SECOND DIVISION

[G.R. No. 96161. February 21, 1992.]

PHILIPS EXPORT B.V., PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS INDUSTRIAL DEVELOPMENT, INC., petitioners, vs. COURT OF
APPEALS, SECURITIES & EXCHANGE COMMISSION and STANDARD PHILIPS CORPORATION, respondents.

Emeterio V. Soliven & Associates for petitioners.

Narciso A. Manantan for private respondent.

SYLLABUS

1. COMMERCIAL LAW; CORPORATION CODE; SECTION 18 THEREOF APPLICABLE ONLY WHEN CORPORATE NAMES ARE IDENTICAL. — Section 18 of
the Corporation Code is applicable only when the corporate names in question are identical. In the instant case, there is no confusing similarity between Petitioners' and Private
Respondent's corporate names as those of the Petitioners contain at least two words different from that of the Respondent.

2. ID.; CORPORATION; RIGHT TO USE ITS CORPORATE AND TRADE NAME, A PROPERTY RIGHT. — As early as Western Equipment and Supply Co.  v. Reyes,
51 Phil. 115 (1927), the Court declared that a corporation's right to use its corporate and trade name is a property right, a right in rem, which it may assert and protect against the world in
the same manner as it may protect its tangible property, real or personal, against trespass or conversion. It is regarded, to a certain extent, as a property right and one which cannot be
impaired or defeated by subsequent appropriation by another corporation in the same field (Red Line Transportation Co. vs. Rural Transit co., September 6, 1934, 60 Phil. 549).

3. ID.; ID.; IMPORTANCE OF CORPORATE NAME. — A name is peculiarly important as necessary to the very existence of a corporation. Its name is one of its
attributes, an element of its existence, and essential to its identity (6 Fletcher [Perm Ed], pp. 3-4). The general rule as to corporations is that each corporation must have a name by which
it is to sue and be sued and do all legal acts. The name of a corporation in this respect designates the corporation in the same manner as the name of an individual designates the person
(Cincinnati Cooperage Co. vs. Bate, 96 Ky 356, 26 SW 538; Newport Mechanics Mfg. Co. vs. Starbird, 10 NH 123); and the right to use its corporate name is as much a part of the
corporate franchise as any other privilege granted.

4. ID.; ID.; CORPORATE NAME DISTINGUISHED FROM INDIVIDUAL'S NAME. — A corporation acquires its name by choice and need not select a name identical
with or similar to one already appropriated by a senior corporation while an individual's name is thrust upon him (See Standard Oil Co. of New Mexico, Inc.  v. Standard Oil Co. of
California, 56 F 2d 973, 977). A corporation can no more use a corporate name in violation of the rights of others that an individual can use his name legally acquired so as to mislead the
public and injure another (Armington vs. Palmer, 21 RI 109, 42 A 308).

5. ID.; ID.; ID.; STATUTORY PROHIBITION PROVIDED IN SEC. 18 OF CORPORATION CODE; REQUISITES. — Our own Corporation Code, in its Section 18,
expressly provides that: "No corporate name may be allowed by the Securities and Exchange Commission if the proposed name is  identical or deceptively or confusingly similar to that
of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing law . Where a change in the corporate name is
approved, the commission shall issue an amended certificate of incorporation under the amended name." (Emphasis supplied) The statutory prohibition cannot be any clearer. To come
within its scope, two requisites must be proven, namely: (1) that the complainant corporation acquired a prior right over the use of such corporate name; and (2) the proposed name is
either: (a) identical or (b) deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law; or (c) patently deceptive, confusing or
contrary to existing law.

6. ID.; ID.; ID.; RIGHT TO EXCLUSIVE USE OF CORPORATE NAME DETERMINED BY PRIORITY OF ADOPTION; APPLIED IN CASE AT BAR. — The right to
the exclusive use of a corporate name with freedom from infringement by similarity is determined by priority of adoption (1 Thompson, p.80 citing Munn  v. Americana Co., 82 N., Eq.
63 88 Atl. 30; San Francisco Oyster House v. Mihich, 75 Wash. 274, 134 Pac. 921). In this regard, there is no doubt with respect to Petitioners' prior adoption of the name "PHILIPS" as
part of its corporate name. Petitioners Philips Electrical and Philips Industrial were incorporated on 29 August 1956 and 25 May 1956, respectively, while Respondent Standard Philips
was issued a Certificate of Registration on 19 April 1982, twenty-six (26) years later (Rollo, p.16). Petitioner PEBV has also used the trademark "PHILIPS" on electrical lamps of all
types and their accessories since 30 September 1922, as evidenced by Certificate of Registration No. 1651.

7. ID.; ID.; ID.; TEST IN DETERMINING EXISTENCE OF CONFUSING SIMILARITY; PROOF OF ACTUAL CONFUSION NOT NECESSARY. — In determining
the existence of confusing similarity in corporate names, the test is whether the similarity is such as to mislead a person using ordinary care and discrimination. In so doing, the Court
must look to the record as well as the names themselves (Ohio Nat. Life Ins. Co.  v. Ohio Life Ins. Co., 210 NE 2d 298). It is settled, however, that proof of actual confusion need not be
shown. It suffices that confusion is probably or likely to occur (6 Fletcher [Perm Ed], pp. 107-108, enumerating a long line of cases).

8. ID.; ID.; ID.; INTENT OF SUBSEQUENT APPROPRIATOR OF NAME. — Petitioners pointed out that "[p]rivate respondent's choice of 'PHILIPS' as part of its
corporate name [STANDARD PHILIPS CORPORATION] . . . tends to show said respondent's intention to ride on the popularity and established goodwill of said petitioner's business
throughout the world." The subsequent appropriator of the name or one confusingly similar thereto usually seeks an unfair advantage, a free ride on another's goodwill (American Gold
Star Mothers, Inc. v. National Gold Star Mothers, Inc., et al, 89 App DC 269, 191 F 2d 488).

9. ID.; ID.; ID.; RULE ON PROPOSED NAME. — True, under the Guidelines in the Approval of Corporate and Partnership Names formulated by the SEC, the proposed
name "should not be similar to one already used by another corporation or partnership. If the proposed name contains a word already used as part of the firm name or style of a registered
company, the proposed name must contain two other words different from the company already registered." It is then pointed out that Petitioners Philips Electrical and Philips Industrial
have two words different from that of Private Respondent's name.

10. ID.; ID.; ID.; CORPORATION HAS EXCLUSIVE RIGHT TO THE USE OF ITS NAME WHICH MAY BE PROTECTED BY INJUNCTION; BASIS FOR SUCH
PRINCIPLE. — A corporation has an exclusive right to the use of its name, which may be protected by injunction upon a principle similar to that upon which persons are protected in the
use of trademarks and tradenames (18 C.J.S. 574). Such principle proceeds upon the theory that it is a fraud on the corporation which has acquired a right to that name and perhaps
carried on its business thereunder, that another should attempt to use the same name, or the same name with a slight variation in such a way as to induce persons to deal with it in the
belief that they are dealing with the corporation which has given a reputation to the name (6 Fletcher [Perm Ed.], pp. 39-40, citing Borden Ice Cream Co.  v. Borden's Condensed Milk
Co., 210 F 510).

DECISION

MELENCIO-HERRERA, J p:
 Petitioners challenge the Decision of the Court of Appeals, dated 31 July 1990, in CA-GR Sp. No. 20067,
upholding the Order of the Securities and Exchange Commission, dated 2 January 1990, in SEC-AC No. 202,
dismissing petitioners' prayer for the cancellation or removal of the word "PHILIPS" for private respondent's
corporate name.
Petitioner Philips Export B.V. (PEBV), a foreign corporation organized under the laws of the Netherlands,
although not engaged in business here, is the registered owner of the trademarks PHILIPS and PHILIPS SHIELD
EMBLEM under Certificate of Registration Nos. R-1641 and R-1674, respectively issued by the Philippine Patent
Office (presently known as the Bureau of Patents, Trademarks and Technology Transfer). Petitioners Philips
Electrical Lamps, Inc. (Philips Electrical, for brevity) and Philips Industrial Development, Inc. (Philips Industrial, for
short), authorized users of the trademarks PHILIPS and PHILIPS SHIELD EMBLEM, were incorporated on 29
August 1956 and 25 may 1956, respectively. All petitioner corporations belong to the PHILIPS Group of Companies.
Respondent Standard Philips Corporation (Standard Philips), on the other hand, was issued a Certificate of
Registration by respondent Commission on 19 May 1982.
On 24 September 1984, Petitioners filed a letter complaint with the Securities & Exchange Commission
(SEC) asking for the cancellation of the word "PHILIPS" from Private Respondent's corporate name in view of the
prior registration with the Bureau of Patents of the trademark "PHILIPS" and the logo "PHILIPS SHIELD
EMBLEM" in the name of Petitioner PEBV, and the previous registration of Petitioners Philips Electrical and Philips
Industrial with the SEC.
As a result of Private Respondent's refusal to amend its Articles of Incorporation, Petitioners filed with the
SEC, on 6 February 1985, a Petition (SEC Case No. 2743), praying for the issuance of a Writ of Preliminary
Injunction, alleging, among others, that Private Respondent's use of the word PHILIPS amounts to an infringement
and clear violation of Petitioner's exclusive right to use the same considering that both parties engage in the same
business.
In its Answer, dated 7 March 1985, Private Respondent countered that Petitioner PEBV has no legal capacity
to sue; that its use of its corporate name is not at all similar to Petitioners' trademark PHILIPS when considered in its
entirety; and that its products consisting of chain rollers, belts, bearings and cutting saw are grossly different from
Petitioners' electrical products.
 
After conducting hearings with respect to the prayer for Injunction, the SEC Hearing Officer, on 27
September 1985, ruled against the issuance of such Writ.
On 30 January 1987, the same Hearing Officer dismissed the Petition for lack of merit. In so ruling, the latter
declared that inasmuch as the SEC found no sufficient ground for the granting of injunctive relief on the basis of the
testimonial and documentary evidence presented, it cannot order the removal or cancellation of the word "PHILIPS"
from Private Respondent's corporate name on the basis of the same evidence adopted in toto during trial on the merits.
Besides, Section 18 of the Corporation Code (infra) is applicable only when the corporate names in question are
identical. Here, there is no confusing similarity between Petitioners' and Private Respondent's corporate names as
those of the Petitioners contain at least two words different from that of the Respondent. Petitioners' Motion for
Reconsideration was likewise denied on 17 June 1987. LibLex
On appeal, the SEC en banc affirmed the dismissal declaring that the corporate names of Petitioners and
Private Respondent hardly breed confusion inasmuch as each contains at least two different words and, therefore,
rules out any possibility of confusing one for the other.
On 30 January 1990, Petitioners sought an extension of time to file a Petition for Review on Certiorari before
this Court, which Petition was later referred to the Court of Appeals in a Resolution dated 12 February 1990.
In deciding to dismiss the petition on 31 July 1990, the Court of Appeals 1 swept aside Petitioners' claim that
following the ruling in Converse Rubber Corporation v. Universal Converse Rubber Products, Inc., et al, (G.R. No.
L-27906, January 8, 1987, 147 SCRA 154), the word PHILIPS cannot be used as part of Private Respondent's
corporate name as the same constitutes a dominant part of Petitioners' corporate names. In so holding, the Appellate
Court observed that the Converse case is not four-square with the present case inasmuch as the contending parties
in Converse are engaged in a similar business, that is, the manufacture of rubber shoes. Upholding the SEC, the
Appellate Court concluded that "private respondent's products consisting of chain rollers, belts, bearings and cutting
saw are unrelated and non-competing with petitioners' products i.e. electrical lamps such that consumers would not in
any probability mistake one as the source or origin of the product of the other."
The Appellate Court denied Petitioners' Motion for Reconsideration on 20 November 1990, hence, this
Petition which was given due course on 22 April 1991, after which the parties were required to submit their
memoranda, the latest of which was received on 2 July 1991. In December 1991, the SEC was also required to elevate
its records for the perusal of this Court, the same not having been apparently before respondent Court of Appeals.
We find basis for petitioners' plea.
As early as Western Equipment and Supply Co. v. Reyes, 51 Phil. 115 (1927), the Court declared that a
corporation's right to use its corporate and trade name is a property right, a right  in rem, which it may assert and
protect against the world in the same manner as it may protect its tangible property, real or personal, against trespass
or conversion. It is regarded, to a certain extent, as a property right and one which cannot be impaired or defeated by
subsequent appropriation by another corporation in the same field (Red Line Transportation Co. vs. Rural Transit Co.,
September 6, 1934, 60 Phil 549).
A name is peculiarly important as necessary to the very existence of a corporation (American Steel Foundries
vs. Robertson, 269 US 372, 70 L ed 317, 46 S Ct 160; Lauman vs. Lebanon Valley R. Co., 30 Pa 42; First National
Bank vs. Huntington Distilling Co, 40 W Va 530, 23 SE 792). Its name is one of its attributes, an element of its
existence, and essential to its identity (6 Fletcher [Perm Ed], pp. 3-4). The general rule as to corporations is that each
corporation must have name by which it is to sue and be sued and do all legal acts. The name of a corporation in this
respect designates the corporation in the same manner as the name of an individual designates the person (Cincinnati
Cooperage Co. vs. Bate, 96 Ky 356, 26 SW 538; Newport Mechanics Mfg. Co. vs. Starbird, 10 NH 123); and the right
to use its corporate name is as much a part of the corporate franchise as any other privilege granted (Federal Secur.
Co. vs. Federal Secur. Corp., 129 Or 375, 276 P 1100, 66 ALR 934; Paulino vs. Portuguese Beneficial Association, 18
RI 165, 26 A 36). Cdpr
A corporation acquires its name by choice and need not select a name identical with or similar to one already
appropriated by a senior corporation while an individual's name is thrust upon him (See Standard Oil Co. of New
Mexico, Inc. v. Standard Oil Co. of California, 56 F 2d 973, 977). A corporation can no more use a corporate name in
violation of the rights of others than an individual can use his name legally acquired so as to mislead the public and
injure another (Armington vs. Palmer, 21 RI 109, 42 A 308).
Our own Corporation Code, in its Section 18, expressly provides that:
"No corporate name may be allowed by the Securities and Exchange Commission if the proposed name
is identical or deceptively or confusingly similar to that of any existing corporation or to any other
name already protected by law or is patently deceptive, confusing or contrary to existing law. Where a
change in the corporate name is approved, the commission shall issue an amended certificate of
incorporation under the amended name." (Emphasis supplied).
The statutory prohibition cannot be any clearer. To come within its scope, two requisites must be proven,
namely:
(1) that the complainant corporation acquired a prior right over the use of such corporate name; and
(2) the proposed name is either:
(a) identical or
(b) deceptively or confusingly similar
to that of any existing corporation or to any other name already protected by law; or
(c) patently deceptive, confusing or contrary to existing law.
The right to the exclusive use of a corporate name with freedom from infringement by similarity is
determined by priority of adoption (1 Thomson, p.80 citing Munn v. Americana Co., 82 N., Eq. 63, 88 Atl. 30; San
Francisco Oyster House v. Mihich, 75 Wash, 274, 134 Pac. 921). In this regard, there is no doubt with respect to
Petitioners' prior adoption of the name "PHILIPS" as part of its corporate name. Petitioners Philips Electrical and
Philips Industrial were incorporated on 29 August 1956 and 25 May 1956, respectively, while Respondent Standard
Philips was issued a Certificate of Registration on 19 April 1982, twenty-six (26) years later (Rollo, p.16). Petitioner
PEBV has also used the trademark "PHILIPS" on electrical lamps of all types and their accessories since 30
September 1922, as evidenced by Certificate of Registration No. 1651.
The second requisite no less exists in this case. In determining the existence of confusing similarity in
corporate names, the test is whether the similarity is such as to mislead a person using ordinary care and
discrimination. In so doing, the Court must look to the record as well as the names themselves (Ohio Nat. Life Ins.
Co. v. Ohio Life Ins. Co., 210 NE 2d 298). While the corporate names of Petitioners and Private Respondent are not
identical, a reading of Petitioner's corporate names, to wit: PHILIPS EXPORT B.V., PHILIPS ELECTRICAL
LAMPS, INC. and PHILIPS INDUSTRIAL DEVELOPMENT, INC., inevitably leads one to conclude that
"PHILIPS" is, indeed, the dominant word in that all the companies affiliated or associated with the principal
corporation, PEBV, are known in the Philippines and abroad as the PHILIPS Group of Companies. cdll
Respondents maintain, however, that Petitioners did not present an iota of proof of actual confusion or
deception of the public much less a single purchaser or their product who has been deceived or confused or showed
any likelihood of confusion. It is settled, however, that proof of actual confusion need not be shown. It suffices that
confusion is probably or likely to occur (6 Fletcher [Perm Ed], pp. 107-108, enumerating a long line of cases).
It may be that Private Respondent's products also consist of chain rollers, belts, bearing and the like while
petitioners deal principally with electrical products. It is significant to note, however, that even the Director of Patents
had denied Private Respondent's application for registration of the trademarks "Standard Philips & Device" for chains,
rollers, belts, bearings and cutting saw. That office held that PEBV "had shipped to its subsidiaries in the Philippines
equipment, machines and their parts which fall under international class where chains, rollers, belts, bearings and
cutting saw, the goods in connection with which Respondent is seeking to register "STANDARD PHILIPS . . . also
belong" (Inter Partes Case No. 2010, June 17, 1988, SEC Rollo).
Furthermore, the records show that among Private Respondent's primary purposes in its Articles of
Incorporation (Annex D, Petition; p. 37, Rollo) are the following:
"To buy, sell, barter, trade, manufacture, import, export or otherwise acquire, dispose of, and deal in
and deal with any kind of goods, wares, and merchandise such as but not limited to plastics, carbon
products, office stationery and supplies, hardware parts, electrical wiring devices, electrical component
parts and/or complement of industrial, agricultural or commercial machineries, constructive
supplies, electrical supplies and other merchandise which are or may become articles of commerce
except food, drugs, and cosmetics and to carry on such business as manufacturer, distributor, dealer,
indentor, factor, manufacturer's representative capacity for domestic or foreign companies." (emphasis
ours).
For its part, Philips Electrical also includes, among its primary purposes, the following:
 
"To develop, manufacture and deal in electrical products, including electronic, mechanical and other
similar products . . . ." (p. 30, Record of SEC Case No. 2743)
Given Private Respondent's aforesaid underlined primary purpose, nothing could prevent it from dealing in
the same line of business of electrical devices, products or supplies which fall under its primary purposes. Besides,
there is showing that Private Respondent not only manufactured and sold ballasts for fluorescent lamps with their
corporate name printed thereon but also advertised the same as, among others, Standard Philips (TSN, before the
SEC, pp. 14, 17, 25, 26, 37-42, June 14, 1985; pp. 16-19, July 25, 1985). As aptly pointed out by Petitioners,
"[p]rivate respondent's choice of 'PHILIPS' as part of its corporate name [STANDARD PHILIPS
CORPORATION] . . . tends to show said respondent's intention to ride on the popularity and established goodwill of
said petitioner's business throughout the world" (Rollo, p. 137). The subsequent appropriator of the name or one
confusingly similar thereto usually seeks an unfair advantage, a free ride on another's goodwill (American Gold Star
Mothers, Inc. v. National Gold Star Mothers, Inc., et al, 89 App DC 269, 191 F 2d 488). prLL
In allowing Private Respondent the continued use of its corporate name, the SEC maintains that the corporate
names of Petitioners PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS INDUSTRIAL DEVELOPMENT, INC.
contain at least two words different from that of the corporate name of respondent STANDARD PHILIPS
CORPORATION, which words will readily identify Private Respondent from Petitioners and vice-versa.
True, under the Guidelines in the Approval of Corporate and Partnership Names formulated by the SEC, the
proposed name "should not be similar to one already used by another corporation or partnership. If the proposed name
 contains a word already used as part of the firm name or style of a registered company,  the proposed name must
contain two other words different from the company already registered" (Emphasis ours). It is then pointed out that
Petitioners Philips Electrical and Philips Industrial have two words different from that of Private Respondent's name.
What is lost sight of, however, is that PHILIPS is a trademark or trade name which was registered as far back
as 1922. Petitioners, therefore, have the exclusive right to its use which must be free from any infringement by
similarity. A corporation has an exclusive right to the use of its name, which may be protected by injunction upon a
principle similar to that upon which persons are protected in the use of trademarks and tradenames (18 C.J.S. 574).
Such principle proceeds upon the theory that it is a fraud on the corporation which has acquired a right to that name
and perhaps carried on its business thereunder, that another should attempt to use the same name, or the same name
with a slight variation in such a way as to induce persons to deal with it in the belief that they are dealing with the
corporation which has given a reputation to the name (6 Fletcher [Perm Ed], pp. 39-40, citing Borden Ice Cream Co.
v. Borden's Condensed Milk Co., 210 F 510). Notably, too, Private Respondents' name actually contains only a single
word, that is, "STANDARD", different from that of Petitioners inasmuch as the inclusion of the term "Corporation" or
"Corp." merely serves the purpose of distinguishing the corporation from partnerships and other business
organizations.
The fact that there are other companies engaged in other lines of business using the word "PHILIPS" as part
of their corporate names is no defense and does not warrant the use by Private Respondent of such word which
constitutes an essential feature of Petitioners' corporate name previously adopted and registered and having acquired
the status of a well-known mark in the Philippines and internationally, as well (Bureau of Patents Decision No. 88-35
[TM], June 17, 1988, SEC Records).
In support of its application for the registration of its Articles of Incorporation with the SEC, Private
Respondent had submitted an undertaking "manifesting its willingness to change its corporate name in the event
another person, firm or entity has acquired a prior right to the use of the said firm name or one deceptively or
confusingly similar to it." Private Respondent must now be held to its undertaking. cdll
"As a general rule, parties organizing a corporation must choose a name at their peril; and the use of a
name similar to one adopted by another corporation, whether a business or a nonbusiness or nonprofit
organization if misleading and likely to injure it in the exercise of its corporate functions, regardless of
intent, may be prevented by the corporation having the prior right, by a suit for injunction against the
new corporation to prevent the use of the name (American Gold Star Mothers, Inc. v. National Gold
Star Mothers, Inc. 89 App DC 269, 191 F 2d 488, 27 ALR 2d 948)."
WHEREFORE, the Decision of the Court of Appeals dated 31 July 1990, and its Resolution dated 20
November 1990, are SET ASIDE and a new one entered ENJOINING private respondent from using "PHILIPS" as a
feature of its corporate name, and ORDERING the Securities and Exchange Commission to amend private
respondent's Articles of Incorporation by deleting the word PHILIPS from the corporate name of private respondent.
No costs.
SO ORDERED.
Paras, Padilla, Regalado and Nocon, JJ., concur.
||| (Philips Export B.V. v. Court of Appeals, G.R. No. 96161, [February 21, 1992], 283 PHIL 371-383)
 THIRD DIVISION

[G.R. No. 180073. November 25, 2009.]

PROSOURCE INTERNATIONAL, INC., petitioner, vs. HORPHAG RESEARCH MANAGEMENT SA, respondent.

DECISION

NACHURA, J p:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the Court of
Appeals (CA) Decision 1 dated July 27, 2007 and Resolution 2 dated October 15, 2007 in CA-G.R. CV No. 87556. The assailed
decision affirmed the Regional Trial Court (RTC) 3 Decision 4 dated January 16, 2006 and Order 5 dated May 3, 2006 in Civil Case No.
68048; while the assailed resolution denied petitioner's motion for reconsideration.
The facts are as follows:
Respondent Horphag Research Management SA is a corporation duly organized and existing under the laws of Switzerland and
the owner 6 of trademark PYCNOGENOL, a food supplement sold and distributed by Zuellig Pharma Corporation. Respondent later
discovered that petitioner Prosource International, Inc. was also distributing a similar food supplement using the mark PCO-GENOLS
since 1996. 7 This prompted respondent to demand that petitioner cease and desist from using the aforesaid mark. 8
Without notifying respondent, petitioner discontinued the use of, and withdrew from the market, the products under the name
PCO-GENOLS as of June 19, 2000. It, likewise, changed its mark from PCO-GENOLS to PCO-PLUS. 9
 On August 22, 2000, respondent filed a Complaint 10 for Infringement of Trademark with Prayer for Preliminary Injunction
against petitioner, praying that the latter cease and desist from using the brand PCO-GENOLS for being confusingly similar with
respondent's trademark PYCNOGENOL. It, likewise, prayed for actual and nominal damages, as well as attorney's fees. 11
In its Answer, 12 petitioner contended that respondent could not file the infringement case considering that the latter is not the
registered owner of the trademark PYCNOGENOL, but one Horphag Research Limited. It, likewise, claimed that the two marks were
not confusingly similar. Finally, it denied liability, since it discontinued the use of the mark prior to the institution of the infringement
case. Petitioner thus prayed for the dismissal of the complaint. By way of counterclaim, petitioner prayed that respondent be directed to
pay exemplary damages and attorney's fees. 13 CIaDTE
During the pre-trial, the parties admitted the following:
1. Defendant [petitioner] is a corporation duly organized and existing under the laws of the Republic of the
Philippines with business address at No. 7 Annapolis Street, Greenhills, San Juan, Metro Manila;
2. The trademark PYCNOGENOL of the plaintiff is duly registered with the Intellectual Property Office but
not with the Bureau of Food and Drug (BFAD).
3. The defendant's product PCO-GENOLS is duly registered with the BFAD but not with the Intellectual
Property Office (IPO).
4. The defendant corporation discontinued the use of and had withdrawn from the market the products under
the name of PCO-GENOLS as of June 19, 2000, with its trademark changed from PCO-GENOLS to PCO-PLUS.
5. Plaintiff corporation sent a demand letter to the defendant dated 02 June 2000. 14
On January 16, 2006, the RTC decided in favor of respondent. It observed that PYCNOGENOL and PCO-GENOLS have the
same suffix "GENOL" which appears to be merely descriptive and thus open for trademark registration by combining it with other
words. The trial court, likewise, concluded that the marks, when read, sound similar, and thus confusingly similar especially since they
both refer to food supplements. The court added that petitioner's liability was not negated by its act of pulling out of the market the
products bearing the questioned mark since the fact remains that from 1996 until June 2000, petitioner had infringed respondent's
product by using the trademark PCO-GENOLS. As respondent manifested that it was no longer interested in recovering actual damages,
petitioner was made to answer only for attorney's fees amounting to P50,000.00. 15 For lack of sufficient factual and legal basis, the
court dismissed petitioner's counterclaim. Petitioner's motion for reconsideration was likewise denied.
On appeal to the CA, petitioner failed to obtain a favorable decision. The appellate court explained that under the Dominancy
or the Holistic Test, PCO-GENOLS is deceptively similar to PYCNOGENOL. It also found just and equitable the award of attorney's
fees especially since respondent was compelled to litigate. 16
Hence, this petition, assigning the following errors:
I. THAT THE COURT OF APPEALS ERRED IN AFFRIMING THE RULING OF THE LOWER [COURT] THAT
RESPONDENT'S TRADEMARK P[YC]NOGENOLS (SIC) WAS INFRINGED BY PETITIONER'S PCO-
GENOLS.
II. THAT THE COURT OF APPEALS ERRED IN AFFIRMING THE AWARD OF ATTORNEY'S FEES IN FAVOR
OF RESPONDENT HORPHAG RESEARCH MANAGEMENT S.A. IN THE AMOUNT OF
Php50,000.00. 17
The petition is without merit.
It must be recalled that respondent filed a complaint for trademark infringement against petitioner for the latter's use of the
mark PCO-GENOLS which the former claimed to be confusingly similar to its trademark PYCNOGENOL. Petitioner's use of the
questioned mark started in 1996 and ended in June 2000. The instant case should thus be decided in light of the provisions of Republic
Act (R.A.) No. 166 18 for the acts committed until December 31, 1997, and R.A. No. 8293 19 for those committed from January 1,
1998 until June 19, 2000. SHECcD
A trademark is any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof, adopted and used by
a manufacturer or merchant on his goods to identify and distinguish them from those manufactured, sold, or dealt by others. Inarguably,
a trademark deserves protection. 20
Section 22 of R.A. No. 166, as amended, and Section 155 of R.A. No. 8293 define what constitutes trademark infringement, as
follows:
Sec. 22. Infringement, what constitutes. — Any person who shall use, without the consent of the registrant,
any reproduction, counterfeit, copy or colorable imitation of any registered mark or tradename in connection with the
sale, offering for sale, or advertising of any goods, business or services on or in connection with which such use is likely
to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or services, or
identity of such business; or reproduce, counterfeit, copy of colorably imitate any such mark or tradename and apply
such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods, business, or services, shall be liable to a civil
action by the registrant for any or all of the remedies herein provided.
 Sec. 155. Remedies; Infringement. — Any person who shall, without the consent of the owner of the registered
mark:
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark or the
same container or a dominant feature thereof in connection with the sale, offering for sale, distribution, advertising of
any goods or services including other preparatory steps necessary to carry out the sale of any goods or services on or in
connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature thereof and
apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages, wrappers, receptacles
or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or
advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause
mistake, or to deceive, shall be liable in a civil action for infringement by the registrant for the remedies hereinafter set
forth: Provided, That infringement takes place at the moment any of the acts stated in Subsection 155.1 or this
subsection are committed regardless of whether there is actual sale of goods or services using the infringing material.
In accordance with Section 22 of R.A. No. 166, as well as Sections 2, 2-A, 9-A, and 20 thereof, the following constitute the
elements of trademark infringement: ICacDE
(a) A trademark actually used in commerce in the Philippines and registered in the principal register of the
Philippine Patent Office[;]
(b) [It] is used by another person in connection with the sale, offering for sale, or advertising of any goods,
business or services or in connection with which such use is likely to cause confusion or mistake or to deceive
purchasers or others as to the source or origin of such goods or services, or identity of such business; or such trademark
is reproduced, counterfeited, copied or colorably imitated by another person and such reproduction, counterfeit, copy or
colorable imitation is applied to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be
used upon or in connection with such goods, business or services as to likely cause confusion or mistake or to deceive
purchasers[;]
(c) [T]he trademark is used for identical or similar goods[;] and
(d) [S]uch act is done without the consent of the trademark registrant or assignee. 21
On the other hand, the elements of infringement under R.A. No. 8293 are as follows:
(1) The trademark being infringed is registered in the Intellectual Property Office; however, in infringement of trade
name, the same need not be registered;
(2) The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the infringer;
(3) The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising of any goods,
business or services; or the infringing mark or trade name is applied to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business
or services;
(4) The use or application of the infringing mark or trade name is likely to cause confusion or mistake or to deceive
purchasers or others as to the goods or services themselves or as to the source or origin of such goods or
services or the identity of such business; and
(5) It is without the consent of the trademark or trade name owner or the assignee thereof. 22
In the foregoing enumeration, it is the element of "likelihood of confusion" that is the gravamen of trademark infringement. But
"likelihood of confusion" is a relative concept. The particular, and sometimes peculiar, circumstances of each case are determinative of
its existence. Thus, in trademark infringement cases, precedents must be evaluated in the light of each particular case. 23 CIScaA
In determining similarity and likelihood of confusion, jurisprudence has developed two tests: the Dominancy Test and the
Holistic or Totality Test. The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks that might
cause confusion and deception, thus constituting infringement. 24 If the competing trademark contains the main, essential and dominant
features of another, and confusion or deception is likely to result, infringement takes place. Duplication or imitation is not necessary; nor
is it necessary that the infringing label should suggest an effort to imitate. The question is whether the use of the marks involved is likely
to cause confusion or mistake in the mind of the public or to deceive purchasers. 25 Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving little weight to factors like prices, quality, sales outlets, and market
segments. 26
In contrast, the Holistic Test entails a consideration of the entirety of the marks as applied to the products, including the labels
and packaging, in determining confusing similarity. 27 The discerning eye of the observer must focus not only on the predominant
words but also on the other features appearing on both labels in order that the observer may draw his conclusion whether one is
confusingly similar to the other. 28
 The trial and appellate courts applied the Dominancy Test in determining whether there was a confusing similarity between the
marks PYCNOGENOL and PCO-GENOL. Applying the test, the trial court found, and the CA affirmed, that:
Both the word[s] PYCNOGENOL and PCO-GENOLS have the same suffix "GENOL" which on evidence,
appears to be merely descriptive and furnish no indication of the origin of the article and hence, open for trademark
registration by the plaintiff thru combination with another word or phrase such as PYCNOGENOL, Exhibits "A" to "A-
3". Furthermore, although the letters "Y" between P and C, "N" between O and C and "S" after L are missing in the
[petitioner's] mark PCO-GENOLS, nevertheless, when the two words are pronounced, the sound effects are confusingly
similar not to mention that they are both described by their manufacturers as a food supplement and thus, identified as
such by their public consumers. And although there were dissimilarities in the trademark due to the type of letters used
as well as the size, color and design employed on their individual packages/bottles, still the close relationship of the
competing products' name in sounds as they were pronounced, clearly indicates that purchasers could be misled into
believing that they are the same and/or originates from a common source and manufacturer. 29
We find no cogent reason to depart from such conclusion.
This is not the first time that the Court takes into account the aural effects of the words and letters contained in the marks in
determining the issue of confusing similarity. In Marvex Commercial Co., Inc. v. Petra Hawpia & Co., et al., 30 cited in McDonald's
Corporation v. L.C. Big Mak Burger, Inc., 31 the Court held: EITcaH
The following random list of confusingly similar sounds in the matter of trademarks, culled from Nims,
Unfair Competition and Trade Marks, 1947, Vol. 1, will reinforce our view that "SALONPAS" and "LIONPAS" are
confusingly similar in sound: "Gold Dust" and "Gold Drop"; "Jantzen" and "Jass-Sea"; "Silver Flash" and "Supper
Flash"; "Cascarete" and "Celborite"; "Celluloid" and "Cellonite"; "Chartreuse" and "Charseurs"; "Cutex" and
"Cuticlean"; "Hebe" and "Meje"; "Kotex" and "Femetex"; "Zuso" and "Hoo Hoo". Leon Amdur, in his book "Trade-
Mark Law and Practice", pp. 419-421, cities, as coming within the purview of the idem sonans rule, "Yusea" and "U-C-
A", "Steinway Pianos" and "Steinberg Pianos", and "Seven-Up" and "Lemon-Up". In Co Tiong vs. Director of
Patents, this Court unequivocally said that "Celdura" and "Cordura" are confusingly similar in sound; this Court held
in Sapolin Co. vs. Balmaceda, 67 Phil. 795 that the name "Lusolin" is an infringement of the trademark "Sapolin", as
the sound of the two names is almost the same. 32
Finally, we reiterate that the issue of trademark infringement is factual, with both the trial and appellate courts finding the
allegations of infringement to be meritorious. As we have consistently held, factual determinations of the trial court, concurred in by the
CA, are final and binding on this Court. 33 Hence, petitioner is liable for trademark infringement.
We, likewise, sustain the award of attorney's fees in favor of respondent. Article 2208 of the  Civil Code enumerates the
instances when attorney's fees are awarded, viz.:
Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs,
cannot be recovered, except:
1. When exemplary damages are awarded;
2. When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest;
3. In criminal cases of malicious prosecution against the plaintiff;
4. In case of a clearly unfounded civil action or proceeding against the plaintiff;
5. Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff"s plainly valid,
just and demandable claim;
6. In actions for legal support;
7. In actions for the recovery of wages of household helpers, laborers and skilled workers;
8. In actions for indemnity under workmen's compensation and employer's liability laws; ITScAE
9. In a separate civil action to recover civil liability arising from a crime;
10. When at least double judicial costs are awarded;
11. In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation
should be recovered.
In all cases, the attorney's fees and expenses of litigation must be reasonable.
As a rule, an award of attorney's fees should be deleted where the award of moral and exemplary damages is not
granted. 34 Nonetheless, attorney's fees may be awarded where the court deems it just and equitable even if moral and exemplary
damages are unavailing. 35 In the instant case, we find no reversible error in the grant of attorney's fees by the CA.
 WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of Appeals Decision dated July 27,
2007 and its Resolution dated October 15, 2007 in CA-G.R. CV No. 87556 are AFFIRMED.
SO ORDERED.
||| (Prosource International, Inc. v. Horphag Research Management SA, G.R. No. 180073, [November 25, 2009], 620 PHIL 539-553)

SECOND DIVISION

[G.R. No. 169504. March 3, 2010.]

COFFEE PARTNERS, INC., petitioner, vs. SAN FRANCISCO COFFEE & ROASTERY, INC., respondent.

DECISION

CARPIO, J p:

The Case
This is a petition for review 1 of the 15 June 2005 Decision 2 and the 1 September 2005 Resolution 3 of the Court of
Appeals in CA-G.R. SP No. 80396. In its 15 June 2005 Decision, the Court of Appeals set aside the 22 October 2003
Decision 4 of the Office of the Director General-Intellectual Property Office and reinstated the 14 August 2002 Decision 5 of the
Bureau of Legal Affairs-Intellectual Property Office. In its 1 September 2005 Resolution, the Court of Appeals denied petitioner's
motion for reconsideration and respondent's motion for partial reconsideration.
The Facts
Petitioner Coffee Partners, Inc. is a local corporation engaged in the business of establishing and maintaining coffee
shops in the country. It registered with the Securities and Exchange Commission (SEC) in January 2001. It has a franchise
agreement 6 with Coffee Partners Ltd. (CPL), a business entity organized and existing under the laws of British Virgin Islands,
for a non-exclusive right to operate coffee shops in the Philippines using trademarks designed by CPL such as "SAN
FRANCISCO COFFEE."
Respondent is a local corporation engaged in the wholesale and retail sale of coffee. It registered with the SEC in May
1995. It registered the business name "SAN FRANCISCO COFFEE & ROASTERY, INC." with the Department of Trade and
Industry (DTI) in June 1995. Respondent had since built a customer base that included Figaro Company, Tagaytay Highlands, Fat
Willy's, and other coffee companies.
In 1998, respondent formed a joint venture company with Boyd Coffee USA under the company name Boyd Coffee
Company Philippines, Inc. (BCCPI). BCCPI engaged in the processing, roasting, and wholesale selling of coffee. Respondent
later embarked on a project study of setting up coffee carts in malls and other commercial establishments in Metro Manila.
In June 2001, respondent discovered that petitioner was about to open a coffee shop under the name "SAN FRANCISCO
COFFEE" in Libis, Quezon City. According to respondent, petitioner's shop caused confusion in the minds of the public as it bore
a similar name and it also engaged in the business of selling coffee. Respondent sent a letter to petitioner demanding that the latter
stop using the name "SAN FRANCISCO COFFEE." Respondent also filed a complaint with the Bureau of Legal Affairs-
Intellectual Property Office (BLA-IPO) for infringement and/or unfair competition with claims for damages. DAHSaT
In its answer, petitioner denied the allegations in the complaint. Petitioner alleged it filed with the Intellectual Property
Office (IPO) applications for registration of the mark "SAN FRANCISCO COFFEE & DEVICE" for class 42 in 1999 and for
class 35 in 2000. Petitioner maintained its mark could not be confused with respondent's trade name because of the notable
distinctions in their appearances. Petitioner argued respondent stopped operating under the trade name "SAN FRANCISCO
COFFEE" when it formed a joint venture with Boyd Coffee USA. Petitioner contended respondent did not cite any specific acts
that would lead one to believe petitioner had, through fraudulent means, passed off its mark as that of respondent, or that it had
diverted business away from respondent.
Mr. David Puyat, president of petitioner corporation, testified that the coffee shop in Libis, Quezon City opened
sometime in June 2001 and that another coffee shop would be opened in Glorietta Mall, Makati City. He stated that the coffee
shop was set up pursuant to a franchise agreement executed in January 2001 with CPL, a British Virgin Island Company owned
by Robert Boxwell. Mr. Puyat said he became involved in the business when one Arthur Gindang invited him to invest in a coffee
shop and introduced him to Mr. Boxwell. For his part, Mr. Boxwell attested that the coffee shop "SAN FRANCISCO COFFEE"
has branches in Malaysia and Singapore. He added that he formed CPL in 1997 along with two other colleagues, Shirley Miller
John and Leah Warren, who were former managers of Starbucks Coffee Shop in the United States. He said they decided to invest
in a similar venture and adopted the name "SAN FRANCISCO COFFEE" from the famous city in California where he and his
former colleagues once lived and where special coffee roasts came from.
The Ruling of the Bureau of Legal Affairs-Intellectual Property Office
In its 14 August 2002 Decision, the BLA-IPO held that petitioner's trademark infringed on respondent's trade name. It
ruled that the right to the exclusive use of a trade name with freedom from infringement by similarity is determined from priority
of adoption. Since respondent registered its business name with the DTI in 1995 and petitioner registered its trademark with the
IPO in 2001 in the Philippines and in 1997 in other countries, then respondent must be protected from infringement of its trade
name.
The BLA-IPO also held that respondent did not abandon the use of its trade name as substantial evidence indicated
respondent continuously used its trade name in connection with the purpose for which it was organized. It found that although
respondent was no longer involved in blending, roasting, and distribution of coffee because of the creation of BCCPI, it continued
making plans and doing research on the retailing of coffee and the setting up of coffee carts. The BLA-IPO ruled that for
abandonment to exist, the disuse must be permanent, intentional, and voluntary.
The BLA-IPO held that petitioner's use of the trademark "SAN FRANCISCO COFFEE" will likely cause confusion
because of the exact similarity in sound, spelling, pronunciation, and commercial impression of the words "SAN FRANCISCO"
which is the dominant portion of respondent's trade name and petitioner's trademark. It held that no significant difference resulted
even with a diamond-shaped figure with a cup in the center in petitioner's trademark because greater weight is given to words —
the medium consumers use in ordering coffee products. DIcTEC
On the issue of unfair competition, the BLA-IPO absolved petitioner from liability. It found that petitioner adopted the
trademark "SAN FRANCISCO COFFEE" because of the authority granted to it by its franchisor. The BLA-IPO held there was no
evidence of intent to defraud on the part of petitioner.
The BLA-IPO also dismissed respondent's claim of actual damages because its claims of profit loss were based on mere
assumptions as respondent had not even started the operation of its coffee carts. The BLA-IPO likewise dismissed respondent's
claim of moral damages, but granted its claim of attorney's fees.
Both parties moved for partial reconsideration. Petitioner protested the finding of infringement, while respondent
questioned the denial of actual damages. The BLA-IPO denied the parties' partial motion for reconsideration. The parties appealed
to the Office of the Director General-Intellectual Property Office (ODG-IPO).
The Ruling of the Office of the Director General-
Intellectual Property Office
In its 22 October 2003 Decision, the ODG-IPO reversed the BLA-IPO. It ruled that petitioner's use of the trademark
"SAN FRANCISCO COFFEE" did not infringe on respondent's trade name. The ODG-IPO found that respondent had stopped
using its trade name after it entered into a joint venture with Boyd Coffee USA in 1998 while petitioner continuously used the
trademark since June 2001 when it opened its first coffee shop in Libis, Quezon City. It ruled that between a subsequent user of a
trade name in good faith and a prior user who had stopped using such trade name, it would be inequitable to rule in favor of the
latter.
The Ruling of the Court of Appeals
In its 15 June 2005 Decision, the Court of Appeals set aside the 22 October 2003 decision of the ODG-IPO in so far as it
ruled that there was no infringement. It reinstated the 14 August 2002 decision of the BLA-IPO finding infringement. The
appellate court denied respondent's claim for actual damages and retained the award of attorney's fees. In its 1 September 2005
Resolution, the Court of Appeals denied petitioner's motion for reconsideration and respondent's motion for partial
reconsideration.
The Issue
 The sole issue is whether petitioner's use of the trademark "SAN FRANCISCO COFFEE" constitutes infringement of
respondent's trade name "SAN FRANCISCO COFFEE & ROASTERY, INC.," even if the trade name is not registered with the
Intellectual Property Office (IPO).
The Court's Ruling
The petition has no merit.
Petitioner contends that when a trade name is not registered, a suit for infringement is not available. Petitioner alleges
respondent has abandoned its trade name. Petitioner points out that respondent's registration of its business name with the DTI
expired on 16 June 2000 and it was only in 2001 when petitioner opened a coffee shop in Libis, Quezon City that respondent
made a belated effort to seek the renewal of its business name registration. Petitioner stresses respondent's failure to continue the
use of its trade name to designate its goods negates any allegation of infringement. Petitioner claims no confusion is likely to
occur between its trademark and respondent's trade name because of a wide divergence in the channels of trade, petitioner serving
ready-made coffee while respondent is in wholesale blending, roasting, and distribution of coffee. Lastly, petitioner avers the
proper noun "San Francisco" and the generic word "coffee" are not capable of exclusive appropriation. cACTaI
Respondent maintains the law protects trade names from infringement even if they are not registered with the IPO.
Respondent claims Republic Act No. 8293 (RA 8293) 7 dispensed with registration of a trade name with the IPO as a requirement
for the filing of an action for infringement. All that is required is that the trade name is previously used in trade or commerce in
the Philippines. Respondent insists it never abandoned the use of its trade name as evidenced by its letter to petitioner demanding
immediate discontinuation of the use of its trademark and by the filing of the infringement case. Respondent alleges petitioner's
trademark is confusingly similar to respondent's trade name. Respondent stresses ordinarily prudent consumers are likely to be
misled about the source, affiliation, or sponsorship of petitioner's coffee. 
As to the issue of alleged abandonment of trade name by respondent, the BLA-IPO found that respondent continued to
make plans and do research on the retailing of coffee and the establishment of coffee carts, which negates abandonment. This
finding was upheld by the Court of Appeals, which further found that while respondent stopped using its trade name in its
business of selling coffee, it continued to import and sell coffee machines, one of the services for which the use of the business
name has been registered. The binding effect of the factual findings of the Court of Appeals on this Court applies with greater
force when both the quasi-judicial body or tribunal like the BLA-IPO and the Court of Appeals are in complete agreement on
their factual findings. It is also settled that absent any circumstance requiring the overturning of the factual conclusions made by
the quasi-judicial body or tribunal, particularly if affirmed by the Court of Appeals, the Court necessarily upholds such findings of
fact. 8
Coming now to the main issue, in Prosource International, Inc. v Horphag Research Management SA, 9 this Court laid
down what constitutes infringement of an unregistered trade name, thus:
(1) The trademark being infringed is registered in the Intellectual Property Office; however, in
infringement of trade name, the same need not be registered;
(2) The trademark or trade name is reproduced, counterfeited, copied, or colorably imitated by the
infringer;
(3) The infringing mark or trade name is used in connection with the sale, offering for sale, or advertising
of any goods, business or services; or the infringing mark or trade name is applied to labels, signs, prints,
packages, wrappers, receptacles, or advertisements intended to be used upon or in connection with such goods,
business, or services;
(4) The use or application of the infringing mark or trade name is likely to cause confusion or mistake or
to deceive purchasers or others as to the goods or services themselves or as to the source or origin of such goods
or services or the identity of such business; and
(5) It is without the consent of the trademark or trade name owner or the assignee thereof. 10 (Emphasis
supplied)
Clearly, a trade name need not be registered with the IPO before an infringement suit may be filed by its owner against
the owner of an infringing trademark. All that is required is that the trade name is previously used in trade or commerce in the
Philippines. 11 SCETHa
Section 22 of Republic Act No. 166, 12 as amended, required registration of a trade name as a condition for the
institution of an infringement suit, to wit:
Sec. 22. Infringement, what constitutes. — Any person who shall use, without the consent of the
registrant, any reproduction, counterfeit, copy, or colorable imitation of any registered mark or trade name in
connection with the sale, offering for sale, or advertising of any goods, business or services on or in connection
with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or
origin of such goods or services, or identity of such business; or reproduce, counterfeit, copy, or colorably imitate
 any such mark or trade name and apply such reproduction, counterfeit, copy, or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles, or advertisements intended to be used upon or in connection with
such goods, business, or services, shall be liable to a civil action by the registrant for any or all of the remedies
herein provided. (Emphasis supplied)
However, RA 8293, which took effect on 1 January 1998, has dispensed with the registration requirement. Section 165.2
of RA 8293 categorically states that trade names shall be protected, even prior to or without registration with the IPO, against any
unlawful act including any subsequent use of the trade name by a third party, whether as a trade name or a trademark likely to
mislead the public. Thus:
SEC. 165.2 (a) Notwithstanding any laws or regulations providing for any obligation to register
trade names, such names shall be protected, even prior to or without registration, against any unlawful act
committed by third parties.
(b) In particular, any subsequent use of a trade name by a third party, whether as a trade name or a mark
or collective mark, or any such use of a similar trade name or mark, likely to mislead the public, shall be deemed
unlawful. (Emphasis supplied)
It is the likelihood of confusion that is the gravamen of infringement. But there is no absolute standard for likelihood of
confusion. Only the particular, and sometimes peculiar, circumstances of each case can determine its existence. Thus, in
infringement cases, precedents must be evaluated in the light of each particular case. 13
In determining similarity and likelihood of confusion, our jurisprudence has developed two tests: the dominancy test and
the holistic test. The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that might
cause confusion and deception, thus constituting infringement. If the competing trademark contains the main, essential, and
dominant features of another, and confusion or deception is likely to result, infringement occurs. Exact duplication or imitation is
not required. The question is whether the use of the marks involved is likely to cause confusion or mistake in the mind of the
public or to deceive consumers. 14 THIAaD
In contrast, the holistic test entails a consideration of the entirety of the marks as applied to the products, including the
labels and packaging, in determining confusing similarity. 15 The discerning eye of the observer must focus not only on the
predominant words but also on the other features appearing on both marks in order that the observer may draw his conclusion
whether one is confusingly similar to the other. 16
Applying either the dominancy test or the holistic test, petitioner's "SAN FRANCISCO COFFEE" trademark is a clear
infringement of respondent's "SAN FRANCISCO COFFEE & ROASTERY, INC." trade name. The descriptive words "SAN
FRANCISCO COFFEE" are precisely the dominant features of respondent's trade name. Petitioner and respondent are engaged in
the same business of selling coffee, whether wholesale or retail. The likelihood of confusion is higher in cases where the business
of one corporation is the same or substantially the same as that of another corporation. In this case, the consuming public will
likely be confused as to the source of the coffee being sold at petitioner's coffee shops. Petitioner's argument that "San Francisco"
is just a proper name referring to the famous city in California and that "coffee" is simply a generic term, is untenable.
Respondent has acquired an exclusive right to the use of the trade name "SAN FRANCISCO COFFEE & ROASTERY, INC."
since the registration of the business name with the DTI in 1995. Thus, respondent's use of its trade name from then on must be
free from any infringement by similarity. Of course, this does not mean that respondent has exclusive use of the geographic word
"San Francisco" or the generic word "coffee." Geographic or generic words are not, per se, subject to exclusive appropriation. It
is only the combination of the words "SAN FRANCISCO COFFEE," which is respondent's trade name in its coffee business, that
is protected against infringement on matters related to the coffee business to avoid confusing or deceiving the public.
In Philips Export B.V. v. Court of Appeals, 17 this Court held that a corporation has an exclusive right to the use of its
name. The right proceeds from the theory that it is a fraud on the corporation which has acquired a right to that name and perhaps
carried on its business thereunder, that another should attempt to use the same name, or the same name with a slight variation in
such a way as to induce persons to deal with it in the belief that they are dealing with the corporation which has given a reputation
to the name. 18
This Court is not just a court of law, but also of equity. We cannot allow petitioner to profit by the name and reputation
so far built by respondent without running afoul of the basic demands of fair play. Not only the law but equity considerations hold
petitioner liable for infringement of respondent's trade name.
The Court of Appeals was correct in setting aside the 22 October 2003 Decision of the Office of the Director General-
Intellectual Property Office and in reinstating the 14 August 2002 Decision of the Bureau of Legal Affairs-Intellectual Property
Office.
WHEREFORE, we DENY the petition for review. We AFFIRM the 15 June 2005 Decision and 1 September 2005
Resolution of the Court of Appeals in CA-G.R. SP No. 80396.
Costs against petitioner. IaHAcT
SO ORDERED.
 Velasco, Jr., * Del Castillo, Abad and Perez, JJ., concur.
||| (Coffee Partners, Inc. v. San Francisco Coffee & Roastery, Inc., G.R. No. 169504, [March 3, 2010], 628 PHIL 13-26)

SECOND DIVISION

[G.R. No. 185917. June 1, 2011.]

FREDCO MANUFACTURING CORPORATION, petitioner, vs. PRESIDENT AND FELLOWS OF HARVARD COLLEGE (HARVARD

UNIVERSITY), respondents.

DECISION

CARPIO, J p:

The Case
Before the Court is a petition for review 1 assailing the 24 October 2008 Decision 2 and 8 January 2009 Resolution 3 of
the Court of Appeals in CA-G.R. SP No. 103394.
The Antecedent Facts
On 10 August 2005, petitioner Fredco Manufacturing Corporation (Fredco), a corporation organized and existing under
the laws of the Philippines, filed a Petition for Cancellation of Registration No. 56561 before the Bureau of Legal Affairs of the
Intellectual Property Office (IPO) against respondents President and Fellows of Harvard College (Harvard University), a
corporation organized and existing under the laws of Massachusetts, United States of America. The case was docketed as Inter
Partes Case No. 14-2005-00094.
Fredco alleged that Registration No. 56561 was issued to Harvard University on 25 November 1993 for the mark
"Harvard Veritas Shield Symbol" for decals, tote bags, serving trays, sweatshirts, t-shirts, hats and flying discs under Classes 16,
18, 21, 25 and 28 of the Nice International Classification of Goods and Services. Fredco alleged that the mark "Harvard" for t-
shirts, polo shirts, sandos, briefs, jackets and slacks was first used in the Philippines on 2 January 1982 by New York Garments
Manufacturing & Export Co., Inc. (New York Garments), a domestic corporation and Fredco's predecessor-in-interest. On 24
January 1985, New York Garments filed for trademark registration of the mark "Harvard" for goods under Class 25. The
application matured into a registration and a Certificate of Registration was issued on 12 December 1988, with a 20-year term
subject to renewal at the end of the term. The registration was later assigned to Romeo Chuateco, a member of the family that
owned New York Garments. CEASaT
Fredco alleged that it was formed and registered with the Securities and Exchange Commission on 9 November 1995
and had since then handled the manufacture, promotion and marketing of "Harvard" clothing articles. Fredco alleged that at the
time of issuance of Registration No. 56561 to Harvard. University, New York Garments had already registered the mark
"Harvard" for goods under Class 25. Fredco alleged that the registration was cancelled on 30 July 1998 when New York
Garments inadvertently failed to file an affidavit of use/non-use on the fifth anniversary of the registration but the right to the
mark "Harvard" remained with its predecessor New York Garments and now with Fredco.
Harvard University, on the other hand, alleged that it is the lawful owner of the name and mark "Harvard" in numerous
countries worldwide, including the Philippines. Among the countries where Harvard University has registered its name and mark
"Harvard" are:
1. Argentina
2. Benelux 4
3. Brazil
4. Canada
5. Chile
6. China P.R.
7. Colombia
8. Costa Rica
9. Cyprus
10. Czech Republic
11. Denmark
12. Ecuador
13. Egypt
14. Finland
15. France
16. Great Britain
17. Germany
18. Greece DCcTHa
19. Hong Kong
20. India
21. Indonesia
22. Ireland
23. Israel
24. Italy
25. Japan
26. South Korea
27. Malaysia
28. Mexico
29. New Zealand
30. Norway
31. Peru
32. Philippines
33. Poland
34. Portugal
35. Russia
36. South Africa
37. Switzerland
38. Singapore
39. Slovak Republic
40. Spain
41. Sweden
42. Taiwan
43. Thailand
44. Turkey TaCSAD
45. United Arab Emirates
 46. Uruguay
47. United States of America
48. Venezuela
49. Zimbabwe
50. European Community 5
The name and mark "Harvard" was adopted in 1639 as the name of Harvard College 6 of Cambridge, Massachusetts, U.S.A. The
name and mark "Harvard" was allegedly used in commerce as early as 1872. Harvard University is over 350 years old and is a
highly regarded institution of higher learning in the United States and throughout the world. Harvard University promotes, uses,
and advertises its name "Harvard" through various publications, services, and products in foreign countries, including the
Philippines. Harvard University further alleged that the name and the mark have been rated as one of the most famous brands in
the world, valued between US$750,000,000 and US$1,000,000,000.
Harvard University alleged that in March 2002, it discovered, through its international trademark watch program,
Fredco's website www.harvard-usa.com. The website advertises and promotes the brand name "Harvard Jeans USA" without
Harvard University's consent. The website's main page shows an oblong logo bearing the mark "Harvard Jeans USA®,"
"Established 1936," and "Cambridge, Massachusetts." On 20 April 2004, Harvard University filed an administrative complaint
against Fredco before the IPO for trademark infringement and/or unfair competition with damages.
Harvard University alleged that its valid and existing certificates of trademark registration in the Philippines are:
1. Trademark Registration No. 56561 issued on 25 November 1993 for "Harvard Veritas Shield Design" for goods
and services in Classes 16, 18, 21, 25 and 28 (decals, tote bags, serving trays, sweatshirts, t-shirts, hats
and flying discs) of the Nice International Classification of Goods and Services;
2. Trademark Registration No. 57526 issued on 24 March 1994 for "Harvard Veritas Shield Symbol" for services
in Class 41; Trademark Registration No. 56539 issued on 25 November 1998 for "Harvard" for services
in Class 41; and
3. Trademark Registration No. 66677 issued on 8 December 1998 for "Harvard Graphics" for goods in Class 9.
Harvard University further alleged that it filed the requisite affidavits of use for the mark "Harvard
Veritas Shield Symbol" with the IPO.
Further, on 7 May 2003 Harvard University filed Trademark Application No. 4-2003-04090 for "Harvard Medical
International & Shield Design" for services in Classes 41 and 44. In 1989, Harvard University established the Harvard Trademark
Licensing Program, operated by the Office for Technology and Trademark Licensing, to oversee and manage the worldwide
licensing of the "Harvard" name and trademarks for various goods and services. Harvard University stated that it never authorized
or licensed any person to use its name and mark "Harvard" in connection with any goods or services in the Philippines. DcaSIH
In a Decision 7 dated 22 December 2006, Director Estrellita Beltran-Abelardo of the Bureau of Legal Affairs, IPO
cancelled Harvard University's registration of the mark "Harvard" under Class 25, as follows:
WHEREFORE, premises considered, the Petition for Cancellation is hereby GRANTED. Consequently,
Trademark Registration Number 56561 for the trademark "HARVARD VE RI TAS 'SHIELD' SYMBOL" issued
on November 25, 1993 to PRESIDENT AND FELLOWS OF HARVARD COLLEGE (HARVARD
UNIVERSITY) should be CANCELLED only with respect to goods falling under Class 25. On the other hand,
considering that the goods of Respondent-Registrant falling under Classes 16, 18, 21 and 28 are not confusingly
similar with the Petitioner's goods, the Respondent-Registrant has acquired vested right over the same and
therefore, should not be cancelled.
Let the filewrapper of the Trademark Registration No. 56561 issued on November 25, 1993 for the
trademark "HARVARD VE RI TAS 'SHIELD' SYMBOL", subject matter of this case together with a copy of this
Decision be forwarded to the Bureau of Trademarks (BOT) for appropriate action.
SO ORDERED. 8
Harvard University filed an appeal before the Office of the Director General of the IPO. In a Decision 9 dated 21 April
2008, the Office of the Director General, IPO reversed the decision of the Bureau of Legal Affairs, IPO.
The Director General ruled that more than the use of the trademark in the Philippines, the applicant must be the owner of
the mark sought to be registered. The Director General ruled that the right to register a trademark is based on ownership and when
the applicant is not the owner, he has no right to register the mark. The Director General noted that the mark covered by Harvard
University's Registration No. 56561 is not only the word "Harvard" but also the logo, emblem or symbol of Harvard University.
The Director General ruled that Fredco failed to explain how its predecessor New York Garments came up with the mark
"Harvard." In addition, there was no evidence that Fredco or New York Garments was licensed or authorized by Harvard
University to use its name in commerce or for any other use.
The dispositive portion of the decision of the Office of the Director General, IPO reads:
WHEREFORE, premises considered, the instant appeal is GRANTED. The appealed decision is hereby
REVERSED and SET ASIDE. Let a copy of this Decision as well as the trademark application and records be
furnished and returned to the Director of Bureau of Legal Affairs for appropriate action. Further, let also the
Directors of the Bureau of Trademarks and the Administrative, Financial and Human Resources Development
Services Bureau, and the library of the Documentation, Information and Technology Transfer Bureau be furnished
a copy of this Decision for information, guidance, and records purposes. aIcETS
SO ORDERED. 10
Fredco filed a petition for review before the Court of Appeals assailing the decision of the Director General.
The Decision of the Court of Appeals
In its assailed decision, the Court of Appeals affirmed the decision of the Office of the Director General of the IPO.
The Court of Appeals adopted the findings of the Office of the Director General and ruled that the latter correctly set
aside the cancellation by the Director of the Bureau of Legal Affairs of Harvard University's trademark registration under Class
25. The Court of Appeals ruled that Harvard University was able to substantiate that it appropriated and used the marks "Harvard"
and "Harvard Veritas Shield Symbol" in Class 25 way ahead of Fredco and its predecessor New York Garments. The Court of
Appeals also ruled that the records failed to disclose any explanation for Fredco's use of the name and mark "Harvard" and the
words "USA," "Established 1936," and "Cambridge, Massachusetts" within an oblong device, "US Legend" and "Europe's No. 1
Brand." Citing Shangri-La International Hotel Management, Ltd. v Developers Group of Companies, Inc., 11 the Court of
Appeals ruled:  
One who has imitated the trademark of another cannot bring an action for infringement, particularly
against the true owner of the mark, because he would be coming to court with unclean hands. Priority is of no
avail to the bad faith plaintiff. Good faith is required in order to ensure that a second user may not merely take
advantage of the goodwill established by the true owner. 12
The dispositive portion of the decision of the Court of Appeals reads:
WHEREFORE, premises considered, the petition for review is DENIED. The Decision dated April 21,
2008 of the Director General of the IPO in Appeal No. 14-07-09 Inter Partes Case No. 14-2005-00094 is hereby
AFFIRMED.
SO ORDERED. 13
Fredco filed a motion for reconsideration.
In its Resolution promulgated on 8 January 2009, the Court of Appeals denied the motion for lack of merit.
Hence, this petition before the Court. CaAcSE
The Issue
The issue in this case is whether the Court of Appeals committed a reversible error in affirming the decision of the Office
of the Director General of the IPO.
The Ruling of this Court
The petition has no merit.
There is no dispute that the mark "Harvard" used by Fredco is the same as the mark "Harvard" in the "Harvard Veritas
Shield Symbol" of Harvard University. It is also not disputed that Harvard University was named Harvard College in 1639 and
that then, as now, Harvard University is located in Cambridge, Massachusetts, U.S.A. It is also unrefuted that Harvard University
has been using the mark "Harvard" in commerce since 1872. It is also established that Harvard University has been using the
marks "Harvard" and "Harvard Veritas Shield Symbol" for Class 25 goods in the United States since 1953. Further, there is no
dispute that Harvard University has registered the name and mark "Harvard" in at least 50 countries.
On the other hand, Fredco's predecessor-in-interest, New York Garments, started using the mark "Harvard" in the
Philippines only in 1982. New York Garments filed an application with the Philippine Patent Office in 1985 to register the mark
"Harvard," which application was approved in 1988. Fredco insists that the date of actual use in the Philippines should prevail on
the issue of who has the better right to register the marks.
Under Section 2 of Republic Act No. 166, 14 as amended (R.A. No. 166), before a trademark can be registered, it must
have been actually used in commerce for not less than two months in the Philippines prior to the filing of an application for its
registration. While Harvard University had actual prior use of its marks abroad for a long time, it did not have actual prior use in
the Philippines of the mark "Harvard Veritas Shield Symbol" before its application for registration of the mark "Harvard" with the
then Philippine Patents Office. However, Harvard University's registration of the name "Harvard" is based on home registration
which is allowed under Section 37 of R.A. No. 166. 15 As pointed out by Harvard University in its Comment:
Although Section 2 of the Trademark law (R.A. 166) requires for the registration of trademark that the
applicant thereof must prove that the same has been actually in use in commerce or services for not less than two
(2) months in the Philippines before the application for registration is filed, where the trademark sought to be
registered has already been registered in a foreign country that is a member of the Paris Convention, the
requirement of proof of use in the commerce in the Philippines for the said period is not necessary. An applicant
for registration based on home certificate of registration need not even have used the mark or trade name in this
country. 16
Indeed, in its Petition for Cancellation of Registration No. 56561, Fredco alleged that Harvard University's registration "is based
on 'home registration' for the mark 'Harvard Veritas Shield' for Class 25." 17 HESIcT
In any event, under Section 239.2 of Republic Act No. 8293 (R.A. No. 8293), 18 "[m]arks registered under Republic Act
No. 166 shall remain in force but shall be deemed to have been granted under this Act . . .," which does not require actual
prior use of the mark in the Philippines. Since the mark "Harvard Veritas Shield Symbol" is now deemed granted under R.A. No.
8293, any alleged defect arising from the absence of actual prior use in the Philippines has been cured by Section 239.2.  19 In
addition, Fredco's registration was already cancelled on 30 July 1998 when it failed to file the required affidavit of use/non-use for
the fifth anniversary of the mark's registration. Hence, at the time of Fredco's filing of the Petition for Cancellation before the
Bureau of Legal Affairs of the IPO, Fredco was no longer the registrant or presumptive owner of the mark "Harvard."
There are two compelling reasons why Fredco's petition must fail.
First, Fredco's registration of the mark "Harvard" and its identification of origin as "Cambridge, Massachusetts" falsely
suggest that Fredco or its goods are connected with Harvard University, which uses the same mark "Harvard" and is also located
in Cambridge, Massachusetts. This can easily be gleaned from the following oblong logo of Fredco that it attaches to its clothing
line:

Fredco's registration of the mark "Harvard" should not have been allowed because Section 4 (a) of R.A. No.
166 prohibits the registration of a mark "which may disparage or falsely suggest a connection with persons, living or
dead, institutions, beliefs . . . ." Section 4 (a) of R.A. No. 166 provides:
Section 4. Registration of trade-marks, trade-names and service-marks on the principal register. —
There is hereby established a register of trade-mark, trade-names and service-marks which shall be known as the
principal register. The owner of a trade-mark, a trade-name or service-mark used to distinguish his goods,
business or services from the goods, business or services of others shall have the right to register the same on the
principal register, unless it:
(a) Consists of or comprises immoral, deceptive or scandalous manner, or matter which may disparage
or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring
them into contempt or disrepute;
 (b) . . . (emphasis supplied)
Fredco's use of the mark "Harvard," coupled with its claimed origin in Cambridge, Massachusetts, obviously suggests a false
connection with Harvard University. On this ground alone, Fredco's registration of the mark "Harvard" should have been
disallowed. EcDATH
Indisputably, Fredco does not have any affiliation or connection with Harvard University, or even with Cambridge,
Massachusetts. Fredco or its predecessor New York Garments was not established in 1936, or in the U.S.A. as indicated by
Fredco in its oblong logo. Fredco offered no explanation to the Court of Appeals or to the IPO why it used the mark "Harvard" on
its oblong logo with the words "Cambridge, Massachusetts," "Established in 1936," and "USA." Fredco now claims before this
Court that it used these words "to evoke a 'lifestyle' or suggest a 'desirable aura' of petitioner's clothing lines." Fredco's belated
justification merely confirms that it sought to connect or associate its products with Harvard University, riding on the prestige and
popularity of Harvard University, and thus appropriating part of Harvard University's goodwill without the latter's consent.
Section 4 (a) of R.A. No. 166 is identical to Section 2 (a) of the Lanham Act, 20 the trademark law of the United States.
These provisions are intended to protect the right of publicity of famous individuals and institutions from commercial
exploitation of their goodwill by others. 21 What Fredco has done in using the mark "Harvard" and the words "Cambridge,
Massachusetts," "USA" to evoke a "desirable aura" to its products is precisely to exploit commercially the goodwill of Harvard
University without the latter's consent. This is a clear violation of Section 4 (a) of R.A. No. 166. Under Section 17 (c) 22 of R.A.
No. 166, such violation is a ground for cancellation of Fredco's registration of the mark "Harvard" because the registration was
obtained in violation of Section 4 of R.A. No. 166. acHTIC
Second, the Philippines and the United States of America are both signatories to the Paris Convention for the Protection
of Industrial Property (Paris Convention). The Philippines became a signatory to the Paris Convention on 27 September 1965.
Articles 6bis and 8 of the Paris Convention state:
ARTICLE 6bis
(i) The countries of the Union undertake either administratively if their legislation so permits, or at the
request of an interested party, to refuse or to cancel the registration and to prohibit the use of a trademark which
constitutes a reproduction, imitation or translation, liable to create confusion or a mark considered by the
competent authority of the country as being already the mark of a person entitled to the benefits of the present
Convention and used for identical or similar goods. These provisions shall also apply when the essential
part of the mark constitutes a reproduction of any such well-known mark or an imitation liable to create
confusion therewith.
ARTICLE 8
A trade name shall be protected in all the countries of the Union without the obligation of filing or
registration, whether or not it forms part of a trademark. (Emphasis supplied)
Thus, this Court has ruled that the Philippines is obligated to assure nationals of countries of the Paris Convention that they are
afforded an effective protection against violation of their intellectual property rights in the Philippines in the same way that their
own countries are obligated to accord similar protection to Philippine nationals. 23
Article 8 of the Paris Convention has been incorporated in Section 37 of R.A. No. 166, as follows:
Section 37. Rights of foreign registrants. — Persons who are nationals of, domiciled in, or have a bona
fide or effective business or commercial establishment in any foreign country, which is a party to any
international convention or treaty relating to marks or trade-names, or the repression of unfair competition to
which the Philippines may be a party, shall be entitled to the benefits and subject to the provisions of this Act to
the extent and under the conditions essential to give effect to any such convention and treaties so long as the
Philippines shall continue to be a party thereto, except as provided in the following paragraphs of this section. 
xxx xxx xxx
Trade-names of persons described in the first paragraph of this section shall be protected without
the obligation of filing or registration whether or not they form parts of marks. 24 DcSACE
xxx xxx xxx (Emphasis supplied)
Thus, under Philippine law, a trade name of a national of a State that is a party to the Paris Convention, whether or not the trade
name forms part of a trademark, is protected "without the obligation of filing or registration."
"Harvard" is the trade name of the world famous Harvard University, and it is also a trademark of Harvard University.
Under Article 8 of the Paris Convention, as well as Section 37 of R.A. No. 166, Harvard University is entitled to protection in the
Philippines of its trade name "Harvard" even without registration of such trade name in the Philippines. This means that no
educational entity in the Philippines can use the trade name "Harvard" without the consent of Harvard University. Likewise, no
entity in the Philippines can claim, expressly or impliedly through the use of the name and mark "Harvard," that its products or
services are authorized, approved, or licensed by, or sourced from, Harvard University without the latter's consent.
Article 6bis of the Paris Convention has been administratively implemented in the Philippines through two directives of
the then Ministry (now Department) of Trade, which directives were upheld by this Court in several cases.  25 On 20 November
1980, then Minister of Trade Secretary Luis Villafuerte issued a Memorandum directing the Director of Patents to reject, pursuant
to the Paris Convention, all pending applications for Philippine registration of signature and other world-famous trademarks by
applicants other than their original owners. 26 The Memorandum states:
Pursuant to the Paris Convention for the Protection of Industrial Property to which the Philippines is a
signatory, you are hereby directed to reject all pending applications for Philippine registration of signature and
other world-famous trademarks by applicants other than its original owners or users.
The conflicting claims over internationally known trademarks involve such name brands as Lacoste,
Jordache, Vanderbilt, Sasson, Fila, Pierre Cardin, Gucci, Christian Dior, Oscar de la Renta, Calvin Klein,
Givenchy, Ralph Lauren, Geoffrey Beene, Lanvin and Ted Lapidus.
It is further directed that, in cases where warranted, Philippine registrants of such trademarks should be
asked to surrender their certificates of registration, if any, to avoid suits for damages and other legal action by the
trademarks' foreign or local owners or original users.
You are also required to submit to the undersigned a progress report on the matter.
For immediate compliance. 27
In a Memorandum dated 25 October 1983, then Minister of Trade and Industry Roberto Ongpin affirmed the earlier
Memorandum of Minister Villafuerte. Minister Ongpin directed the Director of Patents to implement measures necessary to
comply with the Philippines' obligations under the Paris Convention, thus: EScaIT
1. Whether the trademark under consideration is well-known in the Philippines or is a mark already
belonging to a person entitled to the benefits of the CONVENTION, this should be established, pursuant to
Philippine Patent Office procedures in inter partes and ex parte cases, according to any of the following
criteria or any combination thereof:
(a) a declaration by the Minister of Trade and Industry that the trademark being considered is already
well-known in the Philippines such that permission for its use by other than its original owner will constitute a
reproduction, imitation, translation or other infringement;
(b) that the trademark is used in commerce internationally, supported by proof that goods bearing the
trademark are sold on an international scale, advertisements, the establishment of factories, sales offices,
distributorships, and the like, in different countries, including volume or other measure of international trade and
commerce;
(c) that the trademark is duly registered in the industrial property office(s) of another country or
countries, taking into consideration the dates of such registration;
(d) that the trademark has been long established and obtained goodwill and general international
consumer recognition as belonging to one owner or source;
(e) that the trademark actually belongs to a party claiming ownership and has the right to registration
under the provisions of the aforestated PARIS CONVENTION.
2. The word trademark, as used in this MEMORANDUM, shall include tradenames, service
marks, logos, signs, emblems, insignia or other similar devices used for identification and recognition by
consumers.
3. The Philippine Patent Office shall refuse all applications for, or cancel the registration of, trademarks
which constitute a reproduction, translation or imitation of a trademark owned by a person, natural or corporate,
who is a citizen of a country signatory to the PARIS CONVENTION FOR THE PROTECTION OF
INDUSTRIAL PROPERTY.
xxx xxx xxx 28 (Emphasis supplied)
In Mirpuri, the Court ruled that the essential requirement under Article 6bis of the Paris Convention is that the
trademark to be protected must be "well-known" in the country where protection is sought. 29 The Court declared that the power
to determine whether a trademark is well-known lies in the competent authority of the country of registration or use. 30 The Court
then stated that the competent authority would either be the registering authority if it has the power to decide this, or the courts of
the country in question if the issue comes before the courts. 31 caEIDA
 To be protected under the two directives of the Ministry of Trade, an internationally well-known mark need not be
registered or used in the Philippines. 32 All that is required is that the mark is well-known internationally and in the Philippines
for identical or similar goods, whether or not the mark is registered or used in the Philippines. The Court ruled in  Sehwani,
Incorporated v. In-N-Out Burger, Inc.: 33
The fact that respondent's marks are neither registered nor used in the Philippines is of no
moment. The scope of protection initially afforded by Article 6bis of the Paris Convention has been expanded in
the 1999 Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks, wherein the
World Intellectual Property Organization (WIPO) General Assembly and the Paris Union agreed to a nonbinding
recommendation that a well-known mark should be protected in a country even if the mark is neither
registered nor used in that country. Part I, Article 2(3) thereof provides:
(3) [Factors Which Shall Not Be Required] (a) A Member State shall not require, as a condition for
determining whether a mark is a well-known mark:
(i) that the mark has been used in, or that the mark has been registered or that an application for
registration of the mark has been filed in or in respect of, the Member State;
(ii) that the mark is well known in, or that the mark has been registered or that an application for
registration of the mark has been filed in or in respect of, any jurisdiction other than the Member State; or
(iii) that the mark is well known by the public at large in the Member State. 34 (Italics in the original
decision; boldface supplied)
Indeed, Section 123.1 (e) of R.A. No. 8293 now categorically states that "a mark which is considered by the competent
authority of the Philippines to be well-known internationally and in the Philippines, whether or not it is registered here,"
cannot be registered by another in the Philippines. Section 123.1 (e) does not require that the well-known mark be used in
commerce in the Philippines but only that it be well-known in the Philippines. Moreover, Rule 102 of the Rules and Regulations
on Trademarks, Service Marks, Trade Names and Marked or Stamped Containers, which implement R.A. No. 8293, provides:
Rule 102. Criteria for determining whether a mark is well-known. In determining whether a mark is well-
known, the following criteria or any combination thereof may be taken into account: CSTHca
(a) the duration, extent and geographical area of any use of the mark, in particular, the duration, extent
and geographical area of any promotion of the mark, including advertising or publicity and the presentation, at
fairs or exhibitions, of the goods and/or services to which the mark applies;
(b) the market share, in the Philippines and in other countries, of the goods and/or services to which the
mark applies;
(c) the degree of the inherent or acquired distinction of the mark;
(d) the quality-image or reputation acquired by the mark;
(e) the extent to which the mark has been registered in the world;
(f) the exclusivity of registration attained by the mark in the world;
(g) the extent to which the mark has been used in the world;
(h) the exclusivity of use attained by the mark in the world;
(i) the commercial value attributed to the mark in the world;
(j) the record of successful protection of the rights in the mark;
(k) the outcome of litigations dealing with the issue of whether the mark is a well-known mark; and
(l) the presence or absence of identical or similar marks validly registered for or used on identical or
similar goods or services and owned by persons other than the person claiming that his mark is a well-known
mark. (Emphasis supplied)
Since "any combination" of the foregoing criteria is sufficient to determine that a mark is well-known, it is clearly not necessary
that the mark be used in commerce in the Philippines. Thus, while under the territoriality principle a mark must be used in
commerce in the Philippines to be entitled to protection, internationally well-known marks are the exceptions to this rule.
In the assailed Decision of the Office of the Director General dated 21 April 2008, the Director General found that:
Traced to its roots or origin, HARVARD is not an ordinary word. It refers to no other than Harvard
University, a recognized and respected institution of higher learning located in Cambridge, Massachusetts, U.S.A.
 Initially referred to simply as "the new college," the institution was named "Harvard College" on 13 March 1639,
after its first principal donor, a young clergyman named John Harvard. A graduate of Emmanuel College,
Cambridge in England, John Harvard bequeathed about four hundred books in his will to form the basis of the
college library collection, along with half his personal wealth worth several hundred pounds. The earliest known
official reference to Harvard as a "university" rather than "college" occurred in the new Massachusetts
Constitution of 1780. IcTaAH
Records also show that the first use of the name HARVARD was in 1638 for educational services, policy
courses of instructions and training at the university level. It has a Charter. Its first commercial use of the name or
mark HARVARD for Class 25 was on 31 December 1953 covered by UPTON Reg. No. 2,119,339 and 2,101,295.
Assuming in arguendo, that the Appellate may have used the mark HARVARD in the Philippines ahead of the
Appellant, it still cannot be denied that the Appellant's use thereof was decades, even centuries, ahead of the
Appellee's. More importantly, the name HARVARD was the name of a person whose deeds were considered to be
a cornerstone of the university. The Appellant's logos, emblems or symbols are owned by Harvard University. The
name HARVARD and the logos, emblems or symbols are endemic and cannot be separated from the
institution. 35
Finally, in its assailed Decision, the Court of Appeals ruled:
Records show that Harvard University is the oldest and one of the foremost educational institutions in the
United States, it being established in 1636. It is located primarily in Cambridge, Massachusetts and was named
after John Harvard, a puritan minister who left to the college his books and half of his estate.
The mark "Harvard College" was first used in commerce in the United States in 1638 for educational
services, specifically, providing courses of instruction and training at the university level (Class 41). Its
application for registration with the United States Patent and Trademark Office was filed on September 20, 2000
and it was registered on October 16, 2001. The marks "Harvard" and "Harvard Ve ri tas 'Shield' Symbol" were
first used in commerce in the United States on December 31, 1953 for athletic uniforms, boxer shorts, briefs, caps,
coats, leather coats, sports coats, gym shorts, infant jackets, leather jackets, night shirts, shirts, socks, sweat pants,
sweatshirts, sweaters and underwear (Class 25). The applications for registration with the USPTO were filed on
September 9, 1996, the mark "Harvard" was registered on December 9, 1997 and the mark "Harvard Ve ri tas
'Shield' Symbol" was registered on September 30, 1997. 36
We also note that in a Decision 37 dated 18 December 2008 involving a separate case between Harvard University and
Streetward International, Inc., 38 the Bureau of Legal Affairs of the IPO ruled that the mark "Harvard" is a "well-known mark."
This Decision, which cites among others the numerous trademark registrations of Harvard University in various countries, has
become final and executory. SCEDAI
There is no question then, and this Court so declares, that "Harvard" is a well-known name and mark not only in the
United States but also internationally, including the Philippines. The mark "Harvard" is rated as one of the most famous marks in
the world. It has been registered in at least 50 countries. It has been used and promoted extensively in numerous publications
worldwide. It has established a considerable goodwill worldwide since the founding of Harvard University more than 350 years
ago. It is easily recognizable as the trade name and mark of Harvard University of Cambridge, Massachusetts, U.S.A.,
internationally known as one of the leading educational institutions in the world. As such, even before Harvard University applied
for registration of the mark "Harvard" in the Philippines, the mark was already protected under Article 6 bis and Article 8 of the
Paris Convention. Again, even without applying the Paris Convention, Harvard University can invoke Section 4 (a) of  R.A. No.
166 which prohibits the registration of a mark "which may disparage or falsely suggest a connection with persons, living or
dead, institutions, beliefs . . . ."
WHEREFORE, we DENY the petition. We AFFIRM the 24 October 2008 Decision and 8 January 2009 Resolution of
the Court of Appeals in CA-G.R. SP No. 103394.
SO ORDERED.
Nachura, Peralta, Abad and Mendoza, JJ., concur.
||| (Fredco Manufacturing Corp. v. President and Fellows of Hardvard College, G.R. No. 185917, [June 1, 2011], 665 PHIL 374-399)
 SECOND DIVISION

[G.R. No. 194307. November 20, 2013.]

BIRKENSTOCK ORTHOPAEDIE GMBH AND CO. KG (formerly BIRKENSTOCK ORTHOPAEDIE GMBH), petitioner, vs. PHILIPPINE SHOE
EXPO MARKETING CORPORATION, respondent.

DECISION

PERLAS-BERNABE, J p:

Assailed in this Petition for Review on Certiorari 1 are the Court of Appeals' (CA) Decision 2 dated June 25, 2010 and
Resolution 3 dated October 27, 2010 in CA-G.R. SP No. 112278 which reversed and set aside the Intellectual Property Office (IPO)
Director General's Decision 4 dated December 22, 2009 that allowed the registration of various trademarks in favor of petitioner
Birkenstock Orthopaedie GmbH & Co. KG.
The Facts
Petitioner, a corporation duly organized and existing under the laws of Germany, applied for various trademark registrations
before the IPO, namely: (a) "BIRKENSTOCK" under Trademark Application Serial No. (TASN) 4-1994-091508 for goods falling
under Class 25 of the International Classification of Goods and Services (Nice Classification) with filing date of March 11,
1994; (b)"BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE COMPRISING OF ROUND COMPANY SEAL AND
REPRESENTATION OF A FOOT, CROSS AND SUNBEAM" under TASN 4-1994-091509 for goods falling under Class 25 of the
Nice Classification with filing date of March 11, 1994; and (c) "BIRKENSTOCK BAD HONNEF-RHEIN & DEVICE
COMPRISING OF ROUND COMPANY SEAL AND REPRESENTATION OF A FOOT, CROSS AND SUNBEAM" under TASN
4-1994-095043 for goods falling under Class 10 of the Nice Classification with filing date of September 5, 1994 (subject
applications). 5 AcDHCS
However, registration proceedings of the subject applications were suspended in view of an existing registration of the mark
"BIRKENSTOCK AND DEVICE" under Registration No. 56334 dated October 21, 1993 (Registration No. 56334) in the name of
Shoe Town International and Industrial Corporation, the predecessor-in-interest of respondent Philippine Shoe Expo Marketing
Corporation. 6 In this regard, on May 27, 1997 petitioner filed a petition for cancellation of Registration No. 56334 on the ground that
it is the lawful and rightful owner of the Birkenstock marks (Cancellation Case). 7 During its pendency, however, respondent and/or
its predecessor-in-interest failed to file the required 10th Year Declaration of Actual Use (10th Year DAU) for Registration No. 56334
on or before October 21, 2004, 8 thereby resulting in the cancellation of such mark. 9 Accordingly, the cancellation case was
dismissed for being moot and academic. 10
The aforesaid cancellation of Registration No. 56334 paved the way for the publication of the subject applications in the IPO
e-Gazette on February 2, 2007. 11 In response, respondent filed three (3) separate verified notices of oppositions to the subject
applications docketed as Inter Partes Case Nos. 14-2007-00108, 14-2007-00115, and 14-2007-00116, 12 claiming, inter alia,
that: (a) it, together with its predecessor-in-interest, has been using Birkenstock marks in the Philippines for more than 16 years
through the mark "BIRKENSTOCK AND DEVICE"; (b) the marks covered by the subject applications are identical to the one
covered by Registration No. 56334 and thus, petitioner has no right to the registration of such marks;  (c) on November 15, 1991,
respondent's predecessor-in-interest likewise obtained a Certificate of Copyright Registration No. 0-11193 for the word
"BIRKENSTOCK"; (d) while respondent and its predecessor-in-interest failed to file the 10th Year DAU, it continued the use of
"BIRKENSTOCK AND DEVICE" in lawful commerce; and (e) to record its continued ownership and exclusive right to use the
"BIRKENSTOCK" marks, it has filed TASN 4-2006-010273 as a "re-application" of its old registration, Registration No.
56334. 13 On November 13, 2007, the Bureau of Legal Affairs (BLA) of the IPO issued Order No. 2007-2051 consolidating the
aforesaid inter partes cases (Consolidated Opposition Cases). 14 CHEIcS
The Ruling of the BLA
In its Decision 15 dated May 28, 2008, the BLA of the IPO sustained respondent's opposition, thus, ordering the rejection of
the subject applications. It ruled that the competing marks of the parties are confusingly similar since they contained the word
"BIRKENSTOCK" and are used on the same and related goods. It found respondent and its predecessor-in-interest as the prior user
and adopter of "BIRKENSTOCK" in the Philippines, while on the other hand, petitioner failed to present evidence of actual use in the
trade and business in this country. It opined that while Registration No. 56334 was cancelled, it does not follow that prior right over
the mark was lost, as proof of continuous and uninterrupted use in trade and business in the Philippines was presented. The BLA
likewise opined that petitioner's marks are not well-known in the Philippines and internationally and that the various certificates of
registration submitted by petitioners were all photocopies and, therefore, not admissible as evidence. 16
Aggrieved, petitioner appealed to the IPO Director General.
The Ruling of the IPO Director General
In his Decision 17 dated December 22, 2009, the IPO Director General reversed and set aside the ruling of the BLA, thus
allowing the registration of the subject applications. He held that with the cancellation of Registration No. 56334 for respondent's
failure to file the 10th Year DAU, there is no more reason to reject the subject applications on the ground of prior registration by
another proprietor. 18 More importantly, he found that the evidence presented proved that petitioner is the true and lawful owner and
prior user of "BIRKENSTOCK" marks and thus, entitled to the registration of the marks covered by the subject applications.  19 The
IPO Director General further held that respondent's copyright for the word "BIRKENSTOCK" is of no moment since copyright and
trademark are different forms of intellectual property that cannot be interchanged. 20 HETDAC
Finding the IPO Director General's reversal of the BLA unacceptable, respondent filed a petition for review with the CA.
Ruling of the CA
In its Decision 21 dated June 25, 2010, the CA reversed and set aside the ruling of the IPO Director General and reinstated
that of the BLA. It disallowed the registration of the subject applications on the ground that the marks covered by such applications
"are confusingly similar, if not outright identical" with respondent's mark. 22 It equally held that respondent's failure to file the 10th
Year DAU for Registration No. 56334 "did not deprive petitioner of its ownership of the "BIRKENSTOCK' mark since it has
submitted substantial evidence showing its continued use, promotion and advertisement thereof up to the present." 23 It opined that
when respondent's predecessor-in-interest adopted and started its actual use of "BIRKENSTOCK," there is neither an existing
registration nor a pending application for the same and thus, it cannot be said that it acted in bad faith in adopting and starting the use
of such mark. 24 Finally, the CA agreed with respondent that petitioner's documentary evidence, being mere photocopies, were
submitted in violation of Section 8.1 of Office Order No. 79, Series of 2005 (Rules on Inter Partes Proceedings).
Dissatisfied, petitioner filed a Motion for Reconsideration 25 dated July 20, 2010, which was, however, denied in a
Resolution 26 dated October 27, 2010. Hence, this petition. 27
Issues Before the Court
The primordial issue raised for the Court's resolution is whether or not the subject marks should be allowed registration in the
name of petitioner.
The Court's Ruling
The petition is meritorious.
A. Admissibility of Petitioner's
Documentary Evidence.
In its Comment 28 dated April 29, 2011, respondent asserts that the documentary evidence submitted by petitioner in the
Consolidated Opposition Cases, which are mere photocopies, are violative of Section 8.1 of the Rules on Inter Partes Proceedings,
which requires certified true copies of documents and evidence presented by parties in lieu of originals.  29 As such, they should be
deemed inadmissible.
The Court is not convinced.
It is well-settled that "the rules of procedure are mere tools aimed at facilitating the attainment of justice, rather than its
frustration. A strict and rigid application of the rules must always be eschewed when it would subvert the primary objective of the
rules, that is, to enhance fair trials and expedite justice. Technicalities should never be used to defeat the substantive rights of the other
party. Every party-litigant must be afforded the amplest opportunity for the proper and just determination of his cause, free from the
constraints of technicalities." 30 "Indeed, the primordial policy is a faithful observance of [procedural rules], and their relaxation or
suspension should only be for persuasive reasons and only in meritorious cases, to relieve a litigant of an injustice not commensurate
with the degree of his thoughtlessness in not complying with the procedure prescribed." 31 This is especially true with quasi-judicial
and administrative bodies, such as the IPO, which are not bound by technical rules of procedure. 32 On this score, Section 5 of the
Rules on Inter Partes Proceedings provides: CSTcEI
Sec. 5.  Rules of Procedure to be followed in the conduct of hearing of Inter Partes cases. — The rules
of procedure herein contained primarily apply in the conduct of hearing of Inter Partes cases. The Rules of Court
may be applied suppletorily. The Bureau shall not be bound by strict technical rules of procedure and
evidence but may adopt, in the absence of any applicable rule herein, such mode of proceedings which is
 consistent with the requirements of fair play and conducive to the just, speedy and inexpensive disposition
of cases, and which will give the Bureau the greatest possibility to focus on the contentious issues before it.
(Emphasis and underscoring supplied)
In the case at bar, while petitioner submitted mere photocopies as documentary evidence in the Consolidated Opposition
Cases, it should be noted that the IPO had already obtained the originals of such documentary evidence in the related Cancellation
Case earlier filed before it. Under this circumstance and the merits of the instant case as will be subsequently discussed, the Court
holds that the IPO Director General's relaxation of procedure was a valid exercise of his discretion in the interest of substantial
justice. 33
Having settled the foregoing procedural matter, the Court now proceeds to resolve the substantive issues.
B. Registration and ownership of
"BIRKENSTOCK."
Republic Act No. (RA) 166, 34 the governing law for Registration No. 56334, requires the filing of a DAU on specified
periods, 35 to wit:
Section 12. Duration. — Each certificate of registration shall remain in force for twenty years:
Provided, That registrations under the provisions of this Act shall be cancelled by the Director, unless
within one year following the fifth, tenth and fifteenth anniversaries of the date of issue of the certificate of
registration, the registrant shall file in the Patent Office an affidavit showing that the mark or trade-name
is still in use or showing that its non-use is due to special circumstance which excuse such non-use and is not due
to any intention to abandon the same, and pay the required fee. acCTSE
The Director shall notify the registrant who files the above-prescribed affidavits of his acceptance or
refusal thereof and, if a refusal, the reasons therefor. (Emphasis and underscoring supplied)
The aforementioned provision clearly reveals that failure to file the DAU within the requisite period results in the automatic
cancellation of registration of a trademark. In turn, such failure is tantamount to the abandonment or withdrawal of any right or
interest the registrant has over his trademark. 36
In this case, respondent admitted that it failed to file the 10th Year DAU for Registration No. 56334 within the requisite
period, or on or before October 21, 2004. As a consequence, it was deemed to have abandoned or withdrawn any right or interest over
the mark "BIRKENSTOCK." Neither can it invoke Section 236 37 of the IP Code which pertains to intellectual property rights
obtained under previous intellectual property laws, e.g., RA 166, precisely because it already lost any right or interest over the said
mark.
Besides, petitioner has duly established its true and lawful ownership of the mark "BIRKENSTOCK."
Under Section 2 38 of RA 166, which is also the law governing the subject applications, in order to register a trademark, one
must be the owner thereof and must have actually used the mark in commerce in the Philippines for two (2) months prior to the
application for registration. Section 2-A 39 of the same law sets out to define how one goes about acquiring ownership thereof. Under
the same section, it is clear that actual use in commerce is also the test of ownership but the provision went further by saying that the
mark must not have been so appropriated by another. Significantly, to be an owner, Section 2-A does not require that the actual use of
a trademark must be within the Philippines. Thus, under RA 166, one may be an owner of a mark due to its actual use but may not yet
have the right to register such ownership here due to the owner's failure to use the same in the Philippines for two (2) months prior to
registration. 40 EaSCAH
It must be emphasized that registration of a trademark, by itself, is not a mode of acquiring ownership. If the applicant is not
the owner of the trademark, he has no right to apply for its registration. Registration merely creates a  prima facie presumption of the
validity of the registration, of the registrant's ownership of the trademark, and of the exclusive right to the use thereof. Such
presumption, just like the presumptive regularity in the performance of official functions, is rebuttable and must give way to evidence
to the contrary. 41
Clearly, it is not the application or registration of a trademark that vests ownership thereof, but it is the ownership of a
trademark that confers the right to register the same. A trademark is an industrial property over which its owner is entitled to property
rights which cannot be appropriated by unscrupulous entities that, in one way or another, happen to register such trademark ahead of
its true and lawful owner. The presumption of ownership accorded to a registrant must then necessarily yield to superior evidence of
actual and real ownership of a trademark. The Court's pronouncement in Berris Agricultural Co., Inc. v. Abyadang 42 is instructive on
this point:
The ownership of a trademark is acquired by its registration and its actual use by the manufacturer or
distributor of the goods made available to the purchasing public. . . . A certificate of registration of a mark, once
issued, constitutes prima facie evidence of the validity of the registration, of the registrant's ownership of the
mark, and of the registrant's exclusive right to use the same in connection with the goods or services and those that
are related thereto specified in the certificate. . . . In other words, the prima facie presumption brought about by
 the registration of a mark may be challenged and overcome in an appropriate action, . . . by evidence of prior use
by another person, i.e., it will controvert a claim of legal appropriation or of ownership based on
registration by a subsequent user. This is because a trademark is a creation of use and belongs to one who
first used it in trade or commerce. 43 (Emphasis and underscoring supplied)
In the instant case, petitioner was able to establish that it is the owner of the mark "BIRKENSTOCK." It submitted evidence
relating to the origin and history of "BIRKENSTOCK" and its use in commerce long before respondent was able to register the same
here in the Philippines. It has sufficiently proven that "BIRKENSTOCK" was first adopted in Europe in 1774 by its inventor, Johann
Birkenstock, a shoemaker, on his line of quality footwear and thereafter, numerous generations of his kin continuously engaged in the
manufacture and sale of shoes and sandals bearing the mark "BIRKENSTOCK" until it became the entity now known as the
petitioner. Petitioner also submitted various certificates of registration of the mark "BIRKENSTOCK" in various countries and that it
has used such mark in different countries worldwide, including the Philippines. 44
On the other hand, aside from Registration No. 56334 which had been cancelled, respondent only presented copies of sales
invoices and advertisements, which are not conclusive evidence of its claim of ownership of the mark "BIRKENSTOCK" as these
merely show the transactions made by respondent involving the same. 45 ETDHaC
In view of the foregoing circumstances, the Court finds the petitioner to be the true and lawful owner of the mark
"BIRKENSTOCK" and entitled to its registration, and that respondent was in bad faith in having it registered in its name. In this
regard, the Court quotes with approval the words of the IPO Director General, viz.:
The facts and evidence fail to show that [respondent] was in good faith in using and in registering the
mark BIRKENSTOCK. BIRKENSTOCK, obviously of German origin, is a highly distinct and arbitrary mark. It
is very remote that two persons did coin the same or identical marks. To come up with a highly distinct and
uncommon mark previously appropriated by another, for use in the same line of business, and without any
plausible explanation, is incredible. The field from which a person may select a trademark is practically unlimited.
As in all other cases of colorable imitations, the unanswered riddle is why, of the millions of terms and
combinations of letters and designs available, [respondent] had to come up with a mark identical or so closely
similar to the [petitioner's] if there was no intent to take advantage of the goodwill generated by the [petitioner's]
mark. Being on the same line of business, it is highly probable that the [respondent] knew of the existence of
BIRKENSTOCK and its use by the [petitioner], before [respondent] appropriated the same mark and had it
registered in its name. 46
WHEREFORE, the petition is GRANTED. The Decision dated June 25, 2010 and Resolution dated October 27, 2010 of the
Court of Appeals in CA-G.R. SP No. 112278 are REVERSED and SET ASIDE. Accordingly, the Decision dated December 22, 2009
of the IPO Director General is hereby REINSTATED.
SO ORDERED.
Brion, Del Castillo, Perez and Reyes, * JJ., concur.
||| (Birkenstock Orthopaedie GmbH and Co. KG v. Phil. Shoe Expo Marketing Corp., G.R. No. 194307, [November 20, 2013], 721
PHIL 867-882)

SECOND DIVISION

[G.R. No. 185830. June 5, 2013.]

ECOLE DE CUISINE MANILLE (CORDON BLEU OF THE PHILIPPINES), INC., petitioner, vs. RENAUD COINTREAU & CIE and LE CORDON
BLEU INT'L., B.V., respondents.

DECISION
PERLAS-BERNABE, J p:

Assailed in this petition for review on certiorari 1 is the December 23, 2008 Decision 2 of the Court of Appeals (CA) in CA-
G.R. SP No. 104672 which affirmed in toto the Intellectual Property Office (IPO) Director General's April 21, 2008 Decision 3 that
declared respondent Renaud Cointreau & Cie (Cointreau) as the true and lawful owner of the mark "LE CORDON BLEU &
DEVICE" and thus, is entitled to register the same under its name.
The Facts
On June 21, 1990, Cointreau, a partnership registered under the laws of France, filed before the (now defunct) Bureau of
Patents, Trademarks, and Technology Transfer (BPTTT) of the Department of Trade and Industry a trademark application for the
mark "LE CORDON BLEU & DEVICE" for goods falling under classes 8, 9, 16, 21, 24, 25, 29, and 30 of the International
Classification of Goods and Services for the Purposes of Registrations of Marks ("Nice Classification") (subject mark). The
application was filed pursuant to Section 37 of Republic Act No. 166, as amended (R.A. No. 166), on the basis of Home Registration
No. 1,390,912, issued on November 25, 1986 in France. Bearing Serial No. 72264, such application was published for opposition in
the March-April 1993 issue of the BPTTT Gazette and released for circulation on May 31, 1993. 4 STaCIA
On July 23, 1993, petitioner Ecole De Cuisine Manille, Inc. (Ecole) filed an opposition to the subject application, averring
that: (a) it is the owner of the mark "LE CORDON BLEU, ECOLE DE CUISINE MANILLE," which it has been using since 1948 in
cooking and other culinary activities, including in its restaurant business; and (b) it has earned immense and invaluable goodwill such
that Cointreau's use of the subject mark will actually create confusion, mistake, and deception to the buying public as to the origin and
sponsorship of the goods, and cause great and irreparable injury and damage to Ecole's business reputation and goodwill as a senior
user of the same. 5
On October 7, 1993, Cointreau filed its answer claiming to be the true and lawful owner of the subject mark. It averred
that: (a) it has filed applications for the subject mark's registration in various jurisdictions, including the Philippines; (b) Le Cordon
Bleu is a culinary school of worldwide acclaim which was established in Paris, France in 1895; (c) Le Cordon Bleu was the first
cooking school to have set the standard for the teaching of classical French cuisine and pastry making; and  (d) it has trained students
from more than eighty (80) nationalities, including Ecole's directress, Ms. Lourdes L. Dayrit. Thus, Cointreau concluded that Ecole's
claim of being the exclusive owner of the subject mark is a fraudulent misrepresentation. 6
During the pendency of the proceedings, Cointreau was issued Certificates of Registration Nos. 60631 and 54352 for the
marks "CORDON BLEU & DEVICE" and "LE CORDON BLEU PARIS 1895 & DEVICE" for goods and services under classes 21
and 41 of the Nice Classification, respectively. 7
The Ruling of the Bureau of Legal Affairs
In its Decision 8 dated July 31, 2006, the Bureau of Legal Affairs (BLA) of the IPO sustained Ecole's opposition to the
subject mark, necessarily resulting in the rejection of Cointreau's application. 9 While noting the certificates of registration obtained
from other countries and other pertinent materials showing the use of the subject mark outside the Philippines, the BLA did not find
such evidence sufficient to establish Cointreau's claim of prior use of the same in the Philippines. It emphasized that the adoption and
use of trademark must be in commerce in the Philippines and not abroad. It then concluded that Cointreau has not established any
proprietary right entitled to protection in the Philippine jurisdiction because the law on trademarks rests upon the doctrine of
nationality or territoriality. 10 AaHTIE
On the other hand, the BLA found that the subject mark, which was the predecessor of the mark "LE CORDON BLEU
MANILLE" has been known and used in the Philippines since 1948 and registered under the name "ECOLE DE CUISINE MANILLE
(THE CORDON BLEU OF THE PHILIPPINES), INC." on May 9, 1980. 11
Aggrieved, Cointreau filed an appeal with the IPO Director General.
The Ruling of the IPO Director General
In his Decision dated April 21, 2008, the IPO Director General reversed and set aside the BLA's decision, thus, granting
Cointreau's appeal and allowing the registration of the subject mark. 12 He held that while Section 2 of R.A. No. 166 requires actual
use of the subject mark in commerce in the Philippines for at least two (2) months before the filing date of the application, only the
owner thereof has the right to register the same, explaining that the user of a mark in the Philippines is not  ipso facto its owner.
Moreover, Section 2-A of the same law does not require actual use in the Philippines to be able to acquire ownership of a mark. 13
In resolving the issue of ownership and right to register the subject mark in favor of Cointreau, he considered Cointreau's
undisputed use of such mark since 1895 for its culinary school in Paris, France (in which petitioner's own directress, Ms. Lourdes L.
Dayrit, had trained in 1977). Contrarily, he found that while Ecole may have prior use of the subject mark in the Philippines since
1948, it failed to explain how it came up with such name and mark. The IPO Director General therefore concluded that Ecole has
unjustly appropriated the subject mark, rendering it beyond the mantle of protection of Section 4 (d) 14 of R.A. No. 166. 15 HCacDE
Finding the IPO Director General's reversal of the BLA's Decision unacceptable, Ecole filed a Petition for Review  16 dated
June 7, 2008 with the CA.
 Ruling of the CA
In its Decision dated December 23, 2008, the CA affirmed the IPO Director General's Decision in toto. 17 It declared
Cointreau as the true and actual owner of the subject mark with a right to register the same in the Philippines under Section 37 of R.A.
No. 166, having registered such mark in its country of origin on November 25, 1986. 18
The CA likewise held that Cointreau's right to register the subject mark cannot be barred by Ecole's prior use thereof as early
as 1948 for its culinary school "LE CORDON BLEU MANILLE" in the Philippines because its appropriation of the mark was done in
bad faith. Further, Ecole had no certificate of registration that would put Cointreau on notice that the former had appropriated or has
been using the subject mark. In fact, its application for trademark registration for the same which was just filed on February 24, 1992
is still pending with the IPO. 19
Hence, this petition.
Issues Before the Court
The sole issue raised for the Court's resolution is whether the CA was correct in upholding the IPO Director General's ruling
that Cointreau is the true and lawful owner of the subject mark and thus, entitled to have the same registered under its name.
At this point, it should be noted that the instant case shall be resolved under the provisions of the old Trademark Law, R.A.
No. 166, which was the law in force at the time of Cointreau's application for registration of the subject mark.
The Court's Ruling
The petition is without merit. ADSTCI
In the petition, Ecole argues that it is the rightful owner of the subject mark, considering that it was the first entity that used
the same in the Philippines. Hence, it is the one entitled to its registration and not Cointreau.
Petitioner's argument is untenable.
Under Section 2 20 of R.A. No. 166, in order to register a trademark, one must be the owner thereof and must have actually
used the mark in commerce in the Philippines for two (2) months prior to the application for registration. Section 2-A  21 of the same
law sets out to define how one goes about acquiring ownership thereof. Under Section 2-A, it is clear that actual use in commerce is
also the test of ownership but the provision went further by saying that the mark must not have been so appropriated by another.
Additionally, it is significant to note that Section 2-A does not require that the actual use of a trademark must be within the
Philippines. Thus, as correctly mentioned by the CA, under R.A. No. 166, one may be an owner of a mark due to its actual use but
may not yet have the right to register such ownership here due to the owner's failure to use the same in the Philippines for two (2)
months prior to registration. 22
Nevertheless, foreign marks which are not registered are still accorded protection against infringement and/or unfair
competition. At this point, it is worthy to emphasize that the Philippines and France, Cointreau's country of origin, are both signatories
to the Paris Convention for the Protection of Industrial Property (Paris Convention). 23 Articles 6bis and 8 of the Paris
Convention state: DHEACI
ARTICLE 6bis
(1) The countries of the Union undertake, ex officio if their legislation so permits, or at the request of an
interested party, to refuse or to cancel the registration, and to prohibit the use, of a trademark which constitutes
a reproduction, an imitation, or a translation, liable to create confusion, of a mark considered by the competent
authority of the country of registration or use to be well known in that country as being already the mark of a
person entitled to the benefits of this Convention and used for identical or similar goods. These provisions
shall also apply when the essential part of the mark constitutes a reproduction of any such well-known
mark or an imitation liable to create confusion therewith.
ARTICLE 8
A trade name shall be protected in all the countries of the Union without the obligation of filing or
registration, whether or not it forms part of a trademark. (Emphasis and underscoring supplied)
In this regard, Section 37 of R.A. No. 166 incorporated Article 8 of the Paris Convention, to wit:
Section 37. Rights of foreign registrants. — Persons who are nationals of, domiciled in, or have a bona fide or
effective business or commercial establishment in any foreign country, which is a party to any international
convention or treaty relating to marks or trade-names, or the repression of unfair competition to which the
Philippines may be a party, shall be entitled to the benefits and subject to the provisions of this Act to the extent
and under the conditions essential to give effect to any such convention and treaties so long as the Philippines
shall continue to be a party thereto, except as provided in the following paragraphs of this section.
 xxx xxx xxx
Trade-names of persons described in the first paragraph of this section shall be protected without the obligation
of filing or registration whether or not they form parts of marks. HCacDE
xxx xxx xxx
In view of the foregoing obligations under the Paris Convention, the Philippines is obligated to assure nationals of the
signatory-countries that they are afforded an effective protection against violation of their intellectual property rights in the Philippines
in the same way that their own countries are obligated to accord similar protection to Philippine nationals. 24 "Thus, under Philippine
law, a trade name of a national of a State that is a party to the Paris Convention, whether or not the trade name forms part of a
trademark, is protected 'without the obligation of filing or registration.'" 25
In the instant case, it is undisputed that Cointreau has been using the subject mark in France since 1895, prior to Ecole's
averred first use of the same in the Philippines in 1948, of which the latter was fully aware thereof. In fact, Ecole's present directress,
Ms. Lourdes L. Dayrit (and even its foundress, Pat Limjuco Dayrit), had trained in Cointreau's Le Cordon Bleu culinary school in
Paris, France. Cointreau was likewise the first registrant of the said mark under various classes, both abroad and in the Philippines,
having secured Home Registration No. 1,390,912 dated November 25, 1986 from its country of origin, as well as several trademark
registrations in the Philippines. 26
On the other hand, Ecole has no certificate of registration over the subject mark but only a pending application covering
services limited to Class 41 of the Nice Classification, referring to the operation of a culinary school. Its application was filed only on
February 24, 1992, or after Cointreau filed its trademark application for goods and services falling under different classes in 1990.
Under the foregoing circumstances, even if Ecole was the first to use the mark in the Philippines, it cannot be said to have validly
appropriated the same.
It is thus clear that at the time Ecole started using the subject mark, the same was already being used by Cointreau, albeit
abroad, of which Ecole's directress was fully aware, being an alumna of the latter's culinary school in Paris, France. Hence, Ecole
cannot claim any tinge of ownership whatsoever over the subject mark as Cointreau is the true and lawful owner thereof. As such, the
IPO Director General and the CA were correct in declaring Cointreau as the true and lawful owner of the subject mark and as such, is
entitled to have the same registered under its name. SDTaHc
In any case, the present law on trademarks, Republic Act No. 8293, otherwise known as the Intellectual Property Code of the
Philippines, as amended, has already dispensed with the requirement of prior actual use at the time of registration.  27 Thus, there is
more reason to allow the registration of the subject mark under the name of Cointreau as its true and lawful owner.
As a final note, "the function of a trademark is to point out distinctly the origin or ownership of the goods (or services) to
which it is affixed; to secure to him, who has been instrumental in bringing into the market a superior article of merchandise, the fruit
of his industry and skill; to assure the public that they are procuring the genuine article; to prevent fraud and imposition; and to protect
the manufacturer against substitution and sale of an inferior and different article as his product." 28 As such, courts will protect trade
names or marks, although not registered or properly selected as trademarks, on the broad ground of enforcing justice and protecting
one in the fruits of his toil. 29
WHEREFORE, the petition is DENIED. Accordingly, the December 23, 2008 Decision of the Court of Appeals in CA-
G.R. SP No. 104672 is hereby AFFIRMED in toto.
SO ORDERED.
||| (Ecole de Cuisine Manille, Inc. v. Renaud Cointreau & Cie, G.R. No. 185830, [June 5, 2013], 710 PHIL 305-316)
 THIRD DIVISION

[G.R. No. 71189. November 4, 1992.]

FABERGE, INCORPORATED, petitioner, vs. THE INTERMEDIATE APPELLATE COURT and CO BENG KAY, respondents.

Siguion Reyna, Montecillo and Ongsiako for petitioner.

Roberto M. Sison for private respondent.

DECISION

MELO, J p:

The Director of Patents authorized herein private respondent Co Beng Kay to register the trademark "BRUTE" for the briefs
manufactured and sold by his Corporation in the domestic market vis-a-vis petitioner's opposition grounded on similarity of said
trademark with petitioner's own symbol "BRUT" which it previously registered for after shave lotion, shaving cream, deodorant, talcum
powder, and toilet soap. Thereafter, respondent court, through Justice Gopengco with Justices Patajo and Racela, Jr. concurring, was
initially persuaded by petitioner's plea for reversal directed against the permission granted by the Director of Patents, but the decision of
the Second Special Cases Division handed down on April 29, 1983 was later reconsidered in favor of herein private respondent (pp. 46-
54; pp. 34-36, Rollo).
 Hence, the petition at bar assailing the action of respondent court in affirming the ruling of the Director of Patents (Page 7,
Petition; Page 16, Rollo). llcd
In essence, it appears that in the course of marketing petitioner's "BRUT" products and during the pendency of its application
for registration of the trademark "BRUT 33 and DEVICE" for anti-perspirant, personal deodorant, cream shave, after shave/shower
lotion, hair spray, and hair shampoo (page 236, Rollo), respondent Co Beng Kay of Webengton Garments Manufacturing applied for
registration of the disputed emblem "BRUTE" for briefs. Opposition raised by petitioner anchored on similarity with its own symbol and
irreparable injury to the business reputation of the first user was to no avail. When the legal tussle was elevated to respondent court,
Justice Gopengco remarked that:
"Indeed, a look at the marks "BRUT," "BRUT 33" and "BRUTE" shows that such marks are not only similar in
appearance but they are even similar in sound and in the style of presentation. It is reasonable to believe that this
similarity is sufficient to cause confusion and even mistake and deception in the buying public as to the origin or source
of the goods bearing such trademarks. It should be considered that, although the mark "BRUTE" was applied for, only
for briefs, yet such product has the same outlet — such as department stores and haberdashery stores in the Philippines
— as the goods covered by the trademarks "BRUT" and "BRUT 33" so that such confusion, mistake or deception is not
unlikely to occur. The argument of appellee, that in modern marketing, goods of similar use are grouped in one section
of the supermarket and thus it is unlikely that cosmetics be mixed with textile or wearing apparel, is hardly convincing
enough, for a look at the modern department stores shows that merchandise intended for the use of men are now placed
in a section which is then labelled "Men's Accessories." It is not unlikely, therefore, that in said section, appellant's
products, which are cosmetics for men's use, be placed beside appellee's product, and cause such confusion or mistake
as to the source of the goods displayed in the section. To avoid this, the Director of Patents held:
"The marks KEYSTON (on shirts) and KEYSTONE (on shoes and slippers), the latter having been previously
registered are clearly similar in sound and appearance that confusion or mistake, or deception among
purchasers as to origin and source of goods is likely to occur. Shirts and shoes are both wearing apparel and
there is no gainsaying the truth that these items are ordinarily displayed in the same manner and sold through
the same retail outlets such as department and haberdashery stores in the Philippines. "(Ex-Parte Keystone
Garment Manufacturing Co., Decision No. 245 of the Director of Patents, January 25, 1963.).
It is also not disputed that on account of the considerable length of time that appellant has marketed its products bearing
the trademarks "BRUT" and "BRUT 33," and its maintenance of high quality of its products through the years, appellant
has earned and established immense goodwill among its customers. We agree with appellant that should appellee be
allowed to use the trademark "BRUTE" on the briefs manufactured by him, appellee would be cashing in on the
goodwill already established by appellant, because, as already stated above, appellant's cosmetics and appellee's briefs
are not entirely unrelated since both are directed to the fashion trade and in the marketing process, they may find
themselves side by side in the "men's Accessories Section" of the market, thus easily leading the buying public to
believe that such briefs come from the same source as appellant's cosmetics, and be induced to buy said briefs, to the
undue advantage of appellee. Again, if after purchasing such briefs, the public finds them to be of non-competitive
quality, or not of the high quality expected of appellant's products, then appellant's reputation and goodwill will be
ruined, to its damage and prejudice. Thus, for the protection of the goodwill already established by a party, the Supreme
Court held: cdrep
"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." (Chuanchow Soy & Canning Co. vs. Dir. of Patents and
Villapanta, 108 Phil. 833, 836.)
The test of confusing similarity which would preclude the registration of a trademark 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. In short, the law does not require that the competing marks
must be so identical as to produce actual error or mistake. It would be sufficient, for purposes of the law, that the
similarity between the two labels be such that there is a possibility or likelihood of the purchaser of the older brand
mistaking the newer brand for it. (Gopengco, Mercantile Law Compendium, 1983 ed., p. 684; Acoje Mining Co., Inc.
vs. Director of Patents, 38 SCRA 480)." (pp. 3-6, Decision; pp. 48-51, Rollo).
On June 5, 1984, respondent's Motion for Reconsideration merited the nod of approval of the appellate court brought about by
private respondent's suggestion that the controlling ruling is that laid down in Philippine Refining Co., Inc. vs. Ng Sam (115 SCRA 472
[1982]), ESSO Standard Eastern, Inc. vs. Court of Appeals (116 SCRA 336 [1982]); Hickok Manufacturing Co., Inc. vs. CA (116 SCRA
387 [1982]), and Acoje Mining Co., Inc. vs. Director of Patents (38 SCRA 480 [1971], to the effect that the identical trademark can be
used by different manufacturers for products that are non-competing and unrelated. (pp. 34-36, Rollo).
Petitioner is of the impression that respondent court could not have relied on the rulings of this Court in the  ESSO and
the PRC cases when the original decision was reconsidered since respondent court already expressed the opinion in the text of the
previous discourse that the facts in said cases "are not found in the case at bar" (Page 12, Brief for the Petitioner, Page 202, Rollo).
Petitioner likewise emphasizes American jurisprudential doctrines to the effect that sale of cosmetics and wearing apparel under similar
marks is likely to cause confusion. Instead of applying the ESSO, PRC and Hickok cases, petitioner continues to asseverate, the rule as
announced in Ang vs. Teodoro (74 Phil. 50 [1942]) as reiterated in Sta. Ana vs. Maliwat and Evalle (24 SCRA (1968) 101) should be
applied.
In addition, it seems that petitioner would want this Court to appreciate petitioner's alleged application for registration of the
trademark "Brut 33 DEVICE" for briefs as an explicit proof that petitioner intended to expand its mark "BRUT" to other goods,
following the sentiment expressed by Justice J.B.L. Reyes in the Sta. Ana case (supra, at page 1025) that relief is available where the
junior user's goods are not remote from any product that the senior user would be likely to make or sell (Pages 26-27, Brief for the
Petitioner).
Besides, petitioner insists that in view of the repeal of Republic Act No. 166 (which advocated the related goods theory)
by Republic Act No. 666 which deleted the phrase found in the old law that the merchandise must be of substantially the same
descriptive properties, respondent Court should have heeded the pronouncement in the Ang case that there can be unfair competition
even if the goods are noncompeting (supra, at page 54).
On the other hand, private respondent echoes the glaring differences in physical appearance of its products with petitioner's
own goods by stressing the observations of the Director of Patents on May 3, 1978: LibLex
"Considered in their entireties as depicted in the parties' sample box and can containers, the involved trademarks
are grossly different in their overall appearance that even at a distance a would-be purchaser could easily distinguish
what is BRUTE brief and what is BRUT after shave lotion, lotion and the like. Opposer's mark BRUT or BRUT 33, as
shown in Exhibit "6", is predominantly colored green with a blue and white band at the middle portion of the container.
Also appearing therein in bold letters is opposer's name "FABERGE" and a notation "Creme Shave". On the other hand,
respondent's mark as shown in Exh. "4-A" prominently displays the representation of a muscular man, underneath of
which appears the trademark BRUTE with a notation "Bikini Brief". Equally visible at the other portions of respondent's
labels are the pictorial representation of "briefs" which unmistakably suggest that the product contained in the box
container is that of a man's brief. The fact therefore is obvious that the goods upon which the conflicting trademarks are
used are clearly different and the intended purpose of such goods are likewise not the same. Accordingly, a purchaser
who is out in the market for the purpose of buying respondent's BRUTE brief would definitely be not mistaken or
misled into buying instead opposer's BRUT after shave lotion or deodorant.
"Additionally, the meaning or connotation of the bare word marks of opposer, BRUT, and BRUTE of respondent, are
clearly different and not likely to be confused with each other. BRUT simply means "dry", and also, "to browse"; while
BRUTE means "ferocious, sensual", and in Latin, it signifies "heavy". Gleaned from the respective meanings of the two
marks in question, they both suggest the resultant effects of the application of the products, upon which the said
trademarks are employed, which fact all the more renders confusion or deception of purchasers a remote possibility."
The products covered by petitioner's trademarks "BRUT" and "BRUT 33 & Device" enjoying its so-called "goodwill"
are after-shave lotion, shaving cream, deodorant, talcum powder, toilet soap, anti-perspirant, personal deodorant, cream
shave, after shave/shower lotion, hair spray and hair shampoo. Petitioner has never applied for, registered nor used its
trademarks for briefs in commerce or trade in the Philippines. Private respondent seeks to register his trademark
"BRUTE" only for briefs which is a product non-competitive to and entirely unrelated with petitioner's aforementioned
products." (pp. 3-4, Brief for the Respondents)
in order to impress upon Us that the controlling norm is the comparison of the trademarks in their entirety as they appear in their labels
to determine whether there is confusing similarity.
Moreover, private respondent asserts that briefs and cosmetics do not belong to the same class nor do they have the same
descriptive properties such that the use of a trademark on one's goods does not prevent the adoption and use of the same trademark by
others on unrelated articles of a different nature in line with the ruling of this Court in  Hickok Manufacturing Co., Inc. vs. Court of
Appeals (116 SCRA 387 [1982]). Furthermore, respondent belies petitioner's claim that the latter had applied for registration of the
trademark "BRUT 33 DEVICE" for briefs since the documents on file with the Director of Patents attached to respondent's legal Brief
does not include the so-called application by petitioner of the alleged trademark for briefs.
To the legal query of whether private respondent may appropriate the trademark "BRUTE" for the briefs it manufactures and
sells to the public albeit petitioner had previously registered the symbol "BRUT" and "BRUT 33" for its own line of items, it is but
apropos to shift Our attention to the pertinent provisions of the new Civil Code vis-a-vis Republic Act No. 166, as amended, the special
law patterned after the United States Trademark Act of 1946 (Director of Patents, Circular Release No. 36, 45 O.G. 3704;  Martin,
Commentaries and Jurisprudence on the Philippine Commercial Laws, 1986 Revised Edition, Volume 2, page 489), thus: LibLex
"ARTICLE 520. A trade-mark or trade-name duly registered in the proper government bureau or office is owned by and
pertains to the person, corporation, or firm registering the same, subject to the provisions of special laws.
"ARTICLE 521. The goodwill of a business is property, and may be transferred together with the right to use the name
under which the business is conducted.
"ARTICLE 522. Trade-marks and trade-names are governed by special laws."
xxx xxx xxx
 "SECTION 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
by Rep. Act No. 865).
"SECTION 2-A. Ownership of trademarks, trade-names and service-marks; how acquired. — Anyone who lawfully
produces or deals in merchandise of any kind or who engages in any lawful business or who renders any lawful service
in commerce, by actual use thereof 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 service from the merchandise, business or services of others. The ownership or possession of a
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 known to the law. (As
inserted by Sec. 1 of Rep. Act 638).
xxx xxx xxx
"SECTION 4. Registration of trade-marks, trade-names and service-marks on the principal register. —
. . . The owner of 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, unless it:
xxx xxx xxx
"4(d) Consists of or comprises a mark or trade-name which so resembles a mark or trade-name registered in the
Philippines or a mark or trade-name previously used in the Philippines by another and not abandoned, as to be likely,
when applied to or used in connection with the goods, business or services of the applicant, to cause confusion or
mistake or to deceive purchasers.
xxx xxx xxx
"SECTION 11. Issuance and contents of the certificate. — Certificates of registration shall be issued in the name of the
Republic of the Philippines under the seal of the Patent Office, and shall be signed by the Director, and a record thereof
together with a copy of the specimen or facsimile and the statement of the applicant, shall be kept in books for that
purpose. The certificate shall reproduce the specimen or facsimile of the mark or trade-name, contain the statement of
the applicant and state that the mark or trade-name is registered under this Act, the date of the first use in commerce or
business, the particular goods or services for which it is registered, the number and date of the registration, the term
thereof, the date on which the application for registration was received in the Patent Office, a statement of the
requirement that in order to maintain the registration, periodical affidavits of use within the specified times hereinafter
in section twelve provided, shall be filed, and such other data as the rules and regulations may from time to time
prescribe.
xxx xxx xxx
"SECTION 20. Certificate of registration prima facie evidence of validity. — A certificate of registration of a mark or
trade-name shall be prima facie evidence of the validity of the registration, the registrant's ownership of the mark or
trade-name, and of the registrant's exclusive right to use the same in connection with the goods, business or services
specified in the certificate, subject to any conditions and limitations stated therein."
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. In as much as petitioner has not ventured in the production of briefs, an item which is
not listed in its certificate of registration, petitioner can not 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 therein. This basic point is
perhaps the unwritten rationale of Justice Escolin in Philippine Refining Co., Inc. vs. Ng Lam (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. LexLib
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. 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).
Withal, judging from the physical attributes of petitioner's and private respondent's products, there can be no doubt that
confusion or the likelihood of deception to the average purchaser is unlikely since the goods are non-competing and unrelated. In
upholding registration of the brand "ESSO for cigarettes inspite previous appropriation of the same mark "ESSO" for petroleum
products, then Justice, later Chief Justice Teehankee in Esso Standard Eastern, Inc. vs. Court of Appeals (116 SCRA 336 [1982] said:
"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.
xxx xxx xxx
"The trial court, relying on the old cases of Ang vs. Teodoro and Arce & Sons, Inc. vs. Selecta Biscuit Company,
referring 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 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 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. v. Ng Sam and Director of Patents, the Court
upheld the patent director's 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
noncompetitive 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"
as 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. 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.
"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.
xxx xxx xxx
"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." (339; 341-346). prLL
The glaring discrepancies between the two products had been amply portrayed to such an extent that indeed, "a purchaser who
is out in the market for the purpose of buying respondent's BRUTE brief would definitely be not mistaken or misled into buying BRUT
after shave lotion or deodorant" as categorically opined in the decision of the Director of Patents relative to the inter-partes case. (supra,
at page 7).
Petitioner's bid to persuade Us into accepting the doctrines announced in the aforementioned cases of Sta. Ana vs. Maliwat and
Ang vs. Teodoro hardly inspire belief. In Sta Ana, it was admitted that the marks were confusingly similar which is not so in the case at
bar. In the 1942 case of Ang vs. Teodoro, Justice Ozaeta noted that pants and shirts are similar to shoes and slippers within the meaning
of Sections 3, 7, 11, 13 and 20 of Act No. 666 which was the old Trademark Law enacted on March 6, 1903 prior to the present law.
Obviously, the conclusion reached by the ponente in the Ang case may not now be utilized by analogy to the case at bar due to variance
in the factual and legal milieu. Neither can We agree with petitioner that the ruling in La Chemise Lacoste, S.A. vs. Fernandez (129
SCRA 373 [1984]) is applicable to the controversy at hand. The case adverted to by petitioner involved the same mark for the same class
of shirts manufactured by the parties therein. llcd
It would appear that as a consequence of this discourse, there still remains hanging in mid-air the unanswered puzzle as to why
an aspiring commercial enterprise, given the infinite choices available to it of names for the intended product, would select a trademark
or tradename which somewhat resembles an existing emblem that had established goodwill. Our opinion hereinbefore expressed could
even open the floodgates to similar incursions in the future when We interpreted Section 20 of the Trademark Law as an implicit
permission to a manufacturer to venture into the production of goods and allow that producer to appropriate the brand name of the senior
registrant on goods other than those stated in the certificate of registration.
But these nagging and disturbing points cannot win the day for petitioner, although We must hasten to add that in the final
denouement, Our apprehensions in this regard are not entirely irreversible since Section 4(d) and 20 of the law in question may still be
subjected to legislative modification in order to protect the original user of the symbol.
 WHEREFORE, the petition is hereby DISMISSED without pronouncement as to costs.
SO ORDERED.
Gutierrez, Jr., Bidin, Davide, Jr. and Romero, JJ ., concur.

SECOND DIVISION

[G.R. No. 190065. August 16, 2010.]

DERMALINE, INC., petitioner, vs. MYRA PHARMACEUTICALS, INC., respondent.

DECISION

NACHURA, J p:

This is a petition for review on certiorari 1 seeking to reverse and set aside the Decision dated August 7, 2009 2 and the
Resolution dated October 28, 2009 3 of the Court of Appeals (CA) in CA-G.R. SP No. 108627.
The antecedent facts and proceedings —
On October 21, 2006, petitioner Dermaline, Inc. (Dermaline) filed before the Intellectual Property Office (IPO) an
application for registration of the trademark "DERMALINE DERMALINE, INC." (Application No. 4-2006011536). The
application was published for Opposition in the IPO E-Gazette on March 9, 2007.
On May 8, 2007, respondent Myra Pharmaceuticals, Inc. (Myra) filed a Verified Opposition 4 alleging that the trademark
sought to be registered by Dermaline so resembles its trademark "DERMALIN" and will likely cause confusion, mistake and
deception to the purchasing public. Myra said that the registration of Dermaline's trademark will violate Section
123 5 of Republic Act (R.A.) No. 8293 (Intellectual Property Code of the Philippines). It further alleged that Dermaline's use and
registration of its applied trademark will diminish the distinctiveness and dilute the goodwill of Myra's "DERMALIN," registered
with the IPO way back July 8, 1986, renewed for ten (10) years on July 8, 2006. Myra has been extensively using "DERMALIN"
commercially since October 31, 1977, and said mark is still valid and subsisting.
Myra claimed that, despite Dermaline's attempt to differentiate its applied mark, the dominant feature is the term
"DERMALINE," which is practically identical with its own "DERMALIN," more particularly that the first eight (8) letters of the
marks are identical, and that notwithstanding the additional letter "E" by Dermaline, the pronunciation for both marks are
identical. Further, both marks have three (3) syllables each, with each syllable identical in sound and appearance, even if the last
syllable of "DERMALINE" consisted of four (4) letters while "DERMALIN" consisted only of three (3). CIcTAE
Myra also pointed out that Dermaline applied for the same mark "DERMALINE" on June 3, 2003 and was already
refused registration by the IPO. By filing this new application for registration, Dermaline appears to have engaged in a fishing
expedition for the approval of its mark. Myra argued that its intellectual property right over its trademark is protected under
Section 147 6 of R.A. No. 8293.
Myra asserted that the mark "DERMALINE DERMALINE, INC." is aurally similar to its own mark such that the
registration and use of Dermaline's applied mark will enable it to obtain benefit from Myra's reputation, goodwill and advertising
and will lead the public into believing that Dermaline is, in any way, connected to Myra. Myra added that even if the subject
application was under Classification 44 7 for various skin treatments, it could still be connected to the "DERMALIN" mark under
Classification 5 8 for pharmaceutical products, since ultimately these goods are very closely related.
In its Verified Answer, 9 Dermaline countered that a simple comparison of the trademark "DERMALINE
DERMALINE, INC." vis-à-vis Myra's "DERMALIN" trademark would show that they have entirely different features and
distinctive presentation, thus it cannot result in confusion, mistake or deception on the part of the purchasing public. Dermaline
contended that, in determining if the subject trademarks are confusingly similar, a comparison of the words is not the only
determinant, but their entirety must be considered in relation to the goods to which they are attached, including the other features
appearing in both labels. It claimed that there were glaring and striking dissimilarities between the two trademarks, such that its
trademark "DERMALINE DERMALINE, INC." speaks for itself (Res ipsa loquitur). Dermaline further argued that there could
not be any relation between its trademark for health and beauty services from Myra's trademark classified under medicinal goods
against skin disorders.
The parties failed to settle amicably. Consequently, the preliminary conference was terminated and they were directed to
file their respective position papers. 10
 On April 10, 2008, the IPO-Bureau of Legal Affairs rendered Decision No. 2008-70 11 sustaining Myra's opposition
pursuant to Section 123.1 (d) of R.A. No. 8293. It disposed —
WHEREFORE, the Verified Opposition is, as it is, hereby SUSTAINED. Consequently, Application
Serial No. 4-2006-011536 for the mark 'DERMALINE, DERMALINE, INC. Stylized Wordmark' for Dermaline,
Inc. under class 44 covering the aforementioned goods filed on 21 October 2006, is as it is hereby, REJECTED.
Let the file wrapper of 'DERMALINE, DERMALINE, INC. Stylized Wordmark' subject matter of this
case be forwarded to the Bureau of Trademarks (BOT) for appropriate action in accordance with this Decision.
SO ORDERED. 12
Aggrieved, Dermaline filed a motion for reconsideration, but it was denied under Resolution No. 2009-12 (D) 13 dated
January 16, 2009.
Expectedly, Dermaline appealed to the Office of the Director General of the IPO. However, in an Order 14 dated April
17, 2009, the appeal was dismissed for being filed out of time. TCaADS
Undaunted, Dermaline appealed to the CA, but it affirmed and upheld the Order dated April 17, 2009 and the rejection of
Dermaline's application for registration of trademark. The CA likewise denied Dermaline's motion for reconsideration; hence, this
petition raising the issue of whether the CA erred in upholding the IPO's rejection of Dermaline's application for registration of
trademark.
The petition is without merit.
A trademark is any distinctive word, name, symbol, emblem, sign, or device, or any combination thereof, adopted and
used by a manufacturer or merchant on his goods to identify and distinguish them from those manufactured, sold, or dealt by
others. 15 Inarguably, it is an intellectual property deserving protection by law. In trademark controversies, each case must be
scrutinized according to its peculiar circumstances, such that jurisprudential precedents should only be made to apply if they are
specifically in point. 16
As Myra correctly posits, as a registered trademark owner, it has the right under Section 147 of R.A. No. 8293 to prevent
third parties from using a trademark, or similar signs or containers for goods or services, without its consent, identical or similar
to its registered trademark, where such use would result in a likelihood of confusion.
In determining likelihood of confusion, case law has developed two (2) tests, the Dominancy Test and the Holistic or Totality
Test.
The Dominancy Test focuses on the similarity of the prevalent features of the competing trademarks that might cause
confusion or deception. 17 It is applied when the trademark sought to be registered contains the main, essential and dominant
features of the earlier registered trademark, and confusion or deception is likely to result. Duplication or imitation is not even
required; neither is it necessary that the label of the applied mark for registration should suggest an effort to imitate. The
important issue is whether the use of the marks involved would likely cause confusion or mistake in the mind of or deceive the
ordinary purchaser, or one who is accustomed to buy, and therefore to some extent familiar with, the goods in question.  18 Given
greater consideration are the aural and visual impressions created by the marks in the public mind, giving little weight to factors
like prices, quality, sales outlets, and market segments. 19 The test of dominancy is now explicitly incorporated into law in
Section 155.1 of R.A. No. 8293 which provides —
155.1. Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark
or the same container or a dominant feature thereof in connection with the sale, offering for sale, distribution,
advertising of any goods or services including other preparatory steps necessary to carry out the sale of any goods
or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to
deceive; (emphasis supplied) DETcAH
On the other hand, the Holistic Test entails a consideration of the entirety of the marks as applied to the products,
including labels and packaging, in determining confusing similarity. The scrutinizing eye of the observer must focus not only on
the predominant words but also on the other features appearing in both labels so that a conclusion may be drawn as to whether
one is confusingly similar to the other. 20
Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2) types of confusion, viz.:
(1) confusion of goods (product confusion), where the ordinarily prudent purchaser would be induced to purchase one product in
the belief that he was purchasing the other; and (2) confusion of business (source or origin confusion), where, although the goods
of the parties are different, the product, the mark of which registration is applied for by one party, is such as might reasonably be
assumed to originate with the registrant of an earlier product, and the public would then be deceived either into that belief or into
the belief that there is some connection between the two parties, though inexistent. 21
In rejecting the application of Dermaline for the registration of its mark "DERMALINE DERMALINE, INC.," the IPO
applied the Dominancy Test. It declared that both confusion of goods and service and confusion of business or of origin were
 apparent in both trademarks. It also noted that, per Bureau Decision No. 2007-179 dated December 4, 2007, it already sustained
the opposition of Myra involving the trademark "DERMALINE" of Dermaline under Classification 5. The IPO also upheld
Myra's right under Section 138 of R.A. No. 8293, which provides that a certification of registration of a mark is prima
facie evidence of the validity of the registration, the registrant's ownership of the mark, and of the registrant's exclusive right to
use the same in connection with the goods and those that are related thereto specified in the certificate.  
We agree with the findings of the IPO. As correctly applied by the IPO in this case, while there are no set rules that can
be deduced as what constitutes a dominant feature with respect to trademarks applied for registration; usually, what are taken into
account are signs, color, design, peculiar shape or name, or some special, easily remembered earmarks of the brand that readily
attracts and catches the attention of the ordinary consumer. 22
Dermaline's insistence that its applied trademark "DERMALINE DERMALINE, INC." had differences "too striking to
be mistaken" from Myra's "DERMALIN" cannot, therefore, be sustained. While it is true that the two marks are presented
differently — Dermaline's mark is written with the first "DERMALINE" in script going diagonally upwards from left to right,
with an upper case "D" followed by the rest of the letters in lower case, and the portion "DERMALINE, INC." is written in upper
case letters, below and smaller than the long-hand portion; while Myra's mark "DERMALIN" is written in an upright font, with a
capital "D" and followed by lower case letters — the likelihood of confusion is still apparent. This is because they are almost
spelled in the same way, except for Dermaline's mark which ends with the letter "E," and they are pronounced practically in the
same manner in three (3) syllables, with the ending letter "E" in Dermaline's mark pronounced silently. Thus, when an ordinary
purchaser, for example, hears an advertisement of Dermaline's applied trademark over the radio, chances are he will associate it
with Myra's registered mark. aECSHI
Further, Dermaline's stance that its product belongs to a separate and different classification from Myra's products with
the registered trademark does not eradicate the possibility of mistake on the part of the purchasing public to associate the former
with the latter, especially considering that both classifications pertain to treatments for the skin.
Indeed, the registered trademark owner may use its mark on the same or similar products, in different segments of the
market, and at different price levels depending on variations of the products for specific segments of the market. The Court is
cognizant that the registered trademark owner enjoys protection in product and market areas that are the  normal potential
expansion of his business. Thus, we have held —
Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to
guarding his goods or business from actual market competition with identical or similar products of the parties,
but extends to all cases in which the use by a junior appropriator of a trade-mark or trade-name is  likely to lead to
a confusion of source, as where prospective purchasers would be misled into thinking that the complaining
party has extended his business into the field (see 148 ALR 56 et seq; 53 Am Jur. 576) or is in any way
connected with the activities of the infringer; or when it forestalls the normal potential expansion of his
business (v. 148 ALR 77, 84; 52 Am. Jur. 576, 577). 23 (Emphasis supplied)
Thus, the public may mistakenly think that Dermaline is connected to or associated with Myra, such that, considering the
current proliferation of health and beauty products in the market, the purchasers would likely be misled that Myra has already
expanded its business through Dermaline from merely carrying pharmaceutical topical applications for the skin to health and
beauty services.
Verily, when one applies for the registration of a trademark or label which is almost the same or that very closely
resembles one already used and registered by another, the application should be rejected and dismissed outright, even without any
opposition on the part of the owner and user of a previously registered label or trademark. This is intended not only to avoid
confusion on the part of the public, but also to protect an already used and registered trademark and an established goodwill. 24
Besides, the issue on protection of intellectual property, such as trademarks, is factual in nature. The findings of the IPO,
upheld on appeal by the same office, and further sustained by the CA, bear great weight and deserves respect from this Court.
Moreover, the decision of the IPO had already attained finality when Dermaline failed to timely file its appeal with the IPO Office
of the Director General.
WHEREFORE, the petition is DENIED. The Decision dated August 7, 2009 and the Resolution dated October 28,
2009 of the Court of Appeals in CA-G.R. SP No. 108627 are AFFIRMED. Costs against petitioner. aTADcH
SO ORDERED.
Carpio, Peralta, Abad and Mendoza, JJ., concur.
||| (Dermaline, Inc. v. Myra Pharmaceuticals, Inc., G.R. No. 190065, [August 16, 2010], 642 PHIL 503-515)
 SECOND DIVISION

[G.R. No. 183404. October 13, 2010.]

BERRIS AGRICULTURAL CO., INC., petitioner, vs. NORVY ABYADANG, respondent.

DECISION
NACHURA, ** J p:

This petition for review 1 on certiorari  under Rule 45 of the Rules of Court seeks the reversal of the Decision
dated April 14, 2008 2 and the Resolution dated June 18, 2008 3 of the Court of Appeals (CA) in CA-G.R. SP No. 99928.
The antecedents —
On January 16, 2004, respondent Norvy A. Abyadang (Abyadang), proprietor of NS Northern Organic Fertilizer,
with address at No. 43 Lower QM, Baguio City, filed with the Intellectual Property Office (IPO) a trademark application
for the mark "NS D-10 PLUS" for use in connection with Fungicide (Class 5) with active ingredient 80% Mancozeb. The
application, under Application Serial No. 4-2004-00450, was given due course and was published in the IPO e-Gazette for
opposition on July 28, 2005.
On August 17, 2005, petitioner Berris Agricultural Co., Inc. (Berris), with business address in Barangay Masiit,
Calauan, Laguna, filed with the IPO Bureau of Legal Affairs (IPO-BLA) a Verified Notice of Opposition  4 against the
mark under application allegedly because "NS D-10 PLUS" is similar and/or confusingly similar to its registered trademark
"D-10 80 WP," also used for Fungicide (Class 5) with active ingredient 80% Mancozeb. The opposition was docketed
as IPC No. 14-2005-00099.
After an exchange of pleadings, on April 28, 2006, Director Estrellita Beltran-Abelardo (Director Abelardo) of the
IPO-BLA issued Decision No. 2006-24 5 (BLA decision), the dispositive portion of which reads —
WHEREFORE, viewed in the light of all the foregoing, this Bureau finds and so holds that
Respondent-Applicant's mark "NS D-10 PLUS" is confusingly similar to the Opposer's mark and as such,
the opposition is hereby SUSTAINED. Consequently, trademark application bearing Serial No. 4-2004-
00450 for the mark "NS D-10 PLUS" filed on January 16, 2004 by Norvy A. Ab[yada]ng covering the
goods fungicide under Class 5 of the International Classification of goods is, as it is
hereby, REJECTED. EADSIa
Let the filewrapper of the trademark "NS D-10 PLUS" subject matter under consideration be
forwarded to the Administrative, Financial and Human Resources Development Services Bureau
(AFHRDSB) for appropriate action in accordance with this Order with a copy to be furnished the Bureau of
Trademark (BOT) for information and to update its records.
SO ORDERED. 6
Abyadang filed a motion for reconsideration, and Berris, in turn, filed its opposition to the motion.
On August 2, 2006, Director Abelardo issued Resolution No. 2006-09(D) 7 (BLA resolution), denying the motion
for reconsideration and disposing as follows —
IN VIEW OF THE FOREGOING, the Motion for Reconsideration filed by the Respondent-
Applicant is hereby DENIED FOR LACK OF MERIT. Consequently, Decision No. 2006-24 dated April
28, 2006 STANDS.
Let the filewrapper of the trademark "NS D-10 PLUS" subject matter under consideration be
forwarded to the Bureau of Trademarks for appropriate action in accordance with this Resolution.
SO ORDERED. 8
Aggrieved, Abyadang filed an appeal on August 22, 2006 with the Office of the Director General, Intellectual
Property Philippines (IPPDG), docketed as Appeal No. 14-06-13.
With the filing of the parties' respective memoranda, Director General Adrian S. Cristobal, Jr. of the IPPDG
rendered a decision dated July 20, 2007, 9 ruling as follows —
Wherefore, premises considered[,] the appeal is hereby DENIED. Accordingly, the appealed
Decision of the Director is hereby AFFIRMED.
Let a copy of this Decision as well as the trademark application and records be furnished and
returned to the Director of Bureau of Legal Affairs for appropriate action. Further, let also the Directors of
the Bureau of Trademarks, the Administrative, Financial and Human Resources Development Services
Bureau, and the library of the Documentation, Information and Technology Transfer Bureau be furnished a
copy of this Decision for information, guidance, and records purposes.
SO ORDERED. 10
 Undeterred, Abyadang filed a petition for review 11 before the CA.
In its Decision dated April 14, 2008, the CA reversed the IPPDG decision. It held —
In sum, the petition should be granted due to the following reasons: 1) petitioner's mark "NS D-10
PLUS" is not confusingly similar with respondent's trademark "D-10 80 WP"; 2) respondent failed to
establish its ownership of the mark "D-10 80 WP" and 3) respondent's trademark registration for "D-10 80
WP" may be cancelled in the present case to avoid multiplicity of suits.
WHEREFORE, the petition is GRANTED. The decision dated July 20, 2007 of the IPO Director
General in Appeal No. 14-06-13 (IPC No. 14-2005-00099) is REVERSED and SET ASIDE, and a new one
is entered giving due course to petitioner's application for registration of the mark "NS D-10 PLUS," and
canceling respondent's trademark registration for "D-10 80 WP."
SO ORDERED. 12
Berris filed a Motion for Reconsideration, but in its June 18, 2008 Resolution, the CA denied the motion for lack of
merit. Hence, this petition anchored on the following arguments — CSDTac
I. The Honorable Court of Appeals' finding that there exists no confusing similarity between Petitioner's and
respondent's marks is based on misapprehension of facts, surmise and conjecture and not in accord
with the Intellectual Property Code and applicable Decisions of this Honorable Court [Supreme
Court].
II. The Honorable Court of Appeals' Decision reversing and setting aside the technical findings of the
Intellectual Property Office even without a finding or, at the very least, an allegation of grave abuse
of discretion on the part of said agency is not in accord with law and earlier pronouncements of this
Honorable Court [Supreme Court].
III. The Honorable Court of Appeals' Decision ordering the cancellation of herein Petitioner's duly registered
and validly existing trademark in the absence of a properly filed Petition for Cancellation before the
Intellectual Property Office is not in accord with the Intellectual Property Code and applicable
Decisions of this Honorable Court [Supreme Court]. 13
The basic law on trademark, infringement, and unfair competition is Republic Act (R.A.) No. 8293 14 (Intellectual
Property Code of the Philippines), specifically Sections 121 to 170 thereof. It took effect on January 1, 1998. Prior to its
effectivity, the applicable law was R.A. No. 166, 15 as amended.
Interestingly, R.A. No. 8293 did not expressly repeal in its entirety R.A. No. 166, but merely provided in Section
239.1 16 that Acts and parts of Acts inconsistent with it were repealed. In other words, only in the instances where a
substantial and irreconcilable conflict is found between the provisions of R.A. No. 8293 and of R.A. No. 166 would the
provisions of the latter be deemed repealed.
R.A. No. 8293 defines a "mark" as any visible sign capable of distinguishing the goods (trademark) or services
(service mark) of an enterprise and shall include a stamped or marked container of goods.  17 It also defines a "collective
mark" as any visible sign designated as such in the application for registration and capable of distinguishing the origin or
any other common characteristic, including the quality of goods or services of different enterprises which use the sign under
the control of the registered owner of the collective mark. 18
On the other hand, R.A. No. 166 defines a "trademark" as any distinctive word, name, symbol, emblem, sign, or
device, or any combination thereof, adopted and used by a manufacturer or merchant on his goods to identify and
distinguish them from those manufactured, sold, or dealt by another. 19 A trademark, being a special property, is afforded
protection by law. But for one to enjoy this legal protection, legal protection ownership of the trademark should rightly be
established.
The ownership of a trademark is acquired by its registration and its actual use by the manufacturer or distributor of
the goods made available to the purchasing public. Section 122 20 of R.A. No. 8293 provides that the rights in a mark shall
be acquired by means of its valid registration with the IPO. A certificate of registration of a mark, once issued,
constitutes  prima facie  evidence of the validity of the registration, of the registrant's ownership of the mark, and of the
registrant's exclusive right to use the same in connection with the goods or services and those that are related thereto
specified in the certificate. 21 R.A. No. 8293, however, requires the applicant for registration or the registrant to file a
declaration of actual use (DAU) of the mark, with evidence to that effect, within three (3) years from the filing of the
application for registration; otherwise, the application shall be refused or the mark shall be removed from the register. 22 In
other words, the  prima facie  presumption brought about by the registration of a mark may be challenged and overcome, in
an appropriate action, by proof of the nullity of the registration or of non-use of the mark, except when
excused. 23 Moreover, the presumption may likewise be defeated by evidence of prior use by another person, i.e., it will
controvert a claim of legal appropriation or of ownership based on registration by a subsequent user. This is because a
trademark is a creation of use and belongs to one who first used it in trade or commerce. 24 TAIaHE
The determination of priority of use of a mark is a question of fact. Adoption of the mark alone does not suffice.
One may make advertisements, issue circulars, distribute price lists on certain goods, but these alone will not inure to the
claim of ownership of the mark until the goods bearing the mark are sold to the public in the market. Accordingly, receipts,
sales invoices, and testimonies of witnesses as customers, or orders of buyers, best prove the actual use of a mark in trade
and commerce during a certain period of time. 25  
In the instant case, both parties have submitted proof to support their claim of ownership of their respective
trademarks.
Culled from the records, Berris, as oppositor to Abyadang's application for registration of his trademark, presented
the following evidence: (1) its trademark application dated November 29, 2002 26 with Application No. 4-2002-0010272;
(2) its IPO certificate of registration dated October 25, 2004, 27 with Registration No. 4-2002-010272 and July 8, 2004 as
the date of registration; (3) a photocopy of its packaging 28 bearing the mark "D-10 80 WP"; (4) photocopies of its sales
invoices and official receipts; 29 and (5) its notarized DAU dated April 23, 2003, 30 stating that the mark was first used on
June 20, 2002, and indicating that, as proof of actual use, copies of official receipts or sales invoices of goods using the
mark were attached as Annex "B."
On the other hand, Abyadang's proofs consisted of the following: (1) a photocopy of the packaging  31 for his
marketed fungicide bearing mark "NS D-10 PLUS"; (2) Abyadang's Affidavit dated February 14, 2006, 32 stating among
others that the mark "NS D-10 PLUS" was his own creation derived from: N — for Norvy, his name; S — for Soledad, his
wife's name; D — the first letter for December, his birth month; 10 — for October, the 10th month of the year, the month of
his business name registration; and PLUS — to connote superior quality; that when he applied for registration, there was
nobody applying for a mark similar to "NS D-10 PLUS"; that he did not know of the existence of Berris or any of its
products; that "D-10" could not have been associated with Berris because the latter never engaged in any commercial
activity to sell "D-10 80 WP" fungicide in the local market; and that he could not have copied Berris' mark because he
registered his packaging with the Fertilizer and Pesticide Authority (FPA) ahead of Berris; (3) Certification dated December
19, 2005 33 issued by the FPA, stating that "NS D-10 PLUS" is owned and distributed by NS Northern Organic Fertilizer,
registered with the FPA since May 26, 2003, and had been in the market since July 30, 2003; (4) Certification dated
October 11, 2005 34 issued by the FPA, stating that, per monitoring among dealers in Region I and in the Cordillera
Administrative Region registered with its office, the Regional Officer neither encountered the fungicide with mark "D-10
80 WP" nor did the FPA provincial officers from the same area receive any report as to the presence or sale of Berris'
product; (5) Certification dated March 14, 2006 35 issued by the FPA, certifying that all pesticides must be registered with
the said office pursuant to Section 9 36 of Presidential Decree (P.D.) No. 1144 37 and Section 1, Article II of FPA Rules
and Regulations No. 1, Series of 1977; (6) Certification dated March 16, 2006 38 issued by the FPA, certifying that the
pesticide "D-10 80 WP" was registered by Berris on November 12, 2004; and (7) receipts from Sunrise Farm Supply 39 in
La Trinidad, Benguet of the sale of Abyadang's goods referred to as "D-10" and "D-10+."
Based on their proffered pieces of evidence, both Berris and Abyadang claim to be the prior user of their respective
marks.
We rule in favor of Berris.
Berris was able to establish that it was using its mark "D-10 80 WP" since June 20, 2002, even before it filed for its
registration with the IPO on November 29, 2002, as shown by its DAU which was under oath and notarized, bearing the
stamp of the Bureau of Trademarks of the IPO on April 25, 2003, 40 and which stated that it had an attachment as Annex
"B" sales invoices and official receipts of goods bearing the mark. Indeed, the DAU, being a notarized document, especially
when received in due course by the IPO, is evidence of the facts it stated and has the presumption of regularity, entitled to
full faith and credit upon its face. Thus, the burden of proof to overcome the presumption of authenticity and due execution
lies on the party contesting it, and the rebutting evidence should be clear, strong, and convincing as to preclude all
controversy as to the falsity of the certificate. 41 What is more, the DAU is buttressed by the Certification dated April 21,
2006 42 issued by the Bureau of Trademarks that Berris' mark is still valid and existing.
Hence, we cannot subscribe to the contention of Abyadang that Berris' DAU is fraudulent based only on his
assumption that Berris could not have legally used the mark in the sale of its goods way back in June 2002 because it
registered the product with the FPA only on November 12, 2004. As correctly held by the IPPDG in its decision on
Abyadang's appeal, the question of whether or not Berris violated P.D. No. 1144, because it sold its product without prior
registration with the FPA, is a distinct and separate matter from the jurisdiction and concern of the IPO. Thus, even a
determination of violation by Berris of P.D. No. 1144 would not controvert the fact that it did submit evidence that it had
used the mark "D-10 80 WP" earlier than its FPA registration in 2004.
 Furthermore, even the FPA Certification dated October 11, 2005, stating that the office had neither encountered
nor received reports about the sale of the fungicide "D-10 80 WP" within Region I and the Cordillera Administrative
Region, could not negate the fact that Berris was selling its product using that mark in 2002, especially considering that it
first traded its goods in Calauan, Laguna, where its business office is located, as stated in the DAU. DcCASI
Therefore, Berris, as prior user and prior registrant, is the owner of the mark "D-10 80 WP." As such, Berris has in
its favor the rights conferred by Section 147 of R.A. No. 8293, which provides —
Sec. 147. Rights Conferred.  —
147.1. The owner of a registered mark shall have the exclusive right to prevent all third parties not
having the owner's consent from using in the course of trade identical or similar signs or containers for
goods or services which are identical or similar to those in respect of which the trademark is registered
where such use would result in a likelihood of confusion. In case of the use of an identical sign for identical
goods or services, a likelihood of confusion shall be presumed.
147.2. The exclusive right of the owner of a well-known mark defined in Subsection 123.1(e) which
is registered in the Philippines, shall extend to goods and services which are not similar to those in respect of
which the mark is registered: Provided,That use of that mark in relation to those goods or services would
indicate a connection between those goods or services and the owner of the registered mark: Provided,
further, That the interests of the owner of the registered mark are likely to be damaged by such use.
Now, we confront the question, "Is Abyadang's mark 'NS D-10 PLUS' confusingly similar to that of Berris' 'D-10
80 WP' such that the latter can rightfully prevent the IPO registration of the former?"
We answer in the affirmative.
According to Section 123.1(d) of R.A. No. 8293, a mark cannot be registered if it is identical with a registered
mark belonging to a different proprietor with an earlier filing or priority date, with respect to: (1) the same goods or
services; (2) closely related goods or services; or (3) near resemblance of such mark as to likely deceive or cause confusion.
In determining similarity and likelihood of confusion, jurisprudence has developed tests — the Dominancy Test
and the Holistic or Totality Test. The Dominancy Test focuses on the similarity of the prevalent or dominant features of the
competing trademarks that might cause confusion, mistake, and deception in the mind of the purchasing public. Duplication
or imitation is not necessary; neither is it required that the mark sought to be registered suggests an effort to imitate. Given
more consideration are the aural and visual impressions created by the marks on the buyers of goods, giving little weight to
factors like prices, quality, sales outlets, and market segments. 43
In contrast, the Holistic or Totality Test necessitates a consideration of the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity. The discerning eye of the observer must
focus not only on the predominant words but also on the other features appearing on both labels so that the observer may
draw conclusion on whether one is confusingly similar to the other. 44
Comparing Berris' mark "D-10 80 WP" with Abyadang's mark "NS D-10 PLUS," as appearing on their respective
packages, one cannot but notice that both have a common component which is "D-10." On Berris' package, the "D-10" is
written with a bigger font than the "80 WP." Admittedly, the "D-10" is the dominant feature of the mark. The "D-10," being
at the beginning of the mark, is what is most remembered of it. Although, it appears in Berris' certificate of registration in
the same font size as the "80 WP," its dominancy in the "D-10 80 WP" mark stands since the difference in the form does
not alter its distinctive character. 45
Applying the Dominancy Test, it cannot be gainsaid that Abyadang's "NS D-10 PLUS" is similar to Berris' "D-10
80 WP," that confusion or mistake is more likely to occur. Undeniably, both marks pertain to the same type of goods —
fungicide with 80% Mancozeb as an active ingredient and used for the same group of fruits, crops, vegetables, and
ornamental plants, using the same dosage and manner of application. They also belong to the same classification of goods
under R.A. No. 8293. Both depictions of "D-10," as found in both marks, are similar in size, such that this portion is what
catches the eye of the purchaser. Undeniably, the likelihood of confusion is present.
This likelihood of confusion and mistake is made more manifest when the Holistic Test is applied, taking into
consideration the packaging, for both use the same type of material (foil type) and have identical color schemes (red, green,
and white); and the marks are both predominantly red in color, with the same phrase "BROAD SPECTRUM FUNGICIDE"
written underneath. SHTEaA 
Considering these striking similarities, predominantly the "D-10," the buyers of both products, mainly farmers,
may be misled into thinking that "NS D-10 PLUS" could be an upgraded formulation of the "D-10 80 WP."
 Moreover, notwithstanding the finding of the IPPDG that the "D-10" is a fanciful component of the trademark,
created for the sole purpose of functioning as a trademark, and does not give the name, quality, or description of the product
for which it is used, nor does it describe the place of origin, such that the degree of exclusiveness given to the mark is
closely restricted, 46 and considering its challenge by Abyadang with respect to the meaning he has given to it, what
remains is the fact that Berris is the owner of the mark "D-10 80 WP," inclusive of its dominant feature "D-10," as
established by its prior use, and prior registration with the IPO. Therefore, Berris properly opposed and the IPO correctly
rejected Abyadang's application for registration of the mark "NS D-10 PLUS."
Verily, the protection of trademarks as intellectual property is intended not only to preserve the goodwill and
reputation of the business established on the goods bearing the mark through actual use over a period of time, but also to
safeguard the public as consumers against confusion on these goods. 47 On this matter of particular concern, administrative
agencies, such as the IPO, by reason of their special knowledge and expertise over matters falling under their jurisdiction,
are in a better position to pass judgment thereon. Thus, their findings of fact in that regard are generally accorded great
respect, if not finality by the courts, as long as they are supported by substantial evidence, even if such evidence might not
be overwhelming or even preponderant. It is not the task of the appellate court to weigh once more the evidence submitted
before the administrative body and to substitute its own judgment for that of the administrative agency in respect to
sufficiency of evidence. 48
Inasmuch as the ownership of the mark "D-10 80 WP" fittingly belongs to Berris, and because the same should not
have been cancelled by the CA, we consider it proper not to belabor anymore the issue of whether cancellation of a
registered mark may be done absent a petition for cancellation.
WHEREFORE, the petition is GRANTED. The assailed Decision dated April 14, 2008 and Resolution dated
June 18, 2008 of the Court of Appeals in CA-G.R. SP No. 99928 are REVERSED and SET ASIDE. Accordingly, the
Decision No. 2006-24 dated April 28, 2006 and the Resolution No. 2006-09(D) dated August 2, 2006 in IPC No. 14-2005-
00099, and the Decision dated July 20, 2007 in Appeal No. 14-06-13 are REINSTATED. Costs against respondent.
SO ORDERED. ESTCDA
|||  (Berris Agricultural Co., Inc. v. Abyadang, G.R. No. 183404, [October 13, 2010], 647 PHIL 517-534)
 FIRST DIVISION

[G.R. No. L-24075. January 31, 1974.]

CRISANTA Y. GABRIEL, petitioner, vs. DR. JOSE R. PEREZ and HONORABLE TIBURCIO EVALLE as Director of Patents, respondents.

Paredes, Poblador, Cruz & Nazareno for petitioner.

Jesus I . Santos for respondent Dr. Jose R. Perez.

Solicitor General Antonio P. Barredo, Assistant Solicitor General Antonio G. Ibarra and Solicitor Alicia V . Sempio-Diy for respondent Director of Patents.

DECISION

MAKASIAR, J p:

Petition for review of the decision dated July 18, 1964 of the respondent Director of Patents denying the petition of
herein petitioner Crisanta Y. Gabriel to cancel and revoke certificate of registration No. SR-389 covering the trademark
"WONDER" used on beauty soap issued on May 11, 1961 to herein private respondent Dr. Jose R. Perez.
On October 19, 1962, petitioner Crisanta Y. Gabriel filed with the Patent Office a petition for cancellation of the
trademark "WONDER from the supplemental register alleging that the registrant was not entitled to register the said trademark at
the time of his application for registration; that the trademark was not used and has not been actually used by registrant at the time
he applied for its registration; that it was thru fraud and misrepresentation that the registration was procured by the registrant; and
that it was she who has been actually using the said trademark since March, 1959, and as such is the rightful and recognized
owner thereof and therefore entitled to its registration. In support of her petition, she further alleged the written contract between
her and the registrant (respondent) wherein, according to her, the latter has recognized her right of use and ownership of said
trademark; and that the labels submitted by the registrant are the very containers bearing the trademark "WONDER" which are
owned by her and which she has been exclusively and continuously using in commerce (pp. 24-25, Vol. I, rec.)
Respondent Dr. Jose R. Perez, in due time, duly filed his answer denying each and every ground for cancellation alleged
in the said petition, and further averring that there is pending in the Court of First Instance of Bulacan a civil case (No. 2422) for
unfair competition with injunction and damages filed by him against herein petitioner involving the manufacture of beauty soap
and the use of the trademark "WONDER"; that a writ of preliminary injunction has been issued on September 7, 1961 by the said
court against herein petitioner restraining her "from making, manufacturing and producing 'Wonder Bleaching Beauty Soap' with
the same labels and chemical ingredients as those of the plaintiff, and from advertising, selling and distributing the same
products"; and that no right of petitioner had been violated and therefore no cause of action exists in favor of petitioner (pp. 28-
32, Vol. I, rec.)
 Issues having been joined, the case was heard and thereafter, respondent Director of Patents rendered his decision
denying the petition to cancel the certificate of registration (pp. 139-150, Vol. I, rec.)
Petitioner filed a motion for reconsideration on the ground that the decision is contrary to law and the evidence; but the
same was denied on January 15, 1965 by respondent Director of Patents for lack of merit (p. 158, Vol. I, rec.)
Hence, this petition for review filed on January 28, 1965 by herein petitioner (pp. 1-5, Vol. IV, rec.). Respondents were
required to answer the same, and respondent Director Tiburcio Evalle filed his answer on August 6, 1965 (pp. 29-32, Vol. IV,
rec.), Private respondent Dr. Jose R. Perez did not file an answer. Thereafter, both parties were required to file their respective
briefs and petitioner filed one on September 28, 1965 (p. 38, Vol. IV, rec.) while respondent Director Evalle filed his brief on
February 23, 1966 (p. 53, Vol. IV, rec.). Again, private respondent Perez did not file a brief as his counsel's motion for an
extension of time within which to file one was denied by this Court for being late (pp. 41-42, Vol. IV, rec.). Consequently, the
case was submitted for decision on May 22, 1966.
On May 22, 1973, counsel for private respondent filed a motion for the early resolution of the case alleging among
others that "respondent Dr. Jose R. Perez had died already and still Crisanta Y. Gabriel, the petitioner in this case, has been
continuously harassing the rights of the late Dr. Jose R. Perez as far as the ownership and use of the trademark are concerned."
(Pp. 59-61, Vol. IV, rec.) [No motion has been filed for substitution of the heirs in lieu of the deceased private respondent.]
By way of factual background, herein private respondent Dr. Jose R. Perez filed with the Patents Office on February 23,
1961 an application for registration of the trademark "WONDER" in the Supplemental Register. After due and proper
proceedings, the said petition was approved and the trademark "WONDER" was registered, as prayed for, in the Supplemental
Register. Thereafter, Certificate of Registration No. SR-389 was issued to and in the name of herein private respondent Dr. Jose
R. Perez. Said trademark "WONDER" is used by said private respondent on bleaching beauty soap (Medicated and Special)
which under the Official Classification of Merchandise (Rule 82) of the Board of Patents falls under Class 51. Private respondent
Dr. Perez, in his petition for registration, claimed March 10, 1953 as the date of first use of said trademark and August 1, 1953 as
the date of first use of said trademark in commerce in the Philippines (see pp. 1-7, Vol. I, rec.)
Petitioner Crisanta Y. Gabriel on the other hand, earlier filed on October 3, 1960 with the Patent Office a petition to
register the same trademark "WONDER" and claimed March 7, 1959 as the date of first use of said trademark in commerce. Said
petition was dismissed on November 18, 1960 by the Patents Office (thru its examiner) on the ground that said petitioner was not
the owner of the trademark sought to be registered, informing at the same time petitioner that "as shown on the labels submitted, it
appears that Dr. Jose R. Perez is the owner of the present mark . . ." Subsequently, on March 23, 1961, the said application was
considered abandoned under Rules 97 and 98 of the Revised Rules of Practice in Trademark Cases for failure of petitioner to
comply with Rule 93 of the same Revised Rules (see p. 8, Vol. I, rec.; pp. 79-86, Vol. III, rec.). Later, said application was
revived, but further consideration thereof was suspended by the Patents Office until final determination of the present case
considering that the matter of ownership of the trademark "WONDER" is in dispute (see p. 9, Vol. IV, rec.)
The main facts of this case as substantially supported by the evidence on record, are related by respondent Director of
Patents in the decision now under review, thus:
". . . Way back in 1953, the Respondent who claims to be a medical researcher and manufacturer. was
experimenting on the creation of a beauty soap. Having discovered a workable formula he applied from the
Bureau of Health for the issuance of a Certificate of Label Approval and on June 6, 1958 he was issued such
certificate. It covers a beauty soap for bleaching, which whitens or sometimes softens the skin. (t.s.n., p. 48, Aug.
27, 1968). This certificate (Exh. '5') particularly describes and mentions 'Dr. Perez' Wonder Beauty Soap. He
continued experimenting until he was able to discover an improved soap formula which he claims that aside from
bleaching or whitening the skin it also allegedly removes pimples, freckles, dandruff, scabies, itching, head
lice(s), rashes, falling of hair, and shallow wrinkles (t.s.n. p. 49, Aug. 27, 1963). For such product he obtained
another certificate of label approval from the Bureau of Health on August 10, 1959 (Exh. '6'). This document also
particularly describes 'Dr. Perez Wonder Beauty Soap (Improved Formula).'
"In January, 1959 he made an agreement with a certain company named 'Manserco' for the distribution of
his soap. It was then being managed by Mariano S. Yangga who happens to be the brother of the Petitioner
Crisanta Y. Gabriel (t.s.n., pp. 3-4, Aug. 27, 1963). This was corroborated by Mr. August Cesar Espiritu who
testified in favor of the Respondent. Mr. Espiritu claims to be the organizer and one of the incorporators of
'Manserco,' although really no document of its corporate existence was introduced as evidence in this case (t.s.n.,
pp. 55-57, Sept. 23, 1963). However, this fact had never been disputed by the Petitioner.
"Because the corporation was allegedly going bankrupt and the members were deserting, the Respondent
terminated the agreement in July, 1959, and thereafter he asked the Petitioner to become the distributor of his
products (t.s.n., pp. 4-5, Aug. 27, 1963) and on September 1, 1959, a contract of 'Exclusive Distributorship' was
executed between the Petitioner and the Respondent. (Exh. '7'; 'F-1' to 'F-2'.) The agreement is hereunder
reproduced, to wit:
"EXCLUSIVE DISTRIBUTORSHIP AGREEMENT
 "KNOW ALL MEN BY THESE PRESENT:
"THIS AGREEMENT made and executed by and between DR. JOSE R. PEREZ, Filipino, of legal age, a
resident of Sta. Maria, Bulacan. now and hereinafter called the Party of the First Part,
"AND
"CRISANTA Y. GABRIEL, likewise Filipino, of legal age, a resident of 1558 Camarines St., Manila,
now and hereinafter called the Party of the Second Part,
"WITNESSETH
"1. That the Party of the First Part hereby agrees and binds himself to make the Party of the
Second Part the sole and exclusive distributor of his product called and popularly known as 'Dr. Perez'
Wonder Medicated Beauty Soap' for the whole Philippines for a period of five (5) years from date of
perfection of this agreement, renewable for another five (5) years at the mutual agreement of both parties;
"2. That the Party of the First Part hereby agrees to sell to the Party of the Second Part the
abovementioned merchandise at the rate of sixty (P.60) centavos a piece which shall have a minimum
weight of eighty (80) grams; PROVIDED however that said price may be subject to change in cases of
deflation and inflation of the peso;
 
"3. That the Party of the First Part hereby binds himself to make delivery of the merchandise
under contract at 1558 Camarines St. Manila, the cost of the same being for the account of the former;
"4. That the Party of the First Part hereby agrees to extend to the Party of the Second Part a
credit line of TWO THOUSAND (P2,000.00) PESOS with accounts due and payable on the 5th and 20th
of each month with a maximum of sixty days from date of receipt of the merchandise by the Party of the
Second Part;
"5. That the Party of the First Part guarantees the production of the full quantity of Dr. Perez
Wonder Medicated Beauty Soap that the Party of the Second Part could sell and distribute; with the latter
giving the former a written notice of the same;
"6. That the Party of the Second Part has the exclusive right of ownership of the packages and
that said party is responsible for the costs as well as the design and the manner of packing the same;
"7. That the Party of the First Part hereby binds himself not to give or sell to any person or
entity the same product or any similar product or products of the same name during the term and duration
of this contract;
"8. That this contract is binding upon the administrator, heirs and assigns of both parties during
the term and duration of this agreement;
"9. That this contract will take effect upon the signing thereof.
"IN WITNESS WHEREOF, the parties and their witnesses have hereunder set their hands at
Manila this 1st day of September, 1959." (See pp. 11-13, Vol. IV, rec.)
"At this juncture, mention should be made of the Petitioner's commercial background, as it appears in the
record. Her documentary exhibits show that she was registered as a bona fide Filipino retailer as of April 8, 1958
(Exh. 'C'); that she was doing business under the name 'Gabriel Grocery and Cold Store' as of March 20, 1958
(Exh. 'A'); and that on September 24, 1959 she obtained another certificate of registration for the firm name
'Wonder Commercial Co., Inc.,' she being the Manager thereof (Exh. 'B')." (Pp. 10-13, Vol. IV, rec.)
Respondent Director of Patents set forth the evidence of the petitioner as follows:
"From the evidence presented by her, she endeavors to prove that even before the execution of the
agreement (Exh 'F-1') or particularly on March 11, 1959 she hired the services of Eriberto Flores (t.s.n., pp. 43-52,
May 23, 1963) who allegedly designed the packages for which she paid him the sum of P50.00 (Exh. 'FF').
Thereafter she allegedly started the sales promotion of the Respondent's product by extensive advertisement
through some magazines (Exhs. 'G'; 'G-1'; and 'H'), the radio (Exhs. 'I'-'18'), and the cinema by means of projector
'slides' (Exhs. 'M' and 'N') in various neighborhood theatres in the Philippines (Exhs. 'O' to '-48'). She also
allegedly caused the printing of thousands of boxes and literature accompanying the soap with printing companies
(Exhs. 'P', 'Q', 'R', 'S'. 'T', 'U', 'V', 'W', and 'X' to 'X-8'). She also presented a few sales invoices, the earliest of
which was issued on November 4, 1959 by the Wonder Commercial Co., Inc., showing sales of the 'Wonder
Soap.' (Exh. 'Y'). Another booklet of sales invoices under the firm name 'C.Y. Gabriel' showing sales of the same
 soap, the earliest of which was August 13, 1960, was also presented (Exhs. 'Z' and 'AA'). All the while the
packages (Exhs. 'D' and 'E') and literature (Exh. 'W') indicate that the soap is known as 'Dr. Perez Bleaching
Beauty Soap' manufactured by Dr. Jose R. Perez Cosmetic Laboratory and that the exclusive distributor is
'Crisanta Y. Gabriel (C Y. Gabriel)', the herein Petitioner.
"As further evidence of sale, the Petitioner presented as witness Pedro Alvero, a businessman from San
Pablo City who, as alleged dealer in medicinal products, toiletries, etc., testified as having purchased from her
'Wonder' soap in 1959 up to 1961 (t.s.n., pp. 43-52, May 23. 1963)." (See pp. 13-14, Vol. IV, rec.)
I
The determination that Dr, Perez is the rightful owner of the disputed trademark "WONDER" and the consequent denial
by the respondent Director of Patents of the petition to cancel certificate of registration No. SR-389 covering said trademark
issued to and in the name of Dr. Jose R. Perez, were based mainly on his finding that Dr. Perez had priority of adoption and use of
the said trademark. And such finding of fact is conclusive on this Court. As stated by Justice Fernando in Lim Kiah vs. Kaynee
Company (25 SCRA 485) and reiterated by him in the subsequent case of Sy Chang vs. Gaw Liu (44 SCRA 150-151): "It is well-
settled that we are precluded from making an inquiry as the finding of facts of the Director of Patents in the absence of any
showing that there was grave abuse of discretion is binding on us. As set forth by Justice Makalintal in Chung Te vs. Ng Kian
Giab (18 SCRA 747): 'The rule is that findings of facts by the Director of Patents are conclusive on the Supreme Court provided
that they are supported by substantial evidence.'" In the present case, the findings of fact of the respondent Director of Patents are
substantially supported by evidence and no grave abuse of discretion was committed by said respondent.
1. At the time of the analysis of the soap product of private respondent Dr. Jose R. Perez, there was already a label or
trademark known as "Dr. Perez' WONDER Beauty Soap" as shown and supported by Exhibit "5" which is a Certificate of Label
Approval dated June 6, 1958 (p. 103, Vol. III, rec.) and Exhibit "6" another Certificate of Label Approval dated August 10,
1959 (p. 104, Vol. III, rec.) both issued by the Bureau of Health to Dr. Jose R. Perez as manager of the Dr. Jose R. Perez
Cosmetic Laboratory. Both certificates identified the product covered as "Dr. Perez' Wonder Beauty Soap" and further indicated
that said product emanated from the Dr. Jose R. Perez Cosmetic Laboratory. Furthermore, the certificates show that the Bureau of
Health referred to and relied on the said label or trademark of the product as the basis for its certification that the same (product)
"was found not adulterated nor misbranded."
2. It is not denied that private respondent Dr. Jose R. Perez was the originator, producer and manufacturer of the soap
product identified as "DR. JOSE R. PEREZ WONDER BEAUTY SOAP." This fact, furthermore, is clearly shown in Exhibits "5"
and "6" which, as already adverted to, point out that said product emanated from the Dr. Jose R. Perez Cosmetic Laboratory. The
very boxes-containers used in packing the said product also exhibit this fact (Exhs. "DD", "EE", "LL", "HH" also marked as Exh.
"7", "JJ" and "KK", pp. 94-96, 98-101, Vol. III, rec.).
On the other hand, petitioner Crisanta Y. Gabriel appears to be a mere distributor of the product by contract with the
manufacturer, respondent Dr. Jose R. Perez (Exhs. "7", "F-1" to "F-2", p. 13, Vol. III, rec.) and the same was only for a term. This
fact is also clearly shown by the containers-boxes used in packing the product (Exhs. "E", "D" and "II" also marked as Exh. "8",
pp. 10, 11 and 99, Vol. III, rec.) which indicate and describe Crisanta Y. Gabriel as the exclusive distributor of the product.
Thus, as stated in the decision under review: "Therefore, it cannot be denied that the Respondent is the originator and
manufacturer of the so-called 'Dr. Perez Wonder Beauty Soap,' a phrase clearly coined by, and associated with, the Respondent.
As such, the connotation in itself is sufficient to clothe the product as an item or a commodity emanating from a particularly
identified source who is none other than Dr. Jose R. Perez. The words serve as an indication of origin, and the product identified
by the words can never be regarded as having emanated or originated from another individual, typical of which is the Petitioner, a
mere distributor." (P. 15, Vol. IV, rec.). Under Sections 2 and 2-A of the Trademark Law, Republic Act No. 166, as amended, the
right to register trademark is based on ownership and a mere distributor of a product bearing a trademark, even if permitted to use
said trademark, has no right to and cannot register the said trademark (Marvex Commercial Co., Inc. vs. Petra Hawpia & Co., 18
SCRA 1178; Operators, Inc. vs. Director of Patents, et al., 15 SCRA 148).
II
1. Petitioner urges that the agreement of exclusive distributorship executed by and between her and respondent vested in
her the exclusive ownership of the trademark "WONDER". But a scrutiny of the provisions of said contract does not yield any
right in favor of petitioner other than that expressly granted to her — to be the sole and exclusive distributor of respondent Dr.
Perez' product.
The fact that paragraph 6 (Exh. "F-2") of the agreement provides that the petitioner "has the exclusive right of ownership
of the packages and that said party is responsible for the costs as well as the design and manner of packing the same" did not
necessarily grant her the right to the exclusive use of the trademark; because the agreement never mentioned transfer of ownership
of the trademark. It merely empowers the petitioner as exclusive distributor to own the package and to create a design at her
pleasure, but not the right to appropriate unto herself the sole ownership of the trademark so as to entitle her to registration in the
Patent Office. In fact, the agreement does not even grant her the right to register the mark, as correctly stated in the appealed
decision, which further held that:
 "The statute provides that 'the owner of a trademark used in commerce may register his trademark . . .'
By statutory definition a trademark is 'any word, name, symbol or device or any combination thereof adopted and
used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured by
others.' (Emphasis added). There is nothing in the statute which remotely suggests that one who merely sells a
manufacturer's goods bearing the manufacturer's mark acquires any rights in the mark; nor is there anything in the
statute which suggests that such a person may register a mark which his supplier has adopted and used to identify
his goods. Ex parte E. Leitz, Inc., (Comr Pats) 105 USPQ 480." (pp. 16-17. Vol. IV, rec.). 
2. The exclusive distributor does not acquire any proprietary interest in the principal's trademark.
"In the absence of any inequitable conduct on the part of the manufacturer, an exclusive distributor, who
employs the trademark of the manufacturer does not acquire proprietary interest in the mark which will extinguish
the rights of the manufacturer, and a registration of the trademark by the distributor as such belongs to the
manufacturer, provided the fiduciary relationship does not terminate before application for registration is filed."
(87 CJS 258-259, citing cases.)
III
It has been repeatedly said that the objects of a trademark are "to point out distinctly the origin or ownership of the goods
to which it is affixed, to secure to him, who has been instrumental in bringing into market a superior article of merchandise, the
fruit of his industry and skill, and to prevent fraud and imposition. 52 Am. Jur., p. 50, citing cases." (Etepha vs. Director of
Patents, et al., 16 SCRA 495). Necessarily, therefore, a trademark can only be used in connection with the sale of the identical
article that has been sold under the trademark or tradename to the extent necessary to establish them as such (Note 1 L.R.A. [N.S.]
704; A.I.M. Percolating Corporation vs. Ferrodine Chemical Corporation, et al., 124 S.E. 446).
In this instant case, the trademark "WONDER" has long been identified and associated with the product manufactured
and produced by the Dr. Jose R. Perez Cosmetic Laboratory. It would thus appear that the decision under review is but in
consonance with the sound purposes or objects of a trademark. Indeed, a contrary ruling would have resulted in the cancellation
of the trademark in question and in granting the pending application of herein petitioner to register the same trademark in her
favor to be used on her bleaching soap, which is of the same class as that of respondent (bleaching and beauty soap) [see pp. 222,
265-276, Vol. I, rec.; also Exh. "9", p. 105, Vol. III, rec.]. And the effect on the public as well as on respondent Dr. Jose R. Perez
would have been disastrous. Such a situation would sanction a false implication that the product to be sold by her (petitioner) is
still that manufactured by respondent.
IV
Petitioner would also anchor her claim of exclusive ownership of the trademark in question on the fact that she defrayed
substantial expenses in the promotion of respondent's soap as covered by the trademark "WONDER" and the printing of the
packages which she further claimed to have been designed thru her efforts as she was the one who hired the services of an artist
who created the design of the said packages and trademark. Such claim was disposed correctly by respondent Director of Patents,
thus:
"Petitioner's act in defraying substantial expenses in the promotion of the Respondent's goods and the
printing of the packages are the necessary or essential consequences of Paragraph 6 of the agreement because,
anyway, those activities are normal in the field of sale and distribution, as it would redound to her own benefit as
distributor, and those acts are incumbent upon her to do. While it may be argued that sale by the Petitioner may be
regarded as trademark use by her. nevertheless it should also be regarded that such sale is a consequence of the
'Exclusive Distributorship Agreement' and it inured to the benefit of the Respondent because it was his trademark
that was being used. But this does not result in the Respondent's surrender in her favor of the right to register the
trademark in her own name. What would happen if the first five years' period terminates and the Respondent
decides not to continue with the agreement under Paragraph 1 thereof? What trademark would be use if he himself
assumes the distribution thereof or if he contracts with another entity or person for exclusive distributorship?" (P.
17, Vol. IV, rec.)
It is true that she has been dealing with the product "Wonder Soap" even before the execution of the Exclusive
Distributorship Agreement on September 1, 1959, evidenced by her agreement with Grace Trading Co., Inc. dated June 23,
1959 for the printing of boxes-containers for the "Wonder Soap" and the literature accompanying the same (Exhs. "Q" and "W",
pp. 58, 68, Vol. III, rec.), as well as by another contract dated July 22, 1959 with the Philippine Broadcasting Corporation for spot
announcement of the product "Wonder Soap" showing her as the sponsor (Exh. "I-1" or "5-A", p. 18, Vol. III, rec.). But this was
because Manserco, Inc., which handled first the distribution of the product "Wonder Soap" from January, 1959 to July, 1959,
employed her (petitioner) to help precisely in the marketing and distribution of the said product, she being the sister of Mariano
Yangga who was then the general manager of said Manserco, Inc., as testified to by Mr. Augusto Cesar Espiritu, who, as earlier
adverted to, was the organizer and one of the incorporators of the Manserco, Inc. (pp. 480-481, Vol. III, rec.).
V
 From the records, it further appears that pursuant to the Exclusive Distributorship Agreement between petitioner and
respondent, the latter manufactured "WONDER" soap and delivered them to the former who in turn handled the distribution
thereof. This continued for sometime until January, 1961, when the arrangement was stopped because as claimed and alleged by
herein respondent, he discovered that petitioner began manufacturing her own soap and placed them in the boxes which
contained his name and trademark, and for which reason respondent Dr. Perez filed an unfair competition case against her
(petitioner) [see pp. 29-31, Vol. I, rec.; pp. 379-380, Vol. II, rec.] with the Court of First Instance of Bulacan, which issued a writ
of preliminary injunction against her. These claims of respondent were never denied, much less refuted by petitioner in her
rebuttal testimony. Earlier in her direct testimony, petitioner stated that her occupation was merchant and manufacturer of
bleaching soap (p. 222, Vol. II, rec.) and on cross-examination she stated that she manufactured Marvel and Dahlia Bleaching
Beauty Soap as well as C.Y. GABRIEL WONDER BEAUTY SOAP, although she claimed to have manufactured the same only
from February, 1961 to September, 1961 (pp. 265-270, Vol. II, rec.). Her use of the mark "Wonder" on the soap manufactured by
her is patently shown by Exhibit "9" consisting of a cake of soap with the inscription C.Y. GABRIEL WONDER SPECIAL and
an accompanying literature wherein appear, among others, the following words: C.Y. Gabriel — WONDER MEDICATED
Beauty Soap, Manufactured by: C.Y. GABRIEL COSMETIC LABORATORY (see Exh. "9", p. 105, Vol. III, rec.; pp. 440-441,
Vol. II, rec.).
VI
OUR examination of the entire records of the present case likewise revealed petitioner's disregard of the rudiments of
fair dealing. Mr. Justice Fernando, in behalf of the Court, stated in Lim Kiah vs. Kaynee Company, thus:
". . . The decision of the Director of Patents is not only sound in law but also commendable for its
consonance with the appropriate ethical standard which by no means should be excluded from the business world
as alien, if not a hostile, force. While in the fierce competitive jungle which at times constitutes the arena of
commercial transactions, shrewdness and ingenuity are at a premium, the law is by no means called upon to yield
invariably its nod of approval to schemes frowned upon by the concept of fairness. Here. petitioner engaged in
manufacturing and selling the same kind of products would rely on a trademark, which Undeniably was
previously registered abroad and which theretofore had been used and advertised extensively by one of the leading
department stores in the Philippines." (26 SCRA 490.)
To our mind, the situation of herein petitioner is worse.
WHEREFORE, THE DECISION SOUGHT TO BE REVIEWED IS HEREBY AFFIRMED AND THE PETITION IS
HEREBY DISMISSED. WITH COSTS AGAINST PETITIONER.
Makalintal, C .J ., Castro, Teehankee, Esguerra and Muñoz Palma, JJ ., concur.
||| (Gabriel v. Perez, G.R. No. L-24075, [January 31, 1974], 154 PHIL 371-387)

SECOND DIVISION

[G.R. No. 169974. April 20, 2010.]

SUPERIOR COMMERCIAL ENTERPRISES, INC., petitioner, vs. KUNNAN ENTERPRISES LTD. AND SPORTS CONCEPT & DISTRIBUTOR,
INC., respondents.

DECISION

BRION, J p:
 We review in this petition for review on certiorari 1 the (1) decision 2 of the Court of Appeals (CA) in CA-G.R. CV No.
60777 that reversed the ruling of the Regional Trial Court of Quezon City, Branch 85 (RTC), 3 and dismissed the petitioner
Superior Commercial Enterprises, Inc.'s (SUPERIOR) complaint for trademark infringement and unfair competition (with prayer
for preliminary injunction) against the respondents Kunnan Enterprises Ltd. (KUNNAN) and Sports Concept and Distributor, Inc.
(SPORTS CONCEPT); and (2) the CA resolution 4 that denied SUPERIOR's subsequent motion for reconsideration. The RTC
decision that the CA reversed found the respondents liable for trademark infringement and unfair competition, and ordered them
to pay SUPERIOR P2,000,000.00 in damages, P500,000.00 as attorney's fees, and costs of the suit.
THE FACTUAL ANTECEDENTS
On February 23, 1993, SUPERIOR 5 filed a complaint for trademark infringement and unfair competition with
preliminary injunction against KUNNAN 6 and SPORTS CONCEPT 7 with the RTC, docketed as Civil Case No. Q-93014888.
In support of its complaint, SUPERIOR first claimed to be the owner of the trademarks, trading styles, company names
and business names 8 "KENNEX", 9 "KENNEX & DEVICE", 10 "PRO KENNEX" 11 and "PRO-KENNEX" (disputed
trademarks). 12 Second, it also asserted its prior use of these trademarks, presenting as evidence of ownership the Principal and
Supplemental Registrations of these trademarks in its name. Third, SUPERIOR also alleged that it extensively sold and advertised
sporting goods and products covered by its trademark registrations. Finally, SUPERIOR presented as evidence of its ownership of
the disputed trademarks the preambular clause of the Distributorship Agreement dated October 1, 1982 (Distributorship
Agreement) it executed with KUNNAN, which states: HCIaDT
Whereas, KUNNAN intends to acquire the ownership of KENNEX trademark registered by the
[sic] Superior in the Philippines. Whereas, the [sic] Superior is desirous of having been appointed [sic] as the
sole distributor by KUNNAN in the territory of the Philippines." [Emphasis supplied.] 13
In its defense, KUNNAN disputed SUPERIOR's claim of ownership and maintained that SUPERIOR — as mere
distributor from October 6, 1982 until December 31, 1991 — fraudulently registered the trademarks in its name. KUNNAN
alleged that it was incorporated in 1972, under the name KENNEX Sports Corporation for the purpose of manufacturing and
selling sportswear and sports equipment; it commercially marketed its products in different countries, including the Philippines
since 1972. 14 It created and first used "PRO KENNEX," derived from its original corporate name, as a distinctive trademark for
its products in 1976. KUNNAN also alleged that it registered the "PRO KENNEX" trademark not only in the Philippines but also
in 31 other countries, and widely promoted the "KENNEX" and "PRO KENNEX" trademarks through worldwide advertisements
in print media and sponsorships of known tennis players.
On October 1, 1982, after the expiration of its initial distributorship agreement with another company, 15 KUNNAN
appointed SUPERIOR as its exclusive distributor in the Philippines under a Distributorship Agreement whose pertinent
provisions state: 16
Whereas, KUNNAN intends to acquire ownership of KENNEX trademark registered by the Superior in
the Philippines. Whereas, the Superior is desirous of having been appointed [sic] as the sole distributor by
KUNNAN in the territory of the Philippines.
Now, therefore, the parties hereto agree as follows:
1. KUNNAN in accordance with this Agreement, will appoint the sole distributorship right to Superior in
the Philippines, and this Agreement could be renewed with the consent of both parties upon the time of
expiration. aTcIEH
2. The Superior, in accordance with this Agreement, shall assign the ownership of KENNEX trademark,
under the registration of Patent Certificate No. 4730 dated 23 May 1980 to KUNNAN on the effects
[sic] of its ten (10) years contract of distributorship, and it is required that the ownership of the said
trademark shall be genuine, complete as a whole and without any defects.
3. KUNNAN will guarantee to the Superior that no other third parties will be permitted to supply the KENNEX
PRODUCTS in the Philippines except only to the Superior. If KUNNAN violates this stipulation, the
transfer of the KENNEX trademark shall be null and void.
4. If there is a necessity, the Superior will be appointed, for the protection of interest of both parties, as the agent
in the Philippines with full power to exercise and granted the power of attorney, to pursue any case of
Pirating, Infringement and Counterfeiting the [sic] KENNEX trade mark in the Philippine territory.
5. The Superior will be granted from [sic] KUNNAN's approval before making and selling any KENNEX
products made in the Philippines and the other countries, and if this is the situation, KUNNAN is entitled
to have a royalty of 5%-8% of FOB as the right. SIcEHC
6. Without KUNNAN's permission, the Superior cannot procure other goods supply under KENNEX brand of
which are not available to supply [sic] by KUNNAN. However, in connection with the sporting goods, it
 is permitted that the Superior can procure them under KENNEX brand of which are not available to be
supplied by KUNNAN. [Emphasis supplied.]
Even though this Agreement clearly stated that SUPERIOR was obligated to assign the ownership of the KENNEX
trademark to KUNNAN, the latter claimed that the Certificate of Registration for the KENNEX trademark remained with
SUPERIOR because Mariano Tan Bon Diong (Mr. Tan Bon Diong), SUPERIOR's President and General Manager, misled
KUNNAN's officers into believing that KUNNAN was not qualified to hold the same due to the "many requirements set by the
Philippine Patent Office" that KUNNAN could not meet. 17 KUNNAN further asserted that SUPERIOR deceived it into
assigning its applications for registration of the "PRO KENNEX" trademark in favor of SUPERIOR, through an Assignment
Agreement dated June 14, 1983 whose pertinent provisions state: 18
1. In consideration of the distributorship relationship between KUNNAN and Superior, KUNNAN, who
is the seller in the distributorship relationship, agrees to assign the following trademark applications owned by
itself in the Philippines to Superior who is the buyer in the distributorship relationship.

Trademark Application Number Class

     

PROKENNEX 49999 28

PROKENNEX 49998 25
PROKENNEX 49997 18

2. Superior shall acknowledge that KUNNAN is still the real and truthful owner of the
abovementioned trademarks, and shall agree that it will not use the right of the abovementioned
trademarks to do anything which is unfavourable or harmful to KUNNAN.
3. Superior agrees that it will return back the abovementioned trademarks to KUNNAN without
hesitation at the request of KUNNAN at any time. KUNNAN agrees that the cost for the concerned assignment
of the abovementioned trademarks shall be compensated by KUNNAN. TAHIED
4. Superior agrees that the abovementioned trademarks when requested by KUNNAN shall be clean and
without any incumbency.
5. Superior agrees that after the assignment of the abovementioned trademarks, it shall have no right to
reassign or license the said trademarks to any other parties except KUNNAN. [Emphasis supplied]
Prior to and during the pendency of the infringement and unfair competition case before the RTC, KUNNAN
filed with the now defunct Bureau of Patents, Trademarks and Technology Transfer 19 separate Petitions for the
Cancellation of Registration Trademark Nos. 41032, SR 6663, 40326, 39254, 4730 and 49998, docketed as Inter Partes Cases
Nos. 3709, 3710, 3811, 3812, 3813 and 3814, as well as Opposition to Application Serial Nos. 84565 and 84566, docketed as
Inter Partes Cases Nos. 4101 and 4102 (Consolidated Petitions for Cancellation) involving the KENNEX and PRO KENNEX
trademarks. 20 In essence, KUNNAN filed the Petition for Cancellation and Opposition on the ground that SUPERIOR
fraudulently registered and appropriated the disputed trademarks; as mere distributor and not as lawful owner, it obtained the
registrations and assignments of the disputed trademarks in violation of the terms of the Distributorship Agreement and Sections
2-A and 17 of Republic Act No. 166, as amended. 21
On December 3, 1991, upon the termination of its distributorship agreement with SUPERIOR, KUNNAN appointed
SPORTS CONCEPT as its new distributor. Subsequently, KUNNAN also caused the publication of a Notice and Warning in the
Manila Bulletin's January 29, 1993 issue, stating that (1) it is the owner of the disputed trademarks; (2) it terminated its
Distributorship Agreement with SUPERIOR; and (3) it appointed SPORTS CONCEPT as its exclusive distributor. This notice
prompted SUPERIOR to file its Complaint for Infringement of Trademark and Unfair Competition with Preliminary Injunction
against KUNNAN. 22
The RTC Ruling
On March 31, 1998, the RTC issued its decision 23 holding KUNNAN liable for trademark infringement and unfair
competition. The RTC also issued a writ of preliminary injunction enjoining KUNNAN and SPORTS CONCEPT from using the
disputed trademarks. DaCTcA
The RTC found that SUPERIOR sufficiently proved that it was the first user and owner of the disputed trademarks in the
Philippines, based on the findings of the Director of Patents in Inter Partes Case No. 1709 and 1734 that SUPERIOR was
"rightfully entitled to register the mark 'KENNEX' as user and owner thereof." It also considered the "Whereas clause" of the
Distributorship Agreement, which categorically stated that "KUNNAN intends to acquire ownership of [the] KENNEX trademark
registered by SUPERIOR in the Philippines." According to the RTC, this clause amounts to KUNNAN's express recognition of
SUPERIOR's ownership of the KENNEX trademarks. 24  
KUNNAN and SPORTS CONCEPT appealed the RTC's decision to the CA where the appeal was docketed as CA-G.R.
CV No. 60777. KUNNAN maintained that SUPERIOR was merely its distributor and could not be the owner of the disputed
trademarks. SUPERIOR, for its part, claimed ownership based on its prior use and numerous valid registrations.
Intervening Developments:
The IPO and CA Rulings
In the course of its appeal to the CA, KUNNAN filed on December 19, 2003 a Manifestation and Motion praying  that
the decision of the Bureau of Legal Affairs (BLA) of the Intellectual Property Office (IPO), dated October 30, 2003, in the
Consolidated Petitions for Cancellation be made of record and be considered by the CA in resolving the case . 25 The BLA
ruled in this decision —
In the case at bar, Petitioner-Opposer (Kunnan) has overwhelmingly and convincingly established its
rights to the mark "PRO KENNEX". It was proven that actual use by Respondent-Registrant is not in the concept
of an owner but as a mere distributor (Exhibits "I", "S" to "S-1", "P" and "P-1" and "Q" and "Q-2") and as
enunciated in the case of Crisanta Y. Gabriel vs. Dr. Jose R. Perez, 50 SCRA 406, "a mere distributor of a product
bearing a trademark, even if permitted to use said trademark has no right to and cannot register the said
trademark." EAcCHI
WHEREFORE, there being sufficient evidence to prove that the Petitioner-Opposer (KUNNAN) is the
prior user and owner of the trademark "PRO-KENNEX", the consolidated Petitions for Cancellation and the
Notices of Opposition are hereby GRANTED. Consequently, the trademark "PRO-KENNEX" bearing
Registration Nos. 41032, 40326, 39254, 4730, 49998 for the mark PRO-KENNEX issued in favor of Superior
Commercial Enterprises, Inc., herein Respondent-Registrant under the Principal Register and SR No. 6663 are
hereby CANCELLED. Accordingly, trademark application Nos. 84565 and 84566, likewise for the registration
of the mark PRO-KENNEX are hereby REJECTED.
Let the file wrappers of PRO-KENNEX subject matter of these cases be forwarded to the Administrative
Finance and Human Resources Development Services Bureau (AFHRDSB) for appropriate action in accordance
with this Decision and a copy thereof be furnished the Bureau of Trademarks (BOT) for information and update of
its record. 26
On February 4, 2005, KUNNAN again filed another Manifestation requesting that the IPO Director General's decision
on appeal dated December 8, 2004, denying SUPERIOR's appeal, be given weight in the disposition of the case. 27 The
dispositive portion of the decision reads: 28
WHEREFORE, premises considered, there is no cogent reason to disturb Decision No. 2003-35 dated 30
October 2003 rendered by the Director of the Bureau of Legal Affairs. Accordingly, the instant appeal is DENIED
and the appealed decision is hereby AFFIRMED.
We take judicial notice that SUPERIOR questioned the IPO Director General's ruling before the Court of Appeals on a
petition for review under Rule 43 of the Rules of Court, docketed as CA-G.R. SP No. 87928 (Registration Cancellation Case). On
August 30, 2007, the CA rendered its decision dismissing SUPERIOR's petition. 29 On December 3, 2007, the CA decision was
declared final and executory and entry of judgment was accordingly made. Hence, SUPERIOR's registration of the disputed
trademarks now stands effectively cancelled.
The CA Ruling
On June 22, 2005, the CA issued its decision in CA-G.R. CV No. 60777, reversing and setting aside the RTC's decision
of March 31, 1998. 30 It dismissed SUPERIOR's Complaint for Infringement of Trademark and Unfair Competition with
Preliminary Injunction on the ground that SUPERIOR failed to establish by preponderance of evidence its claim of ownership
over the KENNEX and PRO KENNEX trademarks. The CA found the Certificates of Principal and Supplemental Registrations
and the "whereas clause" of the Distributorship Agreement insufficient to support SUPERIOR's claim of ownership over the
disputed trademarks. cEaDTA
The CA stressed that SUPERIOR's possession of the aforementioned Certificates of Principal Registration does not
conclusively establish its ownership of the disputed trademarks as dominion over trademarks is not acquired by the fact of
registration alone; 31 at best, registration merely raises a presumption of ownership that can be rebutted by contrary
evidence. 32 The CA further emphasized that the Certificates of Supplemental Registration issued in SUPERIOR's name do not
even enjoy the presumption of ownership accorded to registration in the principal register; it does not amount to a prima
facie evidence of the validity of registration or of the registrant's exclusive right to use the trademarks in connection with the
goods, business, or services specified in the certificate. 33
 In contrast with the failure of SUPERIOR's evidence, the CA found that KUNNAN presented sufficient evidence to
rebut SUPERIOR's presumption of ownership over the trademarks. KUNNAN established that SUPERIOR, far from being the
rightful owner of the disputed trademarks, was merely KUNNAN's exclusive distributor. This conclusion was based on three
pieces of evidence that, to the CA, clearly established that SUPERIOR had no proprietary interest over the disputed trademarks.
First, the CA found that the Distributorship Agreement, considered in its entirety, positively confirmed that SUPERIOR
sought to be the KUNNAN's exclusive distributor. The CA based this conclusion on the following provisions of the
Distributorship Agreement:
(1) that SUPERIOR was "desirous of [being] appointed as the sole distributor by KUNNAN in the
territory of the Philippines;" IHAcCS
(2) that "KUNNAN will appoint the sole distributorship right to Superior in the Philippines;" and
(3) that "no third parties will be permitted to supply KENNEX PRODUCTS in the Philippines except
only to Superior."
The CA thus emphasized that the RTC erred in unduly relying on the first whereas clause, which states that "KUNNAN
intends to acquire ownership of [the] KENNEX trademark registered by SUPERIOR in the Philippines" without considering the
entirety of the Distributorship Agreement indicating that SUPERIOR had been merely appointed by KUNNAN as its distributor.
Second, the CA also noted that SUPERIOR made the express undertaking in the Assignment Agreement to
"acknowledge that KUNNAN is still the real and truthful owner of the [PRO KENNEX] trademarks," and that it "shall agree that
it will not use the right of the abovementioned trademarks to do anything which is unfavourable or harmful to KUNNAN." To the
CA, these provisions are clearly inconsistent with SUPERIOR's claim of ownership of the disputed trademarks. The CA also
observed that although the Assignment Agreement was a private document, its authenticity and due execution was proven by the
similarity of Mr. Tan Bon Diong's signature in the Distributorship Agreement and the Assignment Agreement.
Third, the CA also took note of SUPERIOR's Letter dated November 12, 1986 addressed to Brig. Gen. Jose Almonte,
identifying itself as the "sole and exclusive licensee and distributor in the Philippines of all its KENNEX and PRO-KENNEX
products." Attached to the letter was an agreement with KUNNAN, identifying the latter as the "foreign manufacturer of all
KENNEX products." The CA concluded that in this letter, SUPERIOR acknowledged its status as a distributor in its dealings with
KUNNAN, and even in its transactions with third persons.
Based on these reasons, the CA ruled that SUPERIOR was a mere distributor and had no right to the registration of the
disputed trademarks since the right to register a trademark is based on ownership. Citing Section 4 of  Republic Act No.
166 34 and established jurisprudence, 35 the CA held that SUPERIOR — as an exclusive distributor — did not acquire any
proprietary interest in the principal's (KUNNAN's) trademark. SaIEcA
The CA denied SUPERIOR's motion for reconsideration for lack of merit in its Resolution dated October 4, 2005.
THE PETITION
In the present petition, SUPERIOR raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER SUPERIOR IS
NOT THE TRUE AND RIGHTFUL OWNER OF THE TRADEMARKS "KENNEX" AND "PRO-KENNEX" IN
THE PHILIPPINES
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER
SUPERIOR IS A MERE DISTRIBUTOR OF RESPONDENT KUNNAN IN THE PHILIPPINES
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN REVERSING AND SETTING
ASIDE THE DECISION OF THE REGIONAL TRIAL COURT OF QUEZON CITY IN CIVIL CASE NO. Q-
93-14888, LIFTING THE PRELIMINARY INJUNCTION ISSUED AGAINST RESPONDENTS KUNNAN
AND SPORTS CONCEPT AND DISMISSING THE COMPLAINT FOR INFRINGEMENT OF TRADEMARK
AND UNFAIR COMPETITION WITH PRELIMINARY INJUNCTION
THE COURT'S RULING
We do not find the petition meritorious.
On the Issue of Trademark Infringement
 We first consider the effect of the final and executory decision in the Registration Cancellation Case on the present case.
This decision — rendered after the CA decision for trademark infringement and unfair competition in CA-G.R. CV No. 60777
(root of the present case) — states:
As to whether respondent Kunnan was able to overcome the presumption of ownership in favor of
Superior, the former sufficiently established the fraudulent registration of the questioned trademarks by Superior.
The Certificates of Registration No. SR-4730 (Supplemental Register) and 33487 (Principal Register) for the
KENNEX trademark were fraudulently obtained by petitioner Superior. Even before PROKENNEX products
were imported by Superior into the Philippines, the same already enjoyed popularity in various countries and had
been distributed worldwide, particularly among the sports and tennis enthusiasts since 1976. Riding on the said
popularity, Superior caused the registration thereof in the Philippines under its name when it knew fully well that
it did not own nor did it manufacture the PROKENNEX products. Superior claimed ownership of the subject
marks and failed to disclose in its application with the IPO that it was merely a distributor of KENNEX and
PROKENNEX products in the Philippines. CacHES 
While Superior accepted the obligation to assign Certificates of Registration Nos. SR-4730 and 33487 to
Kunnan in exchange for the appointment by the latter as its exclusive distributor, Superior however breached its
obligation and failed to assign the same to Kunnan. In a letter dated 13 February 1987, Superior, through Mr. Tan
Bon Diong, misrepresented to Kunnan that the latter cannot own trademarks in the Philippines. Thus, Kunnan was
misled into assigning to Superior its (Kunnan's) own application for the disputed trademarks. In the same
assignment document, however. Superior was bound to ensure that the PROKENNEX trademarks under
Registration Nos. 40326, 39254, and 49998 shall be returned to Kunnan clean and without any incumbency when
requested by the latter.
In fine, We see no error in the decision of the Director General of the IPO which affirmed the decision of
the Director of the Bureau of Legal Affairs canceling the registration of the questioned marks in the name of
petitioner Superior and denying its new application for registration, upon a finding that Superior is not the rightful
owner of the subject marks.
WHEREFORE, the foregoing considered, the petition is DISMISSED.
The CA decided that the registration of the "KENNEX" and "PRO KENNEX" trademarks should be cancelled
because SUPERIOR was not the owner of, and could not in the first place have validly registered these trademarks . Thus,
as of the finality of the CA decision on December 3, 2007, these trademark registrations were effectively cancelled and
SUPERIOR was no longer the registrant of the disputed trademarks. HICSTa
Section 22 of Republic Act No. 166, as amended ("RA 166"), 36 the law applicable to this case, defines trademark
infringement as follows:
Section 22. Infringement, what constitutes. — Any person who [1] shall use, without the consent of the
registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or trade-name in
connection with the sale, offering for sale, or advertising of any goods, business or services on or in connection
with which such use is likely to cause confusion or mistake or to deceive purchasers or others as to the source or
origin of such goods or services, or identity of such business; or [2] reproduce, counterfeit, copy, or colorably
imitate any such mark or trade-name and apply such reproduction, counterfeit, copy, or colorable imitation to
labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection
with such goods, business or services, shall be liable to a civil action by the registrant for any or all of the
remedies herein provided. [Emphasis supplied]
Essentially, Section 22 of RA 166 states that only a registrant of a mark can file a case for infringement. Corollary to this, Section
19 of RA 166 provides that any right conferred upon the registrant under the provisions of RA 166 37 terminates when the
judgment or order of cancellation has become final, viz.:
Section 19. Cancellation of registration. — If the Director finds that a case for cancellation has been
made out he shall order the cancellation of the registration. The order shall not become effective until the period
for appeal has elapsed, or if appeal is taken, until the judgment on appeal becomes final.  When the order or
judgment becomes final, any right conferred by such registration upon the registrant or any person in
interest of record shall terminate. Notice of cancellation shall be published in the Official Gazette. [Emphasis
supplied.]
Thus, we have previously held that the cancellation of registration of a trademark has the effect of depriving the
registrant of protection from infringement from the moment judgment or order of cancellation has become final. 38
In the present case, by operation of law, specifically Section 19 of RA 166, the trademark infringement aspect of
SUPERIOR's case has been rendered moot and academic in view of the finality of the decision in the Registration Cancellation
Case. In short, SUPERIOR is left without any cause of action for trademark infringement since the cancellation of registration of
a trademark deprived it of protection from infringement from the moment judgment or order of cancellation became final. To be
sure, in a trademark infringement, title to the trademark is indispensable to a valid cause of action and such title is shown by its
certificate of registration. 39 With its certificates of registration over the disputed trademarks effectively cancelled with finality,
SUPERIOR's case for trademark infringement lost its legal basis and no longer presented a valid cause of action. HEASaC
Even assuming that SUPERIOR's case for trademark infringement had not been rendered moot and academic, there can
be no infringement committed by KUNNAN who was adjudged with finality to be the rightful owner of the disputed trademarks
in the Registration Cancellation Case. Even prior to the cancellation of the registration of the disputed trademarks, SUPERIOR —
as a mere distributor and not the owner — cannot assert any protection from trademark infringement as it had no right in the first
place to the registration of the disputed trademarks. In fact, jurisprudence holds that in the absence of any inequitable conduct on
the part of the manufacturer, an exclusive distributor who employs the trademark of the manufacturer does not acquire proprietary
rights of the manufacturer, and a registration of the trademark by the distributor as such belongs to the manufacturer,
provided the fiduciary relationship does not terminate before application for registration is filed. 40 Thus, the CA in the
Registration Cancellation Case correctly held:
As a mere distributor, petitioner Superior undoubtedly had no right to register the questioned mark in its
name. Well-entrenched in our jurisdiction is the rule that the right to register a trademark should be based on
ownership. When the applicant is not the owner of the trademark being applied for, he has no right to apply for the
registration of the same. Under the Trademark Law, only the owner of the trademark, trade name or service mark
used to distinguish his goods, business or service from the goods, business or service of others is entitled to
register the same. An exclusive distributor does not acquire any proprietary interest in the principal's trademark
and cannot register it in his own name unless it is has been validly assigned to him.
In addition, we also note that the doctrine of res judicata bars SUPERIOR's present case for trademark infringement.
The doctrine of res judicata embraces two (2) concepts: the first is "bar by prior judgment" under paragraph (b) of Rule 39,
Section 47, and the second is "conclusiveness of judgment" under paragraph (c) thereof.
In the present case, the second concept — conclusiveness of judgment — applies. Under the concept of res
judicata by conclusiveness of judgment, a final judgment or decree on the merits by a court of competent jurisdiction is
conclusive of the rights of the parties or their privies in all later suits on points and matters determined in the former
suit. 41 Stated differently, facts and issues actually and directly resolved in a former suit cannot again be raised in any future case
between the same parties, even if the latter suit may involve a different cause of action. 42 This second branch of the principle
of res judicata bars the re-litigation of particular facts or issues in another litigation between the same parties on a different claim
or cause of action. 43 acCTIS
Because the Registration Cancellation Case and the present case involve the same parties, litigating with respect to and
disputing the same trademarks, we are bound to examine how one case would affect the other. In the present case, even if the
causes of action of the Registration Cancellation Case (the cancellation of trademark registration) differs from that of the present
case (the improper or unauthorized use of trademarks), the final judgment in the Registration Cancellation Case is nevertheless
conclusive on the particular facts and issues that are determinative of the present case.
To establish trademark infringement, the following elements must be proven: (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." 44
Based on these elements, we find it immediately obvious that the second element — the plaintiff's ownership of the mark
— was what the Registration Cancellation Case decided with finality. On this element depended the validity of the registrations
that, on their own, only gave rise to the presumption of, but was not conclusive on, the issue of ownership. 45
In no uncertain terms, the appellate court in the Registration Cancellation Case ruled that SUPERIOR was a mere
distributor and could not have been the owner, and was thus an invalid registrant of the disputed
trademarks. Significantly, these are the exact terms of the ruling the CA arrived at in the present petition now under our review.
Thus, whether with one or the other, the ruling on the issue of ownership of the trademarks is the same. Given, however, the final
and executory ruling in the Registration Cancellation Case on the issue of ownership that binds us and the parties, any further
discussion and review of the issue of ownership — although the current CA ruling is legally correct and can stand on its own
merits — becomes a pointless academic discussion. DaScHC
On the Issue of Unfair Competition
Our review of the records shows that the neither the RTC nor the CA made any factual findings with respect to the issue
of unfair competition. In its Complaint, SUPERIOR alleged that: 46
17. In January 1993, the plaintiff learned that the defendant Kunnan Enterprises, Ltd., is intending to
appoint the defendant Sports Concept and Distributors, Inc. as its alleged distributor for sportswear and sporting
goods bearing the trademark "PRO-KENNEX." For this reason, on January 20, 1993, the plaintiff, through
counsel, wrote the defendant Sports Concept and Distributor's, Inc. advising said defendant that the trademark
"PRO-KENNEX" was registered and owned by the plaintiff herein. 
 18. The above information was affirmed by an announcement made by the defendants in The Manila
Bulletin issue of January 29, 1993, informing the public that defendant Kunnan Enterprises, Ltd. has appointed the
defendant Sports Concept and Distributors, Inc. as its alleged distributor of sportswear and sporting goods and
equipment bearing the trademarks "KENNEX and "PRO-KENNEX" which trademarks are owned by and
registered in the name of plaintiff herein as alleged hereinabove.
xxx xxx xxx
27. The acts of defendants, as previously complained herein, were designed to and are of the nature so as
to create confusion with the commercial activities of plaintiff in the Philippines and is liable to mislead the public
as to the nature and suitability for their purposes of plaintiff's business and the defendant's acts are likely to
discredit the commercial activities and future growth of plaintiff's business.
From jurisprudence, unfair competition has been defined as the passing off (or palming off) or attempting to pass off
upon the public of the goods or business of one person as the goods or business of another with the end and probable effect of
deceiving the public. The essential elements of unfair competition 47 are (1) confusing similarity in the general appearance of the
goods; and (2) intent to deceive the public and defraud a competitor. 48
Jurisprudence also formulated the following "true test" of unfair competition: whether the acts of the defendant have the
intent of deceiving or are calculated to deceive the ordinary buyer making his purchases under the ordinary conditions of the
particular trade to which the controversy relates. One of the essential requisites in an action to restrain unfair competition is proof
of fraud; the intent to deceive, actual or probable must be shown before the right to recover can exist. 49 DTSIEc
In the present case, no evidence exists showing that KUNNAN ever attempted to pass off the goods it sold (i.e.,
sportswear, sporting goods and equipment) as those of SUPERIOR. In addition, there is no evidence of bad faith or fraud
imputable to KUNNAN in using the disputed trademarks. Specifically, SUPERIOR failed to adduce any evidence to show that
KUNNAN by the above-cited acts intended to deceive the public as to the identity of the goods sold or of the manufacturer of the
goods sold. In McDonald's Corporation v. L.C. Big Mak Burger, Inc., 50 we held that there can be trademark
infringement without unfair competition such 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. In this case, no issue of confusion arises because the same manufactured products are sold; only the ownership of the
trademarks is at issue. Furthermore, KUNNAN's January 29, 1993 notice by its terms prevents the public from being deceived
that the goods originated from SUPERIOR since the notice clearly indicated that KUNNAN is the manufacturer of the goods
bearing the trademarks "KENNEX" and "PRO KENNEX." This notice states in full: 51
NOTICE AND WARNING
Kunnan Enterprises Ltd. is the owner and first user of the internationally-renowned trademarks
KENNEX and PRO KENNEX for sportswear and sporting goods and equipment. Kunnan Enterprises Ltd. has
registered the trademarks KENNEX and PRO KENNEX in the industrial property offices of at least 31 countries
worldwide where KUNNAN Enterprises Ltd. has been selling its sportswear and sporting goods and equipment
bearing the KENNEX and PRO KENNEX trademarks.
Kunnan Enterprises Ltd. further informs the public that it had terminated its Distributorship Agreement
with Superior Commercial Enterprises, Inc. on December 31, 1991. As a result, Superior Commercial
Enterprises, Inc. is no longer authorized to sell sportswear and sporting goods and equipment
manufactured by Kunnan Enterprises Ltd. and bearing the trademarks KENNEX and PRO KENNEX.
xxx xxx xxx
In its place, KUNNAN has appointed SPORTS CONCEPT AND DISTRIBUTORS, INC. as its
exclusive Philippine distributor of sportswear and sporting goods and equipment bearing the trademarks
KENNEX and PRO KENNEX. The public is advised to buy sporting goods and equipment bearing these
trademarks only from SPORTS CONCEPT AND DISTRIBUTORS, INC. to ensure that the products they
are buying are manufactured by Kunnan Enterprises Ltd. [Emphasis supplied.] CcAESI
Finally, with the established ruling that KUNNAN is the rightful owner of the trademarks of the goods that SUPERIOR
asserts are being unfairly sold by KUNNAN under trademarks registered in SUPERIOR's name, the latter is left with no effective
right to make a claim. In other words, with the CA's final ruling in the Registration Cancellation Case, SUPERIOR's case no
longer presents a valid cause of action. For this reason, the unfair competition aspect of the SUPERIOR's case likewise falls.
WHEREFORE, premises considered, we DENY Superior Commercial Enterprises, Inc.'s petition for review
on certiorari for lack of merit. Cost against petitioner Superior Commercial Enterprises, Inc. TacESD
SO ORDERED.
Carpio, Del Castillo, Abad and Perez, JJ., concur.
 FIRST DIVISION

[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.

[G.R. No. 114802. June 21, 2001.]

DEVELOPERS GROUP OF COMPANIES, INC., petitioner, vs. THE COURT OF APPEALS, HON. IGNACIO S. SAPALO, in his capacity as Director,
Bureau of Patents, Trademarks and Technology Transfer, and SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., respondents.

Oreta Suarez & Narvasa Law Firm for petitioners.

Carag Cabales Jamora & Somera for private respondents.

SYNOPSIS

The Shangri-La Group (petitioner in G.R. No. 111580 and respondent G.R. No. 114802), filed with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) a
petition 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 has been using the said mark and logo for its corporate affairs and
business since March 1962. 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 opposition
to the application. Almost three (3) years later, the Developers Group instituted with the Regional Trial Court a complaint for infringement and damages with prayer for injunction against the
Shangri-La Group. 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. This was denied by the trial court. The Shangri-La Group filed a Motion for Reconsideration. Soon thereafter, it also filed a Motion to Inhibit against Presiding Judge. The trial court
denied both motions. The Shangri-La Group filed a petition for certiorari before the Court of Appeals, however, the Court of Appeals dismissed the petition as well as the Motion for
Reconsideration. Hence, the petition in G.R. No. 111580.

Meanwhile, the Developers Group filed with the BPTTT an Urgent Motion to Suspend Proceedings, invoking the pendency of the infringement case it filed before the Regional
Trial Court of Quezon City. The motion was denied and the Motion for Reconsideration as well. From the denial of the BPTTT, the Developers Group filed with the Court of Appeals a petition
for certiorari, mandamus and prohibition, which was dismissed for lack of merit. This brought about the petition for review in G.R. No. 111580. The Supreme Court ordered the two petitions
consolidated. The core issue therein simply was 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.

On the issue involved in this consolidated petitions, the Supreme Court ruled in the affirmative. According to the Court, in applying Section 151.2 of  Republic Act No. 8293,
otherwise known as the Intellectual Property Code 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 issue raised before
the BPTTT was quite different from that raised in the trial court. Before the BPTTT was the issue of 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 right of Developers
Group within the contemplation of Section 22 of Republic Act 166. However, while the instant petitions were still pending with the Supreme Court, the infringement court rendered its decision
upholding the validity of the registration of the service mark "Shangri-La" and "S-Logo" in the name of the Developers Group. The said decision was appealed with the Court of Appeals. There
can be no denying that the infringement court may validly pass upon the right of registration. 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 became 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 had rendered, albeit the same was still on appeal. The Supreme Court dismissed the petition in G.R.
No. 111580 for being moot and academic, and in connection with G.R. No. 114802, it ordered the Bureau of Legal Affairs, Intellectual Property Office, to suspend further proceedings in  Inter
Partes Case No. 3145, to await the final outcome of the appeal in Civil Case No. Q-91-8476. EADCHS

SYLLABUS

1. COMMERCIAL LAW; TRADEMARKS LAW; EARLIER INSTITUTION OF AN INTER PARTES CASE BY SHANGRI-LA GROUP FOR CANCELLATION OF
"SHANGRI-LA" MARK AND "S" LOGO WITH THE BUREAU OF PATENTS, TRADEMARKS AND TECHNOLOGY TRANSFER CANNOT EFFECTIVELY BAR SUBSEQUENT
FILING OF AN INFRINGEMENT CASE BY REGISTRANT DEVELOPERS GROUP; RATIONALE. — 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." 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. 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. HEDCAS

2. ID.; ID.; INFRINGEMENT CASE IN CASE AT BAR CAN AND SHOULD PROCEED INDEPENDENTLY FROM CANCELLATION CASE WITH BUREAU OF LEGAL
AFFAIRS, INTELLECTUAL PROPERTY OFFICE; REASONS. — 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.

DECISION
YNARES-SANTIAGO, J p:

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 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
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. cSCTID
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. (Italics provided)
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. (Italics supplied)
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 Appeals 18 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, 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.
xxx xxx xxx
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
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 said Decision is now on appeal with respondent Court of Appeals. 21 CADSHI
Following both law and the jurisprudence enunciated in Conrad and Company, Inc. v. Court of Appeals, 22 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.
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
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 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. 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). (Italics supplied)
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.
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 dismissing G.R. No. 111580 for being moot and academic,
and ordering the Bureau of Legal Affairs, Intellectual Property Office, to suspend further proceedings in Inter Partes Case No. 3145, to await
the final outcome of the appeal in Civil Case No. Q-91-8476.
SO ORDERED.
||| (Shangri-la International Hotel Management Ltd. v. Court of Appeals, G.R. Nos. 111580 & 114802, [June 21, 2001], 411 PHIL 802-813)

FIRST DIVISION

[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.

Bito, Misa & Lozada for petitioners.

Reynaldo F. Singson for private respondent.

DECISION
CRUZ, J p:

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. cCESTA
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. cdll
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
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 trade-
name 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.
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 likely 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.
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. 8
In the challenged decision, the respondent court cited the following test laid down by this Court in a number of cases:
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. 9
and applying the same, held that there was no colorable imitation of the petitioners' trademark and logo by the private respondent.
The respondent court agreed with the findings of the trial court that:
In order to resolve the said issue, the Court now attempts to make a comparison of the two products, to wit:
1. As to the shape of label or make:
Del Monte: Semi-rectangular, with a crown or tomato shape design on top of the
rectangle.
Sunshine: Regular rectangle.
2. As to brand printed on label:
Del Monte: Tomato catsup mark.
Sunshine: Fruit catsup.
3. As to the words or lettering on label or mark:
Del Monte: Clearly indicated words packed by Sysu International, Inc., Q.C.,
Philippines.
Sunshine: Sunshine fruit catsup is clearly indicated "made in the Philippines by
Sunshine Sauce Manufacturing Industries" No. 1 Del Monte Avenue, Malabon, Metro
Manila.
4. As to color of logo:
Del Monte: Combination of yellow and dark red, with words "Del Monte
Quality" in white.
Sunshine: White, light green and light red, with words "Sunshine Brand" in
yellow.
5. As to shape of logo:
Del Monte: In the shape of a tomato.
 Sunshine: Entirely different in shape.
6. As to label below the cap:
Del Monte: Seal covering the cap down to the neck of the bottle, with picture of
tomatoes with words "made from real tomatoes.
"Sunshine: There is a label below the cap which says "Sunshine Brand."
7. As to the color of the products:
Del Monte: Darker red.
Sunshine: Lighter than Del Monte.
While the Court does recognize these distinctions, it does not agree with the conclusion that there was no infringement or unfair
competition. It seems to us that the lower courts have been so preoccupied with the details that they have not seen the total picture.
It has been correctly held that side-by-side comparison is not the final test of similarity. 10 Such comparison requires a careful
scrutiny to determine in what points the labels of the products differ, as was done by the trial judge. The ordinary buyer does not
usually make such scrutiny nor does he usually have the time to do so. The average shopper is usually in a hurry and does not inspect
every product on the shelf as if he were browsing in a library. Where the housewife has to return home as soon as possible to her baby
or the working woman has to make quick purchases during her off hours, she is apt to be confused by similar labels even if they do
have minute differences. The male shopper is worse as he usually does not bother about such distinctions.
 
The question is not whether the two articles are distinguishable by their label when set side by side but whether the general confusion
made by the article upon the eye of the casual purchaser who is unsuspicious and off his guard, is such as to likely result in his
confounding it with the original. 11 As observed in several cases, the general impression of the ordinary purchaser, buying under the
normally prevalent conditions in trade and giving the attention such purchasers usually give in buying that class of goods is the
touchstone. 12
It has been held that in making purchases, the consumer must depend upon his recollection of the appearance of the product which he
intends to purchase. 13 The buyer having in mind the mark/label of the respondent must rely upon his memory of the petitioner's
mark. 14 Unlike the judge who has ample time to minutely examine the labels in question in the comfort of his sala, the ordinary
shopper does not enjoy the same opportunity. LexLib
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. 19 Well has it been said that the most successful form of
copying is to employ enough points of similarity to confuse the public with enough points of difference to confuse the courts. 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. 21 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. 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. EaIDAT
As previously stated, the person who infringes a trade mark does not normally copy out but only makes colorable changes, employing
enough points of similarity to confuse the public with enough points of differences to confuse the courts. What is undeniable is the
fact that when a manufacturer prepares to package his product, he has before him a boundless choice of words, phrases, colors and
symbols sufficient to distinguish his product from the others. When as in this case, Sunshine chose, without a reasonable explanation,
to use the same colors and letters as those used by Del Monte though the field of its selection was so broad, the inevitable conclusion
is that it was done deliberately to deceive. 24
It has been aptly observed that the ultimate ratio in cases of grave doubt is the rule that as between a newcomer who by the confusion
has nothing to lose and everything to gain and one who by honest dealing has already achieved favor with the public, any doubt should
be resolved against the newcomer inasmuch as the field from which he can select a desirable trademark to indicate the origin of his
product is obviously a large one. 25
Coming now to the second issue, we find that the private respondent is not guilty of infringement for having used the Del Monte
bottle. The reason is that the configuration of the said bottle was merely registered in the Supplemental Register.
In the case of Lorenzana v. Macagba, 26 we declared that:
(1) Registration in the Principal Register gives rise to a presumption of the validity of the registration, the
registrant's ownership of the mark and his right to the exclusive use thereof. There is no such presumption in the
registration in the Supplemental Register.
(2) Registration in the Principal Register is limited to the actual owner of the trademark and proceedings therein
on the issue of ownership which may be contested through opposition or interference proceedings or, after
registration, in a petition for cancellation.
Registration in the Principal Register is constructive notice of the registrant's claim of ownership, while
registration in the Supplemental Register is merely proof of actual use of the trademark and notice that the
registrant has used or appropriated it. It is not subject to opposition although it may be cancelled after the
issuance. Corollarily, registration in the Principal Register is a basis for an action for infringement while
registration in the Supplemental Register is not.
(3) In applications for registration in the Principal Register, publication of the application is necessary. This is not
so in applications for registrations in the Supplemental Register.
It can be inferred from the foregoing that although Del Monte has actual use of the bottle's configuration, the petitioners cannot claim
exclusive use thereof because it has not been registered in the Principal Register. However, we find that Sunshine, despite the many
choices available to it and notwithstanding that the caution "Del Monte Corporation, Not to be Refilled" was embossed on the bottle,
still opted to use the petitioners' bottle to market a product which Philpack also produces. This clearly shows the private respondent's
bad faith and its intention to capitalize on the latter's reputation and goodwill and pass off its own product as that of Del Monte.
The Court observes that the reasons given by the respondent court in resolving the case in favor of Sunshine are untenable. First, it
declared that the registration of the Sunshine label belied the company's malicious intent to imitate petitioner's product. Second, it held
that the Sunshine label was not improper because the Bureau of Patent presumably considered other trademarks before approving it.
Third, it cited the case of Shell Co. v. Insular Petroleum, 27 where this Court declared that selling oil in containers of another with
markings erased, without intent to deceive, was not unfair competition.
Regarding the fact of registration, it is to be noted that the Sunshine label was registered not in the Principal Register but only in the
Supplemental Register where the presumption of the validity of the trademark, the registrant's ownership of the mark and his right to
its exclusive use are all absent.
Anent the assumption that the Bureau of Patent had considered other existing patents, it is reiterated that since registration was only in
the Supplemental Register, this did not vest the registrant with the exclusive right to use the label nor did it give rise to the
presumption of the validity of the registration.
On the argument that no unfair competition was committed, the Shell Case is not on all fours with the case at bar because:
(1) In Shell, the absence of intent to deceive was supported by the fact that the respondent therein, before marketing its product, totally
obliterated and erased the brands/mark of the different companies stenciled on the containers thereof, except for a single isolated
transaction. The respondent in the present case made no similar effort.
(2) In Shell, what was involved was a single isolated transaction. Of the many drums used, there was only one container where the
Shell label was not erased, while in the case at hand, the respondent admitted that it made use of several Del Monte bottles and
without obliterating the embossed warning.
(3) In Shell, the product of respondent was sold to dealers, not to ultimate consumers. As a general rule, dealers are well acquainted
with the manufacturer from whom they make their purchases and since they are more experienced, they cannot be so easily deceived
like the inexperienced public. There may well be similarities and imitations which deceive all, but generally the interests of the dealers
are not regarded with the same solicitude as are the interests of the ordinary consumer. For it is the form in which the wares come to
the final buyer that is of significance. 28
As Sunshine's label is an infringement of the Del Monte's trademark, law and equity call for the cancellation of the private
respondent's registration and withdrawal of all its products bearing the questioned label from the market. With regard to the use of Del
Monte's bottle, the same constitutes unfair competition; hence, the respondent should be permanently enjoined from the use of such
bottles. Cdpr
 
The court must rule, however, that the damage prayed for cannot be granted because the petitioner has not presented evidence to prove
the amount thereof. Section 23 of R.A. No. 166 provides:
Sec. 23. Actions and damages and injunction for infringement. — Any person entitled to the exclusive use of a
registered mark or trade name may recover damages in a civil action from any person who infringes his rights, and
the measure of the damages suffered shall be either the reasonable profit which the complaining party would have
made, had the defendant not infringed his said rights or the profit which the defendant actually made out of the
infringement, or in the event such measure of damages cannot be readily ascertained with reasonable certainty the
court may award as damages reasonable percentage based upon the amount of gross sales of the defendant or the
value of the services in connection with which the mark or trade name was used in the infringement of the rights
of the complaining party. In cases where actual intent to mislead the public or to defraud the complaining party
shall be shown, in the discretion of the court, the damages may be doubled.
The complaining party, upon proper showing may also be granted injunction.
Fortunately for the petitioners, they may still find some small comfort in Art. 2222 of the Civil Code, which provides:
Art. 2222. The court may award nominal damages in every obligation arising from any source enumerated in Art.
1157, or in every case where any property right has been invaded.
Accordingly, the Court can only award to the petitioners, as it hereby does award, nominal damages in the amount of P1,000.00.
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 Registration 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 P1,000.00, and the costs of the suit. LLpr
SO ORDERED.
||| (Del Monte Corp. v. Court of Appeals, G.R. No. 78325, [January 25, 1990], 260 PHIL 435-448)
 EN BANC

[G.R. No. 103543. July 5, 1993.]

ASIA BREWERY, INC. petitioner, vs. THE HON. COURT OF APPEALS and SAN MIGUEL CORPORATION, respondents.

Abad Santos & Associates and Sycip, Salazar, Hernandez and Gatmaitan for petitioner.

Roco, Bunag, Kapunan Law Office for private respondent.

SYLLABUS

1. REMEDIAL LAW; APPEAL; FACTUAL FINDINGS OF COURT OF APPEALS CONCLUSIVE AND BINDING ON SUPREME COURT; EXCEPTIONS; CASE AT BAR. — As a
general rule, the findings of the Court of Appeals upon factual questions are conclusive and ought not to be disturbed by us. However, there are exceptions to this general rule, and they are: (1)
When the conclusion is grounded entirely on speculation, surmises and conjectures; (2) When the inference of the Court of Appeals from its findings of fact is manifestly mistaken, absurd and
impossible; (3) Where there is grave abuse of discretion; (4) When the judgment is based on a misapprehension of facts; (5) When the appellate court, in making its findings, went beyond the
issues of the case, and the same are contrary to the admissions of both the appellant and the appellee; (6) When the findings of said court are contrary to those of the trial court; (7) When the
findings are without citation of specific evidence on which they are based; (8) When the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the
respondents; and (9) When the findings of facts of the Court of Appeals are premised on the absence of evidence and are contradicted on record. (Reynolds Philippine Corporation vs. Court of
Appeals, 169 SCRA 220, 223 citing, Mendoza vs. Court of Appeals, 156 SCRA 597; Manlapaz vs. Court of Appeals, 147 SCRA 238; Sacay vs. Sandiganbayan, 142 SCRA 593, 609;
Guita vs. CA, 139 SCRA 576; Casanayan vs. Court of Appeals, 198 SCRA 333, 336; also Apex Investment and Financing Corp. vs. IAC, 166 SCRA 458 [citing Tolentino vs. De Jesus, 56
SCRA 167; Carolina Industries, Inc. vs. CMS Stock Brokerage, Inc., 97 SCRA 734; Manero vs. CA, 102 SCRA 817; and Moran, Jr. vs. Ca, 133 SCRA 88].) Under any of these exceptions, the
Court has to review the evidence in order to arrive at the correct findings based on the record (Roman Catholic Bishop of Malolos, Inc. vs. IAC, 191 SCRA 411, 420.) Where findings of the
Court of Appeals and trial court are contrary to each other, the Supreme Court may scrutinize the evidence on record. (Cruz vs. CA, 129 SCRA 222, 227.) The present case is one of the
exceptions because there is no concurrence between the trial court and the Court of Appeals on the lone factual issue of whether ABI, by manufacturing and selling its BEER PALE PILSEN in
amber colored steinie bottles of 320 ml. capacity with a white painted rectangular label has committed trademark infringement and unfair competition against SMC.

2. COMMERCIAL LAW; TRADEMARK LAW (REPUBLIC ACT NO. 166); INFRINGEMENT; DEFINED; NATURE THEREOF. — Infringement of trademark is a form of unfair
competition (Clarke vs. Manila Candy Co., 36 Phil. 100, 106). Sec. 22 of Republic Act No. 166, otherwise known as the Trademark Law, defines what constitutes infringement: Sec.
22. Infringement, what constitutes. — Any person who shall use, without the consent of the registrant, any reproduction, counterfeit, copy or colorable imitation of any registered mark or
trade-name in connection with the sale, offering for sale, or advertising of any goods, business or services on or in connection with which such use is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or origin of such goods or services, or identity of such business; or reproduce, counterfeit, copy or colorably imitate any such mark or trade-name
and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used upon or in connection with
such goods, business or services, shall be liable to a civil action by the registrant for any or all of the remedies herein provided. This definition implies that only registered trade marks, trade
names and service marks are protected against infringement or unauthorized use by another or others. The use of someone else's registered trademark, trade name or service mark is
unauthorized, hence, actionable, if it is done "without the consent of the registrant."

3. ID.; ID.; HOW QUESTION OF INFRINGEMENT OF TRADEMARK DETERMINED; QUESTION AT ISSUE IN CASES OF INFRINGEMENT. — Infringement is determined by the
"test of dominancy" rather than by differences or variations in the details of one trademark and of another. The rule was formulated in Co Tiong Sa vs. Director of Patents, 95 Phil. 1, 4 (1954);
reiterated in Lim Hoa vs. Director of Patents, 100 Phil. 214, 216-217 (1956), thus: "It has been consistently held that the question of infringement of a trademark is to be determined by the test
of dominancy. Similarity in size, form and color, while relevant, is not conclusive. If the competing trademark contains the main or essential or dominant features of another, and confusion and
deception is likely to result, infringement takes place. Duplication or imitation is not necessary; not it is necessary that the infringing label should suggest an effort to imitate. [C. Neilman
Brewing Co. vs. Independent Brewing Co., 191 F., 489, 495, citing Eagle While Lead Co., vs. Pflugh (CC) 180 Fed. 579]. The question at issue in cases of infringement of trademarks is
whether the use of the marks involved would be likely to cause confusion or mistakes in the mind of the public or deceive purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co.,
107 F. 2d 588; . . .)" In Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272, 275), the test was similarity or "resemblance between the two (trademarks) such as would be likely to cause the
one mark to be mistaken for the other. . . . [But] this is not such similitude as amounts to identity." In Phil. Nut Industry Inc. vs. Standard Brands Inc., 65 SCRA 575, the court was more
specific: the test is "similarity in the dominant features of the trademarks."

4. ID.; ID.; ID.; ID.; CASE AT BAR. — The dominant feature of SMC's trademark is the name of the product: SAN MIGUEL PALE PILSEN, written in white Gothic letters with elaborate
serifs at the beginning and end of the letters "S" and "M" on an amber background across the upper portion of the rectangular design. On the other hand, the dominant feature of ABI's
trademark is the name: BEER PALE PILSEN, with the word "Beer" written in large amber letters, larger than any of the letters found in the SMC label. The trial court perceptively observed
that the word "BEER" does not appear in SMC's trademark, just as the words "SAM MIGUEL" do not appear in ABI's trademark. Hence, there is absolutely no similarity in the dominant
features of both trademarks. Neither in sound, spelling or appearance can BEER PALE PILSEN be said to be confusingly similar to SAN MIGUEL PALE PILSEN. No one who purchases
BEER PALE PILSEN can possibly be deceived that it is SAN MIGUEL PALE PILSEN. No evidence whatsoever was presented by SMC proving otherwise.

5. ID.; ID.; GENERIC OR DESCRIPTIVE AND PRIMARILY GEOGRAPHICALLY DESCRIPTIVE WORDS NON-REGISTRABLE AND NOT APPROPRIABLE; REASON
THEREFOR; CASE AT BAR. — The fact that the words pale pilsen are part of ABI's trademark does not constitute an infringement of SMC's trademark: SAN MIGUEL PALE PILSEN, for
"pale pilsen" are generic words descriptive of the color ("pale"), of a type of beer ("pilsen"), which is a light bohemian beer with a strong hops flavor that originated in the City of Pilsen in
Czechoslovakia and became famous in the Middle Ages. (Webster's Third New International Dictionary of the English Language, Unabridged. Edited by Philip Babcock Gove. Springfield,
Mass.: G & C Merriam Co.,) 1976, page 1716.) "Pilsen" is a "primarily geographically descriptive word," (Sec. 4, subpar. [e] Republic Act No. 166, as inserted by Sec. 2 of R.A. No. 638)
hence, non-registerable and not appropriable by any beer manufacturer. The Trademark Law provides: "Sec. 4 . . . The owner of trade-mark, trade-name or service-mark used to distinguished
his goods, business or services from the goods, business or services of others shall have the right to register the same [on the principal register], unless it: . . . "(e) Consists of a mark or trade-
name which, when applied to or used in connection with the goods, business or services of the applicant is merely descriptive or deceptively misdescriptive of them, or when applied to or used
in connection with the goods, business or services of the applicant is primarily geographically descriptive or deceptively misdescriptive of them, or is primarily merely a surname." The words
"pale pilsen" may not be appropriated by SMC for its exclusive use even if they are part of its registered trademark: SAN MIGUEL PALE PILSEN, any more than such descriptive words as
"evaporated milk," "tomato ketchup," "cheddar cheese," "corn flakes" and "cooking oil" may be appropriated by any single manufacturer of these food products, for no other reason than that he
was the first to use them in his registered trademark. In Masso Hermanos, S.A. vs. Director of Patents, 94 Phil. 136, 139 (1953), it was held that a dealer in shoes cannot register "Leather
Shoes" as his trademark because that would be merely descriptive and it would be unjust to deprive other dealers in leather shoes of the right to use the same words with reference to their
merchandise. No one may appropriate generic or descriptive words. They belong to the public domain (Ong Ai Gui vs. Director of Patents, 96 Phil. 673, 676 [1955]).

6. ID.; ID.; UNFAIR COMPETITION; DEFINED. — Unfair competition is the employment of deception or any other means contrary to good faith by which a person shall pass off the goods
manufactured by him or in which he deals, or his business, or services, for those of another who has already established goodwill for his similar goods, business or services, or any acts
calculated to produce the same result. (Sec. 29, Republic Act No. 166, as amended.)

7. ID.; ID.; ID.; TEST TO DETERMINE EXISTENCE THEREOF. — The universal test question is whether the public is likely to be deceived. Nothing less than conduct tending to pass off
one man's goods or business as that of another will constitute unfair competition. Actual or probable deception and confusion on the part of the customers by reason of defendant's practices
must always appear." (Shell Co. of the Philippines, Ltd. vs. Insular Petroleum Refining Co. Ltd. et al., 120 Phil. 434, 439.) . . . In Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190, 196-197, where
two competing tea products were both labelled as Formosan tea, both sold in 5-ounce packages made of ordinary wrapping paper of conventional color, both with labels containing designs
drawn in green ink and Chinese characters written in red ink, one label showing a double-decked jar in the center, the other, a flower pot, this court found that the resemblances between the
designs were not sufficient to mislead the ordinary intelligent buyer, hence, there was no unfair competition. The Court held: ". . . In order that there may be deception of the buying public in
the sense necessary to constitute unfair competition, it is necessary to suppose a public accustomed to buy, and therefore to some extent familiar with, the goods in question. The test of
fraudulent simulation is to be found in the likelihood of the deception of persons in some measure acquainted with an established design and desirous of purchasing the commodity with which
that design has been associated. The test is not found in the deception, or possibility of the deception, of the person who knows nothing about the design which has been counterfeited, and who
must be indifferent as between that and the other. The simulation, in order to be objectionable, must be such as appears likely to mislead the ordinarily intelligent buyer who has a need to
supply and is familiar with the article that he seeks to purchase."

8. ID.; ID.; PROTECTION AGAINST IMITATION PROPERLY LIMITED TO NONFUNCTIONAL FEATURES; CASE AT BAR. — The petitioner's contention that bottle size, shape and
color may not be the exclusive property of any one beer manufacturer is well taken. SMC's being the first to use the steinie bottle does not give SMC a vested right to use it to the exclusion of
everyone else. Being of functional or common use, and not the exclusive invention of any one, it is available to all who might need to use it within the industry. Nobody can acquire any
exclusive right to market articles supplying simple human needs in containers or wrappers of the general form, size and character commonly and immediately used in marketing such articles
(Dy Buncio vs. Tan Tiao Bok, 42 Phil. 190, 194-195.) . . . ABI does not use SMC's steinie bottle. Neither did ABI copy it. ABI makes its own steinie bottle which has a fat bulging neck to
differentiate it from SMC's bottle. The amber color is a functional feature of the beer bottle. As pointed out by ABI, all bottled beer produced in the Philippines is contained and sold in amber-
colored bottles because amber is the most effective color in preventing transmission of light and provides the maximum protection to beer. As was ruled in California Crushed Fruit
Corporation vs. Taylor B. and Candy Co., 38 F2d 885, a merchant cannot be enjoined from using a type or color of bottle where the same has the useful purpose of protecting the contents from
the deleterious effects of light rays. Moreover, no one may have a monopoly of any color. Not only beer, but most medicines, whether in liquid or tablet form, are sold in amber-colored bottles.
That the ABI bottle has a 320 ml. capacity is not due to a desire to imitate SMC's bottle but because that bottle capacity is the standard prescribed under Metrication Circular No. 778, dated 4
December 1979, of the Department of Trade, Metric System Board. With regard to the white label of both beer bottles, ABI explained that it used the color white for its label because white
presents the strongest contrast to the amber color of ABI's bottle; it is also the most economical to use on labels, and the easiest to "bake" in the furnace. No one can have a monopoly of the
color amber for bottles, nor of white for labels, nor of the rectangular shape which is the usual configuration of labels. Needless to say, the shape of the bottle and of the label is unimportant.
What is all important is the name of the product written on the label of the bottle for that is how one beer may be distinguished from the others.

9. ID.; ID.; TRADEMARK ALLEGEDLY INFRINGED CONSIDERED AS A WHOLE AND NOT AS DISSECTED; DOCTRINE ENUNCIATED IN DEL MONTE
CORPORATION vs. COURT OF APPEALS AND SUNSHINE SAUCE MANUFACTURING INDUSTRIES, 181 SCRA 410, 419, NOT APPLICABLE TO CASE AT BAR. — Our decision
in this case will not diminish our ruling in "Del Monte Corporation vs. Court of Appeals and Sunshine Sauce Manufacturing Industries," 181 SCRA 410, 419, that: ". . . to determine whether a
trademark has been infringed, we must consider the mark as a whole and not as dissected. If the buyer is deceived, it is attributable to the marks as a totality, not usually to any part of it." That
ruling may not apply to all kinds of products. The Court itself cautioned that in resolving cases of infringement and unfair competition, the courts should "take into consideration several factors
which would affect is conclusion, to wit: the age, training and education of the usual purchaser, the nature and cost of the article, whether the article is bought for immediate consumption and
also the conditions under which it is usually purchased." (181 SCRA 410, 418-419). The Del Monte case involved catsup, a common household item which is bought off the store shelves by
housewives and house help who, if they are illiterate and cannot identify the product by name or brand, would very likely identify it by mere recollection of its appearance. Since the
competitor, Sunshine Sauce Mfg. Industries, not only used recycled Del Monte bottles for its catsup (despite the warning embossed on the bottles: "Del Monte Corporation. Not to be refilled.")
but also used labels which were "a colorable imitation" of Del Monte's label, we held that there was infringement of Del Monte's trademark and unfair competition by Sunshine. Our ruling in
Del Monte would not apply to beer which is not usually picked up from a store shelf but ordered by brand by the beer drinker himself from the storekeeper or waiter in a pub or restaurant.

DECISION

GRIÑO-AQUINO, J p:

On September 15, 1988, San Miguel Corporation (SMC) filed a complaint against Asia Brewery Inc. (ABI) for infringement of
trademark and unfair competition on account of the latter's BEER PALE PILSEN or BEER NA BEER product which has been
competing with SMC's SAN MIGUEL PALE PILSEN for a share of the local beer market. (San Miguel Corporation vs. Asia Brewery
Inc., Civ. Case No. 56390, RTC Branch 166, Pasig, Metro Manila.)
On August 27, 1990, a decision was rendered by the trial Court, presided over by Judge Jesus O. Bersamira, dismissing SMC's
complaint because ABI "has not committed trademark infringement or unfair competition against" SMC (p. 189, Rollo). prcd
SMC appealed to the Court of Appeals (C.A.-G.R. CV No. 28104). On September 30, 1991, the Court of Appeals (Sixth Division
composed of Justice Jose C. Campos, Jr., chairman and ponente, and Justices Venancio D. Aldecoa Jr. and Filemon H. Mendoza, as
members) reversed the trial court. The dispositive part of the decision reads as follows:
 "In the light of the foregoing analysis and under the plain language of the applicable rule and principle on the
matter, We find the defendant Asia Brewery Incorporated GUILTY of infringement of trademark and unfair
competition. The decision of the trial court is hereby REVERSED, and a new judgment entered in favor of the
plaintiff and against the defendant as follows:
"(1) The defendant Asia Brewery Inc. its officers, agents, servants and employees are hereby permanently
enjoined and restrained from manufacturing, putting up, selling, advertising, offering or announcing for sale, or
supplying Beer Pale Pilsen, or any similar preparation, manufacture or beer in bottles and under labels
substantially identical with or like the said bottles and labels of plaintiff San Miguel Corporation employed for
that purpose, or substantially identical with or like the bottles and labels now employed by the defendant for that
purpose, or in bottles or under labels which are calculated to deceive purchasers and consumers into the belief that
the beer is the product of the plaintiff or which will enable others to substitute, sell or palm off the said beer of the
defendant as and for the beer of the plaintiff-complainant.
 
"(2) The defendant Asia Brewery Inc. is hereby ordered to render an accounting and pay the San Miguel
Corporation double any and all the payments derived by defendant from operations of its business and sale of
goods bearing the mark 'Beer Pale Pilsen' estimated at approximately Five Million Pesos (P5,000,000.00); to
recall all its products bearing the mark 'Beer Pale Pilsen' from its retailers and deliver these as well as all labels,
signs, prints, packages, wrappers, receptacles and advertisements bearing the infringing mark and all plates,
molds, materials and other means of making the same to the Court authorized to execute this judgment for
destruction.
"(3) The defendant is hereby ordered to pay plaintiff the sum of Two Million Pesos (P2,000,000.00) as moral
damages and Half a Million Pesos (P5,000,000.00) by way of exemplary damages.
"(4) The defendant is further ordered to pay the plaintiff attorney's fees in the amount of P250,000.00 plus costs of
this suit." (p. 90, Rollo.)
Upon a motion for reconsideration filed by ABI, the above dispositive part of the decision, was modified by the separate opinions of
the Special Sixth Division 1 so that it should read thus:
In the light of the foregoing analysis and under the plain language of the applicable rule and principle on the
matter, We find the defendant Asia Brewery Incorporated GUILTY of infringement of trademark and unfair
competition. The decision of the trial court is hereby REVERSED, and a new judgment entered in favor of the
plaintiff and against the defendant as follows:
(1) The defendant Asia Brewery Inc., its officers, agents, servants and employees are hereby permanently
enjoined and restrained from manufacturing, putting up, selling, advertising, offering or announcing for sale, or
supplying Beer Pale Pilsen, or any similar preparation, manufacture or beer in bottles and under labels
substantially identical with or like the said bottles and labels of plaintiff San Miguel Corporation employed for
that purpose, or substantially identical with or like the bottles and labels now employed by the defendant for that
purpose, or in bottles or under labels which are calculated to deceive purchasers and consumers into the belief that
the beer is the product of the plaintiff or which will enable others to substitute, sell or palm off the said beer of the
defendant as and for the beer of the plaintiff-complainant.
(2) The defendant Asia Brewery Inc. is hereby ordered 2 to recall all its products bearing the mark Beer Pale
Pilsen from its retailers and deliver these as well as all labels, signs, prints, packages, wrappers, receptacles and
advertisements bearing the infringing mark and all plates, molds, materials and other means of making the same to
the Court authorized to execute this judgment for destruction.
(3) The defendant is hereby ordered to pay plaintiff the sum of Two Million Pesos (P2,000,000.00) as moral
damages and Half a Million Pesos (P500,000.00) by way of exemplary damages.
(4) The defendant is further ordered to pay the plaintiff attorney's fees in the amount of P250,000.00 plus costs of
this suit.
In due time, ABI appealed to this Court by a petition for certiorari under Rule 45 of the Rules of Court. The lone issue in this appeal is
whether ABI infringes SMC's trademark: San Miguel Pale Pilsen with Rectangular Hops and Malt Design, and thereby commits
unfair competition against the latter. It is a factual issue (Phil. Nut Industry Inc. v. Standard Brands Inc., 65 SCRA 575) and as a
general rule, the findings of the Court of Appeals upon factual questions are conclusive and ought not to be disturbed by us. However,
there are exceptions to this general rule, and they are:
(1) When the conclusion is grounded entirely on speculation, surmises and conjectures;
 (2) When the inference of the Court of Appeals from its findings of fact is manifestly mistaken, absurd and
impossible;
(3) Where there is grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the appellate court, in making its findings, went beyond the issues of the case, and the same are contrary
to the admissions of both the appellant and the appellee;
(6) When the findings of said court are contrary to those of the trial court;
(7) When the findings are without citation of specific evidence on which they are based;
(8) When the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by
the respondents; and
(9) When the findings of facts of the Court of Appeals are premised on the absence of evidence and are
contradicted on record. (Reynolds Philippine Corporation vs. Court of Appeals, 169 SCRA 220, 223 citing,
Mendoza vs. Court of Appeals, 156 SCRA 597; Manlapaz vs. Court of Appeals, 147 SCRA 238; Sacay vs.
Sandiganbayan, 142 SCRA 593, 609; Guita vs. CA, 139 SCRA 576; Casanayan vs. Court of Appeals, 198 SCRA
333, 336; also Apex Investment and Financing Corp. vs. IAC, 166 SCRA 458 [citing Tolentino vs. De Jesus, 56
SCRA 167; Carolina Industries, Inc. vs. CMS Stock Brokerage, Inc., 97 SCRA 734; Manero vs. CA, 102 SCRA
817; and Moran, Jr. vs. CA, 133 SCRA 88].)
Under any of these exceptions, the Court has to review the evidence in order to arrive at the correct findings based on the record
(Roman Catholic Bishop of Malolos, Inc. vs. IAC, 191 SCRA 411, 420.) Where findings of the Court of Appeals and trial court are
contrary to each other, the Supreme Court may scrutinize the evidence on record. (Cruz vs. CA, 129 SCRA 222, 227.)
The present case is one of the exceptions because there is no concurrence between the trial court and the Court of Appeals on the lone
factual issue of whether ABI, by manufacturing and selling its BEER PALE PILSEN in amber colored steinie bottles of 320 ml.
capacity with a white painted rectangular label has committed trademark infringement and unfair competition against SMC.
Infringement of trademark is a form of unfair competition (Clarke vs. Manila Candy Co., 36 Phil. 100, 106). Sec. 22 of Republic Act
No. 166, otherwise known as the Trademark Law, defines what constitutes infringement:
Sec. 22. Infringement, what constitutes. — Any person who shall use, without the consent of the registrant, any
reproduction, counterfeit, copy or colorable imitation of any registered mark or trade-name in connection with the
sale, offering for sale, or advertising of any goods, business or services on or in connection with which such use is
likely to cause confusion or mistake or to deceive purchasers or others as to the source or origin of such goods or
services, or identity of such business; or reproduce, counterfeit, copy or colorably imitate any such mark or trade-
name and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in connection with such goods, business or
services, shall be liable to a civil action by the registrant for any or all of the remedies herein provided. (Emphasis
supplied.)
This definition implies that only registered trade marks, trade names and service marks are protected against infringement or
unauthorized use by another or others. The use of someone else's registered trademark, trade name or service mark is unauthorized,
hence, actionable, if it is done "without the consent of the registrant." (Ibid.)
The registered trademark of SMC for its pale pilsen beer is:
"San Miguel Pale Pilsen With Rectangular Hops and Malt Design. (Philippine Bureau of Patents, Trademarks and
Technology Transfer Trademark Certificate of Registration No. 36103, dated 23 Oct. 1986." (p. 174, Rollo.)
As described by the trial court in its decision (Page 177, Rollo):
". . . a rectangular design [is] bordered by what appears to be minute grains arranged in rows of three in which
there appear in each corner hop designs. At the top is a phrase written in small print 'Reg. Phil. Pat. Off.' and at
the bottom 'Net Contents: 320 Ml.' The dominant feature is the phrase 'San Miguel' written horizontally at the
upper portion. Below are the words 'Pale Pilsen' written diagonally across the middle of the rectangular design. In
between is a coat of arms and the phrase 'Expertly Brewed.' The 'S' in 'San' and the 'M' of 'Miguel,' 'P' of 'Pale' and
'Pilsen' are written in Gothic letters with fine strokes of serifs, the kind that first appeared in the 1780s in England
and used for printing German as distinguished from Roman and Italic. Below 'Pale Pilsen' is the statement 'And
Bottled by' (first line, 'San Miguel Brewery' (second line), and 'Philippines' (third line)." (p. 177, Rollo; Italics
supplied.)
On the other hand, ABI's trademark, as described by the trial court, consists of:
 ". . . a rectangular design bordered by what appear to be buds of flowers with leaves. The dominant feature is
'Beer' written across the upper portion of the rectangular design. The phrase 'Pale Pilsen' appears immediately
below in smaller block letters. To the left is a hop design and to the right, written in small prints, is the phrase 'Net
Contents 320 ml.' immediately below 'Pale Pilsen' is the statement written in three lines 'Especially brewed and
bottled by' (first line), 'Asia Brewery Incorporated' (second line), and 'Philippines' (third line)." (p. 177, Rollo;
Italics supplied.)
Does ABI's BEER PALE PILSEN label or "design" infringe upon SMC's SAN MIGUEL PALE PILSEN WITH RECTANGULAR
MALT AND HOPS DESIGN? The answer is "No."
Infringement is determined by the "test of dominancy" rather than by differences or variations in the details of one trademark and of
another. The rule was formulated in Co Tiong Sa vs. Director of Patents, 95 Phil. 1, 4 (1954); reiterated in Lim Hoa vs. Director of
Patents, 100 Phil. 214, 216-217 (1956), thus:
"It has been consistently held that the question of infringement of a trademark is to be determined by the test of
dominancy. Similarity in size, form and color, while relevant, is not conclusive. If the competing trademark
contains the main or essential or dominant features of another, and confusion and deception is likely to result,
infringement takes place. Duplication or imitation is not necessary; nor it is necessary that the infringing label
should suggest an effort to imitate. [C. Neilman Brewing Co. vs. Independent Brewing Co., 191 F., 489, 495,
citing Eagle White Lead Co., vs. Pflugh (CC) 180 Fed. 579]. The question at issue in cases of infringement of
trademarks is whether the use of the marks involved would be likely to cause confusion or mistakes in the mind of
the public or deceive purchasers. (Auburn Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; . . .)"
(Emphasis supplied.)
 
In Forbes, Munn & Co. (Ltd.) vs. Ang San To, 40 Phil. 272, 275), the test was similarity or "resemblance between the two
(trademarks) such as would be likely to cause the one mark to be mistaken for the other . . . [But] this is not such similitude as
amounts to identity."
In Phil. Nut Industry Inc. vs. Standard Brands Inc., 65 SCRA 575, the court was more specific: the test is "similarity in the dominant
features of the trademarks."
What are the dominant features of the competing trademarks before us?
There is hardly any dispute that the dominant feature of SMC's trademark is the name of the product: SAN MIGUEL PALE PILSEN,
written in white Gothic letters with elaborate serifs at the beginning and end of the letters "S" and "M" on an amber background across
the upper portion of the rectangular design.
On the other hand, the dominant feature of ABI's trademark is the name: BEER PALE PILSEN, with the word "Beer" written in large
amber letters, larger than any of the letters found in the SMC label.
The trial court perceptively observed that the word "BEER" does not appear in SMC's trademark, just as the words "SAN MIGUEL"
do not appear in ABI's trademark. Hence, there is absolutely no similarity in the dominant features of both trademarks.
Neither in sound, spelling or appearance can BEER PALE PILSEN be said to be confusingly similar to SAN MIGUEL PALE
PILSEN. No one who purchases BEER PALE PILSEN can possibly be deceived that it is SAN MIGUEL PALE PILSEN. No
evidence whatsoever was presented by SMC proving otherwise.
Besides the dissimilarity in their names, the following other dissimilarities in the trade dress or appearance of the competing products
abound:
(1) The SAN MIGUEL PALE PILSEN bottle has a slender tapered neck.
The BEER PALE PILSEN bottle has a fat, bulging neck.
(2) The words "pale pilsen" on SMC's label are printed in bold and laced letters along a diagonal band, whereas the words "pale
pilsen" on ABI's bottle are half the size and printed in slender block letters on a straight horizontal band. (See Exhibit "8-a".)
(3) The names of the manufacturers are prominently printed on their respective bottles.
SAN MIGUEL PALE PILSEN is "Bottled by the San Miguel Brewery, Philippines," whereas BEER PALE PILSEN is "Especially
brewed and bottled by Asia Brewery Incorporated, Philippines."
(4) On the back of ABI's bottle is printed in big, bold letters, under a row of flower buds and leaves, its copyrighted slogan:
"BEER NA BEER!"
Whereas SMC's bottle carries no slogan.
(5) The back of the SAN MIGUEL PALE PILSEN bottle carries the SMC logo, whereas the BEER PALE PILSEN bottle has no logo.
(6) The SAN MIGUEL PALE PILSEN bottle cap is stamped with a coat of arms and the words "San Miguel Brewery Philippines"
encircling the same.
The BEER PALE PILSEN bottle cap is stamped with the name "BEER" in the center, surrounded by the words "Asia Brewery
Incorporated Philippines."
(7) Finally, there is a substantial price difference between BEER PALE PILSEN (currently at P4.25 per bottle) and SAN MIGUEL
PALE PILSEN (currently at P7.00 per bottle). One who pays only P4.25 for a bottle of beer cannot expect to receive San Miguel Pale
Pilsen from the storekeeper or bartender.
The fact that the words pale pilsen are part of ABI's trademark does not constitute an infringement of SMC's trademark: SAN
MIGUEL PALE PILSEN, for "pale pilsen" are generic words descriptive of the color ("pale"), of a type of beer ("pilsen"), which is a
light bohemian beer with a strong hops flavor that originated in the City of Pilsen in Czechoslovakia and became famous in the Middle
Ages. (Webster's Third New International Dictionary of the English Language, Unabridged. Edited by Philip Babcock Gove.
Springfield, Mass.: G & C Merriam Co., c) 1976, page 1716.) "Pilsen" is a "primarily geographically descriptive word," (Sec. 4,
subpar. [e] Republic Act No. 166, as inserted by Sec. 2 of R.A. No. 638) hence, non-registerable and not appropriable by any beer
manufacturer. The Trademark Law provides:
"Sec. 4. . . . The owner of trade-mark, trade-name or service-mark used to distinguish his goods, business or
services from the goods, business or services of others shall have the right to register the same [on the principal
register], unless it:
xxx xxx xxx
"(e) Consists of a mark or trade-name which, when applied to or used in connection with the goods, business or
services of the applicant is merely descriptive or deceptively misdescriptive of them, or when applied to or used in
connection with the goods, business or services of the applicant is primarily geographically descriptive or
deceptively misdescriptive of them, or is primarily merely a surname." (Emphasis supplied.)
The words "pale pilsen" may not be appropriated by SMC for its exclusive use even if they are part of its registered trademark: SAN
MIGUEL PALE PILSEN, any more than such descriptive words as "evaporated milk," "tomato ketchup," "cheddar cheese," "corn
flakes" and "cooking oil" may be appropriated by any single manufacturer of these food products, for no other reason than that he was
the first to use them in his registered trademark. In Masso Hermanos, S.A. vs. Director of Patents, 94 Phil. 136, 139 (1953), it was
held that a dealer in shoes cannot register "Leather Shoes" as his trademark because that would be merely descriptive and it would be
unjust to deprive other dealers in leather shoes of the right to use the same words with reference to their merchandise. No one may
appropriate generic or descriptive words. They belong to the public domain (Ong Ai Gui vs. Director of Patents, 96 Phil. 673, 676
[1955]):
"A word or a combination of words which is merely descriptive of an article of trade, or of its composition,
characteristics, or qualities, cannot be appropriated and protected as a trademark to the exclusion of its use by
others . . . inasmuch as all persons have an equal right to produce and vend similar articles, they also have the
right to describe them properly and to use any appropriate language or words for that purpose, and no person can
appropriate to himself exclusively any word or expression, properly descriptive of the article, its qualities,
ingredients or characteristics, and thus limit other persons in the use of language appropriate to the description of
their manufactures, the right to the use of such language being common to all. This rule excluding descriptive
terms has also been held to apply to trade-names. As to whether words employed fall within this prohibition, it is
said that the true test is not whether they are exhaustively descriptive of the article designated, but whether in
themselves, and as they are commonly used by those who understand their meaning, they are reasonably
indicative and descriptive of the thing intended. If they are thus descriptive, and not arbitrary, they cannot be
appropriated from general use and become the exclusive property of anyone. (52 Am. Jur. 542-543.)
". . . Others may use the same or similar descriptive word in connection with their own wares, provided they take
proper steps to prevent the public being deceived. (Richmond Remedies Co. vs. Dr. Miles Medical Co., 16 E. [2d]
598.)
". . . A descriptive word may be admittedly distinctive, especially if the user is the first creator of the article. It
will, however, be denied protection, not because it lacks distinctiveness, but rather because others are equally
entitled to its use. (2 Callman, Unfair Competition and Trademarks, pp. 869-870.)" (Emphasis supplied.)
The circumstance that the manufacturer of BEER PALE PILSEN, Asia Brewery Incorporated, has printed its name all over the bottle
of its beer product: on the label, on the back of the bottle, as well as on the bottle cap, disproves SMC's charge that ABI dishonestly
and fraudulently intends to palm off its BEER PALE PILSEN as SMC's product. In view of the visible differences between the two
products, the Court believes it is quite unlikely that a customer of average intelligence would mistake a bottle of BEER PALE
PILSEN for SAN MIGUEL PALE PILSEN.
The fact that BEER PALE PILSEN like SAN MIGUEL PALE PILSEN is bottled in amber-colored steinie bottles of 320 ml. capacity
and is also advertised in print, broadcast, and television media, does not necessarily constitute unfair competition.
Unfair competition is the employment of deception or any other means contrary to good faith by which a person shall pass off the
goods manufactured by him or in which he deals, or his business, or services, for those of another who has already established
goodwill for his similar goods, business or services, or any acts calculated to produce the same result. (Sec. 29, Republic Act No. 166,
as amended.) The law further enumerates the more common ways of committing unfair competition, thus:
"Sec. 29.  . . .
"In particular, and without in any way limiting the scope of unfair competition, the following shall be deemed
guilty of unfair competition:
"(a) Any person, who in selling his goods shall give them the general appearance of goods of another
manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in which they are
contained, or the devices or words thereon, or in any other feature of their appearance, which would be likely to
influence purchasers to believe that the goods offered are those of a manufacturer or dealer other than the actual
manufacturer or dealer, or who otherwise clothes the goods with such appearance as shall deceive the public and
defraud another of his legitimate trade, or any subsequent vendor of such goods or any agent of any vendor
engaged in selling such goods with a like purpose.
"(b) Any person who by any artifice, or device, or who employs any other means calculated to induce the false
belief that such person is offering the services of another who has identified such services in the mind of the
public; or
"(c) Any person who shall make any false statement in the course of trade or who shall commit any other act
contrary to good faith of a nature calculated to discredit the goods, business or services of another."
 
In this case, the question to be determined is whether ABI is using a name or mark for its beer that has previously come to designate
SMC's beer, or whether ABI is passing off its BEER PALE PILSEN as SMC's SAN MIGUEL PALE PILSEN.
". . . The universal test question is whether the public is likely to be deceived. Nothing less than conduct tending
to pass off one man's goods or business as that of another will constitute unfair competition. Actual or probable
deception and confusion on the part of the customers by reason of defendant's practices must always appear."
(Shell Co. of the Philippines, Ltd. vs. Insular Petroleum Refining Co. Ltd. et al., 120 Phil. 434, 439.)
The use by ABI of the steinie bottle, similar but not identical to the SAN MIGUEL PALE PILSEN bottle, is not unlawful. As pointed
out by ABI's counsel, SMC did not invent but merely borrowed the steinie bottle from abroad and it claims neither patent nor
trademark protection for that bottle shape and design. (See rollo, page 55.) The Cerveza Especial and the Efes Pale Pilsen use the
"steinie" bottle. (See Exhibits 57-D, 57-E.) The trial court found no infringement of SMC's bottle —
"The court agrees with defendant that there is no infringement of plaintiff's bottle, firstly, because according to
plaintiff's witness Deogracias Villadolid, it is a standard type of bottle called steinie, and to witness Jose Antonio
Garcia, it is not a San Miguel Corporation design but a design originally developed in the United States by the
Glass Container Manufacturer's Institute and therefore lacks exclusivity. Secondly, the shape was never registered
as a trademark. Exhibit 'C' is not a registration of a beer bottle design required under Rep. Act 165 but the
registration of the name and other marks of ownership stamped on containers as required by Rep. Act 623.
Thirdly, the neck of defendant's bottle is much larger and has a distinct bulge in its uppermost part." (p. 186,
Rollo.)
The petitioner's contention that bottle size, shape and color may not be the exclusive property of any one beer manufacturer is well
taken. SMC's being the first to use the steinie bottle does not give SMC a vested right to use it to the exclusion of everyone else. Being
of functional or common use, and not the exclusive invention of any one, it is available to all who might need to use it within the
industry. Nobody can acquire any exclusive right to market articles supplying simple human needs in containers or wrappers of the
general form, size and character commonly and immediately used in marketing such articles (Dy Buncio vs. Tan Tiao Bok, 42 Phil.
190, 194-195.)
". . . protection against imitation should be properly confined to nonfunctional features. Even if purely functional
elements are slavishly copied, the resemblance will not support an action for unfair competition, and the first user
cannot claim secondary meaning protection. Nor can the first user predicate his claim to protection on the
argument that his business was established in reliance on any such unpatented nonfunctional feature, even 'at large
expenditure of money.' (Callman Unfair Competition, Trademarks and Monopolies, Sec. 19.33 [4th Ed.].)"
(Petition for Review, p. 28.)
ABI does not use SMC's steinie bottle. Neither did ABI copy it. ABI makes its own steinie bottle which has a fat bulging neck to
differentiate it from SMC's bottle. The amber color is a functional feature of the beer bottle. As pointed out by ABI, all bottled beer
produced in the Philippines is contained and sold in amber-colored bottles because amber is the most effective color in preventing
transmission of light and provides the maximum protection to beer. As was ruled in California Crushed Fruit Corporation vs. Taylor
B. and Candy Co., 38 F2d 885, a merchant cannot be enjoined from using a type or color of bottle where the same has the useful
purpose of protecting the contents from the deleterious effects of light rays. Moreover, no one may have a monopoly of any color. Not
only beer, but most medicines, whether in liquid or tablet form, are sold in amber-colored bottles.
That the ABI bottle has a 320 ml. capacity is not due to a desire to imitate SMC's bottle but because that bottle capacity is the standard
prescribed under Metrication Circular No. 778, dated 4 December 1979, of the Department of Trade, Metric System Board.
With regard to the white label of both beer bottles, ABI explained that it used the color white for its label because white presents the
strongest contrast to the amber color of ABI's bottle; it is also the most economical to use on labels, and the easiest to "bake" in the
furnace (p. 16, TSN of September 20, 1988). No one can have a monopoly of the color amber for bottles, nor of white for labels, nor
of the rectangular shape which is the usual configuration of labels. Needless to say, the shape of the bottle and of the label is
unimportant. What is all important is the name of the product written on the label of the bottle for that is how one beer may be
distinguished from the others. prLL
In Dy Buncio v. Tan Tiao Bok, 42 Phil. 190, 196-197, where two competing tea products were both labelled as Formosan tea, both
sold in 5-ounce packages made of ordinary wrapping paper of conventional color, both with labels containing designs drawn in green
ink and Chinese characters written in red ink, one label showing a double-decked jar in the center, the other, a flower pot, this court
found that the resemblances between the designs were not sufficient to mislead the ordinary intelligent buyer, hence, there was no
unfair competition. The Court held:
". . . In order that there may be deception of the buying public in the sense necessary to constitute unfair
competition, it is necessary to suppose a public accustomed to buy, and therefore to some extent familiar with, the
goods in question. The test of fraudulent simulation is to be found in the likelihood of the deception of persons in
some measure acquainted with an established design and desirous of purchasing the commodity with which that
design has been associated. The test is not found in the deception, or possibility of the deception, of the person
who knows nothing about the design which has been counterfeited, and who must be indifferent as between that
and the other. The simulation, in order to be objectionable, must be such as appears likely to mislead the
ordinarily intelligent buyer who has a need to supply and is familiar with the article that he seeks to purchase."
The main thrust of SMC's complaint is not infringement of its trademark, but unfair competition arising from the allegedly "confusing
similarity" in the general appearance or trade dress of ABI's BEER PALE PILSEN beside SMC's SAN MIGUEL PALE PILSEN (p.
209, Rollo).
SMC claims that the "trade dress" of BEER PALE PILSEN is "confusingly similar" to its SAN MIGUEL PALE PILSEN because
both are bottled in 320 ml. steinie type, amber-colored bottles with white rectangular labels.
However, when as in this case, the names of the competing products are clearly different and their respective sources are prominently
printed on the label and on other parts of the bottle, mere similarity in the shape and size of the container and label, does not constitute
unfair competition. The steinie bottle is a standard bottle for beer and is universally used. SMC did not invent it nor patent it. The fact
that SMC's bottle is registered under R.A. No. 623 (as amended by RA 5700, An Act to Regulate the Use of Duly Stamped or Marked
Bottles, Boxes, Casks, Kegs, Barrels and Other Similar Containers) simply prohibits manufacturers of other foodstuffs from the
unauthorized use of SMC's bottles by refilling these with their products. It was not uncommon then for products such as patis (fish
sauce) and toyo (soy sauce) to be sold in recycled SAN MIGUEL PALE PILSEN bottles. Registration of SMC's beer bottles did not
give SMC a patent on the steinie or on bottles of similar size, shape or color.
Most containers are standardized because they are usually made by the same manufacturer. Milk, whether in powdered or liquid form,
is sold in uniform tin cans. The same can be said of the standard ketchup or vinegar bottle with its familiar elongated neck. Many other
grocery items such as coffee, mayonnaise, pickles and peanut butter are sold in standard glass jars. The manufacturers of these
foodstuffs have equal right to use these standard tins, bottles and jars for their products. Only their respective labels distinguish them
from each other. Just as no milk producer may sue the others for unfair competition because they sell their milk in the same size and
shape of milk can which he uses, neither may SMC claim unfair competition arising from the fact that ABI's BEER PALE PILSEN is
sold, like SMC's SAN MIGUEL PALE PILSEN in amber steinie bottles. prcd
The record does not bear out SMC's apprehension that BEER PALE PILSEN is being passed off as SAN MIGUEL PALE PILSEN.
This is unlikely to happen for consumers or buyers of beer generally order their beer by brand. As pointed out by ABI's counsel, in
supermarkets and tiendas, beer is ordered by brand, and the customer surrenders his empty replacement bottles or pays a deposit to
guarantee the return of the empties. If his empties are SAN MIGUEL PALE PILSEN, he will get SAN MIGUEL PALE PILSEN as
replacement. In sari-sari stores, beer is also ordered from the tindera by brand. The same is true in restaurants, pubs and beer gardens
— beer is ordered from the waiters by brand. (Op. cit. page 50.)
Considering further that SAN MIGUEL PALE PILSEN has virtually monopolized the domestic beer market for the past hundred
years, those who have been drinking no other beer but SAN MIGUEL PALE PILSEN these many years certainly know their beer too
well to be deceived by a newcomer in the market. If they gravitate to ABI's cheaper beer, it will not be because they are confused or
deceived, but because they find the competing product to their taste.
 
Our decision in this case will not diminish our ruling in "Del Monte Corporation vs. Court of Appeals and Sunshine Sauce
Manufacturing Industries," 181 SCRA 410, 419, 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 up from a store shelf but ordered by brand by the beer
drinker himself from the storekeeper or waiter in a pub or restaurant.
Moreover, SMC's brand or trademark: "SAN MIGUEL PALE PILSEN" is not infringed by ABI's mark: "BEER NA BEER" or
"BEER PALE PILSEN." ABI makes its own bottle with a bulging neck to differentiate it from SMC's bottle, and prints ABI's name in
three (3) places on said bottle (front, back and bottle cap) to prove that it has no intention to pass off its "BEER" as "SAN MIGUEL."
There is no confusing similarity between the competing beers for the name of one is "SAN MIGUEL" while the competitor is plain
"BEER" and the points of dissimilarity between the two outnumber their points of similarity.
Petition ABI has neither infringed SMC's trademark nor committed unfair competition with the latter's SAN MIGUEL PALE PILSEN
product. While its BEER PALE PILSEN admittedly competes with the latter in the open market, the competition is neither unfair nor
fraudulent. Hence, we must deny SMC's prayer to suppress it.
WHEREFORE, finding the petition for review meritorious, the same is hereby granted. The decision and resolution of the Court of
Appeals in CA-G.R. CV No. 28104 are hereby set aside and that of the trial court is REINSTATED and AFFIRMED. Costs against
the private respondent.
SO ORDERED.
||| (Asia Brewery, Inc. v. Court of Appeals, G.R. No. 103543, [July 5, 1993])
 FIRST DIVISION

[G.R. No. 100098. December 29, 1995.]

EMERALD GARMENT MANUFACTURING CORPORATION, petitioner, vs. HON. COURT OF APPEALS, BUREAU OF PATENTS,

TRADEMARKS AND TECHNOLOGY TRANSFER and H.D. LEE COMPANY, INC., respondents.

Julio C. Contreras for petitioner.

Sycip, Salazar, Hernandez & Gatmaitan for private respondent.

SYLLABUS

1. COMMERCIAL LAW; TRADEMARK LAW; INFRINGEMENT; DECISION ON EACH CASE MUST BE BASED ON ITS OWN MERIT. — 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, 116 SCRA 336 (1982), 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." 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." TCIHSa

2. ID.; ID.; ID.; COLORABLE IMITATION, CONSTRUED. — The essential element of infringement is colorable imitation. This term has been defined as "such a close or
ingenious imitation as to be calculated to deceive ordinary purchasers, or such resemblance of the infringing mark to the original as to deceive an ordinary purchaser giving such attention as a
purchaser usually gives, and to cause him to purchase the one supposing it to be the other." "Colorable imitation does not mean such similitude as amounts to identity. Nor does it require that
all the details be literally copied. 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."

3. ID.; ID.; ID.; ID.; TEST IN THE DETERMINATION. — 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, 224 SCRA 437 (1993), and other cases and the Holistic Test developed in  Del Monte Corporation v. Court of Appeals, 181 SCRA 410
(1990), 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. 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.

4. ID.; ID.; REQUISITES FOR THE ACQUISITION OF OWNERSHIP OVER TRADEMARK. — 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). In Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft, 27 SCRA 1214 (1969), we declared: . . . "It would seem quite clear that adoption alone of a trademark would not give exclusive right thereto. Such right "grows out of their
actual use." Adoption is not use. One may make advertisements, issue circulars, give out price lists on certain goods; but these alone would not give exclusive right of use. For trademark is a
creation of use. The underlying reason for all these is that purchasers have come to understand the mark as indicating the origin of the wares. Flowing from this is the 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
preexisting right. Registration does not, however, perfect a trademark right." 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. cCTIaS

5. ID.; ID.; DETERMINATION OF PRIOR USER OF TRADEMARK; FINDINGS OF FACTS BY THE DIRECTOR OF PATENTS, CONCLUSIVE UPON THE SUPREME
COURT. — 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.
 6. ID.; ID.; NATURE OF SUPPLEMENTAL 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. ScaCEH

DECISION

KAPUNAN, J p:

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
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;
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:
xxx xxx xxx.
Whether or not a trademark causes confusion and is likely to deceive the public is a question of fact
which is to be resolved by applying the "test of dominancy", meaning, if the competing trademark contains the
main or essential or dominant features of another by reason of which confusion and deception are likely to result,
then infringement takes place; that duplication or imitation is not necessary, a similarity in the dominant features
of the trademark would be sufficient.
The word "LEE" is the most prominent and distinctive feature of the 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 appellee'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.
xxx xxx xxx.
The appellee has sufficiently established its right to prior use and registration of the trademark "LEE" in
the Philippines and is thus entitled to protection from any infringement upon the same. It is thus axiomatic that
one who has identified a peculiar symbol or mark with his goods thereby acquires a property right in such symbol
or mark, and if another infringes the trademark, he thereby invokes this property right.
The merchandise or goods being sold by the parties are not that expensive as alleged to be by the
appellant and are quite ordinary commodities purchased by the average person and at times, by the ignorant and
the unlettered. Ordinary purchasers will not as a rule examine the small letterings printed on the label but will
simply be guided by the presence of the striking mark "LEE". Whatever difference there may be will pale in
insignificance in the face of an evident similarity in the dominant features and overall appearance of the labels of
the parties. 12
xxx xxx xxx.
On 19 December 1990, petitioner filed a motion for reconsideration of the above-mentioned decision of the Court of Appeals.
Private respondent opposed said motion on 8 January 1991 on grounds that it involved an impermissible change of theory on
appeal. Petitioner allegedly raised entirely new and unrelated arguments and defenses not previously raised in the proceedings below
such as laches and a claim that private respondent appropriated the style and appearance of 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:
xxx xxx xxx.
A defense not raised in the trial court cannot be raised on appeal for the first time. An issue raised for the
first time on appeal and not raised timely in the proceedings in the lower court is barred by estoppel.
The object of requiring the parties to present all questions and issues to the lower court before they can
be presented to this Court is to have the lower court rule upon them, so that this Court on appeal may determine
whether or not such ruling was erroneous. The purpose is also in furtherance of justice to require the party to first
present the question he contends for in the lower court so that the other party may not be taken by surprise and
may present evidence to properly meet the issues raised.
 Moreover, for a question to be raised on appeal, the same must also be within the issues raised by the
parties in their pleadings. Consequently, when a party deliberately adopts a certain theory, and the case is tried
and decided based upon such theory presented in the court below, he will not be permitted to change his theory on
appeal. To permit him to do so would be unfair to the adverse party. A question raised for the first time on appeal,
there having opportunity to raise them in the court of origin constitutes a change of theory which is not
permissible on appeal.
In the instant case, 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 LEE RIDERS, 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
xxx xxx xxx.
Twice rebuffed, petitioner presents its case before this Court on the following assignment of errors:
I. THE COURT OF APPEALS ERRED IN NOT FINDING THAT PRIVATE RESPONDENT CAUSED THE ISSUANCE
OF A FOURTH "LEE" TRADEMARK IMITATING THAT OF THE 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.
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 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 STYLISTIC 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 being the presence or absence of confusing similarity between the two trademarks in question. 18
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." 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 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.
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."
xxx xxx xxx.
Likewise, it has been observed that:
In determining whether a particular name or mark is a "colorable imitation" of another, no all-embracing
rule seems possible in view of the great number of factors which must necessarily be considered in resolving this
question of fact, such as the class of product or business to which the article belongs; the 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
Colorable imitation does not mean such similitude as amounts to identity. Nor does it require that all the
details be literally copied. Colorable imitation refers to such similarity in form, content, words, sound, meaning,
special arrangement, or general appearance of the trademark or tradename with that of the other mark or
tradename in their over-all presentation or in their essential, substantive and distinctive parts as would likely
mislead or confuse persons in the ordinary course of purchasing the genuine article. 27
In determining whether colorable imitation exists, jurisprudence has developed two kinds of tests — the Dominancy Test
applied in Asia Brewery, Inc. v. Court of Appeals 28 and other cases 29 and the Holistic Test developed in Del Monte Corporation
v. Court of Appeals 30 and its proponent cases. 31
As its title implies, the test of dominancy focuses on the similarity of the prevalent features of the competing trademarks
which might cause confusion or deception and thus constitutes infringement.
xxx xxx xxx.
. . . If the competing trademark contains the main or essential or dominant features of another, and
confusion and deception is likely to result, infringement takes place. Duplication or imitation is not necessary; nor
it is necessary that the infringing label should suggest an effort to imitate. [ C. Neilman Brewing Co. v.
Independent Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co., vs. Pflugh (CC), 180 Fed. 579]. The
question at issue in cases of infringement of trademarks is whether the use of the marks involved would be
likely to cause confusion or mistakes in the mind of the public or deceive purchasers. (Auburn Rubber
Corporation vs. Honover Rubber Co., 107 F. 2d 588; . . . .) 32
xxx xxx xxx.
On the other side of the spectrum, the holistic test mandates that the entirety of the marks in question must be considered in
determining confusing similarity.
xxx xxx xxx.
In determining whether the trademarks are confusingly similar, a comparison of the words is not the only
determinant factor. The trademarks in their entirety as they appear in their respective labels or hang tags must also
be considered in relation to the goods to which they are attached. The discerning eye of the observer must focus
not only on the predominant words but also on the other features appearing in both labels in order that he may
draw his conclusion whether one is confusingly similar to the other. 33
xxx xxx xxx.
Applying the foregoing tenets to the present controversy and taking into account the factual circumstances of this case, we
considered the trademarks involved as a whole and rule that petitioner's "STYLISTIC MR. LEE" is not confusingly similar to private
respondent's "LEE" trademark.
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, soy sauce or soap which are of minimal cost. Maong pants or jeans are not inexpensive. Accordingly, the casual
buyer is predisposed to be more cautious and discriminating in and would prefer to mull over his purchase. Confusion and deception,
then, is less likely. In Del Monte Corporation v. Court of Appeals, 34 we noted that:
. . . Among these, what essentially determines the attitudes of the purchaser, specifically his inclination to
be cautious, is the cost of the goods. To be sure, a person who buys a box of candies will not exercise as much
care as one who buys an expensive watch. As a general rule, an ordinary buyer does not exercise as much
prudence in buying an article for which he pays a few centavos as he does in purchasing a more valuable thing.
Expensive and valuable items are normally bought only after deliberate, comparative and analytical investigation.
But mass products, low priced articles in wide use, and matters of everyday purchase requiring frequent
replacement are bought by the casual consumer without great care. . . .
Second, like his beer, the average Filipino consumer generally buys his jeans by brand. He does not ask the sales clerk for
generic jeans but for, say, a Levis, Guess, Wrangler or even an Armani. He is, therefore, more or less knowledgeable and familiar with
his preference and will not easily be distracted.
 Finally, in line with the foregoing discussions, more credit should be given to the "ordinary purchaser." Cast in this particular
controversy, the ordinary purchaser is not the "completely unwary consumer" but is the "ordinarily intelligent buyer" considering the
type of product involved.
The definition laid down in Dy Buncio v. Tan Tiao Bok 35 is better suited to the present case. There, the "ordinary purchaser"
was defined as one "accustomed to buy, and therefore to some extent familiar with, the goods in question. The test of fraudulent
simulation is to be found in the likelihood of the deception of some persons in some measure acquainted with an established design
and desirous of purchasing the commodity with which that design has been associated. The test is not found in the deception, or the
possibility of deception, of the person who knows nothing about the design which has been counterfeited, and who must be indifferent
between that and the other. The simulation, in order to be objectionable, must be such as appears likely to mislead the ordinary
intelligent buyer who has a need to supply and is familiar with the article that he seeks to purchase."
There is no cause for the Court of 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):
CHAPTER II-A. — The Principal Register
(Inserted by Sec. 2, Rep. Act No. 638.)
SEC. 4. Registration of trade-marks, trade-names and service-marks on the principal
register. — There is hereby established a register of trade-marks, trade-names and service-marks which shall be
known as the principal register. The owner of a trade-mark, trade-name or service-mark used to distinguish his
goods, business or services from the goods, business or services of others shall have the right to register the same
on the principal register, unless it:
xxx xxx xxx.
(e) Consists of a mark or trade-name which, when applied to or used in connection with the goods,
business or services of the applicant is merely descriptive or deceptively misdescriptive of them, or when applied
to or used in connection with the goods, business or services of the applicant is primarily geographically
descriptive or deceptively misdescriptive of them, or is primarily merely a surname; (Italics ours.)
xxx xxx xxx.
"LEE" is primarily a surname. Private respondent cannot, therefore, acquire exclusive ownership over and singular use of
said term.
. . . It has been held that a personal name or surname may not be monopolized as a trademark or
tradename as against others of the same name or surname. For in the absence of contract, fraud, or estoppel, any
man may use his name or surname in all legitimate ways. Thus, "Wellington" is a surname, and its first user has
no cause of action against the junior user of "Wellington" as it is incapable of exclusive appropriation. 37
In addition to the foregoing, we are constrained to agree with 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.) (Italics 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.) (Italics
ours.)
The provisions of the 1965 Paris Convention for the Protection of Industrial Property 38 relied upon by private respondent
and Sec. 21-A of the Trademark Law (R.A. No. 166) 39 were sufficiently expounded upon and qualified in the recent case of Philip
Morris, Inc. v. Court of Appeals: 40
xxx xxx xxx
Following universal acquiescence and comity, our municipal law on trademarks regarding the
requirement of actual use in the Philippines must subordinate an international agreement inasmuch as the apparent
clash is being decided by a municipal tribunal (Mortisen vs. Peters, Great Britain, High Court of Judiciary of
Scotland, 1906, 8 Sessions, 93; Paras, International Law and World Organization, 1971 Ed., p. 20). Withal, the
fact that international law has been made part of the law of the land does not by any means imply the primacy of
international law over national law in the municipal sphere. Under the doctrine of incorporation as applied in most
countries, rules of international law are given a standing equal, not superior, to national legislative enactments.
xxx xxx xxx.
In other words, (a foreign corporation) may have the capacity to sue for infringement irrespective of lack
of business activity in the Philippines on account of Section 21-A of the Trademark Law but the question of
whether they have an exclusive right over their symbol as to justify issuance of the controversial writ will depend
on actual use of their trademarks in the Philippines  in line with Sections 2 and 2-A of the same law. It is thus
incongruous for petitioners to claim that when a foreign corporation not licensed to do business in the Philippines
files a complaint for infringement, the entity need not be actually using its trademark in commerce in the
Philippines. Such a foreign corporation may have the personality to file a suit for infringement but it may not
necessarily be entitled to protection due to absence of actual use of the emblem in the local market.
xxx xxx xxx.
Undisputably, private respondent is the senior registrant, having obtained several registration certificates for its various
trademarks "LEE," "LEE RIDERS," and "LEESURES" in both the supplemental and principal registers, as early as 1969 to
1973. 41 However, registration alone will not suffice. In Sterling Products International, Inc. v. Farbenfabriken Bayer
Aktiengesellschaft, 42 we declared:
xxx xxx xxx.
A rule widely accepted and firmly entrenched because it has come down through the years is that actual
use in commerce or business is a prerequisite in the acquisition of the right of ownership over a trademark.
xxx xxx xxx.
It would seem quite clear that adoption alone of a trademark would not give exclusive right thereto. Such
right "grows out of their actual use." Adoption is not use. One may make advertisements, issue circulars, give out
price lists on certain goods; but these alone would not give exclusive right of use. For trademark is a creation of
use. The underlying reason for all these is that purchasers have come to understand the mark as indicating the
origin of the wares. Flowing from this is the 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.
(Italics ours.)
xxx xxx xxx.
To augment its arguments that it was, not only the prior registrant, but also the prior user, private respondent invokes Sec. 20
of the Trademark Law, thus:
SEC. 20. Certificate of registration prima facie evidence of validity. — A certificate of registration of a
mark or tradename shall be a prima facie evidence of the validity of the registration, the 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 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. 47 Similarly, we give little weight to the numerous vouchers representing various advertising expenses in the Philippines
for "LEE" products. 48 It is well to note that these expenses were incurred only in 1981 and 1982 by LEE (Phils.), Inc. after it entered
into a licensing agreement with private respondent on 11 May 1981. 49
On the other hand, petitioner has sufficiently shown that it has been in the business of selling jeans and other garments
adopting its "STYLISTIC MR. LEE" trademark since 1975 as evidenced by appropriate sales invoices to various stores and
retailers. 50
Our rulings in Pagasa Industrial Corp. v. Court of Appeals 51 and Converse Rubber Corp. v. Universal Rubber Products,
Inc., 52 respectively, are instructive:
The Trademark Law is very clear. It requires actual commercial use of the mark prior to its registration.
There is no dispute that respondent corporation was the first registrant, yet it failed to fully substantiate its claim
that it used in trade or business in the Philippines the subject mark; it did not present proof to invest it with
exclusive, continuous adoption of the trademark which should consist among others, of considerable sales since
its first use. The invoices submitted by respondent which were dated way back in 1957 show that the zippers sent
to the Philippines were to be used as "samples" and "of no commercial value." The evidence for respondent must
be clear, definite and free from inconsistencies. "Samples" are not for sale and therefore, the fact of exporting
them to the Philippines cannot be considered to be equivalent to the "use" contemplated by law. Respondent did
not expect income from such "samples." There were no receipts to establish sale, and no proof were presented to
show that they were subsequently sold in the Philippines.
xxx xxx xxx.
The sales invoices provide the best proof that there were actual sales of 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.
SO ORDERED.
Bellosillo and Hermosisima, Jr., JJ., concur.
Davide, Jr., J., I vote to deny the petition there being no showing of an exception to inclusiveness of findings of BPTTT and
of CA.
Padilla, J., I dissent. I vote to deny the petition; I agree with BPTTT and the CA that petitioner's trademark "STYLISTIC
MR. LEE" is confusingly similar to private respondent's earlier registered trademarks "LEE" or "LEE RIDER, LEE-LEENS and LEE-
SURES" such that the trademark "STYLISTIC MR. LEE" is an infringement of the earlier registered trademarks.
||| (Emerald Garment Manufacturing Corp. v. Court of Appeals, G.R. No. 100098, [December 29, 1995], 321 PHIL 1001-1027)
 SECOND DIVISION

[G.R. No. L-32747. November 29, 1984.]

FRUIT OF THE LOOM, INC., petitioner, vs. COURT OF APPEALS and GENERAL GARMENTS CORPORATION, respondents.

Lichauco, Picazo & Agcaoili Law Office for petitioner.

SYLLABUS

1. MERCANTILE LAW; TRADEMARKS AND TRADENAMES; INFRINGEMENT OF TRADEMARKS; WHEN IT EXISTS. — 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 commodity.

2. ID.; ID.; ID.; ID.; FACTORS IN DETERMINING WHETHER TRADEMARKS ARE CONFUSINGLY SIMILAR. — 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).

3. ID.; ID.; ID; ID.; ID.; CASE AT BAR. — In the trademarks FRUIT OF THE LOOM and FRUIT FOR EVE, the lone similar word is FRUIT 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.
The Court does 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. 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. The similarities of the competing trademarks in this case are completely lost
in the substantial differences in the design and general appearance of their respective hang tags. The Court has examined the two trademarks as they appear in the hang tags submitted by
the parties and the Court is impressed more by the dissimilarities than by the similarities appearing therein. 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, 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.

DECISION
MAKASIAR, J p:

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 said
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.
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. cdrep
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 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. LLjur
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 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.
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: cdrep
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 light
brown while that of respondent is pink with a white colored centerpiece. 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 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.
||| (Fruit of the Loom, Inc. v. Court of Appeals, G.R. No. L-32747, [November 29, 1984], 218 PHIL 375-382)
 FIRST DIVISION

[G.R. No. 166115. February 2, 2007.]

McDONALD'S CORPORATION, petitioner, vs. MACJOY FASTFOOD CORPORATION, respondent.

DECISION

GARCIA, J p:

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. SCDaET
Petitioner McDonald's Corporation, a corporation duly organized and existing under the laws of the State of Delaware, USA,
filed a verified Notice of Opposition 3 against the respondent's application claiming that the trademark "MACJOY & DEVICE" so
resembles its corporate logo, otherwise known as the Golden Arches or "M" design, and its marks "McDonalds," McChicken,"
"MacFries," "BigMac," "McDo," "McSpaghetti," "McSnack," and "Mc," (hereinafter collectively known as the MCDONALD'S
marks) such that when used on identical or related goods, the trademark applied for would confuse or deceive purchasers into
believing that the goods originate from the same source or origin. Likewise, the petitioner alleged that the respondent's use and
adoption in bad faith of the "MACJOY & DEVICE" mark would falsely tend to suggest a connection or affiliation with petitioner's
restaurant services and food products, thus, constituting a fraud upon the general public and further cause the dilution of the
distinctiveness of petitioner's registered and internationally recognized MCDONALD'S marks to its prejudice and irreparable damage.
The application and the opposition thereto was docketed as Inter Partes Case No. 3861.
Respondent denied the aforementioned allegations of the petitioner and averred that it has used the mark "MACJOY" for the
past many years in good faith and has spent considerable sums of money for said mark's extensive promotion in tri-media, especially
in Cebu City where it has been doing business long before the petitioner opened its outlet thereat sometime in 1992; and that its use of
said mark would not confuse affiliation with the petitioner's restaurant services and food products because of the differences in the
design and detail of the two (2) marks.
In a decision 4 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. DHIaTS
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 Order 5 of January 14, 2000.
Therefrom, the respondent went to the CA via a Petition for Review with prayer for Preliminary Injunction 6 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:
. . . , it is clear that the IPO brushed aside and rendered useless the glaring and drastic differences and
variations in style of the two trademarks and even decreed that these pronounced differences are "miniscule" and
considered them to have been "overshadowed by the appearance of the predominant features" such as "M," "Mc,"
and "Mac" appearing in both MCDONALD'S and MACJOY marks. Instead of taking into account these
differences, the IPO unreasonably shrugged off these differences in the device, letters and marks in the trademark
sought to be registered. The IPO brushed aside and ignored the following irrefutable facts and circumstances
showing differences between the marks of MACJOY and MCDONALD'S. They are, as averred by the petitioner
[now respondent]:
1. The word "MacJoy" is written in round script while the word "McDonald's" is written in single stroke
gothic;
2. The word "MacJoy" comes with the picture of a chicken head with cap and bowtie and wings
sprouting on both sides, while the word "McDonald's" comes with an arches "M" in gold colors,
and absolutely without any picture of a chicken;
3. The word "MacJoy" is set in deep pink and white color scheme while "McDonald's" is written in red,
yellow and black color combination;
4. The façade of the respective stores of the parties are entirely different. Exhibits 1 and 1-A, show that
[respondent's] restaurant is set also in the same bold, brilliant and noticeable color scheme as
that of its wrappers, containers, cups, etc., while [petitioner's] restaurant is in yellow and red
colors, and with the mascot of "Ronald McDonald" being prominently displayed therein."
(Words in brackets supplied.) AICDSa
Petitioner promptly filed a motion for reconsideration. However, in its similarly challenged Resolution 8 of November 12,
2004, the CA denied the motion, as it further held:
Whether a mark or label of a competitor resembles another is to be determined by an inspection of the
points of difference and resemblance as a whole, and not merely the points of resemblance. The articles and
trademarks employed and used by the [respondent] Macjoy Fastfood Corporation are so different and distinct as to
preclude any probability or likelihood of confusion or deception on the part of the public to the injury of the trade
or business of the [petitioner] McDonald's Corporation. The "Macjoy & Device" mark is dissimilar in color,
design, spelling, size, concept and appearance to the McDonald's marks. (Words in brackets supplied.)
Hence, the petitioner's present recourse on the following grounds:
I.
THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT'S "MACJOY & DEVICE" MARK IS
NOT CONFUSINGLY SIMILAR TO PETITIONER'S "McDONALD'S MARKS." IT FAILED TO
 CORRECTLY APPLY THE DOMINANCY TEST WHICH HAS BEEN CONSISTENTLY APPLIED BY THIS
HONORABLE COURT IN DETERMINING THE EXISTENCE OF CONFUSING SIMILARITY BETWEEN
COMPETING MARKS.
A. The McDonald's Marks belong to a well-known and established "family of marks" distinguished by
the use of the prefix "Mc" and/or "Mac" and the corporate "M" logo design.
B. The prefix "Mc" and/or "Mac" is the dominant portion of both Petitioner's McDonald's Marks and the
Respondent's "Macjoy & Device" mark. As such, the marks are confusingly similar under the
Dominancy Test.
C. Petitioner's McDonald's Marks are well-known and world-famous marks which must be protected
under the Paris Convention.
II.
THE COURT OF APPEALS ERRED IN RULING THAT THE DECISION OF THE IPO DATED 28
DECEMBER 1998 AND ITS ORDER DATED 14 JANUARY 2000 WERE NOT BASED ON SUBSTANTIAL
EVIDENCE. DacASC
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 Certification 10 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 . . . 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, . . . 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. HICEca
The old Trademark Law, Republic Act (R.A.) No. 166, as amended, defines a "trademark" as any distinctive word, name,
symbol, emblem, sign, or device, or any combination thereof adopted and used by a manufacturer or merchant on his goods to identify
and distinguish them from those manufactured, sold, or dealt in by others. 14
Under the same law, the registration of a trademark is subject to the provisions of Section 4 thereof, paragraph (d) of which is
pertinent to this case. The provision reads:
Section 4. Registration of trademarks, trade-names and service-marks on the principal register. — There
is hereby established a register of trademarks, tradenames and service-marks which shall be known as the
principal register. The owner of the trade-mark, trade-name or service-mark used to distinguish his goods,
business or services of others shall have the right to register the same on the principal register, unless it:
xxx xxx xxx
(d) Consists of or comprises a mark or trade-name which so resembles a mark or trade-name
registered in the Philippines or a mark or trade-name previously used in the Philippines by another and
not abandoned, as to be likely, when applied to or used in connection with the goods, business or services
of the applicant, to cause confusion or mistake or to deceive purchasers;
 xxx xxx xxx
Essentially, the issue here is whether there is a confusing similarity between the MCDONALD'S marks of the petitioner and
the respondent's "MACJOY & DEVICE" trademark when applied to Classes 29 and 30 of the International Classification of Goods,
i.e., food and ingredients of food.
In determining similarity and likelihood of confusion, jurisprudence has developed two tests, the dominancy test and
the holistic test. 15 The dominancy test focuses on the similarity of the prevalent features of the competing trademarks that might
cause confusion or deception. 16 In contrast, the holistic test requires the court to consider the entirety of the marks as applied to the
products, including the labels and packaging, in determining confusing similarity. 17 Under the latter test, a comparison of the words
is not the only determinant factor. 18
Here, the IPO used the dominancy test in concluding that there was confusing similarity between the two (2) trademarks in
question as it took note of the appearance of the predominant features "M", "Mc" and/or "Mac" in both the marks. In reversing the
conclusion reached by the IPO, the CA, while seemingly applying the dominancy test, in fact actually applied the holistic test. The
appellate court ruled in this wise:
Applying the Dominancy test to the present case, the IPO should have taken into consideration the
entirety of the two marks instead of simply fixing its gaze on the single letter "M" or on the combinations "Mc" or
"Mac". A mere cursory look of the subject marks will reveal that, save for the letters "M" and "c", no other
similarity exists in the subject marks. HCITAS
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, . . . , has relied on the dominancy test rather than the holistic test. The dominancy test
considers the dominant features in the competing marks in determining whether they are confusingly similar.
Under the dominancy test, courts give greater weight to the similarity of the appearance of the product arising
from the adoption of the dominant features of the registered mark, disregarding minor differences. Courts will
consider more the aural and visual impressions created by the marks in the public mind, giving little weight to
factors like prices, quality, sales outlets and market segments.
Moreover, in Societe Des Produits Nestle, S.A. v. 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:
. . . , 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. ECaAHS
To begin with, both marks use the corporate "M" design logo and the prefixes "Mc" and/or "Mac" as dominant features. The
first letter "M" in both marks puts emphasis on the prefixes "Mc" and/or "Mac" by the similar way in which they are depicted i.e. in an
arch-like, capitalized and stylized manner. 25
For sure, it is the prefix "Mc," an abbreviation of "Mac," which visually and aurally catches the attention of the consuming
public. Verily, the word "MACJOY" attracts attention the same way as did "McDonalds," "MacFries," "McSpaghetti," "McDo," "Big
Mac" and the rest of the MCDONALD'S marks which all use the prefixes Mc and/or Mac.
Besides and most importantly, both trademarks are used in the sale of fastfood products. Indisputably, the respondent's
trademark application for the "MACJOY & DEVICE" trademark covers goods under Classes 29 and 30 of the International
Classification of Goods, namely, fried chicken, chicken barbeque, burgers, fries, spaghetti, etc. Likewise, the petitioner's trademark
registration for the MCDONALD'S marks in the Philippines covers goods which are similar if not identical to those covered by the
respondent's application.
Thus, we concur with the IPO's findings that:
In the case at bar, the predominant features such as the "M," "Mc," and "Mac" appearing in both
McDonald's marks and the MACJOY & DEVICE" easily attract the attention of would-be customers. Even non-
regular customers of their fastfood restaurants would readily notice the predominance of the "M" design,
"Mc/Mac" prefixes shown in both marks. Such that the common awareness or perception of customers that the
trademarks McDonalds mark and MACJOY & DEVICE are one and the same, or an affiliate, or under the
sponsorship of the other is not far-fetched.
The differences and variations in styles as the device depicting a head of chicken with cap and bowtie
and wings sprouting on both sides of the chicken head, the heart-shaped "M," and the stylistic letters in
"MACJOY & DEVICE;" in contrast to the arch-like "M" and the one-styled gothic letters in McDonald's marks
are of no moment. These minuscule variations are overshadowed by the appearance of the predominant features
mentioned hereinabove. EDSHcT
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 37 27 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
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. HaTDAE
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 . . . in the Philippines" before
one may register a trademark, trade-name and service mark under the Trademark Law 33 pertains to the territorial jurisdiction of the
Philippines and is not only confined to a certain region, province, city or barangay.
Likewise wanting in merit is the respondent's claim that the petitioner cannot acquire ownership of the word "Mac" because it
is a personal name which may not be monopolized as a trademark as against others of the same name or surname. As stated earlier,
once a trademark has been registered, the validity of the mark is prima facie presumed. In this case, the respondent failed to overcome
such presumption. We agree with the observations of the petitioner regarding the respondent's explanation that the word "MACJOY"
is based on the name of its president's niece, Scarlett Yu Carcell. In the words of the petitioner:
First of all, Respondent failed to present evidence to support the foregoing claim which, at best, is a mere
self-serving assertion. Secondly, it cannot be denied that there is absolutely no connection between the name
"Scarlett Yu Carcel" and "MacJoy" to merit the coinage of the latter word. Even assuming that the word "MacJoy"
was chosen as a term of endearment, fondness and affection for a certain Scarlett Yu Carcel, allegedly the niece of
Respondent's president, as well as to supposedly bring good luck to Respondent's business, one cannot help but
wonder why out of all the possible letters or combinations of letters available to Respondent, its president had to
choose and adopt a mark with the prefix "Mac" as the dominant feature thereof. A more plausible explanation
perhaps is that the niece of Respondent's president was fond of the food products and services of the Respondent,
but that is beside the point." 34
By reason of the respondent's implausible and insufficient explanation as to how and why out of the many choices of words it
could have used for its trade-name and/or trademark, it chose the word "MACJOY," the only logical conclusion deducible therefrom
is that the respondent would want to ride high on the established reputation and goodwill of the MCDONALD's marks, which, as
applied to petitioner's restaurant business and food products, is undoubtedly beyond question.
Thus, the IPO was correct in rejecting and denying the respondent's application for registration of the trademark "MACJOY
& DEVICE." As this Court ruled in Faberge Inc. v. IAC, 35 citing Chuanchow Soy & Canning Co. v. Dir. of Patents and
Villapanta: 36
When one applies for the registration of a trademark or label which is almost the same or very closely
resembles one already used and registered by another, the application should be rejected and dismissed outright,
even without any opposition on the part of the owner and user of a previously registered label or trademark, this
not only to avoid confusion on the part of the public, but also to protect an already used and registered trademark
and an established goodwill. HTSaEC
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.
||| (McDonald's Corporation v. Macjoy Fastfood Corporation, G.R. No. 166115, [February 2, 2007], 543 PHIL 90-107)

SECOND DIVISION

[G.R. No. L-27906. January 8, 1987.]

CONVERSE RUBBER CORPORATION, petitioner, vs. UNIVERSAL RUBBER PRODUCTS, INC. and TIBURCIO S. EVALLE, DIRECTOR OF
PATENTS, respondents.

Paredes, Poblador, Nazareno, Azada & Tomacruz for petitioner.

RESOLUTION
FERNAN, J p:

The undisputed facts of the case are as follows:

Respondent Universal Rubber Products, Inc. filed an application with the Philippine Patent office for registration of the
trademark "UNIVERSAL CONVERSE AND DEVICE" used on rubber shoes and rubber slippers.
Petitioner Converse Rubber Corporation filed its opposition to the application for registration on grounds that:
a] The trademark sought to be registered is confusingly similar to the word "CONVERSE" which is part
of petitioner's corporate name "CONVERSE RUBBER CORPORATION" as to likely deceive purchasers of
products on which it is to be used to an extent that said products may be mistaken by the unwary public to be
manufactured by the petitioner; and,
b] The registration of respondent's trademark will cause great and irreparable injury to the business
reputation and goodwill of petitioner in the Philippines and would cause damage to said petitioner within the
meaning of Section 8, R.A. No. 166, as amended.
Thereafter, respondent filed its answer and at the pre-trial, the parties submitted the following partial stipulation of facts:
"1] The petitioner's corporate name is 'CONVERSE RUBBER CORPORATION' and has been in
existence since July 31, 1946; it is duly organized under the laws of Massachusetts, USA and doing business at
392 Pearl St., Malden, County of Middlesex, Massachusetts;
2] Petitioner is not licensed to do business in the Philippines and it is not doing business on its own in the
Philippines; and,
3] Petitioner manufacturers rubber shoes and uses thereon the trademarks 'CHUCK TAYLOR' and 'ALL
STAR AND DEVICE'. 1
At the trial, petitioner's lone witness, Mrs. Carmen B. Pacquing, a duly licensed private merchant with stores at the Sta.
Mesa Market and in Davao City, testified that she had been selling CONVERSE rubber shoes in the local market since 1956 and
that sales of petitioner's rubber shoes in her stores averaged twelve to twenty pairs a month purchased mostly by basketball
players of local private educational institutions like Ateneo, La Salle and San Beda.
Mrs. Pacquing, further stated that she knew petitioner's rubber shoes came from the United States "because it says there
in the trademark Converse Chuck Taylor with star red or blue and is a round figure and made in U.S.A"  2 In the invoices issued
by her store, the rubber shoes were described as "Converse Chuck Taylor", 3 "Converse All Star," 4 "All Star Converse Chuck
Taylor, " 5 or "Converse Shoes Chuck Taylor." 6 She also affirmed that she had no business connection with the petitioner.
Respondent, on the other hand, presented as its lone witness the secretary of said corporation who testified that
respondent has been selling on wholesale basis "Universal Converse" sandals since 1962 and "Universal Converse" rubber shoes
since 1963. Invoices were submitted as evidence of such sales. The witness also testified that she had no idea why respondent
chose "Universal Converse" as a trademark and that she was unaware of the name "Converse" prior to her corporation's sale of
"Universal Converse" rubber shoes and rubber sandals.
Eventually, the Director of Patents dismissed the opposition of the petitioner and gave due course to respondent's
application. His decision reads in part:
". . . the only question for determination is whether or not the applicant's partial appropriation of the
Opposer's [petitioner'] corporate name is of such character that in this particular case, it is calculated to deceive or
confuse the public to the injury of the corporation to which the name belongs . . .
. . . I cannot find anything that will prevent registration of the word 'UNIVERSAL CONVERSE' in favor
of the respondent. In arriving at this conclusion, I am guided by the fact that the opposer failed to present proof
that the single word "CONVERSE' in its corporate name has become so identified with the corporation that
whenever used, it designates to the mind of the public that particular corporation.
The proofs herein are sales made by a single witness who had never dealt with the petitioner . . . the entry
of Opposer's [petitioner's] goods in the Philippines were not only effected in a very insignificant quantity but
without the opposer [petitioner] having a direct or indirect hand in the transaction so as to be made the basis for
trademark pre-emption. cdphil
Opposer's proof of its corporate personality cannot establish the use of the word 'CONVERSE' in any
sense, as it is already stipulated that it is not licensed to do business in the Philippines, and is not doing business of
its own in the Philippines. If so, it will be futile for it to establish that 'CONVERSE' as part of its corporate name
identifies its rubber shoes. Besides, it was also stipulated that opposer [petitioner], in manufacturing rubber shoes
uses thereon the trademark 'CHUCK TAYLOR' and 'ALL STAR and DEVICE' and none other.
 Furthermore, inasmuch as the Opposer never presented any label herein, or specimen of its shoes,
whereon the label may be seen, notwithstanding its witness' testimony touching upon her identification of the
rubber shoes sold in her stores, no determination can be made as to whether the word 'CONVERSE' appears
thereon.
. . . the record is wanting in proof to establish likelihood of confusion so as to cause probable damage to
the Opposer." 7
Its motion for reconsideration having been denied by the respondent Director of Patents, petitioner instituted the instant
petition for review.
As correctly phrased by public respondent Director of Patents, the basic issue presented for our consideration is whether
or not the respondent's partial appropriation of petitioner's corporate name is of such character that it is calculated to deceive or
confuse the public to the injury of the petitioner to which the name belongs.
"A trade name is any individual name or surname, firm name, device or word used by manufacturers, industrialists,
merchants and others to identify their businesses, vocations or occupations." 8 "As the trade name refers to the business and its
goodwill . . . the trademark refers to the goods." 9 The ownership of a trademark or tradename is a property right which the owner
is entitled to protect "since there is damage to him from confusion or reputation or goodwill in the mind of the public as well as
from confusion of goods. The modern trend is to give emphasis to the unfairness of the acts and to classify and treat the issue as
fraud." 10
From a cursory appreciation of the petitioner's corporate name "CONVERSE RUBBER CORPORATION,' it is evident
that the word "CONVERSE" is the dominant word which identifies petitioner from other corporations engaged in similar
business. Respondent, in the stipulation of facts, admitted petitioner's existence since 1946 as a duly organized foreign
corporation engaged in the manufacture of rubber shoes. This admission necessarily betrays its knowledge of the reputation and
business of petitioner even before it applied for registration of the trademark in question. Knowing, therefore, that the word
"CONVERSE" belongs to and is being used by petitioner, and is in fact the dominant word in petitioner's corporate name,
respondent has no right to appropriate the same for use on its products which are similar to those being produced by petitioner.
"A corporation is entitled to the cancellation of a mark that is confusingly similar to its corporate
name." 11 "Appropriation by another of the dominant part of a corporate name is an infringement." 12
Respondent's witness had no idea why respondent chose "UNIVERSAL CONVERSE" as trademark and the record
discloses no reasonable explanation for respondent's use of the word "CONVERSE" in its trademark. Such unexplained use by
respondent of the dominant word of petitioner's corporate name lends itself open to the suspicion of fraudulent motive to trade
upon petitioner's reputation, thus:
"A boundless choice of words, phrases and symbols is available to one who wishes a trademark sufficient
unto itself to distinguish his product from those of others. When, however, there is no reasonable explanation for
the defendant's choice of such a mark though the field for his selection was so broad, the inference is inevitable
that it was chosen deliberately to deceive." 13
The testimony of petitioner's witness, who is a legitimate trader as well as the invoices evidencing sales of petitioner's
products in the Philippines, give credence to petitioner's claim that it has earned a business reputation and goodwill in this
country. The sales invoices submitted by petitioner's lone witness show that it is the word "CONVERSE" that mainly identifies
petitioner's products, i.e. "CONVERSE CHUCK TAYLOR," 14 "CONVERSE ALL STAR," 15 "ALL STAR CONVERSE
CHUCK TAYLOR," 16 or "CONVERSE SHOES CHUCK and TAYLOR." 17 Thus, contrary to the determination of the
respondent Director of Patents, the word "CONVERSE" has grown to be identified with petitioner's products, and in this sense,
has acquired a second meaning within the context of trademark and tradename laws.
Furthermore, said sales invoices provide the best proof that there were actual sales of petitioner's products in the country
and that there was actual use for a protracted period of petitioner's trademark or part thereof through these sales. "The most
convincing proof of use of a mark in commerce is testimony of such witnesses as customers, or the orders of buyers during a
certain period." 18 Petitioner's witness, having affirmed her lack of business connections with petitioner, has testified as such
customer, supporting strongly petitioner's move for trademark pre-emption.
The sales of 12 to 20 pairs a month of petitioner's rubber shoes cannot be considered insignificant, considering that they
appear to be of high expensive quality, which not too many basketball players can afford to buy. Any sale made by a legitimate
trader from his store is a commercial act establishing trademark rights since such sales are made in due course of business to the
general public, not only to limited individuals. It is a matter of public knowledge that all brands of goods filter into the market,
indiscriminately sold by jobbers, dealers and merchants not necessarily with the knowledge or consent of the manufacturer. Such
actual sale of goods in the local market establishes trademark use which serves as the basis for any action aimed at trademark pre-
emption. It is a corollary logical deduction that while Converse Rubber Corporation is not licensed to do business in the country
and is not actually doing business here, it does not mean that its goods are not being sold here or that it has not earned a reputation
or goodwill as regards its products. The Director of Patents was, therefore, remiss in ruling that the proofs of sales presented "was
made by a single witness who had never dealt with nor had never known opposer [petitioner] . . . without Opposer having a direct
or indirect hand in the transaction to be the basis of trademark pre-emption."
Another factor why respondent's application should be denied is the confusing similarity between its trademark
"UNIVERSAL CONVERSE AND DEVICE" and petitioner's corporate name and/or its trademarks "CHUCK TAYLOR" and
"ALL STAR DEVICE" which could confuse the purchasing public to the prejudice of petitioner. cdll
The trademark of respondent "UNIVERSAL CONVERSE and DEVICE" is imprinted in a circular manner on the side of
its rubber shoes. In the same manner, the trademark of petitioner which reads "CONVERSE CHUCK TAYLOR" is imprinted on
a circular base attached to the side of its rubber shoes.
The determinative factor in ascertaining whether or not marks are confusingly similar to each other "is not whether the
challenged mark would actually cause commission 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. It would be sufficient, for purposes of the law, that the similarity
between the two labels is such that there is a possibility or likelihood of the purchaser of the older brand mistaking the new brand
for it." 19 Even if not all the details just mentioned were identical, with the general appearance alone of the two products, any
ordinary, or even perhaps even [sic] a not too perceptive and discriminating customer could be deceived . . ." 20
When the law speaks of "purchaser," the reference is to ordinary average purchasers. 21 "It is not necessary in either case
that the resemblance be sufficient to deceive experts, dealers, or other persons specially familiar with the trademark or goods
involved." 22
The similarity in the general appearance of respondent's trademark and that of petitioner would evidently create a
likelihood of confusion among the purchasing public. But even assuming, arguendo, that the trademark sought to be registered by
respondent is distinctively dissimilar from those of the petitioner, the likelihood of confusion would still subsists, not on the
purchaser's perception of the goods but on the origins thereof. By appropriating the word "CONVERSE," respondent's products
are likely to be mistaken as having been produced by petitioner. "The risk of damage is not limited to a possible confusion of
goods but also includes confusion of reputation if the public could reasonably assume that the goods of the parties originated from
the same source. 23
It is unfortunate that respondent Director of Patents has concluded that since the petitioner is not licensed to do business
in the country and is actually not doing business on its own in the Philippines, it has no name to protect in the forum and thus, it is
futile for it to establish that "CONVERSE" as part of its corporate name identifies its rubber shoes. That a foreign corporation has
a right to maintain an action in the forum even if it is not licensed to do business and is not actually doing business on its own
therein has been enunciated many times by this Court. In La Chemise Lacoste, S.A. vs. Fernandez, 129 SCRA 373, this Court,
reiterating Western Equipment and Supply Co. vs. Reyes, 51 Phil. 115, stated that: LibLex
". . . 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.
"We further held:
xxx xxx xxx
"'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. vs. 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 trademark 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.'"
 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
[corporate 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." [emphasis supplied]
The object of the Convention is to accord a national of a member nation extensive protection "against infringement and
other types of unfair competition" [Vanitary Fair Mills, Inc. vs. T. Eaton Co., 234 F. 2d 633]
The mandate of the aforementioned Convention finds implementation in Sec. 37 of RA No. 166, otherwise known as
the Trademark Law: Cdpr
"Sec. 37. Rights of Foreign Registrants-Persons who are nationals of, domiciled in, or have a bona fide or
effective business or commercial establishment in any foreign country, which is a party to an international
convention or treaty relating to marks or tradenames on the repression of unfair competition to which the
Philippines may be a party, shall be entitled to the benefits and subject to the provisions of this Act . . .
"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 parts of marks." [emphasis supplied.]
WHEREFORE, the decision of the Director of Patents is hereby set aside and a new one entered denying Respondent
Universal Rubber Products, Inc.'s application for registration of the trademark "UNIVERSAL CONVERSE AND DEVICE" on
its rubber shoes and slippers.
SO ORDERED.
||| (Converse Rubber Corp. v. Universal Rubber Products, Inc., G.R. No. L-27906 (Resolution), [January 8, 1987], 231 PHIL 149-
159)

SECOND DIVISION

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

LEVI STRAUSS & CO., & LEVI STRAUSS (PHILS.), INC., petitioners, vs. CLINTON APPARELLE, INC., respondent.

Poblador Bautista & Reyes for petitioners.

Arnold V. Guerrero for respondent.

SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; DEFINED. — Section 1, Rule 58 of the  Rules of Court defines a preliminary injunction as
an order granted at any stage of an action prior to the judgment or final order requiring a party or a court, agency or a person to refrain from a particular act or acts. Injunction is accepted as the
strong arm of equity or a transcendent remedy to be used cautiously as it affects the respective rights of the parties, and only upon full conviction on the part of the court of its extreme
necessity. An extraordinary remedy, injunction is designed to preserve or maintain the status quo of things and is generally availed of to prevent actual or threatened acts until the merits of the
case can be heard. It may be resorted to only by a litigant for the preservation or protection of his rights or interests and for no other purpose during the pendency of the principal action. It is
resorted to only when there is a pressing necessity to avoid injurious consequences, which cannot be remedied under any standard compensation. The resolution of an application for a writ of
preliminary injunction rests upon the existence of an emergency or of a special recourse before the main case can be heard in due course of proceedings.

2. ID.; ID.; ID.; NOT A REMEDY TO PROTECT OR ENFORCE CONTINGENT, ABSTRACT OR FUTURE RIGHTS. — Injunction is not a remedy to protect or enforce
contingent, abstract, or future rights; it will not issue to protect a right not in esse and which may never arise, or to restrain an act which does not give rise to a cause of action. There must exist
an actual right. There must be a patent showing by the complaint that there exists a right to be protected and that the acts against which the writ is to be directed are violative of said right.

3. ID.; ID.; ID.; KINDS. — There are generally two kinds of preliminary injunction: (1) a prohibitory injunction which commands a party to refrain from doing a particular act;
and (2) a mandatory injunction which commands the performance of some positive act to correct a wrong in the past.

4. ID.; ID.; ID.; THE EXERCISE OF DISCRETION BY THE TRIAL COURT IN INJUNCTIVE MATTERS IS GENERALLY NOT INTERFERED WITH SAVE IN CASES
OF MANIFEST ABUSE. — While the matter of the issuance of a writ of preliminary injunction is addressed to the sound discretion of the trial court, this discretion must be exercised based
upon the grounds and in the manner provided by law. The exercise of discretion by the trial court in injunctive matters is generally not interfered with save in cases of manifest abuse. And to
determine whether there was abuse of discretion, a scrutiny must be made of the bases, if any, considered by the trial court in granting injunctive relief. Be it stressed that injunction is the
strong arm of equity which must be issued with great caution and deliberation, and only in cases of great injury where there is no commensurate remedy in damages.

5. COMMERCIAL LAW; INTELLECTUAL PROPERTY LAW; TRADEMARKS; TRADEMARK DILUTION, DEFINED; WHEN ELIGIBLE FOR PROTECTION FROM
DILUTION; CASE AT BAR. — Trademark dilution is the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of: (1)
competition between the owner of the famous mark and other parties; or (2) likelihood of confusion, mistake or deception. Subject to the principles of equity, the owner of a famous mark is
entitled to an injunction "against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the
distinctive quality of the mark." This is intended to protect famous marks from subsequent uses that blur distinctiveness of the mark or tarnish or disparage it. Based on the foregoing, to be
eligible for protection from dilution, there has to be a finding that: (1) the trademark sought to be protected is famous and distinctive; (2) the use by respondent of "Paddocks and Design" began
after the petitioners' mark became famous; and (3) such subsequent use defames petitioners' mark. In the case at bar, petitioners have yet to establish whether "Dockers and Design" has
acquired a strong degree of distinctiveness and whether the other two elements are present for their cause to fall within the ambit of the invoked protection. The Trends MBL Survey Report
which petitioners presented in a bid to establish that there was confusing similarity between two marks is not sufficient proof of any dilution that the trial court must enjoin.

6. REMEDIAL LAW; PROVISIONAL REMEDIES; PRELIMINARY INJUNCTION; IN GRANTING THE INJUNCTIVE RELIEF, THE TRIAL COURT MUST STATE ITS
OWN FINDINGS OF FACT AND CITE THE PARTICULAR LAW JUSTIFYING THE GRANT. — The Court also finds that the trial court's order granting the writ did not adequately detail
the reasons for the grant, contrary to our ruling in University of the Philippines v. Hon. Catungal Jr., wherein we held that: "The trial court must state its own findings of fact and cite particular
law to justify grant of preliminary injunction. Utmost care in this regard is demanded." The trial court in granting the injunctive relief tersely ratiocinated that "the plaintiffs appear to be entitled
to the relief prayed for and this Court is of the considered belief and humble view that, without necessarily delving on the merits, the paramount interest of justice will be better served if the
status quo shall be maintained." Clearly, this statement falls short of the requirement laid down by the above-quoted case. Similarly, in  Developers Group of Companies, Inc. v. Court of
Appeals, we held that it was "not enough" for the trial court, in its order granting the writ, to simply say that it appeared "after hearing that plaintiff is entitled to the relief prayed for."

7. ID.; ID.; ID.; A WRIT OF INJUNCTION SHOULD NEVER BE ISSUED WHEN AN ACTION FOR DAMAGES WOULD ADEQUATELY COMPENSATE THE INJURIES
CAUSED. — [W]e agree with the Court of Appeals in its holding that the damages the petitioners had suffered or continue to suffer may be compensated in terms of monetary consideration.
As held in Government Service Insurance System v. Florendo: ". . . a writ of injunction should never have been issued when an action for damages would adequately compensate the injuries
caused. The very foundation of the jurisdiction to issue the writ of injunction rests in the probability of irreparable injury, inadequacy of pecuniary estimation and the prevention of the
multiplicity of suits, and where facts are not shown to bring the case within these conditions, the relief of injunction should be refused."

8. ID.; ID.; ID.; COURTS SHOULD AVOID ISSUING A WRIT OF PRELIMINARY INJUNCTION THAT WOULD IN EFFECT DISPOSE OF THE MAIN CASE WITHOUT
TRIAL. — The prevailing rule is that courts should avoid issuing a writ of preliminary injunction that would in effect dispose of the main case without trial. There would be a prejudgment of
the main case and a reversal of the rule on the burden of proof since it would assume the proposition which petitioners are inceptively bound to prove.

9. POLITICAL LAW; CONSTITUTIONAL LAW; BILL OF RIGHTS; DUE PROCESS; ESSENCE IS SIMPLY AN OPPORTUNITY TO BE HEARD. — Due process, in
essence, is simply an opportunity to be heard. And in applications for preliminary injunction, the requirement of hearing and prior notice before injunction may issue has been relaxed to the
point that not all petitions for preliminary injunction must undergo a trial-type hearing, it being a hornbook doctrine that a formal or trial-type hearing is not at all times and in all instances
essential to due process. Due process simply means giving every contending party the opportunity to be heard and the court to consider every piece of evidence presented in their favor.

DECISION

TINGA, J p:

Before us is a petition for review on certiorari  1  under Rule 45 of the 1997 Rules of Civil Procedure filed by Levi
Strauss & Co. (LS & Co.) and Levi Strauss (Philippines), Inc. (LSPI) assailing the Court of
Appeals' Decision 2 and Resolution 3 respectively dated 21 December 1998 and 10 May 1999. The questioned Decision granted
respondent's prayer for a writ of preliminary injunction in its Petition 4 and set aside the trial court's orders dated 15 May
1998 5 and 4 June 1998 6 which respectively granted petitioners' prayer for the issuance of a temporary restraining order (TRO)
and application for the issuance of a writ of preliminary injunction.
This case stemmed from the Complaint  7  for Trademark Infringement, Injunction and Damages filed by petitioners LS
& Co. and LSPI against respondent Clinton Apparelle, Inc. * (Clinton Aparelle) together with an alternative defendant,
Olympian Garments, Inc. (Olympian Garments), before the Regional Trial Court of Quezon City, Branch
90. 8 The Complaint was docketed as Civil Case No. Q-98-34252, entitled "Levi Strauss & Co. and Levi Strauss (Phils.), Inc. v.
Clinton Aparelle, Inc. and/or Olympian Garments, Inc."
The Complaint alleged that LS & Co., a foreign corporation duly organized and existing under the laws of the State of
Delaware, U.S.A., and engaged in the apparel business, is the owner by prior adoption and use since 1986 of the internationally
famous "Dockers and Design" trademark. This ownership is evidenced by its valid and existing registrations in various member
countries of the Paris Convention. In the Philippines, it has a Certificate of Registration No. 46619 in the Principal Register for
use of said trademark on pants, shirts, blouses, skirts, shorts, sweatshirts and jackets under Class 25. 9
The "Dockers and Design" trademark was first used in the Philippines in or about May 1988, by LSPI, a domestic
corporation engaged in the manufacture, sale and distribution of various products bearing trademarks owned by LS & Co. To
date, LSPI continues to manufacture and sell Dockers Pants with the "Dockers and Design" trademark. 10
LS & Co. and LSPI further alleged that they discovered the presence in the local market of jeans under the brand name
"Paddocks" using a device which is substantially, if not exactly, similar to the "Dockers and Design" trademark owned by and
registered in the name of LS & Co., without its consent. Based on their information and belief, they added, Clinton Apparelle
manufactured and continues to manufacture such "Paddocks" jeans and other apparel. SDATEc
However, since LS & Co. and LSPI are unsure if both, or just one of impleaded defendants are behind the manufacture
and sale of the "Paddocks" jeans complained of, they brought this suit under Section 13, Rule 3 11 of the 1997 Rules of Civil
Procedure. 12
The Complaint contained a prayer that reads as follows:
1. That upon the filing of this complaint, a temporary restraining order be immediately issued
restraining defendants, their officers, employees, agents, representatives, dealers, retailers or assigns from
 committing the acts herein complained of, and, specifically, for the defendants, their officers, employees,
agents, representatives, dealers and retailers or assigns, to cease and desist from manufacturing, distributing,
selling, offering for sale, advertising, or otherwise using denims, jeans or pants with the design herein
complained of as substantially, if not exactly similar, to plaintiffs' "Dockers and Design"
trademark. DIEAHc
2. That after notice and hearing, and pending trial on the merits, a writ of preliminary injunction be
issued enjoining defendants, their officers, employees, agents, dealers, retailers, or assigns from
manufacturing, distributing, selling, offering for sale, advertising, jeans the design herein complained of as
substantially, if not exactly similar, to plaintiffs' "Dockers and Design" trademark.
3. That after trial on the merits, judgment be rendered as follows:
a. Affirming and making permanent the writ of preliminary injunction;
b. Ordering that all infringing jeans in the possession of either or both defendants as the evidence
may warrant, their officers, employees, agents, retailers, dealers or assigns, be delivered to the Honorable
Court of plaintiffs, and be accordingly destroyed; 13
Acting on the prayer for the issuance of a TRO, the trial court issued an Order 14 setting it for hearing on 5 May 1998.
On said date, as respondent failed to appear despite notice and the other defendant, Olympian Garments, had yet to be notified,
the hearing was re-scheduled on 14 May 1998. 15
On 14 May 1998, neither Clinton Apparelle nor Olympian Garments appeared. Clinton Apparelle claimed that it was
not notified of such hearing. Only Olympian Garments allegedly had been issued with summons. Despite the absence of the
defendants, the hearing on the application for the issuance of a TRO continued. 16
The following day, the trial court issued an Order 17 granting the TRO applied for, the pertinent portions of which
state:
. . . Considering the absence of counsel/s for the defendant/s during the summary hearing scheduled
on May 5, 1998 and also during the re-scheduled summary hearing held on May 14, 1998 set for the purpose
of determining whether or not a Temporary Restraining Order shall be issued, this Court allowed the counsel
for the plaintiffs to present on May 14, 1998 their arguments/evidences in support of their application. After
hearing the arguments presented by the counsel for the plaintiffs during the summary hearing, this Court is
of the considered and humble view that grave injustice and irreparable injury to the plaintiffs would arise
before the matter of whether or not the application for the issuance of a Writ of Preliminary Injunction can
be heard, and that, in the interest of justice, and in the meantime, a Temporary Restraining Order be issued.
WHEREFORE, let this Temporary Restraining Order be issued restraining the defendants, their
officers, employees, agents, representatives, dealers, retailers or assigns from committing the acts
complained of in the verified Complaint, and specifically, for the defendants, their officers, employees,
agents, representatives, dealers and retailers or assigns, to cease and desist from manufacturing, distributing,
selling, offering for sale, advertising or otherwise using denims, jeans or pants with the design complained of
in the verified Complaint as substantially, if not exactly similar, to plaintiffs' "Dockers and Design"
trademark; until after the application/prayer for the issuance of a Writ of Preliminary Injunction is
heard/resolved, or until further orders from this Court.
The hearing on the application for the issuance of a Writ of Preliminary Injunction as embodied in
the verified Complaint is set on May 26, 1998 (Tuesday) at 2:00 P.M. which setting is intransferable in
character considering that the lifetime of this Temporary Restraining Order is twenty (20) days from date
hereof. 18
On 4 June 1998, the trial court issued another Order 19 granting the writ of preliminary injunction, to wit:
ORDER
This resolves the plaintiffs' application or prayer for the issuance of a writ of preliminary injunction
as embodied in the verified complaint in this case. Parenthetically, this Court earlier issued a temporary
restraining order. (see Order dated May 15, 1998; see also Order dated May 26, 1998)
After a careful perusal of the contents of the pleadings and documents on record insofar as they are
pertinent to the issue under consideration, this Court finds that at this point in time, the plaintiffs appear to be
entitled to the relief prayed for and this Court is of the considered belief and humble view that, without
 necessarily delving on the merits, the paramount interest of justice will be better served if the status quo shall
be maintained and that an injunction bond of P2,500,000.00 appears to be in order. (see Sections 3 and 4,
Rule 58, 1997 Rules of Civil Procedure)
IN VIEW OF THE FOREGOING, the plaintiffs' prayer for the issuance of a writ of preliminary
injunction is GRANTED. Accordingly, upon the plaintiffs' filing, within ten (10) days from their receipt
hereof, an injunction bond of P2,500,000.00 executed to the defendants to the effect that the plaintiffs will
pay all damages the defendants may sustain by reason of this injunction in case the Court should finally
decide that the plaintiffs are not entitled thereto, let a writ of preliminary injunction issue enjoining or
restraining the commission of the acts complained of in the verified Complaint in this case, and specifically,
for the defendants, their officers, employees, agents, representatives, dealers and retailers or assigns or
persons acting in their behalf to cease and desist from manufacturing, distributing, selling, offering for sale,
advertising, or otherwise using, denims, jeans or pants with the design complained of in the verified
Complaint in this case, which is substantially, if not exactly, similar to plaintiffs' "DOCKERS and DESIGN"
trademark or logo as covered by the Bureau of Patents, Trademarks and Technology Transfer Certificate of
Registration No. 46619, until after this case shall have been decided on the merits and/or until further orders
from this Court. 20
The evidence considered by the trial court in granting injunctive relief were as follows: (1) a certified true copy of the
certificate of trademark registration for "Dockers and Design"; (2) a pair of DOCKERS pants bearing the "Dockers and Design"
trademark; (3) a pair of "Paddocks" pants bearing respondent's assailed logo; (4) the Trends MBL Survey Report purportedly
proving that there was confusing similarity between two marks; (5) the affidavit of one Bernabe Alajar which recounted
petitioners' prior adoption, use and registration of the "Dockers and Design" trademark; and (6) the affidavit of one Mercedes
Abad of Trends MBL, Inc. which detailed the methodology and procedure used in their survey and the results thereof. 21
 
Clinton Apparelle thereafter filed a Motion to Dismiss 22 and a Motion for Reconsideration 23 of the Order granting
the writ of preliminary injunction. Meantime, the trial court issued an Order 24 approving the bond filed by petitioners.
On 22 June 1998, the trial court required 25 the parties to file their "respective citation of
authorities/jurisprudence/Supreme Court decisions" on whether or not the trial court may issue the writ of preliminary
injunction pending the resolution of the Motion for Reconsideration and the Motion to Dismiss filed by respondent.
On 2 October 1998, the trial court denied Clinton Apparelle's Motion to Dismiss and Motion for Reconsideration in
an Omnibus Order, 26 the pertinent portions of which provide:
After carefully going over the contents of the pleadings in relation to pertinent portions of the
records, this Court is of the considered and humble view that:
On the first motion, the arguments raised in the plaintiffs' aforecited Consolidated Opposition
appears to be meritorious. Be that as it may, this Court would like to emphasize, among other things, that the
complaint states a cause of action as provided under paragraphs 1 to 18 thereof.
On the second motion, the arguments raised in the plaintiffs' aforecited Consolidated Opposition
likewise appear to be impressed with merit. Besides, there appears to be no strong and cogent reason to
reconsider and set aside this Court's Order dated June 4, 1998 as it has been shown  so far that the trademark
or logo of defendants is substantially, if not exactly, similar to plaintiffs' "DOCKERS and DESIGN"
trademark or logo as covered by BPTTT Certificate of Registration No. 46619 even as the BPTTT
Certificate of Registration No. 49579 of Clinton Apparelle, Inc. is only for the mark or word "PADDOCKS"
(see Records, p. 377) In any event, this Court had issued an Order dated June 18, 1998 for the issuance of the
writ of preliminary injunction after the plaintiffs filed the required bond of P2,500,000.00.
IN VIEW OF THE FOREGOING, the aforecited Motion To Dismiss and Motion For
Reconsideration are both DENIED for lack of merit, and accordingly, this Court's Order dated June 18, 1998
for the issuance of the writ of preliminary injunction is REITERATED so the writ of preliminary injunction
could be implemented unless the implementation thereof is restrained by the Honorable Court of Appeals or
Supreme Court. SDEITC
The writ of preliminary injunction was thereafter issued on 8 October 1998. 27
Thus, Clinton Apparelle filed with the Court of Appeals a Petition 28 for certiorari, prohibition and mandamus with
prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction, assailing the orders of the trial
court dated 15 May 1998, 4 June 1998 and 2 October 1998.
 On 20 October 1998, the Court of Appeals issued a Resolution 29 requiring herein petitioners to file their comment on
the Petition and at the same time issued the prayed-for temporary restraining order.
The appellate court rendered on 21 December 1998 its now assailed Decision granting Clinton Apparelle's petition. The
Court of Appeals held that the trial court did not follow the procedure required by law for the issuance of a temporary
restraining order as Clinton Apparelle was not duly notified of the date of the summary hearing for its issuance. Thus, the Court
of Appeals ruled that the TRO had been improperly issued. 30
The Court of Appeals also held that the issuance of the writ of preliminary injunction is questionable. In its opinion,
herein petitioners failed to sufficiently establish its material and substantial right to have the writ issued. Secondly, the Court of
Appeals observed that the survey presented by petitioners to support their contentions was commissioned by petitioners. The
Court of Appeals remarked that affidavits taken ex-parte are generally considered to be inferior to testimony given in open
court. The appellate court also considered that the injury petitioners have suffered or are currently suffering may be
compensated in terms of monetary consideration, if after trial, a final judgment shall be rendered in their favor. 31
In addition, the Court of Appeals strongly believed that the implementation of the questioned writ would effectively
shut down respondent's business, which in its opinion should not be sanctioned. The Court of Appeals thus set aside the orders
of the trial court dated 15 May 1998 and 4 June 1998, respectively issuing a temporary restraining order and granting the
issuance of a writ of preliminary injunction.
With the denial of their Motion for Reconsideration, 32 petitioners are now before this Court seeking a review of the
appellate court's Decision and Resolution. LS & Co. and LSPI claim that the Court of Appeals committed serious error in: (1)
disregarding the well-defined limits of the writ of certiorari that questions on the sufficiency of evidence are not to be resolved
in such a petition; (2) in holding that there was no confusion between the two marks; (3) in ruling that the erosion of petitioners'
trademark is not protectable by injunction; (4) in ignoring the procedure previously agreed on by the parties and which was
adopted by the trial court; and (5) in declaring that the preliminary injunction issued by the trial court will lead to the closure of
respondent's business.
In its Comment, 33 Clinton Apparelle maintains that only questions of law may be raised in an appeal
by certiorari under Rule 45 of the Rules of Court. It asserts that the question of whether the Court of Appeals erred in: (1)
disregarding the survey evidence; (2) ruling that there was no confusion between the two marks; and (c) finding that the erosion
of petitioners' trademark may not be protected by injunction, are issues not within the ambit of a petition for review
on certiorari under Rule 45. Clinton Apparelle also contends that the Court of Appeals acted correctly when it overturned the
writ of preliminary injunction issued by the trial court. It believes that the issued writ in effect disturbed the  status quo and
disposed of the main case without trial.
There is no merit in the petition.
At issue is whether the issuance of the writ of preliminary injunction by the trial court was proper and whether the
Court of Appeals erred in setting aside the orders of the trial court.
Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as an order granted at any stage of an action
prior to the judgment or final order requiring a party or a court, agency or a person to refrain from a particular act or acts.
Injunction is accepted as the strong arm of equity or a transcendent remedy to be used cautiously as it affects the respective
rights of the parties, and only upon full conviction on the part of the court of its extreme necessity. An extraordinary remedy,
injunction is designed to preserve or maintain the status quo of things and is generally availed of to prevent actual or threatened
acts until the merits of the case can be heard. 34 It may be resorted to only by a litigant for the preservation or protection of his
rights or interests and for no other purpose during the pendency of the principal action. 35 It is resorted to only when there is a
pressing necessity to avoid injurious consequences, which cannot be remedied under any standard compensation. The resolution
of an application for a writ of preliminary injunction rests upon the existence of an emergency or of a special recourse before
the main case can be heard in due course of proceedings. 36
Section 3, Rule 58, of the Rules of Court enumerates the grounds for the issuance of a preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. — A preliminary injunction may be
granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists
in restraining the commission or continuance of the act or acts complained of, or in requiring the
performance of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance, or non-performance of the act or acts complained of during
the litigation would probably work injustice to the applicant; or
 (c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is
procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant
respecting the subject of the action or proceeding, and tending to render the judgment ineffectual.
Under the cited provision, a clear and positive right especially calling for judicial protection must be shown. Injunction
is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a right not  in esse and
which may never arise, or to restrain an act which does not give rise to a cause of action. There must exist an actual
right. 37 There must be a patent showing by the complaint that there exists a right to be protected and that the acts against which
the writ is to be directed are violative of said right. 38
There are generally two kinds of preliminary injunction: (1) a prohibitory injunction which commands a party to refrain
from doing a particular act; and (2) a mandatory injunction which commands the performance of some positive act to correct a
wrong in the past. 39
The Court of Appeals did not err in reviewing proof adduced by petitioners to support its application for the issuance of
the writ. While the matter of the issuance of a writ of preliminary injunction is addressed to the sound discretion of the trial
court, this discretion must be exercised based upon the grounds and in the manner provided by law. The exercise of discretion
by the trial court in injunctive matters is generally not interfered with save in cases of manifest abuse. 40 And to determine
whether there was abuse of discretion, a scrutiny must be made of the bases, if any, considered by the trial court in granting
injunctive relief. Be it stressed that injunction is the strong arm of equity which must be issued with great caution and
deliberation, and only in cases of great injury where there is no commensurate remedy in damages. 41
 
In the present case, we find that there was scant justification for the issuance of the writ of preliminary injunction.
Petitioners anchor their legal right to "Dockers and Design" trademark on the Certificate of Registration issued in their
favor by the Bureau of Patents, Trademarks and Technology Transfer. * According to Section 138 of Republic Act No.
8293, 42 this Certificate of Registration is  prima facie evidence of the validity of the registration, the registrant's ownership of
the mark and of the exclusive right to use the same in connection with the goods or services and those that are related thereto
specified in the certificate. Section 147.1 of said law likewise grants the owner of the registered mark the exclusive right to
prevent all third parties not having the owner's consent from using in the course of trade identical or similar signs for goods or
services which are identical or similar to those in respect of which the trademark is registered if such use results in a likelihood
of confusion. cTCADI
However, attention should be given to the fact that petitioners' registered trademark consists of two elements: (1) the
word mark "Dockers" and (2) the wing-shaped design or logo. Notably, there is only one registration for both features of the
trademark giving the impression that the two should be considered as a single unit. Clinton Apparelle's trademark, on the other
hand, uses the "Paddocks" word mark on top of a logo which according to petitioners is a slavish imitation of the "Dockers"
design. The two trademarks apparently differ in their word marks ("Dockers" and "Paddocks"), but again according to
petitioners, they employ similar or identical logos. It could thus be said that respondent only "appropriates" petitioners' logo and
not the word mark "Dockers"; it uses only a portion of the registered trademark and not the whole.
Given the single registration of the trademark "Dockers and Design" and considering that respondent only uses the
assailed device but a different word mark, the right to prevent the latter from using the challenged "Paddocks" device is far from
clear. Stated otherwise, it is not evident whether the single registration of the trademark "Dockers and Design" confers on the
owner the right to prevent the use of a fraction thereof in the course of trade. It is also unclear whether the use without the
owner's consent of a portion of a trademark registered in its entirety constitutes material or substantial invasion of the owner's
right.
It is likewise not settled whether the wing-shaped logo, as opposed to the word mark, is the dominant or central feature
of petitioners' trademark — the feature that prevails or is retained in the minds of the public — an imitation of which creates the
likelihood of deceiving the public and constitutes trademark infringement. 43 In sum, there are vital matters which have yet and
may only be established through a full-blown trial. TaEIAS
From the above discussion, we find that petitioners' right to injunctive relief has not been clearly and unmistakably
demonstrated. The right has yet to be determined. Petitioners also failed to show proof that there is material and substantial
invasion of their right to warrant the issuance of an injunctive writ. Neither were petitioners able to show any urgent and
permanent necessity for the writ to prevent serious damage.
Petitioners wish to impress upon the Court the urgent necessity for injunctive relief, urging that the erosion or dilution
of their trademark is protectable. They assert that a trademark owner does not have to wait until the mark loses its
distinctiveness to obtain injunctive relief, and that the mere use by an infringer of a registered mark is already actionable even if
he has not yet profited thereby or has damaged the trademark owner.
Trademark dilution is the lessening of the capacity of a famous mark to identify and distinguish goods or services,
regardless of the presence or absence of: (1) competition between the owner of the famous mark and other parties; or (2)
likelihood of confusion, mistake or deception. Subject to the principles of equity, the owner of a famous mark is entitled to an
injunction "against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has
become famous and causes dilution of the distinctive quality of the mark." This is intended to protect famous marks from
subsequent uses that blur distinctiveness of the mark or tarnish or disparage it. 44
Based on the foregoing, to be eligible for protection from dilution, there has to be a finding that: (1) the trademark
sought to be protected is famous and distinctive; (2) the use by respondent of "Paddocks and Design" began after the petitioners'
mark became famous; and (3) such subsequent use defames petitioners' mark. In the case at bar, petitioners have yet to establish
whether "Dockers and Design" has acquired a strong degree of distinctiveness and whether the other two elements are present
for their cause to fall within the ambit of the invoked protection. The Trends MBL Survey Report which petitioners presented in
a bid to establish that there was confusing similarity between two marks is not sufficient proof of any dilution that the trial court
must enjoin.
The Court also finds that the trial court's order granting the writ did not adequately detail the reasons for the grant,
contrary to our ruling in University of the Philippines v. Hon. Catungal Jr., 45 wherein we held that:
The trial court must state its own findings of fact and cite particular law to justify grant of
preliminary injunction. Utmost care in this regard is demanded. 46
The trial court in granting the injunctive relief tersely ratiocinated that "the plaintiffs appear to be entitled to the relief
prayed for and this Court is of the considered belief and humble view that, without necessarily delving on the merits, the
paramount interest of justice will be better served if the status quo shall be maintained." Clearly, this statement falls short of the
requirement laid down by the above-quoted case. Similarly, in Developers Group of Companies, Inc. v. Court of Appeals, 47 we
held that it was "not enough" for the trial court, in its order granting the writ, to simply say that it appeared "after hearing that
plaintiff is entitled to the relief prayed for."
In addition, we agree with the Court of Appeals in its holding that the damages the petitioners had suffered or continue
to suffer may be compensated in terms of monetary consideration. As held in  Government Service Insurance System v.
Florendo: 48
. . . a writ of injunction should never have been issued when an action for damages would
adequately compensate the injuries caused. The very foundation of the jurisdiction to issue the writ of
injunction rests in the probability of irreparable injury, inadequacy of pecuniary estimation and the
prevention of the multiplicity of suits, and where facts are not shown to bring the case within these
conditions, the relief of injunction should be refused. 49
We also believe that the issued injunctive writ, if allowed, would dispose of the case on the merits as it would
effectively enjoin the use of the "Paddocks" device without proof that there is basis for such action. The prevailing rule is that
courts should avoid issuing a writ of preliminary injunction that would in effect dispose of the main case without trial.  50 There
would be a prejudgment of the main case and a reversal of the rule on the burden of proof since it would assume the proposition
which petitioners are inceptively bound to prove. 51
Parenthetically, we find no flaw in the Court of Appeals' disquisition on the consequences of the issued injunction. An
exercise of caution, we believe that such reflection is necessary to weigh the alleged entitlement to the writ  vis-à-vis its possible
effects. The injunction issued in the instant case is of a serious nature as it tends to do more than to maintain the status quo. In
fact, the assailed injunction if sustained would bring about the result desired by petitioners without a trial on the
merits. HScAEC
Then again, we believe the Court of Appeals overstepped its authority when it declared that the "alleged similarity as to
the two logos is hardly confusing to the public." The only issue brought before the Court of Appeals through
respondent's Petition under Rule 65 of the Rules of Court involved the grave abuse of discretion allegedly committed by the
trial court in granting the TRO and the writ of preliminary injunction. The appellate court in making such a statement went
beyond that issue and touched on the merits of the infringement case, which remains to be decided by the trial court. In our
view, it was premature for the Court of Appeals to declare that there is no confusion between the two devices or logos. That
matter remains to be decided on by the trial court.
Finally, we have no contention against the procedure adopted by the trial court in resolving the application for an
injunctive writ and we believe that respondent was accorded due process. Due process, in essence, is simply an opportunity to
be heard. And in applications for preliminary injunction, the requirement of hearing and prior notice before injunction may issue
has been relaxed to the point that not all petitions for preliminary injunction must undergo a trial-type hearing, it being a
hornbook doctrine that a formal or trial-type hearing is not at all times and in all instances essential to due process. Due process
simply means giving every contending party the opportunity to be heard and the court to consider every piece of evidence
presented in their favor. Accordingly, this Court has in the case of Co v. Calimag, Jr., 52 rejected a claim of denial of due
process where such claimant was given the opportunity to be heard, having submitted his counter-affidavit and memorandum in
support of his position. 53
 
After a careful consideration of the facts and arguments of the parties, the Court finds that petitioners did not
adequately prove their entitlement to the injunctive writ. In the absence of proof of a legal right and the injury sustained by the
applicant, an order of the trial court granting the issuance of an injunctive writ will be set aside for having been issued with
grave abuse of discretion. 54 Conformably, the Court of Appeals was correct in setting aside the assailed orders of the trial
court. HESAIT
WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals dated 21 December 1998 and
its Resolution dated 10 May 1999 are AFFIRMED. Costs against petitioners.
SO ORDERED.
|||  (Levi Strauss & Co. v. Clinton Apparelle Inc., G.R. No. 138900, [September 20, 2005], 507 PHIL 238-258)

SECOND DIVISION

[G.R. No. 164321. March 28, 2011.]

SKECHERS, U.S.A., INC., petitioner, vs. INTER PACIFIC INDUSTRIAL TRADING CORP., and/or INTER PACIFIC TRADING CORP. and/or
STRONG SPORTS GEAR CO., LTD., and/or STRONGSHOES WAREHOUSE and/or STRONG FASHION SHOES TRADING and/or TAN TUAN
HONG and/or VIOLETA T. MAGAYAGA and/or JEFFREY R. MORALES and/or any of its other proprietor/s, directors, officers, employees and/or
occupants of its premises located at S-7, Ed & Joe's Commercial Arcade, No. 153 Quirino Avenue, Parañaque City, respondents.
 TRENDWORKS INTERNATIONAL CORPORATION, petitioner-intervenor, vs. INTER PACIFIC INDUSTRIAL TRADING CORP. and/or INTER
PACIFIC TRADING CORP. and/or STRONG SPORTS GEAR CO., LTD., and/or STRONGSHOES WAREHOUSE and/or STRONG FASHION
SHOES TRADING and/or TAN TUAN HONG and/or VIOLETA T. MAGAYAGA and/or JEFFREY R. MORALES and/or any of its other proprietor/s,
directors, officers, employees and/or occupants of its premises located at S-7, Ed & Joe's Commercial Arcade, No. 153 Quirino Avenue, Parañaque
City, respondents.

RESOLUTION

PERALTA, J p:

For resolution are the twin Motions for Reconsideration 1 filed by petitioner and petitioner-intervenor from the Decision
rendered in favor of respondents, dated November 30, 2006. aCHDAE
At the outset, a brief narration of the factual and procedural antecedents that transpired and led to the filing of the motions is in
order.
The present controversy arose when petitioner filed with Branch 24 of the Regional Trial Court (RTC) of Manila an application
for the issuance of search warrants against an outlet and warehouse operated by respondents for infringement of trademark under Section
155, in relation to Section 170 of Republic Act No. 8293, otherwise known as the Intellectual Property Code of the Philippines. 2 In the
course of its business, petitioner has registered the trademark "SKECHERS" 3 and the trademark "S" (within an oval design) 4 with the
Intellectual Property Office (IPO).
Two search warrants 5 were issued by the RTC and were served on the premises of respondents. As a result of the raid, more
than 6,000 pairs of shoes bearing the "S" logo were seized.
Later, respondents moved to quash the search warrants, arguing that there was no confusing similarity between petitioner's
"Skechers" rubber shoes and its "Strong" rubber shoes.
On November 7, 2002, the RTC issued an Order 6 quashing the search warrants and directing the NBI to return the seized
goods. The RTC agreed with respondent's view that Skechers rubber shoes and Strong rubber shoes have glaring differences such that an
ordinary prudent purchaser would not likely be misled or confused in purchasing the wrong article.
Aggrieved, petitioner filed a petition for certiorari 7 with the Court of Appeals (CA) assailing the RTC Order. On November
17, 2003, the CA issued a Decision 8 affirming the ruling of the RTC.
Subsequently, petitioner filed the present petition 9 before this Court which puts forth the following assignment of errors:
A.  WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN CONSIDERING
MATTERS OF DEFENSE IN A CRIMINAL TRIAL FOR TRADEMARK INFRINGEMENT IN PASSING
UPON THE VALIDITY OF THE SEARCH WARRANT WHEN IT SHOULD HAVE LIMITED ITSELF TO
A DETERMINATION OF WHETHER THE TRIAL COURT COMMITTED GRAVE ABUSE OF
DISCRETION IN QUASHING THE SEARCH WARRANTS. TCaEIc
B.  WHETHER THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN FINDING THAT
RESPONDENTS ARE NOT GUILTY OF TRADEMARK INFRINGEMENT IN THE CASE WHERE THE
SOLE TRIABLE ISSUE IS THE EXISTENCE OF PROBABLE CAUSE TO ISSUE A SEARCH
WARRANT. 10
In the meantime, petitioner-intervenor filed a Petition-in-Intervention 11 with this Court claiming to be the sole licensed
distributor of Skechers products here in the Philippines.
On November 30, 2006, this Court rendered a Decision 12 dismissing the petition.
Both petitioner and petitioner-intervenor filed separate motions for reconsideration.
In petitioner's motion for reconsideration, petitioner moved for a reconsideration of the earlier decision on the following
grounds:
(a)  THIS HONORABLE COURT MUST RE-EXAMINE THE FACTS OF THIS CASE DUE TO THE
SIGNIFICANCE AND REPERCUSSIONS OF ITS DECISION.
(b)  COMMERCIAL QUANTITIES OF THE SEIZED ITEMS WITH THE UNAUTHORIZED REPRODUCTIONS
OF THE "S" TRADEMARK OWNED BY PETITIONER WERE INTENDED FOR DISTRIBUTION IN
THE PHILIPPINE MARKET TO THE DETRIMENT OF PETITIONER — RETURNING THE GOODS TO
RESPONDENTS WILL ADVERSELY AFFECT THE GOODWILL AND REPUTATION OF
PETITIONER.
(c)  THE SEARCH WARRANT COURT AND THE COURT OF APPEALS BOTH ACTED WITH GRAVE ABUSE
OF DISCRETION.
 (d)  THE SEARCH WARRANT COURT DID NOT PROPERLY RE-EVALUATE THE EVIDENCE PRESENTED
DURING THE SEARCH WARRANT APPLICATION PROCEEDINGS.
(e)  THE SOLID TRIANGLE CASE IS NOT APPLICABLE IN THIS CASE, AS IT IS BASED ON A DIFFERENT
FACTUAL MILIEU. PRELIMINARY FINDING OF GUILT (OR ABSENCE THEREOF) MADE BY THE
SEARCH WARRANT COURT AND THE COURT OF APPEALS WAS IMPROPER.
(f)  THE SEARCH WARRANT COURT OVERSTEPPED ITS DISCRETION. THE LAW IS CLEAR. THE
DOMINANCY TEST SHOULD BE USED.
(g)  THE COURT OF APPEALS COMMITTED ERRORS OF JURISDICTION. 13
On the other hand, petitioner-intervenor's motion for reconsideration raises the following errors for this Court's consideration,
to wit:
(a)  THE COURT OF APPEALS AND THE SEARCH WARRANT COURT ACTED CONTRARY TO LAW AND
JURISPRUDENCE IN ADOPTING THE ALREADY-REJECTED HOLISTIC TEST IN DETERMINING
THE ISSUE OF CONFUSING SIMILARITY; dctai
(b)  THE COURT OF APPEALS AND THE SEARCH WARRANT COURT ACTED CONTRARY TO LAW IN
HOLDING THAT THERE IS NO PROBABLE CAUSE FOR TRADEMARK INFRINGEMENT; AND
(c)  THE COURT OF APPEALS SANCTIONED THE TRIAL COURT'S DEPARTURE FROM THE USUAL AND
ACCEPTED COURSE OF JUDICIAL PROCEEDINGS WHEN IT UPHELD THE QUASHAL OF THE
SEARCH WARRANT ON THE BASIS SOLELY OF A FINDING THAT THERE IS NO CONFUSING
SIMILARITY. 14
A perusal of the motions submitted by petitioner and petitioner-intervenor would show that the primary issue posed by them
dwells on the issue of whether or not respondent is guilty of trademark infringement.
After a thorough review of the arguments raised herein, this Court reconsiders its earlier decision.
The basic law on trademark, infringement, and unfair competition is Republic Act (R.A.) No. 8293. Specifically, Section 155
of R.A. No. 8293 states:
Remedies; Infringement. — Any person who shall, without the consent of the owner of the registered mark:
155.1.  Use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered
mark or the same container or a dominant feature thereof in connection with the sale, offering for sale,
distribution, advertising of any goods or services including other preparatory steps necessary to carry out the
sale of any goods or services on or in connection with which such use is likely to cause confusion, or to
cause mistake, or to deceive; or
155.2.  Reproduce, counterfeit, copy or colorably imitate a registered mark or a dominant feature
thereof and apply such reproduction, counterfeit, copy or colorable imitation to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale,
offering for sale, distribution, or advertising of goods or services on or in connection with which such use is
likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action for infringement
by the registrant for the remedies hereinafter set forth: Provided, That the infringement takes place at the
moment any of the acts stated in Subsection 155.1 or this subsection are committed regardless of whether there
is actual sale of goods or services using the infringing material. 15 HDaACI
The essential element of infringement under R.A. No. 8293 is that the infringing mark is likely to cause confusion. In
determining similarity and likelihood of confusion, jurisprudence has developed tests — the Dominancy Test and the Holistic or Totality
Test. The Dominancy Test focuses on the similarity of the prevalent or dominant features of the competing trademarks that might cause
confusion, mistake, and deception in the mind of the purchasing public. Duplication or imitation is not necessary; neither is it required
that the mark sought to be registered suggests an effort to imitate. Given more consideration are the aural and visual impressions created
by the marks on the buyers of goods, giving little weight to factors like prices, quality, sales outlets, and market segments. 16
In contrast, the Holistic or Totality Test necessitates a consideration of the entirety of the marks as applied to the products,
including the labels and packaging, in determining confusing similarity. The discerning eye of the observer must focus not only on the
predominant words, but also on the other features appearing on both labels so that the observer may draw conclusion on whether one is
confusingly similar to the other. 17
Relative to the question on confusion of marks and trade names, jurisprudence has noted two (2) types of confusion,  viz.: (1)
confusion of goods (product confusion), where the ordinarily prudent purchaser would be induced to purchase one product in the belief
that he was purchasing the other; and (2) confusion of business (source or origin confusion), where, although the goods of the parties are
different, the product, the mark of which registration is applied for by one party, is such as might reasonably be assumed to originate
with the registrant of an earlier product, and the public would then be deceived either into that belief or into the belief that there is some
connection between the two parties, though inexistent. 18
 Applying the Dominancy Test to the case at bar, this Court finds that the use of the stylized "S" by respondent in its Strong
rubber shoes infringes on the mark already registered by petitioner with the IPO. While it is undisputed that petitioner's stylized "S" is
within an oval design, to this Court's mind, the dominant feature of the trademark is the stylized "S," as it is precisely the stylized "S"
which catches the eye of the purchaser. Thus, even if respondent did not use an oval design, the mere fact that it used the same stylized
"S", the same being the dominant feature of petitioner's trademark, already constitutes infringement under the Dominancy Test.  
This Court cannot agree with the observation of the CA that the use of the letter "S" could hardly be considered as highly
identifiable to the products of petitioner alone. The CA even supported its conclusion by stating that the letter "S" has been used in so
many existing trademarks, the most popular of which is the trademark "S" enclosed by an inverted triangle, which the CA says is
identifiable to Superman. Such reasoning, however, misses the entire point, which is that respondent had used a stylized "S," which is
the same stylized "S" which petitioner has a registered trademark for. The letter "S" used in the Superman logo, on the other hand, has a
block-like tip on the upper portion and a round elongated tip on the lower portion. Accordingly, the comparison made by the CA of the
letter "S" used in the Superman trademark with petitioner's stylized "S" is not appropriate to the case at bar.
Furthermore, respondent did not simply use the letter "S," but it appears to this Court that based on the font and the size of the
lettering, the stylized "S" utilized by respondent is the very same stylized "S" used by petitioner; a stylized "S" which is unique and
distinguishes petitioner's trademark. Indubitably, the likelihood of confusion is present as purchasers will associate the respondent's use
of the stylized "S" as having been authorized by petitioner or that respondent's product is connected with petitioner's business.
Both the RTC and the CA applied the Holistic Test in ruling that respondent had not infringed petitioner's trademark. For its
part, the RTC noted the following supposed dissimilarities between the shoes, to wit:
1.  The mark "S" found in Strong Shoes is not enclosed in an "oval design."
2.  The word "Strong" is conspicuously placed at the backside and insoles.
3.  The hang tags and labels attached to the shoes bears the word "Strong" for respondent and "Skechers U.S.A." for
private complainant. CTHDcE
4.  Strong shoes are modestly priced compared to the costs of Skechers Shoes. 19
While there may be dissimilarities between the appearances of the shoes, to this Court's mind such dissimilarities do not
outweigh the stark and blatant similarities in their general features. As can be readily observed by simply comparing petitioner's
Energy 20 model and respondent's Strong 21 rubber shoes, respondent also used the color scheme of blue, white and gray utilized by
petitioner. Even the design and "wavelike" pattern of the midsole and outer sole of respondent's shoes are very similar to petitioner's
shoes, if not exact patterns thereof. At the side of the midsole near the heel of both shoes are two elongated designs in practically the
same location. Even the outer soles of both shoes have the same number of ridges, five at the back and six in front. On the side of
respondent's shoes, near the upper part, appears the stylized "S," placed in the exact location as that of the stylized "S" on petitioner's
shoes. On top of the "tongue" of both shoes appears the stylized "S" in practically the same location and size. Moreover, at the back of
petitioner's shoes, near the heel counter, appears "Skechers Sport Trail" written in white lettering. However, on respondent's shoes
appears "Strong Sport Trail" noticeably written in the same white lettering, font size, direction and orientation as that of petitioner's
shoes. On top of the heel collar of petitioner's shoes are two grayish-white semi-transparent circles. Not surprisingly, respondent's shoes
also have two grayish-white semi-transparent circles in the exact same location.
Based on the foregoing, this Court is at a loss as to how the RTC and the CA, in applying the holistic test, ruled that there was
no colorable imitation, when it cannot be any more clear and apparent to this Court that there is colorable imitation. The dissimilarities
between the shoes are too trifling and frivolous that it is indubitable that respondent's products will cause confusion and mistake in the
eyes of the public. Respondent's shoes may not be an exact replica of petitioner's shoes, but the features and overall design are so similar
and alike that confusion is highly likely.
In Converse Rubber Corporation v. Jacinto Rubber & Plastic Co., Inc., 22 this Court, in a case for unfair competition, had
opined that even if not all the details are identical, as long as the general appearance of the two products are such that any ordinary
purchaser would be deceived, the imitator should be liable, to wit:
From said examination, We find the shoes manufactured by defendants to contain, as found by the trial court,
practically all the features of those of the plaintiff Converse Rubber Corporation and manufactured, sold or marketed by
plaintiff Edwardson Manufacturing Corporation, except for their respective brands, of course. We fully agree with the
trial court that "the respective designs, shapes, the colors of the ankle patches, the bands, the toe patch and the soles of
the two products are exactly the same . . . (such that) at a distance of a few meters, it is impossible to distinguish
"Custombuilt" from "Chuck Taylor." These elements are more than sufficient to serve as basis for a charge of unfair
competition. Even if not all the details just mentioned were identical, with the general appearances alone of the two
products, any ordinary, or even perhaps even a not too perceptive and discriminating customer could be deceived, and,
therefore, Custombuilt could easily be passed off for Chuck Taylor. Jurisprudence supports the view that under such
circumstances, the imitator must be held liable. . . . 23
Neither can the difference in price be a complete defense in trademark infringement. In  McDonald's Corporation v. L.C. Big
Mak Burger, Inc., 24 this Court held:
Modern law recognizes that the protection to which the owner of a trademark is entitled is not limited to
guarding his goods or business from actual market competition with identical or similar products of the parties, but
 extends to all cases in which the use by a junior appropriator of a trade-mark or trade-name is likely to lead to a
confusion of source, as where prospective purchasers would be misled into thinking that the complaining party has
extended his business into the field (see 148 ALR 56 et seq; 53 Am. Jur. 576) or is in any way connected with the
activities of the infringer; or when it forestalls the normal potential expansion of his business (v. 148 ALR 77, 84; 52
Am. Jur. 576, 577). . . . 25 SIAEHC
Indeed, the registered trademark owner may use its mark on the same or similar products, in different segments of the market,
and at different price levels depending on variations of the products for specific segments of the market.  26 The purchasing public might
be mistaken in thinking that petitioner had ventured into a lower market segment such that it is not inconceivable for the public to think
that Strong or Strong Sport Trail might be associated or connected with petitioner's brand, which scenario is plausible especially since
both petitioner and respondent manufacture rubber shoes.
Withal, the protection of trademarks as intellectual property is intended not only to preserve the goodwill and reputation of the
business established on the goods bearing the mark through actual use over a period of time, but also to safeguard the public as
consumers against confusion on these goods. 27 While respondent's shoes contain some dissimilarities with petitioner's shoes, this Court
cannot close its eye to the fact that for all intents and purpose, respondent had deliberately attempted to copy petitioner's mark and
overall design and features of the shoes. Let it be remembered, that defendants in cases of infringement do not normally copy but only
make colorable changes. 28 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. 29
WHEREFORE, premises considered, the Motion for Reconsideration is GRANTED. The Decision dated November 30, 2006
is RECONSIDERED and SET ASIDE.
SO ORDERED.