G.R. No.
L-32747 November 29, 1984 At the pre-trial on May 5, 1965, the following admissions
FRUIT OF THE LOOM, INC., petitioner,
vs.
COURT OF APPEALS and GENERAL GARMENTS
CORPORATION, respondents.
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.
were made: (1) That the trademark FRUIT OF THE
LOOM has been registered with the Bureau of Patents
and it does not bear the notice 'Reg. Phil. Patent Off.',
and (2) That the trademark FRUIT FOR EVE has been
registered with the Bureau of Patents and it bears the
notice "Reg. Phil. Patent Off." and (3) That at the time of
its registration, plaintiff filed no opposition thereto.
After trial, judgment was rendered by the lower court in
favor of herein petitioner, the dispositive portion of which
reads as follows:
Judgment is, therefore, rendered ordering the Bureau
of Patents to cancel the registration of the Trademark
"Fruit for Eve", permanently enjoining Defendant from
using the trademark "Fruit for Eve", ordering Defendant
to pay plaintiff the sum of P10,000.00 as attorney's
fees and to pay the costs.
Both parties appealed to the former Court of Appeals,
herein petitioner's appeal being centered on the failure of
the trial court to award damages in its favor. Private
respondent, on the other hand, sought the reversal of the
lower court's decision.
On October 8, 1970, the former Court of Appeals, as
already stated, rendered its questioned decision
reversing the judgment of the lower court and dismissing
herein petitioner's complaint.
Petitioner's motion for reconsideration having been
denied, the present petition was filed before this Court.
The first and second arguments advanced by petitioner
are that the respondent court committed an error in
holding that the word FRUIT, being a generic word, is
not capable of exclusive appropriation by petitioner and
that the registrant of a trademark is not entitled to the
exclusive use of every word of his mark. Otherwise
stated, petitioner argues that the respondent court
committed an error in ruling that petitioner cannot
appropriate exclusively the word FRUIT in its trademark
FRUIT OF THE LOOM.
The third and fourth arguments submitted by petitioner
which We believe is the core of the present controversy,
are that the respondent court erred in holding that there
is no confusing similarity in sound and appearance
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.
G.R. No. L-78325 January 25, 1990
DEL MONTE TE CORPORATION and PHILIPPINE
PACKING CORPORATION, petitioners,
vs.
COURT OF APPEALS and SUNSHINE SAUCE
MANUFACTURING INDUSTRIES, respondents.
CRUZ, J.:
The petitioners are questioning the decision of the
respondent court upholding the dismissal by the trial
court of their complaint against the private respondent
for infringement of trademark and unfair competition.
Petitioner Del Monte Corporation is a foreign company
organized under the laws of the United States and not
engaged in business in the Philippines. Both the
Philippines and the United States are signatories to the
Convention of Paris of September 27, 1965, which
grants to the nationals of the parties rights and
advantages which their own nationals enjoy for the
repression of acts of infringement and unfair competition.
Petitioner Philippine Packing Corporation (Philpack) is a
domestic corporation duly organized under the laws of
the Philippines. On April 11, 1969, Del Monte granted
Philpack the right to manufacture, distribute and sell in
the Philippines various agricultural products, including
catsup, under the Del Monte trademark and logo.
On October 27,1965, Del Monte authorized Philpack to
register with the Philippine Patent Office the Del Monte
catsup bottle configuration, for which it was granted
Certificate of Trademark Registration No. SR-913 by the
Philippine Patent Office under the Supplemental
Register. 1 On November 20, 1972, Del Monte also
obtained two registration certificates for its trademark
"DEL MONTE" and its logo. 2
Respondent Sunshine Sauce Manufacturing Industries
was issued a Certificate of Registration by the Bureau of
Domestic Trade on April 17,1980, to engage in the
manufacture, packing, distribution and sale of various
kinds of sauce, identified by the logo Sunshine Fruit
Catsup.3
This logo was registered in the Supplemental Register
on September 20, 1983. 4
The product itself was contained in various kinds of
bottles, including the Del Monte bottle, which the private
respondent bought from the junk shops for recycling.
Having received reports that the private respondent was
using its exclusively designed bottles and a logo
confusingly similar to Del Monte's, Philpack warned it to
desist from doing so on pain of legal action. Thereafter,
claiming that the demand had been ignored, Philpack
and Del Monte filed a complaint against the private
respondent for infringement of trademark and unfair
competition, with a prayer for damages and the issuance
of a writ of preliminary injunction. 5
In its answer, Sunshine alleged that it had long ceased
to use the Del Monte bottle and that its logo was
substantially different from the Del Monte logo and would
not confuse the buying public to the detriment of the
petitioners. 6
After trial, the Regional Trial Court of Makati dismissed
the complaint. It held that there were substantial
differences between the logos or trademarks of the
parties; that the defendant had ceased using the
petitioners' bottles; and that in any case the defendant
became the owner of the said bottles upon its purchase
thereof from the junk yards. Furthermore, the
complainants had failed to establish the defendant's
malice or bad faith, which was an essential element of
infringement of trademark or unfair competition. 7
This decision was affirmed in toto by the respondent
court, which is now faulted in this petition
for certiorari under Rule 45 of the Rules of Court.
Section 22 of R.A. No. 166, otherwise known as the
Trademark Law, provides in part as follows:
Sec. 22. Infringement, what constitutes. — Any
person who shall use, without the consent of the
registrant, any reproduction, counterfeit, copy or
colorable imitation of any registered mark or
trade-name in connection with the sale, offering
for sale, or advertising of any goods, business or
services on or in connection with which such use
is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or
origin of such goods or services or identity of
such business; or reproduce, counterfeit copy or
colorably imitate any such mark or trade name
and apply such reproduction, counterfeit copy or
colorable imitation to labels, signs, prints,
packages, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such goods, business or
services, shall be liable to a civil action by the
registrant for any or all of the remedies herein
provided.
Sec. 29 of the same law states as follows:
Sec. 29. Unfair competition, rights and
remedies. — A person who has identified in the
mind of the public the goods he manufactures or
deals in, his business or services from those of
others, whether or not a mark or tradename is
employed, has a property right in the goodwill of
the said goods, business or services so
identified, which will be protected in the same
manner as other property rights. Such a person
shall have the remedies provided in section
twenty- three, Chapter V hereof.
Any person who shall employ deception or any
other means contrary to good faith by which he
shall pass off the goods manufactured by him or
in which he deals, or his business, or services
for those of the one having established such
goodwill, or who shall commit any acts
calculated to produce said result, shall be guilty
of unfair competition, and shall be subject to an
action therefor.
In particular, and without in any way limiting the
scope of unfair competition, the following shall
be deemed guilty of unfair competition:
(a) Any person, who in selling his goods
shall give them the general appearance
of goods of another manufacturer or
dealer, either as to the goods
themselves or in the wrapping of the
packages in which they are contained,
or the devices or words thereon, or in
any other feature of their appearance,
which would likely influence purchasers
to believe that the goods offered are
those of a manufacturer or dealer other
than the actual manufacturer or dealer,
or who otherwise clothes the goods with
such appearance as shall deceive the
public and defraud another of his
legitimate trade, or any subsequent
vendor of such goods or any agent of
any vendor engaged in selling such
goods with a like purpose;
(b) Any person who by any artifice, or
device, or who employs ally other
means calculated to induce the false
belief that such person is offering the
services of another who has identified
such services in the mind of the public;
or
(c) Any person who shall make any false
statement in the course of trade or who
shall commit any other act contrary to
good faith of a nature calculated to
discredit the goods, business or services
of another.
To arrive at a proper resolution of this case, it is
important to bear in mind the following
distinctions between infringement of trademark
and unfair competition.
(1) Infringement of trademark is the
unauthorized use of a trademark,
whereas unfair competition is the
passing off of one's goods as those of
another.
(2) In infringement of trademark
fraudulent intent is unnecessary
whereas in unfair competition fraudulent
intent is essential.
(3) In infringement of trademark the prior
registration of the trademark is a
prerequisite to the action, whereas in
unfair competition registration is not
necessary. 8
In the challenged decision, the respondent court
cited the following test laid down by this Court in
a number of cases:
In determining whether two trademarks
are confusingly similar, the two marks in
their entirety as they appear in the
respective labels must be considered in
relation to the goods to which they are
attached; the discerning eye of the
observer must focus not only on the
predorninant words but also on the other
features appearing on both labels. 9
and applying the same, held that there was no
colorable imitation of the petitioners' trademark
and logo by the private respondent. The
respondent court agreed with the findings of the
trial court that:
In order to resolve the said issue, the Court now
attempts to make a comparison of the two products, to
wit:
1. As to the shape of label or make:
Del Monte: Semi-rectangular with a
crown or tomato shape design on top of
the rectangle.
Sunshine: Regular rectangle.
2. As to brand printed on label:
Del Monte: Tomato catsup mark.
Sunshine: Fruit catsup.
3. As to the words or lettering on label or mark:
 Del Monte: Clearly indicated words
packed by Sysu International, Inc., Q.C.,
Philippines.
Sunshine: Sunshine fruit catsup is
clearly indicated "made in the
Philippines by Sunshine Sauce
Manufacturing Industries" No. 1 Del
Monte Avenue, Malabon, Metro Manila.
4. As to color of logo:
Del Monte: Combination of yellow and
dark red, with words "Del Monte Quality"
in white.
Sunshine: White, light green and light
red, with words "Sunshine Brand" in
yellow.
5. As to shape of logo:
Del Monte: In the shape of a tomato.
Sunshine: Entirely different in shape.
6. As to label below the cap:
Del Monte: Seal covering the cap down
to the neck of the bottle, with picture of
tomatoes with words "made from real
tomatoes."
Sunshine: There is a label below the cap
which says "Sunshine Brand."
7. As to the color of the products:
Del Monte: Darker red.
Sunshine: Lighter than Del Monte.
While the Court does recognize these distinctions, it
does not agree with the conclusion that there was no
infringement or unfair competition. It seems to us that the
lower courts have been so pre-occupied with the details
that they have not seen the total picture.
It has been correctly held that side-by-side comparison is
not the final test of similarity. 10 Such comparison
requires a careful scrutiny to determine in what points
the labels of the products differ, as was done by the trial
judge. The ordinary buyer does not usually make such
scrutiny nor does he usually have the time to do so. The
average shopper is usually in a hurry and does not
inspect every product on the shelf as if he were browsing
in a library. Where the housewife has to return home as
soon as possible to her baby or the working woman has
to make quick purchases during her off hours, she is apt
to be confused by similar labels even if they do have
minute differences. The male shopper is worse as he
usually does not bother about such distinctions.
The question is not whether the two articles are
distinguishable by their label when set side by side but
whether the general confusion made by the article upon
the eye of the casual purchaser who is unsuspicious and
off his guard, is such as to likely result in his confounding
it with the original. 11 As observed in several cases, the
general impression of the ordinary purchaser, buying
under the normally prevalent conditions in trade and
giving the attention such purchasers usually give in
buying that class of goods is the touchstone. 12
It has been held that in making purchases, the consumer
must depend upon his recollection of the appearance of
the product which he intends to purchase. 13 The buyer
having in mind the mark/label of the respondent must
rely upon his memory of the petitioner's mark. 14 Unlike
the judge who has ample time to minutely examine the
labels in question in the comfort of his sala, the ordinary
shopper does not enjoy the same opportunity.
A number of courts have held that to determine whether
a trademark has been infringed, we must consider the
mark as a whole and not as dissected. If the buyer is
deceived, it is attributable to the marks as a totality, not
usually to any part of it. 15 The court therefore should be
guided by its first impression, 16 for a buyer acts quickly
and is governed by a casual glance, the value of which
may be dissipated as soon as the court assumes to
analyze carefully the respective features of the mark. 17
It has also been held that it is not the function of the
court in cases of infringement and unfair competition to
educate purchasers but rather to take their carelessness
for granted, and to be ever conscious of the fact that
marks need not be identical. A confusing similarity will
justify the intervention of equity. 18 The judge must also
be aware of the fact that usually a defendant in cases of
infringement does not normally copy but makes only
colorable changes. 19 Well has it been said that the most
successful form of copying is to employ enough points of
similarity to confuse the public with enough points of
difference to confuse the courts. 20
We also note that the respondent court failed to take into
consideration several factors which should have affected
its conclusion, to wit: age, training and education of the
usual purchaser, the nature and cost of the article,
whether the article is bought for immediate consumption
and also the conditions under which it is usually
purchased . 21 Among these, what essentially determines
the attitude of the purchaser, specifically his inclination to
be cautious, is the cost of the goods. To be sure, a
person who buys a box of candies will not exercise as
much care as one who buys an expensive watch. As a
general rule, an ordinary buyer does not exercise as
much prudence in buying an article for which he pays a
few centavos as he does in purchasing a more valuable
thing. 22 Expensive and valuable items are normally
bought only after deliberate, comparative and analytical
investigation. But mass products, low priced articles in
wide use, and matters of everyday purchase requiring
frequent replacement are bought by the casual
consumer without great care. 23 In this latter category is
catsup.
At that, even if the labels were analyzed together it is not
difficult to see that the Sunshine label is a colorable
imitation of the Del Monte trademark. The predominant
colors used in the Del Monte label are green and red-
orange, the same with Sunshine. The word "catsup" in
both bottles is printed in white and the style of the
print/letter is the same. Although the logo of Sunshine is
not a tomato, the figure nevertheless approximates that
of a tomato.
As previously stated, the person who infringes a trade
mark does not normally copy out but only makes
colorable changes, employing enough points of similarity
to confuse the public with enough points of differences to
confuse the courts. What is undeniable is the fact that
when a manufacturer prepares to package his product,
he has before him a boundless choice of words,
phrases, colors and symbols sufficient to distinguish his
product from the others. When as in this case, Sunshine
chose, without a reasonable explanation, to use the
same colors and letters as those used by Del Monte
though the field of its selection was so broad, the
inevitable conclusion is that it was done deliberately to
deceive .24
It has been aptly observed that the ultimate ratio in
cases of grave doubt is the rule that as between a
newcomer who by the confusion has nothing to lose and
everything to gain and one who by honest dealing has
already achieved favor with the public, any doubt should
be resolved against the newcomer inasmuch as the field
from which he can select a desirable trademark to
indicate the origin of his product is obviously a large
one. 25
Coming now to the second issue, we find that the private
respondent is not guilty of infringement for having used
the Del Monte bottle. The reason is that the configuration
of the said bottle was merely registered in the
Supplemental Register. In the case of Lorenzana v.
Macagba, 26 we declared that:
(1) Registration in the Principal Register gives
rise to a presumption of the validity of the
registration, the registrant's ownership of the
mark and his right to the exclusive use thereof.
There is no such presumption in the registration
in the Supplemental Register.
(2) Registration in the Principal Register is
limited to the actual owner of the trademark and
proceedings therein on the issue of ownership
which may be contested through opposition or
interference proceedings or, after registration, in
a petition for cancellation.
Registration in the Principal Register is
constructive notice of the registrant's claim of
ownership, while registration in the
Supplemental Register is merely proof of actual
use of the trademark and notice that the
registrant has used or appropriated it. It is not
subject to opposition although it may be
cancelled after the issuance. Corollarily,
registration in the Principal Register is a basis
for an action for infringement while registration in
the Supplemental Register is not.
(3) In applications for registration in the Principal
Register, publication of the application is
necessary. This is not so in applications for
registrations in the Supplemental Register.
It can be inferred from the foregoing that although Del
Monte has actual use of the bottle's configuration, the
petitioners cannot claim exclusive use thereof because it
has not been registered in the Principal Register.
However, we find that Sunshine, despite the many
choices available to it and notwithstanding that the
caution "Del Monte Corporation, Not to be Refilled" was
embossed on the bottle, still opted to use the petitioners'
bottle to market a product which Philpack also produces.
This clearly shows the private respondent's bad faith and
its intention to capitalize on the latter's reputation and
goodwill and pass off its own product as that of Del
Monte.
The Court observes that the reasons given by the
respondent court in resolving the case in favor of
Sunshine are untenable. First, it declared that the
registration of the Sunshine label belied the company's
malicious intent to imitate petitioner's product. Second, it
held that the Sunshine label was not improper because
the Bureau of Patent presumably considered other
trademarks before approving it. Third, it cited the case
of Shell Co. v. Insular Petroleum, 27 where this Court
declared that selling oil in containers of another with
markings erased, without intent to deceive, was not
unfair competition.
Regarding the fact of registration, it is to be noted that
the Sunshine label was registered not in the Principal
Register but only in the Supplemental Register where
the presumption of the validity of the trademark, the
registrant's ownership of the mark and his right to its
exclusive use are all absent.
Anent the assumption that the Bureau of Patent had
considered other existing patents, it is reiterated that
since registration was only in the Supplemental Register,
this did not vest the registrant with the exclusive right to
use the label nor did it give rise to the presumption of the
validity of the registration.
On the argument that no unfair competition was
committed, the Shell Case is not on all fours with the
case at bar because:
(1) In Shell, the absence of intent to deceive was
supported by the fact that the respondent
therein, before marketing its product, totally
obliterated and erased the brands/mark of the
different companies stenciled on the containers
thereof, except for a single isolated transaction.
The respondent in the present case made no
similar effort.
(2) In Shell, what was involved was a single
isolated transaction. Of the many drums used,
there was only one container where the Shell
label was not erased, while in the case at hand,
the respondent admitted that it made use of
several Del Monte bottles and without
obliterating the embossed warning.
(3) In Shell, the product of respondent was sold
to dealers, not to ultimate consumers. As a
general rule, dealers are well acquainted with
the manufacturer from whom they make their
purchases and since they are more experienced,
they cannot be so easily deceived like the
inexperienced public. There may well be
similarities and imitations which deceive all, but
generally the interests of the dealers are not
regarded with the same solicitude as are the
interests of the ordinary consumer. For it is the
form in which the wares come to the final buyer
that is of significance. 28
As Sunshine's label is an infringement of the Del Monte's
trademark, law and equity call for the cancellation of the
private respondent's registration and withdrawal of all its
products bearing the questioned label from the market.
With regard to the use of Del Monte's bottle, the same
constitutes unfair competition; hence, the respondent
should be permanently enjoined from the use of such
bottles.
The court must rule, however, that the damage prayed
for cannot be granted because the petitioner has not
presented evidence to prove the amount thereof. Section
23 of R.A. No. 166 provides:
Sec. 23. Actions and damages and injunction for
infringement. — Any person entitled to the
exclusive use of a registered mark or trade
name may recover damages in a civil action
from any person who infringes his rights, and the
measure of the damages suffered shall be either
the reasonable profit which the complaining
party would have made, had the defendant not
infringed his said rights or the profit which the
defendant actually made out of the infringement,
or in the event such measure of damages
cannot be readily ascertained with reasonable
certainty the court may award as damages
reasonable percentage based upon the amount
of gross sales of the defendant or the value of
the services in connection with which the mark
or trade name was used in the infringement of
the rights of the complaining party. In cases
where actual intent to mislead the public or to
defraud the complaining party shall be shown, in
the discretion of the court, the damages may be
doubled.
The complaining party, upon proper showing
may also be granted injunction.1âwphi1
Fortunately for the petitioners, they may still find some
small comfort in Art. 2222 of the Civil Code, which
provides:
Art. 2222. The court may award nominal
damages in every obligation arising from any
source enumerated in Art. 1157, or in every case
where any property right has been invaded.
Accordingly, the Court can only award to the petitioners,
as it hereby does award, nominal damages in the
amount of Pl,000.00.
WHEREFORE, the petition is GRANTED. The decision
of the Court of Appeals dated December 24, 1986 and
the Resolution dated April 27,1987, are REVERSED and
SET ASIDE and a new judgment is hereby rendered:
(1) Canceling the private respondent's
Certificate of Register No. SR-6310 and
permanently enjoining the private respondent
from using a label similar to that of the
petitioners.
(2) Prohibiting the private respondent from using
the empty bottles of the petitioners as containers
for its own products.
(3) Ordering the private respondent to pay the
petitioners nominal damages in the amount of
Pl,000.00, and the costs of the suit.
SO ORDERED.

G.R. No. 143993             August 18, 2004
MCDONALD'S CORPORATION and MCGEORGE
FOOD INDUSTRIES, INC., petitioners,
vs.
L.C. BIG MAK BURGER, INC., FRANCIS B. DY, EDNA
A. DY, RENE B. DY, WILLIAM B. DY, JESUS
AYCARDO, ARACELI AYCARDO, and GRACE
HUERTO, respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the Decision dated 26
November 1999 of the Court of Appeals2 finding
respondent L.C. Big Mak Burger, Inc. not liable for
trademark infringement and unfair competition and
ordering petitioners to pay respondents P1,900,000 in
damages, and of its Resolution dated 11 July 2000
denying reconsideration. The Court of Appeals' Decision
reversed the 5 September 1994 Decision3 of the
Regional Trial Court of Makati, Branch 137, finding
respondent L.C. Big Mak Burger, Inc. liable for
trademark infringement and unfair competition.
The Facts
Petitioner McDonald's Corporation ("McDonald's") is a
corporation organized under the laws of Delaware,
United States. McDonald's operates, by itself or through
its franchisees, a global chain of fast-food restaurants.
McDonald's4 owns a family of marks5 including the "Big
Mac" mark for its "double-decker hamburger
sandwich."6 McDonald's registered this trademark with
the United States Trademark Registry on 16 October
1979.7 Based on this Home Registration, McDonald's
applied for the registration of the same mark in
the Principal Register of the then Philippine Bureau of
Patents, Trademarks and Technology
("PBPTT"), now the Intellectual Property Office
("IPO"). Pending approval of its application, McDonald's
introduced its "Big Mac" hamburger sandwiches in the
Philippine market in September 1981. On 18 July
1985, the PBPTT allowed registration of the "Big Mac"
mark in the Principal Register based on its Home
Registration in the United States.
Like its other marks, McDonald's displays the "Big Mac"
mark in items8 and paraphernalia9 in its restaurants, and
in its outdoor and indoor signages. From 1982 to 1990,
McDonald's spent P10.5 million in advertisement for "Big
Mac" hamburger sandwiches alone.10
Petitioner McGeorge Food Industries ("petitioner
McGeorge"), a domestic corporation, is McDonald's
Philippine franchisee.11
Respondent L.C. Big Mak Burger, Inc. ("respondent
corporation") is a domestic corporation which operates
fast-food outlets and snack vans in Metro Manila and
nearby provinces.12 Respondent corporation's menu
includes hamburger sandwiches and other food
items.13 Respondents Francis B. Dy, Edna A. Dy, Rene
B. Dy, William B. Dy, Jesus Aycardo, Araceli Aycardo,
and Grace Huerto ("private respondents") are the
incorporators, stockholders and directors of respondent
corporation.14
On 21 October 1988, respondent corporation applied
with the PBPTT for the registration of the "Big Mak" mark
for its hamburger sandwiches. McDonald's opposed
respondent corporation's application on the ground that
"Big Mak" was a colorable imitation of its registered "Big
Mac" mark for the same food products. McDonald's also
informed respondent Francis Dy ("respondent Dy"), the
chairman of the Board of Directors of respondent
corporation, of its exclusive right to the "Big Mac" mark
and requested him to desist from using the "Big Mac"
mark or any similar mark.
Having received no reply from respondent Dy,
petitioners on 6 June 1990 sued respondents in the
Regional Trial Court of Makati, Branch 137 ("RTC"), for
trademark infringement and unfair competition. In its
Order of 11 July 1990, the RTC issued a temporary
restraining order ("TRO") against respondents enjoining
them from using the "Big Mak" mark in the operation
of their business in the National Capital Region.15 On 16
August 1990, the RTC issued a writ of preliminary
injunction replacing the TRO.16
In their Answer, respondents admitted that they have
been using the name "Big Mak Burger" for their fast-food
business. Respondents claimed, however, that
McDonald's does not have an exclusive right to the "Big
Mac" mark or to any other similar mark. Respondents
point out that the Isaiyas Group of Corporations ("Isaiyas
Group") registered the same mark for hamburger
sandwiches with the PBPTT on 31 March 1979. One
Rodolfo Topacio ("Topacio") similarly registered the
same mark on 24 June 1983, prior to McDonald's
registration on 18 July 1985. Alternatively, respondents
claimed that they are not liable for trademark
infringement or for unfair competition, as the "Big Mak"
mark they sought to register does not constitute a
colorable imitation of the "Big Mac" mark. Respondents
asserted that they did not fraudulently pass off their
hamburger sandwiches as those of petitioners' Big Mac
hamburgers.17 Respondents sought damages in their
counterclaim.
In their Reply, petitioners denied respondents' claim that
McDonald's is not the exclusive owner of the "Big Mac"
mark. Petitioners asserted that while the Isaiyas Group
and Topacio did register the "Big Mac" mark ahead of
McDonald's, the Isaiyas Group did so only in the
Supplemental Register of the PBPTT and such
registration does not provide any protection. McDonald's
disclosed that it had acquired Topacio's rights to his
registration in a Deed of Assignment dated 18 May
1981.18
The Trial Court's Ruling
On 5 September 1994, the RTC rendered judgment
("RTC Decision") finding respondent corporation liable
for trademark infringement and unfair
competition. However, the RTC dismissed the complaint
against private respondents and the counterclaim
against petitioners for lack of merit and insufficiency of
evidence. The RTC held:
Undeniably, the mark "B[ig] M[ac]" is a
registered trademark for plaintiff McDonald's,
and as such, it is entitled [to] protection against
infringement.
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
Significantly, the contending parties are both in
the business of fast-food chains and restaurants.
An average person who is hungry and wants to
eat a hamburger sandwich may not be
discriminating enough to look for a McDonald's
restaurant and buy a "B[ig] M[ac]" hamburger.
Once he sees a stall selling hamburger
sandwich, in all likelihood, he will dip into his
pocket and order a "B[ig] M[ak]" hamburger
sandwich. Plaintiff McDonald's fast-food chain
has attained wide popularity and acceptance by
the consuming public so much so that its air-
conditioned food outlets and restaurants will
perhaps not be mistaken by many to be the
same as defendant corporation's mobile snack
vans located along busy streets or highways.
But the thing is that what is being sold
by both contending parties is a food item – a
hamburger sandwich which is for immediate
consumption, so that a buyer may easily be
confused or deceived into thinking that the "B[ig]
M[ak]" hamburger sandwich he bought is a food-
product of plaintiff McDonald's, or a subsidiary or
allied outlet thereof. Surely, defendant
corporation has its own secret ingredients to
make its hamburger sandwiches as palatable
and as tasty as the other brands in the market,
considering the keen competition among
mushrooming hamburger stands and
multinational fast-food chains and
restaurants. Hence, the trademark "B[ig] M[ac]"
has been infringed by defendant corporation
when it used the name "B[ig] M[ak]" in its
signages, wrappers, and containers in
connection with its food business. 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. xxx Notwithstanding the
distinction between an action for trademark
infringement and an action for unfair
competition, however, the law extends
substantially the same relief to the injured party
for both cases. (See Sections 23 and 29 of
Republic Act No. 166)
Any conduct may be said to constitute unfair
competition if the effect is to pass off on the
public the goods of one man as the goods of
another. The choice of "B[ig] M[ak]" as
tradename by defendant corporation is not
merely for sentimental reasons but was clearly
made to take advantage of the reputation,
popularity and the established goodwill of
 plaintiff McDonald's. For, as stated in Section
29, a person is guilty of unfair competition who in
selling his goods shall give them the general
appearance, of goods of another manufacturer
or dealer, either as to the goods themselves or
in the wrapping of the packages in which they
are contained, or the devices or words thereon,
or in any other feature of their appearance,
which would likely influence purchasers to
believe that the goods offered are those of a
manufacturer or dealer other
than the actual manufacturer or dealer. Thus,
plaintiffs have established their valid cause of
action against the defendants for trademark
infringement and unfair competition and for
damages.19
The dispositive portion of the RTC Decision provides:
WHEREFORE, judgment is rendered in favor of
plaintiffs McDonald's Corporation and McGeorge
Food Industries, Inc. and against defendant L.C.
Big Mak Burger, Inc., as follows:
1. The writ of preliminary injunction issued in this
case on [16 August 1990] is made permanent;
2. Defendant L.C. Big Mak Burger, Inc. is
ordered to pay plaintiffs actual damages in
the amount of P400,000.00, exemplary damages
in the amount of P100,000.00, and attorney's
fees and expenses of litigation in the amount
of P100,000.00;
3. The complaint against defendants Francis B.
Dy, Edna A. Dy, Rene B. Dy, Wiliam B. Dy,
Jesus Aycardo, Araceli Aycardo and Grace
Huerto, as well as all counter-claims, are
dismissed for lack of merit as well as for
insufficiency of evidence.20
Respondents appealed to the Court of Appeals.
The Ruling of the Court of Appeals
On 26 November 1999, the Court of Appeals rendered
judgment ("Court of Appeals' Decision") reversing the
RTC Decision and ordering McDonald's to pay
respondents P1,600,000 as actual and compensatory
damages and P300,000 as moral damages. The Court of
Appeals held:
Plaintiffs-appellees in the instant case would like
to impress on this Court that the use
of defendants-appellants of its corporate name –
the whole "L.C. B[ig] M[ak] B[urger], I[nc]." which
appears on their food packages, signages and
advertisements is an infringement of their
trademark "B[ig] M[ac]" which they use to
identify [their] double decker sandwich, sold in a
Styrofoam box packaging material with the
McDonald's logo of umbrella "M" stamped
thereon, together with the printed mark in red
bl[o]ck capital letters, the words being separated
by a single space. Specifically, plaintiffs-
appellees argue that defendants-appellants' use
of their corporate name is a colorable imitation of
their trademark "Big Mac".
xxxx
To Our mind, however, this Court is fully
convinced that no colorable imitation exists. As
the definition dictates, it is not sufficient that a
similarity exists in both names, but that more
importantly, the over-all presentation, or in their
essential, substantive and distinctive parts is
such as would likely MISLEAD or CONFUSE
persons in the ordinary course of purchasing the
genuine article. A careful comparison of the way
the trademark "B[ig] M[ac]" is being used by
plaintiffs-appellees and corporate name L.C. Big
Mak Burger, Inc. by defendants-appellants,
would readily reveal that no confusion could take
place, or that the ordinary purchasers would be
misled by it. As pointed out by defendants-
appellants, the plaintiffs-appellees' trademark is
used to designate only one product, a double
decker sandwich sold in a Styrofoam box with
the "McDonalds" logo. On the other hand, what
the defendants-appellants corporation is using is
not a trademark for its food product but a
business or corporate name. They use the
business name "L.C. Big Mak Burger, Inc." in
their restaurant business which serves
diversified food items such as siopao, noodles,
pizza, and sandwiches such as hotdog, ham,
fish burger and hamburger. Secondly,
defendants-appellants' corporate or business
name appearing in the food packages and
signages are written in silhouette red-orange
letters with the "b" and "m" in upper case letters.
Above the words "Big Mak" are the upper case
letter "L.C.". Below the words "Big Mak" are the
words "Burger, Inc." spelled out in upper case
letters. Furthermore, said corporate or business
name appearing in such food packages and
signages is always accompanied by the
company mascot, a young chubby boy named
Maky who wears a red T-shirt with the upper
case "m" appearing therein and a blue lower
garment. Finally, the defendants-appellants' food
packages are made of plastic material.
xxxx
xxx [I]t is readily apparent to the naked eye that
there appears a vast difference in the
appearance of the product and the manner that
the tradename "Big Mak" is being used and
presented to the public. As earlier noted, there
are glaring dissimilarities between plaintiffs-
appellees' trademark and defendants-appellants'
corporate name. Plaintiffs-appellees' product
carrying the trademark "B[ig] M[ac]" is a double
decker sandwich (depicted in the tray mat
containing photographs of the various food
products xxx sold in a Styrofoam box with the
"McDonald's" logo and trademark in red, bl[o]ck
capital letters printed thereon xxx at a price
which is more expensive than the defendants-
appellants' comparable food products. In order
to buy a "Big Mac", a customer needs to visit an
air-conditioned "McDonald's" restaurant
usually located in a nearby commercial center,
advertised and identified by its logo - the
umbrella "M", and its mascot – "Ronald
McDonald". A typical McDonald's restaurant
boasts of a playground for kids, a second floor to
accommodate additional customers, a drive-thru
to allow customers with cars to make orders
without alighting from their vehicles, the interiors
of the building are well-lighted, distinctly
decorated and painted with pastel colors xxx. In
buying a "B[ig] M[ac]", it is necessary to specify
it by its trademark. Thus, a customer needs to
look for a "McDonald's" and enter it first before
he can find a hamburger sandwich which carry
the mark "Big Mac". On the other
hand, defendants-appellants sell their goods
through snack vans xxxx
Anent the allegation that defendants-appellants
are guilty of unfair competition, We likewise find
the same untenable.
Unfair competition is defined as
"the employment of deception or any other
means contrary to good faith by which a
person shall pass off the goods manufactured by
him or in which he deals, or his business, or
service, for those of another who has already
established good will for his similar good,
business or services, or any acts calculated to
produce the same result" (Sec. 29, Rep. Act No.
166, as amended).
To constitute unfair competition therefore it
must necessarily follow that there was malice
and that the entity concerned was in bad faith.
In the case at bar, We find no sufficient evidence
adduced by plaintiffs-appellees that defendants-
appellants deliberately tried to pass off the
goods manufactured by them for those of
plaintiffs-appellees. The mere suspected
similarity in the sound of the defendants-
appellants' corporate name with the plaintiffs-
appellees' trademark is not sufficient evidence to
conclude unfair competition. Defendants-
appellants explained that the name "M[ak]" in
their corporate name was derived from both the
first names of the mother and father of
defendant Francis Dy, whose names are
Maxima and Kimsoy. With this explanation, it is
up to the plaintiffs-appellees to prove bad
faith on the part of defendants-appellants. It is a
settled rule that the law always presumes good
faith such that any person who seeks to be
awarded damages due to acts of another has
the burden of proving that the latter acted in bad
faith or with ill motive. 21
Petitioners sought reconsideration of the Court of
Appeals' Decision but the appellate court denied their
motion in its Resolution of 11 July 2000.
Hence, this petition for review.
Petitioners raise the following grounds for their petition:
I. THE COURT OF APPEALS ERRED IN
FINDING THAT RESPONDENTS'
CORPORATE NAME "L.C. BIG MAK BURGER,
INC." IS NOT A COLORABLE IMITATION OF
THE MCDONALD'S TRADEMARK "BIG MAC",
SUCH COLORABLE IMITATION BEING
AN ELEMENT OF TRADEMARK
INFRINGEMENT.
A. Respondents use the words "Big
Mak" as trademark for their products
and not merely as their business or
corporate name.
B. As a trademark, respondents' "Big
Mak" is undeniably and unquestionably
similar to petitioners' "Big Mac"
trademark based on the dominancy test
and the idem sonans test resulting
inexorably in confusion on the part of the
consuming public.
II. THE COURT OF APPEALS ERRED IN
REFUSING TO CONSIDER THE INHERENT
SIMILARITY BETWEEN THE MARK "BIG MAK"
AND THE WORD MARK "BIG MAC" AS
AN INDICATION OF RESPONDENTS' INTENT
TO DECEIVE OR DEFRAUD FOR PURPOSES
OF ESTABLISHING UNFAIR COMPETITION.22
Petitioners pray that we set aside the Court of Appeals'
Decision and reinstate the RTC Decision.
In their Comment to the petition, respondents question
the propriety of this petition as it allegedly raises only
questions of fact. On the merits, respondents contend
that the Court of Appeals committed no reversible error
in finding them not liable for trademark infringement and
unfair competition and in ordering petitioners to pay
damages.
The Issues
The issues are:
1. Procedurally, whether the questions raised in this
petition are proper for a petition for review under Rule
45.
2. On the merits, (a) whether respondents used the
words "Big Mak" not only as part of the corporate name
"L.C. Big Mak Burger, Inc." but also as a trademark for
their hamburger products, and (b) whether respondent
corporation is liable for trademark infringement and
unfair competition.23
The Court's Ruling
The petition has merit.
On Whether the Questions Raised in the Petition are
Proper for a Petition for Review
A party intending to appeal from a judgment of the Court
of Appeals may file with this Court a petition for review
under Section 1 of Rule 45 ("Section 1")24 raising only
questions of law. A question of law exists when the
doubt or difference arises on what the law is on a certain
state of facts. There is a question of fact when the doubt
or difference arises on the truth or falsity of
the alleged facts. 25
Here, petitioners raise questions of fact and law in
assailing the Court of Appeals' findings on respondent
corporation's non-liability for trademark infringement and
unfair competition. Ordinarily, the Court can deny due
course to such a petition. In view, however, of the
contradictory findings of fact of the RTC and Court of
Appeals, the Court opts to accept the petition, this being
one of the recognized exceptions to Section 1.26 We took
a similar course of action in Asia Brewery, Inc. v. Court
of Appeals27 which also involved a suit for trademark
infringement and unfair competition in which the trial
court and the Court of Appeals arrived at conflicting
findings.
On the Manner Respondents Used
"Big Mak" in their Business
Petitioners contend that the Court of Appeals erred in
ruling that the corporate name "L.C. Big Mak Burger,
Inc." appears in the packaging for respondents'
hamburger products and not the words "Big Mak" only.
The contention has merit.
The evidence presented during the hearings on
petitioners' motion for the issuance of a writ of
preliminary injunction shows that the plastic wrappings
and plastic bags used by respondents for their
hamburger sandwiches bore the words "Big Mak." The
other descriptive words "burger" and "100% pure beef"
were set in smaller type, along with the locations of
branches.28 Respondents' cash invoices simply refer to
their hamburger sandwiches as "Big Mak."29 It is
respondents' snack vans that carry the words "L.C. Big
Mak Burger, Inc."30
It was only during the trial that respondents presented in
evidence the plastic wrappers and bags for their
hamburger sandwiches relied on by the Court of
Appeals.31 Respondents' plastic wrappers and bags were
identical with those petitioners presented during the
hearings for the injunctive writ except that the letters
"L.C." and the words "Burger, Inc." in respondents'
evidence were added above and below the words "Big
Mak," respectively. Since petitioners' complaint was
based on facts existing before and during the hearings
on the injunctive writ, the facts established during those
hearings are the proper factual bases for the disposition
of the issues raised in this petition.
On the Issue of Trademark Infringement
Section 22 ("Section 22) of Republic Act No. 166, as
amended ("RA 166"), the law applicable to this
case,32 defines trademark infringement as follows:
Infringement, what constitutes. — Any person
who [1] shall use, without the consent of the
registrant, any reproduction, counterfeit, copy or
colorable imitation of any registered mark or
trade-name in connection with the sale, offering
for sale, or advertising of any goods, business or
services on or in connection with which such use
is likely to cause confusion or mistake or to
deceive purchasers or others as to the source or
origin of such goods or services, or identity of
such business; or [2] reproduce, counterfeit,
copy, or colorably imitate any such mark or
trade-name and apply such reproduction,
counterfeit, copy, or colorable imitation to labels,
signs, prints, packages, wrappers, receptacles
or advertisements intended to be
used upon or in connection with such goods,
business or services, shall be liable to a civil
action by the registrant for any or all of the
remedies herein provided.33
Petitioners base their cause of action under the first part
of Section 22, i.e. respondents allegedly used, without
petitioners' consent, a colorable imitation of the "Big
Mac" mark in advertising and selling respondents'
hamburger sandwiches. This likely caused confusion in
the mind of the purchasing public on the source of the
hamburgers or the identity of the business.
To establish trademark infringement, the following
elements must be shown: (1) the validity of plaintiff's
mark; (2) the plaintiff's ownership of the mark; and
(3) the use of the mark or its colorable imitation by
the alleged infringer results in "likelihood of
confusion."34 Of these, it is the element of likelihood of
confusion that is the gravamen of trademark
infringement.35
On the Validity of the "Big Mac"Mark
and McDonald's Ownership of such Mark
A mark is valid if it is "distinctive" and thus not barred
from registration under Section 436 of RA 166 ("Section
4"). However, once registered, not only the mark's
validity but also the registrant's ownership of the mark is
prima facie presumed.37
Respondents contend that of the two words in the "Big
Mac" mark, it is only the word "Mac" that is valid
because the word "Big" is generic and descriptive
(proscribed under Section 4[e]), and thus "incapable of
exclusive appropriation."38
The contention has no merit. The "Big Mac" mark, which
should be treated in its entirety and not dissected word
for word,39 is neither generic nor descriptive. Generic
marks are commonly used as the name or description of
a kind  of goods,40 such as "Lite" for beer41 or "Chocolate
Fudge" for chocolate soda drink.42 Descriptive marks, on
the other hand, convey the characteristics, functions,
qualities or ingredients of a product to one who has
never seen it or does not know it exists,43 such as
"Arthriticare" for arthritis medication.44 On the contrary,
"Big Mac" falls under the class of fanciful or arbitrary
marks as it bears no logical relation to
the actual characteristics of the product it
represents.45 As such, it is highly distinctive and thus
valid. Significantly, the trademark "Little Debbie" for
snack cakes was found arbitrary or fanciful.46
The Court also finds that petitioners have duly
established McDonald's exclusive ownership of the "Big
Mac" mark. Although Topacio and the Isaiyas Group
registered the "Big Mac" mark ahead of McDonald's,
Topacio, as petitioners disclosed, had already assigned
his rights to McDonald's. The Isaiyas Group, on the other
hand, registered its trademark only in the Supplemental
Register. A mark which is not registered in
the Principal Register, and thus not distinctive, has no
real protection.47 Indeed, we have held that registration in
the Supplemental Register is not even a prima facie
evidence of the validity of the registrant's exclusive right
to use the mark on the goods specified in the
certificate.48
On Types of Confusion
Section 22 covers two types of confusion arising
from the use of similar or colorable imitation
marks, namely, confusion of goods (product confusion)
and confusion of business (source or origin confusion).
In Sterling Products International, Incorporated v.
Farbenfabriken Bayer Aktiengesellschaft, et al.,49 the
Court distinguished these two types of confusion, thus:
[Rudolf] Callman notes two types of confusion.
The first is the confusion of goods "in which
event the ordinarily prudent purchaser would be
induced to purchase one product in the belief
that he was purchasing the other." xxx The other
is the confusion of business: "Here though the
goods of the parties are different, the
defendant's product is such as might reasonably
be assumed to originate with the plaintiff, and
the public would then be deceived either into
that belief or into the belief that there is some
connection between the plaintiff and defendant
which, in fact, does not exist."
Under Act No. 666,50 the first trademark law, infringement
was limited to confusion of goods only, when the
infringing mark is used on "goods of a similar
kind."51 Thus, no relief was afforded to the party whose
registered mark or its colorable imitation is used on
different although related goods. To remedy this
situation, Congress enacted RA 166 on 20 June 1947. In
defining trademark infringement, Section 22 of RA 166
deleted the requirement in question and expanded its
scope to include such use of the mark or its colorable
imitation that is likely to result in confusion on "the
source or origin of such goods or services, or identity of
such business."52 Thus, while there is confusion of goods
when the products are competing, confusion of business
exists when the products are non-competing but related
enough to produce confusion of affiliation.53
On Whether Confusion of Goods and
Confusion of Business are Applicable
Petitioners claim that respondents' use of the "Big Mak"
mark on respondents' hamburgers results in confusion of
goods, particularly with respect to petitioners'
hamburgers labeled "Big Mac." Thus,
petitioners alleged in their complaint:
1.15. Defendants have unduly prejudiced and
clearly infringed upon the property rights of
plaintiffs in the McDonald's Marks, particularly
the mark "B[ig] M[ac]". Defendants' unauthorized
acts are likely, and calculated, to confuse,
mislead or deceive the public into believing that
the products and services offered by defendant
Big Mak Burger, and the business it is engaged
in, are approved and sponsored by, or affiliated
with, plaintiffs.54 (Emphasis supplied)
Since respondents used the "Big Mak" mark on the
same goods, i.e. hamburger sandwiches, that
petitioners' "Big Mac" mark is used, trademark
infringement through confusion of goods is a proper
issue in this case.
Petitioners also claim that respondents' use of the "Big
Mak" mark in the sale of hamburgers, the same business
that petitioners are engaged in, results in confusion of
business. Petitioners alleged in their complaint:
 1.10. For some period of time, and without the
consent of plaintiff McDonald's nor its
licensee/franchisee, plaintiff McGeorge, and in
clear violation of plaintiffs' exclusive right to
use and/or appropriate the McDonald's marks,
defendant Big Mak Burger acting through
individual defendants, has been operating "Big
Mak Burger", a fast food restaurant business
dealing in the sale of hamburger and
cheeseburger sandwiches, french fries and other
food products, and has caused to be printed on
the wrapper of defendant's food products and
incorporated in its signages the name "Big Mak
Burger", which is confusingly similar to and/or is
a colorable imitation of the plaintiff McDonald's
mark "B[ig] M[ac]", xxx. Defendant Big Mak
Burger has thus unjustly created the
impression that its business is approved and
sponsored by, or affiliated with,
plaintiffs. xxxx
2.2 As a consequence of the acts committed by
defendants, which unduly prejudice and
infringe upon the property rights of plaintiffs
McDonald's and McGeorge as the real owner
and rightful proprietor, and the
licensee/franchisee, respectively, of the
McDonald's marks, and which are likely to
have caused confusion or deceived the
public as to the true source, sponsorship or
affiliation of defendants' food products and
restaurant business, plaintiffs have suffered
and continue to suffer actual damages in the
form of injury to their business reputation and
goodwill, and of the dilution of the distinctive
quality of the McDonald's marks, in particular,
the mark "B[ig] M[ac]".55 (Emphasis supplied)
Respondents admit that their business includes selling
hamburger sandwiches, the same food product that
petitioners sell using the "Big Mac" mark. Thus,
trademark infringement through confusion of business is
also a proper issue in this case.
Respondents assert that their "Big Mak" hamburgers
cater mainly to the low-income group while petitioners'
"Big Mac" hamburgers cater to the middle and upper
income groups. Even if this is true, the likelihood of
confusion of business remains, since the low-income
group might be led to believe that the "Big Mak"
hamburgers are the low-end hamburgers marketed by
petitioners. After all, petitioners have the exclusive right
to use the "Big Mac" mark. On the other
hand, respondents would benefit by associating their
low-end hamburgers, through the use of the "Big Mak"
mark, with petitioners' high-end "Big Mac" hamburgers,
leading to likelihood of confusion in the identity of
business.
Respondents further claim that petitioners use the "Big
Mac" mark only on petitioners' double-decker
hamburgers, while respondents use the "Big Mak" mark
on hamburgers and other products like siopao, noodles
and pizza. Respondents also point out that petitioners
sell their Big Mac double-deckers in a styrofoam box with
the "McDonald's" logo and trademark in red, block letters
at a price more expensive than the hamburgers of
respondents. In contrast, respondents sell their Big Mak
hamburgers in plastic wrappers and plastic bags.
Respondents further point out that petitioners'
restaurants are air-conditioned buildings with drive-thru
service, compared to respondents' mobile vans.
These and other factors respondents cite cannot negate
the undisputed fact that respondents use their "Big Mak"
mark on hamburgers, the same food product that
petitioners' sell with the use of their registered mark "Big
Mac." Whether a hamburger is single, double or triple-
decker, and whether wrapped in plastic or styrofoam, it
remains the same hamburger food product. Even
respondents' use of the "Big Mak" mark on non-
hamburger food products cannot excuse their
infringement of petitioners' registered mark, otherwise
registered marks will lose their protection under the law.
The registered trademark owner may use his mark on
the same or similar products, in different segments of the
market, and at different price levels depending on
variations of the products for specific segments of the
market. The Court has recognized that the registered
trademark owner enjoys protection in product and
market areas that are the normal potential expansion
of his business. Thus, the Court has declared:
Modern law recognizes that the protection to
which the owner of a trademark is entitled is not
limited to guarding his goods or business
from actual market competition with identical or
similar products of the parties, but extends to all
cases in which the use by a junior appropriator
of a trade-mark or trade-name is likely to lead to
a confusion of source, as where prospective
purchasers would be misled into thinking that the
complaining party has extended his business
into the field (see 148 ALR 56 et seq; 53 Am Jur.
576) or is in any way connected with the
activities of the infringer; or when it forestalls the
normal potential expansion of his business (v.
148 ALR, 77, 84; 52 Am. Jur. 576,
577).56 (Emphasis supplied)
On Whether Respondents' Use of the "Big Mak"
Mark Results in Likelihood of Confusion
In determining likelihood of confusion, jurisprudence has
developed two tests, the dominancy test and the holistic
test.57 The dominancy test focuses on the similarity of
the prevalent features of the competing trademarks that
might cause confusion. In contrast, the holistic
test requires the court to consider the entirety of the
marks as applied to the products, including the labels
and packaging, in determining confusing similarity.
The Court of Appeals, in finding that there is no
likelihood of confusion that could arise in the use
of respondents' "Big Mak" mark on hamburgers, relied
on the holistic test. Thus, the Court of Appeals ruled that
"it is not sufficient that a similarity exists in both name(s),
but that more importantly, the overall presentation, or in
their essential, substantive and distinctive parts is such
as would likely MISLEAD or CONFUSE persons in the
ordinary course of purchasing the genuine article." The
holistic test considers the two marks in their entirety, as
they appear on the goods with their labels and
packaging. It is not enough to consider their words and
compare the spelling and pronunciation of the words.58
Respondents now vigorously argue that the Court of
Appeals' application of the holistic test to this case is
correct and in accord with prevailing jurisprudence.
This Court, however, has relied on the dominancy test
rather than the holistic test. The dominancy test
considers the dominant features in the competing marks
in determining whether they are confusingly similar.
Under the dominancy test, courts give greater weight to
the similarity of the appearance of the product arising
from the adoption of the dominant features of the
registered mark, disregarding minor differences.59 Courts
will consider more the aural and visual impressions
created by the marks in the public mind, giving little
weight to factors like prices, quality, sales outlets and
market segments.
Thus, in the 1954 case of Co Tiong Sa v. Director of
Patents,60 the Court ruled:
xxx It has been consistently held that the
question of infringement of a trademark is to
be determined by the test of dominancy.
Similarity in size, form and color, while relevant,
is not conclusive. If the competing trademark
contains the main or essential or dominant
features of another, and confusion and
deception is likely to result, infringement
takes place. Duplication or imitation is
not necessary; nor is it necessary that the
infringing label should suggest an effort to
imitate. (G. Heilman Brewing Co. vs.
Independent Brewing Co., 191 F., 489, 495,
citing Eagle White Lead Co. vs. Pflugh (CC) 180
Fed. 579). The question at issue in cases
of infringement of trademarks is whether the use
of the marks involved would be likely to cause
confusion or mistakes in the mind of the public
or deceive purchasers. (Auburn Rubber
Corporation vs. Honover Rubber Co., 107 F. 2d
588; xxx) (Emphasis supplied.)
The Court reiterated the dominancy test in Lim Hoa v.
Director of Patents,61 Phil. Nut Industry, Inc. v.
Standard Brands Inc.,62 Converse Rubber
Corporation v. Universal Rubber Products,
Inc.,63 and Asia Brewery, Inc. v. Court of Appeals.64 In
the 2001 case of Societe Des Produits Nestlé, S.A. v.
Court of Appeals,65 the Court explicitly rejected the
holistic test in this wise:
[T]he totality or holistic test is contrary to the
elementary postulate of the law on
trademarks and unfair competition that
confusing similarity is to be determined on the
basis of visual, aural, connotative comparisons
and overall impressions engendered by the
marks in controversy as they
are encountered in the realities of the
marketplace. (Emphasis supplied)
The test of dominancy is now explicitly incorporated into
law in Section 155.1 of the Intellectual Property Code
which defines infringement as the "colorable imitation
of a registered mark xxx or a dominant feature thereof."
Applying the dominancy test, the Court finds that
respondents' use of the "Big Mak" mark results in
likelihood of confusion. First, "Big Mak"
sounds exactly the same as "Big Mac." Second, the first
word in "Big Mak" is exactly the same as the first word in
"Big Mac." Third, the first two letters in "Mak" are the
same as the first two letters in "Mac." Fourth, the last
letter in "Mak" while a "k" sounds the same as "c" when
the word "Mak" is pronounced. Fifth, in Filipino, the letter
"k" replaces "c" in spelling, thus "Caloocan" is spelled
"Kalookan."
In short, aurally the two marks are the same, with the
first word of both marks phonetically the same, and the
second word of both marks also phonetically 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 Dy's mother
(Maxima) and father (Kimsoy) is not credible. As
petitioners well noted:
[R]espondents, particularly Respondent Mr.
Francis Dy, could have arrived at a more
creative choice for a corporate name by using
the names of his parents, especially since he
was allegedly driven by sentimental reasons. For
one, he could have put his father's name ahead
of his mother's, as is usually done in this
patriarchal society, and derived letters from said
names in that order. Or, he could have taken an
equal number of letters (i.e., two) from each
name, as is the more usual thing done. Surely,
the more plausible reason behind Respondents'
choice of the word "M[ak]", especially when
taken in conjunction with the word "B[ig]", was
their intent to take advantage of Petitioners' xxx
"B[ig] M[ac]" trademark, with
their alleged sentiment-focused "explanation"
merely thought of as a dealer, or who otherwise clothes the goods with
convenient, albeit unavailing, excuse or defense
for such an unfair choice of name.67
Absent proof that respondents' adoption of the "Big Mak"
mark was due to honest mistake or was fortuitous,68 the
inescapable conclusion is that respondents adopted the
"Big Mak" mark to "ride on the coattails" of the more
established "Big Mac" mark.69 This saves respondents
much of the expense in advertising to create market
recognition of their mark and hamburgers.70
Thus, we hold that confusion is likely to result in the
public mind. We sustain petitioners' claim of trademark
infringement.
On the Lack of Proof of
Actual Confusion
Petitioners' failure to present proof of actual confusion
does not negate their claim of trademark infringement.
As noted in American Wire & Cable Co. v. Director of
Patents,71 Section 22 requires the less stringent
standard of "likelihood of confusion" only. While proof
of actual confusion is the best evidence of infringement,
its absence is inconsequential.72
On the Issue of Unfair Competition
Section 29 ("Section 29")73 of RA 166 defines unfair
competition, thus:
xxxx
Any person who will employ deception
or any other means contrary to good faith by
which he shall pass off the goods manufactured
by him or in which he deals, or his business, or
services for those of the one having established
such goodwill, or who shall commit any acts
calculated to produce said result, shall be guilty
of unfair competition, and shall be subject to an
action therefor.
In particular, and without in any way limiting the
scope of unfair competition, the
following shall be deemed guilty of unfair
competition:
(a) Any person, who in selling his
goods shall give them the general
appearance of goods of another
manufacturer or dealer, either as to the
goods themselves or in the wrapping of the
packages in which they are contained, or the
devices or words thereon, or in any feature of
their appearance, which would be likely to
influence purchasers to believe that the goods
offered are those of a manufacturer or
dealer, other than the actual manufacturer or
 such appearance as shall deceive the public and
defraud another of his legitimate trade,
or any subsequent vendor of such goods
or any agent of any vendor engaged in selling
such goods with a like purpose;
(b) Any person who by any artifice, or device, or
who employs any other means calculated to
induce the false belief that such person is
offering the services of another who has
identified such services in the mind of the public;
or
(c) Any person who shall make any false
statement in the course of trade or
who shall commit any other act contrary to good
faith of a nature calculated to discredit the
goods, business or services of another.
(Emphasis supplied)
The essential elements of an action for unfair
competition are (1) confusing similarity in the general
appearance of the goods, and (2) intent to deceive the
public and defraud a competitor.74 The confusing
similarity may or may not result from similarity in the
marks, but may result from other external factors
in the packaging or presentation of the goods. The intent
to deceive and defraud may be inferred from the
similarity of the appearance of the goods as offered for
sale to the public.75 Actual fraudulent intent need not be
shown.76
Unfair competition is broader than trademark
infringement and includes passing off goods with or
without trademark infringement. Trademark infringement
is a form of unfair competition.77 Trademark infringement
constitutes unfair competition when there is not merely
likelihood of confusion, but also actual or probable
deception on the public because of the general
appearance of the goods. There can be trademark
infringement without unfair competition as when the
infringer discloses on the labels containing the mark that
he manufactures the goods, thus preventing the public
from being deceived that the goods originate from the
trademark owner.78
To support their claim of unfair competition, petitioners
allege that respondents fraudulently passed off their
hamburgers as "Big Mac" hamburgers. Petitioners add
that respondents' fraudulent intent can be inferred from
the similarity of the marks in question.79
Passing off (or palming off) takes place where the
defendant, by imitative devices on the general
appearance of the goods, misleads prospective
purchasers into buying his merchandise under the
impression that they are buying that of his
competitors.80 Thus, the defendant gives his goods the
general appearance of the goods of his competitor with
the intention of deceiving the public that the goods are
those of his competitor.
The RTC described the respective marks and the goods
of petitioners and respondents in this wise:
The mark "B[ig] M[ac]" is used by plaintiff
McDonald's to identify its double decker
hamburger sandwich. The packaging material is
a styrofoam box with the McDonald's logo and
trademark in red with block capital letters printed
on it. All letters of the "B[ig] M[ac]" mark are also
in red and block capital letters. On the other
hand, defendants' "B[ig] M[ak]" script print is
in orange with only the letter "B" and "M" being
capitalized and the packaging material is plastic
wrapper. xxxx Further, plaintiffs' logo and
mascot are the umbrella "M" and "Ronald
McDonald's", respectively, compared to the
mascot of defendant Corporation which is a
chubby boy called "Macky" displayed or printed
between the words "Big" and "Mak."81 (Emphasis
supplied)
Respondents point to these dissimilarities as proof that
they did not give their hamburgers the general
appearance of petitioners' "Big Mac" hamburgers.
The dissimilarities in the packaging are minor compared
to the stark similarities in the words that give
respondents' "Big Mak" hamburgers the general
appearance of petitioners' "Big Mac" hamburgers.
Section 29(a) expressly provides that the similarity in the
general appearance of the goods may be in the "devices
or words" used on the wrappings. Respondents have
applied on their plastic wrappers and bags almost
the same words that petitioners use on their styrofoam
box. What attracts the attention of the buying public are
the words "Big Mak" which are almost the same, aurally
and visually, as the words "Big Mac." The dissimilarities
in the material and other devices are insignificant
compared to the glaring similarity in the words used in
the wrappings.
Section 29(a) also provides that the defendant gives "his
goods the general appearance of goods of another
manufacturer." Respondents' goods are hamburgers
which are also the goods of petitioners. If respondents
sold egg sandwiches only instead of hamburger
sandwiches, their use of the "Big Mak" mark would not
give their goods the general appearance of petitioners'
"Big Mac" hamburgers. In such case, there is only
trademark infringement but no unfair
competition. However, since respondents chose to apply
the "Big Mak" mark on hamburgers, just like petitioner's
use of the "Big Mac" mark on hamburgers, respondents
have obviously clothed their goods with the general
appearance of petitioners' goods.
Moreover, there is no notice to the public that the "Big
Mak" hamburgers are products of "L.C. Big Mak Burger,
Inc." Respondents introduced during the trial plastic
wrappers and bags with the words "L.C. Big Mak Burger,
Inc." to inform the public of the name of the seller of the
hamburgers. However, petitioners introduced during the
injunctive hearings plastic wrappers and bags with the
"Big Mak" mark without the name "L.C. Big Mak Burger,
Inc." Respondents' belated presentation of plastic
wrappers and bags bearing the name of "L.C. Big Mak
Burger, Inc." as the seller of the hamburgers is an after-
thought designed to exculpate them from their unfair
business conduct. As earlier stated, we cannot consider
respondents' evidence since petitioners' complaint was
based on facts existing before and during the injunctive
hearings.

Thus, there is actually no notice to the public that the

"Big Mak" hamburgers are products of "L.C. Big Mak
Burger, Inc." and not those of petitioners who have the
exclusive right to the "Big Mac" mark. This clearly shows
respondents' intent to deceive the public. Had
respondents' placed a notice on their plastic wrappers
and bags that the hamburgers are sold by "L.C. Big Mak
Burger, Inc.", then they could validly claim that they did
not intend to deceive the public. In such case, there is
only trademark infringement but no unfair
competition.82 Respondents, however, did not give such
notice. We hold that as found by the RTC, respondent
corporation is liable for unfair competition.

The Remedies Available to Petitioners

Under Section 2383 ("Section 23") in relation to Section

29 of RA 166, a plaintiff who successfully maintains
trademark infringement and unfair competition claims is
entitled to injunctive and monetary reliefs. Here, the RTC
did not err in issuing the injunctive writ of 16 August
1990 (made permanent in its Decision of 5 September
1994) and in ordering the payment
of P400,000 actual damages in favor of petitioners. The
injunctive writ is indispensable to prevent further acts of
infringement by respondent corporation. Also, the
amount of actual damages is a reasonable percentage
(11.9%) of respondent corporation's gross sales for three
(1988-1989 and 1991) of the six years (1984-1990)
respondents have used the "Big Mak" mark.84

The RTC also did not err in awarding exemplary

damages by way of correction for the public good85 in
view of the finding of unfair competition where intent to
deceive the public is essential. The award of attorney's
fees and expenses of litigation is also in order.86

WHEREFORE, we GRANT the instant petition. We SET

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

SO ORDERED.

G.R. No. 115115 July 18, 1995
CONRAD AND COMPANY, INC., petitioner,
vs.
HON. COURT OF APPEALS, FITRITE INC., and
VICTORIA BISCUITS CO., INC., respondents.
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
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
Register was approved by BPTTT and FITRITE was
issued a Certificate of Registration No. 47590 for a
term of 20 years from said date of approval. On June
28, 1984 FITRITE authorized its sister company, co-
plaintiff VICTORIA BISCUIT CO., to use this trademark
on its biscuits and cookies, as well as to manufacture,
promote, sell and distribute products bearing said
trademark.
On September 7, 1990, FITRITE assigned its
trademark "SUNSHINE AND DEVICE LABEL,"
together with its interest and business goodwill to said
VICTORIA BISCUIT. From the time FITRITE was
issued the Certificate of Registration for this trademark
on May 20, 1983 up to the filing of the complaint a
quo FITRITE 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 demand was
ignored. Being acts of infringement and unfair
competition in violation of plaintiffs' rights, plaintiffs can
validly avail themselves of the remedies against
infringement under Sec. 23 of Republic Act No. 166, as
amended, as well as of the remedies against unfair
competition under
Sec. 29 of the same statute.1
In seeking the dismissal of the complaint filed by private
respondents with the trial court, petitioner invoked,
among other grounds, litis pendentia, the doctrine of
primary jurisdiction and failure to state a cause of action.
The trial court, agreeing with petitioner, granted the
motion to dismiss the complaint in an Order, dated 26
February 1992, reading thusly:
The Court agrees with defendant that internationally
accepted trademarks enjoy protection under Philippine
laws. Defendant having been granted distributorship by
Sunshine Biscuits USA over Philippine territory it follows
that the resolution of the issue with respect to the
ownership of Sunshine Biscuits which is the basis of
plaintiffs' claim is lodged under the exclusive jurisdiction
of the BPTTT. The action filed by defendant's principal in
whose name the trademark "SUNSHINE BISCUITS" is
alleged to be registered in the United States should be
considered as including defendant Conrad and
Company, Inc., it being the beneficiary/agent/assignee of
said Sunshine Biscuits, Inc. Thus, the Court finds the
ground of forum shopping applicable to the case at bar.
It cannot also be denied that there is another action
pending between the same parties for the same cause.
Plaintiffs, therefore, should not have filed this case with
this court. It must, therefore, be summarily dismissed.
The ground of
litis pendentia is no doubt meritorious. The doctrine of
primary jurisdiction should be made to apply in this case
considering that the BPTTT had already acquired
jurisdiction over the suit brought by defendant's principal
against the plaintiffs involving the right of plaintiffs to use
said trademark. No doubt the BPTTT is better situated,
considering its experience and special knowledge to
determine the matters of fact involved. Indeed, the
rulings laid down by the Supreme Court on the point is
along this trend.
WHEREFORE, premises considered,
the Motion To Dismiss filed by
defendant is hereby GRANTED. The
instant case filed by plaintiffs is hereby
ordered DISMISSED.2 (Emphasis ours)
Unsuccessful in their attempt to have the order
reconsidered, private respondents brought the case to
the Court of Appeals (CA-G.R. CV No. 38822).
In an amended decision, dated 20 April 1994, the
appellate court reversed the order of the trial court and
ordered the reinstatement of the case, holding, in part,
thusly:
1. It was a motion to dismiss that CONRAD filed
instead of an answer where its "affirmative defense"
could have been alleged and later raised in a motion
for preliminary hearing for reception of evidence and
not, as CONRAD did, raise such defense in a mere
motion to dismiss, although such defense involved
factual matters outside of the allegations contained in
the complaint;
2. No evidence whatever had been introduced before
the outright dismissal, despite the fact that the factual
issues involved in CONRAD's "affirmative defense"
were whether the "SUNSHINE" trademark has been
registered in the United States of America as claimed
by CONRAD; if so registered, whether such
registration antedated the registered trademark of
FITRITE in the Philippines; whether Sunshine
Biscuits, Inc., CONRAD's principal, is the actual
registrant thereof; and whether CONRAD is truly an
agent of Sunshine Biscuits, Inc. who is protected by
the alleged American "SUNSHINE" trademark and
therefore vested with the legal capacity to raise such
"affirmative defense" in the action a quo; etc.; and
3. Unless and until FITRITE's certificates both in the
Supplemental and Principal Registers as registrant of
said "SUNSHINE" trademark are cancelled by BPTTT,
or so long as said "SUNSHINE" trademark has not
been successfully proved by CONRAD in the action
a quo as belonging to Sunshine Biscuits, Inc. or so
long as said trademark has not been successfully
proved by Sunshine Biscuits, Inc. in the cancellation
proceeding before BPTTT as belonging to it (Sunshine
Biscuits), for all legal intents and purposes the
trademark belongs to FITRITE and all those acts of
importing, selling and distributing by CONRAD
constitute 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
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, Inc. in
inter partes Case No. 3397 and 3739
before BPTTT.4
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 Chapter and Chapters VI and VII
hereof shall be brought before the proper [Regional
Trial Court].
Surely, an application with BPTTT for an administrative
cancellation of a registered trade mark cannot per
se have the effect of restraining or preventing the courts
from the exercise of their lawfully conferred jurisdiction.
A contrary rule would unduly expand the doctrine of
primary jurisdiction which, simply expressed, would
merely behoove regular courts, in controversies involving
specialized disputes, to defer to the findings of
resolutions of administrative tribunals on certain
technical matters. This rule, evidently, did not escape the
appellate court for it likewise decreed that for "good
cause shown, the lower court, in its sound discretion,
may suspend the action pending outcome of the
cancellation proceedings" before BPTTT.
Needless to say, we cannot at this stage delve
into the merits of the cancellation case. In this
instance, the sole concern, outside of the
jurisdictional aspect of the petition hereinbefore
discussed, would be that which focuses on the
propriety of the injunction order of the appellate
court. On this score, the appellate court has
said:
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.
All given, we find no reversible error on the part of the
appellate court in its appealed decision.
In closing, the Court would urge the Bureau of Patents,
Trademarks and Technology Transfer to resolve with
dispatch the administrative cases (Inter Partes Case No.
3397 and No. 3739) referred to in this decision.
WHEREFORE, the petition for review is DENIED for lack
of merit, and the questioned amended decision of the
Court of Appeals is AFFIRMED. Costs against petitioner.
G.R. No. 154342             July 14, 2004
MIGHTY CORPORATION and LA CAMPANA
FABRICA DE TABACO, INC., petitioner,
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 decision1 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 reconsideration4 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 Winery’s exclusive wine importer and distributor in
the Philippines since 1991, selling these products in its
own name and for its own account.5
Gallo Winery’s GALLO wine trademark was registered in
the principal register of the Philippine Patent Office (now
Intellectual Property Office) on November 16, 1971
under Certificate of Registration No. 17021 which was
renewed on November 16, 1991 for another 20
years.6 Gallo Winery also applied for registration of its
ERNEST & JULIO GALLO wine trademark on October
11, 1990 under Application Serial No. 901011-
00073599-PN but the records do not disclose if it was
ever approved by the Director of Patents.7
On the other hand, petitioners Mighty Corporation and
La Campana and their sister company, Tobacco
Industries of the Philippines (Tobacco Industries), are
engaged in the cultivation, manufacture, distribution and
sale of tobacco products for which they have been using
the GALLO cigarette trademark since 1973. 8
The Bureau of Internal Revenue (BIR) approved
Tobacco Industries’ use of GALLO 100’s cigarette mark
on September 14, 1973 and GALLO filter cigarette mark
on March 26, 1976, both for the manufacture and sale of
its cigarette products. In 1976, Tobacco Industries filed
its manufacturer’s sworn statement as basis for BIR’s
collection of specific tax on GALLO cigarettes.9
On February 5, 1974, Tobacco Industries applied for, but
eventually did not pursue, the registration of the GALLO
cigarette trademark in the principal register of the then
Philippine Patent Office.10
In May 1984, Tobacco Industries assigned the GALLO
cigarette trademark to La Campana which, on July 16,
1985, applied for trademark registration in the Philippine
Patent Office.11 On July 17, 1985, the National Library
issued Certificate of Copyright Registration No. 5834 for
La Campana’s lifetime copyright claim over GALLO
cigarette labels.12
Subsequently, La Campana authorized
Mighty Corporation to manufacture and sell cigarettes
bearing the GALLO trademark.13 BIR approved Mighty
Corporation’s use of GALLO 100’s cigarette brand,
under licensing agreement with Tobacco Industries, on
May 18, 1988, and GALLO SPECIAL MENTHOL 100’s
cigarette brand on April 3, 1989.14
Petitioners claim that GALLO cigarettes have been sold
in the Philippines since 1973, initially by Tobacco
Industries, then by La Campana and finally by Mighty
Corporation.15
On the other hand, although the GALLO wine trademark
was registered in the Philippines in 1971, respondents
claim that they first introduced and sold the GALLO and
ERNEST & JULIO GALLO wines in the
Philippines 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 3021 (for unfair
competition and false designation of origin) and 37 (for
tradename infringement).22 They claimed that petitioners
adopted the GALLO trademark to ride on Gallo Winery’s
GALLO and ERNEST & JULIO GALLO trademarks’
established reputation and popularity, thus causing
confusion, deception and mistake on the part of the
purchasing public who had always associated GALLO
and ERNEST & JULIO GALLO trademarks with Gallo
Winery’s wines. Respondents prayed for the issuance of
a writ of preliminary injunction and ex parte restraining
order, plus P2 million as actual and compensatory
damages, at least P500,000 as exemplary and moral
damages, and at least P500,000 as attorney’s fees and
litigation expenses.23
In their answer, petitioners alleged, among other WHEREFORE, judgment is rendered in favor of
affirmative defenses, that: petitioner’s GALLO cigarettes the plaintiff (sic) and against the defendant (sic),
and Gallo Winery’s wines were totally unrelated to wit:
products; Gallo Winery’s GALLO trademark registration
certificate covered wines only, not cigarettes; GALLO a. permanently restraining and enjoining
cigarettes and GALLO wines were sold through different defendants, their distributors, trade
channels of trade; GALLO cigarettes, sold at P4.60 for outlets, and all persons acting for them
GALLO filters and P3 for GALLO menthols, were low- or under their instructions, from (i) using
cost items compared to Gallo Winery’s high-priced luxury E & J’s registered trademark GALLO or
wines which cost between P98 to P242.50; the target any other reproduction, counterfeit, copy
market of Gallo Winery’s wines was the middle or high- or colorable imitation of said trademark,
income bracket with at least P10,000 monthly income either singly or in conjunction with other
while GALLO cigarette buyers were farmers, fishermen, words, designs or emblems and other
laborers and other low-income workers; the dominant acts of similar nature, and (ii) committing
feature of the GALLO cigarette mark was the rooster other acts of unfair competition against
device with the manufacturer’s name clearly indicated as plaintiffs by manufacturing and selling
MIGHTY CORPORATION while, in the case of Gallo their cigarettes in the domestic or export
Winery’s wines, it was the full names of the founders- markets under the GALLO trademark.
owners ERNEST & JULIO GALLO or just their surname
GALLO; by their inaction and conduct, respondents were b. ordering defendants to pay plaintiffs –
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. (i) actual and compensatory
damages for the injury and
prejudice and impairment of
In an order dated April 21, 1993,24 the Makati RTC plaintiffs’ business and goodwill
denied, for lack of merit, respondent’s prayer for the as a result of the acts and
issuance of a writ of preliminary injunction,25 holding that conduct pleaded as basis for
respondent’s GALLO trademark registration certificate this suit, in an amount equal to
covered wines only, that respondents’ wines and 10% of FOURTEEN MILLION
petitioners’ cigarettes were not related goods and TWO HUNDRED THIRTY FIVE
respondents failed to prove material damage or great THOUSAND PESOS
irreparable injury as required by Section 5, Rule 58 of (PHP14,235,000.00) from the
the Rules of Court.26 filing of the complaint until fully
paid;
On August 19, 1993, the Makati RTC denied, for lack of
merit, respondents’ motion for reconsideration. The court (ii) exemplary damages in the
reiterated that respondents’ wines and petitioners’ amount of PHP100,000.00;
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 (iii) attorney’s fees and
it could not rely on foreign rulings cited by respondents expenses of litigation in the
"because the[se] cases were decided by foreign courts amount of PHP1,130,068.91;
on the basis of unknown facts peculiar to each case or
upon factual surroundings which may exist only within (iv) the cost of suit.
their jurisdiction. Moreover, there [was] no showing that
[these cases had] been tested or found applicable in our SO ORDERED."29
jurisdiction."27
On June 24, 1999, the Makati RTC granted respondent’s
On February 20, 1995, the CA likewise dismissed motion for partial reconsideration and increased the
respondents’ petition for review on certiorari, docketed award of actual and compensatory damages to 10%
as CA-G.R. No. 32626, thereby affirming the Makati of P199,290,000 or P19,929,000.30
RTC’s denial of the application for issuance of a writ of
preliminary injunction against petitioners.28 On appeal, the CA affirmed the Makati RTC decision and
subsequently denied petitioner’s motion for
After trial on the merits, however, the Makati RTC, on reconsideration.
November 26, 1998, held petitioners liable for, and
permanently enjoined them from, committing trademark III.
infringement and unfair competition with respect to the
GALLO trademark:
The Issues
Petitioners now seek relief from this Court contending
that the CA did not follow prevailing laws and
jurisprudence when it held that: [a] RA 8293 (Intellectual
Property Code of the Philippines [IP Code]) was
applicable in this case; [b] GALLO cigarettes and GALLO
wines were identical, similar or related goods for the
reason alone that they were purportedly forms of vice; [c]
both goods passed through the same channels of trade
and [d] petitioners were liable for trademark
infringement, unfair competition and damages.31
Respondents, on the other hand, assert that this petition
which invokes Rule 45 does not involve pure questions
of law, and hence, must be dismissed outright.
IV.
Discussion
THE EXCEPTIONAL CIRCUMSTANCES
IN THIS CASE OBLIGE THE COURT TO REVIEW
THE CA’S FACTUAL FINDINGS
As a general rule, a petition for review on certiorari under
Rule 45 must raise only "questions of law"32 (that is, the
doubt pertains to the application and interpretation of law
to a certain set of facts) and not "questions of fact"
(where the doubt concerns the truth or falsehood of
alleged 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 competitor’s unfairness or fraud. Conduct constitutes
unfair competition if the effect is to pass off on the public
the goods of one man as the goods of another. It is not
necessary that any particular means should be used to
this end.44
In Del Monte Corporation vs. Court of Appeals, 45 we
distinguished trademark infringement from unfair
competition:
(1) Infringement of trademark is the
unauthorized use of a trademark, whereas unfair
competition is the passing off of one's goods as
those of another.
(2) In infringement of trademark fraudulent intent
is unnecessary, whereas in unfair competition
fraudulent intent is essential.
(3) In infringement of trademark the prior
registration of the trademark is a prerequisite to
the action, whereas in unfair competition
registration is not necessary.
Pertinent Provisions on Trademark
Infringement under the Paris
Convention and the Trademark Law
Article 6bis of the Paris Convention,46 an international
agreement binding on the Philippines and the United
States (Gallo Winery’s country of domicile and 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 use48 to
be well-known in that country and is already the
mark of a person entitled to the benefits of the
Paris Convention, and
(c) such trademark is used for identical or similar
goods.
On the other hand, Section 22 of the Trademark Law
holds a person liable for infringement when, among
others, he "uses without the consent of the registrant,
any reproduction, counterfeit, copy or colorable imitation
of any registered mark or tradename in connection with
the sale, offering for sale, or advertising of any goods,
business or services or in connection with which such
use is likely to cause confusion or mistake or to deceive
purchasers or others as to the source or origin of such
goods or services, or identity of such business; or
reproduce, counterfeit, copy or colorably imitate any
such mark or tradename and apply such reproduction,
counterfeit, copy or colorable imitation to labels, signs,
prints, packages, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such goods, business or
services."49 Trademark registration and actual use are
material to the complaining party’s cause of action.
Corollary to this, Section 20 of the Trademark
Law50 considers the trademark registration certificate
as prima facie evidence of the validity of the registration,
the registrant’s ownership and exclusive right to use the
trademark in connection with the goods, business or
services as classified by the Director of Patents51 and as
specified in the certificate, subject to the conditions and
limitations stated therein. Sections 2 and 2-A52 of the
Trademark Law emphasize the importance of the
trademark’s actual use in commerce in the Philippines
prior to its registration. In the adjudication of trademark
rights between contending parties, equitable principles of
laches, estoppel, and acquiescence may be considered
and applied.53
Under Sections 2, 2-A, 9-A, 20 and 22 of the Trademark
Law therefore, the following constitute the elements of
trademark infringement:
(a) a trademark actually used in commerce in
the Philippines and registered in the principal
register of the Philippine Patent Office
(b) is used by another person in connection with
the sale, offering for sale, or advertising of any
goods, business or services or in connection
with which such use is likely to cause confusion
or mistake or to deceive purchasers or others as
to the source or origin of such goods or
services, or identity of such business; or such
trademark is reproduced, counterfeited, copied
or colorably imitated by another person and such
reproduction, counterfeit, copy or colorable
imitation is applied to labels, signs, prints,
packages, wrappers, receptacles or
advertisements intended to be used upon or in
connection with such goods, business or
services as to likely cause confusion or mistake
or to deceive purchasers,
(c) the trademark is used for identical or similar
goods, and
(d) such act is done without the consent of the
trademark registrant or assignee.
In summary, the Paris Convention protects well-known
trademarks only (to be determined by domestic
authorities), while the Trademark Law protects all
trademarks, whether well-known or not, provided that
they have been registered and are in actual commercial
use in the Philippines. Following universal acquiescence
and comity, in case of domestic legal disputes on any
conflicting provisions between the Paris Convention
(which is an international agreement) and the Trademark
law (which is a municipal law) the latter will prevail.54
Under both the Paris Convention and the Trademark
Law, the protection of a registered trademark is limited
only to goods identical or similar to those in respect of
which such trademark is registered and only when there
is likelihood of confusion. Under both laws, the time
element in commencing infringement cases is material in
ascertaining the registrant’s express or implied consent
to another’s use of its trademark or a colorable imitation
thereof. This is why acquiescence, estoppel or laches
may defeat the registrant’s otherwise valid cause of
action.
Hence, proof of all the elements of trademark
infringement is a condition precedent to any finding of
liability.
THE ACTUAL COMMERCIAL USE IN THE
PHILIPPINES OF GALLO CIGARETTE
TRADEMARK PRECEDED THAT OF
GALLO WINE TRADEMARK.
By respondents’ own judicial admission, the GALLO
wine trademark was registered in the Philippines in
November 1971 but the wine itself was first marketed
and sold in the country only in 1974 and only within the
former U.S. military facilities, and outside thereof, only in
1979. To prove commercial use of the GALLO wine
trademark in the Philippines, respondents presented
sales invoice no. 29991 dated July 9, 1981 addressed to
Conrad Company Inc., Makati, Philippines and sales
invoice no. 85926 dated March 22, 1996 addressed to
Andresons Global, Inc., Quezon City, Philippines. Both
invoices were for the sale and shipment of GALLO wines
to the Philippines during that period.55 Nothing at all,
however, was presented to evidence the alleged sales of
GALLO wines in the Philippines in 1974 or, for that
matter, prior to July 9, 1981.
On the other hand, by testimonial evidence supported by
the BIR authorization letters, forms and manufacturer’s
sworn statement, it appears that petitioners and its
predecessor-in-interest, Tobacco Industries, have indeed
been using and selling GALLO cigarettes in the
Philippines since 1973 or before July 9, 1981.56
In Emerald Garment Manufacturing Corporation vs.
Court of Appeals,57 we reiterated our rulings in Pagasa
Industrial Corporation vs. Court of Appeals, 58 Converse
Rubber Corporation vs. Universal Rubber Products,
Inc.,59 Sterling Products International, Inc. vs.
Farbenfabriken Bayer Aktiengesellschaft,60 Kabushi
Kaisha Isetan vs. Intermediate Appellate
Court,61 and  Philip Morris vs. Court of Appeals,62 giving
utmost importance to the actual commercial 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 facie evidence. 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 Winery’s exclusive right to use the
GALLO trademark should be limited to wines, the only
product indicated in its registration certificates. This strict
statutory limitation on the exclusive right to use
trademarks was amply clarified in our ruling in Faberge,
Inc. vs. Intermediate Appellate Court:64
Having thus reviewed the laws applicable to the
case before Us, it is not difficult to discern from
the foregoing statutory enactments that private
respondent may be permitted to register the
trademark "BRUTE" for briefs produced by it
notwithstanding petitioner's vehement
protestations of unfair dealings in marketing its
own set of items which are limited to: after-shave
lotion, shaving cream, deodorant, talcum powder
and toilet soap. Inasmuch as petitioner has
not ventured in the production of briefs, an
item which is not listed in its certificate of
registration, petitioner cannot and should not
be allowed to feign that private respondent
had invaded petitioner's exclusive
domain. To be sure, it is significant that
petitioner failed to annex in its Brief the so-called
"eloquent proof that petitioner indeed intended to
expand its mark ‘BRUT’ to other goods" (Page
27, Brief for the Petitioner; page 202, Rollo).
Even then, a mere application by petitioner in
this aspect does not suffice and may not vest an
exclusive right in its favor that can ordinarily be
protected by the Trademark Law. In
short, paraphrasing Section 20 of the
Trademark Law as applied to the
documentary evidence adduced by
petitioner, the certificate of registration
issued by the Director of Patents can confer
upon petitioner the exclusive right to use its
own symbol only to those goods specified in
the certificate, subject to any conditions and
limitations stated 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 defendant’s goods are then bought as the
plaintiff’s and its poor quality reflects badly on the
plaintiff’s reputation. The other is "confusion of
business"  wherein the goods of the parties are different
but the defendant’s product can reasonably (though
mistakenly) be assumed to originate from the plaintiff,
thus deceiving the public into believing that there is
some connection between the plaintiff and defendant
which, in fact, does not exist.66
In determining the likelihood of confusion, the Court must
consider: [a] the resemblance between the trademarks;
[b] the similarity of the goods to which the trademarks
are attached; [c] the likely effect on the purchaser and [d]
the registrant’s express or implied consent and other fair
and equitable considerations.
Petitioners and respondents both use "GALLO" in the
labels of their respective cigarette and wine products.
But, as held in the following cases, the use of an
identical mark does not, by itself, lead to a legal
conclusion that there is trademark infringement:
(a) in Acoje Mining Co., Inc. vs. Director of
Patent,67 we ordered the approval of Acoje
Mining’s application for registration of the
trademark LOTUS for its soy sauce even though
Philippine Refining Company had prior
registration and use of such identical mark for its
edible oil which, like soy sauce, also belonged to
Class 47;
(b) in Philippine Refining Co., Inc. vs. Ng Sam
and Director of Patents,68 we upheld the Patent
Director’s registration of the same trademark
CAMIA for Ng Sam’s ham under Class 47,
despite Philippine Refining Company’s prior
trademark registration and actual use of such
mark on its lard, butter, cooking oil (all of which
belonged to Class 47), abrasive detergents,
polishing materials and soaps;
(c) in Hickok Manufacturing Co., Inc. vs. Court of
Appeals and Santos Lim Bun Liong,69 we
dismissed Hickok’s petition to cancel private
respondent’s HICKOK trademark registration for
its Marikina shoes as against petitioner’s earlier
registration of the same trademark for
handkerchiefs, briefs, belts and wallets;
(d) in Shell Company of the Philippines vs. Court
of Appeals,70 in a minute resolution, we
dismissed the petition for review for lack of merit
and affirmed the Patent Office’s registration of
the trademark SHELL used in the cigarettes
manufactured by respondent Fortune Tobacco
Corporation, notwithstanding Shell Company’s
opposition as the prior registrant of the same
trademark for its gasoline and other petroleum
products;
(e) in Esso Standard Eastern, Inc. vs. Court of
Appeals,71 we dismissed ESSO’s complaint for
trademark infringement against United Cigarette
Corporation and allowed the latter to use the
trademark ESSO for its cigarettes, the same
trademark used by ESSO for its petroleum
products, and
(f) in Canon Kabushiki Kaisha vs. Court of
Appeals and NSR Rubber Corporation,72 we
affirmed the rulings of the Patent Office and the
CA that NSR Rubber Corporation could use the
trademark CANON for its sandals (Class 25)
despite Canon Kabushiki Kaisha’s prior
registration and use of the same trademark for
its paints, chemical products, toner and dyestuff
(Class 2).
Whether a trademark causes confusion and is likely to
deceive the public hinges on "colorable imitation"73 which
has been defined as "such similarity in form, content,
words, sound, meaning, special arrangement or general
appearance of the trademark or tradename in their
overall presentation or in their essential and substantive
and distinctive parts as would likely mislead or confuse
persons in the ordinary course of purchasing the genuine
article."74
Jurisprudence has developed two tests in determining
similarity and likelihood of confusion in trademark
resemblance:75
(a) the Dominancy Test applied in Asia Brewery,
Inc. vs. Court of Appeals76 and other cases,77 and
(b) the Holistic or Totality Test used in Del Monte
Corporation vs. Court of Appeals78 and its
preceding cases.79
The Dominancy Test focuses on the similarity of the
prevalent features of the competing trademarks which
might cause confusion or deception, and thus
infringement. If the competing trademark contains the
main, essential or dominant features of another, and
confusion or deception is likely to result, infringement
takes place. Duplication or imitation is not necessary; nor
is it necessary that the infringing label should suggest an
effort to imitate. The question is whether the use of the
marks involved is likely to cause confusion or mistake in
the mind of the public or deceive purchasers.80
On the other hand, the Holistic Test requires that the
entirety of the marks in question be considered in
resolving confusing similarity. Comparison of words is
not the only determining factor. The trademarks in their
entirety as they appear in their respective labels or hang
tags must also be considered in relation to the goods to
which they are attached. The discerning eye of the
observer must focus not only on the predominant words
but also on the other features appearing in both labels in
order that he may draw his conclusion whether one is
confusingly similar to the other.81
In comparing the resemblance or colorable imitation of
marks, various factors have been considered, such as
the dominant color, style, size, form, meaning of letters,
words, designs and emblems used, the likelihood of
deception of the mark or name's tendency to
confuse82 and the commercial impression likely to be
conveyed by the trademarks if used in conjunction with
the respective goods of the parties.83
Applying the Dominancy and Holistic Tests, we find that
the dominant feature of the GALLO cigarette trademark
is the device of a large rooster facing left, outlined in
black against a gold background. The rooster’s color is
either green or red – green for GALLO menthols and red
for GALLO filters. Directly below the large rooster device
is the word GALLO. The rooster device is given
prominence in the GALLO cigarette packs in terms of
size and location on the labels.84
The GALLO mark appears to be a fanciful and arbitrary
mark for the cigarettes as it has no relation at all to the
product but was chosen merely as a trademark due to
the fondness for fighting cocks of the son of petitioners’
president. Furthermore, petitioners adopted GALLO, the
Spanish word for rooster, as a cigarette trademark to
appeal to one of their target markets,
the sabungeros (cockfight aficionados).85
Also, as admitted by respondents themselves,86 on the
side of the GALLO cigarette packs are the words "MADE
BY MIGHTY CORPORATION," thus clearly informing
the public as to the identity of the manufacturer of the
cigarettes.
On the other hand, GALLO Winery’s wine and brandy
labels are diverse. In many of them, the labels are
embellished with sketches of buildings and trees,
vineyards or a bunch of grapes while in a few, one or two
small roosters facing right or facing each other (atop the
EJG crest, surrounded by leaves or ribbons), with
additional designs in green, red and yellow colors,
appear as minor features thereof.87 Directly below or
above these sketches is the entire printed name of the
founder-owners, "ERNEST & JULIO GALLO" or just their
surname "GALLO,"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 Winery’s wines are
printed the words "VINTED AND BOTTLED BY ERNEST
& JULIO GALLO, MODESTO, CALIFORNIA."89
The many different features like color schemes, art
works and other markings of both products drown out
the similarity between them – the use of the word
“GALLO” ― a family surname for the Gallo Winery’s
wines and a Spanish word for rooster for petitioners’
cigarettes.
WINES AND CIGARETTES ARE NOT
IDENTICAL, SIMILAR, COMPETING OR
RELATED GOODS
Confusion of goods is evident where the litigants are
actually in competition; but confusion of business may
arise between non-competing interests as well.90
Thus, apart from the strict application of Section 20 of
the Trademark Law and Article 6bis of the Paris
Convention which proscribe trademark infringement not
only of goods specified in the certificate of registration
but also of identical or similar goods, we have also
uniformly recognized and applied the modern concept of
"related goods."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 articles98
(e) the descriptive properties, physical attributes or
essential characteristics with reference to their form,
composition, texture or quality
(f) the purpose of the goods99
(g) whether the article is bought for immediate
consumption,100 that is, day-to-day household items101
(h) the fields of manufacture102
(i) the conditions under which the article is usually
purchased103 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 purchaser’s
character, attitude, habits, age, training and
education. 111
Applying these legal precepts to the present case,
petitioner’s use of the GALLO cigarette trademark is not
likely to cause confusion or mistake, or to deceive the
"ordinarily intelligent buyer" of either wines or cigarettes
or both as to the identity of the goods, their source and
origin, or identity of the business of petitioners and
respondents.
Obviously, wines and cigarettes are not identical or
competing products. Neither do they belong to the same
class of goods. Respondents’ GALLO wines belong to
Class 33 under Rule 84[a] Chapter III, Part II of the
Rules of Practice in Trademark Cases while petitioners’
GALLO cigarettes fall under Class 34.
We are mindful that product classification alone cannot
serve as the decisive factor in the resolution of whether
or not wines and cigarettes are related goods. Emphasis
should be on the similarity of the products involved and
not on the arbitrary classification or general description
of their properties or characteristics. But the mere fact
that one person has adopted and used a particular
trademark for his goods does not prevent the adoption
and use of the same trademark by others on articles of a
different description. 112
Both the Makati RTC and the CA held that wines and
cigarettes are related products because: (1) "they are
related forms of vice, harmful when taken in excess, and
used for pleasure and relaxation" and (2) "they are
grouped or classified in the same section of
supermarkets and groceries."
We find these premises patently insufficient and too
arbitrary to support the legal conclusion that wines and
cigarettes are related products within the contemplation
of the Trademark Law and the Paris Convention.
First, anything –- not only wines and cigarettes ― can be
used for pleasure and relaxation and can be harmful
when taken in excess. Indeed, it would be a grave abuse
of discretion to treat wines and cigarettes as similar or
related products likely to cause confusion just because
they are pleasure-giving, relaxing or potentially harmful.
Such reasoning makes no sense.
Second, it is common knowledge that supermarkets sell
an infinite variety of wholly unrelated products and the
goods here involved, wines and cigarettes, have nothing
whatsoever in common with respect to their essential
characteristics, quality, quantity, size, including the
nature of their packages, wrappers or containers.113
Accordingly, the U.S. patent office and courts have
consistently held that the mere fact that goods are sold
in one store under the same roof does not automatically
mean that buyers are likely to be confused as to the
goods’ respective sources, connections or sponsorships.
The fact that different products are available in the same
store is an insufficient standard, in and of itself, to
warrant a finding of likelihood of confusion.114
In this regard, we adopted the Director of Patents’ finding
in Philippine Refining Co., Inc. vs. Ng Sam and the
Director of Patents:115
In his decision, the Director of Patents
enumerated the factors that set respondent’s
products apart from the goods of petitioner. He
opined and we quote:
 "I have taken into account such factors
as probable purchaser attitude and
habits, marketing activities, retail outlets,
and commercial impression likely to be
conveyed by the trademarks if used in
conjunction with the respective goods of
the parties, I believe that ham on one
hand, and lard, butter, oil, and soap
on the other are products that would
not move in the same manner
through the same channels of trade.
They pertain to unrelated fields of
manufacture, might be distributed
and marketed under dissimilar
conditions, and are displayed
separately even though they
frequently may be sold through the
same retail food
establishments. Opposer’s products
are ordinary day-to-day household items
whereas ham is not necessarily so.
Thus, the goods of the parties are not of
a character which purchasers would
likely attribute to a common origin.
The observations and conclusion of the Director
of Patents are correct. The particular goods of
the parties are so unrelated that consumers,
would not, in any probability mistake one as the
source of origin of the product of the other.
(Emphasis supplied).
The same is true in the present case. Wines and
cigarettes are non-competing and are totally unrelated
products not likely to cause confusion vis-à-vis the
goods or the business of the petitioners and
respondents.
Wines are bottled and consumed by drinking while
cigarettes are packed in cartons or packages and
smoked. There is a whale of a difference between their
descriptive properties, physical attributes or essential
characteristics like form, composition, texture and
quality.
GALLO cigarettes are inexpensive items while GALLO
wines are not. GALLO wines are patronized by middle-
to-high-income earners while GALLO cigarettes appeal
only to simple folks like farmers, fishermen, laborers and
other low-income workers.116 Indeed, the big price
difference of these two products is an important factor in
proving that they are in fact unrelated and that they
travel in different channels of trade. There is a distinct
price segmentation based on vastly different social
classes of purchasers.117
GALLO cigarettes and GALLO wines are not sold
through the same channels of trade. GALLO cigarettes
are Philippine-made and petitioners neither claim nor
pass off their goods as imported or emanating from Gallo
Winery. GALLO cigarettes are distributed, marketed and
sold through ambulant and sidewalk vendors, small
local sari-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 Winery’s exclusive contracts with a
domestic entity, which is currently Andresons. By
respondents’ own testimonial evidence, GALLO wines
are sold in hotels, expensive bars and restaurants, and
high-end grocery stores and supermarkets, not
through sari-sari stores or ambulant vendors.119
Furthermore, the Makati RTC and the CA erred in relying
on Carling Brewing Company vs. Philip Morris, Inc. 120 to
support its finding that GALLO wines and GALLO
cigarettes are related goods. The courts a quo  should
have taken into consideration the subsequent case
of IDV North America, Inc. and R & A Bailey Co. Limited
vs. S & M Brands, Inc.:121
IDV correctly acknowledges, however, that there
is no per se  rule that the use of the same mark
on alcohol and tobacco products always will
result in a likelihood of confusion. Nonetheless,
IDV relies heavily on the decision in John
Walker & Sons, Ltd. vs. Tampa Cigar Co., 124
F. Supp. 254, 256 (S.D. Fla. 1954), aff’d,  222 F.
2d 460 (5th Cir. 1955), wherein the court
enjoined the use of the mark "JOHNNIE
WALKER" on cigars because the fame of the
plaintiff’s mark for scotch whiskey and because
the plaintiff advertised its scotch whiskey on, or
in connection with tobacco products. The court,
in John Walker & Sons, placed great
significance on the finding that the infringers
use was a deliberate attempt to capitalize on
the senior marks’ fame. Id.  At 256.  IDV also
relies on Carling Brewing Co. v. Philip
Morris, Inc.,  297 F. Supp. 1330, 1338 (N.D.
Ga. 1968), in which the court enjoined the
defendant’s use of the mark "BLACK LABEL"
for cigarettes because it was likely to cause
confusion with the plaintiff’s well-known
mark "BLACK LABEL" for beer.
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
plaintiff’s long use and extensive advertising of
its mark and placed great emphasis on the fact
that the defendant used the trademark ‘Johnnie
Walker with full knowledge of its fame and
reputation and with the intention of taking
advantage thereof.’ John Walker & Sons, 124 F.
Supp. At 256; see Mckesson & Robbins, Inc. v.
P. Lorillard Co., 1959 WL 5894, 120 U.S.P.Q.
306, 307 (1959) (holding that the decision
in John Walker & Sons was ‘merely the law on
the particular case based upon its own peculiar
facts’); see also Alfred Dunhill,  350 F. Supp. At
1363 (defendant’s adoption of ‘Dunhill’ mark was
not innocent). However, in Schenley, the court
noted that the relation between tobacco and
whiskey products is significant where a widely
known arbitrary mark has long been used for
diversified products emanating from a single
source and a newcomer seeks to use the same
mark on unrelated goods. Schenley, 427 F.2d.
at 785. Significantly, in Schenley, the court
looked at the industry practice and the facts of
the case in order to determine the nature and
extent of the relationship between the mark on
the tobacco product and the mark on the alcohol
product.
The record here establishes conclusively that
IDV has never advertised BAILEYS liqueurs in
conjunction with tobacco or tobacco accessory
products and that IDV has no intent to do so.
And, unlike the defendant in Dunhill, S & M
Brands does not market bar accessories, or
liqueur related products, with its cigarettes. The
advertising and promotional materials presented
a trial in this action demonstrate a complete lack
of affiliation between the tobacco and liqueur
products bearing the marks here at issue.
xxx xxx xxx
Of equal significance, it is undisputed that S & M
Brands had no intent, by adopting the family
name ‘Bailey’s’  as the mark for its cigarettes, to
capitalize upon the fame of the ‘BAILEYS’ mark
for liqueurs. See Schenley, 427 F. 2d at
785. Moreover, as will be discussed below,
and as found in Mckesson & Robbins, the
survey evidence refutes the contention that
cigarettes and alcoholic beverages are so
intimately associated in the public mind that
they cannot under any circumstances be
sold under the same mark without causing
confusion. See Mckesson & Robbins, 120
U.S.P.Q. at 308.
Taken as a whole, the evidence here
demonstrates the absence of the ‘special
circumstances’ in which courts have found a
relationship between tobacco and alcohol
products sufficient to tip the similarity of goods
analysis in favor of the protected mark and
against the allegedly infringing mark. It is true
that BAILEYS liqueur, the world’s best
selling liqueur and the second best selling in
the United States, is a well-known product.
That fact alone, however, is insufficient to
invoke the special circumstances connection
here where so much other evidence and so
many other factors disprove a likelihood of
confusion. The similarity of products
analysis, therefore, augers against finding
that there is a likelihood of
confusion. (Emphasis supplied).
In short, tobacco and alcohol products may be
considered related only in cases involving special
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 Winery’s GALLO trademark registration, the
Bureau of Patents, Trademarks and Technology
Transfer also issued on September 4, 1992 Certificate of
Registration No. 53356 under the Principal Register
approving Productos Alimenticios Gallo, S.A’s April 19,
1990 application for GALLO trademark registration and
use for its "noodles, prepared food or canned noodles,
ready or canned sauces for noodles, semolina, wheat
flour and bread crumbs, pastry, confectionery, ice cream,
honey, molasses syrup, yeast, baking powder, salt,
mustard, vinegar, species and ice."122
Third and most important, pursuant to our ruling
in  Canon Kabushiki Kaisha vs. Court of Appeals and
NSR Rubber Corporation,123 "GALLO" cannot be
considered a "well-known" mark within the
contemplation and protection of the Paris Convention in
this case since wines and cigarettes are not identical or
similar goods:
We agree with public respondents that the
controlling doctrine with respect to the
applicability of Article 8 of the Paris Convention
is that established in Kabushi Kaisha Isetan vs.
Intermediate Appellate Court (203 SCRA 59
[1991]).  As pointed out by the BPTTT:
"Regarding the applicability of Article
8 of the Paris Convention, this Office
believes that there is no automatic
protection afforded an entity whose
tradename is alleged to have been
infringed through the use of that
name as a trademark by a local entity.
In Kabushiki Kaisha Isetan vs. The
Intermediate Appellate Court, et. al.,
G.R. No. 75420, 15 November 1991, the
Honorable Supreme Court held that:
‘The Paris Convention for the
Protection of Industrial
Property does not
automatically exclude all
countries of the world which
have signed it from using a
tradename which happens to
be used in one country. To
illustrate — if a taxicab or bus
company in a town in the
United Kingdom or India
happens to use the
tradename ‘Rapid
Transportation,’ it does not
necessarily follow that ‘Rapid’
can no longer be registered in
Uganda, Fiji, or the
Philippines.
This office is not unmindful that in
(sic) the Treaty of Paris for the
Protection of Intellectual Property
regarding well-known marks and
possible application 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 man’s goods or business as that of another
constitutes unfair competition. Actual or probable
deception and confusion on the part of customers by
reason of defendant’s practices must always
appear.125 On this score, we find that petitioners never
attempted to pass off their cigarettes as those of
respondents. There is no evidence of bad faith or fraud
imputable to petitioners in using their GALLO cigarette
mark.
All told, after applying all the tests provided by the
governing laws as well as those recognized by
jurisprudence, we conclude that petitioners are not liable
for trademark infringement, unfair competition or
damages.
WHEREFORE, finding the petition for review
meritorious, the same is hereby GRANTED. The
questioned decision and resolution of the Court of
Appeals in CA-G.R. CV No. 65175 and the November
26, 1998 decision and the June 24, 1999 order of the
Regional Trial Court of Makati, Branch 57 in Civil Case
No. 93-850 are hereby REVERSED and SET ASIDE and
the complaint against petitioners DISMISSED.
Costs against respondents.
SO ORDERED.
G.R. No. 164321               March 23, 2011
SKECHERS, U.S.A., INC., Petitioner,
vs.
INTER PACIFIC INDUSTRIAL TRADING CORP.,
and/or INTER PACIFIC TRADING CORP. and/or
STRONG SPORTS GEAR CO., LTD., and/or
STRONGSHOES WAREHOUSE and/or STRONG
FASHION SHOES TRADING and/or TAN TUAN HONG
and/or VIOLETA T. MAGAYAGA and/or JEFFREY R.
MORALES and/or any of its other proprietor/s,
directors, officers, employees and/or occupants of
its premises located at S-7, Ed & Joe's Commercial
Arcade, No. 153 Quirino Avenue, Parañaque
City, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
TRENDWORKS INTERNATIONAL
CORPORATION, Petitioner-Intervenor,
vs.
INTER PACIFIC INDUSTRIAL TRADING CORP. and/or
INTER PACIFIC TRADING CORP. and/or STRONG
SPORTS GEAR CO., LTD., and/or STRONGSHOES
WAREHOUSE and/or STRONG FASHION SHOES
TRADING and/or TAN TUAN HONG and/or VIOLETA
T. MAGAYAGA and/or JEFFREY R. MORALES and/or
any of its other proprietor/s, directors, officers,
employees and/or occupants of its premises located
at S-7, Ed & Joe's Commercial Arcade, No. 153
Quirino Avenue, Parañaque City, Respondents.
RESOLUTION
PERALTA, J.:
For resolution are the twin Motions for
Reconsideration1 filed by petitioner and petitioner-
intervenor from the Decision rendered in favor of
respondents, dated November 30, 2006.
At the outset, a brief narration of the factual and
procedural antecedents that transpired and led to the
filing of the motions is in order.
The present controversy arose when petitioner filed with
Branch 24 of the Regional Trial Court (RTC) of Manila an
application for the issuance of search warrants against
an outlet and warehouse operated by respondents for
infringement of trademark under Section 155, in relation
to Section 170 of Republic Act No. 8293, otherwise
known as the Intellectual Property Code of the
Philippines.2 In the course of its business, petitioner has
registered the trademark "SKECHERS"3 and the
trademark "S" (within an oval design)4 with the
Intellectual Property Office (IPO).
5 moved for a reconsideration of the earlier decision on the
Two search warrants  were issued by the RTC and were
served on the premises of respondents. As a result of
the raid, more than 6,000 pairs of shoes bearing the "S"
logo were seized.
Later, respondents moved to quash the search warrants,
arguing that there was no confusing similarity between
petitioner’s "Skechers" rubber shoes and its "Strong"
rubber shoes.
On November 7, 2002, the RTC issued an
Order6 quashing the search warrants and directing the
NBI to return the seized goods. The RTC agreed with
respondent’s view that Skechers rubber shoes and
Strong rubber shoes have glaring differences such that
an ordinary prudent purchaser would not likely be misled
or confused in purchasing the wrong article.
Aggrieved, petitioner filed a petition for certiorari7 with
the Court of Appeals (CA) assailing the RTC Order. On
November 17, 2003, the CA issued a Decision8 affirming
the ruling of the RTC.
Subsequently, petitioner filed the present petition9 before
this Court which puts forth the following assignment of
errors:
A. WHETHER THE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION
IN CONSIDERING MATTERS OF DEFENSE IN
A CRIMINAL TRIAL FOR TRADEMARK
INFRINGEMENT IN PASSING UPON THE
VALIDITY OF THE SEARCH WARRANT WHEN
IT SHOULD HAVE LIMITED ITSELF TO A
DETERMINATION OF WHETHER THE TRIAL
COURT COMMITTED GRAVE ABUSE OF
DISCRETION IN QUASHING THE SEARCH
WARRANTS.
B. WHETHER THE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION
IN FINDING THAT RESPONDENTS ARE NOT
GUILTY OF TRADEMARK INFRINGEMENT IN
THE CASE WHERE THE SOLE TRIABLE
ISSUE IS THE EXISTENCE OF PROBABLE
CAUSE TO ISSUE A SEARCH WARRANT.10
In the meantime, petitioner-intervenor filed a Petition-in-
Intervention11 with this Court claiming to be the sole
licensed distributor of Skechers products here in the
Philippines.
On November 30, 2006, this Court rendered a
Decision12 dismissing the petition.
Both petitioner and petitioner-intervenor filed separate
motions for reconsideration.
In petitioner’s motion for reconsideration, petitioner
following grounds:
(a) THIS HONORABLE COURT MUST RE-
EXAMINE THE FACTS OF THIS CASE DUE TO
THE SIGNIFICANCE AND REPERCUSSIONS
OF ITS DECISION.
(b) COMMERCIAL QUANTITIES OF THE
SEIZED ITEMS WITH THE UNAUTHORIZED
REPRODUCTIONS OF THE "S" TRADEMARK
OWNED BY PETITIONER WERE INTENDED
FOR DISTRIBUTION IN THE PHILIPPINE
MARKET TO THE DETRIMENT OF
PETITIONER – RETURNING THE GOODS TO
RESPONDENTS WILL ADVERSELY AFFECT
THE GOODWILL AND REPUTATION OF
PETITIONER.
(c) THE SEARCH WARRANT COURT AND
THE COURT OF APPEALS BOTH ACTED
WITH GRAVE ABUSE OF DISCRETION.
(d) THE SEARCH WARRANT COURT DID NOT
PROPERLY RE-EVALUATE THE EVIDENCE
PRESENTED DURING THE SEARCH
WARRANT APPLICATION PROCEEDINGS.
(e) THE SOLID TRIANGLE CASE IS NOT
APPLICABLE IN THIS CASE, AS IT IS BASED
ON A DIFFERENT FACTUAL MILIEU.
PRELIMINARY FINDING OF GUILT (OR
ABSENCE THEREOF) MADE BY THE
SEARCH WARRANT COURT AND THE
COURT OF APPEALS WAS IMPROPER.
(f) THE SEARCH WARRANT COURT
OVERSTEPPED ITS DISCRETION. THE LAW
IS CLEAR. THE DOMINANCY TEST SHOULD
BE USED.
(g) THE COURT OF APPEALS COMMITTED
ERRORS OF JURISDICTION.13
On the other hand, petitioner-intervenor’s motion for
reconsideration raises the following errors for this Court’s
consideration, to wit:
(a) THE COURT OF APPEALS AND THE
SEARCH WARRANT COURT ACTED
CONTRARY TO LAW AND JURISPRUDENCE
IN ADOPTING THE ALREADY-REJECTED
HOLISTIC TEST IN DETERMINING THE ISSUE
OF CONFUSING SIMILARITY;
(b) THE COURT OF APPEALS AND THE
SEARCH WARRANT COURT ACTED
CONTRARY TO LAW IN HOLDING THAT
THERE IS NO PROBABLE CAUSE FOR
TRADEMARK INFRINGEMENT; AND
(c) THE COURT OF APPEALS SANCTIONED
THE TRIAL COURT’S DEPARTURE FROM
THE USUAL AND ACCEPTED COURSE OF
JUDICIAL PROCEEDINGS WHEN IT UPHELD
THE QUASHAL OF THE SEARCH WARRANT
ON THE BASIS SOLELY OF A FINDING THAT
THERE IS NO CONFUSING SIMILARITY.14
A perusal of the motions submitted by petitioner and
petitioner-intervenor would show that the primary issue
posed by them dwells on the issue of whether or not
respondent is guilty of trademark infringement.
After a thorough review of the arguments raised herein,
this Court reconsiders its earlier decision.
The basic law on trademark, infringement, and unfair
competition is Republic Act (R.A.) No. 8293. Specifically,
Section 155 of R.A. No. 8293 states:
Remedies; Infringement. — Any person who shall,
without the consent of the owner of the registered mark:
155.1. Use in commerce any reproduction, counterfeit,
copy, or colorable imitation of a registered mark or the
same container or a dominant feature thereof in
connection with the sale, offering for sale, distribution,
advertising of any goods or services including other
preparatory steps necessary to carry out the sale of any
goods or services on or in connection with which such
use is likely to cause confusion, or to cause mistake, or
to deceive; or
155.2. Reproduce, counterfeit, copy or colorably imitate
a registered mark or a dominant feature thereof and
apply such reproduction, counterfeit, copy or colorable
imitation to labels, signs, prints, packages, wrappers,
receptacles or advertisements intended to be used in
commerce upon or in connection with the sale, offering
for sale, distribution, or advertising of goods or services
on or in connection with which such use is likely to cause
confusion, or to cause mistake, or to deceive, shall be
liable in a civil action for infringement by the registrant for
the remedies hereinafter set forth: Provided, That the
infringement takes place at the moment any of the acts
stated in Subsection 155.1 or this subsection are
committed regardless of whether there is actual sale of
goods or services using the infringing material.15
The essential element of infringement under R.A. No.
8293 is that the infringing mark is likely to cause
confusion. In determining similarity and likelihood of
confusion, jurisprudence has developed tests  the
Dominancy Test and the Holistic or Totality Test. The
Dominancy Test focuses on the similarity of the
prevalent or dominant features of the competing
trademarks that might cause confusion, mistake, and
deception in the mind of the purchasing public.
Duplication or imitation is not necessary; neither is it
required that the mark sought to be registered suggests
an effort to imitate. Given more consideration are the
aural and visual impressions created by the marks on
the buyers of goods, giving little weight to factors like
prices, quality, sales outlets, and market segments.16
In contrast, the Holistic or Totality Test necessitates a
consideration of the entirety of the marks as applied to
the products, including the labels and packaging, in
determining confusing similarity. The discerning eye of
the observer must focus not only on the predominant
words, but also on the other features appearing on both
labels so that the observer may draw conclusion on
whether one is confusingly similar to the other.17
Relative to the question on confusion of marks and trade
names, jurisprudence has noted two (2) types of
confusion, viz.: (1) confusion of goods (product
confusion), where the ordinarily prudent purchaser would
be induced to purchase one product in the belief that he
was purchasing the other; and (2) confusion of business
(source or origin confusion), where, although the goods
of the parties are different, the product, the mark of
which registration is applied for by one party, is such as
might reasonably be assumed to originate with the
registrant of an earlier product, and the public would then
be deceived either into that belief or into the belief that
there is some connection between the two parties,
though inexistent.18
Applying the Dominancy Test to the case at bar, this
Court finds that the use of the stylized "S" by respondent
in its Strong rubber shoes infringes on the mark already
registered by petitioner with the IPO. While it is
undisputed that petitioner’s stylized "S" is within an oval
design, to this Court’s mind, the dominant feature of the
trademark is the stylized "S," as it is precisely the
stylized "S" which catches the eye of the purchaser.
Thus, even if respondent did not use an oval design, the
mere fact that it used the same stylized "S", the same
being the dominant feature of petitioner’s trademark,
already constitutes infringement under the Dominancy
Test.
This Court cannot agree with the observation of the CA
that the use of the letter "S" could hardly be considered
as highly identifiable to the products of petitioner alone.
The CA even supported its conclusion by stating that the
letter "S" has been used in so many existing trademarks,
the most popular of which is the trademark "S" enclosed
by an inverted triangle, which the CA says is identifiable
to Superman. Such reasoning, however, misses the
entire point, which is that respondent had used
a stylized "S," which is the same stylized "S" which
petitioner has a registered trademark for. The letter "S"
used in the Superman logo, on the other hand, has a
block-like tip on the upper portion and a round elongated
tip on the lower portion. Accordingly, the comparison
made by the CA of the letter "S" used in the Superman
trademark with petitioner’s stylized "S" is not appropriate
to the case at bar.
Furthermore, respondent did not simply use the letter
"S," but it appears to this Court that based on the font
and the size of the lettering, the stylized "S" utilized by
respondent is the very same stylized "S" used by
petitioner; a stylized "S" which is unique and
distinguishes petitioner’s trademark. Indubitably, the
likelihood of confusion is present as purchasers will
associate the respondent’s use of the stylized "S" as
having been authorized by petitioner or that respondent’s
product is connected with petitioner’s business.
Both the RTC and the CA applied the Holistic Test in
ruling that respondent had not infringed petitioner’s
trademark. For its part, the RTC noted the following
supposed dissimilarities between the shoes, to wit:
1. The mark "S" found in Strong Shoes is not
enclosed in an "oval design."
2. The word "Strong" is conspicuously placed at
the backside and insoles.
3. The hang tags and labels attached to the
shoes bears the word "Strong" for respondent
and "Skechers U.S.A." for private complainant;
4. Strong shoes are modestly priced compared
to the costs of Skechers Shoes.19
While there may be dissimilarities between the
appearances of the shoes, to this Court’s mind such
dissimilarities do not outweigh the stark and blatant
similarities in their general features. As can be readily
observed by simply comparing petitioner’s
Energy20 model and respondent’s Strong21 rubber shoes,
respondent also used the color scheme of blue, white
and gray utilized by petitioner. Even the design and
"wavelike" pattern of the midsole and outer sole of
respondent’s shoes are very similar to petitioner’s shoes,
if not exact patterns thereof. At the side of the midsole
near the heel of both shoes are two elongated designs in
practically the same location. Even the outer soles of
both shoes have the same number of ridges, five at the
back and six in front. On the side of respondent’s shoes,
near the upper part, appears the stylized "S," placed in
the exact location as that of the stylized "S" on
petitioner’s shoes. On top of the "tongue" of both shoes
appears the stylized "S" in practically the same location
and size. Moreover, at the back of petitioner’s shoes,
near the heel counter, appears "Skechers Sport Trail"
written in white lettering. However, on respondent’s
shoes appears "Strong Sport Trail" noticeably written in
the same white lettering, font size, direction and
orientation as that of petitioner’s shoes. On top of the
heel collar of petitioner’s shoes are two grayish-white
semi-transparent circles. Not surprisingly, respondent’s
shoes also have two grayish-white semi-transparent
circles in the exact same location.lihpwa1
Based on the foregoing, this Court is at a loss as to how
the RTC and the CA, in applying the holistic test, ruled
that there was no colorable imitation, when it cannot be
any more clear and apparent to this Court that there is
colorable imitation. The dissimilarities between the shoes
are too trifling and frivolous that it is indubitable that
respondent’s products will cause confusion and mistake
in the eyes of the public. Respondent’s shoes may not
be an exact replica of petitioner’s shoes, but the features
and overall design are so similar and alike that confusion
is highly likely.1avvphi1
In Converse Rubber Corporation v. Jacinto Rubber &
Plastic Co., Inc.,22 this Court, in a case for unfair
competition, had opined that even if not all the details
are identical, as long as the general appearance of the
two products are such that any ordinary purchaser would
be deceived, the imitator should be liable, to wit:
From said examination, We find the shoes manufactured
by defendants to contain, as found by the trial court,
practically all the features of those of the plaintiff
Converse Rubber Corporation and manufactured, sold or
marketed by plaintiff Edwardson Manufacturing
Corporation, except for their respective brands, of
course. We fully agree with the trial court that "the
respective designs, shapes, the colors of the ankle
patches, the bands, the toe patch and the soles of the
two products are exactly the same ... (such that) at a
distance of a few meters, it is impossible to distinguish
"Custombuilt" from "Chuck Taylor." These elements are
more than sufficient to serve as basis for a charge of
unfair competition. Even if not all the details just
mentioned were identical, with the general appearances
alone of the two products, any ordinary, or even perhaps
even a not too perceptive and discriminating customer
could be deceived, and, therefore, Custombuilt could
easily be passed off for Chuck Taylor. Jurisprudence
supports the view that under such circumstances, the
imitator must be held liable. x x x23
Neither can the difference in price be a complete
defense in trademark infringement. In McDonald’s
Corporation v. L.C. Big Mak Burger. Inc.,24 this Court
held:
Modern law recognizes that the protection to which the
owner of a trademark is entitled is not limited to guarding
his goods or business from actual market competition
with identical or similar products of the parties, but
extends to all cases in which the use by a junior
appropriator of a trade-mark or trade-name is likely to
lead to a confusion of source, as where prospective
purchasers would be misled into thinking that the
complaining party has extended his business into the
field (see 148 ALR 56 et seq; 53 Am. Jur. 576) or is in
any way connected with the activities of the infringer; or
when it forestalls the normal potential expansion of his
business (v. 148 ALR 77, 84; 52 Am. Jur. 576, 577). x x
x25
Indeed, the registered trademark owner may use its
mark on the same or similar products, in different
segments of the market, and at different price levels
depending on variations of the products for specific
segments of the market.26 The purchasing public might
be mistaken in thinking that petitioner had ventured into
a lower market segment such that it is not inconceivable
for the public to think that Strong or Strong Sport Trail
might be associated or connected with petitioner’s brand,
which scenario is plausible especially since both
petitioner and respondent manufacture rubber shoes.
Withal, the protection of trademarks as intellectual
property is intended not only to preserve the goodwill
and reputation of the business established on the goods
bearing the mark through actual use over a period of
time, but also to safeguard the public as consumers
against confusion on these goods.27 While respondent’s
shoes contain some dissimilarities with petitioner’s
shoes, this Court cannot close its eye to the fact that for
all intents and purpose, respondent had deliberately
attempted to copy petitioner’s mark and overall design
and features of the shoes. Let it be remembered, that
defendants in cases of infringement do not normally
copy but only make colorable changes.28 The most
successful form of copying is to employ enough points of
similarity to confuse the public, with enough points of
difference to confuse the courts.29
WHEREFORE, premises considered, the Motion for
Reconsideration is GRANTED. The Decision dated
November 30, 2006 is RECONSIDERED and SET
ASIDE.
SO ORDERED.
THIRD DIVISION
[G.R. No. 139300. March 14, 2001.]
AMIGO MANUFACTURING, Inc., Petitioner, v.
CLUETT PEABODY CO., 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:jgc:chanrobles.com.ph
"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." chanrob1es virtua1 1aw 1ibrary
The Decision of the Director of Patents, referred to by
the CA, disposed as follows:jgc:chanrobles.com.ph
"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."cralaw virtua1aw library
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:jgc:chanrobles.com.ph
"The source of the controversy that precipitated the filing
by [herein Respondent] Cluett Peabody Co., Inc. (a New
York corporation) of the present case against [herein
Petitioner] Amigo Manufacturing Inc. (a Philippine
corporation) for cancellation of trademark is
[respondent’s] claim of exclusive ownership (as
successor in interest of Great American Knitting Mills,
Inc.) of the following trademark and devices, as used on
men’s socks:chanrob1es virtual 1aw library
a) GOLD TOE, under Certificate of Registration No.
6797 dated September 22, 1958;
b) DEVICE, representation of a sock and magnifying
glass on the toe of a sock, under Certificate of
Registration No. 13465 dated January 25, 1968;
c) DEVICE, consisting of a ‘plurality of gold colored lines
arranged in parallel relation within a triangular area of
toe of the stocking and spread from each other by lines
of contrasting color of the major part of the stocking’
under Certificate of Registration No. 13887 dated May 9,
1968; and
d) LINENIZED, under Certificate of Registration No.
15440 dated April 13, 1970.
On the other hand, [petitioner’s] trademark and device
‘GOLD TOP, Linenized for Extra Wear’ has the dominant
color ‘white’ at the center and a ‘blackish brown’
background with a magnified design of the sock’s garter,
and is labeled ‘Amigo Manufacturing Inc., Mandaluyong,
Metro Manila, Made in the Philippines’.
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 course 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:jgc:chanrobles.com.ph
"After a careful consideration of [respondent’s]
arguments and a re-appreciation of the records of this
case, [w]e find [respondent’s] motion for reconsideration
meritorious. As shown by the records, and as correctly
held by the Director of Patents, there is hardly any
variance in the appearance of the marks ‘GOLD TOP’
and ‘GOLD TOE’ since both show a representation of a
man’s foot wearing a sock, and the marks are printed in
identical lettering. Section 4(d) of R.A. No. 166 declares
to be unregistrable, ‘a mark which consists o[r]
comprises a mark or trademark which so resembles a
mark or tradename registered in the Philippines of
tradename previously used in the Philippines by another
and not abandoned, as to be likely, when applied to or
used in connection with the goods, business or services
of the applicant, to cause confusion or mistake or to
deceive the purchasers. [Petitioner]’s mark is a
combination of the different registered marks owned by
[respondent]. As held in Del Monte Corporation v. Court
of Appeals, 181 SCRA 410 (1990), the question is not
whether the two articles are distinguishable by their label
when set aside but whether the general confusion made
by the article upon the eye of the casual purchaser who
is unsuspicious and off his guard, is such as to likely
result in confounding it with the original. As held by the
Court in the same decision[,] ‘The most successful form
of copying is to employ enough points of similarity to
confuse the public with enough points of difference to
confuse the courts.’ Furthermore, [petitioner]’s mark is
only registered with the Supplemental Registry which
gives no right of exclusivity to the owner and cannot
overturn the presumption of validity and exclusiv[ity]
given to a registered mark.
"Finally, the Philippines and the United States are parties
to the Union Convention for the Protection of Industrial
Property adopted in Paris on March 20, 1883, otherwise
known as the Paris Convention. (Puma
Sportschuhfabriken Rudolf Dassler K.G. v. Intermediate
Appellate Court, 158 SCRA 233). [Respondent] is
domiciled in the United States of America and is the
lawful owner of several trademark registrations in the
United States for the mark ‘GOLD TOE’.chanrob1es
virtua1 1aw 1ibrary
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:chanrob1es
virtual 1aw library
"I
Whether or not the Court of Appeals overlooked that
petitioner’s trademark was used in commerce in the
Philippines earlier than respondent’s actual use of its
trademarks, hence the Court of Appeals erred in
affirming the Decision of the Director of Patents dated
September 3, 1990.
"II
Since the petitioner’s actual use of its trademark was
ahead of the respondent, whether or not the Court of
Appeals erred in canceling the registration of petitioner’s
trademark instead of canceling the trademark of
the Respondent.
"III
Whether or not the Court of Appeals erred in affirming
the findings of the Director of Patents that petitioner’s
trademark [was] confusingly similar to respondent’s
trademarks.
"IV
Whether or not the Court of Appeals erred in applying
the Paris Convention in holding that respondent ha[d] an
exclusive right to the trademark ‘gold toe’ without taking
into consideration the absence of actual use in the
Philippines." 8 ahead of petitioner’s claimed date of first use of "Gold
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 Court’s Ruling
The Petition has no merit.
First Issue:chanrob1es virtual 1aw library
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
latter’s 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 findings of the Bureau of Patents
that respondent had actually used the trademark and the
devices in question prior to petitioner’s 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." chanrob1es virtua1 1aw 1ibrary
The registration of the above marks in favor of
respondent constitutes prima facie evidence, which
petitioner failed to overturn satisfactorily, of respondent’s
ownership of those marks, the dates of appropriation and
the validity of other pertinent facts stated therein Indeed,
Section 20 of Republic Act 166 provides as
follows:jgc:chanrobles.com.ph
"SECTION 20. Certificate of registration prima facie
evidence of validity. — A certificate of registration of a
mark or tradename shall be prima facie evidence of the
validity of the registration, the registrant’s ownership of
the mark or tradename, and of the registrant’s exclusive
right to use the same in connection with the goods,
business or services specified in the certificate, subject
to any conditions and limitations stated therein." 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 respondent’s first
use of the marks are presumed valid. Clearly, they were
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:jgc:chanrobles.com.ph
"The registration of a mark upon the supplemental
register is not, as in the case of the principal register,
prima facie evidence of (1) the validity of registration; (2)
registrant’s ownership of the mark; and (3) registrant’s
exclusive right to use the mark. It is not subject to
opposition, although it may be cancelled after its
issuance. Neither may it be the subject of interference
proceedings. Registration [i]n the supplemental register
is not constructive notice of registrant’s claim of
ownership. A supplemental register is provided for the
registration because of some defects (conversely,
defects which make a mark unregistrable on the principal
register, yet do not bar them from the supplemental
register.)’ (Agbayani, II Commercial Laws of the
Philippines, 1978, p. 514, citing Uy Hong Mo v. Titay &
Co., Et Al., Dec. No. 254 of Director of Patents, Apr. 30,
1968."cralaw virtua1aw library
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:jgc:chanrobles.com.ph
". . .. 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:chanrob1es virtual 1aw library
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 his application of the idem sonans rule,
claiming that the two trademarks "Gold Toe" and "Gold
Top" do not sound alike and are pronounced differently.
It avers that since the words gold and toe are generic,
respondent has no right to their exclusive use.
The arguments of petitioner are incorrect. True, it would
not be guilty of infringement on the basis alone of the
similarity in the sound of petitioner’s "Gold Top" with that
of respondent’s "Gold Toe." Admittedly, the
pronunciations of the two do not, by themselves, create
confusion.
The Bureau of Patents, however, did not rely on the
idem sonans test alone in arriving at its conclusion. This
fact is shown in the following portion of its
Decision:jgc:chanrobles.com.ph
"As shown by the drawings and labels on file, the mark
registered by Respondent-Registrant under Registration
No. SR-2206 is a combination of the abovementioned
trademarks registered separately by the petitioner in the
Philippines and the United States.
"With respect to the issue of confusing similarity between
the marks of the petitioner and that of the respondent-
registrant applying the tests of idem sonans, the mark
‘GOLD TOP & DEVICE’ is confusingly similar with the
mark ‘GOLD TOE’. The difference in sound occurs only
in the final letter at the end of the marks. For the same
reason, hardly is there any variance in their
appearance.’GOLD TOE’ and ‘GOLD TOP’ are printed in
identical lettering. Both show [a] representation of a
man’s foot wearing a sock.’GOLD TOP’ blatantly
incorporates petitioner’s ‘LINENIZED’ which by itself is a
registered mark." 13
The Bureau considered the drawings and the labels, the
appearance of the labels, the lettering, and the
representation of a man’s foot wearing a sock.
Obviously, its conclusion is based on the totality of the
similarities between the parties’ trademarks and not on
their sounds alone.chanrob1es virtua1 1aw 1ibrary
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:jgc:chanrobles.com.ph
"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
. . . . 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., v. 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 v.
Hanover Rubber Co., 107 F. 2d 588; . . ..)
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."cralaw
virtua1aw library
In the present case, a resort to either the Dominancy
Test or the Holistic Test shows that colorable imitation
exists between respondent’s "Gold Toe" and petitioner’s
"Gold Top." A glance at petitioner’s mark shows that it
definitely has a lot of similarities and in fact looks like a
combination of the trademark and devices that
respondent has already registered; namely, "Gold Toe,"
the representation of a sock with a magnifying glass, the
"Gold Toe" representation and "linenized."cralaw
virtua1aw library
Admittedly, there are some minor differences between
the two sets of marks. The similarities, however, are of
such degree, number and quality that the overall
impression given is that the two brands of socks are
deceptively the same, or at least very similar to each
another. An examination of the products in question
shows that their dominant features are gold checkered
lines against a predominantly black background and a
representation of a sock with a magnifying glass. In
addition, both products use the same type of lettering.
Both also include a representation of a man’s foot
wearing a sock and the word "linenized" with arrows
printed on the label. Lastly, the names of the brands are
similar — "Gold Top" and "Gold Toe." Moreover, it must
also be considered that petitioner and respondent are
engaged in the same line of business.
Petitioner cannot therefore ignore the fact that, when
compared, most of the features of its trademark are
strikingly similar to those of Respondent. In addition,
these representations are at the same location, either in
the sock itself or on the label. Petitioner presents no
explanation why it chose those representations,
considering that these were the exact symbols used in
respondent’s marks. Thus, the overall impression
created is that the two products are deceptively and
confusingly similar to each other. Clearly, petitioner
violated the applicable trademark provisions during that
time.
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:chanrob1es virtual 1aw library
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.chanrob1es virtua1 1aw 1ibrary
WHEREFORE, the Petition is hereby DENIED and the
assailed Resolution AFFIRMED. Costs against
petitioner.
SO ORDERED.
G.R. No. 78413 November 8, 1989
CAGAYAN VALLEY ENTERPRISES, INC.,
Represented by its President, Rogelio Q.
Lim, petitioner,
vs.
THE HON. COURT OF APPEALS and LA TONDEÑA,
INC., respondents.
Efren M. Cacatian for petitioners.
San Jose, Enrique, Lacas, Santos and Borje for private
respondent.
REGALADO, J.:
This petition for review on certiorari seeks the
nullification of the decision of the Court of Appeals of
December 5, 1986 in CA-G.R. CV No. 06685 which
reversed the decision of the trial court, and its resolution
dated May 5, 1987 denying petitioner's motion for
reconsideration.
The following antecedent facts generative of the present
controversy are not in dispute.
Sometime in 1953, La Tondeña, Inc. (hereafter, LTI for
short) registered with the Philippine Patent Office
pursuant to Republic Act No. 623 1 the 350 c.c. white flint
bottles it has been using for its gin popularly known as
"Ginebra San Miguel". This registration was
subsequently renewed on December 4, 1974. 2
On November 10, 1981, LTI filed Civil Case No. 2668 for
injunction and damages in the then Branch 1, Court of
First Instance of Isabela against Cagayan Valley
Enterprises, Inc. (Cagayan, for brevity) for using the 350
c.c., white flint bottles with the mark "La Tondeña Inc."
and "Ginebra San Miguel" stamped or blown-in therein
by filling the same with Cagayan's liquor product bearing
the label "Sonny Boy" for commercial sale and
distribution, without LTI's written consent and in violation
of Section 2 of Republic Act No. 623, as amended by
Republic Act No. 5700. On the same date, LTI further
filed an ex parte petition for the issuance of a writ of
preliminary injunction against the defendant therein. 3 On
November 16, 1981, the court a quo issued a temporary
restraining order against Cagayan and its officers and
employees from using the 350 c.c. bottles with the marks
"La Tondeña" and "Ginebra San Miguel." 4
Cagayan, in its answer, 5 alleged the
following defenses:
1. LTI has no cause of action due to its
failure to comply with Section 21 of
Republic Act No. 166 which requires the
giving of notice that its aforesaid marks
are registered by displaying and printing
the words "Registered in the Phil. Patent
Office" or "Reg Phil. Pat. Off.," hence no
suit, civil or criminal, can be filed against
Cagayan;
2. LTI is not entitled to any protection
under Republic Act No. 623, as
amended by Republic Act No. 5700,
because its products, consisting of hard
liquor, are not among those
contemplated therein. What is protected
under said law are beverages like Coca-
cola, Royal Tru-Orange, Lem-o-Lime
and similar beverages the bottles
whereof bear the words "Reg Phil. Pat.
Off.;"
3. No reservation of ownership on its bottles was made
by LTI in its sales invoices nor does it require any
deposit for the retention of said bottles; and
4. There was no infringement of the goods or products of
LTI since Cagayan uses its own labels and trademark on
its product.
In its subsequent pleadings, Cagayan contended that the
bottles they are using are not the registered bottles of
LTI since the former was using the bottles marked with
"La Tondeña, Inc." and "Ginebra San Miguel" but without
the words "property of" indicated in said bottles as stated
in the sworn statement attached to the certificate of
registration of LTI for said bottles.
On December 18, 1981, the lower court issued a writ of
preliminary injunction, upon the filing of a bond by LTI in
the sum of P50,000.00, enjoining Cagayan, its officers
and agents from using the aforesaid registered bottles of
LTI. 6
After a protracted trial, which entailed five (5) motions for
contempt filed by LTI against Cagayan, the trial court
rendered judgment 7 in favor of Cagayan, ruling that the
complaint does not state a cause of action and that
Cagayan was not guilty of contempt. Furthermore, it
awarded damages in favor of Cagayan.
LTI appealed to the Court of Appeals which, on
December 5, 1986 rendered a decision in favor of said
appellant, the dispositive portion whereof reads:
WHEREFORE, the decision appealed
from is hereby SET ASIDE and
judgment is rendered permanently
enjoining the defendant, its officers and
agents from using the 350 c.c. white flint
bottles with the marks of ownership "La
Tondeña, Inc." and "Ginebra San
Miguel", blown-in or stamped on said
bottles as containers for defendant's
products.
The writ of preliminary injunction issued
by the trial court is therefore made
permanent.
Defendant is ordered to pay the
amounts of:
(1) P15,000.00 as nominal or temperate
damages;
(2) P50,000.00 as exemplary damages;
(3) P10,000.00 as attorney's fees; and
(4) Costs of suit. 8
On December 23, 1986, Cagayan filed a motion for
reconsideration which was denied by the respondent
court in its resolution dated May 5, 1987, hence the
present petition, with the following assignment of errors:
I. The Court of Appeals
gravely erred in the
decision granting that
"there is, therefore, no
need for plaintiff to
display the words "Reg.
Phil. Pat. Off." in order
for it to succeed in
bringing any injunction
suit against defendant
for the illegal use of its
bottles. Rep. Act No.
623, as amended by
Rep. Act No. 5700
simply provides and
requires that the marks
or names shall be
stamped or marked on
the containers."
II. The Court of Appeals
gravely erred in
deciding that "neither is
there a reason to
distinguish between the
two (2) sets of marked
bottles-those which
contain the marks
"Property of La
Tondeña, Inc., Ginebra
San Miguel," and those
simply marked La
Tondeña Inc., Ginebra
San Miguel'. By omitting
the words "property of"
plaintiff did not open
itself to violation of
Republic Act No. 623,
as amended, as having
registered its marks or
names it is protected
under the law."
III. The Honorable Court
of Appeals gravely
erred in deciding that
the words "La Tondeña,
Inc. and Ginebra San
Miguel" are sufficient
notice to the defendant
which should have
inquired from the
plaintiff or the Philippine
Patent Office, if it was
lawful for it to re-use the
empty bottles of the
plaintiff.
IV. The Honorable
Court of Appeals
gravely erred in
deciding that defendant-
appellee cannot claim
good faith from using
the bottles of plaintiff
with marks "La
Tondeña, Inc." alone,
short for the description
contained in the sworn
statement of Mr. Carlos
Palanca, Jr., which was
a requisite of its original
and renewal
registrations.
V. The Honorable Court
of Appeals gravely
erred in accommodating
the appeal on the
dismissals of the five (5)
contempt charges.
VI. The Honorable
Court of Appeals
gravely erred in
deciding that the award
of damages in favor of
the defendant-appellee,
petitioner herein, is not
in order. Instead it
awarded nominal or
temperate, exemplary
damages and attorney's
fees without proof of
bad faith. 9
The pertinent provisions of Republic Act No. 623, as
amended by Republic Act No. 5700, provides:
SECTION 1. Persons engaged or
licensed to engage in the manufacture,
bottling, or selling of soda water, mineral
or aerated waters, cider, milk, cream or
other lawful beverages in bottles, boxes,
casks, kegs, or barrels and other similar
containers, or in the manufacturing,
compressing or selling of gases such as
oxygen, acytelene, nitrogen, carbon
dioxide ammonia, hydrogen, chloride,
helium, sulphur, dioxide, butane,
propane, freon, melthyl chloride or
similar gases contained in steel
cylinders, tanks, flasks, accumulators or
similar containers, with the name or the
names of their principals or products, or
other marks of ownership stamped or
marked thereon, may register with the
Philippine Patent Office a description of
the names or marks, and the purpose
for which the containers so marked and
used by them, under the same
conditions, rules, and regulations, made
 applicable by law or regulation to the
issuance of trademarks.
SEC. 2. It shall be unlawful for any
person, without the written consent of
the manufacturer, bottler, or seller, who
has succesfully registered the marks of
ownership in accordance with the
provisions of the next preceding section,
to fill such bottles, boxes, kegs, barrels,
steel cylinders, tanks, flasks,
accumulators or other similar containers
so marked or stamped, for the purpose
of sale, or to sell, disposed of, buy or
traffic in, or wantonly destroy the same,
whether filled or not, to use the same,
for drinking vessels or glasses or drain
pipes, foundation pipes, for any other
purpose than that registered by the
manufacturer, bottler or seller. Any
violation of this section shall be
punished by a fine of not more than one
thousand pesos or imprisonment of not
more than one year or both.
SEC. 3. The use by any person other
than the registered manufacturer, bottler
or seller, without written permission of
the latter of any such bottle, cask, barrel,
keg, box, steel cylinders, tanks, flask,
accumulators, or other similar
containers, or the possession thereof
without written permission of the
manufacturer, by any junk dealer or
dealer in casks, barrels, kegs boxes,
steel cylinders, tanks, flasks,
accumulators or other similar containers,
the same being duly marked or stamped
and registered as herein provided, shall
give rise to a prima facie presumption
that such use or possession is unlawful.
The above-quoted provisions grant protection to a
qualified manufacturer who successfully registered with
the Philippine Patent Office its duly stamped or marked
bottles, boxes, casks and other similar containers. The
mere use of registered bottles or containers without the
written consent of the manufacturer is prohibited, the
only exceptions being when they are used as containers
for "sisi," bagoong," "patis" and similar native products. 10
It is an admitted fact that herein petitioner Cagayan buys
from junk dealers and retailers bottles which bear the
marks or names La Tondeña Inc." and "Ginebra San
Miguel" and uses them as containers for its own liquor
products. The contention of Cagayan that the
aforementioned bottles without the words "property of"
indicated thereon are not the registered bottles of LTI,
since they do not conform with the statement or
description in the supporting affidavits attached to the
original registration certificate and renewal, is untenable.
Republic Act No. 623 which governs the registration of
marked bottles and containers merely requires that the
bottles, in order to be eligible for registration, must be
stamped or marked with the names of the manufacturers
or the names of their principals or products, or other
marks of ownership. No drawings or labels are required
but, instead, two photographs of the container, duly
signed by the applicant, showing clearly and legibly the
names and other marks of ownership sought to be
registered and a bottle showing the name or other mark
or ownership, irremovably stamped or marked, shall be
submitted. 11
The term "Name or Other Mark of Ownership" 12 means
the name of the applicant or the name of his principal, or
of the product, or other mark of ownership. The second
set of bottles of LTI without the words "property of"
substantially complied with the requirements of Republic
Act No. 623, as amended, since they bear the name of
the principal, La Tondeña Inc., and of its product,
Ginebra San Miguel. The omitted words "property of" are
not of such vital indispensability such that the omission
thereof will remove the bottles from the protection of the
law. The owner of a trade-mark or trade-name, and in
this case the marked containers, does not abandon it by
making minor modifications in the mark or name
itself. 13 With much more reason will this be true where
what is involved is the mere omission of the words
"property of" since even without said words the
ownership of the bottles is easily Identifiable. The words
"La Tondeña Inc." and "Ginebra San Miguel" stamped on
the bottles, even without the words "property of," are
sufficient notice to the public that those bottles so
marked are owned by LTI.
The claim of petitioner that hard liquor is not included
under the term "other lawful beverages" as provided in
Section I of Republic Act No. 623, as amended by
Republic Act No. 5700, is without merit. The title of the
law itself, which reads " An Act to Regulate the Use of
Duly Stamped or Marked Bottles, Boxes, Casks, Kegs,
Barrels and Other Similar Containers" clearly shows the
legislative intent to give protection to all marked bottles
and containers of all lawful beverages regardless of the
nature of their contents. The words "other lawful
beverages" is used in its general sense, referring to all
beverages not prohibited by law. Beverage is defined as
a liquor or liquid for drinking. 14 Hard liquor, although
regulated, is not prohibited by law, hence it is within the
purview and coverage of Republic Act No. 623, as
amended.
Republic Act No. 623, as amended, has for its purpose
the protection of the health of the general public and the
prevention of the spread of contagious diseases. It
further seeks to safeguard the property rights of an
important sector of Philippine industry. 15 As held by this
Court in Destileria Ayala, Inc. vs. Tan Tay & Co., 16 the
purpose of then Act 3070, was to afford a person a
means of Identifying the containers he uses in the
manufacture, preservation, packing or sale of his
products so that he may secure their registration with the
Bureau of Commerce and Industry and thus prevent
other persons from using them. Said Act 3070 was
substantially reenacted as Republic Act No. 623. 17
The proposition that Republic Act No. 623, as amended,
protects only the containers of the soft drinks
enumerated by petitioner and those similar thereto, is
unwarranted and specious. The rule of ejusdem
generis cannot be applied in this case. To limit the
coverage of the law only to those enumerated or of the
same kind or class as those specifically mentioned will
defeat the very purpose of the law. Such rule of ejusdem
generis is to be resorted to only for the purpose of
determining what the intent of the legislature was in
enacting the law. If that intent clearly appears from other
parts of the law, and such intent thus clearly manifested
is contrary to the result which would be reached by the
appreciation of the rule of ejusdem generis, the latter
must give way.18
Moreover, the above conclusions are supported by the
fact that the Philippine Patent Office, which is the proper
and competent government agency vested with the
authority to enforce and implement Republic Act No.
623, registered the bottles of respondent LTI as
containers for gin and issued in its name a certificate of
registration with the following findings:
It appearing, upon due examination that
the applicant is entitled to have the said
MARKS OR NAMES registered under
R.A. No. 623, the said marks or names
have been duly registered this day in the
PATENT OFFICE under the said Act, for
gin, Ginebra San Miguel. 19
While executive construction is not necessarily binding
upon the courts, it is entitled to great weight and
consideration. The reason for this is that such
construction comes from the particular branch of
government called upon to implement the particular law
involved. 20
Just as impuissant is petitioners contention that
respondent court erred in holding that there is no need
for LTI to display the words "Reg Phil. Pat. Off." in order
to succeed in its injunction suit against Cagayan for the
illegal use of the bottles. To repeat, Republic Act No. 623
governs the registration of marked bottles and containers
and merely requires that the bottles and/or containers be
marked or stamped by the names of the manufacturer or
the names of their principals or products or other marks
of ownership. The owner upon registration of its marked
bottles, is vested by law with an exclusive right to use
the same to the exclusion of others, except as a
container for native products. A violation of said right
gives use to a cause of action against the violator or
infringer.
While Republic Act No. 623, as amended, provides for a
criminal action in case of violation, a civil action for
damages is proper under Article 20 of the Civil Code
which provides that every person who, contrary to law,
wilfully or negligently causes damage to another, shall
indemnify the latter for the same. This particular
provision of the Civil Case was clearly meant to
complement all legal provisions which may have
inadvertently failed to provide for indemnification or
reparation of damages when proper or called for. In the
language of the Code Commission "(t)he foregoing rule
pervades the entire legal system, and renders it
impossible that a person who suffers damage because
another has violated some legal provisions, should find
himself without relief." 21 Moreover, under Section 23 of
Republic Act No. 166, as amended, a person entitled to
the exclusive use of a registered mark or tradename may
recover damages in a civil action from any person who
infringes his rights. He may also, upon proper showing,
be granted injunction.
It is true that the aforesaid law on trademarks provides:
SEC. 21. Requirements of notice of
registration of trade-mark.-The registrant
of a trade-mark, heretofore registered or
registered under the provisions of this
Act, shall give notice that his mark is
registered by displaying with the same
as used the words 'Registered in the
Philippines Patent Office' or 'Reg Phil.
Pat. Off.'; and in any suit for
infringement under this Act by a
registrant failing so to mark the goods
bearing the registered trade-mark, no
damages shall be recovered under the
provisions of this Act, unless the
defendant has actual notice of the
registration.
 
Even assuming that said provision is applicable in this
case, the failure of LTI to make said marking will not bar
civil action against petitioner Cagayan. The aforesaid
requirement is not a condition sine qua non for filing of a
civil action against the infringer for other reliefs to which
the plaintiff may be entitled. The failure to give notice of
registration will not deprive the aggrieved party of a
cause of action against the infringer but, at the most,
such failure may bar recovery of damages but only under
the provisions of Republic Act No. 166.
However, in this case an award of damages to LTI is
ineluctably called for. Petitioner cannot claim good faith.
The record shows that it had actual knowledge that the
bottles with the blown-in marks "La Tondeña Inc." and
"Ginebra San Miguel" are duly registered. In Civil Case
No. 102859 of the Court of First Instance of Manila,
entitled "La Tondeña Inc. versus Diego Lim, doing
business under the name and style 'Cagayan Valley
Distillery,' " a decision was rendered in favor of plaintiff
therein on the basis of the admission and/or
acknowledgment made by the defendant that the bottles
marked only with the words "La Tondeña Inc." and
"Ginebra San Miguel" are registered bottles of LTI. 22
Petitioner cannot avoid the effect of the admission and/or
acknowledgment made by Diego Lim in the said case.
While a corporation is an entity separate and distinct
from its stock-holders and from other corporations with
which it may be connected, where the discreteness of its
personality is used to defeat public convenience, justify
wrong, protect fraud, or defend crime, the law will regard
the corporation as an association of persons, or in the
case of two corporations, merge them into one. When
the corporation is the mere alter ego  or business conduit
of a person, it may be disregaded. 23
Petitioner's claim that it is separate and distinct from the
former Cagayan Valley Distillery is belied by the
evidence on record. The following facts warrant the
conclusion that petitioner, as a corporate entity, and
Cagayan Valley Distillery are one and the same. to wit:
(1) petitioner is being managed by Rogelio Lim, the son
of Diego Lim, the owner and manager of Cagayan Valley
Distellery; (2) it is a family corporation; 24 (3) it is an
admitted fact that before petitioner was incorporated it
was under a single proprietorship; 25 (4) petitioner is
engaged in the same business as Cagayan Valley
Distillery, the manufacture of wines and liquors; and (5)
the factory of petitioner is located in the same place as
the factory of the former Cagayan Valley Distillery.
It is thus clear that herein petitioner is a mere
continuation and successor of Cagayan Valley Distillery.
It is likewise indubitable that the admission made in the
former case, as earlier explained, is binding on it as
cogent proof that even before the filing of this case it had
actual knowledge that the bottles in dispute were
registered containers of LTI As held in La Campana
Coffee Factory, Inc., et al. vs. Kaisahan Ng Mga
Manggagawa sa La Campana (KKM), et al., 26 where the
main purpose in forming the corporation was to evade
one's subsidiary liability for damages in a criminal case,
the corporation may not be heard to say that it has a
personality separate and distinct from its members,
because to allow it to do so would be to sanction the use
of the fiction of corporate entity as a shield to further an
end subversive of justice.
Anent the several motions of private respondent LTI to
have petitioner cited for contempt, we reject the
argument of petitioner that an appeal from a verdict of
acquittal in a contempt, proceeding constitutes double
jeopardy. A failure to do something ordered by the court
for the benefit of a party constitutes civil contempt. 27 As
we held in Converse Rubber Corporation vs. Jacinto
Rubber & Plastics Co., Inc.:
...True it is that generally, contempt
proceedings are characterized as
criminal in nature, but the more accurate
juridical concept is that contempt
proceedings may actually be either civil
or criminal, even if the distinction
between one and the other may be so
thin as to be almost imperceptible. But it
does exist in law. It is criminal when the
purpose is to vindicate the authority of
the court and protect its outraged
dignity. It is civil when there is failure to
do something ordered by a court to be
done for the benefit of a party (3 Moran
Rules of Court, pp. 343-344, 1970 ed.;
see also Perkins vs. Director of Prisons,
58 Phil. 272; Harden vs. Director of
Prisons, 81 Phil. 741.) And with this
distinction in mind, the fact that the
injunction in the instant case is
manifestly for the benefit of plaintiffs
makes of the contempt herein involved
civil, not criminal. Accordingly, the
conclusion is inevitable that appellees
have been virtually found by the trial
court guilty of civil contempt, not criminal
contempt, hence, the rule on double
jeopardy may not be invoked. 28
The contempt involved in this case is civil and
constructive in nature, it having arisen from the act of
Cagayan in violating the writ of preliminary injunction of
the lower court which clearly defined the forbidden act, to
wit:
NOW THEREFORE, pending the
resolution of this case by the court, you
are enjoined from using the 350 c.c.
white flint bottles with the marks La
Tondeña Inc.,' and 'Ginebra San Miguel'
blown-in or stamped into the bottles as
containers for the defendant's
products. 19
On this incident, two considerations must be borne in
mind. Firstly, an injunction duly issued must be obeyed,
however erroneous the action of the court may be, until
its decision is overruled by itself or by a higher
court. 30 Secondly, the American rule that the power to
judge a contempt rests exclusively with the court
contemned does not apply in this Jurisdiction. The
provision of the present Section 4, Rule 71 of the Rules
of Court as to where the charge may be filed is
permissive in nature and is merely declaratory of the
inherent power of courts to punish contumacious
conduct. Said rules do not extend to the determination of
the jurisdiction of Philippine courts. 31 In appropriate case
therefore, this Court may, in the interest of expedient
justice, impose sanctions on contemners of the lower
courts.
Section 3 of Republic Act No. 623, as amended, creates
a prima facie  presumption against Cagayan for its
unlawful use of the bottles registered in the name of LTI
Corollarily, the writ of injunction directing petitioner to
desist from using the subject bottles was properly issued
by the trial court. Hence, said writ could not be simply
disregarded by Cagayan without adducing proof
sufficient to overcome the aforesaid presumption. Also,
based on the findings of respondent court, and the
records before us being sufficient for arbitrament without
remanding the incident to the court a quo  petitioner can
be adjudged guilty of contempt and imposed a sanction
in this appeal since it is a cherished rule of procedure for
this Court to always strive to settle the entire controversy
in a single proceeding, 32 We so impose such penalty
concordant with the preservative principle and as
demanded by the respect due the orders, writs and
processes of the courts of justice.
WHEREFORE, judgment is hereby rendered DENYING
the petition in this case and AFFIRMING the decision of
respondent Court of Appeals. Petitioner is hereby
declared in contempt of court and ORDERED to pay a
fine of One Thousand Pesos (P1,000.00), with costs.
SO ORDERED.
[G.R. No. 120961. October 2, 1997.]
DISTILLERIA WASHINGTON, INC. OR WASHINGTON
DISTILLERY, INC., Petitioner, v. LA TONDEÑA
DISTILLERS, INC. and THE HONORABLE COURT OF
APPEALS, Respondents.
RESOLUTION
KAPUNAN, J.:
On October 17, 1996, this Court rendered a decision in
the above-entitled case, the dispositive portion of which
reads, as follows:chanrob1es virtual 1aw library
WHEREFORE, the decision of the appellate court is
MODIFIED by ordering LTDI to pay petitioner just
compensation for the seized bottles. Instead, however,
of remanding the case to the Court of Appeals to receive
evidence on, and thereafter resolve, the assessment
thereof, this Court accepts and accordingly adopts the
quantification of P18,157.00 made by the trial court. No
costs.
With the denial of the motion for reconsideration,
petitioner sought a second reconsideration with leave of
court of our decision raising new issues, to
wit:chanrob1es virtual 1aw library
1.01.d. The Supreme Court, in its Decision of October
17, 1996, modified the decision of the Court of Appeals.
It held that ownership of the bottles had passed to the
consumer, ultimately, to Washington Distillery, Inc.,
thereby upholding the finding of the Regional Trial Court
and reversing the ruling of the Court of Appeals;
nonetheless, while ruling that the ownership over the
bottles had passed to Washington Distillery, Inc., it held
that Washington Distillery, Inc. may not use the bottles
because of the ‘trademark protection to the registrant’
(La Tondeña Distillers, Inc.). Instead of directing the
return of the bottles to Washington Distillery, Inc., the
Court ordered La Tondeña Distillers, Inc. to pay
Washington Distillery, Inc. the amount of P18,157.00.
2.00. The decision of the Supreme Court itself therefore
raises new issues. As owner of the bottles, should not
Washington Distillery, Inc. be given possession of the
bottles? Would its use of the bottles violate the
‘trademark protection of the registrant,’ La Tondeña
Distillers, Inc. afforded by R.A. No. 623, as amended?
3.00. The ‘Motion for Reconsideration’ of the petitioner
Washington Distillery, Inc. is addressed to these new
issues. They had not been previously addressed by the
parties. They could not have been previously passed
upon. It could hardly be said that ‘no substantial
argument,’ not previously raised, is made in the ‘Motion
for Reconsideration’ to warrant a modification of the
Court’s decision.
On May 21, 1997, the Court resolved to set for hearing
the motion for reconsideration on May 28, 1997 for its
judicious disposition. Thereafter, the parties as required
by the Court filed their simultaneous memoranda "to
expound and lay particular emphasis on the provision of
Section 5 of R.A. 623 which proscribes the filing of an
action against any person to whom registered
manufacturer, bottler or seller has transferred by way of
sale, any of the containers." The parties complied.
A reexamination of the arguments raised by petitioner in
its Second Motion for Reconsideration filed on February
13, 1997, in the hearing on May 28, 1997 and in the
subsequent memorandum filed thereafter, convinces us
the merits of its position.
To recall, La Tondeña Distillers, Inc. (La Tondeña, for
short) filed before the Regional Trial Court for the
recovery, under its claim of ownership, of possession or
replevin against Distilleria Washington, Inc. or
Washington Distillery, Inc. (Distilleria Washington) of
18,157 empty "350 c.c. white flint bottles" bearing the
blown-in marks of "La Tondeña Inc." and "Ginebra San
Miguel," averring that Distilleria Washington was using
the bottles for its own "Gin Seven" products without the
consent of La Tondeña in violation of Republic Act 623.
The trial court in its decision dismissed the complaint,
upholding Distilleria Washington’s contention that a
purchaser of liquor pays only a single price for the liquor
and the bottle and is not required to return the bottle at
any time.
The Court of Appeals reversed the trial court’s decision,
ruling that under Republic Act 623, the use of marked
bottles by any person other than the manufacturer,
bottler or seller, without the latter’s written consent, is
unlawful. It emphasized that the marks of La Tondeña’s
ownership stamped or blown-in to the bottles are
sufficient notice to the public that the bottles are La
Tondeña’s property; hence, Distilleria Washington
cannot be considered a purchaser in good faith.
While our decision of October 17, 1996 affirmed with
modification the Court of Appeals’ decision, we at least
implicitly acknowledged that there was a valid transfer of
the bottles to Distilleria Washington, except that its
possession of the bottles without the written consent of
La Tondeña gives rise to a prima facie presumption of
illegal use under R.A. 623.
In seeking reconsideration of the decision of this Court,
petitioner advances, among others, the following
arguments:chanrob1es virtual 1aw library
(1) If, as the Court found in its decision of October 17,
1996, Distilleria Washington had acquired ownership of
the bottles, La Tondeña’s suit for replevin, where the
sole issue is possession, should be denied.
(2) Since the right of ownership over the bottles gives
rise, according to the Court’s own language, to its own
elements of jus posidendi, jus utendi, jus fruendi, jus
disponendi, and jus abutendi, along with the applicable
jus lex, to allow La Tondeña to keep the bottles is to
deny Distilleria Washington, the very attributes or
elements of its ownership.
(3) There is no showing — and it cannot be assumed —
that if Distilleria Washington would have possession of
the bottles, it will exercise the other attributes of
ownership, along with the applicable jus lex, over the
"marks of ownership stamped or marked" on the bottles.
(4) The provision in Sec. 3 of Republic Act 623 to the
effect that the use by any person other than the
registered manufacturer, bottler or seller without the
written permission of the latter of any such bottle, etc.
shall give rise to a prima facie presumption that such use
or possession is unlawful, does not arise in the instant
case because the Court has itself found Section 5 of the
same law applicable.
Additionally, petitioner argues with persuasion the
following points in its memorandum:chanrob1es virtual
1aw library
(5) It is absurd to hold the buyer such as Distilleria
Washington, liable for the possession and use of its own
bottles without the written consent of La Tondeña who is
no longer the owner thereof and for which it has received
payment in full.
(6) To hold the buyer liable under Sections 2 and 3
would grant La Tondeña the extraordinary right not only
of possession and use of the bottles which it has sold
and no longer owns, but also to sell said bottles ad
infinitum, thus enriching itself unjustly.
(7) It is manifestly unjust and unconscionable that
millions of buyers of Ginebra San Miguel, who pay not
only for the gin but also for the bottles containing it
should run the risk of criminal prosecution by the mere
fact of possession of the empty bottles after consuming
the liquor.
Distilleria Washington’s motion raises the novel issue
that if, as we ruled in our decision of October 17, 1996,
petitioner became the owner over the bottles seized from
it by replevin, then it has the right to their possession and
use as attributes of ownership, unless their use violates
the trademark or incorporeal rights accorded private
respondent by R.A. 623 which has not really been
established in this case.
As pointed out in our decision,
"Parenthetically, petitioner is not here being charged with
violation of Sec. 2 of R.A. 623 or the Trademark Law.
The instant case is one for replevin (manual delivery)
where the claimant must be able to show convincingly
that he is either the owner or clearly entitled to the
possession of the object sought to be recovered.
Replevin is a possessory action. The gist of which
focuses on the right of possession that in turn, is
dependent on a legal basis that, not infrequently, looks
to the ownership of the object sought to be
replevied."cralaw virtua1aw library
Since replevin as a possessory action is dependent upon
ownership, it is relevant to ask: Did La Tondeña
Distillers, Inc. transfer ownership of its marked bottles or
containers when it sold its products in the market? Were
the marked bottles or containers part of the products
sold to the public?
In our decision sought to be reconsidered, we
categorically answered the question in the affirmative in
this wise:chanrob1es virtual 1aw library
R.A. No. 623 does not disallow the sale or transfer of
ownership of the marked bottles or containers. In fact,
the contrary is implicit in the law thus:chanrob1es virtual
1aw library
SEC. 5. . . .
SEC. 6. . . .
Scarcely disputed are certain and specific industry
practices in the sale of gin. The manufacturer sells the
product in marked containers, through dealers, to the
public in supermarkets, grocery shops, retail stores and
other sales outlets. The buyer takes the item; he is
neither required to return the bottle nor required to make
a deposit to assure its return to the seller. He could
return the bottle and get a refund. A number of bottles at
times find their way to commercial users. It cannot be
gainsaid that ownership of the containers does pass on
the consumer albeit subject to the statutory limitations on
the use of the registered containers and to the trademark
rights of the registrant. The statement in Section 5 of
R.A. 623 to the effect that the ‘sale of beverage
contained the said containers shall not include the sale
of the containers unless specifically so provided’ is not a
rule of proscription. It is a rule of construction that, in
keeping with the spirit and intent of the law, establishes
at best a presumption (of non-conveyance of the
container) and which by no means can be taken to be
either interdictive or conclusive in character. Upon the
other hand, LTDI’s sales invoice, stipulating that the ‘sale
does not include the bottles with the blown-in marks of
ownership of La Tondeña Distillers,’ cannot affect those
who are not privies thereto.
In plain terms, therefore, La Tondeña not only sold its gin
products but also the marked bottles or containers, as
well. And when these products were transferred by way
of sale, then ownership over the bottles and all its
attributes (jus utendi, jus abutendi, jus fruendi, jus
disponendi) passed to the buyer. It necessarily follows
that the transferee has the right to possession of the
bottles unless he uses them in violation of the original
owner’s registered or incorporeal rights.
After practically saying that La Tondeña has surrendered
ownership and consequently, possession of the marked
bottles or container, it is incongruous and, certainly, it
does not seem fair and just to still allow La Tondeña,
citing the prima facie presumption of illegal use under
Sec. 3 of R.A. 623, to retain possession of the seized
bottles by simply requiring payment of just compensation
to petitioner.
The pertinent provisions of R.A. 623 are as
follows:chanrob1es virtual 1aw library
SEC. 2. It shall be unlawful for any person, without the
written consent of the manufacturer, bottler, or seller
(underscoring supplied) who has successfully registered
the marks of ownership in accordance with the
provisions of the next preceding section, to fill such
bottles, boxes, kegs, barrels, steel cylinders, tanks,
flasks, accumulators, or other similar containers so
marked or stamped, for the purpose of sale, or to sell,
dispose of, buy or traffic in, or wantonly destroy the
same, whether filled or not to use the same for drinking
vessels or glasses or drain pipes, foundation pipers, for
any other purpose than that registered by the
manufacturer, bottler or seller. Any violation of this
section shall be punished by a fine of not more than one
thousand pesos or imprisonment of not more than one
year or both.
SEC. 3. The use by any person other than the registered
manufacturer, bottler or seller, without written permission
of the latter (underscoring supplied) of any such bottle,
cask, barrel, keg, box, steel cylinders, tanks, flask,
accumulators, or other similar containers, or the
possession thereof without written permission of the
manufacturer, by any junk dealer or dealer in casks,
barrels, keg, boxes, steel cylinders, tanks, flask,
accumulators or other similar containers, the same being
duly marked or stamped and registered as herein
provided, shall give rise to a prima facie presumption
that such use or possession is unlawful.
x           x          x
SEC. 5. No action shall be brought under this Act
(underscoring supplied) against any person to whom the
registered manufacturer, bottler or seller, has transferred
by way of sale, (underscoring supplied) any of the
containers herein referred to, but the sale of the
beverage contained in the said containers shall not
include the sale of the containers unless specifically so
provided.
In resolving that petitioner is the owner of the bottles, this
Court applied Section 5 of R.A. 623; and in withholding
possession of the bottles from the petitioner and in
concluding that use or possession thereof without the
written permission of the registered owner would
constitute prima facie presumption of illegal use, this
Court invoked Sections 2 and 3 of the same law.
A careful reading of Sections 2, 3 and 5 of R.A. 623
would lead to the conclusion that they contemplate
situations separate and distinct from each other. Section
2 prohibits any person from using, selling or otherwise
disposing of registered containers without the written
consent of the registrant. Such rights belong exclusively
to the registrant. Under Section 3, mere possession of
such registered containers without the written consent of
the registrant is prima facie presumed unlawful.
It appears — and this is the critical point — that Sections
2 and 3 apply only when the "filling" up of the bottle or
the "use" of the bottle is "without the written permission"
of the "registered manufacturer, bottler, or seller," who
has registered the marks of "ownership" of the bottles. It
is thus implicit that Sections 2 and 3 apply only when the
"registered manufacturer, bottler, or seller" retain
ownership of the bottles.
Upon the other hand, when the bottles have been
"transferred by way of sale," Section 5 applies, thereby
precluding the institution of any action "under this Act,"
meaning to say, any action under Sections 2 and 3.
The general rule on ownership, therefore, must apply
and petitioner be allowed to enjoy all the rights of an
owner in regard the bottles in question, to wit: the jus
utendi or the right to receive from the thing what it
produces; the jus abutendi or the right to consume the
thing by its use; the jus disponendi or the power of the
owner to alienate, encumber, transform and even
destroy the thing owned; and the jus vindicandi or the
right to exclude from the possession of the thing owned
any other person to whom the owner has not transmitted
such thing. What is proscribed is the use of the bottles in
infringement of another’s trademark or incorporeal
rights.chanroblesvirtuallawlibrary
Since the Court has found that the bottles have been
transferred by way of sale, then La Tondeña has
relinquished all its proprietary rights over the bottles in
favor of Distilleria Washington who has obtained them in
due course. Now as owner, it can exercise all attributes
of ownership over the bottles. This is the import of the
decision that La Tondeña had transferred ownership
over its marked bottles or containers when it sold its gin
products to the public. While others may argue that
Section 5 is applicable only to the immediate transferee
of the marked bottles or container, this matter is best
discussed where the applicability of Sec. 5, R.A. 623 is
squarely raised. It must be recalled, however, that this is
a case of replevin, not a violation of the "trademark
protection of the registrant" under R.A. 623 or of the
Trademark Law.
A query may be posed: Would use of the bottles
constitute a violation of the incorporeal rights of La
Tondeña Distillers, Inc. over its "marks of ownership"
embossed on the bottles? While apparently relevant, it
would be improper and premature for this Court to rule
on the point because:chanrob1es virtual 1aw library
First, violation of the "marks of ownership" of La
Tondeña Distillers, Inc., on the bottles has not been put
in issue, the parties did not have the opportunity to
ventilate their respective positions on the matter. Thus, a
ruling would be violative of due process.
Second, the question calls for a factual investigation
which this Court has generally not taken upon itself to
undertake because it is not a trier of facts; and
Third, disregarding the above, the facts before this Court
do not provide a sufficient basis for a fair and intelligent
resolution of the question.
Moreover, our decision added that "the Court sees no
other insistence to keep the bottles, except for such
continued use." This, to our mind, is rather speculative at
this point; something which was never touched upon in
the proceedings below.
We cannot also be oblivious of the fact that if La
Tondeña’s thesis that every possession of the bottles
without the requisite written consent is illegal, thousands
upon thousands of buyers of Ginebra San Miguel would
be exposed to criminal prosecution by the mere fact of
possession of the empty bottles after consuming the
content.
One last point. It may not be amiss to state that La
Tondeña is a big and established distillery which already
has captured a big share of the gin market, estimated to
be 90%. Distilleria Washington, on the other hand,
together with other small distillers — around 40 in
number — concedes that it cannot fight this giant, but
only asks a share of the market. It cannot afford to
manufacture its own bottles and just have to rely on
recycled bottles to sell its products. To disallow the use
of these recycled products would necessarily deprive it a
share of the market which La Tondeña seeks to
monopolize.
We recognize the role of large industry in the growth of
our nascent economy. However, small industries
likewise play a vital role in economic growth, playing a
significant part in the success of such tiger economies as
Korea, Taiwan and Thailand. Industries, big and small,
should adopt symbiotic relationship, not the animosity of
Goliath and David. Our holding today merely recognizes
that in the country’s march toward economic
development and independence, it is essential that a
balance protecting small industries and large scale
businesses be maintained.
IN VIEW OF THE FOREGOING, the Court RESOLVED
to RECONSIDER its Decision promulgated on October
17, 1996 and render another judgment REVERSING in
toto the Decision of the Court of Appeals promulgated on
January 11, 1995 and its Resolution of June 23, 1995.
The decision of the Regional Trial Court of December 3,
1991 is REINSTATED.
SO ORDERED.
Bellosillo and Hermosisima, JJ., concur.
Davide, Jr., J., took no part as he was not a member of
the Division when this case was deliberated upon.
Separate Opinions
VITUG, J., dissenting:chanrob1es virtual 1aw library
I regret that I am unable to join my colleagues in the
modification of the decision under reconsideration. The
Court’s ruling did say that the ownership of the "marked
bottles" passed on to the consumer but it was
understood to be subject to the "statutory limitations on
the use of registered containers and to the trademark
rights of the registrant." Republic Act No. 623, which is
the law applicable, prohibits the use of registered bottles
or containers without the written consent of the
manufacturer. 1 This enactment has heretofore been
upheld by the Court in Cagayan Valley Enterprise, Inc. v.
Court of Appeals. 2
The marked bottles in the instant case were evidently
being used by petitioner for its own "Gin Seven" products
without the consent of La Tondeña Distillers, Inc.
("LTDI"). The Court of Appeals itself made such a finding
of unauthorized commercial use by petitioner. Our
ponencia did not thus rely merely, albeit not at all
unwarranted had it been otherwise, on the statutory
prima facie presumption of illegal use. The matter is on
record, and it cannot just be ignored. For how else would
petitioner insist on keeping the marked bottles if it were
not for its own continued use.chanrobles virtual
lawlibrary
Given the circumstances, the unavoidable alternative
would be, such as arrived at in the ponencia sought to
be reconsidered, for LTDI (the registrant of the
trademark) to simply pay petitioner just compensation for
the seized marked bottles.
WHEREFORE, I am constrained to vote, most
respectfully, for the denial of the second motion for
reconsideration.
[G.R. No. 123248. October 16, 1997]
TWIN ACE HOLDINGS
CORPORATION, Petitioner, v. COURT OF APPEALS
and LORENZANA FOOD
CORPORATION, Respondents.
DECISION
BELLOSILLO, J.:
TWIN ACE HOLDINGS CORPORATION (TWIN ACE) is
a manufacturer, distiller and bottler of distillery products,
e.g., rhum, gin, brandy, whiskey, vodka, liquor and
cordial under the name and style of Tanduay Distillers,
Inc. (TANDUAY). Lorenzana Food Corporation
(LORENZANA), on the other hand, manufactures and
exports processed foods and other related products,
e.g., patis, toyo, bagoong,  vinegar and other food
seasonings. On 16 January 1992 TWIN ACE filed a
complaint for replevin1 to recover three hundred eighty
thousand (380,000) bottles of 350 ml., 375 ml. and 750
ml. allegedly owned by it but detained and used by
LORENZANA as containers for native products without
its express permission, in violation of RA No. 623.2 This
law prohibits the use of registered bottles and other
containers for any purpose other than that for which they
were registered without the express permission of the
owner.
LORENZANA moved to dismiss the complaint on the
ground that RA No. 623 could not be invoked by TWIN
ACE because the law contemplated containers of non-
alcoholic beverages only. But, assuming arguendo that
the law applied in TWIN ACE's favor, the right of
LORENZANA to use the bottles as containers for
its patis and other native products was expressly
sanctioned by Sec. 63 of the same law and upheld by
this Court in Cagayan Valley Enterprises, Inc. v. Court of
Appeals.4chanroblesvirtuallawlibrary
On 16 March 1992 the Regional Trial Court of Manila
dismissed the complaint.5 TWIN ACE appealed to
respondent Court of Appeals which affirmed the action of
the trial court. In its Decision dated 22 December
19956 respondent court ruled that while bottles and
containers of alcoholic beverages were indeed covered
within the protective mantle of RA No. 623, as correctly
argued by TWIN ACE, nevertheless the Supreme Court
in Cagayan Valley Enterprises, Inc. v. Court of
Appeals expressly recognized the exception granted in
Sec. 6 thereof to those who used the bottles as
containers for sisi, bagoong, patis and other native
products. Hence, no injunctive relief and damages could
be obtained against LORENZANA for exercising what
was precisely allowed by the law.
Petitioner TWIN ACE contends that Sec. 6
notwithstanding, respondent LORENZANA is obliged to
pay just compensation for the use of the subject bottles
because Sec. 6 exempts the user from criminal sanction
only but does not shield him from civil liability arising
from the use of the registered bottles without the express
consent of the registered owner. Such civil liability arises
from the fact that Sec. 5 of RA No 623 expressly
reserves for the registered owner the ownership of the
containers notwithstanding the sale of the beverage
contained therein. Private respondent, on the other
hand, contends that petitioner's bottles used as
containers for hard liquor are not protected by RA No.
623. But even assuming the applicability of the law,
LORENZANA invokes the exemption granted in Sec. 6
thereof.
We deny the petition. The question of whether registered
containers of hard liquor such as rhum, gin, brandy and
the like are protected by RA No. 623 has already been
settled in Cagayan Valley Enterprises, Inc. v. Court of
Appeals.7 In that case, the Court dealt squarely with the
issue and ruled in the affirmative reasoning that hard
liquor, although regulated, is not prohibited by law,
hence, still within the purview of the phrase "other lawful
beverages" protected by RA No. 623, as amended.
Consequently petitioner therein Cagayan Valley
Enterprises, Inc. was enjoined from using the 350 ml.
white flint bottles of La Tondea, Inc., with the marks of
ownership "La Tondea, Inc." and "Ginebra San Miguel"
for its own liquor products.
But while we adopt the foregoing precedent and rule in
accordance therewith, we will not decide this case in
favor of petitioner because it is quite clear that
respondent falls within the exemption granted in Sec. 6
which states: "The provisions of this Act shall not be
interpreted as prohibiting the use of bottles as containers
for "sisi," "bagoong," "patis," and similar native
products."
Petitioner itself alleges that respondent LORENZANA
uses the subject 350 ml., 375 ml. and 750 ml. bottles as
containers for processed foods and other related
products such as patis, toyo, bagoong,  vinegar and
other food seasonings. Hence, Sec. 6 squarely applies in
private respondent's favor. Obviously, the contention of
TWIN ACE that the exemption refers only to criminal
liability but not to civil liability is without merit. It is
inconceivable that an act specifically allowed by law, in
other words legal, can be the subject of injunctive relief
and damages. Besides, the interpretation offered by
petitioner defeats the very purpose for which the
exemption was provided.

Republic Act No. 623, "An Act to Regulate the Use of

Duly Stamped or Marked Bottles, Boxes, Casks, Kegs,
Barrels and Other Similar Containers," as amended by
RA No. 5700,8 was meant to protect the intellectual
property rights of the registrants of the containers and
prevent unfair trade practices and fraud on the
public.9 However, the exemption granted in Sec. 6
thereof was deemed extremely necessary to provide
assistance and incentive to the backyard, cottage and
small-scale manufacturers of indigenous native products
such as patis, sisi and toyo who do not have the capital
to buy brand new bottles as containers nor afford to pass
the added cost to the majority of poor Filipinos who use
the products as their daily condiments or viands.10 If the
contention of petitioner is accepted, i.e., to construe the
exemption as to apply to criminal liability only but not to
civil liability, the very purpose for which the exemption
was granted will be defeated. None of the small-scale
manufacturers of the indigenous native products
protected would possibly wish to use the registered
bottles if they are vulnerable to civil suits. The effect is a
virtual elimination of the clear and unqualified exemption
embodied in Sec. 6. It is worthy to note that House Bill
No. 2058511 was completely rejected because it sought
to expressly and directly eliminate that which petitioner
indirectly proposes to do with this petition.

Petitioner cannot seek refuge in Sec. 512 of RA No. 623

to support its claim of continuing ownership over the
subject bottles. In United States v. Manuel13 we held that
since the purchaser at his discretion could either retain
or return the bottles, the transaction must be regarded as
a sale of the bottles when the purchaser actually
exercised that discretion and decided not to return them
to the vendor. We also take judicial notice of the
standard practice today that the cost of the container is
included in the selling price of the product14 such that the
buyer of liquor or any such product from any store is not
required to return the bottle nor is the liquor placed in a
plastic container that possession of the bottle is retained
by the store.15chanroblesvirtuallawlibrary

WHEREFORE, the questioned decision and resolution of

the Court of Appeals are AFFIRMED. Costs against
petitioner.

SO ORDERED.