G.R. No.
L-32747 November 29, 1984 At the pre-trial on May 5, 1965, the following admissions were made: (1) That the
FRUIT OF THE LOOM, INC., petitioner,  it does not bear the notice 'Reg. Phil. Patent Off.', and (2) That the trademark FRUIT
vs.
COURT OF APPEALS and GENERAL GARMENTS CORPORATION, respondents.
Lichauco, Picazo & Agcaoli Law Office for petitioner.
MAKASIAR, J.:
This is a petition for review on certiorari of the decision dated October 8, 1970 of the
former Court of Appeals reversing the decision of the defunct Court of First Instance
of Manila, Branch XIV, ordering the cancellation of private respondent's registration of
the trademark FRUIT FOR EVE, enjoining it permanently from using trademark and
ordering it to pay herein petitioner P10,000.00 as attorney's fees.
Petitioner, a corporation duly organized and existing under the laws of the State of
Rhode Island, United States of America, is the registrant of a trademark, FRUIT OF
THE LOOM, in the Philippines Patent Office and was issued two Certificates of
Registration Nos. 6227 and 6680, on November 29, 1957 and July 26, 1958,
respectively. The classes of merchandise covered by Registration Certificate No.
6227 are, among others, men's, women's and children's underwear, which includes
women's panties and which fall under class 40 in the Philippine Patent Office's
classification of goods. Registration Certificate No. 6680 covers knitted, netted and
textile fabrics.
Private respondent, a domestic corporation, is the registrant of a trademark FRUIT
FOR EVE in the Philippine Patent Office and was issued a Certificate of Registration
No. 10160, on January 10, 1963 covering garments similar to petitioner's products
like women's panties and pajamas.
On March 31, 1965 petitioner filed before the lower court, a complaint for infringement
of trademark and unfair competition against the herein private respondent. Petitioner
principally alleged in the complaint that private respondent's trademark FRUIT FOR
EVE is confusingly similar to its trademark FRUIT OF THE LOOM used also on
women's panties and other textile products. Furthermore, it was also alleged therein
that the color get-up and general appearance of private respondent's hang tag
consisting of a big red apple is a colorable imitation to the hang tag of petitioner.
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.
trademark FRUIT OF THE LOOM has been registered with the Bureau of Patents and
FOR EVE has been registered with the Bureau of Patents and it bears the notice
"Reg. Phil. Patent Off." and (3) That at the time of its registration, plaintiff filed no
opposition thereto.
After trial, judgment was rendered by the lower court in favor of herein petitioner, the
dispositive portion of which reads as follows:
Judgment is, therefore, rendered ordering the Bureau of Patents to
cancel the registration of the Trademark "Fruit for Eve",
permanently enjoining Defendant from using the trademark "Fruit
for Eve", ordering Defendant to pay plaintiff the sum of P10,000.00
as attorney's fees and to pay the costs.
Both parties appealed to the former Court of Appeals, herein petitioner's appeal being
centered on the failure of the trial court to award damages in its favor. Private
respondent, on the other hand, sought the reversal of the lower court's decision.
On October 8, 1970, the former Court of Appeals, as already stated, rendered its
questioned decision reversing the judgment of the lower court and dismissing herein
petitioner's complaint.
Petitioner's motion for reconsideration having been denied, the present petition was
filed before this Court.
The first and second arguments advanced by petitioner are that the respondent court
committed an error in holding that the word FRUIT, being a generic word, is not
capable of exclusive appropriation by petitioner and that the registrant of a trademark
is not entitled to the exclusive use of every word of his mark. Otherwise stated,
petitioner argues that the respondent court committed an error in ruling that petitioner
cannot appropriate exclusively the word FRUIT in its trademark FRUIT OF THE
LOOM.
The third and fourth arguments submitted by petitioner which We believe is the core
of the present controversy, are that the respondent court erred in holding that there is
no confusing similarity in sound and appearance between the two trademarks in
question. According to petitioner, the prominent and dominant features in both of
petitioner's and private respondent's trademark are the word FRUIT and the big red
apple design; that ordinary or average purchasers upon seeing the word FRUIT and
the big red apple in private respondent's label or hang tag would be led to believe that
the latter's products are those of the petitioner, The resolution of these two assigned
errors in the negative will lay to rest the matter in litigation and there is no need to
touch on the other issues raised by petitioner. Should the said questions be resolved
in favor of petitioner, then the other matters may be considered.
Petitioner, on its fifth assigned error, blames the former Court of Appeals for not
touching the question of the fraudulent registration of private respondent's trademark
FRUIT FOR EVE. As may be gleaned from the questioned decision, respondent court
did not pass upon the argument of petitioner that private respondent obtained the
registration of its trademark thru fraud or misrepresentation because of the said
court's findings that there is no confusing similarity between the two trademarks in
question. Hence, said court has allegedly nothing to determine as to who has the right
to registration because both parties have the right to have their respective trademarks
registered.
Lastly, petitioner asserts that respondent court should have awarded damages in its
favor because private respondent had clearly profited from the infringement of the
former's trademark.
The main issue involved in this case is whether or not private respondent's trademark
FRUIT FOR EVE and its hang tag are confusingly similar to petitioner's trademark
FRUIT OF THE LOOM and its hang tag so as to constitute an infringement of the
latter's trademark rights and justify the cancellation of the former.
In cases involving infringement of trademark brought before this Court it has been
consistently held that there is infringement of trademark when the use of the mark
involved would be likely to cause confusion or mistake in the mind of the public or to
deceive purchasers as to the origin or source of the commodity (Co Tiong Sa vs.
Director of Patents, 95 Phil. 1; Alhambra Cigar & Cigarette Co. vs. Mojica, 27 Phil.
266; Sapolin Co. vs. Balmaceda, 67 Phil. 705; La Insular vs. Jao Oge, 47 Phil. 75).
In cases of this nature, there can be no better evidence as to whether there is a
confusing similarity in the contesting trademarks than the labels or hang tags
themselves. A visual presentation of the labels or hang tags is the best argument for
one or the other, hence, We are reproducing hereunder pictures of the hang tags of
the products of the parties to the case. The pictures below 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:
1. The shape of petitioner's hang tag is round with a base that looks
like a paper rolled a few inches in both ends; while that of private
respondent is plain rectangle without any base.
2. The designs differ. Petitioner's trademark is written in almost
semi-circle while that of private respondent is written in straight line
in bigger letters than petitioner's. Private respondent's tag has only
an apple in its center but that of petitioner has also clusters of
grapes that surround the apple in the center.
3. The colors of the hang tag are also very distinct from each other.
Petitioner's hang tag is fight brown while that of respondent is pink
with a white colored center piece. The apples which are the only
similarities in the hang tag are differently colored. Petitioner's apple
is colored dark red, while that of private respondent is light red.
The similarities of the competing trademarks in this case are completely lost in the
substantial differences in the design and general appearance of their 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.
CONRAD AND COMPANY, INC., petitioner,  On September 7, 1990, FITRITE assigned its trademark
vs.
HON. COURT OF APPEALS, FITRITE INC., and VICTORIA BISCUITS CO.,
INC., respondents.
VITUG, J.:
In an Amended Decision, dated 20 April 1994, the Court of Appeals reversed  an
order of the Regional Trial Court ("RTC") which dismissed Civil Case No. 91-3119 for
"Injunction with Damages with Prayer for Preliminary Injunction" filed by herein private
respondents Fitrite, Inc., and Victoria Biscuits Co., Inc., against petitioner Conrad and
Company, Inc.
The RTC, acting on a motion to dismiss filed by petitioner, ordered the dismissal of
the complaint. Accordingly, for purposes of this review, the facts alleged in the
complaint, narrated by the appellate court and hereunder reproduced, should be
deemed hypothetically admitted.
. . . Plaintiffs appellants FITRITE, INC. and VICTORIA BISCUIT
CO., INC. [private respondents here], both domestic corporations,
are engaged in the business of manufacturing, selling and
distributing biscuits and cookies bearing the trademark
"SUNSHINE" in the Philippines. Defendant CONRAD AND
COMPANY [petitioner here] is also engaged in the business of
importing, selling and distributing biscuits and cookies in the
Philippines.
Sometime in April 1982, plaintiff FITRITE filed in the Bureau of
Patents, Trademarks and Technology Transfer (hereto referred as
BPTTT) applications for registration of the trademark "SUNSHINE,"
both in the Supplemental and Principal Registers, to be used on
biscuits and cookies. Since March 31, 1981 FITRITE had
exclusively used this trademark in the concept of owner on its
biscuits and cookies. On May 20, 1983  demand was ignored. Being acts of infringement and unfair
FITRITE's application for this trademark in the Supplemental
Register was approved by the BPTTT and FITRITE was issued a
Certificate of Registration No. SR-6217 for a term of 20 years from
the date of approval. On March 22, 1990 FITRITE's application for
the same trademark in the Principal Registerwas approved by
BPTTT and FITRITE was issued a Certificate of Registration No.
47590 for a term of 20 years from said date of approval. On June
28, 1984 FITRITE authorized its sister company, co-plaintiff
VICTORIA BISCUIT CO., to use this trademark on its biscuits and
cookies, as well as to manufacture, promote, sell and distribute
products bearing said trademark.
"SUNSHINE AND DEVICE LABEL," together with its interest and
business goodwill to said VICTORIA BISCUIT. From the time
FITRITE was issued the Certificate of Registration for this
trademark on May 20, 1983 up to the filing of the complaint a
quoFITRITE and VICTORIA BISCUIT have been manufacturing,
selling and distributing on a massive scale biscuits and cookies
bearing this trademark; so that through the years of extensive
marketing of plaintiffs' biscuits and cookies with this trademark,
their products have become popularly known and enjoyed wide
acceptability in Metro Manila and in the provinces.
Then sometime in June 1990, through the affidavit executed on
May 30, 1990 by defendant CONRAD's own Import Manager and
Executive Assistant by the name of Raul Olaya, plaintiffs
succeeded in tracing and discovered that CONRAD had been
importing, selling and distributing biscuits and cookies, and other
food items bearing this trademark in the Philippines. Although
CONRAD had never before been engaged in the importation, sale
and distribution of products similar to those of plaintiffs, on April 18,
1988 CONRAD was suddenly designated exclusive importer and
dealer of the products of "Sunshine Biscuits, Inc." for sale in the
Philippine market; and on April 21, 1988, per the affidavit of said
Raul Olaya, CONRAD made its first importation, which was
continuously repeated up to the present (May 30, 1990 [date of the
affidavit]), altogether consisting of 51,575 cartons and amounting to
$579,224.35.
Those acts of CONRAD, done without plaintiffs' consent, were
deliberately calculated to mislead and deceive the purchasers by
making them believe that its (CONRAD'S) "Sunshine" products had
originated from plaintiffs and thereby inducing them to patronize
those products, all to the damage and prejudice of both the
purchasing public and plaintiffs. Through their counsel, plaintiffs
addressed a letter to CONRAD demanding, among other things,
that it cease and desist from continuing with those acts, but the
competition in violation of plaintiffs' rights, plaintiffs can validly avail
themselves of the remedies against infringement under Sec. 23 of
Republic Act No. 166, as amended, as well as of the remedies
against unfair competition under 
Sec. 29 of the same statute.1
In seeking the dismissal of the complaint filed by private respondents with the trial
court, petitioner invoked, among other grounds, litis pendentia, the doctrine of primary
jurisdiction and failure to state a cause of action.
The trial court, agreeing with petitioner, granted the motion to dismiss the complaint in
an Order, dated 26 February 1992, reading thusly:
 The Court agrees with defendant that internationally accepted 2. No evidence whatever had
trademarks enjoy protection under Philippine laws. Defendant been introduced before the
having been granted distributorship by Sunshine Biscuits USA over outright dismissal, despite the
Philippine territory it follows that the resolution of the issue with fact that the factual issues
respect to the ownership of Sunshine Biscuits which is the basis of involved in CONRAD's
plaintiffs' claim is lodged under the exclusive jurisdiction of the "affirmative defense" were
BPTTT.The action filed by defendant's principal in whose name the whether the "SUNSHINE"
trademark "SUNSHINE BISCUITS" is  trademark has been registered
alleged to be registered in the United States should be considered in the United States of America
as including defendant Conrad and Company, Inc., it being the as claimed by CONRAD; if so
beneficiary/agent/assignee of said Sunshine Biscuits, Inc. Thus, the registered, whether such
Court finds the ground of forum shopping applicable to the case at registration antedated the
bar. It cannot also be denied that there is another action pending registered trademark of
between the same parties for the same cause. Plaintiffs, therefore, FITRITE in the Philippines;
should not have filed this case with this court. It must, therefore, be whether Sunshine Biscuits,
summarily dismissed. The ground of  Inc., CONRAD's principal, is
litis pendentia is no doubt meritorious. The doctrine of primary the actual registrant thereof;
jurisdiction should be made to apply in this case considering that and whether CONRAD is truly
the BPTTT had already acquired jurisdiction over the suit brought an agent of Sunshine Biscuits,
by defendant's principal against the plaintiffs involving the right of Inc. who is protected by the
plaintiffs to use said trademark. No doubt the BPTTT is better alleged American "SUNSHINE"
situated, considering its experience and special knowledge to trademark and therefore vested
determine the matters of fact involved. Indeed, the rulings laid down with the legal capacity to raise
by the Supreme Court on the point is along this trend. such "affirmative defense" in
the action a quo; etc.; and
WHEREFORE, premises considered, the Motion To Dismiss filed
by defendant is hereby GRANTED. The instant case filed by 3. Unless and until FITRITE's
plaintiffs is hereby ordered DISMISSED.2 (Emphasis ours) certificates both in the
Supplemental and Principal
Unsuccessful in their attempt to have the order reconsidered, private respondents Registers as registrant of said
brought the case to the Court of Appeals (CA-G.R. CV No. 38822). "SUNSHINE" trademark are
cancelled by BPTTT, or so long
as said "SUNSHINE"
In an amended decision, dated 20 April 1994, the appellate court reversed the order trademark has not been
of the trial court and ordered the reinstatement of the case, holding, in part, thusly: successfully proved by
CONRAD in the action 
1. It was a motion to dismiss a quo as belonging to
that CONRAD filed instead of Sunshine Biscuits, Inc. or so
an answer where its long as said trademark has not
"affirmative defense" could been successfully proved by
have been alleged and later Sunshine Biscuits, Inc. in the
raised in a motion for cancellation proceeding before
preliminary hearing for BPTTT as belonging to it
reception of evidence and not, (Sunshine Biscuits), for all legal
as CONRAD did, raise such intents and purposes the
defense in a mere motion to trademark belongs to FITRITE
dismiss, although such defense and all those acts of importing,
involved factual matters selling and distributing by
outside of the allegations CONRAD constitute
contained in the complaint; infringement as defined in said
 Sec. 22 of Republic Act No.
166, as amended.
xxx xxx xxx
In sum, we find the appeal impressed with merit, considering that
FITRITE is the registrant of the "SUNSHINE" trademark in the
Philippines; that CONRAD's claim that its principal, Sunshine
Biscuits, Inc., is the registrant of a "SUNSHINE" trademark in the
United States of America is a mere allegation still subject to proof;
that there is no identity of causes of action and because the cause
before BPTTT is the cancellability of FITRITE's registration while
the cause in the case a quo is infringement by CONRAD of said
"SUNSHINE" trademark of FITRITE; that there is implied admission
that CONRAD has been importing, selling and distributing biscuits,
cookies and other food items bearing said "SUNSHINE" trademark
without FITRITE's consent; that so long as the cancellation
proceeding remains pending in BPTTT, said "SUNSHINE"
trademark belongs exclusively to FITRITE in the Philippines, and
any person using it without FITRITE's consent is guilty of
infringement.
WHEREFORE, the Court hereby:
(1) SETS ASIDE the appealed order dated February 26, 1992
dismissing the complaint a quo;
(2) REINSTATES the complaint;
(3) ORDERS defendant Conrad and Company, Inc. to file its
answer within the reglementary period from receipt hereof;
(4) ORDERS the lower court to proceed with the action a quo,
although for a good cause shown the lower court, in its sound
discretion, may suspend the action pending outcome of the
cancellation proceeding between Sunshine Biscuits, Inc. and Fitrite,
Inc. in Inter Partes Case  Inc. in inter partes Case No. 3397 and 3739 before BPTTT.4
No. 3397 before BPTTT, subject to the condition provided for in No.
(5) below;
(5) ORDERS defendant-appellee Conrad and Company, Inc. to
desist and refrain from importing, manufacturing, selling and
distributing in the Philippines any goods bearing the trademark
"SUNSHINE & DEVICE LABEL" registered in FITRITE's name
pending final decision in the action a quo, it being understood that
this order, to effect such desistance and enjoin defendant-appellee
from the aforesaid activities, shall be considered as the Writ of
Injunction itself and an integral part of this Amended Decision.
No pronouncement as to costs.
SO ORDERED.3 (Emphasis ours.)
In the instant petition for review, which has additionally prayed for a writ of preliminary
injunction or for a temporary restraining order, petitioner tells us that the appellate
court has erred —
1. When it ordered the issuance of a writ of preliminary injunction,
upon private respondents, posting of a bond in the sum of
P10,000.00, despite the pendency of the cancellation proceedings
in Inter Partes case Nos. 3397 and 3739, and in subsequently
amending its decision by issuing the writ of preliminary injunction
itself.
2. When respondent court failed to apply and totally disregarded
the provisions of the Paris Convention for the protection of
industrial property, as well as the memorandum of the Minister of
Trade, dated November 20, 1980.
3. In holding that the doctrine of primary jurisdiction by the Bureau
of Patents, Trademarks and Technology Transfer (BPTTT) is not
applicable in this case, and in further holding that the issues
involved in this case is not whether the "SUNSHINE" trademark in
question is registerable or cancellable.
4. Respondent court erred in holding that the ground of litis
pendentia under the Rules of Court does not apply in this case for
the reason that the cause of action in the cancellation proceedings
before the BPTTT is not the same as the cause of action in the
case a quo.
5. In ordering the lower court to proceed with the action a quo,
although for a good cause shown the lower court, in its sound
discretion, may suspend the action pending outcome of the
cancellation proceeding between Sunshine Biscuits, Inc. and Fitrite,
The petition was given due course; however, neither a writ of preliminary injunction
nor a restraining order was issued by this Court.
Unadorned, the issues would revolve simply around the question of whether or not
the Court of Appeals committed reversible error (1) in allowing the trial court to
proceed with the case for "injunction with damages" filed by private respondents
notwithstanding the pendency of an administrative case for the cancellation of the
former's trademark filed by supposedly "petitioner's principal" with the Bureau of
Patents, Trademarks and Technology Transfer ("BPTTT"); and (2) in meanwhile
issuing an injunction order against petitioner.
We find for private respondents.
The assailed amended decision of the appellate court reinstated the complaint for
"Injunction with Damages with Prayer for Preliminary Injunction" filed by private
respondents with the trial court and ordered petitioner to file its answer. The appellate
court enjoined petitioner in the meantime from importing, manufacturing, selling and
distributing in the Philippines goods bearing the trademark "Sunshine and Device
Label" duly registered with BPTTT in private respondents' name.
Petitioner, invoking the case of Developers Group of Companies vs.  Court of
Appeals (219 SCRA 715), contends that the "Petitions for Cancellation" of Fitrite's
Certificate of Registration No. SR-6217 and No. 47590 in the Supplemental Register
and the Principal Register, respectively, which Sunshine Biscuits, Inc., of the United
States of America filed in 1989 and in 1990 (docketed Inter Partes Case No. 3397
and 3739) with BPTTT cast a cloud of doubt on private respondents' claim of
ownership and exclusive right to the use of the trademark "Sunshine." Considering
that this matter is at issue before the BPTTT, which has primary jurisdiction over the
case, petitioner argues, an injunctive relief from any court would be precipitate and
improper.
The appellate court, in disposing of petitioner's argument, points out:
Notwithstanding those provisions, it is CONRAD's contention —
relying on the ruling in Industrial Enterprises, Inc.  vs. Court of
Appeals (G.R. No. 88550, 184 SCRA 426 [1990]) — that, because
technical matters or intricate issues of fact regarding the ownership
of the trademark in question are involved, its determination requires
the expertise, specialized skills and knowledge of the proper
administrative body, which is BPTTT, which has the primary
jurisdiction over the action a quo; and therefore the trial court
should, and as it correctly did, yield its jurisdiction to BPTTT.
The trial court erred in adopting such fallacious argument. The
issue involved in the action a quo is not whether the "SUNSHINE"
trademark in question is registerable or cancellable — which is the
issue pending in BPTTT that may be technical in nature requiring
"expertise, specialized skills and knowledge" — since the
trademark has already been registered in both the Supplemental
and Principal Registers of BPTTT in the name of FITRITE; actually,
the issue involved in the action a quo is whether CONRAD's acts of
importing, selling and distributing biscuits, cookies and other food
items bearing said registered "SUNSHINE" trademark in the
Philippines without the consent of its registrant (FITRITE) constitute
infringement thereof in contemplation of Sec. 22 of Republic Act
No. 166, as amended. Under Sec. 22, the elements that constitute
infringement are simply (1) the use by any person, without the
consent of the registrant, (2) of any registered mark or trade-name
in connection with the sale, business or services, among other
things, bearing such registered mark or trade-name. This, clearly, is
a factual question that does not require any specialized skill and
knowledge for resolution to justify the exercise of primary
jurisdiction by BPTTT.
But, even assuming — which is not the case — that the issue
involved here is technical in nature requiring specialized skills and
knowledge, still Industrialized Enterprises does not authorize the
outright dismissal of a case originally cognizable in the courts; what
it says is where primary jurisdiction comes into play in a case "the
judicial process is suspended pending referral of such issues to the
administrative body for its view.5
We cannot see any error in the above disquisition. It might be mentioned that while an
application for the administrative cancellation of a registered trademark on any of the
grounds enumerated in Section 176 of Republic Act No. 166, as amended, otherwise
known as the Trade-Mark Law, falls under the exclusive cognizance of BPTTT (Sec.
19, Trade-Mark Law), an action, however, for infringement or unfair competition, as
well as the remedy of injunction and relief for damages, is explicitly and
unquestionably within the competence and jurisdiction of ordinary courts.
Private respondents are the holder of Certificate of Registration No. 47590 (Principal
Register) for the questioned trademark. In Lorenzana vs.  Macagba, 154 SCRA 723,
cited with approval in Del Monte Corporation vs.  Court of Appeals, 181 SCRA 410,
we have declared that registration in the Principal Register gives rise to a
presumption of validity of the registration and of the registrant's ownership and right to
the exclusive use of the mark. It is precisely such a registration that can serve as the
basis for an action for infringement.7 An invasion of this right entitles the registrant to
court protection and relief. Section 23 and Section 27, Chapter V, of the Trade-Mark
Law provides:
Sec. 23. Actions, and damages and injunction for infringement. —
Any person entitled to the exclusive use of a registered mark or
trade-name may recover damages in a civil action from any person
who infringes his rights, and the measure of the damages suffered
shall be either the reasonable profit which the complaining party
would have made, had the defendant not infringe his said rights, or
the profit which the defendant actually made out of the
infringement, or in the event such measure of damages cannot be
readily ascertained with reasonable certainty, then the court may
award as damages a reasonable percentage based upon the
amount of gross sales of the defendant or the value of the services
in connection with which the mark or trade-name was used in the
infringement of the rights of the complaining party. In cases where
actual intent to mislead the public or to defraud the complaining
party shall be shown, in the discretion of the court, the damages
may be doubled.
The complaining party, upon proper showing, may also be granted
injunction.
 Sec. 27. Jurisdiction of [Regional Trial Court]. All actions under this All given, we find no reversible error on the part of the appellate court in its appealed
Chapter and Chapters VI and VII hereof shall be brought before the decision.
proper [Regional Trial Court].
In closing, the Court would urge the Bureau of Patents, Trademarks and Technology
Surely, an application with BPTTT for an administrative cancellation of a registered Transfer to resolve with dispatch the administrative cases (Inter Partes Case No.
trade mark cannot per se have the effect of restraining or preventing the courts from 3397 and No. 3739) referred to in this decision.
the exercise of their lawfully conferred jurisdiction. A contrary rule would unduly
expand the doctrine of primary jurisdiction which, simply expressed, would merely WHEREFORE, the petition for review is DENIED for lack of merit, and the questioned
behoove regular courts, in controversies involving specialized disputes, to defer to the amended decision of the Court of Appeals is AFFIRMED. Costs against petitioner.
findings of resolutions of administrative tribunals on certain technical matters. This
rule, evidently, did not escape the appellate court for it likewise decreed that for "good
cause shown, the lower court, in its sound discretion, may suspend the action
pending outcome of the cancellation proceedings" before BPTTT.

Needless to say, we cannot at this stage delve into the merits of the
cancellation case. In this instance, the sole concern, outside of the
jurisdictional aspect of the petition hereinbefore discussed, would be that
which focuses on the propriety of the injunction order of the appellate court.
On this score, the appellate court has said:

Thus, having the exclusive right over said trademark, FITRITE

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

The appellate court's finding that there is an urgent necessity for the issuance of the
writ of preliminary injunction pending resolution by BPTTT of the petition for
cancellation filed by Sunshine USA in Inter Partes Case No. 3397 would indeed
appear to have merit. The prematurity of petitioner's motion to dismiss places the
case at bench quite apart from that of Developers Group of Companies,
Inc.  vs. Court of Appeals, 219 SCRA 715. The allegations of the complaint, perforced
hypothetically deemed admitted by petitioner, would here justify the issuance by
appellate court of its injunction order. Petitioner, itself, does not even appear to be a
party in the administrative case (Inter Partes Case No. 3397). The averment that
Sunshine USA is petitioner's principal, and that it has a prior foreign registration that
should be respected conformably with the Convention of the Union of Paris for the
Protection of Industrial Property are mere asseverations in the motion to dismiss
which, along with some other factual assertions, are yet to be established.
AMIGO MANUFACTURING, Inc., petitioner, vs.  CLUETT PEABODY
INC., respondent.
DECISION
PANGANIBAN,  J.:
The findings of the Bureau of Patents that two trademarks are confusingly and
deceptively similar to each other are binding upon the courts, absent any sufficient
evidence to the contrary. In the present case, the Bureau considered the totality of the
similarities between the two sets of marks and found that they were of such degree,
number and quality as to give the overall impression that the two products are
confusingly if not deceptively the same.
Statement of the Case
Petitioner Amigo Manufacturing Inc. challenges, under Rule 45 of the Rules of
Court, the January 14, 1999 Resolution[1] of the Court of Appeals (CA) in CA-GR SP
No. 22792, which reversed, on reconsideration, its own September 29, 1998
Decision.[2] The dispositive portion of the assailed Resolution reads as follows:
WHEREFORE, the Motion for Reconsideration is GRANTED, and the Decision dated
September 29, 1998 REVERSED. Consequently, the decision rendered by the
Director of Patents dated September 3, 1990 is hereby AFFIRMED.
The Decision of the Director of Patents, referred to by the CA, disposed as
follows:
WHEREFORE, the Petition is GRANTED. Consequently, Certificate of Registration
No. SR-2206 issued to Respondent-Registrant [herein petitioner] is hereby cancelled.
Let the records of this case be remanded to the Patent/Trademark Registry and EDP
Division for appropriate action in accordance with this Decision.
Petitioner also seeks the reversal of the June 30, 1999 CA Resolution[3] denying
its own Motion for Reconsideration.
The Facts
The facts, which are undisputed, are summarized by the Court of Appeals in its
original Decision, as follows:
CO., The source of the controversy that precipitated the filing by [herein Respondent]
Cluett Peabody Co., Inc. (a New York corporation) of the present case against [herein
Petitioner] Amigo Manufacturing Inc. (a Philippine corporation) for cancellation of
trademark is [respondents] claim of exclusive ownership (as successor in interest of
Great American Knitting Mills, Inc.) of the following trademark and devices, as used
on mens socks:
a) GOLD TOE, under Certificate of Registration No. 6797 dated
September 22, 1958;
b) DEVICE, representation of a sock and magnifying glass on the toe of a
sock, under Certificate of Registration No. 13465 dated January 25,
1968;
c) DEVICE, consisting of a plurality of gold colored lines arranged in
parallel relation within a triangular area of toe of the stocking and
spread from each other by lines of contrasting color of the major part of
the stocking under Certificate of Registration No. 13887 dated May 9,
1968; and
d) LINENIZED, under Certificate of Registration No. 15440 dated April 13,
1970.
On the other hand, [petitioners] trademark and device GOLD TOP, Linenized for
Extra Wear has the dominant color white at the center and a blackish brown
background with a magnified design of the socks garter, and is labeled Amigo
Manufacturing Inc., Mandaluyong, Metro Manila, Made in the Philippines.
In the Patent Office, this case was heard by no less than six Hearing Officers: Attys.
Rodolfo Gilbang, Rustico Casia, M. Yadao, Fabian Rufina, Neptali Bulilan and Pausi
Sapak. The last named officer drafted the decision under appeal which was in due
court signed and issued by the Director of Patents (who never presided over any
hearing) adversely against the respondent Amigo Manufacturing, Inc. as heretofore
mentioned (supra, p.1).
The decision pivots on two point: the application of the rule of idem sonans and the
existence of a confusing similarity in appearance between two trademarks (Rollo, p.
33).[4]
Ruling of the Court of Appeals
In its assailed Resolution, the CA held as follows:
After a careful consideration of [respondents] arguments and a re-appreciation of the
records of this case. [w]e find [respondents] motion for reconsideration
meritorious. As shown by the records, and as correctly held by the Director of
Patents, there is hardly any variance in the appearance of the marks GOLD TOP and
GOLD TOE since both show a representation of a mans foot wearing a sock, and the
marks are printed in identical lettering. Section 4(d) of R.A. No. 166 declares to be
unregistrable, a mark which consists o[r] comprises a mark or trademark which so
resembles a mark or tradename registered in the Philippines of tradename previously
used in the Philippines by another and not abandoned, as to be likely, when applied
to or used in connection with the goods, business or services of the applicant, to
cause confusion or mistake or to deceive the purchasers. [Petitioner]s mark is a
combination of the different registered marks owned by [respondent]. As held in Del
Monte Corporation v. Court of Appeals, 181 SCRA 410 (1990), the question is not
whether the two articles are distinguishable by their label when set aside but whether
the general confusion made by the article upon the eye of the casual purchaser who
is unsuspicious and off his guard, is such as to likely result in confounding it with the
original. As held by the Court in the same decision[,] The most successful form of
copying is to employ enough points of similarity to confuse the public with enough
points of difference to confuse the courts. Furthermore, [petitioner]s mark is only
registered with the Supplemental Registry which gives no right of exclusivity to the
owner and cannot overturn the presumption of validity and exclusiv[ity] given to a
registered mark.
Finally, the Philippines and the United States are parties to the Union Convention for
the Protection of Industrial Property adopted in Paris on March 20, 1883, otherwise
known as the Paris Convention.(Puma Sportschuhfabriken Rudolf Dassler K.G. v.
Intermediate Appellate Court, 158 SCRA 233). [Respondent] is domiciled in the
United States of America and is the lawful owner of several trademark registrations in
the United States for the mark GOLD TOE.
x x x x x x x x x
By virtue of the Philippines membership to the Paris Union, trademark rights in favor
of the [respondent] were created. The object of the Convention is to accord a national
of a member nation extensive protection against infringement and other types of
unfair competition. (Puma Sportschuhfabriken Rudolf Dassler K.G. v. Intermediate
Appellate Court, 158 SCRA 233; La Chemise Lacoste, S.A. v. Fernandez, 129 SCRA
373)[5]
Hence, this Petition.[6]
Issues
In its Memorandum,[7] petitioner raises the following issues for the consideration
of this Court:
I findings of the Bureau of Patents that respondent had actually used the trademark
Whether or not the Court of Appeals overlooked that petitioners trademark was used
in commerce in the Philippines earlier than respondents actual use of its trademarks,
hence the Court of Appeals erred in affirming the Decision of the Director of Patents
dated September 3, 1990.
II
Since the petitioners actual use of its trademark was ahead of the respondent,
whether or not the Court of Appeals erred in canceling the registration of petitioners
trademark instead of canceling the trademark of the respondent.
III
Whether or not the Court of Appeals erred in affirming the findings of the Director of
Patents that petitioners trademark [was] confusingly similar to respondents
trademarks.
IV
Whether or not the Court of Appeals erred in applying the Paris Convention in holding
that respondent ha[d] an exclusive right to the trademark gold toe without taking into
consideration the absence of actual use in the Philippines.[8]
In the main, the Court will resolve three issues: (1) the date of actual use of the
two trademarks; (2) their confusing similarities, and (3) the applicability of the Paris
Convention.
The Courts Ruling
The Petition has no merit.
First Issue:
Dates of First Use of Trademark and Devices
Petitioner claims that it started the actual use of the trademark Gold Top and
Device in September 1956, while respondent began using the trademark Gold Toe
only on May 15, 1962. It contends that the claim of respondent that it had been using
the Gold Toe trademark at an earlier date was not substantiated. The latters
witnesses supposedly contradicted themselves as to the date of first actual use of
their trademark, coming up with different dates such as 1952, 1947 and 1938.
We do not agree. Based on the evidence presented, this Court concurs in the
and the devices in question prior to petitioners use of its own. During the hearing at
the Bureau of Patents, respondent presented Bureau registrations indicating the
dates of first use in the Philippines of the trademark and the devices as follows:a)
March 16, 1954, Gold Toe; b) February 1, 1952, the Representation of a Sock and a
Magnifying Glass; c) January 30, 1932, the Gold Toe Representation; and d)
February 28, 1952, Linenized.
 The registration of the above marks in favor of respondent constitutes prima
facie evidence, which petitioner failed to overturn satisfactorily, of respondents
ownership of those marks, the dates of appropriation and the validity of other
pertinent facts stated therein. Indeed, Section 20 of Republic Act 166 provides as
follows:
Sec. 20. Certificate of registration prima facie evidence of validity. - A certificate of
registration of a mark or 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.[9]
Moreover, the validity of the Certificates of Registration was not
questioned. Neither did petitioner present any evidence to indicate that they were
fraudulently issued. Consequently, the claimed dates of respondents first use of the
marks are presumed valid. Clearly, they were ahead of petitioners claimed date of
first use of Gold Top and Device in 1958.
Section 5-A of Republic Act No. 166 [10] states that an applicant for a trademark
or trade name shall, among others, state the date of first use. The fact that the marks
were indeed registered by respondent shows that it did use them on the date
indicated in the Certificate of Registration.
On the other hand, petitioner failed to present proof of the date of alleged first
use of the trademark Gold Top and Device. Thus, even assuming that respondent
started using it only on May 15, 1962, we can make no finding that petitioner had
started using it ahead of respondent.
Furthermore, petitioner registered its trademark only with the supplemental
register. In La Chemise Lacoste v. Fernandez,[11] the Court held that registration with
the supplemental register gives no presumption of ownership of the trademark. Said
the Court:
The registration of a mark upon the supplemental register is not, as in the case of the
principal register, prima facie evidence of (1) the validity of registration; (2) registrants
ownership of the mark; and (3) registrants exclusive right to use the mark. It is not
subject to opposition, although it may be cancelled after its issuance. Neither may it
be the subject of interference proceedings. Registration [i]n the supplemental register
is not constructive notice of registrants claim of ownership. A supplemental register is
provided for the registration because of some defects (conversely, defects which
make a mark unregistrable on the principal register, yet do not bar them from the
supplemental register.) (Agbayani, II Commercial Laws of the Philippines, 1978, p.
514, citing Uy Hong Mo v. Titay & Co., et al., Dec. No. 254 of Director of Patents, Apr.
30, 1968.
As to the actual date of first use by respondent of the four marks it registered,
the seeming confusion may have stemmed from the fact that the marks have different
dates of first use. Clearly, however, these dates are indicated in the Certificates of
Registration.
In any case, absent any clear showing to the contrary, this Court accepts the
finding of the Bureau of Patents that it was respondent which had prior use of its
trademark, as shown in the various Certificates of Registration issued in its
favor. Verily, administrative agencies findings of fact in matters falling under their
jurisdiction are generally accorded great respect, if not finality. Thus, the Court has
held:
x x x. By reason of the special knowledge and expertise of said administrative
agencies over matters falling under their jurisdiction, they are in a better position to
pass judgment thereon; thus, their findings of fact in that regard are generally
accorded great respect, if not finality, by the courts. The findings of fact of an
administrative agency must be respected as long as they are supported by
substantial evidence, even if such evidence might not be overwhelming or even
preponderant. It is not the task of an appellate court to weigh once more the evidence
submitted before the administrative body and to substitute its own judgment for that of
the administrative agency in respect of sufficiency of evidence.[12]
Second Issue:
Similarity of Trademarks
Citing various differences between the two sets of marks, petitioner assails the
finding of the director of patents that its trademark is confusingly similar to that of
respondent. Petitioner points out that the director of patents erred in its application of
the idem sonans rule, claiming that the two trademarks Gold Toe and Gold Top do
not sound alike and are pronounced differently. It avers that since the
words goldand toe are generic, respondent has no right to their exclusive use.
The arguments of petitioner are incorrect. True, it would not be guilty of
infringement on the basis alone of the similarity in the sound of petitioners Gold Top
with that of respondents Gold Toe. Admittedly, the pronunciations of the two do not,
by themselves, create confusion.
The Bureau of Patents, however, did not rely on the idem sonans test alone in
arriving at its conclusion. This fact is shown in the following portion of its Decision:
As shown by the drawings and labels on file, the mark registered by Respondent-
Registrant under Registration No. SR-2206 is a combination of the abovementioned
trademarks registered separately by the petitioner in the Philippines and the United
States.
With respect to the issue of confusing similarity between the marks of the petitioner
and that of the respondent-registrant applying the tests of idem sonans, the mark
GOLD TOP & DEVICE is confusingly similar with the mark GOLD TOE. The
difference in sound occurs only in the final letter at the end of the marks. For the
same reason, hardly is there any variance in their appearance. GOLD TOE and
GOLD TOP are printed in identical lettering. Both show [a] representation of a mans
foot wearing a sock. GOLD TOP blatantly incorporates petitioners LINENIZED which
by itself is a registered mark.[13]
 The Bureau considered the drawings and the labels, the appearance of the
labels, the lettering, and the representation of a mans foot wearing a sock. Obviously,
its conclusion is based on the totality of the similarities between the parties
trademarks and not on their sounds alone.
In Emerald Garment Manufacturing Corporation v. Court of Appeals,[14] this
Court stated that in determining whether trademarks are confusingly similar,
jurisprudence has developed two kinds of tests, the Dominancy Test[15] and the
Holistic Test.[16] In its words:
In determining whether colorable imitation exists, jurisprudence has developed two
kinds of tests the Dominancy Test applied in Asia Brewery, Inc. v. Court of Appeals
and other cases and the Holistic Test developed in Del Monte Corporation v. Court of
Appeals and its proponent cases.
As its title implies, the test of dominancy focuses on the similarity of the prevalent
features of the competing trademarks which might cause confusion or deception and
thus constitutes infringement.
x x x x x x x x x
. . . . If the competing trademark contains the main or essential or dominant features
of another, and confusion and deception is likely to result, infringement takes
place. Duplication or imitation is not necessary; nor is it necessary that the infringing
label should suggest an effort to imitate. [C. Neilman Brewing Co. v. Independent
Brewing Co., 191 F., 489, 495, citing Eagle White Lead Co., vs. Pflugh (CC) 180 Fed.
579]. The question at issue in cases of infringement of trademarks is whether the use
of the marks involved would be likely to cause confusion or mistakes in the mind of
the public or deceive purchasers. (Auburn Rubber Corporation vs. Hanover Rubber
Co., 107 F. 2d 588; x x x.)
x x x x x x x x x
On the other side of the spectrum, the holistic test mandates that the entirety of the
marks in question must be considered in determining confusing similarity.
In the present case, a resort to either the Dominancy Test or the Holistic Test
shows that colorable imitation exists between respondents Gold Toe and petitioners
Gold Top. A glance at petitioners mark shows that it definitely has a lot of similarities
and in fact looks like a combination of the trademark and devices that respondent has
already registered; namely, Gold Toe, the representation of a sock with a magnifying
glass, the Gold Toe representation and linenized.
Admittedly, there are some minor differences between the two sets of
marks. The similarities, however, are of such degree, number and quality that the
overall impression given is that the two brands of socks are deceptively the same, or
at least very similar to each another. An examination of the products in question
shows that their dominant features are gold checkered lines against a predominantly
black background and a representation of a sock with a magnifying glass. In addition,
both products use the same type of lettering. Both also include a representation of a
mans foot wearing a sock and the word linenized with arrows printed on the
label. Lastly, the names of the brands are similar -- Gold Top and Gold
Toe. Moreover, it must also be considered that petitioner and respondent are
engaged in the same line of business.
Petitioner cannot therefore ignore the fact that, when compared, most of the
features of its trademark are strikingly similar to those of respondent. In addition,
these representations are at the same location, either in the sock itself or on the
label. Petitioner presents no explanation why it chose those representations,
considering that these were the exact symbols used in respondents marks. Thus, the
overall impression created is that the two products are deceptively and confusingly
similar to each other. Clearly, petitioner violated the applicable trademark provisions
during that time.
Let it be remembered that duly registered trademarks are protected by law as
intellectual properties and cannot be appropriated by others without violating the due
process clause. An infringement of intellectual rights is no less vicious and
condemnable as theft of material property, whether personal or real.
Third Issue:
The Paris Convention
Petitioner claims that the Court of Appeals erred in applying the Paris
Convention. Although respondent registered its trademark ahead, petitioner argues
that the actual use of the said mark is necessary in order to be entitled to the
protection of the rights acquired through registration.
As already discussed, respondent registered its trademarks under the principal
register, which means that the requirement of prior use had already been fulfilled. To
emphasize, Section 5-A of Republic Act 166 requires the date of first use to be
specified in the application for registration. Since the trademark was successfully
registered, there exists a prima facie presumption of the correctness of the contents
thereof, including the date of first use. Petitioner has failed to rebut this presumption.
Thus, applicable is the Union Convention for the Protection of Industrial Property
adopted in Paris on March 20, 1883, otherwise known as the Paris Convention, of
which the Philippines and the United States are members. Respondent is domiciled in
the United States and is the registered owner of the Gold Toe trademark. Hence, it is
entitled to the protection of the Convention. A foreign-based trademark owner, whose
country of domicile is a party to an international convention relating to protection of
trademarks,[17] is accorded protection against infringement or any unfair competition
as provided in Section 37 of Republic Act 166, the Trademark Law which was the law
in force at the time this case was instituted.
In sum, petitioner has failed to show any reversible error on the part of the Court
of Appeals. Hence, its Petition must fail.
WHEREFORE, the Petition is hereby DENIED  and the assailed
Resolution AFFIRMED. Costs against petitioner.
SO ORDERED.
MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO,
INC. petitioners, vs.  E. & J. GALLO WINERY and THE ANDRESONS
GROUP, INC. respondents.
DECISION
CORONA, J.:
In this petition for review on certiorari under Rule 45, petitioners Mighty
Corporation and La Campana Fabrica de Tabaco, Inc. (La Campana) seek to annul,
reverse and set aside: (a) the November 15, 2001 decision[1] of the Court of Appeals
(CA) in CA-G.R. CV No. 65175 affirming the November 26, 1998 decision, [2] as
modified by the June 24, 1999 order,[3] of the Regional Trial Court of Makati City,
Branch 57 (Makati RTC) in Civil Case No. 93-850, which held petitioners liable for,
and permanently enjoined them from, committing trademark infringement and unfair
competition, and which ordered them to pay damages to respondents E. & J. Gallo
Winery (Gallo Winery) and The Andresons Group, Inc. (Andresons); (b) the July 11,
2002 CA resolution denying their motion for reconsideration [4] and (c) the aforesaid
Makati RTC decision itself.
I.
The Factual Background
Respondent Gallo Winery is a foreign corporation not doing business in the
Philippines but organized and existing under the laws of the State of California,
United States of America (U.S.), where all its wineries are located. Gallo Winery
produces different kinds of wines and brandy products and sells them in many
countries under different registered trademarks, including the GALLO and ERNEST &
JULIO GALLO wine trademarks.
Respondent domestic corporation, Andresons, has been Gallo Winerys
exclusive wine importer and distributor in the Philippines since 1991, selling these
products in its own name and for its own account.[5]
Gallo Winerys GALLO wine trademark was registered in the principal register of
the Philippine Patent Office (now Intellectual Property Office) on November 16, 1971
under Certificate of Registration No. 17021 which was renewed on November 16,
1991 for another 20 years.[6] Gallo Winery also applied for registration of its ERNEST
& JULIO GALLO wine trademark on October 11, 1990 under Application Serial No.
901011-00073599-PN but the records do not disclose if it was ever approved by the
Director of Patents.[7]
On the other hand, petitioners Mighty Corporation and La Campana and their
sister company, Tobacco Industries of the Philippines (Tobacco Industries), are
engaged in the cultivation, manufacture, distribution and sale of tobacco products for
which they have been using the GALLO cigarette trademark since 1973. [8]
The Bureau of Internal Revenue (BIR) approved Tobacco Industries use of
GALLO 100s cigarette mark on September 14, 1973 and GALLO filter cigarette mark
on March 26, 1976, both for the manufacture and sale of its cigarette products. In
1976, Tobacco Industries filed its manufacturers sworn statement as basis for BIRs
collection of specific tax on GALLO cigarettes.[9]
On February 5, 1974, Tobacco Industries applied for, but eventually did not
pursue, the registration of the GALLO cigarette trademark in the principal register of
the then Philippine Patent Office.[10]
In May 1984, Tobacco Industries assigned the GALLO cigarette trademark to La
Campana which, on July 16, 1985, applied for trademark registration in the Philippine
Patent Office.[11]On July 17, 1985, the National Library issued Certificate of Copyright
Registration No. 5834 for La Campanas lifetime copyright claim over GALLO cigarette
labels.[12]
Subsequently, La Campana authorized Mighty  Corporation to manufacture and
sell cigarettes bearing the GALLO trademark.[13] BIR approved Mighty Corporations
use of GALLO 100s cigarette brand, under licensing agreement with Tobacco
Industries, on May 18, 1988, and GALLO SPECIAL MENTHOL 100s cigarette brand
on April 3, 1989.[14]
Petitioners claim that GALLO cigarettes have been sold in the Philippines since
1973, initially by Tobacco Industries, then by La Campana and finally by Mighty
Corporation.[15]
On the other hand, although the GALLO wine trademark was registered in the
Philippines in 1971, respondents claim that they first introduced and sold the GALLO
and ERNEST & JULIO GALLO wines in the Philippines circa 1974 within the then
U.S. military facilities only. By 1979, they had expanded their Philippine market
through authorized distributors and independent outlets.[16]
Respondents claim that they first learned about the existence of GALLO
cigarettes in the latter part of 1992 when an Andresons employee saw such cigarettes
on display with GALLO wines in a Davao supermarket wine cellar section.
[17]
 Forthwith, respondents sent a demand letter to petitioners asking them to stop
using the GALLO trademark, to no avail.
II.
The Legal Dispute
On March 12, 1993, respondents sued petitioners in the Makati RTC for
trademark and tradename infringement and unfair competition, with a prayer for
damages and preliminary injunction.
Respondents charged petitioners with violating Article 6bis of the Paris
Convention for the Protection of Industrial Property (Paris Convention)[18] and RA 166
(Trademark Law),[19]specifically, Sections 22 and 23 (for trademark infringement),
[20]
 29 and 30[21] (for unfair competition and false designation of origin) and 37 (for
tradename infringement).[22] They claimed that petitioners adopted the GALLO
trademark to ride on Gallo Winerys GALLO and ERNEST & JULIO GALLO
trademarks established reputation and popularity, thus causing confusion, deception
and mistake on the part of the purchasing public who had always associated GALLO
and ERNEST & JULIO GALLO trademarks with Gallo Winerys wines. Respondents
prayed for the issuance of a writ of preliminary injunction and ex parte restraining
order, plus P2 million as actual and compensatory damages, at least P500,000 as
exemplary and moral damages, and at least P500,000 as attorneys fees and litigation
expenses.[23]
In their answer, petitioners alleged, among other affirmative defenses, that:
petitioners GALLO cigarettes and Gallo Winerys wines were totally unrelated
products; Gallo Winerys GALLO trademark registration certificate covered wines only,
not cigarettes; GALLO cigarettes and GALLO wines were sold through different
channels of trade; GALLO cigarettes, sold at P4.60 for GALLO filters and P3 for
GALLO menthols, were low-cost items compared to Gallo Winerys high-priced luxury
wines which cost between P98 to P242.50; the target market of Gallo Winerys wines
was the middle or high-income bracket with at least P10,000 monthly income while
GALLO cigarette buyers were farmers, fishermen, laborers and other low-income
workers; the dominant feature of the GALLO cigarette mark was the rooster device
with the manufacturers name clearly indicated as MIGHTY CORPORATION while, in
the case of Gallo Winerys wines, it was the full names of the founders-owners
ERNEST & JULIO GALLO or just their surname GALLO; by their inaction and
conduct, respondents were guilty of laches and estoppel; and petitioners acted with
honesty, justice and good faith in the exercise of their right to manufacture and sell
GALLO cigarettes.
In an order dated April 21, 1993,[24] the Makati RTC denied, for lack of merit,
respondents prayer for the issuance of a writ of preliminary injunction, [25] holding that
respondents GALLO trademark registration certificate covered wines only, that
respondents wines and petitioners cigarettes were not related goods and respondents
failed to prove material damage or great irreparable injury as required by Section 5,
Rule 58 of the Rules of Court.[26]
On August 19, 1993, the Makati RTC denied, for lack of merit, respondents
motion for reconsideration. The court reiterated that respondents wines and
petitioners cigarettes were not related goods since the likelihood of deception and
confusion on the part of the consuming public was very remote. The trial court
emphasized that it could not rely on foreign rulings cited by respondents because
the[se] cases were decided by foreign courts on the basis of unknown facts peculiar
to each case or upon factual surroundings which may exist only within their
jurisdiction. Moreover, there [was] no showing that [these cases had] been tested or
found applicable in our jurisdiction.[27]
On February 20, 1995, the CA likewise dismissed respondents petition for
review on certiorari, docketed as CA-G.R. No. 32626, thereby affirming the Makati
RTCs denial of the application for issuance of a writ of preliminary injunction against
petitioners.[28]
After trial on the merits, however, the Makati RTC, on November 26, 1998, held
petitioners liable for, and permanently enjoined them from, committing trademark
infringement and unfair competition with respect to the GALLO trademark:
WHEREFORE, judgment is rendered in favor of the plaintiff (sic) and against the
defendant (sic), to wit:
a. permanently restraining and enjoining defendants, their distributors, trade outlets,
and all persons acting for them or under their instructions, from (i) using E & Js
registered trademark GALLO or any other reproduction, counterfeit, copy or colorable
imitation of said trademark, either singly or in conjunction with other words, designs or
emblems and other acts of similar nature, and (ii) committing other acts of unfair
competition against plaintiffs by manufacturing and selling their cigarettes in the
domestic or export markets under the GALLO trademark.
b. ordering defendants to pay plaintiffs
(i) actual and compensatory damages for the injury and prejudice and impairment of
plaintiffs business and goodwill as a result of the acts and conduct pleaded as basis
for this suit, in an amount equal to 10% of FOURTEEN MILLION TWO HUNDRED
THIRTY FIVE THOUSAND PESOS (PHP14,235,000.00) from the filing of the
complaint until fully paid;
(ii) exemplary damages in the amount of PHP100,000.00;
(iii) attorneys fees and expenses of litigation in the amount of PHP1,130,068.91;
(iv) the cost of suit.
SO ORDERED.[29]
On June 24, 1999, the Makati RTC granted respondents motion for partial
reconsideration and increased the award of actual and compensatory damages to
10% of P199,290,000 or P19,929,000.[30]
On appeal, the CA affirmed the Makati RTC decision and subsequently denied
petitioners motion for reconsideration.
III.
The Issues
Petitioners now seek relief from this Court contending that the CA did not follow
prevailing laws and jurisprudence when it held that: [a] RA 8293 (Intellectual Property
Code of the Philippines [IP Code])  was applicable in this case; [b] GALLO cigarettes
and GALLO wines were identical, similar or related goods for the reason alone that
they were purportedly forms of vice; [c] both goods passed through the same
channels of trade and [d] petitioners were liable for trademark infringement, unfair
competition and damages.[31]
Respondents, on the other hand, assert that this petition which invokes Rule 45
does not involve pure questions of law, and hence, must be dismissed outright.
IV.
 Discussion
THE EXCEPTIONAL CIRCUMSTANCES
IN THIS CASE OBLIGE THE COURT TO REVIEW
THE CAS FACTUAL FINDINGS
As a general rule, a petition for review on certiorari under Rule 45 must raise
only questions of law[32] (that is, the doubt pertains to the application and
interpretation of law to a certain set of facts) and not questions of fact (where the
doubt concerns the truth or falsehood of alleged facts),[33] otherwise, the petition will
be denied. We are not a trier of facts and the Court of Appeals factual findings are
generally conclusive upon us.[34]
This case involves questions of fact which are directly related and intertwined
with questions of law. The resolution of the factual issues concerning the goods
similarity, identity, relation, channels of trade, and acts of trademark infringement and
unfair competition is greatly dependent on the interpretation of applicable laws. The
controversy here is not simply the identity or similarity of both parties trademarks but
whether or not infringement or unfair competition was committed, a conclusion based
on statutory interpretation. Furthermore, one or more of the following exceptional
circumstances oblige us to review the evidence on record:[35]
(1) the conclusion is grounded entirely on speculation, surmises, and
conjectures;
(2) the inference of the Court of Appeals from its findings of fact is
manifestly mistaken, absurd and impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of facts;
(5) the appellate court, in making its findings, went beyond the issues of
the case, and the same are contrary to the admissions of both the
appellant and the appellee;
(6) the findings are without citation of specific evidence on which they are
based;
(7) the facts set forth in the petition as well as in the petitioner's main and
reply briefs are not disputed by the respondents; and
(8) the findings of fact of the Court of Appeals are premised on the
absence of evidence and are contradicted [by the evidence] on record.
[36]
In this light, after thoroughly examining the evidence on record, weighing,
analyzing and balancing all factors to determine whether trademark infringement
and/or unfair competition has been committed, we conclude that both the Court of
Appeals and the trial court veered away from the law and well-settled jurisprudence.
Thus, we give due course to the petition.
THE TRADEMARK LAW AND THE PARIS
CONVENTION ARE THE APPLICABLE LAWS,
NOT THE INTELLECTUAL PROPERTY CODE
We note that respondents sued petitioners on March 12, 1993 for trademark
infringement and unfair competition committed during the effectivity of the Paris
Convention and the Trademark Law.
Yet, in the Makati RTC decision of November 26, 1998, petitioners were held
liable not only under the aforesaid governing laws but also under the IP Code which
took effect only on January 1, 1998,[37] or about five years after the filing of the
complaint:
Defendants unauthorized use of the GALLO trademark constitutes trademark
infringement pursuant to Section 22 of Republic Act No. 166, Section 155 of the IP
Code, Article 6bis of the Paris Convention, and Article 16 (1) of the TRIPS Agreement
as it causes confusion, deception and mistake on the part of the purchasing public.
[38]
 (Emphasis and underscoring supplied)
The CA apparently did not notice the error and affirmed the Makati RTC
decision:
In the light of its finding that appellants use of the GALLO trademark on its cigarettes
is likely to create confusion with the GALLO trademark on wines previously registered
and used in the Philippines by appellee E & J Gallo Winery, the trial court thus did
not err in holding that appellants acts not only violated the provisions of the our
trademark laws (R.A. No. 166 and R.A. Nos. (sic)  8293) but also Article 6bis of the
Paris Convention.[39] (Emphasis and underscoring supplied)
We therefore hold that the courts a quo erred in retroactively applying the IP
Code in this case.
It is a fundamental principle that the validity and obligatory force of a law
proceed from the fact that it has first been promulgated. A law that is not yet effective
cannot be considered as conclusively known by the populace. To make a law binding
even before it takes effect may lead to the arbitrary exercise of the legislative power.
[40]
 Nova constitutio futuris formam imponere debet non praeteritis. A new state of the
law ought to affect the future, not the past. Any doubt must generally be resolved
against the retroactive operation of laws, whether these are original enactments,
amendments or repeals.[41] There are only a few instances when laws may be given
retroactive effect,[42] none of which is present in this case.
The IP Code, repealing the Trademark Law,[43] was approved on June 6,
1997. Section 241 thereof expressly decreed that it was to take effect only on January
1, 1998, without any provision for retroactive application. Thus, the Makati RTC and
the CA should have limited the consideration of the present case within the
parameters of the Trademark Law and the Paris Convention, the laws in force at the
time of the filing of the complaint.
DISTINCTIONS BETWEEN
TRADEMARK INFRINGEMENT
AND UNFAIR COMPETITION
 Although the laws on trademark infringement and unfair competition have a
common conception at their root, that is, a person shall not be permitted to
misrepresent his goods or his business as the goods or business of another, the law
on unfair competition is broader and more inclusive than the law on trademark
infringement. The latter is more limited but it recognizes a more exclusive right
derived from the trademark adoption and registration by the person whose goods or
business is first associated with it. The law on trademarks is thus a specialized
subject distinct from the law on unfair competition, although the two subjects are
entwined with each other and are dealt with together in the Trademark Law (now,
both are covered by the IP Code). Hence, even if one fails to establish his exclusive
property right to a trademark, he may still obtain relief on the ground of his
competitors unfairness or fraud.Conduct constitutes unfair competition if the effect is
to pass off on the public the goods of one man as the goods of another. It is not
necessary that any particular means should be used to this end.[44]
In Del Monte Corporation vs. Court of Appeals, [45] we distinguished trademark
infringement from unfair competition:
(1) Infringement of trademark is the unauthorized use of a trademark,
whereas unfair competition is the passing off of one's goods
as those of another.
(2) In infringement of trademark fraudulent intent is unnecessary, whereas
in unfair competition fraudulent intent is essential.
(3) In infringement of trademark the prior registration of the trademark is a
prerequisite to the action, whereas in unfair competition
registration is not necessary.
Pertinent Provisions on Trademark
Infringement under the Paris
Convention and the Trademark Law
Article 6bis of the Paris Convention,[46] an international agreement binding on the
Philippines and the United States (Gallo Winerys country of domicile and origin)
prohibits the [registration] or use of a trademark which constitutes a reproduction,
imitation or translation, liable to create confusion, of a mark considered by the
competent authority of the country of registration or use to be well-known in that
country as being already the mark of a person entitled to the benefits of the [Paris]
Convention and used for identical or similar  goods. [This rule also applies] when the
essential part of the mark constitutes a reproduction of any such well-known mark or
an imitation liable to create confusion therewith. There is no time limit for seeking the
prohibition of the use of marks used in bad faith.[47]
Thus, under Article 6bis of the Paris Convention, the following are the elements
of trademark infringement:
(a) registration or use by another person of a trademark which is a reproduction,
imitation or translation liable to create confusion,
(b) of a mark considered by the competent authority of the country of registration
or use[48] to be well-known in that country and is already the mark of a
person entitled to the benefits of the Paris Convention, and
(c) such trademark is used for identical or similar goods.
On the other hand, Section 22 of the Trademark Law holds a person liable for
infringement when, among others, he uses without the consent of the registrant, any
reproduction, counterfeit, copy or colorable imitation of any registered mark or
tradename in connection with the sale, offering for sale, or advertising of any goods,
business or services or in connection with which such use is likely to cause confusion
or mistake or to deceive purchasers or others as to the source or origin of such goods
or services, or identity of such business; or reproduce, counterfeit, copy or colorably
imitate any such mark or tradename and apply such reproduction, counterfeit, copy or
colorable imitation to labels, signs, prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in connection with such goods, business
or services.[49] Trademark registration and actual use are material to the complaining
partys cause of action.
Corollary to this, Section 20 of the Trademark Law[50] considers the trademark
registration certificate as prima facie evidence of the validity of the registration, the
registrants ownership and exclusive right to use the trademark in connection with the
goods, business or services as classified by the Director of Patents [51] and as
specified in the certificate, subject to the conditions and limitations stated
therein. Sections 2 and 2-A[52] of the Trademark Law emphasize the importance of the
trademarks actual use in commerce in the Philippines prior to its registration. In the
adjudication of trademark rights between contending parties, equitable principles of
laches, estoppel, and acquiescence may be considered and applied.[53]
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark Law therefore, the
following constitute the elements of trademark infringement:
(a) a trademark actually used in commerce in the Philippines and registered in
the principal register of the Philippine Patent Office
(b) is used by another person in connection with the sale, offering for sale, or
advertising of any goods, business or services or in connection with which
such use is likely to cause confusion or mistake or to deceive purchasers or
others as to the source or origin of such goods or services, or identity of
such business; or such trademark is reproduced, counterfeited, copied or
colorably imitated by another person and such reproduction, counterfeit,
copy or colorable imitation is applied to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used upon or in
connection with such goods, business or services as to likely cause
confusion or mistake or to deceive purchasers,
(c) the trademark is used for identical or similar goods, and
(d) such act is done without the consent of the trademark registrant or assignee.
In summary, the Paris Convention protects well-known trademarks only (to be
determined by domestic authorities), while the Trademark Law protects all
trademarks, whether well-known or not, provided that they have been registered and
are in actual commercial use in the Philippines. Following universal acquiescence and
comity, in case of domestic legal disputes on any conflicting provisions between the
Paris Convention (which is an international agreement) and the Trademark law (which
is a municipal law) the latter will prevail.[54]
Under both the Paris Convention and the Trademark Law, the protection of a
registered trademark is limited only to goods identical or similar to those in respect of
which such trademark is registered and only when there is likelihood of confusion.
Under both laws, the time element in commencing infringement cases is material in
ascertaining the registrants express or implied consent to anothers use of its
trademark or a colorable imitation thereof. This is why acquiescence, estoppel or
laches may defeat the registrants otherwise valid cause of action.
Hence, proof of all the elements of trademark infringement is a condition
precedent to any finding of liability.
THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.
By respondents own judicial admission, the GALLO wine trademark was
registered in the Philippines in November 1971 but the wine itself was first marketed
and sold in the country only in 1974 and only within the former U.S. military facilities,
and outside thereof, only in 1979. To prove commercial use of the GALLO wine
trademark in the Philippines, respondents presented sales invoice no. 29991 dated
July 9, 1981 addressed to Conrad Company Inc., Makati, Philippines and sales
invoice no. 85926 dated March 22, 1996 addressed to Andresons Global, Inc.,
Quezon City, Philippines. Both invoices were for the sale and shipment of GALLO
wines to the Philippines during that period.[55] Nothing at all, however, was presented
to evidence the alleged sales of GALLO wines in the Philippines in 1974 or, for that
matter, prior to July 9, 1981.
On the other hand, by testimonial evidence supported by the BIR authorization
letters, forms and manufacturers sworn statement, it appears that petitioners and its
predecessor-in-interest, Tobacco Industries, have indeed been using and selling
GALLO cigarettes in the Philippines since 1973 or before July 9, 1981.[56]
In Emerald Garment Manufacturing Corporation vs. Court of Appeals,[57] we
reiterated our rulings in Pagasa Industrial Corporation vs. Court of Appeals,
[58]
 Converse Rubber Corporation vs. Universal Rubber Products, Inc., [59] Sterling
Products International, Inc. vs. Farbenfabriken Bayer Aktiengesellschaft, [60] Kabushi
Kaisha Isetan vs. Intermediate Appellate Court,[61] and Philip Morris vs. Court of
Appeals,[62] giving utmost importance to the actual commercial use of a trademark in
the Philippines prior to its registration, notwithstanding the provisions of the Paris
Convention:
xxx xxx xxx
In addition to the foregoing, we are constrained to agree with petitioner's contention
that private respondent failed to prove prior actual commercial use of its LEE
trademark in the Philippines before filing its application for registration with the
BPTTT and hence, has not acquired ownership over said mark.
Actual use in commerce in the Philippines is an essential prerequisite for the
acquisition of ownership over a trademark pursuant to Sec. 2 and 2-A of the
Philippine Trademark Law (R.A. No. 166) x x x
xxx xxx xxx
The provisions of the 1965 Paris Convention for the Protection of Industrial
Property relied upon by private respondent and Sec. 21-A of the Trademark Law
(R.A. No. 166) were sufficiently expounded upon and qualified in the recent case
of Philip Morris, Inc. v. Court of Appeals (224 SCRA 576 [1993]):
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
the trademark in commerce in the Philippines. Such a foreign corporation may have
the personality to file a suit for infringement but it may not necessarily be entitled to
protection due to absence of actual use of the emblem in the local market.
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. However, registration alone will not suffice. In Sterling Products
International, Inc. v. Farbenfabriken Bayer Aktiengesellschaft (27 SCRA 1214
[1969]; Reiterated in  Kabushi Isetan vs. Intermediate Appellate Court  (203 SCRA 583
[1991]) 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
The credibility placed on a certificate of registration of one's trademark, or its weight
as evidence of validity, ownership and exclusive use, is qualified. A registration
certificate serves merely as prima facieevidence. It is not conclusive but can
and may be rebutted by controverting evidence.
xxx xxx xxx
In the case at bench, however, we reverse the findings of the Director of Patents and
the Court of Appeals. After a meticulous study of the records, we observe that
the Director of Patents and the Court of Appeals relied mainly on the
registration certificates as proof of use by private respondent of the trademark
LEE which, as we have previously discussed are not sufficient. We cannot give
credence to private respondent's claim that its LEE mark first reached the
Philippines in the 1960's through local sales by the Post Exchanges of the U.S.
Military Bases in the Philippines (Rollo, p. 177) based as it was solely on the
self-serving statements of Mr. Edward Poste, General Manager of Lee (Phils.),
Inc., a wholly owned subsidiary of the H.D. Lee, Co., Inc., U.S.A., herein private
respondent. (Original Records, p. 52) Similarly, we give little weight to the
numerous vouchers representing various advertising expenses in the
Philippines for LEE products. It is well to note that these expenses were
incurred only in 1981 and 1982 by LEE (Phils.), Inc. after it entered into a
licensing agreement with private respondent on 11 May 1981. (Exhibit E)
On the other hand, petitioner has sufficiently shown that it has been in the
business of selling jeans and other garments adopting its STYLISTIC MR. LEE
trademark since 1975 as evidenced by appropriate sales invoices to various stores
and retailers. (Exhibit 1-e to 1-o)
Our rulings in Pagasa Industrial Corp. v. Court of Appeals  (118 SCRA 526
[1982]) and Converse Rubber Corp. v. Universal Rubber Products, Inc., (147 SCRA
154 [1987]), respectively, are instructive:
The Trademark Law is very clear. It requires actual commercial use of the mark prior
to its registration. There is no dispute that respondent corporation was the first
registrant, yet it failed to fully substantiate its claim that it used in trade or
business in the Philippines the subject mark; it did not present proof to invest it
with exclusive, continuous adoption of the trademark which should consist
among others, of considerable sales since its first use. The invoices submitted
by respondent which were dated way back in 1957 show that the zippers sent to
the Philippines were to be used as samples and of no commercial value. The
evidence for respondent must be clear, definite and free from
inconsistencies. Samples are not for sale and therefore, the fact of exporting them to
the Philippines cannot be considered to be equivalent to the use contemplated by
law. Respondent did not expect income from such samples. There were no receipts
to establish sale, and no proof were presented to show that they were subsequently
sold in the Philippines.
xxx xxx xxx
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. (Emphasis supplied.)
In view of the foregoing jurisprudence and respondents judicial admission that
the actual commercial use of the GALLO wine trademark was subsequent to its
registration in 1971 and to Tobacco Industries commercial use of the GALLO
cigarette trademark in 1973, we rule that, on this account, respondents never enjoyed
the exclusive right to use the GALLO wine trademark to the prejudice of Tobacco
Industries and its successors-in-interest, herein petitioners, either under the
Trademark Law or the Paris Convention.
Respondents GALLO trademark
registration is limited to
wines only
We also note that the GALLO trademark registration certificates in the
Philippines and in other countries expressly state that they cover wines only, without
any evidence or indication that registrant Gallo Winery expanded or intended to
expand its business to cigarettes.[63]
Thus, by strict application of Section 20 of the Trademark Law, Gallo Winerys
exclusive right to use the GALLO trademark should be limited to wines, the only
product indicated in its registration certificates. This strict statutory limitation on the
exclusive right to use trademarks was amply clarified in our ruling in Faberge, Inc. vs.
Intermediate Appellate Court:[64]
Having thus reviewed the laws applicable to the case before Us, it is not difficult to
discern from the foregoing statutory enactments that private respondent may be
permitted to register the trademark BRUTE for briefs produced by it notwithstanding
petitioner's vehement protestations of unfair dealings in marketing its own set of items
which are limited to: after-shave lotion, shaving cream, deodorant, talcum powder and
toilet soap. Inasmuch as petitioner has not ventured in the production of briefs,
an item which is not listed in its certificate of registration, petitioner cannot and
should not be allowed to feign that private respondent had invaded petitioner's
exclusive domain. To be sure, it is significant that petitioner failed to annex in its
Brief the so-called eloquent proof that petitioner indeed intended to expand its mark
BRUT to other goods (Page 27, Brief for the Petitioner; page 202, Rollo). Even then,
a mere application by petitioner in this aspect does not suffice and may not vest an
exclusive right in its favor that can ordinarily be protected by the Trademark Law. In
short, paraphrasing Section 20 of the Trademark Law as applied to the
documentary evidence adduced by petitioner, the certificate of registration
issued by the Director of Patents can confer upon petitioner the exclusive right
to use its own symbol only to those goods specified in the certificate, subject to
any conditions and limitations stated therein. This basic point is perhaps the
unwritten rationale of Justice Escolin in Philippine Refining Co., Inc. vs. Ng
Sam  (115 SCRA 472 [1982]), when he stressed the principle enunciated by the
United States Supreme Court in American Foundries vs. Robertson  (269 U.S. 372,
381, 70 L ed 317, 46 Sct. 160) that one who has adopted and used a trademark
on his goods does not prevent the adoption and use of the same trademark by
others for products which are of a different description. Verily, this Court had the
occasion to observe in the 1966 case of George W. Luft Co., Inc. vs. Ngo Guan (18
SCRA 944 [1966]) that no serious objection was posed by the petitioner therein since
the applicant utilized the emblem Tango for no other product than hair pomade in
which petitioner does not deal.
This brings Us back to the incidental issue raised by petitioner which private
respondent sought to belie as regards petitioner's alleged expansion of its business. It
may be recalled that petitioner claimed that it has a pending application for
registration of the emblem BRUT 33 for briefs (page 25, Brief for the Petitioner; page
202, Rollo) to impress upon Us the Solomonic wisdom imparted by Justice JBL
Reyes in Sta. Ana vs. Maliwat  (24 SCRA 1018 [1968]), to the effect that
dissimilarity of goods will not preclude relief if the junior user's goods are not
remote from any other product which the first user would be likely to make or
sell (vide, at page 1025). Commenting on the former provision of the Trademark Law
now embodied substantially under Section 4(d) of Republic Act No. 166, as amended,
the erudite jurist opined that the law in point does not require that the articles of
manufacture of the previous user and late user of the mark should possess the same
descriptive properties or should fall into the same categories as to bar the latter from
registering his mark in the principal register. (supra at page 1026).
Yet, it is equally true that as aforesaid, the protective mantle of the Trademark
Law extends only to the goods used by the first user as specified in the
certificate of registration following the clear message conveyed by Section 20.
How do We now reconcile the apparent conflict between Section 4(d) which
was relied upon by Justice JBL Reyes in the Sta. Ana case and Section 20? It
would seem that Section 4(d) does not require that the goods manufactured by
the second user be related to the goods produced by the senior user while
Section 20 limits the exclusive right of the senior user only to those goods
specified in the certificate of registration. But the rule has been laid down that the
clause which comes later shall be given paramount significance over an
anterior proviso upon the presumption that it expresses the latest and dominant
purpose. (Graham Paper Co. vs. National Newspapers Asso. (Mo. App.) 193 S.W.
1003; Barnett vs. Merchant's L. Ins. Co.,  87 Okl. 42;  State ex nel Atty. Gen. vs.
Toledo, 26 N.E., p. 1061; cited by Martin, Statutory Construction Sixth ed., 1980
Reprinted, p. 144). It ineluctably follows that Section 20 is controlling and,
therefore, private respondent can appropriate its symbol for the briefs it
manufactures because as aptly remarked by Justice Sanchez in Sterling
Products International Inc. vs. Farbenfabriken Bayer (27 SCRA 1214 [1969]):
Really, if the certificate of registration were to be deemed as including goods
not specified therein, then a situation may arise whereby an applicant may be
tempted to register a trademark on any and all goods which his mind may
conceive even if he had never intended to use the trademark for the said
goods. We believe that such omnibus registration is not contemplated by our
Trademark Law. (1226).
NO LIKELIHOOD OF CONFUSION, MISTAKE
OR DECEIT AS TO THE IDENTITY OR SOURCE
OF PETITIONERS AND RESPONDENTS
GOODS OR BUSINESS
A crucial issue in any trademark infringement case is the likelihood of confusion,
mistake or deceit as to the identity, source or origin of the goods or identity of the
business as a consequence of using a certain mark. Likelihood of confusion is
admittedly a relative term, to be determined rigidly according to the particular (and
sometimes peculiar) circumstances of each case. Thus, in trademark cases, more
than in other kinds of litigation, precedents must be studied in the light of each
particular case. [65]
There are two types of confusion in trademark infringement. The first is
confusion of goods when an otherwise prudent purchaser is induced to purchase one
product in the belief that he is purchasing another, in which case defendants goods
are then bought as the plaintiffs and its poor quality reflects badly on the plaintiffs
reputation. The other is confusion of businesswherein the goods of the parties are
different but the defendants product can reasonably (though mistakenly) be assumed
to originate from the plaintiff, thus deceiving the public into believing that there is
some connection between the plaintiff and defendant which, in fact, does not exist.[66]
In determining the likelihood of confusion, the Court must consider: [a] the
resemblance between the trademarks; [b] the similarity of the goods to which the
trademarks are attached; [c] the likely effect on the purchaser and [d] the registrants
express or implied consent and other fair and equitable considerations.
Petitioners and respondents both use GALLO in the labels of their respective
cigarette and wine products. But, as held in the following cases, the use of an
identical mark does not, by itself, lead to a legal conclusion that there is trademark
infringement:
(a) in Acoje Mining Co., Inc. vs. Director of Patent,[67] we ordered the approval
of Acoje Minings application for registration of the trademark LOTUS for
its soy sauce even though Philippine Refining Company had prior
registration and use of such identical mark for its edible oil which, like
soy sauce, also belonged to Class 47;
(b) in Philippine Refining Co., Inc. vs. Ng Sam and Director of Patents,[68] we
upheld the Patent Directors registration of the same trademark CAMIA
for Ng Sams ham under Class 47, despite Philippine Refining
Companys prior trademark registration and actual use of such mark on
its lard, butter, cooking oil (all of which belonged to Class 47), abrasive
detergents, polishing materials and soaps;
(c) in Hickok Manufacturing Co., Inc. vs. Court of Appeals and Santos Lim Bun
Liong,[69] we dismissed Hickoks petition to cancel private respondents
HICKOK trademark registration for its Marikina shoes as against
petitioners earlier registration of the same trademark for handkerchiefs,
briefs, belts and wallets;
(d) in Shell Company of the Philippines vs. Court of Appeals,[70] in a minute
resolution, we dismissed the petition for review for lack of merit and
affirmed the Patent Offices registration of the trademark SHELL used in
 the cigarettes manufactured by respondent Fortune Tobacco
Corporation, notwithstanding Shell Companys opposition as the prior
registrant of the same trademark for its gasoline and other petroleum
products;
(e) in Esso Standard Eastern, Inc. vs. Court of Appeals,[71]  we dismissed
ESSOs complaint for trademark infringement against United Cigarette
Corporation and allowed the latter to use the trademark ESSO for its
cigarettes, the same trademark used by ESSO for its petroleum
products, and
(f) in Canon Kabushiki Kaisha vs. Court of Appeals and NSR Rubber
Corporation,[72]  we affirmed the rulings of the Patent Office and the CA
that NSR Rubber Corporation could use the trademark CANON for its
sandals (Class 25) despite Canon Kabushiki Kaishas prior registration
and use of the same trademark for its paints, chemical products, toner
and dyestuff (Class 2).
Whether a trademark causes confusion and is likely to deceive the public hinges
on colorable imitation[73] which has been defined as such similarity in form, content,
words, sound, meaning, special arrangement or general appearance of the trademark
or tradename in their overall presentation or in their essential and substantive and
distinctive parts as would likely mislead or confuse persons in the ordinary course of
purchasing the genuine article.[74]
Jurisprudence has developed two tests in determining similarity and likelihood of
confusion in trademark resemblance:[75]
(a) the Dominancy Test applied in Asia Brewery, Inc. vs. Court of
Appeals[76] and other cases,[77] and
(b) the Holistic or Totality Test used in Del Monte Corporation vs. Court of
Appeals[78] and its preceding cases.[79]
The Dominancy Test focuses on the similarity of the prevalent features of the
competing trademarks which might cause confusion or deception, and thus
infringement. If the competing trademark contains the main, essential or dominant
features of another, and confusion or deception is likely to result, infringement takes
place. Duplication or imitation is not necessary; nor is it necessary that the infringing
label should suggest an effort to imitate. The question is whether the use of the marks
involved is likely to cause confusion or mistake in the mind of the public or deceive
purchasers.[80]
On the other hand, the Holistic Test requires that the entirety of the marks in
question be considered in resolving confusing similarity. Comparison of words is not
the only determining factor. The trademarks in their entirety as they appear in their
respective labels or hang tags must also be considered in relation to the goods to
which they are attached. The discerning eye of the observer must focus not only on
the predominant words but also on the other features appearing in both labels in
order that he may draw his conclusion whether one is confusingly similar to the other.
[81]
In comparing the resemblance or colorable imitation of marks, various factors
have been considered, such as the dominant color, style, size, form, meaning of
letters, words, designs and emblems used, the likelihood of deception of the mark or
name's tendency to confuse[82] and the commercial impression likely to be conveyed
by the trademarks if used in conjunction with the respective goods of the parties.[83]
Applying the Dominancy and Holistic Tests, we find that the dominant feature of
the GALLO cigarette trademark is the device of a large rooster facing left, outlined in
black against a gold background. The roosters color is either green or red green for
GALLO menthols and red for GALLO filters. Directly below the large rooster device is
the word GALLO. The rooster device is given prominence in the GALLO cigarette
packs in terms of size and location on the labels.[84]
The GALLO mark appears to be a fanciful and arbitrary mark for the cigarettes
as it has no relation at all to the product but was chosen merely as a trademark due to
the fondness for fighting cocks of the son of petitioners president. Furthermore,
petitioners adopted GALLO, the Spanish word for rooster, as a cigarette trademark to
appeal to one of their target markets, the sabungeros (cockfight aficionados).[85]
Also, as admitted by respondents themselves,[86] on the side of the GALLO
cigarette packs are the words MADE BY MIGHTY CORPORATION, thus clearly
informing the public as to the identity of the manufacturer of the cigarettes.
On the other hand, GALLO Winerys wine and brandy labels are diverse. In
many of them, the labels are embellished with sketches of buildings and trees,
vineyards or a bunch of grapes while in a few, one or two small roosters facing right
or facing each other (atop the EJG crest, surrounded by leaves or ribbons), with
additional designs in green, red and yellow colors, appear as minor features thereof.
[87]
 Directly below or above these sketches is the entire printed name of the founder-
owners, ERNEST & JULIO GALLO or just their surname GALLO,[88] which appears
in different fonts, sizes, styles and labels, unlike petitioners uniform casque-font bold-
lettered GALLO mark.
Moreover, on the labels of Gallo Winerys wines are printed the words VINTED
AND BOTTLED BY ERNEST & JULIO GALLO, MODESTO, CALIFORNIA.[89]
The many different features like color schemes, art works and other markings of
both products drown out the similarity between them the use of the word GALLO ― a
family surname for the Gallo Winerys wines and a Spanish word for rooster for
petitioners cigarettes.
WINES AND CIGARETTES ARE NOT
IDENTICAL, SIMILAR, COMPETING OR
RELATED GOODS
Confusion of goods is evident where the litigants are actually in competition; but
confusion of business may arise between non-competing interests as well.[90]
Thus, apart from the strict application of Section 20 of the Trademark Law and
Article 6bis of the Paris Convention which proscribe trademark infringement not only of
goods specified in the certificate of registration but also of identical or similar goods,
we have also uniformly recognized and applied the modern concept of related goods.
[91]
 Simply stated, when goods are so related that the public may be, or is actually,
deceived and misled that they come from the same maker or manufacturer,
trademark infringement occurs.[92]
Non-competing goods may be those which, though they are not in actual
competition, are so related to each other that it can reasonably be assumed that they
originate from one manufacturer, in which case, confusion of business can arise out
of the use of similar marks.[93] They may also be those which, being entirely unrelated,
cannot be assumed to have a common source; hence, there is no confusion of
business, even though similar marks are used.[94] Thus, there is no trademark
infringement if the public does not expect the plaintiff to make or sell the same class
of goods as those made or sold by the defendant.[95]
In resolving whether goods are related,[96] several factors come into play:
(a) the business (and its location) to which the goods belong
(b) the class of product to which the goods belong
(c) the product's quality, quantity, or size, including the nature of the package,
wrapper or container [97]
(d) the nature and cost of the articles[98]
(e) the descriptive properties, physical attributes or essential characteristics
with reference to their form, composition, texture or quality
(f) the purpose of the goods[99]
(g) whether the article is bought for immediate consumption,[100] that is, day-to-
day household items[101]
(h) the fields of manufacture[102]
[103]
(i) the conditions under which the article is usually purchased  and
(j) the channels of trade through which the goods flow,[104] how they are
distributed, marketed, displayed and sold.[105]
The wisdom of this approach is its recognition that each trademark infringement
case presents its own unique set of facts. No single factor is preeminent, nor can the
presence or absence of one determine, without analysis of the others, the outcome of
an infringement suit. Rather, the court is required to sift the evidence relevant to each
of the criteria. This requires that the entire panoply of elements constituting the
relevant factual landscape be comprehensively examined.[106] It is a weighing and
balancing process. With reference to this ultimate question, and from a balancing of
the determinations reached on all of the factors, a conclusion is reached whether the
parties have a right to the relief sought.[107]
A very important circumstance though is whether there exists a likelihood that
an appreciable number of ordinarily prudent purchasers will be misled, or simply
confused, as to the source of the goods in question.[108] The purchaser is not the
completely unwary consumer but is the ordinarily intelligent buyer considering the
type of product involved.[109] He is accustomed to buy, and therefore to some extent
familiar with, the goods in question. The test of fraudulent simulation is to be found in
the likelihood of the deception of some persons in some measure acquainted with an
established design and desirous of purchasing the commodity with which that design
has been associated. The test is not found in the deception, or the possibility of
deception, of the person who knows nothing about the design which has been
counterfeited, and who must be indifferent between that and the other. The
simulation, in order to be objectionable, must be such as appears likely to mislead the
ordinary intelligent buyer who has a need to supply and is familiar with the article that
he seeks to purchase.[110]
Hence, in the adjudication of trademark infringement, we give due regard to the
goods usual purchasers character, attitude, habits, age, training and education. [111]
Applying these legal precepts to the present case, petitioners use of the GALLO
cigarette trademark is not likely to cause confusion or mistake, or to deceive the
ordinarily intelligent buyer of either wines or cigarettes or both as to the identity of the
goods, their source and origin, or identity of the business of petitioners and
respondents.
Obviously, wines and cigarettes are not identical or competing products. Neither
do they belong to the same class of goods. Respondents GALLO wines belong to
Class 33 under Rule 84[a] Chapter III, Part II of the Rules of Practice in Trademark
Cases while petitioners GALLO cigarettes fall under Class 34.
We are mindful that product classification alone cannot serve as the decisive
factor in the resolution of whether or not wines and cigarettes are related
goods. Emphasis should be on the similarity of the products involved and not on the
arbitrary classification or general description of their properties or characteristics. But
the mere fact that one person has adopted and used a particular trademark for his
goods does not prevent the adoption and use of the same trademark by others on
articles of a different description. [112]
Both the Makati RTC and the CA held that wines and cigarettes are related
products because: (1) they are related forms of vice, harmful when taken in excess,
and used for pleasure and relaxation and (2) they are grouped or classified in the
same section of supermarkets and groceries.
We find these premises patently insufficient and too arbitrary to support the legal
conclusion that wines and cigarettes are related products within the contemplation of
the Trademark Law and the Paris Convention.
First, anything - not only wines and cigarettes ― can be used for pleasure and
relaxation and can be harmful when taken in excess. Indeed, it would be a grave
abuse of discretion to treat wines and cigarettes as similar or related products likely to
cause confusion just because they are pleasure-giving, relaxing or potentially harmful.
Such reasoning makes no sense.
Second, it is common knowledge that supermarkets sell an infinite variety of
wholly unrelated products and the goods here involved, wines and cigarettes, have
nothing whatsoever in common with respect to their essential characteristics, quality,
quantity, size, including the nature of their packages, wrappers or containers.[113]
Accordingly, the U.S. patent office and courts have consistently held that the
mere fact that goods are sold in one store under the same roof does not automatically
mean that buyers are likely to be confused as to the goods respective sources,
connections or sponsorships. The fact that different products are available in the
same store is an insufficient standard, in and of itself, to warrant a finding of likelihood
of confusion.[114]
In this regard, we adopted the Director of Patents finding in Philippine Refining
Co., Inc. vs. Ng Sam and the Director of Patents:[115]
In his decision, the Director of Patents enumerated the factors that set respondents
products apart from the goods of petitioner. He opined and we quote:
I have taken into account such factors as probable purchaser attitude and habits,
marketing activities, retail outlets, and commercial impression likely to be conveyed
by the trademarks if used in conjunction with the respective goods of the parties, I
believe that ham on one hand, and lard, butter, oil, and soap on the other are
products that would not move in the same manner through the same channels
of trade. They pertain to unrelated fields of manufacture, might be distributed
and marketed under dissimilar conditions, and are displayed separately even
though they frequently may be sold through the same retail food
establishments. Opposers products are ordinary day-to-day household items
whereas ham is not necessarily so. Thus, the goods of the parties are not of a
character which purchasers would likely attribute to a common origin.
The observations and conclusion of the Director of Patents are correct. The particular
goods of the parties are so unrelated that consumers, would not, in any probability
mistake one as the source of origin of the product of the other. (Emphasis supplied).
The same is true in the present case. Wines and cigarettes are non-competing
and are totally unrelated products not likely to cause confusion vis--vis the goods or
the business of the petitioners and respondents.
Wines are bottled and consumed by drinking while cigarettes are packed in
cartons or packages and smoked. There is a whale of a difference between their
descriptive properties, physical attributes or essential characteristics like form,
composition, texture and quality.
GALLO cigarettes are inexpensive items while GALLO wines are not. GALLO
wines are patronized by middle-to-high-income earners while GALLO cigarettes
appeal only to simple folks like farmers, fishermen, laborers and other low-income
workers.[116] Indeed, the big price difference of these two products is an important
factor in proving that they are in fact unrelated and that they travel in different
channels of trade. There is a distinct price segmentation based on vastly different
social classes of purchasers.[117]
GALLO cigarettes and GALLO wines are not sold through the same channels of
trade. GALLO cigarettes are Philippine-made and petitioners neither claim nor pass
off their goods as imported or emanating from Gallo Winery. GALLO cigarettes are
distributed, marketed and sold through ambulant and sidewalk vendors, small
local sari-sari stores and grocery stores in Philippine rural areas, mainly in Misamis
Oriental, Pangasinan, Bohol, and Cebu.[118] On the other hand, GALLO wines are
imported, distributed and sold in the Philippines through Gallo Winerys exclusive
contracts with a domestic entity, which is currently Andresons. By respondents own
testimonial evidence, GALLO wines are sold in hotels, expensive bars and
restaurants, and high-end grocery stores and supermarkets, not through sari-
sari  stores or ambulant vendors.[119]
Furthermore, the Makati RTC and the CA erred in relying on Carling Brewing
Company vs. Philip Morris, Inc.[120] to support its finding that GALLO wines and
GALLO cigarettes are related goods. The courts a quo  should have taken into
consideration the subsequent case of IDV North America, Inc. and R & A Bailey Co.
Limited vs. S & M Brands, Inc.:[121]
IDV correctly acknowledges, however, that there is no per se  rule that the use of the
same mark on alcohol and tobacco products always will result in a likelihood of
confusion. Nonetheless, IDV relies heavily on the decision in John Walker & Sons,
Ltd. vs. Tampa Cigar Co., 124 F. Supp. 254, 256 (S.D. Fla. 1954), affd, 222 F. 2d
460 (5th Cir. 1955), wherein the court enjoined the use of the mark JOHNNIE
WALKER on cigars because the fame of the plaintiffs mark for scotch whiskey and
because the plaintiff advertised its scotch whiskey on, or in connection with tobacco
products. The court, in John Walker & Sons,  placed great significance on the
finding that the infringers use was a deliberate attempt to capitalize on the
senior marks fame. Id. At 256. IDV also relies on Carling Brewing Co. v. Philip
Morris, Inc.,  297 F. Supp. 1330, 1338 (N.D. Ga. 1968), in which the court
enjoined the defendants use of the mark BLACK LABEL for cigarettes because
it was likely to cause confusion with the plaintiffs well-known mark BLACK
LABEL for beer.
xxx xxx xxx
Those decisions, however, must be considered in perspective of the principle
that tobacco products and alcohol products should be considered related only
in cases involving special circumstances.Schenley Distillers, Inc. v. General
Cigar Co.,  57C.C.P.A. 1213, 427 F. 2d 783, 785 (1970). The presence of special
circumstances has been found to exist where there is a finding of unfair
competition or where a famous or well-known mark is involved and there is a
demonstrated intent to capitalize on that mark. For example, in John Walker &
Sons, the court was persuaded to find a relationship between products, and hence a
likelihood of confusion, because of the plaintiffs long use and extensive advertising of
its mark and placed great emphasis on the fact that the defendant used the trademark
Johnnie Walker with full knowledge of its fame and reputation and with the intention of
taking advantage thereof. John Walker & Sons, 124 F. Supp. At 256; see Mckesson
& Robbins, Inc. v. P. Lorillard Co.,  1959 WL 5894, 120 U.S.P.Q. 306, 307 (1959)
(holding that the decision in John Walker & Sons was merely the law on the particular
case based upon its own peculiar facts); see also Alfred Dunhill, 350 F. Supp. At
1363 (defendants adoption of Dunhill mark was not innocent). However,
in Schenley, the court noted that the relation between tobacco and whiskey products
is significant where a widely known arbitrary mark has long been used for diversified
products emanating from a single source and a newcomer seeks to use the same
mark on unrelated goods. Schenley, 427 F.2d. at 785. Significantly, in Schenley, the
court looked at the industry practice and the facts of the case in order to determine
the nature and extent of the relationship between the mark on the tobacco product
and the mark on the alcohol product.
The record here establishes conclusively that IDV has never advertised BAILEYS
liqueurs in conjunction with tobacco or tobacco accessory products and that IDV has
no intent to do so. And, unlike the defendant in Dunhill,  S & M Brands does not
market bar accessories, or liqueur related products, with its cigarettes. The
advertising and promotional materials presented a trial in this action demonstrate a
complete lack of affiliation between the tobacco and liqueur products bearing the
marks here at issue.
xxx xxx xxx
Of equal significance, it is undisputed that S & M Brands had no intent, by adopting
the family name Baileys as the mark for its cigarettes, to capitalize upon the fame of
the BAILEYS mark for liqueurs. See Schenley, 427 F. 2d at 785. Moreover, as will
be discussed below, and as found in Mckesson & Robbins, the survey
evidence refutes the contention that cigarettes and alcoholic beverages are so
intimately associated in the public mind that they cannot under any
circumstances be sold under the same mark without causing confusion. See
Mckesson & Robbins, 120 U.S.P.Q. at 308.
Taken as a whole, the evidence here demonstrates the absence of the special
circumstances in which courts have found a relationship between tobacco and alcohol
products sufficient to tip the similarity of goods analysis in favor of the protected mark
and against the allegedly infringing mark. It is true that BAILEYS liqueur, the
worlds best selling liqueur and the second best selling in the United States, is a
well-known product. That fact alone, however, is insufficient to invoke the
special circumstances connection here where so much other evidence and so
many other factors disprove a likelihood of confusion. The similarity of
products analysis, therefore, augers against finding that there is a likelihood of
confusion. (Emphasis supplied).
In short, tobacco and alcohol products may be considered related only in cases
involving special circumstances which exist only if a famous mark is involved and
there is a demonstrated intent to capitalize on it. Both of these are absent in the
present case.
THE GALLO WINE TRADEMARK IS NOT A
WELL-KNOWN MARK IN THE CONTEXT
OF THE PARIS CONVENTION IN THIS CASE
SINCE WINES AND CIGARETTES ARE NOT
IDENTICAL OR SIMILAR GOODS
First, the records bear out that most of the trademark registrations took place in
the late 1980s and the 1990s, that is, after Tobacco Industries use of the GALLO
cigarette trademark in 1973 and petitioners use of the same mark in 1984.
GALLO wines and GALLO cigarettes are neither the same, identical, similar nor
related goods, a requisite element under both the Trademark Law and the Paris
Convention.
Second, the GALLO trademark cannot be considered a strong and distinct mark
in the Philippines. Respondents do not dispute the documentary evidence that aside
from Gallo Winerys GALLO trademark registration, the Bureau of Patents,
Trademarks and Technology Transfer also issued on September 4, 1992 Certificate
of Registration No. 53356 under the Principal Register approving Productos
Alimenticios Gallo, S.As April 19, 1990 application for GALLO trademark registration
and use for its noodles, prepared food or canned noodles, ready or canned sauces
for noodles, semolina, wheat flour and bread crumbs, pastry, confectionery, ice
cream, honey, molasses syrup, yeast, baking powder, salt, mustard, vinegar, species
and ice.[122]
Third and most important, pursuant to our ruling in Canon Kabushiki Kaisha vs.
Court of Appeals and NSR Rubber Corporation,[123]  GALLO cannot be considered a
well-known mark within the contemplation and protection of the  Paris Convention in
this case since wines and cigarettes are not identical or similar goods:
We agree with public respondents that the controlling doctrine with respect to the
applicability of Article 8 of the Paris Convention is that established in Kabushi Kaisha
Isetan vs. Intermediate Appellate Court (203 SCRA 59 [1991]). As pointed out by the
BPTTT:
Regarding the applicability of Article 8 of the Paris Convention, this Office
believes that there is no automatic protection afforded an entity whose
tradename is alleged to have been infringed through the use of that name as a
trademark by a local entity.
In Kabushiki Kaisha Isetan vs. The Intermediate Appellate Court, et. al., G.R. No.
75420, 15 November 1991, the Honorable Supreme Court held that:
The Paris Convention for the Protection of Industrial Property does not
automatically exclude all countries of the world which have signed it from
using a tradename which happens to be used in one country. To illustrate if a
taxicab or bus company in a town in the United Kingdom or India happens to
use the tradename Rapid Transportation, it does not necessarily follow that
Rapid can no longer be registered in Uganda, Fiji, or the Philippines.
This office is not unmindful that in (sic)  the Treaty of Paris for the Protection of
Intellectual Property regarding well-known marks and possible application thereof in
this case. Petitioner, as this office sees it, is trying to seek refuge under its protective
mantle, claiming that the subject mark is well known in this country at the time the
then application of NSR Rubber was filed.
However, the then Minister of Trade and Industry, the Hon. Roberto V. Ongpin,
issued a memorandum dated 25 October 1983 to the Director of Patents, a set of
guidelines in the implementation of Article 6bis of the Treaty of Paris. These
conditions are:
 a) the mark must be internationally known;
b) the subject of the right must be a trademark, not a patent or
copyright or anything else;
c) the mark must be for use in the same or similar kinds of
goods; and
d) the person claiming must be the owner of the mark (The
Parties Convention Commentary on the Paris
Convention. Article by Dr. Bogsch, Director General
of the World Intellectual Property Organization,
Geneva, Switzerland, 1985)
From the set of facts found in the records, it is ruled that the Petitioner failed to
comply with the third requirement of the said memorandum that is the mark
must be for use in the same or similar kinds of goods. The Petitioner is using
the mark CANON for products belonging to class 2 (paints, chemical products)
while the Respondent is using the same mark for sandals (class 25).
Hence, Petitioner's contention that its mark is well-known at the time the
Respondent filed its application for the same mark should fail. (Emphasis
supplied.)
Consent of the Registrant and
Other air, Just and Equitable
Considerations
Each trademark infringement case presents a unique problem which must be
answered by weighing the conflicting interests of the litigants.[124]
Respondents claim that GALLO wines and GALLO cigarettes flow through the
same channels of trade, that is, retail trade. If respondents assertion is true, then both
goods co-existed peacefully for a considerable period of time. It took respondents
almost 20 years to know about the existence of GALLO cigarettes and sue petitioners
for trademark infringement. Given, on one hand, the long period of time that
petitioners were engaged in the manufacture, marketing, distribution and sale of
GALLO cigarettes and, on the other, respondents delay in enforcing their rights (not
to mention implied consent, acquiescence or negligence) we hold that equity, justice
and fairness require us to rule in favor of petitioners. The scales of conscience and
reason tip far more readily in favor of petitioners than respondents.
Moreover, there exists no evidence that petitioners employed malice, bad faith
or fraud, or that they intended to capitalize on respondents goodwill in adopting the
GALLO mark for their cigarettes which are totally unrelated to respondents GALLO
wines. Thus, we rule out trademark infringement on the part of petitioners.
PETITIONERS ARE ALSO NOT LIABLE
FOR UNFAIR COMPETITION
Under Section 29 of the Trademark Law, any person who employs deception or
any other means contrary to good faith by which he passes off the goods
manufactured by him or in which he deals, or his business, or services for those of
the one having established such goodwill, or who commits any acts calculated to
produce said result, is guilty of unfair competition. It includes the following acts:
(a) Any person, who in selling his goods shall give them the general appearance of
goods of another manufacturer or dealer, either as to the goods themselves or in the
wrapping of the packages in which they are contained, or the devices or words
thereon, or in any other feature of their appearance, which would be likely to influence
purchasers to believe that the goods offered are those of a manufacturer or dealer
other than the actual manufacturer or dealer, or who otherwise clothes the goods with
such appearance as shall deceive the public and defraud another of his legitimate
trade, or any subsequent vendor of such goods or any agent of any vendor engaged
in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other means
calculated to induce the false belief that such person is offering the services of
another who has identified such services in the mind of the public;
(c) Any person who shall make any false statement in the course of trade or who shall
commit any other act contrary to good faith of a nature calculated to discredit the
goods, business or services of another.
The universal test question is whether the public is likely to be deceived.
Nothing less than conduct tending to pass off one mans goods or business as that of
another constitutes unfair competition. Actual or probable deception and confusion on
the part of customers by reason of defendants practices must always appear. [125] On
this score, we find that petitioners never attempted to pass off their cigarettes as
those of respondents. There is no evidence of bad faith or fraud imputable to
petitioners in using their GALLO cigarette mark.
All told, after applying all the tests provided by the governing laws as well as
those recognized by jurisprudence, we conclude that petitioners are not liable for
trademark infringement, unfair competition or damages.
WHEREFORE, finding the petition for review meritorious, the same is hereby
GRANTED. The questioned decision and resolution of the Court of Appeals in CA-
G.R. CV No. 65175 and the November 26, 1998 decision and the June 24, 1999
order of the Regional Trial Court of Makati, Branch 57 in Civil Case No. 93-850 are
hereby REVERSED and SET ASIDE and the complaint against petitioners
DISMISSED.
 McDONALDS CORPORATION,
Petitioner,   G.R. No. 166115 registration of the trademark MACJOY & DEVICE for fried chicken, chicken barbeque,
  Present:
    burgers, fries, spaghetti, palabok, tacos, sandwiches, halo-halo and steaks under
  PUNO, C.J., Chairperson,
  SANDOVAL-GUTIERREZ, classes 29 and 30 of the International Classification of Goods.
  CORONA,
- versus - AZCUNA,  
  GARCIA, JJ.
  Promulgated: Petitioner McDonalds Corporation, a corporation duly organized and existing under
   
    the laws of the State of Delaware, USA, filed a verified Notice of Opposition[3] against
 
MACJOY FASTFOOD CORPORATION, the respondents application claiming that the trademark MACJOY & DEVICE so
Respondent. February 2, 2007
resembles its corporate logo, otherwise known as the Golden Arches or M design,
x----------------------------------------------------------------------------------------x
and its marks McDonalds, McChicken, MacFries, BigMac, McDo, McSpaghetti,
DECISION
McSnack, and Mc, (hereinafter collectively known as the MCDONALDS marks) such
GARCIA, J.: that when used on identical or related goods, the trademark applied for would confuse

In this petition for review on certiorari under Rule 45 of the Rules of Court, herein or deceive purchasers into believing that the goods originate from the same source or

petitioner McDonalds Corporation seeks the reversal and setting aside of the origin. Likewise, the petitioner alleged that the respondents use and adoption in bad

faith of the MACJOY & DEVICE mark would falsely tend to suggest a connection or
following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 57247, to wit:

  affiliation with petitioners restaurant services and food products, thus, constituting a
1. Decision dated 29 July 2004[1] reversing an earlier decision of
the Intellectual Property Office (IPO) which rejected herein fraud upon the general public and further cause the dilution of the distinctiveness of
respondent MacJoy FastFood Corporations application for
registration of the trademark MACJOY & DEVICE; and petitioners registered and internationally recognized MCDONALDS marks to its
 
2. Resolution dated 12 November 2004[2] denying the petitioners prejudice and irreparable damage. The application and the opposition
motion for reconsideration.
  thereto was docketed as Inter Partes Case No. 3861.

As culled from the record, the facts are as follows:  

  Respondent denied the aforementioned allegations of the petitioner and averred that

On 14 March 1991, respondent MacJoy Fastfood Corporation, a domestic corporation it has used the mark MACJOY for the past many years in good faith and has spent

engaged in the sale of fast food products in Cebu City, filed with the then Bureau of considerable sums of money for said marks extensive promotion in tri-media,

Patents, Trademarks and Technology Transfer (BPTT), now the Intellectual Property especially in Cebu City where it has been doing business long before the petitioner

Office (IPO), an application, thereat identified as Application Serial No. 75274, for the opened its outletthereat sometime in 1992; and that its use of said mark would not
confuse affiliation with the petitioners restaurant services and food products because Finding no confusing similarity between the marks MACJOY and

of the differences in the design and detail of the two (2) marks. MCDONALDS, the CA, in its herein assailed Decision[7] dated July 29, 2004,

 
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 petitioners opposition and rejected the respondents
application, viz:
WHEREFORE, the Opposition to the registration of the
mark MACJOY & DEVICE for use in fried chicken and chicken
barbecue, burgers, fries, spaghetti, palabok, tacos, sandwiches,
halo-halo, and steaks is, as it is hereby, SUSTAINED. Accordingly,
Application Serial No. 75274 of the herein Respondent-Applicant
is REJECTED.
 
Let the filewrapper of MACJOY subject matter of this case
be sent to the Administrative, Financial and Human Resources
Development Bureau for appropriate action in accordance with this
Decision, with a copy to be furnished the Bureau of Trademarks for
information and to update its record.
SO ORDERED.
 
In time, the respondent moved for a reconsideration but the IPO denied the motion in
its 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.
 
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 petitioners
Application Serial No. 75274.
SO ORDERED.
Explains the CA in its decision:
 
xxx, it is clear that the IPO brushed aside and rendered useless the
glaring and drastic differences and variations in style of the two
trademarks and even decreed that these pronounced differences
are miniscule and considered them to have been overshadowed by
the appearance of the predominant features such as M, Mc, and
Mac appearing in both MCDONALDS 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
MCDONALDS. They are, as averred by the petitioner [now
respondent]:
1. The word MacJoy is written in round script
while the word McDonalds 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 McDonalds 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 McDonalds is
written in red, yellow and black color
combination;
4. The faade of the respective stores of the
parties are entirely different. Exhibits 1
and 1-A, show that [respondents]
 restaurant is set also in the same bold,
brilliant and noticeable color scheme as
that of its wrappers, containers, cups,
etc., while [petitioners] restaurant is in
yellow and red colors, and with the
mascot of Ronald McDonald being
prominently displayed therein. (Words in
brackets supplied.)
 
Petitioner promptly filed a motion for reconsideration. However, in its
similarly challenged 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] McDonalds Corporation. The Macjoy &
Device mark is dissimilar in color, design, spelling, size, concept
and appearance to the McDonalds marks. (Words in brackets
supplied.)
 
 
Hence, the petitioners present recourse on the following grounds:
 
I.
THE COURT OF APPEALS ERRED IN RULING THAT
RESPONDENTS MACJOY & DEVICE MARK IS NOT
CONFUSINGLY SIMILAR TO PETITIONERS McDONALDS
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 McDonalds 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 Petitioners McDonalds
Marks and the Respondents Macjoy &
Device mark. As such, the marks are
confusingly similar under the Dominancy
Test.
 
C. Petitioners McDonalds Marks are well-known
and world-famous marks which must be
protected under the Paris Convention.
 
II.
 
THE COURT OF APPEALS ERRED IN RULING THAT THE
DECISION OF THE IPO DATED 28 DECEMBER 1998 AND ITS
ORDER DATED 14 JANUARY 2000 WERE NOT BASED ON
SUBSTANTIAL EVIDENCE.
 
In its Comment,[9] the respondent asserts that the petition should be
dismissed outright for being procedurally defective: first, because the person who
signed the certification against forum shopping in behalf of the petitioner was not
specifically authorized to do so, and second, because the petition does not present a
reviewable issue as what it challenges are the factual findings of the CA. In any
event, the respondent insists that the CA committed no reversible error in finding no
confusing similarity between the trademarks in question.
The petition is impressed with merit.
Contrary to respondents claim, the petitioners 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 petitioners
Board of Directors Resolution dated December 5, 2002, as embodied in the
Certificate of the Assistant Secretary dated December 21, 2004,[11] Sheila Lehr was
one of those authorized and empowered to execute and deliver for and on behalf of
[the petitioner] all documents as may be required in connection with x  x x  the
protection and maintenance of any foreign patents, trademarks, trade-names, and

copyrights owned now or hereafter by [the petitioner], including, but not limited to,
x  x x  documents required to institute opposition or cancellation proceedings against
conflicting trademarks, and to do such other acts and things and to execute such
other documents as may be necessary and appropriate to effect and carry out the
intent of this resolution.  Indeed, the afore-stated authority given to Lehr necessarily
includes the authority to execute and sign the mandatorily required certification of
non-forum shopping to support the instant petition for review which stemmed from
the opposition proceedings  lodged by the petitioner before the IPO. Considering that
the person who executed and signed the certification against forum shopping has the
authority to do so, the petition, therefore, is not procedurally defective.
As regards the respondents argument that the petition raises only questions
of fact which are not proper in a petition for review, suffice it to say that the
contradictory findings of the IPO and the CA constrain us to give due course to the
petition, this being one of the recognized exceptions to Section 1, Rule 45 of the
Rules of Court. True, this Court is not the proper venue to consider factual issues as it
is not a trier of facts.[12] Nevertheless, when the factual findings of the appellate court
are mistaken, absurd, speculative, conjectural, conflicting, tainted with grave abuse of
discretion, or contrary to the findings culled by the court of origin,[13] as here, this
Court will review them.
The old Trademark Law, Republic Act (R.A.) No. 166, as amended, defines
a trademark as any distinctive word, name, symbol, emblem, sign, or device, or any
combination thereof adopted and used by a manufacturer or merchant on his goods
to identify and distinguish them from those manufactured, sold, or dealt in by others.
[14]
Under the same law, the registration of a trademark is subject to the
provisions of Section 4 thereof, paragraph (d) of which is pertinent to this case. The
provision reads:
Section 4. Registration of trademarks, trade-names and
service-marks on the principal register. There is hereby established
a register of trademarks, tradenames and service-marks which
shall be known as the principal register. The owner of the trade-
mark, trade-name or service-mark used to distinguish his goods,
business or services of others shall have the right to register the
same on the principal register, unless it:
xxx xxx xxx
(d) Consists of or comprises a mark or
trade-name which so resembles a mark or trade-
name registered in the Philippines or a mark or
trade-name previously used in the Philippines by
another and not abandoned, as to be likely, when
applied to or used in connection with the goods,
business or services of the applicant, to cause
confusion or mistake or to deceive purchasers;
xxx xxx xxx
Essentially, the issue here is whether there is a confusing similarity between
the MCDONALDS marks of the petitioner and the respondents 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.
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 [respondents] 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 CAs detailed enumeration of differences between
the two (2) competing trademarks herein involved, we believe that the holistic test is
not the one applicable in this case, the dominancy test being the one more suitable.
In recent cases with a similar factual milieu as here, the Court has consistently used
and applied the dominancy test in determining confusing similarity or likelihood of
confusion between competing trademarks.[22]
 
Notably, in McDonalds Corp. v. LC Big Mak Burger, Inc.,[23] a case where the
trademark Big Mak was found to be confusingly similar with the Big Mac mark of the
herein the petitioner, the Court explicitly held:
 
This Court, xxx, has relied on the dominancy test rather
than the holistic test. The dominancy test considers the dominant
features in the competing marks in determining whether they are
confusingly similar. Under the dominancy test, courts give greater
weight to the similarity of the appearance of the product arising
from the adoption of the dominant features of the registered mark,
disregarding minor differences. Courts will consider more the aural
and visual impressions created by the marks in the public mind,
giving little weight to factors like prices, quality, sales outlets and
market segments.
Moreover, in Societe Des Produits Nestle, S.A. v. 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 petitioners coffee products MASTER ROAST and MASTER BLEND and
further ruled:
  
xxx, the totality or holistic test is contrary to the elementary
postulate of the law on trademarks and unfair competition that
confusing similarity is to be determined on the basis of visual, aural,
connotative comparisons and overall impressions engendered by
the marks in controversy as they are encountered in the
marketplace. The totality or holistic test only relies on visual
comparisons between two trademarks whereas the dominancy test
relies not only on the visual but also on the aural and connotative
comparisons and overall impressions between the two trademarks.
 
 
Applying the dominancy test to the instant case, the Court finds that herein
petitioners MCDONALDS and respondents MACJOY marks are confusingly similar
with each other such that an ordinary purchaser can conclude an association or
relation between the marks.
To begin with, both marks use the corporate M design logo and the prefixes
Mc and/or Mac as dominant features. The first letter M in both marks puts emphasis
on the prefixes Mc and/or Mac by the similar way in which they are depicted i.e. in an
arch-like, capitalized and stylized manner.[25]
 
For sure, it is the prefix Mc, an abbreviation of Mac, which visually and
aurally catches the attention of the consuming public. Verily, the word MACJOY
attracts attention the same way as did McDonalds, MacFries, McSpaghetti, McDo,
Big Mac and the rest of the MCDONALDS 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 respondents 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 petitioners trademark registration for the
MCDONALDS marks in the Philippines covers goods which are similar if not identical
to those covered by the respondents application.
Thus, we concur with the IPOs findings that:
 
In the case at bar, the predominant features such as the M, Mc,
and Mac appearing in both McDonalds 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 McDonalds marks are of no
moment. These minuscule variations are overshadowed by the
appearance of the predominant features mentioned hereinabove.
Thus, with the predominance of the letter M, and prefixes Mac/Mc
found in both marks, the inevitable conclusion is there is confusing
similarity between the trademarks Mc Donalds 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 marks validity but also
the registrants 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
petitioners domicile, the United States, are adherent-members, the petitioner was
able to register its MCDONALDS marks successively, i.e., McDonalds in 04 October,
1971[29]; the corporate logo which is the M or the golden arches design and the
McDonalds 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 respondents 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.
Respondents 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 McDonalds outlet of the
petitioner thereat was opened only in 1992, is downright unmeritorious. For the
requirement of actual use in commerce x x x in the Philippines before one may
register a trademark, trade-name and service mark under the Trademark
[33]
Law  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 respondents 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
faciepresumed. In this case, the respondent failed to overcome such
presumption. We agree with the observations of the petitioner regarding the
respondents explanation that the word MACJOY is based on the name of its
presidents 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
Respondents president, as well as to supposedly bring good luck to
Respondents 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 Respondents president
was fond of the food products and services of the Respondent, but
that is beside the point. [34]
 
By reason of the respondents 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 MCDONALDs marks, which, as applied to petitioners restaurant
business and food products, is undoubtedly beyond question.
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.
MCDONALDS CORPORATION and G.R. No. 143993 The Case
MCGEORGE FOOD INDUSTRIES, INC.,  

Petitioners,  

Present:  

Davide, Jr., C.J.,

Chairman, This is a petition for review[1] of the Decision dated 26 November 1999 of the Court of

- versus - Quisumbing, Appeals[2] finding respondent L.C. Big Mak Burger, Inc. not liable for trademark

Ynares-Santiago,
infringement and unfair competition and ordering petitioners to pay
Carpio, and
respondents P1,900,000 in damages, and of its Resolution dated 11 July 2000
Azcuna, JJ.

  denying reconsideration. The Court of Appeals Decision reversed the 5 September

L.C. BIG MAK BURGER, INC., 1994 Decision[3] of the Regional Trial Court of Makati, Branch 137, finding respondent
FRANCIS B. DY, EDNA A. DY,
L.C. Big Mak Burger, Inc. liable for trademark infringement and unfair competition.
RENE B. DY, WILLIAM B. DY,
 
JESUS AYCARDO, ARACELI Promulgated:
 
AYCARDO, and GRACE HUERTO,
Respondents. August 18, 2004
 
The Facts
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
 
 

 
Petitioner McDonalds Corporation (McDonalds) is a corporation organized
DECISION
  under the laws of Delaware, United States. McDonalds operates, by itself or through

 
its franchisees, a global chain of fast-food restaurants. McDonalds [4] owns a family of
CARPIO, J.:
marks[5] including the Big Mac mark for its double-decker hamburger sandwich.
 
[6]
  McDonalds registered this trademark with the United States Trademark Registry on
16 October 1979.[7] Based on this Home Registration, McDonalds applied respondents) are the incorporators, stockholders and directors of respondent

corporation.[14]
for the registration of the same mark in the Principal Register of the then Philippine
 
Bureau of Patents, Trademarks and Technology (PBPTT), now the Intellectual

Property Office (IPO). Pendingapproval of its application, McDonalds introduced its On 21 October 1988, respondent corporation applied with the PBPTT

Big Mac hamburger sandwiches in the Philippine market in September 1981. On 18 for the registration of the Big Mak mark for its hamburger sandwiches. McDonalds

July 1985, the PBPTT allowed registration of the Big Mac mark in opposed respondent corporations application on the ground that Big Mak was a

the Principal Register based on its Home Registration in the United States.
Like its other marks, McDonalds displays the Big Mac mark in items [8] and
paraphernalia[9] in its restaurants, and in its outdoor and indoor signages. From 1982
colorable imitation of its registered Big Mac mark for the same food products.
McDonalds also informed respondent Francis Dy (respondent Dy), the chairman of
the Board of Directors of respondent corporation, of its exclusive right to the Big Mac

to 1990, McDonalds spent P10.5 million in advertisement for Big Mac hamburger mark and requested him to desist from using the Big Mac mark or any similar mark.
 
sandwiches alone.[10]
Having received no reply from respondent Dy, petitioners on 6 June 1990
 

sued respondents in the Regional Trial Court of Makati, Branch 137 (RTC), for
Petitioner McGeorge Food Industries (petitioner McGeorge), a domestic
trademark infringement and unfair competition. In its Order of 11 July 1990, the RTC
corporation, is McDonalds Philippine franchisee.[11]

  issued a temporary restraining order (TRO) against respondents enjoining them from

using the Big Mak mark in the operation of their business in the National Capital
Respondent L.C. Big Mak Burger, Inc. (respondent corporation) is a
Region.[15] On 16 August 1990, the RTC issued a writ of preliminary injunction
domestic corporation which operates fast-food outlets and snack vans in Metro

Manila and nearby provinces.[12] Respondent corporations menu includes hamburger replacing the TRO.[16]
 
sandwiches and other food items.[13] Respondents Francis B. Dy, Edna A. Dy, Rene

B. Dy, William B. Dy, Jesus Aycardo, Araceli Aycardo, and Grace Huerto (private
  
 
In their Answer, respondents admitted that they have been using the name Big Mak

Burger for their fast-food business. Respondents claimed, however, that McDonalds The Trial Courts Ruling
 
 
does not have an exclusive right to the Big Mac mark or to any other similar mark.

On 5 September 1994, the RTC rendered judgment (RTC Decision) finding

Respondents point out that the Isaiyas Group of Corporations (Isaiyas Group)

respondent corporation liable for trademark infringement and unfair

registered the same mark for hamburger sandwiches with the PBPTT on 31 March

competition. However, the RTC dismissed the complaint against private respondents

1979. One Rodolfo Topacio (Topacio) similarly registered the same mark on 24 June

and the counterclaim against petitioners for lack of merit and insufficiency of
1983, prior to McDonalds registration on 18 July 1985. Alternatively, respondents

evidence. The RTC held:

claimed that they are not liable for trademark infringement or for unfair competition, as  

the Big Mak mark they sought to register does not constitute a colorable imitation of Undeniably, the mark B[ig] M[ac] is a registered trademark
for plaintiff McDonalds, and as such, it is entitled [to] protection
against infringement.
the Big Mac mark. Respondents asserted that they did not fraudulently pass off their
 
[17]
hamburger sandwiches as those of petitioners Big Mac hamburgers.  Respondents

sought damages in their counterclaim.
 
In their Reply, petitioners denied respondents claim that McDonalds is not the
exclusive owner of the Big Mac mark. Petitioners asserted that while the Isaiyas
Group and Topacio did register the Big Mac mark ahead of McDonalds, the Isaiyas
xxxx
There exist some distinctions between the names B[ig] M[ac] and
B[ig] M[ak] as appearing in the respective signages, wrappers and
containers of the food products of the parties. But infringement
goes beyond the physical features of the questioned name and the
original name. There are still other factors to be considered.
xxxx

Group did so only in the Supplemental Register of the PBPTT and such registration  

does not provide anyprotection. McDonalds disclosed that it had acquired Topacios  

 
rights to his registration in a Deed of Assignment dated 18 May 1981.[18]
   
Significantly, the contending parties are both in the business of fast-
food chains and restaurants. An average person who is hungry and
wants to eat a hamburger sandwich may not be discriminating
enough to look for a McDonalds restaurant and buy a B[ig] M[ac]
hamburger. Once he sees a stall selling hamburger sandwich, in all
likelihood, he will dip into his pocket and order a B[ig] M[ak]
hamburger sandwich. Plaintiff McDonalds fast-food chain
has attained wide popularity and acceptance by the consuming
public so much so that its air-conditioned food outlets and
restaurants will perhaps not be mistaken by many to be the same
as defendant corporations mobile snack vans located along busy
streets or highways. But the thing is that what is being sold
by both contending parties is a food item a hamburger sandwich
which is for immediate consumption, so that a buyer may easily be
confused or deceived into thinking that the B[ig] M[ak] hamburger
sandwich he bought is a food-product of plaintiff McDonalds, or a
subsidiary or allied outlet thereof. Surely, defendant corporation has
its own secret ingredients to make its hamburger sandwiches as
palatable and as tasty as the other brands in the market,
considering the keen competition among mushrooming hamburger
stands and multinational fast-food chains and restaurants. Hence,
the trademark B[ig] M[ac] has been infringed by defendant
corporation when it used the name B[ig] M[ak] in its signages,  
wrappers, and containers in connection withits food business. xxxx  
Did the same acts of defendants in using the name B[ig] M[ak] as a
trademark or tradename in their signages, or in causing the name
B[ig] M[ak] to be printed on the wrappers and containers of their
food products also constitute an act of unfair competition under
Section 29 of the Trademark Law?
The answer is in the affirmative. xxxx
The xxx provision of the law concerning unfair competition is
broader and more inclusive than the law concerning the
infringement of trademark, which is of more limited range, but
within its narrower range recognizes a more exclusive right derived
by the adoption and registration of the trademark by the person
whose goods or services are first associated therewith.
xxxNotwithstanding the distinction between an action for trademark
infringement and an action for unfair competition, however, the law
extends substantially the same relief to the injured party
for both cases. (See Sections 23 and 29 of Republic Act No. 166)
 
Any conduct may be said to constitute unfair competition if the
effect is to pass off on the public the goods of one man as the
goods of another. The choice of B[ig] M[ak] as tradename by
defendant corporation is not merely for sentimental reasons but
was clearly made to take advantage of the reputation, popularity
and the established goodwill of plaintiff McDonalds. For, as stated
in Section 29, a person is guilty of unfair competition who in selling
his goods shall give them the general appearance, of goods of
another manufacturer or dealer, either as to the goods themselves
or in the wrapping of the packages in which they are contained, or
the devices or words thereon, or in any other feature of their
appearance, which would likely influence purchasers to believe that
the goods offered are those of a manufacturer or dealer other
than the actual manufacturer or dealer. Thus, plaintiffs have
established their valid cause of action against the defendants for
trademark infringement and unfair competition and for damages.[19]
The dispositive portion of the RTC Decision provides:
 
WHEREFORE, judgment is rendered in favor of plaintiffs
McDonalds Corporation and McGeorge Food Industries, Inc. and
against defendant L.C. Big Mak Burger, Inc., as follows:
1. The writ of preliminary injunction issued in this case on
[16 August 1990] is made permanent;
2. Defendant L.C. Big Mak Burger, Inc. is ordered to pay
plaintiffs actual damages in the amount of P400,000.00,
exemplary damages in the amount of P100,000.00, and attorneys
fees and expenses of litigation in the amount of P100,000.00;
 
 3. The complaint against defendants Francis B. Dy, Edna  
A. Dy, Rene B. Dy, Wiliam B. Dy, Jesus Aycardo, Araceli Aycardo
and Grace Huerto, as well as all counter-claims, are dismissed for To Our mind, however, this Court is fully convinced that no
lack of merit as well as for insufficiency of evidence.[20] colorable imitation exists. As the definition dictates, it is
  not sufficient that a similarity exists in both names, but that more
  importantly, the over-all presentation, or in their essential,
  substantive and distinctive parts is such as would likely MISLEAD
or CONFUSE persons in the ordinary course of purchasing the
genuine article. A careful comparison of the way the trademark
Respondents appealed to the Court of Appeals. B[ig] M[ac] is being used by plaintiffs-appellees and corporate
name L.C. Big Mak Burger, Inc. by defendants-appellants, would
  readily reveal that no confusion could take place, or that the
  ordinary purchasers would be misled by it. As pointed out by
defendants-appellants, the plaintiffs-appellees trademark is used to
The Ruling of the Court of Appeals designate only one product, a double decker sandwich sold in a
Styrofoam box with the McDonalds logo. On the other hand, what
the defendants-appellants corporation is using is not a trademark
  for its food product but a business or corporate name. They use the
business name L.C. Big Mak Burger, Inc. in their restaurant
On 26 November 1999, the Court of Appeals rendered judgment (Court of Appeals business which serves diversified food items such as siopao,
noodles, pizza, and sandwiches such as hotdog, ham, fish burger
and hamburger. Secondly, defendants-appellants corporate or
Decision) reversing the RTC Decision and ordering McDonalds to pay
business name appearing in the food packages and signages are
written in silhouette red-orange letters with the b and m in upper
respondents P1,600,000 as actual and compensatory damages and P300,000 as case letters. Above the words Big Mak are the upper case letter
L.C.. Below the words Big Mak are the words Burger, Inc. spelled
moral damages. The Court of Appeals held: out in upper case letters. Furthermore, said corporate or business
  name appearing in such food packages and signages is always
accompanied by the company mascot, a young chubby boy named
Plaintiffs-appellees in the instant case would like to Maky who wears a red T-shirt with the upper case m
impress on this Court that the use of defendants-appellants of its appearing therein and a blue lower garment. Finally, the
corporate name the whole L.C. B[ig] M[ak] B[urger], I[nc]. which defendants-appellants food packages are made of plastic material.
appears on their food packages, signages and advertisements is an
infringement of their trademark B[ig] M[ac] which they use to  
identify [their] double decker sandwich, sold in a Styrofoam box
packaging material with the McDonalds logo of umbrella M xxxx
stamped thereon, together with the printed mark in red bl[o]ck
capital letters, the words being separated by a  
single space.Specifically, plaintiffs-appellees argue that
xxx [I]t is readily apparent to the naked eye that there appears a
defendants-appellants use of their corporate name is a colorable
vast difference in the appearance of the product and
imitation of their trademark Big Mac.
the manner that the tradename Big Mak is being used and
  presented to the public. As earlier noted, there are glaring
dissimilarities between plaintiffs-appellees trademark and
xxxx defendants-appellants corporate name. Plaintiffs-appellees product
carrying the trademark B[ig] M[ac] is a double decker sandwich
(depicted in the tray mat containing photographs of the various food another has the burden of proving that the latter acted in bad faith
products xxx sold in a Styrofoam box with the McDonalds logo and or with ill motive. [21]
trademark in red, bl[o]ck capital letters printed thereon xxx at a  
price which is more expensive than the defendants-appellants
comparable food products. In order to buy a Big Mac, a customer
 
needs to visit an air-conditioned McDonalds restaurant
usually located in a nearby commercial center, advertised and
identified by its logo - the umbrella M, and its mascot Ronald Petitioners sought reconsideration of the Court of Appeals Decision but the appellate
McDonald. A typical McDonalds restaurant boasts of a playground
for kids, a second floor to accommodate additional customers, a court denied their motion in its Resolution of 11 July 2000.
drive-thru to allow customers with cars to make orders without  
alighting from their vehicles, the interiors of the building are well-
lighted, distinctly decorated and painted with pastel colors xxx. In
Hence, this petition for review.
buying a B[ig] M[ac], it is necessary to specify it by its
 
trademark. Thus, a customer needs to look for a McDonalds and
enter it first before he can find a hamburger sandwich which carry
the mark Big Mac. On the other hand, defendants-appellants sell Petitioners raise the following grounds for their petition:
their goods through snack vans xxxx  
  I. THE COURT OF APPEALS ERRED IN FINDING THAT
RESPONDENTS CORPORATE NAME L.C. BIG MAK
Anent the allegation that defendants-appellants are guilty of unfair BURGER, INC. IS NOT A COLORABLE IMITATION OF THE
competition, We likewise find the same untenable. MCDONALDS TRADEMARK BIG MAC, SUCH COLORABLE
  IMITATION BEING AN ELEMENT OF TRADEMARK
Unfair competition is defined as the employment of deception INFRINGEMENT.
or any other means contrary to good faith by which a  
person shall pass off the goods manufactured by him or in which he
deals, or his business, or service, for those of another who has
A.     Respondents use the words Big Mak as trademark
already established good will for his similar good, business or
services, or any acts calculated to produce the same result (Sec. for their products and not merely as their business or
29, Rep. Act No. 166, as amended). corporate name.
 
To constitute unfair competition therefore it must necessarily follow  
that there was malice and that the entity concerned was in bad
faith. B.     As a trademark, respondents Big Mak is undeniably
  and unquestionably similar to petitioners Big Mac
In the case at bar, We find no sufficient evidence adduced trademark based on the dominancy test and the idem
by plaintiffs-appellees that defendants-appellants deliberately tried sonans test resulting inexorably in confusion on the
to pass off the goods manufactured by them for those of plaintiffs- part of the consuming public.
appellees. The mere suspected similarity in the sound of the
defendants-appellants corporate name with the plaintiffs-appellees  
trademark is not sufficient evidence to conclude unfair
competition. Defendants-appellants explained that the name M[ak] II. THE COURT OF APPEALS ERRED IN REFUSING TO
in their corporate name was derived from both the first names of CONSIDER THE INHERENT SIMILARITY BETWEEN THE
the mother and father of defendant Francis Dy, whose names are MARK BIG MAK AND THE WORD MARK BIG MAC AS
Maxima and Kimsoy. With this explanation, it is up to the plaintiffs- AN INDICATION OF RESPONDENTS INTENT TO DECEIVE
appellees to prove bad faith on the part of defendants-appellants. It OR DEFRAUD FOR PURPOSES
is a settled rule that the law always presumes good faith such OF ESTABLISHING UNFAIR COMPETITION.[22]
that any person who seeks to be awarded damages due to acts of
   their hamburger products, and (b) whether respondent corporation is liable for

Petitioners pray that we set aside the Court of Appeals Decision and reinstate the trademark infringement and unfair competition.[23]

RTC Decision.  
 
The Courts Ruling
In their Comment to the petition, respondents question the propriety of this  

 
petition as it allegedly raises only questions of fact. On the merits, respondents

contend that the Court of Appeals committed no reversible error in finding them not The petition has merit.

 
liable for trademark infringement and unfair competition and in ordering petitioners to
 
pay damages.
  On Whether the Questions Raised in the Petition are
Proper for a Petition for Review
 
 

The Issues  
 

A party intending to appeal from a judgment of the Court of Appeals may file with this
The issues are:
  Court a petition for review under Section 1 of Rule 45 (Section 1) [24] raising only

questions of law. A question of law exists when the doubt or difference arises on what
1. Procedurally, whether the questions raised in this petition are proper for a

the law is on a certain state of facts. There is a question of fact when the doubt or
petition for review under Rule 45.
  difference arises on the truth or falsity of the alleged facts. [25]

2. On the merits, (a) whether respondents used the words Big Mak not only  

as part of the corporate name L.C. Big Mak Burger, Inc. but also as a trademark for Here, petitioners raise questions of fact and law in assailing the Court of Appeals

findings on respondent corporations non-liability for trademark infringement and unfair

competition. Ordinarily, the Court can deny due course to such a petition. In view,
however, of the contradictory findings of fact of the RTC and Court of Appeals, the by respondents for their hamburger sandwiches bore the words Big Mak. The other

Court opts to accept the petition, this being one of the recognized exceptions to descriptive words burger and 100% pure beef were set in smaller type, along with the

Section 1.[26] We took a similar course of action in Asia Brewery, Inc. v. Court of locations of branches.[28] Respondents cash invoices simply refer to their hamburger

Appeals[27] which also involved a suit for trademark infringement and unfair sandwiches as Big Mak.[29] It is respondents snack vans that carry the words L.C. Big

competition in which the trial court and the Court of Appeals arrived at conflicting Mak Burger, Inc.[30]

findings.
It was only during the trial that respondents presented in evidence the plastic
 
  wrappers and bags for their hamburger sandwiches relied on by the Court of

  Appeals.[31]Respondents plastic wrappers and bags were identical with those

On the  Manner Respondents Used
petitioners presented during the hearings for the injunctive writ except that the letters
Big Mak in their Business
 
L.C. and the words Burger, Inc. in respondents evidence were added above and
 
below the words Big Mak, respectively. Since petitioners complaint was based on
 
facts existing before and during the hearings on the injunctive writ, the facts
 
established during those hearings are the proper factual bases for the disposition of

Petitioners contend that the Court of Appeals erred in ruling that the corporate name the issues raised in this petition.

L.C. Big Mak Burger, Inc. appears in the packaging for respondents hamburger  
 
products and not the words Big Mak only.
On  the Issue of Trademark Infringement
   

 
The contention has merit.
 
 

Section 22 (Section 22) of Republic Act No. 166, as amended (RA 166), the law
The evidence presented during the hearings on petitioners motion for the issuance of
applicable to this case,[32] defines trademark infringement as follows:
a writ of preliminary injunction shows that the plastic wrappings and plastic bags used
 
 Infringement, what constitutes. Any person who [1] shall use, On the Validity of the Big MacMark
without the consent of the registrant, any reproduction, counterfeit, and McDonalds Ownership of such Mark
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 A mark is valid if it is distinctive and thus not barred from
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, registration under Section 4[36] of RA 166 (Section 4). However, once registered, not
business or services, shall be liable to a civil action by the registrant
for any or all of the remedies herein provided.[33] only the marks validity but also the registrants ownership of the mark is prima

  facie  presumed.[37]

   

 
Petitioners base their cause of action under the first part of Section

Respondents contend that of the two words in the Big Mac mark, it is only
22, i.e. respondents allegedly used, without petitioners consent, a colorable imitation

the word Mac that is valid because the word Big is generic and descriptive
of the Big Mac mark in advertising and selling respondents hamburger sandwiches.

(proscribed under Section 4[e]), and thus incapable of exclusive appropriation.[38]

This likely caused confusion in the mind of the purchasing public on the source of the
 
hamburgers or the identity of the business.

 
The contention has no merit. The Big Mac mark, which should be treated in its

entirety and not dissected word for word,[39] is neither generic nor descriptive. Generic
To establish trademark infringement, the following elements must be shown:

marks are commonly used as the name or description of a kind  of goods,[40] such as

(1) the validity of plaintiffs mark; (2) the plaintiffs ownership of the mark; and (3) the

Lite for beer[41] or Chocolate Fudge for chocolate soda drink. [42] Descriptive marks, on
use ofthe mark or its colorable imitation by the alleged infringer results in likelihood of

the other hand, convey the characteristics, functions, qualities or ingredients of a

confusion.[34] Of these, it is the element of likelihood of confusion that is the gravamen

product to one who has never seen it or does not know it exists,[43] such as Arthriticare
of trademark infringement.[35]

  for arthritis medication.[44] On the contrary, Big Mac falls under the class  of fanciful or

arbitrary marks as it bears no logical relation to the actual characteristics of the


product it represents.[45] As such, it is highly distinctive and thus valid. Significantly,
the trademark Little Debbie for snack cakes was found arbitrary or fanciful.[46]
The Court also finds that petitioners have duly established McDonalds  
exclusive ownership of the Big Mac mark. Although Topacio and the Isaiyas Group
Under Act No. 666,[50] the first trademark law, infringement was limited to confusion of
registered the Big Mac mark ahead of McDonalds, Topacio, as petitioners disclosed,
purchasing the other. xxx The other is the  confusion of business:
Here though the goods of the parties are different, the defendants
product is such as might reasonably be assumed to originate with
the plaintiff, and the public would then be deceived either into that
belief or into the belief that there is some connection between the
plaintiff and defendant which, in fact, does not exist.

had already assigned his rights to McDonalds. The Isaiyas Group, on the other hand, goods only, when the infringing mark is used on goods of a similar kind. [51] Thus, no

registered its trademark only in the Supplemental Register. A mark which is not relief was afforded to the party whose registered mark or its colorable imitation is

registered in the Principal Register, and thus not distinctive, has no real protection.

used on different although related goods. To remedy this situation, Congress enacted
[47]
 Indeed, we have held that registration in the Supplemental Register is not even
RA 166 on 20 June 1947. In defining trademark infringement, Section 22 of RA 166
a prima facie  evidence of the validity of the registrants exclusive right to use the mark
deleted the requirement in question and expanded its scope to include such use of
on the goods specified in the certificate.[48]
the mark or its colorable imitation that is likely to result in confusion on the

 
On Types of Confusion  

source or origin of such goods or services, or identity of such business.[52] Thus, while

 

there is confusion of goods when the products are competing, confusion of business
Section 22 covers two types of confusion arising from the use of similar or colorable

exists when the products are non-competing but related enough to produce confusion
imitation marks, namely, confusion of goods (product confusion) and confusion of

of affiliation.[53]
business (source or origin confusion). In Sterling Products International,
 
 
Incorporated v. Farbenfabriken Bayer Aktiengesellschaft, et al.,[49] the Court On Whether Confusion of Goods and
Confusion of Business are Applicable
distinguished these two types of confusion, thus:  
 
[Rudolf] Callman notes two types of confusion. The first is the
confusion of goods in which event the ordinarily prudent purchaser
would be induced to purchase one product in the belief that he was

Petitioners claim that respondents use of the Big Mak mark on respondents
hamburgers results in confusion of goods, particularly with respect to petitioners
hamburgers labeled Big Mac. Thus, petitioners alleged in their complaint:
1.15.        Defendants have unduly prejudiced and clearly
infringed upon the property rights of plaintiffs in the McDonalds
Marks, particularly the mark B[ig] M[ac]. Defendants unauthorized
acts are likely, and calculated, to confuse, mislead or deceive the
public into believing that the products and services offered by
defendant Big Mak Burger, and the business it is engaged in, are
approved and sponsored by, or affiliated with, plaintiffs.
[54]
 (Emphasis supplied)
 
 
Since respondents used the Big Mak mark on the same goods, i.e. hamburger
sandwiches, that petitioners Big Mac mark is used, trademark infringement through
confusion of goods is a proper issue in this case.
Petitioners also claim that respondents use of the Big Mak mark in the sale of
hamburgers, the same business that petitioners are engaged in, results in confusion
of business.Petitioners alleged in their complaint:
1.10. For some period of time, and without the consent of
plaintiff McDonalds nor its licensee/franchisee, plaintiff McGeorge,
and in clear violation of plaintiffs exclusive right to
use and/or appropriate the McDonalds marks, defendant Big Mak
Burger acting through individual defendants, has been operating
Big Mak Burger, a fast food restaurant business dealing in the sale
of hamburger and cheeseburger sandwiches, french fries and other
food products, and has caused to be printed on the wrapper
of defendants food products and incorporated in its signages the
name Big Mak Burger, which is confusingly similar to and/or is a
colorable imitation of the plaintiff McDonalds mark B[ig] M[ac],
xxx. Defendant Big Mak Burger has thus unjustly created the
impression that its business is approved and sponsored by, or
affiliated with, plaintiffs. xxxx
2.2 As a  consequence  of the acts committed by
defendants, which unduly prejudice and infringe upon the property
rights of plaintiffs McDonalds and McGeorge as the real owner and
rightful proprietor, and the licensee/franchisee, respectively, of the
McDonalds marks, and which are likely to have caused confusion
or deceived the public as to the true source, sponsorship or
affiliation of defendants food products and restaurant
business, plaintiffs have suffered and continue to
suffer actual damages in the form of injury to their business
reputation and goodwill, and of the dilution of the distinctive quality
of the McDonalds marks, in particular, the mark B[ig] M[ac].
[55]
 (Emphasis supplied)
 
Respondents admit that their business includes selling hamburger sandwiches, the
same food product that petitioners sell using the Big Mac mark. Thus, trademark
infringement through confusion of business is also a proper issue in this case.
 
Respondents assert that their Big Mak hamburgers cater mainly to the low-
income group while petitioners Big Mac hamburgers cater to the middle and upper
income groups. Even if this is true, the likelihood of confusion of business remains,
since the low-income group might be led to believe that the Big Mak hamburgers are
the low-end hamburgers marketed by petitioners. After all, petitioners have the
exclusive right to use the Big Mac mark. On the other hand, respondents would
benefit by associating their low-end hamburgers, through the use of the Big Mak
mark, with petitioners high-end Big Mac hamburgers, leading to likelihood of
confusion in the identity of business.
Respondents further claim that petitioners use the Big Mac mark only on
petitioners double-decker hamburgers, while respondents use the Big Mak mark on
hamburgers and other products like siopao, noodles and pizza. Respondents also
point out that petitioners sell their Big Mac double-deckers in a styrofoam box with the
McDonalds logo and trademark in red, block letters at a price more expensive than
the hamburgers of respondents. In contrast, respondents sell their Big Mak
hamburgers in plastic wrappers and plastic bags. Respondents further point out that
petitioners restaurants are air-conditioned buildings with drive-thru service, compared
to respondents mobile vans.
These and other factors respondents cite cannot negate the undisputed fact
that respondents use their Big Mak mark on hamburgers, the same food product that
petitioners sell with the use of their registered mark Big Mac. Whether a hamburger is
single, double or triple-decker, and whether wrapped in plastic or styrofoam, it
remains the same hamburger food product. Even respondents use of the Big Mak
mark on non-hamburger food products cannot excuse their infringement of petitioners
registered mark, otherwise registered marks will lose their protection under the law.
The registered trademark owner may use his mark on the same or similar
products, in different segments of the market, and at different price levels depending
on variations of the products for specific segments of the market. The Court has
recognized that the registered trademark owner enjoys protection in product and
market areas that are the normal potential expansion of his business. Thus, the
Court has declared:
Modern law recognizes that the protection to which the
owner of a trademark is entitled is not limited to guarding his goods
or business from actual market competition with identical or similar
products of the parties, but extends to all cases in which the use by
a junior appropriator of a trade-mark or trade-name is likely to
lead to a confusion of source, as where prospective
purchasers would be misled into thinking that the complaining
party has extended his business into the field (see 148 ALR 56
et seq; 53 Am Jur. 576) or is in any way connected with the
activities of the infringer; or when it forestalls the normal
potential expansion of his business (v. 148 ALR, 77, 84; 52 Am.
Jur. 576, 577).[56] (Emphasis supplied)
 
On Whether Respondents Use of the Big Mak
Mark Results in Likelihood of Confusion
 
In determining likelihood of confusion, jurisprudence has developed two tests, the
dominancy test and the holistic test.[57] The dominancy test focuses on the similarity of
the prevalent features of the competing trademarks that might cause confusion. In
contrast, the holistic test requires the court to consider the entirety of the marks as
applied to the products, including the labels and packaging, in determining confusing
similarity.
The Court of Appeals, in finding that there is no likelihood of confusion that
could arise in the use of respondents Big Mak mark on hamburgers, relied on the
holistic test. Thus, the Court of Appeals ruled that it is not sufficient that a similarity
exists in both name(s), but that more importantly, the overall presentation, or in their
essential, substantive and distinctive parts is such as would likely MISLEAD or
CONFUSE persons in the ordinary course of purchasing the genuine article. The
holistic test considers the two marks in their entirety, as they appear on the goods
with their labels and packaging. It is not enough to consider their words and
compare the spelling and pronunciation of the words.[58]
 
Respondents now vigorously argue that the Court of Appeals application of
the holistic test to this case is correct and in accord with prevailing jurisprudence.
This Court, however, has relied on the dominancy test rather than the holistic test.
The dominancy test considers the dominant features in the competing marks
in determiningwhether they are confusingly similar. Under the dominancy test, courts
give greater weight to the similarity of the appearance of the product arising
from the adoption of the dominant features of the registered mark,
disregarding minor differences.[59] Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving little weight to factors like
prices, quality, sales outlets and market segments.
 
Thus, in the 1954 case of Co Tiong Sa v. Director of Patents,[60] the Court
ruled:
xxx It has been consistently held that the question of
infringement of a trademark is to be determined by the test of
dominancy. Similarity in size, form and color, while relevant, is not
conclusive. If the competing trademark contains the main or
essential or dominant features of another, and confusion and
deception is likely to result, infringement takes place.
Duplication or imitation is not necessary; nor is it necessary that the
infringing label should suggest an effort to imitate. (G. Heilman
Brewing Co. vs. Independent Brewing Co., 191 F., 489, 495, citing
Eagle White Lead Co. vs. Pflugh (CC) 180 Fed. 579). The question
at issue in cases of infringement of trademarks is whether the use
of the marks involved would be likely to cause confusion or
mistakes in the mind of the public or deceive purchasers. (Auburn
Rubber Corporation vs. Honover Rubber Co., 107 F. 2d 588; xxx)
(Emphasis supplied.)
The Court reiterated the dominancy test in Lim Hoa v. Director of Patents,
[61]
 Phil. Nut Industry, Inc. v. Standard Brands Inc.,[62] Converse Rubber
Corporation v. Universal Rubber Products, Inc.,[63] and Asia Brewery, Inc. v.
Court of Appeals.[64] In the 2001 case of Societe Des Produits Nestl, S.A. v. Court
of Appeals,[65] the Court explicitly rejected the holistic test in this wise:
[T]he totality or holistic test is contrary to the elementary
postulate of the law on trademarks and unfair competition that
confusing similarity is to be determined on the basis of visual, aural,
connotative comparisons and overall impressions engendered by
the marks in controversy as they are encountered in the realities
of the marketplace. (Emphasis supplied)
 
 
The test of dominancy is now explicitly incorporated into law in Section 155.1
of the Intellectual Property Code which defines infringement as the colorable imitation
of a registered mark xxx or a dominant feature thereof.
Applying the dominancy test, the Court finds that respondents use of the Big
Mak mark results in likelihood of confusion. First, Big Mak sounds exactly the same
as Big Mac. Second, the first word in Big Mak is exactly the same as the first word in
Big Mac. Third, the first two letters in Mak are the same as the first two letters in
Mac. Fourth, the last letter in Mak while a k sounds the same as c when the word Mak
is pronounced. Fifth, in Filipino, the letter k replaces c in spelling, thus Caloocan is
spelled Kalookan.
 
In short, aurally the two marks are the same, with the first word
of both marks phonetically the same, and the second word of both marks also
phonetically the same.Visually, the two marks have both two words and six letters,
with the first word of both marks having the same letters and the second word having
the same first two letters. In spelling, considering the Filipino language, even the last
letters of both marks are the same.
 
Clearly, respondents have adopted in Big Mak not only the dominant
but also almost all the features of Big Mac. Applied to the same food product of
hamburgers, the two marks will likely result in confusion in the public mind.
 
The Court has taken into account the aural effects of the words and letters contained
in the marks in determining the  issue of confusing similarity. Thus, in Marvex
Commercial Co., Inc. v. Petra Hawpia & Co., et al.,[66] the Court held:
The following random list of confusingly similar sounds in
the matter of trademarks, culled from Nims, Unfair Competition and
Trade Marks, 1947, Vol. 1, will reinforce our view that SALONPAS
and LIONPAS are confusingly similar in sound: Gold Dust and Gold
Drop; Jantzen and Jass-Sea; Silver Flash and Supper Flash;
Cascarete and Celborite; Celluloid and Cellonite; Chartreuse and
Charseurs; Cutex and Cuticlean; Hebe and Meje; Kotex and
Femetex; Zuso and Hoo Hoo. Leon Amdur, in his book Trade-Mark
Law and Practice, pp. 419-421, cities, as coming within the purview
of the idem sonans rule, Yusea and U-C-A, Steinway Pianos and
Steinberg Pianos, and Seven-Up and Lemon-Up. In Co Tiong vs.
Director of Patents, this Court unequivocally said that Celdura and
Cordura are confusingly similar in sound; this Court held in Sapolin
Co. vs. Balmaceda, 67 Phil. 795 that the name Lusolin is an
infringement of the trademark Sapolin, as the sound of the two
names is almost the same. (Emphasis supplied)

Certainly, Big Mac and Big Mak for hamburgers create even greater confusion, not
only aurally but also visually.
Indeed, a person cannot distinguish Big Mac from Big Mak by their
sound. When one hears a Big Mac or Big Mak hamburger advertisement over the
radio, one would not know whether the Mac or Mak ends with a c or a k.
Petitioners aggressive promotion of the Big Mac mark, as borne by their
advertisement expenses, has built goodwill and reputation for such mark making it
one of the easily recognizable marks in the market today. This increases the
likelihood that consumers will mistakenly associate petitioners hamburgers and
business with those of respondents.
Respondents inability to explain sufficiently how and why they came to choose Big
Mak for their hamburger sandwiches indicates their intent to imitate petitioners Big
Mac mark. Contrary to the Court of Appeals finding, respondents claim that their Big
Mak mark was inspired by the first names of respondent Dys mother (Maxima) and
father (Kimsoy) is not credible. As petitioners well noted:
[R]espondents, particularly Respondent Mr. Francis Dy, could have
arrived at a more creative choice for a corporate name by using the
names of his parents, especially since he was allegedly driven by
sentimental reasons. For one, he could have put his fathers name
ahead of his mothers, as is usually done in this patriarchal society,
and derived letters from said names in that order.Or, he could have
taken an equal number of letters (i.e., two) from each name, as is
the more usual thing done. Surely, the more plausible reason
behind Respondents choice of the word M[ak], especially when
taken in conjunction with the word B[ig], was their intent to take
advantage of Petitioners xxx B[ig] M[ac] trademark, with
their alleged sentiment-focused explanation merely thought of as a
convenient, albeit unavailing, excuse or defense for such an unfair
choice of name.[67]
 
Absent proof that respondents adoption of the Big Mak mark was due
to honest mistake or was fortuitous,[68] the inescapable conclusion is that respondents
adopted the Big Mak mark to ride on the coattails of the more established Big Mac
mark.[69] This saves respondents much of the expense in advertising to create market
recognition of their mark and hamburgers.[70]
Thus, we hold that confusion is likely to result in the public mind. We sustain
petitioners claim of trademark infringement.
On the Lack of Proof of
Actual  Confusion
Petitioners failure to present proof of actual confusion does not negate their claim of
trademark infringement. As noted in American Wire & Cable Co. v. Director of
 of such goods or any agent of any vendor engaged in selling such
[71] goods with a like purpose;
Patents, Section 22 requires the less stringent standard of likelihood of confusion
(b) Any person who by any artifice, or device, or
only. While proof of actual confusion is the best evidence of infringement, its absence who employs any other means calculated to induce the false belief
that such person is offering the services of another who has
is inconsequential.[72] identified such services in the mind of the public; or
 
(c) Any person who shall make any false statement in the course
  of trade or who shall commit any other act contrary to good faith of
a nature calculated to discredit the goods, business or services of
another. (Emphasis supplied)

On the  Issue of  Unfair Competition

 
 
 

Section 29 (Section 29)[73] of RA 166 defines unfair competition, thus:

The essential elements of an action for unfair competition are (1) confusing
xxxx

  similarity in the general appearance of the goods, and (2) intent to deceive the public

Any person who will employ deception or any other means contrary and defraud a competitor.[74] The confusing similarity may or may not result from
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 similarity in the marks, but may result from other external factors in the packaging or
the one having established such goodwill, or
who shall commit any acts calculated to produce said presentation of the goods. The intent to deceive and defraud may be inferred from the
result, shall be guilty of unfair competition, and shall be subject to
an action therefor. similarity of the appearance of the goods as offered for sale to the public.

In  particular, and without in any way limiting the scope of unfair [75]
 Actual fraudulent intent need not be shown.[76]
competition, the following shall be deemed guilty of unfair
competition:
Unfair competition is broader than trademark infringement and includes
(a) Any person, who in selling his goods shall give them the
general appearance of goods of another manufacturer or passing off goods with or without trademark infringement. Trademark infringement is
dealer, either as to the goods themselves or in the wrapping of
the packages in which they are contained, or the devices or a form of unfair competition.[77] Trademark infringement constitutes unfair competition
words thereon, or in any feature of their appearance, which would
be likely to influence purchasers to believe that the goods offered when there is not merely likelihood of confusion, but also actual or probable deception
are those of a manufacturer or dealer, other
than the actual manufacturer or dealer, or who otherwise clothes on the public because of the general appearance of the goods. There can be
the goods with such appearance as shall deceive the public and
defraud another of his legitimate trade, or any subsequent vendor trademark infringement without unfair competition as when the infringer discloses on

the labels containing the mark that he manufactures the goods, thus preventing the
public from being deceived that the goods originate from the trademark owner.[78]
 
letter B and M being capitalized and the packaging material
is plastic wrapper. xxxx Further, plaintiffs logo and mascot are the
umbrella M and Ronald McDonalds, respectively, compared to the
mascot of defendant Corporation which is a chubby boy called
Macky displayed or printed between the words Big and Mak.
[81]
 (Emphasis supplied)

To support their claim of unfair competition, petitioners allege that  

respondents fraudulently passed off their hamburgers as Big Mac hamburgers.

Respondents point to these dissimilarities as proof that they did not give their
Petitioners add that respondents fraudulent intent can be inferred from the similarity
hamburgers the general appearance of petitioners Big Mac hamburgers.
of the marks in question.[79]
 
 

The dissimilarities in the packaging are minor compared to the stark

Passing off (or palming off) takes place where the defendant, by imitative
similarities in the words that give respondents Big Mak hamburgers the general
devices on the general appearance of the goods, misleads prospective purchasers
appearance of petitioners Big Mac hamburgers. Section 29(a) expressly provides that
into buying his merchandise under the impression that they are buying that of his
the similarity in the general appearance of the goods may be in the devices
competitors.[80] Thus, the defendant gives his goods the general appearance of the
or words used on the wrappings. Respondents have applied on their plastic wrappers
goods of his competitor with the intention of deceiving the public that the goods are
and bags almost the same words that petitioners use on their styrofoam box. What
those of his competitor.
attracts the attention of the buying public are the words Big Mak which are almost the
 
same, aurally and visually, as the words Big Mac. The dissimilarities in the material

The RTC described the respective marks and the goods of petitioners and and other devices are insignificant compared to the glaring similarity in the words

respondents in this wise: used in the wrappings.

   

The mark B[ig] M[ac] is used by plaintiff McDonalds to

identify its double decker hamburger sandwich. The packaging
Section 29(a) also provides that the defendant gives his goods the general
material is a styrofoam box with the McDonalds logo and trademark
in red with block capital letters printed on it. All letters of the B[ig]
appearance of goods of another manufacturer. Respondents goods are hamburgers
M[ac] mark are also in red and block capital letters. On the other
hand, defendants B[ig] M[ak] script print is in orange with only the
which are also the goods of petitioners. If respondents sold egg sandwiches
only instead of hamburger sandwiches, their use of the Big Mak mark would not give exclusive right to the Big Mac mark. This clearly shows respondents intent to deceive

their goods the general appearance of petitioners Big Mac hamburgers. In such case, the public. Had respondents placed a notice on their plastic wrappers and bags that

there is only trademark infringement but no unfair competition. However, since the hamburgers are sold by L.C. Big Mak Burger, Inc., then they could validly claim

respondents chose to apply the Big Mak mark on hamburgers, just like petitioners use that they did not intend to deceive the public. In such case, there is only trademark

of the Big Mac mark on hamburgers, respondents have obviously clothed their goods infringement but no unfair competition.[82] Respondents, however, did not give such

with the general appearance of petitioners goods. notice. We hold that as found by the RTC, respondent corporation is liable for unfair

  competition.

 
Moreover, there is no notice to the public that the Big Mak hamburgers are

products of L.C. Big Mak Burger, Inc. Respondents introduced during the trial plastic The Remedies Available to Petitioners
 
wrappers and bags with the words L.C. Big Mak Burger, Inc. to inform the public of

the name of the seller of the hamburgers. However, petitioners introduced during the  

injunctive hearings plastic wrappers and bags with the Big Mak mark without the
Under Section 23[83] (Section 23) in relation to Section 29 of RA 166, a plaintiff who
name L.C. Big Mak Burger, Inc. Respondents belated presentation of plastic
successfully maintains trademark infringement and unfair competition claims is
wrappers and bags bearing the name of L.C. Big Mak Burger, Inc. as the seller of the
entitled to injunctive and monetary reliefs. Here, the RTC did not err in issuing the
hamburgers is an after-thought designed to exculpate them from their unfair business
injunctive writ of 16 August 1990 (made permanent in its Decision of 5 September
conduct. As earlier stated, we cannot consider respondents evidence since
1994) and in ordering the payment of P400,000 actual damages in favor of
petitioners complaint was based on facts existing before and during the injunctive
petitioners. The injunctive writ is indispensable to prevent further acts of infringement
hearings.
by respondent corporation. Also, the amount of actual damages is a reasonable
 
percentage (11.9%) of respondent corporations gross sales for three (1988-1989 and

Thus, there is actually no notice to the public that the Big Mak hamburgers 1991) of the six years (1984-1990) respondents have used the Big Mak mark.[84]

are products of L.C. Big Mak Burger, Inc. and not those of petitioners who have the  
 The RTC also did not err in awarding exemplary damages by way of

correction for the public good[85] in view of the finding of unfair competition where

intent to deceive the public is essential. The award of attorneys fees and expenses of

litigation is also in order.[86]

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

dated 26 November 1999 of the Court of Appeals and its Resolution dated 11 July

2000 and REINSTATE the Decision dated 5 September 1994 of the Regional Trial

Court of Makati, Branch 137, finding respondent L.C. Big Mak Burger, Inc. liable for

trademark infringement and unfair competition.

OCIETE DES PRODUITS G.R. No. 172276
NESTLE, S.A., Nestle distributes and sells its NAN milk products all over the Philippines. It has been
Petitioner, investing tremendous amounts of resources to train its sales force and to promote the
Present:
  NAN milk products through advertisements and press releases.
CARPIO, J., Chairperson,  
NACHURA,
- versus - PERALTA, Dy, Jr. owns 5M Enterprises. He imports Sunny Boy powdered milk from Australia
ABAD, and
and repacks the powdered milk into three sizes of plastic packs bearing the name
MENDOZA, JJ.
  NANNY.The packs weigh 80, 180 and 450 grams and are sold for P8.90, P17.50
MARTIN T. DY, JR., Promulgated:
Respondent. August 8, 2010 and P39.90, respectively. NANNY is is also classified under Class 6 full cream milk
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x for adults in [sic] all ages. Dy, Jr. distributes and sells the powdered milk
  in Dumaguete, Negros Oriental, Cagayan de Oro, and parts of Mindanao.
DECISION  
  In a letter dated 1 August 1985, Nestle requested Dy, Jr. to refrain from using NANNY
CARPIO, J.: and to undertake that he would stop infringing the NAN trademark. Dy, Jr. did not act
  on Nestles request. On 1 March 1990, Nestle filed before the RTC, Judicial Region 7,
The Case Branch 31, Dumaguete City, a complaint against Dy, Jr. for infringement. Dy, Jr. filed
  a motion to dismiss alleging that the complaint did not state a cause of action. In its 4
This is a petition for review on certiorari under Rule 45 of the Rules of Court. The June 1990 order, the trial court dismissed the complaint. Nestle appealed the 4 June
petition challenges the 1 September 2005 Decision and 4 April 2006 Resolution of the 1990 order to the Court of Appeals. In its 16 February 1993 Resolution, the Court of
Court of Appeals in CA-G.R. CV No. 62730, finding respondent Martin T. Dy, Jr. (Dy, Appeals set aside the 4 June 1990 order and remanded the case to the trial court for
Jr.) not liable for trademark infringement. The Court of Appeals reversed the 18 further proceedings.
September 1998 Decision of the Regional Trial Court (RTC), Judicial Region 7,  
Branch 9, Cebu City, in Civil Case No. CEB-19345. Pursuant to Supreme Court Administrative Order No. 113-95, Nestle filed with the trial
The Facts court a motion to transfer the case to the RTC, Judicial Region 7, Branch
  9, Cebu City, which was designated as a special court for intellectual property rights.
Petitioner Societe Des Produits Nestle, S.A. (Nestle) is a foreign corporation  
organized under the laws of Switzerland. It manufactures food products and The RTCs Ruling
beverages. As evidenced by Certificate of Registration No. R-14621 issued on 7 April  
1969 by the then Bureau of Patents, Trademarks and Technology Transfer, Nestle In its 18 September 1998 Decision, the trial court found Dy, Jr. liable for
owns the NAN trademark for its line of infant powdered milk products, consisting of infringement. The trial court held:
PRE-NAN, NAN-H.A., NAN-1, and NAN-2. NAN is classified under Class  
6 diatetic preparations for infant feeding. If determination of infringement shall only be limited on whether or
not the mark used would likely cause confusion or mistake in the
  minds of the buying public or deceive customers, such in [sic] the
most considered view of this forum would be highly unlikely to
happen in the instant case. This is because upon comparison of the
plaintiffs NAN and defendants NANNY, the following features would
reveal the absence of any deceptive tendency in defendants
NANNY: (1) all NAN products are contained tin cans [sic], while
NANNY are contained in plastic packs;(2) the predominant colors
used in the labels of NAN products are blue and white, while the
predominant colors in the plastic packings of NANNY
are blue and green; (3) the labels of NAN products have at the
bottom portion an elliptical shaped figure containing inside it a
drawing of nestling birds, which is overlapped by the trade-name
Nestle, while the plastic packs of NANNY have a drawing of milking
cows lazing on a vast green field, back-dropped with snow covered
mountains; (4) the word NAN are [sic] all in large, formal and
conservative-like block letters, while the word NANNY are [sic] all in
small and irregular style of letters with curved ends; and (5) all NAN
products are milk formulas intended for use of [sic] infants, while
NANNY is an instant full cream powdered milk intended for use of
[sic] adults.
 
The foregoing has clearly shown that infringement in the instant
case cannot be proven with the use of the test of dominancy
because the deceptive tendency of the unregistered trademark
NANNY is not apparent from the essential features of the registered
trademark NAN.
However, in Esso Standard Eastern, Inc. vs. Court of Appeals, et
al. L-29971, Aug. 31, 1982, the Supreme Court took the occasion of
discussing what is implied in the definition of infringement when it
stated: Implicit in this definition is the concept that the goods must
be so related that there is likelihood either of confusion of goods or
business. x x x But as to whether trademark infringement exists
depends for the most part upon whether or not the goods are so
related that the public may be, or is actually, deceived and misled
that they came from the same maker or manufacturer. For non-
competing goods may be those which, though they are not in actual
competition, are so related to each other that it might reasonably be
assumed that they originate from one manufacturer. Non-
competing goods may also be those which, being entirely
unrelated, could not reasonably be assumed to have a common
source. In the former case of related goods, confusion of business
could arise out of the use of similar marks; in the latter case of non-
related goods, it could not.
 
Furthermore, in said case the Supreme Court as well discussed on
when goods may become so related for purposes of infringement
when it stated: Goods are related when they belong to the same
class or have same descriptive properties; when they possess the
same physical attributes or essential characteristics with reference
to their form, composition, texture or quality. They may also be
related because they serve the same purpose or are sold in grocery
stores. x x x
 
Considering that defendants NANNY belongs to the same class as
that of plaintiffs NAN because both are food products, the
defendants unregistered trade mark NANNY should be held an
infringement to plaintiffs registered trademark NAN because
defendants use of NANNY would imply that it came from the
manufacturer of NAN. Furthermore, since the word nanny means a
childs nurse, there might result the not so remote probability that
defendants NANNY may be confused with infant formula NAN
despite the aparent [sic] disparity between the features of the two
products.
 
Dy, Jr. appealed the 18 September 1998 Decision to the Court of Appeals.
 
The Court of Appeals Ruling
In its 1 September 2005 Decision, the Court of Appeals reversed the trial courts 18
September 1998 Decision and found Dy, Jr. not liable for infringement. The Court of
Appeals held:
[T]he trial court appeared to have made a finding that there is no
colorable imitation of the registered mark NAN in Dys use of
NANNY for his own milk packs. Yet it did not stop there. It
continued on applying the concept of related goods.
 
The Supreme Court utlilized the concept of related goods in the
said case of Esso Standard Easter, Inc. versus Court of Appeals,
et al. wherein two contending parties used the same trademark
ESSO for two different goods, i.e. petroleum products and
cigarettes. It rules that there is infringement of trademark involving
two goods bearing the same mark or label, even if the said goods
are non-competing, if and only if they are so related that the public
may be, or is actually, deceived that they originate from the one
maker or manufacturer. Since petroleum products and cigarettes, in
kind and nature, flow through different trade channels, and since
the possibility of confusion is unlikely in the general appearances of
each mark as a whole, the Court held in this case that they cannot
be so related in the context of infringement.
 
In applying the concept of related goods in the present case, the
trial court haphazardly concluded that since plaintiff-appellees NAN
and defendant-appellants NANNY belong to the same class being
food products, the unregistered NANNY should be held an
infringement of Nestles NAN because the use of NANNY would
imply that it came from the manufacturer of NAN. Said court went
on to elaborate further: since the word NANNY means a childs
nurse, there might result the not so remote probability that
defendants NANNY may be confused with infant formula NAN
despite the aparent (sic) disparity between the features of the two
products as discussed above.
 
The trial courts application of the doctrine laid down by the
Supreme Court in the Esso Standard case aforementioned and the
cases cited therein is quite misplaced. The goods of the two
contending parties in those cases bear similar marks or
labels: Esso for petroleum products and cigarettes, Selecta for
biscuits and milk, X-7 for soap and perfume, lipstick and nail
polish. In the instant case, two dissimilar marks are involved
plaintiff-appellees NAN and defendant-appellants
NANNY. Obviously, the concept of related goods cannot be utilized
in the instant case in the same way that it was used in
the Esso Standard case.
 
In the Esso Standard case, the Supreme Court even cautioned
judges that in resolving infringement or trademark cases in the
Philippines, particularly in ascertaining whether one trademark is
confusingly similar to or is a colorable imitation of another,
precedent must be studied in the light of the facts of the particular
case. Each case must be decided on its own merits. In the more
recent case of Societe Des  Produits  Nestle S.A. Versus Court of
Appeals, the High Court further stressed that due to the peculiarity
of the facts of each infringement case, a judicial forum should not
readily apply a certain test or standard just because of seeming
similarities. The entire panoply of elements constituting the relevant
factual landscape should be comprehensively examined.
 
While it is true that both NAN and NANNY are milk products and
that the word NAN is contained in the word NANNY, there are more
glaring dissimilarities in the entirety of their trademarks as they
appear in their respective labels and also 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. Even the
trial court found these glaring dissimilarities as above-quoted. We
need not add more of these factual dissimilarities.
NAN products, which consist of Pre-NAN, NAN-H-A, NAN-1 and
NAN-2, are all infant preparations, while NANNY is a full cream milk
for adults in [sic] all ages. NAN milk products are sold in tin cans
and hence, far expensive than the full cream milk NANNY sold in
three (3) plastic packs containing 80, 180 and 450 grams and
worth P8.90, P17.50 and P39.90 per milk pack.The labels of NAN
products are of the colors blue and white and have at the bottom
portion an elliptical shaped figure containing inside it a drawing of
nestling birds, which is overlapped by the trade-name Nestle. On
the other hand, the plastic packs NANNY have a drawing of milking
cows lazing on a vast green field, back-dropped with snow-capped
mountains and using the predominant colors of blue and
green. The word NAN are [sic] all in large, formal and conservative-
like block letters, while the word NANNY are [sic] all in small and
irregular style of letters with curved ends. With these material
differences apparent in the packaging of both milk products,
NANNY full cream milk cannot possibly be an infringement of NAN
infant milk.
 
Moreover, NAN infant milk preparation is more expensive than
NANNY instant full cream milk. The cheaper price of NANNY would
give, at the very first instance, a considerable warning to the
ordinary purchaser on whether he is buying an infant milk or a full
cream milk for adults. A cursory examination of the packaging
would confirm the striking differences between the products in
question.
 
In view of the foregoing, we find that the mark NANNY is not
confusingly similar to NAN. Dy therefore cannot be held liable for
infringement.
 
Nestle filed a motion for reconsideration. In its 4 April 2006 Resolution, the Court of
Appeals denied the motion for lack of merit. Hence, the present petition.
 
Issue
The issue is whether Dy, Jr. is liable for infringement.
 
The Courts Ruling
 
The petition is meritorious.
 
Section 22 of Republic Act (R.A.) No. 166, as amended, states:
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.
 
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.
In Prosource International, Inc. v. Horphag Research Management SA, the Court laid
down the elements of infringement under R.A. Nos. 166 and 8293:
In accordance with Section 22 of R.A. No. 166, as well as Sections
2, 2-A, 9-A, and 20 thereof, the following constitute the elements of
trademark infringement:
(a) A trademark actually used in commerce in the
Philippines and registered in the principal register
of the Philippine Patent Office[;]
 
(b) [It] is used by another person in connection
with the sale, offering for sale, or advertising of
any goods, business or services or in connection
with which such use is likely to cause confusion
or mistake or to deceive purchasers or others as
to the source or origin of such goods or services,
or identity of such business; or such trademark is
reproduced, counterfeited, copied
or colorably imitated by another person and such
reproduction, counterfeit, copy or colorable
imitation is applied to labels, signs, prints,
packages, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such goods, business or services
as to likely cause confusion or mistake or to
deceive purchasers[;]
 
(c) [T]he trademark is used for identical or
similar goods[;] and
(d) [S]uch act is done without the consent of the
trademark registrant or assignee.
On the other hand, the elements of infringement under R.A. No.
8293 are as follows:
 
The trademark being infringed is
registered in the Intellectual Property Office;
however, in infringement of trade name, the same
need not be registered;
The trademark or trade name is
reproduced, counterfeited, copied,
or colorably imitated by the infringer;
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;

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 idenity of such business; and
 
It is without the consent of the
trademark or trade name owner or the assignee
thereof.
 
Among the elements, the element of likelihood of confusion is the gravamen of
trademark infringement. There are two types of confusion in trademark infringement:
confusion of goods and confusion of business. In Sterling Products International, Inc.
v.  Farbenfabriken  Bayer Aktiengesellschaft, the Court distinguished the two types of
confusion:
Callman notes two types of confusion. The first is the confusion of
goods in which event the ordinarily prudent purchaser would be
induced to purchase one product in the belief that he was
purchasing the other. In which case, defendants goods are then
bought as the plaintiffs, and the poorer quality of the former reflects
adversely on the plaintiffs reputation. The other is the confusion of
business: Here though the goods of the parties are different, the
defendants product is such as might reasonably be assumed to
originate with the plaintiff, and the public would then be deceived
either into that belief or into the belief that there is some connection
between the plaintiff and defendant which, in fact, does not exist.
 
There are two tests to determine likelihood of confusion: the dominancy test and
holistic test. The dominancy test focuses on the similarity of the main, prevalent or
essential features of the competing trademarks that might
confusion. Infringement takes place when the competing trademark contains the
essential features of another. Imitation or an effort to imitate is unnecessary. The
question is whether the use of the marks is likely to cause confusion or deceive
purchasers.
 
The holistic test considers the entirety of the marks, including labels and packaging,
in determining confusing similarity. The focus is not only on the predominant words
but also on the other features appearing on the labels.
 
In cases involving trademark infringement, no set of rules can be deduced. Each case
must be decided on its own merits. Jurisprudential precedents must be studied in the
light of the facts of each particular case. In McDonalds Corporation
v.  MacJoy Fastfood Corporation, the Court held:
In trademark cases, particularly in ascertaining whether one
trademark is confusingly similar to another, no set rules can be
deduced because each case must be decided on its merits. In such
cases, even more than in any other litigation, precedent must be
studied in the light of the facts of the particular case. That is the
reason why in trademark cases, jurisprudential precedents should
be applied only to a case if they are specifically in point.
 
 
In the light of the facts of the present case, the Court holds that the dominancy test is
applicable. In recent cases with similar factual milieus, the Court has consistently
applied the dominancy test. In Prosource International, Inc., the Court applied the
dominancy test in holding that PCO-GENOLS is confusingly similar to
PYCNOGENOL. The Court held:
 
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-
cause 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 through 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 [petitioners] 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 is 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.
We find no cogent reason to depart from such conclusion.
This is not the first time 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., cited in McDonalds Corporation v. L.C. Big  Mak Burger, Inc.,
the Court held:
The following random list of confusingly similar
sounds in the matter of trademarks, culled
from Nims, Unfair Competition and Trade Marks,
1947, Vol. 1, will reinforce our view that
SALONPAS and LIONPAS are confusingly
similar in sound: Gold Dust and Gold
Drop; Jantzen and Jass-Sea; Silver Flash and
Supper Flash; Cascarete and Celborite; Celluloid
and Cellonite; Chartreuse
and Charseurs; Cutex and Cuticlean; Hebe
and Meje; Kotex
and Femetex; Zuso and Hoo Hoo. Leon Amdur,
in his book Trade-Mark Law and Practice, pp.
419-421, cities [sic], 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 Condura 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.
 
In McDonalds Corporation v.  MacJoy Fastfood Corporation, the Court applied the
dominancy test in holding that MACJOY is confusingly similar to MCDONALDS. The
Court held:
 
While we agree with the CAs 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.
x x x x
Applying the dominancy test to the instant case, the Court finds that
herein petitioners MCDONALDS and respondents MACJOY marks
are are confusingly similar with each other that an ordinary
purchaser can conclude an association or relation between the
marks.
To begin with, both marks use the corporate M design logo and the
prefixes Mc and/or Mac as dominant features. x x x
 
For sure, it is the prefix Mc, and abbreviation of Mac, which visually
and aurally catches the attention of the consuming public. Verily,
the word MACJOY attracts attention the same way as did
McDonalds, MacFries, McSpaghetti, McDo, Big Mac and the rest of
the MCDONALDS 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 respondents 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 petitioners trademark registration for
the MCDONALDS marks in the Philippines covers goods which are
similar if not identical to those covered by the respondents
application.

In McDonalds Corporation v. L.C. Big  Mak Burger, Inc., the Court applied the
dominancy test in holding that BIG MAK is confusingly similar to BIG MAC. The Court
held:
 
This Court x x x has relied on the dominancy test rather than the
holistic test. The dominancy test considers the dominant features in
the competing marks in determining whether they are confusingly
similar. Under the dominancy test, courts give greater weight to the
similarity of the appearance of the product arising from the adoption
of the dominant features of the registered mark, disregarding minor
differences. Courts will consider more the aural and visual
impressions created by the marks in the public mind, giving little
weight to factors like prices, quality, sales outlets and market
segments.
 
Thus, in the 1954 case of Co  Tiong  Sa v. Director of Patents, the
Court ruled:
 
x x x It has been consistently held that the
question of infringement of a trademark is to be
determined by the test of dominancy. Similarity in
size, form and color, while relevant, is not
conclusive. If the competing trademark contains
the main or essential or dominant features of
another, and confusion and deception is likely to
result, infringement takes place. Duplication or
imitation is not necessary; nor is it necessary that
the infringing label should suggest an effort to
imitate. (G. Heilman Brewing Co. vs.
Independent Brewing Co., 191 F., 489, 495,
citing Eagle White Lead Co. vs. Pflugh (CC) 180
Fed. 579). The question at issue in cases of
infringement of trademarks is whether the use of
the marks involved would be likely to cause
confusion or mistakes in the mind of the public or
deceive purchasers. (Auburn Rubber Corporation
vs. Honover Rubber Co., 107 F. 2d 588; x x x)
x x x x
 
The test of dominancy is now explicitly incorporated into law in
Section 155.1 of the Intellectual Property Code which defines
infringement as the colorable imitation of a registered mark x x xor
a dominant feature thereof.
Applying the dominancy test, the Court finds that respondents use
of the Big Mak mark results in likelihood of confusion. First,
Big Mak sounds exactly the same as Big Mac. Second, the first
word in Big Mak is exactly the same as the first word in Big
Mac. Third, the first two letters in Mak are the same as the first two
letters in Mac. Fourth, the last letter Mak while a k sounds the same
as c when the word Mak is pronounced. Fifth, in Filipino, the letter k
replaces c in spelling, thus Caloocan is spelled Kalookan.
 
In Societe Des  Produits  Nestle, S.A v. Court of Appeals, the Court applied the
dominancy test in holding that FLAVOR MASTER is confusingly similar to MASTER
ROAST and MASTER BLEND. The Court held:
While this Court agrees with the Court of Appeals detailed
enumeration of differences between the respective trademarks of
the two coffee products, this Court cannot agree that totality test is
the one applicable in this case. Rather, this Court believes that the
dominancy test is more suitable to this case in light of its peculiar
factual milieu.
 
Moreover, the totality or holistic test is contrary to the elementary
postulate of the law on trademarks and unfair competition that
confusing similarity is to be determined on the basis of visual, aural,
connotative comparisons and overall impressions engendered by
the marks in controversy as they are encountered in the realities of
the marketplace. The totality or holistic test only relies on visual
comparison between two trademarks whereas the dominancy test
relies not only on the visual but also on the aural and connotative
comparisons and overall impressions between the two trademarks.
 
For this reason, this Court agrees with the BPTTT when it applied
the test of dominancy and held that:
 
 
From the evidence at hand, it is sufficiently
established that the word MASTER is the
dominant feature of opposers mark. The word
MASTER is printed across the middle portion of
the label in bold letters almost twice the size of
the printed word ROAST. Further, the word
MASTER has always been given emphasis in the
TV and radio commercials and other
 advertisements made in promoting the
product. x x x In due time, because of these
advertising schemes the mind of the buying
public had come to learn to associate the word
MASTER with the opposers goods.
x x x. It is the observation of this Office that much
of the dominance which the word MASTER has
acquired through Opposers advertising schemes
is carried over when the same is incorporated
into respondent-applicants trademark FLAVOR
MASTER. Thus, when one looks at the label
bearing the trademark FLAVOR MASTER (exh.
4) ones attention is easily attracted to the word
MASTER, rather than to the dissimilarities that
exist. Therefore, the possibility of confusion as to
the goods which bear the competing marks or as
to the origins thereof is not farfetched.
 
Applying the dominancy test in the present case, the Court finds that NANNY is
confusingly similar to NAN. NAN is the prevalent feature of Nestles line of infant
powdered milk products. It is written in bold letters and used in all products. The line
consists of PRE-NAN, NAN-H.A., NAN-1, and NAN-2. Clearly, NANNY contains the
prevalent feature NAN. The first three letters of NANNY are exactly the same as the
letters of NAN. When NAN and NANNY are pronounced, the aural effect is
confusingly similar.
In determining the issue of confusing similarity, the Court takes into account the aural
effect of the letters contained in the marks. In Marvex Commercial Company, Inc. v.
Petra  Hawpia  & Company, the Court held:
 
It is our considered view that the trademarks SALONPAS and
LIONPAS are confusingly similar in sound.
Both these words have the same suffix, PAS, which is used to
denote a plaster that adheres to the body with curative
powers. PAS, being merely descriptive, furnishes no indication of
the origin of the article and therefore is open for appropriation by
anyone (Ethepa vs. Director of Patents, L-20635, March 31, 1966)
and may properly become the subject of a trademark by
combination with another word or phrase.
 
x x x x
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 [sic], 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 Condura 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.
 
The scope of protection afforded to registered trademark owners is not limited to
protection from infringers with identical goods. The scope of protection extends to
protection from infringers with related goods, and to market areas that are the normal
expansion of business of the registered trademark owners. Section 138 of R.A. No.
8293 states:
Certificates of Registration. A certificate of registration of a mark
shall be prima facie evidence of validity of the registration, the
registrants ownership of the mark, and of the registrants exclusive
right to use the same in connection with the goods or services and
those that are related thereto specified in the
certificate. (Emphasis supplied)
In Mighty Corporation v. E. & J. Gallo Winery, the Court held that, Non-competing
goods may be those which, though they are not in actual competition, are so related
to each other that it can reasonably be assumed that they originate from one
manufacturer, in which case, confusion of business can arise out of the use of similar
 limited to guarding his goods or business from
marks. In that case, the Court enumerated factors in determining whether goods are actual market competition with identical or similar
related: (1) classification of the goods; (2) nature of the goods; (3) descriptive products of the parties, but extends to all cases in
which the use by a junior appropriator of a trade-
properties, physical attributes or essential characteristics of the goods, with reference mark or trade-name is likely to lead to a confusion
to their form, composition, texture or quality; and (4) style of distribution and of source, as where prospective purchasers
would be misled into thinking that the complaining
marketing of the goods, including how the goods are displayed and sold. party has extended his business into the field
(see 148 ALR 56 et sq; 53 Am. Jur. 576) or is in
 
any way connected with the activities of the
NANNY and NAN have the same classification, descriptive properties and physical infringer; or when it forestalls the normal potential
expansion of his business (v. 148 ALR, 77, 84; 52
attributes. Both are classified under Class 6, both are milk products, and both are in Am. Jur. 576, 577). (Emphasis supplied)
powder form. Also, NANNY and NAN are displayed in the same section of stores the  
milk section.  

  WHEREFORE, we GRANT the petition. We SET ASIDE the 1 September 2005

The Court agrees with the lower courts that there are differences between NAN and Decision and 4 April 2006 Resolution of the Court of Appeals in CA-G.R. CV No.

NANNY: (1) NAN is intended for infants while NANNY is intended for children past 62730 and REINSTATE the 18 September 1998 Decision of the Regional Trial Court,

their infancy and for adults; and (2) NAN is more expensive than NANNY. However, Judicial Region 7, Branch 9, Cebu City, in Civil Case No. CEB-19345.

as the registered owner of the NAN mark, Nestle should be free to use its mark on
similar products, in different segments of the market, and at different price
levels. In McDonalds Corporation v. L.C. Big  Mak Burger, Inc., the Court held that the
scope of protection afforded to registered trademark owners extends to market areas
that are the normal expansion of business:
 
x x x
 
Even respondents use of the Big Mak mark on non-hamburger food
products cannot excuse their infringement of petitioners
registered mark, otherwise registered marks will lose their
protection under the law.
 
The registered trademark owner may use his mark on the
same or similar products, in different segments of the market,
and at different price levels depending on variations of the
products for specific segments of the market. The Court has
recognized that the registered trademark owner enjoys
protection in product and market areas that are the normal
potential expansion of his business. Thus, the Court has
declared:
 
Modern law recognizes that the protection to
which the owner of a trademark is entitled is not