parties
Convention Commentary on the Paris Convention. Article by Dr. Bogsch,
Director General of the World Intellectual Property Organization, Geneva,
Switzerland, 1985)’
From the set of facts found in the records, it is ruled that the  Petitioner failed
to comply with the third requirement of the said memorandum that is
the mark must be for use in the same or similar kinds of goods. The
Petitioner is using the mark "CANON" for products belonging to class 2
(paints, chemical products) while the Respondent is using the same
mark for sandals (class 25).
Hence, Petitioner's contention that its mark is well-known at the time
the Respondent filed its application for the same mark should
fail." (Emphasis supplied.)
Consent of the Registrant and Other air, Just and Equitable
Considerations
Each trademark infringement case presents a unique problem which must be
answered by weighing the conflicting interests of the litigants. 124
Respondents claim that GALLO wines and GALLO cigarettes flow through
the same channels of trade, that is, retail trade. If respondents’ assertion is
true, then both goods co-existed peacefully for a considerable period of time.
It took respondents almost 20 years to know about the existence of GALLO
cigarettes and sue petitioners for trademark infringement. Given, on one
hand, the long period of time that petitioners were engaged in the
IPL- Assignment No. 6
manufacture, marketing, distribution and sale of GALLO cigarettes and, on
the other, respondents’ delay in enforcing their rights (not to mention implied
consent, acquiescence or negligence) we hold that equity, justice and
fairness require us to rule in favor of petitioners. The scales of conscience
and reason tip far more readily in favor of petitioners than respondents.
Moreover, there exists no evidence that petitioners employed malice, bad
faith or fraud, or that they intended to capitalize on respondents’ goodwill in
adopting the GALLO mark for their cigarettes which are totally unrelated to
respondents’ GALLO wines. Thus, we rule out trademark infringement on the
part of petitioners.
PETITIONERS ARE ALSO NOT LIABLE FOR UNFAIR COMPETITION
Under Section 29 of the Trademark Law, any person who employs deception
or any other means contrary to good faith by which he passes 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 commits any acts
calculated to produce said result, is guilty of unfair competition. It includes the
following acts:
(a) Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as to the
goods themselves or in the wrapping of the packages in which they are
contained, or the devices or words thereon, or in any other feature of their
appearance, which would be likely to influence purchasers to believe that the
goods offered are those of a manufacturer or dealer other than the actual
manufacturer or dealer, or who otherwise clothes the goods with such
appearance as shall deceive the public and defraud another of his legitimate
trade, or any subsequent vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other
means calculated to induce the false belief that such person is offering the
services of another who has identified such services in the mind of the public;
(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.
The universal test question is whether the public is likely to be deceived.
Nothing less than conduct tending to pass off one man’s goods or business
as that of another constitutes unfair competition. Actual or probable
deception and confusion on the part of customers by reason of defendant’s
practices must always appear.125 On this score, we find that petitioners never
Page 123 of 143
attempted to pass off their cigarettes as those of respondents. There is no
evidence of bad faith or fraud imputable to petitioners in using their GALLO
cigarette mark.

All told, after applying all the tests provided by the governing laws as well as
those recognized by jurisprudence, we conclude that petitioners are not liable
for trademark infringement, unfair competition or damages.

WHEREFORE, finding the petition for review meritorious, the same is hereby
GRANTED. The questioned decision and resolution of the Court of Appeals
in CA-G.R. CV No. 65175 and the November 26, 1998 decision and the June
24, 1999 order of the Regional Trial Court of Makati, Branch 57 in Civil Case
No. 93-850 are hereby REVERSED and SET ASIDE and the complaint
against petitioners DISMISSED.

Costs against respondents.

SO ORDERED.

IPL- Assignment No. 6 Page 124 of 143

[73] G.R. No. 166115. February 2, 2007. *
McDONALD’S CORPORATION, petitioner, vs. MACJOY
FASTFOOD CORPORATION, respondent.
Appeals; While the Supreme Court is not the proper venue to consider
factual issues as it is not a trier of facts, when the factual findings of the appellate
court are mistaken, absurd, speculative, conjectural, conflicting, tainted with grave
abuse of discretion, or contrary to the findings called by the court of origin, the
Supreme Court will review them.—As regards the respondent’s argument that the
petition raises only questions of fact which are not proper in a petition for review,
suffice it to say that the contradictory findings of the IPO and the CA constrain us to
give due course to the petition, this being one of the recognized exceptions to Section
1, Rule 45 of the Rules of Court. True, this Court is not the proper venue to consider
factual issues as it is not a trier of facts. Nevertheless, when the factual findings of
the appellate court are mistaken, absurd, speculative, conjectural, conflicting, tainted
with grave abuse of discretion, or contrary to the findings culled by the court of
origin, as here, this Court will review them.
Trademarks and Trade Names; Dominancy Test; Holistic Test; In
determining similarity and likelihood of confusion jurisprudence has developed two
tests—the dominancy test and the holistic test; The dominancy test focuses on the
similarity of the prevalent features of the competing trademarks that might cause
confusion or deception; The holistic test requires the court to consider the entirety of
the marks as applied to the products, including the labels and packaging, in
determining confusing similarity.—In determining similarity and likelihood of
confusion, jurisprudence has developed two tests, the dominancy test and the holistic
test. The dominancy test focuses on the similarity of the prevalent features of the
competing trademarks that might cause confusion or deception. In contrast, the
holistic test requires the court to consider the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity.
Under the latter test, a comparison of the words is not the only determinant factor.
Same; In trademark cases, particularly in ascertaining whether one
trademark is confusingly similar to another, no set of 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.—
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. While we agree with the CA’s detailed enumeration of
IPL- Assignment No. 6
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.
Same; Paris Convention; A mark is valid if it is distinctive and hence not
barred from registration under the Trademark Law; Once registered, not only the
mark’s validity but also the registrant’s ownership thereof is prima facie presumed.
—A mark is valid if it is distinctive and hence not barred from registration under the
Trademark Law. However, once registered, not only the mark’s validity but also the
registrant’s ownership thereof is prima facie presumed. Pursuant to Section 37 of
R.A. No. 166, as amended, as well as the provision regarding the protection of
industrial property of foreign nationals in this country as embodied in the Paris
Convention under which the Philippines and the petitioner’s domicile, the United
States, are adherentmembers, the petitioner was able to register its MCDONALD’S
marks successively, i.e., “McDonald’s” in 04 October, 1971; the corporate logo
which is the “M” or the golden arches design and the “McDonald’s” with the “M” or
golden arches design both in 30 June 1977; and so on and so forth.
Same; Same; The Paris Convention is essentially a compact among the
various member countries to accord in their own countries to citizens of the other
contracting parties’ trademarks and other rights comparable to those accorded their
own citizens by their domestic laws.—The Paris Convention is essentially a compact
among the various member countries to accord in their own countries to citizens of
the other contracting parties’ trademarks and other rights comparable to those
accorded their own citizens by their domestic laws. The underlying principle is that
foreign nationals should be given the same treatment in each of the member
countries as that country makes available to its own citizens. In addition, the
Convention sought to create uniformity in certain respects by obligating each nation
to assure to nationals of countries of the Union an effective protection against unfair
competition. Article 2 of the Paris Convention provides that: ART. 2. Nationals of
each of the countries of the Union shall, as regards the protection of industrial
property, enjoy in all the other countries of the Union the advantages that their
respective laws now grant, or may hereafter grant, to nationals, without prejudice to
the rights specially provided by the present Convention. Consequently, they shall
have the same protection as the latter, and the same legal remedy against any
infringement of their rights, provided they observe the conditions and formalities
imposed upon nationals.
Same; The requirement of “actual use in commerce * * * in the
Philippines” before one may register a trademark, trade name and service mark
under the Trademark Law pertains to the territorial jurisdiction of the Philippines
and is not only confined to a certain region, province, city or barangay.—
Page 125 of 143
Respondent’s contention that it was the first user of the mark in the Philippines
having used “MACJOY & DEVICE” on its restaurant business and food products
since December, 1987 at Cebu City while the first McDonald’s outlet of the
petitioner thereat was opened only in 1992, is downright unmeritorious. For the
requirement of “actual use in commerce x x x in the Philippines” before one may
register a trademark, trade name and service mark under the Trademark Law pertains
to the territorial jurisdiction of the Philippines and is not only confined to a certain
region, province, city or barangay.
DECISION
GARCIA, J.:
In this petition for review on certiorari under Rule 45 of the Rules of Court,
herein petitioner McDonald’s Corporation seeks the reversal and setting
aside of the following issuances of the Court of Appeals (CA) in CA-G.R. SP
No. 57247, to wit:
1. Decision dated 29 July 2004 1 reversing an earlier decision of the
Intellectual Property Office (IPO) which rejected herein respondent MacJoy
FastFood Corporation’s application for registration of the trademark
"MACJOY & DEVICE"; and
2. Resolution dated 12 November 2004 2 denying the petitioner’s motion for
reconsideration.
As culled from the record, the facts are as follows:
On 14 March 1991, respondent MacJoy Fastfood Corporation, a domestic
corporation engaged in the sale of fast food products in Cebu City, filed with
the then Bureau of Patents, Trademarks and Technology Transfer (BPTT),
now the Intellectual Property Office (IPO), an application, thereat identified as
Application Serial No. 75274, for the registration of the trademark "MACJOY
& DEVICE" for fried chicken, chicken barbeque, burgers, fries, spaghetti,
palabok, tacos, sandwiches, halo-halo and steaks under classes 29 and 30
of the International Classification of Goods.
Petitioner McDonald’s Corporation, a corporation duly organized and existing
under the laws of the State of Delaware, USA, filed a verified Notice of
Opposition3 against the respondent’s application claiming that the trademark
"MACJOY & DEVICE" so resembles its corporate logo, otherwise known as
the Golden Arches or "M" design, and its marks "McDonalds," McChicken,"
"MacFries," "BigMac," "McDo," "McSpaghetti," "McSnack," and "Mc,"
(hereinafter collectively known as the MCDONALD’S marks) such that when
used on identical or related goods, the trademark applied for would confuse
IPL- Assignment No. 6
or deceive purchasers into believing that the goods originate from the same
source or origin. Likewise, the petitioner alleged that the respondent’s use
and adoption in bad faith of the "MACJOY & DEVICE" mark would falsely
tend to suggest a connection or affiliation with petitioner’s restaurant services
and food products, thus, constituting a fraud upon the general public and
further cause the dilution of the distinctiveness of petitioner’s registered and
internationally recognized MCDONALD’S marks to its prejudice and
irreparable damage. The application and the opposition thereto was
docketed as Inter Partes Case No. 3861.
Respondent denied the aforementioned allegations of the petitioner and
averred that it has used the mark "MACJOY" for the past many years in good
faith and has spent considerable sums of money for said mark’s extensive
promotion in tri-media, especially in Cebu City where it has been doing
business long before the petitioner opened its outlet thereat sometime in
1992; and that its use of said mark would not confuse affiliation with the
petitioner’s restaurant services and food products because of the differences
in the design and detail of the two (2) marks.
In a decision4 dated December 28, 1998, the IPO, ratiocinating that the
predominance of the letter "M," and the prefixes "Mac/Mc" in both the
"MACJOY" and the "MCDONALDS" marks lead to the conclusion that there
is confusing similarity between them especially since both are used on
almost the same products falling under classes 29 and 30 of the International
Classification of Goods, i.e., food and ingredients of food, sustained the
petitioner’s opposition and rejected the respondent’s application, viz:
WHEREFORE, the Opposition to the registration of the mark MACJOY &
DEVICE for use in fried chicken and chicken barbecue, burgers, fries,
spaghetti, palabok, tacos, sandwiches, halo-halo, and steaks is, as it is
hereby, SUSTAINED. Accordingly, Application Serial No. 75274 of the herein
Respondent-Applicant is REJECTED.
Let the filewrapper of MACJOY subject matter of this case be sent to the
Administrative, Financial and Human Resources Development Bureau for
appropriate action in accordance with this Decision, with a copy to be
furnished the Bureau of Trademarks for information and to update its record.
SO ORDERED.
In time, the respondent moved for a reconsideration but the IPO denied the
motion in its Order5 of January 14, 2000.
Page 126 of 143
Therefrom, the respondent went to the CA via a Petition for Review with
prayer for Preliminary Injunction6 under Rule 43 of the Rules of Court,
whereat its appellate recourse was docketed as CA-G.R. SP No. 57247.
Finding no confusing similarity between the marks "MACJOY" and
"MCDONALD’S," the CA, in its herein assailed Decision 7 dated July 29,
2004, reversed and set aside the appealed IPO decision and order, thus:
WHEREFORE, in view of the foregoing, judgment is hereby rendered by us
REVERSING and SETTING ASIDE the Decision of the IPO dated 28
December 1998 and its Order dated 14 January 2000 and ORDERING the
IPO to give due course to petitioner’s Application Serial No. 75274.
SO ORDERED.
Explains the CA in its decision:
xxx, it is clear that the IPO brushed aside and rendered useless the glaring
and drastic differences and variations in style of the two trademarks and even
decreed that these pronounced differences are "miniscule" and considered
them to have been "overshadowed by the appearance of the predominant
features" such as "M," "Mc," and "Mac" appearing in both MCDONALD’S and
MACJOY marks. Instead of taking into account these differences, the IPO
unreasonably shrugged off these differences in the device, letters and marks
in the trademark sought to be registered. The IPO brushed aside and ignored
the following irrefutable facts and circumstances showing differences
between the marks of MACJOY and MCDONALD’S. They are, as averred by
the petitioner [now respondent]:
1. The word "MacJoy" is written in round script while the word "McDonald’s"
is written in single stroke gothic;
2. The word "MacJoy" comes with the picture of a chicken head with cap and
bowtie and wings sprouting on both sides, while the word "McDonald’s"
comes with an arches "M" in gold colors, and absolutely without any picture
of a chicken;
3. The word "MacJoy" is set in deep pink and white color scheme while
"McDonald’s" is written in red, yellow and black color combination;
4. The façade of the respective stores of the parties are entirely different.
Exhibits 1 and 1-A, show that [respondent’s] restaurant is set also in the
same bold, brilliant and noticeable color scheme as that of its wrappers,
containers, cups, etc., while [petitioner’s] restaurant is in yellow and red
IPL- Assignment No. 6
colors, and with the mascot of "Ronald McDonald" being prominently
displayed therein." (Words in brackets supplied.)
Petitioner promptly filed a motion for reconsideration. However, in its similarly
challenged Resolution8 of November 12, 2004, the CA denied the motion, as
it further held:
Whether a mark or label of a competitor resembles another is to be
determined by an inspection of the points of difference and resemblance as a
whole, and not merely the points of resemblance. The articles and
trademarks employed and used by the [respondent] Macjoy Fastfood
Corporation are so different and distinct as to preclude any probability or
likelihood of confusion or deception on the part of the public to the injury of
the trade or business of the [petitioner] McDonald’s Corporation. The "Macjoy
& Device" mark is dissimilar in color, design, spelling, size, concept and
appearance to the McDonald’s marks. (Words in brackets supplied.)
Hence, the petitioner’s present recourse on the following grounds:
I.
THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT’S
"MACJOY & DEVICE" MARK IS NOT CONFUSINGLY SIMILAR TO
PETITIONER’S "McDONALD’S MARKS." IT FAILED TO CORRECTLY
APPLY THE DOMINANCY TEST WHICH HAS BEEN CONSISTENTLY
APPLIED BY THIS HONORABLE COURT IN DETERMINING THE
EXISTENCE OF CONFUSING SIMILARITY BETWEEN COMPETING
MARKS.
A. The McDonald’s Marks belong to a well-known and established "family of
marks" distinguished by the use of the prefix "Mc" and/or "Mac" and the
corporate "M" logo design.
B. The prefix "Mc" and/or "Mac" is the dominant portion of both Petitioner’s
McDonald’s Marks and the Respondent’s "Macjoy & Device" mark. As such,
the marks are confusingly similar under the Dominancy Test.
C. Petitioner’s McDonald’s Marks are well-known and world-famous marks
which must be protected under the Paris Convention.
II.
Page 127 of 143
THE COURT OF APPEALS ERRED IN RULING THAT THE DECISION OF
THE IPO DATED 28 DECEMBER 1998 AND ITS ORDER DATED 14
JANUARY 2000 WERE NOT BASED ON SUBSTANTIAL EVIDENCE.
In its Comment,9 the respondent asserts that the petition should be dismissed
outright for being procedurally defective: first, because the person who
signed the certification against forum shopping in behalf of the petitioner was
not specifically authorized to do so, and second, because the petition does
not present a reviewable issue as what it challenges are the factual findings
of the CA. In any event, the respondent insists that the CA committed no
reversible error in finding no confusing similarity between the trademarks in
question.
The petition is impressed with merit.
Contrary to respondent’s claim, the petitioner’s Managing Counsel, Sheila
Lehr, was specifically authorized to sign on behalf of the petitioner the
Verification and Certification10 attached to the petition. As can be gleaned
from the petitioner’s Board of Director’s Resolution dated December 5, 2002,
as embodied in the Certificate of the Assistant Secretary dated December 21,
2004,11 Sheila Lehr was one of those authorized and empowered "to execute
and deliver for and on behalf of [the petitioner] all documents as may be
required in connection with x x x the protection and maintenance of any
foreign patents, trademarks, trade-names, and copyrights owned now or
hereafter by [the petitioner], including, but not limited to, x x x documents
required to institute opposition or cancellation proceedings against conflicting
trademarks, and to do such other acts and things and to execute such other
documents as may be necessary and appropriate to effect and carry out the
intent of this resolution." Indeed, the afore-stated authority given to Lehr
necessarily includes the authority to execute and sign the mandatorily
required certification of non-forum shopping to support the instant petition for
review which stemmed from the "opposition proceedings" lodged by the
petitioner before the IPO. Considering that the person who executed and
signed the certification against forum shopping has the authority to do so, the
petition, therefore, is not procedurally defective.
As regards the respondent’s argument that the petition raises only questions
of fact which are not proper in a petition for review, suffice it to say that the
contradictory findings of the IPO and the CA constrain us to give due course
to the petition, this being one of the recognized exceptions to Section 1, Rule
45 of the Rules of Court. True, this Court is not the proper venue to consider
factual issues as it is not a trier of facts. 12 Nevertheless, when the factual
findings of the appellate court are mistaken, absurd, speculative, conjectural,
conflicting, tainted with grave abuse of discretion, or contrary to the findings
culled by the court of origin,13 as here, this Court will review them.
IPL- Assignment No. 6
The old Trademark Law, Republic Act (R.A.) No. 166, as amended, defines a
"trademark" as any distinctive word, name, symbol, emblem, sign, or device,
or any combination thereof adopted and used by a manufacturer or merchant
on his goods to identify and distinguish them from those manufactured, sold,
or dealt in by others.14
Under the same law, the registration of a trademark is subject to the
provisions of Section 4 thereof, paragraph (d) of which is pertinent to this
case. The provision reads:
Section 4. Registration of trademarks, trade-names and service-marks on the
principal register. – There is hereby established a register of trademarks,
tradenames and service-marks which shall be known as the principal
register. The owner of the trade-mark, trade-name or service-mark used to
distinguish his goods, business or services of others shall have the right to
register the same on the principal register, unless it:
(d) Consists of or comprises a mark or trade-name which so resembles a
mark or trade-name registered in the Philippines or a mark or trade-name
previously used in the Philippines by another and not abandoned, as to be
likely, when applied to or used in connection with the goods, business or
services of the applicant, to cause confusion or mistake or to deceive
purchasers;
Essentially, the issue here is whether there is a confusing similarity between
the MCDONALD’S marks of the petitioner and the respondent’s "MACJOY &
DEVICE" trademark when applied to Classes 29 and 30 of the International
Classification of Goods, i.e., food and ingredients of food.
In determining similarity and likelihood of confusion, jurisprudence has
developed two tests, the dominancy test and the holistic test. 15 The
dominancy test focuses on the similarity of the prevalent features of the
competing trademarks that might cause confusion or deception. 16 In contrast,
the holistic test requires the court to consider the entirety of the marks as
applied to the products, including the labels and packaging, in determining
confusing similarity.17 Under the latter test, a comparison of the words is not
the only determinant factor.18 1awphi1.net
Here, the IPO used the dominancy test in concluding that there was
confusing similarity between the two (2) trademarks in question as it took
note of the appearance of the predominant features "M", "Mc" and/or "Mac"
in both the marks. In reversing the conclusion reached by the IPO, the CA,
while seemingly applying the dominancy test, in fact actually applied the
holistic test. The appellate court ruled in this wise:
Page 128 of 143
Applying the Dominancy test to the present case, the IPO should have taken
into consideration the entirety of the two marks instead of simply fixing its
gaze on the single letter "M" or on the combinations "Mc" or "Mac". A mere
cursory look of the subject marks will reveal that, save for the letters "M" and
"c", no other similarity exists in the subject marks.
We agree with the [respondent] that it is entirely unwarranted for the IPO to
consider the prefix "Mac" as the predominant feature and the rest of the
designs in [respondent’s] mark as details. Taking into account such
paramount factors as color, designs, spelling, sound, concept, sizes and
audio and visual effects, the prefix "Mc" will appear to be the only similarity in
the two completely different marks; and it is the prefix "Mc" that would thus
appear as the miniscule detail. When pitted against each other, the two
marks reflect a distinct and disparate visual impression that negates any
possible confusing similarity in the mind of the buying public. (Words in
brackets supplied.)
Petitioner now vigorously points out that the dominancy test should be the
one applied in this case.
We agree.
In trademark cases, particularly in ascertaining whether one trademark is
confusingly similar to another, no set rules can be deduced because each
case must be decided on its merits. 19 In such cases, even more than in any
other litigation, precedent must be studied in the light of the facts of the
particular case.20 That is the reason why in trademark cases, jurisprudential
precedents should be applied only to a case if they are specifically in point. 21
While we agree with the CA’s detailed enumeration of differences between
the two (2) competing trademarks herein involved, we believe that the holistic
test is not the one applicable in this case, the dominancy test being the one
more suitable. In recent cases with a similar factual milieu as here, the Court
has consistently used and applied the dominancy test in determining
confusing similarity or likelihood of confusion between competing
trademarks.22
Notably, in McDonalds Corp. v. LC Big Mak Burger, Inc., 23 a case where the
trademark "Big Mak" was found to be confusingly similar with the "Big Mac"
mark of the herein the petitioner, the Court explicitly held:
This Court, xxx, has relied on the dominancy test rather than the holistic test.
The dominancy test considers the dominant features in the competing marks
in determining whether they are confusingly similar. Under the dominancy
test, courts give greater weight to the similarity of the appearance of the
IPL- Assignment No. 6
product arising from the adoption of the dominant features of the registered
mark, disregarding minor differences. Courts will consider more the aural and
visual impressions created by the marks in the public mind, giving little weight
to factors like prices, quality, sales outlets and market segments.
Moreover, in Societe Des Produits Nestle, S.A. v. CA 24 the Court, applying
the dominancy test, concluded that the use by the respondent therein of the
word "MASTER" for its coffee product "FLAVOR MASTER" was likely to
cause confusion with therein petitioner’s coffee products’ "MASTER ROAST"
and "MASTER BLEND" and further ruled:
xxx, the totality or holistic test is contrary to the elementary postulate of the
law on trademarks and unfair competition that confusing similarity is to be
determined on the basis of visual, aural, connotative comparisons and overall
impressions engendered by the marks in controversy as they are
encountered in the marketplace. The totality or holistic test only relies on
visual comparisons between two trademarks whereas the dominancy test
relies not only on the visual but also on the aural and connotative
comparisons and overall impressions between the two trademarks.
Applying the dominancy test to the instant case, the Court finds that herein
petitioner’s "MCDONALD’S" and respondent’s "MACJOY" marks are
confusingly similar with each other such that an ordinary purchaser can
conclude an association or relation between the marks.
To begin with, both marks use the corporate "M" design logo and the prefixes
"Mc" and/or "Mac" as dominant features. The first letter "M" in both marks
puts emphasis on the prefixes "Mc" and/or "Mac" by the similar way in which
they are depicted i.e. in an arch-like, capitalized and stylized manner. 25
For sure, it is the prefix "Mc," an abbreviation of "Mac," which visually and
aurally catches the attention of the consuming public. Verily, the word
"MACJOY" attracts attention the same way as did "McDonalds," "MacFries,"
"McSpaghetti," "McDo," "Big Mac" and the rest of the MCDONALD’S marks
which all use the prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale of
fastfood products. Indisputably, the respondent’s trademark application for
the "MACJOY & DEVICE" trademark covers goods under Classes 29 and 30
of the International Classification of Goods, namely, fried chicken, chicken
barbeque, burgers, fries, spaghetti, etc. Likewise, the petitioner’s trademark
registration for the MCDONALD’S marks in the Philippines covers goods
which are similar if not identical to those covered by the respondent’s
application.
Page 129 of 143
Thus, we concur with the IPO’s findings that:
In the case at bar, the predominant features such as the "M," "Mc," and
"Mac" appearing in both McDonald’s marks and the MACJOY & DEVICE"
easily attract the attention of would-be customers. Even non-regular
customers of their fastfood restaurants would readily notice the
predominance of the "M" design, "Mc/Mac" prefixes shown in both marks.
Such that the common awareness or perception of customers that the
trademarks McDonalds mark and MACJOY & DEVICE are one and the
same, or an affiliate, or under the sponsorship of the other is not far-fetched.
The differences and variations in styles as the device depicting a head of
chicken with cap and bowtie and wings sprouting on both sides of the
chicken head, the heart-shaped "M," and the stylistic letters in "MACJOY &
DEVICE;" in contrast to the arch-like "M" and the one-styled gothic letters in
McDonald’s marks are of no moment. These minuscule variations are
overshadowed by the appearance of the predominant features mentioned
hereinabove.
Thus, with the predominance of the letter "M," and prefixes "Mac/Mc" found
in both marks, the inevitable conclusion is there is confusing similarity
between the trademarks Mc Donald’s marks and "MACJOY AND DEVICE"
especially considering the fact that both marks are being used on almost the
same products falling under Classes 29 and 30 of the International
Classification of Goods i.e. Food and ingredients of food.
With the existence of confusing similarity between the subject trademarks,
the resulting issue to be resolved is who, as between the parties, has the
rightful claim of ownership over the said marks.
We rule for the petitioner.
A mark is valid if it is distinctive and hence not barred from registration under
the Trademark Law. However, once registered, not only the mark’s validity
but also the registrant’s ownership thereof is prima facie presumed. 26
Pursuant to Section 3727 of R.A. No. 166, as amended, as well as the
provision regarding the protection of industrial property of foreign nationals in
this country as embodied in the Paris Convention 28 under which the
Philippines and the petitioner’s domicile, the United States, are adherent-
members, the petitioner was able to register its MCDONALD’S marks
successively, i.e., "McDonald’s" in 04 October, 1971 29 ; the corporate logo
which is the "M" or the golden arches design and the "McDonald’s" with the
"M" or golden arches design both in 30 June 1977 30 ; and so on and so
forth.31
IPL- Assignment No. 6
On the other hand, it is not disputed that the respondent’s application for
registration of its trademark "MACJOY & DEVICE" was filed only on March
14, 1991 albeit the date of first use in the Philippines was December 7,
1987.32
Hence, from the evidence on record, it is clear that the petitioner has duly
established its ownership of the mark/s.
Respondent’s contention that it was the first user of the mark in the
Philippines having used "MACJOY & DEVICE" on its restaurant business and
food products since December, 1987 at Cebu City while the first McDonald’s
outlet of the petitioner thereat was opened only in 1992, is downright
unmeritorious. For the requirement of "actual use in commerce x x x in the
Philippines" before one may register a trademark, trade-name and service
mark under the Trademark Law33 pertains to the territorial jurisdiction of the
Philippines and is not only confined to a certain region, province, city or
barangay.
Likewise wanting in merit is the respondent’s claim that the petitioner cannot
acquire ownership of the word "Mac" because it is a personal name which
may not be monopolized as a trademark as against others of the same name
or surname. As stated earlier, once a trademark has been registered, the
validity of the mark is prima facie presumed. In this case, the respondent
failed to overcome such presumption. We agree with the observations of the
petitioner regarding the respondent’s explanation that the word "MACJOY" is
based on the name of its president’s niece, Scarlett Yu Carcell. In the words
of the petitioner:
First of all, Respondent failed to present evidence to support the foregoing
claim which, at best, is a mere self-serving assertion. Secondly, it cannot be
denied that there is absolutely no connection between the name "Scarlett Yu
Carcel" and "MacJoy" to merit the coinage of the latter word. Even assuming
that the word "MacJoy" was chosen as a term of endearment, fondness and
affection for a certain Scarlett Yu Carcel, allegedly the niece of Respondent’s
president, as well as to supposedly bring good luck to Respondent’s
business, one cannot help but wonder why out of all the possible letters or
combinations of letters available to Respondent, its president had to choose
and adopt a mark with the prefix "Mac" as the dominant feature thereof. A
more plausible explanation perhaps is that the niece of Respondent’s
president was fond of the food products and services of the Respondent, but
that is beside the point." 34
By reason of the respondent’s implausible and insufficient explanation as to
how and why out of the many choices of words it could have used for its
trade-name and/or trademark, it chose the word "MACJOY," the only logical
Page 130 of 143
conclusion deducible therefrom is that the respondent would want to ride high
on the established reputation and goodwill of the MCDONALD’s marks,
which, as applied to petitioner’s restaurant business and food products, is
undoubtedly beyond question.

Thus, the IPO was correct in rejecting and denying the respondent’s
application for registration of the trademark "MACJOY & DEVICE." As this
Court ruled in Faberge Inc. v. IAC, 35 citing Chuanchow Soy & Canning Co. v.
Dir. of Patents and Villapanta:36

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

WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed

Decision and Resolution of the Court of Appeals in CA-G.R. SP NO. 57247,
are REVERSED and SET ASIDE and the Decision of the Intellectual
Property Office in Inter Partes Case No. 3861 is REINSTATED.

No pronouncement as to costs.

SO ORDERED.

IPL- Assignment No. 6 Page 131 of 143

[74] G.R. No. 143993. August 18, 2004. *
MCDONALD’S CORPORATION and MCGEORGE FOOD INDUSTRIES,
INC., petitioners, vs. L.C. BIG MAK BURGER, INC., FRANCIS B. DY,
EDNA A. DY, RENE B. DY, WILLIAM B. DY, JESUS AYCARDO, ARACELI
AYCARDO, and GRACE HUERTO, respondents.
Remedial Law; Appeals; A party intending to appeal from a judgment of the
Court of Appeals may file with the Supreme Court a petition for review under
Section 1 of Rule 45 raising only questions of law; Question of Law and Question of
Fact Distinguished.—A party intending to appeal from a judgment of the Court of
Appeals may file with this Court a petition for review under Section 1 of Rule 45
raising only questions of law. A question of law exists when the doubt or difference
arises on what the law is on a certain state of facts. There is a question of fact when
the doubt or difference arises on the truth or falsity of the alleged facts.
Trademarks and Trade Names; Infringement; Elements to Establish
Trademark Infringement.—To establish trademark infringement, the following
elements must be shown: (1) the validity of plaintiff’s mark; (2) the plaintiff’s
ownership of the mark; and (3) the use of the mark or its colorable imitation by the
alleged infringer results in “likelihood of confusion.” Of these, it is the element of
likelihood of confusion that is the gravamen of trademark infringement.
Same; Same; A mark is valid if it is “distinctive” and thus not barred from
registration under Section 4 of RA 166; Once registered, not only the mark’s validity
but also the registrant’s ownership of the mark is prima facie presumed.—A mark is
valid if it is “distinctive” and thus not barred from registration under Section 4 of RA
166. However, once registered, not only the mark’s validity but also the registrant’s
ownership of the mark is prima facie presumed.
Same; Same; A mark which is not registered in the Principal Register and
thus not distinctive has no real protection.—TheCourt also finds that petitioners have
duly established McDonald’s exclusive ownership of the “Big Mac” mark. Although
Topacio and the Isaiyas Group registered the “Big Mac” mark ahead of McDonald’s,
Topacio, as petitioners disclosed, had already assigned his rights to McDonald’s. The
Isaiyas Group, on the other hand, registered its trademark only in the Supplemental
Register. A mark which is not registered in the Principal Register, and thus not
distinctive, has no real protection. Indeed, we have held that registration in the
Supplemental Register is not even a prima facie evidence of the validity of the
registrant’s exclusive right to use the mark on the goods specified in the certificate.
Same; Same; Confusion of Goods and Confusion of Business Distinguished.
—Section 22 covers two types of confusion arising from the use of similar or
colorable imitation marks, namely, confusion of goods (product confusion) and
IPL- Assignment No. 6
confusion of business (source or origin confusion). In Sterling Products International,
Incorporated v. Farbenfabriken Bayer Aktiengesellschaft, et al., the Court
distinguished these two types of confusion, thus: [Rudolf] Callman notes two types
of confusion. The first is the confusion of goods “in which event the ordinarily
prudent purchaser would be induced to purchase one product in the belief that he was
purchasing the other.” x x x 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.”
Same; Same; Two Tests in Determining Likelihood of Confusion, the
Dominancy Test and the Holistic Test.—In determining likelihood of confusion,
jurisprudence has developed two tests, the dominancy test and the holistic test. The
dominancy test focuses on the similarity of the prevalent features of the competing
trademarks that might cause confusion. In contrast, the holistic test requires the court
to consider the entirety of the marks as applied to the products, including the labels
and packaging, in determining confusing similarity.
Same; Same; Court rejected the holistic test in Societe Des Produits Nestlé
S.A. vs. Court of Appeals.—In the 2001 case of Societe Des Produits Nestlé, S.A. v.
Court of Appeals, the Court explicitly rejected the holistic test in this wise: [T]he
totality or holistic test is contrary to the elementary postulate of the law on
trademarks and unfair competition that confusing similarity is to be determined on
the basis of visual, aural, connotative comparisons and overall impressions
engendered by the marks in controversy as they are encountered in the realities of the
marketplace.
Same; Same; While proof of actual confusion is the best evidence of
infringement its absence is inconsequential.— Petitioners’ failure to present proof of
actual confusion does not negate their claim of trademark infringement. As noted in
American Wire & Cable Co. v. Director of Patents, Section 22 requires the less
stringent standard of “likelihood of confusion” only. While proof of actual confusion
is the best evidence of infringement, its absence is inconsequential.
Same; Unfair Competition; Essential Elements of Unfair Competition.—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.
Page 132 of 143
 Same; Same; Trademark infringement is a form of unfair competition;
Trademark infringement constitutes unfair competition when there is not merely
likelihood of confusion but also actual or probable deception on the public because
of the general appearance of the goods.—Unfair competition is broader than
trademark infringement and includes passing off goods with or without trademark
infringement. Trademark infringement is a form of unfair competition.Trademark
infringement constitutes unfair competition when there is not merely likelihood of
confusion, but also actual or probable deception on the public because of the general
appearance of the goods. There can be trademark infringement without unfair
competition as when the infringer discloses on the labels containing the mark that he
manufactures the goods, thus preventing the public from being deceived that the
goods originate from the trademark owner.
Same; Same; 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.—Passing off (or palming off) takes place where the
defendant, by imitative devices on the general appearance of the goods, misleads
prospective purchasers into buying his merchandise under the impression that they
are buying that of his competitors.Thus, the defendant gives his goods the general
appearance of the goods of his competitor with the intention of deceiving the public
that the goods are those of his competitor.
DECISION
CARPIO, J.:
The Case
This is a petition for review 1 of the Decision dated 26 November 1999 of the
Court of Appeals2 finding respondent L.C. Big Mak Burger, Inc. not liable for
trademark infringement and unfair competition and ordering petitioners to pay
respondents P1,900,000 in damages, and of its Resolution dated 11 July
2000 denying reconsideration. The Court of Appeals' Decision reversed the 5
September 1994 Decision3 of the Regional Trial Court of Makati, Branch 137,
finding respondent L.C. Big Mak Burger, Inc. liable for trademark
infringement and unfair competition.
The Facts
Petitioner McDonald's Corporation ("McDonald's") is a corporation organized
under the laws of Delaware, United States. McDonald's operates, by itself or
through its franchisees, a global chain of fast-food restaurants.
McDonald's4 owns a family of marks5 including the "Big Mac" mark for its
"double-decker hamburger sandwich."6McDonald's registered this trademark
IPL- Assignment No. 6
with the United States Trademark Registry on 16 October 1979. 7 Based on
this Home Registration, McDonald's applied for the registration of the same
mark in the Principal Register of the then Philippine Bureau of Patents,
Trademarks and Technology ("PBPTT"), now the Intellectual Property Office
("IPO"). Pending approval of its application, McDonald's introduced its "Big
Mac" hamburger sandwiches in the Philippine market in September 1981. On
18 July 1985, the PBPTT allowed registration of the "Big Mac" mark in
the Principal Register based on its Home Registration in the United States.
Like its other marks, McDonald's displays the "Big Mac" mark in items 8 and
paraphernalia9 in its restaurants, and in its outdoor and indoor signages.
From 1982 to 1990, McDonald's spent P10.5 million in advertisement for "Big
Mac" hamburger sandwiches alone.10
Petitioner McGeorge Food Industries ("petitioner McGeorge"), a domestic
corporation, is McDonald's Philippine franchisee.11
Respondent L.C. Big Mak Burger, Inc. ("respondent corporation") is a
domestic corporation which operates fast-food outlets and snack vans in
Metro Manila and nearby provinces.12 Respondent corporation's menu
includes hamburger sandwiches and other food items. 13 Respondents Francis
B. Dy, Edna A. Dy, Rene B. Dy, William B. Dy, Jesus Aycardo, Araceli
Aycardo, and Grace Huerto ("private respondents") are the incorporators,
stockholders and directors of respondent corporation. 14
On 21 October 1988, respondent corporation applied with the PBPTT
for the registration of the "Big Mak" mark for its hamburger sandwiches.
McDonald's opposed respondent corporation's application on the ground that
"Big Mak" was a colorable imitation of its registered "Big Mac" mark for the
same food products. McDonald's also informed respondent Francis Dy
("respondent Dy"), the chairman of the Board of Directors of respondent
corporation, of its exclusive right to the "Big Mac" mark and requested him
to desist from using the "Big Mac" mark or any similar mark.
Having received no reply from respondent Dy, petitioners on 6 June 1990
sued respondents in the Regional Trial Court of Makati, Branch 137 ("RTC"),
for trademark infringement and unfair competition. In its Order of 11 July
1990, the RTC issued a temporary restraining order ("TRO") against
respondents enjoining them from using the "Big Mak" mark in the operation
of their business in the National Capital Region. 15 On 16 August 1990, the
RTC issued a writ of preliminary injunction replacing the TRO. 16
In their Answer, respondents admitted that they have been using the name
"Big Mak Burger" for their fast-food business. Respondents claimed,
however, that McDonald's does not have an exclusive right to the "Big Mac"
Page 133 of 143
mark or to any other similar mark. Respondents point out that the Isaiyas
Group of Corporations ("Isaiyas Group") registered the same mark for
hamburger sandwiches with the PBPTT on 31 March 1979. One Rodolfo
Topacio ("Topacio") similarly registered the same mark on 24 June
1983, prior to McDonald's registration on 18 July 1985. Alternatively,
respondents claimed that they are not liable for trademark infringement or for
unfair competition, as the "Big Mak" mark they sought to register does not
constitute a colorable imitation of the "Big Mac" mark. Respondents asserted
that they did not fraudulently pass off their hamburger sandwiches as those
of petitioners' Big Mac hamburgers.17 Respondents sought damages in their
counterclaim.
In their Reply, petitioners denied respondents' claim that McDonald's is not
the exclusive owner of the "Big Mac" mark. Petitioners asserted that while the
Isaiyas Group and Topacio did register the "Big Mac" mark ahead of
McDonald's, the Isaiyas Group did so only in the Supplemental Register of
the PBPTT and such registration does not provide any protection.
McDonald's disclosed that it had acquired Topacio's rights to his registration
in a Deed of Assignment dated 18 May 1981.18
The Trial Court's Ruling
On 5 September 1994, the RTC rendered judgment ("RTC Decision") finding
respondent corporation liable for trademark infringement and unfair
competition. However, the RTC dismissed the complaint against private
respondents and the counterclaim against petitioners for lack of merit and
insufficiency of evidence. The RTC held:
Undeniably, the mark "B[ig] M[ac]" is a registered trademark for plaintiff
McDonald's, and as such, it is entitled [to] protection against infringement.
There exist some distinctions between the names "B[ig] M[ac]" and "B[ig]
M[ak]" as appearing in the respective signages, wrappers and containers of
the food products of the parties. But infringement goes beyond the physical
features of the questioned name and the original name. There are still other
factors to be considered.
Significantly, the contending parties are both in the business of fast-food
chains and restaurants. An average person who is hungry and wants to eat a
hamburger sandwich may not be discriminating enough to look for a
McDonald's restaurant and buy a "B[ig] M[ac]" hamburger. Once he sees a
stall selling hamburger sandwich, in all likelihood, he will dip into his pocket
and order a "B[ig] M[ak]" hamburger sandwich. Plaintiff McDonald's fast-food
chain has attained wide popularity and acceptance by the consuming public
so much so that its air-conditioned food outlets and restaurants will perhaps
IPL- Assignment No. 6
not be mistaken by many to be the same as defendant corporation's mobile
snack vans located along busy streets or highways. But the thing is that what
is being sold by both contending parties is a food item – a hamburger
sandwich which is for immediate consumption, so that a buyer may easily be
confused or deceived into thinking that the "B[ig] M[ak]" hamburger sandwich
he bought is a food-product of plaintiff McDonald's, or a subsidiary or allied
outlet thereof. Surely, defendant corporation has its own secret ingredients to
make its hamburger sandwiches as palatable and as tasty as the other
brands in the market, considering the keen competition among mushrooming
hamburger stands and multinational fast-food chains and restaurants. Hence,
the trademark "B[ig] M[ac]" has been infringed by defendant corporation
when it used the name "B[ig] M[ak]" in its signages, wrappers, and
containers in connection with its food business. xxxx
Did the same acts of defendants in using the name "B[ig] M[ak]" as a
trademark or tradename in their signages, or in causing the name "B[ig]
M[ak]" to be printed on the wrappers and containers of their food products
also constitute an act of unfair competition under Section 29 of the
Trademark Law?
The answer is in the affirmative.
The xxx provision of the law concerning unfair competition is broader and
more inclusive than the law concerning the infringement of trademark, which
is of more limited range, but within its narrower range recognizes a more
exclusive right derived by the adoption and registration of the trademark by
the person whose goods or services are first associated therewith.
xxx Notwithstanding the distinction between an action for trademark
infringement and an action for unfair competition, however, the law extends
substantially the same relief to the injured party for both cases. (See Sections
23 and 29 of Republic Act No. 166)
Any conduct may be said to constitute unfair competition if the effect is to
pass off on the public the goods of one man as the goods of another. The
choice of "B[ig] M[ak]" as tradename by defendant corporation is not merely
for sentimental reasons but was clearly made to take advantage of the
reputation, popularity and the established goodwill of plaintiff McDonald's.
For, as stated in Section 29, a person is guilty of unfair competition who in
selling his goods shall give them the general appearance, of goods of
another manufacturer or dealer, either as to the goods themselves or in the
wrapping of the packages in which they are contained, or the devices or
words thereon, or in any other feature of their appearance, which would likely
influence purchasers to believe that the goods offered are those of a
manufacturer or dealer other than the actual manufacturer or dealer. Thus,
plaintiffs have established their valid cause of action against the defendants
for trademark infringement and unfair competition and for damages. 19
Page 134 of 143
The dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is rendered in favor of plaintiffs McDonald's
Corporation and McGeorge Food Industries, Inc. and against defendant L.C.
Big Mak Burger, Inc., as follows:
1. The writ of preliminary injunction issued in this case on [16 August 1990] is
made permanent;
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay
plaintiffs actual damages in the amount ofP400,000.00, exemplary damages
in the amount of P100,000.00, and attorney's fees and expenses of litigation
in the amount of P100,000.00;
3. The complaint against defendants Francis B. Dy, Edna A. Dy, Rene B. Dy,
Wiliam B. Dy, Jesus Aycardo, Araceli Aycardo and Grace Huerto, as well
as all counter-claims, are dismissed for lack of merit as well as for
insufficiency of evidence.20
Respondents appealed to the Court of Appeals.
The Ruling of the Court of Appeals
On 26 November 1999, the Court of Appeals rendered judgment ("Court of
Appeals' Decision") reversing the RTC Decision and ordering McDonald's to
pay respondents P1,600,000 as actual and compensatory damages and
P300,000 as moral damages. The Court of Appeals held:
Plaintiffs-appellees in the instant case would like to impress on this Court
that the use of defendants-appellants of its corporate name – the whole "L.C.
B[ig] M[ak] B[urger], I[nc]." which appears on their food packages, signages
and advertisements is an infringement of their trademark "B[ig] M[ac]" which
they use to identify [their] double decker sandwich, sold in a Styrofoam box
packaging material with the McDonald's logo of umbrella "M" stamped
thereon, together with the printed mark in red bl[o]ck capital letters, the words
being separated by a single space. Specifically, plaintiffs-appellees argue
that defendants-appellants' use of their corporate name is a colorable
imitation of their trademark "Big Mac".
To Our mind, however, this Court is fully convinced that no colorable imitation
exists. As the definition dictates, it is not sufficient that a similarity exists
in both names, but that more importantly, the over-all presentation, or in their
essential, substantive and distinctive parts is such as would likely MISLEAD
or CONFUSE persons in the ordinary course of purchasing the genuine
article. A careful comparison of the way the trademark "B[ig] M[ac]" is being
IPL- Assignment No. 6
used by plaintiffs-appellees and corporate name L.C. Big Mak Burger, Inc. by
defendants-appellants, would readily reveal that no confusion could take
place, or that the ordinary purchasers would be misled by it. As pointed out
by defendants-appellants, the plaintiffs-appellees' trademark is used to
designate only one product, a double decker sandwich sold in a Styrofoam
box with the "McDonalds" logo. On the other hand, what the defendants-
appellants corporation is using is not a trademark for its food product but a
business or corporate name. They use the business name "L.C. Big Mak
Burger, Inc." in their restaurant business which serves diversified food items
such as siopao, noodles, pizza, and sandwiches such as hotdog, ham, fish
burger and hamburger. Secondly, defendants-appellants' corporate or
business name appearing in the food packages and signages are written in
silhouette red-orange letters with the "b" and "m" in upper case letters. Above
the words "Big Mak" are the upper case letter "L.C.". Below the words "Big
Mak" are the words "Burger, Inc." spelled out in upper case
letters. Furthermore, said corporate or business name appearing in such food
packages and signages is always accompanied by the company mascot, a
young chubby boy named Maky who wears a red T-shirt with the upper case
"m" appearing thereinand a blue lower garment. Finally, the defendants-
appellants' food packages are made of plastic material.
[I]t is readily apparent to the naked eye that there appears a vast difference
in the appearance of the product and the manner that the tradename "Big
Mak" is being used and presented to the public. As earlier noted, there are
glaring dissimilarities between plaintiffs-appellees' trademark and
defendants-appellants' corporate name. Plaintiffs-appellees' product carrying
the trademark "B[ig] M[ac]" is a double decker sandwich (depicted in the tray
mat containing photographs of the various food products xxx sold in a
Styrofoam box with the "McDonald's" logo and trademark in red, bl[o]ck
capital letters printed thereon xxx at a price which is more expensive than the
defendants-appellants' comparable food products. In order to buy a "Big
Mac", a customer needs to visit an air-conditioned "McDonald's" restaurant
usually located in a nearby commercial center, advertised and identified by
its logo - the umbrella "M", and its mascot – "Ronald McDonald". A typical
McDonald's restaurant boasts of a playground for kids, a second floor to
accommodate additional customers, a drive-thru to allow customers with cars
to make orders without alighting from their vehicles, the interiors of the
building are well-lighted, distinctly decorated and painted with pastel colors
xxx. In buying a "B[ig] M[ac]", it is necessary to specify it by its
trademark. Thus, a customer needs to look for a "McDonald's" and enter it
first before he can find a hamburger sandwich which carry the mark "Big
Mac". On the other hand,defendants-appellants sell their goods through
snack vans xxxx
Anent the allegation that defendants-appellants are guilty of unfair
competition, We likewise find the same untenable.
Page 135 of 143
Unfair competition is defined as "the employment of deception or any other
means contrary to good faith by which a person shall pass off the goods
manufactured by him or in which he deals, or his business, or service, for
those of another who has already established good will for his similar good,
business or services, or any acts calculated to produce the same result"
(Sec. 29, Rep. Act No. 166, as amended).
To constitute unfair competition therefore it must necessarily follow that there
was malice and that the entity concerned was in bad faith.
In the case at bar, We find no sufficient evidence adduced by plaintiffs-
appellees that defendants-appellants deliberately tried to pass off the goods
manufactured by them for those of plaintiffs-appellees. The mere suspected
similarity in the sound of the defendants-appellants' corporate name with the
plaintiffs-appellees' trademark is not sufficient evidence to conclude unfair
competition. Defendants-appellants explained that the name "M[ak]" in their
corporate name was derived from both the first names of the mother and
father of defendant Francis Dy, whose names are Maxima and Kimsoy. With
this explanation, it is up to the plaintiffs-appellees to prove bad faith on the
part of defendants-appellants. It is a settled rule that the law always
presumes good faith such that any person who seeks to be awarded
damages due to acts of another has the burden of proving
that the latter acted in bad faith or with ill motive. 21
Petitioners sought reconsideration of the Court of Appeals' Decision but the
appellate court denied their motion in its Resolution of 11 July 2000.
Hence, this petition for review.
Petitioners raise the following grounds for their petition:
I. THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENTS'
CORPORATE NAME "L.C. BIG MAK BURGER, INC." IS NOT A
COLORABLE IMITATION OF THE MCDONALD'S TRADEMARK "BIG
MAC", SUCH COLORABLE IMITATION BEING AN ELEMENT
OF TRADEMARK INFRINGEMENT.
A. Respondents use the words "Big Mak" as trademark for their products and
not merely as their business or corporate name.
B. As a trademark, respondents' "Big Mak" is undeniably and unquestionably
similar to petitioners' "Big Mac" trademark based on the dominancy test and
the idem sonans test resulting inexorably in confusion on the part of the
consuming public.
IPL- Assignment No. 6
II. THE COURT OF APPEALS ERRED IN REFUSING TO CONSIDER THE
INHERENT SIMILARITY BETWEEN THE MARK "BIG MAK" AND THE
WORD MARK "BIG MAC" AS AN INDICATION OF RESPONDENTS'
INTENT TO DECEIVE OR DEFRAUD FOR PURPOSES OF
ESTABLISHING UNFAIR COMPETITION.22
Petitioners pray that we set aside the Court of Appeals' Decision and
reinstate the RTC Decision.
In their Comment to the petition, respondents question the propriety of this
petition as it allegedly raises only questions of fact. On the merits,
respondents contend that the Court of Appeals committed no reversible error
in finding them not liable for trademark infringement and unfair competition
and in ordering petitioners to pay damages.
The Issues
The issues are:
1. Procedurally, whether the questions raised in this petition are proper for a
petition for review under Rule 45.
2. On the merits, (a) whether respondents used the words "Big Mak" not only
as part of the corporate name "L.C. Big Mak Burger, Inc." but also as a
trademark for their hamburger products, and (b) whether respondent
corporation is liable for trademark infringement and unfair competition. 23
The Court's Ruling
The petition has merit.
On Whether the Questions Raised in the Petition are Proper for a
Petition for Review
A party intending to appeal from a judgment of the Court of Appeals may file
with this Court a petition for review under Section 1 of Rule 45 ("Section
1")24 raising only questions of law. A question of law exists when the doubt or
difference arises on what the law is on a certain state of facts. There is a
question of fact when the doubt or difference arises on the truth or falsity of
the alleged facts. 25
Here, petitioners raise questions of fact and law in assailing the Court of
Appeals' findings on respondent corporation's non-liability for trademark
infringement and unfair competition. Ordinarily, the Court can deny due
Page 136 of 143
course to such a petition. In view, however, of the contradictory findings of
fact of the RTC and Court of Appeals, the Court opts to accept the petition,
this being one of the recognized exceptions to Section 1. 26 We took a similar
course of action in Asia Brewery, Inc. v. Court of Appeals 27 which also
involved a suit for trademark infringement and unfair competition in which the
trial court and the Court of Appeals arrived at conflicting findings.
On the Manner Respondents Used  "Big Mak" in their Business
Petitioners contend that the Court of Appeals erred in ruling that the
corporate name "L.C. Big Mak Burger, Inc." appears in the packaging for
respondents' hamburger products and not the words "Big Mak" only.
The contention has merit.
The evidence presented during the hearings on petitioners' motion for the
issuance of a writ of preliminary injunction shows that the plastic wrappings
and plastic bags used by respondents for their hamburger sandwiches bore
the words "Big Mak." The other descriptive words "burger" and "100% pure
beef" were set in smaller type, along with the locations of
branches.28 Respondents' cash invoices simply refer to their hamburger
sandwiches as "Big Mak."29It is respondents' snack vans that carry the words
"L.C. Big Mak Burger, Inc."30
It was only during the trial that respondents presented in evidence the plastic
wrappers and bags for their hamburger sandwiches relied on by the Court of
Appeals.31 Respondents' plastic wrappers and bags were identical with those
petitioners presented during the hearings for the injunctive writ except that
the letters "L.C." and the words "Burger, Inc." in respondents' evidence were
added above and below the words "Big Mak," respectively. Since petitioners'
complaint was based on facts existing before and during the hearings on the
injunctive writ, the facts established during those hearings are the proper
factual bases for the disposition of the issues raised in this petition.
On the Issue of Trademark Infringement
Section 22 ("Section 22) of Republic Act No. 166, as amended ("RA 166"),
the law applicable to this case,32 defines trademark infringement as follows:
Infringement, what constitutes. — Any person who [1] shall use, without the
consent of the registrant, anyreproduction, counterfeit, copy or colorable
imitation of any registered mark or trade-name in connection withthe sale,
offering for sale, or advertising of any goods, business or services on or in
connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or
IPL- Assignment No. 6
services, or identity of such business; or [2] reproduce, counterfeit, copy, or
colorably imitate any such mark or trade-name and apply such reproduction,
counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in
connection with such goods, business or services, shall be liable to a civil
action by the registrant for any or all of the remedies herein provided.33
Petitioners base their cause of action under the first part of Section
22, i.e. respondents allegedly used, without petitioners' consent, a colorable
imitation of the "Big Mac" mark in advertising and selling respondents'
hamburger sandwiches. This likely caused confusion in the mind of the
purchasing public on the source of the hamburgers or the identity of the
business.
To establish trademark infringement, the following elements must be shown:
(1) the validity of plaintiff's mark; (2) the plaintiff's ownership of the mark; and
(3) the use of the mark or its colorable imitation by the alleged infringer
results in "likelihood of confusion."34 Of these, it is the element of likelihood of
confusion that is the gravamen of trademark infringement. 35
On the Validity of the "Big Mac"Mark  and McDonald's Ownership of
such Mark
A mark is valid if it is "distinctive" and thus not barred from registration under
Section 436 of RA 166 ("Section 4"). However, once registered, not only the
mark's validity but also the registrant's ownership of the mark is prima facie
presumed.37
Respondents contend that of the two words in the "Big Mac" mark, it is only
the word "Mac" that is valid because the word "Big" is generic and descriptive
(proscribed under Section 4[e]), and thus "incapable of exclusive
appropriation."38
The contention has no merit. The "Big Mac" mark, which should be treated in
its entirety and not dissected word for word, 39 is neither generic nor
descriptive. Generic marks are commonly used as the name or description of
a kind  ofgoods,40 such as "Lite" for beer 41 or "Chocolate Fudge" for chocolate
soda drink.42 Descriptive marks, on the other hand, convey the
characteristics, functions, qualities or ingredients of a product to one who has
never seen it or does not know it exists, 43 such as "Arthriticare" for arthritis
medication.44 On the contrary, "Big Mac" falls under theclass  of fanciful or
arbitrary marks as it bears no logical relation to the actual characteristics of
the product it represents.45 As such, it is highly distinctive and thus valid.
Significantly, the trademark "Little Debbie" for snack cakes was found
arbitrary or fanciful.46
Page 137 of 143
The Court also finds that petitioners have duly established McDonald's
exclusive ownership of the "Big Mac" mark. Although Topacio and the Isaiyas
Group registered the "Big Mac" mark ahead of McDonald's, Topacio, as
petitioners disclosed, had already assigned his rights to McDonald's. The
Isaiyas Group, on the other hand, registered its trademark only in the
Supplemental Register. A mark which is not registered in
the Principal Register, and thus not distinctive, has no real
protection.47 Indeed, we have held that registration in the Supplemental
Register is not even a prima facie evidence of the validity of the registrant's
exclusive right to use the mark on the goods specified in the certificate. 48
On Types of Confusion
Section 22 covers two types of confusion arising from the use of similar or
colorable imitation marks, namely, confusion of goods (product confusion)
and confusion of business (source or origin confusion). In Sterling Products
International, Incorporated v. Farbenfabriken Bayer Aktiengesellschaft, et
al.,49 the Court distinguished these two types of confusion, thus:
[Rudolf] Callman notes two types of confusion. The first is the confusion of
goods "in which event the ordinarily prudent purchaser would be induced to
purchase one product in the belief that he was purchasing the other." xxx
The other is the confusion of business: "Here though the goods of the parties
are different, the defendant's product is such as might reasonably be
assumed to originate with the plaintiff, and the public would then be deceived
either into that belief or into the belief that there is some connection between
the plaintiff and defendant which, in fact, does not exist."
Under Act No. 666,50 the first trademark law, infringement was limited to
confusion of goods only, when the infringing mark is used on "goods of a
similar kind."51 Thus, no relief was afforded to the party whose registered
mark or its colorable imitation is used on different although related goods. To
remedy this situation, Congress enacted RA 166 on 20 June 1947. In
defining trademark infringement, Section 22 of RA 166 deleted the
requirement in question and expanded its scope to include such use of the
mark or its colorable imitation that is likely to result in confusion on "the
source or origin of such goods or services, or identity of such
business."52 Thus, while there is confusion of goods when the products are
competing, confusion of business exists when the products are non-
competing but related enough to produce confusion of affiliation. 53
On Whether Confusion of Goods and  Confusion of Business are
Applicable
IPL- Assignment No. 6
Petitioners claim that respondents' use of the "Big Mak" mark on
respondents' hamburgers results in confusion of goods, particularly with
respect to petitioners' hamburgers labeled "Big Mac." Thus,
petitioners alleged in their complaint:
1.15. Defendants have unduly prejudiced and clearly infringed upon the
property rights of plaintiffs in the McDonald's Marks, particularly the mark
"B[ig] M[ac]". Defendants' unauthorized acts are likely, and calculated, to
confuse, mislead or deceive the public into believing that the products and
services offered by defendant Big Mak Burger, and the business it is
engaged in, are approved and sponsored by, or affiliated with,
plaintiffs.54 (Emphasis supplied)
Since respondents used the "Big Mak" mark on the same
goods, i.e. hamburger sandwiches, that petitioners' "Big Mac" mark is used,
trademark infringement through confusion of goods is a proper issue in this
case.
Petitioners also claim that respondents' use of the "Big Mak" mark in the sale
of hamburgers, the same business that petitioners are engaged in, results in
confusion of business. Petitioners alleged in their complaint:
1.10. For some period of time, and without the consent of plaintiff McDonald's
nor its licensee/franchisee, plaintiff McGeorge, and in clear violation of
plaintiffs' exclusive right to use and/or appropriate the McDonald's marks,
defendant Big Mak Burger acting through individual defendants, has been
operating "Big Mak Burger", a fast food restaurant business dealing in the
sale of hamburger and cheeseburger sandwiches, french fries and other food
products, and has caused to be printed on the wrapper of defendant's food
products and incorporated in its signages the name "Big Mak Burger", which
is confusingly similar to and/or is a colorable imitation of the plaintiff
McDonald's mark "B[ig] M[ac]", xxx. Defendant Big Mak Burger has thus
unjustly created the impression that its business is approved and
sponsored by, or affiliated with, plaintiffs .xxxx
2.2 As a consequence of the acts committed by defendants, which unduly
prejudice and infringe upon the property rights of plaintiffs McDonald's and
McGeorge as the real owner and rightful proprietor, and the
licensee/franchisee, respectively, of the McDonald's marks, and which are
likely to have caused confusion or deceived the public  as to the true
source, sponsorship or affiliation of defendants' food products and
restaurant business, plaintiffs have suffered and continue to
suffer actual damages in the form of injury to their business reputation and
goodwill, and of the dilution of the distinctive quality of the McDonald's
marks, in particular, the mark "B[ig] M[ac]".55 (Emphasis supplied)
Page 138 of 143
Respondents admit that their business includes selling hamburger
sandwiches, the same food product that petitioners sell using the "Big Mac"
mark. Thus, trademark infringement through confusion of business is also a
proper issue in this case.
Respondents assert that their "Big Mak" hamburgers cater mainly to the low-
income group while petitioners' "Big Mac" hamburgers cater to the middle
and upper income groups. Even if this is true, the likelihood of confusion of
business remains, since the low-income group might be led to believe that
the "Big Mak" hamburgers are the low-end hamburgers marketed by
petitioners. After all, petitioners have the exclusive right to use the "Big Mac"
mark. On the other hand, respondents would benefit by associating their low-
end hamburgers, through the use of the "Big Mak" mark, with petitioners'
high-end "Big Mac" hamburgers, leading to likelihood of confusion in the
identity of business.
Respondents further claim that petitioners use the "Big Mac" mark only on
petitioners' double-decker hamburgers, while respondents use the "Big Mak"
mark on hamburgers and other products like siopao, noodles and pizza.
Respondents also point out that petitioners sell their Big Mac double-deckers
in a styrofoam box with the "McDonald's" logo and trademark in red, block
letters at a price more expensive than the hamburgers of respondents. In
contrast, respondents sell their Big Mak hamburgers in plastic wrappers and
plastic bags. Respondents further point out that petitioners' restaurants are
air-conditioned buildings with drive-thru service, compared to respondents'
mobile vans.
These and other factors respondents cite cannot negate the undisputed fact
that respondents use their "Big Mak" mark on hamburgers, the same food
product that petitioners' sell with the use of their registered mark "Big Mac."
Whether a hamburger is single, double or triple-decker, and whether
wrapped in plastic or styrofoam, it remains the same hamburger food
product. Even respondents' use of the "Big Mak" mark on non-hamburger
food products cannot excuse their infringement of petitioners' registered
mark, otherwise registered marks will lose their protection under the law.
The registered trademark owner may use his mark on the same or similar
products, in different segments of the market, and at different price levels
depending on variations of the products for specific segments of the market.
The Court has recognized that the registered trademark owner enjoys
protection in product and market areas that are the normal potential
expansion of his business. Thus, the Court has declared:
Modern law recognizes that the protection to which the owner of a trademark
is entitled is not limited to guarding his goods or business from actual market
IPL- Assignment No. 6
competition with identical or similar products of the parties, but extends to all
cases in which the use by a junior appropriator of a trade-mark or trade-name
is likely to lead to a confusion of source, as where prospective purchasers
would be misled into thinking that the complaining party has extended his
business into the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or is
in any way connected with the activities of the infringer; or when it forestalls
the normal potential expansion of his business (v. 148 ALR, 77, 84; 52 Am.
Jur. 576, 577).56 (Emphasis supplied)
On Whether Respondents' Use of the "Big Mak"  Mark Results in
Likelihood of Confusion
In determining likelihood of confusion, jurisprudence has developed two
tests, the dominancy test and the holistic test. 57 The dominancy test focuses
on the similarity of the prevalent features of the competing trademarks that
might cause confusion. In contrast, the holistic test requires the court to
consider the entirety of the marks as applied to the products, including the
labels and packaging, in determining confusing similarity.
The Court of Appeals, in finding that there is no likelihood of confusion that
could arise in the use of respondents' "Big Mak" mark on hamburgers, relied
on the holistic test. Thus, the Court of Appeals ruled that "it is
not sufficientthat a similarity exists in both name(s), but that more
importantly, the overall presentation, or in their essential, substantive and
distinctive parts is such as would likely MISLEAD or CONFUSE persons in
the ordinary course of purchasing the genuine article." The holistic test
considers the two marks in their entirety, as they appear on the goods with
their labels and packaging. It is not enough to consider their words and
compare the spelling and pronunciation of the words.58
Respondents now vigorously argue that the Court of Appeals' application of
the holistic test to this case is correct and in accord with prevailing
jurisprudence.
This Court, however, has relied on the dominancy test rather than the holistic
test. The dominancy test considers the dominant features in the competing
marks in determining whether they are confusingly similar. Under the
dominancy test, courts give greater weight to the similarity of the appearance
of the product arising from the adoption of the dominant features of the
registered mark, disregarding minor differences.59 Courts will consider more
the aural and visual impressions created by the marks in the public mind,
giving little weight to factors like prices, quality, sales outlets and market
segments.
Page 139 of 143
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,60 the Court
ruled:
xxx It has been consistently held that the question of infringement of a
trademark is to be determined by the test of dominancy. Similarity in size,
form and color, while relevant, is not conclusive. If the competing
trademark contains the main or essential or dominant features of
another, and confusion and deception is likely to result, infringement
takes place. Duplication or imitation is not necessary; nor is it necessary that
the infringing label should suggest an effort to imitate. (G. Heilman Brewing
Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead
Co. vs. Pflugh (CC) 180 Fed. 579). The question at issue in cases
of infringement of trademarks is whether the use of the marks involved would
be likely to cause confusion or mistakes in the mind of the public or deceive
purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d
588; xxx) (Emphasis supplied.)
The Court reiterated the dominancy test in Lim Hoa v. Director of
Patents,61 Phil. Nut Industry, Inc. v. Standard Brands Inc.,62 Converse
Rubber Corporation v. Universal Rubber Products, Inc.,63 and Asia
Brewery, Inc. v. Court of Appeals.64 In the 2001 case of Societe Des
Produits Nestlé, S.A. v. Court of Appeals,65 the Court explicitly rejected the
holistic test in this wise:
[T]he totality or holistic test is contrary to the elementary postulate of
the law on trademarks and unfair competition that confusing similarity is
to be determined on the basis of visual, aural, connotative comparisons
and overall impressions engendered by the marks in controversy as they
are encountered in the realities of the marketplace. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into law in Section 155.1
of the Intellectual Property Code which defines infringement as the "colorable
imitation of a registered mark xxx or a dominant feature thereof."
Applying the dominancy test, the Court finds that respondents' use of the "Big
Mak" mark results in likelihood of confusion. First, "Big Mak"
sounds exactly the same as "Big Mac." Second, the first word in "Big Mak"
is exactly the same as the first word in "Big Mac." Third, the first two letters in
"Mak" are the same as the first two letters in "Mac." Fourth, the last letter in
"Mak" while a "k" sounds the same as "c" when the word "Mak" is
pronounced. Fifth, in Filipino, the letter "k" replaces "c" in spelling, thus
"Caloocan" is spelled "Kalookan."
In short, aurally the two marks are the same, with the first word of both marks
phonetically the same, and the second word of both marks also phonetically
IPL- Assignment No. 6
the same. Visually, the two marks have both two words and six letters, with
the first word of both marks having the same letters and the second word
having the same first two letters. In spelling, considering the Filipino
language, even the last letters of both marks are the same.
Clearly, respondents have adopted in "Big Mak" not only the dominant
but also almost all the features of "Big Mac." Applied to the same food
product of hamburgers, the two marks will likely result in confusion in the
public mind.
The Court has taken into account the aural effects of the words and
letters contained in the marks in determining the issue of confusing
similarity. Thus, in Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et
al.,66 the Court held:
The following random list of confusingly similar sounds in the matter of
trademarks, culled from Nims, Unfair Competition and Trade Marks, 1947,
Vol. 1, will reinforce our view that "SALONPAS" and "LIONPAS" are
confusingly similar in sound: "Gold Dust" and "Gold Drop"; "Jantzen" and
"Jass-Sea"; "Silver Flash" and "Supper Flash"; "Cascarete" and "Celborite";
"Celluloid" and "Cellonite"; "Chartreuse" and "Charseurs"; "Cutex" and
"Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and "Hoo
Hoo". Leon Amdur, in his book "Trade-Mark Law and Practice", pp. 419-421,
cities, as coming within the purview of the idem sonans rule, "Yusea" and "U-
C-A", "Steinway Pianos" and "Steinberg Pianos", and "Seven-Up" and
"Lemon-Up". In Co Tiong vs. Director of Patents, this Court unequivocally
said that "Celdura" and "Cordura" are confusingly similar in sound; this Court
held in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the name "Lusolin" is an
infringement of the trademark "Sapolin", as the sound of the two names is
almost the same. (Emphasis supplied)
Certainly, "Big Mac" and "Big Mak" for hamburgers create even greater
confusion, not only aurally but also visually.
Indeed, a person cannot distinguish "Big Mac" from "Big Mak" by their sound.
When one hears a "Big Mac" or "Big Mak" hamburger advertisement over the
radio, one would not know whether the "Mac" or "Mak" ends with a "c" or a
"k."
Petitioners' aggressive promotion of the "Big Mac" mark, as borne by their
advertisement expenses, has built goodwill and reputation for such mark
making it one of the easily recognizable marks in the market today.
This increases the likelihood that consumers will mistakenly associate
petitioners' hamburgers and business with those of respondents'.
Page 140 of 143
Respondents' inability to explain sufficiently how and why they came to
choose "Big Mak" for their hamburger sandwiches indicates their intent to
imitate petitioners' "Big Mac" mark. Contrary to the Court of Appeals' finding,
respondents' claim that their "Big Mak" mark was inspired by the first names
of respondent Dy's mother (Maxima) and father (Kimsoy) is not credible. As
petitioners well noted:
[R]espondents, particularly Respondent Mr. Francis Dy, could have arrived at
a more creative choice for a corporate name by using the names of his
parents, especially since he was allegedly driven by sentimental reasons. For
one, he could have put his father's name ahead of his mother's, as is usually
done in this patriarchal society, and derived letters from said names in that
order. Or, he could have taken an equal number of letters (i.e., two) from
each name, as is the more usual thing done. Surely, the more plausible
reason behind Respondents' choice of the word "M[ak]", especially when
taken in conjunction with the word "B[ig]", was their intent to take advantage
of Petitioners' xxx "B[ig] M[ac]" trademark, with their allegedsentiment-
focused "explanation" merely thought of as a convenient, albeit unavailing,
excuse or defense for such an unfair choice of name. 67
Absent proof that respondents' adoption of the "Big Mak" mark was due
to honest mistake or was fortuitous, 68 the inescapable conclusion is that
respondents adopted the "Big Mak" mark to "ride on the coattails" of the
more established "Big Mac" mark. 69 This saves respondents much of the
expense in advertising to create market recognition of their mark and
hamburgers.70
Thus, we hold that confusion is likely to result in the public mind. We sustain
petitioners' claim of trademark infringement.
On the Lack of Proof of  Actual Confusion
Petitioners' failure to present proof of actual confusion does not negate their
claim of trademark infringement. As noted in American Wire & Cable Co. v.
Director of Patents,71 Section 22 requires the less stringent standard of
"likelihood of confusion" only. While proof of actual confusion is the best
evidence of infringement, its absence is inconsequential. 72
On the Issue of Unfair Competition
Section 29 ("Section 29")73 of RA 166 defines unfair competition, thus:
Any person who will employ deception or any other means contrary to good
faith by which he shall pass off the goods manufactured by him or in which
he deals, or his business, or services for those of the one having established
IPL- Assignment No. 6
such goodwill, or who shall commit any acts calculated to produce said
result, shall be guilty of unfair competition, and shall be subject to an
action therefor.
In particular, and without in any way limiting the scope of unfair
competition, the following shall be deemed guilty of unfair competition:
(a) Any person, who in selling his goods shall give them the general
appearance of goods of another manufacturer or dealer, either as to the
goods themselves or in the wrapping of the packages in which they are
contained, or the devices or words thereon, or in any feature of their
appearance, which would be likely to influence purchasers to believe that the
goods offered are those of a manufacturer or dealer, other
than the actual manufacturer or dealer, or who otherwise clothes the goods
with such appearance as shalldeceive the public and defraud another of his
legitimate trade, or any subsequent vendor of such goods or any agent
of any vendor engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other
means calculated to induce the false belief that such person is offering the
services of another who has identified such services in the mind of the public;
or
(c) Any person who shall make any false statement in the course of trade or
who shall commit any other act contrary to good faith of a nature calculated
to discredit the goods, business or services of another. (Emphasis supplied)
The essential elements of an action for unfair competition are (1) confusing
similarity in the general appearance of the goods, and (2) intent to deceive
the public and defraud a competitor. 74 The confusing similarity may or may
not result from similarity in the marks, but may result from other external
factors in the packaging or presentation of the goods. The intent to deceive
and defraud may be inferred from the similarity of the appearance of the
goods as offered for sale to the public. 75 Actual fraudulent intent need not be
shown.76
Unfair competition is broader than trademark infringement and includes
passing off goods with or without trademark infringement. Trademark
infringement is a form of unfair competition. 77 Trademark infringement
constitutes unfair competition when there is not merely likelihood of
confusion, but also actual or probable deception on the public because of the
general appearance of the goods. There can be trademark infringement
without unfair competition as when the infringer discloses on the labels
containing the mark that he manufactures the goods, thus preventing the
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public from being deceived that the goods originate from the trademark
owner.78
To support their claim of unfair competition, petitioners allege that
respondents fraudulently passed off their hamburgers as "Big Mac"
hamburgers. Petitioners add that respondents' fraudulent intent can be
inferred from the similarity of the marks in question.79
Passing off (or palming off) takes place where the defendant, by imitative
devices on the general appearance of the goods, misleads prospective
purchasers into buying his merchandise under the impression that they are
buying that of his competitors. 80 Thus, the defendant gives his goods the
general appearance of the goods of his competitor with the intention of
deceiving the public that the goods are those of his competitor.
The RTC described the respective marks and the goods of petitioners and
respondents in this wise:
The mark "B[ig] M[ac]" is used by plaintiff McDonald's to identify its double
decker hamburger sandwich. The packaging material is a styrofoam box with
the McDonald's logo and trademark in red with block capital letters printed on
it. All letters of the "B[ig] M[ac]" mark are also in red and block capital
letters. On the other hand,defendants' "B[ig] M[ak]" script print is in orange
with only the letter "B" and "M" being capitalized and the packaging material
is plastic wrapper. xxxx Further, plaintiffs' logo and mascot are the umbrella
"M" and "Ronald McDonald's", respectively, compared to the mascot of
defendant Corporation which is a chubby boy called "Macky" displayed or
printed between the words "Big" and "Mak."81 (Emphasis supplied)
Respondents point to these dissimilarities as proof that they did not give their
hamburgers the general appearance of petitioners' "Big Mac" hamburgers.
The dissimilarities in the packaging are minor compared to the stark
similarities in the words that give respondents' "Big Mak" hamburgers the
general appearance of petitioners' "Big Mac" hamburgers. Section 29(a)
expressly provides that the similarity in the general appearance of the goods
may be in the "devices or words" used on the wrappings. Respondents have
applied on their plastic wrappers and bags almost the same words that
petitioners use on their styrofoam box. What attracts the attention of the
buying public are the words "Big Mak" which are almost the same, aurally
and visually, as the words "Big Mac." The dissimilarities in the material and
other devices are insignificant compared to the glaring similarity in the words
used in the wrappings.
IPL- Assignment No. 6
Section 29(a) also provides that the defendant gives "his goods the general
appearance of goods of another manufacturer." Respondents' goods are
hamburgers which are also the goods of petitioners. If respondents sold egg
sandwiches only instead of hamburger sandwiches, their use of the "Big
Mak" mark would not give their goods the general appearance of petitioners'
"Big Mac" hamburgers. In such case, there is only trademark infringement
but no unfair competition. However, since respondents chose to apply the
"Big Mak" mark on hamburgers, just like petitioner's use of the "Big Mac"
mark on hamburgers, respondents have obviously clothed their goods with
the general appearance of petitioners' goods.
Moreover, there is no notice to the public that the "Big Mak" hamburgers are
products of "L.C. Big Mak Burger, Inc." Respondents introduced during the
trial plastic wrappers and bags with the words "L.C. Big Mak Burger, Inc." to
inform the public of the name of the seller of the hamburgers. However,
petitioners introduced during the injunctive hearings plastic wrappers and
bags with the "Big Mak" mark without the name "L.C. Big Mak Burger, Inc."
Respondents' belated presentation of plastic wrappers and bags bearing the
name of "L.C. Big Mak Burger, Inc." as the seller of the hamburgers is an
after-thought designed to exculpate them from their unfair business conduct.
As earlier stated, we cannot consider respondents' evidence since
petitioners' complaint was based on facts existing before and during the
injunctive hearings.
Thus, there is actually no notice to the public that the "Big Mak" hamburgers
are products of "L.C. Big Mak Burger, Inc." and not those of petitioners who
have the exclusive right to the "Big Mac" mark. This clearly shows
respondents' intent to deceive the public. Had respondents' placed a notice
on their plastic wrappers and bags that the hamburgers are sold by "L.C. Big
Mak Burger, Inc.", then they could validly claim that they did not intend to
deceive the public. In such case, there is only trademark infringement but no
unfair competition.82 Respondents, however, did not give such notice. We
hold that as found by the RTC, respondent corporation is liable for unfair
competition.
The Remedies Available to Petitioners
Under Section 2383 ("Section 23") in relation to Section 29 of RA 166, a
plaintiff who successfully maintains trademark infringement and unfair
competition claims is entitled to injunctive and monetary reliefs. Here, the
RTC did not err in issuing the injunctive writ of 16 August 1990 (made
permanent in its Decision of 5 September 1994) and in ordering the payment
of P400,000 actual damages in favor of petitioners. The injunctive writ is
indispensable to prevent further acts of infringement by respondent
corporation. Also, the amount of actual damages is a reasonable percentage
(11.9%) of respondent corporation's gross sales for three (1988-1989 and
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1991) of the six years (1984-1990) respondents have used the "Big Mak"
mark.84

The RTC also did not err in awarding exemplary damages by way of
correction for the public good85 in view of the finding of unfair competition
where intent to deceive the public is essential. The award of attorney's fees
and expenses of litigation is also in order.86

WHEREFORE, we GRANT the instant petition. We SET ASIDE the Decision

dated 26 November 1999 of the Court of Appeals and its Resolution dated 11
July 2000 and REINSTATE the Decision dated 5 September 1994 of the
Regional Trial Court of Makati, Branch 137, finding respondent L.C. Big Mak
Burger, Inc. liable for trademark infringement and unfair competition.

SO ORDERED.

IPL- Assignment No. 6 Page 143 of 143